EXHIBIT 99.1

PRESS RELEASE	FOR IMMEDIATE RELEASE
July 17, 2014	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 Increases in June 30, 2014 Linked Quarterly

Net Income, Loans and Assets Outstanding

 

Washington, North Carolina - First South Bancorp, Inc. (NASDAQ: FSBK) (the “Company”), the parent holding company of First South Bank (the “Bank”), reports its unaudited operating results for the quarter and six months ended June 30, 2014.

 

For the 2014 second quarter, net income increased 16.7% to $1.29 million, or $0.13 per diluted common share, from net income of $1.10 million, or $0.11 per diluted common share for the linked 2014 first quarter. The improvement in net income on a linked quarter basis reflects increases in net interest income and non-interest income, a decline in non-interest expense and is partially offset by a higher loan loss provision. Pre-tax, pre-provision operating earnings, which exclude net gains on the sale of securities and other real estate owned (OREO), were $2.24 million for the current quarter compared with $1.72 million for the quarter ended March 31, 2014, reflecting a $527,000 or 30.69% increase.

 

Net income and earnings per diluted common share for the current quarter declined by $479,000 and $0.05, respectively, when compared with $1.76 million or $0.18 per diluted common share for the quarter ended June 30, 2013. However, on a pre-tax, pre-provision operating basis, current quarter results were $82,000 higher than the $2.16 million from a year ago as the prior year results included over $567,000 in non-recurring income items.

 

Net income for the first six months of 2014 was $2.39 million, or $0.25 per diluted common share, compared to net income of $3.33 million, or $0.34 per diluted common share earned in the first six months of 2013. Earnings for the current six month period were negatively impacted by a decline in net interest income and non-interest revenue, an increase in the loan loss provisions and partially offset by a decrease in non-interest expenses. Pre-tax, pre-provision operating earnings for the current six-month period declined by $1.00 million to $3.96 million from $4.96 million a year ago attributed entirely to a $1.03 million decline in mortgage-related revenue.

 

Bruce Elder, President and CEO, commented, “Our core earnings, which exclude certain non-recurring revenue items, continues to improve despite the slowdown in mortgage origination activity. We have shown modest, yet quality, net growth in our loan and lease portfolio for four consecutive quarters. Mortgage origination activity during the first half of 2014 is down significantly from the prior year period as the volume of refinances has declined and not been replaced to an equal extent by new purchases. We continue to focus on enhancing net interest income through earning asset growth, increasing non-mortgage related sources of non-interest income and efficiently managing operating expenses to improve bottom-line results.

 

Mr. Elder commented further, “During the quarter ended June 30, 2014, we paid our second consecutive quarterly cash dividend of $0.025 per share. Our dividend payments for the six months ended June 30, 2014 represent a 20% payout ratio of diluted earnings per share. The payment of these quarterly dividends reflects the Company’s strong capital position, improved financial performance and our confidence in the future.”

 

Net Interest Income

 

Net interest income for the 2014 second quarter increased to $6.57 million from $6.43 million for the linked 2014 first quarter, but was below the $6.72 million posted for the 2013 second quarter. Net interest income for the first six months of 2014 declined to $13.00 million, from $13.85 million for the comparative 2013 six month period. The tax equivalent net interest margin declined 8 basis points to 4.16% for the 2014 second quarter, from 4.24% for the linked 2014 first quarter, and fell 18 basis points when compared to the 4.34% for the 2013 second quarter. The tax equivalent net interest margin for the first six months of 2014 declined by 16 basis points to 4.20%, from 4.36% for the comparative 2013 six month period.

 

 

The increase in net interest income from the linked 2014 first quarter is due primarily to an increase in the volume of earning assets, which was partially offset by an increase in the volume of interest-bearing liabilities and a reduction in the yield on earning assets. The decline in net interest income from the comparative prior year period is due primarily to lower yields on earning assets and partially offset by increased earning asset volume. The decline in net interest income for the comparative six month periods is due primarily to lower yields on earning assets. We anticipate our margin may experience contraction pressure as we grow our earning asset base in this historically low interest rate environment and as we take steps to protect our balance sheet from exposure to rising interest rates.

 

Asset Quality and Provisions for Loan Losses

 

Total nonperforming assets were $17.4 million, or 2.4% of total assets at June 30, 2014, compared to $15.4 million or 2.3% of total assets at December 31, 2013, and $17.2 million or 2.5% of total assets at June 30, 2013. Total loans in non-accrual status were $7.8 million at June 30, 2014, compared to $5.6 million at December 31, 2013 and $7.4 million at June 30, 2013. The second quarter of 2014 increase in non-accrual loans included a relationship of $1.7 million for which an agreement has been negotiated and is anticipated to be resolved during the third quarter. Our level of OREO declined to $8.7 million at June 30, 2014, from $9.4 million at December 31, 2013 and $9.1 million at June 30, 2013. The Bank continues to place improving asset quality metrics as a key component of its short-term and long-term performance objectives.

 

The allowance for loan and lease losses (ALLL) was $7.9 million at June 30, 2014, representing 1.69% of loans and leases held for investment, compared to $7.6 million at December 31, 2013, also 1.69% of loans and leases held for investment, and $8.6 million at June 30, 2013, or 1.98% of loans and leases held for investment. The Bank recorded $450,000 of provision for credit losses in the 2014 second quarter, $250,000 in the first quarter of 2014, and none in the comparative 2013 second quarter. During the first six months of 2014, the Bank recorded $700,000 of provision for credit losses, compared to $400,000 in the first six months of 2013. Management believes the ALLL remains adequate.

 

Non-Interest Income

 

Total non-interest income is $2.17 million for the 2014 second quarter compared with $1.92 million for the linked 2014 first quarter and $2.92 million for the 2013 second quarter.

 

Deposit fees and service charges increased to $1.14 million for the 2014 second quarter representing 52.5% of total non-interest income, from $927,000 earned in the linked 2014 first quarter and $1.08 million in the comparative 2013 second quarter, representing 48.3% and 36.9% of total non-interest income, respectively. We anticipate additional service charge revenue from deposits going forward as we focus on growing our deposit base through new product offerings and customer acquisition.

 

Total non-interest income generated from the sale and servicing of mortgage loans and loan fees is $612,000 for the 2014 second quarter representing 28.2% of total non-interest income, compared with $512,000 earned in the linked 2014 first quarter and $988,000 for the 2013 second quarter, representing 26.7% and 33.8% of total non-interest income, respectively. Net gains recognized from the sale of mortgage loans is $313,000 for the 2014 second quarter compared with $235,000 for the linked 2014 first quarter and $652,000 for the 2013 second quarter. Mortgage originations increased in the second quarter of 2014 from levels experienced during the first quarter, but remain below levels from a year ago. Revenue generated from the servicing of mortgage loans increased to $250,000 for the 2014 second quarter, from $226,000 earned in the linked 2014 first quarter and $238,000 for the comparative 2013 second quarter.

 

Net gains recognized from the sale of OREO is $34,000 for the 2014 second quarter, compared to $39,000 for the linked 2014 first quarter and $287,000 for the comparative 2013 second quarter, as the Bank continues in its efforts of disposing of these nonperforming assets.

 

There were no investment security sales during the 2014 second quarter. Net gains from the sale of investment securities were $14,000 for the linked 2014 first quarter and $281,000 for the comparative 2013 second quarter.

 

 

Included in other non-interest income is revenue from investments in Bank-owned life insurance (BOLI) of $132,000 for both the 2014 second quarter and the linked 2014 first quarter, respectively, compared to $50,000 for the 2013 second quarter.

 

Total core non-interest income, excluding net gains from the sale of OREO and investment securities, increased to $2.14 million for the 2014 second quarter, from to $1.87 million for the linked 2014 first quarter, and declined when compared to $2.35 million for the 2013 second quarter due primarily to lower gains on the sale of originated mortgage loans.

 

For the first six months of 2014, total non-interest income was $4.09 million, compared to $5.40 million for the first six months 2013. Fees and service charges on deposits remained consistent at $2.07 million for the first six months of 2014, compared to $2.10 million for the 2013 six month period. The Bank and the mortgage industry overall, has experienced a slowdown in mortgage activity due to the current economic conditions and increases in mortgage rates from their recent historic low levels. As a result, revenue generated from the sale and servicing of mortgage loans and loan fees declined by $1.03 million to $1.12 million for the first six months of 2014, from $2.15 million for 2013 six month period. Net gains recognized from the sale of OREO and investment securities declined to $73,000 and $14,000, respectively, for the first six months of 2014, from $335,000 and $281,000, respectively, for the first six months of 2013, reflecting a reduced volume of sales activity in the respective periods. BOLI earnings increased to $265,000 for the first six months of 2014, compared to $85,000 for the first six months of 2013.

 

Non-Interest Expense

 

Total non-interest expense declined to $6.46 million for the 2014 second quarter, from $6.58 million for the linked 2014 first quarter and $6.91 million for the comparative 2013 second quarter. For the first six months of 2014, total non-interest expense declined to $13.04 million, from $13.67 million reported in the first six months of 2013.

 

Compensation and benefit expenses, the largest component of non-interest expenses, remains relatively consistent at $3.82 million for the 2014 second quarter, compared to $3.80 million for the linked 2014 first quarter and $3.86 million for the 2013 second quarter. For the first six months of 2014, compensation expense declined marginally to $7.63 million, from $7.69 million reported in the first six months of 2013. The Bank will continue to manage staffing levels to ensure we meet the ongoing needs of our customers and to support our future growth.

 

FDIC insurance premiums declined to $139,000 for the 2014 second quarter, from $145,000 for the linked 2014 first quarter and from $236,000 for the comparative 2013 second quarter. For the first six months of 2014, FDIC insurance declined to $284,000, from $472,000 reported in the first six months of 2013. The decline in FDIC insurance premiums reflects a reduction in the deposit insurance assessment calculation base.

 

Data processing costs declined to $568,000 for the 2014 second quarter, from to $586,000 for the linked 2014 first quarter and $590,000 for the 2013 second quarter. For the first six months of 2014, data processing costs declined to $1.15 million, from $1.20 million reported in the first six months of 2013. Data processing costs fluctuate in conjunction with changes in the number of customer accounts and transaction activity volumes.

 

Expenses attributable to ongoing maintenance, property taxes and insurance, and valuation adjustments for OREO properties declined to $107,000 for the 2014 second quarter, from $121,000 for the linked 2014 first quarter and from $545,000 for the comparative 2013 second quarter. For the first six months of 2014, OREO expenses declined significantly to $228,000, from $717,000 for the first six months of 2013.

 

Premises and equipment, advertising, amortization of intangibles and other expense, in aggregate, were also relatively consistent during the respective three and six month reporting periods.

 

 

Balance Sheet

 

Total assets increased to $711.6 million at June 30, 2014, from $674.7 million at December 31, 2013. The increase is the result of growth in earning assets, primarily through growth in loans and leases held for investment and securities available for sale.

 

Loans and leases held for investment grew by $19.0 million during the six months ended June 30, 2014. As a result of this increase, total loans and leases held for investment increased to $470.0 million at June 30, 2014, from $451.0 million at December 31, 2013.

 

The investment securities portfolio increased to $172.5 million at June 30, 2014, from $150.8 million at December 31, 2013. During this current period, the Bank implemented a leverage strategy for the investment portfolio. This strategy adds bonds of similar quality, structure and duration to our portfolio that will enhance income generation.

 

During the six months ended June 30, 2014, the Bank had a $3.8 million net increase in its investment in BOLI, to $14.9 million at June 30, 2014, from $11.1 million at December 31, 2013. The investment returns from the BOLI will offset a portion of the cost of providing benefit plans to our employees.

 

Total deposits increased to $592.5 million at June 30, 2014, from $585.7 million at December 31, 2013. Total non-maturity deposits increased by $25.4 million to $362.9 million at June 30, 2014, from $337.5 million at December 31, 2013, and were partially offset by an $18.6 million decline in certificates of deposits. Certificates of deposit declined to $229.6 million or 38.8% of total deposits at June 30, 2014, from $248.2 million, or 42.4% of total deposits at December 31, 2013.

 

FHLB advances increased to $25.5 million at June 30, 2014, compared to none at December 31, 2013, reflecting $10.5 million of short-term advances, and $15.0 million of long-term fixed rate funding acquired in connection with a strategy targeted at hedging the potential impact of rising interest rates on future earnings. The Bank uses FHLB borrowings as a supplemental funding source for earning asset growth, for providing an effective means of managing its overall cost of funds, and to manage its exposure to interest rate risk.

 

Stockholders' equity increased to $79.2 million at June 30, 2014, from $74.9 million at December 31, 2013. This increase reflects the $2.4 million of net income earned for the six months ended June 30, 2014 and a $2.8 million increase in accumulated other comprehensive income resulting from the mark-to-market adjustment of the available-for-sale securities portfolio, net of $483,000 dividend payments, and $457,000 used to acquire 55,876 shares of the Company’s common stock pursuant to a previously announced repurchase plan.

 

The tangible equity to assets ratio was 10.53% at June 30, 2014, compared to 10.47% at December 31, 2013. There were 9,598,007 common shares outstanding at June 30, 2014, compared to 9,653,883 shares outstanding at December 31, 2013, reflecting the net effect of shares purchased through the stock repurchase program. The tangible book value per common share increased to $7.81 at June 30, 2014, from $7.32 at December 31, 2013.

 

Key Performance Ratios

 

Some of our key performance ratios are the return on average assets (ROA), the return on average equity (ROE) and the efficiency ratio. ROA is 0.73% for the 2014 second quarter, compared with 0.66% for the linked 2014 first quarter and 1.03% for the 2013 second quarter. ROE is 6.61% for the 2014 second quarter compared with 5.89% for the linked 2014 first quarter and 9.22% for the 2013 second quarter. The efficiency ratio (noninterest expenses as a percentage of net interest income plus noninterest income) improved to 72.77% for the 2014 second quarter, from 77.68% for the linked 2014 first quarter, but was higher than the 71.69% for the 2013 second quarter. The efficiency ratio measures the proportion of net operating revenues that are absorbed by overhead expenses.

 

First South Bank has been serving the citizens of eastern and central North Carolina since 1902 and offers a variety of financial products and services, including a leasing company. Securities brokerage services are made available through an affiliation with an independent broker/dealer. The Bank operates through its main office headquartered in Washington, North Carolina, and has 26 full service branch offices located throughout eastern and central North Carolina.

 

 

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 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.

 

Certain amounts in the unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2013 have been reclassified to conform with the presentation as of and for the Three and Six Months Ended June 30, 2014. The reclassifications had no effect on previously reported net income.

 

Non-GAAP Financial Measures

 

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States. First South Bancorp, Inc.’s 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 in the current period. 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. See the attached disclosures for a reconciliation of any non-GAAP measures to the most directly comparable GAAP measure.

 

(More)

(NASDAQ: FSBK)

 

 

First South Bancorp, Inc. and Subsidiary

Consolidated Statements of Financial Condition

 

		June 30,				December 31,
		2014				2013
		(unaudited)				(*)
Assets
Cash and due from banks		$	12,375,471			$	11,816,071
Interest-bearing deposits with banks			5,282,836				12,419,244
Investment securities available for sale, at fair value			171,961,212				150,300,079
Investment securities held to maturity			506,740				506,176
Loans held for sale:
Mortgage loans			4,714,812				2,992,017
Total loans held for sale			4,714,812				2,992,017
Loans and leases held for investment			470,001,128				450,960,277
Allowance for loan and lease losses			(7,925,751	)			(7,609,467	)
Net loans and leases held for investment			462,075,377				443,350,810
Premises and equipment, net			11,671,087				11,759,521
Other real estate owned			8,729,188				9,353,835
Federal Home Loan Bank stock, at cost			1,754,000				848,800
Accrued interest receivable			2,418,075				2,334,944
Goodwill			4,218,576				4,218,576
Mortgage servicing rights			1,179,897				1,219,623
Identifiable intangible assets			-				7,860
Income tax receivable			2,628,640				2,901,062
Bank-owned life insurance			14,858,921				11,094,182
Prepaid expenses and other assets			7,172,629				9,599,143
Total assets		$	711,547,461			$	674,721,943
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing demand		$	97,733,716			$	96,445,049
Interest bearing demand			179,453,432				171,548,658
Savings			85,703,122				69,542,654
Large denomination certificates of deposit			104,313,575				123,492,907
Other time			125,256,744				124,674,588
Total deposits			592,460,589				585,703,856
Borrowed money			25,500,000				-
Junior subordinated debentures			10,310,000				10,310,000
Other liabilities			4,127,134				3,849,944
Total liabilities			632,397,723				599,863,800
Common stock, $.01 par value, 25,000,000 shares authorized; 9,598,007 and 9,653,883 shares outstanding, respectively			95,980				96,539
Additional paid-in capital			35,838,115				35,809,397
Retained earnings			40,297,998				38,849,326
Accumulated other comprehensive income			2,917,645				102,881
Total stockholders' equity			79,149,738				74,858,143
Total liabilities and stockholders' equity		$	711,547,461			$	674,721,943

 

(*) Derived from audited consolidated financial statements

 

 

First South Bancorp, Inc. and Subsidiary

Consolidated Statements of Operations

Three and Six Months Ended June 30, 2014 and 2013

(unaudited)

 

		Three Months Ended								Six Months Ended
		June 30								June 30,
		2014				2013				2014				2013
Interest income:
Interest and fees on loans		$	5,969,398			$	6,107,467			$	11,898,632			$	12,660,156
Interest on investments and deposits			1,248,271				1,327,449				2,394,082				2,669,046
Total interest income			7,217,669				7,434,916				14,292,714				15,329,202
Interest expense:
Interest on deposits			526,343				625,772				1,086,052				1,296,497
Interest on borrowings			44,428				882				45,112				7,058
Interest on junior subordinated notes			81,359				89,125				161,280				176,340
Total interest expense			652,130				715,779				1,292,444				1,479,895
Net interest income			6,565,539				6,719,137				13,000,270				13,849,307
Provision for credit losses			450,000				-				700,000				400,000
Net interest income after provision for credit losses			6,115,539				6,719,137				12,300,270				13,449,307
Non-interest income:
Deposit fees and service charges			1,139,262				1,076,753				2,066,209				2,095,447
Loan fees and charges			41,425				39,109				78,557				79,618
Mortgage loan servicing fees			250,107				238,038				476,428				633,738
Gain on sale and other fees on mortgage loans			362,016				749,605				648,069				1,519,217
Gain on sale of other real estate, net			33,999				286,593				73,419				334,834
Gain on sale of investment securities			-				280,511				13,509				280,511
Other income			343,775				249,150				732,327				452,175
Total non-interest income			2,170,584				2,919,759				4,088,518				5,395,540
Non-interest expense:
Compensation and fringe benefits			3,823,779				3,857,822				7,627,777				7,691,296
Federal deposit insurance premiums			139,022				236,350				283,620				472,300
Premises and equipment			831,016				749,000				1,657,161				1,485,397
Advertising			105,579				39,116				169,012				82,062
Data processing			568,215				589,620				1,153,808				1,196,037
Amortization of intangible assets			-14,592				120,254				108,212				238,319
Other real estate owned expense			107,183				544,889				228,488				717,184
Other			898,027				772,850				1,812,950				1,784,178
Total non-interest expense			6,458,229				6,909,901				13,041,028				13,666,773
Income before income tax expense			1,827,894				2,728,995				3,347,760				5,178,074
Income tax expense			542,062				964,339				959,925				1,847,008
NET INCOME		$	1,285,832			$	1,764,656			$	2,387,835			$	3,331,066
Per share data:
Basic earnings per share		$	0.13			$	0.18			$	0.25			$	0.34
Diluted earnings per share		$	0.13			$	0.18			$	0.25			$	0.34
Dividends per share		$	0.025			$	0.00			$	0.050			$	0.00
Average basic shares outstanding			9,629,040				9,751,271				9,640,736				9,751,271
Average diluted shares outstanding			9,648,158				9,757,338				9,659,572				9,755,758

 

 

First South Bancorp, Inc.		Supplemental Financial Data (Unaudited)
		Quarter to Date																				Year to Date
		6/30/2014				3/31/2014				12/31/2013				9/30/2013				6/30/2013				6/30/2014				6/30/2013
	(dollars in thousands except per share data)
Consolidated balance sheet data:
Total assets		$	711,547			$	700,764			$	674,722			$	682,015			$	680,082			$	711,547			$	680,082
Loans held for sale:		$	4,715			$	5,649			$	2,992			$	9,183			$	13,746			$	4,715			$	13,746
Loans held for investment:
Mortgage		$	69,454			$	66,630			$	69,006			$	68,125			$	76,751			$	69,454			$	76,751
Commercial			322,775				317,711				305,160				296,218				283,936				322,775				283,936
Consumer			66,122				67,621				68,615				68,537				66,637				66,122				66,637
Leases			11,650				10,123				8,179				7,467				6,722				11,650				6,722
Total loans held for investment			470,001				462,085				450,960				440,347				434,046				470,001				434,046
Allowance for loan and lease losses			(7,926	)			(7,804	)			(7,609	)			(7,707	)			(8,604	)			(7,926	)			(8,604	)
Net loans held for investment		$	462,075			$	454,281			$	443,351			$	432,640			$	425,442			$	462,075			$	425,442
Cash & interest bearing deposits		$	17,658			$	22,703			$	24,235			$	37,617			$	23,148			$	17,658			$	23,148
Investment securities			172,468				166,072				150,806				149,337				162,336				172,468				162,336
Premises and equipment			11,671				11,561				11,760				11,759				11,879				11,671				11,879
Goodwill			4,219				4,219				4,219				4,219				4,219				4,219				4,219
Mortgage servicing rights			1,180				1,119				1,220				1,268				1,271				1,180				1,271
Deposits:
Non-interest checking		$	97,734			$	98,419			$	96,445			$	99,350			$	92,540			$	97,734			$	92,540
Interest checking			133,512				129,798				128,161				129,675				133,470				133,512				133,470
Money market			45,941				45,771				43,388				43,457				44,496				45,941				44,496
Savings			85,703				79,018				69,543				60,576				49,173				85,703				49,173
Certificates			229,571				239,394				248,167				258,573				270,149				229,571				270,149
Total deposits		$	592,461			$	592,400			$	585,704			$	591,631			$	589,828			$	592,461			$	589,828
Borrowings		$	25,500			$	17,000			$	0			$	0			$	0			$	25,500			$	0
Junior subordinated debentures			10,310				10,310				10,310				10,310				10,310				10,310				10,310
Stockholders' equity			79,150				77,166				74,858				75,028				73,888				79,150				73,888
Consolidated earnings summary:
Interest income		$	7,218			$	7,075			$	7,123			$	7,220			$	7,435			$	14,293			$	15,329
Interest expense			652				640				672				694				716				1,292				1,480
Net interest income			6,566				6,435				6,451				6,526				6,719				13,001				13,849
Provision for credit losses			450				250				685				0				0				700				400
Noninterest income			2,170				1,918				2,306				2,706				2,920				4,088				5,396
Noninterest expense			6,458				6,583				6,442				6,928				6,910				13,041				13,667
Income before taxes			1,828				1,520				1,630				2,304				2,729				3,348				5,178
Income tax expense			542				418				486				767				964				960				1,847
Net income		$	1,286			$	1,102			$	1,144			$	1,537			$	1,765			$	2,388			$	3,331
Adjusted pre-tax pre-provision operating  earnings (non-GAAP):
Income before taxes		$	1,828			$	1,520			$	1,630			$	2,304			$	2,729			$	3,348			$	5,178
Provision for credit losses			450				250				685				0				0				700				400
Pre-tax pre-provision net income			2,278				1,770				2,315				2,304				2,729				4,048				5,578
Securities gains			0				14				0				268				281				14				281
OREO gains (net)			34				39				206				68				287				73				335
Adjusted pre-tax pre-provision operating earnings (non-GAAP)		$	2,244			$	1,717			$	2,109			$	1,968			$	2,161			$	3,961			$	4,962
Per Share Data:
Basic earnings per share		$	0.13			$	0.11			$	0.12			$	0.16			$	0.18			$	0.25			$	0.34
Diluted earnings per share		$	0.13			$	0.11			$	0.12			$	0.16			$	0.18			$	0.25			$	0.34
Dividends per share		$	0.025			$	0.025			$	0.000			$	0.000			$	0.000			$	0.050			$	0.000
Book value per share		$	8.25			$	7.99			$	7.75			$	7.69			$	7.58			$	8.25			$	7.58
Tangible book value per share		$	7.81			$	7.56			$	7.32			$	7.26			$	7.14			$	7.81			$	7.14
Average basic shares			9,629,040				9,652,804				9,727,175				9,751,271				9,751,271				9,640,736				9,751,271
Average diluted shares			9,648,158				9,671,557				9,737,495				9,757,881				9,757,338				9,659,572				9,755,758

 

 

First South Bancorp, Inc.

Supplemental Financial Data (Unaudited)

 

		Quarter to Date																				Year to Date
		6/30/2014				3/31/2014				12/31/2013				9/30/2013				6/30/2013				6/30/2014				6/30/2013
		(dollars in thousands except per share data)
Performance ratios (tax equivalent):
Yield on average earning assets			4.56	%			4.66	%			4.63	%			4.69	%			4.80	%			4.61	%			4.82	%
Cost of interest bearing liabilities			0.49	%			0.52	%			0.53	%			0.54	%			0.56	%			0.50	%			0.57	%
Net interest spread			4.07	%			4.14	%			4.10	%			4.15	%			4.24	%			4.11	%			4.25	%
Net interest margin			4.16	%			4.24	%			4.20	%			4.25	%			4.34	%			4.20	%			4.36	%
Avg earning assets to total avg assets			91.31	%			91.76	%			91.84	%			91.66	%			92.40	%			91.53	%			92.29	%
Return on average assets (annualized)			0.73	%			0.66	%			0.67	%			0.90	%			1.03	%			0.70	%			0.97	%
Return on average equity (annualized)			6.61	%			5.89	%			5.96	%			8.18	%			9.22	%			6.27	%			8.62	%
Efficiency ratio			72.77	%			77.68	%			73.56	%			75.05	%			71.69	%			75.17	%			71.01	%
Average assets		$	705,393			$	679,608			$	681,690			$	680,741			$	688,897			$	692,500			$	695,353
Average earning assets		$	644,074			$	623,617			$	626,050			$	623,953			$	636,511			$	633,845			$	641,757
Average equity		$	78,724			$	76,682			$	76,231			$	74,569			$	76,754			$	77,703			$	77,959
Equity/Assets			11.12	%			11.01	%			11.09	%			11.00	%			10.86	%			11.12	%			10.86	%
Tangible Equity/Assets			10.53	%			10.41	%			10.47	%			10.38	%			10.24	%			10.53	%			10.24	%
Asset quality data and ratios:
Nonaccrual loans:
Non-TDR nonaccrual loans
Earning		$	312			$	463			$	683			$	1,459			$	1,429			$	312			$	1,429
Non-Earning			2,853				1,248				1,331				2,649				4,130				2,853				4,130
Total Non-TDR nonaccrual loans		$	3,165			$	1,711			$	2,014			$	4,108			$	5,559			$	3,165			$	5,559
TDR nonaccrual loans
Past Due TDRs		$	3,303			$	2,188			$	1,821			$	1,336			$	990			$	3,303			$	990
Current TDRs			1,326				1,583				1,739				1,677				818				1,326				818
Total TDR nonaccrual loans		$	4,629			$	3,771			$	3,560			$	3,013			$	1,808			$	4,629			$	1,808
Total nonaccrual loans		$	7,794			$	5,482			$	5,574			$	7,121			$	7,367			$	7,794			$	7,367
Loans >90 days past due, still accruing			896				61				420				544				762				896				762
Other real estate owned			8,729				9,013				9,354				8,996				9,069				8,729				9,069
Total nonperforming assets		$	17,419			$	14,556			$	15,348			$	16,661			$	17,198			$	17,419			$	17,198
Allowance for loan and lease losses to loans held for investment			1.69	%			1.69	%			1.69	%			1.75	%			1.98	%			1.69	%			1.98	%
Net charge-offs (recoveries)		$	328			$	56			$	782			$	898			$	(37	)		$	384			$	(344	)
Net charge-offs (recoveries) to total loans			0.07	%			0.01	%			0.17	%			0.20	%			(0.01	)%			0.08	%			(0.08	)%
Total nonaccrual loans to total loans			1.64	%			1.17	%			1.23	%			1.58	%			1.65	%			1.64	%			1.65	%
Total nonperforming assets to total assets			2.45	%			2.08	%			2.27	%			2.44	%			2.53	%			2.45	%			2.53	%
Total loans to total deposits			80.13	%			78.96	%			77.51	%			75.98	%			75.92	%			80.13	%			75.92	%
Total loans to total assets			66.72	%			66.75	%			67.28	%			65.91	%			65.84	%			66.72	%			65.84	%
Loans serviced for others		$	315,732			$	318,670			$	325,441			$	325,833			$	319,124			$	315,732			$	319,124