Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. VALLEY FINANCIAL CORP /VA/ (921590) 10-Q published on May 14, 2015 at 10:57 am
Reporting Period: Mar 30, 2015
amendments to have a material effect on its financial statements.
In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements.
In April 2015, the FASB issued guidance that will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This update affects disclosures related to debt issuance costs but does not affect existing recognition and measurement guidance for these items. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.
In comparison to the linked quarter, net income available to common shareholders increased $392,000 or 26% while diluted earnings per share increased $0.08 or 26%. Absent the merger related expenses, securities gains and other nonrecurring items, net income available to common shareholders would have increased $83,000 or 5% as compared to the fourth quarter 2014. The following table is a comparison to prior periods after excluding merger related transaction costs, securities gains and other nonrecurring items recorded in the periods:
In comparison to the fourth quarter of 2014, noninterest expense decreased by $568,000 or 9%, driven by a $337,000 or 77% decrease in merger transaction costs and a $164,000 or 46% decrease in foreclosed asset expense (driven by reduced impairment charges). Compensation expense decreased 99,000 or 3% from the fourth quarter of 2014 due to lower incentive and bonus accruals as a result of the pending merger. The Company's efficiency ratio for the first quarter of 2015 was 66.95% as compared to 73.04% for the fourth quarter of 2014. (The efficiency ratio is computed by dividing noninterest expenses by
the sum of fully taxable equivalent net interest income and fully taxable equivalent noninterest income, less gains (losses) on the sale of securities). Excluding merger transaction costs, the efficiency ratio would have been 65.71% in the first quarter of 2015 and 67.80% in the fourth quarter of 2014. The improved efficiency ratio is due to lower noninterest expenses and higher noninterest income.
In comparison to the three months ended March 31, 2014, noninterest expense increased $209,000 or 4%. Excluding merger transaction costs, noninterest expenses grew just $107,000 or 2%. Compensation expense increased $46,000 or 1% due to equity increases to all employees on January 1, 2015, offset by lower incentive and bonus accruals. The 7% or $27,000 increase in data processing expense was driven by higher debit card transactions and internet banking processing costs while the 21% or $33,000 increase in foreclosed asset expenses is due to development costs on several of our OREO properties. The 17% or $24,000 reduction in professional fees is due to lower audit and consulting fees as a result of the pending merger. The Company's efficiency ratio for the first quarter of 2015 was 66.95%, slightly increased from the 65.36% for the same quarter last year.