FSBK First South Bancorp

WASHINGTON, N.C., April 17 /PRNewswire-FirstCall/ -- First South Bancorp, Inc. (NASDAQ:FSBK) (the "Company"), the parent holding company of First South Bank (the "Bank"), reports its earnings for the quarter ended March 31, 2007 (unaudited), the first quarter of its fiscal year ending December 31, 2007. Net income for the quarter ended March 31, 2007 increased 1.8% to $4,297,997, from net income of $4,223,299 earned in the quarter ended March 31, 2006. Diluted earnings per share increased 2.4% to $0.43 per share for the quarter ended March 31, 2007, from $0.42 per share for the quarter ended March 31, 2006. Tom Vann, Chief Executive Officer of the Company, stated, "Net earnings this quarter were supported by our net interest income and increased noninterest income, during a period of slower loan growth and competitive pressure on interest rates and deposit flows in the market areas we serve. Net interest income was $10.1 million for the quarter ended March 31, 2007, compared to $10.4 million for the quarter ended March 31, 2006, reflecting both increased market competition and credit risk management. Net loans and leases held for sale declined to $14.5 million at March 31, 2007 from $25.6 million at December 31, 2006. During the quarter ended March 31, 2007 the Bank sold $17.7 million of real estate mortgage loans and invested the proceeds into short-term investments in order to protect itself from interest rate risks due to the uncertainty of further Federal Reserve interest rate adjustments, as well as providing a readily available funding source. Net loans and leases held for investment declined to $725.1 million at March 31, 2007 from $735.9 million at December 31, 2006. During the quarter ended March 31, 2007, the Bank allowed certain credits to repay in order to protect itself from potential credit risk issues. Proceeds from loan principal repayments were used to repay higher costing borrowings, which declined to $6.0 million at March 31, 2007 from $11.1 million at December 31, 2006. The Bank maintains allowances for loan and lease losses and a reserve for unfunded loan commitments, based upon an evaluation of inherent risk and estimates of probable credit losses within the loan and lease portfolio. The Bank recorded no provisions for credit losses during the quarter ended March 31, 2007 compared to $346,000 recorded for the quarter ended March 31, 2006. No provisions for credit losses were deemed necessary for the current quarter due to the decline in growth of the net loan and leases receivable portfolio during the quarter. At March 31, 2007, the Bank had $8.5 million of general allowances, $612,000 of specific allowances and $765,000 of reserves for unfunded commitments, totaling $9.9 million, or 1.3% of total loans outstanding, which management considers adequate to absorb probable losses on loans, leases and unfunded commitments. Total assets of the Company increased to $911.0 million at March 31, 2007 from $871.0 million at March 31, 2006, while deposit accounts increased to $802.2 million at March 31, 2007 from $771.6 million at March 31, 2006. We recently announced an 11.8% payment rate increase in our quarterly cash dividend for the quarter ended March 31, 2007, which will be our 40th consecutive quarterly cash dividend. We continue placing efforts on controlling operating expenses and improving our operating efficiency, resulting in a 43.8% efficiency ratio for the quarter ended March 31, 2007. During the quarter ended March 31, 2007, we received national recognition for our operating efficiency from the American Banker, rating us the 50th most efficient bank holding company among the largest 500 bank holding companies in the United States. In addition, our key performance ratios, return on average assets (ROA) and return on average equity (ROE), continue to place us at the top of our peer group. Our ROA and ROE was 1.9% and 21.3%, respectively, for the quarter ended March 31, 2007. We opened a new loan production office located at 7210 Wrightsville Avenue in Wilmington, North Carolina on April 2, 2007. This new office will allow us to provide an additional level of residential construction lending services to the Wilmington and New Hanover County market area." First South Bank has been serving the citizens of eastern North Carolina since 1902 and offers a variety of financial products and services, including a Leasing Company and securities brokerage services through an affiliation with a broker/dealer. The Bank operates through its main office headquartered in Washington, North Carolina, and has twenty-six branch offices and two loan production offices located throughout central, eastern, northeastern and southeastern North Carolina. Statements contained in this release, which are not historical facts, are forward-looking statements as defined in the Private 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 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 to 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. (NASDAQ:FSBK) For More Information Contact: Bill Wall (CFO) or Tom Vann (CEO) Phone: (252) 946-4178 Website: http://www.firstsouthnc.com/ First South Bancorp, Inc. and Subsidiary Consolidated Statements of Financial Condition March 31 December 31 2007 2006 * Assets (unaudited) Cash and due from banks $25,772,472 $24,608,819 Interest-bearing deposits in financial institutions 24,909,072 1,194,801 Investment securities - available for sale 56,108,811 56,454,127 Mortgage-backed securities - available for sale 33,666,454 35,066,627 Mortgage-backed securities - held for investment 1,579,621 1,662,540 Loans and leases receivable, net: Held for sale 14,471,666 25,576,080 Held for investment 725,136,630 735,860,969 Premises and equipment, net 9,173,471 8,898,009 Real estate owned 1,060,202 634,434 Federal Home Loan Bank of Atlanta stock, at cost which approximates market 1,635,100 1,933,300 Accrued interest receivable 5,310,829 5,398,477 Goodwill 4,218,576 4,218,576 Mortgage servicing rights 1,282,864 1,266,530 Identifiable intangible assets 220,080 227,940 Prepaid expenses and other assets 6,474,023 7,546,676 Total assets $911,019,871 $910,547,905 Liabilities and Stockholders' Equity Deposits: Demand $272,503,302 $264,722,202 Savings 18,970,854 18,481,271 Large denomination certificates of deposit 184,433,722 181,078,901 Other time 326,308,832 335,906,107 Total deposits 802,216,710 800,188,481 Borrowed money 6,005,148 11,139,947 Junior subordinated debentures 10,310,000 10,310,000 Other liabilities 9,969,100 10,112,899 Total liabilities 828,500,958 831,751,327 Common stock, $.01 par value, 25,000,000 shares authorized; 11,254,222 issued; 9,956,511 and 9,788,133 shares outstanding, respectively 99,565 97,881 Additional paid-in capital 36,989,210 38,165,536 Retained earnings, substantially restricted 72,606,765 70,217,380 Treasury stock at cost (26,736,542) (29,104,894) Accumulated other comprehensive loss, net (440,085) (579,325) Total stockholders' equity 82,518,913 78,796,578 Total liabilities and stockholders' equity $911,019,871 $910,547,905 * Derived from audited consolidated financial statements First South Bancorp, Inc. and Subsidiary Consolidated Statements of Operations (unaudited) Three Months Ended March 31 2007 2006 Interest income: Interest and fees on loans $15,986,587 $14,613,159 Interest and dividends on investments and deposits 1,335,378 968,108 Total interest income 17,321,965 15,581,267 Interest expense: Interest on deposits 6,868,826 4,848,239 Interest on borrowings 143,342 185,811 Interest on junior subordinated notes 207,844 186,922 Total interest expense 7,220,012 5,220,972 Net interest income 10,101,953 10,360,295 Provision for credit losses 0 346,377 Net interest income after provision for credit losses 10,101,953 10,013,918 Non-interest income: Fees and service charges 1,816,737 1,526,357 Loan servicing fees 162,100 169,289 Gain (loss) on sale of real estate, net (143) 568 Gain on sale of mortgage loans 214,644 187,384 Other income 291,170 360,117 Total non-interest income 2,484,508 2,243,715 Non-interest expense: Compensation and fringe benefits 3,297,926 3,319,935 Federal insurance premiums 24,287 23,907 Premises and equipment 473,094 434,331 Advertising 26,495 32,469 Payroll and other taxes 351,965 325,353 Data processing 621,611 569,185 Amortization of intangible assets 96,969 94,698 Other 628,954 557,677 Total non-interest expense 5,521,301 5,357,555 Income before income taxes 7,065,160 6,900,078 Income taxes 2,767,163 2,676,779 Net income $4,297,997 $4,223,299 Per share data: (*) Basic earnings per share $0.43 $0.44 Diluted earnings per share $0.43 $0.42 Dividends per share $0.19 $0.17 Weighted average shares-Basic 9,930,732 9,580,471 Weighted average shares-Diluted 10,069,085 10,024,792 (*) Adjusted for May 25, 2006 three-for-two stock split. Supplemental Quarterly Financial Data First South Bancorp, Inc. (Unaudited) 03/31/2007 12/31/2006 09/30/2006 (dollars in thousands except per share data) Consolidated balance sheet data: Total assets $911,020 $910,548 $916,914 Loans receivable (net) 739,608 761,437 762,020 Cash and investments 106,790 82,258 85,614 Mortgage-backed securities 35,246 36,729 37,719 Premises and equipment 9,173 8,898 8,665 Goodwill 4,219 4,219 4,219 Mortgage servicing rights 1,283 1,267 1,349 Deposits 802,217 800,188 803,512 Borrowings 6,005 11,140 15,397 Junior subordinated debentures 10,310 10,310 10,310 Stockholders' equity 82,519 78,797 76,275 Consolidated earnings summary: Interest income $17,322 $17,849 $17,528 Interest expense 7,220 7,343 6,960 Net interest income 10,102 10,506 10,568 Provision for credit losses 0 0 150 Noninterest income 2,484 2,190 2,516 Noninterest expense 5,521 5,532 5,758 Income taxes 2,767 2,799 2,859 Net income $4,298 $4,365 $4,317 Per Share Data: * Earnings per share-Basic * $0.43 $0.45 $0.44 Earnings per share-Diluted * $0.43 $0.43 $0.43 Dividends per share * $0.19 $0.17 $0.17 Book value per share * $8.29 $8.05 $7.80 Average shares-Basic * 9,930,732 9,780,619 9,776,933 Average shares-Diluted * 10,069,085 10,060,369 10,070,678 * Adjusted for 3-for-2 stock split on May 25, 2006 Performance ratios: Yield on earning assets 8.11% 8.32% 8.26% Cost of funds 3.54% 3.57% 3.39% Net interest spread 4.57% 4.75% 4.87% Net interest margin on earning assets 4.73% 4.90% 4.98% Earning assets to total assets 94.13% 94.20% 93.65% Return on average assets 1.90% 1.92% 1.90% Return on average equity 21.34% 22.42% 23.13% Efficiency ratio 43.80% 43.51% 44.46% Dividend payout ratio 44.19% 37.78% 38.64% Asset quality data and ratios: Nonperforming loans $3,019 $2,740 $3,314 Real estate owned $1,060 $634 $1,006 Allowance for loan and lease losses $9,120 $9,158 $9,174 Reserve for unfunded loan commitments $765 $765 $891 Allowance for credit losses $9,885 $9,923 $10,065 Allowance for loan and lease losses to loans 1.22% 1.19% 1.19% Allowance for credit losses to loans 1.32% 1.29% 1.31% Net charge-offs (recoveries) $38 $143 $-15 Net charge-offs (recoveries) to loans 0.005% 0.019% -0.002% Nonperforming loans to assets 0.33% 0.30% 0.36% Loans to deposits 92.20% 95.16% 94.84% Loans to assets 81.18% 83.62% 83.11% Loans serviced for others $254,741 $245,633 $253,485 Supplemental Quarterly Financial Data First South Bancorp, Inc. (Unaudited) 06/30/2006 03/31/2006 (dollars in thousands except per share data) Consolidated balance sheet data: Total assets $898,581 $870,979 Loans receivable (net) 750,264 737,519 Cash and investments 76,689 83,824 Mortgage-backed securities 37,935 21,925 Premises and equipment 9,000 8,873 Goodwill 4,219 4,219 Mortgage servicing rights 1,433 1,415 Deposits 772,969 771,611 Borrowings 29,736 6,414 Junior subordinated debentures 10,310 10,310 Stockholders' equity 72,657 70,882 Consolidated earnings summary: Interest income $16,794 $15,581 Interest expense 6,082 5,221 Net interest income 10,712 10,360 Provision for credit losses 437 346 Noninterest income 2,311 2,244 Noninterest expense 5,562 5,358 Income taxes 2,737 2,677 Net income $4,287 $4,223 Per Share Data: * Earnings per share-Basic * $0.44 $0.44 Earnings per share-Diluted * $0.43 $0.42 Dividends per share * $0.17 $0.17 Book value per share * $7.44 $7.39 Average shares-Basic * 9,719,014 9,580,471 Average shares-Diluted * 10,010,945 10,024,792 * Adjusted for 3-for-2 stock split on May 25, 2006 Performance ratios: Yield on earning assets 8.08% 7.78% Cost of funds 3.03% 2.69% Net interest spread 5.05% 5.09% Net interest margin on earning assets 5.15% 5.17% Earning assets to total assets 93.24% 93.88% Return on average assets 1.93% 1.97% Return on average equity 24.25% 24.12% Efficiency ratio 42.65% 42.44% Dividend payout ratio 38.64% 38.64% Asset quality data and ratios: Nonperforming loans $3,029 $2,120 Real estate owned $67 $14 Allowance for loan and lease losses $8,891 $8,456 Reserve for unfunded loan commitments $1,010 $1,109 Allowance for credit losses $9,901 $9,565 Allowance for loan and lease losses to loans 1.17% 1.13% Allowance for credit losses to loans 1.30% 1.28% Net charge-offs (recoveries) $100 $4 Net charge-offs (recoveries) to loans 0.013% 0.001% Nonperforming loans to assets 0.34% 0.24% Loans to deposits 97.06% 95.58% Loans to assets 83.49% 84.68% Loans serviced for others $261,279 $251,787 DATASOURCE: First South Bancorp, Inc. CONTACT: Bill Wall (CFO) or Tom Vann (CEO), +1-252-946-4178, both of First South Bancorp, Inc. Web site: http://www.firstsouthnc.com/

Copyright