8-K
Primis Financial Corp. (FRST)
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): October 26, 2020
Southern National Bancorp of Virginia, Inc.
(Exact Name of Registrant as Specified in Charter)
| Virginia | 001-33037 | 20-1417448 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
6830 Old Dominion Drive, McLean, Virginia 22101
(Address of Principal Executive Offices) (Zip Code)
(703) 893-7400
(Registrant's telephone number, including area code)
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 exchanged on which registered |
|---|---|---|
| COMMON STOCK | SONA | NASDAQ |
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 period 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 October 26, 2020, Southern National Bancorp of Virginia, Inc. (“Southern National”) issued a press release announcing its financial results for the three months ended September 30, 2020. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 8.01. Other Events.
On October 26, 2020, Southern National issued a press release announcing the declaration of a dividend payable to shareholders of record as of November 9, 2020. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated October 26, 2020 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Southern National Bancorp of Virginia, Inc. | ||
|---|---|---|
| Date: October 26, 2020 | By: | /s/ Jeffrey L. Karafa |
| Jeffrey L. Karafa | ||
| Chief Financial Officer |
Exhibit 99.1
Southern National Bancorp of Virginia, Inc. announces earnings of $9.6 million for the quarter ended September 30, 2020, compared to $8.9 million for the quarter ended September 30, 2019
Southern National Bancorp of Virginia, Inc. also declares a dividend of $0.10 per share, its thirty-sixth consecutive quarterly dividend.
MCLEAN, Va., Oct. 26, 2020 /PRNewswire/ -- Southern National Bancorp of Virginia, Inc. (NASDAQ: SONA) ("Southern National" or the "Company"), and its wholly-owned subsidiary Sonabank (the "Bank"), today announced net income of $9.6 million for the quarter ended September 30, 2020, compared to $8.9 million for the quarter ended September 30, 2019. Earnings per share for the three months ended September 30, 2020 were $0.40 basic and $0.39 diluted compared to $0.37 basic and $0.36 diluted for the three months ended September 30, 2019.
Earnings for the nine months ended September 30, 2020 were $14.3 million compared to $24.2 million for the nine months ended September 30, 2019. Earnings per share for the nine months ended September 30, 2020 were $0.59 basic and diluted compared to $1.01 basic and $0.99 diluted for the nine months ended September 30, 2019.
The Board of Directors also announces and declares a dividend of $0.10 per share payable on November 20, 2020 to shareholders of record on November 9, 2020. This is Southern National's thirty-sixth consecutive quarterly dividend.
Commenting on the quarter, President and CEO Dennis J. Zember, Jr. said, "We finished an outstanding quarter with record net income and a substantially improved picture on deferrals. Compared to last year, we are seeing higher levels of pre-tax, pre-provision earnings thanks to modestly higher net interest income, solid results in fee income and an impressive efficiency ratio. Our credit team has worked diligently with each of our deferred loan customers, moving our current level of deferred loans down dramatically. As we work to finish out the year, we are going to stay focused on credit quality and credit trends and build an impressive story for loan and deposit growth in 2021."
Highlights for the three months ended September 30, 2020 include:
- Loans on deferral declined significantly. Management estimates that deferrals at the end of October, 2020 (end of our initial round of six month deferrals) to be approximately $115 million, or 4.2% of loans, compared to $707.8 million at the end of the second quarter and $429.7 million at the end of the third quarter.
- Total revenue of $29.3 million, up 22% against same quarter in 2019.
- Total deposits increased $37.7 million despite a $300.2 million decline in CD over the last 12 months.
- Demand deposits (NIB, NOW, MMDA) increased to 66.6% of total deposits compared to 53.7% at same time in 2019.
- Cost of deposits declined to 0.80% at the end of the third quarter of 2020 compared to 1.47%
- The Company booked its first Panacea customers, a treasury deposit account.
- Our operating efficiency ratio of 52.79% for the third quarter of 2020 compared to 52.76% in the same quarter of 2019.
- Another sizable contribution from our mortgage investment of $3.8 million for the quarter.
- Pretax preprovision (PTPP) earnings of $14.0 million or 1.78% of average assets for the quarter compared to $11.4 or 1.65% in the same quarter in 2019.
- Total assets increased to approximately $3.2 billion at September 30, 2020.
- Successful completion of a $60 million subordinated debt offering during the quarter.
- Tangible book value per share of $11.53 at September 30, 2020 has increased 6.68% since a year ago despite significant build in loan loss reserves and steady dividends.
Net Interest Income
Net interest income increased to $23.0 million for the three months ended September 30, 2020 or $2.0 million due to higher levels of average earning assets compared to the three months ended
September 30, 2019. The Company's reported net interest margin for the current quarter declined to 3.18% compared to 3.37% in the same quarter in 2019. Several temporary items account for substantially all of the decline in the margin. First, the impact of lending in the PPP program in the current quarter lowered the margin by 10 basis points and secondly, the impact of higher cash balances as a percentage of earning assets resulting from successful efforts on deposit sales reduced the margin by six basis points compared to the same quarter in 2019.
Loan yields in the current quarter were 4.60%, excluding the effect of PPP loans compared to 5.21% in the same quarter of 2019. Lower yields on loans are the results of the significant decline in interest rates in the first half of the year, which has also affected the Company's funding costs. Despite aggressive efforts to increase core deposits and shift the Company's deposit mix, total funding costs have still declined to 0.83%. Loan yields are expected to remain more stable and management believes that there is a likelihood for increased core margins and profitability levels from this global repricing activity.
Commenting on the trends around net interest margin, Mr. Zember stated "We recognize that our deposit costs are higher than our peers and are using this in the short-term to continue shifting our deposit mix away from CDs. We expect that early in 2021, we will have moved time deposits to below 20% of total deposits and will start working to lower deposit costs in a way that will not affect the stability of our deposit base. As we have stated, we expect to finish 2021 with the deposit side of our balance sheet balanced more similarly to our peers with costs that are in-line with the industry."
Noninterest Income
During the three months ended September 30, 2020, Southern National had non-interest income of $6.3 million compared to $3.0 million for the three months ended September 30, 2019. Income on account maintenance and deposit service fees declined $204 thousand primarily in account service charges and NSF fees. Gains on our investment in Southern Trust Mortgage ("STM") increased to $3.8 million compared to $599 thousand in the same quarter in 2019, driven by higher margins on closed loans and materially higher volumes from refinance activity as well as production from new hires and teams that were on boarded in the second half of 2019.
Noninterest Expense
Noninterest expense was $15.3 million for the three months ended September 30, 2020, compared to the $12.6 million reported for the three months ended September 30, 2019. Employee compensation and benefits expense increased $1.3 million due to increased staffing in the commercial lending and Panacea divisions along with modified incentive and bonus plans. Occupancy and equipment expense increased $669 thousand. Professional Services increased $821 thousand due to consulting and legal services which are wholly centered on improving systems integration and technology or fees associated with recruiting additional talent on the commercial banking or risk management division of the business.
Loan Portfolio
Loans outstanding grew to $2.52 billion at September 30, 2020 compared to $2.14 billion at the same time in 2019. Loan production for the first nine months of 2020 centered mostly on PPP which totaled $348.0 million. Excluding PPP loans, loans outstanding have decreased $10.4 million since December 31, 2019.
The Company ended the third quarter of 2020 with a concentration in hotels totaling $265.5 million. The portfolio, prior to the pandemic, had debt weighted average debt coverage of approximately 147% and weighted average loan to value of approximately 68%. Substantially all of the Company's hotel loans are to national brands and approximately 93% of the portfolio are to limited service hotels, in non-leisure areas with historically lower operating costs. Commenting on the hospitality portfolio, Mr. Zember stated, "Our hospitality book has performed exceptionally well given the current circumstances. For the hotel book, we have seen steady increases in occupancy and room revenues to the point that all but 2.47% of our book can comfortably service interest costs. The pre-COVID loan to value ratio of the hotels asking for another deferral of principal and interest was 55.32%, respectively, which we believe speaks to the strength of this portfolio."
Credit Loss Provision and Asset Quality
The Allowance for Loan Losses (incurred loss model) increased to $25.8 million at September 30, 2020, up substantially from $10.3 million at December 31, 2019. In addition to the allowance, the Company has discounts and marks on acquired loans totaling $6.9 million at the end of the current quarter in 2020 and $9.9 million at the previous year end. As a percentage of loans (excluding PPP), the allowance plus discounts and marks has increased from 0.92% at the end of 2019 to 1.50% at the end of the current quarter in 2020.
During the third quarter, and through October 23, 2020, the Company saw a substantial amount of deferred loans go back to traditional loan terms. As of October 23, 2020, loans on any form of deferral totaled $202.9 million or 8.1% of total loans, compared to $707.8 million and 28.2% at the end of the second quarter of 2020. Additional information relative to COVID-19 deferrals is seen below as of September 30, 2020 with estimates for the end of October, 2020:
| (000's) | Entire Portfolio | ||
|---|---|---|---|
| 2Q 2020 | 3Q 2020 | Est 10/2020 | |
| Balances not modified | 1,803,663 | 2,094,038 | 2,396,788 |
| Modified | 707,841 | 429,671 | 115,113 |
| Total | 2,511,504 | 2,523,709 | 2,511,901 |
| Hotels | |||
| 2Q 2020 | 3Q 2020 | Est 10/2020 | |
| Balances not modified | 43,518 | 131,545 | 225,745 |
| Modified | 219,673 | 133,933 | 41,492 |
| Total | 263,191 | 265,478 | 267,237 |
| Restaurants | |||
| 2Q 2020 | 3Q 2020 | Est 10/2020 | |
| Balances not modified | 32,390 | 45,798 | 105,254 |
| Modified | 68,727 | 60,824 | 1,390 |
| Total | 101,117 | 106,622 | 106,644 |
All values are in US Dollars.
Nonperforming assets, excluding portions guaranteed by the SBA, were 0.53% of total assets at September 30, 2020, compared to 0.40% at December 31, 2019. Total non-accrual loans increased to $15.3 million at September 30, 2020 compared to $8.9 million at December 31, 2019 due to COVID-19 related issues.
Deposits
Total deposits increased to $2.22 billion at September 30, 2020 compared to $2.18 billion at the same time in 2019. During the quarter, the Company replaced $58 million of brokered, listing service and higher rate customer CDs with growth in checking, NOW and MMDA balances (core deposits). Since December 31, 2019, the Company has run off $221 million of brokered and listing service accounts and grown core deposits by $277.8 million. The Company is aggressively building sales and incentive cultures focused on growing and managing core deposits, with the primary attention on commercial and consumer checking accounts. Management expects continued improvement in the funding mix over the next several quarters with more material reductions in total funding costs to occur in the last several quarters of 2021.
Stockholders' Equity
Tangible common book value at the end of the third quarter of 2020 was $11.53 per share, an increase of 6.8% since the same time in 2019. Tangible common equity at September 30, 2020 was $280.9 million, or 9.22% of tangible assets. Excluding increases in the Company's tangible assets related to PPP, the Company's tangible common equity to tangible assets is approximately 10.36% at September 30, 2020. Sonabank's capital ratios were especially strong with tier one leverage and total risk based capital ratios estimated at 10.62% and 16.09%, respectively at the end of the third quarter of 2020.
About Southern National Bancorp of Virginia, Inc.
As of September 30, 2020, Southern National had $3.15 billion in total assets, $2.52 billion in total loans and $2.22 billion in total deposits. Sonabank, the Company's banking subsidiary provides a range of financial services to individuals and small and medium sized businesses through forty-two full-service branches in Virginia and Maryland and through certain internet and mobile applications.
Non-GAAP Measures
Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables. Southern National uses non-GAAP financial measures to analyze its performance.
Management believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of Southern National and provide meaningful comparison to its peers. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider Southern National's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of Southern National.
Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that relate to future events or the future performance of Southern National. Forward-looking statements are not guarantees of performance or results. These forward-looking statements are based on the current beliefs and expectations of the respective management of Southern National and Sonabank and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond their respective control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the anticipated results discussed or implied in these forward-looking statements because of numerous possible uncertainties. Words like "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate," "could," "should," "would," "will," and similar expressions, should be considered as identifying forward-looking statements, although other phrasing may be used. Such forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Registration Statements on Form S-4) filed by Southern National. You should consider such factors and not place undue reliance on such forward-looking statements. No obligation is undertaken by Southern National to update such forward-looking statements to reflect events or circumstances occurring after the issuance of this press release.
| Southern National Bancorp of Virginia, inc. (000's, except share data) | For the Three Month Period: | Year to date Period: | ||||||
|---|---|---|---|---|---|---|---|---|
| Condensed Consolidated Balance Sheets (unaudited) | 3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 3Q 2020 | 3Q 2019 | |
| Assets | ||||||||
| Cash and cash equivalents | $ <br> 149,272 | $ 82,586 | $ 55,865 | $ 31,928 | $ 48,572 | $ 149,272 | $ <br> 48,572 | |
| Investment securities-available for sale | 157,896 | 160,979 | 168,520 | 164,820 | 163,344 | 157,896 | 163,344 | |
| Investment securities-held to maturity | 49,323 | 53,958 | 59,234 | 72,448 | 78,790 | 49,323 | 78,790 | |
| Stock in Federal Reserve Bank and Federal Home Loan Bank | 16,927 | 16,927 | 21,396 | 17,832 | 14,602 | 16,927 | 14,602 | |
| Loans receivable, net of deferred fees | 2,523,709 | 2,511,504 | 2,212,538 | 2,186,047 | 2,141,385 | 2,523,709 | 2,141,385 | |
| Allowance for loan losses | (25,779) | (23,627) | (12,722) | (10,261) | (11,201) | (25,779) | (11,201) | |
| Net loans | 2,497,930 | 2,487,877 | 2,199,816 | 2,175,786 | 2,130,184 | 2,497,930 | 2,130,184 | |
| Loans held for sale | - | - | - | - | - | - | - | |
| Intangible assets | 108,122 | 108,463 | 108,804 | 109,145 | 109,486 | 108,122 | 109,486 | |
| Operating lease right-of-use assets | 7,033 | 7,111 | 7,664 | 8,013 | 8,374 | 7,033 | 8,374 | |
| Bank premises and equipment, net | 30,679 | 31,087 | 31,079 | 31,184 | 31,265 | 30,679 | 31,265 | |
| Bank-owned life insurance | 65,015 | 64,622 | 64,236 | 63,850 | 63,452 | 65,015 | 63,452 | |
| Deferred tax assets, net | 14,477 | 11,087 | 11,154 | 11,788 | 14,319 | 14,477 | 14,319 | |
| Other assets | 57,899 | 47,474 | 34,795 | 35,376 | 36,527 | 57,899 | 36,527 | |
| Total assets | $ 3,154,573 | $ 3,072,171 | $ <br> 2,762,563 | $ 2,722,170 | $ 2,698,915 | $ 3,154,573 | $ 2,698,915 | |
| Liabilities and stockholders' equity | ||||||||
| Demand deposits | $ <br> 467,581 | $ 447,605 | $ 338,095 | $ 339,153 | $ 343,686 | $ 467,581 | $ <br> 343,686 | |
| NOW accounts | 472,553 | 424,096 | 380,977 | 391,172 | 368,354 | 472,553 | 368,354 | |
| Money market accounts | 534,899 | 488,229 | 477,660 | 466,867 | 458,737 | 534,899 | 458,737 | |
| Savings accounts | 179,756 | 171,681 | 151,406 | 144,486 | 146,119 | 179,756 | 146,119 | |
| Time deposits | 561,685 | 619,918 | 727,216 | 783,040 | 861,842 | 561,685 | 861,842 | |
| Total deposits | 2,216,474 | 2,151,529 | 2,075,354 | 2,124,718 | 2,178,738 | 2,216,474 | 2,178,738 | |
| Federal Home Loan Bank advances | 100,000 | 100,000 | 205,140 | 121,640 | 45,640 | 100,000 | 45,640 | |
| PPPLF Advances | 283,906 | 333,574 | - | - | - | 283,906 | - | |
| Subordinated notes | 115,378 | 56,689 | 56,686 | 56,683 | 56,681 | 115,378 | 56,681 | |
| Operating lease liabilities | 7,800 | 7,896 | 8,509 | 8,469 | 8,830 | 7,800 | 8,830 | |
| Other liabilities | 42,032 | 40,814 | 38,052 | 33,419 | 38,396 | 42,032 | 38,396 | |
| Total liabilities | 2,765,590 | 2,690,502 | 2,383,741 | 2,344,929 | 2,328,285 | 2,765,590 | 2,328,285 | |
| Stockholders' equity | 388,983 | 381,669 | 378,822 | 377,241 | 370,630 | 388,983 | 370,630 | |
| Total liabilities and stockholders' equity | $ <br>3,154,573 | $ 3,072,171 | $ 2,762,563 | $ 2,722,170 | $ 2,698,915 | $ 3,154,573 | $<br> 2,698,915 | |
| Tangible common equity | $ <br> 280,861 | $ 273,206 | $ 270,018 | $ 268,096 | $ 261,144 | $ 280,861 | $ <br> 261,144 | |
| Tangible common equity to tangible assets | 9.22% | 9.22% | 10.17% | 10.26% | 10.09% | 9.22% | 10.09% | |
| Tangible book value | 11.53 | 11.21 | 11.11 | 11.09 | 10.80 | 11.53 | 10.80 | |
| Southern National Bancorp of Virginia, inc. (000's, except share data) | For the Three Month Period: | Year to date Period: | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Condensed Consolidated Statement of Operations (unaudited) | 3Q2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 3Q 2020 | 3Q 2019 | |
| Interest and dividend income | $ 28,707 | $ 28,672 | $ <br> 28,481 | $ 29,354 | $ 30,474 | $ 85,860 | $<br> 91,170 | |
| Interest expense | 5,709 | 6,199 | 7,966 | 8,685 | 9,459 | 19,874 | 28,239 | |
| Net interest income | 22,998 | 22,473 | 20,515 | 20,669 | 21,015 | 65,986 | 62,931 | |
| Provision for credit losses | 2,000 | 10,899 | 3,450 | - | 150 | 16,349 | 350 | |
| Net interest income after provision for loan losses | 20,998 | 11,574 | 17,065 | 20,669 | 20,865 | 49,637 | 62,581 | |
| Account maintenance and deposit service fees | 1,633 | 1,489 | 1,698 | 1,847 | 1,837 | 4,820 | 5,312 | |
| Income from bank-owned life insurance | 394 | 385 | 386 | 399 | 392 | 1,165 | 1,300 | |
| Equity gain from mortgage affiliate | 3,826 | 4,161 | 231 | 16 | 599 | 8,218 | 1,175 | |
| Recoveries related to acquired charged-off | ||||||||
| loans and investment securities | 288 | 2,235 | 184 | 477 | 145 | 2,707 | 1,060 | |
| Other | 130 | 123 | 321 | 620 | 1 | 574 | 380 | |
| Noninterest income | 6,271 | 8,393 | 2,820 | 3,359 | 2,974 | 17,484 | 9,227 | |
| Employee compensation and benefits | 7,817 | 7,338 | 12,309 | 6,738 | 6,567 | 27,464 | 19,523 | |
| Occupancy and equipment expenses | 2,151 | 2,044 | 2,558 | 2,389 | 1,482 | 6,753 | 6,534 | |
| Amortization of core deposit intangible | 341 | 341 | 341 | 341 | 352 | 1,023 | 1,077 | |
| Virginia franchise tax expense | 615 | 659 | 570 | 562 | 563 | 1,844 | 1,689 | |
| Data processing expense | 701 | 956 | 707 | 677 | 622 | 2,364 | 1,704 | |
| Telecommunication and communication expense | 382 | 369 | 368 | 357 | 477 | 1,119 | 1,258 | |
| Net (gain) loss on other real estate owned | (16) | - | 71 | - | - | 55 | (38) | |
| Professional fees | 1,494 | 873 | 1,193 | 1,036 | 673 | 3,560 | 2,576 | |
| Other expenses | 1,779 | 1,490 | 1,735 | 1,696 | 1,878 | 5,004 | 8,473 | |
| Noninterest expense | 15,264 | 14,070 | 19,852 | 13,796 | 12,614 | 49,186 | 42,796 | |
| Income before income taxes | 12,005 | 5,897 | 33 | 10,232 | 11,225 | 17,935 | 29,012 | |
| Income tax expense | 2,417 | 1,188 | 6 | 1,268 | 2,361 | 3,611 | 4,809 | |
| Net income | $ <br>9,588 | $ 4,709 | $ 27 | $ 8,964 | $ 8,864 | $ 14,324 | $ 24,203 | |
| Non-GAAP adjustments to Net Income | ||||||||
| Management Restructure | $ <br> - | $ - | $ 4,899 | $ - | $ - | $ 4,899 | $ - | |
| Branch Closures | - | - | 479 | - | - | 479 | - | |
| Other loss and related legal expenses | - | - | - | - | - | - | 3,702 | |
| Income tax effect | - | - | (1,076) | - | - | (1,076) | (777) | |
| Total Net Income adjusted for nonrecurring expenses | $<br> 9,588 | $ 4,709 | $ 4,329 | $ 8,964 | $ 8,864 | $ 18,626 | $ 27,128 | |
| Pretax preprovision earnings | $ <br> 14,005 | $ 16,796 | $ 8,861 | $ 10,232 | $ 11,375 | $ 38,586 | $<br> 32,287 | |
| Pretax preprovision earnings to average assets | 1.78% | 2.28% | 1.30% | 1.50% | 1.65% | 1.74% | 1.58% | |
| Southern National Bancorp of Virginia, inc. (000's, except share data) | For the Three Month Period: | Year to date Period: | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Per Share Data: | 3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 3Q 2020 | 3Q 2019 | |
| Earnings per share - Basic | $ 0.40 | $ 0.19 | $ <br> 0.00 | $ 0.37 | $ 0.37 | $ 0.59 | $ 1.01 | |
| Earnings per share - Diluted | $ 0.39 | $ 0.19 | $ 0.00 | $ 0.37 | $ 0.36 | $ 0.59 | $ 0.99 | |
| Book value per share | $ 15.96 | $ 15.67 | $ 15.59 | $ 15.60 | $ 15.33 | $ 15.96 | $ 15.33 | |
| Tangible book value per share | $ 11.53 | $ 11.21 | $ 11.11 | $ 11.09 | $ 10.80 | $ 11.53 | $ 10.80 | |
| Weighted average shares outstanding - Basic | 24,270,455 | 24,246,355 | 24,168,359 | 24,092,534 | 24,071,925 | 24,228,543 | 24,035,716 | |
| Weighted average shares outstanding - Diluted | 24,375,383 | 24,352,708 | 34,388,085 | 24,411,147 | 24,374,163 | 24,349,995 | 24,334,789 | |
| Shares outstanding at end of period | 24,368,853 | 24,361,603 | 24,297,703 | 24,181,534 | 24,171,776 | 24,368,853 | 24,171,776 | |
| Selected Performance Ratios: | ||||||||
| Return on average assets | 1.19% | 0.61% | 0.00% | 1.31% | 1.29% | 0.65% | 1.19% | |
| Return on average equity | 9.87% | 4.92% | 0.03% | 9.49% | 9.57% | 4.89% | 9.01% | |
| Return on average tangible equity | 13.72% | 6.86% | 0.04% | 13.40% | 13.64% | 6.95% | 12.98% | |
| Yield on earning assets | 3.97% | 4.25% | 4.61% | 4.75% | 4.89% | 4.26% | 4.93% | |
| Cost of funds on interest bearing liabilities | 0.83% | 0.97% | 1.60% | 1.49% | 1.60% | 1.05% | 1.61% | |
| Net interest margin | 3.18% | 3.33% | 3.32% | 3.35% | 3.37% | 3.27% | 3.40% | |
| Net loans to deposits | 112.70% | 115.63% | 106.00% | 102.40% | 97.77% | 112.70% | 97.77% | |
| Operating efficiency ratio | 52.79% | 49.07% | 85.84% | 57.60% | 52.76% | 60.91% | 60.06% | |
| Overhead ratio | 1.15% | 0.77% | 1.86% | 1.54% | 1.41% | 1.24% | 1.50% | |
| Net charge-offs to average loans | -0.01% | 0.00% | 0.04% | 0.04% | 0.03% | 0.04% | 0.07% | |
| Reconciliation of Non-GAAP items: | ||||||||
| Return on average assets | 1.19% | 0.61% | 0.00% | 1.31% | 1.29% | 0.65% | 1.19% | |
| Effect of adjustment for the nonrecurring expenses | 0.00% | 0.00% | 0.63% | 0.00% | 0.00% | 0.14% | 0.14% | |
| Return on average assets excluding the nonrecurring expenses (Non-GAAP) | 0.61% | 0.61% | 0.63% | 1.31% | 1.29% | 0.79% | 1.33% | |
| Return on average equity | 9.87% | 4.92% | 0.03% | 9.49% | 9.57% | 4.89% | 9.01% | |
| Effect of adjustment for the nonrecurring expenses | 0.00% | 0.00% | 4.54% | 0.00% | 0.00% | 1.12% | 1.08% | |
| Return on average equity excluding the nonrecurring expenses (Non-GAAP) | 4.92% | 4.92% | 4.57% | 0.00% | 0.00% | 6.01% | 10.09% | |
| Operating efficiency ratio | 52.79% | 49.07% | 85.84% | 57.60% | 52.76% | 60.91% | 60.06% | |
| Effect of adjustment for the nonrecurring expenses | 0.00% | 0.00% | -23.34% | 0.00% | 0.00% | -3.08% | -5.19% | |
| Operating efficiency ratio excluding the nonrecurring expenses (Non-GAAP) | 52.79% | 49.07% | 62.50% | 57.60% | 52.76% | 57.83% | 54.87% | |
| Tangible book value | $ <br> 11.53 | $ 11.21 | $ 11.11 | $ 11.09 | $ 10.80 | $ 11.53 | $ 10.80 | |
| Effect of adjustment for the nonrecurring expenses | - | - | 0.18 | - | - | 0.18 | 0.12 | |
| Tangible book value excluding the nonrecurring expenses (Non-GAAP) | $ <br> 11.53 | $ 11.21 | $ 11.29 | $ 11.09 | $ 10.80 | $ 11.71 | $ 10.92 | |
| Southern National Bancorp of Virginia, inc. (000's, except share data) | For the Three Month Period: | Year to date Period: | ||||||
| --- | --- | --- | --- | --- | --- | --- | ||
| Asset Quality Information: | 3Q 2020 | 2Q 2020 | 1Q 2020 | 3Q 2019 | 3Q 2020 | |||
| Loans secured by real estate: | ||||||||
| Commercial real estate - owner occupied | $ 416,717 | $ 412,916 | 409,739 | $ 399,105 | 416,717 | |||
| Commercial real estate - non-owner occupied | 605,053 | 591,229 | 599,987 | 542,909 | 605,053 | |||
| Secured by farmland | 16,608 | 16,845 | 16,608 | 17,504 | 16,608 | |||
| Construction and loan loans | 120,066 | 122,086 | 115,144 | 162,458 | 120,066 | |||
| Residential 1-4 family | 581,237 | 612,247 | 624,119 | 574,935 | 581,237 | |||
| Multi-family residential | 107,672 | 100,685 | 90,652 | 82,626 | 107,672 | |||
| Home equity lines of credit | 97,727 | 101,218 | 106,820 | 112,801 | 97,727 | |||
| Total real estate loans | 1,945,080 | 1,957,226 | 1,963,069 | 1,892,338 | 1,945,080 | |||
| Commercial loans | 216,711 | 204,160 | 223,433 | 220,707 | 216,711 | |||
| SBA Paycheck Protection Program loans | 348,022 | 335,612 | - | - | 348,022 | |||
| Consumer loans | 23,078 | 24,733 | 25,708 | 28,075 | 23,078 | |||
| Gross loans | 2,532,891 | 2,521,731 | 2,212,210 | 2,141,120 | 2,532,891 | |||
| Plus (less) deferred costs (fees) on loans | (9,182) | (10,227) | 328 | 265 | (9,182) | |||
| Loan receivable, net of deferred costs (fees) | $ <br> 2,523,709 | $ 2,511,504 | 2,212,538 | $ 2,141,385 | 2,523,709 | |||
| Allowance for Loan Losses (Incurred Loss Model): | ||||||||
| Balance at beginning of period | $ (23,626) | $ (12,721) | (10,260) | $ (11,613) | (10,260) | |||
| Provision for loan losses | (2,000) | (10,900) | (3,450) | (150) | (16,350) | |||
| Charge-offs | 86 | 34 | 1,098 | 648 | 1,218 | |||
| Recoveries | (239) | (39) | (109) | (85) | (387) | |||
| Net charge-offs | (153) | (5) | 989 | 563 | 831 | |||
| Ending balance | $ (25,779) | $ (23,626) | (12,721) | $ (11,200) | (25,779) | |||
| Cummulative reconciliation to CECL (Not yet adopted): | ||||||||
| CECL adoption impact on acquired loans | $ <br>(1,997) | $ (1,997) | (1,997) | (1,997) | ||||
| CECL adoption impact on retained earnings | (5,429) | (5,429) | (5,429) | (5,429) | ||||
| CECL adoption impact on deferred tax assets | (1,495) | (1,495) | (1,495) | (1,495) | ||||
| Cummulative additional provision for loan losses | (1,649) | (3,191) | (11,016) | (1,649) | ||||
| Ending balance | $ (36,349) | $ (35,738) | (32,658) | (36,349) | ||||
| Allowance for Unfunded Commitments (Incurred Loss Model): | ||||||||
| Balance at beginning of period | $ <br> (55) | $ (55) | (55) | $ (55) | (55) | |||
| Cummulative reconciliation to CECL (Not yet adopted): | ||||||||
| CECL adoption impact on retained earnings | $ <br> (239) | $ (239) | (239) | (239) | ||||
| CECL adoption impact on deferred tax assets | (66) | (66) | (66) | (66) | ||||
| Cummulative additional provision for unfunded commitments | (1,224) | (817) | (425) | (1,224) | ||||
| Ending balance | $ (1,584) | $ (1,177) | (785) | (1,584) |
All values are in US Dollars.
| Southern National Bancorp of Virginia, inc. (000's, except share data) | For the Three Month Period: | Year to date Period: | ||||||
|---|---|---|---|---|---|---|---|---|
| Net Charge-off Information: | 3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 3Q 2020 | 3Q 2019 | |
| Charge-offs | ||||||||
| Commercial, financial and agricultural | $ <br> 13 | $ - | $ 821 | $ 188 | $ 267 | $ 834 | $ 434 | |
| Real estate - construction and development | - | - | - | - | - | - | - | |
| Real estate - commercial and farmland | - | - | - | 403 | - | - | 1,244 | |
| Real estate - residential | 47 | - | 245 | 336 | 316 | 292 | 406 | |
| Consumer installment | 26 | 34 | 32 | 47 | 65 | 92 | 221 | |
| Total charge-offs | 86 | 34 | 1,098 | 974 | 648 | 1,218 | 2,305 | |
| Recoveries | ||||||||
| Commercial, financial and agricultural | (1) | (18) | (66) | (14) | (65) | (85) | (337) | |
| Real estate - construction and development | - | - | - | - | - | - | - | |
| Real estate - commercial and farmland | (4) | (3) | (6) | (3) | (4) | (13) | (210) | |
| Real estate - residential | (225) | (6) | (31) | (6) | (8) | (262) | (300) | |
| Consumer installment | (9) | (12) | (6) | (11) | (8) | (27) | (25) | |
| Total recoveries | (239) | (39) | (109) | (34) | (85) | (387) | (872) | |
| Net charge-offs | $ (153) | $ (5) | $ 989 | $ 940 | $ 563 | $ 831 | $ 1,433 | |
| Non-Performing Assets: | ||||||||
| Accruing loans delinquent 90 days or more | $ <br> - | $ - | $ - | $ - | $ - | $ - | $ - | |
| Nonaccrual loans | 15,270 | 14,930 | 8,941 | 8,900 | 3,842 | 15,270 | 3,842 | |
| Other real estate owned | 5,388 | 6,006 | 5,876 | 6,224 | 5,835 | 5,388 | 5,835 | |
| Total non-performing assets | $ <br> 20,658 | $ 20,936 | $ 14,817 | $ 15,124 | $ 9,677 | $ 20,658 | $ 9,677 | |
| SBA guaranteed portion of non-performing loans | $ <br> 4,076 | $ 3,513 | $ 2,889 | $ 4,129 | $ 3,309 | $ 4,076 | $ 3,309 | |
| Troubled debt restructuring | $ <br>1,629 | $ 1,667 | $ 694 | $ 697 | $ 679 | $ 1,629 | $ 679 | |
| Loans deferred under COVID-19 modifications | $ 436,591 | $ 707,841 | $ 24,308 | $ - | $ - | $ 436,591 | $ <br> - | |
| Asset Quality Ratios: | ||||||||
| Non-performing assets as a percent of total assets, excluding SBA guarantees | 0.53% | 0.57% | 0.43% | 0.40% | 0.24% | 0.53% | 0.24% | |
| Net charge-offs as a percent of average loans (annualized) | -0.02% | 0.00% | 0.18% | 0.17% | 0.10% | 0.05% | 0.09% | |
| Allowance for loan losses to total loans | 1.02% | 0.94% | 0.57% | 0.47% | 0.52% | 1.02% | 0.52% | |
| Loans by Risk Grade: | ||||||||
| Pass, not graded | $ <br> 574,954 | $ 653,943 | $ 630,827 | $ 611,160 | $ 568,101 | $ 574,954 | $ <br> 568,101 | |
| Pass Grade 1 - Highest Quality | 891 | 306 | 538 | 374 | 271 | 891 | 271 | |
| Pass Grade 2 - Good Quality | 375,861 | 323,512 | 28,583 | 27,855 | 25,852 | 375,861 | 25,852 | |
| Pass Grade 3 - Satisfactory Quality | 878,031 | 837,606 | 866,316 | 871,463 | 856,087 | 878,031 | 856,087 | |
| Pass Grade 4 - Pass | 660,630 | 662,534 | 664,124 | 652,464 | 666,958 | 660,630 | 666,958 | |
| Pass Grade 5 - Special Mention | 14,132 | 14,006 | 11,622 | 12,235 | 13,093 | 14,132 | 13,093 | |
| Grade 6 - Substandard | 19,210 | 19,597 | 10,528 | 10,496 | 11,023 | 19,210 | 11,023 | |
| Grade 7 - Doubtful | - | - | - | - | - | - | - | |
| Grade 8 - Loss | - | - | - | - | - | - | - | |
| Total loans | $ 2,523,709 | $ 2,511,504 | $ 2,212,538 | $ 2,186,047 | $ 2,141,385 | $ 2,523,709 | $ 2,141,385 | |
| Southern National Bancorp of Virginia, inc. (000's, except share data) | For the Three Month Period: | Year to date Period: | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |
| Average Balances: | 3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 3Q 2020 | 3Q 2019 | |
| Assets | ||||||||
| Interest-earning assets: | ||||||||
| Loans, net of deferred fees | $ <br>2,501,614 | $ 2,401,620 | $<br> 2,200,926 | $ 2,156,174 | $ 2,165,717 | $ 2,368,541 | $ <br> 2,160,863 | |
| Investment securities | 213,039 | 222,124 | 231,794 | 238,563 | 242,916 | 222,285 | 242,891 | |
| Other earning assets | 163,159 | 91,230 | 54,800 | 54,826 | 65,707 | 103,283 | 70,543 | |
| Total earning assets | 2,877,812 | 2,714,974 | 2,487,520 | 2,449,563 | 2,474,340 | 2,694,109 | 2,474,297 | |
| Other assets | 256,284 | 250,897 | 252,700 | 255,916 | 254,550 | 253,304 | 251,232 | |
| Total assets | $ 3,134,096 | $ 2,965,871 | $ 2,740,220 | $ 2,705,479 | $ 2,728,890 | $ 2,947,413 | $ 2,725,529 | |
| Liabilities and stockholders' equity | ||||||||
| Demand deposits | $ <br> 452,500 | $ 418,382 | $ 333,408 | $ 345,191 | $ 334,435 | $ 401,616 | $ <br> 328,790 | |
| Interest-bearing liabilities: | ||||||||
| NOW and other demand accounts | 451,583 | 404,700 | 379,531 | 374,328 | 362,564 | 412,083 | 355,511 | |
| Money market accounts | 504,887 | 488,648 | 469,651 | 464,471 | 456,492 | 487,791 | 430,546 | |
| Savings accounts | 176,305 | 163,574 | 147,697 | 145,532 | 144,266 | 162,575 | 145,964 | |
| Time deposits | 590,263 | 710,483 | 756,055 | 832,246 | 867,533 | 685,253 | 880,610 | |
| Total Deposits | 2,175,538 | 2,185,787 | 2,086,342 | 2,161,768 | 2,165,290 | 2,149,318 | 2,141,421 | |
| Borrowings | 547,182 | 371,836 | 251,830 | 144,664 | 173,867 | 390,856 | 203,469 | |
| Total Funding | 2,722,720 | 2,557,623 | 2,338,172 | 2,306,432 | 2,339,157 | 2,540,174 | 2,344,890 | |
| Other Liabilities | 25,869 | 24,495 | 21,781 | 34,398 | 22,385 | 24,055 | 21,347 | |
| Stockholders' equity | 385,507 | 383,753 | 380,267 | 374,649 | 367,349 | 383,184 | 359,292 | |
| Total liabilities and stockholders' equity | $ 3,134,096 | $ 2,965,871 | $ 2,740,220 | $ 2,705,479 | $ 2,728,890 | $ 2,947,413 | $ 2,725,529 | |
| Memo: SBA PPP loans | $ <br> 335,653 | $ 192,751 | $ - | $ - | $ - | $ 176,717 | $ <br> - | |
| Southern National Bancorp of Virginia, inc. (000's, except share data) | For the Three Month Period: | Year to date Period: | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |
| Net Interest Margin: | 3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 3Q 2020 | 3Q 2019 | |
| Loans | $ 27,266 | $ <br> 27,044 | $ 26,741 | $ 27,489 | $ 28,340 | $ 81,051 | $ <br> 84,692 | |
| Investment securities | 1,129 | 1,247 | 1,361 | 1,496 | 1,520 | 3,737 | 4,728 | |
| Other earning assets | 312 | 381 | 379 | 370 | 614 | 1,072 | 1,750 | |
| Total Earning Assets | 28,707 | 28,672 | 28,481 | 29,355 | 30,474 | 85,860 | 91,170 | |
| NIB DDA | ||||||||
| NOW and other demand accounts | 807 | 745 | 786 | 792 | 783 | 2,338 | 2,198 | |
| Money market accounts | 800 | 830 | 1,575 | 1,779 | 2,080 | 3,204 | 5,966 | |
| Savings accounts | 130 | 107 | 116 | 116 | 115 | 353 | 345 | |
| Time deposits | 2,620 | 3,464 | 4,026 | 4,799 | 5,023 | 10,111 | 14,608 | |
| Total Deposit Costs | 4,357 | 5,146 | 6,503 | 7,486 | 8,001 | 16,006 | 23,117 | |
| Other Borrowings | 1,352 | 1,053 | 1,463 | 1,200 | 1,458 | 3,868 | 5,122 | |
| Total Funding | 5,709 | 6,199 | 7,966 | 8,686 | 9,459 | 19,874 | 28,239 | |
| Net Interest Income | $ <br> 22,998 | $ 22,473 | $ 20,515 | $ 20,669 | $ 21,015 | $ 65,986 | $ 62,931 | |
| Memo: SBA PPP loan interest and fee income | $ <br> 2,233 | $ 512 | $ - | $ - | $ - | $ 2,745 | $<br> - | |
| Southern National Bancorp of Virginia, inc. (000's, except share data) | For the Three Month Period: | Year to date Period: | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Asset and Liability Yields | 3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 3Q 2020 | 3Q 2019 | |
| Loans | 4.34% | 4.53% | 4.89% | 5.07% | 5.21% | 4.57% | 5.25% | |
| Investments | 2.11% | 2.26% | 2.36% | 2.49% | 2.49% | 2.25% | 2.61% | |
| Short term assets | 0.76% | 1.68% | 2.78% | 2.68% | 3.72% | 1.39% | 3.33% | |
| Total Earning Assets | 3.97% | 4.25% | 4.60% | 4.77% | 4.90% | 4.26% | 4.94% | |
| NOW | 0.71% | 0.74% | 0.83% | 0.84% | 0.86% | 0.76% | 0.83% | |
| MMDA | 0.63% | 0.68% | 1.35% | 1.52% | 1.81% | 0.88% | 1.86% | |
| Savings | 0.29% | 0.26% | 0.32% | 0.32% | 0.32% | 0.29% | 0.32% | |
| CDs | 1.77% | 1.96% | 2.14% | 2.29% | 2.30% | 1.97% | 2.22% | |
| Interest Bearing Deposits | 1.01% | 1.17% | 1.49% | 1.64% | 1.74% | 1.22% | 1.71% | |
| (total cost of deposits) | 0.80% | 0.95% | 1.25% | 1.38% | 1.47% | 0.99% | 1.45% | |
| Other Funding | 0.98% | 1.14% | 2.34% | 3.30% | 3.34% | 1.32% | 3.37% | |
| Total Cost of Funding | 0.83% | 0.97% | 1.37% | 1.50% | 1.61% | 1.05% | 1.61% | |
| Net Interest Margin | 3.18% | 3.33% | 3.32% | 3.36% | 3.38% | 3.27% | 3.41% | |
| Net Interest Spread | 3.14% | 3.27% | 3.23% | 3.27% | 3.29% | 3.21% | 3.33% | |
| Memo: Yields without SBA PPP loans | ||||||||
| Loans | 4.60% | 4.83% | 4.77% | |||||
| Total Earning Assets | 4.14% | 4.49% | 4.41% | |||||
| Net Interest Margin | 3.25% | 3.50% | 3.36% | |||||
| Net Interest Spread | 3.31% | 3.52% | 3.37% |
Contacts:
Dennis J. Zember, Jr., President and CEO
Phone: 804-997-2406
Jeffrey L. Karafa, EVP and CFO
Phone: 804-997-2404
