Waccamaw Bankshares, Inc. Announces Financial Results for the Second Quarter of 2010

WHITEVILLE, N.C., July 30 /PRNewswire-FirstCall/ -- "While we were disappointed with the results for the quarter, we are encouraged by the improved financial performance being reported in 2010. Our earnings continue to be reduced by our provision for loan losses but the real estate markets consistently reflect signs of stabilization of real estate values," commented, Jim Graham, President and CEO of Waccamaw Bankshares, Inc.

Second Quarter 2010 Results. For the three months ended June 30, 2010, we reported a net loss to common shareholders of $(127,753), or $(.02) per diluted common share, compared to a net loss of $(2,119,491), or $(.38) per diluted share for the same period in 2009, an increase of $1,991,738 in net income. The Company had a slight decrease in net interest income in the second quarter of 2010 as compared to the second quarter of 2009. A decrease in loan market interest rates, coupled with a $4,024,343 increase in nonaccrual loans, accounted for a $1,084,971 decrease in interest income. This decrease in interest income was almost completely offset by an $800,009 decrease in interest expense which resulted from a decrease in deposit rates. For the six-month period ended June 30, 2010, we reported net income of $160,662, or $.03 per diluted common share, as compared to a net loss of $(2,255,030), or $(.41) per share, for the same period in 2009.

On June 30, 2010, our assets totaled $573,493,596 compared to $533,221,072 on December 31, 2009. Net loans were $323,530,066 compared to $340,020,798 on December 31, 2009. Total deposits on June 30, 2010, were $475,979,553 compared to $433,537,959 at the end of 2009. Stockholders' equity after adjustments for unrealized losses on securities available for sale as required by SFAS No. 115 increased by $1,280,645. At June 30, 2010, tangible book value per share was $3.29, as compared to $3.05 at December 31, 2009.  For more information, see the consolidated balance sheets, the consolidated statements of income, and the consolidated statements of cash flows below.

Loans and Asset Quality.  We continue to maintain a loan portfolio dominated by real estate and commercial loans diversified among various industries.

There has been very little change in the composition of the loan portfolio over the last six months.

The allowance for loan losses on June 30, 2010, was $10,902,377 or 3.26% of period-end loans compared to $10,148,927 or 2.90% at December 31, 2009.  At June 30, 2010, our nonperforming assets (including non-accrual loans, loans greater than 90 days past due and still accruing, and other real estate owned) were $49,691,904, or 14.86% and 8.66% as a percentage of total loans and total assets, respectively.  At June 30, 2010, the Bank had $5,406,533  in loans that were past due 90 days or more and still accruing interest as compared to $1,409,061 at December 31, 2009, and $748,185 at June 30, 2009. At June 30, 2010, the Bank had $4,964,245 in loans that were 30–89 days past due, as compared to $26,301,069 at December 31, 2009, and $13,679,566 at March 31, 2010. At June 30, 2010, the Bank had loans totaling $35,077,457 in non-accrual status as compared to $21,439,670 at December 31, 2009, and $26,010,130 at June 30, 2009. The increase in non-accrual loans includes increases in eight non-performing commercial real estate loans. The largest non-accrual loan relationship totaled $4.7 million with the average balance for the ninety three non-accrual loans totaling $377,177. For the six months ended June 30, 2010, there was $1,057,164 in net charge-offs compared to $329,878 for the six months ended June 30, 2009. There was $98,575 in repossessed assets at June 30, 2010, compared to $8,281 at June 30, 2009. At June 30, 2010, there was $9,207,914 in other real estate owned compared to $4,994,241 at December 31, 2009 and $731,087 at June 30, 2009.

Deposits.  Deposits on June 30, 2010, were $475,979,553 compared to $433,537,959 on December 31, 2009. Interest-bearing accounts represented 91.7% of total deposits at June 30, 2010, and 92.4% of total deposits at December 31, 2009. Non interest-bearing deposits on June 30, 2010, were $39,346,105 compared to $32,940,811 on December 31, 2009, an increase of 19.4%. The significant increase in deposits was the result of the Bank taking advantage of low deposit interest rates in the brokered CD market, purchasing brokered CDs of approximately $40,000,000.

Investments.  We maintain a portfolio of securities as part of our asset/liability and liquidity management programs which emphasize effective yields and maturities to match our needs. Investments in securities of $98,513,820 at June 30, 2010, consisted of corporate securities, municipal securities, U.S. government agency securities and mortgage-backed securities. The composition of the investment portfolio is examined periodically and appropriate realignments are initiated to meet liquidity and interest rate sensitivity needs for the Bank. At June 30, 2010, and at December 31, 2009, we had no investments classified as held to maturity.

Available for sale securities are reported at fair value.  Unrealized holding gains and losses, net of tax, on available for sale securities are reported as a net amount in a separate component of stockholders' equity. Realized gains and losses on the sale of available for sale securities are determined using the specific-identification method. Premiums and discounts are recognized in interest income using the interest method over the period to maturity or to call dates.

Declines in the fair value of individual held to maturity and available for sale securities below cost that are other than temporary are reflected as write-downs of the individual securities to fair value. Related write-downs are included in earnings as realized losses. For the six-month period ended June 30, 2010, there were no impairment write-downs. For the six month period ended June 30, 2009, we wrote down $2,156,820 in two single-issue trust preferred securities and $152,656 of stock in Silverton Bank.  

Stockholders Equity.  Total stockholders' equity at June 30, 2010 was $18,435,076 compared to $17,154,431 at December 31, 2009. This $1,280,645 increase was primarily due to unrealized gains on securities available for sale increasing $1,974,712, net of tax and operating income of $160,662 for the six months ended June 30, 2010. The per share book value of our common stock as of June 30, 2010 was $3.32.  The per share tangible book value of our common stock as of June 30, 2010 was $3.29.  The Company and the Bank exceed all capital requirements under the applicable federal regulations.  At June 30, 2010, the Company's ratios of Tier 1 capital to risk-weighted assets and total capital to risk-based assets were 8.3% and 9.3%, respectively.  At June 30, 2010, Waccamaw Bank had Tier 1 capital to risk-weighted assets and total capital to risk-based assets ratios of 8.6% and 10.7%, respectively. These capital ratios were sufficient at June 30, 2010, and December 31, 2009, to classify the Bank as "well capitalized" in accordance with the FDIC's regulatory capital rules.

Waccamaw Bank, the primary subsidiary of Waccamaw Bankshares, Inc., is a state chartered bank operating seventeen offices in Whiteville, Wilmington, Shallotte (2), Sunset Beach, Oak Island, Holden Beach, Chadbourn, Tabor City, Southport (2) and Elizabethtown, North Carolina. Offices in South Carolina include Little River, Conway (2), Myrtle Beach, and Heath Springs.  In addition to primary banking operations, the Bank's Investment Group provides consumer investment and insurance services. Common stock of Waccamaw Bankshares, Inc. is listed on the NASDAQ Market and trades under the symbol WBNK.  Additional corporate information, product descriptions, and online services can be located on the Bank's website at http://www.waccamawbank.com.

Information in the press release contains "forward-looking statements." These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates and the effects of competition.  Additional factors that could cause actual results to differ materially are discussed in Waccamaw Bankshares, Inc.'s recent filings with the Securities Exchange Commission, including but not limited to its Annual Report on Form 10-K and its other periodic reports.  

SOURCE Waccamaw Bankshares, Inc.