Exhibit 99.1
PRESS RELEASE
American Community Bancshares, Inc. Announces
Fourth Quarter and Full Year 2008 Results
Charlotte, NC – February 11, 2009 – American Community Bancshares, Inc. (NASDAQ: ACBA) today announced fourth quarter and year-end 2008 financial results:
Fourth Quarter 2008 Highlights:
| • | Total annualized loan growth of 6% from the third quarter of 2008 |
| • | Net interest margin of 2.76%, a decrease of 62 basis points from 3.38% in the third quarter 2008, and a decrease of 125 basis points from 4.01% in the fourth quarter of 2007 |
| • | Nonperforming loans of 1.82% of total loans, compared to 0.93% at the end of the third quarter of 2008 and 0.44% at the end of the fourth quarter of 2007 |
| • | Provision for loan losses of $2.8 million, up $1.4 million from the third quarter of 2008, and up $2.4 million from $471,000 in the fourth quarter of 2007 |
| • | Allowance for loan losses equal to 2.13% of total loans compared to 1.74% at the end of the third quarter of 2008 and 1.46% at the end of the fourth quarter of 2007 |
| • | Net loss of $934,000, or $0.14 per diluted share |
Full Year 2008 Highlights:
| • | Well-capitalized, with Tier 1, total capital, and leverage ratios of 11.38%, 12.64%, and 9.45%, respectively |
| • | Total loans grew 9% on a year-over-year basis, with total deposit growth of 7% |
| • | Net loss of $2.7 million for the full year ended December 31, 2008, or $0.41 per diluted share |
The fourth quarter 2008 net loss of $934,000, or $0.14 per diluted share resulted primarily from a $1.4 million increase, to $2.8 million, in the provision for loan losses compared to the third quarter of 2008. Also impacting the results was a 14% decrease in net interest income, mainly due to a decrease in the net interest margin of 62 basis points to 2.76% in the fourth quarter of 2008, compared to 3.38% in the third quarter of 2008. The decrease in the net interest margin was principally the result of the 175 basis point decrease in the Fed Funds rate during the fourth quarter of 2008, which had a more immediate impact on loan yields than on deposit costs. Fourth quarter 2008 results also included a $128,000 other than temporary impairment charge related to investments in Federal home Loan Mortgage Corporation (“Freddie Mac”) and Federal National Mortgage Association (“Fannie Mae”) preferred stock.
The Company’s net loss for the year ended December 31, 2008 was $2.7 million, or $0.41 per diluted share, compared with net income of $5.0 million, or $0.72 per diluted share for the year ended December 31, 2007. The net loss for the full year 2008 was due to several factors, including a $2.9 million other than
temporary impairment charge related to investments in Freddie Mac and Fannie Mae preferred stock, a $593,000 loss on a supplemental executive retirement plan investment also related to Freddie Mac and Fannie Mae preferred stock, a $4.0 million increase in the provision for loan losses compared to the prior year, and merger-related expenses of $472,000. Also impacting full year 2008 results was a decrease of 91 basis points in the net interest margin to 3.32% from 4.23% for the year ended December 31, 2007. The decrease in the net interest margin during 2008 was primarily due to the 400 basis point decrease in the Fed Funds rate that occurred during 2008 as well as interest income reversals on an increased level of nonaccrual loans.
Randy P. Helton, President and Chief Executive Officer commented, “Despite the current economic environment, American Community continues to have a solid business model. In the fourth quarter of 2008, we increased our loan loss reserves significantly over the first three quarters of the year in recognition of an increase in nonperforming assets during the quarter and in light of the continuing softness in the economic environment. The loan loss reserve to loans at December 31, 2008 was 2.13%, up from 1.74% as of September 30, 2008. Even during the current credit cycle our nonperforming assets as a percentage of total assets continue to outperform our peers, while our reserves as a percentage of loans are actually considerably stronger than our peers due to our conservative approach to managing asset quality.
“We believe the actions taken in the fourth quarter leave us well-positioned for our upcoming successful merger with Yadkin Valley Financial. Our capital position remains strong, and we remain well-capitalized for regulatory purposes.
“Looking forward, we see a number of opportunities for disciplined loan and deposit growth across our footprint, and look forward to the new chapter in our future with Yadkin Valley Financial. Over the past several months, we have been working diligently to ensure a smooth and successful integration of the two companies. I am most pleased that our core team of seasoned bankers remains intact and ready for business as part of the Yadkin Valley franchise. We have planned extensive employee training in early March, and expect the full systems conversion to occur in early June. Together, we will work to successfully weather the challenges ahead of us.”
FOURTH QUARTER 2008 FINANCIAL HIGHLIGHTS
The provision for loan losses increased $1.4 million to $2.8 million from $1.4 million in the third quarter of 2008. On a year-over-year basis, the loan loss provision increased $2.4 million from $471,000. The linked quarter and year-over-year increases in the loan loss provision were primarily due to the increase in nonperforming loans and net charge-offs as well as growth in the loan portfolio.
Nonperforming loans (including restructured loans of $745,000) totaled $7.8 million or 1.82% of total loans, an increase of $3.9 million compared to $3.9 million or 0.93% of total loans in the third quarter of 2008. The increase in nonperforming loans was primarily due to a $3.7 million increase in nonperforming residential construction loans to $4.0 million from $279,000 in the third quarter of 2008. A breakdown of nonperforming loans, by loan type, consisted of the following at the end of the fourth quarter of 2008, compared to the third quarter of 2008 and the fourth quarter of 2007 (in thousands of dollars):
Non-performing loans
| December 31, 2008 | September 30, 2008 | December 31, 2007 | ||||||||||||||||||||||
Loan Type | # Loans | Balance | % of Total Loans | # Loans | Balance | % of Total Loans | # Loans | Balance | % of Total Loans | |||||||||||||||
1-4 Family Construction | 9 | $ | 4,005 | 0.94 | % | 2 | $ | 279 | 0.07 | % | — | $ | — | 0.00 | % | |||||||||
Raw Land | 4 | 241 | 0.06 | % | 2 | 635 | 0.15 | % | — | — | 0.00 | % | ||||||||||||
Commercial Real Estate | 9 | 914 | 0.22 | % | 6 | 414 | 0.10 | % | 4 | 262 | 0.07 | % | ||||||||||||
Commercial & Industrial | 7 | 303 | 0.07 | % | 6 | 260 | 0.06 | % | 10 | 341 | 0.09 | % | ||||||||||||
Residential 1-4 Family - Permanent | 8 | 1,373 | 0.32 | % | 7 | 812 | 0.19 | % | 4 | 557 | 0.14 | % | ||||||||||||
HELOC | 2 | 175 | 0.04 | % | 1 | 600 | 0.14 | % | 2 | 111 | 0.03 | % | ||||||||||||
Personal Loans | 9 | 186 | 0.04 | % | 5 | 75 | 0.02 | % | 8 | 106 | 0.03 | % | ||||||||||||
Commercial Leases | 10 | 440 | 0.10 | % | 17 | 835 | 0.20 | % | 5 | 345 | 0.08 | % | ||||||||||||
Other | 1 | 147 | 0.03 | % | — | — | 0.00 | % | — | — | 0.00 | % | ||||||||||||
Total | 59 | $ | 7,784 | 1.82 | % | 46 | $ | 3,910 | 0.93 | % | 33 | $ | 1,722 | 0.44 | % | |||||||||
Loans 30-89 days past due totaled $3.8 million in the fourth quarter of 2008, an increase of $1.7 million compared to $2.1 million in the third quarter of 2008. The increase in loans 30-89 days past due was predominantly concentrated within the residential construction portfolio.
Total loans increased to $427.5 million in the fourth quarter 2008, or 6% on an annualized basis due to increases in 1-4 family mortgages, home equity lines, and C&I loan balances. On a year-over-year basis, loans increased $34.5 million or 9% also due to higher balances in most loan categories.
Deposits of $429.4 million were essentially unchanged compared to the third quarter of 2008 mainly due to a $10.0 million decrease in brokered CDs, which was offset by a $14.3 million increase in CDs and a slight increase in interest-bearing checking balances. On a year-over-year basis, deposits increased by 7% due to increases in CD and interest checking balances. While brokered CD balances increased significantly year-over-year, they remain a relatively small part of the Company’s funding base at 8% of total deposits, up from 3% a year earlier.
American Community remains well capitalized for regulatory purposes. As of the fourth quarter of 2008, Tier 1, total capital, and leverage ratios were 11.38%, 12.64%, and 9.45%, respectively, compared to 11.74%, 12.99%, and 10.02% in the third quarter of 2008. The Company’s tangible equity as a percentage of tangible assets was 7.82%, compared to 7.78% in the third quarter of 2008.
About American Community Bancshares
American Community Bancshares, headquartered in Charlotte, NC is the holding company for American Community Bank. American Community Bank is a full service community bank, headquartered in Monroe, NC with nine North Carolina offices located in the fast growing Union and Mecklenburg counties and four South Carolina offices located in York and Cherokee counties. The Bank provides a wide assortment of traditional banking and financial services offered with a high level of personal attention. American Community Bancshares website iswww.americancommunitybank.com. American Community Bancshares stock is traded on the NASDAQ Capital Market under the symbol “ACBA”.
Information in this press release contains “forward-looking statements.” These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates and the effects of competition. Additional factors that could cause actual results to differ materially are discussed in American Community Bancshares’s recent filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K and its other periodic reports.
###
For additional information contact:
Randy P. Helton, President and CEO
Dan R. Ellis, Jr., CFO
(704) 225-8444
Megan R. Malanga
Nvestcom Investor Relations
(954) 781-4393
megan.malanga@nvestcom.com
American Community Bancshares, Inc.
(Amounts in thousands except share and per share data)
(Unaudited)
Consolidated Balance Sheet
| December 31, 2008 | September 30, 2008 | June 30, 2008 | March 31, 2008 | December 31, 2007 (a) | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 13,809 | $ | 15,968 | $ | 16,078 | $ | 16,126 | $ | 14,346 | ||||||||||
Interest-earning deposits with banks | 894 | 8,720 | 749 | 682 | 930 | |||||||||||||||
Investment securities | 73,030 | 73,538 | 77,563 | 79,521 | 76,782 | |||||||||||||||
Loans | 427,492 | 421,141 | 412,881 | 404,954 | 392,959 | |||||||||||||||
Allowance for loan losses | (9,124 | ) | (7,316 | ) | (6,390 | ) | (6,095 | ) | (5,740 | ) | ||||||||||
Net loans | 418,368 | 413,825 | 406,491 | 398,859 | 387,219 | |||||||||||||||
Accrued interest receivable | 2,032 | 2,173 | 2,148 | 2,398 | 2,640 | |||||||||||||||
Bank premises and equipment | 7,125 | 7,293 | 8,434 | 8,605 | 8,694 | |||||||||||||||
Foreclosed real estate | — | 77 | — | — | — | |||||||||||||||
Non-marketable equity securities at cost | 2,980 | 2,980 | 3,039 | �� | 2,814 | 2,119 | ||||||||||||||
Goodwill | 9,838 | 9,838 | 9,838 | 9,838 | 9,838 | |||||||||||||||
Other assets | 7,603 | 6,433 | 5,510 | 5,308 | 3,027 | |||||||||||||||
Total assets | $ | 535,679 | $ | 540,845 | $ | 529,850 | $ | 524,151 | $ | 505,595 | ||||||||||
Liabilities and stockholders’ equity | ||||||||||||||||||||
Deposits | ||||||||||||||||||||
Non-interest bearing | $ | 48,826 | $ | 50,693 | $ | 52,278 | $ | 53,439 | $ | 54,459 | ||||||||||
Interest bearing | 380,578 | 378,591 | 364,268 | 357,701 | 345,335 | |||||||||||||||
Total deposits | 429,404 | 429,284 | 416,546 | 411,140 | 399,794 | |||||||||||||||
Borrowings | 53,017 | 57,921 | 58,140 | 55,709 | 49,504 | |||||||||||||||
Accrued expenses and other liabilities | 1,976 | 2,142 | 393 | 1,807 | 2,273 | |||||||||||||||
Total liabilities | 484,397 | 489,347 | 475,079 | 468,656 | 451,571 | |||||||||||||||
Total stockholders’ equity | 51,282 | 51,498 | 54,771 | 55,495 | 54,024 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 535,679 | $ | 540,845 | $ | 529,850 | $ | 524,151 | $ | 505,595 | ||||||||||
Ending shares outstanding | 6,633,169 | 6,574,600 | 6,542,091 | 6,542,091 | 6,502,288 | |||||||||||||||
Book value per share | $ | 7.73 | $ | 7.83 | $ | 8.37 | $ | 8.48 | $ | 8.31 | ||||||||||
Average Balances: | ||||||||||||||||||||
Loans | $ | 415,480 | $ | 408,037 | $ | 407,925 | $ | 389,144 | $ | 379,191 | ||||||||||
Earning assets | 498,598 | 488,193 | 489,032 | 471,071 | 462,078 | |||||||||||||||
Total assets | 542,106 | 529,524 | 525,587 | 513,398 | 499,430 | |||||||||||||||
Interest-bearing deposits | 383,515 | 361,391 | 360,784 | 351,699 | 344,619 | |||||||||||||||
Stockholders’ equity | 51,624 | 53,918 | 55,346 | 55,069 | 53,366 | |||||||||||||||
| (a) | Derived from audited consolidated financial statements |
American Community Bancshares, Inc.
Consolidated Income Statements
(Amounts in thousands except share and per share data)
(Unaudited)
| Year ended | ||||||||
| December 31, 2008 | December 31, 2007 | |||||||
Total interest income | $ | 30,411 | $ | 35,426 | ||||
Total interest expense | 14,699 | 16,193 | ||||||
Net interest income | 15,712 | 19,233 | ||||||
Provision for loan losses | 4,999 | 1,033 | ||||||
Net interest income after provision for loan loss | 10,713 | 18,200 | ||||||
Non-interest income | ||||||||
Service charges on deposit accounts | 2,317 | 2,419 | ||||||
Mortgage banking operations | 259 | 326 | ||||||
Realized gains on sale of securities | — | 20 | ||||||
Gain/loss on derivatives | 331 | 214 | ||||||
Loss on SERP investment | (593 | ) | — | |||||
Other | 172 | 412 | ||||||
Total non-interest income | 2,486 | 3,391 | ||||||
Non-interest expense | ||||||||
Salaries and employee benefits | 7,078 | 6,893 | ||||||
Occupancy and equipment | 2,280 | 2,194 | ||||||
Other than temporary impairment of investment securities | 2,881 | 76 | ||||||
Merger related expenses | 472 | — | ||||||
Other | 4,498 | 4,539 | ||||||
Total non-interest expense | 17,209 | 13,702 | ||||||
Income (loss) before income taxes | (4,010 | ) | 7,889 | |||||
Provision (benefit) for income taxes | (1,353 | ) | 2,869 | |||||
Net income (loss) | $ | (2,657 | ) | $ | 5,020 | |||
Net income (loss) per share | ||||||||
Basic | $ | (0.41 | ) | $ | 0.74 | |||
Diluted | $ | (0.41 | ) | $ | 0.72 | |||
Weighted average number of shares outstanding | ||||||||
Basic | 6,555,255 | 6,779,635 | ||||||
Diluted | 6,555,255 | 6,938,259 | ||||||
Return (loss) on average equity | -4.92 | % | 9.15 | % | ||||
Return (loss) on average assets | -0.50 | % | 1.01 | % | ||||
Net interest margin | 3.32 | % | 4.23 | % | ||||
Efficiency ratio | 94.57 | % | 60.56 | % | ||||
Allowance for loan losses to total loans | 2.13 | % | 1.46 | % | ||||
Net charge-offs to avg loans (annualized) | 0.40 | % | 0.25 | % | ||||
Nonperforming loans to total loans | 1.82 | % | 0.44 | % | ||||
Nonperforming assets to total assets | 1.45 | % | 0.34 | % | ||||
American Community Bancshares, Inc.
Consolidated Income Statements
(Amounts in thousands except share and per share data)
(Unaudited)
| Three months ended | December 31, 2008 | September 30, 2008 | June 30, 2008 | March 31, 2008 | December 31, 2007 | |||||||||||||||
Total interest income | $ | 7,082 | $ | 7,572 | $ | 7,569 | $ | 8,188 | $ | 8,737 | ||||||||||
Total interest expense | 3,629 | 3,568 | 3,629 | 3,873 | 4,068 | |||||||||||||||
Net interest income | 3,453 | 4,004 | 3,940 | 4,315 | 4,669 | |||||||||||||||
Provision for loan losses | 2,837 | 1,441 | 296 | 425 | 471 | |||||||||||||||
Net interest income after provision for loan loss | 616 | 2,563 | 3,644 | 3,890 | 4,198 | |||||||||||||||
Non-interest income | ||||||||||||||||||||
Service charges on deposit accounts | 525 | 593 | 597 | 602 | 613 | |||||||||||||||
Mortgage banking operations | 35 | 43 | 95 | 86 | 83 | |||||||||||||||
Realized gains on sale of securities | — | — | — | — | — | |||||||||||||||
Gain/loss on derivatives | 211 | (4 | ) | (148 | ) | 272 | 132 | |||||||||||||
Loss on SERP investment | (106 | ) | (397 | ) | (72 | ) | (18 | ) | — | |||||||||||
Other | (24 | ) | 51 | 68 | 77 | 73 | ||||||||||||||
Total non-interest income | 641 | 286 | 540 | 1,019 | 901 | |||||||||||||||
Non-interest expense | ||||||||||||||||||||
Salaries and employee benefits | 1,823 | 1,873 | 1,639 | 1,743 | 1,724 | |||||||||||||||
Occupancy and equipment | 516 | 566 | 614 | 584 | 505 | |||||||||||||||
Other than temporary impairment of investment securities | 128 | 2,753 | — | — | — | |||||||||||||||
Merger related expenses | 73 | 399 | — | — | — | |||||||||||||||
Other | 1,155 | 1,109 | 1,190 | 1,044 | 1,132 | |||||||||||||||
Total non-interest expense | 3,695 | 6,700 | 3,443 | 3,371 | 3,361 | |||||||||||||||
Income (loss) before income taxes | (2,438 | ) | (3,851 | ) | 741 | 1,538 | 1,738 | |||||||||||||
Provision (benefit) for income taxes | (1,504 | ) | (653 | ) | 257 | 547 | 626 | |||||||||||||
Net income (loss) | $ | (934 | ) | $ | (3,198 | ) | $ | 484 | $ | 991 | $ | 1,112 | ||||||||
Net income (loss) per share | ||||||||||||||||||||
Basic | $ | (0.14 | ) | $ | (0.49 | ) | $ | 0.07 | $ | 0.15 | $ | 0.17 | ||||||||
Diluted | $ | (0.14 | ) | $ | (0.49 | ) | $ | 0.07 | $ | 0.15 | $ | 0.17 | ||||||||
Weighted average number of shares outstanding | ||||||||||||||||||||
Basic | 6,603,816 | 6,561,132 | 6,542,091 | 6,513,526 | 6,502,288 | |||||||||||||||
Diluted | 6,603,816 | 6,561,132 | 6,613,633 | 6,623,392 | 6,652,452 | |||||||||||||||
Return (loss) on average equity | -7.20 | % | -23.53 | % | 3.46 | % | 7.24 | % | 8.26 | % | ||||||||||
Return (loss) on average assets | -0.69 | % | -2.40 | % | 0.36 | % | 0.78 | % | 0.88 | % | ||||||||||
Net interest margin | 2.76 | % | 3.38 | % | 3.23 | % | 3.76 | % | 4.01 | % | ||||||||||
Efficiency ratio | 114.35 | % | 156.18 | % | 76.85 | % | 63.20 | % | 60.34 | % | ||||||||||
Allowance for loan losses to total loans | 2.13 | % | 1.74 | % | 1.55 | % | 1.51 | % | 1.46 | % | ||||||||||
Net charge-offs to avg loans (annualized) | 0.99 | % | 0.50 | % | 0.00 | % | 0.07 | % | 0.10 | % | ||||||||||
Nonperforming loans to total loans | 1.82 | % | 0.93 | % | 0.52 | % | 0.60 | % | 0.44 | % | ||||||||||
Nonperforming assets to total assets | 1.45 | % | 0.74 | % | 0.42 | % | 0.47 | % | 0.34 | % | ||||||||||