WFBI Washingtonfirst Bankshares

WashingtonFirst Bankshares, Inc. (NASDAQ: WFBI) (“WashingtonFirst” or the “Company”) announced today that it had achieved record financial results for the year ended December 31, 2016. Loans, deposits, fee income, net income, return on assets, and earnings per share reached all-time highs. At the same time, the Company’s asset quality has improved to its best since 2007, as measured in terms of non-performing assets as a percentage of total assets. In addition, the Company opened two additional full-service bank branches in 2016 and increased its dividends to shareholders.

In commenting on the Company’s 2016 performance, Shaza Andersen, the Company's President and CEO, said “I am very excited to report our record performance. Our team was charged with high expectations and goals in 2016 and we achieved them. Looking to the future, WashingtonFirst remains committed to growing long-term shareholder value through a continued focus on customer relationships, high standards of quality and service, and strong financial performance.”

In the fourth quarter of 2016, the Company reported net income of $4.7 million, a 34.0% increase compared to the fourth quarter of 2015. This translated into fully-diluted earnings per share of $0.36 for the fourth quarter of 2016, a 20.0% increase compared to the fourth quarter of 2015. The percentage increase in per-share earnings was lower than the percentage increase in net income because of the 1,655,000 shares that were issued in the Company’s public stock offering in December 2015.

For the year ended December 31, 2016, WashingtonFirst reported net income of $18.0 million and fully-diluted earnings per share of $1.37, representing increases of 47.8% and 21.2%, respectively, compared to the previous year. Return on average assets, a key performance objective for the Company, reached 1.00% in 2016 compared to 0.83% in 2015. Management attributed the increase in return on average assets to the increased level of fee income contributed by the mortgage and wealth management businesses acquired in July 2015.

The Company’s total assets reached $2.0 billion as of December 31, 2016, an increase of 19.6% compared to one year earlier. Net loans held-for-investment and total deposits each ended the year at $1.5 billion, reflecting increases of 17.4% and 14.2%, respectively, compared to one year earlier. Non-performing assets represented 0.43% of total assets as of December 31, 2016, compared to 0.86% one year earlier.

In November 2016 the Company announced a 5% stock dividend, the fourth such dividend since the inception of WashingtonFirst Bank in 2004. Additionally, the Company increased its quarterly cash dividend by 16.7% to $0.07 from $0.06 per share. WashingtonFirst has increased its cash dividend to stockholders every year since it declared its initial dividend in October 2013.

About The Company

WashingtonFirst Bankshares, Inc., headquartered in Reston, Virginia, is the holding company for WashingtonFirst Bank, which operates 19 full-service banking offices throughout the Washington, D.C. metropolitan area. In addition, the Company provides wealth management services through its subsidiary, 1st Portfolio Wealth Advisors, and mortgage banking services through the Bank's subsidiary, WashingtonFirst Mortgage Corporation. The Company's common stock is traded on the NASDAQ Stock Market under the quotation symbol "WFBI" and is included in the ABA NASDAQ Community Bank Index and the Russell 2000® index. For more information about the Company, please visit: www.wfbi.com.

Cautionary Statements About Forward-Looking Information

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements of the goals, intentions, and expectations of the Company as to future trends, plans, events, results of operations and policies and regarding general economic conditions. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors which include, but are not limited to, factors discussed in our Annual Report on Form 10-K and in other documents we file with the Securities and Exchange Commission from time to time. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” and similar words or phrases. These statements are based upon the beliefs of the management of the Company as to the expected outcome of future events, current and anticipated economic conditions, nationally and in the Company’s market, and their impact on the operations, assets and earnings of the Company, interest rates and interest rate policy, competitive factors, judgments about the ability of the Company to successfully integrate its operations following significant transactions including, but not limited to, mergers and acquisitions, the ability to avoid customer dislocation during the period leading up to and following such transactions, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Readers are cautioned against placing undue reliance on such forward-looking statements. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.

    WashingtonFirst Bankshares, Inc. Consolidated Balance Sheets

(unaudited)

  December 31, 2016 December 31, 2015 ($ in thousands) Assets: Cash and cash equivalents: Cash and due from bank balances $ 3,614 $ 3,739 Federal funds sold 93,659 59,014 Interest bearing deposits   100     —   Cash and cash equivalents 97,373 62,753 Investment securities, available-for-sale, at fair value 280,204 220,113 Restricted stock, at cost 11,726 6,128 Loans held for sale, at lower of cost or fair value 32,109 36,494 Loans held for investment: Loans held for investment, at amortized cost 1,534,543 1,308,083 Allowance for loan losses   (13,582 )   (12,289 ) Total loans held for investment, net of allowance 1,520,961 1,295,794 Premises and equipment, net 6,955 7,374 Goodwill 11,420 11,431 Identifiable intangibles 1,619 1,888 Deferred tax asset, net 8,944 8,116 Accrued interest receivable 5,243 4,502 Other real estate owned 1,428 — Bank-owned life insurance 13,880 13,521 Other assets   11,049     6,352   Total Assets $ 2,002,911   $ 1,674,466   Liabilities and Shareholders' Equity: Liabilities: Non-interest bearing deposits $ 381,887 $ 304,425 Interest bearing deposits   1,140,854     1,028,817   Total deposits 1,522,741 1,333,242 Other borrowings 6,707 6,942 FHLB advances 232,097 110,087 Long-term borrowings 32,638 32,884 Accrued interest payable 947 912 Other liabilities   15,121     11,804   Total Liabilities 1,810,251 1,495,871 Commitments and contingent liabilities — — Shareholders' Equity: Preferred stock: Series D, $5.00 par value, 0, 0, and 13,347 shares issued and outstanding, respectively, 1% dividend — — Additional paid-in capital - preferred — — Common stock: Common Stock Voting, $0.01 par value, 50,000,000 shares authorized, 10,987,652 and 10,377,981 shares issued and outstanding, respectively 109 103 Common Stock Non-Voting, $0.01 par value, 10,000,000 shares authorized; 1,908,733 and 1,817,842 shares issued and outstanding, respectively 19 18 Additional paid-in capital 177,924 160,861 Accumulated earnings 17,187 17,740 Accumulated other comprehensive income/(loss)   (2,579 )   (127 ) Total Shareholders' Equity   192,660     178,595   Total Liabilities and Shareholders' Equity $ 2,002,911   $ 1,674,466             WashingtonFirst Bankshares, Inc. Consolidated Statements of Income

(unaudited)

  For the Three Months Ended For the Year Ended December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 ($ in thousands, except per share data) Interest and dividend income: Interest and fees on loans $ 17,971 $ 16,088 $ 68,901 $ 59,346 Interest and dividends on investments: Taxable 1,002 923 4,274 3,257 Tax-exempt 57 23 123 74 Dividends on other equity securities 76 71 284 257 Interest on Federal funds sold and other short-term investments   79   54     265   249   Total interest and dividend income 19,185 17,159 73,847 63,183 Interest expense: Interest on deposits 2,300 1,809 8,727 6,431 Interest on borrowings   906   1,018     3,744   2,780   Total interest expense   3,206   2,827     12,471   9,211   Net interest income 15,979 14,332 61,376 53,972 Provision for loan losses   1,240   1,075     3,880   3,550   Net interest income after provision for loan losses 14,739 13,257 57,496 50,422 Non-interest income: Service charges on deposit accounts 45 97 259 434 Earnings on bank-owned life insurance 89 93 359 374 Gain on sale of other real estate owned, net — 100 11 231 Gain on sale of loans, net 3,973 2,462 18,329 4,645 Mortgage banking activities 493 470 4,265 759 Wealth management income 497 425 1,835 693 Gain/(loss) on sale of available-for-sale investment securities, net 36 — 1,323 10 Other operating income   435   159     1,124   745   Total non-interest income 5,568 3,806 27,505 7,891 Non-interest expense: Compensation and employee benefits 7,974 7,616 35,183 23,122 Premises and equipment 1,888 1,697 7,370 6,327 Data processing 986 895 4,169 3,510 Professional fees 290 362 1,336 1,285 Merger expenses — (9 ) 30 545 Mortgage loan processing expenses 246 139 1,240 248 Debt extinguishment 136 — 1,335 — Other operating expenses   1,696   1,214     6,200   4,552   Total non-interest expense   13,216   11,914     56,863   39,589   Income before provision for income taxes 7,091 5,149 28,138 18,724 Provision for income taxes   2,347   1,607     10,131   6,469   Net income 4,744 3,542 18,007 12,255 Preferred stock dividends   —   (1 )   —   (74 ) Net income available to common shareholders $ 4,744 $ 3,541   $ 18,007 $ 12,181     Earnings per common share: (1) Basic earnings per common share $ 0.37 $ 0.31 $ 1.40 $ 1.15 Diluted earnings per common share $ 0.36 $ 0.30 $ 1.37 $ 1.13  

(1)

 

2015 amounts have been adjusted to reflect the 5% stock dividend declared in December 2016

        For the Three Months Ended For the Year Ended December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 ($ in thousands, except per share data)

Performance Ratios:

Return on average assets 1.00 % 0.86 % 1.00 % 0.83 % Return on average shareholders' equity 9.69 % 8.93 % 9.50 % 8.48 % Yield on average interest-earning assets 4.10 % 4.24 % 4.23 % 4.32 % Rate on average interest-earning liabilities 1.00 % 0.99 % 1.02 % 0.90 % Net interest spread 3.10 % 3.25 % 3.21 % 3.42 % Net interest margin 3.40 % 3.53 % 3.52 % 3.74 % Efficiency ratio (1) 60.81 % 65.69 % 63.42 % 64.00 % Net charge-offs to average loans held for investment (2) 0.16 % 0.11 % 0.18 % 0.04 %   Mortgage origination volume $ 168,902 $ 118,454 $ 772,076 $ 216,330   Assets under management $ 297,394 $ 226,688 $ 297,394 $ 226,688  

Per Share Data: (3)

Basic earnings per common share $ 0.37 $ 0.31 $ 1.40 $ 1.15 Fully diluted earnings per common share $ 0.36 $ 0.30 $ 1.37 $ 1.13 Weighted average basic shares outstanding 12,877,374 11,503,785 12,854,011 10,593,573 Weighted average diluted shares outstanding 13,151,482 11,747,996 13,108,247 10,781,434

 

(1) The efficiency ratio is calculated as total non-interest expense (less debt extinguishment costs) divided by the sum of net interest income and total non-interest income (less gain on sale of AFS securities). This non-GAAP financial measure is presented to facilitate an understanding of the Company's performance. (2) Annualized (3) 2015 amounts have been adjusted to reflect the 5% stock dividend declared in December 2016     December 31, 2016   December 31, 2015

Capital Ratios:

Total risk-based capital ratio 13.99% 14.86% Tier 1 risk-based capital ratio 11.61% 12.22% Common equity tier 1 risk-based capital ratio 11.12% 11.66% Tier 1 leverage ratio 10.14% 10.67% Tangible common equity to tangible assets (1) 9.03% 9.95%  

Per Share Capital Data: (2)

Book value per common share $14.94 $13.95 Tangible book value per common share $13.93 $12.91 Common shares outstanding 12,896,385 12,805,152 (1) This is a non-GAAP financial measure. Refer to the table below outlining the reconciliation of tangible common equity to tangible assets. (2) 2015 amounts have been adjusted to reflect the 5% stock dividend declared in December 2016               Average Balances, Interest Income and Expense and Average Yield and Rates (QTD) For the Three Months Ended December 31, 2016 December 31, 2015 AverageBalance Income/Expense Yield/Rate (6) AverageBalance Income/Expense Yield/Rate (6) ($ in thousands) Assets Interest-earning assets: Loans (1) $ 1,518,639 $ 17,971 4.63 % $ 1,317,000 $ 16,088 4.78 % Investment securities - taxable 234,321 1,002 1.67 % 208,301 923 1.74 % Investment securities - tax-exempt (2) 13,416 69 2.02 % 4,274 28 2.52 % Other equity securities 6,806 76 4.41 % 6,530 71 4.34 % Interest-bearing balances 100 — 0.60 % — — — % Federal funds sold   60,335     79 0.52 %   49,364     54 0.43 % Total interest earning assets 1,833,617 19,197 4.10 % 1,585,469 17,164 4.24 % Non-interest earning assets: Cash and due from banks 5,276 3,905 Premises and equipment 7,179 7,214 Other real estate owned 1,830 80 Other assets (3) 47,045 46,829 Less: allowance for loan losses   (13,216 )   (11,867 ) Total non-interest earning assets   48,114     46,161   Total Assets $ 1,881,731   $ 1,631,630     Liabilities and Shareholders’ Equity Interest-bearing liabilities: Interest-bearing demand deposits $ 120,645 $ 86 0.28 % $ 109,939 $ 73 0.26 % Money market deposit accounts 285,036 440 0.61 % 265,665 335 0.50 % Savings accounts 213,283 379 0.71 % 157,994 277 0.70 % Time deposits   498,576     1,395 1.11 %   436,198     1,124 1.02 % Total interest-bearing deposits 1,117,540 2,300 0.82 % 969,796 1,809 0.74 % FHLB advances 116,108 366 1.24 % 119,614 454 1.49 % Other borrowings and long-term borrowings   38,640     540 5.54 %   38,508     564 5.79 % Total interest-bearing liabilities 1,272,288 3,206 1.00 % 1,127,918 2,827 0.99 % Non-interest-bearing liabilities: Demand deposits 401,985 332,906 Other liabilities   12,752     13,491   Total non-interest-bearing liabilities   414,737     346,397   Total Liabilities 1,687,025 1,474,315 Shareholders’ Equity   194,706     157,315   Total Liabilities and Shareholders’ Equity $ 1,881,731   $ 1,631,630     Interest Spread (4)   3.10 %   3.25 % Net Interest Margin (2)(5) $ 15,991 3.40 % $ 14,337 3.53 %

(1)

 

Includes loans held for sale and loans placed on non-accrual status.

(2)

Yield and income presented on a fully taxable equivalent basis using a federal statutory rate of 35 percent.

(3)

Includes intangibles, deferred tax asset, accrued interest receivable, bank-owned life insurance and other assets.

(4)

Interest spread is the average yield earned on earning assets, less the average rate incurred on interest bearing liabilities.

(5)

Net interest margin is net interest income, expressed as a percentage of average earning assets.

(6)

Annualized income/expense is used for the yield/rate.

              Average Balances, Interest Income and Expense and Average Yield and Rates (YTD) For the Year Ended December 31, 2016 2015 AverageBalance Income/Expense Yield/Rate AverageBalance Income/Expense Yield/Rate ($ in thousands) Assets Interest-earning assets: Loans (1) $ 1,440,519 $ 68,901 4.78 % $ 1,187,273 $ 59,346 5.00 % Investment securities - taxable 243,578 4,274 1.75 % 186,931 3,257 1.74 % Investment securities - tax-exempt (2) 6,849 149 2.18 % 3,088 93 3.01 % Other equity securities 6,289 284 4.52 % 6,153 257 4.18 % Interest-bearing balances 86 1 1.57 % 4,239 27 0.64 % Federal funds sold   48,110     264 0.55 %   55,121     222 0.40 % Total interest earning assets 1,745,431 73,873 4.23 % 1,442,805 63,202 4.32 % Non-interest earning assets: Cash and due from banks 3,209 3,795 Premises and equipment 7,499 6,575 Other real estate owned 1,609 250 Other assets (3) 47,291 40,549 Less: allowance for loan losses   (12,604 )   (10,474 ) Total non-interest earning assets   47,004     40,695   Total Assets $ 1,792,435   $ 1,483,500     Liabilities and Shareholders’ Equity Interest-bearing liabilities: Interest-bearing demand deposits $ 121,823 $ 355 0.29 % $ 106,202 $ 261 0.25 % Money market deposit accounts 277,552 1,666 0.60 % 229,819 1,129 0.49 % Savings accounts 207,153 1,469 0.71 % 137,010 943 0.69 % Time deposits   475,224     5,237 1.10 %   411,336     4,098 1.00 % Total interest-bearing deposits 1,081,752 8,727 0.81 % 884,367 6,431 0.73 % FHLB advances 106,882 1,583 1.48 % 109,967 1,625 1.48 % Other borrowings and long-term borrowings   39,122     2,161 5.52 %   23,816     1,155 4.85 % Total interest-bearing liabilities 1,227,756 12,471 1.02 % 1,018,150 9,211 0.90 % Non-interest-bearing liabilities: Demand deposits 362,196 310,182 Other liabilities   12,851     10,676   Total non-interest-bearing liabilities   375,047     320,858   Total Liabilities 1,602,803 1,339,008 Shareholders’ Equity   189,632     144,492   Total Liabilities and Shareholders’ Equity $ 1,792,435   $ 1,483,500     Interest Spread (4)   3.21 %   3.42 % Net Interest Margin (2)(5) $ 61,402 3.52 % $ 53,991 3.74 %

(1)

   

Includes loans held for sale and loans placed on non-accrual status.

(2)

Yield and income presented on a fully taxable equivalent basis using a federal statutory rate of 35 percent.

(3)

Includes intangibles, deferred tax asset, accrued interest receivable, bank-owned life insurance and other assets.

(4)

Interest spread is the average yield earned on earning assets, less the average rate incurred on interest bearing liabilities.

(5)

Net interest margin is net interest income, expressed as a percentage of average earning assets.

    Composition of Loans Held for Investment   December 31, 2016   December 31, 2015 ($ in thousands) Construction and development $ 288,193 $ 249,433 Commercial real estate 789,260 657,110 Residential real estate   287,250   241,395 Real estate loans 1,364,703 1,147,938 Commercial and industrial 165,172 153,860 Consumer   4,668   6,285 Total loans 1,534,543 1,308,083 Less: allowance for loan losses   13,582   12,289 Net loans $ 1,520,961 $ 1,295,794       Composition of Deposits December 31, 2016 December 31, 2015 ($ in thousands) Demand deposit accounts $381,887 $304,425 NOW accounts 134,938 115,459 Money market accounts 270,794 309,940 Savings accounts 209,961 163,289 Time deposits up to $250,000 386,095 324,454 Time deposits over $250,000 139,066 115,675 Total deposits $1,522,741 $1,333,242       December 31, 2016 December 31, 2015

Allowance and Asset Quality Ratios:

Allowance for loan losses to loans held for investment 0.89 % 0.94 % Adjusted allowance for loan losses to loans held for investment (1) 1.11 % 1.30 % Allowance for loan losses to non-accrual loans 236.37 % 120.47 % Allowance for loan losses to non-performing assets 159.10 % 84.76 % Non-performing assets to total assets 0.43 % 0.86 %  

(1)

 

This is a non-GAAP financial measure. Refer to the table below outlining the reconciliation of GAAP Allowance Ratio to Adjusted Allowance Ratio.

      Non-Performing Assets December 31, 2016 December 31, 2015 ($ in thousands) Non-accrual loans $ 5,746 $ 10,201 90+ days still accruing 2 28 Trouble debt restructurings still accruing 1,361 4,269 Other real estate owned   1,428   — Total non-performing assets $ 8,537 $ 14,498     Reconciliation of Tangible Common Equity to Tangible Assets Ratio (1)   December 31, 2016   December 31, 2015 ($ in thousands)

Tangible Common Equity:

Common Stock Voting $ 109 $ 103 Common Stock Non-Voting 19 18 Additional paid-in capital - common 177,924 160,861 Accumulated earnings 17,187 17,740 Accumulated other comprehensive income/(loss)   (2,579 )   (127 ) Total Common Equity $ 192,660   $ 178,595    

Less Intangibles:

Goodwill $ 11,420 $ 11,431 Identifiable intangibles   1,619     1,888   Total Intangibles $ 13,039   $ 13,319     Tangible Common Equity $ 179,621   $ 165,276    

Tangible Assets:

Total Assets $ 2,002,911 $ 1,674,466  

Less Intangibles:

Goodwill $ 11,420 $ 11,431 Identifiable intangibles   1,619     1,888   Total Intangibles $ 13,039   $ 13,319     Tangible Assets $ 1,989,872   $ 1,661,147     Tangible Common Equity to Tangible Assets 9.03 % 9.95 %  

(1)

 

Tangible common equity to tangible assets ratio is a non-GAAP financial measure that is presented to facilitate an understanding of the Company's capital structure. This table provides a reconciliation between certain GAAP amounts and this non-GAAP financial measure.

  Reconciliation of GAAP Allowance Ratio to Adjusted Allowance Ratio (1)   December 31, 2016   December 31, 2015 ($ in thousands) GAAP allowance for loan losses $ 13,582 $ 12,289 GAAP loans held for investment, at amortized cost 1,534,543 1,308,083   GAAP allowance for loan losses to total loans held for investment 0.89 % 0.94 %   GAAP allowance for loan losses $ 13,582 $ 12,289 Plus: Credit purchase accounting marks   3,439     4,721   Adjusted allowance for loan losses $ 17,021   $ 17,010     GAAP loans held for investment, at amortized cost $ 1,534,543 $ 1,308,083 Plus: Credit purchase accounting marks   3,439     4,721   Adjusted loans held for investment, at amortized cost $ 1,537,982   $ 1,312,804     Adjusted allowance for loan losses to total loans held for investment 1.11 % 1.30 %  

(1)

 

This is a non-GAAP financial measure. Credit purchase accounting marks are GAAP marks under purchase accounting guidance.

  Segment Reporting (QTD)   For the Three Months Ended December 31, 2016 Commercial Bank   Mortgage Bank   Wealth Management   Other (1)   Consolidated Totals ($ in thousands) Revenues: Interest income 19,102 427 — (344 ) 19,185 Gain on sale of loans — 3,973 — — 3,973 Other revenues   604   493   498   —     1,595 Total income $ 19,706 $ 4,893 $ 498 $ (344 ) $ 24,753   Expenses: Interest expense 2,677 344 1 184 3,206 Salaries and employee benefits 3,970 3,540 246 218 7,974 Other expenses   7,962   871   170   (174 )   8,829 Total expenses $ 14,609 $ 4,755 $ 417 $ 228   $ 20,009   Net Income (loss) $ 5,097 $ 138 $ 81 $ (572 ) $ 4,744   Total assets $ 1,952,964 $ 46,185 $ 3,868 $ (106 ) $ 2,002,911

(1)

 

Includes parent company and intercompany eliminations

    Segment Reporting (YTD)   For the Year Ended December 31, 2016 Commercial Bank   Mortgage Bank   Wealth Management   Other (1)   Consolidated Totals ($ in thousands) Revenues: Interest income 73,340 1,790 — (1,283 ) 73,847 Gain on sale of loans — 18,329 — — 18,329 Other revenues   3,008   4,265   1,837   66     9,176 Total income $ 76,348 $ 24,384 $ 1,837 $ (1,217 ) $ 101,352   Expenses: Interest expense 10,378 1,283 3 807 12,471 Salaries and employee benefits 18,376 14,961 974 872 35,183 Other expenses   30,466   5,227   602   (604 )   35,691 Total expenses $ 59,220 $ 21,471 $ 1,579 $ 1,075   $ 83,345   Net Income (loss) $ 17,128 $ 2,913 $ 258 $ (2,292 ) $ 18,007   Total assets $ 1,952,964 $ 46,185 $ 3,868 $ (106 ) $ 2,002,911 (1) Includes parent company and intercompany eliminations  

Additional Discussion and Analysis

Consolidated net income for the year was $18.0 million ($1.37 per diluted common share), an increase of $5.8 million (47.8%) over the $12.2 million ($1.13 per diluted common share) earned during the prior year. For the three months ended December 31, 2016, consolidated net income was $4.7 million ($0.36 per diluted common share), an increase of $1.2 million (34.0%) over the $3.5 million in net income (or $0.30 per diluted common share) earned during the three months ended December 31, 2015.

As of December 31, 2016, the Company reported total assets of $2.0 billion, compared to $1.7 billion as of December 31, 2015. During the year ended December 31, 2016, total loans held for investment increased $226.5 million or 17.3% to $1.5 billion. This increase is attributable to organic loan growth from our existing lending team. During the year ended 2016, total deposits increased $189.5 million or 14.2% to $1.5 billion. The increase in deposits is due to core deposit growth in our branch network and commercial customers.

The net interest margin was 3.40% and 3.52% for the three months and year ended December 31, 2016, respectively, as compared to 3.53% and 3.74% for the same periods in 2015. This decrease is primarily attributable to the addition of $25.0 million in subordinated debt added in the fourth quarter of 2015 and competitive pressure for incremental loans and deposits. On a linked quarter basis, net interest margin decreased from 3.53% for the three months ended September 30, 2016, to 3.40% for the three months ended December 31, 2016. The Company remains focused on its pricing discipline on both sides of the balance sheet and on all factors contributing to net income.

The adjusted allowance for loan losses to adjusted total loans held for investment, which includes credit purchase accounting marks, was 1.11% as of December 31, 2016, compared to 1.30% as of December 31, 2015. This decrease is attributable to net charge-offs of $2.6 million which had substantially been reserved for previously and credit mark accretion during the year ended December 31, 2016. A reconciliation of the allowance for loan losses and related ratios to the adjusted allowance for loan losses and related ratios is included herein. Non-performing assets continue to decline. The ratio of non-performing assets to total assets decreased to 0.43% as of December 31, 2016, compared to 0.86% as of December 31, 2015.

Non-interest income grew during the three months and year ended December 31, 2016, by $1.8 million and $19.6 million, respectively, compared to the same periods ended December 31, 2015, as a result of the strong performance of the mortgage and wealth management units. The mortgage subsidiary closed on a record volume of loans during the year ended December 31, 2016. During the three months and year ended December 31, 2016, the mortgage subsidiary originated $168.9 million and $772.1 million, respectively, in total mortgage loan volume. The strategic initiatives executed in 2015 to diversify revenue channels have proven to be very effective.

Non-interest expense grew during both the three months and year ended December 31, 2016, by $1.3 million and $17.3 million, respectively, compared to the same periods ended December 31, 2015, primarily as a result of the new mortgage and wealth units acquired in 2015, as well as further expansion of the Bank's retail network. As a result of record performance of the new mortgage and wealth units where compensation is directly linked to production levels, total compensation and employee benefit costs have risen year over year. In addition, the Company incurred one-time debt termination expenses of $1.3 million during the year ended December 31, 2016. This was offset by gains on the sale of available-for-sale securities of $1.3 million as part of a debt repositioning strategy.

During the year ended 2016, total shareholders’ equity increased $14.1 million (7.9%) to $192.7 million due primarily to earnings offset by dividends of $3.1 million and changes in accumulated other comprehensive income. Tangible book value per common share increased to $13.93 as of December 31, 2016, compared to $12.91 as of December 31, 2015. The Company's capital position remains well in excess of "well-capitalized" per the regulatory framework.

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WashingtonFirst Bankshares, Inc.Matthew R. Johnson, 703-840-2410Executive Vice President & Chief Financial OfficerMJohnson@wfbi.com