MT. PLEASANT, S.C., Feb. 4, 2009 (GLOBE NEWSWIRE) -- Tidelands Bancshares, Inc. (Nasdaq:TDBK), holding company for Tidelands Bank, announces year-to-date results for the period ended December 31, 2008. "During the year, the economic environment has changed significantly," said President and Chief Executive Officer, Robert E. Coffee, Jr. "The fourth quarter of 2008 did not provide any relief to these most difficult and unique times. In fact, by many measures, the economic environment has deteriorated significantly. Despite these uncertain conditions in the financial markets, we continue to execute our strategic goals successfully and remain diligent in our day to day activities."
We recorded a net after-tax loss of $5.0 million for the year ended December 31, 2008 as compared to a net profit of approximately $413,000 for the year ended December 31, 2007. In comparison to our previous year's results, the decrease in 2008 earnings was primarily driven by the pre-tax impairment charge of $4.6 million related to the government placing the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation into conservatorship and our provisional expense for credit losses of $4.7 million. This provision for loan losses is reflective of year-to-date loan growth of $70.6 million, net charge-offs of $1.2 million, and the effects that the deteriorating credit, real estate and job markets are having on our customers and communities which is reflected in higher levels of non-performing assets. Our net loss per common share amounted to $1.22 on both a basic and diluted basis for the year ended December 31, 2008. Furthermore, although our branches assist us in attaining our retail deposit and loan growth projections, the current retail deposit rate environment and the expenses associated with the new branches have had a dampening effect on our earnings. On the other hand, in an environment where during the last year the Federal Reserve Board reduced the federal funds rate from 4.25% to 0.25% at December 31, 2008, our net interest margin only declined from 2.99% to 2.50%.
As part of the Capital Purchase Program established by the U.S. Department of the Treasury under the Emergency Economic Stabilization Act of 2008, on December 19, 2008, Tidelands Bancshares, Inc. issued 14,448 preferred shares, in return for approximately $14.4 million in cash, to the U.S. Department of Treasury. By meeting the criteria for this program, Tidelands Bancshares, Inc. demonstrates our strong banking culture and strict internal guidelines. This additional capital enhances our ability to lend money to local businesses and provide additional financial resources to our customers in order for them to weather this financial storm. Without considering the issuance of preferred shares and in spite of our net loss for 2008, Tidelands Bank remains "well-capitalized" as defined by bank regulators, which is the highest bank capital classification. The Company's total shareholders' equity was $52.0 million with book value at $8.77 per common share at year end.
Despite the deepening troubles in the mortgage and credit markets, Tidelands Bank continued to experience strong loan growth for 2008. During the year ending December 31, 2008, loans grew $70.6 million to $462.0 million with assets increasing $203.8 million to reach $716.1 million at year end. Although our credit-related issues increased in comparison to previous periods, we are working to resolve each situation. At December 31, 2008, non-accrual loans amounted to $11.5 million, or 2.49% of total gross loans, and other real estate owned was approximately $1.8 million. At December 31, 2008, our ratios of nonperforming assets to total assets of 1.85% and net charge-offs to average loans of 0.27% continue to compare favorably to industry peers. Consistent with these circumstances, at December 31, 2008, the allowance for loan losses amounted to 1.65% of total loans.
During the year ended December 31, 2008, Tidelands generated significant increases in retail deposits through its seven full-service branch locations. As a result, our ratio of wholesale deposits to total deposits has decreased from 58.4% at December 31, 2007 to 50.6% at December 31, 2008. We anticipate this trend will continue with momentum from our retail branch offices. At year end December 31, 2008, customer time deposits have grown $136.4 million and interest checking deposits increased by $38.5 million in comparison to previous year end amounts.
"In a year where our core financial performance has been overshadowed by the pervasive global recession, we regard our pre-tax loss of $7.6 million, which includes impairment and credit provisions of $9.3 million, as evidence that our core business model is compelling and poised for success when economic conditions begin to improve. Until then," Coffee notes, "Tidelands is committed to managing its assets and maintaining the credit reserves and capital resources sufficient to thrive 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.
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 year ended December 31, 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)
2008 2007 2006
Interest income: ----------- ----------- -----------
Loans, including fees $27,378,906 $27,805,332 $20,130,292
Securities available for
sale, taxable 6,805,459 2,462,876 1,306,995
Securities available for
sale, non-taxable 286,844 439,719 6,832
Federal funds sold 280,973 701,701 323,084
Other interest income 5,116 16,211 2,648
----------- ----------- -----------
Total interest income 34,757,298 31,425,839 21,769,851
----------- ----------- -----------
Interest expense:
Time deposits $100,000
and over 2,634,756 562,024 486,814
Other deposits 14,153,141 16,256,750 10,059,639
Other borrowings 3,554,669 2,415,800 1,401,680
----------- ----------- -----------
Total interest expense 20,342,566 19,234,574 11,948,133
----------- ----------- -----------
Net interest income 14,414,732 12,191,265 9,821,718
Provision for loan
losses 4,665,000 1,025,000 1,222,000
----------- ----------- -----------
Net interest income after
provision for loan losses 9,749,732 11,166,265 8,599,718
----------- ----------- -----------
Noninterest income (loss):
Service charges on
deposit accounts 36,340 35,476 23,631
Residential mortgage
origination income 383,341 764,130 664,454
Gain (loss) on sale of
securities available
for sale 509,373 37,637 (136,628)
Gain on sale of real
estate 12,865 9,488 13,686
Other service fees and
commissions 362,029 192,697 144,236
Bank owned life insurance 484,352 290,032 59,124
Impairment on securities
available for sale (4,596,200) -- --
Other 32,352 25,407 18,614
----------- ----------- -----------
Total noninterest
income (loss) (2,775,548) 1,354,867 787,117
----------- ----------- -----------
Noninterest expense:
Salaries and employee
benefits 8,322,117 6,918,015 4,483,848
Net occupancy 1,423,198 1,029,784 486,311
Furniture and equipment 734,497 484,146 297,637
Other operating 4,147,955 3,400,883 1,756,233
----------- ----------- -----------
Total noninterest
expense 14,627,767 11,832,828 7,024,029
----------- ----------- -----------
Income (loss) before
income taxes (7,653,583) 688,304 2,362,806
Income tax expense
(benefit) (2,699,000) 275,000 874,000
----------- ----------- -----------
Net income (loss) $(4,954,583) $ 413,304 $ 1,488,806
=========== =========== ===========
Earnings (loss) per
common share
Basic earnings (loss)
per share $ (1.22) $ 0.10 $ 0.45
=========== =========== ===========
Diluted earnings (loss)
per share $ (1.22) $ 0.10 $ 0.44
=========== =========== ===========
Weighted average common
shares outstanding
Basic 4,050,301 4,214,910 3,327,103
=========== =========== ===========
Diluted 4,050,301 4,270,005 3,327,505
=========== =========== ===========
Tidelands Bancshares, Inc. and Subsidiary
Consolidated Balance Sheets
December 31, December 31,
2008 2007
Assets: ------------ ------------
Cash and cash equivalents:
Cash and due from banks $ 2,471,797 $ 724,957
Federal funds sold 40,375,000 1,945,000
------------ ------------
Total cash and cash equivalents 42,846,797 2,669,957
------------ ------------
Securities available for sale 171,769,851 88,036,109
Nonmarketable equity securities 3,807,140 2,060,940
------------ ------------
Total securities 175,576,991 90,097,049
------------ ------------
Mortgage loans held for sale 241,500 1,426,800
Loans receivable 461,967,217 391,349,869
Less allowance for loan losses 7,635,173 4,158,324
------------ ------------
Loans, net 454,332,044 387,191,545
------------ ------------
Premises, furniture and equipment,
net 19,411,592 17,759,388
Accrued interest receivable 3,337,660 3,164,124
Bank owned life insurance 13,335,170 7,849,156
Other assets 7,022,493 2,111,572
------------ ------------
Total assets $716,104,247 $512,269,591
============ ============
Liabilities:
Deposits:
Noninterest-bearing transaction
accounts $ 12,133,098 $ 10,191,152
Interest-bearing transaction
accounts 46,987,209 8,460,166
Savings and money market 182,856,286 199,833,835
Time deposits $100,000 and over 92,825,486 29,876,086
Other time deposits 226,423,397 139,808,202
------------ ------------
Total deposits 561,225,476 388,169,441
------------ ------------
Securities sold under agreements
to repurchase 20,000,000 41,040,000
Junior subordinated debentures 14,434,000 8,248,000
Advances from Federal Home Loan Bank 60,800,000 29,000,000
ESOP borrowings 2,600,000 2,427,500
Other borrowings 615,837 --
Accrued interest payable 2,841,473 1,341,161
Other liabilities 1,628,029 1,088,319
------------ ------------
Total liabilities 664,144,815 471,314,421
------------ ------------
Commitments and contingencies -- --
Shareholders' equity:
Preferred stock, $1,000 par value,
10,000,000 shares authorized,
14,448 issued and outstanding at
December 31, 2008 13,335,752 --
Common stock, $.01 par value,
10,000,000 shares authorized;
4,277,176 and 4,277,176 shares
issued and outstanding at
December 31, 2008 and December 31,
2007, respectively 42,772 42,772
Unearned ESOP shares (2,522,860) (2,427,500)
Capital surplus 44,476,503 42,788,666
Retained earnings (deficit) (4,905,419) 49,164
Accumulated other comprehensive
income 1,532,684 502,068
------------ ------------
Total shareholders' equity 51,959,432 40,955,170
------------ ------------
Total liabilities and
shareholders' equity $716,104,247 $512,269,591
============ ============
Tidelands Bancshares, Inc. and Subsidiary
Per Share Data: Year Ended
December 31,
-----------------------------------
2008 2007 2006
--------- --------- ---------
Net income (loss), basic $(1.22) $0.10 $0.45
Net income (loss), diluted $(1.22) $0.10 $0.44
Book value per common share $8.77 $9.58 $9.79
Weighted average number of
shares outstanding:
Basic 4,050,301 4,214,910 3,327,103
Diluted 4,050,301 4,270,005 3,372,505
Performance Ratios:
Return on average assets (0.81)% 0.10% 0.52%
Return on average equity (12.40)% 1.00% 5.38%
Net interest margin 2.50% 2.99% 3.60%
At December 31,
----------------------------
2008 2007
----------- ---------
Nonaccrual loans $11,481,559 $ 389,095
Loans 90 days or more past due
and still accruing interest -- --
Loans restructured or otherwise
impaired -- --
----------- ---------
Total impaired loans 11,481,559 389,095
Other real estate owned 1,800,604 --
----------- ---------
Total nonperforming assets $13,282,163 $ 389,095
=========== =========
Loan charge-offs year to date,
net recoveries $ 1,188,151 $ 333,676
Nonperforming loans to total
loans 2.49% 0.10%
Nonperforming assets to total
assets(2) 1.85% 0.08%
Net charge-offs year to date
to average total loans(1) 0.27% 0.10%
Allowance for loan losses to
nonperforming loans 66.50% 1,068.72%
Allowance for loan losses
to total loans(1) 1.65% 1.06%
At December 31,
----------------------------
2008 2007
Capital Ratios: ----------- ---------
Period end tangible equity to
tangible assets 7.26% 8.00%
Leverage ratio 9.03% 9.58%
Tier 1 risk-based capital ratio 12.93% 11.39%
Total risk-based capital ratio 14.18% 12.39%
Growth Ratios and Other Data:
Percentage change in assets 39.79% 52.20%
Percentage change in loans(1) 18.04% 43.24%
Percentage change in deposits 44.58% 49.80%
Loans to deposit ratio(1) 82.31% 100.82%
--------------
1 - Includes nonperforming loans.
2 - 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