WILMINGTON, N.C., July 31, 2006 (PRIMEZONE) -- Bank of Wilmington Corporation (Nasdaq:BKWW) reported net income for the second quarter of 2006 of $497,000 compared with $383,000 for the second quarter of 2005, an increase of 29.8 percent. Diluted earnings per share were $0.13 compared with $0.10 for the prior-year second quarter, an increase of 30.0 percent. Performance reflects a continuation of strong loan growth and sound asset quality, tempered by recent expansion-related spending.
For the first six months of 2006, the Company reported net income of $1.1 million, compared with $624,000 for the same period in 2005, an increase of $452,000, or 72.4%. Diluted earnings per share were $0.29 for the 2006 year-to-date period compared with $0.17 for the prior-year period, an increase of 70.6%.
Cameron Coburn, Chairman, President and CEO, commented, "Our year-to-date performance reflects a more sustainable level from the rapid loan growth experienced in 2005, but still provides significant lending opportunities. Second quarter loan growth improved over the more moderate first quarter. We anticipate that lower cost transaction accounts will grow as our branch network expands and matures, helping us to offset the impact of our rising cost of funds."
Total revenue, consisting of net interest income and non-interest income, was $3.5 million for the second quarter, an increase of 44.6 percent over the $2.4 million reported for the prior-year period. Net interest income for the current quarter increased 45.4 percent over 2005 to $3.2 million, reflecting a 52.8 percent growth in average earning assets partially offset by a 17 basis point decline in the net interest margin to 3.42 percent. Net interest margin declined seven basis points from the 3.49 percent reported for the first quarter of 2006.
Non-interest income was $337,000 for the second quarter of 2006 compared with $246,000 for the 2005 second quarter, an increase of $91,000 or 37.0 percent, due to the collection this quarter of approximately $91,000 of expenses associated with a loan charged off in 2003.
Non-interest expense increased $846,000, or 58.0 percent, to $2.3 million this quarter, from $1.5 million for the 2005 quarter. Salaries and benefits were $1.2 million, up $512,000 or 71.3 percent from a year ago, reflecting the addition of 21 full-time equivalent employees, as well as newly-added 2006 costs associated with the expensing of stock options and the supplemental retirement program implemented in the third quarter of 2005. Occupancy and equipment expense grew $145,000, or 63.3 percent. Other expense was $701,000 for the 2006 quarter, up $189,000, or 36.9 percent, from last year's second quarter, reflecting higher costs of regulation and expenses associated with the holding company. The efficiency ratio increased to 65.73 percent for the 2006 quarter compared with 63.09 for the prior quarter and 60.14 percent for the prior-year second quarter.
According to Mr. Coburn, "Asset quality strengthened further this quarter. There were no charge-offs at all, and we had net recoveries of $75,000, of which $63,000 represents a portion of a loan charged off in the first quarter. Our level of nonperforming assets has remained relatively stable over the past five quarters, but continues to decline as a percentage of our growing portfolio." For the second quarter of 2006, net recoveries were $75,000, or 0.10 percent of average loans on an annualized basis, compared with net charge-offs of $401,000, or 0.56 percent annualized, for the March 31, 2006 quarter, and net recoveries of $28,000, or 0.05 percent annualized, for the year-ago quarter. Non-performing assets were $920,000, or 0.23 percent of assets at June 30, 2006 compared with $948,000, or 0.25 percent of total assets at March 31, 2006, and $1.0 million, or 0.46 percent, twelve months ago. Loan loss reserves at June 30, 2006 were $3.9 million, or 1.23 percent of total loans compared with 1.17 percent of total loans at March 31, 2006 and 1.30 percent a year ago.
Total assets were $397.3 million at June 30, 2006, an increase of $128.7 million, or 47.9 percent, from twelve months ago. Year-over-year, loans outstanding grew $99.0 million, or 45.8 percent, from $216.1 million a year ago to $315.1 million for the current quarter. While there were increases in virtually every category, construction lending, up $53.1 million or 63.2 percent, commercial real estate, up $19.7 million or 27.3 percent, and 1-4 family mortgages, up $14.9 million or 68.3 percent, accounted for the majority of this growth.
The pace of loan growth increased in the second quarter of this year; loans increased $24.6 million, or 8.5 percent, compared with an increase of $12.1 million, or 4.4 percent, in the first quarter of 2006. Construction lending accounted for $16.6 million of this increase, while commercial real estate lending has slowed.
Loan growth over the past twelve months was funded primarily by a $99.5 million, or 43.3 percent, increase in deposits, to $329.2 million. For the recent quarter, deposits grew $6.6 million, or 2.1 percent. Core deposits, which include retail CDs, grew 2.2 percent. The lowest cost accounts (transaction accounts plus money market and savings) increased by $4.2 million, or 5.4 percent; they now constitute 24.9 percent of the deposit mix compared to 22.5 percent at December 31, 2005, and 27.9 percent a year ago.
Shareholders' equity at June 30, 2006 was $25.1 million, a twelve-month increase of $1.1 million, or 4.6 percent. The Company's total risk-based capital ratio at quarter-end was 12.23 percent. Total shares outstanding at June 30, 2006 were 3,586,518.
About the Company
Bank of Wilmington (the "Bank") was established in 1998 as a local bank, developed and managed by local people committed to improving the quality of life and the quality of the banking experience in the communities it serves. Bank of Wilmington Corporation, the parent company, was formed in June 2005. The Bank's market area includes the counties of New Hanover, Pender, and Brunswick, serving southeastern North Carolina, through five full-service banking locations: 1117 Military Cutoff Road; 3702 South College Road in the Pine Valley neighborhood; 14572 US Highway 17 in Hampstead; 206 North Topsail Drive in Surf City, and 503 Olde Waterford Way in Leland. The Company's stock is listed on the Nasdaq Capital Market under the symbol 'BKWW.'
Forward-Looking Statements
This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; changes in demand for products and services; changes in the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors, referred to from time to time in filings made by Bank of Wilmington Corporation with the Securities and Exchange Commission. Bank of Wilmington Corporation undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
Bank of Wilmington Corporation
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
(dollars in thousands except per share data)
Quarterly
-----------------------------------------------------
2006 2006 2005 2005 2005
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
--------- --------- --------- --------- ---------
EARNINGS
Net interest
income $ 3,170 3,087 2,797 2,469 2,180
Provision for
loan and
lease losses $ 391 293 388 355 392
NonInterest
income $ 337 240 292 264 246
NonInterest
expense $ 2,305 2,099 1,794 1,735 1,459
Net income $ 497 579 637 422 383
Basic earnings
per share (a) $ 0.14 0.16 0.18 0.12 0.11
Diluted
earnings per
share (a) $ 0.13 0.16 0.17 0.11 0.10
Average
shares out-
standing (a) 3,586,518 3,586,518 3,586,518 3,586,518 3,586,518
Average diluted
shares out-
standing (a) 3,712,586 3,680,149 3,678,552 3,684,443 3,660,931
Actual common
shares out-
standing (a) 3,586,518 3,586,518 3,586,518 3,586,518 3,586,518
PERFORMANCE
RATIOS
Return on
average assets 0.52% 0.63% 0.77% 0.59% 0.61%
Return on
average common
equity 7.99% 9.17% 10.34% 6.92% 6.41%
Net interest
margin (fully
tax-equivalent) 3.42% 3.49% 3.47% 3.54% 3.59%
Efficiency ratio 65.73% 63.09% 58.08% 63.48% 60.14%
Full-time
equivalent
employees 74 73 62 54 53
CAPITAL
Equity to assets 6.32% 6.58% 7.18% 7.78% 8.93%
Regulatory
leverage ratio 9.14% 9.33% 10.69% 8.59% 9.57%
Tier 1 capital
ratio 10.68% 11.23% 12.09% 9.43% 11.50%
Total risk-based
capital ratio 12.23% 12.80% 13.29% 10.65% 12.84%
Book value per
share (a) $ 7.00 7.00 6.87 6.76 6.69
ASSET QUALITY
Gross loan
charge-offs $ 0 402 53 45 5
Net loan
charge-offs
(recoveries) $ (75) 401 42 1 (28)
Net loan
charge-offs to
average loans -0.10% 0.56% 0.06% 0.00% -0.05%
Allowance for
loan losses $ 3,868 3,402 3,510 3,165 2,811
Allowance for
losses to
total loans 1.23% 1.17% 1.26% 1.28% 1.30%
Nonperforming
loans $ 920 948 1,174 751 1,043
Other real
estate and
repossessed
assets $ 0 0 0 13 195
Nonperforming
assets to
total assets 0.23% 0.25% 0.34% 0.25% 0.46%
END OF PERIOD
BALANCES
Loans $ 315,113 290,524 278,386 246,757 216,140
Total earning
assets (before
allowance) $ 386,167 371,661 334,053 303,134 257,755
Total assets $ 397,321 381,777 343,327 311,813 268,654
Deposits $ 329,248 322,634 284,134 258,084 229,775
Shareholders'
equity $ 25,097 25,110 24,635 24,245 23,985
AVERAGE BALANCES
Loans $ 302,759 285,654 261,652 230,140 204,684
Total earning
assets (before
allowance) $ 371,984 358,991 320,139 276,848 243,381
Total assets $ 383,697 368,403 329,152 285,444 251,829
Deposits $ 318,983 308,702 269,824 238,439 211,684
Shareholders'
equity $ 24,894 25,270 24,642 24,383 23,886
Year to Date
-----------------------
2006 2005
---------- ----------
EARNINGS
Net interest income $ 6,256 4,033
Provision for loan and lease losses $ 684 757
NonInterest income $ 578 494
NonInterest expense $ 4,404 2,852
Net income $ 1,076 624
Basic earnings per share (a) $ 0.30 0.17
Diluted earnings per share (a) $ 0.29 0.17
Average shares outstanding (a) 3,586,518 3,585,845
Average diluted shares outstanding (a) 3,696,368 3,661,733
Actual common shares outstanding (a) 3,586,518 3,586,518
PERFORMANCE RATIOS
Return on average assets 0.57% 0.53%
Return on average common equity 8.58% 5.24%
Net interest margin (fully tax-equivalent) 3.45% 3.59%
Efficiency ratio 64.44% 63.00%
Full-time equivalent employees 74 53
CAPITAL
Equity to assets 6.32% 8.93%
Regulatory leverage ratio 9.14% 9.57%
Tier 1 capital ratio 10.68% 11.50%
Total risk-based capital ratio 12.23% 12.84%
Book value per share (a) $ 7.00 6.69
ASSET QUALITY
Gross loan charge-offs $ 402 86
Net loan charge-offs (recoveries) $ 326 52
Net loan charge-offs to average loans 0.22% 0.06%
Allowance for loan losses $ 3,868 2,811
Allowance for losses to total loans 1.23% 1.30%
Nonperforming loans $ 920 1,043
Other real estate and repossessed assets $ 0 195
Nonperforming assets to total assets 0.23% 0.46%
END OF PERIOD BALANCES
Loans $ 315,113 216,140
Total earning assets (before allowance) $ 386,167 257,755
Total assets $ 397,321 268,654
Deposits $ 329,248 229,775
Shareholders' equity $ 25,097 23,985
AVERAGE BALANCES
Loans $ 294,254 188,843
Total earning assets (before allowance) $ 365,524 226,251
Total assets $ 376,093 234,621
Deposits $ 313,871 199,062
Shareholders' equity $ 25,081 23,816
(a) Restated for 5% stock dividend for shareholders of record
6/22/06, paid out effective 6/30/06
BANK OF WILMINGTON CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
---------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2006 2005 2006 2005
--------- --------- --------- ---------
(In thousands, except share and per share data)
INTEREST INCOME
Loans $ 5,983 $ 3,324 $ 11,385 $ 5,962
Investment securities,
available for sale 695 318 1,285 585
Federal funds sold and
interest-earning
deposits 79 34 253 84
--------- --------- --------- ---------
TOTAL INTEREST INCOME 6,757 3,676 12,923 6,631
--------- --------- --------- ---------
INTEREST EXPENSE
Money market, NOW and
savings deposits 369 131 678 217
Time deposits 2,685 1,227 5,108 2,202
Short-term borrowings 57 31 59 39
Long-term borrowings 476 107 822 140
--------- --------- --------- ---------
TOTAL INTEREST EXPENSE 3,587 1,496 6,667 2,598
--------- --------- --------- ---------
NET INTEREST INCOME 3,170 2,180 6,256 4,033
PROVISION FOR LOAN LOSSES 391 392 684 757
--------- --------- --------- ---------
NET INTEREST INCOME
AFTER PROVISION FOR
LOAN LOSSES 2,779 1,788 5,572 3,276
--------- --------- --------- ---------
NON-INTEREST INCOME 337 246 578 494
--------- --------- --------- ---------
NON INTEREST EXPENSE
Salaries and employee
benefits 1,230 718 2,283 1,481
Occupancy and equipment 374 229 701 439
Other 701 512 1,420 932
--------- --------- --------- ---------
TOTAL NON-INTEREST
EXPENSE 2,305 1,459 4,404 2,852
--------- --------- --------- ---------
INCOME BEFORE INCOME
TAXES 811 575 1,746 918
INCOME TAXES 314 192 670 294
--------- --------- --------- ---------
NET INCOME $ 497 $ 383 $ 1,076 $ 624
========= ========= ========= =========
NET INCOME PER COMMON
SHARE
Basic (a) $ 0.14 $ 0.11 $ 0.30 $ 0.17
========= ========= ========= =========
Diluted (a) $ 0.13 $ 0.10 $ 0.29 $ 0.17
========= ========= ========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
Basic (a) 3,586,518 3,586,871 3,586,518 3,585,845
Effect of dilutive
stock options (a) 126,068 74,060 109,850 75,888
--------- --------- --------- ---------
Diluted (a) 3,712,586 3,660,931 3,696,368 3,661,733
========= ========= ========= =========
(a) All per share and outstanding share data has been restated for
the 5% stock dividend effective 6/30/06
BANK OF WILMINGTON CORPORATION
CONSOLIDATED BALANCE SHEETS
---------------------------------------------------------------------
June 30,
2006 December 31,
(Unaudited) 2005(a)
--------- ---------
(In thousands, except
share data)
ASSETS
Cash and due from banks $ 2,445 $ 1,854
Interest earning deposits in other banks 10,055 5,419
Investment securities available for sale,
at fair value 58,643 48,655
Time deposits in other banks 298 199
Loans 315,113 278,386
Allowance for loan losses (3,868) (3,510)
--------- ---------
NET LOANS 311,245 274,876
Accrued interest receivable 1,860 1,645
Premises and equipment, net 2,610 1,845
Stock in Federal Home Loan Bank of Atlanta,
at cost 2,058 1,394
Bank owned life insurance 5,391 5,296
Other assets 2,716 2,144
--------- ---------
TOTAL ASSETS $ 397,321 $ 343,327
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand $ 38,216 $ 26,025
Savings 2,419 2,594
Money market and NOW 41,320 35,339
Time 247,293 220,176
--------- ---------
TOTAL DEPOSITS 329,248 284,134
Short-term borrowings 7,500 0
Long-term borrowings 33,310 32,310
Accrued interest payable 672 457
Accrued expenses and other liabilities 1,494 1,791
--------- ---------
TOTAL LIABILITIES 372,224 318,692
Shareholders' Equity
Common stock, $3.50 par value,
12,500,000 shares authorized;
3,586,518 shares issued and outstanding 12,553 12,553
Additional paid in capital 12,679 10,455
Accumulated retained earnings 1,064 2,153
Accumulated other comprehensive loss (1,199) (526)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 25,097 24,635
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 397,321 $ 343,327
========= =========
(a) Derived from audited financial statements