Cardinal Bankshares Corporation Reports Results for the Quarter ended March 31, 2014

 Cardinal Bankshares Corporation Reports Results for the Quarter ended March
                                   31, 2014

PR Newswire

FLOYD, Va., April 22, 2014

FLOYD, Va., April 22, 2014 /PRNewswire/ --Cardinal Bankshares Corporation
(OTC: CDBK), parent company of Bank of Floyd, announced today its consolidated
financial results for the first quarter of 2014 and reported net income of $87
thousand, or $0.06 per share versus $130 thousand, or $0.08 per share for the
same quarter in 2013. The Company's net income for the three-month period
produced an annualized return on average assets of 0.13% and an annualized
return on average equity of 1.93% as compared to 0.19% and 1.74% for these
measures in the same period last year.

Michael Larrowe, President and Chief Executive Officer added, "The Bank
experienced increased net interest income, driven by additional loan income
and a decrease in interest expense on deposit accounts relative to the same
period in 2013. As a result, net interest margin for the quarter improved to
3.08% from 2.85% for the year in 2013. We believe these improved operating
metrics coupled with our new product and service offerings will continue to
bring improved value to our customers and shareholders. Due to substantial
investment in both technology and personnel, the Bank's ability to be
competitive has dramatically improved, while retaining capital levels well
above required amounts."

Financial Highlights:

  oTotal assets increased by $2.9 million from $268.8 million at December 31,
    2013 to $271.7 million at March 31, 2014.
  oTotal loans at March 31, 2014 were $146.2 million, which is an increase of
    $200 thousand compared to December 31, 2013.
  oA decrease in higher cost interest-bearing deposits of $2.9 million in the
    three-month period helped to improve the net interest margin.
  oThe first quarter 2014 provision for loan losses of $22 thousand was an
    improvement of $278 thousand versus the same period in 2013 as losses from
    legacy loans continue to decrease.

Capital Levels

Both the Bank's and the Company's capital levels remain above the regulatory
well-capitalized ratios. The Company's consolidated Tier 1 risk-based and
total risk-based capital ratios were 12.25% and 13.50%, respectively, at March
31, 2014, down from the 12.63% and 13.89% reported at December 31, 2013.

Nonperforming Assets

The Company's ratio of nonperforming assets as a percentage of total assets
decreased 169 basis points to 3.10% as compared to 4.79% one year earlier.
Nonperforming assets decreased $5.1 million from $13.5 million at March 31,
2013 to $8.4 million at March 31, 2014. Nonperforming assets at March 31,
2014 consisted of nonaccrual loans of $6.2 million, foreclosed assets of $2.2
million, and loans that were past due greater than 90 days and still accruing
interest of zero. Nonperforming assets at March 31, 2013 consisted of
nonaccrual loans of $9.3 million, foreclosed assets of $2.7 million, and loans
totaling $1.5 million that were past due greater than 90 days and still
accruing interest.

The Company recorded a provision for loan losses for the first quarter of 2014
of $22 thousand, as compared to a provision of $300 thousand for the same
period last year. Net charge-offs annualized as a percentage of average loans
outstanding was (.043%) for the first quarter of 2014, compared to (.04%) for
the same quarter in the prior year. Net charge-offs (recoveries) for the
quarter ended March 31, 2014 were $(156) thousand, in comparison to $(11)
thousand for the same quarter one year ago.

The allowance for loan losses as a percentage of total loans increased from
1.30% at March 31, 2013 to 2.08% at March 31, 2014. At March 31, 2014, the
Company's total reserves were $3.0 million, which was comprised of $2.3
million in general reserves to cover estimated losses in the portfolio and
$780 thousand that are allocated to specific credits.

Financial Position

At March 31, 2014, the Company's total assets were $271.7 million, total
deposits were $237.0 million, total loans were $143.2 million and total
stockholders' equity was $18.5 million. Compared with December 31, 2013, the
Company's total assets increased $2.9 million or 1.1%.

Total deposits decreased by $4.7 million or 2.0%, while new advances of $7.0
million were drawn on the Federal Home Loan Bank of Atlanta during the first
three months of 2014. This shift allowed the Bank to reduce its cost of funds
as rates paid on these borrowings are lower than rates paid on most of our
deposits.

Stockholders' equity increased $1.1 million to $18.4 million at March 31, 2014
compared to $17.3 at December 31, 2013. Reduction of unrealized portfolio
losses resulted in an increase to total equity of $1.0 million as compared to
December 31, 2013. Net income of $87 thousand accounts for the remaining
increase to equity.

Net Interest Income

The Company's net interest income was $1.9 million for the three months ended
March 31, 2014, an increase of $225 thousand or 13.1% compared to same period
last year. The increase is a result interest income from new loan
originations combined with lower-costs on deposits and debt.

Noninterest Income

Noninterest income decreased $247 thousand for the three-month period ended
March 31, 2014, compared to the same period last year, due to recognition of
net realized gains on sales of securities of $296 thousand for the three-month
period ended March 31, 2013. However, excluding gains taken on the sales of
securities, noninterest income increased $50 thousand or 32.5%.

Noninterest Expense

Noninterest expense for the first quarter of 2014 totaled $2.0 million, up
$226 thousand or 12.5% as compared to the quarter ended March 31, 2013. The
increase in noninterest expense is due to salaries and employee benefits as a
result of experienced personnel additions, occupancy and equipment expense as
building improvements are ongoing, data processing services as technology
services offered continue to expand and other operating expenses related to
increased data transmission speeds.

For Further Information Contact:

Michael D. Larrowe, President and Chief Executive Officer
Alan Dickerson, Chief Financial Officer
(540) 745-4191



Consolidated Balance Sheets
(in thousands, except share data)
                                                                  March    December
                                                                  31,      31,
                                                                  2014     2013
Assets
Cash and due from                                                 $     $   
banks                          
                                                                  3,537    3,339
Interest-bearing deposits in                                      8,240    6,757
banks
Investment securities, available for sale  97,452   96,932
Investment securities, held to maturity   -        -
Restricted equity                                                 1,314    999
securities
Total                                                             146,206  146,031
loans
Allowance for loan losses   (3,040)  (2,862)
 Net                                                           143,166  143,169
loans
Bank premises and equipment, net         4,951    4,971
Accrued interest receivable  795      910
Foreclosed                                                        2,209    2,196
assets
Bank owned life insurance   6,611    6,571
Deferred tax                                                      6,351    6,891
asset
Reserve deferred tax asset  (5,139)  (5,139)
Prepaid                                                           947      800
assets
Other                                                             1,299    451
assets
 Total                                                     $     $   
assets                
                                                                  271,733  268,847
Liabilities and Stockholders' Equity
Liabilities
                                                                  $     $   
Noninterest-bearing deposits         
                                                                  39,020   40,882
Interest-bearing                                                  197,976  200,861
deposits
 Total                                                     236,996  241,743
deposits
FHLB                                                              15,000   8,000
advances
Accrued interest                                                  67       65
payable
Bank owned life insurance SERP      830      828
Other                                                             383      891
liabilities
 Total                                                     253,276  251,527
liabilities
Stockholders' Equity
Common stock, $10 par value; 5,000,000
Shares authorized; 1,535,733 shares issued
Issued and outstanding      15,357   15,357
Additional paid-in                                                2,925    2,925
capital
Retained                                                          2,527    2,440
earnings
Accumulated other comprehensive income              (2,352)  (3,402)
 Total stockholders' equity  18,457   17,320
                                                                  $     $   
 Total liabilities and stockholders' equity               
                                                                  271,733  268,847





Consolidated Statements of Operations
(in thousands, except share data)
                                                    Three Months Ended March
                                                    31,
                                                    2014          2013
Interest and dividend income
                                                    $        $     
 Loans and fees on loans                              
                                                    1,858         1,723
 Federal funds sold             -             -
 Investment securities
 Taxable                       485           402
 Exempt from federal income tax          81            191
 Dividend income               5             5
 Deposits with banks                      3             6
 Total interest income               2,432         2,327
Interest expense
 Deposits                489           611
 Borrowings                  4             2
 Total interest expense         493           613
 Net interest income              1,939         1,714
Provision for loan losses                  22            300
 Net interest income after provision
 for loan losses               1,917         1,414
Noninterest income
 Service charges on deposit accounts    38            42
 Other service charges and fees      27            26
 Net realized gains on sales of securities    (1)           296
 Income on bank owned life insurance       40            43
 Other income   99            43
 Total noninterest income          203           450
Noninterest expense
 Salaries and employee benefits            1,138         1,065
 Occupancy and equipment             287           202
 Legal and professional        68            120
 Bank franchise tax       42            36
 Data processing services         124           71
 FDIC insurance premiums           91            91
 Foreclosed assets, net        19            34
 Other operating expense  265           189
 Total noninterest expense   2,034         1,808
 Income (loss) before income taxes       86            56
 Income tax expense (benefit)        (1)           (74)
                                                    $        $     
Net income (loss)              
                                                      87         130
                                                    $        $     
Basic earnings (loss) per share                     
                                                    0.06         0.08



Cardinal Bankshares Corporation
Financial Highlights (Unaudited)
(in thousands)
                                             Three Months Ended
                                             March 31,        March 31,
                                             2014             2013
Per Share
Earnings per share, basic and diluted        $     0.06  $      0.08
Book value                                   $    12.02   $     18.41
Financial Ratios
Annualized Return on Average Assets          0.13%            0.19%
Annualized Return on Average Equity          1.93%            1.74%
Annualized Net Interest Margin for the       3.08%            3.25%
quarter ended^1
Efficiency Ratio^2                           94.03%           97.39%
Capital Ratios
Tier 1 risk-based capital - Bank only        11.15%           12.19%
Total risk-based capital - Bank only         12.40%           13.22%
Tier 1 risk-based capital - consolidated     12.25%           15.33%
Total risk-based capital - consolidated      13.50%           16.42%
Allowance for Loan Losses at Beginning of    $    2,862   $     1,514
Period
Loans Charged-off, net of Recoveries         156              11
Provision for Loan Losses                    22               300
Allowance for Loan Losses at End of Period   $    3,040   $     1,825
Credit Quality Ratios
Nonperforming Assets as a % of Total Assets  3.10%            4.79%
Total Allowance for Loan Losses as a % of    2.08%            1.30%
Total Loans
Total Allowance for Loan Losses as a % of    48.97%           16.87%
Nonperforming Loans
Annualized Net Charge-offs as a % of Average -0.43%           -0.04%
Loans
Nonperforming Assets
Nonaccrual Loans                             $    6,192   $     9,271
Loans Past Due 90 Days+, still accruing      16               1,547
Total Nonperforming Loans                    6,208            10,818
Other Real Estate Owned                      2,209            2,671
Total Nonperforming Assets                   $    8,417   $    13,489

^1 Net interest margin equals net interest income divided by interest-earning
average assets.
^2 Efficiency ratio equals noninterest expense (excluding OREO valuations and
OREO operating expenses) divided by net interest income plus noninterest
income (excluding net realized gains on sales of securities).



SOURCE Cardinal Bankshares Corporation
 
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