Southcoast Announces First Quarter Earnings


MT. PLEASANT, S.C., April 20, 2007 (PRIME NEWSWIRE) -- Southcoast Financial Corporation (Nasdaq:SOCB), announced that it had unaudited pre-tax income of $1,275,000 and unaudited net income of $831,000, or $.16 per basic share, for the quarter ended March 31, 2007. This compares to pre-tax income of $2,087,000 and net income of $1,336,000, or $0.25 per basic share for the quarter ended March 31, 2006. The March 31, 2007 earnings per share are based on 5,317,350 basic average shares compared to 5,451,109 average shares for the first quarter of 2006. This decrease in shares is the result of a stock repurchase initiative undertaken in January 2007. The Company's Board of Directors authorized the repurchase of up to 547,194 shares, or 10% of the Company's outstanding shares as of January 23, 2007. During the quarter the Company repurchased 154,588 shares for a total of $6,407,901. Chairman and Chief Executive Officer, L. Wayne Pearson said, "While we experienced a drop in net income compared to the first quarter of 2006, we continue to focus on the growth of our banking system. The decline in net income is due primarily to a decrease in non-recurring income from real estate sales. We also experienced increases in personnel costs to support the growth of our branch network, and due to the acquisition of Charlestowne Mortgage Corporation, and our expansion to Hilton Head, South Carolina."

Total assets as of March 31, 2007 were $463.9 million compared to $504.1 million as of March 31, 2006, a decrease of 8.0%. Loans, excluding loans held for sale, decreased to $364.0 million, down 3.3% from $376.3 million as of March 31, 2006. Deposits during the same period declined 15.2% to $279.1 million. The decline in loans and deposits is directly related to our decision to reduce our wholesale lending operations and our related brokered and wholesale deposit base. As of March 31, 2007, the ratio of nonperforming assets to total assets was 0.09% and the allowance for loan losses as a percentage of loans was 1.20%.

The Corporation currently has nine branches and will open our tenth branch at the intersection of Highway 17N at Park West and South Morgans Point Road in Mt. Pleasant, South Carolina in the next few days.

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. Trading in Southcoast Financial Corporation's common stock is traded on the NASDAQ Global Market under the symbol SOCB.

This press release contains forward-looking statements about branch openings within the meaning of the Securities Litigation Reform Act of 1995. Forward-looking statements give our expectations or forecasts of future events.

Any or all of our forward-looking statements here or in other publications may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining our actual future results. Consequently, no forward looking-statements can be guaranteed. Our actual results may vary materially, and there are no guarantees about the performance of our stock.

We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future results or otherwise. You are advised, however, to consult any future disclosures we make on related subjects in our reports to the SEC.



                   Southcoast Financial Corporation
                        SELECTED FINANCIAL DATA
             (dollars in thousands, except earnings per share)

                                       Three Months Ended
                                   March 2007    March 2006
                                          (Unaudited)
 INCOME STATEMENT DATA
  Net interest income              $   3,641    $   4,026
  Provision for loan losses             --            319
  Noninterest income                     603          786
  Noninterest expenses                 2,969        2,406
  Net income                             831        1,336

 PER SHARE DATA (a)
  Net income per share
   Basic                           $    0.16    $    0.25
   Diluted                         $    0.16    $    0.24

 BALANCE SHEET DATA
  Total assets                     $ 463,900    $ 504,069
  Total deposits                     279,148      328,981
  Total loans (net)                  359,625      371,747
  Investment securities               47,404       54,820
  Total earning assets               425,821      468,596
  Advances from FHLB                  81,000       77,000
  Junior subordinated debentures      21,655       21,655
  Shareholders' equity                73,272       74,576

 Average shares outstanding

  Basic                             5,317,350    5,451,109
  Diluted                           5,322,363    5,456,380

 Key ratios (b)
  Return on assets                       0.71%        1.16%
  Return on equity                       4.43%        7.33%
  Equity to asset ratio                 15.79%       14.79%
  Non-performing assets to assets        0.09%        0.10%
  Reserve to loans                       1.20%        1.20%
  Net interest margin                    3.42%        3.80%

  Employees                               115           88
  # of accounts                        10,863       10,726
  # of offices open                         9            8
  # of offices under construction           1            1
  # of office sites purchased               2            0
  ATM stand alone                           1            1

                  Year       Year       Year       Year       Year
                  Ended      Ended      Ended      Ended      Ended
                Dec. 2006  Dec. 2005  Dec. 2004  Dec. 2003  Dec. 2002

 INCOME STATEMENT DATA
  Net interest
   income      $   16,145 $   13,914 $   10,692 $    7,858 $    5,458
  Provision for
   loan losses        723        865      1,146        735        480
  Noninterest
   income           3,837      2,725      2,700      1,711      1,767
  Noninterest
   expenses        11,542      9,243      7,966      6,171      4,866
  Net income        4,839      4,189      2,982      1,704      1,147

 PER SHARE DATA (a)
  Net income
   per share
   Basic       $     0.89 $     1.06 $     0.83 $     0.76 $     0.57
   Diluted     $     0.89 $     1.06 $     0.82 $     0.74 $     0.55

 BALANCE SHEET DATA
  Total assets $  481,856 $  476,599 $  366,103 $  253,217 $  181,513
  Total deposits  310,893    311,554    258,153    166,213    132,655
  Total loans
   (net)          363,246    371,656    293,207    199,732    134,729
  Investment
   securities      46,341     35,203     24,831     22,049      7,608
  Total earning
   assets         445,525    440,942    344,482    238,009    168,225
  Advances from
   FHLB            66,000     67,000     58,000     41,100     23,500
  Junior
   subordinated
   debentures      21,655     21,655     11,345     11,345     11,345
  Shareholders'
   equity          78,803     73,315     36,571     33,410     12,709

 Average shares outstanding

   Basic        5,461,034  3,941,199  3,586,523  2,246,398  2,021,109
   Diluted      5,465,859  3,945,882  3,637,618  2,299,766  2,102,388

 Key ratios (b)
  Return on
   assets            1.00%      1.04%      0.98%      0.79%      0.78%
  Return on
   equity            6.22%      9.28%      8.56%     10.43%      9.45%
  Equity to
   asset ratio      16.35%     15.38%      9.99%     13.19%      7.00%
  Non-performing
   assets to
   assets            0.18%      0.11%      0.27%      0.04%      0.06%
  Reserve to
   loans             1.19%      1.14%      1.15%      1.18%      1.21%
  Net interest
   margin            3.64%      3.69%      3.78%      3.90%      4.02%

  Employees           110         88         83         68         59
  # of accounts    10,778     10,728      9,391      7,814      6,899
  # of offices
   open                 8          8          7          5          5
  # of offices
   under
   construction         2          1          0          2          0
  # of office
   sites
   purchased            2          0          2          1          2
  ATM stand
   alone                1          1          1          0          0

 (a) Per share data has been adjusted for 10% stock dividends in 
     2006, 2005, 2004, 2002, and a 15% dividend in 2003.

 (b) Ratios for three months are annualized.


                          Southcoast Financial Corporation
                             Consolidated Balance Sheets

                  March 31   March 31    Dec. 31   Dec. 31   Dec. 31
                    2007       2006       2006      2005      2004
                (Unaudited) (Unaudited) (Audited) (Audited) (Audited)
 Assets

 Cash and due
  from banks      $  8,458   $ 19,317  $  7,008  $ 14,378  $ 11,853
 Federal Funds
  sold              13,762     24,034    31,204    16,964     4,236
 Investments        47,404     54,821    46,460    35,203    24,831
 Loans held for
  sale                 331      5,424       140     9,275    12,010
 Loans             363,989    376,273   367,611   375,926   296,611
 Less: Allowance
  for loan losses    4,364      4,525     4,364     4,270     3,404
                  --------   --------  --------  --------  --------
 Net loans         359,625    371,748   363,247   371,656   293,207
 Fixed assets       25,605     20,008    25,126    19,898    14,844
 Other assets        8,715      8,717     8,671     9,225     5,122
                  --------   --------  --------  --------  --------
   Total Assets   $463,900   $504,069  $481,856  $476,599  $366,103
                  ========   ========  ========  ========  ========
 Liabilities &
  Shareholders'
  Equity
 Deposits:

  Non-interest
   bearing          31,499   $ 42,217  $ 34,694  $ 38,754  $ 27,955
  Interest
   bearing         247,649    286,764   276,199   272,800   230,198
                  --------   --------  --------  --------  --------
   Total deposits  279,148    328,981   310,893   311,554   258,153
 Other borrowings   86,925     77,053    67,841    67,000    58,000
 Other liabilities   2,900      1,804     2,664     3,075     2,034
 Junior
  subordinated
  debentures        21,655     21,655    21,655    21,655    11,345
                  --------   --------  --------  --------  --------
   Total
    liabilities    390,628    429,493   403,053   403,284   329,532

 Shareholders'
  Equity

  Common Stock      68,937     74,943    75,316    70,268    34,081
  Retained
   Earnings and
   Accumulated
   Other
   Comprehensive
   Income or Loss    4,335       (367)    3,487     3,047     2,490
                  --------   --------  --------  --------  --------
   Total
    shareholders'
    equity          73,272     74,576    78,803    73,315    36,571
                  --------   --------  --------  --------  --------
   Total
    Liabilities and
    Shareholders'
    equity        $463,900   $504,069  $481,856  $476,599  $366,103
                  ========   ========  ========  ========  ========

 Book Value Per
  Share(a)        $  14.13   $  13.68  $  14.41  $  13.45  $  10.17
 Reserve to Loans
  Ratio               1.20%      1.20%     1.19%     1.14%     1.15%

 (a) Adjusted for a 10% stock dividend in 2006, 2005, and 2004.


                          Southcoast Financial Corporation
                            Consolidated Income Statement
                      (Dollars in thousands, except share data)


                                               Quarter Ended
                                           March 31,    March 31,
                                             2007         2006
                                          (Unaudited)  (Unaudited)
 Interest Income
  Interest and fees on loans              $    6,974   $    6,734

  Interest on investments                        602          440
  Interest on Fed funds sold                     217          105
                                          ----------   ----------
   Total interest income                       7,793        7,279

 Interest expense                              4,152        3,253
                                          ----------   ----------
   Net interest income                         3,641        4,026
 Provision for loan losses                      --            319
                                          ----------   ----------
   Net interest after provision                3,641        3,707

 Other noninterest income                        603          786
                                          ----------   ----------
   Total operating income                      4,244        4,493

 Noninterest expense
  Salaries and benefits                        1,728        1,477
  Occupancy and furniture and equipment          545          388
  Other expenses                                 696          541
                                          ----------   ----------
   Total noninterest expense                   2,969        2,406

 Income before taxes                           1,275        2,087
 Income tax expense                              444          751
                                          ----------   ----------
 Net income                               $      831   $    1,336
                                          ==========   ==========
 Basic net income per common share        $     0.16   $     0.25

 Diluted net income per common share      $     0.16   $     0.24

 Average number of common shares(a)
    Basic(a)                               5,317,350    5,451,109
    Diluted(a)                             5,322,363    5,456,380

 (a) Adjusted for a 10% stock dividend in 2006.


            

Contact Data