RESTON, Va.--(BUSINESS WIRE)--

Access National Corporation (NASDAQ: ANCX) (the “Corporation” or “Access”), parent company for Access National Bank (the “Bank”), reported first quarter 2017 net income of $1.37 million, or $0.13 per common share. This represents the Corporation’s 67^th consecutive quarterly profit over its 69 quarter history. In anticipation of the Corporation’s merger with Middleburg and to align first quarter earnings of Access to its pre-merger shareholders of record, a $0.15 per share dividend was declared on March 20, 2017 for common shareholders of record as of March 31, 2017 and is payable on May 25, 2017.

Highlights

• Strategic merger with Middleburg announced October 24, 2016, closed April 1, 2017;
• Reported earnings reflect $2.1 million in pre-tax merger related costs ($1.8 million after-tax) impacting earnings per share by $0.16 on a diluted basis;
• Tangible book value per common share grew 5.8% to $11.22 at March 31, 2017 when compared to $10.60 at March 31, 2016;
• Loans held for investment grew $158.1 million or 17.3% year-over-year;
• Demand deposits grew $41.5 million year-over-year and account for 32.6% of total deposits at March 31, 2017; and
• An increase in the provision for loan loss reserve of $1.4 million when compared to the quarter ended March 31, 2016 was recorded to resolve one problematic credit as well as account for the continued loan growth in the portfolio.

“We are delighted with the timely closing of our strategic merger with Middleburg on April 1 and the continued growth of the core commercial bank,” said Michael W. Clarke, President and Chief Executive Officer of Access, “however, we experienced some choppiness this quarter due to one problem credit which drove a sizable charge-off as well as the second consecutive period of elevated provisioning. We believe this is an isolated situation and not indicative of any systemic credit deterioration. Importantly, core loan and deposit growth grew directionally consistent with our strategic goals. As previously announced, the core conversion project related to our merger is slated for August of this year. We expect 65% of the annual overhead cost savings from the combination to be realized in 2017 as contrasted with an expectation of 75% at the time of announcement in October 2016. We remain optimistic concerning the future growth and efficiencies of our newly expanded business and ability to deliver financial results that equal or exceed peers.”

First quarter 2017 pre-tax earnings were $2.5 million, down $3.7 million from the first quarter of 2016 due mainly to merger related costs of $2.1 million as well as an increase in the provision for loan losses of $1.4 million. The commercial banking segment’s net interest income grew $1.2 million when compared to the first quarter 2016 and was offset by an increase in salaries and employee benefits of $495 thousand, due to an increase in commercial lending staffing when compared to the first quarter 2016, as well as an increase in other expenses not related to the provision of $287 thousand. The increase in other expenses pertains to the increased rent expense related to the addition of the Alexandria, Virginia branch as well as increases in data processing and FDIC insurance expense.

The net interest margin decreased from 3.61% to 3.46% when comparing first quarter 2016 to first quarter 2017, while on a linked quarter basis the margin remained stable at 3.46%.

Total assets were $1.4 billion at March 31, 2017 and grew $184.3 million when compared to March 31, 2016. The growth in assets since March 31, 2016 was due mainly to an increase in loans held for investment of $158.1 million, a $27.3 million increase in investment securities, and a $11.3 million increase in other assets which was largely due to an increase in bank owned life insurance of $10.6 million. Offsetting these increases was a decrease in loans held for sale of $13.7 million. Total loans held for investment grew 17.3% year-over-year with commercial loans remaining the largest portfolio segment.

Total deposits at March 31, 2017 were $1.2 billion, an increase of $196.5 million when compared to March 31, 2016. At March 31, 2017, non-interest bearing deposits were $376.7 million, an increase of $41.5 million or 12.4% when compared to March 31, 2016. On a linked quarter basis non-interest bearing deposits grew 16.2% on an annualized basis. Interest-bearing deposits increased to $780.3 million at March 31, 2017, an increase of $155.1 million since March 31, 2016. A targeted marketing campaign continues to propel growth in this category which saw a year-over-year increase in savings and money market accounts of $134.5 million and an increase in non-brokered time deposits of $16.8 million. These increases were partially offset by a $14.3 million reduction in wholesale funding when comparing March 31, 2017 to March 31, 2016.

Non-performing assets (“NPAs”) decreased to $5.2 million at March 31, 2017 from $7.3 million at March 31, 2016, representing 0.37% and 0.60% of total assets, respectively. The allowance for loan loss was $13.7 million and $13.6 million at March 31, 2017 and 2016, respectively, and represented 1.28% of total loans held for investment at March 31, 2017 and 1.49% of total loans held for investment at March 31, 2016. The growth in the loan portfolio from the fourth quarter of 2016 as well as an increased allowance for one specific non-performing asset was responsible for the $1.4 million increase in the provision for loan loss when comparing first quarter 2016 to first quarter 2017.

Tangible book value per common share increased from $10.60 at March 31, 2016 to $11.22 at March 31, 2017. The tangible common equity ratio for Access National Corporation and its subsidiary bank was 8.64% at March 31, 2017, within the Corporation’s target range of 8.00% to 10.50%.

Access National Corporation is the parent company of Access National Bank, an independent, nationally chartered bank serving the business community of the greater Washington DC Metropolitan area. Additional information is available on our website at www.AccessNationalBank.com. Shares of Access National Corporation are traded on the NASDAQ Global Market under the symbol "ANCX".

Forward-Looking Statements

The information presented herein contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding expectations or predictions of future financial or business performance or conditions. Forward-looking statements may be identified by words such as "may," "could," "will," "expect," "believe," "anticipate," "forecast," "intend," "plan," "prospects," "estimate," "potential," or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time. Forward-looking statements in this report may include, but are not limited to, statements about projected impacts of and financial results generated by the merger of Access and Middleburg Financial Corporation (“Middleburg”). Forward-looking statements speak only as of the date they are made and Access assumes no duty to update forward-looking statements.

In addition to factors previously disclosed in Access's reports filed with the SEC and those identified elsewhere in this release, the following factors, among others, could cause actual results to differ materially from the results expressed in or implied by forward-looking statements and historical performance: changes in asset quality and credit risk; changes in interest rates and capital markets; the introduction, timing and success of business initiatives; competitive conditions; and the inability to recognize cost savings or revenues or to implement integration plans associated with the merger of Access and Middleburg.

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