The first-quarter profit at Cardinal Financial Corp. (CFNL) in Tysons Corner, Va., fell 42% from a year earlier, largely due to merger-related expenses.
On Wednesday, the $3.1 billion-asset company reported earnings of $4.3 million, or 13 cents per diluted share.
Cardinal incurred $3.2 million of expenses related to its Jan. 15 acquisition of United Financial Banking Companies and its subsidiary, the Business Bank. That includes legal and accounting costs, contract termination expenses, and the conversion of back-office systems, according to a press release.
Total acquisition expenses initially were estimated to be up to $7 million and Cardinal said Wednesday that it still does not expect to exceed that amount. It anticipates the remaining acquisition expenses will be booked in the second quarter.
Cardinal said it did improve the cost savings it expects to realize from the acquisition, however. Savings are now estimated at 50%, up from the original 40%. The company says four branches will be consolidated in the second quarter and another two by yearend.
Total assets jumped 12% from a year earlier, with $329 million of that increase coming from United Financial.
Net interest income increased 13.6% from a year earlier, to $25.2 million. United Financial added approximately $2.3 million to that figure. Noninterest income was $535,000, up 6.6% from a year ago. Cardinal attributed $134,000 of that to the United Financial acquisition,
Bernard Clineburg, Cardinal's chairman and chief executive, said in a press release that the company is open to doing more deals. "We will continue to concentrate on gaining profitable market share, either through de novo expansion or acquisition," he said.
Even given the recent acquisition, the company remains highly capitalized, with a tier 1 capital ratio 10.72%.