ABVA Alliance Bankshares Corp. (MM)

Alliance Bankshares Corporation (NASDAQ – ABVA) today reported a net loss of $433 thousand for the quarter ended March 31, 2012. Results during the quarter were primarily impacted by reduced interest income and increased provision expense, which offset reduced interest and non-interest expenses, and a favorable adjustment to the fair value of the FHLB advance. The quarterly results represent a loss of $.08 per share versus income of $.07 per share for the same period in 2011. Alliance’s regulatory capital ratios at March 31, 2012 remain above the levels necessary to be considered a “well capitalized” institution.

At March 31, 2012, total assets amounted to $508.7 million, essentially flat as compared to the level at December 31, 2011. Total loans were $297.1 million at March 31, 2012, reflecting a decline of 3.2% since December 31, 2011. The decline in the loan portfolio results from a combination of strategic repositioning of lending activities, normal amortization, and payoffs, the total of which offset new loan production during the period. Investment securities amounted to $105.7 million as of March 31, 2012, a decline of $17.8 million from the December 31, 2011 level of $123.5 million. Total deposits at March 31, 2012, were $380.5, virtually unchanged from December 31, 2011.

Non-performing assets (NPAs) of $17.1 million at March 31, 2012 were slightly lower when compared to $18.0 million at December 31, 2011. The overall decrease resulted largely from charge-offs during the quarter. The mix in NPAs changed during the quarter due to foreclosure on a residential property securing a non-performing loan – OREO increased by $935 thousand to a total of $4.7 million. NPAs-to-total assets declined slightly from 3.55% at December 31, 2011, to 3.37% at March 31, 2012. At March 31, 2011, the allowance for loan losses stood at $5.1 million, or 1.71% of loans.

The Company’s net interest margin for the quarter was 3.10%, a decrease from 3.78% when compared to the same period in 2011. The margin decline resulted largely from the change in mix in investments, which was a product of our restructuring the portfolio in anticipation of the planned merger that was subsequently terminated. The margin was also negatively impacted by reversals of interest income for non-accrual loans.

On May 3, 2012, the Company and WashingtonFirst Bankshares entered into an agreement to merge. Details regarding the terms of the merger are disclosed in the SEC 8-K filed by the Company on May 8, 2012.

Cautionary Statement Regarding Forward-Looking Statements. Certain statements contained in this report that are not historical facts may constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements can generally be identified by the use of words such as “may,” “will,” “should,” “could,” “would,” “plan,” “believe,” “expect,” “anticipate,” “intend” or words of similar meaning. These statements are inherently uncertain; there can be no assurance that the underlying assumptions will prove to be accurate. These forward-looking statements include statements relating to the Company’s anticipated future performance, mix of assets and liabilities and effects of efforts to reposition its business. Readers should not place undue reliance on such statements, which speak only as of the date of this release. The Company does not undertake to update any forward-looking statement that may be made from time to time by it or on its behalf.

Forward-looking statements are subject to risks, assumptions and uncertainties, and could be affected by many factors. Some factors that could cause the Company’s actual results to differ materially from those anticipated in these forward-looking statements include: interest rates, general business conditions, as well as conditions within the financial markets, general economic conditions, unemployment levels, the legislative/regulatory climate, including the effect of the Dodd-Frank Wall Street Reform Act and Consumer Protection Act of 2010 and related regulations, regulatory compliance costs, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve, the quality/composition of the loan portfolios and the value of related collateral, the value of securities the Company holds, charge-offs on loans and the adequacy of the allowance for loan losses, loan demand, deposit flows, counterparty strength, competition, reliance on third parties for key services, the health of the real estate markets, the outcome of the Company’s repositioning initiatives, and changes in accounting principles.

More information on Alliance Bankshares Corporation can be found online at www.alliancebankva.com, or by phoning an Alliance office.

      ALLIANCE BANKSHARES CORPORATION Consolidated Balance Sheets     March 31, December 31, March 31, 2012*   2011   2011* ASSETS (Dollars in thousands)   Cash and due from banks $ 66,589 $ 45,837 $ 49,635 Federal funds sold 25,307 16,567 8,272 Trading securities, at fair value 454 596 605 Investment securities available-for-sale, at fair value 105,744 123,463 125,469 Restricted stock, at cost 4,772 4,772 6,374 Loans, net of unearned discount and fees 297,085 306,876 319,607 Less: allowance for loan losses   (5,070 )     (5,393 )     (5,611 ) Loans, net 292,015 301,483 313,996   Premises and equipment, net 1,297 1,415 1,579 Other real estate owned (OREO) 4,683 3,748 4,533 Deferred tax asset, net of allowance $0, $5,291, and $0 1,378 1,535 4,652 Other assets   6,425       7,067       13,184     TOTAL ASSETS $ 508,664     $ 506,483     $ 528,299     LIABILITIES AND STOCKHOLDERS' EQUITY   Non-interest bearing deposits $ 118,067 $ 112,450 $ 120,687 Savings and NOW deposits 57,415 51,475 53,233 Money market deposits 15,885 23,370 24,671 Time deposits   189,106       193,148       207,539   Total deposits 380,473 380,443 406,130   Repurchase agreements, federal funds purchased and other borrowings 43,842 40,420 33,992 Federal Home Loan Bank advances ($28,887, $29,350 and $26,057 at fair value) 43,887 44,350 41,057 Trust Preferred Capital Notes 10,310 10,310 10,310 Other liabilities   2,421       2,838       3,052     TOTAL LIABILITIES   480,933       478,361       494,541    

Common stock, $4 par value; 15,000,000 shares authorized; 5,109,969 issued and outstanding at March, 31, 2012 and December 31, 2011 and 5,108,219 shares issued and outstanding at March 31, 2011

20,440 20,440 20,433 Capital surplus 25,924 25,915 25,855 Retained (deficit) (18,702 ) (18,269 ) (11,946 ) Accumulated other comprehensive income (loss), net   69       36       (584 )   TOTAL STOCKHOLDERS' EQUITY   27,731       28,122       33,758     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 508,664     $ 506,483     $ 528,299                   * Unaudited financial results     ALLIANCE BANKSHARES CORPORATION Consolidated Income Statements   Three Months Ended Three Months Ended March 31, March 31, 2012*   2011* (Dollars in thousands, except share and per share)   INTEREST INCOME: Loans $ 4,183 $ 4,545 Trading security 10 33 Investment securities 323 1,321 Federal funds sold   15       10     Total interest income   4,531       5,909     INTEREST EXPENSE: Savings and NOW deposits 29 32 Time deposits 747 997 Money market deposits 30 49 Repurchase agreements 57 88 FHLB advances 268 259 Trust preferred capital notes   103       92     Total interest expense   1,234       1,517     Net interest income 3,297 4,392 Provision for loan losses   450       306     Net interest income after provision for loan losses   2,847       4,086     OTHER INCOME: Deposit account service charges 34 37 Net gain on sale of available-for-sale securities 3 79 Gain/(Loss) and fair value adjustments on trading security (71 ) (127 ) Fair value adjustments on FHLB advance 463 151 Other operating income   40       44     Total other income 469 184   OTHER EXPENSES: Salaries and employee benefits 1,164 1,392 Occupancy expense 591 561 Equipment expense 134 168 Other real estate owned expense 41 35 FDIC assessments 222 350 Operating expenses   1,439       1,217     Total other expenses   3,591       3,723     Income before income taxes (275 ) 547 Income tax expense   158       182   NET INCOME $ (433 )   $ 365   Net income per common share, basic $ (0.08 )   $ 0.07   Net income per common share, diluted $ (0.08 )   $ 0.07   Weighted average number of shares, basic   5,109,969       5,108,048   Weighted average number of shares, diluted   5,109,969       5,123,029             * Unaudited financial results     ALLIANCE BANKSHARES CORPORATION Consolidated Statistical Information Performance Information     March 31, March 31, 2012*   2011* (Dollars in thousands, except per share) Performance Information:   For The Three Months Ended: Average loans $ 301,600 $ 325,151 Average earning assets 429,596 474,291 Average assets 463,551 512,790 Average non-interest bearing deposits 87,197 87,960 Average total deposits 337,712 357,236 Average interest-bearing liabilities 345,685 388,930 Average stockholder equity 28,093 33,619 Net interest margin (1) 3.10 % 3.78 % Net income per share, basic $ (0.08 ) $ 0.07 Net income per share, diluted $ (0.08 ) $ 0.07             * Unaudited financial results (1) On a fully-tax equivalent basis assuming a 34% federal tax rate.       ALLIANCE BANKSHARES CORPORATION Consolidated Statistical Information Credit Quality Information (1)     March 31, December 31, March 31, 2012* 2011 2011* (Dollars in thousands) Credit Quality Information: Nonperforming assets: Impaired loans (performing loans without a specific allowance) $ 3,249 $ 4,233 $ 2,997 Non-accrual loans 7,934 9,031 8,577 Loans past due 90 days and still accruing 370 - - Troubled debt restructured 904 957 843 OREO   4,683   3,748   4,533 Total nonperforming assets $ 17,140 $ 17,969 $ 16,950     Specific reserves associated with impaired & non-accrual loans $ 2,121 $ 2,271 $ 1,780     Largest components of the nonperforming assets listed above:   March 31, 2012 non-accrual and Impaired loans (98% of the total) $2.6 million which is secured by commercial real estate. $2.5 million which is secured by residential land.

$2.2 million which is secured by 17 residential units

$1.0 million which is secured by commercial real estate $948 thousand which is secured by commercial equipment and receivables. $900 thousand secured by commercial land $540 thousand which is secured by a residential property and lot. $336 thousand which is secured by residential real estate.   March 31, 2012 OREO (92% of the total)

$1.3 million which is secured by commercial real estate

$879 thousand which is acreage in Woodstock, VA $477 thousand which consists of two parcels of land in Northern Virginia. $963 thousand which is secured residential property $720 thousand which is acreage in Stephens City, VA  

(1)

The allowance for loan losses includes a specific allocation for all impaired loans. Nonperforming assets are defined as impaired loans, non-accrual loans, OREO, troubled debt restructured, and loans past due 90 days or more and still accruing interest.

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Unaudited financial results

          ALLIANCE BANKSHARES CORPORATION Consolidated Statistical Information Credit Quality Information (1)     For The Three Months Ended: March 31, March 31, 2012*   2011* (Dollars in thousands)   Balance, beginning of period $ 5,393 $ 5,281

 

Provision for loan losses 450 306   Loans charged off (782 ) (206 )   Recoveries of loans charged off   9     230     Net charge-offs   (773 )   24     Balance, end of period $ 5,070   $ 5,611                               March 31, December 31, September 30, June 30, March 31, 2012*   2011 2011* 2011*   2011* Ratios: Allowance for loan losses to total loans 1.71 % 1.76 % 1.62 % 1.75 % 1.76 %   Allowance for loan losses to non-accrual loans 0.64X 0.41X 0.56X 0.53X 0.65X   Allowance for loan losses to nonperforming assets 0.40X 0.30X 0.33X 0.36X 0.33X   Nonperforming assets to total assets 3.37 % 3.51 % 2.85 % 2.91 % 3.21 %   Net charge-offs to average loans 0.26 % 0.45 % 0.40 % 0.43 % 0.00 %                                    

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Unaudited financial results

(1)

The allowance for loan losses includes a specific allocation for all impaired loans. Nonperforming assets are defined as impaired loans, non-accrual loans, OREO, troubled debt restructured, and loans past due 90 days or more and still accruing interest.

 

        ALLIANCE BANKSHARES CORPORATION Consolidated Statistical Information Trading Asset & Liability Summary    

March 31, 2011

December 31, 2011

Fair Fair Trading Security   Value   Yield   Value   Yield (Dollars in thousands)   PCMO 1 $ 454 5.40 % $ 596 5.44 %   Total $ 454 5.40 % $ 596 5.44 %  

1

 

As of March 31, 2012 trading securities consisted of one PCMO instrument. This PCMO was rated AAA by at least one ratings agency on the purchase date. Currently the security has a rating below investment grade. The instrument is currently performing as expected.

      March 31, 2012 December 31, 2011 Fair Fair Fair Value Asset and Liabilities   Value   Value (Dollars in thousands)   Trading security $ 454 $ 596   FHLB advances $ 29,345 $ 29,350     ALLIANCE BANKSHARES CORPORATION Consolidated Statistical Information Capital Information     March 31, December 31, 2012*   2011 (Dollars in thousands, except per share)   Capital Information: Book value per share $ 5.43 $ 5.50 Tier I risk-based capital ratio 12.1% 12.6% Total risk-based capital ratio 13.6% 13.8% Leverage capital ratio 8.1% 7.6% Total equity to total assets ratio 5.5% 5.6%             * Unaudited financial results       ALLIANCE BANKSHARES CORPORATION Components of Stockholder Equity on a Book Value per Share Basis           Three Months Twelve Months Three Months Ended March 31, Ended December 31, Ended March 31, 2012*   2011   2011* Book Value Per Share, beginning of the period $ 5.50 $ 6.60 $ 6.60   Net income (loss) per common share (0.08 ) (1.17 ) 0.07 Stock based compensation - - -

Effects of Changes in Other Comprehensive Income 1

  0.01       0.07       (0.06 )   Book Value Per Share, end of the period $ 5.43     $ 5.50     $ 6.61                

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Unaudited financial results

1

Other Comprehensive Income represents the unrealized gains or losses associated with available-for-sale securities and the related reclassification adjustments.