Free 7-day Trial
All Articles and Columns »

First South Bancorp Inc Reports Operating Results (10-Q)

August 06, 2010 | About:
insider

10qk

18 followers
First South Bancorp Inc (FSBK) filed Quarterly Report for the period ended 2010-06-30.

First South Bancorp Inc has a market cap of $114.2 million; its shares were traded at around $11.72 with a P/E ratio of 17.7 and P/S ratio of 1.9. The dividend yield of First South Bancorp Inc stocks is 6.8%. First South Bancorp Inc had an annual average earning growth of 37.1% over the past 10 years.
This is the annual revenues and earnings per share of FSBK over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of FSBK.


Highlight of Business Operations:

The Bank is subject to various capital requirements administered by federal and state banking agencies. At June 30, 2010, the Bank's regulatory capital ratios were in excess of all regulatory requirements and were the following: Total Risk-Based Capital – 13.62%; Tier 1 Risk-Based Capital – 12.37%; and Tier 1 Leverage Capital – 9.99%. See "Liquidity and Capital Resources" below for additional information.

Key performance ratios are return on average assets (ROA), return on average equity (ROE), and efficiency. ROA was .8% for both the three and six months ended June 30, 2010, compared to .8% and .9% for the three and six months ended June 30, 2009. ROE was 7.2% and 7.1% for the three and six months ended June 30, 2010, compared to 8.0% and 9.1% for the three and six months ended June 30, 2009. The Company s efficiency ratio was 59.1% and 57.8% for the three and six months ended June 30, 2010, compared to 58.6% and 57.2% for the three and six months ended June 30, 2009.

Net Interest Income. Net interest income increased to $8.6 million and $17.3 million for the three and six months ended June 30, 2010, from $7.9 million and $15.8 million for the three and six months ended June 30, 2009. The interest rate spread (the difference between the effective yield on average earning assets and the effective cost of average deposits and borrowings) improved to 4.6% for both the three and six months ended June 30, 2010, compared to 3.8% for both the three and six months ended June 30, 2009. The net yield on interest-earning assets (net interest income divided by average interest-earning assets) improved to 4.6% and 4.7% for the three and six months ended June 30, 2010, from 3.9% for both the three and six months ended June 30, 2009. The increase in interest rate spread and net yield on interest-earning assets is a result of effectively managing the rates earned and paid and the volume of interest-earning assets and interest-bearing liabilities.

Income Taxes. Income tax expense was $1.0 million and $2.0 million for the three and six months ended June 30, 2010, compared to $1.1 million and $2.4 million for the three and six months ended June 30, 2009. Changes in amounts of income tax provisions reflect changes in pretax income and estimated income tax rates in effect during each period. Effective income tax rates were 39.8% and 39.6% for the three and six months ended June 30, 2010, compared to 39.2% and 38.6% for the three and six months ended June 30, 2009. See “Critical Accounting Policies” below for additional information.

The FDIC requires the Bank to meet a minimum leverage capital requirement of Tier 1 capital (consisting of retained earnings and common stockholders equity, less any intangible assets) to assets ratio of 4%. The FDIC also requires the Bank to meet a ratio of total capital to risk-weighted assets of 8%, of which at least 4% must be in the form of Tier 1 capital. The North Carolina Office of the Commissioner of Banks requires the Bank to maintain a capital surplus of not less than 50% of common capital stock. The Bank was in compliance with all regulatory capital requirements at June 30, 2010 and December 31, 2009.

The Bank has experienced intense price competition for both loans and deposits over the past two years, which presented a net interest margin management challenge. Net interest margin management has been significantly influenced by the Federal Reserve s 500 basis point rate cuts since September 2007. The Federal Reserve s aggressive series of rate cuts caused immediate downward pricing of the Bank s loan portfolio, while simultaneously outpacing the ability to reduce its funding cost as rapidly. With the prime rate set at 3.25% since December 2008, and the current federal funds rate at 0% to 0.25%, it is not foreseeable that interest rates can decline farther. Over the remainder of 2010, the Bank anticipates little compression in its net interest margin as maturing time deposits continue to reprice at lower rates, although there are no guarantees or assurances.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.0/5 (2 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Hide