News Column

Southcoast Announces 2013 Results

January 17, 2014

MT. PLEASANT, S.C. , Jan. 17, 2014 (GLOBE NEWSWIRE) -- Southcoast Financial Corporation (Nasdaq:SOCB) announced that it had unaudited net income of $9,065,000 , or $1.28 per basic share, for the year ended December 31, 2013 . This compares to unaudited net income of $3,518,000 , or $0.50 per basic share, for the year ended December 31, 2012 . The December 31, 2013 income per share is based on 7,076,157 basic average shares compared to 7,044,365 basic average shares for 2012. The 2013 results included the reversal of the Deferred Tax Asset (DTA) valuation allowance which contributed to a net tax benefit of approximately $6,590,000 , or $0.93 per share. The reversal was the result of six quarters of sustained profitability and improving credit quality which indicated an anticipated capacity to utilize the DTA in future periods. The impact of the DTA valuation allowance reversal, coupled with operating earnings, increased the Company's book value to $6.02 per share as of December 31, 2013 , compared to $4.86 per share as of December 31, 2012 . The 2013 results also reflect decreased levels of nonperforming assets and an improved deposit mix. For the year ended December 31, 2013 , net interest income totaled $13,703,000 , an increase of $327,000 from $13,376,000 for the year ended December 31, 2012 . The net interest margin increased to 3.63% as of December 31, 2013 from 3.55% as of December 31, 2012 . Noninterest income for 2013 decreased to $2,360,000 from $3,277,000 for 2012, primarily due to $626,000 of securities gains and $192,000 of gains on sales of fixed assets during the 2012 period, compared to only $105,000 of gains from sales of securities and $28,000 of gains on sales of fixed assets in the 2013 period. Noninterest expense levels increased to $13,188,000 for 2013 from $12,118,000 for 2012. Included in 2012 was the benefit of $1,240,000 in net gains on sales of other real estate owned compared to only $339,000 for 2013. Total assets as of December 31, 2013 were $447.4 million compared to $438.2 million as of December 31, 2012 , an increase of 2.09%. Loans, excluding loans held for sale, increased to $331.9 million , from $327.5 million as of December 31, 2012 . Deposits decreased by $3.8 million to $315.8 million at December 31, 2013 , from $319.6 million at December 31, 2012 . This decrease was comprised of a $29.1 million decrease in time deposits between the two periods, offset by an increase of $25.3 in non-maturity deposit accounts. The growth in these core deposits was a major strategy incorporated in our 2013 strategic plan. The Company's ratio of nonperforming assets to total assets was 3.47% as of December 31, 2013 , compared to 4.87% as of December 31, 2012 . The allowance for loan losses as a percentage of loans was 1.82% as of December 31, 2013 , compared to 2.49% as of December 31, 2012 . The allowance for loan losses as a percentage of total nonperforming loans totaled 58.88% as of December 31, 2013 , compared to 71.86% as of December 31, 2012 . The year to year reduction in the allowance for loan losses was indicative of improved credit quality in the loan portfolio, most notably due to a significant reduction in criticized and classified loans. The subsidiary bank's capital position as of December 31, 2013 remains in excess of regulatory well-capitalized requirements. From January 4, 2013 to January 16, 2014 , the Company's stock price rose from $3.97 to $5.96 . The earlier price has been adjusted for the stock dividend issued in early 2013. During the same period, the stock was included in the Russell 2000 Small Cap Index fund and celebrated its ten year anniversary on the NASDAQ exchange. "We are proud of these accomplishments and they reflect the hard work of our employees during an extremely challenging extended period," said L. Wayne Pearson , Chairman and Chief Executive Officer. About Southcoast Financial Corporation Southcoast Financial Corporation , headquartered in Mt. Pleasant, South Carolina , is the holding company of Southcoast Community Bank . The Bank, which opened for business July 20, 1998 , is a state chartered commercial bank operating from its main office at 530 Johnnie Dodds Boulevard in Mt. Pleasant, South Carolina and nine branches in the Charleston, South Carolina area. Southcoast Financial Corporation's common stock is traded on the NASDAQ Global Market under the symbol SOCB. Southcoast Financial Corporation Consolidated Balance Sheets (Dollars in thousands) December 31 December 31 2013 2012 (Unaudited) Assets Cash and cash equivalents $28,460 $21,984 Investments 43,451 48,367 Loans held for sale 271 1,789 Loans 331,906 327,469 Less: Allowance for loan losses 6,041 8,159 Net loans 325,865 319,310 Fixed assets 21,150 21,653 Other assets 28,187 25,118 Total Assets $447,384 $438,221 Liabilities & Shareholders' Equity Deposits: Noninterest bearing $40,399 $38,797 Interest bearing nontime 138,899 115,245 Time deposits 136,530 165,590 Total deposits 315,828 319,632 Other borrowings 73,818 69,949 Other liabilities 4,859 4,066 Junior subordinated debentures 10,310 10,310 Total liabilities 404,815 403,957 Shareholders' Equity Common Stock 54,544 54,437 Accumulated deficit (9,937) (19,002) Accumulated other comprehensive loss (2,038) (1,171) Total shareholders' equity 42,569 34,264 Total Liabilities and Shareholders' equity $447,384 $438,221 Southcoast Financial Corporation Consolidated Income Statements (Dollars in thousands, except earnings per share) Year Ended December 31 , December 31 , 2013 2012 (Unaudited) Interest Income Interest and fees on loans $16,425 $16,947 Interest on investments 1,106 1,260 Interest on Fed funds sold 30 29 Total interest income 17,561 18,236 Interest expense 3,858 4,860 Net interest income 13,703 13,376 Provision for loan losses 400 880 Net interest income after provision 13,303 12,496 Noninterest income 2,360 3,277 Total operating income 15,663 15,773 Noninterest expense Salaries and benefits 7,024 6,487 Occupancy and equipment 2,935 2,904 Other expenses 3,229 2,727 Total noninterest expense 13,188 12,118 Income before taxes 2,475 3,655 Income tax expense (benefit) (6,590) 137 Net income $9,065 $3,518 Basic net income per share $1.28 $0.50 Diluted net income per share $1.28 $0.50 Average number of shares Basic 7,076,157 7,044,365 Diluted 7,076,157 7,044,365 Southcoast Financial Corporation SELECTED FINANCIAL DATA (dollars in thousands, except earnings per share) Year Ended December 31, 2013 December 31, 2012 (Unaudited) INCOME STATEMENT DATA Net interest income $ 13,703 $ 13,376 Provision for loan losses 400 880 Noninterest income 2,360 3,277 Noninterest expenses 13,188 12,118 Income tax expense (benefit) (6,590) 137 Net income $ 9,065 $ 3,518 PER SHARE DATA Net income per share Basic $ 1.28 $ 0.50 Diluted $ 1.28 $ 0.50 BALANCE SHEET DATA Total assets $ 447,384 $ 438,221 Total deposits 315,828 319,632 Total loans (net) 325,865 319,310 Investment securities 43,451 48,367 Other borrowings 73,818 69,949 Junior subordinated debentures 10,310 10,310 Shareholders' equity 42,569 34,264 Average shares outstanding 1 Basic 7,076,157 7,044,365 Diluted 7,076,157 7,044,365 Book value per share 1 $6.01 $4.86 Key ratios Return on assets 2.09% 0.81% Return on equity 23.60% 10.81% Equity to asset ratio 9.52% 7.82% Nonperforming assets 2 to assets 3.47% 4.87% Reserve to loans 1.82% 2.49% Reserve to nonperforming loans 3 58.88% 69.56% Net interest margin 3.63% 3.55% 1 Prior period per share amounts restated for 15% stock dividend paid during June 2013. 2 Includes nonaccruing loans, loans 90 or more days past due still accruing interest, troubled debt restructures, and other real estate owned. 3 Includes nonaccruing loans, loans 90 or more days past due still accruing interest, and troubled debt restructures. CONTACT: William C. Heslop , Senior Vice President and Chief Financial Officer, (843) 216-3019 Source: Southcoast Financial Corporation


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