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04.11.2016 23:40
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GrandSouth Bancorporation reports earnings for the third quarter of 2016 of $127 thousand and declares a dividend of $0.10 per common share.
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PR Newswire
GREENVILLE, S.C., Nov. 4, 2016
GREENVILLE, S.C., Nov. 4, 2016 /PRNewswire/ -- GrandSouth Bancorporation (GRRB:OTCQB), the holding company for GrandSouth Bank
We are pleased to give you an update on our strategic growth plan and our financial results through September 30, 2016. After successfully raising additional capital in February of this year, we immediately began to put it to work by recruiting some of the best banking talent in SC. Our commitment to ensuring that our growth in assets be of the highest quality led to a substantial investment and restructuring of our credit department. In November of 2015, we hired Richard Harrington as our SVP and Chief Credit Officer. He has over 25 years of credit experience working with First Union, Summit National Bank, and First Citizens. Richard has three highly trained credit analysts on his team to support our underwriting process. These additions have allowed us to enhance our analysis of risk, credit policy, accuracy of credit grading, and the calculation of the allowance for loan loss reserve. This is the foundation that is required to build quality loan growth.
We continued to invest our capital by opening branches in 3 new markets within the past year. Our Greer office opened in December 2015 and is led by our Market President, Jack Lucas. Jack has 26 years of banking experience having worked with BB&T, where he served as their Market President in Greer. He joined our company in July 2014. In less than a year our Greer office has grown to $21 million in deposits and $25 million in loans. In August of 2016, we opened in Columbia and hired David Anderson as our Market President. David has over 38 years of experience in banking having worked with C&S, Nations Bank, and First Citizens. Our Columbia office is located at 1901 Assembly Street. In September of 2016, we opened in Orangeburg and hired Michael Delaney as our Market President. Michael has 18 years of banking experience having worked at First Union, South State and First Citizens. Our Orangeburg office is located at 1085 Saint Matthews Road.
All of our new hires were strategically recruited and are very experienced. They know their markets and how to do their jobs. They are all bankers that produce at high levels and have managed large high quality portfolios.
As you will note in the following financial report, our 3rd quarter earnings are down substantially from the same period last year. Noninterest expense for the 3rd quarter of this year increased by 45% to $5.9 million from $4.1 million for the 3rd quarter of 2015. This is the result of our investment in human resources and expansion into three markets. Additionally, there were approximately $700 thousand in non-recurring expenses related to a negotiated settlement of an employment contract and fees associated with the settlement of an interest swap contract. The bank also recorded a larger provision in the allowance for loan loss in the amount of $790 thousand for the 3rd quarter of this year compared to $390 thousand for the 3rd quarter of 2015. This increase was related to a write down of two loans that experienced a decline in collateral value.
Total assets grew 13.7% to $482 million from $424 million at September 30, 2015. Total loans grew by 10% for that same period with the majority of growth coming in the third quarter of this year. Total deposits grew by 23% to $374 million compared to $304 million at September 30, 2015. This improved the banks liquidity and lowered our loan to deposit ratio to 95%. Additionally, we decreased our outstanding wholesale funding balance by 34% year over year.
We believe the investments we have made in human resources and moving into new markets will provide long term growth and profitability for our company. In closing, I would like to mention that we have hired a new Human Resources Director, Mike West, who brings great knowledge in talent acquisition, performance based evaluations, strategic planning, employment law, and succession planning.
We think the investments we have made in our Credit and Human Resources areas are a very important component of our growth strategy. Our goal is to give our customers exceptional service, provide financial products they need, and extend credit on terms they can repay. Our company will always put quality and integrity before growth. Our mission is to always do the right thing for our customers, shareholders, and employees.
Sincerely,
JB Schwiers
President
GrandSouth Bancorporation (GRRB:OTCQB), the holding company for GrandSouth Bank, announced today that net income for the quarter ended September 30, 2016 was $127 thousand compared to $1.4 million during the quarter ended September 30, 2015.
The Board of Directors declared a dividend of $0.10 per common share ($0.105 per Series A preferred share) payable on November 25, 2016 to shareholders of record on November 10, 2016. This is our fourteenth consecutive quarterly dividend.
Overview
- Net loans increased by $22.58 million, or 6.31%, during the quarter.
- GrandSouth Bancorporation's efficiency ratio was 85.19% during the third quarter of 2016 compared to 61.78% during the third quarter of 2015.
- GrandSouth Bancorporation's return on average assets was 0.11% during the third quarter of 2016 compared to 1.32% in the same quarter last year.
- The return on average equity was 0.96% in the third quarter of 2016, down from 12.58% in the third quarter of 2015.
Net Interest Income
During the third quarter of 2016, net interest income before the provision for loan losses was $6.7 million, up from $6.4 million during the third quarter of 2015. Average loans during the third quarter of 2016 were $369.6 million compared to $345.0 million during the same period last year. The net interest margin was 6.15% in the third quarter of 2016, down from 6.65% in the third quarter of 2015 and down from 6.35% in the prior quarter.
Noninterest income
Noninterest income was $227 thousand during the third quarter of 2016, compared to $193 thousand during the same quarter of 2015.
Noninterest Expense
Noninterest expense was $5.9 million for the third quarter of 2016 compared to $4.1 million for the third quarter of 2015. Growth in non-interest expense during the quarter was impacted by the Company's in-process expansion of two new offices in the Columbia and Orangeburg, S.C. markets. Employee compensation increased by $1.3 million compared to the third quarter of 2015. Additionally, there were approximately $700 thousand in non-recurring expenses related to a negotiated settlement of an employee contract and fees associated with the settlement of an interest swap contract. During the third quarter of 2016, we sold $106 thousand of other real estate owned (OREO) properties recognizing gains of $97 thousand, and we recognized impairment in the amount of $10 thousand on OREO properties resulting in a net gain of $87 thousand. This compared to a loss on OREO of $126 thousand for the third quarter of 2015.
The efficiency ratio increased to 85.19% during the quarter ended September 30, 2016 from 61.78% during the third quarter of 2015.
Loan Portfolio
Net loan growth in the third quarter of 2016 was $22.58 million.
The composition of our loan portfolio consisted of the following at September 30, 2016 and December 31, 2015:
| | | | September 30, | | December 31, | |
| | | | 2016 | | 2015 | |
| | | | (Dollars in thousands) | |||
| | | | | | | |
| Loans secured by real estate: | | | | |||
| | Commercial, financial and agricultural | $ 111,990 | | $ 100,485 | ||
| | Real estate - construction, land development and other land loans | 37,041 | | 47,714 | ||
| | Real estate - mortgage | 200,101 | | 182,284 | ||
| | Installment loans to individuals | 35,642 | | 38,867 | ||
| | | Loans, gross | 384,774 | | 369,350 | |
| | Allowance for possible loan losses | (4,412) | | (4,315) | ||
| | | Loans, net | $ 380,362 | | $ 365,035 | |
| | | | | | | |
Loan Loss Provision/Asset Quality
The loan loss provision for the quarter ended September 30, 2016 was $790 thousand, compared to $390 for the same period last year. Net charge offs for the three months ended September 30, 2016 were $724 thousand, compared to $454 thousand for the same period in 2015.
OREO as of September 30, 2016 was $4.8 million compared to $5.3 million as of the end of the previous year. Nonaccrual loans were $3.5 million at September 30, 2016 compared to $1.7 million at the end of last year.
GrandSouth Bancorporation's allowance for loan losses as a percentage of total loans at September 30, 2016 was 1.15%, compared to 1.17% at the end of 2015. Management believes the allowance is adequate at this time but continues to monitor trends in environmental factors which may potentially affect future losses.
Securities Portfolio
Investment securities, all of which are available-for-sale, were $28.5 million at September 30, 2016 up from $14.9 million at December 31, 2015.
Securities in our investment portfolio as of September 30, 2016 were as follows:
- callable agency securities in the amount of $10.0 million
- residential government-sponsored mortgage-backed securities in the amount of $11.6 million and residential government-sponsored collateralized mortgage obligations totaling $129 thousand
- taxable municipal bonds in the amount of $1.0 million
- nontaxable municipal bonds in the amount of $5.8 million
During the third quarter of 2016, we purchased $2.0 million of callable agency securities and $4.2 million of residential government-sponsored mortgage-backed securities. Three callable agency securities in the amount of $5.7 million and one municipal bond in the amount of $500 thousand were called.
Deposits
Total deposits were $404.1 million at September 30, 2016 compared to $350.3 million at December 31, 2015. Interest-bearing accounts were $336.4 million at September 30, 2016 up from $304.7 million at December 31, 2015.
Shareholders' Equity
Total shareholders' equity increased from $42.7 million at December 31, 2015 to $52.1 million at September 30, 2016 as a result of a previously announced completion of the sale of $12 million in common stock through a private placement, the redemption of all remaining Series T-3 preferred stock and the retention of earnings. Our Tier 1 Risk Based Capital Ratios were 15.18% and 14.90% for GrandSouth Bancorporation and GrandSouth Bank, respectively, as of September 30, 2016.
GrandSouth Bancorporation is a bank holding company with assets of $482.2 million at September 30, 2016. GrandSouth Bank provides a range of financial services to individuals and small and medium sized businesses. GrandSouth Bank has six branches in South Carolina, located in Greenville, Fountain Inn, Anderson, Greer, Columbia and Orangeburg, S.C.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that relate to future events or the future performance of GrandSouth Bancorporation. Forward-looking statements are not guarantees of performance or results. These forward-looking statements are based on the current beliefs and expectations of the respective management of GrandSouth Bancorporation and GrandSouth Bank and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond their respective control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the anticipated results discussed or implied in these forward-looking statements because of numerous possible uncertainties. Words like "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate," "could," "should," "would," "will," and similar expressions, should be considered as identifying forward-looking statements, although other phrasing may be used. Such forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the reports (such as Annual Reports) filed by GrandSouth Bancorporation. You should consider such factors and not place undue reliance on such forward-looking statements. No obligation is undertaken by GrandSouth Bancorporation to update such forward-looking statements to reflect events or circumstances occurring after the issuance of this press release.
| GrandSouth Bancorporation | ||||||
| | ||||||
| Condensed Consolidated Balance Sheets (Unaudited) | ||||||
| | ||||||
| | | | | September 30, | | December 31, |
| | | | | 2016 | | 2015 |
| | | | | (Dollars in thousands) | ||
| Assets | | | | |||
| | Cash and due from banks | $ 13,630 | | $ 11,695 | ||
| | Interest bearing transaction accounts with other banks | 15,499 | | 456 | ||
| | Federal funds sold | 13,438 | | 3,701 | ||
| | | Cash and cash equivalents | 42,567 | | 15,852 | |
| | Certificates of deposit with other banks | 2,500 | | 2,000 | ||
| | Securities available-for-sale | 28,472 | | 14,885 | ||
| | Other investments, at cost | 957 | | 1,276 | ||
| | Loans, gross | 384,774 | | 369,350 | ||
| | Allowance for loan losses | (4,412) | | (4,315) | ||
| | Loans, net of allowance for loan losses | 380,362 | | 365,035 | ||
| | Premises and equipment, net | 9,147 | | 8,814 | ||
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