SCMFO Capital Bank Financial Corp. - Southern Community Capital Trust II - % Cumulative Trust Preferred Securities (MM)

Southern Community Financial Corporation (NASDAQ: SCMF) (NASDAQ: SCMFO), the holding company for Southern Community Bank and Trust, today reported first quarter 2009 results.

Financial Highlights

--  Deposit growth for first quarter 2009 of 16% year-over-year and 8% on
    a linked quarter basis
--  Non-interest income increased $473 thousand or 19% compared with
    fourth quarter 2008
--  Net interest margin for the first quarter 2009 decreased 9 basis
    points to 3.01% from 3.10% in the fourth quarter 2008
--  First quarter provision for loan losses of $4.00 million, an increase
    of $1.64 million, compared to $2.36 million in the fourth quarter 2008
--  Allowance for loan losses was 1.49% of total loans at March 31, 2009
    compared to 1.43% at December 31, 2008
--  Nonperforming loans were 1.56% of total loans at March 31, 2009
    compared with 1.10% of total loans at December 31, 2008
--  Nonperforming assets were 1.73% of total assets at March 31, 2009
    compared with 1.12% of total assets at December 31, 2008
--  Annualized first quarter 2009 net charge-offs increased to 1.09% of
    average loans compared with 0.43% for the fourth quarter 2008
--  First quarter 2009 net loss available to common shareholders of $49.70
    million, or $2.96 per diluted common share included a one-time, non-cash
    goodwill impairment charge of $49.50 million
--  Excluding the goodwill impairment charge and the preferred dividends
    of $627 thousand, the first quarter 2009 net income was $425 thousand, a
    decrease from fourth quarter 2008 earnings of $1.56 million.
    

The Company reported a net loss available to common shareholders of $49.70 million, or $2.96 per diluted common share in the first quarter of 2009. The net loss available to common shareholders primarily reflects a goodwill impairment charge of $49.50 million to write off the entire amount of goodwill as of March 31, 2009. This charge is a one-time, non-cash accounting transaction that will not impact the Company's cash flows, liquidity, tangible capital, and ability to conduct its business and is primarily due to the current state of the financial markets.

Excluding the impact of the goodwill impairment charge and the $627 thousand in dividends on preferred stock, net income for the first quarter of 2009 was $425 thousand, compared with $1.56 million for the fourth quarter of 2008 and $2.07 million for the first quarter of 2008.

Asset Quality

Nonperforming loans increased to $20.25 million, or 1.56% of total loans, at March 31, 2009 from $14.43 million, or 1.10% of total loans, at December 31, 2008. Nonperforming assets increased to $31.05 million, or 1.73% of total loans, at March 31, 2009 from $20.18 million, or 1.12% of total assets, at December 31, 2008. Net charge-offs totaled $3.54 million during the first quarter of 2009, or 1.09% of average loans on an annualized basis, compared to $1.44 million, or 0.43% of average loans annualized, in the fourth quarter of 2008. Nonperforming loans, nonperforming assets and net charge-off activity continue to be predominantly related to residential construction and development lending as 89% of nonperforming loans, 91% of nonperforming assets and 62% of net charge-offs originated from this segment of the loan portfolio.

The provision for loan losses of $4.00 million for the first quarter increased $1.64 million compared to the fourth quarter 2008 provision and increased $3.08 million compared to the first quarter 2008 provision. The allowance for loan losses at March 31, 2009 of $19.31 million represented 1.49% of total loans and 0.95 times nonperforming loans compared with 1.43% of total loans and 1.31 times nonperforming loans at December 31, 2008.

"As was the case in the fourth quarter of 2008, the majority of our nonperforming loans and charge-offs continue to be contained within our residential construction and development portfolio. As expected, results for the first quarter were impacted by increased provision for loan losses and expenses associated with managing our loan portfolio," said F. Scott Bauer, Chairman and Chief Executive Officer. "While this difficult credit cycle continues to impact our industry as a whole, Southern Community's core bank continues to operate well. The company-wide focus on deposits and fee income produced good results, as deposits increased 8% and fee income increased 19% compared to the fourth quarter of 2008. During the first quarter, we offered a CD promotion which was instrumental in our deposit growth. Fee income increased largely due to greater mortgage refinance and brokerage activity.

Looking ahead to the second quarter of 2009, we expect our loan loss provision, charge-offs, and reserve coverage to remain at current levels as we prudently bolster reserves and aggressively manage problem assets. We do not anticipate a significant increase in nonperforming loans in the second quarter. Depending upon the interest rate environment as well as our level of nonperforming loans, we expect modest net interest margin compression in the second quarter. During the second half of 2009, we believe there will be several opportunities to decrease our cost of funds and improve our net interest margin and overall profitability.

While loan demand remains soft primarily due to the weakened economy, we believe that it has the potential to increase during the second half of 2009; however, we expect it to remain at current levels during the second quarter of 2009. We are offering a special jumbo mortgage product to qualified borrowers and effectively targeting new relationships, and anticipate that both of these efforts will help to stimulate future loan demand. While these are difficult times in which to operate, Southern Community remains solid from a capital and liquidity standpoint, and is well positioned to weather this economic storm. Our Board and management team are dedicated to working through these challenges and to the excellent opportunities that lie ahead."

Financial Performance

Net interest income of $12.46 million for the first quarter 2009 decreased by 3% compared with $12.82 million in the fourth quarter 2008; however, it increased 13% over the $11.00 million in the first quarter 2008. The net interest margin of 3.01% for the first quarter 2009 decreased 9 basis points from 3.10% compared with the fourth quarter and increased 3 basis points from 2.98% in the first quarter 2008. The sequential decrease in net interest income resulted from the impact of increased nonperforming assets and a shift in the mix of assets more heavily weighted toward investment securities than loans. Investment securities increased by $21.57 million during the first quarter of 2009 offsetting an $17.32 million decrease in loan balances outstanding for the quarter. This decrease in loans was due to a slowdown in loan demand as some of our primary customers are deleveraging and taking a more conservative stance towards borrowing.

Non-interest income of $2.99 million during the first quarter 2009 increased by $473 thousand or 19% compared with the fourth quarter 2008 primarily resulting from increases in mortgage banking income from increased refinance activity, wealth management income from brokerage volume shifting toward sales of annuities and life insurance products and $149 thousand increase in income from SBIC activities.

Excluding the goodwill impairment charge, non-interest expenses of $11.08 million for the first quarter 2009 increased $430 thousand or 4% on a linked quarter basis and $523 thousand or 5% year-over-year. The sequential increase in non-interest expenses was mainly due to increases in health insurance benefit costs, commissions on increased mortgage and wealth management transaction volumes, and increases in marketing efforts focused on deposit gathering and offering buyer incentives to purchasers of bank-financed builder housing inventory. Expenses related to problem loan workout activity and foreclosed properties remained comparable with fourth quarter 2008 levels. As an annualized percentage of average assets, the expense load, excluding the goodwill impairment charge, represented 2.45% of average assets for the first quarter 2009 compared with 2.35% for fourth quarter 2008 and 2.61% for first quarter 2008.

As of March 31, 2009, total assets amounted to $1.79 billion, representing an increase of $99.67 million, or 6% year-over-year; however, excluding the goodwill impairment charge of $49.50 million, total assets increased $149.19 million or 9% year-over-year. On a linked quarter basis, asset growth for the first quarter 2009, excluding the reduction related to goodwill impairment, was relatively flat at $35.86 million or 2%. The loan portfolio decreased by $17.32 million or 1% sequentially during the first quarter due to slowing loan demand. Total deposits stood at $1.33 billion at March 31, 2009, an increase of $185.41 million or 16% year-over-year. During the first quarter 2009, deposits increased $95.03 million or 8% from the December 31, 2008 level as depositors moved liquidity into certificates of deposit for higher yield and safety.

At March 31, 2009, stockholders' equity of $138.46 million represented 7.73% of total assets. Stockholders' equity decreased $49.25 million or 26% from $187.71 million at December 31, 2008 as a result of the $49.50 million goodwill impairment charge. Regulatory capital ratios remain in excess of the "well capitalized" threshold as the calculations for these regulatory capital measures exclude goodwill and any related impairment charges.

Southern Community's executive management team will host a conference call on May 1, 2009, at 9:30 AM Eastern Time to discuss the quarter-end results. The call can be accessed by dialing 1-877-795-3610 or 1-719-325-4804 and entering pass code 9364725. A replay of the conference call can be accessed until 11:59 pm on May 15, 2009, by calling 1-888-203-1112 or 1-719-457-0820 and entering pass code 9364725. You may access additional presentation materials for this conference call in the Investor Relations section of Southern Community's web site at www.smallenoughtocare.com.

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 Financial Corporation is available on its website at www.smallenoughtocare.com or by email at investor.relations@smallenoughtocare.com.

This news release contains forward-looking statements. Such statements are subject to certain factors that may cause the Company's results to vary from those expected. These factors include changing economic and financial market conditions, competition, ability to execute our business plan, items already mentioned in this press release, and other factors described in our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's judgment only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events and circumstances that arise after the date hereof.

Southern Community Financial Corporation
(Dollars in thousands except per share data)
(Unaudited)

                                For the three months ended
Income
 Statement       Mar 31,     Dec 31,     Sep 30,     Jun 30,     Mar 31,
                  2009        2008        2008        2008        2008
               ----------  ----------  ----------  ----------  ----------

Total Interest
 Income        $   22,744  $   24,278  $   24,412  $   23,727  $   24,325
Total Interest
 Expense           10,285      11,459      12,553      11,947      13,323
               ----------  ----------  ----------  ----------  ----------
  Net Interest
   Income          12,459      12,819      11,859      11,780      11,002

Provision for
 Loan Losses        4,000       2,360       1,350       3,530         925

Net Interest
 Income after
 Provision for
 Loan Losses        8,459      10,459      10,509       8,250      10,077

Non-Interest
 Income
Service Charges
 on Deposit
 Accounts           1,444       1,487       1,491       1,475       1,406
Income from
 mortgage
 banking
 activities           416         233         219         358         484
Investment
 brokerage and
 trust fees           296         147         285         335         371
SBIC income
 (loss) and
 management
 fees                 238          89          39          82        (150)
Gain (Loss) on
 Sale of
 Investment
 Securities             1          98           -           -           -
Gain (Loss) and
 Net Cash
 Settlement on
 Economic
 Hedges               (22)          -        (440)        330       1,044
Other Income          618         464         483         518         434
               ----------  ----------  ----------  ----------  ----------
  Total
   Non-Interest
   Income           2,991       2,518       2,077       3,098       3,589

Non-Interest
 Expense
Salaries and
 Employee
 Benefits           5,530       5,088       5,535       5,621       5,794
Occupancy and
 Equipment          2,034       1,930       1,854       1,931       1,964
Goodwill
 Impairment        49,501           -           -           -           -
Other               3,519       3,635       2,815       3,120       2,802
               ----------  ----------  ----------  ----------  ----------
  Total
   Non-Interest
   Expense         60,584      10,653      10,204      10,672      10,560

Income (Loss)
 Before Taxes     (49,134)      2,324       2,382         676       3,106
Provision for
 Income Taxes         (58)        766         754          73       1,041
               ----------  ----------  ----------  ----------  ----------

Net Income
 (Loss)        $  (49,076) $    1,558  $    1,628  $      603  $    2,065
               ==========  ==========  ==========  ==========  ==========

Effective dividend
 on preferred
 stock                627         185           -           -           -
               ----------  ----------  ----------  ----------  ----------

Net income (loss)
 available to
 common
 shareholders  $  (49,703) $    1,373  $    1,628  $      603  $    2,065
               ==========  ==========  ==========  ==========  ==========

Net Income (Loss)
 per Common Share
Basic          $    (2.96) $     0.08  $     0.09  $     0.03  $     0.12
Diluted        $    (2.96) $     0.08  $     0.09  $     0.03  $     0.12
               ==========  ==========  ==========  ==========  ==========



Balance Sheet    Mar 31,     Dec 31,     Sep 30,     Jun 30,     Mar 31,
                  2009        2008        2008        2008        2008
               ----------  ----------  ----------  ----------  ----------
Assets
Cash and due
 from Banks    $   28,268  $   25,215  $   27,453  $   37,576  $   35,037
Federal Funds
 Sold & Int
 Bearing
 Balances          17,891       2,180       2,605       3,607       4,752
Investment
 Securities       346,265     324,698     302,905     306,666     284,669
Federal Home
 Loan Bank
 Stock             10,178       9,757      10,208       9,670      11,482

Loans held for
 sale               6,044         316         920       2,106       4,110

Loans           1,297,489   1,314,811   1,323,360   1,285,014   1,235,952
Allowance for
 Loan Losses      (19,314)    (18,851)    (17,929)    (17,499)    (14,853)
               ----------  ----------  ----------  ----------  ----------
  Net Loans     1,278,175   1,295,960   1,305,431   1,267,515   1,221,099

Bank Premises
 and Equipment     40,622      40,030      39,264      39,672      38,790
Goodwill                -      49,501      49,792      49,792      49,792
Other Assets       62,695      56,121      59,283      55,101      40,721
               ----------  ----------  ----------  ----------  ----------

Total Assets   $1,790,138  $1,803,778  $1,797,861  $1,771,705  $1,690,452
               ==========  ==========  ==========  ==========  ==========

Liabilities and
 Stockholders'
 Equity
Deposits
  Non-Interest
   Bearing     $   98,618  $  102,048  $  104,988  $  114,685  $  109,534
  Money market,
   savings and
   NOW            479,797     475,772     523,949     560,094     507,105
  Time            749,728     655,292     634,037     542,622     526,096
               ----------  ----------  ----------  ----------  ----------
  Total
   Deposits     1,328,143   1,233,112   1,262,974   1,217,401   1,142,735

Borrowings        314,400     373,213     378,500     401,667     393,306
Accrued
 Expenses and
 Other
 Liabilities        9,137       9,743      13,549      10,747      10,061
               ----------  ----------  ----------  ----------  ----------
  Total
   Liabilities  1,651,680   1,616,068   1,655,023   1,629,815   1,546,102

Total
 Stockholders'
 Equity           138,458     187,710     142,838     141,890     144,350
               ----------  ----------  ----------  ----------  ----------

Total
 Liabilities
 and
 Stockholders'
 Equity        $1,790,138  $1,803,778  $1,797,861  $1,771,705  $1,690,452
               ==========  ==========  ==========  ==========  ==========

Tangible Book
 Value per
 Common Share  $     5.75  $     5.76  $     5.29  $     5.23  $     5.38
               ==========  ==========  ==========  ==========  ==========




                         As of or for the three months ended
                 Mar 31,     Dec 31,     Sep 30,     Jun 30,    Mar 31,
                  2009        2008        2008        2008       2008
               ----------  ----------  ----------  ----------  ----------
Per Common
 Share Data:
Basic Earnings
 per Share     $    (2.96) $     0.08  $     0.09  $     0.03  $     0.12
Diluted
 Earnings per
 Share         $    (2.96) $     0.08  $     0.09  $     0.03  $     0.12
Tangible Book
 Value per
 Share         $     5.75  $     5.76  $     5.29  $     5.23  $     5.38
Cash dividends
 paid          $        -  $    0.040  $    0.040  $    0.040  $    0.040

Selected
 Performance
 Ratios:
Return on
 Average Assets
 (annualized)
 ROA               -10.85%       0.34%       0.36%       0.14%       0.51%
Return on
 Average Equity
 (annualized)
 ROE              -106.14%       4.01%       4.57%       1.68%       5.84%
Return on
 Tangible
 Equity
 (annualized)     -145.38%       5.98%       7.13%       2.60%       9.12%
Net Interest
 Margin              3.01%       3.10%       2.88%       2.99%       2.98%
Net Interest
 Spread              2.78%       2.88%       2.67%       2.76%       2.67%
Non-interest
 Income as a %
 of Revenue         19.36%      16.42%      14.90%      20.82%      24.60%
Non-interest
 Income as a %
 of Average
 Assets              0.66%       0.56%       0.45%       0.71%       0.89%
Non-interest
 Expense to
 Average Assets     13.39%       2.35%       2.27%       2.47%       2.61%
Efficiency
 Ratio             392.13%      69.46%      73.22%      71.73%      72.37%

Asset Quality:
Nonperforming
 Loans         $   20,251  $   14,433  $   12,007  $   12,796  $    7,012
Nonperforming
 Assets        $   31,049  $   20,178  $   15,086  $   14,210  $    8,042
Nonperforming
 Loans to Total
 Loans               1.56%       1.10%       0.91%       1.00%       0.57%
Nonperforming
 Assets to
 Total Assets        1.73%       1.12%       0.84%       0.80%       0.48%
Allowance for
 Loan Losses to
 Period-end
 Loans               1.49%       1.43%       1.35%       1.36%       1.20%
Allowance for
 Loan Losses to
 Nonperforming
 Loans (X)           0.95 X      1.31 X      1.49 X      1.37 X      2.12 X
Net Charge-offs
 to Average
 Loans
 (annualized)        1.09%       0.43%       0.28%       0.28%       0.11%

Capital Ratios:
Equity to Total
 Assets              7.73%      10.41%       7.94%       8.01%       8.54%
Tangible Equity
 to Total
 Tangible
 Assets (1)          5.40%       5.51%       5.26%       5.28%       5.69%

Average
 Balances:
 Year to Date
  Interest
   Earning
   Assets      $1,679,293  $1,588,542  $1,569,306  $1,535,388  $1,485,037
  Total Assets  1,834,575   1,738,868   1,717,357   1,680,842   1,625,164
  Total Loans   1,310,679   1,279,041   1,264,744   1,238,843   1,219,800
  Equity          187,512     145,754     142,800     143,282     142,190
  Interest
   Bearing
   Liabilities  1,535,956   1,474,539   1,456,848   1,421,227   1,368,420

 Quarterly
  Interest
   Earning
   Assets      $1,679,293  $1,645,832  $1,636,404  $1,586,068  $1,485,037
  Total Assets  1,834,575   1,802,934   1,789,593   1,736,520   1,625,164
  Gross Loans   1,310,679   1,321,621   1,315,983   1,257,886   1,219,800
  Equity          187,512     154,552     141,846     144,374     142,190
  Interest
   Bearing
   Liabilities  1,535,956   1,527,227   1,527,316   1,474,186   1,368,420

Weighted
 Average Number
 of Shares
 Outstanding
 Basic         16,780,058  17,369,765  17,369,925  17,354,298  17,359,452
 Diluted       16,780,058  17,398,432  17,416,675  17,401,298  17,401,589
Period end
 outstanding
 shares        16,793,175  16,769,675  17,370,175  17,370,175  17,319,351



(1) - Tangible Equity to Total Tangible Assets is period-ending 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