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Southcoast Financial Corporation Announces Nine Months Earnings



Southcoast Financial Corporation Announces Nine Months Earnings

MT. PLEASANT, S.C., Oct. 8, 2013 (GLOBE NEWSWIRE) -- Southcoast Financial
Corporation (Nasdaq:SOCB) announced that it had unaudited net income of
$8,735,000, or $1.23 per basic share, for the nine months ended September 30,
2013. This compares to unaudited net income of $2,590,000, or $0.37 per basic
share, for the nine months ended September 30, 2012. The September 30, 2013
income per share is based on 7,074,183 basic average shares compared to
7,044,365 basic average shares for 2012.

The year to date 2013 results include the reversal of the deferred tax asset
(DTA) valuation allowance resulting in the recognition of a tax benefit of
approximately $6,363,000, or $0.90 per share. The reversal was reflective of
sustained profitability and improving credit quality that has led to
significantly lower credit related costs supporting the anticipated capacity
to utilize the DTA in future periods to reduce income tax payments. The impact
of the DTA valuation allowance reversal, coupled with operating earnings,
increased the Company's book value to $5.97 per share as of September 30,
2013, compared to $4.76 per share as of September 30, 2012.

For the nine months ended September 30, 2013, net interest income increased
$510,000 from $9,880,000 for the nine months of 2012 to $10,390,000 for the
nine months ended September 30, 2012. 

Noninterest income decreased to $1,840,000 for the first nine months of 2013
from $2,550,000 for the first nine months of 2012, primarily due to $626,000
of securities gains and $124,000 of gains on sales of fixed assets during the
2012 period, compared to only $105,000 of gains from sales of securities and
$28,000 of gains on sales of fixed assets in the 2013 period.

Noninterest expense levels increased to $9,858,000 for the nine months ended
September 30, 2013 from $8,957,000 for the nine months ended September 30,
2012. The first nine months of 2012 included the benefit of $1,042,000 in net
gains on sales of other real estate owned compared to only $314,000 for the
nine months ended September 30, 2013. 

For the quarter ended September 30, 2013, the unaudited net income was
$694,000, or $0.10 per basic share. This compares to an unaudited net income
of $844,000, or $0.12 per basic share for the quarter ended September 30,
2012. The September 30, 2013 income per share is based on 7,077,878 basic
average shares compared to 7,057,450 basic average shares for the quarter
ended September 30, 2012. The third quarter of 2013 represents the seventh
consecutive quarter of net income. The Company's annualized net interest
margin improved by 8 basis points to 3.64% for the quarter ended September 30,
2013, compared to 3.56% for the quarter ended September 30, 2012.

Total assets as of September 30, 2013 were $441.2 million compared to $438.2
million as of December 31, 2012, an increase of 0.68%. Loans, excluding loans
held for sale, increased to $328.6 million, from $327.5 million as of December
31, 2012. Deposits decreased by $6.4 million to $313.2 million at September
30, 2013, from $319.6 million at December 31, 2012.  This decrease was
comprised of a $29.2 million decrease in time deposits between the two
periods, partially offset by increases of $8.5 million and $14.3 million in
noninterest bearing and interest bearing non-time deposits, respectively.

"The 2013 results reflect the continued improvement of our net interest
margin, continued decreased levels of nonperforming assets, and an improved
deposit mix. These items are helping us achieve our goals of increased core
earnings and a strong capital base," said L. Wayne Pearson, Chairman and Chief
Executive Officer.

The Company's ratio of nonperforming assets to total assets was 3.78% as of
September 30, 2013, compared to 5.08% as of September 30, 2012. The allowance
for loan losses as a percentage of loans was 2.02% as of September 30, 2013,
compared to 2.59% as of September 30, 2012. The allowance for loan losses as a
percentage of total nonperforming loans totaled 58.99% as of September 30,
2013, compared to 62.01% as of September 30, 2012. The subsidiary bank's
capital position as of September 30, 2013 remains in excess of regulatory
well-capitalized requirements.

About Southcoast Financial Corporation

Southcoast Financial Corporation, headquartered in Mt. Pleasant, South
Carolina, is the holding company of Southcoast Community Bank. The Bank, which
opened for business July 20, 1998, is a state chartered commercial bank
operating from its main office at 530 Johnnie Dodds Boulevard in Mt. Pleasant,
South Carolina and nine branches in the Charleston, South Carolina area.
Southcoast Financial Corporation's common stock is traded on the NASDAQ Global
Market under the symbol SOCB.

                                     Southcoast Financial Corporation
                                     Consolidated Balance Sheets
                                     (Dollars in thousands)
                                                       
                                      September 30     December 31
                                     2013             2012
                                                       
Assets                                                 
Cash and cash equivalents            $24,785          $21,984
Investments                          43,963           48,367
Loans held for sale                  925              1,789
Loans                                328,567          327,469
Less: Allowance for loan losses      6,649            8,159
Net loans                            321,918          319,310
Fixed assets                         21,324           21,653
Other assets                         28,288           25,118
Total Assets                         $441,203         $438,221
                                                       
Liabilities & Shareholders' Equity                     
Deposits:                                              
Noninterest bearing                  $47,343          $38,797
Interest bearing nontime             129,564          115,245
Time deposits                        136,335          165,590
Total deposits                       313,242          319,632
Other borrowings                     70,833           69,949
Other liabilities                    4,546            4,066
Junior subordinated debentures       10,310           10,310
Total liabilities                    398,931          403,957
                                                       
Shareholders' Equity                                   
Common Stock                         54,519           54,437
Accumulated deficit                   (10,266)         (19,002)
Accumulated other comprehensive loss  (1,981)          (1,171)
Total shareholders' equity           42,272           34,264
Total Liabilities and                                  
Shareholders' equity                 $441,203         $438,221

                        
                        Southcoast Financial Corporation
                        Consolidated Income Statements
                        (Dollars in thousands, except earnings per share)
                                                                  
                        Nine Months Ended           Three Months Ended
                       September 30, September 30, September 30, September 30,
                       2013          2012          2013          2012
                       (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Interest Income                                                   
Interest and fees on   $12,468       $12,632       $4,106        $4,255
loans
Interest on            809           971           318           320
investments
Interest on Fed funds  24            23            11            7
sold
Total interest income  13,301        13,626        4,435         4,582
                                                                  
Interest expense       2,911         3,746         951           1,183
Net interest income    10,390        9,880         3,484         3,399
Provision for loan     0             880           0             450
losses
Net interest income    10,390        9,000         3,484         2,949
after provision
                                                                  
Noninterest income     1,840         2,550         560           1,070
Total operating income 12,230        11,550        4,044         4,019
                                                                  
Noninterest expense                                               
Salaries and benefits  5,260         4,870         1,705         1,639
Occupancy and          2,221         2,132         763           707
equipment 
Other expenses         2,377         1,955         882           865
                                                                  
Total noninterest      9,858         8,957         3,350         3,211
expense
                                                                  
Income before taxes    2,372         2,593         694           808
                                                                  
Income tax expense     -6,363        3              --            (36)
Net income             $8,735        $2,590        $694          $844
Basic net income per   $1.23         $0.37         $0.10         $0.12
share
                                                                  
Diluted net income per $1.23         $0.37         $0.10         $0.12
share
                                                                  
Average number of                                                 
shares
Basic                  7,074,183     7,044,365     7,077,878     7,057,450
Diluted                7,074,183     7,044,365     7,077,878     7,057,450
                                                                  

                                                         
Southcoast Financial Corporation                         
SELECTED FINANCIAL DATA                                  
(dollars in thousands, except earnings per share)        
                                                         
                                 Three Months Ended
                                  September 30, 2013     September 30, 2012
                                 (Unaudited)            (Unaudited)
INCOME STATEMENT DATA                                    
Net interest income               $ 3,484                $ 3,399
Provision for loan losses         --                    450
Noninterest income               560                    1,070
Noninterest expenses             3,350                  3,211
Net income                        $ 694                  $ 844
                                                         
PER SHARE DATA                                           
Net income per share                                     
Basic                             $ 0.10                 $ 0.12
Diluted                           $ 0.10                 $ 0.12
                                                         
BALANCE SHEET DATA                                       
Total assets                      $ 441,203              $ 441,961
Total deposits                   313,242                325,776
Total loans (net)                321,918                316,602
Investment securities            43,963                 51,644
Other borrowings                 70,833                 62,681
Junior subordinated debentures   10,310                 10,310
Shareholders' equity             42,272                 33,593
                                                         
Average shares outstanding^1                             
Basic                            7,077,878              7,057,450
Diluted                          7,077,878              7,057,450
                                                         
Book value per share^1           $5.97                  $4.76
                                                         
Key ratios                                               
Return on assets^2               0.64%                  0.78%
Return on equity^2               7.22%                  10.14%
Equity to asset ratio            9.58%                  7.60%
Nonperforming assets to assets^3 3.83%                  5.08%
Reserve to loans                 2.02%                  2.59%
Reserve to nonperforming loans^4 58.99%                 62.01%
Net interest margin^2            3.64%                  3.56%
                                                         
^1 Prior period per share amounts adjusted for 15% stock dividends paid during
January 2013 and June 2013.
^2 Ratios for three months are annualized.
^3 Includes nonaccruing loans, loans 90 or more days past due still accruing
interest, troubled debt restructures, and other real estate owned.
^4 Includes nonaccruing loans, loans 90 or more days past due still accruing
interest, and troubled debt restructures.
                                                         

CONTACT: Southcoast Financial Corporation
         William C. Heslop, Senior Vice President and
         Chief Financial Officer, (843) 216-3019
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