Published: November 16, 2010
Waccamaw Bankshares, Inc. Announces Financial Results for the Third Quarter of 2010
WHITEVILLE, N.C., Nov. 16, 2010 /PRNewswire-FirstCall/ -- "While we were disappointed with the results for the quarter, we are encouraged by the improved financial performance being reported in 2010. Our earnings continue to be reduced by our provision for loan losses but the real estate markets consistently reflect signs of stabilization of real estate values," commented, Jim Graham, President and CEO of Waccamaw Bankshares, Inc.
Second Quarter 2010 Results. For the three months ended September 30, 2010, we reported a net loss to common shareholders of $(742,996), or $(.12) per diluted common share, compared to net income of $331,038, or .06 per diluted share for the same period in 2009, a decrease of $1,074,034 in net income. The Company had a slight decrease in net interest income in the third quarter of 2010 as compared to the second quarter of 2009. A decrease in loan market interest rates, coupled with a $1,319,650 increase in nonaccrual loans, accounted for a $1,176,791 decrease in interest income. This decrease in interest income was partially offset by a $579,557 decrease in interest expense which resulted from a decrease in deposit rates. For the nine-month period ended September 30, 2010, we reported a net loss of $(582,334), or $(.10) per diluted common share, as compared to a net loss of $(1,714,198), or $(.31) per share, for the same period in 2009.
On September 30, 2010, our assets totaled $566,067,090 compared to $533,221,072 on December 31, 2009. Net loans were $301,395,076 compared to $340,020,798 on December 31, 2009. Total deposits on September 30, 2010, were $466,186,200 compared to $433,537,959 at the end of 2009. Stockholders' equity after adjustments for unrealized losses on securities available for sale as required by SFAS No. 115 increased by $2,591,317. At September 30, 2010, tangible book value per share was $2.64, as compared to $3.05 at December 31, 2009. For more information, see the consolidated balance sheets, the consolidated statements of income, and the consolidated statements of cash flows below.
Loans and Asset Quality. We continue to maintain a loan portfolio dominated by real estate and commercial loans diversified among various industries.
There has been very little change in the composition of the loan portfolio over the last nine months.
The allowance for loan losses on September 30, 2010, was $9,412,813 or 3.03% of period end loans compared to $10,148,927 and 2.90% at December 31, 2009. The allowance for loan losses at September 30, 2010 represented 22.66% of impaired loans compared to 24.41% at December 31, 2009. At September 30, 2010 the Bank had loans totaling $36,397,107 in nonaccrual status as compared to $26,010,130 at December 31, 2009. The increase in non-accrual loans includes increases in six non-performing commercial real estate loans. On September 30, 2010, Waccamaw Bank entered into an Asset Purchase and Sale Agreement with Augusta Holdings, LLC ("Augusta") pursuant to which the Bank sold non-accrual commercial and construction and development loans to Augusta, without recourse, for $11,220,136, with no loss to the Bank. The largest non-accrual loan relationship totaled $4,263,370, with the average balance for the one hundred nine non-accrual loans totaling $333,918. At September 30, 2010 there was $3,762,398 in net charge-offs compared to $2,482,575 at September 30, 2009. The result of the above Sale Agreement with "Augusta" resulted in a recovery of three loan relationships totaling $3,408,183 less an estimated reserve of the Purchase Agreement of $1,250,000. There was $12,548 in repossessed assets at September 30, 2010 and $1,600 in repossessed assets at September 30, 2009. At September 30, 2010 there was $10,265,824 in other real estate owned compared to $5,453,713 at September 30, 2009.
Deposits. Deposits on September 30, 2010, were $466,186,200 compared to $433,537,959 on December 31, 2009. Interest-bearing accounts represented 92.7% of total deposits at September 30, 2010 and 92.4% of total deposits at December 31, 2009. The significant increase in deposits was the result of the Bank taking advantage of low deposit interest rates in the brokered CD market, purchasing brokered CDs of approximately $40,000,000 in the first quarter of 2010.
Investments. The Bank maintains a portfolio of securities as part of its asset/liability and liquidity management programs which emphasize effective yields and maturities to match its needs. The composition of the investment portfolio is examined periodically and appropriate realignments are initiated to meet liquidity and interest rate sensitivity needs for the Bank.
Held to maturity securities are bonds, notes and debentures for which the Bank has the positive intent and ability to hold to maturity and which are reported at cost, adjusted by premiums and discounts that are recognized in interest income using the interest method over the period to maturity or to call dates. At September 30, 2010 and at December 31, 2009, the Bank had no investments classified as held to maturity. Available for sale securities are reported at fair value and consist of bonds, notes, debentures and certain equity securities not classified as trading securities or as held to maturity securities.
Unrealized holding gains and losses, net of tax, on available for sale securities are reported as a net amount in a separate component of stockholders' equity. Realized gains and losses on the sale of available for sale securities are determined using the specific-identification method. Premiums and discounts are recognized in interest income using the interest method over the period to maturity or to call dates.
Declines in the fair value of individual held to maturity and available for sale securities below cost that are other than temporary are reflected as write-downs of the individual securities to fair value. Related write-downs are included in earnings as realized losses. For the nine month period ended September 30, 2010, there were no impairment write-downs. For the nine month period ended September 30, 2009, the Company wrote down $2,156,820 in two single issue trust preferred securities and $152,656 of stock in Silverton Bank.
Stockholders Equity. Waccamaw Bankshares, Inc. maintains a strong capital position which exceeds all capital adequacy requirements of Federal regulatory authorities. Total stockholders' equity at September 30, 2010 was $19,745,748 compared to $17,154,431 at December 31, 2009. This $2,591,317 increase was primarily due to unrealized gains on securities available for sale increasing $1,750,144, net of tax, operating loss of $582,334 and the sale of $2,393,801 of common stock through a rights offering to shareholders pursuant to a prospectus dated June 17, 2010. The per share book value of our common stock as of September 30, 2010 was $2.64. The per share tangible book value of our common stock as of September 30, 2010 was $2.62. The Company and the Bank exceed all capital requirements under the applicable federal regulations. As of September 30, 2010, the Company's Tier 1 risk-weighted capital ratio and total capital ratio were 8.3% and 9.3%, respectively. At September 30, 2010, the Bank's capital ratios were as follows: Tier 1 leverage ratio, 5.9%, Tier 1 risk-based capital ratio, 8.5% and total risk-based ratio, 10.5%.. These capital ratios were sufficient at June 30, 2010, and December 31, 2009, to classify the Bank as "well capitalized" in accordance with the FDIC's regulatory capital rules.
Waccamaw Bankshares, Inc.
Consolidated Balance Sheets
September 30, 2010 and December 31, 2009
(Unaudited) (Audited)
September 30, December 31,
2010 2009
---- ----
Assets
Cash and due from banks $65,655,068 $13,973,474
Interest-bearing deposits with
banks 24,249,610 7,695,499
Federal funds sold 23,360,000 21,315,000
---------- ----------
Total cash and cash equivalents 113,264,678 42,983,973
Investment securities, available-
for-sale 98,020,910 87,769,319
Restricted equity securities 3,815,550 4,041,350
Loans, net of allowance for loan
losses of $9,412,813 in 301,395,076 340,020,798
2010, and $10,148,927 in 2009
Foreclosed assets 10,265,824 4,994,241
Property and equipment, net 16,575,498 17,035,644
Intangible assets, net 167,500 237,270
Accrued income 1,776,252 2,449,081
Bank owned life insurance 6,193,987 18,576,015
Other assets 14,591,815 15,113,381
---------- ----------
Total assets $566,067,090 $533,221,072
============ ============
Liabilities and Stockholders'
Equity
Liabilities
Noninterest-bearing deposits $34,238,883 $32,940,811
Interest-bearing deposits 431,947,317 400,597,148
----------- -----------
Total deposits 466,186,200 433,537,959
Securities sold under agreements to
repurchase 20,462,000 20,615,000
Other short-term borrowings 5,900,000 3,500,000
Long-term debt 38,000,000 43,000,000
Junior subordinated debentures 12,372,000 12,372,000
Accrued interest payable 1,339,300 942,689
Other liabilities 2,061,842 2,098,993
--------- ---------
Total liabilities 546,321,342 516,066,641
----------- -----------
Commitments and contingencies - -
Stockholders' equity
Preferred stock, Series A,
convertible, non-cumulative, 9,064 9,064
non-voting, no par value;
1,000,000 shares authorized;
550 shares issued and outstanding
at September 30,
2010 and December 31, 2009,
respectively
Common stock, no par value;
50,000,000 shares 27,134,544 25,099,770
authorized; 7,466,224 and 5,551,183
shares issued and
outstanding at September 30, 2010
and December 31,
2009, respectively
Retained deficit (6,323,091) (5,129,490)
Accumulated other comprehensive
loss (1,074,769) (2,824,913)
---------- ----------
Total stockholders' equity 19,745,748 17,154,431
---------- ----------
Total liabilities and stockholders'
equity $566,067,090 $533,221,072
============ ============
Waccamaw Bankshares, inc.
Consolidated Statements of Operations
Nine-months ended September 30, 2010 and September 30, 2009
(Unaudited)
Nine-Months Nine-Months
Ended Ended
Sept 30, 2010 Sept 30, 2009
------------- -------------
Interest income
Loans and fees on loans $13,176,541 $15,977,468
Federal funds sold and interest
earning deposits 129,823 13,914
Investment securities, taxable 2,552,075 3,286,867
Investment securities,
nontaxable 286,859 446,400
------- -------
Total interest income 16,145,298 19,724,649
---------- ----------
Interest expense
Deposits 5,296,210 7,445,004
Federal funds purchased and
securities sold under
agreements to repurchase 506,349 558,197
Short-term borrowings 69,619 253,318
Long-term borrowings 1,685,633 1,651,178
--------- ---------
Total interest expense 7,557,811 9,907,697
--------- ---------
Net interest income 8,587,487 9,816,952
Provision for loan losses 3,026,284 4,856,894
--------- ---------
Net interest income after
provision for loan losses 5,561,203 4,960,058
--------- ---------
Non-interest income (loss)
Service charges on deposit
accounts 2,102,135 2,263,858
Mortgage origination income 270,092 294,983
Income from financial services 68,988 110,423
Earnings on bank owned life
insurance 511,632 547,060
Net realized gains on sale or
maturity of investment
securities 1,481,372 1,354,435
Impairment on investment
securities - (2,319,476)
Other operating income 906,280 664,607
------- -------
Total non-interest income 5,340,499 2,915,890
--------- ---------
Non-interest expense
Salaries and employee benefits 4,719,850 5,441,093
Occupancy expense 1,543,270 1,566,101
Data processing 856,821 895,189
Regulatory agency expense 1,343,430 848,758
Amortization expense of
intangible assets 79,270 145,471
Foreclosed assets, net 1,439,606 -
Other expense 2,265,555 2,248,472
--------- ---------
Total non-interest expense 12,247,802 11,145,084
---------- ----------
Loss before income taxes (1,346,100) (3,269,136)
Income tax benefit (763,766) (1,554,938)
-------- ----------
Net loss $(582,334) $(1,714,198)
========= ===========
Basic loss per share $(.10) $(.31)
----- -----
Diluted loss per share $(.10) $(.31)
----- -----
Weighted average shares outstanding 5,796,701 5,529,540
========= =========
Diluted average shares outstanding 5,796,701 5,529,540
========= =========
Waccamaw Bankshares, inc.
Consolidated Statements of Operations
Quarter ended September 30, 2010 and September 30, 2009 (Unaudited)
Quarter Ended Quarter Ended
Sept 30, 2010 Sept 30, 2009
------------- -------------
Interest income
Loans and fees on loans $4,502,513 $5,488,874
Federal funds sold and interest
earning deposits 59,234 11,895
Investment securities, taxable 791,847 968,742
Investment securities,
nontaxable 80,775 141,649
------ -------
Total interest income 5,434,369 6,611,160
Interest expense
Deposits 1,708,456 2,235,730
Federal funds purchased and
securities sold under
agreements to repurchase 174,967 187,358
Short-term borrowings 28,230 81,563
Long-term borrowings 565,854 552,413
------- -------
Total interest expense 2,477,507 3,057,064
--------- ---------
Net interest income 2,956,862 3,554,096
Provision for loan losses 1,215,670 1,230,048
--------- ---------
Net interest income after
provision for loan losses 1,741,192 2,324,048
--------- ---------
Non-interest income (loss)
Service charges on deposit
accounts 717,217 886,191
Mortgage origination income 100,168 91,576
Income from financial services 18,471 56,251
Earnings on bank owned life
insurance 137,484 195,787
Net realized gains on sale or
maturity of investment
securities 833,180 483,758
Impairment on investment
securities - (10,000)
Other operating income 359,523 100,645
------- -------
Total non-interest income 2,166,043 1,804,208
--------- ---------
Non-interest expense
Salaries and employee benefits 1,548,684 1,736,058
Occupancy expense 551,479 519,374
Data processing 289,972 250,324
Regulatory agency expense 703,279 431,158
Amortization expense of
intangible assets 10,667 46,119
Foreclosed assets, net 1,354,201 -
Other expense 763,515 858,244
------- -------
Total non-interest expense 5,221,797 3,841,277
--------- ---------
Income (loss) before income
taxes (1,314,562) 286,979
Income tax expense (benefit) (571,566) (44,059)
-------- -------
Net income (loss) $(742,996) $331,038
========= ========
Basic income (loss) per share $(.12) $.06
----- ----
Diluted income (loss) per share $(.12) $.06
----- ----
Weighted average shares outstanding 6,279,731 5,540,833
========= =========
Diluted average shares outstanding 6,279,731 5,548,564
========= =========
WACCAMAW BANKSHARES, INC.
Consolidated Statements of Cash Flows
Nine-months ended September 30, 2010 and September 30, 2009
(Unaudited)
Nine- Nine-
Months Months
Ended Ended
Sept 30, Sept 30,
2010 2009
--------- ---------
Cash flows from operating activities
Net income (loss) $(582,334) $(1,714,198)
Adjustments to reconcile net
income to net cash provided
(used) by operations:
Depreciation and
amortization 621,234 704,609
Stock-based compensation 66,527 92,956
Provision for loan losses 3,026,284 4,856,894
Accretion of discount on
securities, net of
amortization of premiums 437,850 130,304
Write-down of foreclosed
assets 1,612,917 -
Gain on sale of investments (1,481,372) (1,354,435)
Impairment of investment
securities - 2,319,476
Income from bank owned life
insurance (511,632) (547,060)
Changes in assets and
liabilities:
Accrued income 672,829 395,449
Other assets 1,130,042 (185,660)
Accrued interest payable 396,611 (251,091)
Other liabilities (37,151) (766,349)
------- --------
Net cash provided by
operating activities 5,351,805 3,680,895
--------- ---------
Cash flows from investing activities
Purchases of investment
securities available-for-
sale (114,552,164) (83,321,744)
Sales (purchases) of
restricted equity
securities 225,800 (62,100)
Principal repayments of
investments available-for-
sale 5,626,480 12,262,146
Net decrease in loans 27,464,450 8,478,686
Sales and maturities of
investment securities
available-for-sale 100,248,016 77,021,930
Surrender of bank owned life
insurance 12,893,660 -
Proceeds from the sale of
foreclosed assets 1,250,488 225,745
Purchases of property and
equipment (91,318) (167,920)
------- --------
Net cash provided by
investing activities 33,065,412 14,436,743
---------- ----------
Cash flows from financing activities
Net increase in non-
interest-bearing deposits 1,298,072 2,355,202
Net increase in interest-
bearing deposits 31,350,169 3,843,076
Net decrease in securities
sold under agreements to
repurchase (153,000) (691,000)
Proceeds (repayments) from
short-term borrowings 2,400,000 (3,500,000)
Repayments of long-term debt (5,000,000) (2,500,000)
Stock issuance costs (425,554) (54,230)
Proceeds from issuance of
common stock 2,393,801 -
--------- ---
Net cash (used in) provided
by financing activities 31,863,488 (546,952)
---------- --------
Net increase in cash and
cash equivalents 70,280,705 17,570,686
Cash and cash equivalents,
beginning 42,983,973 15,913,493
---------- ----------
Cash and cash equivalents,
ending $113,264,678 $33,484,179
============ ===========
Supplemental disclosure of cash flow information
Interest paid $7,161,200 $10,158,788
========== ===========
Taxes paid $- $38,000
=== =======
Conversion of common stock to
preferred stock $- $343,993
=== ========
Supplemental disclosure of noncash activities
Real estate acquired in
settlement of loans $8,134,988 $4,722,626
========== ==========
Waccamaw Bank, the primary subsidiary of Waccamaw Bankshares, Inc., is a state chartered bank operating seventeen offices in Whiteville, Wilmington, Shallotte (2), Sunset Beach, Oak Island, Holden Beach, Chadbourn, Tabor City, Southport (2) and Elizabethtown, North Carolina. Offices in South Carolina include Little River, Conway (2), Myrtle Beach, and Heath Springs. In addition to primary banking operations, the Bank's Investment Group provides consumer investment and insurance services. Common stock of Waccamaw Bankshares, Inc. is listed on the NASDAQ Market and trades under the symbol WBNK. Additional corporate information, product descriptions, and online services can be located on the Bank's website at http://www.waccamawbank.com.
Information in the press release contains "forward-looking statements." These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates and the effects of competition. Additional factors that could cause actual results to differ materially are discussed in Waccamaw Bankshares, Inc.'s recent filings with the Securities Exchange Commission, including but not limited to its Annual Report on Form 10-K and its other periodic reports.
SOURCE Waccamaw Bankshares, Inc.
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