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ECB Bancorp, Inc. Reports 2010 Third Quarter Results

Thomas M. Crowder, Executive Vice President and Chief Financial Officer, stated: “We continue to manage our balance sheet to prepare for eventual rising interest rates, but now believe those rate increases have most likely been pushed off into late 2011 by the slow economic recovery.”

Mr. Utz concluded: “The third quarter saw ECB Bancorp continuing to grow its assets over second quarter primarily through modest renewed loan growth. With our focus on small business credit, we are hopeful that with an economic recovery lead by small business, we will begin to see sustained growth in our loan portfolio leading into 2011.”

About ECB Bancorp, Inc.

ECB Bancorp, Inc. is a bank holding company, headquartered in Engelhard, North Carolina, whose wholly-owned subsidiary, The East Carolina Bank, is a state-chartered, independent community bank insured by the FDIC. The Bank provides a full range of financial services through its 24 offices covering eastern North Carolina from Currituck to Ocean Isle Beach and Greenville to Hatteras. The Bank also provides mortgages, insurance services through the Bank’s licensed agents, and investment and brokerage services offered through a third-party broker-dealer. The Company’s common stock is listed on The Nasdaq Global Market under the symbol “ECBE”. More information can be obtained by visiting ECB's web site at www.myecb.com.

“Safe Harbor Statement” Under the Private Securities Litigation Reform Act of 1995

Statements in this Press Release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments, expectations or beliefs about future events or results, and other statements that are not descriptions of historical facts, may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company’s Annual Report on Form 10-K and in other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “feels”, “believes”, “estimates”, “predicts”, “forecasts”, “potential” or “continue”, or similar terms or the negative of these terms, or other statements concerning opinions or judgments of the Company’s management about future events. Factors that could influence the accuracy of such forward-looking statements include, but are not limited to, pressures on the Company’s earnings, capital and liquidity resulting from current and future conditions in the credit and equity markets, the financial success or changing strategies of the Company’s customers, actions of government regulators or changes in laws, regulations or accounting standards that adversely affect our business, changes in the interest rate environment and the level of market interest rates that reduce our net interest margins and/or the values of loans we make and securities we hold, weather and similar conditions, particularly the effect of hurricanes on the Company’s banking and operations facilities and on the Company’s customers and the communities in which it does business, continued or unexpected increases in credit losses in the Company’s loan portfolio, continued adverse conditions in general economic conditions and the real estate values in our banking market (particularly as those conditions affect our loan portfolio, the abilities of our borrowers to repay their loans, and the values of loan collateral), and other developments or changes in our business that we do not expect. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. All forward-looking statements attributable to the Company are expressly qualified in their entirety by the cautionary statements in this paragraph. The Company has no obligation, and does not intend, to update these forward-looking statements.

       
ECB BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
September 30, 2010, December 31, 2009 and September 30, 2009
(Dollars in thousands, except per share data)
 
 
September 30, December 31, September 30,
2010 2009* 2009
Assets (unaudited) (unaudited)
Non-interest bearing deposits and cash $ 8,666 $ 9,076 $ 13,925
Interest bearing deposits 20 870 871
Overnight investments   31,720     7,865     1,600  
Total cash and cash equivalents   40,406     17,811     16,396  
 
Investment securities

Available-for-sale, at market value (cost of $258,148, $237,594 and $213,714 at September 30, 2010, December 31, 2009 and September 30 2009, respectively)

263,946 239,332 218,591
 
Loans held for sale 2,103 - -
 
Loans 575,003 577,791 573,837
Allowance for loan losses   (13,187 )   (9,725 )   (7,800 )
Loans, net   561,816     568,066     566,037  
 
Real estate and repossessions acquired in settlement of loans, net 5,253 5,443 6,039
Federal Home Loan Bank common stock, at cost 4,749 5,116 5,116
Bank premises and equipment, net 25,897 25,329 25,400
Accrued interest receivable 5,176 4,967 5,082
Bank owned life insurance 8,879 8,657 8,593
Other assets   13,984     13,999     7,483  
Total $ 932,209   $ 888,720   $ 858,737  
 
Liabilities and Shareholders' Equity
Deposits
Demand, noninterest bearing $ 105,628 $ 93,492 $ 102,335
Demand, interest bearing 215,346 141,956 117,769
Savings 25,972 19,595 19,958
Time   443,646     499,687     456,571  
Total deposits   790,592     754,730     696,633  
 
Accrued interest payable 982 1,121 1,466
Short-term borrowings 13,534 22,910 46,989
Long-term obligations 34,500 21,000 21,000
Other liabilities   4,969     4,584     4,713  
Total liabilities   844,577     804,345     770,801  
 
Shareholders' equity
Preferred stock, Series A 17,246 17,122 17,080
Common stock, par value $3.50 per share 9,974 9,968 9,968
Capital surplus 25,844 25,803 25,792
Warrant 878 878 878
Retained earnings 30,144 29,555 31,238
Accumulated other comprehensive income   3,546     1,049     2,980  
Total shareholders' equity   87,632     84,375     87,936  
Total $ 932,209   $ 888,720   $ 858,737  
 
Common shares outstanding 2,849,841 2,847,881 2,847,881
Common shares authorized 10,000,000 10,000,000 10,000,000
Preferred shares outstanding 17,949 17,949 17,949
Preferred shares authorized 2,000,000 2,000,000 2,000,000
 
* Derived from audited consolidated financial statements.
         
ECB BANCORP, INC. AND SUBSIDIARY
Consolidated Income Statements
For the three and nine months ended September 30, 2010 and 2009
(Dollars in thousands, except per share data)
 
Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
Interest income: (unaudited) (unaudited) (unaudited) (unaudited)
Interest and fees on loans $ 7,640 $ 7,807 $ 23,062 $ 22,820
Interest on investment securities:
Interest exempt from federal income taxes 385 354 1,337 1,005
Taxable interest income 1,949 2,122 5,519 6,959
Dividend income 6 37 40 67
Other interest income   2     -     9   3  
Total interest income   9,982     10,320     29,967   30,854  
Interest expense:
Deposits:
Demand accounts 406 224 1,045 609
Savings 25 12 52 34
Time 2,347 2,742 7,248 9,510
Short-term borrowings 66 95 183 403
Long-term obligations 161 171 434 538
Other interest expense   -     -     -   30  
Total interest expense   3,005     3,244     8,962   11,124  
 
Net interest income 6,977 7,076 21,005 19,730
Provision for loan losses   3,863     2,675     8,643   5,425  
Net interest income after provision for loan losses   3,114     4,401     12,362   14,305  
 
Noninterest income:
Service charges on deposit accounts 842 932 2,558 2,724
Other service charges and fees 470 330 1,168 947
Mortgage origination brokerage fees 351 153 856 680
Net gain on sale of securities 2,030 444 3,471 1,032
Income from bank owned life insurance 75 82 223 246
Other operating income   32     (15 )   58   (4 )
Total noninterest income   3,800     1,926     8,334   5,625  
 
Noninterest expenses:
Salaries 2,548 2,061 7,193 6,135
Retirement and other employee benefits 740 416 2,182 1,869
Occupancy 480 474 1,384 1,403
Equipment 589 465 1,542 1,284
Professional fees 187 123 686 522
Supplies 45 53 165 164
Telephone 147 168 487 458
FDIC insurance 355 306 1,033 1,216
Other outside services 123 98 351 338

Net cost of real estate and repossessions acquired in settlement of loans

112 1,081 493 1,187
Other operating expenses   1,053     890     3,017   2,459  
Total noninterest expenses   6,379     6,135     18,533   17,035  
Income before income taxes 535 192 2,163 2,895
Income taxes   (5 )   (154 )   179   496  
Net income   540     346     1,984   2,399  
Preferred stock dividends 225 224 673 630
Accretion of discount   42     39     124   108  
Income available to common shareholders $ 273   $ 83   $ 1,187 $ 1,661  
 
Net income per share - basic $ 0.10   $ 0.03   $ 0.42 $ 0.58  
Net income per share - diluted $ 0.10   $ 0.03   $ 0.42 $ 0.58  
Weighted average shares outstanding - basic   2,849,841     2,845,343     2,849,511   2,843,962  
Weighted average shares outstanding - diluted   2,849,841     2,847,053     2,849,554   2,845,630  
ECB Bancorp, Inc.
Supplemental Quarterly Financial Data (Unaudited)
(Dollars in thousands, except per share data)
           
9/30/2010 6/30/2010 3/31/2010 12/31/2009 9/30/2009
Income Statement Data:
Interest income $ 9,982 $ 9,965 $ 10,020 $ 10,051 $ 10,320
Interest expense   3,005     2,932     3,025     3,033     3,244  
Net interest income 6,977 7,033 6,995 7,018 7,076
Provision for loan losses 3,863 1,780 3,000 5,675 2,675
Net after provision expense 3,114 5,253 3,995 1,343 4,401
Noninterest income 3,800 1,866 2,668 3,024 1,926
Noninterest expense 6,379 5,916 6,238 6,117 6,135
Income (loss) before income taxes 535 1,203 425 (1,750 ) 192
Income tax expense (benefit)   (5 )   246     (62 )   (853 )   (154 )
Net income (loss) 540 957 487 (897 ) 346
Preferred stock dividend & accretion of discount   267     265     265     265     263  
Net income (loss) available to common shareholders $ 273   $ 692   $ 222   $ (1,162 ) $ 83  
 
Per Share Data and Shares Outstanding:
Net income - basic $ 0.10 $ 0.24 $ 0.08 $ (0.41 ) $ 0.03
Net income - diluted 0.10 0.24 0.08 (0.41 ) 0.03
Cash dividends 0.0700 0.0700 0.0700 0.1825 0.1825
Book value at period end 24.70 24.46 23.56 23.62 24.88
Dividend payout ratio 73.07 % 28.83 % 87.50 % -44.51 % 608.33 %

Weighted-average number of common shares outstanding:

Basic 2,849,841 2,849,841 2,848,839 2,847,881 2,845,343
Diluted 2,849,841 2,849,936 2,848,969 2,847,881 2,847,053
Shares outstanding at period end 2,849,841 2,849,841 2,849,841 2,847,881 2,847,881
 
Balance Sheet Data:
Total assets $ 932,209 $ 921,840 $ 897,754 $ 888,720 $ 858,737
Loans - gross 575,003 570,174 577,964 577,791 573,837
Allowance for loan losses 13,187 10,462 11,329 9,725 7,800
Investment securities 263,946 268,064 197,520 239,332 218,591
Interest earning assets 877,540 862,410 841,344 830,974 800,015
Premises and equipment, net 25,897 25,294 25,114 25,329 25,400
Total deposits 790,592 792,454 772,927 754,730 696,633
Short-term borrowings 13,534 22,408 20,877 22,910 46,989
Long-term obligations 34,500 14,500 14,500 21,000 21,000
Shareholders' equity 87,632 86,918 84,292 84,375 87,936
 
Selected Performance Ratios (annualized):
Return on average assets 0.23 % 0.43 % 0.22 % -0.41 % 0.16 %
Return on average shareholders' equity 2.44 % 4.48 % 2.28 % -4.09 % 1.59 %
Net interest margin 3.31 % 3.52 % 3.55 % 3.56 % 3.58 %
Efficiency ratio 57.83 % 63.94 % 62.39 % 59.20 % 66.25 %
 
Asset Quality Ratios:
Nonperforming loans to period-end loans 3.59 % 3.37 % 3.19 % 2.54 % 2.18 %
Allowance for loan losses to period-end loans 2.29 % 1.83 % 1.96 % 1.68 % 1.36 %
Allowance for loan losses to nonperforming loans 64 % 54 % 61 % 66 % 62 %
Net charge-offs to average loans (annualized) 0.79 % 1.83 % 0.97 % 2.61 % 0.47 %
 
Capital Ratios:
Equity-to-assets ratio 9.40 % 9.43 % 9.39 % 9.49 % 10.24 %
Leverage Capital Ratio 8.79 % 9.26 % 9.26 % 9.59 % 9.81 %
Tier 1 Capital Ratio 12.37 % 12.78 % 12.69 % 12.77 % 13.16 %
Total Capital Ratio 13.63 % 14.03 % 13.95 % 14.02 % 14.37 %




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