Sound Banking Company Reports First Quarter 2008 Results

MOREHEAD CITY, N.C., May 12  /PRNewswire-FirstCall/ -- Sound Banking Company (OTC:SNBN) (BULLETIN BOARD: SNBN)  reported today that total assets were $118.4 million on March 31, 2008, an 8% increase when compared with total assets of $109.5 million a year earlier.  At quarter end, loans outstanding were $86.5 million while deposits amounted to $95.8 million, up approximately 1% each from a year ago.  Growth during the current period came mainly from increases in investments and other interest-earning assets.

The Bank also reported that unaudited net income for the first quarter of 2008 was $98,000 or $0.12 per diluted share compared with net income of $249,000 or $0.30 per diluted share for the first quarter of 2007.  Earnings for the quarter were lower due to higher operating expenses due primarily to the opening of the Bank's new branch in Beaufort in July of last year, a decline in net interest margin and an increase in the provision for loan losses.  The 2007 earnings per share amount was adjusted to reflect the 6 for 5 stock split in August 2007.

Net interest income decreased $75,000 or 8% to $913,000 for the current period compared to $988,000 for the 2007 period.  The decline in net interest income was the direct result of interest rate cuts by the Federal Reserve over the past several months.  Since September 2007, the Fed has cut interest rates by 3 percentage points. These cuts, coupled with the Bank's slower repricing deposits caused the Bank's net interest margin to decline from 4.07% a year ago to 3.39% as of March 31, 2008.

The Bank maintains a reserve for loan losses based on management's evaluation of internal and external factors.  At March 31, 2008, the reserve was 1.28% of total loans outstanding.  The Bank recorded a provision for loan losses of $67,000 during the current quarter compared to $29,000 for the 2007 quarter.

Non-interest income increased $50,000 or 27% from $180,000 for the prior year period to $230,000 for the current 2008 period due principally to increases in service charges and fees on deposit accounts.  Non-interest expense increased from $758,000 for the 2007 quarter to $940,000 for the current period.  Operating expenses of the Bank's Beaufort branch which opened in July 2007 accounted for approximately half of the increase in those expenses.

Commenting on the first quarter performance, Phil Collins, President and CEO, said, "The decline in net interest margin has significantly affected our profitability. Our increase in expenses is the direct result of our commitment to provide expanded service throughout Carteret County with the opening of our Beaufort Branch. While we expect to operate at a lower level of profitability until economic conditions improve, we believe we are well positioned if we take a long term view of the future."

Sound Banking Company is a state chartered bank and offers a full range of financial services.  Sound Bank, headquartered in Morehead City, operates full service offices in Morehead City, Beaufort and Cape Carteret and a loan production office in New Bern, North Carolina. Information about Sound Banking Company and its products and services is available on its web site at: http://www.soundbanking.com/

The information as of and for the quarter ended March 31, 2008 as presented is unaudited.  This news release contains forward-looking statements.  The actual results might differ materially from those projected in the forward-looking statements for various reasons, including our limited operating history, substantial changes in financial markets, regulatory changes, changes in interest rates, loss of deposits and loan demand to other savings and financial institutions, and changes in real estate values and the real estate market. 

DATASOURCE: Sound Banking Company



CONTACT:  Phil Collins of Sound Banking Company, [phone]



Web site:  http://www.soundbanking.com/ 

Copyright