WHITEVILLE, N.C., July 30 /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 June 30, 2010, we reported a net loss to common shareholders of $(127,753), or $(.02) per diluted common share, compared to a net loss of $(2,119,491), or $(.38) per diluted share for the same period in 2009, an increase of $1,991,738 in net income. The Company had a slight decrease in net interest income in the second quarter of 2010 as compared to the second quarter of 2009. A decrease in loan market interest rates, coupled with a $4,024,343 increase in nonaccrual loans, accounted for a $1,084,971 decrease in interest income. This decrease in interest income was almost completely offset by an $800,009 decrease in interest expense which resulted from a decrease in deposit rates. For the six-month period ended June 30, 2010, we reported net income of $160,662, or $.03 per diluted common share, as compared to a net loss of $(2,255,030), or $(.41) per share, for the same period in 2009.
On June 30, 2010, our assets totaled $573,493,596 compared to $533,221,072 on December 31, 2009. Net loans were $323,530,066 compared to $340,020,798 on December 31, 2009. Total deposits on June 30, 2010, were $475,979,553 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 $1,280,645. At June 30, 2010, tangible book value per share was $3.29, 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 six months.
The allowance for loan losses on June 30, 2010, was $10,902,377 or 3.26% of period-end loans compared to $10,148,927 or 2.90% at December 31, 2009. At June 30, 2010, our nonperforming assets (including non-accrual loans, loans greater than 90 days past due and still accruing, and other real estate owned) were $49,691,904, or 14.86% and 8.66% as a percentage of total loans and total assets, respectively. At June 30, 2010, the Bank had $5,406,533 in loans that were past due 90 days or more and still accruing interest as compared to $1,409,061 at December 31, 2009, and $748,185 at June 30, 2009. At June 30, 2010, the Bank had $4,964,245 in loans that were 30-89 days past due, as compared to $26,301,069 at December 31, 2009, and $13,679,566 at March 31, 2010. At June 30, 2010, the Bank had loans totaling $35,077,457 in non-accrual status as compared to $21,439,670 at December 31, 2009, and $26,010,130 at June 30, 2009. The increase in non-accrual loans includes increases in eight non-performing commercial real estate loans. The largest non-accrual loan relationship totaled $4.7 million with the average balance for the ninety three non-accrual loans totaling $377,177. For the six months ended June 30, 2010, there was $1,057,164 in net charge-offs compared to $329,878 for the six months ended June 30, 2009. There was $98,575 in repossessed assets at June 30, 2010, compared to $8,281 at June 30, 2009. At June 30, 2010, there was $9,207,914 in other real estate owned compared to $4,994,241 at December 31, 2009 and $731,087 at June 30, 2009.
Deposits. Deposits on June 30, 2010, were $475,979,553 compared to $433,537,959 on December 31, 2009. Interest-bearing accounts represented 91.7% of total deposits at June 30, 2010, and 92.4% of total deposits at December 31, 2009. Non interest-bearing deposits on June 30, 2010, were $39,346,105 compared to $32,940,811 on December 31, 2009, an increase of 19.4%. 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.
Investments. We maintain a portfolio of securities as part of our asset/liability and liquidity management programs which emphasize effective yields and maturities to match our needs. Investments in securities of $98,513,820 at June 30, 2010, consisted of corporate securities, municipal securities, U.S. government agency securities and mortgage-backed securities. 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. At June 30, 2010, and at December 31, 2009, we had no investments classified as held to maturity.
Available for sale securities are reported at fair value. 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 six-month period ended June 30, 2010, there were no impairment write-downs. For the six month period ended June 30, 2009, we wrote down $2,156,820 in two single-issue trust preferred securities and $152,656 of stock in Silverton Bank.
Stockholders Equity. Total stockholders' equity at June 30, 2010 was $18,435,076 compared to $17,154,431 at December 31, 2009. This $1,280,645 increase was primarily due to unrealized gains on securities available for sale increasing $1,974,712, net of tax and operating income of $160,662 for the six months ended June 30, 2010. The per share book value of our common stock as of June 30, 2010 was $3.32. The per share tangible book value of our common stock as of June 30, 2010 was $3.29. The Company and the Bank exceed all capital requirements under the applicable federal regulations. At June 30, 2010, the Company's ratios of Tier 1 capital to risk-weighted assets and total capital to risk-based assets were 8.3% and 9.3%, respectively. At June 30, 2010, Waccamaw Bank had Tier 1 capital to risk-weighted assets and total capital to risk-based assets ratios of 8.6% and 10.7%, respectively. 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 June 30, 2010 and December 31, 2009 (Unaudited) (Audited) December June 30, 31, 2010 2009 ---- ---- Assets Cash and due from banks $9,868,202 $13,973,474 Interest-bearing deposits with banks 68,633,796 7,695,499 Federal funds sold 7,014,906 21,315,000 --------- ---------- Total cash and cash equivalents 85,516,904 42,983,973 Investment securities, available- for-sale 98,513,820 87,769,319 Restricted equity securities 4,041,350 4,041,350 Loans, net of allowance for loan losses of $10,902,377 in 2010, and $10,148,927 in 2009 323,530,066 340,020,798 Foreclosed assets 9,207,914 4,994,241 Property and equipment, net 16,737,261 17,035,644 Intangible assets, net 175,000 237,270 Accrued income 2,057,540 2,449,081 Bank owned life insurance 18,950,163 18,576,015 Other assets 14,763,578 15,113,381 ---------- ---------- Total assets $573,493,596 $533,221,072 ============ ============ Liabilities and Stockholders' Equity Liabilities Noninterest-bearing deposits $39,346,105 $32,940,811 Interest-bearing deposits 436,633,448 400,597,148 ----------- ----------- Total deposits 475,979,553 433,537,959 Securities sold under agreements to repurchase 20,053,000 20,615,000 Other short-term borrowings 1,000,000 3,500,000 Long-term debt 43,000,000 43,000,000 Junior subordinated debentures 12,372,000 12,372,000 Accrued interest payable 1,108,008 942,689 Other liabilities 1,545,959 2,098,993 --------- --------- Total liabilities 555,058,520 516,066,641 ----------- ----------- Commitments and contingencies - - Stockholders' equity Preferred stock, Series A, convertible, non-cumulative, non-voting, no par value; 1,000,000 shares authorized; 550 issued and outstanding at June 30, 2010 and December 31, 2009, respectively 9,064 9,064 Common stock, no par value; 50,000,000 shares authorized; 5,551,183 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively 24,856,308 25,099,770 Retained deficit (5,580,095) (5,129,490) Accumulated other comprehensive loss (850,201) (2,824,913) -------- ---------- Total stockholders' equity 18,435,076 17,154,431 ---------- ---------- Total liabilities and stockholders' equity $573,493,596 $533,221,072 ============ ============ WACCAMAW BANKSHARES, INC. Consolidated Statements of Income Six-months ended June 30, 2010 and June 30, 2009 (Unaudited) Six-Months Six-Months Ended Ended June 30, June 30, 2010 2009 --------- ---------- Interest income Loans and fees on loans $8,674,028 $10,147,793 Federal funds sold and interest earning deposits 70,589 2,019 Investment securities, taxable 1,760,228 2,318,125 Investment securities, nontaxable 206,084 304,751 ------- ------- Total interest income 10,710,929 12,772,688 ---------- ---------- Interest expense Deposits 3,587,754 5,209,274 Federal funds purchased and securities sold under agreements to repurchase 331,382 370,839 Short-term borrowings 41,389 171,755 Long-term borrowings 1,119,779 1,098,765 --------- --------- Total interest expense 5,080,304 6,850,633 --------- --------- Net interest income 5,630,625 5,922,055 Provision for loan losses 1,810,614 3,626,846 --------- --------- Net interest income after provision for loan losses 3,820,011 2,295,209 --------- --------- Non-interest income (loss) Service charges on deposit accounts 1,384,918 1,377,667 Mortgage origination income 169,924 203,407 Income from financial services 50,517 54,172 Earnings on bank owned life insurance 374,148 351,273 Net realized gains on sale or maturity of investment securities 648,192 870,677 Impairment on investment securities - (2,309,476) Other operating income 546,757 563,962 ------- ------- Total non-interest income 3,174,456 1,111,682 --------- --------- Non-interest expense Salaries and employee benefits 3,171,166 3,705,035 Occupancy expense 991,791 1,046,727 Data processing 566,849 644,865 Regulatory agency expense 640,151 417,601 Amortization expense of intangible assets 68,603 99,352 Other expense 1,587,445 1,390,227 --------- --------- Total non-interest expense 7,026,005 7,303,807 --------- --------- Income (loss) before income taxes (31,538) (3,896,916) Income tax expense (benefit) (192,200) (1,641,886) -------- ---------- Net income (loss) $160,662 $(2,255,030) ======== =========== Basic income per share $.03 $(.41) ---- ----- Diluted income per share $.03 $(.41) ---- ----- Weighted average shares outstanding 5,551,183 5,523,800 ========= ========= Diluted average shares outstanding 5,551,733 5,523,800 ========= ========= WACCAMAW BANKSHARES, INC. Consolidated Statements of Income Quarter ended June 30, 2010 and June 30, 2009 (Unaudited) Quarter Quarter Ended Ended June 30, June 30, 2010 2009 --------- --------- Interest income Loans and fees on loans $4,059,481 $4,960,028 Federal funds sold and interest earning deposits 45,778 689 Investment securities, taxable 924,288 1,092,927 Investment securities, nontaxable 80,774 141,648 ------ ------- Total interest income 5,110,321 6,195,292 Interest expense Deposits 1,813,438 2,521,027 Federal funds purchased and securities sold under agreements to repurchase 166,786 185,062 Short-term borrowings 12,639 92,877 Long-term borrowings 561,236 555,142 ------- ------- Total interest expense 2,554,099 3,354,108 --------- --------- Net interest income 2,556,222 2,841,184 Provision for loan losses 794,601 2,639,196 ------- --------- Net interest income after provision for loan losses 1,761,621 201,988 --------- ------- Non-interest income (loss) Service charges on deposit accounts 718,693 876,170 Mortgage origination income 83,158 100,672 Income from financial services 31,157 24,520 Earnings on bank owned life insurance 186,065 157,937 Net realized gains on sale or maturity of investment securities 262,265 637,897 Impairment on investment securities - (2,309,476) Other operating income 228,039 278,808 ------- ------- Total non-interest income (loss) 1,509,377 (233,472) --------- -------- Non-interest expense Salaries and employee benefits 1,594,468 1,775,147 Occupancy expense 498,124 515,890 Data processing 281,531 309,936 Regulatory agency expense 324,001 97,919 Amortization expense of intangible assets 22,484 46,119 Other expense 889,755 733,844 ------- ------- Total non-interest expense 3,610,363 3,478,855 --------- --------- Income (loss) before income taxes (339,365) (3,510,339) Income tax expense (benefit) (211,612) (1,390,848) -------- ---------- Net income (loss) $(127,753) $(2,119,491) ========= =========== Basic income per share $(.02) $(.38) ----- ----- Diluted income per share $(.02) $(.38) ----- ----- Weighted average shares outstanding 5,551,183 5,524,048 ========= ========= Diluted average shares outstanding 5,551,183 5,524,048 ========= ========= WACCAMAW BANKSHARES, INC. Consolidated Statements of Cash Flows Six-months ended June 30, 2010 and June 30, 2009 (Unaudited) Six-Months Six-Months Ended Ended June 30, June 30, 2010 2009 --------- --------- Cash flows from operating activities Net income (loss) $160,662 $(2,255,030) Adjustments to reconcile net income to net cash provided (used) by operations: Depreciation and amortization 424,849 469,474 Stock-based compensation 46,114 60,930 Provision for loan losses 1,810,614 3,626,846 Accretion of discount on securities, net of amortization of premiums 191,740 66,255 Gain on sale of investments (648,192) (870,677) Impairment of investment securities - 2,309,476 Income from bank owned life insurance (374,148) (351,273) Changes in assets and liabilities: Accrued income 391,541 676,218 Other assets 817,397 390,118 Accrued interest payable 165,319 25,978 Other liabilities (553,034) (716,485) -------- -------- Net cash provided by operating activities 2,432,862 3,431,830 --------- --------- Cash flows from investing activities Purchases of investment securities available-for- sale (61,812,249) (76,492,813) Purchases of restricted equity securities - (55,800) Principal repayments of investments available-for- sale 2,393,200 11,057,537 Net decrease in loans 10,466,445 5,789,159 Sales and maturities of investment securities available-for-sale 50,026,851 61,978,756 Investment in bank owned life insurance - - Proceeds from the sale of other real estate owned - 225,745 Purchases of property and equipment (64,196) (147,503) ------- -------- Net cash (used in) providing investing activities 1,010,051 2,355,081 --------- --------- Cash flows from financing activities Net increase (decrease) in non-interest-bearing deposits 6,405,294 (2,232,600) Net increase in interest- bearing deposits 36,036,300 47,416,079 Net decrease in securities sold under agreements to repurchase (562,000) (841,000) Proceeds (repayments) from short-term borrowings - (3,500,000) Proceeds (repayments) of long- term debt (2,500,000) (2,500,000) Stock issuance costs and redemption of fractional shares (289,576) - -------- --- Net cash provided by financing activities 39,090,018 38,342,479 ---------- ---------- Net increase in cash and cash equivalents 42,532,931 44,129,390 Cash and cash equivalents, beginning 42,983,973 15,913,493 ---------- ---------- Cash and cash equivalents, ending $85,516,904 $60,042,883 =========== =========== Supplemental disclosure of cash flow information Interest paid $4,914,985 $6,824,655 ========== ========== Taxes paid $- $38,000 === ======= Real estate acquired in settlement of loans $4,213,673 $- ========== ===
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.
Waccamaw Bankshares, Inc.
CONTACT: James Graham, +1-910-914-4200
Web Site: http://www.waccamawbank.com/
