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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 24, 2024
VILLAGE BANK AND TRUST FINANCIAL CORP.
(Exact Name of Registrant as Specified in Charter)
|
Virginia (State or Other Jurisdiction |
0-50765 |
16-1694602 |
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13319 Midlothian Turnpike |
23113 |
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Registrant’s Telephone Number, Including Area Code: (804) 897-3900
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock, par value $4.00 per share |
VBFC |
Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On July 24, 2024, Village Bank and Trust Financial Corp. issued a press release reporting its financial results for the period ended June 30, 2024. A copy of the press release is being furnished as an exhibit to this report and shall not be deemed “filed” for any purpose.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
Description |
|
|
99.1 |
|
104 |
Cover Page Interactive Data File – the cover page iXBRL tags are embedded within the Inline XBRL document. |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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VILLAGE BANK AND TRUST FINANCIAL CORP. |
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(Registrant) |
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Date: July 24, 2024 |
By: |
/s/ Donald M. Kaloski, Jr. |
|
Donald M. Kaloski, Jr. |
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Executive Vice President and CFO |
|
3
Exhibit 99.1
News Release
For Immediate Release
VILLAGE BANK AND TRUST FINANCIAL CORP.
REPORTS EARNINGS FOR THE SECOND QUARTER OF 2024
Midlothian, Virginia, July 24, 2024. Village Bank and Trust Financial Corp. (the “Company”) (Nasdaq symbol: VBFC), parent company of Village Bank (the “Bank”), today reported unaudited results for the second quarter of 2024. Net income for the second quarter of 2024 was $1,653,000, or $1.11 per fully diluted share, compared to net income for the second quarter of 2023 of $1,239,000, or $0.83 per fully diluted share. For the six months ended June 30, 2024, net income was $3,425,000, or $2.29 per fully diluted share, compared to net income for the six months ended June 30, 2023, of $2,779,000, or $1.87 per fully diluted share.
Jay Hendricks, President and CEO, commented, “We are pleased with the Company’s performance during the second quarter. Asset repricing and stabilizing funding cost are supporting net interest margin and helping to offset continued weakness in the mortgage environment.”
“The commercial bank grew loans, excluding student loans, 2.73% and deposits 1.39% during the second quarter 2024. While we anticipate continued pressure on our funding base, increasing loan yields and disciplined management of our deposit mix and cost will support our net interest margin the remainder of the year. Our focus remains on core relationship growth, disciplined management of our funding mix and costs, navigating the weak mortgage environment and remaining vigilant on credit quality.”
Operating Results
The following table presents quarterly results for the indicated periods (in thousands):
GAAP Operating Results by Segment | |||||||||||||||
|
|
Q2 2024 |
|
Q1 2024 |
|
Q4 2023 |
|
Q3 2023 |
|
Q2 2023 |
|||||
Pre-tax earnings (loss) by segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial banking |
|
$ |
2,255 |
|
$ |
2,134 |
|
$ |
2,410 |
|
$ |
(3,019) |
|
$ |
1,816 |
Mortgage banking |
|
|
(193) |
|
|
87 |
|
|
(316) |
|
|
(288) |
|
|
(303) |
Income (loss) before income tax expense (benefit) |
|
|
2,062 |
|
|
2,221 |
|
|
2,094 |
|
|
(3,307) |
|
|
1,513 |
Commercial banking income tax expense (benefit) |
|
|
449 |
|
|
431 |
|
|
468 |
|
|
(693) |
|
|
338 |
Mortgage banking income tax expense (benefit) |
|
|
(40) |
|
|
18 |
|
|
(66) |
|
|
(61) |
|
|
(64) |
Net income (loss) |
|
$ |
1,653 |
|
$ |
1,772 |
|
$ |
1,692 |
|
$ |
(2,553) |
|
$ |
1,239 |
1
Three months ended June 30, 2024 vs. three months ended June 30, 2023.
The Commercial Banking Segment recorded net income of $1,806,000 for Q2 2024 compared to net income of $1,478,000 for Q2 2023.
The following are variances of note for the three months ended June 30, 2024 compared to the three months ended June 30, 2023:
| ● | Net interest margin (“NIM”) expanded by 23 basis points to 3.75% for Q2 2024 compared to 3.52% for Q2 2023. The expansion was driven by the following: |
| o | The yield on our earning assets increased by 94 basis points, 5.60% for Q2 2024 compared to 4.66% for Q2 2023. The increase in our yield on earning assets continues to be a result of improvement in our earning asset mix as well as the impact of the rise in interest rates during 2023 and 2024. We expect to see continued improvement in the yield on earning assets because of higher yielding loan growth combined with the amortization of lower yielding assets. |
| o | The increased yield on earnings assets was partially offset by the cost of interest-bearing liabilities increasing by 109 basis points to 2.95% for Q2 2024 compared to 1.86% for Q2 2023. The increase in our cost of interest bearing liabilities has been driven by an increase in the rate paid on variable rate debt and market pressures on deposit rates. The rate paid on money market deposit accounts increased 137 basis points to 3.16% for Q2 2024 compared to 1.79% for Q2 2023, and the rate paid on time deposits increased 199 basis points to 3.55% for Q2 2024 compared to 1.56% for Q2 2023. The increase in the rate on time deposits was impacted heavily by the addition of $20.0 million in brokered time deposits at a weighted average rate of 4.89% during the three months ended March 31, 2024. While we expect there will be continued pressure on our funding base, we are seeing the velocity of those increases slowing down as of June 30, 2024. |
| o | While the rate paid on interest bearing liabilities increased by 109 basis points for Q2 2024 as compared to Q2 2023, overall cost of funds increased by 76 basis points, 1.93% for Q2 2024 vs. 1.17% for Q2 2023. The lower increase in cost of funds was driven by our strong non-interest bearing deposits level, which remains near 37% of our deposit base. |
| ● | The Company did not record a provision for credit losses for the three months ended June 30, 2024. The lack of a provision for credit losses was driven primarily by the recognition of a net-recovery of previously charged-off loans of $107,000 during the period and was supported by stable local economic conditions and credit quality remaining strong during the period. While current economic challenges due to higher inflation and the speed at which interest rates have risen remain a risk to credit quality, we believe our current level of allowance for credit losses is sufficient. |
| ● | The Commercial Banking Segment posted noninterest income of $881,000 for Q2 2024 compared to $879,000 for Q2 2023. |
| ● | The Commercial Banking Segment posted noninterest expense of $5,100,000 for Q2 2024 compared to $5,086,000 for Q2 2023. Efforts to control expenses resulted in a minimal increase in expenses from Q2 2023. |
2
The Mortgage Banking Segment posted a net loss of $153,000 for Q2 2024 compared to a net loss of $239,000 for Q2 2023. The lower loss is a result of efforts to expand revenue opportunities, control expenses, and improve gross margins on loans sold.
Six months ended June 30, 2024 vs. six months ended June 30, 2023.
The Commercial Banking Segment posted net income of $3,509,000 for the six months ended June 30, 2024 compared to $3,336,000 for the six months ended June 30, 2023.
The following are variances of note for the six months ended June 30, 2024 compared to the six months ended June 30, 2023:
| ● | NIM expanded by 7 basis points to 3.73% for the six months ended June 30, 2024 compared to 3.66% for the six months ended June 30, 2023. The expansion was driven by the following: |
| o | The yield on our earning assets increased by 92 basis points, 5.51% for the six months ended June 30, 2024 compared to 4.59% for the six months ended June 30, 2023. The increase in our yield on earning assets continues to be a result of improvement in our earning asset mix as well as the impact of the rise in interest rates during 2023 and 2024. We expect to see continued improvement in the yield on earning assets because of higher yielding loan growth combined with the amortization of lower yielding assets. |
| o | The increased yield on earnings assets was partially offset by the cost of interest-bearing liabilities increasing by 130 basis points to 2.85% for the six months ended June 30, 2024 compared to 1.55% for the six months ended June 30, 2023. The increase in our cost of funds was driven by an increase in the rate paid on variable rate debt and market pressures on deposit rates. The rate paid on money market deposit accounts increased 163 basis points to 3.05% for the six months ended June 30, 2024 compared to 1.42% for the six months ended June 30, 2023, and the rate paid on time deposits increased 218 basis points to 3.39% for the six months ended June 30, 2024 compared to 1.21% for the six months ended June 30, 2023. The increase in the rate on time deposits was impacted heavily by the addition of $20.0 million in brokered time deposits at a weighted average rate of 4.89% during the three months ended March 31, 2024. While we expect there will be continued pressure on our funding base, we are seeing the velocity of those increases slowing down as of June 30, 2024. |
| o | While the rate paid on interest bearing liabilities increased by 130 basis points for the six months ended June 30, 2024, overall cost of funds increased by 89 basis points, 1.86% for the six months ended June 30, 2024 vs. 0.97% for the six months ended June 30, 2023. The lower increase in cost of funds was driven by our strong non-interest bearing deposits level, which remained near 37% of our deposit base. |
| ● | The Commercial Banking Segment recorded a provision for credit losses of $150,000 for the six months ended June 30, 2024, compared to no provision expense for the six months ended June 30, 2023. The provision for credit losses was driven by loan growth during the period and was supported by stable macroeconomic conditions and credit quality remaining strong. While current economic challenges due to higher inflation and the speed at which interest rates have risen remain a risk to credit quality, we believe our current level of allowance for credit losses is sufficient. |
3
| ● | The Commercial Banking Segment posted noninterest income of $1,676,000 for the six months ended June 30, 2024 compared to $1,701,000 for the six months ended June 30, 2023. The decrease in noninterest income was driven by lower service and charge fee income. |
| ● | The Commercial Banking Segment posted noninterest expense of $9,915,000 for the six months ended June 30, 2024 compared to $9,965,000 for the six months ended June 30, 2023. The decrease in expense was the result of efforts to control expenses, which included efforts to reduce fraud losses from check and debit card fraud. |
The Mortgage Banking Segment posted a net loss of $84,000 for the six months ended June 30, 2024 compared to a net loss of $557,000 for the six months ended June 30, 2023. The lower loss was impacted by the fair value of forward sales commitments associated with the Mortgage Banking Segments loans held for sale and interest rate lock commitments being adjusted, during the three months ended March 31, 2024, to properly reflect the timing of income recognition in the life cycle of the interest rate lock commitments and loans held for sale, which resulted in a $233,900 increase to net income for the period, and efforts to expand revenue opportunities, control expenses, and improve gross margins on loans sold.
Financial Highlights
|
|
Three Months Ended |
Six Months Ended |
|
|||||
Metric |
|
June 30, 2024 |
June 30, 2023 |
June 30, 2024 |
June 30, 2023 |
||||
Consolidated |
|
|
|
|
|
|
|
|
|
Return on average equity(1) |
|
9.63 |
% |
7.70 |
% |
10.06 |
% |
8.81 |
% |
Return on average assets(1) |
|
0.88 |
% |
0.67 |
% |
0.93 |
% |
0.76 |
% |
Commercial Banking Segment |
|
|
|
|
|
|
|
|
|
Return on average equity(1) |
|
10.52 |
% |
9.19 |
% |
10.30 |
% |
10.58 |
% |
Return on average assets(1) |
|
0.97 |
% |
0.80 |
% |
0.95 |
% |
0.92 |
% |
Net interest income to average assets |
|
3.47 |
% |
3.26 |
% |
3.45 |
% |
3.40 |
% |
Provision for credit losses to average assets |
|
— |
% |
— |
% |
0.04 |
% |
— |
% |
Noninterest income to average assets |
|
0.47 |
% |
0.48 |
% |
0.45 |
% |
0.47 |
% |
Noninterest expense to average assets |
|
2.73 |
% |
2.75 |
% |
2.68 |
% |
2.74 |
% |
Mortgage Banking Segment |
|
|
|
|
|
|
|
|
|
Return on average equity(1) |
|
(0.89) |
% |
(1.49) |
% |
(0.25) |
% |
(1.77) |
% |
Return on average assets(1) |
|
(0.08) |
% |
(0.13) |
% |
(0.02) |
% |
(0.15) |
% |
Net income before tax to average assets |
|
(0.10) |
% |
(0.16) |
% |
(0.03) |
% |
(0.19) |
% |
| (1) | Annualized. |
Loans and Asset Quality
The following table provides the composition of our gross loan portfolio at the end of periods indicated (in thousands):
Loans Outstanding | |||||||||||||||
Loan Type |
|
Q2 2024 |
|
Q1 2024 |
|
Q4 2023 |
|
Q3 2023 |
|
Q2 2023 |
|||||
C&I + Owner occupied commercial real estate |
|
$ |
226,146 |
|
$ |
214,029 |
|
$ |
208,869 |
|
$ |
204,697 |
|
$ |
206,358 |
Nonowner occupied commercial real estate |
|
|
181,229 |
|
|
183,786 |
|
|
167,924 |
|
|
164,629 |
|
|
167,958 |
Acquisition, development and construction |
|
|
49,147 |
|
|
43,514 |
|
|
47,495 |
|
|
56,260 |
|
|
50,938 |
Total commercial loans |
|
|
456,522 |
|
|
441,329 |
|
|
424,288 |
|
|
425,586 |
|
|
425,254 |
Consumer/Residential |
|
|
130,285 |
|
|
129,631 |
|
|
128,532 |
|
|
117,014 |
|
|
106,532 |
Student |
|
|
14,156 |
|
|
15,782 |
|
|
17,923 |
|
|
18,923 |
|
|
20,285 |
Other |
|
|
4,445 |
|
|
4,596 |
|
|
4,265 |
|
|
4,578 |
|
|
4,099 |
Total loans |
|
$ |
605,408 |
|
$ |
591,338 |
|
$ |
575,008 |
|
$ |
566,101 |
|
$ |
556,170 |
4
Total loans increased by $14,070,000, or 2.38%, from Q1 2024, and increased by $49,238,000 or 8.85%, from Q2 2023.
| ● | The commercial loan portfolio increased by $15,193,000, or 3.44%, from Q1 2024 and increased by $31,268,000, or 7.35%, from Q2 2023. Growth in the portfolio was driven by building new relationships and expanding core relationships. |
| ● | The consumer/residential loan portfolio grew by $654,000, or 0.50%, from Q1 2024 and increased by $23,753,000, or 22.30%, from Q2 2023. The growth from Q2 2023 was driven by growth in 1-4 family residential loans, which was primarily in purchase money adjustable-rate mortgages and home equity loans. |
Asset quality
Asset quality remains strong, but we remain vigilant in monitoring our portfolio segments for impacts associated with higher rates. The Bank’s period-end asset quality metrics continue to compare favorably to our peers as follows:
Asset Quality Metrics | ||||||||||||
|
|
Village |
|
Peer Group |
||||||||
Metric |
|
Q2 2024 |
|
Q1 2024 |
|
Q4 2023 |
|
Q3 2023 |
|
Q2 2023 |
|
Q1 2024(1) |
Allowance for Credit Losses on Loans/Total Loans |
|
0.61% |
|
0.60% |
|
0.59% |
|
0.59% |
|
0.58% |
|
1.11% |
Allowance for Credit Losses on Loans/Nonperforming Loans |
|
950.13% |
|
1272.03% |
|
1176.12% |
|
1120.23% |
|
1139.05% |
|
213.34% |
Net Charge-offs (recoveries) to Average Loans(2) |
|
(0.07%) |
|
(0.01%) |
|
(0.00%) |
|
(0.11%) |
|
(0.00%) |
|
0.05% |
Nonperforming Loans/Loans (excluding Guaranteed Loans) |
|
0.07% |
|
0.05% |
|
0.06% |
|
0.06% |
|
0.06% |
|
0.42% |
Nonperforming Assets/Bank Total Assets |
|
0.05% |
|
0.04% |
|
0.04% |
|
0.04% |
|
0.04% |
|
0.22% |
(1) Source - S&P Global data for VA Banks <$1 Billion in assets as of March 31, 2024. |
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||||||||
(2) Annualized. |
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|
|
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||||||||
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|
|
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||||||||
As of June 30, 2024, the Allowance for Credit Losses (“ACL”) was $4.00 million and included an allowance for credit losses on loans of $3.68 million and a reserve for unfunded commitments of $319,700. As of June 30, 2023, the ACL was $3.53 million and included an allowance for credit losses on loans of $3.26 million and a reserve for unfunded commitments of $277,000.
The Company did not record a provision for credit losses for the three months ended June 30, 2024. The lack of a provision for credit losses was driven primarily by the recognition of a net-recovery of previously charged-off loans of $107,000 during the period and was supported by stable local economic conditions and credit quality remaining strong during the period.
Non-performing loans as a percentage of loans were consistent, 0.07% at June 30, 2024 compared to 0.06% at June 30, 2023.
The Company did not record a provision for credit losses for unfunded commitments for the three months ended June 30, 2024, which was driven by a stable balance in the total commitments outstanding at June 30, 2024.
The allowance for credit losses on loans to total loans ratio at the Company is 0.61% compared to the peer average of 1.11%, management considers this level of allowance sufficient and appropriate based on the current asset quality and assessment of the Company’s loan portfolio.
While current economic challenges due to higher inflation and the speed at which interest rates rose remain a risk to credit quality, we believe our current level of allowance for credit losses is sufficient.
5
Deposits
The following table provides the composition of our deposits at the end of the periods indicated (in thousands):
Deposits Outstanding | |||||||||||||||
Deposit Type |
|
Q2 2024 |
|
Q1 2024 |
|
Q4 2023 |
|
Q3 2023 |
|
Q2 2023 |
|||||
Noninterest-bearing demand |
|
$ |
236,063 |
|
$ |
230,118 |
|
$ |
247,624 |
|
$ |
243,390 |
|
$ |
249,059 |
Interest checking |
|
|
73,305 |
|
|
78,739 |
|
|
76,289 |
|
|
81,779 |
|
|
88,330 |
Money market |
|
|
217,147 |
|
|
207,640 |
|
|
195,249 |
|
|
210,439 |
|
|
196,603 |
Savings |
|
|
33,892 |
|
|
35,238 |
|
|
39,633 |
|
|
42,367 |
|
|
44,378 |
Time deposits |
|
|
68,505 |
|
|
68,534 |
|
|
46,550 |
|
|
48,799 |
|
|
50,012 |
Total deposits |
|
$ |
628,912 |
|
$ |
620,269 |
|
$ |
605,345 |
|
$ |
626,774 |
|
$ |
628,382 |
Total deposits increased by $8,643,000, or 1.39%, from Q1 2024, and increased by $530,000, or 0.08%, from Q2 2023. Variances of note are as follows:
| ● | Noninterest bearing demand account balances increased $5,945,000 from Q1 2024 and decreased $12,996,000 from Q2 2023, and represented 37.54% of total deposits compared to 37.10% as of Q1 2024 and 39.63% as of Q2 2023. The increase in noninterest bearing demand deposits from Q1 2024 was driven by growth in new relationships and seasonal increases in business accounts. The decrease in noninterest bearing demand deposits from Q2 2023 was driven by a combination of consumers and businesses drawing down balances due to higher costs associated with continued pressure from inflation and some migration to higher yielding products. |
| ● | Low-cost relationship deposits (i.e., interest checking, money market, and savings) balances increased $2,727,000 or 0.85%, from Q1 2024 and decreased $4,967,000, or 1.51%, from Q2 2023. The increase in low-cost relationship deposits from Q1 2024 was the result of seasonal relationship growth as well as some deposits moving from non-interest bearing to interest bearing. The decrease in low-cost relationship deposits from Q2 2023 was driven by the same factors as non-interest bearing. |
| ● | Time deposits decreased by $29,000, or 0.04%, from Q1 2024 and increased by $18,493,000, or 36.98%, from Q2 2023. The increase from Q2 2023 was the result of the Commercial Bank Segment issuing $20.0 million in brokered time deposits, at a weighted average rate of 4.89%, during the six months ended June 30, 2024 to supplement the noninterest-bearing reduction. |
Capital
Shareholders’ equity at June 30, 2024 was $70,142,000 compared to $64,014,000 at June 30, 2023, which resulted in a tangible common equity ratio of 9.38% and 8.48%, as of June 30, 2024 and June 30, 2023, respectively. The $6,128,000 increase in shareholders’ equity during the twelve months ended June 30, 2024, was primarily due to the recognition of net income of $2,564,000, from June 30, 2023 to June 30, 2024, and the $4,303,000 decrease in accumulated other comprehensive loss. The decrease in accumulated other comprehensive loss was primarily attributed to the impact of the balance sheet repositioning that occurred during the three months ended September 30, 2023, which resulted in a pre-tax loss of approximately $4,986,000.
The Bank continues to maintain a strong, well-capitalized position. The following table presents the regulatory capital ratios for the Bank at the end of the periods indicated:
6
Bank Regulatory Capital Ratios | |||||||||||||||
Ratios |
|
Q2 2024 |
|
Q1 2024 |
|
Q4 2023 |
|
Q3 2023 |
|
Q2 2023 |
|||||
Common equity tier 1 |
|
|
13.44% |
|
|
13.51% |
|
|
13.86% |
|
|
13.58% |
|
|
14.36% |
Tier 1 |
|
|
13.44% |
|
|
13.51% |
|
|
13.86% |
|
|
13.58% |
|
|
14.36% |
Total capital |
|
|
14.06% |
|
|
14.13% |
|
|
14.49% |
|
|
14.19% |
|
|
14.96% |
Tier 1 leverage |
|
|
11.33% |
|
|
11.36% |
|
|
11.14% |
|
|
10.74% |
|
|
11.18% |
7
About Village Bank and Trust Financial Corp.
Village Bank and Trust Financial Corp. was organized under the laws of the Commonwealth of Virginia as a bank holding company whose activities consist of investment in its wholly-owned subsidiary, Village Bank. Village Bank is a full-service Virginia-chartered community bank headquartered in Midlothian, Virginia with deposits insured by the Federal Deposit Insurance Corporation (“FDIC”). The Bank has nine branch offices. Village Bank and its wholly-owned subsidiary, Village Bank Mortgage Corporation, offer a complete range of financial products and services, including commercial loans, consumer credit, mortgage lending, checking and savings accounts, certificates of deposit, and 24-hour banking.
Forward-Looking Statements
In addition to historical information, this press release may contain forward-looking statements. For this purpose, any statement that is not a statement of historical fact may be deemed to be a forward-looking statement. These forward-looking statements may include statements regarding profitability, liquidity, allowance for credit losses, interest rate sensitivity, market risk, growth strategy and financial and other goals. Forward-looking statements often use words such as “believes,” “expects,” “plans,” “may,” “will,” “should,” “projects,” “contemplates,” “anticipates,” “forecasts,” “intends” or other words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements.
There are many factors that could have a material adverse effect on the operations and future prospects of the Company including, but not limited to:
| ● | changes in assumptions underlying the establishment of allowances for credit losses, and other estimates; |
| ● | the risks of changes in interest rates on levels, composition and costs of deposits, loan demand, and the values and liquidity of loan collateral, securities, and interest sensitive assets and liabilities; |
| ● | the ability to maintain adequate liquidity by retaining deposit customers and secondary funding sources, especially if the Company’s or banking industry’s reputation becomes damaged; |
| ● | the effects of future economic, business and market conditions; |
| ● | legislative and regulatory changes, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and other changes in banking, securities, and tax laws and regulations and their application by our regulators, and changes in scope and cost of FDIC insurance and other coverages; |
| ● | our inability to maintain our regulatory capital position; |
| ● | the Company’s computer systems and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance, or other disruptions despite security measures implemented by the Company; |
| ● | changes in market conditions, specifically declines in the residential and commercial real estate market, volatility and disruption of the capital and credit markets, and soundness of other financial institutions with which we do business; |
| ● | risks inherent in making loans such as repayment risks and fluctuating collateral values; |
| ● | changes in operations of Village Bank Mortgage Corporation as a result of the activity in the residential real estate market; |
| ● | exposure to repurchase loans sold to investors for which borrowers failed to provide full and accurate information on or related to their loan application or for which appraisals have not been acceptable or when the loan was not underwritten in accordance with the loan program specified by the loan investor; |
8
| ● | governmental monetary and fiscal policies; |
| ● | geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, negatively impacting business and economic conditions in the U.S. and abroad; |
| ● | changes in accounting policies, rules and practices; |
| ● | reliance on our management team, including our ability to attract and retain key personnel; |
| ● | competition with other banks and financial institutions, and companies outside of the banking industry, including those companies that have substantially greater access to capital and other resources; |
| ● | demand, development and acceptance of new products and services; |
| ● | problems with technology utilized by us; |
| ● | the occurrence of significant natural disasters, including severe weather conditions, floods, health related issues, and other catastrophic events; |
| ● | changing trends in customer profiles and behavior; and |
| ● | other factors described from time to time in our reports filed with the Securities and Exchange Commission (“SEC”). |
Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s reports (such as our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available on the SEC’s Web site at www.sec.gov.
For further information contact Donald M. Kaloski, Jr., Executive Vice President and CFO at 804-897-3900 or dkaloski@villagebank.com.
9
Financial Highlights | |||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30 |
|
March 31 |
|
December 31, |
|
September 30, |
|
June 30, |
|||||
|
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|
2023 |
|||||
|
|
(Unaudited) |
|
(Unaudited) |
|
* |
|
(Unaudited) |
|
(Unaudited) |
|||||
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
747,726 |
|
$ |
746,872 |
|
$ |
736,616 |
|
$ |
727,504 |
|
$ |
754,655 |
Investment securities |
|
|
83,124 |
|
|
82,784 |
|
|
105,585 |
|
|
104,046 |
|
|
132,235 |
Loans held for sale |
|
|
8,236 |
|
|
7,019 |
|
|
4,983 |
|
|
5,425 |
|
|
6,887 |
Loans, net |
|
|
606,086 |
|
|
592,088 |
|
|
575,811 |
|
|
566,802 |
|
|
556,916 |
Allowance for credit losses |
|
|
(3,681) |
|
|
(3,574) |
|
|
(3,423) |
|
|
(3,353) |
|
|
(3,256) |
Deposits |
|
|
628,912 |
|
|
620,269 |
|
|
605,345 |
|
|
626,774 |
|
|
628,382 |
Borrowings |
|
|
44,464 |
|
|
54,464 |
|
|
59,464 |
|
|
34,464 |
|
|
59,464 |
Shareholders' equity |
|
|
70,142 |
|
|
68,358 |
|
|
67,556 |
|
|
63,685 |
|
|
64,014 |
Book value per share |
|
$ |
46.91 |
|
$ |
45.72 |
|
$ |
45.25 |
|
$ |
42.89 |
|
$ |
43.08 |
Total shares outstanding |
|
|
1,495,160 |
|
|
1,495,251 |
|
|
1,492,879 |
|
|
1,484,837 |
|
|
1,485,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses on loans to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of deferred fees and costs |
|
|
0.61% |
|
|
0.60% |
|
|
0.59% |
|
|
0.59% |
|
|
0.58% |
Nonperforming loans |
|
|
950.13% |
|
|
1272.03% |
|
|
1176.12% |
|
|
1120.23% |
|
|
1139.05% |
Net charge-offs (recoveries) to average loans(1) |
|
|
(0.07%) |
|
|
(0.01%) |
|
|
0.00% |
|
|
(0.11%) |
|
|
0.00% |
Nonperforming assets to total assets |
|
|
0.05% |
|
|
0.04% |
|
|
0.04% |
|
|
0.04% |
|
|
0.04% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank Capital Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1 |
|
|
13.44% |
|
|
13.51% |
|
|
13.86% |
|
|
13.58% |
|
|
14.36% |
Tier 1 |
|
|
13.44% |
|
|
13.51% |
|
|
13.86% |
|
|
13.58% |
|
|
14.36% |
Total capital |
|
|
14.06% |
|
|
14.13% |
|
|
14.49% |
|
|
14.19% |
|
|
14.96% |
Tier 1 leverage |
|
|
11.33% |
|
|
11.36% |
|
|
11.14% |
|
|
10.74% |
|
|
11.18% |
|
|
Three Months Ended |
|||||||||||||
|
|
June 30 |
|
March 31 |
|
December 31, |
|
September 30, |
|
June 30, |
|||||
|
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|
2023 |
|||||
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|||||
Selected Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
$ |
9,869 |
|
$ |
9,335 |
|
$ |
9,130 |
|
$ |
8,462 |
|
$ |
8,099 |
Interest expense |
|
|
3,259 |
|
|
2,939 |
|
|
2,445 |
|
|
2,348 |
|
|
1,975 |
Net interest income before |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
provision for credit losses |
|
|
6,610 |
|
|
6,396 |
|
|
6,685 |
|
|
6,114 |
|
|
6,124 |
Provision for credit losses |
|
|
— |
|
|
150 |
|
|
50 |
|
|
— |
|
|
— |
Noninterest income (loss) |
|
|
1,391 |
|
|
1,604 |
|
|
1,156 |
|
|
(3,669) |
|
|
1,221 |
Noninterest expense |
|
|
5,939 |
|
|
5,629 |
|
|
5,697 |
|
|
5,752 |
|
|
5,832 |
Income (loss) before income tax expense (benefit) |
|
|
2,062 |
|
|
2,221 |
|
|
2,094 |
|
|
(3,307) |
|
|
1,513 |
Income tax expense (benefit) |
|
|
409 |
|
|
449 |
|
|
402 |
|
|
(754) |
|
|
274 |
Net income (loss) |
|
$ |
1,653 |
|
$ |
1,772 |
|
$ |
1,692 |
|
$ |
(2,553) |
|
$ |
1,239 |
Earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.11 |
|
$ |
1.19 |
|
$ |
1.14 |
|
$ |
(1.72) |
|
$ |
0.83 |
Diluted |
|
$ |
1.11 |
|
$ |
1.19 |
|
$ |
1.14 |
|
$ |
(1.72) |
|
$ |
0.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets(1) |
|
|
0.88% |
|
|
0.97% |
|
|
0.91% |
|
|
(1.36)% |
|
|
0.67% |
Return on average equity(1) |
|
|
9.63% |
|
|
10.50% |
|
|
10.45% |
|
|
(15.82)% |
|
|
7.70% |
Net interest margin(1) |
|
|
3.75% |
|
|
3.72% |
|
|
3.83% |
|
|
3.46% |
|
|
3.52% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Derived from audited consolidated financial statements. |
|
|
|
|
|
|
|||||||||
(1) Annualized. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
Financial Highlights | ||||||
(Dollars in thousands, except per share amounts) | ||||||
|
|
|
|
|
|
|
|
|
Six Months Ended |
||||
|
|
June 30 |
|
June 30 |
||
|
|
2024 |
|
2023 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
Selected Operating Data |
|
|
|
|
|
|
Interest income |
|
$ |
19,204 |
|
$ |
15,682 |
Interest expense |
|
|
6,198 |
|
|
3,193 |
Net interest income before |
|
|
|
|
|
|
provision for (recovery of) credit losses |
|
|
13,006 |
|
|
12,489 |
Provision for (recovery of) credit losses |
|
|
150 |
|
|
— |
Noninterest income (loss) |
|
|
2,994 |
|
|
2,478 |
Noninterest expense |
|
|
11,567 |
|
|
11,589 |
Income before income tax expense |
|
|
4,283 |
|
|
3,378 |
Income tax expense |
|
|
858 |
|
|
599 |
Net income |
|
$ |
3,425 |
|
$ |
2,779 |
Earnings per share |
|
|
|
|
|
|
Basic |
|
$ |
2.29 |
|
$ |
1.87 |
Diluted |
|
$ |
2.29 |
|
$ |
1.87 |
|
|
|
|
|
|
|
Performance Ratios |
|
|
|
|
|
|
Return on average assets |
|
|
0.92% |
|
|
0.76% |
Return on average equity |
|
|
10.06% |
|
|
8.81% |
Net interest margin |
|
|
3.73% |
|
|
3.67% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11