Chain Bridge Bancorp, Inc. and Chain Bridge Bank, N.A. Earnings Release 2012
Chain Bridge Bancorp, Inc. and Chain Bridge Bank, N.A. Earnings Release 2012
Earnings up 23% in 2012 Over 2011
MCLEAN, VA -- (Marketwire) -- 02/07/13 -- Chain Bridge Bancorp, Inc. (the "Company"), the parent of Chain Bridge Bank, N.A. (the "Bank") (collectively, "Chain Bridge"), today reported that its net income grew 23% in 2012, to $2.956 million or $147 per share, up from $2.403 million, or $129 per share in 2011.
Peter G. Fitzgerald, Chairman of Chain Bridge, commented: "Chain Bridge's earnings reflect strong loan growth and continued exceptional credit quality. The Bank performed well even in a weak revenue environment." Regarding the outlook for 2013, Fitzgerald said: "Chain Bridge expects continued low interest rates and, consequently, continued pressure on bank net interest margins. To compensate, management is working hard to control costs while at the same time increasing non-interest income."
Balance Sheet Growth
Loan demand was strong during the year as loans grew 34% from $86.6 million at year end 2011 to $116.3 million at year end 2012. Closed-end residential real estate loans grew $22.9 million while commercial real estate loans rose $4.1 million. The Bank's securities portfolio decreased slightly, by $2.8 million, to $158.5 million at year-end.
Average assets of the Company grew $118 million, or 53%, to $341 million in 2012 compared to $223 million in 2011. The bulk of the growth in average assets was due to a temporary, seasonal rise in client deposit balances. Prior to year-end, clients drew down the bulk of these seasonal deposit balances, so year-over-year assets increased only slightly, by $395 thousand, to $292 million at year end 2012.
Net Interest Income and Yields
Net interest income increased by $2.0 million as average earning assets grew $116 million to $330 million. Liquidity was maintained to fund draw-downs of balances in seasonal deposit accounts, so excess funds were invested in liquid investments and cash. Investments in shorter term assets resulted in a decline in the yield on earning assets of 97 basis points to 3.49 percent. Deposit growth was primarily in non-interest bearing accounts, so the Bank's overall cost of funds declined to 0.24 percent. The net interest margin declined 78 basis points to 3.26 percent.
Non-interest income, excluding securities gains and losses, increased $258 thousand during the year to $668 thousand. Service charge income grew $170 thousand as transaction activity in seasonal accounts was strong. A fresh source of revenue came from the newly established mortgage division of the Bank. Non-interest income earned on consumer mortgage loans totaled $67 thousand during the year.
Asset Quality and Capital
The Bank's asset quality remained exceptional. No loans were past-due at December 31, 2012 and the Bank reported no repossessed assets or non-performing loans. The Bank charged-off one commercial loan during 2012 for $225 thousand as the borrower declared bankruptcy. The Bank is working with the bankruptcy trustee to pursue collection of the debt.
At year-end 2012, the Company's tier 1 risk-based capital ratio stood at 17.08% and its equity-to-assets ratio stood at 10.56. The Company's capital ratios substantially exceed those required by law. In 2012, MSN Money ranked Chain Bridge Bank as one of the 359 safest banks in the country (out of more than 7,300).
New Residential Mortgage Division
During the year, the Bank invested considerable resources in establishing a full service residential mortgage division. In addition to purchasing an office condominium to house the division, the Bank hired six highly experienced specialists who collectively have over 100 years experience in residential mortgage lending. The division has state-of-the art systems, two loan originators, an underwriter, a processor, a closer and an administrative assistant, all under one roof.
Due to legal, regulatory, and start-up costs, the division incurred a loss of $158 thousand and was a drag on net income in 2012. Management expects that if interest rates remain low and the demand for mortgages remains high that the division will add to net income in 2013.
Outlook for 2013
The banking outlook for the coming year contains the same interest rate and regulatory challenges faced over the past year with the added complexity of uncertain fiscal policy decisions. Low rates will continue to place further pressure on net interest income throughout 2013. Likewise, enhanced operating controls will be needed to stay ahead of ever changing regulatory expectations. The U.S. economy is showing signs of improvement with the jobless rate continuing its slow decline and the housing market gradually improving, but the recovery is tenuous and, particularly in the Washington, D.C. area, will be impacted by policy decisions on spending cuts and "sequestration."
"Chain Bridge Bank is uniquely positioned to take advantage of industry challenges over the coming year," said the Bank's President and Chief Executive Officer John J. Brough. Brough added that "Low rates present an opportunity for the Bank to grow its loan portfolio. Loan growth will help the Bank's interest margin as lower yielding cash and bonds are converted into higher yielding loans. We also are excited to offer clients a full suite of real estate loans through our new residential mortgage division."
Chain Bridge Bank, National Association is a full service community bank organized under the laws of the United States and is the sole subsidiary of Chain Bridge Bancorp, Inc., a registered bank holding company. The Bank is headquartered in McLean, Virginia and serves businesses and individuals throughout the metropolitan Washington, D.C. area. The Bank is a member of the FDIC and its deposits are insured up to the legal maximums. The Company's shares are privately held.
Chain Bridge Bancorp, Inc (Consolidated) Chain Bridge Bank, National Association McLean, VA Financial Highlights Year End Period Ended December 31, -------------------------- 2012 2011 ------------ ------------ (Dollars in Thousands) (Unaudited) (Audited) Performance Measures and Yields Consolidated net income $ 2,956 $ 2,403 Earnings growth rate (%) 23.01% 14.56% Return on average assets (ROAA) (%) 0.87% 1.08% Return on average equity (ROAE) (%) 10.04% 10.66% Yield on earning assets (%) 3.49% 4.46% Cost of interest bearing liabilities (%) 0.60% 0.77% Cost of funds (%) 0.24% 0.43% Net interest margin (%) 3.26% 4.04% Balance Sheet Highlights Total assets $ 292,494 $ 292,099 Average assets $ 341,163 $ 223,002 Total loans & leases $ 115,266 $ 86,591 Total deposits $ 254,392 $ 263,019 Loans to deposit ratio (%) 45% 33% Capitalization Total equity capital $ 30,874 $ 26,809 Percent change in total equity capital 15.2% 33.7% Tangible equity $ 30,874 $ 26,809 Tier 1 capital $ 26,761 $ 23,721 Equity as a percentage of total assets (%) 10.56% 9.18% Total risk-based capital ratio (%) 18.23% 15.86% Tier 1 risk-based ratio (%) 17.08% 14.89% Deposit Composition (%) Noninterest bearing deposits / deposits 46.8% 56.8% Transaction accounts / deposits 63.4% 77.3% MMDAs & savings / deposits 15.3% 11.3% Time deposits / deposits 21.6% 11.4% Asset Quality (%) Non-performing assets / assets -% 0.08% Loan loss reserves / gross loans 1.70% 1.78% Reserves / non-performing assets -% 642% Net charge-offs / average loans 0.23% 0.08% Chain Bridge Bancorp, Inc. Share Information Number of shares outstanding 20,158 20,086 Book value per share (dollars) $ 1,531.61 $ 1,334.69 Percent change in book value per share 14.75% 23.68% Net income per share (dollars) $ 146.92 $ 128.82 Percent change in net income per share 14.05% 13.60%
Contact: Guy A. Brewer Senior Vice President & CFO Phone: 703-748-2005 Address: 1445-A Laughlin Avenue McLean, VA 22101 email@example.com www.chainbridgebank.com