Alliance Bankshares Reports 3rd Quarter 2008 Results
Alliance Bankshares Corporation (NASDAQ: ABVA) today reported a third quarter loss of $2,371,000 Much of this loss can be attributed to $364,000 in direct OREO expenses and a $2,200,00 provision for loan losses
On a year to date basis, the organization had a net loss of $5,537,000. Despite the net loss, all regulatory capital ratios remain above the levels necessary to be considered a “well capitalized” institution.
“The exceptionally challenging economy has had an adverse effect on our Bank. Our internal risk management processes have done a good job at identifying and containing the risk in much of our loan portfolio. Like many other banks, our home equity products have seen higher than expected losses. The third quarter results reflect additional charge-offs and an expansion of the allowance for loan losses for the home equity portfolio. We have increased our allowance for loan losses up to 1.62% of loans outstanding as of September 30, 2008. Our nonperforming assets were $24.3 million as of the beginning of the year and have migrated down to $22.3 million as of September 30, 2008, with two additional properties selling in October reducing the total by another $3.5 million to $18.7 million. We feel many of the actions taken by the Federal Government over the past year and specifically in the past two months will have long-term positive benefits to the local real estate economy, our clients and Alliance. Historians many look back at 2008 as a deep recession that rivals the great depression and the strong capital position of Alliance will allow us the opportunity to continue to work with our clients and weather the storm,” said Thomas A. Young, Jr., President & CEO.
Total loans declined by approximately $25.3 million from September 30, 2007 to September 30, 2008. Total loans were $370.8 million as of September 30, 2008, however, exposure to construction and land loans has been reduced by nearly 25% in 2008, a trend we expect to continue. New loan demand is evident in some segments of income producing (leased) commercial properties and closed end, modest loan to value consumer second trusts. We expect commercial and consumer borrowers to remain cautious in the current economic environment despite government efforts to stimulate lending. Total assets were $552.8 million as of September 30, 2008 or $16.2 million less than the September 30, 2007 position of $569.0 million or $11.5 million greater than the December 31, 2007 level of $541.3 million. The 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 $9.4 million over the past year. Total non-interest bearing deposits were $74.2 million or 18.5% of total deposits as of September 30, 2008. Our non-interest bearing deposits increased by $8.0 million or 12.1%, 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 $401.4 million as of September 30, 2008 or $25.9 million greater than the September 30, 2007 level of $375.5 and $36.1 million greater than the December 31, 2007 level of $365.3 million.
During the quarter we had success in selling two residential properties out of the non-performing assets. In addition, two other nonperforming assets totaling $3.5 million were sold in October. We have expressions of interest in several of the OREO properties and we continue to work on achieving the proper balance between value and liquidation of OREO.
“As the U.S. and global economies have suffered record problems, our company has worked hard to manage through this challenging period. Our management team is working diligently to reduce the levels of non-performing assets and we anticipate the levels of non-performing assets to continue to drop over the coming quarters. Our management team is focused on balancing growth with conservative views surrounding credit and developing valuable long-term client relationships. It is in times of difficulty that true character is displayed,” said Harvey E. Johnson, Jr., Chairman of the Board.
Comments
By Alliance Bank Insurance on November 9th, 2008 at 4:36 am
On November 15, 2005, Alliance Bank acquired Danaher Insurance Agency, which we renamed Alliance Insurance Agency, Inc. (AIA). This full line insurance agency offers property and casualty insurance to small businesses and home, life and auto insurance, along with a broad array of employee benefits.
We expanded on our insurance agency line of business in December 2006 and again in April 2007 through the purchase of certain assets and liabilities of Battlefield Insurance Agency, Inc., Northern Virginia Insurance Agency, Inc. and the Thomas Agency, Inc. We operate these business activities as Alliance/Battlefield Insurance Agency, LLC, which is a wholly owned subsidiary of AIA, and Fredericksburg Insurance Group, which is a division of AIA.
For the year ended December 31, 2007 commission revenues were $3.3 million, compared to $1.6 million for the year ended December 31, 2006.
We believe the insurance product line is a natural adjunct to our core business operations. Additionally, this diversified revenue stream reduces the cyclical impact of other Bankshares revenue streams.