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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

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Southern National Bancorp of Virginia (NASDAQ: SONA) reported net income of $9.6 million for Q3 2020, up from $8.9 million in Q3 2019. The earnings per share rose to $0.40 basic. However, earnings for the first nine months of 2020 decreased to $14.3 million from $24.2 million year-over-year. Total revenue was $29.3 million, marking a 22% increase from last year. The dividend declared is $0.10 per share, indicating the 36th consecutive quarterly dividend. The company achieved a significant reduction in deferred loans, illustrating improved credit quality.

Positive
  • Net income for Q3 2020 is $9.6 million, up 7.9% from $8.9 million YoY.
  • Total revenue increased by 22% YoY to $29.3 million.
  • Earnings per share increased to $0.40 basic, up from $0.37 YoY.
  • Achieved a substantial reduction in deferred loans from $707.8 million to approximately $115 million.
  • Declared a dividend of $0.10 per share for shareholders.
Negative
  • Earnings for the first nine months decreased to $14.3 million from $24.2 million YoY.
  • Net interest margin declined to 3.18% from 3.37% YoY.
  • Noninterest expense increased to $15.3 million from $12.6 million YoY.

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

% of loans


3Q 2020

% of loans


Est 10/2020

% of loans

Balances not modified

$1,803,663

71.8%


$2,094,038

83.0%


$2,396,788

95.4%

Modified

707,841

28.2%


429,671

17.0%


115,113

4.6%

   Total

$2,511,504



$2,523,709



$2,511,901












Hotels


2Q 2020

% of loans


3Q 2020

% of loans


Est 10/2020

% of loans

Balances not modified

$43,518

16.5%


$131,545

49.6%


$225,745

84.5%

Modified

219,673

83.5%


133,933

50.4%


41,492

15.5%

   Total

$263,191



$265,478



$267,237












Restaurants


2Q 2020

% of loans


3Q 2020

% of loans


Est 10/2020

% of loans

Balances not modified

$32,390

32.0%


$45,798

43.0%


$105,254

98.7%

Modified

68,727

68.0%


60,824

57.0%


1,390

1.3%

   Total

$101,117



$106,622



$106,644


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

$            149,272

$              82,586

$              55,865

$              31,928

$              48,572


$            149,272

$              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

$         2,762,563

$         2,722,170

$         2,698,915


$         3,154,573

$         2,698,915












Liabilities and stockholders' equity









Demand deposits

$            467,581

$            447,605

$            338,095

$            339,153

$            343,686


$            467,581

$            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

$         3,154,573

$         3,072,171

$         2,762,563

$         2,722,170

$         2,698,915


$         3,154,573

$         2,698,915












Tangible common equity

$            280,861

$            273,206

$            270,018

$            268,096

$            261,144


$            280,861

$            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)

3Q 2020

2Q 2020

1Q 2020

4Q 2019

3Q 2019


3Q 2020

3Q 2019

Interest and dividend income

$              28,707

$              28,672

$              28,481

$              29,354

$              30,474


$              85,860

$              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 

$                 9,588

$                 4,709

$                      27

$                 8,964

$                 8,864


$              14,324

$              24,203












Non-GAAP adjustments to Net Income










Management Restructure

$                         -

$                         -

$                 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

$                 9,588

$                 4,709

$                 4,329

$                 8,964

$                 8,864


$              18,626

$              27,128























Pretax preprovision earnings

$              14,005

$              16,796

$                 8,861

$              10,232

$              11,375


$              38,586

$              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

$                   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

$                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)

$                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

4Q 2019

3Q 2019


3Q 2020

3Q 2019












Loans secured by real estate:










Commercial real estate - owner occupied

$            416,717

$            412,916

$            409,739

$            414,479

$            399,105


$            416,717

$            399,105


Commercial real estate - non-owner occupied

605,053

591,229

599,987

559,195

542,909


605,053

542,909


Secured by farmland

16,608

16,845

16,608

17,622

17,504


16,608

17,504


Construction and loan loans

120,066

122,086

115,144

150,750

162,458


120,066

162,458


Residential 1-4 family

581,237

612,247

624,119

604,777

574,935


581,237

574,935


Multi-family residential

107,672

100,685

90,652

82,055

82,626


107,672

82,626


Home equity lines of credit

97,727

101,218

106,820

109,006

112,801


97,727

112,801


     Total real estate loans

1,945,080

1,957,226

1,963,069

1,937,884

1,892,338


1,945,080

1,892,338












Commercial loans

216,711

204,160

223,433

221,447

220,707


216,711

220,707

SBA Paycheck Protection Program loans

348,022

335,612

-

-

-


348,022

-

Consumer loans


23,078

24,733

25,708

26,304

28,075


23,078

28,075


Gross loans

2,532,891

2,521,731

2,212,210

2,185,635

2,141,120


2,532,891

2,141,120












Plus (less) deferred costs (fees) on loans

(9,182)

(10,227)

328

412

265


(9,182)

265

Loan receivable, net of deferred costs (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 (Incurred Loss Model): 









Balance at beginning of period

$             (23,626)

$             (12,721)

$             (10,260)

$             (11,200)

$             (11,613)


$             (10,260)

$             (12,283)

Provision for loan losses

(2,000)

(10,900)

(3,450)

-

(150)


(16,350)

(350)












Charge-offs


86

34

1,098

974

648


1,218

2,305

Recoveries


(239)

(39)

(109)

(34)

(85)


(387)

(872)

  Net charge-offs


(153)

(5)

989

940

563


831

1,433












Ending balance


$             (25,779)

$             (23,626)

$             (12,721)

$             (10,260)

$             (11,200)


$             (25,779)

$             (11,200)

Cummulative reconciliation to CECL (Not yet adopted):









CECL adoption impact on acquired loans

$               (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

$                    (55)

$                    (55)

$                    (55)

$                    (55)

$                    (55)


$                    (55)

$                    (55)

Cummulative reconciliation to CECL (Not yet adopted):









CECL adoption impact on retained earnings

$                  (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)


 

 

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

$                      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

$                         -

$                         -

$                         -

$                         -

$                         -


$                         -

$                         -

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

$              20,658

$              20,936

$              14,817

$              15,124

$                 9,677


$              20,658

$                 9,677


SBA guaranteed portion of non-performing loans

$                 4,076

$                 3,513

$                 2,889

$                 4,129

$                 3,309


$                 4,076

$                 3,309












Troubled debt restructuring

$                 1,629

$                 1,667

$                    694

$                    697

$                    679


$                 1,629

$                    679

Loans deferred under COVID-19 modifications

$            436,591

$            707,841

$              24,308

$                         -

$                         -


$            436,591

$                         -












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

$            574,954

$            653,943

$            630,827

$            611,160

$            568,101


$            574,954

$            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 

$         2,501,614

$         2,401,620

$         2,200,926

$         2,156,174

$         2,165,717


$         2,368,541

$         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

$            452,500

$            418,382

$            333,408

$            345,191

$            334,435


$            401,616

$            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

$            335,653

$            192,751

$                         -

$                         -

$                         -


$            176,717

$                         -

 

 

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

$              27,044

$              26,741

$              27,489

$              28,340


$              81,051

$              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

$              22,998

$              22,473

$              20,515

$              20,669

$              21,015


$              65,986

$              62,931












Memo:  SBA PPP loan interest and fee income

$                 2,233

$                    512

$                         -

$                         -

$                         -


$                 2,745

$                         -

 

 

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          

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/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--301159333.html

SOURCE Southern National Bancorp of Virginia, Inc.

FAQ

What were Southern National's earnings for Q3 2020?

Southern National reported net income of $9.6 million for Q3 2020.

How much did Southern National declare as quarterly dividend?

The company declared a quarterly dividend of $0.10 per share.

What is the impact of deferred loans on Southern National's financials?

Deferred loans decreased significantly from $707.8 million to approximately $115 million, indicating improved credit quality.

What was the total revenue for Southern National in Q3 2020?

Total revenue for Q3 2020 was $29.3 million, a 22% increase compared to Q3 2019.

How did Southern National's year-to-date earnings compare to last year?

Earnings for the first nine months of 2020 were $14.3 million, down from $24.2 million during the same period last year.

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