BKWW Bank OF Wilmington

WILMINGTON, N.C., Feb. 22 /PRNewswire-FirstCall/ -- Bank of Wilmington Corporation (NASDAQ:BKWW) reported net income for the fiscal year 2005 of $1.7 million compared with $1.1 million for the fiscal year 2004, an increase of 46.6 percent. Diluted earnings per share were $0.48 compared with $0.40 for the prior year, an increase of 20.0 percent. Per share results reflect the issuance of 558,419 shares of common stock during the fourth quarter of 2004, which increased average diluted shares by 23.1 percent over the prior year, to 3,496,780. Performance reflects exceptional loan and deposit growth, combined with disciplined expense control. For the fourth quarter of 2005, the Company reported net income of $637,000 compared with $383,000 for the fourth quarter of 2004, an increase of 66.3 percent. Diluted earnings per share were $0.18 compared with $0.13 for the prior-year quarter, an increase of 38.5 percent. Per share earnings were affected by the fourth quarter 2004 stock issuance, which increased average diluted shares by 16.0 percent to 3,503,383. Cameron Coburn, Chairman, President and CEO, commented, "We are pleased to report another year of record earnings, capped by a fourth quarter of exceptional growth. Loan demand, the driving force behind our earnings performance, continues to be extremely strong. We are pleased that the southeastern North Carolina communities we serve value our expertise and premium service. "We are well positioned to continue these positive trends in 2006; in January, we opened a loan production office in Surf City. This office will be converted to a full-service office later in 2006, as we continue to expand our presence within the Cape Fear Region. During the fourth quarter of 2005, we bolstered our regulatory capital through the issuance of $10 million in floating rate trust preferred securities by the Company's wholly-owned subsidiary, BKWW Statutory Trust I. The resulting additional liquidity will support our growth needs throughout 2006." Total revenue, comprised of net interest income and Noninterest income, was $10.3 million for fiscal year 2005, an increase of 57.0 percent over the $6.6 million reported for the prior year. Net interest income for the current 12-month period increased 58.8 percent over 2004 to $9.3 million, reflecting a 64.8 percent growth in average earning assets partially offset by a 13 basis point decline in the net interest margin to 3.54 percent. Mr. Coburn commented, "Strong loan production is driving net interest income growth. Our balance sheet is asset-sensitive and we continue to fund with a balanced mix of core deposits, wholesale funding, and borrowings. Rising rates and increased competition to fund strong loan demand continue to put pressure on the price of deposits. The modest compression we experienced in 2005 has been more than offset by growth in earning assets as we take advantage of sound lending opportunities where we see them." Noninterest income was $1.1 million, a 40.6 percent increase over the 2004 period. Service fee income accounts for the majority of growth. Income from mortgage originations and investment in bank-owned life insurance also contributed to the increase. Revenue for the fourth quarter of 2005 was $3.1 million compared with $1.9 million for the fourth quarter of 2004, an increase of 62.4 percent. Net interest income increased 67.3 percent to $2.8 million, reflecting a 75.9 percent increase in average earning assets partially offset by an 18 basis point decline in the net interest margin to 3.47 percent. Noninterest income was $292,000 compared with $229,000 for the prior-year period, an increase of 27.1 percent. Revenue growth continues to outpace expense growth. Noninterest expense for the fiscal year 2005 was $6.4 million, an increase of 37.9 percent over the 2004 period. Other expense, up $910,000 or 71.8 percent, represents the largest portion of the increase. Expenses associated with newly implemented supplemental retirement benefits for certain officers and directors, the formation of the holding company, and growth-related increases contributed to the increase. Salaries and benefits grew $650,000 or 25.2 percent and resulted from growth-related personnel additions, normal compensation adjustments, and an increase in benefits costs. The efficiency ratio improved to 61.66 percent for 2005 compared with 70.09 percent for the prior-year fiscal period. Noninterest expense for the fourth quarter of 2005 totaled $1.8 million compared with $1.2 million for the fourth quarter of 2004, an increase of 46.8 percent. The efficiency ratio improved to 58.08 percent for the current period compared with 64.28 percent for the fourth quarter of 2004, and 63.48 percent for the previous quarter. Mr. Coburn commented, "We are pleased to report improvement in asset quality throughout 2005; net charge-offs for the year were dramatically reduced from 2004 levels despite a 71.4 percent year-over-year increase in loans outstanding." Net charge-offs for 2005 were $95,000 or 0.04 percent of average loans, compared with $446,000 or 0.34 percent for fiscal 2004. Non- performing assets were $1.2 million, or 0.34 percent of total assets at December 31, 2005, compared with $1.2 million, or 0.59 percent, twelve months ago. Loan loss reserves were $3.5 million, or 1.26 percent of total loans, at December 31, 2005; this compares with a reserve of $2.1 million at December 31, 2004, equivalent to 1.30 percent of year-end loans. Total assets were $343.0 million at December 31, 2005, an increase of $141.4 million, or 70.2 percent, from twelve months ago. Loans outstanding totaled $278.4 million, an increase of $116.0 million, or 71.4 percent, during the 2005 fiscal period. Residential construction lending accounted for the majority of this growth due to population increases in our market area, and the addition of specialized construction lenders to our staff. Loan growth was funded primarily by a $114.0 million, or 67.0 percent, increase in deposits to $284.1 million. Core deposits, including retail CDs, constituted 66.5 percent of the total; they increased $61.0 million or 47.5 percent year-over-year. Shareholders' equity at December 31, 2005 was $24.6 million, a twelve- month increase of $1.3 million, or 5.6 percent. During the fourth quarter, Bank of Wilmington Corporation, through a newly-formed subsidiary BKWW Statutory Trust I, issued $10 million of floating-rate trust preferred securities. The Company's total risk-based capital ratio at year-end was 13.29 percent. Total shares outstanding at December 31, 2005 were 3,416,068. Mr. Coburn concluded, "Our local economy is thriving. We continue to expand our branch network and add qualified people to our staff so we can maximize our share of this dynamic market." About the Company Bank of Wilmington ("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 three full-service locations and one loan production office: 1117 Military Cutoff Road; 3702 South College Road in the Pine Valley neighborhood; 14572 US Highway 17 in Hampstead; and 206 North Topsail Drive in Surf City. 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 Fourth Quarter 2005 Results Bank of Wilmington Corporation CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) Quarterly (dollars in thousands 2005 2005 2005 except per share data) 4th Qtr 3rd Qtr 2nd Qtr EARNINGS Net interest income $2,797 2,469 2,180 Provision for loan and lease losses $388 355 392 Noninterest income $292 264 246 Noninterest expense $1,794 1,735 1,459 Net income $637 422 383 Basic earnings per share $0.19 0.12 0.11 Diluted earnings per share $0.18 0.12 0.11 Average shares outstanding 3,416,068 3,416,068 3,416,068 Average diluted shares outstanding 3,503,383 3,508,993 3,486,601 PERFORMANCE RATIOS Return on average assets 0.77% 0.59% 0.61% Return on average common equity 10.34% 6.92% 6.41% Net interest margin (fully tax-equivalent) 3.47% 3.54% 3.59% Efficiency ratio 58.08% 63.48% 60.14% Full-time equivalent employees 62 54 53 CAPITAL Equity to assets 7.18% 7.78% 8.93% Regulatory leverage ratio 10.69% 8.59% 9.57% Tier 1 capital ratio 12.09% 9.43% 11.50% Total risk-based capital ratio 13.29% 10.65% 12.84% Book value per share $7.21 7.10 7.02 Cash dividend per share $0.00 0.00 0.00 ASSET QUALITY Gross loan charge-offs $53 45 5 Net loan charge-offs $42 1 (28) Net loan charge-offs to average loans 0.06% 0.00% -0.05% Allowance for loan and lease losses $3,510 3,165 2,811 Allowance for losses to total loans 1.26% 1.28% 1.30% Nonperforming loans $1,174 751 1,043 Other real estate and repossessed assets $0 13 195 Nonperforming assets to total assets 0.34% 0.25% 0.46% END OF PERIOD BALANCES Loans and leases $278,386 246,757 216,140 Total earning assets (before allowance) $334,053 303,133 257,755 Total assets $342,974 311,813 268,654 Deposits $284,134 258,084 229,775 Shareholders' equity $24,636 24,245 23,985 AVERAGE BALANCES Loans and leases $261,652 230,140 204,684 Total earning assets (before allowance) $320,139 276,848 243,380 Total assets $329,152 285,444 251,829 Deposits $269,824 238,439 211,684 Shareholders' equity $24,642 24,383 23,886 *Shares for all periods restated for 5 for 4 split effective 6/30/05 Bank of Wilmington Corporation Fourth Quarter 2005 Results Bank of Wilmington Corporation CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) Quarterly (dollars in thousands 2005 2004 except per share data) 1st Qtr 4th Qtr EARNINGS Net interest income 1,853 1,672 Provision for loan and lease losses 365 277 Noninterest income 248 229 Noninterest expense 1,393 1,222 Net income 241 383 Basic earnings per share 0.07 0.13 Diluted earnings per share 0.07 0.13 Average shares outstanding 3,414,411 2,947,338 Average diluted shares outstanding 3,488,551 3,021,160 PERFORMANCE RATIOS Return on average assets 0.44% 0.80% Return on average common equity 4.06% 7.78% Net interest margin (fully tax-equivalent) 3.59% 3.65% Efficiency ratio 66.30% 64.28% Full-time equivalent employees 51 50 CAPITAL Equity to assets 10.23% 11.58% Regulatory leverage ratio 10.92% 12.29% Tier 1 capital ratio 12.09% 13.64% Total risk-based capital ratio 13.31% 14.87% Book value per share 6.85 6.85 Cash dividend per share 0.00 0.00 ASSET QUALITY Gross loan charge-offs 81 2 Net loan charge-offs 80 1 Net loan charge-offs to average loans 0.19% 0.00% Allowance for loan and lease losses 2,391 2,106 Allowance for losses to total loans 1.28% 1.30% Nonperforming loans 1,162 993 Other real estate and repossessed assets 195 195 Nonperforming assets to total assets 0.59% 0.59% END OF PERIOD BALANCES Loans and leases 187,152 162,399 Total earning assets (before allowance) 220,604 193,650 Total assets 228,863 201,533 Deposits 195,833 170,168 Shareholders' equity 23,404 23,338 AVERAGE BALANCES Loans and leases 172,826 150,736 Total earning assets (before allowance) 208,932 181,950 Total assets 217,222 190,442 Deposits 186,301 159,569 Shareholders' equity 23,745 19,703 *Shares for all periods restated for 5 for 4 split effective 6/30/05 Bank of Wilmington Corporation Fourth Quarter 2005 Results Bank of Wilmington Corporation CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) (dollars in thousands Year-To-Date except per share data) 2005 2004 EARNINGS Net interest income 9,299 5,854 Provision for loan and lease losses 1,499 892 Noninterest income 1,049 746 Noninterest expense 6,381 4,626 Net income 1,683 1,148 Basic earnings per share 0.49 0.41 Diluted earnings per share 0.48 0.40 Average shares outstanding 3,415,582 2,768,040 Average diluted shares outstanding 3,496,780 2,840,524 PERFORMANCE RATIOS Return on average assets 0.62% 0.70% Return on average common equity 6.96% 6.45% Net interest margin (fully tax-equivalent) 3.54% 3.67% Efficiency ratio 61.66% 70.09% Full-time equivalent employees 62 50 CAPITAL Equity to assets 7.18% 11.58% Regulatory leverage ratio 10.69% 12.29% Tier 1 capital ratio 12.09% 13.64% Total risk-based capital ratio 13.29% 14.87% Book value per share 7.21 6.85 Cash dividend per share 0.00 0.00 ASSET QUALITY Gross loan charge-offs 184 502 Net loan charge-offs 95 446 Net loan charge-offs to average loans 0.04% 0.34% Allowance for loan and lease losses 3,510 2,106 Allowance for losses to total loans 1.26% 1.30% Nonperforming loans 1,174 993 Other real estate and repossessed assets 0 195 Nonperforming assets to total assets 0.34% 0.59% END OF PERIOD BALANCES Loans and leases 278,386 162,399 Total earning assets (before allowance) 334,053 193,650 Total assets 342,974 201,533 Deposits 284,134 170,168 Shareholders' equity 24,636 23,338 AVERAGE BALANCES Loans and leases 217,604 130,734 Total earning assets (before allowance) 262,669 159,404 Total assets 271,258 164,220 Deposits 226,823 140,356 Shareholders' equity 24,167 17,803 *Shares for all periods restated for 5 for 4 split effective 6/30/05 Bank of Wilmington Corporation Fourth Quarter 2005 Results Bank of Wilmington Corporation CONSOLIDATED REPORTS OF INCOME THREE THREE TWELVE TWELVE MONTHS MONTHS MONTHS MONTHS ENDED ENDED ENDED ENDED December 31, December 31, December 31, December 31, 2005 2004 2005 2004 (Unaudited) (Unaudited) (Unaudited) (Audited) INTEREST INCOME Loans and leases, including fees $4,781 $2,269 $14,728 $7,663 Investment securities 491 266 1,453 855 Short-term investments 90 21 231 78 Total interest income 5,362 2,556 16,412 8,596 INTEREST EXPENSE Deposits 2,172 827 6,321 2,645 Borrowings-FHLB Advances 251 57 650 97 Trust Preferred Securities/ Subordinated Debt 142 0 142 0 Total interest expense 2,565 884 7,113 2,742 Net interest income 2,797 1,672 9,299 5,854 Provision for loan and lease losses 388 277 1,499 892 Net interest income after provision 2,409 1,395 7,800 4,962 for loan and lease losses NONINTEREST INCOME Service fees & charges on accounts 181 149 644 540 Net gain (loss) on sales of securities (12) 0 (10) (5) Other income 123 80 415 211 Total Noninterest income 292 229 1,049 746 NON INTEREST EXPENSE Salaries and benefits 884 702 3,227 2,577 Occupancy & Furniture and Equipment 283 187 977 782 Other expense 627 333 2,177 1,267 Total Noninterest expense 1,794 1,222 6,381 4,626 Income before federal income tax expense 907 402 2,468 1,082 Federal income tax expense (benefit) 270 19 785 (66) Net income $637 $383 $1,683 $1,148 Basic earnings per share* $0.19 $0.13 $0.49 $0.41 Diluted earnings per share* $0.18 $0.13 $0.48 $0.40 Average shares outstanding * 3,416,068 2,947,338 3,415,582 2,768,040 Average diluted shares outstanding * 3,503,383 3,021,160 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 Fourth Quarter 2005 Results Bank of Wilmington Corporation CONSOLIDATED BALANCE SHEETS DECEMBER 31, DECEMBER 31, 2005 2004 (Unaudited) (Audited) ASSETS Cash and due from banks $1,854 $1,882 Interest earning deposits in other banks 5,419 4,223 Total cash and cash equivalents 7,273 6,105 Securities available for sale 48,655 26,436 Time deposits in other banks 199 0 Federal Home Loan Bank stock 1,394 592 Total loans 278,386 162,399 Allowance for loan losses (3,510) (2,106) Total Loans, net 274,876 160,293 Premises and equipment, net 1,845 1,152 Foreclosed real estate and repossessions 0 195 Bank owned life insurance policies 5,296 5,097 Accrued interest receivable 1,645 734 Investment in Trust 311 0 Other assets 1,480 929 Total assets $342,974 $201,533 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing $26,025 $14,407 Interest-bearing 258,109 155,761 Total deposits 284,134 170,168 Federal Home Loan Bank advances- short term 5,000 7,400 Federal Home Loan Bank advances- long term 17,000 0 Trust Preferred Securities & Subordinated Debentures-L/T 10,310 0 Accrued expenses and other liabilities 1,894 627 Total liabilities 318,338 178,195 SHAREHOLDERS' EQUITY Common stock 11,956 11,918* Additional Paid in Capital 11,053 11,008* Retained earnings 2,153 471 Accumulated other comprehensive income (loss) (526) (59) Total shareholders' equity 24,636 23,338 Total liabilities and shareholders' equity $342,974 $201,533 *Prior periods restated for the 5 for 4 stock split effected 6/30/05 First Call Analyst: FCMN Contact: 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

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