Print page
Email page
Download PDF
« Previous Release | Next Release »
WINSTON-SALEM, NC, Jul 24, 2008 (MARKET WIRE via COMTEX News Network) -- Southern Community Financial Corporation (NASDAQ: SCMF) (NASDAQ: SCMFO) ("the Company"), the holding company for Southern Community Bank and Trust, reported:
-- Net income of $603,000 for 2Q 2008 compared with $1.9 million a year
ago;
-- Diluted earnings per share of $0.03 compared with $0.11 a year ago;
-- Provision for loan losses of $3.5 million (including net increase to
allowance for loan losses of $2.6 million);
-- Average loans up 15% from prior year and 6% (annualized) from prior
quarter;
-- Average deposits up 22% year over year and 6.5% linked quarter;
-- Declared cash dividend of $0.04 per share for second quarter 2008
The Company reported diluted earnings per share of $0.03 for the second quarter 2008 compared with $0.12 in first quarter 2008 and $0.11 in second quarter 2007. Net income was $603 thousand for this quarter compared with $2.07 million in first quarter 2008 and $1.93 million in second quarter 2007. The Board of Directors declared a quarterly dividend of $0.04 per share which is consistent with the previous dividend.
"We continued to strengthen our balance sheet and franchise during the second quarter," said F. Scott Bauer, Chairman and Chief Executive Officer. "Earnings per share were 8 cents below that of last year due to a higher provision expense of $2.93 million, including a net increase to allowance for loan losses of $2.64 million (an impact of 7 cents per share). In addition to increasing our allowance for loan losses, we are proactively assisting our customers through this segment of the credit cycle. Managing the challenges of the current credit environment is our top priority. As demonstrated by our strong loan growth in the first half of 2008, we benefited from opportunities in this environment to acquire new business, gaining new long-term customer relationships from other banks. We are exploring alternatives and intend to raise capital by the end of 2008 expanding our balance sheet capacity for anticipated growth. We remain 'well capitalized' according to regulatory guidelines with good liquidity and strong reserves."
Asset Quality
Net charge-offs increased to 0.28% (annualized) of average loans in second quarter 2008 from the relatively low level of 0.11% in first quarter 2008 and 0.l2% in second quarter 2007. Nonperforming loans increased to $12.8 million or 1.00% of total loans at quarter-end, in comparison to $7.0 million or 0.57% at March 31, 2008 and $1.0 million or 0.09% at June 30, 2007. Nonperforming assets rose to $14.2 million or 0.80% of total assets at quarter-end as compared to $8.0 million or 0.48% at March 31, 2008 and $2.2 million or 0.15% at June 30, 2007. The increase in net charge-offs, nonperforming loans and nonperforming assets are predominately related to residential construction and development lending. The provision for loan losses of $3.53 million for the quarter was $2.60 million higher than the $925 thousand recorded in the first quarter 2008 and $2.93 million higher than the $600 thousand recorded in the second quarter 2007. The allowance for loan losses at June 30, 2008 of $17.5 million represented 1.36% of total loans and 1.37 times nonperforming loans at current quarter-end compared with 1.20% of loans and 2.12 times nonperforming loans at March 31, 2008. We believe the allowance is adequate for losses inherent in the loan portfolio at June 30, 2008.
Financial Performance
Net interest income of $11.8 million for the second quarter 2008 was up 7% compared with $11.0 million in the first quarter 2008 and $11.0 million in the second quarter 2007. This revenue growth was primarily attributable to the growth in interest earning assets for both the year-over-year comparison and the linked quarter comparison. Net interest margin of 2.99% for the second quarter 2008 rose 1 basis point between the linked quarters and declined 26 basis points from 3.25% for the second quarter 2007.
Non-interest income of $3.1 million during the second quarter was up $285 thousand or 10% year-over-year on an increase of $302 thousand in service charges on deposits with a $223 thousand decrease in results from our investment in Salem Capital, a Small Business Investment Corporation, and a $59 thousand decline in mortgage banking income mostly offsetting a $334 thousand increase in gains from derivative activity. On a linked quarter basis, non-interest income was down by $491 thousand or 14% primarily on the decrease of $714 thousand in gains on derivative activity as the Company recorded $1.04 million in this category in the first quarter 2008.
Non-interest expenses of $10.7 million for the second quarter 2008 increased 4% year-over-year and 4% annualized on a linked quarter basis; however, as a percentage of average assets, the expense load represented 2.47% of average assets for the second quarter 2008 compared with 2.61% for the first quarter 2008 and 2.75% for the second quarter 2007.
As of June 30, 2008, the Company reported total assets of $1.77 billion, representing an increase of $251.5 million, or 17% year-over-year driven by strong loan growth. The loan portfolio rose to $1.29 billion as of June 30, 2008, an increase of $180.7 million or 16% year-over-year. Additionally, loans grew by $49.0 million or 16% annualized during the second quarter of 2008 and $97 million or 16% annualized for the first six months of 2008. Total deposits stood at $1.2 billion at June 30, 2008, an increase of $219.2 million or 22% year-over-year and an increase of $74.7 million or 7% over the March 31, 2008 level. The Company has seen good growth in non-maturity deposit balances, up $149.1 million or 28% year-over-year and up $58.1 million or 9% on a linked quarter basis.
At June 30, 2008, stockholders' equity of $141.9 million represented 8.0% of total assets. Stockholders' equity increased $2.8 million or 2.0% from $139.0 million at June 30, 2007. Stockholders' equity declined $2.5 million or 2% from $144.4 million at March 31, 2008 as a result of a $3.0 million decrease in the fair value of the available for sale investment portfolio during the recent quarter. Regulatory capital ratios remain in excess of the "well capitalized" threshold.
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 July 25, 2008, at 10:00 AM Eastern Time to discuss the quarter-end results. The call can be accessed by dialing 1-866-542-4238 or 1-416-340-2220 and asking for the Southern Community Financial Corporation call. A replay of the conference call can be accessed until 11:59 pm on August 8, 2008, by calling 1-800-408-3053 or 1-416-695-5800 and entering pass code 3266433.
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 2008 2008 2007 2007 2007
--------- -------- --------- --------- --------
Total Interest Income $ 23,727 $ 24,325 $ 25,370 $ 25,339 $ 24,626
Total Interest Expense 11,947 13,323 14,132 14,350 13,607
--------- -------- --------- --------- --------
Net Interest Income 11,780 11,002 11,238 10,989 11,019
Provision for Loan Losses 3,530 925 750 575 600
Net Interest Income after
Provision for Loan
Losses 8,250 10,077 10,488 10,414 10,419
Non-Interest Income
Service Charges on
Deposit Accounts 1,475 1,406 1,441 1,266 1,173
Income from mortgage
banking activities 358 484 325 298 417
Investment brokerage and
trust fees 335 371 289 334 331
SBIC income (loss) and
management fees 82 (150) 394 167 305
Gain (Loss) and Net Cash
Settlement on Economic
Hedges 330 1,044 19 69 (4)
Other Income 518 434 372 412 591
--------- -------- --------- --------- --------
Total Non-Interest
Income 3,098 3,589 2,840 2,546 2,813
Non-Interest Expense
Salaries and Employee
Benefits 5,621 5,794 5,467 5,267 5,341
Occupancy and Equipment 1,931 1,964 2,021 2,116 1,888
Other 3,120 2,802 2,999 2,966 3,076
--------- -------- --------- --------- --------
Total Non-Interest
Expense 10,672 10,560 10,487 10,349 10,305
Income Before Taxes 676 3,106 2,841 2,611 2,927
Provision for Income
Taxes 73 1,041 948 890 996
--------- -------- --------- --------- --------
Net Income $ 603 $ 2,065 $ 1,893 $ 1,721 $ 1,931
========= ======== ========= ========= ========
Net Income per Share
Basic $ 0.03 $ 0.12 $ 0.11 $ 0.10 $ 0.11
Diluted $ 0.03 $ 0.12 $ 0.11 $ 0.10 $ 0.11
========= ======== ========= ========= ========
Six Months Ended
Jun 30, Jun 30,
Income Statement 2008 2007
-------- --------
Total Interest Income $ 48,052 $ 48,199
Total Interest Expense 25,270 26,659
-------- --------
Net Interest Income 22,782 21,540
Provision for Loan Losses 4,455 1,450
Net Interest Income after
Provision for Loan
Losses 18,327 20,090
Non-Interest Income
Service Charges on
Deposit Accounts 2,881 2,224
Income from mortgage
banking activities 842 720
Investment brokerage and
trust fees 706 518
SBIC income (loss) and
management fees (68) 1,542
Gain (Loss) and Net Cash
Settlement on Economic
Hedges 1,374 (9)
Other Income 952 950
-------- --------
Total Non-Interest
Income 6,687 5,945
Non-Interest Expense
Salaries and Employee
Benefits 11,415 10,484
Occupancy and Equipment 3,895 3,791
Other 5,922 5,789
-------- --------
Total Non-Interest
Expense 21,232 20,064
Income Before Taxes 3,782 5,971
Provision for Income
Taxes 1,114 2,031
-------- --------
Net Income $ 2,668 $ 3,940
======== ========
Net Income per Share
Basic $ 0.15 $ 0.23
Diluted $ 0.15 $ 0.22
======== ========
Balance Sheet Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2008 2008 2007 2007 2007
---------- ---------- ---------- ---------- ----------
Assets
Cash and due
from Banks $ 37,576 $ 35,037 $ 31,905 $ 24,227 $ 32,742
Federal Funds
Sold & Int
Bearing
Balances 3,607 4,752 2,250 420 8,563
Investment
Securities 316,336 296,151 228,933 247,088 250,211
Loans held for
sale 2,106 4,110 1,929 3,137 5,143
Loans 1,285,014 1,235,952 1,188,438 1,155,031 1,104,299
Allowance for
Loan Losses (17,499) (14,853) (14,258) (14,197) (13,677)
---------- ---------- ---------- ---------- ----------
Net Loans 1,267,515 1,221,099 1,174,180 1,140,834 1,090,622
Bank Premises
and Equipment 39,672 38,790 38,997 38,881 39,587
Goodwill 49,792 49,792 49,792 49,792 49,792
Other Assets 55,101 40,721 41,196 44,352 43,580
---------- ---------- ---------- ---------- ----------
Total Assets $1,771,705 $1,690,452 $1,569,182 $1,548,731 $1,520,240
========== ========== ========== ========== ==========
Liabilities and Stockholders' Equity
Deposits
Non-Interest
Bearing $ 114,685 $ 109,534 $ 109,895 $ 110,718 $ 112,142
Money market,
savings and
NOW 560,094 507,105 495,448 479,595 413,533
Time 542,622 526,096 439,894 443,405 472,504
---------- ---------- ---------- ---------- ----------
Total
Deposits 1,217,401 1,142,735 1,045,237 1,033,718 998,179
Borrowings 401,667 393,306 372,405 360,309 371,024
Accrued
Expenses and
Other
Liabilities 10,747 10,061 9,201 13,868 11,988
---------- ---------- ---------- ---------- ----------
Total
Liabilities 1,629,815 1,546,102 1,426,843 1,407,895 1,381,191
Total
Stockholders'
Equity 141,890 144,350 142,339 140,836 139,049
---------- ---------- ---------- ---------- ----------
Total
Liabilities
and
Stockholders'
Equity $1,771,705 $1,690,452 $1,569,182 $1,548,731 $1,520,240
========== ========== ========== ========== ==========
Book Value per
Share $ 8.17 $ 8.33 $ 8.18 $ 8.04 $ 7.89
========== ========== ========== ========== ==========
As of or for the three months ended
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2008 2008 2007 2007 2007
----------- ----------- ----------- ----------- -----------
Per Share Data:
Basic
Earnings
per Share $ 0.03 $ 0.12 $ 0.11 $ 0.10 $ 0.11
Diluted
Earnings
per Share $ 0.03 $ 0.12 $ 0.11 $ 0.10 $ 0.11
Book Value
per Share $ 8.17 $ 8.33 $ 8.18 $ 8.04 $ 7.89
Cash
dividends
paid $ 0.040 $ 0.040 $ 0.040 $ 0.040 $ 0.040
Selected Performance Ratios:
Return on
Average Assets
(annualized)
ROA 0.14% 0.51% 0.48% 0.45% 0.52%
Return on
Average Equity
(annualized)
ROE 1.68% 5.84% 5.35% 4.92% 5.58%
Return on
Tangible Equity
(annualized) 2.60% 9.12% 8.42% 7.80% 8.86%
Net Interest
Margin 2.99% 2.98% 3.15% 3.16% 3.25%
Net Interest
Spread 2.76% 2.67% 2.77% 2.75% 2.87%
Non-interest
Income as a %
of Revenue 20.82% 24.60% 20.17% 18.81% 20.34%
Non-interest
Income as a %
of Average
Assets 0.71% 0.89% 0.72% 0.66% 0.75%
Non-interest
Expense to
Average Assets 2.47% 2.61% 2.67% 2.69% 2.75%
Efficiency
Ratio 71.73% 72.37% 74.49% 76.46% 74.50%
Asset Quality:
Nonperforming
Loans $ 12,796 $ 7,012 $ 2,052 $ 2,226 $ 983
Nonperforming
Assets $ 14,210 $ 8,042 $ 2,827 $ 3,165 $ 2,227
Nonperforming
Loans to
Total Loans 1.00% 0.57% 0.17% 0.19% 0.09%
Nonperforming
Assets to
Total Assets 0.80% 0.48% 0.18% 0.20% 0.15%
Allowance
for Loan
Losses to
Period-end
Loans 1.36% 1.20% 1.20% 1.23% 1.23%
Allowance
for Loan
Losses to
Nonperforming
Loans (X) 1.37 X 2.12 X 6.95 X 6.38 X 13.91 X
Net Charge-offs
to Average
Loans
(annualized) 0.28% 0.11% 0.23% 0.02% 0.12%
Capital Ratios:
Equity to
Total Assets 8.01% 8.54% 9.07% 9.09% 9.15%
Tangible
Equity to
Total
Tangible
Assets (1) 5.28% 5.69% 6.00% 5.98% 5.97%
Average Balances:
Year to Date
Interest
Earning
Assets $ 1,535,388 $ 1,485,037 $ 1,370,413 $ 1,355,030 $ 1,341,688
Total
Assets 1,680,842 1,625,164 1,513,619 1,498,310 1,485,292
Total
Loans 1,238,843 1,219,800 1,114,677 1,093,693 1,074,700
Equity 143,282 142,190 138,693 138,094 137,716
Interest
Bearing
Liabil-
ities 1,421,227 1,368,420 1,250,986 1,237,398 1,226,580
Quarterly
Interest
Earning
Assets $ 1,586,068 $ 1,485,037 $ 1,416,061 $ 1,381,279 $ 1,358,967
Total
Assets 1,736,520 1,625,164 1,559,047 1,523,922 1,503,090
Gross
Loans 1,257,886 1,219,800 1,176,945 1,131,060 1,094,861
Equity 144,374 142,190 140,470 138,838 138,797
Interest
Bearing
Liabil-
ities 1,474,186 1,368,420 1,291,307 1,258,681 1,240,293
Weighted Average Number of Shares Outstanding
Basic 17,354,298 17,359,452 17,449,203 17,584,565 17,574,100
Diluted 17,401,298 17,401,589 17,466,703 17,602,250 17,667,207
Period end
outstanding
shares 17,370,175 17,319,351 17,399,882 17,520,829 17,621,653
As of or for the
Six Months Ended
Jun 30, Jun 30,
2008 2007
----------- -----------
Per Share Data:
Basic
Earnings
per Share $ 0.15 $ 0.23
Diluted
Earnings
per Share $ 0.15 $ 0.22
Book Value
per Share $ 8.17 $ 7.89
Cash
dividends
paid $ 0.080 $ 0.075
Selected Performance Ratios:
Return on
Average Assets
(annualized)
ROA 0.32% 0.53%
Return on
Average Equity
(annualized)
ROE 3.75% 5.77%
Return on
Tangible Equity
(annualized) 5.82% 9.21%
Net Interest
Margin 2.98% 3.24%
Net Interest
Spread 2.72% 2.86%
Non-interest
Income as a %
of Revenue 22.69% 21.63%
Non-interest
Inco me as a %
of Average
Assets 0.80% 0.81%
Non-interest
Expense to
Average
Assets 2.54% 2.72%
Efficiency
Ratio 72.05% 73.00%
Asset Quality:
Nonperforming
Loans $ 12,796 $ 983
Nonperforming
Assets $ 14,210 $ 2,227
Nonperforming
Loans to
Total Loans 1.00% 0.09%
Nonperforming
Assets to
Total Assets 0.80% 0.15%
Allowance
for Loan
Losses to
Period-end
Loans 1.36% 1.23%
Allowance
for Loan
Losses to
Nonperforming
Loans (X) 1.37 X 13.91 X
Net Charge-offs to
Average Loans
(annualized) 0.20% 0.15%
Capital Ratios:
Equity to
Total Assets 8.01% 9.15%
Tangible
Equity to
Total
Tangible
Assets (1) 5.28% 5.97%
Average Balances:
Year to Date
Interest
Earning
Assets
Total
Assets
Total
Loans
Equity
Interest
Bearing
Liabil-
ities
Quarterly
Interest
Earning
Assets
Total
Assets
Gross
Loans
Equity
Interest
Bearing
Liabil-
ities
Weighted Average Number of Shares Outstanding
Basic 17,356,875 17,506,123
Diluted 17,401,444 17,618,675
Period end
outstanding
shares 17,370,175 17,621,653
(1) - Tangible Equity to Total Tangible Assets is period-e-nding 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 Hastings Executive Vice President/CFO (336) 768-8500
SOURCE: Southern Community Financial Corporation
Copyright 2008 Market Wire, All rights reserved.
News Provided by COMTEX