From First South Bank

 

First South Bancorp Inc., the parent holding company of First South Bank, reports its unaudited operating results for the quarter and six months as of June 30.

 

2016 Second Quarter Highlights

 

• Solid earnings performance with growth in net income, earnings per share, as well as returns on average assets and average equity
• Increase in pre-tax, pre-provision operating earnings by $540,000 compared with linked 2016 first quarter results
• Strong loan growth as we increased our loans-held-for-investment by $29.8 million
• Improvement in asset quality metrics with lower levels of past due and non-performing loans
• Continued deposit growth with strong increase in non-interest bearing deposits
• Expansion of our net interest margin
• Increased quarterly cash dividend payment rate to $0.03 per share, a 20-percent increase

 

Net Income: Net income for the second quarter of 2016 was $1.6 million or $0.17 per diluted common share and compares favorably to the $1.5 million or $0.15 per diluted common share and $1.2 million or $0.12 per diluted common share of net income generated during the linked 2016 first quarter and the comparative prior year quarter, respectively.

The improvement in quarterly net income is primarily attributable to an increase in net interest income, reflecting the impact of strong loan growth over the past twelve months.

The company showed significant improvement in pre-tax, pre-provision operating earnings for the quarter ending on June 30. Pre-tax, pre-provision operating earnings, which excludes certain revenue and expense items as shown on the accompanying table of Supplemental Financial Data, was $2.5 million for the current quarter compared to $2 million for the quarter ending March 31 and $1.8 million for the comparative quarter ending on June 30, 2015.

The company generated a net income of $3.1 million for the first six months of 2016 or $0.32 per diluted common share compared to $1.9 million or $0.20 per diluted common share earned during the first six months of 2015. Earnings for the current six-month period were positively impacted by increases in net interest income and 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. During the first quarter of 2015, the Bank incurred $425,000 of pre-tax one-time transaction expenses associated with acquiring nine branch offices.

Bruce Elder, president and CEO, said, “When we expanded our geographic franchise footprint in December 2014 through a branch acquisition transaction, we realized that it would take time to leverage the personnel, facilities and low-cost deposits we acquired. As of the quarter ended June 30, 2016, we have created shareholder value by generating pre-tax, pre-provision operating earnings in excess of those levels achieved for the quarter ended immediately preceding the branch acquisition. As we continue to grow our earning asset base, further diversify our sources of non-interest income and improve operating efficiency, our earnings potential should show progress toward high performance.”

Elder continued, “During the quarter ended June 30, 2016, we were pleased to increase our quarterly dividend payment rate by 20 percent to $0.03 per share. Our dividend payments for the first six months of 2016 represent a 17-percent payout ratio of diluted earnings per share. The Board of Directors’ decision to increase the quarterly dividend rate reflects the company’s strong capital position, improved financial performance and confidence in the company’s future.”