Virginia Partners Bank Reports Results of Operations for the Third Quarter 2018

FREDERICKSBURG, VA / ACCESSWIRE / October 23, 2018 / Virginia Partners Bank (OTCQX: PTRS) (the 'Bank') reported net income of $827 thousand for the three months ended September 30, 2018, a 79.5% increase when compared to net income of $461 thousand for the same period in 2017. For the nine months ended September 30, 2018, the Bank reported net income of $1.9 million, a 50.1% increase when compared to net income of $1.3 million for the same period in 2017. The increase in net income for the three months ended September 30, 2018, as compared to the same period in 2017, was driven by increases in net interest income, due primarily to loan and deposit growth, and noninterest income, lower provision for loan losses, and partially offset by higher noninterest expense and income tax expense. The increase in net income for the nine months ended September 30, 2018, as compared to the same period in 2017, was driven by increases in net interest income, due primarily to loan and deposit growth, and noninterest income, lower income tax expense, and partially offset by higher provision for loan losses and noninterest expense. The Bank's results of operations for the three and nine months ended September 30, 2018 were directly affected by the inclusion of Johnson Mortgage Company, LLC, which the Bank acquired a 51% ownership interest in effective January 1, 2018. In addition, the Bank's results of operations for the three and nine months ended September 30, 2018 were positively affected by the enactment of the 'Tax Cuts and Jobs Act' on December 22, 2017. The Tax Cuts and Jobs Act, which permanently lowered the federal corporate income tax rate from 35% to 21%, resulted in the Bank incurring less income tax expense in the nine months ended September 30, 2018 when compared to the same period of 2017.

Total assets as of September 30, 2018 were $420.1 million, an increase of $39.6 million or 10.4% from September 30, 2017. Over the same period, gross loans held for investment increased 16.9% to $322.7 million, total deposits increased 10.9% to $344.5 million including growth in non-interest bearing deposits of 21.2% to $55.9 million, and total equity increased 13.3% to $41.6 million. In addition, due to the strong growth in core deposits, the Bank has been able to reduce its utilization of wholesale time deposits and FHLB advances. As of September 30, 2018, wholesale time deposits and FHLB advances were $21.7 million and $25.1 million, respectively, which represent decreases of 16.9% and 19.0%, respectively, from September 30, 2017. All of the Bank's capital ratios continue to exceed regulatory requirements, with total risk-based capital substantially above well-capitalized regulatory requirements.

'I am pleased with our Bank's results during the first nine months of 2018 and the continued bank-wide focus to grow our core community banking business and improve profitability,' said Lloyd B. Harrison, III, Virginia Partners Bank President & CEO. 'Net income for the third quarter of 2018 improved by $214 thousand or 34.9% when compared to the second quarter of 2018. During the third quarter of 2018 we generated loan growth of 2.2% bringing our total loan growth over the first nine months of 2018 to 11.0%, which outpaced our internal targets. We are very excited about the growth activity we are seeing in our existing markets and our current pipeline of opportunities. We believe this growth activity, combined with our emphasis on total relationship banking, positions us to deliver solid growth throughout the balance of 2018. We remain committed to the continued evaluation and implementation of strategies that focus on achieving scale in the community bank space, reducing noninterest expenses and increasing profitability going forward, which we believe will be the keys to our long term success and increasing shareholder value.'

About Virginia Partners Bank

Virginia Partners Bank, headquartered in Fredericksburg, Virginia, was founded in 2008 and has three branches in Fredericksburg, Virginia. In Maryland, the Bank trades under the name Maryland Partners Bank (a division of Virginia Partners Bank), and operates a full service branch and commercial banking office in La Plata, Maryland and a Loan Production Office in Annapolis, Maryland. Virginia Partners Bank also owns a controlling stake in Johnson Mortgage Company, LLC, which is a residential mortgage company headquartered in Newport News, Virginia, with a branch office in Williamsburg, Virginia. For more information, visit www.vapartnersbank.com.

For further information, please contact Lloyd B. Harrison, III, President & CEO, at 540-899-2234.

Cautionary Statement Regarding Forward-Looking Statements

This earnings release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact and are based on assumptions and describe future plans, strategies, and expectations of management, and are inherently subject to risks and uncertainties. These statements are generally identifiable by use of words such as 'believe,' 'expect,' 'intend,' 'anticipate,' 'estimate,' 'project,' 'may,'will' or similar expressions. Forward-looking statements in this earnings release may include, without limitation, statements regarding anticipated future financial performance, funding sources including loan portfolio composition, deposit and loan growth, adequacy of the allowance for loan losses and future provisions for loan losses, investment securities portfolio composition and future performance, strategic business initiatives and future tax savings or other effects of the Tax Cuts and Jobs Act. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the effects of or changes in: management's efforts to maintain asset quality and control operating expenses; the quality, composition and growth of the loan and investment securities portfolios; interest rates; and general economic and financial market conditions. These risks and uncertainties should be considered in evaluating forward-looking statements contained herein. We have based our forward-looking statements on management's beliefs, assumptions, expectations and projections based on information available as of the date of this earnings release. You should not place undue reliance on such statements, because the beliefs, assumptions, expectations and projections about future events on which they are based may, and often do, differ materially from actual events and, in many cases, are outside of our control. We undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

Virginia Partners Bank
Balance Sheet
Unaudited

		September 30, 2018				September 30, 2017
ASSETS
Cash and due from banks		$	3,715,184			$	4,021,612
Federal funds sold			-				1,553,000
Interest bearing deposits in other banks			2,000,000				2,000,000
Investment securities - taxable			70,614,369				73,942,501
Investment securities - tax-exempt			7,821,264				11,579,369
Loans held for sale			2,407,007				-
Loans, net of unearned income			322,735,098				276,052,442
Less: Allowance for loan losses			(3,981,591	)			(3,416,518	)
Premises and equipment, net			3,853,254				4,021,772
Accrued interest receivable			1,102,253				982,103
Deferred income taxes, net			1,628,417				1,608,822
Bank owned life insurance			7,552,280				7,329,756
Other assets			612,244				747,500
Total Assets		$	420,059,779			$	380,422,359
LIABILITIES
Non-interest bearing deposits		$	55,896,213			$	46,103,566
Interest bearing demand deposits			17,476,157				17,499,659
Savings and money market deposits			114,068,148				90,836,210
Time deposits - retail			135,329,731				129,949,032
Time deposits - wholesale			21,745,000				26,163,000
Total deposits			344,515,249				310,551,467
FHLB advances			25,100,000				31,000,000
Federal funds purchased			5,931,000				-
Other borrowings			1,682,476				1,505,080
Accrued expenses and other liabilities			1,269,369				690,502
Total Liabilities			378,498,094				343,747,049
EQUITY
Common stock			19,785,905				17,104,145
Capital surplus			18,569,435				16,482,120
Retained earnings			2,810,211				2,028,691
Noncontrolling interest in consolidated subsidiaries			590,781				-
Accumulated other comprehensive loss			(2,128,259	)			(227,716	)
Net income			1,933,612				1,288,070
Total Equity			41,561,685				36,675,310
Total Liabilities and Equity		$	420,059,779			$	380,422,359

Virginia Partners Bank
Statement of Income
Unaudited

		For the Quarter Ending September 30,								For the Nine Months Ending September 30,
		2018				2017				2018				2017
INTEREST INCOME
Interest on loans		$	3,931,441			$	3,194,592			$	11,072,233			$	9,116,592
Fees on loans			131,535				124,743				380,670				309,882
Interest on federal funds sold			2,894				6,756				24,075				15,838
Interest on deposits with banks			20,527				13,572				46,415				34,331
Investment securities - taxable			464,761				415,716				1,336,321				1,385,922
Investment securities - tax-exempt			42,376				62,117				127,129				179,863
Total interest income			4,593,534				3,817,496				12,986,843				11,042,428
INTEREST EXPENSE
Interest bearing demand deposits			9,773				8,996				27,843				25,163
Savings and money market deposits			159,963				91,675				433,219				268,087
Time deposits - retail			572,024				488,139				1,621,367				1,287,768
Time deposits - wholesale			88,901				107,061				273,053				286,400
Total interest expense on deposits			830,661				695,871				2,355,482				1,867,418
FHLB advances			119,520				114,276				316,393				360,228
Interest on federal funds purchased			3,591				1,694				5,375				3,527
Interest on other borrowings			44,813				27,788				116,472				83,821
Total interest expense			998,585				839,629				2,793,722				2,314,994
Net interest income			3,594,949				2,977,867				10,193,121				8,727,434
Provision for loan losses			66,600				110,000				379,600				200,845
Net interest income after provision			3,528,349				2,867,867				9,813,521				8,526,589
NONINTEREST INCOME
Service charges and fees			84,910				71,294				237,623				213,370
Securities (losses) gains, net			(8,114	)			-				(20,614	)			5,384
(Loss) gain on the sale of assets			-				(996	)			-				46,938
Mortgage banking income			325,507				23,974				770,660				55,172
Earnings on bank owned life insurance policies			55,455				59,760				165,288				138,881
Other noninterest income			32,287				29,625				61,359				46,118
Total noninterest income			490,045				183,657				1,214,316				505,863
NONINTEREST EXPENSE
Salaries and employee benefits			1,676,491				1,243,622				4,798,180				3,781,434
Occupancy and equipment expense			247,266				232,285				753,212				692,225
Professional services			169,068				182,308				549,806				501,187
Data processing			333,450				298,943				938,700				926,233
Promotion and marketing			50,875				30,274				166,825				125,824
FDIC assessment			35,000				44,500				112,400				98,614
Other operating expense			482,126				375,755				1,362,045				1,096,856
Total noninterest expense			2,994,276				2,407,687				8,681,168				7,222,373
Consolidated income before income taxes			1,024,118				643,837				2,346,669				1,810,079
Income tax expense			206,068				182,758				459,275				522,009
Consolidated net income		$	818,050			$	461,079			$	1,887,394			$	1,288,070
Net loss attributable to noncontrolling interest			9,417				-				46,218				-
Net income		$	827,467			$	461,079			$	1,933,612			$	1,288,070

SOURCE: Virginia Partners Bank

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