Add as last table of release: Supplemental Quarterly Financial Data (Unaudited).

The corrected release reads:

ECB BANCORP, INC. REPORTS 2010 ANNUAL AND FOURTH QUARTER RESULTS

ECB Bancorp, Inc. (NASDAQ:ECBE) (“ECB” or the “Company”) today announced its results for the twelve months and three months ended December 31, 2010.

2010 Annual and Fourth Quarter Financial Highlights

For the twelve months ended December 31, 2010, net income was $860,000, a decrease of (42.8%) compared to net income for the twelve months ended December 31, 2009 of $1,502,000. After adjusting for $1,063,000 in preferred stock dividends and accretion of warrant discount, the net loss attributable to common shareholders for the twelve months ended December 31, 2010 was ($203,000) or ($0.07) per diluted share compared to net income of $499,000 or $0.18 per diluted share for the year 2009. As we previously reported, during the fourth quarter of 2010 ECB Bancorp recognized a nonrecurring one-time expense of $1,141,000 for early termination fees payable on certain multi-year support and maintenance contracts in connection with our conversion of East Carolina Bank’s core processing system, scheduled for May 2011. This expense impacted and contributed to the annual and three months ended December 31, 2010 operating loss. Due to the unique, nonrecurring nature of this expense, we believe normalizing earnings to adjust for the impact of this expense, thus presenting on a non-GAAP basis, provides useful comparative information. After backing out the nonrecurring expense of $1,141,000, the comparative annual non-GAAP pre-tax income for 2010 would have been $1,235,000 versus the $1,145,000 for year ending 2009, an improvement of $90,000 or 7.8% in 2010 over 2009.

For the three months ended December 31, 2010, the net loss totaled ($1,124,000), or a (25.3%) increase in net loss from the ($897,000) in net loss for the three months ended December 31, 2009. After adjusting for $266,000 in preferred stock dividends and the accretion of warrant discount, the net loss charged to common shareholders for the three months ended December 31, 2010 was ($1,390,000) or ($0.49) per diluted share, an increase in net loss of (19.6%) compared to the loss of ($1,162,000) or ($0.41) per diluted share for the three months ended December 31, 2009. As was discussed previously, after backing out the nonrecurring expense of $1,141,000 in the fourth quarter, the comparative non-GAAP pre-tax loss for the three months ending December 31, 2010 would have been ($928,000) versus the ($1,750,000) for the same ending period in 2009, an improvement of $822,000 or 47.0%.

In the three months ending December 31, 2010 ECB Bancorp recognized $2,037,000 in net gains from sales in the investment portfolio versus $1,533,000 of recognized net gains in the same period in 2009. These gains resulted from the continued repositioning of the investment portfolio to reduce its exposure to the municipal bond sector of our portfolio. As with the nonrecurring expense, we believe it provides useful comparative information to back out the securities gains as well as the nonrecurring expense for the three month period ending December 31, 2010. The net result of backing out the nonrecurring expense of $1,141,000 and the securities gains of $2,037,000 for the three month period ending December 31, 2010 is a non-GAAP pre-tax loss of ($2,965,000) versus a non-GAAP pre-tax loss of ($3,283,000) for the same period in 2009 after backing out the security gains of $1,533,000 for the same period in 2009. This is an operating improvement of $318,000.

Other Financial Highlights include:
  • Consolidated assets increased 3.5% to $919,869,000 at December 31, 2010 from $888,720,000 at December 31, 2009.
  • Loans decreased (1.8%) to $567,631,000 at December 31, 2010 compared to $577,791,000 at December 31, 2009.
  • Deposits increased 4.1% to $785,941,000 at December 31, 2010 from $754,730,000 at December 31, 2009.
  • Net interest income increased 4.4 % to $27,919,000 for the twelve months ended December 31, 2010 from $26,748,000 for the same period a year ago.
  • Total interest expense for the twelve months ending December 31, 2010 declined (16%) to $11,888,000 from $14,157,000 for the same period in 2009.
  • Non-interest income for the twelve months ended December 31, 2010 net of securities gains was $6,487,000, an increase of 6.6% compared to $6,084,000 of non-interest income net of securities gains for the same period in 2009.
  • Provision for loan losses charged to operations for the twelve months ended December 31, 2010 totaled $12,980,000, an increase of 16.9% compared to the $11,100,000 provision charged to operations for the same period in 2009.
  • During the fourth quarter of 2010, the Company declared a common stock dividend of $0.07 per share, or $0.28 per share on an annualized basis, which was unchanged from the $0.07 dividend, paid in the third quarter of 2010.

A. Dwight Utz, President and Chief Executive Officer, stated: “The special expense we recognized in the fourth quarter of $1,141,000 negatively affected our year end results. The benefits we will gain beginning in May of 2011 with our new core processing capacity we believe will recoup most of the recognized expense over time but more importantly will substantially assist us in managing our growth in coming years. We have strived to assess the proper balance of credit risk and reserves, as have most of the banks in our market. We believe ECB Bancorp is well positioned to grow both organically and perhaps through acquisition, based on our current reserves and the bank’s stability.”

Thomas M. Crowder, Executive Vice President and Chief Financial Officer, stated: “We began to see in the fourth quarter of 2010 a trend toward higher interest rates, particularly in the longer maturities. We will continue to manage our balance sheet to mitigate the impact of a rising rate environment and its potential impact on our present value of equity.”

Mr. Utz concluded: “The fourth quarter saw ECB Bancorp positioning itself to move into 2011 with the personnel, financial resources, technological infrastructure and credit quality necessary to begin the process of moving back into a more normalized and profitable posture, which will allow us to look to a future focused on growth.”

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 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 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. Factors that could influence the accuracy of statements in this report regarding completion of the conversion to the new system and benefits that we will gain, including the recoupment of recognized expense, include, but are not limited to, the possibility that we will encounter (a) unexpected delays in, costs associated with, or other problems in the course of, completion of our conversion to the new system, (b) unexpected compatibility issues associated with the new system, or (c) changes in our business or other factors which offset expected costs savings. 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
December 31, 2010 and 2009
(Dollars in thousands, except per share data)
   
December 31, December 31,
2010 2009*
Assets

(unaudited)
Non-interest bearing deposits and cash $ 11,731 $ 9,076
Interest bearing deposits 20 870
Overnight investments   8,415     7,865  
Total cash and cash equivalents   20,166     17,811  
 
Investment securities
Available-for-sale, at market value (cost of $275,883 and
$237,594 at December 31, 2010 and 2009, respectively) 273,229 239,332
 
Loans held for sale 4,136 -
 
Loans 567,631 577,791
Allowance for loan losses   (13,247 )   (9,725 )
Loans, net   554,384     568,066  
 
Real estate and repossessions acquired in settlement of loans, net 4,536 5,443
Federal Home Loan Bank common stock, at cost 4,571 5,116
Bank premises and equipment, net 26,636 25,329
Accrued interest receivable 5,243 4,967
Bank owned life insurance 8,954 8,657
Other assets   18,014     13,999  
Total $ 919,869   $ 888,720  
 
Liabilities and Shareholders' Equity
Deposits
Demand, noninterest bearing $ 104,932 $ 93,492
Demand, interest bearing 262,977 141,956
Savings 29,938 19,595
Time   388,094     499,687  
Total deposits   785,941     754,730  
 
Payable, settlement for securities purchased - -
Accrued interest payable 631 1,121
Short-term borrowings 11,509 22,910
Long-term obligations 34,500 21,000
Other liabilities   6,394     4,584  
Total liabilities   838,975     804,345  
 
Shareholders' equity

Preferred stock, Series A
17,288 17,122
Common stock, par value $3.50 per share 9,974 9,968
Capital surplus 25,852 25,803
Warrant 878 878
Retained earnings 28,554 29,555
Accumulated other comprehensive income (loss)   (1,652 )   1,049  
Total shareholders' equity   80,894     84,375  
Total $ 919,869   $ 888,720  
 
Common shares outstanding 2,849,841 2,847,881
Common shares authorized

10,000,000

10,000,000
Preferred shares outstanding 17,949 17,949
Preferred shares authorized 2,000,000 2,000,000
 
* Derived from audited consolidated financial statements.
 
ECB BANCORP, INC. AND SUBSIDIARY
Consolidated Income Statements
For the three and twelve months ended December 31, 2010 and 2009
(Dollars in thousands, except per share data)
 
Three months ended Twelve months ended
December 31, December 31,
2010 2009 2010 2009*
Interest income:

(unaudited)

(unaudited)

(unaudited)
Interest and fees on loans $ 7,683 $ 7,775 $ 30,745 $ 30,595
Interest on investment securities:
Interest exempt from federal income taxes 204 401 1,541 1,406
Taxable interest income 1,945 1,815 7,464 8,774
Dividend income 4 60 44 127
Other interest income   4     -     13     3  
Total interest income   9,840     10,051     39,807     40,905  
Interest expense:
Deposits:
Demand accounts 482 224 1,527 833
Savings 39 12 91 46
Time 2,144 2,569 9,392 12,079
Short-term borrowings 58 59 241 462
Long-term obligations 203 169 637 707
Other interest expense   -     -     -     30  
Total interest expense   2,926     3,033     11,888     14,157  
 
Net interest income 6,914 7,018 27,919 26,748
Provision for loan losses   4,337     5,675     12,980     11,100  
Net interest income after provision for loan losses   2,577     1,343     14,939     15,648  
 
Noninterest income:
Service charges on deposit accounts 860 928 3,418 3,652
Other service charges and fees 251 213 1,419 1,160
Mortgage origination brokerage fees 427 270 1,283 950
Net gain on sale of securities 2,037 1,533 5,508 2,565
Income from bank owned life insurance 74 64 297 310
Other operating income   12     16     70     12  
Total noninterest income   3,661     3,024     11,995     8,649  
 
Noninterest expenses:
Salaries 2,639 2,152 9,832 8,287
Retirement and other employee benefits 742 619 2,924 2,488
Occupancy 492 429 1,876 1,832
Equipment 618 479 2,160 1,763
Professional fees 250 310 936 832
Supplies 56 52 221 216
Telephone 176 184 663 642
FDIC insurance 412 473 1,445 1,689
Other outside services 177 132 528 470
Net cost of real estate and repossessions acquired
in settlement of loans 611 158 1,104 1,345
Contract early termination fees 1,141 - 1,141 -
Other operating expenses   993     1,129     4,010     3,588  
Total noninterest expenses   8,307     6,117     26,840     23,152  
Income (loss) before income taxes (2,069 ) (1,750 ) 94 1,145
Income tax benefit   (945 )   (853 )   (766 )   (357 )
Net income (loss)   (1,124 )   (897 )   860     1,502  
Preferred stock dividends 224 223 897 853
Accretion of discount   42     42     166     150  
Income (loss) available to common shareholders   ($1,390 )   ($1,162 )   ($203 ) $ 499  
 
Net income (loss) per share - basic   ($0.49 )   ($0.41 )   ($0.07 ) $ 0.18  
Net income (loss) per share - diluted   ($0.49 )   ($0.41 )   ($0.07 ) $ 0.18  
Weighted average shares outstanding - basic   2,849,841     2,847,881     2,849,594     2,844,950  
Weighted average shares outstanding - diluted   2,849,841     2,847,881     2,849,594     2,845,966  
 
* Derived from audited consolidated financial statements.
ECB Bancorp, Inc.
Supplemental Quarterly Financial Data (Unaudited)
  (Dollars in thousands, except per share data)
         
12/31/2010 9/30/2010 6/30/2010 3/31/2010 12/31/2009
Income Statement Data:
Interest income $ 9,840 $ 9,982 $ 9,965 $ 10,020 $ 10,051
Interest expense   2,926     3,005     2,932     3,025     3,033  
Net interest income 6,914 6,977 7,033 6,995 7,018
Provision for loan losses 4,337 3,863 1,780 3,000 5,675
Net after provision expense 2,577 3,114 5,253 3,995 1,343
Noninterest income 3,661 3,800 1,866 2,668 3,024
Noninterest expense 8,307 6,379 5,916 6,238 6,117
Income (loss) before income taxes (2,069 ) 535 1,203 425 (1,750 )
Income tax expense (benefit)   (945 )   (5 )   246     (62 )   (853 )
Net income (loss) (1,124 ) 540 957 487 (897 )
Preferred stock dividend & accretion of discount   266     267     265     265     265  
Net income (loss) available to common shareholders $ (1,390 ) $ 273   $ 692   $ 222   $ (1,162 )
 
Per Share Data and Shares Outstanding:
Net income - basic $ (0.49 ) $ 0.10 $ 0.24 $ 0.08 $ (0.41 )
Net income - diluted (0.49 ) 0.10 0.24 0.08 (0.41 )
Cash dividends 0.0700 0.0700 0.0700 0.0700 0.1825
Book value at period end 22.32 24.70 24.46 23.56 23.62
Dividend payout ratio -14.29 % 70.00 % 29.17 % 87.50 % -44.51 %
Weighted-average number of common
shares outstanding:
Basic 2,849,841 2,849,841 2,849,841 2,848,839 2,847,881
Diluted 2,849,841 2,849,841 2,849,936 2,848,969 2,847,881
Shares outstanding at period end 2,849,841 2,849,841 2,849,841 2,849,841 2,847,881
 
Balance Sheet Data:
Total assets $ 919,869 $ 932,209 $ 921,840 $ 897,754 $ 888,720
Loans - gross 567,631 575,003 570,174 577,964 577,791
Allowance for loan losses 13,247 13,187 10,462 11,329 9,725
Investment securities 273,229 263,946 268,064 197,520 239,332
Interest earning assets 858,002 877,540 862,410 841,344 830,974
Premises and equipment, net 26,636 25,897 25,294 25,114 25,329
Total deposits 785,941 790,592 792,454 772,927 754,730
Short-term borrowings 11,509 13,534 22,408 20,877 22,910
Long-term obligations 34,500 34,500 14,500 14,500 21,000
Shareholders' equity 80,894 87,632 86,918 84,292 84,375
 
Selected Performance Ratios (annualized):
Return on average assets -0.48 % 0.23 % 0.43 % 0.22 % -0.41 %
Return on average shareholders' equity -5.15 % 2.44 % 4.48 % 2.28 % -4.09 %
Net interest margin 3.23 % 3.31 % 3.52 % 3.55 % 3.56 %
Efficiency ratio 77.28 % 57.83 % 63.94 % 62.39 % 59.20 %
 
Asset Quality Ratios:
Nonperforming loans to period-end loans 3.89 % 3.59 % 3.37 % 3.19 % 2.54 %
Allowance for loan losses to period-end loans 2.33 % 2.29 % 1.83 % 1.96 % 1.68 %
Allowance for loan losses to nonperforming loans 60 % 64 % 54 % 61 % 66 %
Net charge-offs to average loans (annualized) 2.99 % 0.79 % 1.83 % 0.97 % 2.61 %
 
Capital Ratios:
Tangible equity to total assets 6.91 % 7.55 % 7.56 % 7.48 % 7.57 %
Equity-to-assets ratio 8.79 % 9.40 % 9.43 % 9.39 % 9.49 %
Leverage Capital Ratio 8.76 % 8.79 % 9.26 % 9.26 % 9.59 %
Tier 1 Capital Ratio 12.24 % 12.37 % 12.78 % 12.69 % 12.77 %
Total Capital Ratio 13.50 % 13.63 % 14.03 % 13.95 % 14.02 %

Copyright Business Wire 2010

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