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WINSTON-SALEM, NC -- (MARKETWIRE) -- 07/19/07 -- Southern Community Financial Corporation (NASDAQ: SCMF) (NASDAQ: SCMFO) (the "Company"), the holding company for Southern Community Bank and Trust, reported operating results for the second quarter of 2007. For the three month period ended June 30, 2007, net income was $1.93 million or $0.11 per diluted share versus a net loss of $1.43 million or $0.08 per diluted share for the same period in 2006. The loss in 2006 included an after tax charge of $3.8 million ($0.21 per diluted share) related to a balance sheet restructuring and a change in accounting for certain derivative transactions. For the first half of 2007, earnings were $3.94 million or $0.22 per diluted share, versus the $174 thousand earned in the first six months of 2006.
Significant milestones achieved:
-- Achieved year-over-year net loan growth of $149.3 million or 15.8% and
deposit growth of $19.6 million or 2.0%;
-- Achieved second quarter net loan growth of $23.7 million or 2.2%;
-- Net interest margin for the second quarter of 2007 improved to 3.25%
from 3.22% in the first quarter;
-- Increased service charge, mortgage and wealth management income by
12.0% during the second quarter;
-- Continued to maintain strong asset quality as non-performing loans to
total loans declined to 0.09%. The allowance for loan losses equals 1.23%
of gross loans and net charge-offs decreased by six basis points over first
quarter 2007 to 0.12%;
-- Paid a quarterly dividend of $0.04 per share on June 1, 2007.
Net interest income for the second quarter of $10.4 million was up 11.7%,
compared with $9.3 million reported in the comparable quarter of 2006.
Second quarter 2007 net interest margin improved to 3.25% as compared to
the 3.22% reported in the first quarter 2007 due to improved asset yields
and stable funding costs.
Non-interest income was $2.8 million during the second quarter of 2007,
versus the loss of $2.7 million reported in the comparable period in 2006.
Growth in non-interest income during the second quarter of 2007 was due to
increases in income from the Company's investment in Salem Capital
Partners, and improvement in returns from our mortgage production and our
wealth management areas. Salem Capital Partners has provided income of
$1.54 million on a year to date basis and we expect continued returns to
average $300,000 per quarter. The Company recorded non-interest expense of
$10.3 million in the current quarter, versus $9.8 million reported in the
first quarter.
As of June 30, 2007, the Company reported total assets of $1.5 billion,
representing an increase of $167.2 million, or 12.4% year-over-year driven
by increases in the loan portfolio. The loan portfolio rose to $1.1
billion, an increase of $149.3 million, or 15.8% over the amount reported
on June 30, 2006. Additionally, loans during the second quarter grew by
$23.7 million or 2.2% over the level on March 31, 2007. Total deposits
stood at $998.2 million at June 30, 2007, a decline of $80.6 million from
the prior quarter due to customer withdrawals around the mid-April tax
payment date and seasonal outflows from large deposit customers. Deposits
increased $19.6 million from the year ago period.
The Company continues to maintain strong credit standards, which are
reflected in solid credit quality metrics. Non-performing loans decreased
to $983 thousand or 0.09% of total loans at quarter-end, in comparison with
$1.2 million or 0.11% of total loans as reported for March 31, 2007.
Non-performing assets decreased to $2.2 million or 0.15% of assets at June
30, 2007 compared to $2.7 million or 0.18% of assets at March 31, 2007.
Net charge-offs as a percentage of average loans were 0.12% for the quarter
ended June 30, 2007, six basis points lower than the 0.18% reported in the
2007 first quarter. The provision for loan losses of $600 thousand was
lower than the $850 thousand added in the first quarter of 2007. The
Company's allowance for loan losses equaled $13.7 million, or 1.23% of
total loans and 13.9 times non-performing loans at June 30, 2007. The
Company is not in the sub-prime lending business.
At June 30, 2007 stockholders' equity totaled $139.0 million and
represented 9.15% of total assets. Stockholders' equity increased $4.9
million or 3.7% from $134.1 million for the year ago period. Regulatory
capital ratios are all well in excess of the "well-capitalized" threshold.
During the second quarter, the company issued $10 million in subordinated
debentures as a part of a pooled trust preferred security.
Southern Community Financial Corporation Chairman and Chief Executive
Officer F. Scott Bauer commented, "Earnings results were in line with our
expectations. Our credit quality remains excellent. While we note the
improvement in our net interest margin, we continue to experience highly
competitive markets on both the lending and funding side. In this
difficult interest rate environment, we will continue to focus on improving
our profitability through margin improvement, increasing non-interest
income, and expense control."
Southern Community Financial Corporation is headquartered in Winston-Salem,
North Carolina and is the holding company of Southern Community Bank and
Trust, a community bank with twenty-two banking offices throughout North
Carolina.
Southern Community Financial Corporation's common stock and trust preferred
securities are listed on the NASDAQ Global Select Market under the trading
symbols SCMF and SCMFO, respectively. Additional information about
Southern Community is available on its website at www.smallenoughtocare.com
or by email at investor.relations@smallenoughtocare.com.
Southern Community's executive management team will host a conference call
on Friday, July 20 at 9:00 AM Eastern Time to discuss the quarter-end
results. The call can be accessed by dialing (866) 542-4236, conference ID
3228948.
This news release contains forward-looking statements. Such statements are
subject to certain factors that may cause the Company's results to vary
from those expected. These factors include changing economic and financial
market conditions, competition, ability to execute our business plan, items
already mentioned in this press release, and other factors described in our
filings with the Securities and Exchange Commission. Readers are cautioned
not to place undue reliance on these forward-looking statements, which
reflect management's judgment only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking
statements to reflect events and circumstances that arise after the date
hereof.
Southern Community Financial Corporation
(Dollars in thousands except per share data)
(Unaudited)
For the three months ended
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
Income Statement 2007 2007 2006 2006 2006
-------- -------- -------- --------- --------
Total Interest Income $ 24,626 $ 23,573 $ 23,233 $ 22,151 $ 20,862
Total Interest Expense 13,607 13,052 12,807 11,936 10,830
-------- -------- -------- --------- --------
Net Interest Income 11,019 10,521 10,426 10,215 10,032
Provision for Loan Losses 600 850 600 730 705
Net Interest Income after
Provision for Loan
Losses 10,419 9,671 9,826 9,485 9,327
Non-Interest Income
Service Charges on
Deposit Accounts 1,173 1,051 1,109 1,076 1,098
Gain (Loss) on Sale of
Investment Securities - - 44 30 (4,230)
Gain (Loss) and Net Cash
Settlement on Economic
Hedges (4) (5) (25) 296 (582)
Other Income 1,644 2,086 1,209 1,287 1,029
-------- -------- -------- --------- --------
Total Non-Interest
Income 2,813 3,132 2,337 2,689 (2,685)
Non-Interest Expense
Salaries and Employee
Benefits 5,341 5,143 4,936 4,776 4,630
Occupancy and Equipment 1,888 1,903 1,819 1,728 1,680
Other 3,076 2,713 2,834 2,425 2,542
-------- -------- -------- --------- --------
Total Non-Interest
Expense 10,305 9,759 9,589 8,929 8,852
Income Before Taxes 2,927 3,044 2,574 3,245 (2,210)
Provision for Income
Taxes 996 1,035 632 1,163 (780)
-------- -------- -------- --------- --------
Net Income $ 1,931 $ 2,009 $ 1,942 $ 2,082 $ (1,430)
======== ======== ======== ========= ========
Net Income per Share
Basic $ 0.11 $ 0.12 $ 0.11 $ 0.12 $ (0.08)
Diluted $ 0.11 $ 0.11 $ 0.11 $ 0.12 $ (0.08)
======== ======== ======== ========= ========
Six Months Ended
Jun 30, Jun 30,
Income Statement 2007 2006
-------- --------
Total Interest Income $ 48,199 $ 40,136
Total Interest Expense 26,659 20,055
-------- --------
Net Interest Income 21,540 20,081
Provision for Loan Losses 1,450 1,180
Net Interest Income after
Provision for Loan
Losses 20,090 18,901
Non-Interest Income
Service Charges on
Deposit Accounts 2,224 2,133
Gain (Loss) on Sale of
Investment Securities - (4,230)
Gain (Loss) and Net Cash
Settlement on Economic
Hedges (9) (1,068)
Other Income 3,730 1,817
-------- --------
Total Non-Interest
Income 5,945 (1,348)
Non-Interest Expense
Salaries and Employee
Benefits 10,484 9,114
Occupancy and Equipment 3,791 3,288
Other 5,789 4,882
-------- --------
Total Non-Interest
Expense 20,064 17,284
Income Before Taxes 5,971 269
Provision for Income
Taxes 2,031 95
-------- --------
Net Income $ 3,940 $ 174
======== ========
Net Income per Share
Basic $ 0.23 $ 0.01
Diluted $ 0.22 $ 0.01
======== ========
Balance Sheet Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2007 2007 2006 2006 2006
---------- ---------- ---------- ---------- ----------
Assets
Cash and due
from Banks $ 32,742 $ 28,014 $ 29,160 $ 26,390 $ 30,304
Federal Funds
Sold & Int
Bearing
Balances 8,563 14,945 783 887 1,010
Investment
Securities 250,211 261,734 255,496 256,091 249,496
Loans 1,109,442 1,085,479 1,033,411 1,015,984 959,085
Allowance for
Loan Losses (13,677) (13,417) (13,040) (12,990) (12,626)
---------- ---------- ---------- ---------- ----------
Net Loans 1,095,765 1,072,062 1,020,371 1,002,994 946,459
Bank Premises
and Equipment 39,587 39,984 40,492 40,604 36,753
Goodwill 49,792 49,792 49,792 49,792 49,792
Other Assets 43,580 43,536 40,371 40,709 39,190
---------- ---------- ---------- ---------- ----------
Total Assets $1,520,240 $1,510,067 $1,436,465 $1,417,467 $1,353,004
========== ========== ========== ========== ==========
Liabilities and
Stockholders'
Equity
Deposits
Non-Interest
Bearing $ 112,142 $ 113,011 $ 108,950 $ 100,257 $ 106,605
Money market,
savings and
NOW 413,533 448,849 393,152 360,459 326,626
Time 472,504 516,921 522,480 560,140 545,316
---------- ---------- ---------- ---------- ----------
Total
Deposits 998,179 1,078,781 1,024,582 1,020,856 978,547
Borrowings 371,024 281,157 265,297 251,105 230,213
Accrued
Expenses and
Other
Liabilities 11,988 12,083 10,361 10,031 10,120
---------- ---------- ---------- ---------- ----------
Total
Liabilities 1,381,191 1,372,021 1,300,240 1,281,992 1,218,880
Total
Stockholders'
Equity 139,049 138,046 136,225 135,475 134,124
---------- ---------- ---------- ---------- ----------
Total
Liabilities
and
Stockholders'
Equity $1,520,240 $1,510,067 $1,436,465 $1,417,467 $1,353,004
========== ========== ========== ========== ==========
Book Value per
Share $ 7.89 $ 7.93 $ 7.83 $ 7.75 $ 7.61
========== ========== ========== ========== ==========
As of or for the three months ended
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2007 2007 2006 2006 2006
---------- ---------- ---------- ---------- ----------
Per Share Data:
Basic Earnings
per Share $ 0.11 $ 0.12 $ 0.11 $ 0.12 $ (0.08)
Diluted
Earnings per
Share $ 0.11 $ 0.11 $ 0.11 $ 0.12 $ (0.08)
Book Value per
Share $ 7.89 $ 7.93 $ 7.83 $ 7.75 $ 7.61
Cash dividends
paid $ 0.040 $ 0.035 $ 0.035 $ 0.035 $ 0.030
Selected
Performance
Ratios:
Return on
Average Assets
(annualized)
ROA 0.52% 0.56% 0.54% 0.60% -0.42%
Return on
Average Equity
(annualized)
ROE 5.58% 5.96% 5.70% 6.15% -4.24%
Return on
Tangible
Equity
(annualized) 8.86% 9.56% 9.22% 9.99% -6.86%
Net Interest
Margin 3.25% 3.22% 3.22% 3.29% 3.27%
Net Interest
Spread 2.87% 2.85% 2.84% 2.92% 2.90%
Non-interest
Income as a %
of Revenue 20.34% 22.94% 18.31% 20.84% -36.54%
Non-interest
Income as a %
of Average
Assets 0.75% 0.87% 0.65% 0.78% -0.79%
Non-interest
Expense to
Average Assets 2.75% 2.70% 2.67% 2.59% 2.60%
Efficiency
Ratio 74.50% 71.48% 75.13% 69.20% 120.48%
Asset Quality:
Nonperforming
Loans $ 983 $ 1,240 $ 2,636 $ 3,011 $ 2,148
Nonperforming
Assets $ 2,227 $ 2,659 $ 3,531 $ 3,536 $ 2,233
Nonperforming
Loans to Total
Loans 0.09% 0.11% 0.26% 0.30% 0.22%
Nonperforming
Assets to
Total Assets 0.15% 0.18% 0.25% 0.25% 0.17%
Allowance for
Loan Losses to
Period-end
Loans 1.23% 1.24% 1.26% 1.28% 1.32%
Allowance for
Loan Losses to
Nonperforming
Loans (X) 13.91 10.82 4.95 4.31 5.88
Net Charge-offs
to Average
Loans
(annualized) 0.12% 0.18% 0.21% 0.15% 0.12%
Capital Ratios:
Equity to Total
Assets 9.15% 9.14% 9.48% 9.56% 9.91%
Tangible Equity
to Total
Tangible
Assets (1) 5.97% 5.94% 6.12% 6.14% 6.33%
Average
Balances:
Year to Date
Interest
Earning
Assets $1,341,688 $1,324,218 $1,232,305 $1,215,079 $1,207,209
Total Assets 1,485,292 1,467,296 1,368,223 1,349,093 1,338,308
Total Loans 1,074,700 1,054,315 958,001 935,923 913,028
Equity 137,716 136,623 134,886 134,806 135,059
Interest
Bearing
Liabilities 1,226,580 1,212,714 1,115,747 1,097,199 1,084,807
Quarterly
Interest
Earning
Assets $1,358,967 $1,324,218 $1,283,422 $1,230,562 $1,230,155
Total Assets 1,503,090 1,467,296 1,424,990 1,370,311 1,367,073
Gross Loans 1,094,861 1,054,315 1,023,515 980,966 938,074
Equity 138,797 136,623 135,123 134,308 135,396
Interest
Bearing
Liabilities 1,240,293 1,212,714 1,170,786 1,121,579 1,113,408
Weighted
Average Number
of Shares
Outstanding
Basic 17,574,100 17,423,824 17,431,542 17,571,030 17,640,808
Diluted 17,667,207 17,597,029 17,610,248 17,738,817 17,640,808
Period end
outstanding
shares 17,621,653 17,410,115 17,405,940 17,487,801 17,615,355
As of or for the
Six Months Ended
Jun 30, Jun 30,
2007 2006
---------- ----------
Per Share Data:
Basic Earnings
per Share $ 0.23 $ 0.01
Diluted
Earnings per
Share $ 0.22 $ 0.01
Book Value per
Share $ 7.89 $ 7.67
Cash dividends
paid $ 0.075 $ 0.065
Selected
Performance
Ratios:
Return on
Average Assets
(annualized)
ROA 0.53% 0.03%
Return on
Average Equity
(annualized)
ROE 5.77% 0.26%
Return on
Tangible
Equity
(annualized) 9.21% 0.42%
Net Interest
Margin 3.24% 3.35%
Net Interest
Spread 2.86% 2.98%
Non-interest
Income as a %
of Revenue 21.63% -7.20%
Non-interest
Income as a %
of Average
Assets 0.81% 0.20%
Non-interest
Expense to
Average Assets 2.72% 2.60%
Efficiency
Ratio 73.00% 92.26%
Asset Quality:
Nonperforming
Loans $ 983 $ 2,148
Nonperforming
Assets $ 2,227 $ 2,233
Nonperforming
Loans to Total
Loans 0.09% 0.22%
Nonperforming
Assets to
Total Assets 0.15% 0.17%
Allowance for
Loan Losses to
Period-end
Loans 1.23% 1.32%
Allowance for
Loan Losses to
Nonperforming
Loans (X) 13.91 5.88
Net Charge-offs
to Average
Loans
(annualized) 0.15% 0.07%
Capital Ratios:
Equity to Total
Assets 9.15% 10.08%
Tangible Equity
to Total
Tangible
Assets (1) 5.97% 6.48%
Average
Balances:
Year to Date
Interest
Earning
Assets
Total Assets
Total Loans
Equity
Interest
Bearing
Liabilities
Quarterly
Interest
Earning
Assets
Total Assets
Gross Loans
Equity
Interest
Bearing
Liabilities
Weighted
Average Number
of Shares
Outstanding
Basic 17,506,123 17,632,467
Diluted 17,580,981 17,838,621
Period end
outstanding
shares 17,621,653 17,615,355
(1) - Tangible Equity to Total Tangible Assets is period-ending equity less
intangibles, divided by period-ending assets less intangibles.
Management provides the above non-GAAP measure, footnote (1) to provide
readers with the impact of purchase accounting on this key financial ratio.
For additional information:
F. Scott Bauer
Chairman/CEO
James C. Monroe, Jr.
Senior Vice President/Treasurer
(336) 768-8500