EASLEY, S.C., March 31, 2009 (GLOBE NEWSWIRE) -- CommunitySouth Financial Corporation (OTCBB:CBSO), parent company of CommunitySouth Bank & Trust, today announced year-end results for the period ended December 31, 2008. The Company announced a net loss for the year ended 2008 totaling $3.35 million, or $0.71 per diluted share, compared to the year ended 2007 earnings of $1.57 million, or $0.31 per diluted share. Net loss for the quarter ended December 31, 2008 was $2.39 million, or $0.51 per diluted share, compared to the previous year's fourth quarter net income of $0.44 million, or $0.09 per diluted share.
These losses were mainly due to two additional contributions to the Bank's loan loss provision. $2.5 million was allocated for seven residential construction loans in a development on Lake Keowee in Seneca, South Carolina, where fraud was potentially involved. Additionally, $4.30 million was allocated in the fourth quarter due to the impact of the current economic stress on some of the Bank's borrowing relationships.
"2008 represented a period of unprecedented turmoil in the financial services industry," said C. Allan Ducker, III, the Bank's Chief Executive Officer. "As with most banks, CommunitySouth was not immune to the impacts of the current operating environment. Given the fact that the impending recession promises to make 2009 even more difficult, the Bank conducted a detailed analysis of the vast majority of its loan portfolio. As a result of this analysis, the Bank made the tough business decision to contribute the aforementioned funds to our loan loss provision in the fourth quarter of 2008. We believe this additional contribution is appropriate for potential credit losses the Bank may experience given the continued outlook for further economic turbulence."
Highlights for the year-ended 2008 include the following:
* CommunitySouth's capital levels exceeded all well-capitalized regulatory standards, with the Bank's total risk-based capital, Tier 1 risk-based capital, and leverage ratios of 10.18%, 8.92%, and 7.98%, respectively. * CommunitySouth has not and does not make or invest in sub-prime mortgage loans and has no exposure in this area. Likewise, CommunitySouth had no exposure to Fannie Mae or Freddie Mac preferred stock. * Total assets ended the year at $387.8 million, an increase of 2.63% for the year. * Total loans grew 5.93% for the year to $320.9 million. * Total deposits decreased to $296.6 million, a 9.47% decrease for the year. The decrease is centered mainly in high priced retail certificates of deposit and money market accounts. * Net interest income decreased $16,628, or 0.16%, over the prior year. * Average loan yields declined to 6.40% in 2008 compared to 8.08% in 2007, while interest bearing liability costs decreased to 3.86% in 2008 from 4.99% in 2007. * Net interest margin for 2008 was 2.73%, compared to 3.38% for the prior year. Recent actions by the Federal Reserve Board of Governors to reduce the Federal Funds Rate from 4.25% a year ago to its current 0.25% have resulted in a significant deterioration of margins in the financial services industry. While these actions have negatively impacted CommunitySouth, we are beginning to see improvement in our net interest margin as time deposits are maturing and repricing at lower market rates. Additionally, we have put in place a strategic funding plan that emphasizes increasing core funding, more disciplined pricing on certificates of deposit, and more effective utilization of wholesale funding without taking on undue interest rate risk. * Non-interest income decreased $182,428, or 11.59%, over the prior year. This decrease in non-interest income was the result of a decrease in mortgage loan fees, which is reflective of the tightened mortgage market and departmental restructuring. * Non-interest expenses totaled $9.51 million for 2008, a 16.21% increase when compared to non-interest expenses for 2007. This increase in non-interest expenses is also reflected in the Company's efficiency ratio, which was 82.54% for 2008 compared to 69.82% for 2007. The majority of the increase in non-interest expense is a result of the opening of our Laurens Road branch, the establishment of our Investment Services division, and increased legal costs relating to our subordinated debt offering and the Lake Keowee loans. Further impacting the Company's efficiency ratio was the significant erosion of our net interest margin. We believe that an increasing net interest margin and management's focus on non-interest expense control should lower the efficiency ratio to more typical levels in future periods. * Return on average assets was -0.87% for 2008, compared to a return on average assets of 0.50% for the prior year. * Return on average shareholders' equity was -10.91% for 2008, compared to a return on average shareholders' equity of 5.12% for the prior year.
"We believe that CommunitySouth's long term success requires our continued focus on maintaining capital levels that exceed the highest regulatory standards, managing credit and the associated risk, increasing core deposits, enhancing organizational efficiency, and continuing to execute our customer-comes-first culture," said Ducker. "While the financial landscape continues to change, we believe our core business model is sound and positions CommunitySouth for success once the economic environment begins to improve."
CommunitySouth's stock is quoted on the Over the Counter Bulletin Board under the symbol CBSO.
About CommunitySouth Bank & Trust
CommunitySouth Bank & Trust (OTCBB:CBSO) was founded in 2004 by two local bankers, Allan Ducker and David Miller. After completing the largest initial public offering ever for a South Carolina-based bank at the time, the Company capitalized with $30 million. The Company has since grown assets to over $380 million and currently employs more than 95 banking professionals.
CommunitySouth serves the Upstate region of South Carolina and currently operates full-service offices in Greenville, Spartanburg, Anderson, Greer, Mauldin and Easley. The Company also operates full-service investment and mortgage divisions.
CommunitySouth offers a complete line of financial products and services, including Free Checking, Nationwide Free ATMs, Free Refreshment Centers with freshly baked cookies, Free Online Banking & Bill Pay, free business courier service, remote deposit, and commercial and consumer loans.
For additional information about CommunitySouth Bank & Trust, call 864-306-2540, toll-free at 866-421-CSBT, or visit www.communitysouthbankandtrust.com.
The CommunitySouth Bank & Trust logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2708
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 profitability, growth, 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 non-interest expenses or 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 factors that could cause such differences, please see our filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2008, which are available at the SEC's website (www.sec.gov).
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 the 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 years ended December 31, 2008 and December 31, 2007 is based on audited financial statements and should be read in conjunction with those audited reports and accompanying footnotes. Our summary consolidated financial data for the three months ended December 31, 2008 and December 31, 2007 have not been audited but, in the opinion of our management, contain all adjustments necessary to present fairly our financial position and results of operations for such periods in accordance with generally accepted accounting principles.
For the Year For the Three
ended Months ended
December 31, December 31,
2008 2007 2008 2007
-------- -------- -------- --------
(In thousands, except per
share dollar amounts)
Summary Results of
Operations Data:
Interest income - loans $ 20,163 $ 21,403 $ 4,582 $ 5,929
Interest income -
investments 2,547 1,813 541 628
-------- -------- -------- --------
Total interest income 22,710 23,216 5,123 6,557
Interest expense (12,580) (13,069) (2,595) (3,775)
-------- -------- -------- --------
Net interest income 10,130 10,147 2,528 2,872
Provision for loan losses (7,168) (1,188) (4,304) (194)
-------- -------- -------- --------
Net interest income (loss)
after provision for loan
losses 2,962 8,959 (1,776) 2,588
Non-interest income 1,392 1,575 371 426
Non-interest expense (9,510) (8,184) (2,338) (2,357)
-------- -------- -------- --------
Income(loss) before taxes (5,156) 2,350 (3,743) 657
Income tax benefit (expense) 1,806 (782) 1,357 (219)
-------- -------- -------- --------
Net income (loss) $ (3,350) $ 1,568 $ (2,386) $ 438
======== ======== ======== ========
Weighted average number of
shares outstanding:
Basic 4,699 4,699 4,699 4,699
Diluted 4,699 5,127 4,699 4,974
Per Share Data:
Net income (loss), basic $ (0.71) $ 0.33 $ (0.51) $ 0.09
Net income (loss), diluted $ (0.71) $ 0.31 $ (0.51) $ 0.09
Book value $ 6.07 $ 6.70 $ 6.07 $ 6.70
Summary Balance Sheet Data:
Total assets $387,816 $377,867
Earning assets 374,939 361,890
Investment securities(1) 47,602 24,844
Other investments(2) 1,805 447
Total loans(3) 320,907 302,934
Allowance for loan losses (8,088) (4,214)
Total deposits 296,643 327,664
Total shareholders' equity 28,528 31,471
Performance Ratios:
Return on average assets(4) -0.87% 0.50% -2.46% 0.48%
Return on average equity(4) -10.91% 5.12% -31.54% 5.58%
Net interest margin(5) 2.74% 3.38% 2.69% 3.14%
Efficiency ratio(6) 82.54% 69.82% 80.65% 73.48%
Bank Capital Ratios:
Total risk-based capital
ratio 10.18% 10.17%
Tier 1 risk-based capital
ratio 8.92% 8.92%
Tier 1 leverage ratio 7.98% 8.26%
Growth ratios since December
31, 2007:
Percentage change in total
assets 2.63%
Percentage change in total
loans 5.93%
Percentage change in total
deposits -9.47%
Percentage change in equity -9.35%
Other data as of December 31:
Allowance for loan losses to
total loans 2.52% 1.39%
Total loans to deposits
ratio 108.18% 92.45%
(1) Marketable securities are stated at fair value.
(2) Non-marketable securities are stated at cost.
(3) Loans are stated at gross amounts before allowance for loan
losses.
(4) The three month period return is annualized and then divided by
the average total assets for the three month period.
(5) The net interest income is annualized for the three month period.
(6) Computed by dividing non-interest expense by the sum of net
interest income and non-interest income.