ECB Bancorp, Inc. Reports 2011 Third Quarter Results

ECB Bancorp, Inc. (NASDAQ:ECBE) (“ECB” or the “Company”) today announced its results for the three and nine months ended September 30, 2011.

2011 Third Quarter Financial Highlights

For the three months ended September 30, 2011, net income totaled $527,000, a 2.4% decrease from the $540,000 in net income for the three months ended September 30, 2010. After adjusting for $267,000 in preferred stock dividends and the accretion of warrant discount, net income available to common shareholders for the three months ended September 30, 2011 was $260,000 or $0.09 per basic and diluted share, a decrease of 4.8% compared to $273,000 or $0.10 per basic and diluted share for the three months ended September 30, 2010.

For the nine months ended September 30, 2011, net income was $588,000, a decrease of 70.4% compared to net income for the nine months ended September 30, 2010 of $1,984,000. After adjusting for $797,000 in preferred stock dividends and accretion of warrant discount, net loss available to common shareholders for the nine months ended September 30, 2011 was $209,000 or $0.07 per basic and diluted share, compared to net income available to common shareholders of $1,187,000 or $0.42 per basic and diluted share for the prior nine-month period.

Other Financial Highlights include:
  • Consolidated assets decreased 0.9% to $923,695,000 at September 30, 2011 from $932,209,000 at September 30, 2010.
  • Loans decreased 9.3% to $521,626,000 at September 30, 2011 compared to $575,003,000 at September 30, 2010.
  • Deposits increased 0.8% to $796,609,000 at September 30, 2011 from $790,592,000 at September 30, 2010.
  • Net interest income decreased 5.1 % to $6,623,000 for the three months ended September 30, 2011 from $6,977,000 for the same three-month period a year ago. For the nine months ended September 30, 2011, net interest income decreased 2.7% to $20,436,000 compared to $21,005,000 for the first nine months of 2010.
  • Noninterest income for the three months ended September 30, 2011 was $2,568,000, a decrease of 32.4% compared to $3,800,000 for the same three-month period a year ago. For the nine months ended September 30, 2011, noninterest income decreased 21.6% to $6,538,000 compared to $8,334,000 for the same period in 2010. Excluding net gain on sale of securities for the three-month periods ending September 30, 2011 and 2010, noninterest income was $1,570,000, a decrease of 11.3% compared to $1,770,000 in the third quarter of 2010. Excluding net gain on sale of securities for the nine-month period ending September 30, 2011, noninterest income was $4,656,000, a decrease of 4.3% when compared to $4,863,000 for the nine-month period in 2010.
  • Provision for loan losses charged to operations for the three months ended September 30, 2011 totaled $1,028,000, a decrease of 19.2% compared to the $1,273,000 provision charged to operations for the second quarter ended June 30, 2011 and a decrease of 73.4% compared to the $3,863,000 loan loss provision charged in the same period 2010. For the nine months ended September 30, 2011, provision for loan loss totaled $6,231,000, a reduction of 27.9% compared to $8,643,000 loan loss provision taken in the same nine-month period in 2010.
  • During the third quarter of 2011, the Company declared and paid a common stock dividend of $0.07 per share.

A. Dwight Utz, President and Chief Executive Officer, stated: “We have been moving forward with our previously announced private placement to have six institutional investors purchase $79.7 million of our stock at $16 per share. This transaction combined with our announcement in third quarter that we had executed a purchase and assumption agreement to acquire six branches from Bank of Hampton Roads located in Raleigh, Chapel Hill, Cary, Plymouth and Roper, North Carolina, positions the Bank to move into 2012 with good momentum and a strong capital base.”

Thomas M. Crowder, Executive Vice President and Chief Financial Officer stated: “Although we are still seeing slight net interest margin compression, we feel that the fourth quarter should see stabilization in our net interest margin and we look to continue to lower our cost of funds through year end to assist in this result.”

Mr. Utz concluded: “The third quarter saw ECB Bancorp continue to position itself for future expansion and we are looking forward to 2012 and continued execution of our multi-pronged growth strategy that the anticipated enhancement to our capital position will help us to accomplish.”

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: the necessary approvals required for the private placement and branch purchase may not be obtained or may not be obtained on the terms expected or on the schedule that we anticipate, and other closing conditions for such transactions may not be satisfied; 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 its loan portfolio, the abilities of its borrowers to repay their loans, and the values of loan collateral); and other developments or changes in the Company’s business that it does 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, 2011, December 31, 2010 and September 30, 2010
(Dollars in thousands, except per share data)
       
September 30, December 31, September 30,
2011 2010* 2010
Assets (unaudited) (unaudited)
Non-interest bearing deposits and cash $ 13,123 $ 11,731 $ 8,666
Interest bearing deposits 61 20 20
Overnight investments   4,055     8,415     31,720  
Total cash and cash equivalents   17,239     20,166     40,406  
 
Investment securities
Available-for-sale, at market value (cost of $325,023, $275,883 and $258,148
at September 30, 2011, December 31, 2010 and September 30, 2010 respectively) 327,066 273,229 263,946
 
Loans held for sale 2,338 4,136 2,103
 
Loans 521,626 567,631 575,003
Allowance for loan losses   (12,214 )   (13,247 )   (13,187 )
Loans, net   509,412     554,384     561,816  
 
Real estate and repossessions acquired in settlement of loans, net 6,223 4,536 5,253
Federal Home Loan Bank common stock, at cost 3,768 4,571 4,749
Bank premises and equipment, net 26,137 26,636 25,897
Accrued interest receivable 4,972 5,243 5,176
Bank owned life insurance 11,676 8,954 8,879
Other assets   14,864     18,014     13,984  
Total $ 923,695   $ 919,869   $ 932,209  
 
Liabilities and Shareholders' equity
Deposits
Demand, noninterest bearing $ 123,783 $ 104,932 $ 105,628
Demand, interest bearing 257,115 262,977 215,346
Savings 46,879 29,938 25,972
Time   368,832     388,094     443,646  
Total deposits   796,609     785,941     790,592  
 
Accrued interest payable 630 631 982
Short-term borrowings 13,528 11,509 13,534
Long-term obligations 25,500 34,500 34,500
Other liabilities   4,180     6,394     4,969  
Total liabilities   840,447     838,975     844,577  
 
Shareholders' equity
Preferred stock, Series A 17,411 17,288 17,246
Common stock, par value $3.50 per share 9,974 9,974 9,974
Capital surplus 25,868 25,852 25,844
Warrants 878 878 878
Retained earnings 27,947 28,554 30,144
Accumulated other comprehensive income (loss)   1,170     (1,652 )   3,546  
Total shareholders' equity   83,248     80,894     87,632  
Total $ 923,695   $ 919,869   $ 932,209  
 
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 and nine months ended September 30, 2011 and 2010 (unaudited)
(Dollars in thousands, except per share data)
         
Three months ended Nine months ended
September 30, September 30,
2011 2010 2011 2010
Interest income:
Interest and fees on loans $7,096 $7,640 $21,782 $23,062
Interest on investment securities:
Interest exempt from federal income taxes 106 385 351 1,337
Taxable interest income 1,961 1,949 6,061 5,519
Dividend income 9 6 27 40
Other interest income 17   2   38   9
Total interest income 9,189   9,982   28,259   29,967
Interest expense:
Deposits:
Demand accounts 511 406 1,573 1,045
Savings 85 25 212 52
Time 1,751 2,347 5,352 7,248
Short-term borrowings 73 66 215 183
Long-term obligations 146   161   471   434
Total interest expense 2,566   3,005   7,823   8,962
 
Net interest income 6,623 6,977 20,436 21,005
Provision for loan losses 1,028   3,863   6,231   8,643
Net interest income after provision for loan losses 5,595   3,114   14,205   12,362
 
Noninterest income:
Service charges on deposit accounts 836 842 2,429 2,558
Other service charges and fees 410 470 984 1,168
Mortgage origination fees 255 351 1,033 856
Net gain on sale of securities 998 2,030 1,882 3,471
Income from bank owned life insurance 74 75 222 223
Other operating (expense) income (5 ) 32   (12 ) 58
Total noninterest income 2,568   3,800   6,538   8,334
 
Noninterest expenses:
Salaries 2,737 2,548 8,127 7,193
Retirement and other employee benefits 638 740 2,098 2,182
Occupancy 528 480 1,533 1,384
Equipment 550 589 1,622 1,542
Professional fees 240 187 782 686
Supplies 49 45 178 165
Telephone 179 147 537 487
FDIC insurance 236 355 763 1,033
Other outside services 94 123 437 351
Net cost of real estate and repossessions acquired
in settlement of loans 645 112 742 493
Other operating expenses 1,643   1,053   3,621   3,017
Total noninterest expenses 7,539   6,379   20,440   18,533
Income before income taxes 624 535 303 2,163
Income tax expense (benefit) 97   (5 ) (285 ) 179
Net income 527   540   588   1,984
Preferred stock dividends 225 225 673 673
Accretion of discount 42   42   124   124
Income (loss) available to common shareholders $260   $273   ($209 ) $1,187
 
Net income (loss) per share - basic $0.09   $0.10   ($0.07 ) $0.42
Net income (loss) per share - diluted $0.09   $0.10   ($0.07 ) $0.42
Weighted average shares outstanding - basic 2,849,841   2,849,841   2,849,841   2,849,511
Weighted average shares outstanding - diluted 2,849,841   2,849,841   2,849,841   2,849,554
 
  ECB BANCORP, INC. AND SUBSIDIARY
Supplemental Quarterly Financial Data (unaudited)
(Dollars in thousands, except per share data)
       
9/30/2011 6/30/2011 3/31/2011 12/31/2010 9/30/2010
Income Statement Data:
Interest income $ 9,189 $ 9,632 $ 9,438 $ 9,840 $ 9,982
Interest expense   2,566     2,587     2,670     2,926     3,005  
Net interest income 6,623 7,045 6,768 6,914 6,977
Provision for loan losses 1,028 1,273 3,930 4,337 3,863
Net after provision expense 5,595 5,772 2,838 2,577 3,114
Noninterest income 2,568 2,539 1,431 3,661 3,800
Noninterest expense 7,539 6,657 6,244 8,307 6,379
Income (loss) before income taxes 624 1,654 (1,975 ) (2,069 ) 535
Income tax expense (benefit)   97     509     (891 )   (945 )   (5 )
Net income (loss) 527 1,145 (1,084 ) (1,124 ) 540
Preferred stock dividend & accretion of discount   267     265     265     266     267  
Net income (loss) available to common shareholders $ 260   $ 880   $ (1,349 ) $ (1,390 ) $ 273  
 
Per Share Data and Shares Outstanding:
Net income (loss) - basic $ 0.09 $ 0.31 $ (0.47 ) $ (0.49 ) $ 0.10
Net income (loss)- diluted 0.09 0.31 (0.47 ) (0.49 ) 0.10
Cash dividends declared on common stock 0.07 - 0.07 0.07 0.07
Book value at period end 23.10 22.79 21.71 22.32 24.70
Dividend payout ratio 77.78 % - -14.89 % -14.29 % 70.00 %
Weighted-average number of common
shares outstanding:
Basic 2,849,841 2,849,841 2,849,841 2,849,841 2,849,841
Diluted 2,849,841 2,849,841 2,849,841 2,849,841 2,849,841
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 $ 923,695 $ 941,463 $ 916,571 $ 919,869 $ 932,209
Loans - gross 521,626 542,687 546,641 567,631 575,003
Allowance for loan losses 12,214 15,448 15,219 13,247 13,187
Investment securities 327,066 298,116 304,975 273,229 263,946
Interest earning assets 858,914 880,814 856,840 858,002 877,540
Premises and equipment, net 26,137 26,740 26,716 26,636 25,897
Total deposits 796,609 812,774 786,754 785,941 790,592
Short-term borrowings 13,528 13,711 17,421 11,509 13,534
Long-term obligations 25,500 27,500 27,500 34,500 34,500
Shareholders' equity 83,248 82,320 79,213 80,894 87,632
 
Selected Performance Ratios (annualized):
Return on average assets 0.22 % 0.49 % -0.48 % -0.48 % 0.23 %
Return on average shareholders' equity 2.56 % 5.71 % -5.38 % -5.15 % 2.44 %
Net interest margin 3.06 % 3.35 % 3.30 % 3.23 % 3.31 %
Efficiency ratio 81.02 % 68.60 % 75.00 % 77.28 % 57.83 %
 
Asset Quality Ratios:
Nonperforming loans to period-end loans 5.49 % 4.65 % 4.04 % 3.89 % 3.59 %
Allowance for loan losses to period-end loans 2.34 % 2.85 % 2.78 % 2.33 % 2.29 %
Allowance for loan losses to nonperforming loans 43 % 61 % 69 % 60 % 64 %
Net charge-offs to average loans (annualized) 3.18 % 0.77 % 1.40 % 2.99 % 0.79 %
 
Capital Ratios:
Tangible equity to total assets 7.13 % 6.90 % 6.75 % 6.91 % 7.55 %
Equity-to-assets ratio 9.01 % 8.74 % 8.64 % 8.79 % 9.40 %
Leverage Capital Ratio 8.34 % 8.39 % 8.42 % 8.66 % 8.79 %
Tier 1 Capital Ratio 12.59 % 12.20 % 11.97 % 12.08 % 12.38 %
Total Capital Ratio 13.85 % 13.46 % 13.24 % 13.34 % 13.64 %

Copyright Business Wire 2010

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