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WINSTON-SALEM, N.C., April 27 /PRNewswire-FirstCall/ -- Southern Community Financial Corporation (Nasdaq: SCMF; SCMFO) (the "Company"), the holding company for Southern Community Bank and Trust, reported net income of $1.6 million or $0.09 per diluted share for the first quarter ended March 31, 2005. This compares to net income of $1.7 million, or $0.10 per diluted share, for the first quarter of 2004. Net income, exclusive of certain unusual non- interest expenses, discussed below, would have been $2.0 million.
(Logo: http://www.newscom.com/cgi-bin/prnh/20020823/SCFCLOGO )
Highlights for 2005:
-- Achieved year-over-year loan growth of 15% and deposit growth of 4.5%;
-- Paid an annual cash dividend of $0.12 per share on March 15, 2005.
This marks the second consecutive annual cash dividend and an increase
of 9% over the prior years dividend;
-- Authorized a stock repurchase plan of up to 300,000 shares of common
stock;
-- Announced quarterly cash dividend of $0.03 per share, payable on
June 1, 2005 to shareholders of record on May 16, 2005;
-- Moved forward to complete a regional banking office in Greensboro by
the end of 2005.
Net interest income for the first quarter of 2005 was $9.0 million, a 7.1%
increase over the $8.4 million reported in the year ago period and a decline
of 0.4% compared with the fourth quarter of 2004 due in part to two fewer days
in the period. First quarter 2005 net interest margin contracted 2 basis
points to 3.27% from 3.29% in the fourth quarter of 2004. The compression in
the margin is attributed to increased funding costs and pressure on investment
yields due to the flattening yield curve.
Non-interest income was $1.7 million for the three-month period ended
March 31, 2005, reflecting an increase of $217,000, or 14.2%, compared to the
same period a year ago. This improvement was a result of an increase in
service charges on deposit accounts in addition to improved performance in
full-service brokerage and mortgage origination revenue. The Company recorded
non-interest expense of $7.9 million in the current quarter, versus $6.8
million reported in the year ago period. This increase includes pre-tax
charges of approximately $345,000 incurred as a result of the departure of two
former members of senior management as well as a $70,000 expense associated
with the Company's decision to vest all outstanding unvested options in the
first quarter of 2005. Additionally, the company recorded a higher than
normal level of professional fees and expenses during the first quarter of
2005 related to SOX 404 compliance.
As of March 31, 2005, the Company recorded total assets of $1.2 billion,
representing growth of $21.6 million, or 1.8% from the balance recorded at
December 31, 2004 and an increase of $100.9 million, or 8.8% year-over-year.
The increase in total assets for the year was due to the favorable trend in
loan growth, as loans grew $105.5 million, or 15.0%, over the outstanding
balance at March 31, 2004. Deposits increased by 4.5% to $837.0 million at
March 31, 2005 as compared to total deposits of $801.3 million reported in the
year ago period. Over this same time period non-interest bearing and
interest-bearing deposits increased $7.6 million or 8.5% and $28.2 million, or
4.0%, respectively.
The Company's allowance for loan losses equaled $12.1 million, or 1.50% of
total loans and 153% of non-performing loans at March 31, 2005. Net charge-
offs as a percentage of average loans, a primary measure of credit quality,
were 0.16% on an annualized basis for the quarter, a 4 basis point improvement
from the 0.20% reported in the fourth quarter of 2004. Non-performing loans
totaled $7.9 million at quarter end compared to $2.2 million at December 31,
2004. Approximately $6.2 million of nonperforming loans at March 31, 2005
consisted of two relationships. Based on collateral position and previously
established reserves, it is anticipated that losses, if any, will be minimal.
As of December 31, 2004 the allowance for loan losses totaled $12.5
million, or 1.57% of period-end loans. The decline from year-end to the March
31, 2005 level is due primarily to a $490,500 purchase accounting adjustment
associated with management's evaluation of the loan portfolio obtained in The
Community Bank acquisition during the first quarter 2004. This purchase
accounting adjustment resulted in both a reduction of goodwill and the
allowance for loan losses.
Stockholders' equity totaled $135.0 million, or 10.85% of total assets at
March 31, 2005, which represents an increase of $4.0 million, or 3.01% from
$131.1 million reported for the year ago period. Regulatory capital ratios
remain well in excess of the "well-capitalized" threshold.
Southern Community Financial Corporation Chairman and Chief Executive
Officer F. Scott Bauer commented, "We had a tough earnings quarter due to a
number of one-time charges. Professional fees due to new regulatory
requirements, settlements of obligations to two former members of management
who left the company, and a prudent decision to accelerate vesting of options
to avoid future expense all impacted our bottom line. We had a productive
quarter with favorable trends in loan growth and deposit mix which will
position us well for the coming quarters. Furthermore, we are pleased to have
paid our second consecutive annual cash dividend of $0.12 on our common stock
in the first quarter and announce our first quarterly dividend."
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 eighteen banking offices throughout the
Piedmont Triad region of North Carolina.
Southern Community Financial Corporation's common stock and trust
preferred securities are listed on the NASDAQ National 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 .
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
(Amounts in thousands except per share data)
(Unaudited)
For the three months ended
March 31, Dec. 31, Sept. 30, June 30, March 31,
Income Statement 2005 2004 2004 2004 2004
Total Interest Income $15,340 $14,744 $13,909 $13,154 $12,849
Total Interest Expense 6,304 5,674 5,061 4,513 4,409
Net Interest Income 9,036 9,070 8,848 8,641 8,440
Provision for Loan Losses 395 350 575 717 597
Net Interest Income after
Provision for Loan Losses 8,641 8,720 8,273 7,924 7,843
Non-Interest Income
Service Charges on Deposit
Accounts 839 1,109 828 815 750
Other Income 907 1,140 1,020 965 779
Total Non-Interest Income 1,746 2,249 1,848 1,780 1,529
Non-Interest Expense
Salaries and Employee
Benefits 3,978 3,297 3,473 3,525 3,454
Occupancy and Equipment 1,342 1,217 1,068 1,040 1,027
Other 2,577 2,633 2,355 2,161 2,270
Total Non-Interest Expense 7,897 7,147 6,896 6,726 6,751
Income Before Taxes 2,490 3,822 3,225 2,978 2,621
Provision for Income Taxes 890 1,469 1,119 1,021 935
Net Income 1,600 2,353 2,106 1,957 1,686
Net Income per Share
Basic $0.09 $0.13 $0.12 $0.11 $0.11
Diluted $0.09 $0.13 $0.12 $0.11 $0.10
Twelve months ended
Dec. 31, Dec. 31,
Income Statement 2004 2003
Total Interest Income $54,656 $36,019
Total Interest Expense 19,657 14,751
Net Interest Income 34,999 21,268
Provision for Loan Losses 2,239 2,285
Net Interest Income after Provision
for Loan Losses 32,760 18,983
Non-Interest Income
Service Charges on Deposit Accounts 3,502 1,442
Other Income 3,904 3,543
Total Non-Interest Income 7,406 4,985
Non-Interest Expense
Salaries and Employee Benefits 13,749 9,603
Occupancy and Equipment 4,352 3,045
Other 9,419 5,685
Total Non-Interest Expense 27,520 18,333
Income Before Taxes 12,646 5,635
Provision for Income Taxes 4,544 1,972
Net Income 8,102 3,663
Net Income per Share
Basic $0.47 $0.41
Diluted $0.45 $0.40
Balance Sheet March 31, Dec. 31, Sept. 30,
2005 2004 2004
Assets
Cash and due from Banks $19,560 $17,758 $19,544
Federal Funds Sold & Interest Bearing
Balances 1,755 80 1,231
Investment Securities 315,627 312,909 301,736
Loans 809,733 796,103 777,368
Allowance for Loan Losses (12,133) (12,537) (12,629)
Net Loans 797,600 783,566 764,739
Bank Premises and Equipment 28,138 28,325 26,755
Goodwill 49,603 50,135 50,351
Other Assets 31,640 29,589 31,104
Total Assets $1,243,923 $1,222,361 $1,195,460
Liabilities and Stockholders' Equity
Deposits
Non-Interest Bearing 96,917 98,519 87,118
Interest Bearing 740,119 746,709 751,775
Total Deposits 837,036 845,228 838,893
Borrowings 263,622 233,141 212,557
Accrued Expenses and Other Liabilities 8,241 7,086 9,228
Total Liabilities 1,108,899 1,085,455 1,060,678
Total Stockholders' Equity 135,024 136,906 134,782
Total Liabilities and Stockholders'
Equity $1,243,923 $1,222,361 $1,195,460
Book Value per Share $7.53 $7.68 $7.57
Balance Sheet June 30, March 31,
2004 2004
Assets
Cash and due from Banks $24,447 $19,297
Federal Funds Sold & Interest Bearing Balances 4,349 6,014
Investment Securities 315,147 322,471
Loans 740,074 704,237
Allowance for Loan Losses (12,567) (12,125)
Net Loans 727,507 692,112
Bank Premises and Equipment 25,320 24,730
Goodwill 50,063 50,071
Other Assets 29,603 28,295
Total Assets $1,176,436 $1,142,990
Liabilities and Stockholders' Equity
Deposits
Non-Interest Bearing 89,358 89,327
Interest Bearing 705,454 711,946
Total Deposits 794,812 801,273
Borrowings 245,971 202,867
Accrued Expenses and Other Liabilities 6,574 7,775
Total Liabilities 1,047,357 1,011,915
Total Stockholders' Equity 129,079 131,075
Total Liabilities and Stockholders' Equity $1,176,436 $1,142,990
Book Value per Share $7.29 $7.44
As of or for the three months ended
March 31, Dec. 31, Sept. 30, June 30, March 31,
2005 2004 2004 2004 2004
Per Share Data:
Basic Earnings per Share $0.09 $0.13 $0.12 $0.11 $0.11
Diluted Earnings per Share $0.09 $0.13 $0.12 $0.11 $0.10
Book Value per Share $7.53 $7.68 $7.57 $7.29 $7.44
Cash dividends paid (1) $0.12 - - - $0.11
Selected Performance Ratios:
Return on Average Assets
(annualized) ROA 0.52% 0.78% 0.71% 0.68% 0.61%
Return on Average Equity
(annualized) ROE 4.79% 6.93% 6.24% 5.97% 5.61%
Return on Tangible Equity
(annualized) 7.82% 11.35% 10.34% 9.94% 9.50%
Net Interest Margin 3.27% 3.29% 3.28% 3.32% 3.37%
Net Interest Spread 2.98% 3.03% 3.07% 3.10% 3.15%
Non-interest Income as a
% of Revenue 16.19% 19.87% 17.28% 17.08% 15.34%
Non-interest Income as a
% of Average Assets 0.57% 0.74% 0.62% 0.62% 0.55%
Non-interest Expense to
Average Assets 2.59% 2.36% 2.33% 2.33% 2.45%
Efficiency Ratio 73.24% 63.14% 64.47% 64.54% 67.72%
Asset Quality:
Nonperforming Loans $7,910 $2,174 $1,942 $2,536 $1,132
Nonperforming Assets $8,795 $3,260 $2,972 $2,992 $1,685
Nonperforming Loans
to Total Loans 0.98% 0.27% 0.25% 0.34% 0.16%
Nonperforming Assets to
Total Assets 0.71% 0.27% 0.25% 0.25% 0.15%
Allowance for Loan Losses
to Period-end Loans 1.50% 1.57% 1.62% 1.70% 1.72%
Allowance for Loan Losses
to Nonperforming Loans (X) 1.53 5.77 6.50 4.96 10.71
Net Charge-offs to Average
Loans (annualized) 0.16% 0.20% 0.27% 0.15% 0.14%
Capital Ratios:
Equity to Total Assets 10.85% 11.20% 11.27% 10.97% 11.47%
Tangible Equity to Total
Tangible Assets (2) 6.97% 7.21% 7.21% 6.83% 7.23%
As of or for the twelve months ended
Dec. 31, Dec. 31,
2004 2003
Per Share Data:
Basic Earnings per Share $0.47 $0.41
Diluted Earnings per Share $0.45 $0.40
Book Value per Share $7.68 $5.66
Cash dividends paid (1) $0.11 -
Selected Performance Ratios:
Return on Average Assets (annualized) ROA 0.69% 0.53%
Return on Average Equity (annualized) ROE 6.20% 7.48%
Return on Tangible Equity (annualized) 10.37% -
Net Interest Margin 3.31% 3.25%
Net Interest Spread 3.08% 3.03%
Non-interest Income as a % of Revenue 17.46% 18.99%
Non-interest Income as a % of Average Assets 0.63% 0.72%
Non-interest Expense to Average Assets 2.36% 2.63%
Efficiency Ratio 64.90% 69.83%
Asset Quality:
Nonperforming Loans $2,174 $769
Nonperforming Assets $3,260 $1,041
Nonperforming Loans to Total Loans 0.27% 0.15%
Nonperforming Assets to Total Assets 0.27% 0.13%
Allowance for Loan Losses to Period-end Loans 1.57% 1.40%
Allowance for Loan Losses to
Nonperforming Loans (X) 5.77 9.46
Net Charge-offs to Average Loans (annualized) 0.19% 0.29%
Capital Ratios:
Equity to Total Assets 11.20% 6.37%
Tangible Equity to Total Tangible Assets (2) 7.21% -
Reconciliation of Net Income
Before Unusual Expenses to Net Income:
(in thousands)
Net Income $1,600
Unusual Expenses:
Expense associated with departure
of two members of management 345
Expensing of stock options
associated with acceleration of
vesting 70
Expensing of stock options
associated with bank only
directors 23
Professional services associated
with compliance with SOX 404 155
Total Unusual Expenses 593
Tax Effect (212)
Net Income Before Unusual Expenses $1,981
(1) - Amount is an annual dividend.
(2) - Tangible Equity to Total Tangible Assets is period-ending equity
less intangibles of $51.9 million, divided by period-ending assets
less period end intangibles of $51.9 million.
Management provides the above non-GAAP measure, footnote (2) to provide
readers with the impact of purchase accounting on this key financial
ratio.
SOURCE Southern Community Financial Corporation
-0- 04/27/2005
/CONTACT: F. Scott Bauer, Chairman, CEO of Southern Community Financial
Corporation, +1-336-768-8500/
/Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20020823/SCFCLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com /
/Web site: http://www.smallenoughtocare.com /
(SCMF SCMFO)
CO: Southern Community Financial Corporation; Southern Community Bank and
Trust
ST: North Carolina
IN: FIN
SU: ERN
CF-DL
-- CLW109 --
8296 04/27/200518:00 EDThttp://www.prnewswire.com