WHITEVILLE, N.C., March 31 /PRNewswire-FirstCall/ -- Waccamaw Bankshares, Inc. (the "Company"), the holding company for Waccamaw Bank (the "Bank"), today, reported a net loss of [$2,043,030], or $(.37) per diluted share, for the year ended December 31, 2008 versus net earnings of $3,908,948, or $0.71 per diluted share, for the year ended December 31, 2007.
"It would be hard to overstate the change experienced in our economy during 2008," stated Jim Graham, the President and Chief Executive Officer of Waccamaw. "By any measure, 2008 was the most difficult operating environment for the banking industry in decades. Despite these uncertain conditions in the financial markets and global economy, we continue to execute our plan and remain dedicated to providing the very best financial services available to the communities that we serve."
As compared to the prior year's results, the Company's financial performance was impacted by multiple Other Than Temporarily Impaired ("OTTI") charges. Included in the Company's results for the third quarter of 2008, Waccamaw incurred a tax-effected, non-cash charge of $1,138,945 resulting from U.S. Treasury Department's decision to place the Federal National Mortgage Association (commonly known as Fannie Mae), a U.S. Government Sponsored Enterprise, into conservatorship on September 7, 2008. For the fourth quarter, the Company also incurred non-cash OTTI charges of $1,383,687 related to trust preferred securities. Additionally, during FY 2008, Waccamaw increased its provision for loan losses by $2,990,000 to account for future potential credit losses due to the current economic environment. This resulted in Waccamaw increasing its ratio of loan loss reserves to loans to 1.86% as of December 31, 2008 as compared to 1.49% as of December 31, 2007. Finally, in response to the deteriorating economic conditions, the Federal Reserve Board of the United States reduced its Federal Funds Rate and other related interest rates from 4.25% to .25% during the year. This decreased Waccamaw's net interest margin as the Company was not able to lower the rates paid on its deposits as quickly as the yield on its loan portfolio decreased.
Due to the challenging market conditions and slowing economic output, Waccamaw experienced slower growth during the 2008 as compared with previous years. As of December 31, 2008, total assets equaled $537,450,434, a 5.72% increase over year end 2007. Loans and deposits totaled $378,882,889 and $418,579,889, respectively, at year end 2008.
As of December 31, 2008, the Bank remained "well-capitalized" which is the highest capital rating recognized by Bank Regulatory Authorities. Waccamaw's total risk-based capital ratio, Tier 1 risk based capital ratio and Tier 1 leverage ratio were 11.44%, 9.53% and 7.81%, respectively, versus the "well-capitalized" guidelines of 10.0%, 6.0% and 5.0%, respectively.
"Despite the difficult operating conditions, we continue to remain optimistic about the future of our institution. With the interest rate environment displaying evidence of stabilization, our earnings performance is improving. We are also experiencing improved financial results at our five new offices opened in 2007 and one new office in 2008. While the costs associated with these locations negatively impacted financial results in 2008, these branches will provide long-term value to our organization by strengthening our strategic position in Brunswick County, North Carolina and Horry County, South Carolina. Credit concerns clearly remain within our market and the overall economy, but the increase in our level of loan loss reserves addresses the risks that we foresee at the present time in our loan portfolio. We will continue to manage the bank's asset quality and maintain credit reserves and capital at sufficient levels to provide for strong operating performance," commented Graham.
Graham concluded, "In January 2008, the Bank initiated an expense reduction effort with the incentive pay plan for executive officers being eliminated. Further, no incentive pay or bonuses were paid to any officer level staff as a result of our 2008 performance. Significant expense reduction was also achieved during the year and continues into 2009. We are ever grateful for our wonderful staff, the local communities that we proudly serve and our 2,700 shareholders that have supported the organization during the Company's eleven-year history."
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 investment and insurance services. Common stock of Waccamaw Bankshares, Inc. is listed on the NASDAQ Global 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 wit the Securities Exchange Commission, including but not limited to its Annual Report on Form 10-K and its other periodic reports.
Waccamaw Bankshares, Inc.
CONTACT: Jim Graham, President and CEO, +1-910-641-0044
Web Site: http://www.waccamawbank.com/
