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Access National Announces Fourth Quarter 2017 Earnings
RESTON, Va.--(BUSINESS WIRE)--January 30, 2018--Access National Corporation (NASDAQ: ANCX) (the “Corporation” or “Access”), parent company for Access National Bank (the “Bank”) and Middleburg Investment Group, reported fourth quarter 2017 net income of $3.0 million, or $0.15 per diluted share. Excluding a one-time tax adjustment related to the Tax Cuts and Jobs Act of 2017 and provision expense related to one large commercial credit, net income was $8.6 million or $0.42 per diluted share. This represents the Corporation’s 70th consecutive quarterly profit over its 72 quarter history. Consistent with management’s renewed objective of a 40% dividend payout of sustainable core earnings, the Board of Directors declared a dividend of $0.15 per share for common shareholders of record as of February 12, 2018 and payable on February 23, 2018.
- Reported fourth quarter earnings of $3.0 million or $0.15 per diluted share. Excluding $3.1 million in pre-tax ($2.1 million after tax) provision expense related to one large commercial credit and $3.5 million in tax expense related to the Tax Cuts and Jobs Act of 2017 (“Act”), earnings were $8.6 million after tax or $0.42 per diluted share;
- Tangible book value1 per common share was $11.52 at December 31, 2017, a decrease of $0.12 from the prior period. Excluding the $3.5 million tax expense related to the Act, tangible book value per common share was $11.69;
- Loans held for investment were $1.98 billion at December 31, 2017 compared to $1.05 billion at December 31, 2016, a year-over-year growth of 88.5%. Organic loan growth from the linked quarter was $34.8 million prior to the strategic sale of $17.2 million of non-core residential real estate loans and the disposition of a deteriorating commercial loan of $8.5 million; and
- Non-interest bearing demand deposits of $745.0 million were 33.3% of total deposits at December 31, 2017 compared to $362.0 million at December 31, 2016, a year-over-year growth of 105.8%.
The transformative combination of Access National with Middleburg Financial continues on a successful progression. “We continue to work on putting acquisition distractions behind us and believe the stage is set for a promising 2018. In spite of the noise this quarter with the tax adjustment and loan portfolio repositioning, we remain on target with the financial objectives of our merger. Furthermore, we continue to implement a program of enhanced focus on our target markets that is producing results in the most desirable segments of the deposit and loan portfolios. We are confident in our ability to meet our renewed growth targets in 2018 of $200 million per annum in net deposit and loan growth.”
Fourth quarter 2017 pre-tax earnings were $9.0 million, down from the $9.4 million reported in the third quarter of 2017 due mainly to an impaired credit loss of $3.1 million pre-tax. The commercial banking segment’s net interest income declined $636 thousand from the linked quarter, from $24.4 million to $23.7 million. The commercial banking segment’s other expense reflected an increase of $101 thousand when compared to the third quarter of 2017 and included a $3.1 million pre-tax provision expense.
The net interest margin on a fully tax equivalent (non-GAAP) basis decreased to 3.83% from 3.86% when comparing fourth quarter to third quarter 2017. Fourth quarter net interest margin exclusive of the $1.2 million credit mark accretion for the acquired loan portfolio and the $3 thousand in liability discount amortization was 3.77% for the three months ended December 31, 2017.
Total deposits at December 31, 2017 were $2.2 billion, down slightly from the $2.3 billion at September 30, 2017 while non-interest bearing deposits increased $34.3 million from the linked quarter, to $745.0 million. While non-interest bearing demand deposits remain the largest and most attractive source of funding for the Corporation, the combination of legacy Middleburg’s significant low cost interest-bearing demand deposits and legacy Access’ non-interest bearing demand deposits accounted for $1.2 billion or 55.6% of total deposits at December 31, 2017. Interest-bearing deposits decreased to $1.5 billion at December 31, 2017 when compared to $1.6 billion from the prior quarter. Brokered deposits as a percentage of the deposit portfolio decreased quarter over quarter, from 3.1% of the portfolio at September 30, 2017 to 2.3% at December 31, 2017, a decrease of $20.1 million. The go-forward strategy places a high priority on the maintenance and expansion of core deposits, particularly high value demand deposit relationships.
Prior to the strategic sale and disposition of $25.7 million in loans, organic loan growth during the fourth quarter was $34.8 million. Organic loan growth net of run-off totaled $116 million for the three quarters since the acquisition of Middleburg Financial Corporation. Acquired non-core residential real estate loans in the amount $17.2 million were sold to mitigate interest rate risk and provide portfolio capacity for relationship focused credits. A gain on the sale of this portfolio was recognized in the amount of $136 thousand pre-tax as well as the recognition of $481 thousand in pre-tax credit and fair value marks. Separately, a deteriorating commercial loan relationship in the amount $8.5 million was sold for $4.9 million, creating a loss of $3.6 million charged to the reserve. This charge accounted for the majority of the $3.7 million provision expense during the quarter. In careful analysis in reaching the decision to exit this relationship, management concluded the credit was destined to become a non-accrual loan in the very near term and generate losses over a prolonged work out or liquidation at a level well beyond the incurred charge.
Non-performing assets (“NPAs”) decreased to $5.3 million at December 31, 2017 from $7.8 million at September 30, 2017, representing 0.18% and 0.27% of total assets, respectively. Included in the NPAs total is $643 thousand in other real estate owned, a reduction of $1.4 million over the prior quarter. The allowance for loan loss was $15.8 million and $15.7 million at December 31, 2017 and September 30, 2017, respectively, and represented 0.80% of total loans held for investment at December 31, 2017 and September 30, 2017. The remaining credit and fair value marks on the loans acquired in the merger totaled $12.4 million at December 31, 2017.
Tangible book value2 per common share decreased from $11.64 at September 30, 2017 to $11.52 at December 31, 2017. The tangible common equity ratio for Access National Corporation and its subsidiary bank was 8.79% at December 31, 2017, within the Corporation’s target range of 8.50% to 9.50%.
Access National Corporation is the parent company of Access National Bank and Middleburg Investment Group serving Northern and Central Virginia. Additional information is available on our website at www.AccessNationalBank.com. Shares of Access National Corporation are traded on the NASDAQ Global Market under the symbol "ANCX".
The information presented herein contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding expectations or predictions of future financial or business performance or conditions. Forward-looking statements may be identified by words such as "may," "could," "will," "expect," "believe," "anticipate," "forecast," "intend," "plan," "prospects," "estimate," "potential," or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time. Forward-looking statements in this report may include, but are not limited to, statements about projected impacts of and financial results generated by the merger of Access and Middleburg Financial Corporation (“Middleburg”). Forward-looking statements speak only as of the date they are made and Access assumes no duty to update forward-looking statements.
In addition to factors previously disclosed in Access's reports filed with the SEC and those identified elsewhere in this release, the following factors, among others, could cause actual results to differ materially from the results expressed in or implied by forward-looking statements and historical performance: changes in asset quality and credit risk; changes in interest rates and capital markets; the introduction, timing and success of business initiatives; competitive conditions; and the inability to recognize cost savings or revenues or to implement integration plans associated with the merger of Access and Middleburg.
|1||Non-GAAP financial information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.|
|2||Non-GAAP financial information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.|
The following information was filed by Access National Corp (ANCX) on Friday, February 2, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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