| – PRESS RELEASE | FOR IMMEDIATE RELEASE | |
| October 19, 2017 | For more information contact: | |
| First South Bancorp, Inc. | Bruce Elder (CEO) | (252) 940-4936 |
| Scott McLean (CFO) | (252) 940-5016 | |
| Website: www.firstsouthnc.com | ||
First South Bancorp, Inc. Reports September 30, 2017 Quarterly and Nine Months Operating Results
Washington, North Carolina - First South Bancorp, Inc. (NASDAQ: FSBK) (the “Company”), the parent holding company of First South Bank (the “Bank”), reported net income of $2.9 million or $0.31 of earnings per diluted share (EPS) for the 2017 third quarter, an increase from the $1.9 million of net income and $0.20 of EPS for the 2016 third quarter. Net income for the first nine months of 2017 was $6.8 million and $0.72 of EPS, an increase from the $5.0 million of net income and $0.52 of EPS generated during the first nine months of 2016.
Highlights:
| · | Strong quarterly earnings performance with net income of $2.9 million; diluted EPS of $0.31 per share; return on average assets (ROA) of 1.09%, return on average equity (ROE) of 12.31% and return on average tangible common equity* (ROTCE) of 13.29%. | |
| · | Pre-tax, pre-provision operating earnings* for the current quarter of $4.5 million, a 51% increase over the $3.0 million reported for the 2016 third quarter. | |
| · | Continued loan growth as our loans-held-for-investment portfolio increased $80.1 million during the first nine months of 2017. | |
| · | Total deposits have grown $85.5 million or 9.9% over the last twelve months to $945.3 million. | |
| · | Strong core deposit growth as demonstrated by an increase in total non-interest bearing deposits of 11.9% to $212.5 million on a year-over-year basis. | |
| · | Expanded the net interest margin (NIM) to 3.89% versus 3.73% for the third quarter of 2016. | |
| · | Asset quality metrics continue to improve with lower levels of non-performing assets. |
Bruce Elder, President and CEO, commented, “the third quarter financial performance of the Company is a reflection of the strong loan growth experienced over the past year. Pre-tax income of $4.3 million was almost $1.4 million higher than the $2.9 million reported for the second quarter of 2017. The increase was partially due to a $563,000 increase in net interest income driven by a $609,000 increase in interest and fee income from the loan portfolio. Additionally, compared with Q2 2017, non-interest expenses declined by $476,000 and the provision for loan losses decreased by $385,000.”
Mr. Elder also noted that, “the legal merger with Carolina Financial Corporation (CARO) is anticipated to occur in the fourth quarter of 2017. We have a special meeting of shareholders scheduled for October 26, 2017 to formally vote for approval of the merger, and regulatory approval has recently been received. Legacy branches will operate as CresCom Bank doing business as First South Bank until the data system conversion scheduled for the end of the first quarter of 2018, at which time those branches will be rebranded as CresCom Bank. Conversion teams from both organizations are working diligently to ensure a smooth transition.”
Strong loan and deposit growth over the past twelve months, coupled with controlled expenses, has supported the Company’s solid earnings performance for both the current quarter, as well as year-to-date 2017. Since September 30, 2016, the Company’s loans held for investment portfolio has grown $98.2 million. During this same twelve month period the deposit base has expanded by $85.5 million, including a $22.6 million increase in non-interest bearing demand deposits. As a result of this growth, the Company has bolstered its net interest income (NII), net interest margin (NIM), and bottom line net income.
Income Statement: The Company’s NII for the 2017 third quarter grew to $9.6 million compared to $8.3 million for the comparative 2016 third quarter. Our NIM for the third quarter of 2017 expanded 16 basis points to 3.89% versus 3.73% for the same three month period one year ago. NII for first nine months of 2017 grew to $27.4 million, from $24.2 million in the prior year nine month period. The NIM for the nine month period ended September 30, 2017 was 3.81% and compares favorably to the 3.72% posted for the first nine months of 2016.
Total non-interest income was $3.5 million for the current three month period compared to $3.7 million for the prior year three-month period. The decline was primarily a result of lower gains on disposals of OREO properties, a reduction in loan sales for Small Business Administration loans and lower profit margins on the sale of mortgage loans. Total non-interest income for the first nine months of 2017 was $10.4 million compared to $10.8 million for prior year nine month period. Included in non-interest income for the nine month period ended September 30, 2016 is $467,000 of pre-tax gains on the sales of investment securities. These investment securities were sold primarily to fund growth in our loan portfolio.
Non-interest expenses for the third quarter of 2017 were $8.7 million, compared to $8.9 million for the 2016 third quarter. Total non-interest expenses for the current nine month period totaled $27.0 million, compared to $27.1 million for first nine months of 2016. The Company, as a result of prior branch consolidations as well as other cost savings, has been able to control its expenses despite incurring $387,000 in year-to-date merger-related expenses.
Income tax expense was $1.4 million for the 2017 third quarter, compared to $947,000 for the 2016 third quarter. The effective income tax rates were 32.3% and 33.3% for these reporting periods, respectively. For the first nine months of 2017, income tax expense was $3.0 million versus $2.2 million for the comparative period of 2016. The effective income tax rates were 30.8% and 30.6%, respectively for the 2017 and 2016 nine-month periods.
Balance Sheet: Loans and leases held for investment (HFI) totaled $780.7 million at September 30, 2017, increasing $80.1 million, or 11.4%, over the $700.6 million held at December 31, 2016. Loans held for sale totaled $3.8 million at September 30, 2017 versus $5.1 million held at December 31, 2016. Investment securities and interest-bearing deposits at other banks totaled to $228.0 million at September 30, 2017, versus $216.4 million at December 31, 2016, as earnings and cash from robust deposit growth continues to support our strong liquidity position.
Deposits totaled $945.3 million at September 30, 2017, increasing $74.7 million, or 8.6%, from $870.6 million at December 31, 2016. Non-maturity deposits (personal and business checking, money market, and savings accounts) grew by $69.3 million, or 11.3%, to $683.3 million at September 30, 2017, from $614.0 million at December 31, 2016. CDs increased to $261.9 million at September 30, 2017, from $256.6 million at December 31, 2016. CDs represented 27.7% and 29.5% of total deposits at September 30, 2017 and December 31, 2016, respectively.
Stockholders' equity increased by $7.4 million to $94.6 million at September 30, 2017, from $87.2 million at December 31, 2016. This increase primarily reflects the $6.8 million of net income earned for the first nine months of 2017 and a $1.4 million increase in accumulated other comprehensive income resulting from the mark-to-market adjustment of the available-for-sale securities portfolio, and is net of $998,000 of dividends declared and paid to our stockholders.
The tangible equity to assets ratio* was 8.28% at September 30, 2017, compared to 8.21% at December 31, 2016. The tangible book value per common share* increased to $9.36 at September 30, 2017, from $8.57 at December 31, 2016.
Asset Quality: September 30, 2017 strong asset quality metrics continue to reflect the Company’s disciplined credit culture. Non-performing assets (NPAs) declined to $4.5 million at September 30, 2017, or 0.42% of total assets, from $6.3 million, or 0.63% of total assets, at December 31, 2016. NPAs at September 30, 2017 included $2.2 million of other real estate owned (OREO), which has declined by $1.0 million, or 32.4%, from $3.2 million at December 31, 2016. Nonaccrual loans and leases were $2.3 million at September 30, 2017, or 0.30% of loans and leases HFI, and compared favorably to $3.1 million, or 0.44% of loans and leases HFI, at December 31, 2016.
The provision for credit losses in the 2017 third quarter was $100,000, compared to $220,000 for the third quarter of 2016. The provision for credit losses was $850,000 in the first nine months of 2017, compared to $770,000 in the first nine months of 2016. The allowance for loan losses represented 1.22% of loans and leases HFI at September 30, 2017, compared to 1.24% at December 31, 2016.
Regulatory Capital Strength: As of September 30, 2017, reported regulatory capital ratios at the Bank were 12.95% for total risk-based capital, 11.73% for tier 1 risk-based capital and common equity tier 1 risk-based capital and 8.96% for tier 1 leverage, compared to 13.01% for total risk-based capital, 11.80% for tier 1 risk-based capital and common equity tier 1 risk-based capital and 8.89% for tier 1 leverage at December 31, 2016.
Key Performance Ratios: Some of our key performance ratios are ROA, ROE and the efficiency ratio. ROA was 1.09% for the 2017 third quarter, compared with 0.78% for the 2016 third quarter. ROE was 12.31% for the 2017 third quarter, compared with 8.52% for the 2016 third quarter. The Company’s efficiency ratio for the 2017 third quarter improved to 65.53%, from 73.84% for the comparative 2016 third quarter. The efficiency ratio for the first nine months of 2017 improved to 70.55%, from 77.31% for first nine months of 2016.
Corporate and Investor Information: The Bank has been serving the citizens of eastern and central North Carolina since 1902 and offers a variety of financial products and services to business and individual customers. The Bank operates through its main office headquartered in Washington, North Carolina, and has 28 full service branch offices located throughout eastern and central North Carolina. The Bank also provides a full menu of leasing services through its wholly-owned subsidiary, First South Leasing, LLC. In addition, under its First South Wealth Management division, the Bank makes securities brokerage services available through an affiliation with an independent broker/dealer.
Additional investor information for the Company and the Bank may be accessed on our website at www.firstsouthnc.com.
The Company’s common stock symbol as traded on the NASDAQ Global Select Market is “FSBK”.
Forward-Looking Statements: Statements contained in this release, which are not historical facts, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include: failure to meet the closing conditions contained in the Agreement and Plan of Merger and Reorganization, dated as of June 9, 2017, by and between Carolina Financial Corporation (“CARO”) and the Company (the “CARO Merger”), including approval by the stockholders of CARO and the Company, respectively, on the expected terms and time schedule; delay in closing the CARO Merger; difficulties and delays in integrating CARO’s and the Company’s businesses or fully realizing cost savings and other benefits; business disruption as a result of the CARO Merger; customer acceptance of CARO products and services; potential difficulties encountered in expanding into a new market following the CARO Merger; the effects of future economic conditions; governmental fiscal and monetary policies; legislative and regulatory changes; the risks of changes in interest rates; the effects of competition; and including without limitation other factors that could cause actual results to differ materially as discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law.
*Non-GAAP Financial Measures: Important disclosures about and reconciliations of non-GAAP measures to the corresponding GAAP measures, are provided below and attached to this press release.
This press release and the accompanying Supplemental Financial Data contain financial information determined by methods other than in accordance with generally accepted accounting principles (GAAP) in the United States. Management uses these "non-GAAP" measures in their analysis of the Company's performance. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrating the effects of significant gains and charges. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of non-GAAP disclosures are provided within the accompanying tables to this press release.
First South Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition
| September 30, | December 31, | September 30, | ||||||||||
| 2017 | 2016 | 2016 | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 19,923,410 | $ | 22,854,712 | $ | 19,272,704 | ||||||
| Interest-bearing deposits with banks | 36,903,842 | 23,320,968 | 37,936,276 | |||||||||
| Investment securities available for sale, at fair value | 190,573,089 | 192,606,119 | 193,255,580 | |||||||||
| Investment securities held to maturity | 506,223 | 509,617 | 509,328 | |||||||||
| Mortgage loans held for sale | 3,814,715 | 5,098,518 | 7,312,568 | |||||||||
| Loans and leases held for investment | 780,713,736 | 700,642,291 | 682,465,668 | |||||||||
| Allowance for loan and lease losses | (9,561,535 | ) | (8,673,172 | ) | (8,498,061 | ) | ||||||
| Net loans and leases held for investment | 771,152,201 | 691,969,119 | 673,967,607 | |||||||||
| Premises and equipment, net | 10,799,043 | 11,291,596 | 11,608,966 | |||||||||
| Assets held for sale | 185,906 | 192,720 | 192,720 | |||||||||
| Other real estate owned | 2,183,970 | 3,229,423 | 4,810,434 | |||||||||
| Federal Home Loan Bank stock, at cost | 1,592,700 | 1,573,700 | 1,701,200 | |||||||||
| Accrued interest receivable | 3,595,669 | 3,525,684 | 3,118,482 | |||||||||
| Goodwill | 4,218,576 | 4,218,576 | 4,218,576 | |||||||||
| Mortgage servicing rights | 2,170,658 | 2,148,905 | 2,090,680 | |||||||||
| Identifiable intangible assets | 1,429,929 | 1,611,187 | 1,682,269 | |||||||||
| Bank-owned life insurance | 18,483,438 | 18,080,183 | 17,937,292 | |||||||||
| Prepaid expenses and other assets | 5,947,067 | 8,470,887 | 6,180,717 | |||||||||
| Total assets | $ | 1,073,480,436 | $ | 990,701,914 | $ | 985,795,399 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Deposits: | ||||||||||||
| Non-interest bearing demand | $ | 212,521,157 | $ | 196,917,165 | $ | 189,872,662 | ||||||
| Interest bearing demand | 323,893,958 | 272,098,903 | 264,114,729 | |||||||||
| Savings | 146,933,193 | 145,031,981 | 141,701,335 | |||||||||
| Large denomination certificates of deposit | 136,211,749 | 122,819,510 | 124,416,507 | |||||||||
| Other time | 125,727,563 | 133,732,804 | 139,725,846 | |||||||||
| Total deposits | 945,287,620 | 870,600,363 | 859,831,079 | |||||||||
| Borrowed money | 16,500,000 | 17,000,000 | 20,000,000 | |||||||||
| Junior subordinated debentures | 10,310,000 | 10,310,000 | 10,310,000 | |||||||||
| Other liabilities | 6,775,248 | 5,607,832 | 7,360,372 | |||||||||
| Total liabilities | 978,872,868 | 903,518,195 | 897,501,451 | |||||||||
| Common stock, $.01 par value, 25,000,000 shares authorized; 9,504,991; 9,494,935; and 9,494,935 shares outstanding, respectively | 95,050 | 94,949 | 94,949 | |||||||||
| Additional paid-in capital | 36,191,713 | 36,018,743 | 35,998,472 | |||||||||
| Retained earnings | 55,405,706 | 49,560,595 | 47,851,299 | |||||||||
| Accumulated other comprehensive income | 2,915,099 | 1,509,432 | 4,349,228 | |||||||||
| Total stockholders' equity | 94,607,568 | 87,183,719 | 88,293,948 | |||||||||
| Total liabilities and stockholders' equity | $ | 1,073,480,436 | $ | 990,701,914 | $ | 985,795,399 | ||||||
First South Bancorp, Inc. and Subsidiary
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2017 and 2016
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Interest income: | ||||||||||||||||
| Interest and fees on loans | $ | 9,316,002 | $ | 7,915,133 | $ | 26,229,824 | $ | 22,748,826 | ||||||||
| Interest on investments and deposits | 1,360,943 | 1,295,051 | 4,143,972 | 4,131,333 | ||||||||||||
| Total interest income | 10,676,945 | 9,210,184 | 30,373,796 | 26,880,159 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Interest on deposits | 841,961 | 728,106 | 2,426,143 | 2,094,809 | ||||||||||||
| Interest on borrowings | 70,093 | 55,886 | 192,521 | 187,683 | ||||||||||||
| Interest on junior subordinated notes | 127,011 | 127,011 | 378,272 | 408,628 | ||||||||||||
| Total interest expense | 1,039,065 | 911,003 | 2,996,936 | 2,691,120 | ||||||||||||
| Net interest income | 9,637,880 | 8,299,181 | 27,376,860 | 24,189,039 | ||||||||||||
| Provision for credit losses | 100,000 | 220,000 | 850,000 | 770,000 | ||||||||||||
| Net interest income after provision for credit losses | 9,537,880 | 8,079,181 | 26,526,860 | 23,419,039 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Deposit fees and service charges | 1,902,246 | 1,907,878 | 5,723,130 | 5,746,336 | ||||||||||||
| Loan fees and charges | 88,799 | 72,578 | 267,566 | 268,212 | ||||||||||||
| Mortgage loan servicing fees | 356,823 | 343,081 | 995,650 | 850,770 | ||||||||||||
| Gain on sale and other fees on mortgage loans | 709,554 | 812,754 | 1,837,133 | 1,795,017 | ||||||||||||
| Gain (loss) on sale of other real estate, net | 14,343 | 77,416 | 69,843 | 50,932 | ||||||||||||
| Gain on sale of investment securities | - | - | - | 467,470 | ||||||||||||
| Other income | 435,418 | 477,343 | 1,469,882 | 1,636,428 | ||||||||||||
| Total non-interest income | 3,507,183 | 3,691,050 | 10,363,204 | 10,815,165 | ||||||||||||
| Non-interest expense: | ||||||||||||||||
| Compensation and fringe benefits | 5,130,718 | 4,970,846 | 15,245,172 | 14,955,785 | ||||||||||||
| Federal deposit insurance premiums | 156,054 | 157,142 | 460,546 | 479,276 | ||||||||||||
| Premises and equipment | 1,293,477 | 1,349,243 | 4,026,693 | 4,103,726 | ||||||||||||
| Marketing | 96,646 | 151,304 | 279,435 | 568,556 | ||||||||||||
| Data processing | 799,650 | 757,200 | 2,400,740 | 2,303,418 | ||||||||||||
| Amortization of intangible assets | 152,816 | 136,882 | 453,282 | 401,981 | ||||||||||||
| Other real estate owned expense | 2,483 | 119,065 | 272,342 | 425,622 | ||||||||||||
| Other | 1,105,912 | 1,286,741 | 3,860,278 | 3,842,879 | ||||||||||||
| Total non-interest expense | 8,737,756 | 8,928,423 | 26,998,488 | 27,081,243 | ||||||||||||
| Income before income tax expense | 4,307,307 | 2,841,808 | 9,891,576 | 7,152,961 | ||||||||||||
| Income tax expense | 1,391,805 | 947,496 | 3,048,960 | 2,185,841 | ||||||||||||
| NET INCOME | $ | 2,915,502 | $ | 1,894,312 | $ | 6,842,616 | $ | 4,967,120 | ||||||||
| Per share data: | ||||||||||||||||
| Basic earnings per share | $ | 0.31 | $ | 0.20 | $ | 0.72 | $ | 0.52 | ||||||||
| Diluted earnings per share | $ | 0.31 | $ | 0.20 | $ | 0.72 | $ | 0.52 | ||||||||
| Dividends per share | $ | 0.035 | $ | 0.030 | $ | 0.105 | $ | 0.085 | ||||||||
| Average basic shares outstanding | 9,503,800 | 9,494,861 | 9,500,809 | 9,493,285 | ||||||||||||
| Average diluted shares outstanding | 9,567,989 | 9,525,302 | 9,556,254 | 9,520,216 | ||||||||||||
| First South Bancorp, Inc. | Supplemental Financial Data (Unaudited) | |||||||||||||||||||||||||||
| Quarter to Date | Year to Date | |||||||||||||||||||||||||||
| 9/30/2017 | 6/30/2017 | 3/31/2017 | 12/31/2016 | 9/30/2016 | 9/30/2017 | 9/30/2016 | ||||||||||||||||||||||
| (dollars in thousands except per share data) | ||||||||||||||||||||||||||||
| Consolidated balance sheet data: | ||||||||||||||||||||||||||||
| Total assets | $ | 1,073,480 | $ | 1,061,379 | $ | 1,039,424 | $ | 990,702 | $ | 985,795 | $ | 1,073,480 | $ | 985,795 | ||||||||||||||
| Loans held for sale: | $ | 3,815 | $ | 6,381 | $ | 2,507 | $ | 5,099 | $ | 7,313 | $ | 3,815 | $ | 7,313 | ||||||||||||||
| Loans and leases held for investment (HFI): | ||||||||||||||||||||||||||||
| Mortgage | $ | 77,199 | $ | 76,249 | $ | 73,107 | $ | 74,905 | $ | 74,710 | $ | 77,199 | $ | 74,710 | ||||||||||||||
| Commercial | 594,957 | 593,732 | 558,578 | 535,047 | 518,265 | 594,957 | 518,265 | |||||||||||||||||||||
| Consumer | 85,247 | 83,730 | 73,188 | 69,454 | 69,039 | 85,247 | 69,039 | |||||||||||||||||||||
| Leases | 23,311 | 22,945 | 22,270 | 21,236 | 20,452 | 23,311 | 20,452 | |||||||||||||||||||||
| Total loans and leases HFI | 780,714 | 776,656 | 727,143 | 700,642 | 682,466 | 780,714 | 682,466 | |||||||||||||||||||||
| Allowance for loan and lease losses | (9,562 | ) | (9,367 | ) | (8,941 | ) | (8,673 | ) | (8,498 | ) | (9,562 | ) | (8,498 | ) | ||||||||||||||
| Net loans and leases HFI | $ | 771,152 | $ | 767,289 | $ | 718,202 | $ | 691,969 | $ | 673,968 | $ | 771,152 | $ | 673,968 | ||||||||||||||
| Cash & interest bearing deposits | $ | 56,827 | $ | 40,072 | $ | 70,713 | $ | 46,176 | $ | 57,209 | $ | 56,827 | $ | 57,209 | ||||||||||||||
| Investment securities | 191,079 | 195,908 | 195,048 | 193,116 | 193,765 | 191,079 | 193,765 | |||||||||||||||||||||
| Bank-owned life insurance | 18,483 | 18,351 | 18,219 | 18,080 | 17,937 | 18,483 | 17,937 | |||||||||||||||||||||
| Premises and equipment | 10,799 | 11,152 | 11,572 | 11,292 | 11,609 | 10,799 | 11,609 | |||||||||||||||||||||
| Goodwill | 4,219 | 4,219 | 4,219 | 4,219 | 4,219 | 4,219 | 4,219 | |||||||||||||||||||||
| Mortgage servicing rights | 2,171 | 2,134 | 2,140 | 2,149 | 2,091 | 2,171 | 2,091 | |||||||||||||||||||||
| Identifiable intangible assets | 1,430 | 1,490 | 1,551 | 1,611 | 1,682 | 1,430 | 1,682 | |||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||
| Non-interest checking | $ | 212,521 | $ | 208,672 | $ | 204,576 | $ | 196,917 | $ | 189,873 | $ | 212,521 | $ | 189,873 | ||||||||||||||
| Interest checking | 230,084 | 222,267 | 212,386 | 189,401 | 176,034 | 230,084 | 176,034 | |||||||||||||||||||||
| Money market | 93,810 | 86,533 | 86,598 | 82,698 | 88,081 | 93,810 | 88,081 | |||||||||||||||||||||
| Savings | 146,933 | 149,721 | 147,718 | 145,032 | 141,701 | 146,933 | 141,701 | |||||||||||||||||||||
| Certificates | 261,940 | 264,341 | 268,588 | 256,552 | 264,142 | 261,940 | 264,142 | |||||||||||||||||||||
| Total deposits | $ | 945,288 | $ | 931,534 | $ | 919,866 | $ | 870,600 | $ | 859,831 | $ | 945,288 | $ | 859,831 | ||||||||||||||
| Borrowings | $ | 16,500 | $ | 22,500 | $ | 15,000 | $ | 17,000 | $ | 20,000 | $ | 16,500 | $ | 20,000 | ||||||||||||||
| Junior subordinated debentures | 10,310 | 10,310 | 10,310 | 10,310 | 10,310 | 10,310 | 10,310 | |||||||||||||||||||||
| Stockholders' equity | 94,608 | 91,896 | 89,282 | 87,184 | 88,294 | 94,608 | 88,294 | |||||||||||||||||||||
| Consolidated earnings summary: | ||||||||||||||||||||||||||||
| Interest income | $ | 10,677 | $ | 10,093 | $ | 9,604 | $ | 9,336 | $ | 9,210 | $ | 30,374 | $ | 26,880 | ||||||||||||||
| Interest expense | 1,039 | 1,018 | 940 | 920 | 911 | 2,997 | 2,691 | |||||||||||||||||||||
| Net interest income | 9,638 | 9,075 | 8,664 | 8,416 | 8,299 | 27,377 | 24,189 | |||||||||||||||||||||
| Provision for credit losses | 100 | 485 | 265 | 200 | 220 | 850 | 770 | |||||||||||||||||||||
| Noninterest income | 3,507 | 3,558 | 3,298 | 3,372 | 3,691 | 10,363 | 10,815 | |||||||||||||||||||||
| Noninterest expense | 8,737 | 9,214 | 9,047 | 8,819 | 8,929 | 26,998 | 27,081 | |||||||||||||||||||||
| Income before taxes | 4,308 | 2,934 | 2,650 | 2,769 | 2,841 | 9,892 | 7,153 | |||||||||||||||||||||
| Income tax expense | 1,392 | 879 | 778 | 775 | 947 | 3,049 | 2,186 | |||||||||||||||||||||
| Net income | $ | 2,916 | $ | 2,055 | $ | 1,872 | $ | 1,994 | $ | 1,894 | $ | 6,843 | $ | 4,967 | ||||||||||||||
| Per Share Data: | ||||||||||||||||||||||||||||
| Basic earnings per share | $ | 0.31 | $ | 0.22 | $ | 0.20 | $ | 0.21 | $ | 0.20 | $ | 0.72 | $ | 0.52 | ||||||||||||||
| Diluted earnings per share | $ | 0.31 | $ | 0.22 | $ | 0.20 | $ | 0.21 | $ | 0.20 | $ | 0.72 | $ | 0.52 | ||||||||||||||
| Dividends per share | $ | 0.035 | $ | 0.035 | $ | 0.035 | $ | 0.030 | $ | 0.030 | $ | 0.105 | $ | 0.085 | ||||||||||||||
| Book value per share | $ | 9.95 | $ | 9.67 | $ | 9.40 | $ | 9.18 | $ | 9.30 | $ | 9.95 | $ | 9.30 | ||||||||||||||
| Shares outstanding | 9,504,991 | 9,502,520 | 9,500,266 | 9,494,935 | 9,494,935 | 9,504,991 | 9,494,935 | |||||||||||||||||||||
| Average basic shares | 9,503,800 | 9,500,958 | 9,497,601 | 9,494,935 | 9,494,861 | 9,500,809 | 9,493,285 | |||||||||||||||||||||
| Average diluted shares | 9,567,989 | 9,554,420 | 9,541,548 | 9,529,753 | 9,525,302 | 9,556,254 | 9,520,216 | |||||||||||||||||||||
| Performance ratios (tax equivalent): | ||||||||||||||||||||||||||||
| Yield on average earning assets | 4.30 | % | 4.19 | % | 4.15 | % | 4.07 | % | 4.13 | % | 4.22 | % | 4.12 | % | ||||||||||||||
| Cost of interest bearing liabilities | 0.55 | % | 0.55 | % | 0.52 | % | 0.52 | % | 0.52 | % | 0.54 | % | 0.52 | % | ||||||||||||||
| Net interest spread | 3.75 | % | 3.65 | % | 3.62 | % | 3.55 | % | 3.61 | % | 3.68 | % | 3.60 | % | ||||||||||||||
| Net interest margin | 3.89 | % | 3.78 | % | 3.74 | % | 3.68 | % | 3.73 | % | 3.81 | % | 3.72 | % | ||||||||||||||
| Average earning assets to total average assets | 93.85 | % | 93.61 | % | 93.32 | % | 92.92 | % | 92.42 | % | 93.58 | % | 92.33 | % | ||||||||||||||
| Return on average assets (annualized) | 1.09 | % | 0.79 | % | 0.75 | % | 0.80 | % | 0.78 | % | 0.88 | % | 0.70 | % | ||||||||||||||
| Return on average equity (annualized) | 12.31 | % | 9.01 | % | 8.52 | % | 8.94 | % | 8.52 | % | 10.00 | % | 7.69 | % | ||||||||||||||
| Efficiency ratio | 65.53 | % | 71.65 | % | 74.92 | % | 74.16 | % | 73.84 | % | 70.55 | % | 77.31 | % | ||||||||||||||
| Average assets | $ | 1,062,250 | $ | 1,041,823 | $ | 1,014,310 | $ | 992,192 | $ | 968,729 | $ | 1,039,637 | $ | 951,731 | ||||||||||||||
| Average earning assets | $ | 996,923 | $ | 975,211 | $ | 946,578 | $ | 921,984 | $ | 895,290 | $ | 972,903 | $ | 878,761 | ||||||||||||||
| Average equity | $ | 93,984 | $ | 91,452 | $ | 89,143 | $ | 88,694 | $ | 88,481 | $ | 91,544 | $ | 86,225 | ||||||||||||||
| Equity/Assets | 8.81 | % | 8.66 | % | 8.59 | % | 8.80 | % | 8.96 | % | 8.81 | % | 8.96 | % | ||||||||||||||
| First South Bancorp, Inc. | Supplemental Financial Data (Unaudited) | |||||||||||||||||||||||||||
| Quarter to Date | Year to Date | |||||||||||||||||||||||||||
| 9/30/2017 | 6/30/2017 | 3/31/2017 | 12/31/2016 | 9/30/2016 | 9/30/2017 | 9/30/2016 | ||||||||||||||||||||||
| (dollars in thousands except per share data) | ||||||||||||||||||||||||||||
| Asset quality data and ratios: | ||||||||||||||||||||||||||||
| Nonaccrual loans and leases: | ||||||||||||||||||||||||||||
| Non-TDR nonaccrual loans and leases | ||||||||||||||||||||||||||||
| Earning | $ | 811 | $ | 495 | $ | 576 | $ | 410 | $ | 569 | $ | 811 | $ | 569 | ||||||||||||||
| Non-Earning | 1,105 | 1,489 | 1,479 | 1,257 | 1,289 | 1,105 | 1,289 | |||||||||||||||||||||
| Total Non-TDR nonaccrual loans and leases | $ | 1,916 | $ | 1,984 | $ | 2,055 | $ | 1,667 | $ | 1,858 | $ | 1,916 | $ | 1,858 | ||||||||||||||
| TDR nonaccrual loans and leases | ||||||||||||||||||||||||||||
| Current TDRs | $ | 389 | $ | 549 | $ | 720 | $ | 422 | $ | 792 | $ | 389 | $ | 792 | ||||||||||||||
| Past Due TDRs | 0 | 0 | 0 | 962 | 248 | 0 | 248 | |||||||||||||||||||||
| Total TDR nonaccrual loans and leases | $ | 389 | $ | 549 | $ | 720 | $ | 1,384 | $ | 1,040 | $ | 389 | $ | 1,040 | ||||||||||||||
| Total nonaccrual loans and leases | $ | 2,305 | $ | 2,533 | $ | 2,775 | $ | 3,051 | $ | 2,898 | $ | 2,305 | $ | 2,898 | ||||||||||||||
| Loans and leases >90 days past due, still accruing | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Other real estate owned (OREO) | 2,184 | 2,438 | 3,115 | 3,229 | 4,810 | 2,184 | 4,810 | |||||||||||||||||||||
| Total nonperforming assets | $ | 4,489 | $ | 4,971 | $ | 5,890 | $ | 6,280 | $ | 7,708 | $ | 4,489 | $ | 7,708 | ||||||||||||||
| Allowance for loan and lease losses to loans and leases HFI | 1.22 | % | 1.21 | % | 1.23 | % | 1.24 | % | 1.25 | % | 1.22 | % | 1.25 | % | ||||||||||||||
| Net charge-offs (recoveries) | $ | (95 | ) | $ | 59 | $ | (3 | ) | $ | 25 | $ | 60 | $ | (38 | ) | $ | 138 | |||||||||||
| Net charge-offs (recoveries) to total loans and leases | -0.01 | % | 0.01 | % | 0.00 | % | 0.00 | % | 0.01 | % | 0.00 | % | 0.02 | % | ||||||||||||||
| Total nonaccrual loans and leases to total loans and leases HFI | 0.30 | % | 0.33 | % | 0.38 | % | 0.44 | % | 0.42 | % | 0.30 | % | 0.42 | % | ||||||||||||||
| Total nonperforming assets to total assets | 0.42 | % | 0.47 | % | 0.57 | % | 0.63 | % | 0.78 | % | 0.42 | % | 0.78 | % | ||||||||||||||
| Total loans and leases to total deposits | 82.99 | % | 84.06 | % | 79.32 | % | 81.06 | % | 80.22 | % | 82.99 | % | 80.22 | % | ||||||||||||||
| Total loans and leases to total assets | 73.08 | % | 73.78 | % | 70.20 | % | 71.24 | % | 69.97 | % | 73.08 | % | 69.97 | % | ||||||||||||||
| Loans serviced for others | $ | 366,810 | $ | 363,489 | $ | 368,617 | $ | 371,956 | $ | 370,606 | $ | 366,810 | $ | 370,606 | ||||||||||||||
| Reconciliation of Non-GAAP Measures: | ||||||||||||||||||||||||||||
| Pre-tax pre-provision operating earnings (non-GAAP): | ||||||||||||||||||||||||||||
| Income before taxes (GAAP) | $ | 4,308 | $ | 2,934 | $ | 2,650 | $ | 2,769 | $ | 2,841 | $ | 9,892 | $ | 7,153 | ||||||||||||||
| Provision for credit losses | 100 | 485 | 265 | 200 | 220 | 850 | 770 | |||||||||||||||||||||
| Pre-tax pre-provision net income | 4,408 | 3,419 | 2,915 | 2,969 | 3,061 | 10,742 | 7,923 | |||||||||||||||||||||
| Securities (gains) losses, net | 0 | 0 | 0 | 0 | 0 | 0 | (467 | ) | ||||||||||||||||||||
| Merger related expenses | 109 | 278 | 0 | 0 | 0 | 387 | 0 | |||||||||||||||||||||
| OREO valuations | 15 | 58 | 119 | 140 | 0 | 192 | 110 | |||||||||||||||||||||
| OREO (gains) losses, (net) | (14 | ) | 26 | (82 | ) | (80 | ) | (77 | ) | (70 | ) | (51 | ) | |||||||||||||||
| Pre-tax pre-provision operating earnings (non-GAAP) | $ | 4,518 | $ | 3,781 | $ | 2,952 | $ | 3,029 | $ | 2,984 | $ | 11,251 | $ | 7,515 | ||||||||||||||
| Total core non-interest income (non-GAAP): | ||||||||||||||||||||||||||||
| Non-interest income (GAAP) | $ | 3,507 | $ | 3,558 | $ | 3,298 | $ | 3,372 | $ | 3,691 | $ | 10,363 | $ | 10,815 | ||||||||||||||
| Securities (gains) losses, net | 0 | 0 | 0 | 0 | 0 | 0 | (467 | ) | ||||||||||||||||||||
| OREO (gains) losses, (net) | (14 | ) | 26 | (82 | ) | (80 | ) | (77 | ) | (70 | ) | (51 | ) | |||||||||||||||
| Total core non-interest income (non-GAAP) | $ | 3,493 | $ | 3,584 | $ | 3,216 | $ | 3,292 | $ | 3,614 | $ | 10,293 | $ | 10,297 | ||||||||||||||
| Tangible equity (non-GAAP): | ||||||||||||||||||||||||||||
| Total equity (GAAP) | $ | 94,608 | $ | 91,896 | $ | 89,282 | $ | 87,184 | $ | 88,294 | $ | 94,608 | $ | 88,294 | ||||||||||||||
| Intangible assets (a) | 5,649 | 5,709 | 5,770 | 5,830 | 5,901 | 5,649 | 5,901 | |||||||||||||||||||||
| Tangible equity (non-GAAP) | $ | 88,959 | $ | 86,187 | $ | 83,512 | $ | 81,354 | $ | 82,393 | $ | 88,959 | $ | 82,393 | ||||||||||||||
| Tangible Equity/Assets (non-GAAP) | 8.29 | % | 8.12 | % | 8.03 | % | 8.21 | % | 8.36 | % | 8.29 | % | 8.36 | % | ||||||||||||||
| Tangible book value per share (non-GAAP) | $ | 9.36 | $ | 9.07 | $ | 8.79 | $ | 8.57 | $ | 8.68 | $ | 9.36 | $ | 8.68 | ||||||||||||||
| Return on average tangible common equity (non-GAAP): | ||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 2,916 | $ | 2,055 | $ | 1,872 | $ | 1,994 | $ | 1,894 | $ | 6,843 | $ | 4,967 | ||||||||||||||
| Amortization of intangibles, net of tax | 41 | 42 | 43 | 51 | 47 | 125 | 148 | |||||||||||||||||||||
| Tangible net income available to shareholders (non-GAAP) | $ | 2,957 | $ | 2,097 | $ | 1,915 | $ | 2,045 | $ | 1,941 | $ | 6,968 | $ | 5,115 | ||||||||||||||
| Average equity | 93,984 | 91,452 | 89,143 | 88,694 | 88,481 | 91,544 | 86,225 | |||||||||||||||||||||
| Average intangible assets (a) | 5,687 | 5,748 | 5,809 | 5,876 | 5,946 | 5,748 | 6,017 | |||||||||||||||||||||
| Average tangible common equity (non-GAAP) | $ | 88,297 | $ | 85,704 | $ | 83,334 | $ | 82,818 | $ | 82,535 | $ | 85,796 | $ | 80,208 | ||||||||||||||
| Return on average tangible common equity (non-GAAP) | 13.29 | % | 9.82 | % | 9.32 | % | 9.82 | % | 9.36 | % | 10.86 | % | 8.50 | % | ||||||||||||||
(a) Excludes mortgage servicing rights
| Average Balances – Yield/Cost Analysis | Three Months Ended September 30, | |||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||
| Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | |||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Interest earning assets: | ||||||||||||||||||||||||
| Loans receivable | $ | 782,465 | $ | 9,316 | 4.68 | % | $ | 685,441 | $ | 7,915 | 4.54 | % | ||||||||||||
| Investments and deposits | 214,458 | 1,361 | 2.91 | (1) | 209,849 | 1,295 | 2.81 | (1) | ||||||||||||||||
| Total earning assets | 996,923 | 10,677 | 4.30 | (1) | 895,290 | 9,210 | 4.13 | (1) | ||||||||||||||||
| Nonearning assets | 65,327 | 73,439 | ||||||||||||||||||||||
| Total assets | $ | 1,062,250 | $ | 968,729 | ||||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||||||||
| Deposits | $ | 723,960 | 842 | 0.46 | $ | 663,983 | 728 | 0.44 | ||||||||||||||||
| Borrowings | 18,288 | 70 | 1.53 | 18,506 | 56 | 1.18 | ||||||||||||||||||
| Junior subordinated debentures | 10,310 | 127 | 4.82 | 10,310 | 127 | 4.82 | ||||||||||||||||||
| Total interest bearing liabilities | 752,558 | 1,039 | 0.55 | 692,799 | 911 | 0.52 | ||||||||||||||||||
| Noninterest bearing demand deposits | 209,192 | - | - | 181,000 | - | - | ||||||||||||||||||
| Total sources of funds | 961,750 | 1,039 | 0.43 | 873,799 | 911 | 0.41 | ||||||||||||||||||
| Other liabilities | 6,516 | 6,449 | ||||||||||||||||||||||
| Stockholders’ equity | 93,984 | 88,481 | ||||||||||||||||||||||
| Total liabilities and equity | $ | 1,062,250 | $ | 968,729 | ||||||||||||||||||||
| Net interest income | $ | 9,638 | $ | 8,299 | ||||||||||||||||||||
| Interest rate spread (1)(2) | 3.75 | % | 3.61 | % | ||||||||||||||||||||
| Net interest margin (1)(3) | 3.89 | % | 3.73 | % | ||||||||||||||||||||
| Ratio of earning assets to interest bearing liabilities | 132.47 | % | 129.23 | % | ||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||
| Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | |||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Interest earning assets: | ||||||||||||||||||||||||
| Loans receivable | $ | 747,165 | $ | 26,230 | 4.64 | % | $ | 654,696 | $ | 22,749 | 4.59 | % | ||||||||||||
| Investments and deposits | 225,738 | 4,144 | 2.80 | (1) | 224,065 | 4,131 | 2.78 | (1) | ||||||||||||||||
| Total earning assets | 972,903 | 30,374 | 4.22 | (1) | 878,761 | 26,880 | 4.12 | (1) | ||||||||||||||||
| Nonearning assets | 66,734 | 72,970 | ||||||||||||||||||||||
| Total assets | $ | 1,039,637 | $ | 951,731 | ||||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||||||||
| Deposits | $ | 710,313 | 2,426 | 0.46 | $ | 653,116 | 2,095 | 0.43 | ||||||||||||||||
| Borrowings | 19,493 | 193 | 1.32 | 24,450 | 187 | 1.01 | ||||||||||||||||||
| Junior subordinated debentures | 10,310 | 378 | 4.84 | 10,310 | 409 | 5.21 | ||||||||||||||||||
| Total interest bearing liabilities | 740,116 | 2,997 | 0.54 | 687,876 | 2,691 | 0.52 | ||||||||||||||||||
| Noninterest bearing demand deposits | 201,947 | - | - | 171,504 | - | - | ||||||||||||||||||
| Total sources of funds | 942,063 | 2,997 | 0.42 | 859,380 | 2,691 | 0.42 | ||||||||||||||||||
| Other liabilities | 6,030 | 6,126 | ||||||||||||||||||||||
| Stockholders’ equity | 91,544 | 86,225 | ||||||||||||||||||||||
| Total liabilities and equity | $ | 1,039,637 | $ | 951,731 | ||||||||||||||||||||
| Net interest income | $ | 27,377 | $ | 24,189 | ||||||||||||||||||||
| Interest rate spread (1)(2) | 3.68 | % | 3.60 | % | ||||||||||||||||||||
| Net interest margin (1)(3) | 3.81 | % | 3.72 | % | ||||||||||||||||||||
| Ratio of earning assets to interest bearing liabilities | 131.45 | % | 127.75 | % | ||||||||||||||||||||
| (1) | Shown as a tax-adjusted yield. | |
| (2) | Represents the difference between the average yield on earning assets and the average cost of funds. | |
| (3) | Represents net interest income divided by average earning assets. |