Market Overview

First South Bancorp, Inc. Announces Bulk Asset Disposition Plan and Reports December 31, 2012 Quarterly and Year End Operating Results

WASHINGTON, N.C., Feb. 21, 2013 /PRNewswire/ -- First South Bancorp, Inc. (NASDAQ: FSBK) (the "Company"), the parent holding company of First South Bank (the "Bank"), announces a two-tiered plan (the "Plan") to significantly reduce its level of problem assets through the bulk disposition of troubled loans and other real estate owned ("OREO").  In addition, the Company is announcing its operating results for the quarter and year ended December 31, 2012. 

The Plan is segregated into two distinct transactions.  First, on February 15, 2013, the Bank executed an agreement to sell problem loans with a book value of $46.5 million to Emerald Portfolio, LLC ("Emerald"), resulting in a $17.6 million pre-tax charge to 2012 earnings.  Second, the Bank has received a non-binding indication of interest from Emerald to purchase the majority of its OREO assets, resulting in a $5.2 million pre-tax valuation charge to earnings. 

The Bank anticipates completing the first tier of its Plan with the sale of its problem loan portfolio to Emerald and receiving proceeds of $25.1 million on February 22, 2013.  With respect to the second tier of the Plan, the Bank continues its negotiations for the sale of its OREO assets.  Our next milestone in this tier is the end of February 2013, when negotiations with Emerald are expected to be completed.

These events occurred after December 31, 2012, and therefore the effect of these transactions on the liquidation value of the assets impacted is being reflected in our year-end financial statements as a subsequent event. 

For the quarter ended December 31, 2012, our net loss totaled ($12.9) million, or ($1.32) per diluted common share, compared to the $966,000 of net income, or $0.10 per diluted common share for prior linked quarter; and $441,000, or $0.05 per diluted common share, for the comparative 2011 fourth quarter.  The net loss for the full year of 2012 totaled ($11.0) million, or ($1.13) per diluted share, compared to net income of $1.6 million or $0.16 per diluted common share earned for the year ended December 31, 2011.

Excluding the effects of the Plan, net income for the quarter ended December 31, 2012, would have totaled $1.1 million, or $0.12 per diluted common share.  Net income for the year ended December 31, 2012, would have been $3.0 million, or $0.31 per diluted common share.

Summary of Bulk Asset Disposition Plan and Impact on December 31, 2012:

  • Two-tiered Plan includes:
    1st Tier - disposition of problem loans with a book value $46.5 million
    2nd Tier - sale of the majority of our OREO portfolio
  • The combined loss associated with the charge-off and write-down of these troubled assets to their liquidation value, net of tax, totaled ($14.0) million, or ($1.44) per diluted share on an annual basis for 2012.
  • The Company incurred charge-offs of $22.5 million in association with the Plan's problem loans effective December 31, 2012.  While reserves on this pool of loans had been set aside in previous periods, the Bank provided an additional $17.2 million to our allowance for loan and lease losses (the "ALLL") in association with the problem loan disposition plan.
  • The Company took an additional $5.2 million valuation write-down on its' OREO assets associated with the Plan, effective December 31, 2012.
  • Our level of nonperforming assets falls from $52.8 million or 7.36% of total assets as of September 31, 2012, to $32.1 million or 4.54% of total assets as of December 31, 2012.  Assuming that our Plan is executed completely, our pro forma level of nonperforming assets to total assets falls to 0.90%.
  • Our ALLL at December 31, 2012, relative to loans held for investment, adjusting for the loan charge-offs, is 1.78% and covers our non-accrual loans that are held for investment 1.77 times, a favorable change from the 0.43 coverage at the end of the third quarter of 2012.
  • The Company will be able to execute this Plan without the need to raise additional capital.
  • Despite this loss incurred, the capital levels of the Company and the Bank remain very strong and in excess of regulatory minimums to be considered 'well capitalized'.

The table below reflects the impact of the bulk asset disposition on our asset quality metrics.  The pro forma column reflects the effects on year-end 2012, assuming the Plan has been fully executed.

($ in thousands)

Asset Quality Metrics

December 31, 2011

September 30, 2012

December 31, 2012

Pro forma
December 31, 2012

Nonperforming  Assets

$60,030

$52,804

$32,123

$6,350

Nonperforming Assets
/ Total Assets

8.04%

7.36%

4.54%

0.90%

Classified
Assets

$86,150

$80,923

$51,624

$19,762

Classified Assets
/ Total Assets

11.53%

11.28%

7.29%

2.79%

Non-accrual Loans
Held for Investment

$43,025

$34,801

$4,435

$4,435

ALLL / Non-accrual
Loans Held for Investment (x's)

0.35x

0.43x

1.77x

1.77x

Bruce Elder, President and CEO, commented, "We realize that the loss generated from this asset sale represents a significant use of capital.  After careful consideration of the financial ramifications, management and the Board of Directors concluded that the benefits derived from the improved asset quality position achieved from an accelerated disposition plan, outweighed the initial impacts of the transaction on our institution.  A portion of these losses embedded in the Company's balance sheet would have been realized in future periods as these problem assets were subsequently resolved.  Due to our strong capital levels prior to this transaction, First South Bank will be able to execute the disposition plan of these high-risk assets without a simultaneous capital raise.  After the bulk asset sales are completed, the Bank will remain very well capitalized.  In addition, with the uncertainty associated with a high level of adversely classified assets having been removed, management can shift its core focus from credit resolution and asset disposition to franchise growth and the pursuit of future business opportunities.  We believe this shift in focus, coupled with our solid core earnings potential, will lead to greater shareholder value."

Net Interest Income

Net interest income totaled $7.2 million for the 2012 fourth quarter, relatively unchanged when compared to the third quarter of 2012, and below the $7.8 million results for the comparative 2011 fourth quarter.  The net interest margin expanded to 4.44% for the 2012 fourth quarter from the 4.36% posted for third quarter of 2012, but declined in comparison to 4.50% for the fourth quarter of 2011.  Net interest income for the year ended December 31, 2012, totaled $29.5 million, a $2.2 million decline from the same twelve month period one year ago.  The net interest margin for 2012 compressed eleven basis points to 4.42% when compared to the 2011 results, due to reductions in the level and yield on earning assets, which was somewhat offset by a reduction in the Company's cost of funds due to the maturity of longer-term, higher priced CD's.  While a portion of these funds left the Company, the residual renewed into lower priced CD's or migrated to non-maturity deposit products within the Bank.  Cost savings achieved on the funding side helped compensate for the reduction in earning asset yields. 

Asset Quality and Provisions for Loan Losses

Total nonperforming assets, including loans on non-accrual status and OREO declined to $32.1 million or 4.54% of total assets at December 31, 2012, from $52.8 million or 7.36% of total assets at September 30, 2012, and $60.0 million or 8.04% of total assets at December 31, 2011.  Loans on non-accrual status declined to $19.2 million at December 31, 2012, from $34.8 million at September 30, 2012, and $43.0 million at December 31, 2011.  Our level of OREO dropped to $12.9 million at December 31, 2012, from $18.0 million at September 30, 2012, and $17.0 million at December 31, 2011,

The Bank recorded a $18.7 million provision for credit losses in the fourth quarter of 2012, including $17.2 million associated with our disposition of problem loans, compared to $2.0 million in the 2012 third quarter, and $2.6 million in the comparative 2011 fourth quarter.  Provisions for the twelve month period ended December 31, 2012, and 2011, were $23.3 million and $10.8 million, respectively.  Credit loss provisions are necessary to maintain the ALLL at a level that management believes to be adequate.  The ALLL of $7.9 million at December 31, 2012, represented 1.78% of loans held for investment, compared to $15.0 million at September 30, 2012, or 3.06% of loans held for investment, and $15.2 million at December 31, 2011, or 2.85% of loans held for investment.  Net charge offs were $25.8 million in the 2012 fourth quarter, including $22.5 million of charge-offs associated with the first tier of our Plan, compared to $959,000 for the third quarter of 2012, and $5.8 million for the comparative 2011 fourth quarter.  For the year ended December 31, 2012, net charge offs were $30.6 million or 6.39% of total loans, up from $14.4 million of net charge offs realized during the year ended December 31, 2011.

Non-Interest Income

Total non-interest income was $2.7 million for both the 2012 fourth quarter and the linked 2012 third quarter, and $2.6 million for the comparative 2011 fourth quarter.  Fees, service charges, and loan servicing fees increased to $1.8 million for the 2012 fourth quarter, from $1.6 million for the linked 2012 third quarter and $1.7 million for the comparative 2011 fourth quarter.  Non-interest income for the twelve month period ended December 31, 2012, totaled $11.3 million, a $1.8 million increase over the annual results for 2011 due primarily to increased gains on the sales mortgage loans and investment securities.

Net gains from mortgage loan sales increased to $973,000 for the 2012 fourth quarter, from $858,000 for the linked 2012 third quarter, and $467,000 for the comparative 2011 fourth quarter.  No gains from investment securities sales were recorded during the 2012 fourth quarter, compared to $28,000 for the third quarter of 2012, and $262,000 for the fourth quarter of 2011.  For the year ended December 31, 2012, the Company realized $2.4 million and $1.5 million of gains on the sale of mortgage loans and investment securities, respectively.  This is an increase from the $864,000 and $519,000 of gains on the sale of mortgage loans and investment securities, respectively, realized during 2011.

Excluding the bulk asset transaction, the Bank recognized net losses of $396,000 on the sale of OREO properties during the fourth quarter of 2012, compared to $56,000 in the previous quarter, and $24,000 in the comparative 2011 fourth quarter.  For the full year of 2012, the Bank realized $529,000 of net losses on the sale of OREO compared to $68,000 of losses on OREO properties in 2011.

Non-Interest Expense

Total non-interest expense for the fourth quarter of 2012 was $12.3 million, including $5.2 million of expenses incurred due to the valuation of Plan OREO assets, compared to $6.4 million for the third quarter of 2012, and $7.2 million for the comparative 2011 fourth quarter.  Non-interest expense for the full year of 2012 totaled $35.6 million, an increase of $7.6 million over 2011 results.  This increase was due primarily to higher costs and valuation adjustments associated with our OREO properties to adjust them to liquidation value, as well as a non-recurring accrual of retirement benefits. 

Expenses attributable to valuation adjustments, ongoing maintenance and property taxes for OREO properties were $5.9 million for the 2012 fourth quarter, including $5.2 million of valuations absorbed in association with the Plan; compared to $316,000 for the linked 2012 third quarter, and $977,000 for the comparative 2011 fourth quarter.  OREO expenses for the full year of 2012 totaled $8.8 million, an increase from the $2.0 million of similar costs realized in 2011.

Compensation and benefits, the largest component of non-interest expenses, remained consistent at $3.6 million for the 2012 fourth quarter, the linked 2012 third quarter and the comparative 2011 fourth quarter, respectively.  For the year ended December 31, 2012, compensation and benefit expense totaled $15.7 million, a 5.27% increase over the $14.9 million of expenses incurred during 2011.  This increase results primarily from the accrual of a non-recurring retirement benefit.

Balance Sheet

Total assets were $707.7 million at December 31, 2012, compared to $717.2 million at September 30, 2012, and $746.9 million at December 31, 2011.  As our level of loans and leases outstanding decreased during the course of 2012, we were able to manage our level of deposits, while maintaining a strong level of liquidity.

Total loans and leases receivable decreased to $486.6 million at December 31, 2012, from $491.5 million at September 30, 2012.  This decrease was attributable to the impact of the Plan net of an increase in our level of Mortgage Loans Held for Sale.  On a year-over-year comparison, total loans declined $53.8 million, or 10.0%, from $540.4 million at December 31, 2011.

Investment securities totaled $164.8 million at December 31, 2012, compared $172.7 million at September 30, 2012, and $138.5 million at December 31, 2011, reflecting purchases, sales, principal repayments and securitizations of certain mortgage loans.  The year-over-year growth in the level of investments is due primarily to a strategy of diversifying the portfolio mix through the purchase of tax-exempt municipal securities.  At December 31, 2012, the balance of the municipal securities portfolio was $24.6 million.

Cash and overnight investments declined to $12.4 million at December 31, 2012, from $17.5 million at September 30, 2012 and $32.8 million at December 31, 2011, reflecting net changes in the Bank's cash flow and liquidity position, used primarily to fund growth in the investment portfolio and the net decline in deposits.   

Total deposits decreased to $600.9 million at December 31, 2012, from $609.5 million at September 30, 2012, and $642.6 million at December 31, 2011.  Core checking and savings accounts increased to $305.2 million at December 31, 2012, from $298.9 million at September 30, 2012 and $272.7 million at December 31, 2011, while certificates of deposits declined to $295.7 million, or 49.2% of total deposits, at December 31, 2012, from $369.9 million, or 57.6% of total deposits, at December 31, 2011. 

Borrowed money as of December 31, 2012, comprised entirely of short-term FHLB advances, increased to $16.5 million from $2.0 million at September 30, 2012, and $2.1 million at December 31, 2011.  These borrowings were utilized to fund growth in our Mortgage Loans Held for Sale portfolio during fourth quarter of 2012. 

Stockholders' equity decreased to $74.7 million at December 31, 2012, from $88.1 million at September 30, 2012 and $84.1 million at December 31, 2011, reflecting net loss incurred due to execution of our bulk asset disposition plan and changes in accumulated other comprehensive income.  The tangible equity to assets ratio decreased to 9.95% at December 31, 2012, from 11.69% at September 30, 2012 and 10.69% at December 31, 2011.  There were 9,751,271 common shares outstanding at December 31, 2012, September 30, 2012 and December 31, 2011, respectively.  Tangible book value per common share declined to $7.09 at December 31, 2012, from $8.46 at September 30, 2012 and $8.06 at December 31, 2011.

Key Performance Ratios

Return on average assets (ROA) and return on average equity (ROE) ratios were negatively impacted by the execution of the Plan.  The ROA declined to (7.22%) for the 2012 fourth quarter, from 0.53% for the linked 2012 third quarter, and 0.23% for the 2011 fourth quarter.  The ROE fell to (60.76%) for the 2012 fourth quarter, compared to 4.42% for the linked 2012 third quarter, and 2.12% for the comparative 2011 fourth quarter.  For the twelve month period ended December 31, 2012, the Company posted an ROA and ROE of (1.50%) and (12.87%), respectively.  For 2011, the Company achieved an ROA and ROE of 0.20% and 1.91%, respectively.

Excluding the effects of the Plan, ROA and ROE for the quarter ended December 31, 2012, would have been 0.63% and 5.13%, respectively.  The ROA and ROE for the full year ended December 31, 2012, would have been 0.41% and 3.52%, respectively.

Raymond James and Associates acted as exclusive financial advisor to the Company in connection with the execution of the bulk asset disposition plan.

First South Bancorp, Inc. may be accessed on its website at www.firstsouthnc.com.  The Company's common stock symbol as traded on the NASDAQ Global Select Market is "FSBK".

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.  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 central and eastern North Carolina.

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.

                                                                         (More)

(NASDAQ: FSBK)

For more information contact:
Bruce Elder (CEO) (252)-940-4936
Scott McLean (CFO) (252)-940-5016
Website: www.firstsouthnc.com   








First South Bancorp, Inc. and Subsidiary




Consolidated Statements of Financial Condition














December 31,



December 31,




2012



2011

Assets



(unaudited)



(*)








Cash and due from banks


$

8,983,819


$

14,298,146

Interest-earning deposits with banks



3,382,570



18,476,173

Investment securities available for sale, at fair value



164,838,012



138,515,210

Loans held for sale:







   Mortgage loans



20,287,343



6,435,983

   Other loans



24,438,107



-

           Total loans held for sale



44,725,450



6,435,983








Loans and leases held for investment



441,847,019



533,960,226

   Allowance for loan and lease losses



(7,860,195)



(15,194,014)

           Net loans and leases held for investment



433,986,824



518,766,212








Premises and equipment, net



12,233,153



11,679,430

Other real estate owned



12,892,519



17,004,874

Federal Home Loan Bank stock, at cost



1,859,200



1,886,900

Accrued interest receivable



2,408,979



2,210,314

Goodwill



4,218,576



4,218,576

Mortgage servicing rights



1,261,355



1,237,161

Identifiable intangible assets



39,300



70,740

Income tax receivable



10,785,272



2,194,677

Prepaid expenses and other assets



6,098,423



9,946,459








          Total assets


$

707,713,452


$

746,940,855








Liabilities and Stockholders' Equity














Deposits:







  Demand


$

274,662,867


$

243,719,526

  Savings



30,570,259



28,988,522

  Large denomination certificates of deposit



148,838,963



195,429,182

  Other time



146,828,942



174,479,477

          Total deposits



600,901,031



642,616,707

Borrowed money



16,500,000



2,096,189

Junior subordinated debentures



10,310,000



10,310,000

Other liabilities



5,349,368



7,804,687

          Total liabilities



633,060,399



662,827,583








Common stock, $.01 par value, 25,000,000 shares authorized;







   11,254,222 shares issued; 9,751,271 shares outstanding



97,513



97,513

Additional paid-in capital



35,811,804



35,815,098

Retained earnings, substantially restricted



65,532,960



76,510,081

Treasury stock, at cost



(31,967,269)



(31,967,269)

Accumulated other comprehensive income



5,178,045



3,657,849

           Total stockholders' equity



74,653,053



84,113,272








           Total liabilities and stockholders' equity


$

707,713,452


$

746,940,855








(*) Derived from audited consolidated financial statements






















  
















First South Bancorp, Inc. and Subsidiary







Consolidated Statements of Operations







(unaudited)


















Three Months Ended



Year Ended






December 31,



December 31,






2012



2011



2012



2011

















Interest income:














  Interest and fees on loans


$

6,687,582


$

8,110,354


$

28,704,454


$

34,422,548


  Interest and dividends on investments and deposits



1,393,791



1,252,652



5,453,520



4,880,827


           Total interest income



8,081,373



9,363,006



34,157,974



39,303,375

















Interest expense:














  Interest on deposits



752,645



1,520,771



4,325,497



7,189,999


  Interest on borrowings



6,502



1,485



10,997



31,965


  Interest on junior subordinated notes



88,773



85,968



363,754



334,219


           Total interest expense



847,920



1,608,224



4,700,248



7,556,183


Net interest income



7,233,453



7,754,782



29,457,726



31,747,192


Provision for credit losses



18,674,682



2,639,461



23,251,647



10,812,754


           Net interest income (loss) after provision for credit losses


(11,441,229)



5,115,321



6,206,079



20,934,438

















Non-interest income:














  Fees and service charges



1,593,383



1,512,785



5,974,134



6,067,185


  Loan servicing fees



225,091



191,472



832,443



781,881


  Loss on sale of other real estate, net



(396,324)



(23,947)



(528,521)



(68,365)


  Gain on sale of mortgage loans 



973,257



467,287



2,400,614



864,233


  Gain on sale of investment securities



-



262,220



1,546,883



518,614


  Other  income



308,076



238,403



1,027,078



1,256,477


           Total non-interest income



2,703,483



2,648,220



11,252,631



9,420,025

















Non-interest expense:














  Compensation and fringe benefits



3,554,386



3,557,057



15,733,835



14,946,438


  Federal deposit insurance premiums



241,592



260,914



987,139



1,233,377


  Premises and equipment



516,581



430,140



2,004,524



1,703,121


  Advertising



54,742



50,066



211,524



181,121


  Payroll and other taxes



303,034



300,320



1,398,906



1,392,526


  Data processing



320,236



635,901



1,878,517



2,558,390


  Amortization of intangible assets



115,688



100,660



456,576



542,698


  Other real estate owned expense



5,882,371



977,139



8,783,427



2,040,741


  Other



1,322,011



868,171



4,118,682



3,354,936


           Total non-interest expense



12,310,641



7,180,368



35,573,130



27,953,348

















Income (loss) before income tax expense



(21,048,387)



583,173



(18,114,420)



2,401,115


Income tax expense (benefit)



(8,162,654)



142,007



(7,137,299)



847,806

















NET INCOME (LOSS)


$

(12,885,733)


$

441,166


$

(10,977,121)


$

1,553,309
































Per share data: 














Basic earnings (loss) per share


$

(1.32)


$

0.05


$

(1.13)


$

0.16


Diluted earnings (loss) per share


$

(1.32)


$

0.05


$

(1.13)


$

0.16


Average basic shares outstanding



9,751,271



9,751,271



9,751,271



9,751,271


Average diluted shares outstanding



9,751,271



9,751,271



9,751,271



9,751,271

















 

First South Bancorp, Inc.

Supplemental Financial Data (Unaudited)
























Quarterly


Year to Date






12/31/2012


9/30/2012


6/30/2012


3/31/2012


12/31/2011


12/31/2012


12/31/2011





           (dollars in thousands except per share data)





Consolidated balance sheet data:
















Total assets


$

707,713

$

717,162

$

741,965

$

750,350

$

746,941

$

707,713

$

746,941



















Loans receivable (net):
















Mortgage


$

96,308

$

72,659

$

73,455

$

80,263

$

66,249

$

96,308

$

66,249

Commercial



309,441


332,438


341,385


352,459


378,823


309,441


378,823

Consumer



67,501


65,444


70,168


71,270


72,821


67,501


72,821

Leases



5,462


5,936


6,453


7,393


7,309


5,462


7,309


Total loans (net)


$

478,712

$

476,477

$

491,461

$

511,385

$

525,202

$

478,712

$

525,202



















Cash and investments


$

12,366

$

17,511

$

34,759

$

64,662

$

32,774

$

12,366

$

32,774

Investment securities



164,838


172,715


164,977


123,036


138,515


164,838


138,515

Premises and equipment



12,233


12,428


12,621


12,985


11,679


12,233


11,679

Goodwill



4,219


4,219


4,219


4,219


4,219


4,219


4,219

Mortgage servicing rights



1,261


1,340


1,333


1,268


1,237


1,261


1,237



















Deposits:
















Savings


$

30,570

$

30,611

$

30,347

$

31,068

$

28,988

$

30,570

$

28,988

Checking



274,663


268,244


261,295


262,500


243,720


274,663


243,720

Certificates



295,668


310,646


342,988


354,780


369,909


295,668


369,909


Total deposits


$

600,901

$

609,501

$

634,630

$

648,348

$

642,617

$

600,901

$

642,617



















Borrowings


$

16,500

$

1,974

$

1,758

$

1,681

$

2,096

$

16,500

$

2,096

Junior subordinated debentures



10,310


10,310


10,310


10,310


10,310


10,310


10,310

Stockholders' equity



74,653


88,122


86,168


84,343


84,113


74,653


84,113



















Consolidated earnings summary:
















Interest income


$

8,081

$

8,345

$

8,818

$

8,914

$

9,363

$

34,158

$

39,303

Interest expense



848


1,096


1,342


1,415


1,608


4,700


7,556

Net interest income



7,233


7,249


7,476


7,499


7,755


29,458


31,747

Provision for credit losses



18,675


1,962


775


1,840


2,640


23,252


10,813

Noninterest income



2,703


2,655


2,653


3,243


2,648


11,253


9,420

Noninterest expense



12,310


6,424


8,601


8,239


7,180


35,573


27,953

Income tax expense 



(8,163)


552


272


201


142


(7,137)


848

Net income 


$

(12,886)

$

966

$

481

$

462

$

441

$

(10,977)

$

1,553



















Per Share Data: 
















Basic earnings per share


$

(1.32)

$

0.10

$

0.05

$

0.05

$

0.05

$

(1.13)

$

0.16

Diluted earnings per share


$

(1.32)

$

0.10

$

0.05

$

0.05

$

0.05

$

(1.13)

$

0.16

Book value per share


$

7.66

$

9.04

$

8.84

$

8.65

$

8.63

$

7.66

$

8.63



















Average basic shares



9,751,271


9,751,271


9,751,271


9,751,271


9,751,271


9,751,271


9,751,271

Average diluted shares



9,751,271


9,754,794


9,751,271


9,751,271


9,751,271


9,751,271


9,751,271























































First South Bancorp, Inc.

Supplemental Financial Data (Unaudited)









Quarterly


Year to Date






12/31/2012


9/30/2012


6/30/2012


3/31/2012


12/31/2011


12/31/2012


12/31/2011





           (dollars in thousands except per share data)

Performance ratios:
















Yield on average earning assets



4.96%


5.02%


5.22%


5.26%


5.44%


5.12%


5.61%

Cost of funds



0.54%


0.69%


0.83%


0.87%


0.96%


0.73%


1.09%

Net interest spread



4.42%


4.33%


4.39%


4.39%


4.48%


4.39%


4.52%

Net interest margin/average earning assets



4.44%


4.36%


4.42%


4.42%


4.51%


4.42%


4.53%

Earning assets to total assets



91.50%


91.24%


90.94%


90.90%


91.09%


91.50%


91.24%



















Return on average assets (annualized)



-7.22%


0.53%


0.26%


0.25%


0.23%


-1.50%


0.20%

Return on average equity (annualized)



-60.76%


4.42%


2.26%


2.18%


2.12%


-12.87%


1.91%

Efficiency ratio 



123.81%


64.78%


84.84%


76.63%


68.95%


87.30%


67.83%



















Average assets


$

714,377

$

730,204

$

742,690

$

744,395

$

757,905

$

732,091

$

779,369

Average earning assets


$

652,106

$

664,609

$

676,041

$

678,043

$

688,457

$

667,079

$

700,181

Average equity


$

84,830

$

87,437

$

85,018

$

84,582

$

82,708

$

85,295

$

81,458



















Equity/Assets



10.55%


12.29%


11.61%


11.24%


11.26%


10.55%


11.26%

Tangible Equity/Assets



9.95%


11.69%


11.04%


10.67%


10.69%


9.95%


10.69%



















Asset quality data and ratios:
















Loans on nonaccrual status:

















Nonaccrual loans 

















  Earning


$

1,950

$

1,984

$

1,494

$

2,255

$

10,601

$

1,950

$

10,601


  Non-Earning



6,093


12,319


11,151


8,757


11,007


6,093


11,007


     Total Non-Accrual Loans


$

8,043

$

14,303

$

12,645

$

11,012

$

21,608

$

8,043

$

21,608


Nonaccrual restructured loans

















   Past Due TDRs


$

4,029

$

7,649

$

9,100

$

6,029

$

9,170

$

4,029

$

9,170


   Current TDRs



7,158


12,849


16,065


20,456


12,247


7,158


12,247


      Total TDRs


$

11,187

$

20,498

$

25,165

$

26,485

$

21,417

$

11,187

$

21,417

Total loans on nonaccrual status


$

19,230

$

34,801

$

37,810

$

37,497

$

43,025

$

19,230

$

43,025

Other real estate owned 



12,893


18,003


17,845


17,324


17,005


12,893


17,005

Total nonperforming assets


$

32,123

$

52,804

$

55,655

$

54,821

$

60,030

$

32,123

$

60,030



















Allowance for credit losses


$

8,088

$

15,251

$

14,268

$

14,637

$

15,448

$

8,088

$

15,448

Allowance for credit losses to loans



1.82%


3.10%


2.82%


2.78%


2.85%


1.82%


2.85%



















Net charge-offs 


$

25,822

$

959

$

1,167

$

2,638

$

5,752

$

30,585

$

14,449

Net charge-offs to loans 



5.39%


0.20%


0.24%


0.52%


1.10%


6.39%


2.75%

Nonaccrual loans to loans



4.02%


7.30%


7.69%


7.33%


8.19%


4.02%


8.19%

Nonperforming assets to assets



4.54%


7.36%


7.50%


7.31%


8.06%


4.54%


8.06%

Loans to deposits



81.15%


80.80%


79.80%


81.25%


84.26%


81.15%


84.26%

Loans to assets



68.90%


68.67%


68.26%


70.21%


72.66%


68.90%


72.66%

Loans serviced for others


$

313,823

$

328,976

$

326,021

$

316,297

$

319,363

$

313,823

$

319,363



















 

SOURCE First South Bancorp, Inc.

 

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