Bank OF Wilmington (NASDAQ:BKWW)
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WILMINGTON, N.C., May 9 /PRNewswire-FirstCall/ -- Bank of Wilmington Corporation (NASDAQ:BKWW) reported net income for the first quarter of 2006 of $579,000 compared with $241,000 for the first quarter of 2005, an increase of 140.2 percent. Diluted earnings per share were $0.17 compared with $0.07 for the prior-year first quarter, an increase of 142.9 percent. Year-over-year performance reflects exceptional loan and deposit growth.
Cameron Coburn, Chairman, President and CEO, commented, "Our growth reflects the strong economy of the Cape Fear region, driven by population growth and a diversified industrial base. As the leading community bank in this metro area, Bank of Wilmington has benefited handsomely from the exceptional loan demand and deposit growth we witnessed during 2005. As we enter 2006, however, we are seeing the impact of rising interest rates on our local real estate market, which has moderated loan demand across all real estate-related categories. The pace of this first quarter is still strong, but more importantly, it is also more sustainable. We've been able to devote more attention to deposit generation, and one of our most outstanding accomplishments this year is the growth of our demand deposit accounts.
"Early in the second quarter," Mr. Coburn continued, "we completed the conversion of our Surf City office to a full-service branch, and opened our fifth full-service banking office in Waterford. Expense growth reflects the additional costs associated with this expansion. However, the value provided by our expanded branch network has the potential for further growth of our low-cost deposits."
Total revenue, comprised of net interest income and non-interest income, was $3.3 million for the first quarter, an increase of 58.4 percent over the $2.1 million reported for the prior-year period. Net interest income for the current quarter increased 66.6 percent over 2005 to $3.1 million, reflecting a 71.8 percent growth in average earning assets partially offset by an 11 basis point decline in the net interest margin to 3.49 percent. Mr. Coburn commented, "Although our net interest margin has declined year-over-year, we experienced a two basis point improvement since the fourth quarter of 2005 as growth in low-cost deposits, primarily demand and money market accounts, offset the rising cost of time deposits."
Non-interest income was $240,000 for the first quarter of 2006 compared with $248,000 for last year's first quarter. Excluding a $10,000 loss on the sale of securities in 2006 and a $1,000 gain in the first quarter of 2005, non-interest income of $250,000 was virtually unchanged from the prior-year quarter; our demand deposit campaign over the current period translated into lower service fee income in exchange for an improved net interest margin.
As a result of expansion initiatives, non-interest expense increased $706,000, or 50.7 percent, to $2.1 million this year from $1.4 million for the prior-year first quarter. Expenses increased in all categories; salaries and benefits grew 38.0 percent over the past twelve months from a combination of 22 additional FTE employees and $104,000 of expenses associated with the first-time expensing of stock options and an increase in deferred compensation expense from a supplemental retirement program newly-implemented in 2005. Nine of the 22 newly-added FTE employees were hired to staff the two branches opened in the second quarter of 2006, and the remaining 13 are employed in growth-related positions such as operations and loan production. Occupancy and equipment expense also grew $116,000, or 55.0 percent. Other expense was $719,000 for the 2006 quarter, up $300,000, or 71.6 percent, from last year's first quarter, reflecting additional growth-related processing costs and new product introductions (business bill pay and business debit cards), as well as the increased costs of regulatory reporting. The efficiency ratio improved to 63.09 percent for the 2006 quarter compared with 66.30 percent for the prior- year first quarter.
Mr. Coburn commented, "Asset quality remains sound. The $402,000 we charged off this quarter represents primarily non-real estate related commercial loans where we felt there was a deficiency of collateral. However, we have since recovered $63,000 of the amount charged-off, and assets representing an additional $117,000 are under contract to be sold during the second quarter." Net charge-offs for the quarter were $401,000, or 0.56 percent of average loans on an annualized basis, compared with $42,000 or 0.06 percent annualized for the December 31, 2005 quarter, and $80,000 or 0.19 percent annualized for the year-ago quarter. Non-performing assets were $948,000, or 0.25 percent of total assets at March 31, 2006, compared with $1.2 million, or 0.34 percent of assets at year-end 2005, and $1.4 million, or 0.59 percent, twelve months ago. Loan loss reserves at March 31, 2006 were $3.4 million, or 1.17 percent of total loans compared with 1.28 percent a year ago when nonperforming assets were substantially higher.
Total assets were $381.8 million at March 31, 2006, an increase of $152.9 million, or 66.8 percent, from twelve months ago. Year-over-year, loans outstanding grew $103.3 million, or 55.2 percent, from $187.2 million a year ago to $290.5 million for the current quarter. Residential construction lending accounted for the majority of this growth due to population increases in the Bank's market area. Year-to-date, loan growth moderated to $12.1 million, or 4.4 percent (17.6 percent annualized). Coburn added, "We welcome a respite in this market; at this quarter's pace, we have an opportunity to focus on building deeper relationships that will enhance our profitability and our reputation as a full-service community bank."
Loan growth over the past twelve months was funded primarily by a $126.8 million, or 64.8 percent, increase in deposits, to $322.6 million. For the recent quarter, deposits grew $38.5 million, or 13.6 percent. Core deposits, which include retail CDs, grew 12.1 percent. The lowest cost accounts (transaction accounts plus money market and savings) increased by $13.8 million, or 21.6 percent; they now constitute 24.1 percent of the deposit mix compared to 22.5 percent at year-end 2005, regaining ground from the prior- year first quarter, where they comprised 28.3 percent of deposits. Non- interest bearing checking account balances increased $9.6 million since March 31, 2005, or 42.0 percent; of this total, $6.3 million was generated in the first quarter of 2006, representing a growth rate of 24.2 percent quarterly, and 98.3 percent annualized. Mr. Coburn noted, "Our new branches are just getting up to speed; we believe they will make an increasing contribution as a low-cost source of funds."
Shareholders' equity at March 31, 2006 was $25.1 million, a twelve-month increase of $1.7 million, or 7.3 percent. The Company's total risk-based capital ratio at quarter-end was 12.80 percent. Total shares outstanding at March 31, 2006 were 3,416,068. Mr. Coburn concluded, "Our economy continues to perform well. We are benefiting from a balanced mix of tourism, construction, and diverse industrial expansion. Bank of Wilmington is well-positioned to respond to the diverse financial needs of our local communities."
About the Company
Bank of Wilmington (the "Bank") was established in 1998 as a local bank, developed and managed by local people committed to improving the quality of life and the quality of the banking experience in the communities it serves. Bank of Wilmington Corporation, the parent company, was formed in June 2005. The Bank's market area includes the counties of New Hanover, Pender, and Brunswick, serving southeastern North Carolina, through five full-service banking locations: 1117 Military Cutoff Road; 3702 South College Road in the Pine Valley neighborhood; 14572 US Highway 17 in Hampstead; 206 North Topsail Drive in Surf City, and 503 Olde Waterford Way in Leland. The Company's stock is listed on the Nasdaq Capital Market under the symbol 'BKWW.'
Forward-Looking Statements
This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; changes in demand for products and services; changes in the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors, referred to from time to time in filings made by Bank of Wilmington Corporation with the Securities and Exchange Commission. Bank of Wilmington Corporation undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
Bank of Wilmington Corporation
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
Quarterly
2006 2005 2005 2005
(dollars in thousands except
per share data) 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
EARNINGS
Net interest income $3,087 2,797 2,469 2,180
Provision for loan and
lease losses $293 388 355 392
NonInterest income $240 292 264 246
NonInterest expense $2,099 1,794 1,735 1,459
Net income $579 637 422 383
Basic earnings per share $0.17 0.19 0.12 0.11
Diluted earnings per share $0.17 0.18 0.12 0.11
Average shares outstanding 3,416,068 3,416,068 3,416,068 3,416,068
Average diluted shares
outstanding 3,505,309 3,503,383 3,508,993 3,486,601
Period-end common shares
outstanding 3,416,068 3,416,068 3,416,068 3,416,068
PERFORMANCE RATIOS
Return on average assets 0.63% 0.77% 0.59% 0.61%
Return on average common
equity 9.17% 10.34% 6.92% 6.41%
Net interest margin (fully
tax-equivalent) 3.49% 3.47% 3.54% 3.59%
Efficiency ratio 63.09% 58.08% 63.48% 60.14%
Full-time equivalent
employees 73 62 54 53
CAPITAL
Equity to assets 6.58% 7.18% 7.78% 8.93%
Regulatory leverage ratio 9.33% 10.69% 8.59% 9.57%
Tier 1 capital ratio 11.23% 12.09% 9.43% 11.50%
Total risk-based capital
ratio 12.80% 13.29% 10.65% 12.84%
Book value per share $7.35 7.21 7.10 7.02
Cash dividend per share $0.00 0.00 0.00 0.00
ASSET QUALITY
Gross loan charge-offs $402 53 45 5
Net loan charge-offs $401 42 1 (28)
Net loan charge-offs to
average loans 0.56% 0.06% 0.00% -0.05%
Allowance for loan losses $3,402 3,510 3,165 2,811
Allowance for losses to
total loans 1.17% 1.26% 1.28% 1.30%
Nonperforming loans $948 1,174 751 1,043
Other real estate and
repossessed assets $0 0 13 195
Nonperforming assets to
total assets 0.25% 0.34% 0.25% 0.46%
END OF PERIOD BALANCES
Loans $290,524 278,386 246,757 216,140
Total earning assets
(before allowance) $371,661 334,053 303,133 257,755
Total assets $381,777 342,974 311,813 268,654
Deposits $322,634 284,134 258,084 229,775
Shareholders' equity $25,110 24,636 24,245 23,985
AVERAGE BALANCES
Loans $285,654 261,652 230,140 204,684
Total earning assets
(before allowance) $358,991 320,139 276,848 243,380
Total assets $368,403 329,152 285,444 251,829
Deposits $308,702 269,824 238,439 211,684
Shareholders' equity $25,270 24,642 24,383 23,886
*Shares for all periods restated for 5 for 4 split effective 6/30/05
Bank of Wilmington Corporation
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
Quarterly Year Ending
2005
(dollars in thousands except per
share data) 1st Qtr 2005 2004
EARNINGS
Net interest income 1,853 9,299 5,854
Provision for loan and lease
losses 365 1,499 892
NonInterest income 248 1,048 746
NonInterest expense 1,393 6,381 4,626
Net income 241 1,682 1,148
Basic earnings per share 0.07 0.49 0.41
Diluted earnings per share 0.07 0.48 0.40
Average shares outstanding 3,414,411 3,415,582 2,768,040
Average diluted shares outstanding 3,488,551 3,496,780 2,840,524
Period-end common shares
outstanding 3,416,068 3,416,068 3,405,183
PERFORMANCE RATIOS
Return on average assets 0.44% 0.62% 0.70%
Return on average common equity 4.06% 6.96% 6.45%
Net interest margin (fully tax-
equivalent) 3.60% 3.54% 3.68%
Efficiency ratio 66.30% 61.67% 70.09%
Full-time equivalent employees 51 62 50
CAPITAL
Equity to assets 10.23% 7.18% 11.57%
Regulatory leverage ratio 10.92% 10.69% 12.29%
Tier 1 capital ratio 12.09% 12.09% 13.64%
Total risk-based capital ratio 13.31% 13.29% 14.87%
Book value per share 6.85 7.21 6.85
Cash dividend per share 0.00 0.00 0.00
ASSET QUALITY
Gross loan charge-offs 81 184 503
Net loan charge-offs 80 95 447
Net loan charge-offs to average loans 0.19% 0.04% 0.34%
Allowance for loan losses 2,391 3,510 2,106
Allowance for losses to total loans 1.28% 1.26% 1.30%
Nonperforming loans 1,162 1,174 993
Other real estate and repossessed
assets 195 0 195
Nonperforming assets to total assets 0.59% 0.34% 0.59%
END OF PERIOD BALANCES
Loans 187,152 278,386 162,399
Total earning assets (before
allowance) 220,604 334,053 193,650
Total assets 228,863 343,327 201,533
Deposits 195,833 284,134 170,168
Shareholders' equity 23,404 24,635 23,338
AVERAGE BALANCES
Loans 172,826 217,604 130,734
Total earning assets (before
allowance) 208,932 262,669 159,404
Total assets 217,222 271,258 164,220
Deposits 186,301 226,823 140,356
Shareholders' equity 23,745 24,167 17,803
*Shares for all periods restated for 5 for 4 split effective 6/30/05
Bank of Wilmington Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS THREE MONTHS TWELVE MONTHS TWELVE MONTHS
ENDED ENDED ENDED ENDED
March 31, March 31, December 31, December 31,
2006 2005 2005 2004
(Unaudited) (Unaudited) (Audited) (Audited)
INTEREST INCOME
Loans $5,402 $2,638 $14,728 $7,663
Investment
securities,
available for
sale 571 280 1,453 855
Short-term
investments 193 37 231 78
Total interest
income 6,166 2,955 16,412 8,596
INTEREST EXPENSE
Money market, NOW
and savings
deposits 309 86 619 267
Time deposits 2,422 975 5,702 2,378
Short-term
borrowings 228 41 0 97
Long-term
borrowings 120 0 792 0
Total interest
expense 3,079 1,102 7,113 2,742
Net interest
income 3,087 1,853 9,299 5,854
Provision for
loan and lease
losses 293 365 1,499 892
Net interest
income after
provision
for loan
and lease
losses 2,794 1,488 7,800 4,962
NON INTEREST INCOME
Service fees &
charges 150 141 644 540
Net gain (loss)
on sales of
securities (10) 1 (10) (5)
Income from bank
owned life
insurance 47 53 199 97
Other income 53 53 215 114
Total non
interest
income 240 248 1,048 746
NON INTEREST EXPENSE
Salaries and
employee
benefits 1,053 763 3,438 2,577
Occupancy and
Equipment 327 211 977 782
Other expense 719 419 1,966 1,267
Total non
interest
expense 2,099 1,393 6,381 4,626
Income
before federal
income tax
expense 935 343 2,467 1,082
Federal income
tax expense
(benefit) 356 102 785 (66)
Net income $579 $241 $1,682 $1,148
Basic earnings
per share* $0.17 $0.07 $0.49 $0.41
Diluted earnings
per share* $0.17 $0.07 $0.48 $0.40
Average shares
outstanding * 3,416,068 3,414,411 3,415,582 2,768,040
Average diluted
shares
outstanding * 3,505,309 3,488,551 3,496,780 2,840,524
*All per share and outstanding share data has been restated for the 5 for
4 stock split effected 6/30/05
Bank of Wilmington Corporation
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
2006 2005
(Unaudited) (Audited)
ASSETS
Cash and due from banks $2,010 $1,854
Interest earning deposits in other
banks 24,912 5,419
Total cash and cash equivalents 26,922 7,273
Investment securities available
for sale 54,350 48,655
Time deposits in other banks 199 199
Total loans 290,524 278,386
Allowance for loan losses (3,402) (3,510)
Total Loans, net 287,122 274,876
Accrued interest receivable 1,710 1,645
Premises and equipment, net 2,101 1,845
Federal Home Loan Bank stock 1,676 1,394
Bank owned life insurance 5,343 5,296
Other assets 2,354 2,144
Total assets $381,777 $343,327
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $32,335 $26,025
Savings 2,697 2,594
Money market and NOW 42,748 35,339
Time 244,854 220,176
Total deposits 322,634 284,134
Long-term borrowings 32,310 32,310
Accrued interest payable 538 457
Accrued expenses and other
liabilities 1,185 1,791
Total liabilities 356,667 318,692
SHAREHOLDERS' EQUITY
Common stock 11,956 11,956
Additional Paid in Capital 11,052 11,052
Retained earnings 2,761 2,153
Accumulated other comprehensive
loss (659) (526)
Total shareholders' equity 25,110 24,635
Total liabilities and
shareholders' equity $381,777 $343,327
DATASOURCE: Bank of Wilmington Corporation
CONTACT: J. Cameron Coburn, Chairman, President & CEO, +1-910-509-3901,
or , or Betty V. Norris, SVP & Chief Financial
Officer, +1-910-509-3914, or , both of Bank of
Wilmington Corporation