Exhibit 99.1
OFFICER APPOINTMENTS
Beth P. Wilsonjoined The Palmetto Bank as Senior Vice President, Greenville Regional Retail Executive. She brings to the bank 25 years of retail banking experience.
Tracy S. Porterfield joined The Palmetto Bank as Vice President, Trust Officer, Greenville County. She brings to the bank 15 years of trust and wealth management experience.
Kimberly L. Modejoined The Palmetto Bank as Vice President, Commercial Relationship Manager, Spartanburg County. She brings to the bank 29 years of commercial banking experience.
OFFICER PROMOTIONS
Lenora C. Blantonwas promoted to Branch Manager, Easley. She has been employed with The Palmetto Bank since 2006.
Willis B. Fortsonhas been promoted to Vice President, Training Officer. He has been employed with The Palmetto Bank since 1998.
Diane B. Kinghas been promoted to Vice President, Trust Operations Officer. She has been employed with The Palmetto Bank since 1996.
James T. (Jimmy) Rambo, Jr.has been promoted to Vice President, Special Assets. He has been employed with The Palmetto Bank since 2002.
Dawn B. Wessonhas been promoted to Vice President, Trust Officer. She has been employed with Palmetto Trust & Investment Group at The Palmetto Bank since 2000.
Andrew T. (Drew) Boland has been promoted to Assistant Vice President, Credit Analyst. He has been employed with The Palmetto Bank since 2005.
Martha B. Cobb has been promoted to Assistant Vice President, Branch Manager and Loan Officer, Montague. She has been employed with The Palmetto Bank since 1986.
Laura M. Radinohas been promoted to Assistant Vice President, Assistant Branch Manager and Loan Officer, Boiling Springs. She has been employed with The Palmetto Bank since 2006.
Sheila B. Brysonhas been promoted to Loan Processing Manager. She has been employed with The Palmetto Bank since 2007.
William J. Marcus, Jr.has been promoted to Assistant Branch Manager and Loan Officer, Woodruff Road. He has been employed with The Palmetto Bank since 2006.
Claire B. Pratthas been promoted to Compliance Officer. She has been employed with The Palmetto Bank since 2009.
Kenneth B. Stoddardhas been promoted to Assistant Vice President, Appraisal Manager. He has been employed with The Palmetto Bank since 2005.
Wendy G. Workman has been promoted to Senior Auditor. She has been employed with The Palmetto Bank since 2006.
THE PALMETTO BANK FOCUSED ON SMALL BUSINESS MARKET
The Palmetto Bank demonstrated its focus on providing expert banking advice and services to the small business market in the Upstate by appointing a team of Small Business Bankers who are dedicated to meeting the financial and lending needs of small business owners, entrepreneurs and professionals. This team of trusted advisors is focused specifically on providing insightful advice to clients with credit needs up to $500,000. The focus on the small business segment is part of the Bank’s overall strategic effort to further delineate the Bank’s organizational structure to provide tailored and more sophisticated products, services and expertise to meet the needs of the communities in which the Bank operates.
The Small Business Banking Group is currently comprised of the following seasoned bankers:
James C. (Jim) Peters, Jr., Small Business Banking Manager and Small Business Banker for Greenville County
Debbie H. Dennis, Small Business Banker for Laurens, Greenwood and Abbeville counties
Terrance (Jack) Trnavsky, Jr., Small Business Banker for Cherokee, York and Spartanburg counties
THE PALMETTO BANK HOLDS THIRD ANNUAL PROM DRESS COLLECTION
In partnership with The Middle Tyger Community Center & Upstate Family Resource Center, The Palmetto Bank collected new or gently used prom dresses and accessories for young women who otherwise couldn’t afford them. The Middle Tyger Community Center and Upstate Family Resource Center distributed the dresses for free to girls from District 5, Boiling Springs, Chapman, and Chesnee High Schools.
We invite you to follow us on Facebook for weekly updates of our community involvement.
To Our Shareholders:
We continued making progress on our path to profitability this quarter. For the three months ended March 31, 2011, we reported a net loss of $6.1 million, compared to a net loss of $32.6 million for the fourth quarter 2010. Excluding certain noncash charges related to deferred taxes and a nonrecurring gain on the sale of our credit card portfolio in the previous quarter, the first quarter 2011 pre-tax loss was $6.0 million compared to a fourth quarter 2010 pre-tax loss of $19.7 million. Similar to the previous quarter, the first quarter pre-tax loss was driven primarily by the continued elevated level of credit losses on problem assets stemming from depressed real estate values. Our losses over the past two years are a direct result of the impact of the economic downturn on our borrowers. We have been working very hard addressing the credit quality of our loan portfolio and will continue to do so. Our efforts are benefiting from what we see as early signs of possible stabilization in commercial real estate values.
Even though credit-related losses remained elevated, the losses declined significantly from the prior quarter, declining $13.2 million from the fourth quarter 2010 to $7.5 million this quarter. In addition, we also realized a substantial decline in the amount of our loans migrating into nonaccrual status as well as the fourth consecutive quarter of declining nonperforming asset levels. We are hopeful these improving trends in our problem assets will continue as we reposition the Company for the future.
In September 2010 we began marketing for sale a pool of commercial real estate assets in an effort to reduce our problem assets and concentration in commercial real estate. These marketing efforts are a part of our strategic plan to address credit quality issues and accelerate our return to profitability. Since beginning these marketing efforts, we completed the sale of $14.7 million of such assets and expect to conduct further marketing efforts over the remainder of the year.
In addition to lower credit losses, we also realized improvement in our net interest margin, which improved to 3.28% during the first quarter 2011 from 2.78% in the fourth quarter 2010. Improvement in the net interest margin is a direct result of our strategic actions to reposition the balance sheet and improve our profitability. These actions included repayment of higher cost wholesale borrowings, deliberate run-off of higher priced time deposits and redeployment of excess liquidity into more profitable investment securities. New loan programs were also implemented during the first quarter and, while new loan volumes have not returned to historical levels, these efforts resulted in the highest quarterly loan origination volume since 2008.
Reduced credit losses and an improved net interest margin are signs of the sustained effort the Company has expended over the last two years as we continue working to recover from the severe economic downturn. We are seeing encouraging signs of an improving economy, and employees throughout the Company continue to work very hard on the execution of our strategic plan to improve the Company’s performance. While the repercussions of the recession continue to be felt, we are keenly focused on the path to profitability and believe our actions will accelerate our recovery and return to profitability.
Our annual meeting of shareholders is scheduled for May 19, 2011. We look forward to meeting with you and providing an update on our plans for the future. We have made significant progress on our road to recovery, and we are encouraged by the ongoing signs of an improving economy.
Please do not hesitate to contact either one of us with questions or concerns about your Company.
Sincerely,
Leon Patterson | Sam Erwin | |||||
Chairman of the Board of Directors | Chief Executive Officer |
Consolidated Balance Sheets
(in thousands)
March 31, 2011 | December 31, 2010 | March 31, 2010 | ||||||||||
(unaudited) | (unaudited) | |||||||||||
Assets | ||||||||||||
Cash and cash equivalents | ||||||||||||
Cash and due from banks | $ | 188,545 | $ | 223,017 | $ | 156,960 | ||||||
Total cash and cash equivalents | 188,545 | 223,017 | 156,960 | |||||||||
Federal Home Loan Bank (“FHLB”) stock, at cost | 6,785 | 6,785 | 7,010 | |||||||||
Investment securities available for sale, at fair value | 274,103 | 218,775 | 115,893 | |||||||||
Mortgage loans held for sale | 279 | 4,793 | 1,121 | |||||||||
Commercial loans held for sale | 60,346 | 66,157 | — | |||||||||
Loans, gross | 764,227 | 793,426 | 1,010,247 | |||||||||
Less: allowance for loan losses | (26,954 | ) | (26,934 | ) | (28,426 | ) | ||||||
Loans, net | 737,273 | 766,492 | 981,821 | |||||||||
Premises and equipment, net | 28,072 | 28,109 | 30,225 | |||||||||
Goodwill | — | — | 3,691 | |||||||||
Accrued interest receivable | 5,017 | 4,702 | 4,221 | |||||||||
Foreclosed real estate | 16,244 | 19,983 | 28,867 | |||||||||
Income tax refund receivable | 7,436 | 7,436 | 738 | |||||||||
Deferred tax asset, net | — | — | 7,988 | |||||||||
Other | 9,111 | 8,998 | 9,029 | |||||||||
Total assets | $ | 1,333,211 | $ | 1,355,247 | $ | 1,347,564 | ||||||
Liabilities and shareholders’ equity | ||||||||||||
Liabilities | ||||||||||||
Deposits | ||||||||||||
Noninterest-bearing | $ | 156,323 | $ | 141,281 | $ | 139,454 | ||||||
Interest-bearing | 1,021,367 | 1,032,081 | 989,159 | |||||||||
Total deposits | 1,177,690 | 1,173,362 | 1,128,613 | |||||||||
Retail repurchase agreements | 23,641 | 20,720 | 21,417 | |||||||||
Commercial paper (Master notes) | — | — | 18,948 | |||||||||
FHLB borrowings | 5,000 | 35,000 | 96,000 | |||||||||
Convertible debt | — | — | 380 | |||||||||
Accrued interest payable | 955 | 1,187 | 1,528 | |||||||||
Other | 10,080 | 11,079 | 9,700 | |||||||||
Total liabilities | 1,217,366 | 1,241,348 | 1,276,586 | |||||||||
Shareholders’ equity | ||||||||||||
Preferred stock | — | — | — | |||||||||
Common stock | 505 | 474 | 32,295 | |||||||||
Capital surplus | 141,194 | 133,112 | 2,677 | |||||||||
Retained earnings (deficit) | (19,188 | ) | (13,108 | ) | 41,802 | |||||||
Accumulated other comprehensive loss, net of tax | (6,666 | ) | (6,579 | ) | (5,796 | ) | ||||||
Total shareholders’ equity | 115,845 | 113,899 | 70,978 | |||||||||
Total liabilities and shareholders’ equity | $ | 1,333,211 | $ | 1,355,247 | $ | 1,347,564 | ||||||
Consolidated Statements of Income (Loss)
(in thousands) (unaudited)
For the three months ended March 31, 2011 | For the three months ended December 31, 2010 | For the three months ended March 31, 2010 | ||||||||||
Interest income | ||||||||||||
Interest earned on cash and cash equivalents | $ | 105 | $ | 200 | $ | 67 | ||||||
Dividends received on FHLB stock | 14 | 7 | 4 | |||||||||
Interest earned on investment securities available for sale | ||||||||||||
Taxable | 761 | 585 | 818 | |||||||||
Nontaxable | 545 | 370 | 385 | |||||||||
Interest and fees earned on loans | 11,569 | 12,280 | 13,605 | |||||||||
Total interest income | 12,994 | 13,442 | 14,879 | |||||||||
Interest expense | ||||||||||||
Interest paid on deposits | 2,676 | 3,272 | 3,563 | |||||||||
Interest paid on retail repurchase agreements | 11 | 14 | 14 | |||||||||
Interest paid on commercial paper | — | — | 10 | |||||||||
Interest paid on FHLB borrowings | 49 | 395 | 493 | |||||||||
Other | — | 1 | — | |||||||||
Total interest expense | 2,736 | 3,682 | 4,080 | |||||||||
Net interest income | 10,258 | 9,760 | 10,799 | |||||||||
Provision for loan losses | 5,500 | 10,500 | 10,750 | |||||||||
Net interest income (expense) after provision for loan losses | 4,758 | (740 | ) | 49 | ||||||||
Noninterest income | ||||||||||||
Service charges on deposit accounts, net | 1,762 | 1,779 | 1,950 | |||||||||
Fees for trust and investment management and brokerage services | 691 | 626 | 651 | |||||||||
Mortgage-banking | 376 | 201 | 429 | |||||||||
Automatic teller machine | 232 | 261 | 231 | |||||||||
Merchant services | 10 | 32 | 794 | |||||||||
Bankcard services | 76 | 1,291 | 156 | |||||||||
Investment securities gains, net | — | 1 | 8 | |||||||||
Other | 425 | 179 | 278 | |||||||||
Total noninterest income | 3,572 | 4,370 | 4,497 | |||||||||
Noninterest expense | ||||||||||||
Salaries and other personnel | 6,551 | 6,002 | 6,137 | |||||||||
Occupancy | 1,183 | 1,233 | 1,171 | |||||||||
Furniture and equipment | 985 | 879 | 967 | |||||||||
Professional services | 510 | 771 | 547 | |||||||||
FDIC deposit insurance assessment | 958 | 1,015 | 715 | |||||||||
Marketing | 414 | 279 | 295 | |||||||||
Foreclosed real estate writedowns and expenses | 833 | 2,604 | 1,012 | |||||||||
Loss on commercial loans held for sale | 1,151 | 7,562 | — | |||||||||
Other | 1,773 | 1,810 | 2,036 | |||||||||
Total noninterest expense | 14,358 | 22,155 | 12,880 | |||||||||
Net loss before provision (benefit) for income taxes | (6,028 | ) | (18,525 | ) | (8,334 | ) | ||||||
Provision (benefit) for income taxes | 52 | 14,073 | (3,042 | ) | ||||||||
Net loss | $ | (6,080 | ) | $ | (32,598 | ) | $ | (5,292 | ) | |||
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Additional information can be found in our filed reports at the Securities and Exchange Commission’s Internet site (http://www.sec.gov).