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ECB Bancorp, Inc. Reports 2012 Third Quarter Results

Stocks in this article: ECBE

A. Dwight Utz, President and Chief Executive Officer, stated, “As was announced in September ECB Bancorp has executed a definitive agreement to merge with Crescent Financial Bancshares, Inc. We believe the combination of these two well positioned banks will create a strong high performing bank in the North Carolina market. The transaction is expected to close in the first quarter of 2013 subject to receiving regulatory and shareholder approvals. With respect to ECB Bancorp earnings, the economy of our coastal markets in North Carolina have strengthened due to a good tourist season with many of our business clients reporting positive 2012 earnings to date. While some markets in our footprint are still experiencing some economic weakness, many appear to be stabilizing as 2012 progresses. As we have commented earlier this year, we see 2012 as transitional year for ECB Bancorp and our earnings are beginning to transition to a more normalized operating environment.”

Thomas M. Crowder, Executive Vice President and Chief Financial Officer stated: “We have increased our net interest margin through continued lower funding cost in the third quarter and have increased our non- interest income, excluding security gains, by 29.5% in the third quarter compared to the same period in 2011. These operating improvements combined with lower credit costs are supporting our earnings growth in 2012.”

Mr. Utz concluded, “As we enter the fourth quarter of 2012, we are focused on continuing to manage our operations in a profitable manner while looking forward to our future partnership with Crescent State Bank and eventually our new VantageSouth brand.”

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 25 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 NYSE-Amex 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 2011 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 and Board of Directors 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 economic conditions and 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, 2012 (unaudited), December 31, 2011 and September 30, 2011 (unaudited)
(Dollars in thousands, except per share data)
           
 
September 30, December 31, September
2012 2011* 2011
Assets
Non-interest bearing deposits and cash $15,411 $18,363 $13,123
Interest bearing deposits 61 63 61
Overnight investments 51,195 6,305 4,055
Total cash and cash equivalents 66,667 24,731 17,239
 
Investment securities
Available-for-sale, at market value (cost of $280,327, $338,685, and $325,023
at September 30, 2012, December 31, 2011 and September 30, 2011, respectively) 284,963 339,450 327,066
 
Loans held for sale 2,379 2,866 2,338
 
Loans 516,934 496,542 521,626
Allowance for loan losses (11,385) (12,092) (12,214)
Loans, net 505,549 484,450 509,412
 
Real estate and repossessions acquired in settlement of loans, net 7,118 6,573 6,223
Federal Home Loan Bank common stock, at cost 4,150 3,456 3,768
Bank premises and equipment, net 25,773 26,289 26,137
Accrued interest receivable 4,928 5,308 4,972
Bank owned life insurance 12,082 11,778 11,676
Other assets 13,983 16,376 14,864
Total $927,592 $921,277 $923,695
 
Liabilities and Shareholders' equity
Deposits
Demand, noninterest bearing $152,495 $135,732 $123,783
Demand, interest bearing 288,829 270,119 257,115
Savings 59,016 55,517 46,879
Time 279,073 336,277 368,832
Total deposits 779,413 797,645 796,609
 
Accrued interest payable 510 519 630
Short-term borrowings 41,827 11,679 13,528
Long-term obligations 16,000 25,500 25,500
Other liabilities 5,005 5,491 4,180
Total liabilities 842,755 840,834 840,447
 
Shareholders' equity
Preferred stock, Series A 17,578 17,454 17,412
Common stock, par value $3.50 per share 10,167 9,974 9,974
Capital surplus 25,753 25,873 25,868
Warrants 878 878 878
Retained earnings 27,743 25,926 27,946
Accumulated other comprehensive income 2,718 338 1,170
Total shareholders' equity 84,837 80,443 83,248
Total $927,592 $921,277 $923,695
 
Common shares outstanding 2,904,841 2,849,841 2,849,841
Common shares authorized 50,000,000 50,000,000 50,000,000
Preferred shares outstanding 17,949 17,949 17,949
Preferred shares authorized 2,000,000 2,000,000 2,000,000
Non-voting common shares authorized 2,000,000 2,000,000 -
 
* Derived from audited consolidated financial statements.
 
ECB BANCORP, INC. AND SUBSIDIARY
Consolidated Results of Operations
For the three and nine months ended September 30, 2012 and 2011 (unaudited)
(Dollars in thousands, except per share data)
             
Three months ended Nine months ended
September 30, September 30,
2012 2011 2012 2011
Interest income:
Interest and fees on loans $6,741 $7,096 $19,514 $21,782
Interest on investment securities:
Interest exempt from federal income taxes 246 106 730 351
Taxable interest income 1,743 1,961 5,399 6,061
Dividend income 15 9 40 27
Other interest income 6 17 12 38
Total interest income 8,751 9,189 25,695 28,259
Interest expense:
Deposits:
Demand accounts 358 511 1,154 1,573
Savings 50 85 205 212
Time 1,090 1,751 3,526 5,352
Short-term borrowings 104 73 280 215
Long-term obligations 74 146 269 471
Total interest expense 1,676 2,566 5,434 7,823
 
Net interest income 7,075 6,623 20,261 20,436
Provision for loan losses 1,917 1,028 2,783 6,231
Net interest income after provision for loan losses 5,158 5,595 17,478 14,205
 
Noninterest income:
Service charges on deposit accounts 902 836 2,704 2,429
Other service charges and fees 541 410 1,388 984
Mortgage origination fees 446 255 1,228 1,033
Net gain on sale of securities 3,220 998 3,544 1,882
Income from bank owned life insurance 101 74 304 222
Other operating (expense) income 44 (5) 46 (12)
Total noninterest income 5,254 2,568 9,214 6,538
 
Noninterest expenses:
Salaries 2,922 2,737 8,706 8,127
Retirement and other employee benefits 782 638 2,700 2,098
Occupancy 538 528 1,586 1,533
Equipment 587 550 1,780 1,622
Professional fees 271 240 833 782
Supplies 28 49 143 178
Communications/Data lines 170 179 552 537
FDIC insurance 204 236 611 763
Other outside services 279 94 471 437
Data processing and related expenses 421 408 1,163 561
Net cost of real estate and repossessions acquired
in settlement of loans 321 645 1,468 742
Other operating expenses 1,419 1,235 3,104 3,060
Total noninterest expenses 7,942 7,539 23,117 20,440
Income before income taxes 2,470 624 3,575 303
Income tax expense (benefit) 821 97 961 (285)
Net income 1,649 527 2,614 588
Preferred stock dividends 225 225 673 673
Accretion of discount 42 42 124 124
Income (loss) available to common shareholders $1,382 $260 $1,817 ($209)
 
Net income (loss) per share - basic $0.48 $0.09 $0.64 ($0.07)
Net income (loss) per share - diluted $0.48 $0.09 $0.64 ($0.07)
Weighted average shares outstanding - basic 2,849,841 2,849,841 2,849,841 2,849,841
Weighted average shares outstanding - diluted 2,851,408 2,849,841 2,850,367 2,849,841
 
ECB Bancorp, Inc.
Supplemental Quarterly Financial Data (Unaudited)
(Dollars in thousands, except per share data)
             
  9/30/2012     6/30/2012     3/31/2012     12/31/2011     9/30/2011  
Income Statement Data:
Interest income $ 8,751 $ 8,445 $ 8,499 $ 8,818 $ 9,189
Interest expense   1,676     1,787     1,971     2,283     2,566  
Net interest income 7,075 6,658 6,528 6,535 6,623
Provision for loan losses 1,917 866 - 2,252 1,028
Net after provision expense 5,158 5,792 6,528 4,283 5,595
Noninterest income 5,254 2,221 1,739 2,262 2,568
Noninterest expense 7,942 7,257 7,918 9,416 7,539
Income (loss) before income taxes 2,470 756 349 (2,871 ) 624
Income tax expense (benefit)   821     168     (28 )   (1,259 )   97  
Net income (loss) 1,649 588 377 (1,612 ) 527
Preferred stock dividend & accretion of discount   267     266     265     266     267  
Net income (loss) available to common shareholders $ 1,382   $ 322   $ 112   $ (1,878 ) $ 260  
 
Per Share Data and Shares Outstanding:
Net income - basic $ 0.48 $ 0.11 $ 0.04 $ (0.66 ) $ 0.09
Net income - diluted 0.48 0.11 0.04 (0.66 ) 0.09
Cash dividends - - - 0.05 -
Book value at period end 23.15 23.06 22.34 22.10 23.10
Dividend payout ratio 0.00 % 0.00 % 0.00 % -7.58 % 0.00 %
Weighted-average number of common
shares outstanding:
Basic 2,849,841 2,849,841 2,849,841 2,849,841 2,849,841
Diluted 2,851,408 2,849,841 2,849,841 2,849,841 2,849,841
Shares outstanding at period end 2,904,841 2,849,841 2,849,841 2,849,841 2,849,841
 
Balance Sheet Data:
Total assets $ 927,592 $ 944,266 $ 916,274 $ 921,277 $ 923,695
Loans - gross 516,934 506,257 491,383 496,542 521,626
Allowance for loan losses 11,385 10,780 11,385 12,092 12,214
Investment securities 284,963 350,779 348,810 339,450 327,066
Interest earning assets 859,682 871,725 847,893 848,682 858,914
Premises and equipment, net 25,773 26,111 26,286 26,289 26,137
Total deposits 779,413 795,488 772,597 797,645 796,609
Short-term borrowings 41,827 42,101 39,218 11,679 13,528
Long-term obligations 16,000 18,000 18,000 25,500 25,500
Shareholders' equity 84,837 83,260 81,168 80,443 83,248
 
Selected Performance Ratios (quarterly, annualized):
Return on average assets 0.70 % 0.26 % 0.16 % -0.70 % 0.22 %
Return on average shareholders' equity 7.82 % 2.87 % 1.86 % -7.85 % 2.56 %
Net interest margin 3.32 % 3.23 % 3.22 % 3.10 % 3.06 %
Efficiency ratio 63.3 % 79.8 % 93.4 % 105.3 % 81.0 %
 
Asset Quality Ratios:
Non-accruing loans to period-end loans 3.49 % 3.60 % 3.82 % 3.08 % 3.98 %
Performing TDR's loans to period-end loans 2.16 % 2.06 % 2.34 % 2.07 % 1.51 %
Nonperforming loans to period-end loans 5.64 % 5.66 % 6.17 % 5.15 % 5.49 %
Allowance for loan losses to period-end loans 2.20 % 2.13 % 2.32 % 2.44 % 2.34 %
Allowance for loan losses to nonperforming loans 39.0 % 37.6 % 37.6 % 47.3 % 42.7 %
Net charge-offs to average loans (annualized) 1.02 % 1.18 % 0.57 % 1.85 % 3.18 %
 
Capital Ratios:
Tangible equity to total assets 7.25 % 6.96 % 6.95 % 6.84 % 7.13 %
Equity-to-assets ratio 9.15 % 8.82 % 8.86 % 8.73 % 9.01 %
Leverage Capital Ratio 8.27 % 8.25 % 8.23 % 8.25 % 8.34 %
Tier 1 Capital Ratio 12.36 % 12.09 % 12.39 % 12.59 % 12.59 %
Total Capital Ratio 13.62 % 13.35 % 13.65 % 13.85 % 13.85 %




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