WASHINGTON, N.C., Oct. 30, 2015 /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, 2015.
For the 2015 third quarter, net income was $1,237,000, or $0.13 per diluted common share, compared to net income of $1,154,000, or $0.12 per diluted common share for the linked 2015 second quarter, and $1,419,000 or $0.15 per diluted common share for the 2014 third quarter.
The improvement in our operating results on a linked quarter basis is due to increases in net interest income and non-interest income, and a reduction in non-interest expenses. Both net interest income as well as non-interest income results for the third quarter of 2015 were positive when compared to the quarter ended September 30, 2014. The favorable increase in our level of net interest income reflects the impact of strong earning asset growth over the past twelve months. Non-interest expenses in the current quarter exceeded that of the same quarter one year ago due primarily to infrastructure added in association with the branches acquired from Bank of America (BOA) in the fourth quarter of 2014.
Net income for the first nine months of 2015 was $3,116,000, or $0.33 per diluted common share, compared to net income of $3,940,000, or $0.41 per diluted common share earned in the first nine months of 2014. Earnings for the current nine month period were positively impacted by increases in net interest income and non-interest income, as well as lower loan loss provisions. During this same period, non-interest expenses have increased with growth of our franchise and supporting infrastructure. In addition, during the first nine-months of 2015, the Bank incurred $425,000 of one-time, pre-tax transaction expenses associated with the nine newly acquired branch offices from BOA.
Bruce Elder, President and CEO, commented, "After acquiring $170 million in deposits and only $3 million in loans through our branch transaction in December 2014, we have been focused on redeploying the resulting cash and investments into quality loans. We are pleased to report that through the first nine months of 2015, we have generated net growth in our loan portfolio of $86.9 million. After concentrating during the first quarter on ensuring that our new offices and employees reflected our YOU FIRST brand of banking, we turned our attention to new loan origination and experienced almost $78 million in net loan growth during the past six months. With a strong pipeline heading into the fourth quarter, we anticipate net loan growth to continue through the end of 2015 and into next year."
Mr. Elder commented further, "During the quarter ended September 30, 2015, we paid our seventh consecutive quarterly cash dividend of $0.025 per share. Our dividend payments for the nine months ended September 30, 2015 represent a 23% payout ratio of diluted earnings per share. The payment of these quarterly dividends reflects the Company's strong capital position, improved financial performance and our confidence in the future."
Net Interest Income
Net interest income for the 2015 third quarter increased to $7.4 million from $7.2 million for the linked 2015 second quarter, and $6.6 million for the 2014 third quarter. Net interest income for the first nine months of 2015 increased to $21.7 million from $19.6 million for the comparative period one year prior. The tax equivalent net interest margin fell 4 basis points to 3.63% for the 2015 third quarter, from 3.67% for the linked 2015 second quarter, and fell 46 basis points when compared to the 4.09% for the 2014 third quarter. The tax equivalent net interest margin for the first nine months of 2015 declined by 52 basis points to 3.64%, from 4.16% for the comparative nine month period of 2014.
The Company's margin has declined when compared to prior year periods due to a change in the mix of our earning assets coupled with reduced yields on loans and investment; however, the overall level of net interest income has increased. The change in our earning asset mix is due to an increase in bond portfolio holdings in the later portion of 2014 using the funds received from our branch acquisition transaction with BOA. A significant portion of these investments are shorter in duration and therefore have lower yields to provide additional cash flow to support future loan portfolio growth. In addition, we have experienced lower yields on our loan portfolio due to the current historically low rate environment coupled with strong competition for quality credit customers. While our yields are below historical levels, our efforts to increase our overall base of earning assets have resulted in growing net interest income. Average earning assets for the nine month period ended September 30, 2015 are $810.8 million compared to $640.8 million for the comparative period ended September 30, 2014.We anticipate our current margin to remain relatively stable over the near-term as the shift back to a more normalized earning asset mix should offset the impact of the current interest rate environment.
Asset Quality and Provisions for Loan Losses
Total nonperforming assets were $10.2 million, or 1.1% of total assets at September 30, 2015, compared to $13.2 million or 1.5% of total assets at December 31, 2014. Total loans in non-accrual status were $3.5 million at September 30, 2015, compared to $5.0 million at December 31, 2014. Our level of other real estate owned (OREO) declined to $6.5 million at September 30, 2015, from $7.8 million at December 31, 2014. The Bank continues to place improving asset quality metrics as a key component of its short-term and long-term performance objectives.
The allowance for loan and lease losses (ALLL) was $7.6 million at September 30, 2015, representing 1.33% of loans and leases held for investment, compared to $7.5 million at December 31, 2014, or 1.57% of loans and leases held for investment. The Bank recorded $335,000 of provision for credit losses in the 2015 third quarter, $140,000 in the linked 2015 second quarter, and $400,000 in the comparative 2014 third quarter. For the nine months ended September 30, 2015, the Bank recorded $475,000 of provision for credit losses, compared to $1.1 million in the first nine months of 2014. Management believes the ALLL remains adequate.
Non-Interest Income
Total non-interest income was $3.8 million for the 2015 third quarter, compared to $3.6 million for the linked 2015 second quarter and $2.2 million for the 2014 third quarter.
Deposit fees and service charges totaled $2.1 million for both the 2015 third quarter and the linked 2015 second quarter. These results were improved over the $1.1 million generated for the comparative third quarter of 2014. Deposit fees and services charges represented 55.6%, 58.2% and 49.8% of total non-interest income for the 2015 third quarter, the linked 2015 second quarter and the comparative 2014 third quarter, respectively. This increase primarily reflects the additional fees and service charges generated from the branch acquisition transaction. We anticipate additional service charge revenue from deposits going forward, as we focus on growing our core deposit base through new customer acquisition.
Total non-interest income generated from the sale and servicing of mortgage loans and loan fees was $792,000 for the 2015 third quarter, compared to $877,000 in the linked 2015 second quarter and $677,000 for the 2014 third quarter. Due to volatility in interest rates, mortgage originations declined slightly in the third quarter, as compared to the second quarter. We anticipate mortgage origination volumes to remain relatively unchanged during the fourth quarter of 2015. However, new loan volume may be somewhat dampened as new regulatory changes are implemented. We will continue to explore various strategies to enhance our non-interest income from our mortgage division, including the purchasing of servicing rights.
Included in other non-interest income is revenue from investments in Bank-owned life insurance (BOLI) of $127,000 for the 2015 third quarter, compared to $128,000 the linked 2015 second quarter and $133,000 for the 2014 third quarter.
Net losses from sales of OREO were $63,000 for the 2015 third quarter, compared to gains of $27,000 for the linked 2015 second quarter and $9,000 for the 2014 third quarter, as the Bank continues in its efforts of disposing of nonperforming assets.
Net gains from investment securities sales were $503,000 for the 2015 third quarter, compared to $201,000 for the linked 2015 second quarter and none for the 2014 third quarter. During 2014, we implemented a strategy to pre-invest a large portion of the anticipated acquisition transaction proceeds into short and intermediate term investment securities until the funds could be converted to higher yielding assets. During the 2015 third quarter and linked second quarter, we sold $14.8 million and $9.1 million, respectively, of investment securities primarily to fund net growth in our loan portfolio and to exit certain municipalities with exposure to the oil and gas industries.
For the first nine months of 2015, total non-interest income increased to $10.6 million, from $6.3 million for the first nine months 2014. Fees and service charges on deposits increased significantly to $6.1 million for the first nine months of 2015, from $3.2 million for the 2014 nine month period, primarily resulting from additional revenue generated from accounts acquired in the branch transaction with BOA. Revenue generated from the sale and servicing of mortgage loans and loan fees increased to $2.3 million for the first nine months of 2015, from $1.8 million for 2014 nine month period. Net gains recognized from the sale of investment securities increased to $955,000 for the first nine months of 2015, from $14,000 for the first nine months of 2014, reflecting an increased volume of sales activity in the respective periods. Net gains from sales of OREO declined to $10,000 for the first nine months of 2015, from $82,000 for the first nine months of 2014. BOLI earnings declined to $382,000 for the first nine months of 2015, from $398,000 for the first nine months of 2014.
Non-Interest Expense
Total non-interest expense was $9.0 million for both the 2015 third quarter and the linked 2015 second quarter, but was an increase over the $6.5 million reported for the comparative 2014 third quarter. For the first nine months of 2015, total non-interest expense increased to $27.3 million, from the $19.6 million reported in the first nine months of 2014.
Compensation and benefit expenses, the largest component of non-interest expenses, increased to $4.9 million for the 2015 third quarter, from $4.8 million for the linked 2015 second quarter and $3.8 million comparative 2014 third quarter. For the first nine months of 2015, compensation expense increased to $14.5 million, from $11.5 million for the first nine months of 2014. The increase for the respective 2015 periods is primarily attributable to the expense of the staff in the nine acquired branch offices, as well as administrative staff required to support those new offices and the addition of experienced bankers to generate earning asset growth. The Bank will continue to invest in professionals that allow us to expand our market share and meet the growing needs of our customers.
FDIC insurance premiums increased to $163,000 for the 2015 third quarter, from $149,000 for the linked 2015 second quarter and $137,000 for the comparative 2014 third quarter. For the first nine months of 2015, FDIC insurance was $445,000, compared to $421,000 for the first nine months of 2014. The increased quarterly FDIC insurance premium is primarily attributable to growth of the deposit insurance assessment calculation base resulting from the acquisition transaction.
Premises and equipment expense was $1.3 million for both the 2015 third quarter the linked 2015 second quarter, but was an increase over the $877,000 reported for the comparative 2014 third quarter. For the first nine months of 2015, premises and equipment expense increased to $4.0 million from $2.5 million for the first nine months of 2014. While the branch acquisition has resulted in increased infrastructure cost over our historical levels, we continue to explore opportunities to gain efficiency and performance improvement from our branch network and will consider opportunities, such as expansions and consolidations. As such, given our current branch structure, we would anticipate occupancy cost to maintain or improve from their current levels.
Advertising expense was $219,000 for the 2015 third quarter, compared to $217,000 for the linked 2015 second quarter and $127,000 for the 2014 third quarter. For the first nine months of 2015, advertising expense increased to $598,000, from $296,000 for the first nine months of 2014. We are investing in building our brand awareness throughout our expanded geographic footprint with additional marketing efforts, and anticipate our advertising expenses to continue at current levels.
Data processing costs declined to $819,000 for the 2015 third quarter, from $880,000 for the linked 2015 second quarter, but increased by $252,000, when compared to the $567,000 reported for the 2014 third quarter. For the first nine months of 2015, data processing expense increased to $2.8 million, from $1.7 million for the first nine months of 2014. Data processing costs fluctuate in conjunction with changes in the number of customer accounts and transaction activity volumes. As we continue to focus on new customer acquisition and to invest in emerging technology to better serve our customer base, we anticipate that data processing costs will continue at current levels.
Total amortization of intangible assets, including mortgage servicing rights and identifiable intangible assets, was $130,000 for both the 2015 third quarter and the linked 2015 second quarter, compared to $56,000 for the 2014 third quarter. For the first nine months of 2015, amortization of intangible assets increased to $387,000, from $164,000 for the first nine months of 2014. Amortization of mortgage servicing rights was $58,000 for both the 2015 third quarter and the linked 2015 second quarter, compared to a $56,000 for the 2014 third quarter. Amortization of the Company's core deposit intangible, which is the only identifiable intangible asset subject to amortization, was $72,000 for both the 2015 third quarter and the linked 2015 second quarter, compared to none for the 2014 third quarter.
Total expenses for OREO properties were $99,000 for the 2015 third quarter, compared to $157,000 for the linked 2015 second quarter and $167,000 for the 2014 third quarter. Expenses attributable to ongoing maintenance, property taxes and insurance for OREO properties were $89,000 for the 2015 third quarter, compared to $115,000 for the linked 2015 second quarter and $94,000 for the 2014 third quarter. Quarterly OREO valuation adjustments were $10,000 for the 2015 third quarter, compared to $41,000 for the linked 2015 second quarter and $73,000 for the 2014 third quarter. For the first nine months of 2015, total OREO related expenses increased to $463,000, from $396,000 for the first nine months of 2014.
Other non-interest expense was $1.3 million for the 2015 third quarter, compared to $1.4 million for the linked 2015 second quarter and $779,000 for the comparative 2014 third quarter. For the first nine months of 2015, other non-interest expense increased to $4.1 million, from $2.6 million for the first nine months of 2014. The year-over-year increase in operating expenses is primarily due to the branch offices acquired.
Income tax expense was $611,000 for the 2015 third quarter compared to $486,000 for the linked 2015 second quarter and $489,000 for the 2014 third quarter. Taxes for the third quarter of 2015 includes a one-time $80,000 expense adjustment due a write down of our deferred tax asset given the impending decline in the North Carolina statutory tax rate for 2016. For the first nine months of 2015, income tax expense increased to $1.4 million, from $1.3 million for the first nine months of 2014. Exclusive of the $80,000 one-time adjustment noted above, the effective income tax rates were 28.73% for the 2015 third quarter, 29.62% for the linked 2015 second quarter and 25.65% for the comparative 2014 third quarter. Exclusive of the $80,000 one-time adjustment noted above, the effective income tax rates were 28.49% and 25.04% for the respective 2015 and 2014 nine month periods. The income from the Bank's investment in BOLI and tax-exempt municipal bonds contribute to lowering the Company's tax burden.
During the third quarter of 2015, the Company determined that its income tax expense associated with prior periods had been understated by a net amount of $434,000. For the periods prior to 2014 the cumulative net income tax expense understatement was $651,000. During 2014 the Company overstated income tax expense by $217,000. As a result our deferred tax asset and our income tax receivable accounts have been adjusted to reflect the correction of this error, with a corresponding $434,000 reduction recorded to retained earnings. These corrections are similarly reflected as an adjustment to retained earnings as of December 31, 2014 in the consolidated statement of changes in equity.
Balance Sheet
Total assets increased to $913.4 million at September 30, 2015, from $885.4 million at December 31, 2014. The increase is attributable to a net increase in the volume of earning assets, resulting primarily from net growth in the loan and lease receivable portfolio, and partially offset by the sale of investment securities and a reduction in the level of cash on our balance sheet to help fund loan growth.
Loans and leases held for investment grew by $86.9 million during the first nine months of 2015. This reflects the ninth consecutive quarterly growth in loans and leases held for investment. As a result of this net growth, total loans and leases held for investment increased to $567.3 million at September 30, 2015, from $480.4 million at December 31, 2014. Loans held for sale were $4.0 million at September 30, 2015, compared to $4.8 million at December 31, 2014.
The investment securities portfolio and interest-bearing deposits declined to $273.7 million at September 30, 2015, from $325.6 million at December 31, 2014. As previously noted, in 2014 the Bank implemented a strategy to pre-invest a large portion of the anticipated BOA transaction proceeds into short and intermediate term investment securities until the funds can be converted to higher yielding assets. During the first nine months of 2015, the Bank sold $37.7 million of investment securities primarily to fund our loan portfolio growth and to exit certain municipalities.
The Bank's investment in BOLI was $15.5 million at September 30, 2015, compared to $15.1 million at December 31, 2014. The increase in BOLI levels is due to higher policy cash values.
Identifiable intangible assets were $2.0 million at September 30, 2015, compared to $2.2 million at December 31, 2014, reflecting the core deposit intangible associated with the acquisition transaction, which is being amortized over a ten year period.
Total deposits declined by $5.0 million to $783.3 million at September 30, 2015, from $788.3 million at December 31, 2014. Non-interest bearing accounts, savings accounts and certificates of deposit grew by $10.1 million, $15.6 million and $1.7 million, respectively, and were offset by decreases of $32.4 million in interest bearing demand balances. Certificates of deposits represent 32.7% of total deposits at September 30, 2015, compared to 32.3% at December 31, 2014. Non-interest bearing increased to 20.1% of total deposits at September 30, 2015, from 18.7% at December 31, 2014.
Stockholders' equity increased to $81.6 million at September 30, 2015, from $80.0 million at December 31, 2014. This increase primarily reflects the $3.1 million of net income earned for the first nine months, net of a $78,000 increase in accumulated other comprehensive income primarily resulting from the mark-to-market adjustment of the available-for-sale securities portfolio, $716,000 of cash dividends declared, and $909,000 used to acquire shares of the Company's common stock pursuant to an announced repurchase program. There were 9,489,222 common shares outstanding at September 30, 2015, compared to 9,598,007 shares outstanding at December 31, 2014, reflecting the net effect of 3,359 shares issued pursuant to the vesting of restricted stock awards and 112,144 shares purchased through the stock repurchase program.
The tangible equity to assets ratio was 8.26% at September 30, 2015, compared to 8.31% at December 31, 2014. Despite the decline in tangible equity, our tangible book value per common share increased to $7.95 at September 30, 2015, from $7.67 at December 31, 2014, primarily as a result of our share repurchases.
Key Performance Ratios
Some of our key performance ratios are the return on average assets (ROA), the return on average equity (ROE) and the efficiency ratio. ROA is 0.54% for the 2015 third quarter, compared with 0.53% for the linked 2015 second quarter and 0.79% for the 2014 third quarter. ROE is 5.99% for the 2015 third quarter, compared with 5.66% for the linked 2015 second quarter and 7.05% for the 2014 third quarter. The efficiency ratio (noninterest expenses as a percentage of net interest income plus noninterest income) was 82.26% for the 2015 third quarter, compared to 83.71% for the linked 2015 second quarter, and the 72.52% for the 2014 third quarter. The efficiency ratio measures the proportion of net operating revenues that are absorbed by overhead expenses.
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, including a leasing company. Securities brokerage services are made available through an affiliation with an independent broker/dealer. The Bank operates through its main office headquartered in Washington, North Carolina, and has 32 full service branch offices located throughout eastern and central North Carolina.
The Company's common stock symbol as traded 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 to 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 contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States. First South Bancorp, Inc.'s 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 attached disclosures for a reconciliation of any non-GAAP measures to the most directly comparable GAAP measure.
For more information contact:
First South Bancorp, Inc.
Bruce Elder (CEO), (252) 940-4936
Scott McLean (CFO), (252) 940-5016
Website: www.firstsouthnc.com
First South Bancorp, Inc. and Subsidiary Consolidated Statements of Financial Condition September 30, December 31, 2015 2014 ---- ---- Assets (Unaudited) (As restated) Cash and due from banks $17,825,684 $23,281,016 Interest-bearing deposits with banks 24,860,710 32,835,661 Investment securities available for sale, at fair value 248,352,358 292,298,910 Investment securities held to maturity 508,169 507,309 Loans held for sale: Mortgage loans 4,029,423 4,792,943 --------- --------- Total loans held for sale 4,029,423 4,792,943 Loans and leases held for investment 567,304,315 480,436,270 Allowance for loan and lease losses (7,569,573) (7,519,970) ---------- ---------- Net loans and leases held for investment 559,734,742 472,916,300 Premises and equipment, net 15,289,727 15,821,436 Other real estate owned 6,506,062 7,755,541 Federal Home Loan Bank stock, at cost 2,199,300 606,500 Accrued interest receivable 2,678,319 2,851,650 Goodwill 4,218,576 4,218,576 Mortgage servicing rights 1,228,702 1,178,115 Identifiable intangible assets 1,967,363 2,182,909 Income tax receivable - 1,591,105 ( a ) Bank-owned life insurance 15,507,035 15,125,498 Prepaid expenses and other assets 8,461,656 7,467,178 ( b ) --------- --------- Total assets $913,367,826 $885,430,647 ============ ============ Liabilities and Stockholders' Equity Deposits: Non-interest bearing demand $157,609,019 $147,543,594 Interest bearing demand 236,116,807 268,472,945 Savings 133,569,878 117,932,606 Large denomination certificates of deposit 110,764,798 111,523,043 Other time 145,250,812 142,808,182 ----------- ----------- Total deposits 783,311,314 788,280,370 Borrowed money 33,000,000 - Junior subordinated debentures 10,310,000 10,310,000 Other liabilities 5,123,221 6,837,701 --------- --------- Total liabilities 831,744,535 805,428,071 ----------- ----------- Common stock, $.01 par value, 25,000,000 shares authorized; 9,489,222 and 9,598,007 shares outstanding, respectively 94,892 95,980 Additional paid-in capital 35,920,933 35,869,195 Retained earnings 42,360,680 40,868,919 ( c ) Accumulated other comprehensive income 3,246,786 3,168,482 --------- --------- Total stockholders' equity 81,623,291 80,002,576 ---------- ---------- Total liabilities and stockholders' equity $913,367,826 $885,430,647 (a) - reduced income tax receivable for prior period error (b) - increased deferred tax asset for prior period error (c) - reduced retained earnings for prior period error
First South Bancorp, Inc. and Subsidiary Consolidated Statements of Operations Three and Nine Months Ended September 30, 2015 and 2014 (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2015 2014 2015 2014 ---- ---- ---- ---- (As restated) (As restated) Interest income: Interest and fees on loans $6,639,177 $6,068,196 $18,834,471 $17,966,829 Interest on investments and deposits 1,577,440 1,248,382 5,047,181 3,642,464 --------- --------- --------- --------- Total interest income 8,216,617 7,316,578 23,881,652 21,609,293 --------- --------- ---------- ---------- Interest expense: Interest on deposits 598,081 522,861 1,730,070 1,608,913 Interest on borrowings 54,077 112,174 61,593 157,287 Interest on junior subordinated notes 141,578 81,371 421,656 242,651 ------- ------ ------- ------- Total interest expense 793,736 716,406 2,213,319 2,008,851 ------- ------- --------- --------- Net interest income 7,422,881 6,600,172 21,668,333 19,600,442 Provision for credit losses 335,000 400,000 475,000 1,100,000 ------- ------- --------- Net interest income after provision for credit losses 7,087,881 6,200,172 21,193,333 18,500,442 --------- --------- ---------- ---------- Non-interest income: Deposit fees and service charges 2,093,101 1,118,599 6,067,959 3,184,808 Loan fees and charges 62,960 39,057 179,196 117,615 Mortgage loan servicing fees 263,679 248,399 807,126 724,827 Gain on sale and other fees on mortgage loans 528,745 428,514 1,486,278 1,076,583 Gain on sale of other real estate, net (63,402) 8,949 9,814 82,369 Gain on sale of investment securities 502,576 - 954,514 13,509 Other income 378,574 401,584 1,057,395 1,133,910 ------- ------- --------- --------- Total non-interest income 3,766,233 2,245,102 10,562,282 6,333,621 --------- --------- ---------- --------- Non-interest expense: Compensation and fringe benefits 4,935,133 3,826,855 14,475,105 11,454,632 Federal deposit insurance premiums 163,200 137,253 445,081 420,873 Premises and equipment 1,312,123 877,447 3,976,577 2,534,608 Advertising 218,827 126,892 598,477 295,905 Data processing 818,680 566,513 2,805,101 1,720,321 Amortization of intangible assets 129,527 55,796 386,597 164,008 Other real estate owned expense 99,234 167,164 462,825 395,652 Other 1,330,098 779,226 4,137,281 2,592,176 --------- ------- --------- --------- Total non-interest expense 9,006,822 6,537,146 27,287,044 19,578,175 --------- --------- ---------- ---------- Income before income tax expense 1,847,292 1,908,128 4,468,571 5,255,888 Income tax expense 610,680 489,347 ( a ) 1,352,983 1,315,896 ( a ) ------- ------- --------- --------- NET INCOME $1,236,612 $1,418,781 $3,115,588 $3,939,992 ========== ========== ========== ========== Per share data: Basic earnings per share $0.13 $0.15 ( a ) $0.33 $0.41 ( a ) Diluted earnings per share $0.13 $0.15 ( a ) $0.33 $0.41 ( a ) Dividends per share $0.025 $0.025 $0.075 $0.075 Average basic shares outstanding 9,500,885 9,598,007 9,532,393 9,626,346 Average diluted shares outstanding 9,520,943 9,616,004 9,552,298 9,644,834 (a) - revised for prior period error
First South Bancorp, Inc. Supplemental Financial Data (Unaudited) Quarter to Date Year to Date --------------- ------------ 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014 9/30/2015 9/30/2014 --------- --------- --------- ---------- --------- --------- --------- (As restated) (As restated) (As restated) (dollars in thousands except per share data) Consolidated balance sheet data: -------------------------------- Total assets (1) $913,368 $899,390 $879,215 $885,431 $734,225 $913,368 $734,225 Loans held for sale: $4,029 $6,171 $7,947 $4,793 $5,540 $4,029 $5,540 Loans held for investment (HFI): Mortgage $71,148 $68,812 $66,957 $66,391 $67,791 $71,148 $67,791 Commercial 419,784 399,734 346,326 338,861 331,209 419,784 331,209 Consumer 61,934 62,265 62,756 62,792 61,959 61,934 61,959 Leases 14,438 12,825 12,637 12,392 12,054 14,438 12,054 Total loans held for investment 567,304 543,636 488,676 480,436 473,013 567,304 473,013 Allowance for loan and lease losses (7,570) (7,364) (7,203) (7,520) (7,504) (7,570) (7,504) ------ ------ ------ ------ ------ ------ Net loans held for investment $559,734 $536,272 $481,473 $472,916 $465,509 $559,734 $465,509 Cash & interest bearing deposits $42,686 $36,600 $59,641 $56,117 $20,106 $42,686 $20,106 Investment securities 248,861 260,628 272,990 292,806 188,472 248,861 188,472 Premises and equipment 15,290 15,246 15,481 15,821 12,494 15,290 12,494 Goodwill 4,219 4,219 4,219 4,219 4,219 4,219 4,219 Identifiable intangible asset 1,967 2,039 2,111 2,183 0 1,967 0 Mortgage servicing rights 1,229 1,213 1,160 1,178 1,171 1,229 1,171 Deposits: Non-interest checking $157,609 $158,929 $147,946 $147,544 $99,219 $157,609 $99,219 Interest checking 167,673 169,736 180,114 180,558 130,421 167,673 130,421 Money market 68,443 69,646 84,379 87,915 52,052 68,443 52,052 Savings 133,570 131,078 123,457 117,932 90,190 133,570 90,190 Certificates 256,016 243,480 248,129 254,331 230,166 256,016 230,166 ------- ------- ------- ------- ------- ------- ------- Total deposits $783,311 $772,869 $784,025 $788,280 $602,048 $783,311 $602,048 Borrowings $33,000 $32,000 $0 $0 $37,500 $33,000 $37,500 Junior subordinated debentures 10,310 10,310 10,310 10,310 10,310 10,310 10,310 Stockholders' equity (1) 81,623 79,687 80,968 80,003 79,921 81,623 79,921 Consolidated earnings summary: ------------------------------ Interest income $8,217 $7,901 $7,764 $7,569 $7,316 $23,882 $21,609 Interest expense 794 712 708 742 716 2,213 2,009 --- --- --- --- --- ----- ----- Net interest income 7,423 7,189 7,056 6,827 6,600 21,669 19,600 Provision for credit losses 335 140 0 0 400 475 1,100 Noninterest income 3,766 3,616 3,180 2,251 2,245 10,562 6,334 Noninterest expense 9,007 9,026 9,254 8,896 6,537 27,287 19,578 ----- ----- ----- ----- ----- ------ ------ Income before taxes 1,847 1,639 982 182 1,908 4,469 5,256 Income tax expense (1) 610 485 257 33 489 1,353 1,316 --- --- --- --- --- ----- ----- Net income (1) $1,237 $1,154 $725 $149 $1,419 $3,116 $3,940 Adjusted pre-tax pre-provision operating ---------------------------------------- earnings (non-GAAP): -------------------- Income before taxes $1,847 $1,639 $982 $182 $1,908 $4,469 $5,256 Provision for credit losses 335 140 0 0 400 475 1,100 --- --- --- --- --- --- ----- Pre-tax pre-provision net income 2,182 1,779 982 182 2,308 4,944 6,356 Securities (gains) losses, net (503) (201) (251) 0 0 (955) (14) OREO valuations 10 41 44 131 62 95 73 OREO (gains) losses, (net) 63 (27) (46) (33) (9) (10) (82) --- --- --- --- --- --- --- Adjusted pre-tax pre-provision operating earnings (non-GAAP) $1,752 $1,592 $729 $280 $2,361 $4,074 $6,333 Per Share Data: --------------- Basic earnings per share (1) $0.13 $0.12 $0.08 $0.02 $0.15 $0.33 $0.41 Diluted earnings per share (1) $0.13 $0.12 $0.08 $0.02 $0.15 $0.33 $0.41 Dividends per share $0.025 $0.025 $0.025 $0.025 $0.025 $0.075 $0.075 Book value per share (1) $8.60 $8.38 $8.50 $8.34 $8.33 $8.60 $8.33 Tangible book value per share (1) $7.95 $7.73 $7.83 $7.67 $7.89 $7.95 $7.89 Average basic shares 9,500,885 9,526,656 9,570,820 9,598,007 9,598,007 9,532,393 9,626,346 Average diluted shares 9,520,943 9,546,235 9,590,979 9,618,820 9,616,004 9,552,298 9,644,834 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014 9/30/2015 9/30/2014 --------- --------- --------- ---------- --------- --------- --------- (As restated) (As restated) (As restated) (dollars in thousands except per share data) Performance ratios (tax equivalent): ------------------------------------ Yield on average earning assets 4.01% 4.02% 3.97% 4.18% 4.52% 4.00% 4.58% Cost of interest bearing liabilities 0.48% 0.45% 0.44% 0.48% 0.53% 0.46% 0.51% ---- ---- ---- ---- ---- ---- ---- Net interest spread 3.53% 3.57% 3.53% 3.70% 3.99% 3.54% 4.07% Net interest margin 3.63% 3.67% 3.62% 3.78% 4.09% 3.64% 4.16% Avg earning assets to total avg assets (1) 91.65% 91.33% 91.26% 92.23% 91.36% 91.39% 91.51% Return on average assets (annualized) (1) 0.54% 0.53% 0.33% 0.07% 0.79% 0.47% 0.75% Return on average equity (annualized) (1) 5.99% 5.66% 3.61% 0.73% 7.05% 5.08% 6.74% Efficiency ratio 82.26% 83.71% 91.30% 96.31% 72.52% 85.63% 74.26% Average assets (1) $904,017 $877,480 $879,223 $793,852 $716,650 $887,170 $700,256 Average earning assets $828,538 $801,396 $802,387 $732,153 $654,700 $810,774 $640,797 Average equity (1) $81,975 $81,799 $81,446 $81,305 $79,802 $81,990 $78,108 Equity/Assets (1) 8.94% 8.86% 9.21% 9.04% 10.89% 8.94% 10.89% Tangible Equity/Assets (1) 8.26% 8.16% 8.49% 8.31% 10.31% 8.26% 10.31% Asset quality data and ratios: ------------------------------ Nonaccrual loans: Non-TDR nonaccrual loans Earning $799 $990 $858 $723 $317 $799 $317 Non-Earning 964 806 1,158 1,075 940 964 940 Total Non-TDR nonaccrual loans $1,763 $1,796 $2,016 $1,798 $1,257 $1,763 $1,257 TDR nonaccrual loans Past Due TDRs $1,250 $1,065 $1,206 $1,233 $1,260 $1,250 $1,260 Current TDRs 463 1,459 1,194 2,007 2,027 463 2,027 Total TDR nonaccrual loans $1,713 $2,524 $2,400 $3,240 $3,287 $1,713 $3,287 Total nonaccrual loans $3,476 $4,320 $4,416 $5,038 $4,544 $3,476 $4,544 Loans >90 days past due, still accruing 183 248 0 389 476 183 476 Other real estate owned 6,506 7,009 7,082 7,756 8,103 6,506 8,103 ----- ----- ----- ----- ----- ----- Total nonperforming assets $10,165 $11,577 $11,498 $13,183 $13,123 $10,165 $13,123 Allowance for loan and lease losses to loans held for investment 1.33% 1.35% 1.47% 1.57% 1.59% 1.33% 1.59% Net charge-offs (recoveries) $129 $(21) $317 $(17) $822 $425 $1,205 Net charge-offs (recoveries) to total loans 0.02% 0.00% 0.06% 0.00% 0.17% 0.07% 0.25% Total nonaccrual loans to total loans HFI 0.61% 0.79% 0.90% 1.05% 0.96% 0.61% 0.96% Total nonperforming assets to total assets 1.11% 1.29% 1.31% 1.49% 1.79% 1.11% 1.79% Total loans to total deposits 72.94% 71.14% 63.34% 61.56% 79.49% 72.94% 79.49% Total loans to total assets (1) 62.55% 61.13% 56.48% 54.80% 65.18% 62.55% 65.18% Loans serviced for others $297,764 $300,801 $301,482 $306,822 $310,341 $297,764 $310,341 (1) Certain amounts and ratios for prior periods have been restated for correction of an error
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SOURCE First South Bancorp, Inc.