Newport Bancorp, Inc. Reports Results For Second Quarter And Year To Date 2011

Newport Bancorp, Inc. (the “Company”) (Nasdaq: NFSB), the holding company for Newport Federal Savings Bank (the “Bank” or “NewportFed”), today announced second quarter earnings for 2011. For the quarter ended June 30, 2011, the Company reported net income of $439,000, or $0.13 per share (basic and diluted), compared to $501,000, or $0.14 per share (basic and diluted), for the quarter ended June 30, 2010. For the six months ended June 30, 2011, the Company reported net income of $740,000, or $0.22 per share (basic and diluted), compared to $602,000, or $0.17 per share (basic and diluted), for the six months ended June 30, 2010.

During the first six months of 2011, the Company’s assets increased by $4.2 million, or 0.9%, to $453.9 million. The increase in assets was primarily concentrated in cash and cash equivalents, which increased by $9.9 million, or 105.7%, partially offset by a $5.2 million, or 11.1%, decrease in securities and a $874,000, or 0.2%, decrease in net loans. The increase in cash and cash equivalents is due to principal payments received on mortgage-backed securities and an increase in deposits and borrowings. The decrease in securities was attributable to principal payments received on the mortgage-backed securities, partially offset by purchases of mortgage-backed securities held to maturity. The loan portfolio decrease was attributable to a decrease in home equity loans and lines (a decrease of $1.7 million, or 7.2%) and a decrease in commercial loans (a decrease of $343,000, or 20.9%), partially offset by an increase in construction loans (an increase of $785,000, or 15.9%), residential mortgages (an increase of $200,000 or 0.1%) and commercial real estate mortgages (an increase of $127,000, or 0.1%).

Deposit balances increased by $1.3 million, or 0.5%. The increase in deposits occurred in NOW/Demand accounts (an increase of $1.4 million, or 1.2%), savings accounts (an increase of $1.1 million, or 3.8%) and time deposit accounts (an increase of $561,000 or 0.8%), partially offset by a decrease in money market accounts (a decrease of $1.8 million, or 3.5%).

Total stockholders’ equity at June 30, 2011 was $50.9 million compared to $49.7 million at December 31, 2010. The increase was primarily attributable to net income and stock-based compensation credits.

Net interest income was $3.8 million for the quarters ended June 30, 2011 and June 30, 2010. Net interest income for the six months ended June 30, 2011 was $7.6 million, compared to $7.4 million for six months ended June 30, 2010, an increase of $112,000, or 1.5%. The increase in net interest income for the six months ended June 30, 2011 was primarily due to a decrease in expense from deposits and borrowings, partially offset by a decrease in the interest earned on loans and securities.

As a result of the continued low interest rate environment, the average cost of interest-bearing liabilities decreased to 1.80% for the quarter ended June 30, 2011 from 2.05% for the quarter ended June 30, 2010. The average balance of interest-bearing deposits decreased in the second quarter of 2011 from the second quarter of 2010, and the average cost of interest-bearing deposits decreased by 29 basis points, resulting in a $165,000 decrease in interest expense on such deposits. The average yield on interest-earning assets for the second quarter of 2011 was 5.31%, compared to 5.50% for the same period in 2010. The Company’s second quarter 2011 interest rate spread increased to 3.51% from 3.45% in the second quarter of 2010, an increase of 6 basis points.

The average cost of interest-bearing liabilities decreased to 1.81% for the six months ended June 30, 2011 from 2.12% for the six months ended June 30, 2010. The average balance of interest-bearing deposits remained relatively the same in the first six months of June 2011, as compared to the first six months of June 2010, but the average cost of interest-bearing deposits decreased by 34 basis points in the six months ended June 30, 2011, resulting in a $383,000 decrease in interest expense on such deposits. The average yield on interest-earning assets for the six months ended June 30, 2011 was 5.32%, compared to 5.48% for the same period in 2010. For the six months ended June 30, 2011, the interest rate spread increased to 3.51% from 3.37% in 2010, an increase of 14 basis points.

Non-performing assets totaled $1.3 million, or 0.29% of total assets, at June 30, 2011, compared to $208,000, or 0.05% of total assets, at December 31, 2010. Non-performing assets at June 30, 2011 consisted of two commercial real estate mortgage loans totaling $1.1 million, one $21,000 home equity loan and $195,000 of foreclosed real estate. Net charge-offs were $246,000 and $25,000 for the quarters ended June 30, 2011 and 2010, respectively. The loan loss provision for the three and six months ended June 30, 2011 was $207,000 and $522,000, respectively, compared to $80,000 and $394,000 for the three and six months ended June 30, 2010, respectively. Management reviews the level of the allowance for loan losses on a quarterly basis and establishes the provision for loan losses based upon the volume and types of lending, delinquency levels, loss experience, the amount of impaired and classified loans, economic conditions and other factors related to the collectability of the loan portfolio. The provision increased during the first half of 2011 compared to the first half of 2010, due to an increase in problem loans and charge-offs, partially offset by a decrease in the loan portfolio.

Non-interest income for the three and six months ended June 30, 2011 totaled $605,000 and $1.2 million, respectively, compared to $622,000 and $943,000 for the three and six months ended June 30, 2010. The $17,000, or 2.7%, decrease in non-interest income for the quarter ended June 30, 2011 from the quarter ended June 30, 2010 is largely attributable to the $13,000 gain on sale of securities available for sale in the second quarter of 2010. The $216,000, or 22.9%, increase in non-interest income for the six months ended June 30, 2011 when compared to the same period in 2010 is due to a $27,000 increase in fees earned on checking accounts and no loss on sales of securities available for sale recorded in the first half of 2011, as compared to the $204,000 net realized loss on sales of securities available for sale recorded in 2010. The loss on sales of securities available for sale in the first six months of 2010 was due to the sale of the Bank’s entire holdings in one mutual fund, which resulted in a $267,000 realized loss, partially offset by gains on sales of other securities available for sale.

Non-interest expenses totaled $3.5 million for the quarter ended June 30, 2011 compared to $3.6 million for the quarter ended and June 30, 2010. For the six months ended June 30, 2011, non-interest expenses totaled $7.1 million, an increase of $108,000, or 1.5%, compared to the same period in 2010. The decrease in marketing expenditures in the second quarter of 2011 is the primary reason for the decrease in non-interest expenses during the three months ended June 30, 2011 when compared to the same period in 2010. The increase in non-interest expenses for the first six months of 2011 when compared to the first six months of 2010 is attributable to increases in salaries and employee benefits, occupancy and equipment expense, data processing fees, professional fees and foreclosed real estate, offset by decreases in marketing costs and FDIC insurance costs. The increase in salaries and benefits is primarily due to an increase in retirement and incentive compensation expenses, partially offset by a reduction in the stock-based compensation expense associated with option grants and restricted stock awards. The accelerated method of expense recognition was adopted at the inception of the equity incentive plan on October 1, 2007, resulting in a higher stock-based compensation expense in the 2010 period compared to the 2011 period. The increase in occupancy and equipment expense and data processing fees is due to the overall increase in operating costs and an increase in depreciation expense in 2011 as a result of a relocation of an existing branch in the beginning of 2011. The increase in the foreclosed real estate expense is a result of an overall increase in foreclosed real estate assets. The decrease in marketing costs is due to management’s concerted effort to curtail marketing expenditures in 2011.

This news release may contain forward-looking statements, which can be identified by the use of words such as "believes," "expects," "anticipates," "estimates" or similar expressions. Such forward-looking statements and all other statements that are not historic facts are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. These factors include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets, changes in deposit flows and changes in the quality or composition of the Company's loan or investment portfolios. Additionally, other risks and uncertainties may be described in the Company's annual report on Form 10-K, its quarterly reports on Form 10-Q or its other reports filed with the Securities and Exchange Commission which are available through the SEC's website at www.sec.gov. Should one or more of these risks materialize, actual results may vary from those anticipated, estimated or projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as may be required by applicable law or regulation, the Company assumes no obligation to update any forward-looking statements.
       

NEWPORT BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

 

ASSETS
 

 
June 30,

2011
December 31,

2010
 

 

(Unaudited)

(Dollars in thousands, except per share data)
 
Cash and due from banks $ 18,831 $ 8,194
Short-term investments   449     1,181  
Cash and cash equivalents 19,280 9,375
 
Securities held to maturity, at amortized cost 41,810 47,021
Federal Home Loan Bank stock, at cost 5,730 5,730

Loans
358,862 359,721
Allowance for loan losses   (3,687 )   (3,672 )

Loans, net
  355,175     356,049  

Premises and equipment
14,843 14,477
Accrued interest receivable 1,418 1,413
Net deferred tax asset 2,600 2,600
Bank-owned life insurance 10,898 10,705
Foreclosed real estate 195 100
Prepaid FDIC insurance 828 1,052
Other assets   1,133     1,163  
Total assets $ 453,910   $ 449,685  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits $ 262,320 $ 261,050
Short-term borrowings - 3,000
Long-term borrowings 137,117 132,236
Accrued expenses and other liabilities   3,603     3,696  
Total liabilities   403,040     399,982  

 

Preferred stock, $.01 par value; 1,000,000 shares authorized;

    none issued
- -
Common stock, $.01 par value; 19,000,000 shares authorized; 4,878,349 shares issued 49 49
Additional paid-in capital 50,615 50,435
Retained earnings 19,572 18,832
Unearned compensation (324,497 and 338,030 shares at
June 30, 2011 and December 31, 2010, respectively) (2,617 ) (2,864 )
Treasury stock, at cost (1,389,572 shares)   (16,749 )   (16,749 )
Total stockholders’ equity   50,870     49,703  
Total liabilities and stockholders’ equity $ 453,910   $ 449,685  
       

NEWPORT BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME
 
Three Months Ended

June 30,
Six Months Ended

June 30,
2011     2010 2011     2010
(Unaudited)

(Dollars in thousands, except per share data)
 
Interest and dividend income:
Loans $ 4,862 $ 5,008 $ 9,714 $ 10,025
Securities 509 616 1,081 1,261
Other interest-earning assets   9   3   16   6  
Total interest and dividend income   5,380   5,627   10,811   11,292  
 
Interest expense
Deposits 477 642 971 1,354
Short-term borrowings - - 3 -
Long-term borrowings   1,147   1,212   2,286   2,499  
Total interest expense   1,624   1,854   3,260   3,853  
 
Net interest income 3,756 3,773 7,551 7,439
Provision for loan losses   207   80   522   394  
 
Net interest income, after provision for loan losses   3,549   3,693   7,029   7,045  
 
Non-interest income:
Customer service fees 505 497 948 921
Net gain (loss) on sales of available-for-sale securities - 13 - (204 )
Bank-owned life insurance 92 101 194 202
Miscellaneous   8   11   17   24  
Total non-interest income   605   622   1,159   943  
 
Non-interest expenses:
Salaries and employee benefits 1,935 1,964 3,886 3,866
Occupancy and equipment 535 458 1,110 949
Data processing 366 372 761 749
Professional fees 152 117 286 234
Marketing 185 306 379 528
Foreclosed real estate 20 41 58 41
FDIC insurance 106 132 234 244
Other general and administrative   200   176   377   372  
Total non-interest expenses   3,499   3,566   7,091   6,983  
 
Income before income taxes 655 749 1,097 1,005
 
Provision for income taxes   216   248  

357
  403  
 
Net income $ 439 $ 501 $ 740 $ 602  
 

 

Weighted-average shares outstanding:

Basic

3,314,598

3,520,517

3,311,609

3,571,442

Diluted

3,346,169

 3,520,517

3,333,851

3,571,442
 

 

Earnings per share:

Basic

            $

             .13

$

.14

$

.22

     $

      .17

Diluted

            $

             .13

           $

            .14

$

.22

$

.17

Copyright Business Wire 2010

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX