FIRST SOUTH BANCORP, INC. WASHINGTON, N.C., Oct. 20, 2016 /PRNewswire/ -- First South Bancorp, Inc. (NASDAQ: FSBK) (the "Company"), the parent holding company of First South Bank (the "Bank"), reports its unaudited operating results for the quarter and nine months ended September 30, 2016.
2016 Third Quarter Highlights
-- Strong earnings performance with net income of $1.9 million, earnings
per share of $0.20, ROA of 0.78% and ROE of 8.52%
-- Strategic execution as evidenced by highest quarterly EPS since Q1 2009
-- Strong mortgage loan origination, sale and servicing revenue leads to
increased core non-interest income
-- Loans and leases held for investment grew at an annualized rate of over
8%
-- Continued to maintain sound asset quality metrics
-- Growth in non-interest bearing deposits at an annualized rate of over
28%
-- Completed the purchase of mortgage servicing rights for 452 high-quality
Freddie Mac and Fannie Mae loans with an unpaid principal balance of
$84.6 million at settlement
Net Income. Net income for the 2016 third quarter was $1.9 million, representing a 17.5% increase from $1.6 million and a 53.2% increase from $1.2 million for the linked and comparative 2015 quarter, respectively. Earnings per diluted common share, return on average assets and return on average equity for the current quarter were $0.20, 0.78% and 8.52%, respectively, compared with $0.17, 0.68% and 7.55% for the linked quarter and $0.13, 0.54% and 5.99% for the comparative 2015 third quarter. The improvement in quarterly net income is primarily attributable to an increase in net interest income, coupled with solid core non-interest income and a reduction in operating expenses. Income tax expense for the third quarter of 2016 was impacted by a $74,000 adjustment to our deferred tax asset due to a reduction in the North Carolina statutory tax rate. In the third quarter of 2015 an $80,000 adjustment was made for this same circumstance.
The Company showed significant improvement in pre-tax, pre-provision operating earnings for the 2016 third quarter. Pre-tax, pre-provision operating earnings, which excludes certain revenue and expense items as shown under the heading "Reconciliation of Non-GAAP Measures" on the accompanying table of Supplemental Financial Data, was $3.0 million for the current quarter, as compared to $2.5 million for the linked 2016 second quarter and $1.8 million for the comparative 2015 third quarter. Important disclosures about and reconciliations of non-GAAP measures, including pre-tax, pre-provision operating earnings to the corresponding GAAP measures, are provided below and attached to this press release.
Net income for the first nine months of 2016 increased to $5.0 million or $0.52 per diluted common share, a 59.4% increase from the $3.1 million or $0.33 per diluted common share earned during the first nine months of 2015. Earnings for the current nine month period were positively impacted by strong increases in net interest income and core non-interest income, as well as lower non-interest expenses, while being partially offset by an increase in the provision for loan losses associated with the strong loan portfolio growth. During the first nine months of 2015 the Bank incurred $425,000 of one-time pre-tax transaction expenses associated with acquiring nine branch offices.
Bruce Elder, President and CEO, commented, "First South Bancorp continues to execute our strategy to enhance shareholder value. The expansion of our deposit franchise and strong loan growth, leveraging our mortgage servicing infrastructure and our success in Small Business Administration (SBA) lending are having a positive impact on the rate at which earnings are increasing compared to prior year's quarters. While more work is to be done, we have made steady progress improving our efficiency ratio from 82.26% for the quarter ended September 30, 2015, to 73.84% for the current quarter."
Net Interest Income. Net interest income for the 2016 third quarter increased to $8.3 million from $8.1 million for the linked 2016 second quarter and $7.4 million for the 2015 third quarter. The tax equivalent net interest margin fell by 3 basis points to 3.73% for the current quarter from 3.76% for the linked quarter as the current interest rate environment presents challenges to maintain or increase yields on earnings assets as we grow. Compared with the 2015 third quarter, our current quarter net interest margin improved by 10 basis points from 3.63%. This improvement in the net interest margin is due to significant growth of our earning assets with cash flows from lower yielding securities utilized to grow our loan portfolio, thereby changing the mix of earning assets.
Net interest income for the first nine months of 2016 increased to $24.2 million, from $21.7 million for the comparative prior year nine month period. Growth and changes in the mix of our earning asset base positively impacted net interest income as well as the net interest margin for the first nine months of 2016 compared to the prior year period. Net interest income increased by $2.5 million and the net interest margin improved to 3.72% from 3.64%. During the comparative periods average earning assets increased by $68.0 million and the percentage of average loans outstanding to average earning assets increased to 74.5% from 64.2%.
Asset Quality and Provision for Credit Losses. Total nonperforming assets declined to $7.7 million or 0.78% of total assets at September 30, 2016, compared to $9.4 million or 1.0% of total assets at December 31, 2015, and $10.2 million or 1.1% of total assets at September 30, 2015. Total loans and leases in non-accrual status were $2.9 million at September 30, 2016, compared to $3.2 million at December 31, 2015, and $3.5 million at September 30, 2015. Our level of other real estate owned (OREO) declined to $4.8 million at September 30, 2016, from $6.1 million at December 31, 2015, and $6.5 million at September 30, 2015.
The allowance for loan and lease losses (ALLL) was $8.5 million at September 30, 2016, representing 1.25% of loans and leases held for investment, compared to $7.9 million or 1.30% at December 31, 2015, and $7.6 million or 1.33% at September 30, 2015. The Bank recorded $220,000 of provision for credit losses in the 2016 third quarter, $325,000 in the linked second quarter, and $335,000 in the comparative 2015 third quarter. For the nine months ended September 30, 2016, the Bank recorded $770,000 of provision for credit losses compared to $475,000 in the first nine months of 2015. Management believes the Company is adequately reserved for potential future credit losses.
Non-Interest Income. Total non-interest income was $3.7 million for the 2016 third quarter compared to $3.5 million for the linked 2016 second quarter and $3.8 million for the 2015 third quarter. Both the linked and comparative year quarters include gains on sale of investment securities.
Deposit fees and service charges were $1.9 million for the 2016 third quarter and represented 51.7% of total non-interest income. The Company also generated $1.9 million of deposit fees and service charges for the linked 2016 second quarter and $2.1 million in the 2015 third quarter.
Total non-interest income generated from the sale and servicing of mortgage loans and loan fees increased to $1.2 million for the 2016 third quarter compared to $842,000 in the linked 2016 second quarter and $792,000 for the 2015 third quarter. Fee income generated from the servicing of mortgages improved during the current quarter by $53,000 due to the acquisition of mortgage servicing rights in July. Revenue from mortgage banking is subject to the level of activity in the real estate market and changes in the interest rate environment, as such results will vary depending on current levels and trends in the market place.
Sales of OREO resulted in a net gain of $77,000 for the 2016 third quarter compared to net losses of $14,000 for the linked 2016 second quarter and $63,000 for the 2015 third quarter as the Bank continues its efforts to reduce its level of nonperforming assets.
The Bank had no net gains from investment securities sales for the 2016 third quarter compared to $184,000 for the linked quarter and $503,000 for the prior year quarter. We have sold investment securities in prior periods primarily to fund growth in our loan and lease portfolios.
Included in other non-interest income is revenue from investments in Bank-owned life insurance (BOLI) of $142,000 for the 2016 third quarter compared to $142,000 for the linked 2016 second quarter and $127,000 for the 2015 third quarter.
Other non-interest income also includes SBA related revenue of $148,000 for the 2016 third quarter compared to $142,000 for the 2016 second quarter and $51,000 for the 2015 third quarter. While the Bank has originated some SBA loans in prior years, we began to actively originate, sell and service these credits during 2016.
Total core non-interest income, excluding net gains from securities and OREO sales, continued to improve in the current quarter to $3.6 million from $3.4 million for the linked 2016 second quarter and $3.3 million for the comparative 2015 third quarter, as shown under the heading "Reconciliation of Non-GAAP Measures" on the accompanying table of Supplemental Financial Data, primarily due to an increase in revenues from our mortgage banking activities.
For the first nine months of 2016 total non-interest income increased to $10.8 million from $10.6 million for the prior year period driven by increases in mortgage banking and SBA loan sales activity. Fees and service charges on deposits were $5.7 million for the first nine months of 2016 compared to $6.1 million for the first nine months of 2015. Revenue generated from the sale and servicing of mortgage loans and loan fees increased to $2.6 million for the first nine months of 2016 from $2.3 million for the first nine months of 2015. Gains realized from the sale of investment securities were $467,000 and $955,000 for the first nine months of 2016 and 2015, respectively. The Bank recognized net gains of $51,000 and $10,000 on the disposal of OREO during the first nine months of 2016 and 2015, respectively. BOLI earnings increased to $419,000 for the first nine months of 2016 from $382,000 for the first nine months of 2015. SBA related income increased to $434,000 for the first nine months of 2016 from $51,000 for the first nine months of 2015.
Non-Interest Expense. Total non-interest expense has remained stable at $8.9 million for the 2016 third quarter and $9.0 million for both the linked 2016 second quarter and the 2015 third quarter. For the first nine months of 2016, total non-interest expense declined to $27.1 million from $27.3 million reported in the first nine months of 2015.
Compensation and benefit expenses, the largest component of non-interest expenses, were $5.0 million for the 2016 third quarter compared to $4.9 million for both the linked 2016 second quarter and the 2015 third quarter. For the first nine months of 2016 compensation expenses were $15.0 million compared to $14.5 million for the prior year period. Expenses in the first nine months of 2016 included severance costs associated with branch consolidations during the period. The Bank will continue to manage overall staffing levels to ensure we meet the ongoing needs of our customers and support future growth.
FDIC insurance premiums were $157,000 for the 2016 third quarter compared to $161,000 for the linked 2016 second quarter and $163,000 for the 2015 third quarter. For the first nine months of 2016 FDIC insurance costs were $479,000 compared to $455,000 for the first nine months of 2015. The increase in FDIC insurance premiums during the first nine months of 2016 was due to the growth in our balance sheet.
Premises and equipment expense remained relatively stable at $1.3 million for the 2016 third quarter compared to $1.4 million for the linked quarter and $1.3 million for the 2015 third quarter. For the first nine months of 2016 premises and equipment expense was $4.1 million compared to $4.0 million for the prior year period. In 2016 the Bank consolidated three existing branches into nearby locations. Occupancy expense for the 2016 period includes the retirement of certain leasehold improvements and other fixed assets at locations that were consolidated and closed. We will continue to explore opportunities to gain efficiency and performance improvement from our branch network.
Advertising expense declined to $151,000 for the 2016 third quarter compared to $229,000 for the linked 2016 second quarter and $219,000 for the 2015 third quarter. For the first nine months of 2016 advertising expense declined to $569,000 from $598,000 for the first nine months of 2015. The Bank continues to invest in building our brand awareness throughout our expanded footprint with its advertising and marketing efforts.
Data processing costs were $757,000 for the 2016 third quarter compared to $750,000 for the linked 2016 second quarter and $819,000 for the comparative 2015 third quarter. For the first nine months of 2016, data processing expense declined to $2.3 million from $2.8 million for the prior year. Data processing expense for the 2015 nine-month period included $173,000 of one-time expenses associated with a branch acquisition transaction.
Total amortization of intangible assets, including mortgage servicing rights and identifiable intangible assets, was $137,000 for the 2016 third quarter compared to $134,000 for the linked 2016 second quarter and $130,000 for the 2015 third quarter. For the first nine months of 2016 amortization of intangible assets was $402,000 compared to $387,000 for the first nine months of 2015.
Total expenses attributable to ongoing maintenance, property taxes, insurance and valuation adjustments for OREO properties were $119,000 for the 2016 third quarter compared to $213,000 for the linked 2016 second quarter and $99,000 for the 2015 third quarter. For the first nine months of 2016 OREO related expenses were $426,000 compared to $463,000 for the prior year. Management continuously analyzes the carrying value of OREO and makes valuation adjustments as necessary. There were no quarterly valuation adjustments included for the current period and $103,000 and $10,000, respectively, for the linked and comparative prior year quarters. For the first nine months of 2016 and 2015 valuation adjustments were $110,000 and $96,000, respectively.
Other non-interest expense remained consistent at $1.3 million for the 2016 third quarter compared to $1.2 million for the linked 2016 second quarter and $1.3 million for the 2015 third quarter. For the first nine months of 2016 other non-interest expense declined to $3.8 million from $4.1 million for the first nine months of 2015. Other non-interest expense included an $85,000 loss on the disposal of a former branch location and $180,000 of one-time branch acquisition expenses for the current and prior year periods, respectively.
Income tax expense increased to $947,000 for the 2016 third quarter from $665,000 for the linked 2016 second quarter and $611,000 for the 2015 third quarter. For the first nine months of 2016 income tax expense increased to $2.2 million from $1.4 million for the prior year. The effective income tax rates were 33.3% for the 2016 third quarter, 29.2% for the linked 2016 second quarter and 33.1% for the 2015 third quarter. The effective income tax rates were 30.6% and 30.3% for the respective 2016 and 2015 nine-month periods. As previously noted, income tax expense for the third quarter of 2016 and 2015 includes a $74,000 and $80,000 expense adjustment, respectively, due a write down of our deferred tax asset given the declines in the North Carolina statutory tax rate. Exclusive of the $74,000 and $80,000 adjustments noted above, the effective income tax rates were 30.7 % and 29.5% for the three and nine-month periods ended September 30, 2016, respectively; and 28.7% and 28.5% for the respective three and nine-month periods of 2015.
Balance Sheet. Total assets increased at an annualized growth rate of 5.6% to $985.8 million at September 30, 2016, from $946.3 million at December 31, 2015. The increase is attributable to solid growth in the loan and lease portfolio and in interest-bearing deposits with banks. This growth was partially funded by the sale of investment securities as well as a $48.5 million increase in deposits over this same nine-month period.
Loans and leases held for investment grew by $75.5 million during the first nine months of 2016. As a result, total loans and leases held for investment increased to $682.5 million at September 30, 2016, from $607.0 million at December 31, 2015. Mortgage loans held for sale increased to $7.3 million at September 30, 2016, from $3.9 million at December 31, 2015. As a result of the Bank's robust loan growth during 2016 our loans-to-deposits ratio has risen from 75.3% at December 31, 2015, to 80.2% at September 30, 2016.
The investment securities portfolio and interest-bearing deposits totaled $231.7 million at September 30, 2016, compared to $267.4 million at December 31, 2015. The cash flows from these assets were used to support growth in our loan portfolio.
Mortgage servicing rights (MSRs) increased to $2.1 million at September 30, 2016, from $1.3 million at December 31, 2015. During the three months ended September 30, 2016, the Bank purchased the MSRs of 452 high-quality Freddie Mac and Fannie Mae loans with an unpaid principal balance of $84.6 million. The selection of these mortgage loans to service was based on their quality as well as their geographic location. All of the loans acquired were current as to payment on the purchase date and the Bank had the ability to push-back any loans that prepaid or became delinquent within 90 days. In addition, all of these loans are located in the state of North Carolina and a significant portion of the borrowers reside within the Bank's footprint. Mortgage loans serviced for others increased to $370.6 million at September 30, 2016, from $297.5 million at December 31, 2015, primarily due to these acquired MSRs.
The Bank's investment in BOLI increased to $17.9 million at September 30, 2016, from $15.6 million at December 31, 2015. The investment returns from the BOLI are utilized to offset a portion of the cost of providing benefits to our employees.
Total deposits increased to $859.8 million at September 30, 2016, from $811.3 million at December 31, 2015. Total non-maturity deposits grew to $595.7 million at September 30, 2016, from $551.3 million at December 31, 2015. This growth in non-maturity deposits during the first nine months of 2016 includes a $20.3 million or 12.0% increase in non-interest bearing checking account balances.
Stockholders' equity increased by $6.1 million to $88.3 million at September 30, 2016, from $82.2 million at December 31, 2015. This increase primarily reflects the $5.0 million of net income earned for the first nine months of 2016 and a $1.9 million increase in accumulated other comprehensive income resulting from the mark-to-market adjustment of the available-for-sale securities portfolio, net of $807,000 of dividends declared.
The tangible equity to assets ratio increased to 8.36% at September 30, 2016, from 8.04% at December 31, 2015. The tangible book value per common share increased to $8.68 at September 30, 2016, from $8.02 at December 31, 2015.
Corporate and Investor Information. First South Bank has been serving the citizens of eastern and central North Carolina since 1902 and offers a variety of financial products and services to business and individual customers. The Bank operates through its main office headquartered in Washington, North Carolina, and currently has 30 full service branch offices located throughout eastern and central North Carolina. The Bank also provides a full menu of leasing services through its wholly-owned subsidiary, First South Leasing, LLC. In addition, under its First South Wealth Management division, the Bank makes securities brokerage services available through an affiliation with an independent broker/dealer. First South Bank is a wholly-owned subsidiary of First South Bancorp, Inc.
Additional investor information for the Company and the Bank may be accessed on our website at www.firstsouthnc.com. The Company's common stock symbol as listed on the NASDAQ Global Select Market is "FSBK".
Forward-Looking Statements. Statements contained in this release, which are not historical facts, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors which include the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates, the effects of competition, and including without limitation other factors that could cause actual results to differ materially as discussed in documents filed by the Company with the Securities and Exchange Commission from time to time.
Non-GAAP Financial Measures. This press release and the accompanying Supplemental Financial Data contain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States ("GAAP"). Management uses these "non-GAAP" measures in their analysis of the Company's performance. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrating the effects of significant gains and charges in the current period. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. See the disclosures above and in the Supplemental Financial Data for reconciliations of any non-GAAP measures to the most directly comparable GAAP measure.
(NASDAQ: FSBK)
First South Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition
September 30, December 31,
2016 2015
---- ----
Assets (Unaudited)
Cash and due from banks $19,272,704 $19,425,747
Interest-bearing deposits with banks 37,936,276 18,565,521
Investment securities available-for-sale, at fair value 193,255,580 248,294,725
Investment securities held-to-maturity 509,328 508,456
Mortgage loans held for sale 7,312,568 3,943,798
Loans and leases held for investment 682,465,668 607,014,247
Allowance for loan and lease losses (8,498,061) (7,866,523)
---------- ----------
Net loans and leases held for investment 673,967,607 599,147,724
Premises and equipment, net 11,608,966 13,664,937
Assets held for sale 192,720 -
Other real estate owned 4,810,434 6,125,054
Federal Home Loan Bank stock, at cost 1,701,200 2,369,300
Accrued interest receivable 3,118,482 2,874,506
Goodwill 4,218,576 4,218,576
Mortgage servicing rights 2,090,680 1,265,589
Identifiable intangible assets 1,682,269 1,895,514
Bank-owned life insurance 17,937,292 15,635,140
Prepaid expenses and other assets 6,180,717 8,348,385
--------- ---------
Total assets $985,795,399 $946,282,972
============ ============
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing demand $189,872,662 $169,545,849
Interest bearing demand 264,114,729 246,376,521
Savings 141,701,335 135,369,668
Large denomination certificates of deposit 124,416,507 116,299,196
Other time deposits 139,725,846 143,730,993
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Total deposits 859,831,079 811,322,227
Borrowings 20,000,000 37,000,000
Junior subordinated debentures 10,310,000 10,310,000
Other liabilities 7,360,372 5,479,971
--------- ---------
Total liabilities 897,501,451 864,112,198
----------- -----------
Common stock, $.01 par value, 25,000,000 shares authorized;
9,494,935 and 9,489,222 shares outstanding, respectively 94,949 94,892
Additional paid-in capital 35,998,472 35,936,911
Retained earnings 47,851,299 43,691,073
Accumulated other comprehensive income 4,349,228 2,447,898
--------- ---------
Total stockholders' equity 88,293,948 82,170,774
---------- ----------
Total liabilities and stockholders' equity $985,795,399 $946,282,972
First South Bancorp, Inc. and Subsidiary
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2016 and 2015
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2016 2015 2016 2015
---- ---- ---- ----
Interest income:
Interest and fees on loans $7,915,133 $6,639,177 $22,748,826 $18,834,471
Interest on investments and deposits 1,295,051 1,577,440 4,131,333 5,047,181
--------- --------- --------- ---------
Total interest income 9,210,184 8,216,617 26,880,159 23,881,652
--------- --------- ---------- ----------
Interest expense:
Interest on deposits 728,106 598,081 2,094,809 1,730,070
Interest on borrowings 55,886 54,077 187,683 61,593
Interest on junior subordinated notes 127,011 141,578 408,628 421,656
------- ------- ------- -------
Total interest expense 911,003 793,736 2,691,120 2,213,319
------- ------- --------- ---------
Net interest income 8,299,181 7,422,881 24,189,039 21,668,333
Provision for credit losses 220,000 335,000 770,000 475,000
------- -------
Net interest income after provision for credit losses 8,079,181 7,087,881 23,419,039 21,193,333
--------- --------- ---------- ----------
Non-interest income:
Deposit fees and service charges 1,907,878 2,093,101 5,746,336 6,067,959
Loan fees and charges 72,578 62,960 268,212 179,196
Mortgage loan servicing fees 343,081 263,679 850,770 807,126
Gain on sale and other fees on mortgage loans 812,754 528,745 1,795,017 1,486,278
Gain (loss) on sale of other real estate, net 77,416 (63,402) 50,932 9,814
Gain on sale of investment securities - 502,576 467,470 954,514
Other income 477,343 378,574 1,636,428 1,057,395
------- ------- --------- ---------
Total non-interest income 3,691,050 3,766,233 10,815,165 10,562,282
--------- --------- ---------- ----------
Non-interest expense:
Compensation and fringe benefits 4,970,846 4,935,133 14,955,785 14,475,105
Federal deposit insurance premiums 157,142 163,200 479,276 445,081
Premises and equipment 1,349,243 1,312,123 4,103,726 3,976,577
Advertising 151,304 218,827 568,556 598,477
Data processing 757,200 818,680 2,303,418 2,805,101
Amortization of intangible assets 136,882 129,527 401,981 386,597
Other real estate owned expense 119,065 99,234 425,622 462,825
Other 1,286,741 1,330,098 3,842,879 4,137,281
--------- --------- --------- ---------
Total non-interest expense 8,928,423 9,006,822 27,081,243 27,287,044
--------- --------- ---------- ----------
Income before income tax expense 2,841,808 1,847,292 7,152,961 4,468,571
Income tax expense 947,496 610,680 2,185,841 1,352,983
------- ------- --------- ---------
NET INCOME $1,894,312 $1,236,612 $4,967,120 $3,115,588
========== ========== ========== ==========
Per share data:
Basic earnings per share $0.20 $0.13 $0.52 $0.33
Diluted earnings per share $0.20 $0.13 $0.52 $0.33
Dividends per share $0.030 $0.025 $0.085 $0.075
Average basic shares outstanding 9,494,861 9,500,885 9,493,285 9,532,393
Average diluted shares outstanding 9,525,302 9,520,943 9,520,216 9,552,298
First South Bancorp, Inc. Supplemental Financial Data (Unaudited)
Quarter to Date Year to Date
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9/30/2016 6/30/2016 3/31/2016 12/31/2015 9/30/2015 9/30/2016 9/30/2015
--------- --------- --------- ---------- --------- --------- ---------
(dollars in thousands except per share data)
Consolidated balance sheet data:
--------------------------------
Total assets $985,795 $961,479 $940,108 $946,283 $913,368 $985,795 $913,368
Loans held for sale: $7,313 $5,252 $2,490 $3,944 $4,029 $7,313 $4,029
Loans held for investment (HFI):
Mortgage $74,710 $73,100 $73,412 $71,866 $71,148 $74,710 $71,148
Commercial 518,265 510,678 482,779 454,877 419,784 518,265 419,784
Consumer 69,039 66,138 64,521 63,036 61,934 69,039 61,934
Leases 20,452 18,927 18,333 17,235 14,438 20,452 14,438
Total loans held for investment 682,466 668,843 639,045 607,014 567,304 682,466 567,304
Allowance for loan and lease losses (8,498) (8,338) (8,135) (7,867) (7,570) (8,498) (7,570)
------ ------ ------ ------ ------ ------
Net loans held for investment $673,968 $660,505 $630,910 $599,147 $559,734 $673,968 $559,734
Cash & interest bearing deposits $57,209 $40,734 $36,115 $37,991 $42,686 $57,209 $42,686
Investment securities 193,765 200,364 213,520 248,803 248,861 193,765 248,861
Premises and equipment 11,609 11,671 12,144 13,665 15,290 11,609 15,290
Goodwill 4,219 4,219 4,219 4,219 4,219 4,219 4,219
Identifiable intangible asset 1,682 1,753 1,824 1,896 1,967 1,682 1,967
Mortgage servicing rights 2,091 1,273 1,247 1,266 1,229 2,091 1,229
Deposits:
Non-interest checking $189,873 $177,281 $164,244 $169,546 $157,609 $189,873 $157,609
Interest checking 176,034 170,153 171,323 173,934 167,673 176,034 167,673
Money market 88,081 72,054 73,000 72,442 68,443 88,081 68,443
Savings 141,701 142,151 146,255 135,370 133,570 141,701 133,570
Certificates 264,142 263,823 263,845 260,030 256,016 264,142 256,016
------- ------- ------- ------- ------- ------- -------
Total deposits $859,831 $825,462 $818,667 $811,322 $783,311 $859,831 $783,311
Borrowings $20,000 $32,500 $21,500 $37,000 $33,000 $20,000 $33,000
Junior subordinated debentures 10,310 10,310 10,310 10,310 10,310 10,310 10,310
Stockholders' equity 88,294 87,327 84,179 82,171 81,623 88,294 81,623
Consolidated earnings summary:
------------------------------
Interest income $9,210 $8,998 $8,672 $8,569 $8,217 $26,880 $23,882
Interest expense 911 898 882 841 794 2,691 2,213
--- --- --- --- --- ----- -----
Net interest income 8,299 8,100 7,790 7,728 7,423 24,189 21,669
Provision for credit losses 220 325 225 325 335 770 475
Noninterest income 3,691 3,548 3,576 3,736 3,766 10,815 10,562
Noninterest expense 8,929 9,046 9,106 9,087 9,007 27,081 27,287
----- ----- ----- ----- ----- ------ ------
Income before taxes 2,841 2,277 2,035 2,052 1,847 7,153 4,469
Income tax expense 947 665 574 484 610 2,186 1,353
--- --- --- --- --- ----- -----
Net income $1,894 $1,612 $1,461 $1,568 $1,237 $4,967 $3,116
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Per Share Data:
---------------
Basic earnings per share $0.20 $0.17 $0.15 $0.17 $0.13 $0.52 $0.33
Diluted earnings per share $0.20 $0.17 $0.15 $0.16 $0.13 $0.52 $0.33
Dividends per share $0.030 $0.030 $0.025 $0.025 $0.025 $0.085 $0.075
Book value per share $9.30 $9.20 $8.87 $8.66 $8.60 $9.30 $8.60
Tangible book value per share $8.68 $8.57 $8.23 $8.02 $7.95 $8.68 $7.95
Average basic shares 9,494,861 9,493,776 9,491,201 9,489,222 9,500,885 9,493,285 9,532,293
Average diluted shares 9,525,302 9,519,565 9,514,797 9,513,916 9,520,943 9,520,216 9,552,298
First South Bancorp, Inc. Supplemental Financial Data (Unaudited)
Quarter to Date Year to Date
--------------- ------------
9/30/2016 6/30/2016 3/31/2016 12/31/2015 9/30/2015 9/30/2016 9/30/2015
--------- --------- --------- ---------- --------- --------- ---------
(dollars in thousands except per share data)
Performance ratios (tax equivalent):
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Yield on average earning assets 4.13% 4.17% 4.07% 4.03% 4.01% 4.12% 4.00%
Cost of interest bearing liabilities 0.52% 0.52% 0.52% 0.49% 0.48% 0.52% 0.46%
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Net interest spread 3.61% 3.64% 3.55% 3.54% 3.53% 3.60% 3.54%
Net interest margin 3.73% 3.76% 3.66% 3.64% 3.63% 3.72% 3.64%
Avg earning assets to total avg assets 92.42% 92.38% 92.20% 92.19% 91.65% 92.33% 91.39%
Return on average assets (annualized) 0.78% 0.68% 0.63% 0.67% 0.54% 0.70% 0.47%
Return on average equity (annualized) 8.52% 7.55% 6.97% 7.52% 5.99% 7.69% 5.08%
Efficiency ratio 73.84% 77.59% 80.74% 81.41% 82.26% 77.31% 85.63%
Average assets $968,729 $947,761 $938,702 $930,978 $904,017 $951,731 $887,170
Average earning assets $895,290 $875,529 $865,463 $858,243 $828,538 $878,761 $810,774
Average equity $88,481 $85,927 $84,265 $82,713 $81,975 $86,225 $81,990
Equity/Assets 8.96% 9.08% 8.95% 8.68% 8.94% 8.96% 8.94%
Tangible Equity/Assets 8.36% 8.46% 8.31% 8.04% 8.26% 8.36% 8.26%
Asset quality data and ratios:
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Nonaccrual loans:
Non-TDR nonaccrual loans
Earning $661 $555 $945 $985 $799 $661 $799
Non-Earning 1,289 1,075 895 710 964 1,289 964
Total Non-TDR nonaccrual loans $1,950 $1,630 $1,840 $1,695 $1,763 $1,950 $1,763
TDR nonaccrual loans
Current TDRs $700 $706 $847 $1,343 $1,250 $700 $1,250
Past Due TDRs 248 250 154 159 463 248 463
Total TDR nonaccrual loans $948 $956 $1,001 $1,502 $1,713 $948 $1,713
Total nonaccrual loans $2,898 $2,586 $2,841 $3,197 $3,476 $2,898 $3,476
Loans >90 days past due, still accruing 0 218 153 115 183 0 183
Other real estate owned 4,810 5,541 5,956 6,125 6,506 4,810 6,506
----- ----- ----- ----- ----- -----
Total nonperforming assets $7,708 $8,345 $8,950 $9,437 $10,165 $7,708 $10,165
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Allowance for loan and lease losses to
loans held for investment 1.25% 1.25% 1.27% 1.30% 1.33% 1.25% 1.33%
Net charge-offs (recoveries) $60 $122 $(44) $28 $129 $138 $425
Net charge-offs (recoveries) to total loans 0.01% 0.02% -0.01% 0.00% 0.02% 0.02% 0.07%
Total nonaccrual loans to total loans HFI 0.42% 0.39% 0.44% 0.53% 0.61% 0.42% 0.61%
Total nonperforming assets to total assets 0.78% 0.87% 0.95% 1.00% 1.11% 0.78% 1.11%
Total loans to total deposits 80.22% 81.66% 78.36% 75.30% 72.94% 80.22% 72.94%
Total loans to total assets 69.97% 70.11% 68.24% 64.56% 62.55% 69.97% 62.55%
Loans serviced for others $370,606 $292,222 $293,548 $297,494 $297,764 $370,606 $297,764
Reconciliation of Non-GAAP Measures:
------------------------------------
Pre-tax pre-provision operating
earnings (non-GAAP):
Income before taxes (GAAP) $2,841 $2,277 $2,035 $2,052 $1,847 $7,153 $4,469
Provision for credit losses 220 325 225 325 335 770 475
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Pre-tax pre-provision net income 3,061 2,602 2,260 2,377 2,182 7,923 4,944
Securities (gains) losses, net 0 (184) (284) (463) (503) (467) (955)
OREO valuations 0 103 7 100 10 110 95
OREO (gains) losses, (net) (77) 14 12 (30) 63 (51) (10)
--- --- --- --- --- --- ---
Pre-tax pre-provision operating
earnings (non-GAAP) $2,984 $2,535 $1,995 $1,984 $1,752 $7,515 $4,074
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Total core non-interest income (non-GAAP):
Non-interest income (GAAP) $3,691 $3,548 $3,576 $3,736 $3,766 $10,815 $10,562
Securities (gains) losses, net 0 (184) (284) (463) (503) (467) (955)
OREO (gains) losses, (net) (77) 14 12 (30) 63 (51) (10)
--- --- --- --- --- --- ---
Total core non-interest income (non-GAAP) $3,614 $3,378 $3,304 $3,243 $3,326 $10,297 $9,597
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For more information contact:
First South Bancorp, Inc.
Bruce Elder (CEO) (252) 940-4936
Scott McLean (CFO) (252) 940-5016
Website: www.firstsouthnc.com
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/first-south-bancorp-inc-reports-53-and-59-increase-in-quarterly-and-ytd-earnings-for-the-periods-ended-september-30-2016-300348521.html
SOURCE First South Bancorp, Inc.
