SOURCE: Southern Community Financial Corporation

Southern Community Financial Corporation

January 31, 2011 06:30 ET

Southern Community Financial Corporation Announces Results for the Fourth Quarter and Full Year 2010

WINSTON-SALEM, NC--(Marketwire - January 31, 2011) - Southern Community Financial Corporation (NASDAQ: SCMF) (NASDAQ: SCMFO), the holding company for Southern Community Bank and Trust, today reported fourth quarter and full year 2010 results.

Fourth Quarter Financial Highlights:

--  Net loss available to common shareholders of $2.9 million, or $0.17 per
    diluted share;
--  Provision for loan losses of $6.5 million decreased $10.5 million
    compared to third quarter;
--  Allowance for loan losses decreased $5.5 million to $29.6 million, or
    2.60% of total loans;
--  Loans delinquent 30-89 days decreased $3.4 million from September 30, 
    2010 to $5.5 million;
--  Net charge-offs of $12.0 million, or 4.10% of average loans
    (annualized), up from $11.5 million, or 3.78% of average loans
    (annualized), in the third quarter;
--  Nonperforming assets increased to $121.0 million, or 7.28% of
    total assets from $118.1 million, or 7.10%, of total assets at
    September 30, 2010; and
--  Year-over-year improvement in mortgage banking income of 72%.

Full Year 2010 Financial Highlights:

--  Local core deposit funding increased year-over-year to 71% of deposits
    from 67% at December 31, 2009;
--  Wealth management income increased 27% over 2009; and
--  Reduction in personnel and occupancy expenses of 7% and 6%,
    respectively, compared to 2009 levels.

The net loss available to common shareholders decreased to $2.9 million in the fourth quarter of 2010, compared with a net loss of $8.6 million in the third quarter of 2010 and a net loss of $11.3 million in the fourth quarter of 2009. The net loss per diluted common share in the fourth quarter of 2010 also decreased to $0.17, compared to $0.51 in the third quarter of 2010, and $0.68 in the fourth quarter of 2009.

The net loss available to common shareholders for the year ended December 31, 2010 decreased to $17.1 million, or $1.01 per diluted share, compared to a net loss of $65.7 million, or $3.91 per diluted share for the year ended December 31, 2009. Full year 2009 results were significantly impacted by the $49.5 million goodwill impairment charge recorded during the first quarter of 2009. Excluding this charge, the net loss available to common shareholders was $16.2 million, or $0.96 per diluted share, for the full year ended December 31, 2009.

"While our level of nonperforming assets remains high, we are very encouraged by recent trends in our impaired loans and delinquencies," said F. Scott Bauer, Chairman and Chief Executive Officer. "The fourth quarter of 2010 was the third consecutive quarter in which loan delinquencies decreased. Additionally, our allowance for loan losses decreased due to the recognition of charge-offs on loans with specific reserves allocated in prior periods and a decrease in newly identified nonperforming loans requiring a specific allowance. We have made progress in the resolution of certain nonaccrual, collateral dependent loans and as a result, we expect a reduction in our nonperforming loans during the first half of 2011.

As economic conditions across our footprint remain weak, we continue to expect shrinkage in the overall loan portfolio. However, as nonaccrual collateral dependent loans return to performing status and our earning asset mix shifts away from short term, lower yielding securities, we anticipate that our net interest margin should remain fairly stable with opportunities for margin improvement in the second quarter of 2011 and subsequent quarters.

We have identified approximately $2.0 million in annual cost savings, and have implemented these cost saving initiatives effective January 1, 2011. These expense reductions include the elimination of the 401(k) employer match and company-wide efficiency initiatives.

As they have been throughout this difficult credit cycle, our employees remain committed to providing our customers with the best service possible. We have a strong franchise and foundation which will help us weather this difficult environment. Southern Community remains well funded with capital ratios in excess of well capitalized thresholds."

Asset Quality

Nonperforming loans increased to $103.6 million, or 9.12% of total loans, at December 31, 2010 from $98.7 million, or 8.29% of total loans, at September 30, 2010. Loans delinquent 30-89 days have declined to $5.5 million at December 31, 2010 from $8.9 million at September 30, 2010, and from $9.7 million at June 30, 2010. Nonperforming assets increased to $121.0 million, or 7.28% of total assets, at December 31, 2010 from $118.1 million, or 7.10% of total assets, at September 30, 2010.

The provision for loan losses of $6.5 million in the fourth quarter of 2010 decreased from $17.0 million in the third quarter 2010. The allowance for loan losses (ALLL) decreased $5.5 million to $29.6 million, or 2.60% of loans, from $35.1 million, or 2.95% of loans, at September 30, 2010. Net charge-offs increased sequentially to $12.0 million, or 4.17% of average loans on an annualized basis, from $11.5 million, or 3.78% of average loans on an annualized basis, for the third quarter 2010. While nonperforming loans increased slightly during the fourth quarter, the specific allowance for impaired loans decreased by $4.4 million to $5.1 million on a linked quarter basis as fewer newly identified nonperforming loans required a specific allowance.

Given the relative magnitudes of the provision for loan losses and the net charge-offs for the fourth quarter 2010 and their impact on deferred tax assets, the income tax benefit on operating losses during the fourth quarter 2010 was decreased due to realization considerations by an addition of $1.0 million in the valuation allowance on deferred tax assets.

Net Interest Income

Net interest income of $12.4 million in the fourth quarter of 2010 decreased 7% compared to $13.3 million in the third quarter of 2010 and to $13.4 million in the fourth quarter of 2009. The net interest margin decreased 25 basis points to 3.14% compared with 3.39% in the third quarter of 2010. The sequential decrease in the net interest margin resulted from the impact of a significant increase in nonaccrual loans in late third quarter and a shift in the earning asset mix of $46.6 million from average loan balances to lower yielding investments and overnight funds, partially offset by lower deposit costs. Excluding the impact of nonaccrual loans (with an average balance of approximately $92.0 million), the net interest margin for the fourth quarter would have been 31 basis points higher than 3.14%. The funding mix also shifted towards time deposits as higher cost, maturing borrowed funds were repaid, and longer term certificates of deposit were secured at historically reasonable funding costs. Compared to the fourth quarter of 2009, the net interest margin decreased 14 basis points due to the $100.2 million, or 8%, decrease in loan balances.

Net interest income for 2010 increased $613 thousand, or 1%, compared with the full year 2009 primarily due to the 19 basis point increase in net interest margin during 2010 which offset a $75.8 million decrease in earning assets. The increase in net interest margin resulted principally from a 54 basis point decline in the cost of funds during 2010.

Non-interest Income

Non-interest income increased by $1.1 million, or 37%, to $4.2 million during the fourth quarter of 2010, compared with the third quarter of 2010. The increase in non-interest income primarily resulted from a $1.1 million increase in investment securities gains. The sequential increase in the fair value of derivatives of $305 thousand was offset by a $120 thousand decrease in Small Business Investment Company (SBIC) income, a $118 thousand decrease in investment brokerage fee income, a $37 thousand decrease in mortgage banking income, and a $23 thousand decrease in service charge income.

On a year-over-year comparison, non-interest income in the fourth quarter of 2010 increased $674 thousand, or 19%, compared with the fourth quarter of 2009. The year-over-year increase was primarily due to $1.1 million increase in investment securities gains, a $298 thousand increase in mortgage banking income and a $224 thousand increase in SBIC income. These increases were partially offset by a $931 thousand decrease in the fair value of derivatives and a $54 thousand decrease in service charge income.

Non-interest Expenses

Non-interest expenses of $12.6 million during the fourth quarter of 2010 increased $1.6 million, or 15%, on a linked quarter basis. Excluding the sequential increases of $1.8 million in writedowns on foreclosed properties and $64 thousand in other expenses related to foreclosed real estate, non-interest expenses decreased by $212 thousand, or 2%. Compared to the fourth quarter of 2009, non-interest expenses decreased $970 thousand, or 7%. The decrease on a year-over-year basis was primarily due to a $282 thousand decrease in salaries and employee benefits, a $104 thousand decrease in occupancy and equipment expenses, and a $584 thousand decrease in other expenses. The decrease in salaries and employee benefits was due to reductions in staff and cost savings programs initiated in prior quarters.

Balance Sheet

As of December 31, 2010, total assets amounted to $1.7 billion, essentially flat compared to the third quarter of 2010. Total assets decreased $66.6 million, or 4%, compared to the fourth quarter of 2009. The loan portfolio decreased by $53.7 million, or 4%, sequentially, and decreased by $100.2 million, or 8%, since December 31, 2009 due to decreased loan demand resulting from the prolonged weak economic conditions. Total deposits of $1.3 billion at December 31, 2010 increased $30.8 million, or 2%, sequentially due to a $57.0 million increase in time deposits. Compared to the fourth quarter of 2009, deposits increased $34.3 million, or 3%, as time deposits increased $38.8 million, or 6%. Borrowings declined $23.6 million, or 10% compared to the third quarter of 2010, and $80.0 million, or 28%, year-over-year.

At December 31, 2010, stockholders' equity of $100.9 million represented 6.07% of total assets. Stockholders' equity decreased $8.2 million, or 7%, from $109.1 million at September 30, 2010 primarily as a result of the $2.9 million fourth quarter loss discussed above. Also contributing to the decrease in stockholders' equity was a $5.3 million decrease in other comprehensive income resulting from a decrease in the fair values of investment securities available for sale. Regulatory capital ratios remain in excess of the "well capitalized" thresholds.

Conference Call

Southern Community's executive management team will host a conference call on January 31, 2011, at 8:30 am Eastern Time to discuss the quarter-end results. The call can be accessed by dialing 1-877-719-9810 or 1-719-325-4751 and entering pass code 1234990. A replay of the conference call can be accessed until 12:30 pm on February 11, 2011, by calling 1-888-203-1112 or 1-719-457-0820 and entering pass code 1234990. You may access additional presentation materials for this conference call in the Investor Relations section of Southern Community's web site at www.smallenoughtocare.com.

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 our website at www.smallenoughtocare.com or by email at investor.relations@smallenoughtocare.com.

Forward-Looking Statements

Certain statements in this news release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective. Such forward-looking statements include but are not limited to (1) statements regarding potential future economic recovery, (2) statements with respect to our plans, objectives, expectations, intentions and other statements that are not historical facts, and (3) other statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets" and "projects," as well as similar expressions. Such statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by our Company or any person that the future events, plans or expectations contemplated by our Company will be achieved.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan losses, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (2) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third party relationships and revenues; (3) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected resulting in, among other things, a deterioration in the credit quality or a reduced demand for credit, including the resultant effect on the Company's loan portfolio and allowance for loan losses; (4) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (5) changes in deposit rates, the net interest margin and funding sources; (6) changes in the U.S. legal and regulatory framework, including the effect of recent financial reform legislation on the banking industry; and (7) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on the Company. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available at the SEC's website (http://www.sec.gov). All subsequent written and oral forward-looking statements concerning the Company or any person acting on its behalf is expressly qualified in its entirety by the cautionary statements above. We do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

Southern Community Financial Corporation
(Dollars in thousands except per share data)
(Unaudited)
                                     For the three months ended
                           Dec 31,   Sep 30,   Jun 30,   Mar 31,   Dec 31,
Income Statement            2010      2010      2010      2010      2009
                          --------  --------  --------  --------  --------

Interest Income           $ 19,164  $ 20,049  $ 20,439  $ 20,986  $ 22,092
Interest Expense             6,759     6,773     7,007     7,739     8,701
                          --------  --------  --------  --------  --------
  Net Interest Income       12,405    13,276    13,432    13,247    13,391

Provision for Loan Losses    6,500    17,000     5,500    10,000    18,000

Net Interest Income after
 Provision for Loan
 Losses                      5,905    (3,724)    7,932     3,247    (4,609)

Non-Interest Income
Service Charges and Fees
 on Deposit Accounts         1,617     1,640     1,719     1,557     1,671
Income from mortgage
 banking activities            714       751       359       358       416
Investment brokerage and
 trust fees                    306       424       509       235       292
SBIC income (loss) and
 management fees                 6       126       323       176      (218)
Gain (Loss) on Sale of
 Investment Securities       1,135        24     1,018     1,354         -
Gain (Loss) and Net Cash
 Settlement on Economic
 Hedges                        (79)     (384)      (38)      (31)      852
Other-than-temporary
 impairment                      -         -         -      (186)        -
Other Income                   501       479       502       490       513
                          --------  --------  --------  --------  --------
  Total Non-Interest
   Income                    4,200     3,060     4,392     3,953     3,526

Non-Interest Expense
Salaries and Employee
 Benefits                    5,103     5,033     5,321     5,469     5,385
Occupancy and Equipment      1,778     1,839     1,895     1,916     1,882
Goodwill Impairment              -         -         -         -         -
Expenses of Managing
 Foreclosed Assets             469       405       588       360       346
Writedowns of Foreclosed
 Assets                      1,895       123       591       483     1,604
Other                        3,363     3,584     3,938     3,615     4,361
                          --------  --------  --------  --------  --------
  Total Non-Interest
   Expense                  12,608    10,984    12,333    11,843    13,578

Income (Loss) Before
 Taxes                      (2,503)  (11,648)       (9)   (4,643)  (14,661)
Provision for Income
 Taxes                        (282)   (3,698)     (270)      (32)   (3,944)
                          --------  --------  --------  --------  --------

Net Income (Loss)         $ (2,221) $ (7,950) $    261  $ (4,611) $(10,717)
                          ========  ========  ========  ========  ========

Effective dividend on
 preferred stock               633       633       632       633       627
                          --------  --------  --------  --------  --------

Net Income (loss)
 available to common
 shareholders             $ (2,854) $ (8,583) $   (371) $ (5,244) $(11,344)
                          ========  ========  ========  ========  ========

Net Income (Loss) per
 Common Share
Basic                     $  (0.17) $  (0.51) $  (0.02) $  (0.31) $  (0.68)
Diluted                   $  (0.17) $  (0.51) $  (0.02) $  (0.31) $  (0.68)
                          ========  ========  ========  ========  ========


                             Years Ended
                           Dec 31,   Dec 31,
Income Statement            2010      2009
                          --------  --------

Interest Income           $ 80,638  $ 89,473
Interest Expense            28,278    37,726
                          --------  --------
  Net Interest Income       52,360    51,747

Provision for Loan Losses   39,000    34,000

Net Interest Income after
 Provision for Loan
 Losses                     13,360    17,747

Non-Interest Income
Service Charges and Fees
 on Deposit Accounts         6,533     6,246
Income from mortgage
 banking activities          2,182     2,104
Investment brokerage and
 trust fees                  1,474     1,159
SBIC income (loss) and
 management fees               631       148
Gain (Loss) on Sale of
 Investment Securities       3,531     1,236
Gain (Loss) and Net Cash
 Settlement on Economic
 Hedges                       (532)      234
Other-than-temporary
 impairment                   (186)        -
Other Income                 1,972     1,779
                          --------  --------
  Total Non-Interest
   Income                   15,605    12,906

Non-Interest Expense
Salaries and Employee
 Benefits                   20,926    22,502
Occupancy and Equipment      7,428     7,903
Goodwill Impairment              -    49,501
Expenses of Managing
 Foreclosed Assets           1,822       883
Writedowns of Foreclosed
 Assets                      3,092     2,493
Other                       14,500    17,216
                          --------  --------
  Total Non-Interest
   Expense                  47,768   100,498

Income (Loss) Before
 Taxes                     (18,803)  (69,845)
Provision for Income
 Taxes                      (4,282)   (6,686)
                          --------  --------

Net Income (Loss)         $(14,521) $(63,159)
                          ========  ========

Effective dividend on
 preferred stock             2,531     2,508
                          --------  --------

Net Income (loss)
 available to common
 shareholders             $(17,052) $(65,667)
                          ========  ========

Net Income (Loss) per
 Common Share
Basic                     $  (1.01) $  (3.91)
Diluted                   $  (1.01) $  (3.91)
                          ========  ========





Balance Sheet     Dec 31,     Sep 30,     Jun 30,     Mar 31,     Dec 31,
                   2010        2010        2010        2010        2009
                ----------  ----------  ----------  ----------  ----------
Assets
Cash and due
 from Banks     $   16,584  $   44,612  $   35,757  $   33,885  $   30,184
Federal Funds
 Sold and
 Overnight
 Deposits           49,587       1,646       1,358      22,352      31,269
Investment
 Securities        352,873     322,431     307,595     335,519     323,700
Federal Home
 Loan Bank
 Stock               8,750       9,092       9,794       9,794       9,794

Loans held for
 sale                5,991       7,161       6,582       2,984       3,025

Loans            1,130,076   1,183,753   1,198,565   1,208,454   1,230,275
Allowance for
 Loan Losses       (29,580)    (35,100)    (29,609)    (36,007)    (29,638)
                ----------  ----------  ----------  ----------  ----------
  Net Loans      1,100,496   1,148,653   1,168,956   1,172,447   1,200,637

Bank Premises
 and Equipment      40,550      40,718      41,535      42,058      42,630
Foreclosed
 Assets             17,314      19,385      18,781      20,285      19,634
Other Assets        69,853      69,088      69,757      67,856      67,735
                ----------  ----------  ----------  ----------  ----------

Total Assets    $1,661,998  $1,662,786  $1,660,115  $1,707,180  $1,728,608
                ==========  ==========  ==========  ==========  ==========

Liabilities and
 Stockholders'
 Equity
Deposits
  Non-Interest
   Bearing      $  110,114  $  119,249  $  123,573  $  113,292  $  118,372
  Money market,
   savings and
   NOW             582,878     599,978     623,854     620,433     579,027
  Time             655,427     598,383     545,420     573,229     616,671
                ----------  ----------  ----------  ----------  ----------
  Total
   Deposits      1,348,419   1,317,610   1,292,847   1,306,954   1,314,070

Borrowings         204,784     228,343     242,303     275,831     284,580
Accrued
 Expenses and
 Other
 Liabilities         7,854       7,739       7,981       7,513       7,961
                ----------  ----------  ----------  ----------  ----------
  Total
   Liabilities   1,561,057   1,553,692   1,543,131   1,590,298   1,606,611

Total Stockholders'
 Equity            100,941     109,094     116,984     116,882     121,997
                ----------  ----------  ----------  ----------  ----------

Total Liabilities
 and Stockholders'
 Equity         $1,661,998  $1,662,786  $1,660,115  $1,707,180  $1,728,608
                ==========  ==========  ==========  ==========  ==========

Tangible Book
 Value per
 Common Share   $     3.50  $     3.99  $     4.46  $     4.45  $     4.77
                ==========  ==========  ==========  ==========  ==========







                                For the three months ended
                  Dec 31,     Sep 30,     Jun 30,     Mar 31,     Dec 31,
                   2010        2010        2010        2010        2009
                ----------  ----------  ----------  ----------  ----------
Per Common
 Share Data:
Basic Earnings
 (loss) per
 Share          $    (0.17) $    (0.51) $    (0.02) $    (0.31) $    (0.68)
Diluted
 Earnings
 (loss) per
 Share          $    (0.17) $    (0.51) $    (0.02) $    (0.31) $    (0.68)
Tangible Book
 Value per
 Share          $     3.50  $     3.99  $     4.46  $     4.45  $     4.77

Selected
 Performance
 Ratios:
Return on
 Average Assets
 (annualized)
 ROA                 -0.52%      -1.91%       0.06%      -1.10%      -2.44%
Return on
 Average Equity
 (annualized)
 ROE                 -8.09%     -27.07%       0.90%     -15.34%     -31.92%
Return on
 Tangible
 Equity
 (annualized)        -8.15%     -27.25%       0.90%     -15.44%     -32.14%
Net Interest
 Margin               3.14%       3.39%       3.46%       3.41%       3.28%
Net Interest
 Spread               2.99%       3.20%       3.32%       3.26%       3.08%
Non-interest
 Income as a %
 of Revenue          25.29%      18.73%      24.64%      22.98%      20.84%
Non-interest
 Income as a %
 of Average
 Assets               0.99%       0.73%       1.04%       0.94%       0.80%
Non-interest
 Expense to
 Average Assets       2.97%       2.64%       2.93%       2.82%       3.09%
Efficiency
 Ratio               75.93%      67.24%      69.19%      68.85%      80.26%

Asset Quality:
Nonperforming
 Loans          $  103,648  $   98,709  $   55,477  $   50,608  $   37,732
Nonperforming
 Assets         $  120,962  $  118,094  $   74,258  $   70,893  $   57,366
Nonperforming
 Loans to Total
 Loans                9.12%       8.29%       4.60%       4.18%       3.06%
Nonperforming
 Assets to
 Total Assets         7.28%       7.10%       4.47%       4.15%       3.32%
Allowance for
 Loan Losses to
 Period-end
 Loans                2.60%       2.95%       2.46%       2.97%       2.40%
Allowance for
 Loan Losses to
 Nonperforming
 Loans (X)            0.29X       0.36X       0.53X       0.71X       0.79X
Net Charge-offs
 to Average
 Loans
 (annualized)         4.10%       3.78%       3.95%       1.20%       2.92%

Capital Ratios:
Equity to Total
 Assets               6.07%       6.56%       7.05%       6.85%       7.06%
Tangible Common
 Equity to
 Total Tangible
 Assets (1)           3.54%       4.03%       4.52%       4.39%       4.63%

Average Balances:
  Year to Date
   Interest
    Earning
    Assets      $1,562,393  $1,561,504  $1,564,646  $1,573,247  $1,638,171
   Total Assets  1,681,068   1,680,902   1,695,640   1,704,190   1,767,047
   Total Loans   1,200,609   1,213,497   1,215,776   1,222,594   1,272,087
   Equity          115,962     118,352     119,293     121,944     147,652
   Interest
    Bearing
    Liabilities  1,436,443   1,435,705   1,451,099   1,459,636   1,501,705

  Quarterly
   Interest
    Earning
    Assets      $1,565,031  $1,555,323  $1,556,140  $1,573,247  $1,621,037
   Total Assets  1,681,561   1,651,907   1,687,184   1,704,190   1,745,299
   Total Loans   1,162,365   1,209,013   1,209,033   1,222,594   1,246,223
   Equity          108,870     116,501     116,671     121,944     133,201
   Interest
    Bearing
    Liabilities  1,438,633   1,405,419   1,442,655   1,459,636   1,486,386

Weighted Average
 Number of Shares
 Outstanding
  Basic         16,812,380  16,812,625  16,814,378  16,806,292  16,789,045
  Diluted       16,812,380  16,812,625  16,814,378  16,806,292  16,789,045
Period end
 outstanding
 shares         16,812,625  16,812,625  16,812,625  16,818,125  16,787,675


                      Years Ended
                  Dec 31,     Dec 31,
                   2010        2009
                ----------  ----------
Per Common
 Share Data:
Basic Earnings
 (loss) per
 Share          $    (1.01) $    (3.91)
Diluted
 Earnings
 (loss) per
 Share          $    (1.01) $    (3.91)
Tangible Book
 Value per
 Share          $     3.50  $     4.77

Selected
 Performance
 Ratios:
Return on
 Average Assets
 (annualized)
 ROA                 -0.86%      -3.57%
Return on
 Average Equity
 (annualized)
 ROE                -12.52%     -42.78%
Return on
 Tangible
 Equity
 (annualized)       -12.61%     -46.93%
Net Interest
 Margin               3.35%       3.16%
Net Interest
 Spread               3.19%       2.95%
Non-interest
 Income as a %
 of Revenue          22.96%      19.96%
Non-interest
 Income as a %
 of Average
 Assets               0.93%       0.73%
Non-interest
 Expense to
 Average Assets       2.84%       5.69%
Efficiency
 Ratio               70.28%     155.44%

Asset Quality:
Nonperforming
 Loans          $  103,648  $   37,732
Nonperforming
 Assets         $  120,962  $   57,366
Nonperforming
 Loans to Total
 Loans                9.12%       3.07%
Nonperforming
 Assets to
 Total Assets         7.28%       3.32%
Allowance for
 Loan Losses to
 Period-end
 Loans                2.60%       2.40%
Allowance for
 Loan Losses to
 Nonperforming
 Loans (X)            0.29X       0.79X
Net Charge-offs
 to Average
 Loans
 (annualized)         3.25%       1.82%

Capital Ratios:
Equity to Total
 Assets               6.07%       7.06%
Tangible Common
 Equity to
 Total Tangible
 Assets (1)           3.54%       4.63%

Average
 Balances:
  Year to Date
   Interest
    Earning
    Assets
   Total Assets
   Total Loans
   Equity
   Interest
    Bearing
    Liabilities

  Quarterly
   Interest
    Earning
    Assets
   Total Assets
   Total Loans
   Equity
   Interest
    Bearing
    Liabilities

Weighted Average
 Number of Shares
 Outstanding
  Basic         16,811,439  16,787,938
  Diluted       16,811,439  16,787,938
Period end
 outstanding
 shares         16,812,625  16,787,675


(1) - Tangible Common Equity to Total Tangible Assets is period-ending
      common equity less intangibles, divided by period-ending assets less
      intangibles.

Management provides the above non-GAAP measure, footnote (1) to provide
readers with the impact of purchase accounting on this key financial ratio.

Contact Information

  • For additional information:
    F. Scott Bauer
    Chairman/CEO
    James Hastings
    Executive Vice President/CFO
    (336) 768-8500