Southcoast Announces 2014 First Half Results

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| Source: Southcoast Financial Corporation

MT. PLEASANT, S.C., July 18, 2014 (GLOBE NEWSWIRE) -- Southcoast Financial Corporation (Nasdaq:SOCB) announced that it had unaudited net income of $1,352,000, or $.19 per diluted share, for the six months ended June 30, 2014. This compares to unaudited net income of $8,041,000, or $1.14 per diluted share, for the six months ended June 30, 2013. The difference in net income between the two periods primarily relates to the one-time tax benefit of $6.4 million derived from the recapture of the Company's deferred tax asset in the second quarter of 2013. The June 30, 2014 income per share is based on 7,087,860 diluted average shares compared to 7,072,956 diluted average shares for 2013. Income before income taxes increased 23.7% to $2,076,000 from $1,678,000. The 2014 pretax results were influenced by a growth in loan interest income, reduced funding costs, and reductions in noninterest expenses.

For the six months ended June 30, 2014, net interest income totaled $7,203,000, an increase of $297,000 from $6,906,000 for the six months ended June 30, 2013.

Noninterest income for 2014 decreased to $1,118,000 from $1,280,000 for 2013, primarily due to a $150,000 reduction in fees on mortgage loans sold.

Noninterest expense levels decreased from $6,508,000 for 2013 to $6,245,000 for 2014. Contributing to this decrease were reductions in salaries and benefits, FDIC insurance premiums, and overhead expenses on other real estate owned.

For the quarter ended June 30, 2014, the unaudited net income was $709,000, or $0.10 per diluted share. This compares to an unaudited net income of $7,035,000, or $0.99 per diluted share for the quarter ended June 30, 2013. The net income for the quarter ended June 30, 2013, included a one-time tax benefit of $6,419,000 resulting from the Company's recapture of its deferred tax asset valuation allowance. The June 30, 2014 income per share is based on 7,089,902 diluted average shares compared to 7,074,210 diluted average shares for the quarter ended June 30, 2013.

Total assets as of June 30, 2014 were $465.0 million compared to $447.4 million as of December 31, 2013, an increase of 3.93%. Loans, excluding loans held for sale, increased $17.6 million or 5.31% to $349.5 million, from $331.9 million as of December 31, 2013. Deposits increased by $18.6 million, or 5.90% to $334.5 million at June 30, 2014, from $315.8 million at December 31, 2013. The increase in loans was completely funded by an increase in core non-time deposits. Growth in core non-time deposits is a major strategy incorporated in our Company's strategic plan.  

The Company continues to show improvement in asset quality. For the first six months of 2014, additions to the allowance for loan losses have not been required. Increased recoveries, reduced non-performing assets, controlled delinquencies, and reduced classified loans all contributed to this result. The ratio of nonperforming assets to total assets was 2.76% as of June 30, 2014, compared to 3.53% as of June 30, 2013. The allowance for loan losses as a percentage of loans was 1.73% as of June 30, 2014, compared to 2.26% as of June 30, 2013. The allowance for loan losses as a percentage of total nonperforming loans totaled 76.40% as of June 30, 2014, compared to 72.45% as of June 30, 2013.

"The value of our franchise continues to improve as our performance improves. We are proud of our accomplishments as they reflect the loyalty of our customers and the dedication of our employees", 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
SELECTED FINANCIAL DATA
(dollars in thousands, except earnings per share)
     
  Three Months Ended
   June 30, 2014  June 30, 2013
   (Unaudited)
INCOME STATEMENT DATA    
Net interest income  $ 3,573  $ 3,473
Provision for loan losses  --   -- 
Noninterest income 630 691
Noninterest expenses 3,115 3,548
Income tax expense (benefit) 379  (6,419)
Net income  $ 709  $ 7,035
     
PER SHARE DATA    
Net income per share    
Basic  $ 0.10  $ 0.99
Diluted  $ 0.10  $ 0.99
     
     
Average shares outstanding    
Basic 7,089,902 7,074,210
Diluted 7,089,902 7,074,210
     
Key ratios    
Return on assets1 0.62% 6.47%
Return on equity1 6.38% 67.69%
Nonperforming assets to assets2 2.76% 3.53%
Reserve to loans 1.73% 2.26%
Reserve to nonperforming loans3 76.40% 72.45%
Net interest margin1 3.65% 3.69%
     
1 Ratios for three months are annualized.
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.
 
 
  Southcoast Financial Corporation
  Consolidated Balance Sheets
  (Dollars in thousands)
     
   June 30  December 31
  2014 2013
  (Unaudited)  
Assets    
Cash and cash equivalents $31,054 $28,460
Investments 42,783 43,451
Loans held for sale 0 271
Loans 349,546 331,906
Less: Allowance for loan losses 6,037 6,041
     
Net loans 343,509 325,865
Fixed assets 20,780 21,150
Other assets 26,842 28,187
     
Total Assets $464,968 $447,384
     
Liabilities & Shareholders' Equity    
Deposits:    
Noninterest bearing $54,222 $40,399
Interest bearing nontime 141,875 138,899
Time deposits 138,373 136,530
     
Total deposits 334,470 315,828
Other borrowings 70,911 73,818
Other liabilities 4,664 4,859
Junior subordinated debentures 10,310 10,310
     
Total liabilities 420,355 404,815
     
Shareholders' Equity    
Common Stock 54,595 54,544
Accumulated deficit  (8,585)  (9,937)
Accumulated other comprehensive loss  (1,397)  (2,038)
     
Total shareholders' equity 44,613 42,569
     
Total Liabilities and Shareholders' equity $464,968 $447,384
     
Book Value Per Share $6.29 $6.01
     
     
 Southcoast Financial Corporation    
 Consolidated Income Statement    
 (Dollars in thousands, except share data)    
         
  Six Months Ended Three Months Ended
   June 30 June 30,  June 30 June 30,
  2014 2013 2014 2013
   (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)
Interest Income        
Interest and fees on loans $8,417 $8,362 $4,182 $4,161
Interest on investments 579 491 278 239
Interest on Fed funds sold 16 13 10 7
         
Total interest income 9,012 8,866 4,470 4,407
         
Interest expense 1,809 1,960 897 934
         
Net interest income 7,203 6,906 3,573 3,473
Provision for loan losses  --  --  --  --
         
Net interest after provision 7,203 6,906 3,573 3,473
         
Noninterest income 1,118 1,280 630 691
         
Total noninterest income 1,118 1,280 630 691
         
Total operating income 8,321 8,186 4,203 4,164
         
Noninterest expense        
Salaries and benefits 3,449 3,555 1,690 1,876
Occupancy and furniture and equipment 1,428 1,458 709 705
Other expenses 1,368 1,495 716 967
         
Total noninterest expense 6,245 6,508 3,115 3,548
         
Income before taxes 2,076 1,678 1,088 616
Income tax expense (benefit) 724 (6,363) 379 (6,419)
         
Net income $1,352 $8,041 $709 $7,035
         
Basic net income per common share $0.19 $1.14 $0.10 $0.99
         
Diluted net income per common share $0.19 $1.14 $0.10 $0.99
         
Average number of common shares        
Basic 7,087,860 7,072,956 7,089,902 7,074,210
Diluted 7,087,860 7,072,956 7,089,902 7,074,210
         
William C. Heslop, Senior Vice President and
Chief Financial Officer, (843) 216-3019