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New Century Bancorp Reports Year-End 2009 Results

DUNN, N.C., Jan. 29 /PRNewswire-FirstCall/ --
  • Prior to write-off of goodwill, Company's net income for 2009 was $232,000, or $.03 per share.
  • $8.6 million write- off of goodwill from 2006 purchase of Progressive State Bank negatively impacts results.
  • Deposit growth for 2009 was 7.0%.
  • Loan growth for the year was 4.5%.
  • Net interest margin increased 14 basis points to 3.41% for the year.
  • Non-interest expenses declined 2.5%, despite an increase in FDIC insurance premium expense from $525,000 in 2008 to $1.3 million in 2009.
  • Results were accomplished without TARP (Troubled Asset Relief Program) funds.

New Century Bancorp (the "Company" Nasdaq: NCBC), the holding company for New Century Bank, today reported financial results for 2009.  The write-off of goodwill resulted in a decrease in earnings for the Company from net income of $232,000 before the write-off to a net loss of ( $8.4 million) afterwards. This compares to the net loss of ($193,000) for 2008, a year during which there were no write-offs of goodwill.  Basic and diluted net income per share for 2009 prior to the goodwill write-off was $.03 compared to a net (loss) per share of ($1.24) after consideration of the write-off. This compares to the net (loss) per share of ($0.03) for 2008.

Goodwill Impairment

Goodwill, a measure of the difference between the price paid for an acquisition and the fair value of its assets, is being examined and subsequently charged-off in part or in whole by many financial institutions due to the effects of the prolonged economic downturn on financial stocks.  At year-end 2009, New Century wrote-off $8.67 million in goodwill, an intangible asset, which resulted from the purchase of Progressive State Bank in 2006.  The goodwill impairment charge, a one-time, non-cash, accounting transaction, does not affect the liquidity, tangible capital, or regulatory capital ratios of the Company.

Financial Results

Total assets for the Company at year-end 2009 were $630.6 million, total deposits were $540.3 million, and total loans were $481.2 million, compared to total assets of $605.8 million, total deposits of $505.1 million, and total loans of $460.6 million at year-end 2008, increases of 4.1%, 7.0%, and 4.5%, respectively.

"While the write-off of goodwill resulted in New Century Bancorp reporting a loss for the year," said William L. Hedgepeth, president and CEO of New Century Bancorp and New Century Bank, "We are pleased with our core operating results in light of the fact that unlike many banks, we did not accept TARP funds; even though we, like all banks, faced a number of financial challenges.  In addition, we are pleased with a number of positive indicators for the future.  Those indicators include strong loan and deposit growth, increasing margins, and lower non-interest expenses.

Earnings for the year also were impacted by the addition of $5.5 million to the Company's provision for loan losses, compared to $4.3 million in 2008; OREO losses of $565,000 compared to $239,000 in 2008; and, the payment of FDIC insurance premiums totaling $1.3 million, compared to only $525,000 in 2008.  

"In order to recognize operating efficiencies, we consolidated our operations in Clinton, NC into one office.  In preparing for the future, we recently invested in and expanded our ability to serve our customers through installing a new core processor and by developing a new website, with added capabilities.  While the past few years have been difficult, we continue to meet the lending needs of our customers and communities, to expand and develop our staff, and to approach the future through a disciplined approach.

"The Company remains 'well-capitalized,' which is the highest regulatory standard.  While there are challenges ahead—such as high unemployment levels, there is also a great deal of opportunity.  As our market area and our nation begin to come out of the recession, we plan to be in the position to be part of it and to help lead the way for our customers."

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