Virginia | 000-27622 | 54-1796693 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
Date: | August 14, 2019 | HIGHLANDS BANKSHARES, INC. | |
By: | /s/ John H. Gray | ||
John H. Gray | |||
Chief Financial Officer |
Quarterly Consolidated Income Statements (unaudited) | ||||||||||||||||||
Quarter ended | Percent change compared to | |||||||||||||||||
(thousands) | June 30, 2019 | March 31, 2019 | June 30, 2018 | Prior quarter | Same quarter of prior year | |||||||||||||
INTEREST INCOME | ||||||||||||||||||
Loans receivable and fees on loans | $ | 5,652 | $ | 5,653 | $ | 5,276 | — | % | 7.1 | % | ||||||||
Investment securities | 433 | 412 | 438 | 5.1 | % | (1.1 | )% | |||||||||||
Federal funds sold and overnight investments | 227 | 141 | 57 | 61 | % | 298.2 | % | |||||||||||
Total interest income | 6,312 | 6,206 | 5,771 | 1.7 | % | 9.4 | % | |||||||||||
INTEREST EXPENSE | ||||||||||||||||||
Deposits | 955 | 824 | 463 | 15.9 | % | 106.3 | % | |||||||||||
Other borrowed funds | 275 | 273 | 323 | 0.7 | % | (14.9 | )% | |||||||||||
Total interest expense | 1,230 | 1,097 | 786 | 12.1 | % | 56.5 | % | |||||||||||
Net interest income | 5,082 | 5,109 | 4,985 | (0.5 | )% | 1.9 | % | |||||||||||
Provision for loan losses | 836 | 103 | 172 | 711.7 | % | 386 | % | |||||||||||
Net interest income after provision for loan losses | 4,246 | 5,006 | 4,813 | (15.2 | )% | (11.8 | )% | |||||||||||
NONINTEREST INCOME | ||||||||||||||||||
Service charges on deposit accounts | 338 | 342 | 342 | (1.2 | )% | (1.2 | )% | |||||||||||
Other service charges, commissions and fees | 378 | 339 | 428 | 11.5 | % | (11.7 | )% | |||||||||||
Mortgage banking income | 48 | 48 | 52 | — | % | (7.7 | )% | |||||||||||
Securities gains, net | (7 | ) | — | — | ||||||||||||||
Other operating income | 176 | 161 | 167 | 9.3 | % | 5.4 | % | |||||||||||
Total noninterest income | 933 | 890 | 989 | 4.8 | % | (5.7 | )% | |||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||
Salaries and employee benefits | 2,281 | 2,416 | 2,380 | (5.6 | )% | (4.2 | )% | |||||||||||
Occupancy and equipment expense | 527 | 615 | 750 | (14.3 | )% | (29.7 | )% | |||||||||||
OREO-related expenses | 92 | 50 | 146 | 84 | % | (37 | )% | |||||||||||
Other operating expense | 1,633 | 1,473 | 1,356 | 10.9 | % | 20.4 | % | |||||||||||
Total noninterest expense | 4,533 | 4,554 | 4,632 | (0.5 | )% | (2.1 | )% | |||||||||||
Income before income taxes | 646 | 1,342 | 1,170 | (51.9 | )% | (44.8 | )% | |||||||||||
Income tax expense | 75 | 282 | 247 | (73.4 | )% | (69.6 | )% | |||||||||||
Net income | $ | 571 | $ | 1,060 | $ | 923 | (46.1 | )% | (38.1 | )% | ||||||||
Net income per common share: | ||||||||||||||||||
Basic | $ | 0.07 | $ | 0.13 | $ | 0.11 | ||||||||||||
Diluted | 0.06 | 0.10 | 0.09 |
Consolidated Income Statements (unaudited) | ||||||||||||
Six months ended June 30, | ||||||||||||
(thousands) | 2019 | 2018 | Percent change | |||||||||
INTEREST INCOME | ||||||||||||
Loans receivable and fees on loans | $ | 11,305 | $ | 10,591 | 6.7 | % | ||||||
Investment securities | 845 | 916 | (7.8 | )% | ||||||||
Federal funds sold and overnight investments | 368 | 127 | 189.8 | % | ||||||||
Total interest income | 12,518 | 11,634 | 7.6 | % | ||||||||
INTEREST EXPENSE | ||||||||||||
Deposits | 1,779 | 926 | 92.1 | % | ||||||||
Other borrowed funds | 548 | 687 | (20.2 | )% | ||||||||
Total interest expense | 2,327 | 1,613 | 44.3 | % | ||||||||
Net interest income | 10,191 | 10,021 | 1.7 | % | ||||||||
Provision for loan losses | 939 | 344 | 173.0 | % | ||||||||
Net interest income after provision for loan losses | 9,252 | 9,677 | (4.4 | )% | ||||||||
NONINTEREST INCOME | ||||||||||||
Service charges on deposit accounts | 680 | 679 | 0.1 | % | ||||||||
Other service charges, commissions and fees | 717 | 847 | (15.3 | )% | ||||||||
Mortgage banking income | 96 | 152 | (36.8 | )% | ||||||||
Securities gains, net | (7 | ) | — | — | ||||||||
Other operating income | 337 | 393 | (14.2 | )% | ||||||||
Total noninterest income | 1,823 | 2,071 | (12.0 | )% | ||||||||
NONINTEREST EXPENSE | ||||||||||||
Salaries and employee benefits | 4,697 | 4,783 | (1.8 | )% | ||||||||
Occupancy and equipment expense | 1,142 | 1,481 | (22.9 | )% | ||||||||
OREO-related expenses | 142 | 277 | (48.7 | )% | ||||||||
Other operating expense | 3,106 | 3,257 | (4.6 | )% | ||||||||
Total noninterest expense | 9,087 | 9,798 | (7.3 | )% | ||||||||
Income before income taxes | 1,988 | 1,950 | 1.9 | % | ||||||||
Income tax expense | 357 | 417 | (14.4 | )% | ||||||||
Net income | $ | 1,631 | $ | 1,533 | 6.4 | % | ||||||
Net income per common share: | ||||||||||||
Basic | $ | 0.20 | $ | 0.19 | ||||||||
Diluted | 0.16 | 0.15 |
Consolidated Balance Sheets (unaudited) | ||||||||||||||||||
Percent change since | ||||||||||||||||||
(thousands) | June 30, 2019 | December 31, 2018 | June 30, 2018 | Prior quarter | Same quarter of prior year | |||||||||||||
ASSETS | ||||||||||||||||||
Cash and due from banks | $ | 26,684 | $ | 19,965 | $ | 23,007 | 33.7 | % | 16.0 | % | ||||||||
Federal funds sold | 21,138 | 10,101 | 963 | 109.3 | % | 2,095.0 | % | |||||||||||
Total cash and cash equivalents | 47,822 | 30,066 | 23,970 | 59.1 | % | 99.5 | % | |||||||||||
Investment securities | 68,997 | 71,405 | 73,553 | (3.4 | )% | (6.2 | )% | |||||||||||
Loans held for sale | 863 | 265 | 1,424 | 225.7 | % | (39.4 | )% | |||||||||||
Loans held for investment | 451,590 | 448,121 | 441,460 | 0.8 | % | 2.3 | % | |||||||||||
Allowance for loan losses | (4,243 | ) | (4,373 | ) | (4,138 | ) | (3.0 | )% | 2.5 | % | ||||||||
Net loans held for investment | 447,347 | 443,748 | 437,322 | 0.8 | % | 2.3 | % | |||||||||||
Premises and equipment, net | 17,159 | 17,447 | 17,879 | (1.7 | )% | (4.0 | )% | |||||||||||
Real estate held for sale | 590 | 817 | 992 | (27.8 | )% | (40.5 | )% | |||||||||||
Deferred tax assets | 5,706 | 6,526 | 7,152 | (12.6 | )% | (20.2 | )% | |||||||||||
Interest receivable | 2,010 | 1,617 | 1,728 | 24.3 | % | 16.3 | % | |||||||||||
Bank-owned life insurance | 15,215 | 15,022 | 14,835 | 1.3 | % | 2.6 | % | |||||||||||
Other real estate owned | 2,892 | 2,212 | 2,233 | 30.7 | % | 29.5 | % | |||||||||||
Other assets | 3,120 | 2,816 | 2,991 | 10.8 | % | 4.3 | % | |||||||||||
Total assets | $ | 611,721 | $ | 591,941 | $ | 584,079 | 3.3 | % | 4.7 | % | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||
LIABILITIES | ||||||||||||||||||
Deposits: | ||||||||||||||||||
Noninterest bearing | $ | 153,982 | $ | 156,408 | $ | 155,337 | (1.6 | )% | (0.9 | )% | ||||||||
Interest bearing | 364,462 | 346,408 | 342,979 | 5.2 | % | 6.3 | % | |||||||||||
Total deposits | 518,444 | 502,816 | 498,316 | 3.1 | % | 4.0 | % | |||||||||||
Short-term borrowings | 30,000 | 30,000 | — | — | % | — | % | |||||||||||
Long-term debt | 67 | 93 | 30,120 | (28.0 | )% | (99.8 | )% | |||||||||||
Other liabilities | 3,179 | 2,391 | 1,482 | 33.0 | % | 114.5 | % | |||||||||||
Total liabilities | 551,690 | 535,300 | 529,918 | 3.1 | % | 4.1 | % | |||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||||||||
Common stock | 5,156 | 5,156 | 5,124 | — | % | 0.6 | % | |||||||||||
Preferred stock | 4,184 | 4,184 | 4,184 | — | % | — | % | |||||||||||
Additional paid-in capital | 19,292 | 19,277 | 19,224 | 0.1 | % | 0.4 | % | |||||||||||
Retained earnings | 31,762 | 30,131 | 28,072 | 5.4 | % | 13.1 | % | |||||||||||
Accumulated other comprehensive loss | (363 | ) | (2,107 | ) | (2,443 | ) | (82.8 | )% | (85.1 | )% | ||||||||
Total stockholders' equity | 60,031 | 56,641 | 54,161 | 6.0 | % | 10.8 | % | |||||||||||
Total liabilities and stockholders' equity | $ | 611,721 | $ | 591,941 | $ | 584,079 | 3.3 | % | 4.7 | % | ||||||||
Profitability Ratios, Asset Quality and Capital (unaudited) | |||||||||||||
Quarter ended | |||||||||||||
(dollars in thousands) | June 30, 2019 | March 31, 2019 | June 30, 2018 | ||||||||||
Profitability Ratios (current quarter, annualized) | |||||||||||||
Net interest margin | 3.75 | % | 3.86 | % | 3.84 | % | |||||||
Annualized return on average assets | 0.37 | 0.71 | 0.63 | ||||||||||
Annualized return on average equity | 3.89 | 7.53 | 6.89 | ||||||||||
Efficiency ratio | 75.36 | 75.91 | 77.54 | ||||||||||
June 30, 2019 | December 31, 2018 | June 30, 2018 | |||||||||||
Asset Quality | |||||||||||||
Loans 90 days past due and still accruing | $ | 168 | $ | 107 | $ | — | |||||||
Non-accrual loans | 5,265 | 5,920 | 3,871 | ||||||||||
Total non-performing loans | 5,433 | 6,027 | 3,871 | ||||||||||
Other real estate owned | 2,892 | 2,212 | 2,233 | ||||||||||
Total non-performing assets | $ | 8,325 | $ | 8,239 | $ | 6,104 | |||||||
Ratios: | |||||||||||||
Non-performing loans to loans held for investment | 1.20 | % | 1.34 | % | 0.88 | % | |||||||
Non-performing assets to loans held for investment and OREO | 1.83 | 1.83 | 1.38 | ||||||||||
Allowance for credit losses to loans held for investment | 0.96 | 0.98 | 0.94 | ||||||||||
Allowance for credit losses to non-performing loans | 79.64 | 73.87 | 106.90 | ||||||||||
Past-due loans to loans held for investment | 1.36 | 1.51 | 1.47 | ||||||||||
Annualized net charge-offs to loans held for investment | 0.62 | 0.04 | 0.03 | ||||||||||
Capital | |||||||||||||
Common shares outstanding | 8,251 | 8,251 | 8,199 | ||||||||||
Preferred shares outstanding | 2,092 | 2,092 | 2,092 | ||||||||||
Book value per share: | |||||||||||||
Common | $ | 6.43 | $ | 6.02 | $ | 5.76 | |||||||
Combined common and preferred | 5.80 | 5.48 | 5.26 | ||||||||||
Ratios (Bank only, estimated): | |||||||||||||
Tier 1 leverage ratio | 9.19 | % | 9.22 | % | 8.85 | % | |||||||
Tier 1 risk-based capital ratio | 12.89 | 12.94 | 12.22 | ||||||||||
Total risk-based capital ratio | 13.87 | 13.90 | 13.20 | ||||||||||
Common equity tier 1 ratio | 12.89 | 12.94 | 12.22 |