Southern Community Financial Corporation (NASDAQ: SCMF) (NASDAQ:
SCMFO), the holding company for Southern Community Bank and Trust,
reported results for the first quarter of 2010.
Financial Highlights:
-- Net interest margin for first quarter 2010 increased 13 basis
points to 3.41% from 3.28% in fourth quarter of 2009;
-- Provision for loan losses of $10.0 million, a decrease of $8.0
million, compared to the fourth quarter;
-- Net charge-offs of $3.6 million, or 1.20% of average loans
(annualized), down from $9.2 million, or 2.92% of average loans
(annualized), in the fourth quarter;
-- Allowance for loan losses increased to $36.0 million, or 2.98%
of total loans, at March 31, 2010, compared to $29.6 million,
or 2.41% of total loans, at December 31, 2009;
-- Allowance for loan losses as a percentage of nonperforming
loans decreased slightly to 71% at March 31, 2010 compared to
79% at December 31, 2009;
-- Nonperforming loans increased to $50.6 million, or 4.19% of
loans, at March 31, 2010 from $37.7 million, or 3.07% of loans,
at December 31, 2009;
-- Nonperforming assets increased to $70.9 million or 4.15% of
total assets at March 31, 2010 from $57.4 million or 3.32% of
total assets at December 31, 2009;
-- Regulatory capital ratios remain in excess of the "well
capitalized" threshold; and
-- Net loss available to common shareholders of $5.2 million or
$0.31 per share.
Southern Community Financial reported a net loss available to
common shareholders of $5.2 million in the first quarter of 2010.
This compares with a net loss of $11.3 million in the fourth
quarter of 2009 and net loss of $50.0 million in the first quarter
of 2009, which included a goodwill impairment charge of $49.5
million. The net loss per diluted common share in the first quarter
of 2010 was $0.31, compared to $0.68 in the fourth quarter of 2009,
and $2.98 in the first quarter of 2009.
"As we previously announced, our first quarter results were
impacted by the $10.0 million loan loss provision primarily related
to the impairment of two commercial real estate credits. The
results also included a $2.0 million valuation allowance on
deferred tax assets," said F. Scott Bauer, Chairman and Chief
Executive Officer. "We completed a comprehensive review of our loan
portfolio in the fourth quarter of last year; but the credit cycle
continues to be unpredictable. Borrowers that were strong at the
beginning of the cycle are becoming more stressed. The troubled
commercial real estate market is now emerging; therefore, further
reserve building may be necessary during the remainder of this
cycle. Accordingly, we will remain focused on aggressively
managing, reporting and resolving our problem assets.
"Our core bank operations remain strong. The improvement in our
net interest margin in the first quarter of 2010 was the direct
result of our continued focus on improving our funding mix with
lower cost core deposits. While total deposits decreased slightly
compared to the fourth quarter of 2009, money market, savings, and
NOW deposits increased 7% and represent 47% of our total deposits,
up from 44% in the previous quarter. This is a significant
improvement from the first quarter of 2009, when these deposits
represented just 35% of our total deposits and certificates of
deposit comprised 58% of our total deposits.
"Southern Community remains well capitalized with ratios
exceeding regulatory requirements. We are well positioned for a
sustainable improvement in the local and national economies."
Asset Quality
Nonperforming loans increased to $50.6 million, or 4.19% of
total loans, at March 31, 2010 from $37.7 million, or 3.07% of
total loans, at December 31, 2009. Nonperforming assets increased
to $70.9 million, or 4.15% of total assets, at March 31, 2010 from
$57.4 million, or 3.32% of total assets, at December 31, 2009 due
primarily to a $12.9 million increase in nonperforming loans during
the quarter. Net charge-offs totaled $3.6 million, or 1.20% of
average loans on an annualized basis, a decrease from $9.2 million,
or 2.92% of average loans annualized, from the fourth quarter 2009.
The $12.9 million increase in nonperforming loans reflects an
increase of $6.7 million derived from one commercial real estate
relationship as well as an increase in the volume of other new
nonaccrual loans.
The provision for loan losses of $10.0 million in the first
quarter of 2010 decreased $8.0 million compared with the fourth
quarter 2009. This level of provision for loan losses primarily
resulted from the impairment of two commercial real estate credits,
which were identified late in the first quarter. The impairment of
these two loans accounted for approximately $5.1 million of the
$10.0 million provision for loan losses.
Given the relative magnitude of the provision for loan losses
and net charge-offs in the first quarter of 2010 and their impact
on deferred tax assets, the income tax benefit on operating losses
during the first quarter 2010 was decreased by a $2.0 million
valuation allowance on deferred tax assets due to realization
considerations.
Net Interest Income
Net interest income of $13.2 million in the first quarter of
2010 decreased 1% compared to $13.4 million in the fourth quarter
of 2009, and increased 6% compared to $12.6 million in the first
quarter of 2009. The net interest margin increased 13 basis points
to 3.41% in the first quarter of 2010 compared with 3.28% in the
fourth quarter of 2009, primarily due to lower deposit costs
resulting from active liability management with an emphasis on
improving the funding mix and lowering funding costs. Compared to
the first quarter of 2009, the net interest margin increased 40
basis points. The sequential decrease in net interest income in the
first quarter of 2010 was due to a $23.6 million decrease in
average loan balances, which was generally offset by the increase
in net interest margin. The year-over-year growth in net interest
income in the first quarter of 2010 resulted primarily from the
impact of the Company's deposit and borrowing costs repricing lower
than its asset yields which were positively impacted by the
increased utilization of interest rate floors on a majority of
variable rate loans. Offsetting a portion of this favorable margin
variance in comparing year-over-year net interest income was the
decrease in average loan balances of $88.1 million, or 7%, due to a
slowdown in loan demand due to the current economic
environment.
Non-interest Income
Non-interest income increased by $427 thousand, or 12%, to $4.0
million during the first quarter of 2010 compared with the fourth
quarter of 2009. The increase in non-interest income primarily
resulted from a $1.4 million increase in investment securities
gains. This impact was partially offset by an $883 thousand net
decrease in derivatives gains, due primarily to market rate
movement and its impact on fair value hedges, and a $186 thousand
"other-than-temporary impairment" write-down in equity securities
during the quarter. On a year-over-year comparison, non-interest
income in the first quarter of 2010 increased $1.4 million, or 53%,
compared with the first quarter of 2009. The year-over-year
increase was primarily the result of investment sale gains realized
during the first quarter of 2010.
Non-interest Expenses
Non-interest expenses of $11.8 million during the first quarter
of 2010 decreased $1.7 million, or 13%, on a linked quarter basis.
The sequential decrease in non-interest expenses was primarily due
to the $1.1 million reduction in write-downs on carrying values on
foreclosed real estate. In addition, the Company reduced
discretionary spending on a linked quarter basis by approximately
$310 thousand in areas such as marketing, contributions, dues and
subscriptions and travel. Other expense reductions of $152 thousand
in FDIC insurance and $98 thousand in buyer incentive program
expenditures contributed to the decrease in non-interest expenses.
The Company contained personnel expenses to a 2% sequential
increase due to cost savings programs initiated in prior quarters
including a company-wide salary freeze, and a reduction in 401(k)
employer matching contributions.
Balance Sheet
As of March 31, 2010, total assets amounted to $1.7 billion,
representing a decrease of $82.6 million, or 5%, year-over-year. On
a linked quarter basis, total assets decreased $21.4 million, or
1%. The loan portfolio decreased by $21.8 million, or 2%,
sequentially during the first quarter of 2010 and decreased by
$89.0 million, or 7%, since March 31, 2009 due to a decrease in
loan demand. Total deposits of $1.3 billion at March 31, 2010
increased $9.5 million, or 1%, year-over-year. While total deposits
decreased $7.1 million, or less than 1%, during the first quarter
2010, the Company continued to shift its deposit mix toward lower
cost money market and transaction accounts from certificates of
deposit. Time deposits decreased $43.4 million, or 7%, during the
first quarter of 2010 as money market, savings and NOW deposits
increased $41.4 million.
At March 31, 2010, stockholders' equity of $116.9 million
represented 6.85% of total assets. Stockholders' equity decreased
$5.1 million, or 4%, from $122.0 million at December 31, 2009
primarily due to the first quarter loss discussed above. Regulatory
capital ratios remain in excess of the "well capitalized"
threshold.
Conference Call
Southern Community's executive management team will host a
conference call on April 23, 2010, at 9:30 am Eastern Time to
discuss the quarter-end results. The call can be accessed by
dialing 1-855-481-2849 or 1-719-955-1567 and entering pass code
1248434. A replay of the conference call can be accessed until
11:59 pm on May 7, 2010, by calling 1-888-203-1112 or
1-719-457-0820 and entering pass code 1248434. 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 is available on our
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
Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
Income Statement 2010 2009 2009 2009 2009
---------- ---------- ---------- ---------- ----------
Total Interest
Income $ 20,986 $ 22,092 $ 22,186 $ 22,451 $ 22,744
Total Interest
Expense 7,739 8,701 8,868 9,872 10,285
---------- ---------- ---------- ---------- ----------
Net Interest
Income 13,247 13,391 13,318 12,579 12,459
Provision for
Loan Losses 10,000 18,000 6,000 6,000 4,000
Net Interest
Income after
Provision for
Loan Losses 3,247 (4,609) 7,318 6,579 8,459
Non-Interest
Income
Service Charges
on Deposit
Accounts 1,557 1,671 1,588 1,543 1,444
Income from
mortgage banking
activities 358 416 512 760 416
Investment
brokerage and
trust fees 235 292 359 212 296
SBIC income
(loss) and
management fees 176 (218) 171 (43) 238
Gain (Loss) on
Sale of
Investment
Securities 1,354 - 735 500 1
Gain (Loss) and
Net Cash
Settlement on
Economic Hedges (31) 852 316 (912) (22)
Other-than-
temporary
impairment (186) - - - -
Other Income 490 513 508 550 208
---------- ---------- ---------- ---------- ----------
Total
Non-Interest
Income 3,953 3,526 4,189 2,610 2,581
Non-Interest
Expense
Salaries and
Employee
Benefits 5,469 5,385 5,690 5,897 5,530
Occupancy and
Equipment 1,916 1,882 1,997 1,990 2,034
Goodwill
Impairment - - - - 49,501
Other 4,458 6,311 4,934 5,834 3,513
---------- ---------- ---------- ---------- ----------
Total
Non-Interest
Expense 11,843 13,578 12,621 13,721 60,578
Income (Loss)
Before Taxes (4,643) (14,661) (1,114) (4,532) (49,538)
Provision for
Income Taxes (32) (3,944) (683) (1,845) (214)
---------- ---------- ---------- ---------- ----------
Net Income
(Loss) $ (4,611) $ (10,717) $ (431) $ (2,687) $ (49,324)
========== ========== ========== ========== ==========
Effective
dividend on
preferred
stock 633 627 621 633 627
---------- ---------- ---------- ---------- ----------
Net Income (loss)
available to
common
shareholders $ (5,244) $ (11,344) $ (1,052) $ (3,320) $ (49,951)
========== ========== ========== ========== ==========
Net Income (Loss)
per Common
Share
Basic $ (0.31) $ (0.68) $ (0.06) $ (0.20) $ (2.98)
Diluted $ (0.31) $ (0.68) $ (0.06) $ (0.20) $ (2.98)
========== ========== ========== ========== ==========
Balance Sheet Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
2010 2009 2009 2009 2009
---------- ---------- ---------- ---------- ----------
Assets
Cash and due
from Banks $ 33,885 $ 30,184 $ 22,953 $ 27,265 $ 28,268
Federal Funds
Sold & Int
Bearing
Balances 22,352 31,269 21,792 1,496 17,891
Investment
Securities 335,519 323,700 323,800 333,722 345,861
Federal Home
Loan Bank
Stock 9,794 9,794 9,794 9,794 10,178
Loans held for
sale 2,984 3,025 2,559 8,068 6,044
Loans 1,208,454 1,230,275 1,248,249 1,251,200 1,297,489
Allowance for
Loan Losses (36,007) (29,638) (20,807) (19,390) (19,314)
---------- ---------- ---------- ---------- ----------
Net Loans 1,172,447 1,200,637 1,227,442 1,231,810 1,278,175
Bank Premises
and Equipment 42,058 42,630 42,590 42,006 40,622
Foreclosed
Assets 20,285 19,634 18,118 17,881 10,798
Other Assets 67,856 67,735 56,293 54,667 51,897
---------- ---------- ---------- ---------- ----------
Total Assets $1,707,180 $1,728,608 $1,725,341 $1,726,709 $1,789,734
========== ========== ========== ========== ==========
Liabilities and
Stockholders'
Equity
Deposits
Non-Interest
Bearing $ 113,292 $ 118,372 $ 106,156 $ 103,205 $ 98,618
Money market,
savings and
NOW 620,433 579,027 526,884 459,682 449,080
Time 573,229 616,671 646,039 680,875 749,728
---------- ---------- ---------- ---------- ----------
Total Deposits 1,306,954 1,314,070 1,279,079 1,243,762 1,297,426
Borrowings 275,831 284,580 303,978 340,335 345,117
Accrued Expenses
and Other
Liabilities 7,513 7,961 8,222 8,913 8,982
---------- ---------- ---------- ---------- ----------
Total
Liabilities 1,590,298 1,606,611 1,591,279 1,593,010 1,651,525
Total
Stockholders'
Equity 116,882 121,997 134,062 133,699 138,209
---------- ---------- ---------- ---------- ----------
Total Liabilities
and
Stockholders'
Equity $1,707,180 $1,728,608 $1,725,341 $1,726,709 $1,789,734
========== ========== ========== ========== ==========
Tangible Book
Value per
Common Share $ 4.45 $ 4.77 $ 5.49 $ 5.47 $ 5.74
========== ========== ========== ========== ==========
For the three months ended
Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
2010 2009 2009 2009 2009
---------- ---------- ---------- ---------- ----------
Per Common
Share Data:
Basic Earnings
per Share $ (0.31) $ (0.68) $ (0.06) $ (0.20) $ (2.98)
Diluted
Earnings per
Share $ (0.31) $ (0.68) $ (0.06) $ (0.20) $ (2.98)
Tangible Book
Value per
Share $ 4.45 $ 4.77 $ 5.49 $ 5.47 $ 5.74
Cash dividends
paid $ - $ - $ - $ - $ -
Selected
Performance
Ratios:
Return on
Average Assets
(annualized)
ROA -1.10% -2.44% -0.10% -0.61% -10.90%
Return on
Average Equity
(annualized)
ROE -15.34% -31.92% -1.28% -7.87% -106.68%
Return on
Tangible
Equity
(annualized) -15.44% -32.14% -1.29% -7.93% -145.53%
Net Interest
Margin 3.41% 3.28% 3.30% 3.05% 3.01%
Net Interest
Spread 3.26% 3.08% 3.10% 2.84% 2.78%
Non-interest
Income as a %
of Revenue 22.98% 20.84% 23.93% 17.18% 17.16%
Non-interest
Income as a %
of Average
Assets 0.94% 0.80% 0.96% 0.59% 0.57%
Non-interest
Expense to
Average Assets 2.82% 3.09% 2.91% 3.12% 13.39%
Efficiency
Ratio 68.85% 80.26% 72.09% 90.34% 402.78%
Asset Quality:
Nonperforming
Loans $ 50,608 $ 37,732 $ 22,697 $ 17,851 $ 20,251
Nonperforming
Assets $ 70,893 $ 57,366 $ 40,766 $ 35,732 $ 31,049
Nonperforming
Loans to Total
Loans 4.19% 3.07% 1.82% 1.43% 1.56%
Nonperforming
Assets to
Total Assets 4.15% 3.32% 2.36% 2.07% 1.73%
Allowance for
Loan Losses to
Period-end
Loans 2.98% 2.41% 1.67% 1.55% 1.49%
Allowance for
Loan Losses to
Nonperforming
Loans (X) 0.71X 0.79X 0.92X 1.09X 0.95X
Net Charge-offs
to Average
Loans
(annualized) 1.20% 2.92% 1.45% 1.85% 1.09%
Capital Ratios:
Equity to Total
Assets 6.85% 7.06% 7.77% 7.74% 7.72%
Tangible Equity
to Total
Tangible
Assets (1) 4.39% 4.63% 5.34% 5.32% 5.39%
Average Balances:
Year to Date
Interest
Earning
Assets $1,573,247 $1,638,171 $1,643,945 $1,665,784 $1,679,293
Total Assets 1,704,190 1,767,047 1,774,376 1,800,376 1,834,575
Total Loans 1,222,594 1,272,087 1,280,803 1,295,913 1,310,679
Equity 121,944 147,652 155,522 162,126 187,512
Interest
Bearing
Liabilities 1,459,636 1,501,705 1,506,867 1,525,524 1,535,956
Quarterly
Interest
Earning
Assets $1,573,247 $1,621,037 $1,600,979 $1,652,424 $1,679,293
Total Assets 1,704,190 1,745,299 1,723,224 1,766,553 1,834,575
Gross Loans 1,222,594 1,246,223 1,251,076 1,281,309 1,310,679
Equity 121,944 133,201 133,627 137,019 187,512
Interest
Bearing
Liabilities 1,459,636 1,486,386 1,470,162 1,515,206 1,535,956
Weighted Average
Number of Shares
Outstanding
Basic 16,806,292 16,789,045 16,791,175 16,791,340 16,780,058
Diluted 16,806,292 16,789,045 16,791,175 16,791,340 16,780,058
Period end
outstanding
shares 16,818,125 16,787,675 16,791,175 16,793,175 16,793,175
(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
Capital Bank Financial Corp. - Southern Community Capital Trust II - % Cumulative Trust Preferred Securities (MM) (NASDAQ:SCMFO)
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Capital Bank Financial Corp. - Southern Community Capital Trust II - % Cumulative Trust Preferred Securities (MM) (NASDAQ:SCMFO)
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부터 5월(5) 2023 으로 5월(5) 2024
