ECB Bancorp, Inc. Reports 2011 First Quarter Results

ECB Bancorp, Inc. (NASDAQ:ECBE) (“ECB” or the “Company”) today announced its results for the three months ended March 31, 2011.

2011 First Quarter Financial Highlights

For the three months ended March 31, 2011, net loss totaled $1,084,000 compared to the $487,000 in net income for the three months ended March 31, 2010. After adjusting for $265,000 in TARP preferred stock dividends and the accretion of warrant discount, net loss charged to common shareholders for the three months ended March 31, 2011 were $1,349,000 or $0.47 per diluted share compared to income of $222,000 or $0.08 per diluted share for the three months ended March 31, 2010.

Other Financial Highlights include:
  • Consolidated assets increased 2.1% to $916,571,000 at March 31, 2011 from $897,754,000 at March 31, 2010.
  • Loans decreased 5.4% to $546,641,000 at March 31, 2011 compared to $577,964,000 at March 31, 2010.
  • Deposits increased 1.8% to $786,754,000 at March 31, 2011 from $772,927,000 at March 31, 2010.
  • Net interest income decreased 3.2 % to $6,768,000 for the three months ended March 31, 2011 from $6,995,000 for the same three-month period a year ago.
  • Provision for loan losses charged to operations for the three months ended March 31, 2011 totaled $3,930,000, a decrease of 9.4% compared to $4,337,000 charged to operations for the fourth quarter ended December 31, 2010.
  • During the first quarter, the Company declared a common stock dividend of $0.07 per share, or $0.28 per share on an annualized basis, unchanged from the previous quarterly dividend.

A. Dwight Utz, President and Chief Executive Officer, stated: “We still see some weakness in real estate in several of our markets, and we have continued to set aside higher loan loss reserves to compensate for those continued weaknesses. That said, we are positioned to move forward in 2011 with great expectations for the future. On May 20 th we will convert our core processing system, and the positive impact this will have for ECB in the future cannot be overestimated. The technology platform that we will have available upon completion of our conversion will enhance our customer experience and significantly assist our associates with improved customer information and analytical reporting. This new technology will position us to execute our growth strategy moving into 2011 and beyond.”

Thomas M. Crowder, Executive Vice President and Chief Financial Officer stated: “From a financial perspective we have already absorbed some expenses associated with the conversion, particularly in the 4 th quarter of 2010. On a go forward basis you will not see significant reductions in our systems related expenses because of the substantial upgrades that this conversion will result in; however, these upgrades are being achieved at little to no increase in our operating cost to the Company over current cost levels.”

Mr. Utz concluded, “The first quarter saw ECB Bancorp continuing to prepare for the future while continuing to deal with a sluggish economic recovery. The initial feedback from many of our customers dependent on the tourist trade is very positive for the summer of 2011, and we hope this might translate into another record year in tourism for our coastal communities. All in all, I am very optimistic for both the future of ECB and the communities we serve.”

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
March 31, 2011, December 31, 2010 and March 31, 2010
(Dollars in thousands, except per share data)
     
March 31, December 31, March 31,
2011 2010 2010
Assets (unaudited) (unaudited)
Non-interest bearing deposits and cash $ 10,176 $ 11,731 $ 10,133
Interest bearing deposits 30 20 877
Overnight investments   -     8,415     59,240  
Total cash and cash equivalents   10,206     20,166     70,250  
 
Investment securities
Available-for-sale, at market value (cost of $307,812, $275,883 and $196,068
at March 31, 2011, December 31, 2010, and March 31, 2010, respectively) 304,975 273,229 197,520
 
Loans held for sale 623 4,136 627
 
Loans 546,641 567,631 577,964
Allowance for loan losses   (15,219 )   (13,247 )   (11,329 )
Loans, net   531,422     554,384     566,635  
 
Real estate and repossessions acquired in settlement of loans, net 7,258 4,536 4,974
Federal Home Loan Bank common stock, at cost 4,571 4,571 5,116
Bank premises and equipment, net 26,716 26,636 25,114
Accrued interest receivable 4,808 5,243 4,706
Bank owned life insurance 9,028 8,954 8,731
Other assets   16,964     18,014     14,081  
Total $ 916,571   $ 919,869   $ 897,754  
 
Liabilities and Shareholders' Equity
Deposits
Demand, noninterest bearing $ 106,898 $ 104,932 $ 98,320
Demand, interest bearing 251,474 262,977 190,720
Savings 36,314 29,938 19,669
Time   392,068     388,094     464,218  
Total deposits   786,754     785,941     772,927  
 
Accrued interest payable 639 631 1,042
Short-term borrowings 17,421 11,509 20,877
Long-term obligations 27,500 34,500 14,500
Other liabilities   5,044     6,394     4,116  
Total liabilities   837,358     838,975     813,462  
 
Shareholders' equity
Preferred stock, Series A 17,329 17,288 17,163
Common stock, par value $3.50 per share 9,974 9,974 9,974
Capital surplus 25,858 25,852 25,827
Warrants 878 878 878
Retained earnings 27,006 28,554 29,577
Accumulated other comprehensive income (loss)   (1,832 )   (1,652 )   873  
Total shareholders' equity   79,213     80,894     84,292  
Total $ 916,571   $ 919,869   $ 897,754  
 
Common shares outstanding 2,849,841 2,849,841 2,849,841
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 Results of Operations
For the three months ended March 31, 2011 and 2010
(Dollars in thousands, except per share data)
       
Three months ended March 31,
2011 2010
(unaudited) (unaudited)
Interest income:
Interest and fees on loans $ 7,357 $ 7,632
Interest on investment securities:
Interest exempt from federal income taxes 128 462
Taxable interest income 1,937 1,897
Dividend income 9 27
Other interest   7     2  
Total interest income   9,438     10,020  
Interest expense:
Deposits:
Demand accounts 557 317
Savings 53 12
Time 1,811 2,489
Short-term borrowings 69 56
Long-term obligations   180     151  
Total interest expense   2,670     3,025  
 
Net interest income 6,768 6,995
Provision for loan losses   3,930     3,000  
Net interest income after provision for loan losses   2,838     3,995  
 
Noninterest income:
Service charges on deposit accounts 765 823
Other service charges and fees 244 265
Mortgage origination fees 326 212
Net gain on sale of securities 26 1,289
Income from bank owned life insurance 74 74
Other operating income (expense)   (4 )   5  
Total noninterest income   1,431     2,668  
 
Noninterest expenses:
Salaries 2,564 2,319
Retirement and other employee benefits 676 730
Occupancy 483 457
Equipment 559 467
Professional fees 271 288
Supplies 51 52
Telephone/data communications 169 183
FDIC insurance 326 333
Other outside services 181 118
Net cost of real estate and repossessions acquired in settlement of loans 18 334
Other operating expenses   946     957  
Total noninterest expenses   6,244     6,238  
Income (loss) before income taxes (1,975 ) 425
Income tax benefit   (891 )   (62 )
Net income (loss)   (1,084 )   487  
Preferred stock dividends 224 224
Accretion of discount   41     41  
Income (loss) available to common shareholders $ (1,349 ) $ 222  
 
Net income (loss) per share - basic   ($0.47 ) $ 0.08  
Net income (loss) per share - diluted   ($0.47 ) $ 0.08  
Weighted average shares outstanding - basic   2,849,841     2,848,839  
Weighted average shares outstanding - diluted   2,849,841     2,848,969  
 
ECB Bancorp, Inc.        
Supplemental Quarterly Financial Data (Unaudited)
  (Dollars in thousands, except per share data)
 
3/31/2011 12/31/2010 9/30/2010 6/30/2010 3/31/2010
Income Statement Data:
Interest income $ 9,438 $ 9,840 $ 9,982 $ 9,965 $ 10,020
Interest expense   2,670     2,926     3,005     2,932     3,025  
Net interest income 6,768 6,914 6,977 7,033 6,995
Provision for loan losses 3,930 4,337 3,863 1,780 3,000
Net after provision expense 2,838 2,577 3,114 5,253 3,995
Noninterest income 1,431 3,661 3,800 1,866 2,668
Noninterest expense 6,244 8,307 6,379 5,916 6,238
Income (loss) before income taxes (1,975 ) (2,069 ) 535 1,203 425
Income tax expense (benefit)   (891 )   (945 )   (5 )   246     (62 )
Net income (loss) (1,084 ) (1,124 ) 540 957 487
Preferred stock dividend & accretion of discount   265     266     267     265     265  
Net income (loss) available to common shareholders $ (1,349 ) $ (1,390 ) $ 273   $ 692   $ 222  
 
Per Share Data and Shares Outstanding:
Net income - basic $ (0.47 ) $ (0.49 ) $ 0.10 $ 0.24 $ 0.08
Net income - diluted (0.47 ) (0.49 ) 0.10 0.24 0.08
Cash dividends 0.0700 0.0700 0.0700 0.0700 0.0700
Book value at period end 21.71 22.32 24.70 24.46 23.56
Dividend payout ratio -14.89 % -14.29 % 70.00 % 29.17 % 87.50 %
Weighted-average number of common
shares outstanding:
Basic 2,849,841 2,849,841 2,849,841 2,849,841 2,848,839
Diluted 2,849,841 2,849,841 2,849,841 2,849,936 2,848,969
Shares outstanding at period end 2,849,841 2,849,841 2,849,841 2,849,841 2,849,841
 
Balance Sheet Data:
Total assets $ 916,571 $ 919,869 $ 932,209 $ 921,840 $ 897,754
Loans - gross 546,641 567,631 575,003 570,174 577,964
Allowance for loan losses 15,219 13,247 13,187 10,462 11,329
Investment securities 304,975 273,229 263,946 268,064 197,520
Interest earning assets 856,840 858,002 877,540 862,410 841,344
Premises and equipment, net 26,716 26,636 25,897 25,294 25,114
Total deposits 786,754 785,941 790,592 792,454 772,927
Short-term borrowings 17,421 11,509 13,534 22,408 20,877
Long-term obligations 27,500 34,500 34,500 14,500 14,500
Shareholders' equity 79,213 80,894 87,632 86,918 84,292
 
Selected Performance Ratios (annualized):
Return on average assets -0.48 % -0.48 % 0.23 % 0.43 % 0.22 %
Return on average shareholders' equity -5.38 % -5.15 % 2.44 % 4.48 % 2.28 %
Net interest margin 3.30 % 3.23 % 3.31 % 3.52 % 3.55 %
Efficiency ratio 75.00 % 77.28 % 57.83 % 63.94 % 62.39 %
 
Asset Quality Ratios:
Nonperforming loans to period-end loans 4.04 % 3.89 % 3.59 % 3.37 % 3.19 %
Allowance for loan losses to period-end loans 2.78 % 2.33 % 2.29 % 1.83 % 1.96 %
Allowance for loan losses to nonperforming loans 69 % 60 % 64 % 54 % 61 %
Net charge-offs to average loans (annualized) 1.40 % 2.99 % 0.79 % 1.83 % 0.97 %
 
Capital Ratios:
Tangible equity to total assets 6.75 % 6.91 % 7.55 % 7.56 % 7.48 %
Equity-to-assets ratio 8.64 % 8.79 % 9.40 % 9.43 % 9.39 %
Leverage Capital Ratio 8.42 % 8.66 % 8.79 % 9.26 % 9.26 %
Tier 1 Capital Ratio 11.97 % 12.08 % 12.37 % 12.78 % 12.69 %
Total Capital Ratio 13.24 % 13.34 % 13.63 % 14.03 % 13.95 %

Copyright Business Wire 2010

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