EX-99.1 2 ex99.htm PRESS RELEASE ex99.htm
Exhibit 99.1
 
     November 7, 2013

Contact:
Douglas J. Glenn
 
President and Chief Executive Officer
 
(757) 217-1000

Hampton Roads Bankshares Announces Third Quarter Financial Results
 
· Third quarter net income available to common shareholders totaled $2.8 million
· Year-to-date earnings totaled $3.5 million, a $23.0 million increase over the comparable period in 2012
· Average core deposits grew $21.2 million during the third quarter
· Non-performing assets declined to 4.39% of total assets
  from 7.68% over past 12 months

Hampton Roads Bankshares, Inc. (the “Company”) (Nasdaq: HMPR), the holding company for the Bank of Hampton Roads and Shore Bank, today announced financial results for the third quarter of 2013.  Net income available to common shareholders was $2.8 million for the three months ended September 30, 2013, compared to $0.1 million for the second quarter of 2013 and a net loss available to common shareholders of $5.9 million for the third quarter of 2012.  On a year-to-date basis, net income available to common shareholders totaled $3.5 million in 2013, compared to a net loss available to common shareholders of $19.5 million for the comparable period in 2012.
 “I am pleased with the Company’s performance in the third quarter,” said Douglas Glenn, President and Chief Executive Officer.   "We are focused on ensuring that our business model meets the needs of our customers in an evolving banking environment and on continuing to position our Company for future growth through the implementation of our One Bank Strategy.  This quarter represents yet another building block in our long-term foundation."
 
Net Interest Income

Net interest income for the three and nine months ended September 30, 2013 was $15.8 million and $47.8 million, respectively, a decrease of $37 thousand and $910 thousand, respectively, for the same periods ended September 30, 2012.  The decrease in net interest income for the nine months ended September 30, 2013 was due to decreases in average interest-earning assets and the yields received on these assets, partially offset by an increase in net interest margin which benefited from a lower cost of funding due to re-pricing of deposits and a change in the composition of interest bearing liabilities.  Net interest margin, as calculated using our new method that now includes the impact of nonaccrual loans, increased to 3.42% and 3.44% for the three and nine months ended September 30, 2013, respectively from 3.35% and 3.38% for the three and nine months ended September 30, 2012.

 
 

 
Credit Quality
 
The Company’s ratio of non-performing assets to total assets decreased to 4.39% at September 30, 2013 from 4.81% at June 30, 2013. On a year over year basis, the ratio of non-performing assets to total assets declined by 43%. Total past due loans which continue to accrue interest decreased to $4.8 million, or 0.35% of total loans outstanding, at September 30, 2013 from $6.2 million, or 0.44% of total loans outstanding, at June 30, 2013.
As a result of the Company’s quarterly analysis of the adequacy of the allowance for loan losses, the Company did not record a provision for loan losses in the third quarter of 2013, compared to a provision of $2.5 million for the comparable period in 2012 and $1.0 million for the second quarter of 2013. Provision for loan losses totaled $1.0 million for the nine months ended September 30, 2013 compared to $14.1 million for the comparable period in 2012. During the third quarter of 2013, the Company recovered $1.9 million from loans that had previously been charged-off, which increased the allowance for loan losses at September 30, 2013.
 
Noninterest Income

Noninterest income for the three and nine months ended September 30, 2013 was $7.9 million and $20.9 million, respectively, a 259% and 186% increase over the comparative periods in 2012.  This was largely due to a decline in losses on other real estate owned and repossessed assets.  Mortgage revenue decreased during the third quarter of 2013 compared to the same period in 2012 due to declines in both origination volume and margin.  For the nine months ended September 30, 2013 mortgage revenue remained comparable to the corresponding period in 2012. 

Income from bank-owned life insurance increased $1.8 million to $2.2 million and $3.0 million for the three and nine month periods ended September 30, 2013, respectively, compared to $399 thousand and $1.3 million for the comparative periods in 2012, largely due to a $1.8 million life insurance benefit recognized during the third quarter of 2013.

Noninterest Expense

Noninterest expense was $20.8 million and $62.4 million for the three and nine months ended September 30, 2013, respectively, which was an increase of $396 thousand and $3.3 million over the comparable periods in 2012. The 2013 year to date increase is primarily due to higher expenses related to salary and employee benefits and occupancy, partially offset by a decrease in problem loan and repossessed asset costs.

Occupancy expense increased $844 thousand and $1.6 million for the three and nine months ended September 30, 2013, respectively, compared to the same periods in 2012 due to accelerated amortization of leasehold improvements at a closed branch and the accrual needed as a result of our decision to cease using a portion of the leased space in Dominion Tower after moving the Company’s headquarters to Virginia Beach, Virginia.

 
 

 
Balance Sheet Trends

Total assets were $2.0 billion at September 30, 2013.  Total assets decreased by $68.7 million or 3% from $2.1 billion at December 31, 2012.  The decrease in assets was primarily associated with a $54.4 million or 65% decrease in loans held for sale, which can vary each month based on the timing of loan closings and subsequent loan sales to third party investors.

Gross loans decreased by $61.5 million or 4% during the nine months ended September 30, 2013, primarily through reductions in non-performing loans (both payoffs and charge-offs).  The majority of the recent loan demand within our markets has come from the real estate - commercial mortgage category.  Due to relatively soft loan demand in several loan categories, the majority of cash received from normal principal amortization and loan payoffs was reinvested in overnight funds sold and due from the Federal Reserve Bank, which increased $25.6 million or 31% from December 31, 2012, and in investment securities available for sale, which increased $19.1 million or 7% from December 31, 2012.

Deposits decreased $58.4 million or 4% from December 31, 2012 as a result of decreases of $56.8 million in time deposits under $100 thousand and $72.2 million in time deposits over $100 thousand, partially offset by increases of $14.5 million in noninterest-bearing demand deposits, $49.8 million in interest-bearing demand deposits, and $6.4 million in interest-bearing savings deposits.  Decline in time deposits is a result of the Company’s efforts to improve both the average cost and mix of funds.  Average core deposits, which exclude brokered deposits and certificates of deposit greater than $100,000, increased by $21.2 million during the third quarter of 2013 to $1.2 billion as a result of successful marketing campaigns.

Capitalization
 
At September 30, 2013, the Company exceeded all of the regulatory capital minimums and Bank of Hampton Roads and Shore Bank were both considered “well capitalized” under all applicable regulatory capital standards.  The Company’s total risk-based capital, Tier 1 and Tier 1 leverage ratios as of September 30, 2013, were 14.80%, 13.54% and 10.56%, respectively.
 
Caution About Forward-Looking Statements
 
Certain statements made in this 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, including statements about future trends and strategies.  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 that actual results, performance or achievements of the Company will not differ materially from those 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, 2012, Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, and other filings made with the SEC.
 
 
 

 
About Hampton Roads Bankshares
 
Hampton Roads Bankshares, Inc. is a bank holding company headquartered in Virginia Beach, Virginia.  The Company’s primary subsidiaries are The Bank of Hampton Roads, which opened for business in 1987, and Shore Bank, which opened in 1961 (collectively, the “Banks”).  The Banks engage in general community and commercial banking business, targeting the needs of individuals and small to medium-sized businesses.  Currently, The Bank of Hampton Roads operates 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 Virginia, eastern Maryland and southern Delaware through seven banking offices, ATMs and loan production offices in West Ocean City, Maryland and Rehoboth Beach, Delaware. 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.



 
 

 
 
Hampton Roads Bankshares, Inc.
                 
Financial Highlights
                 
(in thousands)
                 
(unaudited)
 
September 30, 2013
   
June 30, 2013
   
September 30, 2012
 
Assets:
                 
Cash and due from banks
  $ 16,251     $ 16,783     $ 15,316  
Interest-bearing deposits in other banks
    662       648       694  
Overnight funds sold and due from Federal Reserve Bank
    109,396       107,339       119,242  
Investment securities available for sale, at fair value
    295,626       278,386       293,335  
Restricted equity securities, at cost
    17,234       17,351       17,769  
                         
Loans held for sale
    29,633       51,369       60,360  
                         
Loans
    1,370,728       1,400,250       1,416,933  
Allowance for loan losses
    (37,701 )     (38,234 )     (54,444 )
Net loans
    1,333,027       1,362,016       1,362,489  
Premises and equipment, net
    69,634       69,925       78,975  
Interest receivable
    4,862       5,003       5,589  
Other real estate owned and repossessed assets,
                 
net of valuation allowance
    39,196       32,906       44,061  
Intangible assets, net
    1,585       1,741       2,745  
Bank-owned life insurance
    56,216       54,006       52,840  
Other assets
    12,098       11,465       18,018  
Totals assets
  $ 1,985,420     $ 2,008,938     $ 2,071,433  
Liabilities and Shareholders' Equity:
                       
Deposits:
                       
Noninterest-bearing demand
  $ 277,731     $ 268,372     $ 252,093  
Interest-bearing:
                       
Demand
    569,608       575,615       527,214  
Savings
    66,297       66,751       60,610  
Time deposits:
                       
Less than $100
    336,753       341,193       402,457  
$100 or more
    309,010       324,466       388,569  
Total deposits
    1,559,399       1,576,397       1,630,943  
Federal Home Loan Bank borrowings
    194,399       194,619       195,280  
Other borrowings
    28,882       38,760       38,457  
Interest payable
    5,670       5,493       4,590  
Other liabilities
    12,075       11,988       11,757  
Total liabilities
    1,800,425       1,827,257       1,881,027  
Shareholders' equity:
                       
Common stock
    1,703       1,703       1,703  
Capital surplus
    587,088       586,745       582,644  
Retained deficit
    (405,415 )     (408,219 )     (403,342 )
Accumulated other comprehensive income, net of tax
    1,109       1,028       8,301  
Total shareholders' equity before non-controlling interest
    184,485       181,257       189,306  
Non-controlling interest
    510       424       1,100  
Total shareholders' equity
    184,995       181,681       190,406  
Total liabilities and shareholders' equity
  $ 1,985,420     $ 2,008,938     $ 2,071,433  
                         
                         
Non-performing Assets at Period-End:
                       
Nonaccrual loans including nonaccrual impaired loans
  $ 47,604     $ 63,739     $ 115,093  
Loans 90 days past due and still accruing interest
    320       -       -  
Other real estate owned and repossessed assets
    39,196       32,906       44,061  
Total non-performing assets
  $ 87,120     $ 96,645     $ 159,154  
                         
Composition of Loan Portfolio at Period-End:
                       
Commercial
  $ 218,504     $ 239,293     $ 247,125  
Construction
    171,683       183,513       233,194  
Real-estate commercial
    569,325       560,235       532,884  
Real-estate residential
    356,998       355,568       379,558  
Installment
    55,759       62,680       24,302  
Deferred loan fees and related costs
    (1,541 )     (1,039 )     (130 )
Total loans
  $ 1,370,728     $ 1,400,250     $ 1,416,933  
 
 
 
 

 
 
Hampton Roads Bankshares, Inc.
                             
Financial Highlights
                             
(in thousands, except share and per share data)
 
Three Months Ended
   
Nine Months Ended
 
(unaudited)
 
September 30, 2013
   
June 30, 2013
   
September 30, 2012
   
September 30, 2013
   
September 30, 2012
 
Interest Income:
                             
Loans, including fees
  $ 17,122     $ 17,687     $ 17,904     $ 52,482     $ 56,026  
Investment securities
    1,831       1,839       1,986       5,485       5,992  
Overnight funds sold and due from FRB
    70       63       43       175       189  
Interest-bearing deposits in other banks
    1       -       -       1       1  
Total interest income
    19,024       19,589       19,933       58,143       62,208  
Interest Expense:
                                       
Deposits:
                                       
Demand
    523       558       549       1,590       1,499  
Savings
    9       9       19       28       61  
Time deposits:
                                       
Less than $100
    851       921       1,168       2,772       4,145  
$100 or more
    837       935       1,187       2,780       4,210  
         Interest on deposits
    2,220       2,423       2,923       7,170       9,915  
Federal Home Loan Bank borrowings
    477       479       562       1,442       1,728  
Other borrowings
    527       592       611       1,706       1,830  
Total interest expense
    3,224       3,494       4,096       10,318       13,473  
Net interest income
    15,800       16,095       15,837       47,825       48,735  
Provision for loan losses
    -       1,000       2,476       1,000       14,124  
Net interest income after provision for loan losses
    15,800       15,095       13,361       46,825       34,611  
Noninterest Income:
                                       
Mortgage banking revenue
    3,139       4,250       5,186       13,353       12,299  
Service charges on deposit accounts
    1,264       1,300       1,276       3,781       3,883  
Income from bank-owned life insurance
    2,210       434       399       3,017       1,261  
Gain (loss) on sale of premises and equipment
    243       7       -       123       (47 )
Impairment of premises and equipment
    -       -       -       (2,825 )     -  
Losses on other real estate owned and repossessed assets
    (378 )     (774 )     (6,445 )     (2,056 )     (14,357 )
Gain on sale of investment securities available for sale
    -       763       218       763       479  
Visa check card income
    649       662       624       1,907       1,782  
Other
    775       942       942       2,851       2,001  
Total noninterest income
    7,902       7,584       2,200       20,914       7,301  
Noninterest Expense:
                                       
Salaries and employee benefits
    9,946       10,951       10,117       31,853       28,973  
Occupancy
    2,772       2,517       1,928       7,091       5,483  
FDIC insurance
    927       878       1,129       2,823       3,530  
Professional and consultant fees
    1,693       1,639       1,514       4,225       4,852  
Data processing
    1,097       1,129       970       3,023       2,986  
Problem loan and repossessed asset costs
    723       530       1,245       1,733       2,761  
Equipment
    386       491       667       1,341       2,101  
Other
    3,246       4,058       2,824       10,326       8,386  
Total noninterest expense
    20,790       22,193       20,394       62,415       59,072  
Income (loss) before provision for income taxes
    2,912       486       (4,833 )     5,324       (17,160 )
Provision for income taxes
    22       135       -       157       -  
Net income (loss)
    2,890       351       (4,833 )     5,167       (17,160 )
Net income attributable to non-controlling interest
    86       262       1,088       1,642       2,333  
Net income (loss) attributable to Hampton Roads Bankshares, Inc.
  $ 2,804     $ 89     $ (5,921 )   $ 3,525     $ (19,493 )
                                         
Per Share:
                                       
Cash dividends declared
  $ -     $ -     $ -     $ -     $ -  
Basic Income (loss)
  $ 0.02     $ -     $ (0.05 )   $ 0.02     $ (0.32 )
Diluted Income (loss)
  $ 0.02     $ -     $ (0.05 )   $ 0.02     $ (0.32 )
Basic weighted average shares outstanding
    170,388,263       170,391,127       108,785,717       170,389,513       60,349,261  
Effect of dilutive shares and warrant
    2,067,958       1,247,524       -       2,025,830       -  
Diluted weighted average shares outstanding
    172,456,221       171,638,651       108,785,717       172,415,343       60,349,261  
                                         
Daily Averages:
                                       
Total assets
  $ 1,995,473     $ 2,027,560     $ 2,054,380     $ 2,017,966     $ 2,100,016  
Gross loans (excludes loans held for sale)
    1,375,985       1,415,524       1,416,959       1,406,063       1,450,475  
Investments
    299,411       298,100       322,306       300,470       318,853  
Intangible assets
    1,659       1,903       2,907       1,930       3,234  
Total deposits
    1,569,781       1,590,107       1,651,972       1,584,826       1,722,432  
Total borrowings
    226,666       233,437       233,792       231,195       233,925  
Shareholders' equity *
    180,994       187,406       150,882       185,030       124,715  
Shareholders' equity - tangible *
    179,335       185,503       147,975       183,100       121,481  
Interest-earning assets
    1,835,211       1,874,902       1,878,073       1,861,476       1,928,799  
Interest-bearing liabilities
    1,525,821       1,574,222       1,636,874       1,563,151       1,722,166  
                                         
Financial Ratios:
                                       
Return on average assets
    0.56 %     0.02 %     -1.15 %     0.23 %     -1.24 %
Return on average equity *
    6.15 %     0.19 %     -15.61 %     2.55 %     -20.88 %
Return on average equity - tangible *
    6.20 %     0.19 %     -15.92 %     2.57 %     -21.43 %
Net interest margin
    3.42 %     3.44 %     3.35 %     3.44 %     3.38 %
Efficiency ratio
    87.71 %     96.84 %     114.45 %     88.16 %     106.33 %
Tangible equity to tangible assets *
    9.22 %     8.94 %     9.02 %     9.22 %     9.02 %
                                         
Allowance for Loan Losses:
                                       
Beginning balance
  $ 38,234     $ 43,709     $ 62,907     $ 48,382     $ 74,947  
Provision
    -       1,000       2,476       1,000       14,124  
Charge-offs
    (2,443 )     (8,501 )     (13,281 )     (16,966 )     (40,933 )
Recoveries
    1,910       2,026       2,342       5,285       6,306  
Ending balance
  $ 37,701     $ 38,234     $ 54,444     $ 37,701     $ 54,444  
                                         
Asset Quality Ratios:
                                       
Annualized net chargeoffs to average loans
    -0.15 %     -1.83 %     -3.06 %     -1.11 %     -3.19 %
Nonperforming loans to total loans
    3.50 %     4.55 %     8.12 %     3.50 %     8.12 %
Nonperforming assets to total assets
    4.39 %     4.81 %     7.68 %     4.39 %     7.68 %
Allowance for loan losses to total loans
    2.75 %     2.73 %     3.84 %     2.75 %     3.84 %
                                         
* Equity amounts exclude non-controlling interest
                                       

 
 

 

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.
 
Non-GAAP Measurement
September 30, 2013
 
 
As of
September 30, 2013
   
As of
June 30, 2013
   
As of
September 30, 2012
 
Total assets
  $ 1,985,420     $ 2,008,938     $ 2,071,433  
Less: intangible assets
    1,585       1,741       2,745  
Tangible assets
  $ 1,983,835     $ 2,007,197     $ 2,068,688  
Total shareholders’ equity *
  $ 184,485     $ 181,257     $ 189,306  
Less: intangible assets
    1,585       1,741       2,745  
Common shareholders’ equity - tangible *
  $ 182,900     $ 179,516     $ 186,561  
Tangible common equity to tangible assets *
    9.22 %     8.94 %     9.02 %
Total common shareholders’ equity to total assets *
    9.29 %     9.02 %     9.14 %
 
* Equity amounts exclude non-controlling interest