First National Corporation, the parent company of First Bank, announced the completion of the acquisition of certain assets and the assumption of $188 million in deposit liabilities from six branch banking operations of Bank of America on April 17, 2015.
The company also reported earnings for the first quarter of 2015. Net income for the quarter totaled $544 thousand, and earnings per basic and diluted share totaled $0.04 for the three months ended March 31, 2015. Earnings for the quarter included the impact of one-time acquisition expenses, as well as increased expenses related to higher staffing levels to support the 35% balance sheet expansion.
Operating highlights for the first quarter:
- Loans increased by $20.1 million during the quarter, largest increase in five years.
- Net interest income increased by 5% to $4.6 million Net interest margin increased to 3.96%
- Nonperforming assets decreased by 38%
- Return on average assets was 0.43%
- Book value per common share increased from $9.17 to $9.31 during the quarter
“During the first quarter, our banking company made significant strides executing on our strategy to build a regional bank that serves small and mid-sized communities in Virginia that value personal service combined with technology driven delivery systems,” said Scott C. Harvard, President and CEO of the Company and the Bank. Harvard continued, “We have successfully added commercial lenders across the system, resulting in more loan growth than we have seen in years. The mortgage division began to achieve higher production levels during the period and we plan to leverage the recent acquisition by integrating First Mortgage with the new branch network. We are pleased with the progress and prospects for First Bank and First National Corporation.”
First Quarter Earnings: Net income totaled $544 thousand for the first quarter of 2015 compared to $1.1 million for the same period of 2014. The return on average assets was 0.43% for the quarter compared to 0.88% for the same quarter one year ago, and the return on average equity was 3.67% compared to 8.53%. Net income was impacted by one-time acquisition expenses that totaled $419 thousand, as well as increased expenses from higher staffing levels needed to support the growth strategy of the Company and the larger balance sheet after the acquisition.
Net interest income increased $206 thousand to $4.6 million for the first quarter compared to $4.4 million for the same period one year ago, which was driven by loan balances that were $39.0 million higher than one year ago. The Bank exceeded its loan growth plans, which resulted in a 24 basis point increase in its net interest margin to 3.96%, compared to 3.72% for the same period of 2014. The higher net interest income and net interest margin was a direct result of increased production and growth of the Bank’s loan portfolio. Noninterest income totaled $1.6 million for the period and was supported by continued revenue growth from the Bank’s Wealth Management division.
Noninterest expense increased to $5.5 million for the quarter compared to $4.6 million for the same period in the prior year. The additional expenses were primarily a result of the execution of the Company’s growth strategy, which included the expansion of its banking franchise into new markets and the creation of new business lines to increase and diversify revenue.
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