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Southcoast Announces First Quarter Earnings

MT. PLEASANT, S.C., April 11, 2013 (GLOBE NEWSWIRE) -- Southcoast Financial Corporation (Nasdaq:SOCB) announced that it had unaudited net income of $1,006,000, or $.16 per basic share, for the quarter ended March 31, 2013. This compares to unaudited net income of $1,243,000, or $0.20 per basic share, for the quarter ended March 31, 2012. The March 31, 2013 income per share is based on 6,148,152 basic average shares compared to 6,114,128 basic average shares for the first quarter of 2012.

"The first quarter's results reflect an improved net interest margin, decreased levels of nonperforming assets, and an improved deposit mix," said L. Wayne Pearson, Chairman and Chief Executive Officer. "The results for this quarter represent the fifth consecutive profitable quarter for our Company since the recession started."

Net interest income increased $256,000 from $3,177,000 for the first quarter of 2012 to $3,433,000 for the first quarter of 2013. The Company's annualized net interest margin improved by 17 basis points to 3.63% for the first quarter of 2013 from 3.46% for the first quarter of 2012, due to the significant reduction in our cost of funds.

Noninterest income decreased to $589,000 for the first quarter of 2013 from $906,000 for the first quarter of 2012, primarily due to $215,000 of securities gains and $124,000 of gains on sales of fixed assets during the first quarter of 2012, compared to no gains from sales of securities or fixed assets during the first quarter of 2013.

Noninterest expense levels increased to $2,961,000 for the quarter ended March 31, 2013 from $2,652,000 for the quarter ended March 31, 2012. The first quarter of 2012 included the benefit of $736,000 in net gains on sales of other real estate owned compared to only $288,000 for the quarter ended March 31, 2013.

Total assets as of March 31, 2013 were $441.8 million compared to $438.2 million as of December 31, 2012, an increase of 0.8%. Loans, excluding loans held for sale, decreased to $324.2 million, down 1.0% from $327.5 million as of December 31, 2012. Deposits during the same period increased0.3% to $320.6 million, while other borrowings increased 3.0% to $64.5 million.

The Company's ratio of nonperforming assets to total assets was 3.90% as of March 31, 2013, compared to 6.71% as of March 31, 2012. The allowance for loan losses as a percentage of loans was 2.41% as of March 31, 2013, compared to 2.96% as of March 31, 2012. The allowance for loan losses as a percentage of total nonperforming loans totaled 74.88% as of March 31, 2013, compared to 43.13% as of March 31, 2012.

The subsidiary bank's capital position as of March 31, 2013 remains substantially in excess of regulatory well-capitalized requirements, with Tier 1 capital to average assets of 10.25%. "We continue to be encouraged by the future direction of our Company given our capital strength and improvement in core operations," concluded Pearson.

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
March 31, 2013 March 31, 2012
(Unaudited)
INCOME STATEMENT DATA
Net interest income $ 3,433 $ 3,177
Provision for loan losses -- 100
Noninterest income 589 906
Noninterest expenses 2,961 2,652
Net income $ 1,006 $ 1,243
PER SHARE DATA
Net income per share
Basic $ 0.16 $ 0.20
Diluted $ 0.16 $ 0.20
BALANCE SHEET DATA
Total assets $ 441,835 $ 437,642
Total deposits 320,637 327,768
Total loans (net) 316,365 313,797
Investment securities 45,879 47,177
Other borrowings 72,066 64,500
Junior subordinated debentures 10,310 10,310
Shareholders' equity 35,267 31,807
Average shares outstanding1
Basic 6,148,152 6,114,128
Diluted 6,148,152 6,114,128
Book value per share1 $5.74 $5.20
Key ratios
Return on assets2 0.95% 1.17%
Return on equity2 11.74% 15.97%
Equity to asset ratio 7.98% 7.27%
Nonperforming assets to assets3 3.90% 6.71%
Reserve to loans4 2.41% 2.96%
Reserve to nonperforming loans 74.88% 43.13%
Net interest margin2 3.63% 3.46%
1 Prior period per share amounts adjusted for 15% stock dividend paid during January 2013.
2 Ratios for three months are annualized.
3 Includes nonaccruing loans, loans 90 or more days past due still accruing interest, troubled debt restructures, and other real estate owned.
4 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)
March 31 December 31
2013 2012
Assets
Cash and cash equivalents $35,097 $21,984
Investments 45,879 48,367
Loans held for sale 776 1,789
Loans 324,172 327,469
Less: Allowance for loan losses 7,807 8,159
Net loans 316,365 319,310
Fixed assets 21,539 21,653
Other assets 22,179 25,118
Total Assets $441,835 $438,221
Liabilities & Shareholders' Equity
Deposits:
Non-interest bearing $45,777 $38,797
Interest bearing non-time 128,093 115,245
Time deposits 146,767 165,590
Total deposits 320,637 319,632
Other borrowings 72,066 69,949
Other liabilities 3,555 4,066
Junior subordinated debentures 10,310 10,310
Total liabilities 406,568 403,957
Shareholders' Equity
Common Stock 54,484 54,437
Accumulated deficit (17,996) (19,002)
Accumulated other comprehensive loss (1,221) (1,171)
Total shareholders' equity 35,267 34,264
Total Liabilities and Shareholders' equity $441,835 $438,221
Southcoast Financial Corporation
Consolidated Income Statement
(Dollars in thousands, except share data)
Quarter Ended
March 31, March 31,
2013 2012
(Unaudited) (Unaudited)
Interest Income
Interest and fees on loans $4,201 $4,155
Interest on investments 252 304
Interest on Fed funds sold 6 6
Total interest income 4,459 4,465
Interest expense 1,026 1,288
Net interest income 3,433 3,177
Provision for loan losses -- 100
Net interest after provision 3,433 3,077
Securities gains -- 215
Other noninterest income 589 691
Total noninterest income 589 906
Total operating income 4,022 3,983
Noninterest expense
Salaries and benefits 1,679 1,596
Occupancy and furniture and equipment 753 735
Other expenses 529 321
Total noninterest expense 2,961 2,652
Income before taxes 1,061 1,331
Income tax expense 55 88
Net income $1,006 $1,243
Basic net income per common share $0.16 $0.20
Diluted net income per common share $0.16 $0.20
Average number of common shares
Basic 6,148,152 6,114,128
Diluted 6,148,152 6,114,128

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