On January 31, 2025, Village Bank and Trust Financial Corp (VBFC, Financial) released its 8-K filing detailing the unaudited financial results for the fourth quarter of 2024. The company, a bank holding entity primarily operating in the Richmond and Williamsburg, Virginia areas, reported a net income of $1,486,000, or $0.99 per fully diluted share, for the quarter. This marks a decrease from the $1,692,000, or $1.14 per share, reported in the same quarter of the previous year.
Company Overview
Village Bank and Trust Financial Corp is a bank holding company that offers a comprehensive range of banking and financial services. Its operations are divided into two segments: Commercial Banking and Mortgage Banking. The Commercial Banking segment is the primary revenue generator, providing short-term funds for mortgage loan origination through a warehouse line of credit.
Performance and Challenges
The company's performance in 2024 was notably impacted by $932,000 in pre-tax merger-related expenses due to its pending merger with TowneBank. Despite these challenges, the company achieved a net income of $7,017,000, or $4.69 per share, for the year, a significant increase from $1,918,000, or $1.29 per share, in 2023. This improvement underscores the company's resilience and strategic management amidst merger activities.
Financial Achievements
Village Bank and Trust Financial Corp's financial achievements are highlighted by an 8.71% growth in loans, excluding student loans, and a 2.33% increase in deposits during 2024. These metrics are crucial for banks as they reflect the company's ability to expand its lending capacity and attract more deposits, which are vital for sustaining growth and profitability.
Key Financial Metrics
For the fourth quarter of 2024, the company's return on average equity was 7.99%, down from 10.45% in the same period of 2023. The return on average assets also decreased to 0.77% from 0.91%. However, the net interest income to average assets improved to 3.75% from 3.56%, indicating better management of interest income relative to assets.
Jay Hendricks, President and CEO, commented, “We are pleased with the Company’s performance during 2024. Asset repricing and stabilizing funding cost are supporting net interest margin growth and helping to offset weakness in the mortgage environment.”
Income Statement and Balance Sheet Highlights
The Commercial Banking segment reported a net income of $1,645,000 for Q4 2024, compared to $1,942,000 in Q4 2023. The Mortgage Banking segment reduced its net loss to $159,000 from $250,000 in the previous year, reflecting efforts to expand revenue opportunities and control expenses.
| Metric | Q4 2024 | Q4 2023 |
|---|---|---|
| Net Income | $1,486,000 | $1,692,000 |
| EPS (Diluted) | $0.99 | $1.14 |
| Return on Average Equity | 7.99% | 10.45% |
| Return on Average Assets | 0.77% | 0.91% |
Analysis and Outlook
Village Bank and Trust Financial Corp's performance in 2024 reflects a strategic focus on core relationship growth and disciplined management of funding mix and costs. The company's ability to grow its loan portfolio and deposits, despite merger-related expenses, positions it well for future growth. The anticipated merger with TowneBank, expected to close in the first quarter of 2025, could further enhance its market position and operational capabilities.
Overall, Village Bank and Trust Financial Corp's financial results demonstrate resilience and strategic foresight in navigating industry challenges and preparing for future opportunities through its merger with TowneBank.
Explore the complete 8-K earnings release (here) from Village Bank and Trust Financial Corp for further details.
