Village Bank and Trust Financial Corp. (VBFC)

[Enterprising Investor]

Village Bank and Trust Financial Corp Reports Results of Operations for the First Quarter 2016 (5/09/16)

Midlothian, Virginia, May 9, 2016. Village Bank and Trust Financial Corp. (the “Company”) (NASDAQ symbol: VBFC), parent company of Village Bank (the “Bank”), today reported first quarter 2016 net income of $402,000, an improvement from net income of $96,000 for the fourth quarter of 2015 and a net loss of $(5,000) for the first quarter of 2015. Net income (loss) available to common shareholders, which deducts from net income (loss) the dividends on preferred stock, amounted to net income of $224,000, or $0.16 per fully diluted share, for the first quarter of 2016, compared to a net loss of $(78,000), or $(0.06) per fully diluted share, for the fourth quarter of 2015, and net income of $6,451,000, or $15.40 per fully diluted share, for the first quarter of 2015. Net income available to common shareholders for the first quarter of 2015 was positively impacted by the forgiveness of principal and accrued dividends on preferred stock associated with the rights offering completed in March 2015.

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Certain items of income and expense affecting net income in Q2, Q3 and Q4 of 2015 affect comparability and are not a result of ongoing operations as follows:

· A recovery of loan losses of $2,000,000 in Q4 2015, all related to the Bank,

· Write downs on our previous headquarters at the Watkins Centre of $675,000 in Q2 2015 and $1,962,000 in Q4 2015 (split $1,759,000 holding company and $878,000 Bank), and

· Legal expenses of $31,000 in Q2 2015, $226,000 in Q3 2015 and $102,000 in Q4 2015, all related to the holding company.


Q1 2016 results were impacted by the following factors:

· Improving net interest income. Net interest income before (recovery of) provision for loan losses amounted to $3,259,000 for Q1 2016, an increase of $44,000, or 1.4%, over Q4 2015, and an increase of $220,000, or 7.2%, over Q1 2015. This was the result of both volume and margin improvements driven by solid organic growth in commercial loans and low cost relationship deposits.

· Declining noninterest expense. The company continued to realize cost savings and productivity improvements from its improving financial performance and initiatives launched during 2015. As a result, noninterest expense amounted to $5,053,000 for Q1 2016, a decrease of $386,000, or 7.1% from Q4 2015 (after adjusting for the write-down of $1,962,000 on the carrying value of our old headquarters building at the Watkins Centre). Noninterest expenses were $161,000, or 3.1%, lower than Q1 2015.

· Village Bank Mortgage Corporation revenue and pretax income. The mortgage company’s Q1 2016 pretax income of $32,000 compares favorably with Q4 2015 pretax income of $1,000 but is $190,000 lower than pretax income of $222,000 recorded during a very strong production quarter in Q1 2015.

Asset Quality

· The Company continued to improve during the first quarter of 2016.

· NPAs (nonaccrual loans and foreclosed real estate) were reduced by 6% during Q1 2016 and have dropped by 52% since Q1 2015.

· Classified Assets, a broader measure of problem assets, declined by 9% during Q1 2016 and by 47% since Q1 2015.

Capital

The capital of the Company and the Bank continue to improve. The Company meets eligibility criteria of a small bank holding company in accordance with the Federal Reserve Board’s Small Bank Holding Company Policy Statement issued in February 2015, and is no longer obligated to report consolidated regulatory capital. The Bank continues to be subject to various capital requirements administered by banking agencies.

President and CEO Bill Foster commented, “I am pleased with our progress and momentum. Every piece of our strategy is yielding results right now. We are seeing good organic loan and low cost deposit growth, net interest margin expansion, solid mortgage company production, quality fee income growth and continued improvement in expenses and asset quality. Our pipelines are full heading into the second quarter. I would again emphasize that we are striving to become a high return bank that grows at a sustainable rate and produces long term returns for our shareholders that are in the top 25% of banks like us in the nation. And when we get there, we will set the bar higher. We are not a bank that is focused on rapid asset growth. We have a lot of work left to do, but I believe that we are on track.”

About Village Bank and Trust Financial Corp.

Village Bank and Trust Financial Corp. was organized under the laws of the Commonwealth of Virginia as a bank holding company whose activities consist of investment in its wholly-owned subsidiary, Village Bank. Village Bank is a full-service Virginia-chartered community bank headquartered in Midlothian, Virginia with deposits insured by the Federal Deposit Insurance Corporation (“FDIC”). The Bank has eleven branch offices. Village Bank and its wholly-owned subsidiary, Village Bank Mortgage Corporation, offer a complete range of financial products and services, including commercial loans, consumer credit, mortgage lending, checking and savings accounts, certificates of deposit, and 24-hour banking.

http://www.sec.gov/Archives/edgar/data/1290476/000114420416099828/v439297_ex99-1.htm