From First South Bank

First South Bancorp Inc., the parent holding company of First South Bank, reported its unaudited operating results for the quarter and nine months ended Sept. 30.

2016 Third-Quarter Highlights

•  Strong earnings performance with net income of $1.9 million, earnings per share of $0.20, ROA of 0.78 percent     and ROE of 8.52 percent
•  Strategic execution as evidenced by highest quarterly EPS since Q1 2009
•  Strong mortgage loan origination, sale and servicing revenue leads to increased core non-interest income
•  Loans and leases held for investment grew at an annualized rate of more than 8 percent
•  Continued to maintain sound asset quality metrics
•  Growth in non-interest bearing deposits at an annualized rate of more than 28 percent
•  Completed the purchase of mortgage servicing rights for 452 high-quality
•   Freddie Mac and Fannie Mae loans with an unpaid principal balance of $84.6 million at settlement

Net income for the 2016 third quarter was $1.9 million, representing a 17.5-percent increase from $1.6 million and a 53.2-percent increase from $1.2 million for the linked and comparative 2015 quarter, respectively. Earnings per diluted common share, return on average assets and return on average equity for the current quarter were $0.20, 0.78 percent and 8.52 percent, respectively, compared with $0.17, 0.68 percent and 7.55 percent for the linked quarter and $0.13, 0.54 percent and 5.99 percent for the comparative 2015 third quarter. The improvement in quarterly net income is primarily attributable to an increase in net interest income, coupled with solid core non-interest income and a reduction in operating expenses. Income tax expense for the third quarter of 2016 was impacted by a $74,000 adjustment to our deferred tax asset due to a reduction in the North Carolina statutory tax rate. In the third quarter of 2015, an $80,000 adjustment was made for this same circumstance.

The company showed significant improvement in pre-tax, pre-provision operating earnings for the 2016 third quarter.

Net income for the first nine months of 2016 increased to $5 million or $0.52 per diluted common share, a 59.4-percent increase from the $3.1 million or $0.33 per diluted common share earned during the first nine months of 2015. Earnings for the current nine-month period were positively impacted by strong increases in net interest income and core non-interest income, as well as lower non-interest expenses, while being partially offset by an increase in the provision for loan losses associated with the strong loan portfolio growth.

Bruce Elder, president and CEO, commented, “First South Bancorp continues to execute our strategy to enhance shareholder value. The expansion of our deposit franchise and strong loan growth, leveraging our mortgage servicing infrastructure and our success in Small Business Administration (SBA) lending are having a positive impact on the rate at which earnings are increasing compared to prior year’s quarters. While more work is to be done, we have made steady progress improving our efficiency ratio from 82.26 percent for the quarter ended Sept. 30, 2015, to 73.84 percent for the current quarter.”