Wednesday, July 30, 2008
StellarOne says it met quarter's expectations, cut jobs
The Virginia-based bank said it earned $6.1 million, up from this time last year.
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StellarOne, a Virginia-based bank created in May, reported Tuesday that its second-quarter results were in line with the bank's expectations, considering "continuing weakness in the economy."
It acknowledged, without revealing specifics, that there have been layoffs related to the merger that launched the new bank.
StellarOne was formed by the controversial merger of FNB Corp. of Christiansburg, Virginia Financial Group of Culpeper and banking subsidiaries of each. Its holding company, StellarOne Corp., is headquartered in Charlottesville.
Specifically, for the second quarter ended June 30, StellarOne reported earnings of $6.1 million, up more than 35 percent from the $4.5 million reported for second-quarter 2007.
StellarOne's second-quarter 2008 numbers include operating results from both the former VFG and FNB, which account, in part, for the increase in earnings for the period. However, only the former VFG's results are used for the comparison with second-quarter 2007.
However, even though income jumped during the second quarter, income per share decreased from 42 cents per share to 27 cents per share. FNB shareholders received about 11 million shares of StellarOne stock, roughly doubling the total outstanding.
Nonrecurring merger expenses during the second quarter were $929,000. In an e-mail, Jeffrey Farrar, StellarOne's executive vice president and chief financial officer, said the bulk of those expenses were marketing related, "with no relationship to personnel changes."
He added that "no further merger-related layoffs are anticipated." He declined to comment further. Earlier this year, StellarOne reported it had 965 employees. Farrar said current full-time employment is 901.
Merger opponents had expressed concerns about job loss.
The new bank said its ratio of problem loans as a percentage of total assets improved during the second quarter, amounting to .86 percent compared with 1.02 percent for the first quarter of 2008. However, when compared with second-quarter 2007, the ratio increased from .20 percent to .86 percent.
The bank cited tough conditions in real estate markets and turmoil in the banking sector as among the factors affecting the economy and StellarOne's second quarter. Farrar also cited market conditions as the factor causing across-the-board drops, quarter to quarter, in four performance ratios -- return on average assets, return on average equity, return on average realized equity and net interest margin.
In a news release, O.R. Barham, president and chief executive officer, said StellarOne "will continue to be vigilant in our monitoring and provisioning of our loan portfolio" during the remainder of 2008.
For the first six months of 2008, the bank's profit was $8.2 million, down about 4 percent for the same period in 2007. The six-month results include FNB numbers beginning Feb. 28.
StellarOne Bank said it has 64 branch offices, serves about 84,000 households, has four loan-production offices and more than 80 ATMs. It serves markets throughout the New River Valley, Shenandoah Valley, and central and north central Virginia. StellarOne says it is the largest independent commercial bank based in Virginia.
On Tuesday, StellarOne's stock, which trades on the Nasdaq exchange, closed at $17.25, up 19 cents.
