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WINSTON-SALEM, NC -- (MARKET WIRE) -- 04/24/08 -- Southern Community Financial Corporation (NASDAQ: SCMF) (NASDAQ: SCMFO) (the "Company"), the holding company for Southern Community Bank and Trust, reported operating results for the first quarter of 2008. For the three month period ended March 31, 2008, net income was $2.1 million or $0.12 per diluted share versus net income of $2.0 million or $0.11 per diluted share for the same period in 2007. For the fourth quarter of 2007, the Company had net income of $1.9 million with earnings per diluted share of $0.11.
Financial Highlights:
-- Achieved year-over-year loan portfolio growth of $158.1 million or
14.7% and deposit growth of $64.0 million or 5.9%;
-- Achieved first quarter loan portfolio growth of $47.5 million or 4.0%;
-- Achieved year-over-year core (non-time) deposit growth of $54.8
million or 9.7% and $11.3 million or 1.9% in the first quarter;
-- Improved the non-interest expense to average asset ratio to 2.61% in
the current quarter from 2.67% in the fourth quarter of 2007;
-- Paid a quarterly dividend of $0.04 per share on February 29, 2008;
-- Introduced ME Banking deposit product, exceeding our first year
projected goals for new accounts in its first 90 days.
Net interest income for the first quarter of $11.0 million was up 4.6%, compared with $10.5 million reported in the comparable quarter of 2007 and down from the $11.2 million earned in the fourth quarter of 2007. The first quarter 2008 net interest margin was 2.98% compared to the 3.22% for the first quarter of 2007 and 3.15% in the fourth quarter of 2007 due to the impact of Federal Reserve rate cuts of 200 basis points during the first quarter 2008.
Non-interest income was $3.6 million during the first quarter of 2008, compared to the $2.8 million reported in the fourth quarter of 2007 and the $3.1 million reported in the first quarter of 2007. Service charges on deposits, mortgage banking income, and brokerage and trust income for the first quarter 2008 in the aggregate increased $720 thousand or 46.7% on a year-over-year basis. During the first quarter 2008, nonrecurring gains on derivative activity of $1.0 million resulted from interest rate hedging transactions called prior to their stated maturity. These gains nearly offset the $1.4 million decline in revenue from Salem Capital for the same period last year. The Company recorded non-interest expense of $10.6 million in the current quarter, compared to $10.5 million reported in the fourth quarter.
As of March 31, 2008, the Company reported total assets of $1.7 billion, representing an increase of $180.4 million, or 12% year-over-year driven primarily by increases in the loan portfolio. The loan portfolio rose to $1.2 billion, an increase of $158.1 million, or 14.7% over the amount reported on March 31, 2007. Additionally, loans during the first quarter of 2008 grew by $47.5 million or 4.0% over the level on December 31, 2007. Total deposits stood at $1.1 billion at March 31, 2008, an increase of $97.5 million or 9.3% from the prior quarter and $64.0 million or 5.9% year-over-year. The Company has seen good growth in core (non-time) deposit balances up $11.3 million or 1.9% since year-end 2007 and $54.8 million or 9.7% since the first quarter 2007.
Nonperforming loans rose to $7.0 million or 0.57% of total loans at quarter-end, in comparison with $2.1 million or 0.17% of total loans as reported for December 31, 2007. At the end of the first quarter of 2007, nonperforming loans stood at $1.2 million or 0.11% of total loans. Nonperforming assets increased to $8.0 million or 0.48% of assets at March 31, 2008, compared to $2.8 million or 0.18% of assets at December 31, 2007. Net charge-offs as a percentage of average loans were 0.11% for the quarter ended March 31, 2008, 12 basis points lower than the 0.23% reported in the prior quarter. The provision for loan losses of $925 thousand was $175 thousand higher than the $750 thousand added in the fourth quarter of 2007. The Company's allowance for loan losses equaled $14.9 million, or 1.20% of total loans and 2.12 times nonperforming loans at March 31, 2008.
At March 31, 2008, stockholders' equity totaled $144.4 million and represented 8.5% of total assets. Stockholders' equity increased $6.3 million or 4.6% from $138.1 million for the year ago period. Regulatory capital ratios are all well in excess of the "well capitalized" threshold. Liquidity improved during the quarter as the investment portfolio grew by $67.2 million or 29.4% over year-end 2007 balances.
Southern Community Financial Corporation Chairman and Chief Executive Officer F. Scott Bauer commented, "We are very pleased with our performance and the efforts of our people in these challenging times for our industry. We remain well capitalized with good liquidity and strong reserves. It is particularly important in this environment that we continue our focus on being fundamentally sound and prudent."
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 April 25, 2008, at 10:00 AM Eastern Time to discuss the quarter-end results. The call can be accessed by dialing 1-866-542-4241 or 1-416-641-6139 and asking for the Southern Community Financial Corporation call. A replay of the conference call can be accessed until 11:59 pm on May 26, 2008, by calling 1-800-408-3053 or 1-416-695-5800 and entering pass code 3258313.
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.
For additional information:
F. Scott Bauer
Chairman/CEO
James Hastings
Executive Vice President/CFO
(336) 768-8500
Southern Community Financial Corporation
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(Unaudited)
