Alliance Bankshares Reports 2nd Quarter 2008 Results
Alliance Bankshares Corporation (NASDAQ - ABVA) today reported a second quarter loss of $1,088,000 which is a $990,000 improvement over the first quarter 2008 loss of $2,078,000
Much of this loss can be attributed to $566,000 in direct OREO expenses and a $610,000 increase in our loan loss provision. On a year to date basis, the organization had a net loss of $3,166,000. Despite the net loss, all regulatory capital ratios remain above the levels necessary to be considered a “well capitalized” institution.
“Needless to say, our management team is less than pleased with the performance levels as they are not reflective of our typical performance or long term expectations, however, we believe the second quarter results reflect several bright spots as we continue to deal with this very unusual and challenging real estate recession. During the quarter, we recorded a fair value gain of $166,000 which is a significant improvement over the first quarter fair value adjustment. This is the result of a restructuring of our balance sheet which has placed the company in a more balanced position relative to fair value. In addition, we sold several pieces of other real estate owned (OREO) which led to a reduction of nonperforming assets by $2.6MM and we have seen a more stable credit quality picture. Lastly, we continue to look closely at all of our expense areas and are making difficult decisions where necessary,” said Thomas A. Young, Jr., President & CEO.
Total loans declined by approximately $17.4 million from June 30, 2007 to June 30, 2008. Total loans were $372.2 million as of June 30, 2008. Total assets were $569.6 million as of June 30, 2008 or $11.5 million less than the June 30, 2007 position of $581.1 million or $28.3 million greater than the December 31, 2007 level of $541.3 million. The modest year over year reduction in assets was primarily the result of the previously reported plan to reduce our investment portfolio and our exposure to mortgage related securities.
Our non-interest bearing deposits decreased by $24.1 million over the past year. Total non-interest bearing deposits were $89.2 million or 20.9% of total deposits as of June 30, 2008. Our non-interest bearing deposits increased by $23 million or 34.8%, over the December 31, 2007 level of $66.2 million. The growth is coming from both existing clients and the expansion of our title and escrow services client base which has led to significant amount of new accounts during 2008. Our total deposits grew to $426.3 million as of June 30, 2008 or $37.0 million greater than the June 30, 2007 level of $389.3 and $61.0 million greater than the December 31, 2007 level of $365.3 million.
Total non-performing assets amounted to $21.9 million as of June 30, 2008 which is down $2.7 million from the March 31, 2008 level of $24.6 million and $2.4 million down from the December 31, 2007 level of $24.3 million. During the quarter we had success in moving two residential properties out of the non-performing assets. The attached schedule reflects the individual properties in the non-performing status. We have expressions of interest in several of the OREO properties and we expect potential contracts in the near term. We recognize several of the development projects may have longer resolution time horizons due to the current real estate slowdown.
“The board and management remain committed to the vision of performance improvement. The management team has taken a variety of proactive steps over the year to improve core performance. As the newspapers, newscasts and the internet reflect each day, this is one of the toughest economic cycles America has faced in a long time. Our management team is working diligently to reduce the levels of non-performing assets as fast as can be reasonably expected. We anticipate the levels of non-performing assets to drop in a systematic fashion over the coming quarters. Our base franchise is an excellent banking company located in one of the key metropolitan areas in the United States. As the economy improves the metropolitan Washington, DC area we will clearly benefit. The support of shareholders during these trying times is greatly appreciated, said Harvey E. Johnson, Jr., Chairman of the Board.
Comments
By Alliance Bank Mortgage Banking on November 9th, 2008 at 4:30 am
We diversified our core banking revenue stream with the addition of our mortgage banking subsidiary, AHF, which opened in July 2001. In December 2006, Bankshares announced its intentions to exit the mortgage banking operations conducted by AHF. Our mortgage banking services operate today as a smaller division of Alliance Bank or ABMD.
Through ABMD or AHF, we originated conforming and non-conforming home mortgages in the greater Washington, D.C. metropolitan area. As part of our overall risk management strategy, loans were sold on a correspondent basis to major national mortgage banking or financial institutions, and servicing rights are sold with the loans.
Loan sale gains were $1.1 million in 2007, compared to $4.1 million in 2006 and $3.0 million in 2005. ABMD originated $56.3 million in loans in 2007 compared to AHF originating $199.6 million in mortgage loans in 2006 and $174.3 million in 2005.