MOREHEAD CITY, N.C., Aug. 22 /PRNewswire-FirstCall/ -- Sound Banking Company (BULLETIN BOARD: SNBN) reported today that net income for the second quarter of 2008 was $18 thousand or $0.02 per diluted share compared with $162 thousand or $0.19 per diluted share for the second quarter of 2007. Net income for the first six months of 2008 was $115 thousand, or $0.14 per diluted share compared with $410 thousand or $0.49 per diluted share for the same period of 2007. The decline in earnings was primarily attributable to a lower interest margin and an increase in the loan loss provision. The Bank also incurred higher non-interest expenses associated with its expansion into the Beaufort market.
Net interest income was $868,000 for the current quarter, a decreased of $127,000 or 13% when compared to $994,000 for the second quarter of 2007. Year-to-date net interest income was $1,781,000, a decreased $201,000 or 10% from the $1,982,000 reported for the comparable 2007 period. The decline in net interest income was the direct result of interest rate cuts by the Federal Reserve over the last nine months. The Bank's net interest margin in the second quarter of 2008 was 3.20% compared to 3.88% for the same period of 2007.
At June 30, 2008, the Bank's reserve for loan losses was 1.40% of total loans outstanding compared with 1.15 % at December 31, 2007 and a peer group average of 1.22%.
Total assets as of June 30, 2008 were $122 million, a $10 million or 9% increase when compared to total assets of $112 million a year earlier. At quarter end, loans outstanding were $90.5 million. Asset growth during the current period came mainly from increases in investments and other interest- earning assets.
Commenting on the second quarter results, Phil Collins, President & CEO, stated, "Our performance reflects the current economic climate of low interest rates and a very soft real estate market. In the second quarter, we made a prudent decision to increase our loan loss reserve even though our loan losses have been minimal this year because we expect little, if any, improvement in current economic conditions until 2009. However, it is important to note that we are well capitalized and are appropriately positioned to operate in this uncertain environment."
Sound Banking Company is a state chartered bank and offers a full range of financial services. Sound Bank, headquartered in Morehead City, operates full service offices in Morehead City, Beaufort and Cape Carteret and a loan production office in New Bern, North Carolina. Information about Sound Banking Company and its products and services is available on its web site at: http://www.soundbanking.com/
The information as of and for the quarter ended June 30, 2008 as presented is unaudited. This news release contains forward-looking statements. The actual results might differ materially from those projected in the forward- looking statements for various reasons, including our limited operating history, substantial changes in financial markets, regulatory changes, changes in interest rates, loss of deposits and loan demand to other savings and financial institutions, and changes in real estate values and the real estate market.
