MT. PLEASANT, S.C., July 27, 2009 (GLOBE NEWSWIRE) -- Tidelands Bancshares, Inc. (Nasdaq:TDBK), holding company for Tidelands Bank, reported a net loss available to common shareholders of $3.7 million, or $(0.92) per diluted share, for the quarter ended June 30, 2009 compared to a net loss of $231,000 for the quarter ended June 30, 2008. The net loss was the result of credit provisions taken to fortify the balance sheet in this difficult economic environment.
The second quarter results reflect the following items:
* FDIC deposit premiums of $515,000, of which $378,000 represents our portion of the one-time special assessment levied against all banks * A 1.6% increase in interest income quarter over quarter * A 2.9% decrease in interest expense quarter over quarter * An expansion of our net interest income of 8.0% quarter over quarter * An increase of 111.4% in noninterest income quarter over quarter * A reduction in salaries and employee benefits expense of 10.6% quarter over quarter * A 9.8% increase in total noninterest expense reflective of the increased deposit insurance premiums and costs associated with our expanded branch franchise quarter over quarter * Preferred stock dividends of $183,000 for the quarter-to-date * Credit provisions of $5.5 million for the quarter to date period
The year to date results for the second quarter reflect the following items:
* FDIC deposit premiums of $755,000, of which $378,000 represents our portion of the one-time special assessment levied against all banks * A 5.3% increase in interest income year over year * A 5.4% decrease in interest expense year over year * An expansion of our net interest income of 21.5% year over year * An increase of 80.0% in noninterest income year over year * A reduction in salaries and employee benefits expense of 8.8% year over year * A 8.2% increase in total noninterest expense reflective of the increased deposit insurance premiums and costs associated with our expanded branch franchise year over year * Preferred stock dividends of $363,000 for the year to date period * Credit provisions of $7.6 million for the year to date period
"In the current economic environment, we measure successes every day as we continue to work with our customers to provide them with the financial resources necessary to endure these most difficult times," said Robert E. Coffee, Jr., President and Chief Executive Officer. We have continued our efforts to improve loans 30-89 days past due as evidenced by the $8.9 million decline from $12.4 million, or 2.69% of total loans, at December 31, 2008, to $3.5 million, or 0.74% of total loans, at June 30, 2009. Similarly, nonaccrual loans have been reduced from $16.9 million at March 31, 2009 to $11.6 million at June 30, 2009. Other real estate owned has increased marginally from $4.0 million at March 31, 2009 to $5.6 million at June 30, 2009.
In consideration of the many factors affecting all financial institutions, we have elected to grow our reserve balance for credit losses above our historical levels. At June 30, 2008, our reserves for credit losses were $4.8 million, or 1.10% of total loans. At December 31, 2008, our reserves totaled $7.6 million, or 1.65% of total loans. During the first half of the year, we continued to grow our reserves to $8.7 million, or 1.86% of total loans at March 31, 2009, and $9.6 million, or 2.04% of total loans, at June 30, 2009. It is our strategy to remain prudent during these uncertain economic times and maintain higher reserves for credit losses until economic conditions begin to improve and stabilize.
As a result of the deteriorating credit, real estate and job markets, which continue to affect our customers and communities, we experienced a decrease in earnings in comparison to previous periods, which was primarily driven by the addition to our provision for loan losses of $7.6 million for the six months ended June 30, 2009. We increased interest income to $17.5 million for the six months ending June 30, 2009 compared to $16.6 million through June 30, 2008, while reducing interest expense to $9.4 million for the six months ending June 30, 2009 from $10.0 million through June 30, 2008. The successful management of these two components of our earnings resulted in an overall increase in net interest income before provision expense of $1.4 million. In addition, non-interest income for the six months ending June 30, 2009 increased to $1.3 million compared to $745,000 from the year earlier period, largely due to gains on sales of callable securities from our investment portfolio. Due to an overall decline in the interest rate environment over the last 18 months, our net interest margin declined from 2.54% at June 30, 2008 to 2.20% at June 30, 2009. This decrease in our net interest margin is also reflective of the investment yield on our mortgage-backed securities decreasing from 5.89% at December 31, 2008 to 5.04% at June 30, 2009, which is a result of an unprecedented high level of pre-payments on these types of investments and an increase in nonaccrual loans.
During the six-month period ending June 30, 2009, loans grew by $9.3 million to $471.3 million. In addition, Tidelands Bank generated significant increases in retail deposits through its seven full-service branch locations. As evidence of our growing local market business, at June 30, 2009, customer time deposits and IRA accounts have grown to $185.9 million compared to $182.0 million at December 31, 2008. In addition, total retail savings accounts have increased to $34.4 million at June 30, 2009 compared to $350,000 at December 31, 2008. Tidelands Bank remains "well-capitalized," which is the highest bank capital classification defined by bank regulators. The Company's total shareholders' equity was $47.6 million with a book value of $7.73 per common share at June 30, 2009.
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.
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, 2009 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,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Interest income:
Loans, including
fees $12,486,519 $13,783,616 $ 6,349,290 $ 6,677,908
Securities avail-
able for sale,
taxable 4,901,260 2,481,591 1,924,218 1,314,734
Securities avail-
able for sale,
non-taxable 95,657 149,486 45,091 70,679
Federal funds sold 4,129 187,876 602 125,499
Other interest
income 2,056 1,914 1,333 576
----------- ----------- ----------- -----------
Total interest
income 17,489,621 16,604,483 8,320,534 8,189,396
----------- ----------- ----------- -----------
Interest expense:
Time deposits
$100,000 and over 1,785,937 951,913 901,774 546,163
Other deposits 5,494,381 7,526,942 2,639,427 3,591,487
Other borrowings 2,165,968 1,503,883 1,122,102 666,278
----------- ----------- ----------- -----------
Total interest
expense 9,446,286 9,982,738 4,663,303 4,803,928
----------- ----------- ----------- -----------
Net interest income 8,043,335 6,621,745 3,657,231 3,385,468
Provision for
loan losses 7,605,000 777,000 5,470,000 314,000
----------- ----------- ----------- -----------
Net interest
income after
provision for
loan losses 438,335 5,844,745 (1,812,769) 3,071,468
----------- ----------- ----------- -----------
Noninterest income:
Service charges on
deposit accounts 20,283 18,312 10,706 8,755
Residential mort-
gage origination
income 261,408 280,128 185,107 139,814
Gain on sale of
securities avail-
able for sale 590,683 32,154 283,679 --
Other service fees
and commissions 270,310 149,935 136,793 86,616
Bank owned life
insurance 252,619 226,229 127,939 129,229
Impairment on non-
marketable equity
securities (76,640) -- (1,640) --
Other 22,188 38,137 54,146 12,413
----------- ----------- ----------- -----------
Total noninterest
income 1,340,851 744,895 796,730 376,827
----------- ----------- ----------- -----------
Noninterest expense:
Salaries and
employee benefits 4,016,672 4,404,340 2,045,568 2,289,191
Net occupancy 780,994 659,784 396,445 334,427
Furniture and
equipment 428,923 334,099 213,325 176,574
Other operating 2,785,419 2,006,696 1,597,831 1,075,063
----------- ----------- ----------- -----------
Total noninterest
expense 8,012,008 7,404,919 4,253,169 3,875,255
----------- ----------- ----------- -----------
Loss before income
taxes (6,232,822) (815,279) (5,269,208) (426,960)
Income tax benefit (2,127,000) (350,480) (1,793,000) (195,480)
----------- ----------- ----------- -----------
Net loss $(4,105,822) $ (464,799) $(3,476,208) $ (231,480)
Accretion of
preferred stock
to redemption
value 96,954 -- 48,477 --
Preferred
dividends accrued 363,207 -- 182,607 --
----------- ----------- ----------- -----------
Net loss available
to common
shareholders $(4,565,983) $ (464,799) $(3,707,292) $ (231,480)
=========== =========== =========== ===========
Loss per common
share
Basic loss per
share $ (1.13) $ (0.12) $ (0.92) $ (0.06)
=========== =========== =========== ===========
Diluted loss
per share $ (1.13) $ (0.12) $ (0.92) $ (0.06)
=========== =========== =========== ===========
Weighted average
common shares
outstanding
Basic 4,044,186 4,056,416 4,044,186 4,044,186
=========== =========== =========== ===========
Diluted 4,044,186 4,056,416 4,044,186 4,044,186
=========== =========== =========== ===========
Tidelands Bancshares, Inc. and Subsidiary
Consolidated Balance Sheets
June 30, December 31,
2009 2008
------------- -------------
Assets: (Unaudited) (Audited)
Cash and cash equivalents:
Cash and due from banks $ 18,401,911 $ 2,471,797
Federal funds sold -- 40,375,000
------------- -------------
Total cash and cash equivalents 18,401,911 42,846,797
------------- -------------
Securities available-for-sale 287,837,131 171,769,851
Nonmarketable equity securities 5,938,900 3,807,140
------------- -------------
Total securities 293,776,031 175,576,991
------------- -------------
Mortgage loans held for sale 1,831,581 241,500
Loans receivable 471,308,448 461,967,217
Less allowance for loan losses 9,605,982 7,635,173
------------- -------------
Loans, net 461,702,466 454,332,044
------------- -------------
Premises, furniture and equipment, net 19,000,984 19,411,592
Accrued interest receivable 3,149,011 3,337,660
Bank owned life insurance 13,587,788 13,335,170
Other assets 12,246,957 6,101,069
------------- -------------
Total assets $ 823,696,729 $ 715,182,823
============= =============
Liabilities:
Deposits:
Noninterest-bearing transaction
accounts $ 13,812,902 $ 12,133,098
Interest-bearing transaction
accounts 45,149,759 46,987,209
Savings and money market 209,751,339 182,856,286
Time deposits $100,000 and over 99,084,184 92,825,486
Other time deposits 214,312,341 226,423,397
------------- -------------
Total deposits 582,110,525 561,225,476
------------- -------------
Securities sold under agreements to
repurchase 72,500,000 20,000,000
Junior subordinated debentures 14,434,000 14,434,000
Advances from Federal Home Loan Bank 100,800,000 60,800,000
ESOP borrowings 2,450,000 2,600,000
Other borrowings -- 615,837
Accrued interest payable 2,165,846 2,841,473
Other liabilities 1,630,027 706,605
------------- -------------
Total liabilities 776,090,398 663,223,391
------------- -------------
Commitments and contingencies -- --
Shareholders' equity:
Preferred stock, $1,000 par value,
10,000,000 shares authorized,
14,448 issued and outstanding at
June 30, 2009 and December 31, 2008 13,432,706 13,335,752
Common stock, $.01 par value,
10,000,000 shares authorized;
4,277,176 shares issued and
outstanding at June 30, 2009 and
December 31, 2008 42,772 42,772
Common stock-warrants, 571,821 shares
outstanding at June 30, 2009 and
December 31, 2008 1,112,248 1,112,248
Unearned ESOP shares (2,363,032) (2,522,860)
Capital surplus 43,505,292 43,364,255
Retained deficit (9,401,168) (4,905,419)
Accumulated other comprehensive
income 1,277,513 1,532,684
------------- -------------
Total shareholders' equity 47,606,331 51,959,432
------------- -------------
Total liabilities and
shareholders' equity $ 823,696,729 $ 715,182,823
============= =============
Tidelands Bancshares, Inc. and Subsidiary
Six Months Ended Three Months Ended
June 30, June 30,
---------------------- ----------------------
2009 2008 2009 2008
Per Share Data: ---- ---- ---- ----
Net income (loss),
basic $ (1.13) $ (0.12) $ (0.92) $ (0.06)
Net income (loss),
diluted $ (1.13) $ (0.12) $ (0.92) $ (0.06)
Book value $ 7.73 $ 9.25 $ 7.73 $ 9.25
Weighted average number
of shares outstanding
Basic 4,044,186 4,056,416 4,044,186 4,044,186
Diluted 4,044,186 4,056,416 4,044,186 4,044,186
Performance Ratios:
Return on average
assets (1) (1.05%) (0.17%) (1.71%) (0.16%)
Return on average
equity (1) (16.63%) (2.30%) (29.03%) (2.30%)
Net interest
margin (1) 2.20% 2.54% 1.94% 2.49%
At June 30,
------------------------
2009 2008
Credit Summary: ----------- -----------
Nonaccrual loans $11,611,355 $ 2,901,061
Loans 90 days or more past due and still
accruing interest -- --
Loans restructured or otherwise impaired(4) -- --
----------- -----------
Total impaired loans 11,611,355 2,901,061
Other real estate owned 5,565,821 --
----------- -----------
Total nonperforming assets $17,177,176 $ 2,901,061
=========== ===========
Loan charge-offs year to date,
net recoveries $ 5,634,191 $ 172,159
Loans past due, 30-89 days $ 3,478,445 $ 2,523,158
Nonperforming loans to total loans 2.46% 0.67%
Nonperforming assets to total assets(3) 2.09% 0.48%
Net charge-offs year to date to average
total loans(2) 1.21% 0.04%
Allowance for loan losses to
nonperforming loans 82.73% 164.19%
Allowance for loan losses to total loans (2) 2.04% 1.10%
At June 30,
------------------------
2009 2008
Capital Ratios: ----------- -----------
Period end tangible equity to
tangible assets 5.78% 6.57%
Leverage ratio 7.47% 7.92%
Tier 1 risk-based capital ratio 12.72% 9.81%
Total risk-based capital ratio 14.00% 11.44%
Growth Ratios and Other Data:
Percentage change in assets(1) 30.60% 35.12%
Percentage change in loans(1) (2) 4.08% 21.40%
Percentage change in deposits(1) 7.50% 51.13%
Loans to deposit ratio (2) 80.97% 88.93%
---------------
1 - Annualized for the six and three month periods, respectively.
2 - Includes nonperforming loans.
3 - 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
4 - Loans restructured or otherwise impaired do not include
nonaccrual loans.