ASB BANCORP INC 
By ASHEVILLE, N.C., Jan. 31, 2012 /PRNewswire/ -- ASB Bancorp, Inc. (the "Company") (NASDAQ GM: ASBB), the holding company for Asheville Savings Bank, S.S.B. (the "Bank"), announced today its operating results for the three months and year ended December 31, 2011. The Company was incorporated on May 12, 2011 by the Bank to be the Bank's holding company upon completion of the Bank's conversion from the mutual to stock form of organization, which occurred on October 11, 2011. The Company reported a net loss of $711,000, or $(0.14) per share, for the three months ended December 31, 2011 and net income of $1.2 million, or $0.23 per share, for the year ended December 31, 2011. The loss for the fourth quarter was primarily caused by higher loan and foreclosed property loss provisions that were principally attributable to lower valuations of real estate held as collateral for collateral dependent impaired loans and held in the foreclosed property portfolio.
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"While we are disappointed with the fourth quarter loss, we are pleased with the overall improved results over last year," said Suzanne S. DeFerie, President and Chief Executive Officer. "We believe that our diligence in the re-evaluation of our non-performing assets, which resulted in additional write-downs during the quarter, will ultimately provide more normalized earnings. Our local market economic indicators have begun to show slight improvements; however, we remain diligent in monitoring real estate valuations for consistent indications of a positive trend, particularly in the commercial segment of the market."
Balance Sheet Review
Total assets increased $40.9 million, or 5.5%, to $790.9 million at December 31, 2011 from $750.0 million at December 31, 2010, primarily due to $53.9 million in proceeds from the sale of common stock, net of issuance expenses, that were partially offset by an $11.5 million reduction in deposits. Cash and cash equivalents also increased $48.1 million, or 198.5%, to $72.3 million at December 31, 2011 from $24.2 million at December 31, 2010 due to the receipt of proceeds from the issuance of stock in the conversion. Investment securities increased $67.7 million, or 37.3%, to $249.1 million at December 31, 2011 from $181.4 million at December 31, 2010, primarily due to the reinvestment of proceeds from loan repayments and prepayments that were not replaced by new loan originations. Loans receivable, net of deferred fees, decreased $67.1 million, or 13.4%, to $432.9 million at December 31, 2011 from $500.0 million at December 31, 2010 as loan repayments, prepayments, and foreclosures continued to outpace new loan originations.
Deposits decreased $11.5 million, or 1.9%, to $608.2 million at December 31, 2011 from $619.8 million at December 31, 2010. During 2011, core deposits, which exclude certificates of deposit, increased $17.3 million, or 5.2%, to $349.7 million at December 31, 2011 from $332.4 million at December 31, 2010 as a result of the Company's continued focus on increasing these types of deposits. Certificates of deposit decreased $28.9 million, or 10.0%, to $258.5 million at December 31, 2011 compared to $287.4 million at December 31, 2010.
Asset Quality
The provision for loan losses totaled $2.0 million for the fourth quarter of 2011 compared to $4.1 million for the fourth quarter of 2010. The decrease in the provision was due to the combination of fewer charge-offs in the loan portfolio, a decline in impaired loans, and lower loan balances as compared to the fourth quarter of 2010. The provision for loan losses for the fourth quarter of 2011 was significantly higher than the provisions for loan losses for the previous three quarters of 2011 primarily because of lower valuations of real estate that serves as collateral for collateral dependent impaired loans and held in the foreclosed property portfolio.
The provision for loan losses totaled $3.8 million for the year ended December 31, 2011 compared to $22.4 million for the year ended December 31, 2010. The decrease in the provision was due to the combination of fewer charge-offs in the loan portfolio, a decline in impaired loans, and lower loan balances. The allowance for loan losses totaled $10.6 million, or 2.45% of total loans at December 31, 2011 compared to $12.7 million, or 2.54% of total loans, at December 31, 2010. The Company charged off $5.8 million in loans, net of recoveries, during 2011 compared to $18.7 million in loans charged off, net of recoveries, during 2010.
Nonperforming assets totaled $28.7 million, or 3.63% of total assets, at December 31, 2011, compared to $24.1 million, or 3.21% of total assets, at December 31, 2010. Nonperforming assets included $20.6 million in nonperforming loans and $8.1 million in foreclosed real estate at December 31, 2011, compared to $13.4 million and $10.7 million, respectively, at December 31, 2010. As of December 31, 2011, nonperforming loans included six commercial land development loans that totaled $14.7 million, one commercial mortgage in the amount of $833,000, five commercial and industrial loans that totaled $2.6 million, eleven residential mortgages that totaled $1.9 million, and five home equity loans that totaled $440,000. As of December 31, 2011, the nonperforming loans had specific reserves of $1.0 million. Foreclosed real estate at December 31, 2011 included eighteen properties with a total carrying value of $8.1 million.
During the fourth quarter of 2011, one loan for the construction of a mixed-use retail, commercial office, and residential condominium project located in western North Carolina migrated from a performing troubled debt restructure loan to a nonaccruing loan. As of December 31, 2011, the primary loan had a balance of $8.6 million, and the Bank loaned an additional $2.3 million loan to a third party associated with the borrower's Chapter 11 bankruptcy plan for the purpose of facilitating a debtor in possession loan. The debtor in possession loan, which totaled $2.9 million, has a superior position to the Bank's primary loan. The court dismissed the bankruptcy, the loan stopped performing and the Bank is in the process of repurchasing the debtor in possession note and proceeding to foreclosure. The project has 8 retail condominiums of which 4 have been leased, 11 commercial office condominiums of which 3 have sold, and 29 residential condominiums of which one has sold.
Income Statement Analysis
Net interest income decreased $263,000, or 5.2%, to $4.7 million for the fourth quarter of 2011 compared to $5.0 million for the fourth quarter of 2010. The net interest margin decreased 23 basis points to 2.51% for the quarter ended December 31, 2011 compared to 2.74% for the quarter ended December 2010. Interest and dividend income decreased $832,000, or 11.0%, for the fourth quarter of 2011 compared to the fourth quarter of 2010, primarily resulting from a 59 basis point decrease in the average yield on interest-earning assets that was partially offset by an increase in average interest-earning assets of $29.5 million. Interest expense decreased $569,000, or 22.0%, for the fourth quarter of 2011 compared to the fourth quarter of 2010, primarily resulting from a 34 basis point decline in the average rate paid on interest-bearing deposits coupled with a $27.7 million decrease in average interest-bearing deposits.
For the year ended December 31, 2011, net interest income decreased $1.3 million, or 6.0%, to $20.1 million compared to $21.4 million for the year ended December 31, 2010. The net interest margin decreased 15 basis points to 2.79% in 2011 from 2.94% in 2010. Interest and dividend income decreased $4.1 million, or 12.4%, to $28.7 million in 2011 from $32.8 million in 2010, primarily resulting from a 54 basis point decrease in the average yield on interest-earning assets. Interest expense decreased $2.8 million, or 24.5%, to $8.6 million in 2011 from $11.4 million in 2010, principally attributable to a 46 basis point reduction in the average rate paid on interest-bearing deposits and, to a lesser extent, a $12.4 million decrease in average interest-bearing deposits.
Noninterest income increased $511,000, or 28.0%, to $2.3 million for the three months ended December 31, 2011 compared to $1.8 million for the three months ended December 31, 2010, primarily due to higher gains from sales of securities that were partially offset by lower gains from sales of residential mortgage loans and lower deposit overdraft fees. For the year ended December 31, 2011, noninterest income increased $266,000, or 3.5%, to $7.9 million from $7.7 million for the year ended December 31, 2010, primarily due to higher gains from sales of securities and higher loan prepayment fees that were partially offset by lower deposit fees and lower gains from sales of residential mortgage loans.
Noninterest expense increased $584,000, or 10.2%, to $6.3 million for the three months ended December 31, 2011 from $5.7 million for the three months ended December 31, 2010. The increase was primarily attributable to increases in foreclosed property, compensation and professional expenses that were partially offset by lower deposit insurance expense. For the year ended December 31, 2011, noninterest expense increased $314,000, or 1.4%, to $22.5 million from $22.2 million for the year ended December 31, 2010, primarily attributable to increases in compensation, foreclosed property, professional service and data processing expenses that were partially offset by lower deposit insurance and advertising expenses.
ASB Bancorp, Inc. is a North Carolina corporation with one wholly-owned subsidiary, Asheville Savings Bank. The Bank is a North Carolina chartered savings bank with a community focus offering traditional financial services through 13 full-service banking centers located in Buncombe, Madison, McDowell, Henderson, and Transylvania counties in Western North Carolina.
This news release, as well as other written communications made from time to time by the Company and its subsidiaries and oral communications made from time to time by authorized officers of the Company, may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the PSLRA). Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential." For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.
The Company cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: prevailing economic and geopolitical conditions; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, pricing, products and services and other factors that may be described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.
Suzanne S.
Contact: DeFerie
Chief Executive
Officer
(828) 254-7411
Selected Financial Condition Data
December 31,
------------
(dollars in thousands) 2011 2010 % change
---- ---- --------
Total assets $790,868 $749,965 5.5%
Cash and cash equivalents 72,327 24,234 198.5%
Investment securities 249,081 181,393 37.3%
Loans receivable, net of deferred fees 432,883 500,003 -13.4%
Allowance for loan losses (10,627) (12,676) 16.2%
Deposits 608,236 619,757 -1.9%
FHLB advances 60,000 60,000 0.0%
Total equity 115,571 62,881 83.8%
Selected
Operating
Data
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
(dollars
in
thousands, 2011 2010 % change 2011 2010 % change
except
per
share
data) ---- ---- -------- ---- ---- --------
Interest
and
dividend
income $6,760 $7,592 -11.0% $28,734 $32,815 -12.4%
Interest
expense 2,013 2,582 -22.0% 8,642 11,444 -24.5%
Net
interest
income 4,747 5,010 -5.2% 20,092 21,371 -6.0%
Provision
for
loan
losses 1,974 4,110 -52.0% 3,785 22,419 -83.1%
----- ----- ----- ------
Net
interest
income
(loss)
after
provision
for
loan
losses 2,773 900 208.1% 16,307 (1,048) 1656.0%
Noninterest
income 2,337 1,826 28.0% 7,949 7,683 3.5%
Noninterest
expense 6,297 5,713 10.2% 22,481 22,167 1.4%
Income
(loss)
before
income
tax
provision (1,187) (2,987) 60.3% 1,775 (15,532) 111.4%
Income
tax
provision
(benefit) (476) (1,188) 59.9% 588 (6,074) 109.7%
Net
income
(loss) $(711) $(1,799) 60.5% $1,187 $(9,458) 112.6%
===== ======= ====== =======
Net
income
(loss)
per
share
Basic $(0.14) n/a n/a $0.23 n/a n/a
Diluted $(0.14) n/a n/a $0.23 n/a n/a
Weighted
average
shares
outstanding
(1)
Basic 5,104,019 - 5,104,019 -
Diluted 5,104,019 - 5,104,019 -
-------
(1) Weighted average shares outstanding used in the calculation of basic and
diluted earnings per share were
calculated from October 12, 2011, the date on which the Company's stock began
trading, through
December 30, 2011.
Selected Average
Balances and
Yields/Costs
Three Months Ended December 31,
-------------------------------
2011 2010
---- ----
Average Yield/ Average Yield/
(dollars in
thousands) Balance Cost Balance Cost
------- ---- ------- ----
Interest-earning
deposits with
banks $64,849 0.25% $21,066 0.26%
Loans receivable 449,036 4.80% 527,481 4.86%
Investment
securities 70,452 2.44% 55,537 2.61%
Mortgage-backed
and similar
securities 168,030 2.06% 118,669 2.52%
Other interest-
earning assets 3,883 1.33% 3,970 0.40%
Total interest-
earning assets 756,250 3.56% 726,723 4.15%
Interest-bearing
deposits 552,558 1.01% 580,270 1.35%
Overnight and
short-term
borrowings 367 0.00% 811 0.49%
Federal Home Loan
Bank advances 60,971 3.96% 60,000 4.03%
Total interest-
bearing
liabilities 613,896 1.30% 641,081 1.60%
Interest rate
spread 2.26% 2.55%
Net interest margin 2.51% 2.74%
Year Ended December 31,
-----------------------
2011 2010
---- ----
Average Yield/ Average Yield/
(dollars in
thousands) Balance Cost Balance Cost
------- ---- ------- ----
Interest-earning
deposits with
banks $33,089 0.26% $21,997 0.27%
Loans receivable 471,260 4.97% 563,013 5.07%
Investment
securities 70,327 2.53% 50,872 3.13%
Mortgage-backed
and similar
securities 145,806 2.41% 87,474 3.06%
Other interest-
earning assets 3,927 1.02% 3,982 0.38%
Total interest-
earning assets 724,409 3.98% 727,338 4.52%
Interest-bearing
deposits 565,268 1.10% 577,648 1.56%
Overnight and
short-term
borrowings 1,049 0.29% 1,189 0.25%
Federal Home Loan
Bank advances 60,245 4.01% 60,000 4.03%
Total interest-
bearing
liabilities 626,562 1.38% 638,837 1.79%
Interest rate
spread 2.60% 2.73%
Net interest margin 2.79% 2.94%
Selected Asset
Quality Data
Three Months Ended Year Ended
Allowance for Loan
Losses December 31, December 31,
------------ ------------
(in thousands) 2011 2010 2011 2010
---- ---- ---- ----
Allowance for loan
losses, beginning
of period $10,873 $16,883 $12,676 $8,994
Provision for loan
losses 1,974 4,110 3,785 22,419
Charge-offs (2,316) (8,339) (6,134) (18,864)
Recoveries 96 22 300 127
Net charge-offs (2,220) (8,317) (5,834) (18,737)
------ ------ ------ -------
Allowance for loan
losses, end of
period $10,627 $12,676 $10,627 $12,676
======= ======= ======= =======
Allowance for loan
losses as a percent
of:
Total loans 2.45% 2.54% 2.45% 2.54%
Total nonperforming
loans 51.53% 94.43% 51.53% 94.43%
Nonperforming Assets December 31,
------------
(dollars in thousands) 2011 2010 % change
---- ---- --------
Nonperforming Loans:
Nonaccruing Loans (1)
Commercial:
Commercial mortgage $833 $3,810 -78.1%
Commercial construction and
land development 14,695 5,205 182.3%
Commercial and industrial 2,595 377 588.3%
Total commercial 18,123 9,392 93.0%
------ -----
Non-commercial:
Residential mortgage 1,922 3,194 -39.8%
Non-commercial
construction and land
development 110 553 -80.1%
Revolving mortgage 440 191 130.4%
Consumer 27 94 -71.3%
Total non-commercial 2,499 4,032 -38.0%
----- -----
Total nonaccruing loans (1) 20,622 13,424 53.6%
------ ------
Total loans past due 90 or
more days
and still accruing - - 0.0%
--- ---
Total nonperforming loans 20,622 13,424 53.6%
Foreclosed real estate 8,125 10,650 -23.7%
----- ------
Total nonperforming assets 28,747 24,074 19.4%
Performing troubled debt
restructurings (2) 1,142 15,233 -92.5%
Performing troubled debt
restructurings and
total nonperforming assets $29,889 $39,307 -24.0%
======= =======
Nonperforming loans as a
percent of total loans 4.76% 2.68%
Nonperforming assets as a
percent of total assets 3.63% 3.21%
Performing troubled debt
restructurings and
total nonperforming assets
to total assets 3.78% 5.24%
--------------------------
(1) Nonaccruing loans include nonaccruing troubled debt
restructurings.
(2) Performing troubled debt restructurings exclude
nonaccruing troubled debt restructurings.
Year Ended December
Foreclosed Real Estate 31,
--------------------
(dollars in thousands) 2011 2010
---- ----
Beginning balance $10,650 $3,699
Transfers from loans 3,533 12,585
Capitalized cost 41 72
Loss provisions (1,574) (1,780)
Proceeds from sales of
properties,
net of gains and losses (4,525) (3,788)
Sales of properties funded by
loans - (138)
Ending balance $8,125 $10,650
====== =======
Foreclosed Real Estate by Loan
Type December 31,
------------
2011 2010
---- ----
(dollars in thousands) Number Amount Number Amount
------ ------ ------ ------
Commercial mortgage 3 $3,045 3 $4,135
Commercial construction and land
development 2 1,683 2 1,967
Residential mortgage 10 1,660 9 1,711
Residential construction and
land development 3 1,737 5 2,837
Total 18 $8,125 19 $10,650
=== ====== === =======
Selected
Performance
Ratios
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
Return on
average
assets (1) -0.35% -0.94% 0.15% -1.25%
Return on
average
equity (1) -2.14% -10.68% 1.44% -13.01%
Interest rate
spread
(1)(2) 2.26% 2.55% 2.60% 2.73%
Net interest
margin
(1)(3) 2.51% 2.74% 2.79% 2.94%
Efficiency
ratio (4) 88.50% 83.41% 79.90% 76.18%
----------
(1) Ratios are annualized.
(2) Represents the difference between the weighted
average yield on average interest-earning assets and
the
weighted average cost on average interest-bearing
liabilities. Tax exempt income is reported on a tax
equivalent basis using a federal marginal tax rate of
34%.
(3) Represents net interest income as a percent of
average interest-earning assets. Tax exempt income is
reported on a tax equivalent basis using a federal
marginal tax rate of 34%.
(4) Represents noninterest expenses divided by the sum
of net interest income, on a tax equivalent basis
using a federal marginal tax rate of 34%, and
noninterest income.
Quarterly Data
Three Month Periods Ended
December
(dollars in thousands, December 31, September 30, June 30, March 31, 31,
except per share data) 2011 2011 2011 2011 2010
---- ---- ---- ---- ----
Income Statement Data:
Interest and dividend income $6,760 $7,090 $7,502 $7,382 $7,592
Interest expense 2,013 2,120 2,205 2,304 2,582
Net interest income 4,747 4,970 5,297 5,078 5,010
Provision for loan losses 1,974 730 424 657 4,110
Net interest income after
provision for loan losses 2,773 4,240 4,873 4,421 900
Noninterest income 2,337 2,004 1,928 1,680 1,826
Noninterest expense 6,297 5,322 5,630 5,232 5,713
Income (loss) before income
tax provision (1,187) 922 1,171 869 (2,987)
Income tax provision (benefit) (476) 351 429 284 (1,188)
Net income (loss) $(711) $571 $742 $585 $(1,799)
===== ==== ==== ==== =======
Per Share Data:
Net income (loss) per share -
Basic $(0.14) n/a n/a n/a n/a
Net income (loss) per share -
Diluted $(0.14) n/a n/a n/a n/a
Book value per share $20.69 n/a n/a n/a n/a
Average shares outstanding
basic 5,104,019 n/a n/a n/a n/a
Average shares outstanding
diluted 5,104,019 n/a n/a n/a n/a
Ending shares outstanding 5,584,551 n/a n/a n/a n/a
As Of As Of As Of As Of As Of
December
December 31, September 30, June 30, March 31, 31,
(dollars in thousands) 2011 2011 2011 2011 2010*
---- ---- ---- ---- -----
Ending Balance Sheet Data:
Total assets $790,868 $798,748 $755,143 $750,709 $749,965
Cash and cash equivalents 72,327 75,402 25,825 26,436 24,234
Investment securities 249,081 235,285 225,802 204,316 181,393
Loans receivable, net of
deferred fees 432,883 450,263 467,599 484,729 500,003
Allowance for loan losses (10,627) (10,873) (12,353) (12,632) (12,676)
Deposits 608,236 615,555 616,463 616,586 619,757
Escrowed stock order funds - 49,063 - - -
FHLB advances 60,000 60,000 60,000 60,000 60,000
Total equity 115,571 67,681 65,547 63,295 62,881
Asset Quality:
Nonperforming loans $20,622 $11,565 $11,070 $14,190 $13,424
Nonperforming assets 28,747 22,262 20,588 24,696 24,074
Nonperforming loans to total
loans 4.76% 2.57% 2.37% 2.93% 2.68%
Nonperforming assets to total
assets 3.63% 2.79% 2.73% 3.29% 3.21%
Allowance for loan losses $10,627 $10,873 $12,353 $12,632 $12,676
Allowance for loan losses to
total loans 2.45% 2.41% 2.64% 2.61% 2.54%
Allowance for loan losses to
nonperforming loans 51.53% 94.02% 111.59% 89.02% 94.43%
-------------------
* Ending balance sheet data as of December 31, 2010 were derived from audited consolidated financial
statements.
SOURCE ASB Bancorp, Inc.
