CommunitySouth Financial Corporation Announces Strong Earnings Growth for First Quarter 2008


EASLEY, S.C., April 29, 2008 (PRIME NEWSWIRE) -- CommunitySouth Financial Corporation (OTCBB:CBSO), parent company of CommunitySouth Bank & Trust, serving the Upstate of South Carolina, today announced that net income for the quarter ended March 31, 2008 was $341,491, or $0.07 per diluted share, compared to net income of $208,372, or $0.04 per diluted share, for the previous year first quarter, an increase of 63.89%.

Highlights for the first quarter of 2008 include the following:



 --  Total assets ended the quarter at $382.3 million, an increase of
     34.40% over the first quarter of 2007 and 1.18% for the quarter.

 --  Total loans grew to $309.7 million, an increase of 26.71% over
     the same quarter as the previous year, and 2.22% for the quarter.

 --  Total deposits increased 22.82% over the same quarter as the
     previous year; however for the quarter, total deposits declined
     by 5.28% to $310.4 million. The decline in total deposits was due
     primarily to run-off experienced in the certificate of deposit
     portfolio, resulting from competitive pricing in the local
     market.

 --  Net interest income increased approximately $446,000, or 20.74%,
     over the same period in the prior year. This increase in net
     interest income was a result of continued loan growth over the
     past twelve months.

 --  Loan yields decreased to 7.21% in the first quarter of 2008 from
     8.12% in the first quarter of 2007, while borrowing costs
     decreased to 4.53% from 4.76% for the same period.

 --  Net interest margin for the quarter ended March 31, 2008 was
     2.81%, compared to 3.44% for the same period in the prior year.
     This decrease was due mainly to the recent decreases in the prime
     rate.

 --  Non-interest income increased approximately $25,000, or 7.27%,
     over the same period in the prior year. The increase in
     non-interest income was a result of increased deposit and related
     fees.

 --  Non-interest expenses totaled approximately $2.3 million for the
     first quarter of 2008, a 29.46% increase when compared to
     non-interest expenses for the first quarter of previous year.
     This increase in non-interest expense is reflective of the
     Company's investment in an additional branch and personnel, which
     have produced additional revenues and provided the infrastructure
     to support the Bank's growth and expansion plans. This is also
     reflected in the Company's efficiency ratio, which for the
     quarter ended March 31, 2008, was 78.10%, compared to 71.72% for
     the same quarter in the previous year.

 --  Annualized return on average assets was 0.36% for the first
     quarter of 2008, compared to a return of 0.32% for the same
     period one year ago.

 --  Annualized return on average shareholders' equity was 4.31% for
     the quarter ended March 31, 2008, compared to a return of 2.80%
     for the same quarter in the prior year.

CommunitySouth's performance has been extremely strong compared to peer banks, defined as the 23 east coast banks that also opened in 2005. According to fourth quarter 2007 data, the latest information supplied by SNL Financial, the leading financial information provider for the financial services industry, CommunitySouth ranked fourth in asset size and fourth in last 12 month's (LTM) annual income among its 23 peer banks.

"We are very pleased to be able to report significant earnings growth for the quarter," said C. Allan Ducker, III, Chief Executive Officer of CommunitySouth. "Although our earnings have continued to grow, we have been impacted by the headwinds experienced by the financial services industry. In particular, our net interest margin continued to erode due mainly to the recent reductions in the Federal Funds Rate. On a positive note, our asset quality remained extremely strong due to tightened credit underwriting standards, especially in the areas of real estate development and speculative construction loans. These tightened credit standards, along with the fact that we have stuck to our guns on commercial loan pricing, were the primary contributors to our flat growth for the quarter. For the remainder of the year our focus will be on maintaining sound asset quality and lowering our overall funding costs, primarily through increasing core deposits."

CommunitySouth's stock is quoted on the Over the Counter Bulletin Board under the symbol CBSO.

About CommunitySouth Bank & Trust:

CommunitySouth Bank & Trust (OTCBB:CBSO) commenced operations in the Upstate of South Carolina on January 18, 2005. After completing what was at the time the largest initial public offering ever to fund a South Carolina-based bank, the Company capitalized with $30 million and has since grown assets to over $382 million. CommunitySouth was recently named the 11th fastest growing company in South Carolina, according to South Carolina's Fastest-Growing Companies 2007 competition.

CommunitySouth is headquartered in Easley, South Carolina and currently operates full-service offices in Greenville, Spartanburg, Anderson, Greer, Mauldin, and Easley. The Company also operates full-service investment, insurance and mortgage divisions.

CommunitySouth offers a complete line of banking products and services, including commercial, consumer and mortgage loans, personal and business checking and savings accounts, free online banking and bill pay, nationwide free ATMs, free business courier service, remote deposit service, courtesy overdraft coverage, and more.

The CommunitySouth Bank & Trust logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=2708

For additional information, please call us at 864-306-2540, toll-free at 866-421-CSBT, or visit www.communitysouthbankandtrust.com.

Certain statements in this news release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future profitability, growth, plans and expectations, and are thus prospective. Such forward-looking statements are subject to risks, uncertainties, and other factors, such as a downturn in the economy, greater than expected non-interest expenses or excessive loan losses, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. For a more detailed description of factors that could cause such differences, please see our filings with the SEC.

Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by our company or any person that the future events, plans, or expectations contemplated by our company will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Summary Consolidated Financial Data

Our summary consolidated financial data as of and for the three months ended March 31, 2008 and 2007 have not been audited but, in the opinion of our management, contain all adjustments necessary to present fairly our financial position and results of operations for such periods in accordance with generally accepted accounting principles.



                                                 Three Months ended
                                                      March 31,
                                                   2008        2007
                                                ---------    ---------
 (In thousands, except
 per share dollar amounts)
 Summary Results of Operations Data:
  Interest income - loans                       $   5,518    $   4,605
  Interest income - investments                       731          310
                                                ---------    ---------
  Total interest income                             6,249        4,915
  Interest expense - deposits                       3,653        2,765
                                                ---------    ---------
  Net interest income                               2,596        2,150
  Provision for loan losses                           125          362
                                                ---------    ---------
  Net interest income after
   provision for loan losses                        2,471        1,788
 Non-interest income                                  369          344
 Non-interest expense                               2,316        1,789
                                                ---------    ---------
  Income before taxes                                 524          343
 Income tax expense                                   183          135
                                                ---------    ---------
  Net income                                    $     341    $     208
                                                =========    =========

 Weighted Average Number
  of Shares Outstanding:
  Basic                                             4,699        4,698
  Diluted                                           4,911        5,216

 Per Share Data:
  Net income, basic                             $    0.07    $    0.04
  Net income, diluted                           $    0.07    $    0.04
  Book value                                    $    6.79    $    6.37

 Summary Balance Sheet Data:
  Total assets                                  $ 382,344    $ 284,472
  Average earning assets                          369,929      253,666
  Investment securities (1)                        54,182          100
  Other investments (1)                               905          271
  Total loans (2)                                 309,670      244,393
  Allowance for loan losses                         4,289        3,438
  Total deposits                                  310,372      252,696
  Shareholders' equity                             31,916       29,913

 Performance Ratios:
  Return on average assets (3)                       0.36%        0.32%
  Return on average equity (3)                       4.31%        2.80%
  Net interest margin (4)                            2.81%        3.44%
  Efficiency ratio (5)                              78.11%       71.73%


Bank Capital Ratios:
  Total risk-based capital ratio                    10.35%       11.56%
  Tier 1 risk-based capital ratio                    9.11%       10.31%
  Leverage ratio                                     8.20%       10.48%

 Growth Ratios since March 31, 2007:
  Percentage change in total assets                 34.40%
  Percentage change in loans, gross                 26.71%
  Percentage change in total deposits               22.82%
  Percentage change in shareholders' equity          6.70%

 Other Data as of March 31, 2008:
  Allowance for loan losses to total loans           1.39%
  Total loans to total deposits ratio               99.77%


 (1) Marketable securities are stated at fair value. Non-marketable
     securities are stated at cost.
 (2) Loans are stated at gross amounts before allowance for loan
     losses.
 (3) The three month period return is annualized and then divided by
     the average total assets or equity for the three month period.
 (4) The net interest margin is annualized for the three month period.
 (5) Computed by dividing non-interest expense by the sum of net
     interest income and non-interest income.

            

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