EXHIBIT 99.1
COOPERATIVE BANKSHARES, INC. REPORTS EARNINGS
For Immediate Release:
Wilmington, NC July 24, 2008--Cooperative Bankshares, Inc. (NASDAQ:
"COOP") (the "Company"), the parent company of Cooperative Bank (the "Bank"),
reported net income for the six months ended June 30, 2008 of $402,000, or $0.06
per diluted share. Net income for the six months ended June 30, 2007 was $4.2
million, or $0.63 per diluted share. The net loss for the quarter ended June 30,
2008 was $350,000, or $0.05 per diluted share, compared to net income of $2.1
million, or $0.31 per diluted share, for the quarter ended June 30, 2007. The
decrease in net income for the three and six months ended June 30, 2008 from the
prior year periods were mainly due to a decrease in net interest income and an
increase in the provision for loan losses. The decrease in net interest income
for the three and six months ended June 30, 2008 from the prior year periods was
primarily caused by a reduction in the interest rate spread of 62 and 61 basis
points, respectively. These decreases are primarily attributable to action taken
by the Federal Reserve to reduce interest rates by 225 basis points during the
first six months of 2008 and 325 basis points since September 18, 2007. As a
result of these rate reductions, the Bank's loan portfolio has repriced faster
than deposits, causing a decline in net interest income. As the interest rate
environment becomes more stable or if interest rates rise, the Bank believes
that its interest rate spread would increase. The provision for loan losses
increased to $3.3 million for the six months ended June 30, 2008 compared to
$650,000 for the six months ended June 30, 2007. The provision for loan losses
increased to $2.5 million for the three months ended June 30, 2008 compared to
$350,000 for the three months ended June 30, 2007. The increases in the
provision for loan losses during the three and six-month periods were primarily
the result of an increase in valuation allowances for the recorded investment in
nonperforming loans. At June 30, 2008 and 2007, the recorded investment in
nonperforming loans was $13.7 million and $1.6 million, respectively, with
corresponding valuation allowances of $2.1 million and $149,000, respectively.
The Bank also incurred additional expenses during 2008 related to foreclosed
real estate owned. During the three and six months ended June 30, 2008, net
expenses related to foreclosed real estate owned totaled $91,000 and $306,000,
respectively, compared to net gains related to foreclosed real estate owned of
$0 and $8,000, respectively, for the same period last year. The majority of
foreclosed real estate expenses for the six-month period ended June 30, 2008 is
related to a write down of $165,000 on one property recorded during the first
quarter and a loss of $67,000 on the sale of another property recorded during
the second quarter. "We are currently operating in an environment in the housing
market and economy as a whole that has resulted in an increase in nonperforming
loans. As a result of this increase and management's evaluation of these loans
based on current appraisals, we have adjusted the allowance for loan losses to a
level we believe to be appropriate," said Frederick Willetts, III, the Company's
Chairman, President, and Chief Executive Officer.
Total assets increased to $973.7 million at June 30, 2008 compared to
$926.8 million at December 31, 2007. Asset growth was primarily the result of
continued loan growth during the first six months of 2008, which was funded by
deposit growth and increased borrowings. Loans increased to $865.5 million at
June 30, 2008 compared to $820.1 million at December 31, 2007. For the six-month
period ended June 30, 2008, the bulk of the increase in the loan portfolio
occurred in one-to-four family loans, which grew $37.6 million (9.4%), and
multi-family residential loans, which grew $14.3 million (89.6%). Deposits and
borrowings at June 30, 2008 increased to $731.6 million and $171.6 million,
respectively, from $714.9 million and $141.9 million, respectively, at December
31, 2007. Loan and deposit growth was primarily attributable to the Bank's
improved branch network. Loan growth was also affected by the Bank's continued
emphasis on increasing overall loan production. The Company's nonperforming
assets, which consist of loans ninety days or more delinquent, non-accrual
loans, and foreclosed real estate owned, increased to $18.1 million at June 30,
2008 compared to $11.6 million at December 31, 2007. All foreclosed real estate
owned has been appraised and is recorded at the lower of the loan balance or the
estimated fair value of the property less estimated costs to sell. At June 30,
2008, stockholders' equity was $63.6 million, or $9.66 per share, and
represented 6.53% of assets, compared to $65.2 million, or $9.94 per share,
representing 7.03% of assets at December 31, 2007. Stockholders' equity for the
six months ended June 30, 2008 was affected by the adoption of EITF 06-4 on
January 1, 2008. The adoption of EITF 06-4 resulted in an adjustment to the
carrying value of liabilities with an offsetting adjustment to the opening
balance of retained earnings of $1.0 million, as discussed in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2007.
Chartered in 1898, Cooperative Bank provides a full range of financial
services through twenty three offices in Eastern North Carolina and three
offices in South Carolina. The Bank's subsidiary, Lumina Mortgage, Inc., is a
mortgage banking firm, originating and selling residential mortgage loans
through three offices in North Carolina.
Statements in this news release that are not historical facts are
forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements, which contain words such as
"expects," "intends," "believes" or words of similar import, are subject to
numerous risks and uncertainties disclosed from time to time in documents the
Company files with the Securities and Exchange Commission (the "SEC"), which
could cause actual results to differ materially from the results currently
anticipated. Undue reliance should not be placed on such forward-looking
statements.
The Company has filed a Form 8-K with the SEC containing additional
financial information regarding the three-month period and six- month period
ended June 30, 2008.
Contact: Frederick Willetts, III, President or Todd L. Sammons, CPA,
Senior Vice President/ CFO, 910-343-0181
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COOPERATIVE BANKSHARES, INC.
201 MARKET ST. UNAUDITED SELECTED FINANCIAL DATA
WILMINGTON, NC 28401 NASDAQ SYMBOL: COOP
(In thousands, except per share data)
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BALANCES AS OF: 06/30/08 03/31/08 12/31/07 09/30/07 06/30/07
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ASSETS $ 973,681 $ 958,195 $ 926,823 $ 921,965 $ 891,567
STOCKHOLDERS' EQUITY 63,607 64,842 65,177 63,484 61,365
DEPOSITS 731,583 728,639 714,892 707,897 690,798
BOOK VALUE (6,586 SHARES AS OF 6/30/08) 9.66 9.85 9.94 9.69 9.37
NON-PERFORMING ASSETS:
ACCRUING LOANS 90 DAYS PAST DUE 4,025 5,316 3,560 5,114 1,082
NON-ACCRUAL LOANS 9,708 3,462 2,083 3,224 525
FORECLOSED REO 4,357 4,549 5,924 1,043 574
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TOTAL NON-PERFORMING ASSETS $ 18,090 $ 13,327 $ 11,567 $ 9,381 $ 2,181
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FOR THE QUARTER ENDED: 06/30/08 03/31/08 12/31/07 09/30/07 06/30/07
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NET INTEREST MARGIN 2.71% 2.83% 3.25% 3.44% 3.48%
(NET INTEREST INCOME/AVERAGE INTEREST-EARNING ASSETS)
EARNING ASSETS/LIABILITIES 108.3% 108.6% 109.7% 110.6% 110.5%
STOCKHOLDERS' EQUITY/ASSETS 6.53% 6.77% 7.03% 6.89% 6.88%
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NET INCOME (LOSS) $ (350) $ 752 $ 1,805 $ 2,107 $ 2,066
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NET INCOME (LOSS) PER DILUTED SHARE $ (0.05) $ 0.11 $ 0.27 $ 0.32 $ 0.31
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DILUTED WEIGHTED AVERAGE
NUMBER OF SHARES 6,585 6,610 6,632 6,646 6,634
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ALLOWANCE FOR LOAN LOSSES
PROVISION $ 2,470 $ 855 $ 450 $ 532 $ 350
CHARGE OFFS 434 226 416 162 68
RECOVERIES 3 8 9 8 --
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BALANCE $ 11,464 $ 9,425 $ 8,788 $ 8,745 $ 8,367
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NOTE: The provision for allowance for loan losses for the quarter ended September 30, 2007 includes $182 representing the balance
of the allowance for loan losses acquired in the purchase of the Bank of Jefferson.