MT. PLEASANT, S.C., July 25, 2008 (PRIME NEWSWIRE) -- Tidelands Bancshares, Inc. (Nasdaq:TDBK), holding company for Tidelands Bank, announced today results for the second quarter ended June 30, 2008. "During the quarter, the Bank reached several strategic milestones that we believe position us for continued success. Most importantly," explained Chief Executive Officer, Robert E. Coffee, Jr., "we completed the sale of $6.0 million of trust preferred securities, which allows us to maintain a well-capitalized position for future growth. Consistent with our objectives, we opened a new branch in Bluffton, SC and are now preparing for the upcoming grand opening of our seventh branch, located in Murrells Inlet. This opening early in the third quarter completes the initial round of expansion and demonstrates our ability to accomplish the strategic objectives set forth by our management team."
The new banking locations and the resulting increase in professional staff have contributed to the growth of both our loan and deposit accounts. As a result, we have added 264 new loan accounts and 3,491 new deposit accounts during the first six months of 2008. Our new branch locations contributed to annualized asset growth of 34.9% during the first half of 2008 and a corresponding increase in interest income of 14.1% compared to June 30, 2007. For the quarter ended June 30, 2008, year-to-date growth for loans and deposits was $41.6 million and $98.7 million, respectively, with assets increasing $89.5 million to reach $601.7 million at quarter end.
Recent actions by the Federal Reserve Board to reduce the federal funds rate from 6.25% a year ago to 2.00% at the end of June 30, 2008 have resulted in tightened margins in the financial market. For the period ended June 30, 2008, our net interest margin was 2.65% compared to 3.24% at June 30, 2007. Primarily as a result of the decrease in the net interest margin, the Company recorded a net loss of $464,799 for the six months ended June 30, 2008 as compared to a net profit of $128,098 for the period ended June 30, 2007. On a per share basis, our loss amounted to $0.12 and $0.11 on a basic and diluted basis, respectively, for the six months ended June 30, 2008.
While there has been significant attention on the problems in the sub prime mortgage markets, our portfolio does not have a material exposure to these higher risk credits as we focus on providing credit and deposit products for proven customer relationships. We do not originate or hold any subprime loans and adhere to strict internal and regulatory guidelines with regard to our credit underwriting standards. Although our credit-related issues increased in comparison to previous periods, we are working to resolve each situation. For the six months ended June 30, 2008, non-accrual and charged-off loans amounted to $2.9 million, and $172,000, respectively. The entire balance of other real estate owned at December 31, 2007, approximately $90,000, was satisfactorily resolved early during the second quarter without any additional loss. At June 30, 2008, our ratio of nonperforming assets to total assets of 0.48% and our ratio of net charge-offs to average loans of 0.04% continue to compare favorably to the industry. Our provision for loan losses for the second quarter totaled $314,000, reflecting the loan growth experienced year-to-date. At June 30, 2008, the allowance for loan losses amounted to 1.10% of total loans.
During the second quarter, Tidelands generated significant increases in retail deposits through its six full-service branch locations. The bank's reliance on brokered deposits decreased $61.5 million during the quarter ended June 30, 2008 while the bank generated $77.2 million in customer time deposits and $17.2 million in interest checking deposits. We anticipate this trend continuing throughout the year as a result of our expansion into the Hilton Head/Bluffton and Murrells Inlet markets. Simultaneously, we have reduced our overall dependence on other wholesale borrowings, which should allow us to lower our cost of funds and increase core deposits. Specifically, securities sold under repurchase agreements and advances from the Federal Home Loan Bank decreased by a combined $15.0 million since December 31, 2007.
Despite the challenges present in the current financial market, there are also many unique opportunities to excel and exceed through the normal course of operations. As we continue to address these events, we believe that our capital base and strong credit culture strategically position Tidelands to capitalize on these opportunities and attract new customer relationships. Our focus remains consistent on the future growth and expansion within our geographic footprint.
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 are subject to risks, uncertainties, and other factors, such as a downturn in the economy, greater than expected noninterest expenses, volatile credit and financial markets, potential deterioration in real estate values, regulatory changes and excessive loan losses, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. For a more detailed description of certain factors, many of which are beyond our control, that could cause or contribute to our actual results differing materially from future results expressed or implied by our forward-looking statements, please see our Annual Report on Form 10-KSB for the year ended December 31, 2007, and our other filings with the Securities and Exchange Commission.
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 future events, plans, or expectations contemplated by our company will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
SUMMARY CONSOLIDATED FINANCIAL DATA
Our summary consolidated financial data as of and for the quarter ended June 30, 2008 are unaudited but, in the opinion of our management, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly our financial position and results of operations for such periods in accordance with generally accepted accounting principles.
Tidelands Bancshares, Inc. and Subsidiary
Consolidated Statements of Operations
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
-------------------------- --------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
Interest
income:
Loans,
including $ 13,783,616 $ 12,983,547 $ 6,677,908 $ 6,823,373
Securities
available
for sale,
taxable 2,481,591 968,042 1,314,734 499,233
Securities
available
for sale,
non-taxable 149,486 159,092 70,679 102,516
Federal funds
sold 187,876 432,126 125,499 280,768
Other
interest
income 1,914 4,146 576 2,938
------------ ------------ ------------ ------------
Total
interest
income 16,604,483 14,546,953 8,189,396 7,708,828
------------ ------------ ------------ ------------
Interest
expense:
Time deposits
$100,000 and
over 951,913 185,725 546,163 89,725
Other
deposits 7,253,837 7,343,465 3,433,765 4,072,976
Other
borrowings 1,503,883 1,054,455 666,278 485,864
------------ ------------ ------------ ------------
Total
interest
expense 9,709,633 8,583,645 4,646,206 4,648,565
------------ ------------ ------------ ------------
Net interest
income 6,894,850 5,963,308 3,543,190 3,060,263
Provision for
loan losses 777,000 1,025,000 314,000 510,000
------------ ------------ ------------ ------------
Net interest
income after
provision for
loan losses 6,117,850 4,938,308 3,229,190 2,550,263
------------ ------------ ------------ ------------
Noninterest
income:
Service
charges on
deposit
accounts 18,312 17,076 8,755 9,270
Residential
mortgage
origination
income 280,128 442,984 139,814 201,156
Gain on sale
of securities
available
for sale 32,154 2,864 -- --
Gain on sale
of real
estate 23,351 -- 2,832 --
Other service
fees and
commissions 149,935 85,014 86,616 43,982
Bank owned
life
insurance 226,229 143,460 129,229 73,515
Other 14,786 8,632 9,581 3,940
------------ ------------ ------------ ------------
Total
noninterest
income 744,895 700,030 376,827 331,863
------------ ------------ ------------ ------------
Noninterest
expense:
Salaries and
employee
benefits 4,404,340 3,207,462 2,289,191 1,698,092
Net occupancy 659,784 380,338 334,427 205,157
Furniture and
equipment 334,099 174,684 176,574 92,260
Other
operating 2,279,801 1,668,756 1,232,785 962,199
------------ ------------ ------------ ------------
Total
noninterest
expense 7,678,024 5,431,240 4,032,977 2,957,708
------------ ------------ ------------ ------------
Income (loss)
before income
taxes (815,279) 207,098 (426,960) (75,582)
Income tax
expense
(benefit) (350,480) 79,000 (195,480) (28,000)
------------ ------------ ------------ ------------
Net income
(loss) $ (464,799) $ 128,098 $ (231,480) $ (47,582)
============ ============ ============ ============
Earnings
(loss) per
common share
Basic
earnings
(loss) per
share $ (0.12) $ 0.03 $ (0.06) $ (0.01)
============ ============ ============ ============
Diluted
earnings
(loss) per
share $ (0.11) $ 0.03 $ (0.06) $ (0.01)
============ ============ ============ ============
Weighted
average
common
shares
outstanding
Basic 4,056,416 4,274,466 4,044,186 4,276,468
============ ============ ============ ============
Diluted 4,073,489 4,274,466 4,053,326 4,276,468
============ ============ ============ ============
Tidelands Bancshares, Inc. and Subsidiary
Consolidated Balance Sheets
June 30, December 31,
2008 2007
------------- -------------
Assets: (Unaudited) (Audited)
Cash and cash equivalents:
Cash and due from banks $ 2,964,503 $ 724,957
Federal funds sold 7,625,000 1,945,000
------------- -------------
Total cash and cash equivalents 10,589,503 2,669,957
------------- -------------
Securities available for sale 120,647,662 88,036,109
Nonmarketable equity securities 2,196,140 2,060,940
------------- -------------
Total securities 122,843,802 90,097,049
------------- -------------
Mortgage loans held for sale 655,967 1,426,800
Loans receivable 432,986,674 391,349,869
Less allowance for loan losses 4,763,165 4,158,324
------------- -------------
Loans, net 428,223,509 387,191,545
------------- -------------
Premises, furniture and equipment,
net 19,587,077 17,759,388
Accrued interest receivable 3,049,974 3,164,124
Bank owned life insurance 13,077,047 7,849,156
Other assets 3,694,244 2,111,572
------------- -------------
Total assets $ 601,721,123 $ 512,269,591
============= =============
Liabilities:
Deposits:
Noninterest-bearing transaction
accounts $ 12,649,686 $ 10,191,152
Interest-bearing transaction
accounts 25,566,735 8,460,166
Savings and money market 152,436,066 199,833,835
Time deposits $100,000 and over 71,573,801 29,876,086
Other time deposits 224,641,285 139,808,202
------------- -------------
Total deposits 486,867,573 388,169,441
------------- -------------
Securities sold under agreements
to repurchase 30,000,000 41,040,000
Junior subordinated debentures 14,434,000 8,248,000
Advances from Federal Home Loan Bank 25,000,000 29,000,000
ESOP borrowings 2,750,000 2,427,500
Accrued interest payable 1,505,727 1,341,161
Other liabilities 1,604,979 1,088,319
------------- -------------
Total liabilities 562,162,279 471,314,421
------------- -------------
Commitments and contingencies -- --
Shareholders' equity:
Preferred stock, $.01 par value,
10,000,000 shares authorized,
none issued -- --
Common stock, $.01 par value,
10,000,000 shares authorized;
4,277,176 and 4,277,176 shares
issued and outstanding at June 30,
2008 and December 31, 2007,
respectively 42,772 42,772
Unearned ESOP shares (2,721,340) (2,427,500)
Capital surplus 43,118,044 42,788,666
Retained earnings (deficit) (415,635) 49,164
Accumulated other comprehensive
income (loss) (464,997) 502,068
------------- -------------
Total shareholders' equity 39,558,844 40,955,170
------------- -------------
Total liabilities and shareholders'
equity $ 601,721,123 $ 512,269,591
============= =============
Tidelands Bancshares, Inc. and Subsidiary
Per Share Data: Six Months Ended Three Months Ended
June 30, June 30,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Net income,
basic $ (0.12) $ 0.03 $ (0.06) $ (0.01)
Net income,
diluted $ (0.11) $ 0.03 $ (0.06) $ (0.01)
Book value $ 9.25 $ 9.72 $ 9.25 $ 9.72
Weighted
average
number of
shares
outstanding:
Basic 4,056,416 4,274,466 4,044,186 4,276,468
Diluted 4,073,489 4,274,466 4,053,326 4,276,468
Performance
Ratios:
Return on
average
assets (1) (0.17%) 0.07% (0.16%) (0.05%)
Return on
average
equity (1) (2.30%) 0.62% (2.30%) (0.45%)
Net
interest
margin (1) 2.65% 3.24% 2.60% 3.09%
Efficiency
ratio (2) 100.50% 81.51% 102.88% 87.19%
At June 30,
Asset Quality Data: 2008 2007
--------- ---------
Loans 90 days or more past due and
still accruing interest $ -- $ --
Loans restructured or otherwise
impaired(5) -- --
Nonaccrual loans 2,901,061 501,094
Loan charge-offs year to date, net
recoveries 172,159 222,106
Other real estate owned -- --
Nonperforming assets to total
loans (4) 0.67% 0.15%
Nonperforming assets to total
assets(4) 0.48% 0.12%
Net charge-offs year to date to
average total loans(3) 0.04% 0.07%
Allowance for loan losses to
nonperforming loans 164.19% 409.17%
Allowance for loan losses to total
loans (3) 1.10% 1.25%
At June 30,
Capital Ratios: 2008 2007
--------- ---------
Period end tangible equity to
tangible assets 6.57% 9.72%
Leverage ratio 7.92% 11.56%
Tier 1 risk-based capital ratio 9.81% 13.46%
Total risk-based capital ratio 11.44% 14.64%
Growth Ratios and Other Data:
Percentage change in assets(1) 35.12% 54.52%
Percentage change in loans(1) (3) 21.40% 50.33%
Percentage change in deposits(1) 51.13% 70.95%
Loans to deposit ratio (3) 88.93% 97.46%
------------------------------------
1 - Annualized for the six and three month periods, respectively.
2 - Computed by dividing non-interest expense by the sum of net
interest income and non-interest income.
3 - Includes nonperforming loans.
4 - Nonperforming assets include nonaccrual loans, loans 90 days or
more past due and still accruing interest, loans restructured or
otherwise impaired, and other real estate owned
5 - Loans restructure or otherwise impaired do not include
nonaccrual loans.