A decline in income from asset sales pulled third-quarter profits down 14 percent for the owner of Southcoast Community Bank.
Southcoast Financial Corp. reported its seventh consecutive quarterly gain Tuesday.
For the July-September period, the Mount Pleasant-based holding company said it earned $694,000 compared to $808,000 a year ago. The decline stemmed mostly from a 48 percent drop in “noninterest” income. Southcoast booked about $1 million in onetime gains from the sales of bonds and loans in the 2012 third quarter, compared to $560,000 this year.
That dip was offset by a $535,000 increase in revenue from loans and interest-earning assets. Also Southcoast did not have to set aside any money to cover future loan losses in the latest quarter. Operating expenses, meanwhile, edged up 4 percent.
Year-to-date, the bank earned $8.7 million, compared to $2.6 million for the same period last year. The bottom-line increase was triggered by a $6.3 million tax benefit tied to losses Southcoast had incurred from bad real estate loans in 2011.
Regulators wouldn’t allow the bank to recognize the gain on its books until earlier this year, after it showed a sustainable run of profits and fewer foreclosures. Southcoast said it can use the benefit to reduce its income tax payments.
Without the gain, Southcoast’s year-to-date profit was about $2.4 million, down 8 percent from the first nine months of 2012.
CEO Wayne Pearson said the bank is seeing improvements in its profit margins and deposit mix. Also, Southcoast has been reducing foreclosures and the expenses that come with owning those properties.
“These items are helping us achieve our goals of increased core earnings and a strong capital base,” Pearson said in a written statement.
Contact John McDermott at 937-5572.