MYRTLE BEACH, S.C., July 25, 2018 /PRNewswire/ -- South
Atlantic Bancshares, Inc. ("South Atlantic") (OTCQX:SABK), announced today the results of its operations for the second quarter
ended June 30, 2018. Highlights include:
- Net operating return on average assets (non-GAAP) of 0.75 percent for the six months ending June 30,
2018, the best performance in company history.
- Net interest margin, taxable equivalent, of 4.20 percent, a 20 basis point, or 5 percent, increase from a year ago.
- Asset quality continues to be a highlight with nonperforming assets to total assets of 0.00 percent.
South Atlantic also completed its acquisition of $82.4 million Atlantic Bancshares, Inc. during
the second quarter.
- Total loans grew 23.37 percent, to $511.9 million at June 30,
2018 from $415.0 million at June 30, 2017, primarily due to
the acquisition of Atlantic Bancshares.
- Total deposits grew 21.7 percent, to $555.1 million at June 30,
2018 from $456.0 million at June 30, 2017, reflecting that
South Atlantic has been successful at retaining Atlantic Bancshares deposits to date.
- Total assets grew 23.0 percent to $638.9 million at June 30,
2018 from $519.3 million at June 30, 2017, primarily due to
the acquisition of Atlantic Bancshares.
K. Wayne Wicker, Chairman and Chief Executive Officer, stated: "It was a productive first six
months as we excelled in our return on average assets and earnings per share. We achieved these milestones through growing loans
by more than 23 percent in the past year while maintaining a very strong net interest margin. Demand deposits also increased
significantly across all markets. Our team has done a great job integrating the Atlantic Bancshares, Inc. acquisition. The
combination of the two banks with complementary business lines strengthens our coastal South
Carolina franchise. As an organization, we continue to improve on our efficiencies as we capture further economies of
scale, even while absorbing the one-time merger and conversion related costs."
2Q 2018 Financial Highlights
Net operating earnings (non-GAAP) for the six months ended June 30, 2018 totaled $2.1 million or $0.29 per diluted common share. Net income for the six
months ending June 30, 2018 was $752 thousand, which includes
one-time charges of $1.4 million in merger and conversion expenses, or $0.10 per common share. Net income for the six months ending June 30, 2017
was $1.6 million or $0.34 per common share.
Net operating earnings (non-GAAP) for the three months ended June 30, 2018 totaled $1.3 million compared to $963 thousand in 2017. For the quarter, net operating
earnings diluted (non-GAAP) per common share was $0.17, compared to $0.17 in 2017. Net income for the quarter was $(48,853) or (0.01) per diluted
share, which includes one-time charges of $1.4 million in merger and conversion expenses, compared
to $963 thousand a year ago.
Non-GAAP Financial Measures
|
|
|
|
For the
|
|
For the
|
|
For the
|
|
For the
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Six Months Ended
|
|
|
June 30, 2018
|
|
June 30, 2017
|
|
June 30, 2018
|
|
June 30, 2017
|
Net Income*
|
$
|
(48,853)
|
$
|
963,937
|
$
|
752,259
|
$
|
1,650,071
|
Merger and Conversion Expenses
|
|
1,385,288
|
|
-
|
|
1,385,288
|
|
-
|
Net operating earnings (non-GAAP)
|
|
1,336,435
|
|
-
|
|
2,137,547
|
|
-
|
|
|
|
|
|
|
|
|
|
Earnings Breakdown
|
|
|
|
|
|
|
|
|
Net Income per share – diluted
|
|
(0.01)
|
|
0.17
|
|
0.10
|
|
0.34
|
Net operating earnings – diluted (non-GAAP)
|
|
0.17
|
|
-
|
|
0.29
|
|
-
|
|
|
462,905
|
|
462,905
|
|
|
|
|
Selected Ratios
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
(0.03)
|
|
0.77
|
|
0.26
|
|
0.69
|
Net operating return on average assets (non-GAAP)
|
|
0.86
|
|
-
|
|
0.75
|
|
-
|
Return on average stockholders' equity
|
|
(0.27)
|
|
6.65
|
|
2.28
|
|
6.88
|
Net operating return on average equity (non-GAAP)
|
|
7.42
|
|
-
|
|
6.47
|
|
-
|
Efficiency ratio
|
|
94.44
|
|
72.49
|
|
89.76
|
|
75.16
|
Efficiency ratio (non-GAAP)
|
|
75.29
|
|
-
|
|
79.00
|
|
-
|
|
|
|
|
|
|
|
|
|
* Net income includes merger and
conversion expenses totaling $1,385,288.
|
Net Interest Income and Net Interest Margin
Net interest income to average assets was 3.87 percent and 3.66 percent for the six months ended June
30, 2018 and 2017, respectively. Net interest income totaled $11.1 million in the first six
months of 2018 compared to $8.7 million for the same period in 2017. Net interest margin, taxable
equivalent, increased from 4.00 percent for the six months ending June 30, 2017 to 4.20 percent for
the same period in 2018. Increases in net interest income and net interest margin are attributed to loan growth and interest rate
increases during the period.
Net interest income to average assets of 3.97 percent for the quarter increased from 3.67 percent in the second quarter of
2017. Net interest income for the second quarter totaled $6.2 million and $4.6 million in 2018 and 2017, respectively. Net interest margin, taxable equivalent, increased from 4.01
percent in the second quarter of 2017 to 4.31 percent in the second quarter of 2018. Improvements in net interest income and net
interest margin for the quarter are attributed to increases in the yield on earning assets.
Noninterest Income and Expense
Noninterest income totaled $1.8 million and $1.5 million for the
first six months in 2018 and 2017, respectively. Noninterest income for the second quarter of 2018 totaled $1.0 million and $838 thousand for 2018 and 2017, respectively. The increases in
noninterest income were related to an increase in mortgage operations income.
Noninterest expense was up during the first six months of 2018 at $11.6 million from
$7.7 million in 2017. For the quarter, noninterest expense totaled $6.8
million compared to $4.0 million in 2018 and 2017, respectively. These increases are
attributed to the merger & conversion expenses and completion of Charleston market
headquarters.
The effective income tax rate for the quarter was 21.6 percent for 2018 as compared to 37.0 percent in 2017. The lower rate
primarily reflects the benefit from a reduction of the US federal corporate income tax rate by the Tax Cuts and Jobs Act. The
effective tax rate for the first six months of 2018 was 21.6 percent as compared to 18.4 percent for the full year of 2017. The
company received a tax benefit of a tax reduction from a deferred tax liability at year end 2017.
Loan Loss Provision
Provision for loan losses for the six months ended June 30, 2018 and 2017, respectively, was
$215 thousand and $285 thousand. The decrease in provision is
primarily a reflection of the company's excellent asset quality and treatment of the reserve related to the merger. Provision for
loan losses for the quarter totaled $165 thousand and $165 thousand
for 2018 and 2017, respectively. The allowance for loan losses and leases at June 30, 2018 was
$4.0 million or 0.78 percent of total loans as compared to $3.1
million or 0.75 percent of total loans at June 30, 2017.
Nonperforming Assets
Nonperforming assets as a percentage of average assets was 0.00 percent and 0.03 for the six months ending June 30, 2018 and 2017, respectively. For the second quarter, nonperforming assets as a percentage of
average assets was 0.00 and 0.02 for 2018 and 2017, respectively. In addition to the allowance, there were $1.7 million additional discounts on $59.1 million of loans acquired with the
purchase of Atlantic Bancshares, Inc. as of June 30, 2018.
About South Atlantic Bancshares, Inc.
South Atlantic Bancshares, Inc., (OTCQX: SABK) is a registered bank holding company based in Myrtle
Beach, South Carolina with $638.9 million in assets. The company's banking subsidiary,
South Atlantic Bank, is a full service financial institution spanning the entire coastal area of South
Carolina, and is locally owned, controlled, and operated. The bank operates nine offices in Myrtle Beach, North Myrtle Beach, Murrells
Inlet, Pawleys Island, Georgetown, Mount Pleasant, Charleston, Hilton Head
Island, and Bluffton, South Carolina. South Atlantic Bank specializes in providing
personalized community banking services to individuals, small businesses and corporations. Services include a full range of
consumer and commercial banking products, including mortgage, and treasury management, including South Atlantic Bank
goMobile, its mobile banking app. The bank also offers online banking, checking, CD, and money market accounts, merchant
services, mortgage loans, remote deposit capture, and more. Recruiting the best people, delivering exceptional client
service, strategic branching and a disciplined approach to lending have contributed to South Atlantic Bank's success. For more
information, visit www.Southatlantic.bank
Non-GAAP Financial Matters
Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying
tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. South Atlantic management uses
several non-GAAP financial measures, including (i) net operating earnings available to common shareholders; and (ii) net
operating return on average assets, in its analysis of the company's performance. Net operating earnings available to common
shareholders excludes the following from net income available to common shareholders: merger and conversion expenses.
Management believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the
ongoing performance of the company and provide meaningful comparisons to its peers. Non-GAAP financial measures should not be
considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should
consider South Atlantic's performance and financial condition as reported under GAAP and all other relevant information when
assessing the performance or financial condition of the company. Non-GAAP financial measures have limitations as analytical
tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition
as reported under GAAP.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains, among other things, certain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including, without limitation, statements preceded by, followed by, or that include the
words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," "projects," "outlook"
or similar expressions, including statements related to the integration of Atlantic Bancshares. These statements are based upon
the current beliefs and expectations of the company's management team and are subject to significant risks and uncertainties that
are subject to change based on various factors (many of which are beyond the company's control). Although the company believes
that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be
inaccurate. Therefore, the company 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 the company or any
person that the future events, plans, or expectations contemplated by the company will be achieved. All subsequent written and
oral forward-looking statements attributable to the company or any person acting on its behalf are expressly qualified in their
entirety by the cautionary statements above. The company does not undertake any obligation to update any forward-looking
statement to reflect circumstances or events that occur after the date the forward-looking statements are made, except as
required by law.
Information contained herein, other than information at December 31, 2017, and for the twelve
months then ended, is unaudited. All financial data should be read in conjunction with the notes to the consolidated
financial statements of the company and South Atlantic Bank as of and for the fiscal year ended December
31, 2017, as contained in the company's 2017 Annual Report located on the company's website.
Member FDIC
South Atlantic Bancshares, Inc.
Selected Financial Highlights
|
|
|
|
For the
|
|
For the
|
|
For the
|
|
For the
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Six Months Ended
|
|
|
June 30, 2018
|
|
June 30, 2017
|
|
June 30, 2018
|
|
June 30, 2017
|
Year End/Quarter End Balances (In Thousands)
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
638,914
|
$
|
519,339
|
$
|
638,914
|
$
|
519,339
|
Investment securities
|
|
41,900
|
|
45,174
|
|
41,900
|
|
45,174
|
Loans, net of unearned income (total loans)
|
|
511,981
|
|
414,987
|
|
511,981
|
|
414,987
|
Deposits
|
|
555,118
|
|
456,026
|
|
555,118
|
|
456,026
|
Shareholders' equity
|
|
77,690
|
|
58,799
|
|
77,690
|
|
58,799
|
|
|
462,905
|
|
462,905
|
|
|
|
|
Average Balances (In Thousands)
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
626,395
|
$
|
504,314
|
$
|
575,541
|
$
|
479,231
|
Earning assets
|
|
585,396
|
|
470,541
|
|
539,041
|
|
446,706
|
Investment securities
|
|
39,102
|
|
44,291
|
|
37,681
|
|
44,099
|
Loans, net of unearned income
|
|
505,347
|
|
410,916
|
|
467,789
|
|
393,692
|
Deposits
|
|
548,657
|
|
443,022
|
|
497,846
|
|
418,519
|
Shareholders' equity
|
|
72,282
|
|
58,174
|
|
66,616
|
|
48,337
|
|
|
|
|
|
|
|
|
|
Earnings Breakdown (In Thousands)
|
|
(Year over Year)
|
Total interest income
|
$
|
6,898
|
$
|
5,027
|
$
|
12,336
|
$
|
9,506
|
Total interest expense
|
|
690
|
|
407
|
|
1,280
|
|
811
|
Net interest income
|
|
6,207
|
|
4,620
|
|
11,056
|
|
8,695
|
Total noninterest income
|
|
1,028
|
|
838
|
|
1,816
|
|
1,537
|
Total noninterest expense
|
|
6,833
|
|
3,957
|
|
11,554
|
|
7,691
|
Provision for loan losses
|
|
165
|
|
165
|
|
215
|
|
285
|
Income before taxes
|
|
237
|
|
1,336
|
|
1,103
|
|
2,256
|
Taxes
|
|
286
|
|
372
|
|
350
|
|
606
|
Net income
|
|
(49)
|
|
964
|
|
752
|
|
1,650
|
Diluted earnings per share
|
|
(0.01)
|
|
0.17
|
|
0.10
|
|
0.34
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
7,525,488
|
|
5,463,976
|
|
7,126,581
|
|
4,679,220
|
Diluted
|
|
7,663,137
|
|
5,649,749
|
|
7,269,156
|
|
4,899,383
|
|
|
|
|
|
|
|
|
|
Selected % Increases
|
|
(Year over Year)
|
Total assets
|
|
23.02
|
|
12.20
|
|
23.02
|
|
12.20
|
Total interest earning assets
|
|
25.27
|
|
11.79
|
|
25.27
|
|
11.79
|
Total loans
|
|
23.37
|
|
21.34
|
|
23.37
|
|
21.34
|
Total deposits
|
|
21.73
|
|
7.56
|
|
21.73
|
|
7.56
|
Interest income
|
|
37.22
|
|
23.68
|
|
29.77
|
|
19.15
|
Interest expense
|
|
69.55
|
|
10.43
|
|
57.85
|
|
17.72
|
Noninterest income
|
|
22.61
|
|
13.16
|
|
18.16
|
|
15.61
|
Noninterest expense
|
|
72.70
|
|
16.09
|
|
50.23
|
|
13.87
|
Net income
|
|
(105.07)
|
|
52.34
|
|
(54.41)
|
|
46.07
|
|
|
|
|
|
|
|
|
|
Selected Ratios
|
|
|
|
|
|
|
|
|
Return on assets
|
|
(0.03)
|
|
0.77
|
|
0.26
|
|
0.69
|
Return on equity
|
|
(0.27)
|
|
6.65
|
|
2.28
|
|
6.88
|
Interest income to total average assets
|
|
4.42
|
|
4.00
|
|
4.32
|
|
4.00
|
Interest expense to total average assets
|
|
0.44
|
|
0.32
|
|
0.45
|
|
0.34
|
Net interest income to total average assets
|
|
3.97
|
|
3.67
|
|
3.87
|
|
3.66
|
Efficiency Ratio
|
|
94.44
|
|
72.49
|
|
89.76
|
|
75.16
|
Loan loss reserve to total loans
|
|
0.78
|
|
0.75
|
|
0.78
|
|
0.75
|
Nonperforming assets to total average assets
|
|
0.00
|
|
0.02
|
|
0.00
|
|
0.03
|
Net charge-offs to total average loans
|
|
0.00
|
|
0.14
|
|
0.00
|
|
0.14
|
Net interest margin
|
|
4.31
|
|
4.01
|
|
4.20
|
|
4.00
|
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SOURCE South Atlantic Bancshares, Inc.