Southcoast Announces 2013 Results

MT. PLEASANT, S.C., Jan. 17, 2014 (GLOBE NEWSWIRE) -- Southcoast Financial Corporation (Nasdaq:SOCB) announced that it had unaudited net income of $9,065,000, or $1.28 per basic share, for the year ended December 31, 2013. This compares to unaudited net income of $3,518,000, or $0.50 per basic share, for the year ended December 31, 2012. The December 31, 2013 income per share is based on 7,076,157 basic average shares compared to 7,044,365 basic average shares for 2012.

The 2013 results included the reversal of the Deferred Tax Asset (DTA) valuation allowance which contributed to a net tax benefit of approximately $6,590,000, or $0.93 per share. The reversal was the result of six quarters of sustained profitability and improving credit quality which indicated an anticipated capacity to utilize the DTA in future periods. The impact of the DTA valuation allowance reversal, coupled with operating earnings, increased the Company's book value to $6.02 per share as of December 31, 2013, compared to $4.86 per share as of December 31, 2012. The 2013 results also reflect decreased levels of nonperforming assets and an improved deposit mix.

For the year ended December 31, 2013, net interest income totaled $13,703,000, an increase of $327,000 from $13,376,000 for the year ended December 31, 2012. The net interest margin increased to 3.63% as of December 31, 2013 from 3.55% as of December 31, 2012.

Noninterest income for 2013 decreased to $2,360,000 from $3,277,000 for 2012, primarily due to $626,000 of securities gains and $192,000 of gains on sales of fixed assets during the 2012 period, compared to only $105,000 of gains from sales of securities and $28,000 of gains on sales of fixed assets in the 2013 period.

Noninterest expense levels increased to $13,188,000 for 2013 from $12,118,000 for 2012. Included in 2012 was the benefit of $1,240,000 in net gains on sales of other real estate owned compared to only $339,000 for 2013.

Total assets as of December 31, 2013 were $447.4 million compared to $438.2 million as of December 31, 2012, an increase of 2.09%. Loans, excluding loans held for sale, increased to $331.9 million, from $327.5 million as of December 31, 2012. Deposits decreased by $3.8 million to $315.8 million at December 31, 2013, from $319.6 million at December 31, 2012. This decrease was comprised of a $29.1 million decrease in time deposits between the two periods, offset by an increase of $25.3 in non-maturity deposit accounts. The growth in these core deposits was a major strategy incorporated in our 2013 strategic plan.

The Company's ratio of nonperforming assets to total assets was 3.47% as of December 31, 2013, compared to 4.87% as of December 31, 2012. The allowance for loan losses as a percentage of loans was 1.82% as of December 31, 2013, compared to 2.49% as of December 31, 2012. The allowance for loan losses as a percentage of total nonperforming loans totaled 58.88% as of December 31, 2013, compared to 71.86% as of December 31, 2012. The year to year reduction in the allowance for loan losses was indicative of improved credit quality in the loan portfolio, most notably due to a significant reduction in criticized and classified loans. The subsidiary bank's capital position as of December 31, 2013 remains in excess of regulatory well-capitalized requirements.

From January 4, 2013 to January 16, 2014, the Company's stock price rose from $3.97 to $5.96. The earlier price has been adjusted for the stock dividend issued in early 2013. During the same period, the stock was included in the Russell 2000 Small Cap Index fund and celebrated its ten year anniversary on the NASDAQ exchange. "We are proud of these accomplishments and they reflect the hard work of our employees during an extremely challenging extended period," 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
Consolidated Balance Sheets
(Dollars in thousands)
December 31 December 31
2013 2012
(Unaudited)
Assets
Cash and cash equivalents $28,460 $21,984
Investments 43,451 48,367
Loans held for sale 271 1,789
Loans 331,906 327,469
Less: Allowance for loan losses 6,041 8,159
Net loans 325,865 319,310
Fixed assets 21,150 21,653
Other assets 28,187 25,118
Total Assets $447,384 $438,221
Liabilities & Shareholders' Equity
Deposits:
Noninterest bearing $40,399 $38,797
Interest bearing nontime 138,899 115,245
Time deposits 136,530 165,590
Total deposits 315,828 319,632
Other borrowings 73,818 69,949
Other liabilities 4,859 4,066
Junior subordinated debentures 10,310 10,310
Total liabilities 404,815 403,957
Shareholders' Equity
Common Stock 54,544 54,437
Accumulated deficit (9,937) (19,002)
Accumulated other comprehensive loss (2,038) (1,171)
Total shareholders' equity 42,569 34,264
Total Liabilities and Shareholders' equity $447,384 $438,221
Southcoast Financial Corporation
Consolidated Income Statements
(Dollars in thousands, except earnings per share)
Year Ended
December 31, December 31,
2013 2012
(Unaudited)
Interest Income
Interest and fees on loans $16,425 $16,947
Interest on investments 1,106 1,260
Interest on Fed funds sold 30 29
Total interest income 17,561 18,236
Interest expense 3,858 4,860
Net interest income 13,703 13,376
Provision for loan losses 400 880
Net interest income after provision 13,303 12,496
Noninterest income 2,360 3,277
Total operating income 15,663 15,773
Noninterest expense
Salaries and benefits 7,024 6,487
Occupancy and equipment 2,935 2,904
Other expenses 3,229 2,727
Total noninterest expense 13,188 12,118
Income before taxes 2,475 3,655
Income tax expense (benefit) (6,590) 137
Net income $9,065 $3,518
Basic net income per share $1.28 $0.50
Diluted net income per share $1.28 $0.50
Average number of shares
Basic 7,076,157 7,044,365
Diluted 7,076,157 7,044,365
Southcoast Financial Corporation
SELECTED FINANCIAL DATA
(dollars in thousands, except earnings per share)
Year Ended
December 31, 2013 December 31, 2012
(Unaudited)
INCOME STATEMENT DATA
Net interest income $ 13,703 $ 13,376
Provision for loan losses 400 880
Noninterest income 2,360 3,277
Noninterest expenses 13,188 12,118
Income tax expense (benefit) (6,590) 137
Net income $ 9,065 $ 3,518
PER SHARE DATA
Net income per share
Basic $ 1.28 $ 0.50
Diluted $ 1.28 $ 0.50
BALANCE SHEET DATA
Total assets $ 447,384 $ 438,221
Total deposits 315,828 319,632
Total loans (net) 325,865 319,310
Investment securities 43,451 48,367
Other borrowings 73,818 69,949
Junior subordinated debentures 10,310 10,310
Shareholders' equity 42,569 34,264
Average shares outstanding1
Basic 7,076,157 7,044,365
Diluted 7,076,157 7,044,365
Book value per share1 $6.01 $4.86
Key ratios
Return on assets 2.09% 0.81%
Return on equity 23.60% 10.81%
Equity to asset ratio 9.52% 7.82%
Nonperforming assets2 to assets 3.47% 4.87%
Reserve to loans 1.82% 2.49%
Reserve to nonperforming loans3 58.88% 69.56%
Net interest margin 3.63% 3.55%
1 Prior period per share amounts restated for 15% stock dividend paid during June 2013.
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.

CONTACT: William C. Heslop, Senior Vice President and Chief Financial Officer, (843) 216-3019Source:Southcoast Financial Corporation