Southern National Bancorp
Apr 28, 2016

Southern National Bancorp of Virginia Inc. reports earnings for the first quarter of 2016 of $2.6 million, up 28% from the first quarter the prior year, and declares a dividend of $.08

MCLEAN, Va., April 28, 2016 (GLOBE NEWSWIRE) -- Southern National Bancorp of Virginia Inc. (NASDAQ:SONA), the holding company for Sonabank, announced today that net income for the quarter ended March 31, 2016 was $2.6 million compared to $2.0 million during the quarter ended March 31, 2015.

The Board of Directors declared a dividend of $.08 per share payable on May 27, 2016 to shareholders of record on May 16, 2016. This is our eighteenth consecutive quarterly dividend.

Overview

Net Interest Income

During the first quarter of 2016, net interest income before the provision for loan losses was $9.7 million, up from $8.9 million during the first quarter of 2015. Average loans during the first quarter of 2016 were $843.2 million compared to $713.6 million during the same period last year. The net interest margin was 4.06% in the first quarter of 2016, down from 4.30% in the first quarter of 2015 and down slightly from 4.07% in the fourth quarter of 2015.The loan discount accretions on our three acquisitions were $551 thousand in the first quarter of 2016 compared to $728 thousand in the same quarter last year.

Before taking the discount accretion related to the three acquisitions into account, the net interest margin was 3.83% in the first quarter of 2016 compared to 3.95% in the first quarter of 2015.  

Noninterest income

Noninterest income was $511 thousand during the first quarter of 2016, compared to $405 thousand during the same quarter of 2015. Non-interest income during the first quarter of 2016 included income attributable to our 44% ownership of STM of $80 thousand, compared to a loss of $16 thousand in the same quarter last year.

Noninterest Expense

Noninterest expense was $6.0 million for the first quarter of 2016 compared to $5.8 million for the first quarter of 2015. During the first quarter of 2016 we sold two real estate owned (OREO) properties recognizing gains of $155 thousand, and we recognized impairment in the amount of $275 thousand on three OREO properties resulting in a net loss of $120 thousand. This compared to a loss on OREO of $320 thousand for the first quarter of 2015 as a result of recognizing impairment on two OREO properties.  Employee compensation increased by $325 thousand compared to the first quarter of 2015, due to increases in the normal course of business.

The efficiency ratio improved from 58.95% during the quarter ended March 31, 2015 to 57.94% during the first quarter of 2016.  

Loan Portfolio

Net loan growth in the first quarter of 2016 was a robust $41.2 million. $11.9 million of that amount were residential mortgages purchased for our portfolio from Southern Trust Mortgage.

The composition of our loan portfolio consisted of the following at March 31, 2016 and December 31, 2015:

         
 Covered Non-coveredTotal  Covered Non-coveredTotal  
  Loans (1) Loans Loans  Loans (1) Loans Loans 
 March 31, 2016 December 31, 2015 
Loans secured by real estate:         
Commercial real estate - owner-occupied $- $138,773 $138,773  $- $141,521 $141,521  
Commercial real estate - non-owner-occupied  -  282,464  282,464   -  256,513  256,513  
Secured by farmland  -  566  566   -  578  578  
Construction and land loans  -  69,574  69,574   -  67,832  67,832  
Residential 1-4 family  12,689  180,038  192,727   12,994  165,077  178,071  
Multi- family residential  -  31,373  31,373   -  25,501  25,501  
Home equity lines of credit  20,470  12,781  33,251   21,379  13,798  35,177  
Total real estate loans  33,159  715,569  748,728   34,373  670,820  705,193  
         
Commercial loans  -  122,939  122,939   -  124,985  124,985  
Consumer loans  -  1,118  1,118   -  1,366  1,366  
Gross loans  33,159  839,626  872,785   34,373  797,171  831,544  
         
Less deferred fees on loans  -  (2,146) (2,146)  -  (2,119) (2,119) 
Loans, net of deferred fees $33,159 $837,480 $870,639  $34,373 $795,052 $829,425  
         
(1) Covered Loans were acquired in the Greater Atlantic transaction and are covered under an FDIC loss-share agreement. The agreement covering non-single family loans expired in December 2014.
 
         

Loan Loss Provision/Asset Quality

The loan loss provision for the quarter ended March 31, 2016 was $625 thousand, compared to $525 thousand for the same period last year.  Charge offs for the three months ended March 31, 2016 were $367 thousand, compared to $355 thousand for the same period in 2015.

Non-covered OREO as of March 31, 2016 was $9.8 million compared to $10.1 million as of the end of the previous year. Non-covered nonaccrual loans were $633 thousand (excluding $2.3 million of loans fully covered by SBA guarantees) at March 31, 2016 compared to $632 thousand (excluding $3.5 million of loans fully covered by SBA guarantees) at the end of last year.  The ratio of non-covered non-performing assets (excluding the SBA guaranteed loans) to non-covered assets decreased from 1.07% at the end of 2015 to 0.99% at March 31, 2016. The portions of these SBA loans that were unguaranteed were charged off.

Southern National Bancorp of Virginia's allowance for loan losses as a percentage of non-covered total loans at March 31, 2016 was 1.04%, compared to 1.06% at the end of 2015.  Management believes the allowance is adequate at this time but continues to monitor trends in environmental factors which may potentially affect future losses.

Securities Portfolio
Investment securities, available for sale and held to maturity, were $102.6 million at March 31, 2016 up from $101.0 million at December 31, 2015. 

Securities in our investment portfolio as of March 31, 2016 were as follows:

During the first quarter of 2016, we purchased $11.0 million of callable agency securities. Three callable agency securities in the amount of $7.9 million were called.

Deposits

Total deposits were $857.5 million at March 31, 2016 compared to $825.3 million at December 31, 2015. Demand deposits and NOW accounts were $112.8 million at March 31, 2016 up from $111.8 million at December 31, 2015.

Stockholders' Equity

Total stockholders' equity increased from $119.6 million at December 31, 2015 to $121.2 million at March 31, 2016 as a result of the retention of earnings. Our Tier 1 Risk Based Capital Ratios were 12.79% and 12.65% for Southern National Bancorp of Virginia, Inc. and Sonabank, respectively, as of March 31, 2016.

Southern National Bancorp of Virginia, Inc. is a bank holding company with assets of $1.1 billion at March 31, 2016.  Sonabank provides a range of financial services to individuals and small and medium sized businesses. Sonabank has fifteen branches in Virginia, located in Fairfax County (Reston, McLean and Fairfax), in Charlottesville, Warrenton (2), Middleburg, Leesburg (2), South Riding, Front Royal, New Market, Haymarket,  Richmond and Clifton Forge, and eight branches in Maryland, in Rockville, Shady Grove, Frederick, Bethesda, Upper Marlboro, Brandywine, Owings and Huntingtown.

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 Bancorp of Virginia, Inc. 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 Bancorp of Virginia, Inc. 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) filed by Southern National Bancorp of Virginia, Inc. You should consider such factors and not place undue reliance on such forward-looking statements. No obligation is undertaken by Southern National Bancorp of Virginia, Inc. 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.  
McLean, Virginia  
        
Condensed Consolidated Balance Sheets  
(Unaudited)  
(in thousands)      
   March 31, December 31,  
    2016   2015   
Assets      
Cash and cash equivalents $  34,124  $  30,336   
Investment securities-available for sale    3,871     4,209   
Investment securities-held to maturity    98,727     96,780   
Stock in Federal Reserve Bank and Federal Home Loan Bank    7,589     6,929   
Loans receivable, net of unearned income    870,639     829,425   
Allowance for loan losses    (8,690)    (8,421)  
 Net loans    861,949     821,004   
Intangible assets    11,545     11,607   
Bank premises and equipment, net    8,744     8,882   
Bank-owned life insurance    23,300     23,126   
FDIC indemnification asset    2,705     2,922   
Other assets    31,716     30,312   
 Total assets $  1,084,270  $  1,036,107   
        
Liabilities and stockholders' equity      
Demand deposits and NOW accounts $  112,840  $  111,849   
Money market accounts    126,578     131,731   
Savings accounts    51,244     49,939   
Time deposits    566,876     531,775   
  Total deposits    857,538     825,294   
Securities sold under agreements to repurchase     11,045     10,381   
Federal Home Loan Bank advances - short term    72,000     59,000   
Federal Home Loan Bank advances - long term    15,000     15,000   
Other liabilities    7,531     6,796   
 Total liabilities    963,114     916,471   
Stockholders' equity    121,156     119,636   
 Total liabilities and stockholders' equity $  1,084,270  $  1,036,107   
        
        
Condensed Consolidated Statements of Income 
(Unaudited) 
 (in thousands)      
   For the Quarters Ended  
   March 31,  
    2016   2015   
        
        
Interest and dividend income $  11,673  $  10,435   
Interest expense    1,962     1,508   
 Net interest income    9,711     8,927   
Provision for loan losses    625     525   
 Net interest income after provision for loan losses    9,086     8,402   
Account maintenance and deposit service fees    223     222   
Income from bank-owned life insurance    174     150   
Equity income from mortgage affiliate    80     (16)  
Other     34     49   
 Noninterest income    511     405   
Employee compensation and benefits    3,128     2,803   
Occupancy expenses    998     1,081   
FDIC assessments    146     172   
Amortization of FDIC indemnification asset    216     129   
Net (gain) loss on other real estate owned    120     320   
Other expenses    1,435     1,316   
 Noninterest expense    6,043     5,821   
 Income before income taxes    3,554     2,986   
Income tax expense    989     982   
 Net income $  2,565  $  2,004   
        
        
        
        
        
        
Financial Highlights 
(Unaudited) 
(Dollars in thousands except per share data)      
        
        
        
   For the Quarters Ended  
   March 31,  
    2016   2015   
        
Per Share Data:      
Earnings  per share - Basic $  0.21  $  0.16   
Earnings  per share - Diluted $  0.21  $  0.16   
Book value per share $  9.89  $  9.42   
Tangible book value per share $  8.95  $  8.46   
Weighted average shares outstanding - Basic    12,237,058     12,217,244   
Weighted average shares outstanding - Diluted    12,402,299     12,341,346   
Shares outstanding at end of period    12,244,943     12,217,770   
        
Selected Performance Ratios and Other Data:      
Return on average assets  1.00%  0.88%  
Return on average equity  8.56%  7.08%  
Yield on earning assets  4.88%  5.03%  
Cost of funds  0.95%  0.84%  
Net interest margin  4.06%  4.30%  
Efficiency ratio (1)  57.94%  58.95%  
Net charge-offs (recoveries) to average loans  0.04%  0.03%  
Amortization of intangibles $  62  $  65   
        
        
   As of  
   March 31, December 31,  
    2016   2015   
        
Stockholders' equity to total assets  11.17%  11.55%  
Tier 1 risk-based capital ratio  12.79%  13.13%  
Intangible assets:      
 Goodwill $  10,514  $  10,514   
 Core deposit intangible    1,031     1,093   
   Total $  11,545  $  11,607   
        
Non-covered loans and other real estate owned (2):      
Nonaccrual loans (3) $  2,904  $  4,173   
Loans past due 90 days and accruing interest    -      -    
Other real estate owned    9,762     10,096   
Total nonperforming assets  $  12,666  $  14,269   
Allowance for loan losses to total non-covered  loans  1.04%  1.06%  
Nonperforming assets excluding SBA guaranteed loans to total       
  non-covered assets  0.99%  1.07%  
        
(1) Excludes gains and write-downs on OREO, gains on sale of loans, gains/losses on sale of securities and impairment losses recognized in earnings.  
(2) Applies only to non-covered Sonabank loans and other real estate owned.    
(3) Nonaccrual loans include SBA guaranteed amounts totaling $2.3 million and $3.5 million at March 31, 2016 and December 31, 2015, respectively.
        
Contact: R. Roderick Porter, President 
Phone: 202-464-1130 ext. 2406
Fax: 202-464-1134
Southern National Bancorp, NASDAQ Symbol SONA
Website: www.sonabank.com