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Posted July 25, 2009 | Copyright © The Northern Virginia Daily
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Treasury takes cut of First Bank profit
Second-quarter earnings decline
By James Heffernan -- email@example.com
STRASBURG -- First Bank's parent company reported second-quarter earnings of $237,000, but investors earned only a penny per share due to Uncle Sam's investment in the community bank.
After paying a dividend on its preferred stock to the U.S. Treasury, First National Corp.'s net income for the quarter totaled $17,000, compared to $1.4 million, or 48 cents a share, for the same quarter in 2008.
The company said the year-over-year decrease in earnings can be attributed to $575,000 in losses from declines in the value of certain foreclosed real estate, a $405,000 increase in its provision for loan losses and a one-time special assessment by the FDIC totaling $246,000.
Other factors included a decrease in net interest income and noninterest income, and an increase in noninterest expenses, the company said.
"While we were pleased with revenue during the quarter, we determined that another increase in the allowance for loan losses and recognition of estimated losses on foreclosed real estate holdings would be prudent," President and CEO Harry S. Smith said in a statement.
"We are continuing to focus efforts on working through problem loans, improving profitability and carefully managing capital during this recessionary period," he said.
When First Bank agreed in March to participate in the Treasury's Capital Purchase Program -- part of the broader Troubled Asset Relief Program -- Smith said the $13.9 million investment would help the bank "remain flexible and agile in meeting the needs of customers and the community, plus take advantage of potential growth opportunities."
First Bank announced earlier this month that it will purchase the StellarOne bank branch on West Reservoir Road in Woodstock by the end of the year, an acquisition expected to slightly dilute First National's earnings in 2010.
Still, First National continues to deliver value to its shareholders, as evidenced by its No. 29 ranking on U.S. Banker magazine's "Top 200 Community Banks" list published last month.
Meanwhile, United Bankshares Inc., the holding company for United Bank, turned in solid second-quarter results.
Earnings for the April-June quarter were $8.2 million, or 19 cents a share, down from $25.1 million, or 58 cents a share, for the same period last year. For the first half of 2009, United earned $37.8 million, or 87 cents a share, compared to $50.8 million, or $1.17 a share, in 2008.
"We are very pleased with the first half of 2009 financial performance results, especially in light of the very challenging economic times," Chairman and CEO Richard M. Adams said in a statement. "While earnings are down compared to last year, United's earnings compare very favorably to most regional banking companies."
United is one of the few larger U.S. banking companies that hasn't reduced or suspended dividends to its shareholders, Adams said, and the company chose not to take government funds.
United Bankshares, with dual headquarters in Washington and Charleston, W.Va., has branch offices in Winchester, Strasburg, Front Royal and Woodstock.
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