Net loss improved to $7.9 million
Provision for loan losses declined to $7.3 million
Noninterest expenses declined by $3.5 million from the previous quarter
Nonperforming assets declined for the sixth consecutive quarter
NORFOLK, Va., May 1, 2012 (GLOBE NEWSWIRE) -- Hampton Roads Bankshares, Inc. (the "Company") (Nasdaq:HMPR), the holding company of Bank of Hampton Roads and Shore Bank, today announced financial results for the first quarter of 2012. The Company reported a net loss of $7.9 million for the quarter, compared to losses of $21.4 million for the fourth quarter of 2011 and $31.6 million for the first quarter of 2011. First quarter 2012 results benefitted from lower provision for loan losses due to continued improvements in credit quality and reduced operating expenses due to continued progress from the Company's expense reduction initiatives.
Net interest income for the first quarter of 2012 was $16.7 million, down from the $17.5 million in the fourth quarter of 2011 and $18.2 million in the first quarter of 2011. Net interest margin during the quarter was 3.62%, a slight increase from the 3.58% in the previous quarter and significantly higher than the net interest margin of 2.98% in the first quarter of 2011. Margin improvements are the result of lower funding costs and a better mix of earning assets as loan origination activity increased during the quarter to help stem the pace of portfolio attrition and additional funds were invested in the securities portfolio.
Provision for loan losses for the first quarter of 2012 was $7.3 million compared to $14.1 million in the fourth quarter of 2011 and $21.3 million in the first quarter of 2011. In addition, the Company reported a decline of $7.0 million in nonperforming assets during the first quarter, marking the sixth straight quarterly decline in the aggregate level of nonperforming assets.
Noninterest income was $3.1 million during the first quarter of 2012 compared to ($1.1) million during the fourth quarter of 2011 and $2.1 million in the first quarter of 2011. Noninterest income benefitted from strong origination volumes in the Company's mortgage unit which saw revenues increase to $3.3 million from $2.4 million and $1.3 million in the prior year fourth and first quarters, respectively. Noninterest income also benefitted from a decline in losses and impairments on foreclosed assets, which declined to $3.0 million compared to $6.5 million in the fourth quarter of 2011 and $3.7 million in the first quarter of 2011.
Noninterest expenses decreased to $19.9 million during the first quarter of 2012 compared to $23.4 million in the fourth quarter of 2011 and $30.6 million in the first quarter of 2011. The cost reductions are a direct result of the Company's success in reducing its expense base through the consolidation and/or sales of selected branches, efficiencies gained in its various business operations and improvements in credit quality. The increase in salary and benefits expense in the first quarter compared to the previous quarter is a direct result of increased mortgage originations during the quarter and the related increase in commissions paid to the mortgage loan officers.
"The first quarter results demonstrate continued progress, particularly with the reduction in operating expenses and positive credit quality trends," said Douglas Glenn, President and Chief Executive Officer. "We are especially pleased with the nearly $50 million of new lending we achieved during the quarter."
As of March 31, 2012, total assets were $2.13 billion, down slightly from $2.17 billion at December 31, 2011. During the quarter, loans outstanding declined from $1.50 billion to $1.47 billion as a result of continued resolutions of problem loans and charge-offs, with new lending activity largely offsetting normal portfolio attrition. Total deposits declined during the quarter to $1.77 billion from $1.80 billion at December 31, 2011 primarily from continued declines in brokered deposits.
During the quarter, nonperforming assets declined to $189.8 million from $196.9 million at December 31, 2011. Nonperforming assets represented 8.90% of total assets at March 31, 2012 compared to 9.08% at December 31, 2011.
At March 31, 2012, the Company exceeded all of the regulatory capital minimums. Bank of Hampton Roads was "well capitalized" with respect to its Tier 1 and leverage ratios and "adequately capitalized" with respect to its total risk based capital ratio. Each of Shore Bank's capital ratios remained above the "well capitalized" threshold at March 31, 2012.
Caution About Forward-Looking Statements.
Certain statements made herein and in the attached earnings press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about events or results or otherwise are not statements of historical facts, such as statements about expense reduction and credit trends. Although the Company believes that its expectations with respect to such forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance the Company will be able to exit its problem assets or return to profitability or that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual events or results to differ significantly from those described in the forward-looking statements include, but are not limited to those described in the cautionary language included under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and other filings made with the SEC.
About Hampton Roads Bankshares
Hampton Roads Bankshares, Inc. is a bank holding company that was formed in 2001 and is headquartered in Norfolk, Virginia. The Company's primary subsidiaries are Bank of Hampton Roads, which opened for business in 1987, and Shore Bank, which opened in 1961 (the "Banks"). The Banks engage in general community and commercial banking business, targeting the needs of individuals and small to medium-sized businesses. Currently, Bank of Hampton Roads operates 38 banking offices in Virginia and North Carolina doing business as Bank of Hampton Roads and Gateway Bank & Trust Co. Shore Bank serves the Eastern Shore of Maryland and Virginia through seven banking offices and a recently opened loan production office in West Ocean City, Maryland. Through various affiliates, the Banks also offer mortgage banking services and investment products. Shares of the Company's common stock are traded on the NASDAQ Global Select Market under the symbol "HMPR." Additional information about the Company and its subsidiaries can be found at www.hamptonroadsbanksharesinc.com.
Use of Non-GAAP Financial Measures
This earnings press release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding our results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the Form 8-K filed related to this release. The Form 8-K can be found on the SEC's EDGAR website at www.sec.gov or our website at www.hamptonroadsbanksharesinc.com.
| Hampton Roads Bankshares, Inc. | |||
| Financial Highlights | |||
| Unaudited | |||
| (in thousands, except per share data) | |||
| Three months ended | |||
| Operating Results | March 31, 2012 | December 31, 2011 | March 31, 2011 |
| Interest income | $ 21,606 | $ 22,876 | $27,183 |
| Interest expense | 4,906 | 5,420 | 8,959 |
| Net interest income | 16,700 | 17,456 | 18,224 |
| Provision for loan losses | 7,302 | 14,117 | 21,314 |
| Noninterest income | 3,109 | (1,127) | 2,125 |
| Noninterest expense | 19,911 | 23,395 | 30,642 |
| Income tax expense | -- | -- | 44 |
| Net loss | (7,404) | (21,183) | (31,651) |
| Noncontrolling interest | 502 | 230 | 17 |
| Net loss available to common shareholders | (7,906) | (21,413) | (31,668) |
| Per Share Data | |||
| Loss per share: | |||
| Basic | $ (0.23) | $ (0.62) | $ (0.95) |
| Diluted | (0.23) | (0.62) | (0.95) |
| Common dividends declared | -- | -- | -- |
| Book value per common share | 3.05 | 3.29 | 4.79 |
| Book value per common share - tangible | 2.95 | 3.18 | 4.48 |
| Balance Sheet at Period-End | |||
| Total assets | $ 2,133,027 | $2,166,860 | $ 2,717,383 |
| Gross loans | 1,471,998 | 1,504,733 | 1,806,447 |
| Allowance for loan losses | 68,917 | 74,947 | 109,990 |
| Total investment securities | 334,622 | 304,527 | 373,267 |
| Intangible assets | 3,415 | 3,751 | 10,371 |
| Total deposits | 1,772,122 | 1,798,034 | 2,271,002 |
| Total borrowings | 236,431 | 236,558 | 262,562 |
| Shareholders' equity | 105,298 | 113,668 | 159,863 |
| Shareholders' equity - tangible | 101,883 | 109,917 | 149,492 |
| Common shareholders' equity | 105,298 | 113,668 | 159,863 |
| Common shareholders' equity - tangible | 101,883 | 109,917 | 149,492 |
| Daily Averages | |||
| Total assets | $ 2,159,488 | $ 2,270,707 | $ 2,810,261 |
| Gross loans | 1,484,814 | 1,577,877 | 1,912,053 |
| Total investment securities | 305,855 | 306,454 | 366,543 |
| Intangible assets | 3,574 | 3,955 | 10,641 |
| Total deposits | 1,791,570 | 1,880,808 | 2,340,879 |
| Total borrowings | 236,524 | 236,541 | 262,893 |
| Shareholders' equity | 112,283 | 131,991 | 183,764 |
| Shareholders' equity - tangible | 108,709 | 128,036 | 173,123 |
| Common shareholders' equity | 112,283 | 131,991 | 183,764 |
| Common shareholders' equity - tangible | 108,709 | 128,036 | 173,123 |
| Interest-earning assets | 1,853,008 | 1,934,073 | 2,477,077 |
| Interest-bearing liabilities | 1,805,115 | 1,878,916 | 2,383,193 |
| Three months ended | |||
| Financial Ratios | March 31, 2012 | December 31, 2011 | March 31, 2011 |
| Return on average assets | -1.47% | -3.74% | -4.57% |
| Return on average common equity | -28.32% | -64.36% | -69.89% |
| Return on average common equity - tangible | -29.25% | -66.35% | -74.19% |
| Net interest margin | 3.62% | 3.58% | 2.98% |
| Efficiency ratio | 100.44% | 143.86% | 150.58% |
| Tangible common equity to tangible assets | 4.78% | 5.08% | 5.52% |
| Allowance for Loan Losses | |||
| Beginning balance | $ 74,947 | $ 83,036 | $ 157,253 |
| Provision for losses | 7,302 | 14,117 | 21,314 |
| Charge-offs | (15,285) | (24,690) | (69,151) |
| Recoveries | 1,953 | 2,484 | 574 |
| Ending balance | 68,917 | 74,947 | 109,990 |
| Nonperforming Assets at Period-End | |||
| Nonaccrual loans - ASC 310-30 (1) | $3,505 | $ 6,084 | $ 12,574 |
| Nonaccrual loans - all other | 125,300 | 127,077 | 185,134 |
| Total nonaccrual loans | 128,805 | 133,161 | 197,708 |
| Loans 90 days past due and still accruing interest | -- | 84 | 770 |
| Repossessed assets | 61,028 | 63,613 | 70,790 |
| Total nonperforming assets | 189,833 | 196,858 | 269,268 |
| Asset Quality Ratios | |||
| Annualized net (chargeoffs) recoveries to average loans | -3.61% | -5.42% | -14.55% |
| Nonperforming loans to total loans | 8.75% | 8.86% | 10.99% |
| Nonperforming assets to total assets | 8.90% | 9.08% | 9.91% |
| Allowance for loan losses to total loans | 4.68% | 4.98% | 6.09% |
| Composition of Loan Portfolio at Period-End | March 31, 2012 | December 31, 2011 | March 31, 2011 |
| Commercial | $ 244,619 | $ 256,058 | $ 270,682 |
| Construction | 271,623 | 284,984 | 395,228 |
| Real-estate commercial | 531,734 | 522,052 | 630,403 |
| Real-estate residential | 400,451 | 414,957 | 472,042 |
| Installment | 23,591 | 26,525 | 38,239 |
| Deferred loan fees and related costs | (20) | 157 | (147) |
| Total loans | 1,471,998 | 1,504,733 | 1,806,447 |
| (1) Represents acquired loans which were recorded at their estimated present values at the acquisition date, in accordance with ASC 310-30 | |||