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