MT. PLEASANT, S.C., Oct. 29, 2008 (GLOBE NEWSWIRE) -- Tidelands Bancshares, Inc. (Nasdaq:TDBK), holding company for Tidelands Bank, announced year-to-date and quarter-to-date results for the periods ended September 30, 2008. "In my 35 years of banking experience, this is the most difficult and unique time that I have ever seen," said President and Chief Executive Officer, Robert E. Coffee, Jr. "During the third quarter, the economic environment that all financial institutions are operating in has changed significantly. Despite these uncertain conditions in the market, we continue to successfully execute our strategic goal to increase our retail presence as demonstrated in the opening of our seventh branch, located in Murrells Inlet, South Carolina and the resulting loan and deposit growth in our markets."
We recorded a net loss of $2.9 million for the nine months ended September 30, 2008 as compared to a net profit of approximately $175,000 for the period ended September 30, 2007. In comparison to our previous year's third quarter results, the decrease in earnings was primarily driven by the pre-tax impairment charge of $4.6 million related to the government placing the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation into conservatorship. Our loss amounted to $0.72 per share on both a basic and diluted basis for the nine months ended September 30, 2008. We also incurred additional operating costs in connection with our new branches. Although our branches are assisting us in attaining our retail deposit and loan growth projections, the current retail deposit rate environment and the expenses associated with the new branches have also had a dampening effect on our earnings. For the period ended September 30, 2008, our net interest margin was 2.64% compared to 3.14% at September 30, 2007.
After our net loss for the quarter, ending September 30, 2008, Tidelands Bank remains "well-capitalized" as defined by bank regulators, which is the highest bank capital classification. The Company's total shareholders' equity was $37.9 million with book value at $8.86 per share at quarter end.
Despite the significant issues in the mortgage and credit markets, Tidelands Bank continues to experience strong loan growth. For the period ending September 30, 2008, loans year-to-date grew $65.4 million to $456.7 million with assets increasing $155.9 million to reach $668.1 million at quarter end. We do not have direct exposure to the sub-prime lending practices that led to many of the problems in the financial industry. Since our inception, we have adhered to strict internal and regulatory guidelines with regards to our credit underwriting standards. Tidelands Bank has always maintained a conservative approach to banking as we focus on providing credit and deposit products for proven customer relationships. Although our credit-related issues increased in comparison to previous periods, we are working to resolve each situation. At September 30, 2008, non-accrual loans amounted to $4.6 million, or 1.0% of total gross loans. The balance of other real estate owned at September 30, 2008 was approximately $965,000. At September 30, 2008, our ratios of nonperforming assets to total assets of 0.83% and net charge-offs to average loans of 0.14% continue to compare favorably to the industry. Our provision for loan losses for the nine months ended September 30, 2008 totaled $1.5 million, reflecting loan growth experienced year-to-date and net charge-offs of $608,000. At September 30, 2008, the allowance for loan losses amounted to 1.10% of total loans.
During the third quarter, Tidelands generated significant increases in retail deposits through its seven full-service branch locations. As a result, our ratio of wholesale deposits to total deposits has decreased from 58.4% at December 31, 2007 to 48.0% at September 30, 2008. We anticipate this trend will continue with the maturation of our retail branch offices. At quarter end September 30, 2008, the bank had generated year-to-date growth of $113.6 million in customer time deposits and $41.8 million in interest checking deposits.
We believe it is imperative to remain diligent in our day to day activities and focus on the strong banking culture that our management team has so proudly built.
FORWARD-LOOKING STATEMENTS
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 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 noninterest expenses, volatile credit and financial markets, potential deterioration in real estate values, regulatory changes and 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 certain factors, many of which are beyond our control, that could cause or contribute to our actual results differing materially from future results expressed or implied by our forward-looking statements, please see our Annual Report on Form 10-KSB for the year ended December 31, 2007, and our other filings with the Securities and Exchange Commission.
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 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 quarter ended September 30, 2008 are unaudited but, in the opinion of our management, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly our financial position and results of operations for such periods in accordance with generally accepted accounting principles.
Tidelands Bancshares, Inc. and Subsidiary
Consolidated Statements of Operations
(Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------ ------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Interest income:
Loans, including
fees $20,688,346 $20,337,589 $ 6,904,730 $ 7,354,042
Securities avail-
able for sale,
taxable 4,551,700 1,525,428 2,070,109 557,386
Securities
available for
sale, non-
taxable 220,165 300,873 70,679 141,781
Federal funds
sold 246,339 614,359 58,463 182,233
Other interest
income 3,933 12,202 2,019 8,056
----------- ----------- ----------- -----------
Total interest
income 25,710,483 22,790,451 9,106,000 8,243,498
----------- ----------- ----------- -----------
Interest expense:
Time deposits
$100,000 and
over 1,726,493 267,089 774,579 81,364
Other deposits 10,459,295 11,780,286 3,205,458 4,436,821
Other borrowings 2,592,080 1,640,037 1,088,197 585,582
----------- ----------- ----------- -----------
Total interest
expense 14,777,868 13,687,412 5,068,234 5,103,767
----------- ----------- ----------- -----------
Net interest
income 10,932,615 9,103,039 4,037,766 3,139,731
Provision for
loan losses 1,473,000 1,025,000 696,000 --
----------- ----------- ----------- -----------
Net interest
income after
provision for
loan losses 9,459,615 8,078,039 3,341,766 3,139,731
----------- ----------- ----------- -----------
Noninterest
income (loss):
Service charges
on deposit
accounts 26,917 26,882 8,605 9,806
Residential
mortgage orig-
ination income 361,896 664,768 81,768 221,784
Gain on sale of
securities
available for
sale 505,585 5,558 473,431 2,694
Gain (loss) on
sale of real
estate 10,979 -- (12,372) --
Other service
fees and
commissions 276,454 138,860 126,519 53,846
Bank owned life
insurance 355,299 216,655 129,069 73,195
Impairment on
securities
available for
sale (4,596,200) -- (4,596,200) --
Other 23,357 14,062 8,571 5,430
----------- ----------- ----------- -----------
Total
non-interest
income (loss) (3,035,713) 1,066,785 (3,780,609) 366,755
----------- ----------- ----------- -----------
Noninterest
expense:
Salaries and
employee
benefits 6,220,329 5,137,237 1,815,989 1,929,775
Net occupancy 1,033,430 715,605 373,646 335,267
Furniture and
equipment 526,868 330,417 192,769 155,733
Other operating 3,349,675 2,679,599 1,069,874 1,010,843
----------- ----------- ----------- -----------
Total
noninterest
expense 11,130,302 8,862,858 3,452,278 3,431,618
----------- ----------- ----------- -----------
Income (loss)
before income
taxes (4,706,400) 281,966 (3,891,121) 74,868
Income tax
expense (benefit) (1,803,708) 107,000 (1,453,228) 28,000
----------- ----------- ----------- -----------
Net income (loss) $(2,902,692) $ 174,966 $(2,437,893) $ 46,868
=========== =========== =========== ===========
Earnings (loss)
per common share
Basic earnings
(loss) per share $ (0.72) $ 0.04 $ (0.60) $ 0.01
=========== =========== =========== ===========
Diluted earnings
(loss) per share $ (0.72) $ 0.04 $ (0.60) $ 0.01
=========== =========== =========== ===========
Weighted average
common shares
outstanding
Basic 4,052,354 4,275,215 4,044,186 4,276,686
=========== =========== =========== ===========
Diluted 4,058,681 4,275,215 4,044,186 4,276,686
=========== =========== =========== ===========
Tidelands Bancshares, Inc. and Subsidiary
Consolidated Balance Sheets
September 30, December 31,
2008 2007
------------ ------------
Assets: (Unaudited) (Audited)
Cash and cash equivalents:
Cash and due from banks
$ 6,457,553 $ 724,957
Federal funds sold 4,250,000 1,945,000
------------ ------------
Total cash and cash equivalents 10,707,553 2,669,957
------------ ------------
Securities available for sale 159,853,129 88,036,109
Nonmarketable equity securities 3,807,140 2,060,940
------------ ------------
Total securities 163,660,269 90,097,049
------------ ------------
Mortgage loans held for sale 346,392 1,426,800
Loans receivable 456,747,003 391,349,869
Less allowance for loan losses 5,023,538 4,158,324
------------ ------------
Loans, net 451,723,465 387,191,545
------------ ------------
Premises, furniture and equipment, net 19,516,323 17,759,388
Accrued interest receivable 2,802,478 3,164,124
Bank owned life insurance 13,206,116 7,849,156
Other assets 6,172,817 2,111,572
------------ ------------
Total assets $668,135,413 $512,269,591
============ ============
Liabilities:
Deposits:
Noninterest-bearing
transaction accounts $ 13,651,973 $ 10,191,152
Interest-bearing transaction accounts 50,230,612 8,460,166
Savings and money market 161,842,300 199,833,835
Time deposits $100,000 and over 80,133,243 29,876,086
Other time deposits 212,478,685 139,808,202
------------ ------------
Total deposits 518,336,813 388,169,441
------------ ------------
Securities sold under
agreements to repurchase 30,000,000 41,040,000
Junior subordinated debentures 14,434,000 8,248,000
Advances from Federal Home Loan Bank 60,800,000 29,000,000
ESOP borrowings 2,675,000 2,427,500
Other borrowings 616,046 --
Accrued interest payable 1,915,169 1,341,161
Other liabilities 1,483,400 1,088,319
------------ ------------
Total liabilities 630,260,428 471,314,421
------------ ------------
Commitments and contingencies -- --
Shareholders' equity:
Preferred stock, $.01 par value,
10,000,000 shares authorized,
none issued -- --
Common stock, $.01 par value,
10,000,000 shares authorized; 4,277,176
and 4,277,176 shares issued and
outstanding at September 30, 2008 and
December 31, 2007, respectively 42,772 42,772
Unearned ESOP shares (2,642,415) (2,427,500)
Capital surplus 43,265,240 42,788,666
Retained earnings (deficit) (2,853,528) 49,164
Accumulated other comprehensive
income (loss) 62,916 502,068
------------ ------------
Total shareholders' equity 37,874,985 40,955,170
------------ ------------
Total liabilities and
shareholders' equity $668,135,413 $512,269,591
============ ============
Tidelands Bancshares, Inc. and Subsidiary
Per Share Data: Nine Months Ended Three Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
---- ---- ---- ----
Net income, basic $(0.72) $0.04 $(0.60) $0.01
Net income, diluted $(0.72) $0.04 $(0.60) $0.01
Book value $8.86 $9.88 $ 8.86 $9.88
Weighted average number
of shares outstanding:
Basic 4,052,354 4,275,215 4,044,186 4,276,686
Diluted 4,058,681 4,275,215 4,044,186 4,276,686
Performance Ratios:
Return on
average assets (1) (0.66%) 0.06% (1.49%) 0.04%
Return on
average equity (1) (9.71%) 0.56% (25.21%) 0.46%
Net interest
margin (1) 2.64% 3.14% 2.63% 2.96%
At September 30,
-----------------------
Asset Quality Data: 2008 2007
----------- ---------
Loans 90 days or more past due and
still accruing interest $ -- $ --
Loans restructured or otherwise impaired(4) -- --
Nonaccrual loans 4,580,548 501,094
Loan charge-offs year to date,
net recoveries 607,786 222,106
Other real estate owned 965,049 --
Nonperforming loans to total loans (3) 1.00% 0.14%
Nonperforming assets to total assets(3) 0.83% 0.11%
Net charge-offs year to date
to average total loans(2) 0.14% 0.07%
Allowance for loan losses
to nonperforming loans 109.67% 852.11%
Allowance for loan losses to total loans (2) 1.10% 1.18%
Capital Ratios:
Period end tangible equity
to tangible assets 5.67% 8.92%
Leverage ratio 6.47% 10.93%
Tier 1 risk-based capital ratio 8.66% 12.68%
Total risk-based capital ratio 10.53% 13.78%
Growth Rates and Other Data:
Percentage change in assets(1) 40.64% 54.49%
Percentage change in loans(1) (2) 22.32% 43.29%
Percentage change in deposits(1) 44.79% 57.86%
Loans to deposit ratio (2) 88.12% 97.42%
--------------
1 - Annualized for the nine and three month periods, respectively.
2 - Includes nonperforming loans.
3 - Nonperforming assets include nonaccrual loans, loans 90 days or
more past due and still accruing interest, loans restructured or
otherwise impaired, and other real estate owned
4 - Loans restructured or otherwise impaired do not
include nonaccrual loans.