Southern Community Financial Corporation Announces Increase in Loan Loss Provision for Fourth Quarter 2009
January 14 2010 - 4:05PM
Marketwired
Southern Community Financial Corporation (NASDAQ: SCMF) (NASDAQ:
SCMFO), the holding company for Southern Community Bank and Trust,
announced that it expects to record a provision for loan losses of
approximately $18.0 million in the fourth quarter of 2009, compared
to $6.0 million in the third quarter of 2009, based on preliminary
results. The increase in the provision for loan losses, which will
result in a loss for the fourth quarter of 2009, is primarily in
response to a higher level of nonperforming assets resulting from
the persistent weak economic environment. The Company also expects
to record a $1.3 million charge to reflect reduced carrying values
on foreclosed real estate. Southern Community remains well
capitalized with ratios exceeding regulatory requirements.
Nonperforming assets in the fourth quarter of 2009 are
anticipated to be approximately $57.5 million, or 3.31% of total
assets, compared to $40.8 million or 2.36% of total assets in the
third quarter of 2009. Fourth quarter net charge-offs are expected
to be approximately $9.2 million, or 2.86% of average loans on an
annualized basis, compared to $4.6 million or 1.45% of average
loans (annualized) in the third quarter of 2009. Net charge-offs
for the year-end 2009 will approximate $23 million, or 1.82% of
average loans. The allowance for loan losses is expected to
increase to approximately $29.6 million, or 2.40% of total loans
and 78% of nonperforming loans, compared to $20.8 million or 1.67%
of total loans and 92% of nonperforming loans in the third quarter
of 2009.
"The increases in nonperforming assets, net charge-offs, and the
allowance for loan losses reflect the economic climate in our
markets and consistent application of our policy to recognize
losses as they occur," said F. Scott Bauer, Chairman and Chief
Executive Officer. "Following an extensive evaluation of our entire
loan portfolio and problem assets, which included a third party
review, we determined that an increase in our allowance for loan
losses was the prudent course of action, primarily due to continued
weakness in the economy. We also analyzed the carrying values on
our foreclosed real estate, in light of continued market pressure
on real estate values, and recorded a $1.3 million charge as a
result. These decisions better position us to focus on profitable
growth in 2010."
About Southern Community Financial Corporation
Southern Community Financial Corporation is headquartered in
Winston-Salem, North Carolina and is the holding company of
Southern Community Bank and Trust, a community bank with twenty-two
banking offices throughout North Carolina.
Southern Community Financial Corporation's common stock and
trust preferred securities are listed on the NASDAQ Global Select
Market under the trading symbols SCMF and SCMFO, respectively.
Additional information about Southern Community is available on its
website at www.smallenoughtocare.com or by email at
investor.relations@smallenoughtocare.com.
This news release contains forward-looking statements. Such
statements are subject to certain factors that may cause the
Company's results to vary from those expected. These factors
include changing economic and financial market conditions,
competition, ability to execute our business plan, items already
mentioned in this press release, and other factors described in our
filings with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which reflect management's judgment only as of the date
hereof. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect events and
circumstances that arise after the date hereof.
For additional information: F. Scott Bauer Chairman/CEO James
Hastings Executive Vice President/CFO (336) 768-8500
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