MT. PLEASANT, S.C., Feb. 27, 2008 (PRIME NEWSWIRE) -- On January 17, 2008, Southcoast Financial Corporation (Nasdaq:SOCB) (the "Company"), released a report of its 2007 Year End Earnings. That report contained errors caused by the incorrect accounting treatment of a sale-leaseback of one of the Company's offices. Prior to the completion of that transaction, which closed December 20, 2007, the Company consulted with accounting experts about how to account for the transaction and, upon completion of the transaction, accounted for the transaction in the manner it had proposed. Subsequently, it was determined that the accounting treatment which was initially used, and was reflected in the Company's unaudited condensed income statements for the year and the three months ended December 31, 2007, included in the January 17, 2008, press release, was incorrect in that it recognized the approximately $1.5 million gain on the sale of the property as noninterest income in 2007. The correct accounting treatment is to defer the recognition of the approximately $1.5 million gain by recognizing the gain ratably over the lease term as a reduction of lease expense. The corrected news release reflects the corrected accounting treatment for the year and three months ended December 31, 2007.
* * * * *
Southcoast Financial Corporation
Corrected News Release
Southcoast Announces
2007 Year End Earnings
Southcoast Financial Corporation announced today that it had unaudited net income of $3,429,000 or $0.63 per basic share, for the year ended December 31, 2007. This compares to net income of $4,839,000, or $0.81 per basic share, for the year ended December 31, 2006. Average shares outstanding for both periods have been adjusted for the 10% stock dividend issued May 30, 2007. Average basic shares decreased 9.8% between 2006 and 2007 primarily due to the Company's buyback of 977,281 shares during 2007.
Total assets as of December 31, 2007 were $500.9 million compared to $481.9 million as of December 31, 2006, an increase of 3.9%. Loans, excluding loans held for sale, increased to $378.4 million, up 2.9% from $367.6 million as of December 31, 2006. Deposits increased 10.2% to $342.8 million over the same period.
For the quarter ended December 31, 2007, unaudited net income was $723,000, or $0.15 per basic share. This compares to net income of $967,000, or $0.16 per basic share, for the quarter ended December 31, 2006. Average shares for both periods have been adjusted for the earlier referenced 10% stock dividend.
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. Southcoast Financial Corporation's common stock trades on the NASDAQ Global Market under the symbol SOCB. Information about the corporation is available on our web site,www.southcoastbank.com.
Southcoast Financial Corporation
SELECTED FINANCIAL DATA
(dollars in thousands, except earnings per share)
Year Year Year
Ended Ended Ended
Dec. 2007 Dec. 2006 Dec. 2005
(Unaudited)
INCOME STATEMENT DATA
Net interest income $14,354 $16,145 $13,914
Provision for loan losses 0 723 865
Noninterest income 2,555 3,837 2,725
Noninterest expenses 11,999 11,542 9,243
Net income 3,429 4,839 4,189
PER SHARE DATA *
Net income per share
Basic $0.63 $0.81 $0.97
Diluted $0.63 $0.80 $0.97
BALANCE SHEET DATA
Total assets $500,852 $481,856 $476,599
Total deposits 342,755 310,893 311,554
Total loans (net) 374,117 363,246 371,656
Investment securities 62,609 46,461 35,203
Total earning assets 443,200 445,119 440,942
Other Borrowings 81,230 67,841 67,000
Junior subordinated debentures 10,310 21,655 21,655
Shareholders' equity 62,741 78,803 73,315
Book value per share $12.52 $14.41 $14.80
Average shares outstanding*
Basic 5,419,474 6,007,137 4,335,319
Diluted 5,423,915 6,012,445 4,340,470
KEY RATIOS
Return on assets 0.71% 1.00% 1.04%
Return on equity 4.96% 6.22% 9.28%
Equity to asset ratio 12.53% 16.35% 15.38%
Non-performing assets to assets 0.18% 0.18% 0.11%
Reserve to loans 1.14% 1.19% 1.14%
Net interest margin 3.40% 3.64% 3.69%
Employees 114 110 91
# of accounts 11,737 10,778 10,728
# of offices open 10 8 8
# of offices under construction 0 2 1
# of office sites purchased 0 2 0
ATM stand alone 1 1 1
Year Year Year
Ended Ended Ended
Dec. 2004 Dec. 2003 Dec. 2002
INCOME STATEMENT DATA
Net interest income $10,692 $7,858 $5,458
Provision for loan losses 1,146 735 480
Noninterest income 2,700 1,711 1,767
Noninterest expenses 7,966 6,171 4,866
Net income 2,982 1,704 1,147
PER SHARE DATA *
Net income per share
Basic $0.76 $0.69 $0.52
Diluted $0.75 $0.67 $0.50
BALANCE SHEET DATA
Total assets $366,102 $253,217 $181,513
Total deposits 258,153 166,213 132,655
Total loans (net) 293,207 199,732 134,729
Investment securities 24,831 22,049 7,608
Total earning assets 344,482 238,009 168,225
Other Borrowings 58,000 41,100 23,500
Junior subordinated debentures 11,345 11,345 11,345
Shareholders' equity 36,571 33,410 12,709
Book value per share $12.31 $12.46 $9.61
Average shares outstanding*
Basic 3,945,175 2,471,038 2,223,220
Diluted 4,001,380 2,529,742 2,312,627
KEY RATIOS
Return on assets 0.98% 0.79% 0.78%
Return on equity 8.56% 10.43% 9.45%
Equity to asset ratio 9.99% 13.19% 7.00%
Non-performing assets to assets 0.27% 0.04% 0.06%
Reserve to loans 1.15% 1.18% 1.21%
Net interest margin 3.78% 3.90% 4.02%
Employees 77 68 61
# of accounts 9,391 7,814 6,899
# of offices open 7 5 5
# of offices under construction 0 2 0
# of office sites purchased 2 1 2
ATM stand alone 1 0 0
*Share and per share data has been adjusted for 10% stock dividends in
2007, 2006, 2005, 2004, and 10% and 5% dividends in 2003.
Southcoast Financial Corporation
Consolidated Income Statements
(Dollars in thousands, except earnings per share)
Year Ended Three Months Ended
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited)
Interest Income
Interest and fees
on loans $28,760 $28,080 $7,289 $7,127
Interest on
investments 2,716 2,852 747 738
Interest on Fed
funds sold 397 478 38 155
------- ------- ------- -------
Total interest
income 31,873 31,410 $8,074 $8,020
Interest expense 17,519 15,265 4,559 4,158
------- ------- ------- -------
Net interest
income 14,354 16,145 3,515 3,862
Provision for loan
losses 0 723 0 0
------- ------- ------- -------
Net interest income
after loan loss
provision 14,354 15,422 3,515 3,862
Noninterest income 2,555 3,837 634 708
------- ------- ------- -------
Total operating
income 16,909 19,259 4,149 4,570
Noninterest expense
Salaries and
benefits 6,747 6,499 1,812 1,557
Occupancy and
equipment 2,288 1,925 584 508
Other expenses 2,964 3,118 854 1,016
------- ------- ------- -------
Total noninterest
expense 11,999 11,542 3,250 3,081
------- ------- ------- -------
Income before taxes 4,910 7,717 899 1,489
Income tax expense 1,481 2,878 176 522
---------- ---------- ---------- ----------
Net income $3,429 $4,839 $723 $967
========== ========== ========== ==========
Basic net income
per common share* $0.63 $0.81 $0.15 $0.16
Diluted net income
per common share* $0.63 $0.80 $0.15 $0.15
Average shares
outstanding*
Basic 5,419,474 6,007,137 5,019,704 6,017,348
Diluted 5,423,915 6,012,445 5,021,347 6,022,140
* Share and per share data has been adjusted for 10% stock dividends
in 2007 and 2006.
Southcoast Financial Corporation
Consolidated Statements of Condition
(Dollars in thousands, except per share data)
Dec. 31 Dec. 31
2007 2006
(Unaudited)
Assets
Cash and due from banks $7,033 $7,008
Federal Funds sold 3,774 31,204
Investments 62,609 46,461
Loans held for sale 384 140
Loans:
Commercial and Construction 222,273 196,572
Mortgage 145,615 159,774
Consumer 10,526 11,264
-------- --------
Total loans 378,414 367,610
Less: Allowance for loan Losses 4,297 4,364
-------- --------
Net loans 374,117 363,246
Fixed assets 26,735 25,126
Other assets 26,200 8,671
-------- --------
Total Assets $500,852 $481,856
======== ========
Liabilities & Shareholders' Equity
Deposits:
Noninterest bearing $32,607 $34,694
Interest bearing 310,148 276,199
-------- --------
Total deposits 342,755 310,893
Other Borrowings 81,230 67,841
Junior subordinated debentures 10,310 21,655
Other liabilities 3,816 2,664
-------- --------
Total liabilities 438,111 403,053
Shareholders' Equity
Common Stock 60,157 75,316
Retained Earnings and Accumulated
Other Comprehensive Income or Loss 2,584 3,487
-------- --------
Total shareholders' equity 62,741 78,803
-------- --------
Total Liabilities and Shareholders' Equity $500,852 $481,856
======== ========
Book value per share $12.52** $14.41**
Allowance for loan losses to Loans Ratio 1.14% 1.19%
** Adjusted for a 10% stock dividend in 2007.