ASBB Asb Bancorp, Inc.

ASHEVILLE, N.C., May 2, 2013 /PRNewswire/ -- ASB Bancorp, Inc. (the "Company") (NASDAQ GM: ASBB), the holding company for Asheville Savings Bank, S.S.B. (the "Bank"), announced today its operating results for the three month period ended March 31, 2013. The Company reported net income of $740,000 for the quarter ended March 31, 2013 compared to $284,000 for the same quarter of 2012. On a basic and diluted per share basis, the Company had net income of $0.15 per share and $0.06 per share for the three month periods ended March 31, 2013 and 2012, respectively.

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"First quarter results indicate continued progress toward the goal of reducing nonperforming assets," said Suzanne S. DeFerie, President and Chief Executive Officer. "Additionally, increases in both core deposits and loan balances support our focus on net interest margin improvement, which will improve our profitability now and for the sustainable future."

First Quarter Highlights

• Net income for the first quarter of 2013 improved to $740,000, or $0.15 per basic and diluted share.
• Loans increased $7.8 million to $395.5 million as new loan originations exceeded loan repayments, prepayments and foreclosures.   
• Nonperforming loans increased to $1.5 million, or 0.39% of total loans, at March 31, 2013 from $1.2 million, or 0.30% of total loans, at December 31, 2012.       
• Delinquent loans totaled $3.1 million, or 0.77% of total loans, at March 31, 2013, a decrease from $3.2 million, or 0.82% of total loans, at December 31, 2012.            
• Nonperforming assets decreased $900,000 to $19.7 million, or 2.60% of total assets, at March 31, 2013 from $20.6 million, or 2.74% of total assets, at December 31, 2012 and have improved in each quarter since the fourth quarter of 2011.
• Core deposits, or deposits excluding time deposits, increased $9.2 million to $398.3 million at March 31, 2013 from $389.1 million at December 31, 2012 and have increased in each of the previous four quarters.  Since December 31, 2012, non-interest-bearing deposits increased $3.1 million, or 4.7%.
• Book value per share increased $0.28 to $20.25 at the end of the first quarter of 2013.
• The Company completed a 5% stock repurchase plan during the first quarter of 2013.  Under the plan, 279,228 shares of common stock were repurchased at an average cost of $16.52 per share.

Balance Sheet Review

Assets. Total assets increased $8.1 million, or 1.1%, to $757.5 million at March 31, 2013 from $749.4 million at December 31, 2012. Cash and cash equivalents increased $2.9 million, or 6.2%, to $50.3 million at March 31, 2013 from $47.4 million at December 31, 2012. Investment securities increased $18.5 million, or 7.6%, to $261.9 million at March 31, 2013 from $243.4 million at December 31, 2012, primarily due to the reinvestment of proceeds from the sale of investment securities in the fourth quarter of 2012 that settled in the first quarter of 2013. Loans receivable, net of deferred fees, increased $7.8 million, or 2.0%, to $395.5 million at March 31, 2013 from $387.7 million at December 31, 2012 as new loan originations exceeded loan repayments, prepayments, and foreclosures.

Liabilities. Total deposits increased $11.3 million, or 2.0%, to $589.6 million at March 31, 2013 from $578.3 million at December 31, 2012. During the three months ended March 31, 2013, the Company continued its focus on core deposit growth, from which it excludes certificates of deposit. Core deposits increased $9.2 million, or 2.4%, to $398.3 million at March 31, 2013 from $389.1 million at December 31, 2012. Non-interest-bearing deposits increased $3.1 million, or 4.7%, to $68.4 million at March 31, 2013 from $65.3 million at December 31, 2012. Over the same period, certificates of deposit increased $2.1 million, or 1.1%, to $191.3 million at March 31, 2013 from $189.2 million at December 31, 2012.

Asset Quality

Provision for Loan Losses. The provision for loan losses was $112,000 for the three months ended March 31, 2013 compared to $598,000 for the three months ended March 31, 2012. The decrease in the provision was primarily due to a decrease in charge-offs, which were $105,000 for the first three months of 2013 compared to $716,000 million for the first three months of 2012.

Nonperforming assets. Nonperforming assets totaled $19.7 million, or 2.60% of total assets, at March 31, 2013, compared to $20.6 million, or 2.74% of total assets, at December 31, 2012. Nonperforming assets included $1.5 million in nonperforming loans and $18.1 million in foreclosed real estate at March 31, 2013, compared to $1.2 million and $19.4 million, respectively, at December 31, 2012.

Nonperforming loans increased $397,000, or 34.5%, to $1.5 million at March 31, 2013 from $1.2 million at December 31, 2012. The increase in nonperforming loans to March 31, 2013 from December 31, 2012 was primarily attributable to the addition of one loan that stopped performing during the period. At March 31, 2013, nonperforming loans included one commercial mortgage in the amount of $389,000, three commercial and industrial loans that totaled $204,000, ten residential mortgage loans that totaled $830,000, and one home equity loan in the amount of $95,000. As of March 31, 2013, the nonperforming loans had specific reserves of $191,000.

Foreclosed real estate at March 31, 2013 included 14 properties with a total carrying value of $18.1 million compared to 18 properties with a total carrying value of $19.4 million at December 31, 2012. During the three months ended March 31, 2013, there was one new property in the amount of $40,000 added to foreclosed real estate, while five properties totaling $1.3 million were sold, including one with a private mortgage insurance settlement pending. The Bank also added $59,000 in loss provisions.

The Bank's largest foreclosed property resulted from a loan relationship that had an original purpose of constructing a mixed-use retail, commercial office, and residential condominium project located in western North Carolina. As a result of this foreclosure, the Bank acquired (1) 44 of the 48 condominium units in the building including all eight of the retail units, three of which are leased, (2) eight of the eleven commercial office condominiums, three of which were sold by the developer prior to the foreclosure, and (3) 28 of the 29 residential units, one of which was sold by the developer prior to the foreclosure. Following an additional write-down of approximately $630,000 on the loans secured by this collateral in the fourth quarter of 2012, the Bank recorded this foreclosed property in the amount of $9.8 million.

Income Statement Analysis

Net Interest Income. Net interest income was $4.6 million for each of the three-month periods ended March 31, 2013 and March 31, 2012. Total interest and dividend income decreased by $793,000, or 12.1%, to $5.7 million for the three months ended March 31, 2013 compared to $6.5 million for the three months ended March 31, 2012. The decrease in interest and dividend income was primarily a result of a 12 basis point decrease in yields on interest-earning assets, a $31.6 million decrease in average loan balances, and a $20.9 million decrease in the average balances of all other interest-earning assets, including investments. The decline in total interest and dividend income was offset by a $802,000, or 41.8%, decrease in interest expense to $1.1 million for the three months ended March 31, 2013 compared to $1.9 million for the three months ended March 31, 2012. The decrease in interest expense resulted from a 46 basis point reduction in the average rate paid on interest-bearing liabilities and a decline of $48.2 million in the average balances of interest-bearing liabilities, reflecting a fourth quarter 2012 $10.0 million prepayment of a FHLB advance, when comparing the three-month periods.

Noninterest Income. Noninterest income decreased $70,000 to $1.9 million for the three months ended March 31, 2013 from $2.0 million for the three months ended March 31, 2012. Factors that contributed to the decrease in noninterest income during the 2013 period were decreases of $509,000 in gains on sale of investment securities and $116,000 in service charge income, partially offset by increases of $261,000 in mortgage banking income and $242,000 in other noninterest income, primarily related to an increase of $114,000 in other income from a SBIC investment. The increase in mortgage banking income was attributable to higher volumes of mortgage loans sold. The decrease in deposit and other service charge income was primarily the result of lower deposit overdraft fees.

Noninterest Expense. Noninterest expense decreased $246,000, or 4.4%, to $5.3 million for the three months ended March 31, 2013 compared to $5.6 million for the three months ended March 31, 2012. The primary reasons for the decrease were decreases of $181,000 in salaries and benefits, and $58,000 in professional and outside services, which were partially offset by an increase of $53,000 in foreclosed property expenses. The decrease in salaries and benefits was primarily due to a $481,000 one-time credit to pension expense resulting from the curtailment of benefits for future service, that was partially offset by increases of $164,000 in expenses related to the Bank's new equity incentive plan and $126,000 in compensation expenses. The increase in foreclosed property expenses related primarily to the increase in the loss provision compared to the prior year.

The Bank is a North Carolina chartered stock savings bank with a community focus offering traditional financial services through thirteen full-service banking centers located in Buncombe, Madison, McDowell, Henderson, and Transylvania counties in Western North Carolina.

This news release, as well as other written communications made from time to time by the Company and its subsidiaries and oral communications made from time to time by authorized officers of the Company, may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the PSLRA). Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential." For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.

The Company cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: prevailing economic and geopolitical conditions; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, pricing, products and services and other factors that may be described in the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

Contact:
Suzanne S. DeFerie  
Chief Executive Officer  
(828) 254-7411 

SOURCE ASB Bancorp, Inc.