ECB Bancorp, Inc. Reports 2011 Annual And Fourth Quarter Results

ECB Bancorp, Inc. (NYSE-AMEX:ECBE) (“ECB” or the “Company”) today announced its results for the twelve months and three months ended December 31, 2011.

2011 Annual and Fourth Quarter Financial Highlights

For the twelve months ended December 31, 2011, net income was a loss of ($1,024,000), a decrease of (219%) compared to net income for the twelve months ended December 31, 2010 of $860,000. 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, 2011 was ($2,087,000) or ($0.73) per diluted share compared to a net loss of ($203,000) or ($0.07) per diluted share for the year 2010. The 2011 loss attributable to common shareholders represents a higher loss than was reported in 2010 primarily due to a decrease in net gains on sales of securities, fees incurred in connection with the terminated private placement offering and increased data processing fees. As we previously reported in February 2012, ECB mutually agreed to terminate its announced private placement of $79.7 million in common equity. This action resulted in the recognition in 2011 of certain costs and expenses related to the capital raise that totaled $1.7 million in the aggregate. This expense contributed significantly to the annual and three months reported loss ended December 31, 2011.

For the three months ended December 31, 2011, the net loss totaled ($1,612,000), or a (43.4%) increase in net loss from the ($1,124,000) in net loss for the three months ended December 31, 2010. 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, 2011 was ($1,878,000) or ($0.66) per diluted share, an increase in net loss of (35.1%) compared to the loss of ($1,390,000) or ($0.49) per diluted share for the three months ended December 31, 2010.

Other Financial Highlights include:

  • Consolidated assets increased .2% to $921,277,000 at December 31, 2011 from $919,869,000 at December 31, 2010.
  • Loans decreased (12.5%) to $496,542,000 at December 31, 2011 compared to $567,631,000 at December 31, 2010.
  • Deposits increased 1.5% to $797,645,000 at December 31, 2011 from $785,941,000 at December 31, 2010.
  • Net interest income decreased (3.4%) to $26,971,000 for the twelve months ended December 31, 2011 from $27,919,000 for the same period a year ago.
  • Total interest expense for the twelve months ending December 31, 2011 declined (15.0%) to $10,106,000 from $11,888,000 for the same period in 2010.
  • Non-interest income for the twelve months ended December 31, 2011 net of securities gains was $6,169,000, a decrease of (4.9%) compared to $6,487,000 of non-interest income net of securities gains for the same period in 2010.
  • Provision for loan losses charged to operations for the twelve months ended December 31, 2011 totaled $8,483,000, a decrease of (34.6%) compared to the $12,980,000 provision charged to operations for the same period in 2010.

Dwight Utz, President and Chief Executive Officer, stated: “2011 was an important year in implementing some key structural changes to our organization. We completed the conversion of our core operating system, expanded our Enterprise Risk function, enhanced our loan loss modeling process and established a Customer Care Center to enhance our overall customer service contact points. Our Board of Directors and leadership team were disappointed that our efforts to enhance the Bank’s capital position through an agreed upon private placement of $79.7 million in common equity was unsuccessful because the regulatory approvals required to complete the private placement offering had not been received by all of the investors as of the termination date. As you know this also resulted in the termination of our acquisition of all deposits and selected assets associated with seven Gateway branches, predominately in the Raleigh/Chapel Hill MSA.”

Mr. Utz concluded: “With these issues addressed early this year, we expect 2012 to be a transitional year for ECB as we continue to build on our improved banking platform and look forward to the return of more normalized earnings and credit quality. It is important to confirm that our Company is well capitalized. Our Board of Directors and leadership team remain committed to the long-term success of our Company.”

Thomas M. Crowder, Executive Vice President and Chief Financial Officer, stated: “We expect rates to continue to remain low for the rest of 2012 and continue to see our cost of funding decline as we move through the first half of 2012. This should assist us in continuing to expand our Net Interest Margin to more normal levels in 2012.”

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 NYSE-Amex 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. 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, 2011 and 2010
(Dollars in thousands, except per share data)
 
 
      December 31,       December 31,
2011* 2010*
Assets
Non-interest bearing deposits and cash $18,363 $11,731
Interest-bearing deposits 63 20
Overnight investments 6,305   8,415  
Total cash and cash equivalents 24,731   20,166  
 
Investment securities

Available-for-sale, at market value (cost of $338,685 and $275,883 at December 31, 2011 and 2010, respectively)
339,450 273,229
 
Loans held for sale 2,866 4,136
 
Loans 496,542 567,631
Allowance for loan losses (12,092 ) (13,247 )
Loans, net 484,450   554,384  
 
Real estate and repossessions acquired in settlement of loans, net 6,573 4,536
Federal Home Loan Bank common stock, at cost 3,456 4,571
Bank premises and equipment, net 26,289 26,636
Accrued interest receivable 5,308 5,243
Bank owned life insurance 11,778 8,954
Other assets 16,376   18,014  
Total $921,277   $919,869  
 
Liabilities and Shareholders' equity
Deposits
Demand, non-interest-bearing $135,732 $104,932
Demand, interest-bearing 270,119 262,977
Savings 55,517 29,938
Time 336,277   388,094  
Total deposits 797,645   785,941  
 
Accrued interest payable 519 631
Short-term borrowings 11,679 11,509
Long-term obligations 25,500 34,500
Other liabilities 5,491   6,394  
Total liabilities 840,834   838,975  
 
Shareholders' equity
Preferred stock, Series A 17,454 17,288
Common stock, par value $3.50 per share 9,974 9,974
Capital surplus 25,873 25,852
Warrant 878 878
Retained earnings 25,926 28,554
Accumulated other comprehensive income (loss) 338   (1,652 )
Total shareholders' equity 80,443   80,894  
Total $921,277   $919,869  
 
Common shares outstanding 2,849,841 2,849,841
Common shares authorized ($3.50 par value) 50,000,000 10,000,000
Preferred shares outstanding 17,949 17,949
Preferred shares authorized 2,000,000 2,000,000
Non-voting common shares authorized 2,000,000 -
 
 
 
* Derived from audited consolidated financial statements.
 
 
ECB BANCORP, INC. AND SUBSIDIARY
Consolidated Results of Operations

For the three and twelve months ended December 31, 2011 and 2010
(Dollars in thousands, except per share data)
 
 
    Three months ended     Twelve months ended
December 31, December 31,
2011     2010 2011*     2010*
Interest income:
Interest and fees on loans $6,870 $7,683 $28,652 $30,745
Interest on investment securities:
Interest exempt from federal income taxes 134 204 485 1,541
Taxable interest income 1,801 1,945 7,862 7,464
Dividend income 7 4 34 44
Other interest income 6   4   44   13  
Total interest income 8,818   9,840   37,077   39,807  
Interest expense:
Deposits:
Demand accounts 400 482 1,973 1,527
Savings 98 39 310 91
Time 1,573 2,144 6,925 9,392
Short-term borrowings 69 58 284 241
Long-term obligations 143   203   614   637  
Total interest expense 2,283   2,926   10,106   11,888  
 
Net interest income 6,535 6,914 26,971 27,919
Provision for loan losses 2,252   4,337   8,483   12,980  
Net interest income after provision for loan losses 4,283   2,577   18,488   14,939  
 
Noninterest income:
Service charges on deposit accounts 833 860 3,262 3,418
Other service charges and fees 241 251 1,225 1,419
Mortgage origination fees 267 427 1,300 1,283
Net gain on sale of securities 749 2,037 2,631 5,508
Income from bank owned life insurance 102 74 324 297
Other operating (expense) income 70   12   58   70  
Total noninterest income 2,262   3,661   8,800   11,995  
 
Noninterest expenses:
Salaries 2,742 2,639 10,869 9,832
Retirement and other employee benefits 716 742 2,814 2,924
Occupancy 508 492 2,041 1,876
Equipment 551 618 2,173 2,160
Professional fees 604 250 1,386 936
Supplies 60 56 238 221
Communications/Data lines 173 176 710 663
FDIC insurance 178 412 941 1,445
Other outside services 165 177 602 528

Net cost of real estate and repossessions acquired in settlement of loans
696 611 1,438 1,104
Contract early termination fees - 1,141 - 1,141
Securities purchase agreement termination fees 1,686 - 1,686 -
Data processing and related expenses 501 76 1,062 295
Other operating expenses 836   917   3,896   3,715  
Total noninterest expenses 9,416   8,307   29,856   26,840  
(Loss) income before income taxes (2,871 ) (2,069 ) (2,568 ) 94
Income tax benefit (1,259 ) (945 ) (1,544 ) (766 )
Net income (loss) (1,612 ) (1,124 ) (1,024 ) 860  
Preferred stock dividends 224 224 897 897
Accretion of discount 42   42   166   166  
Loss available to common shareholders ($1,878 ) ($1,390 ) ($2,087 ) ($203 )
 
Net loss per share - basic ($0.66 ) ($0.49 ) ($0.73 ) ($0.07 )
Net loss per share - diluted ($0.66 ) ($0.49 ) ($0.73 ) ($0.07 )
Weighted average shares outstanding - basic 2,849,841   2,849,841   2,849,841   2,849,594  
Weighted average shares outstanding - diluted 2,849,841   2,849,841   2,849,841   2,849,594  
 
 
* Derived from audited consolidated financial statements.
 
 
ECB Bancorp, Inc.
Supplemental Quarterly Financial Data (Unaudited)
(Dollars in thousands, except per share data)
 
 
    12/31/2011     9/30/2011     6/30/2011     3/31/2011     12/31/2010
Income Statement Data:
Interest income $ 8,818 $ 9,189 $ 9,632 $ 9,438 $ 9,840
Interest expense   2,283     2,566     2,587     2,670     2,926  
Net interest income 6,535 6,623 7,045 6,768 6,914
Provision for loan losses 2,252 1,028 1,273 3,930 4,337
Net after provision expense 4,283 5,595 5,772 2,838 2,577
Noninterest income 2,262 2,568 2,539 1,431 3,661
Noninterest expense 9,416 7,539 6,657 6,244 8,307
Income (loss) before income taxes (2,871 ) 624 1,654 (1,975 ) (2,069 )
Income tax expense (benefit)   (1,259 )   97     509     (891 )   (945 )
Net income (loss) (1,612 ) 527 1,145 (1,084 ) (1,124 )
Preferred stock dividend & accretion of discount   266     267     265     265     266  
Net income (loss) available to common shareholders $ (1,878 ) $ 260   $ 880   $ (1,349 ) $ (1,390 )
 
Per Share Data and Shares Outstanding:
Net income - basic $ (0.66 ) $ 0.09 $ 0.31 $ (0.47 ) $ (0.49 )
Net income - diluted (0.66 ) 0.09 0.31 (0.47 ) (0.49 )
Cash dividends 0.05 - 0.07 0.07 0.07
Book value at period end 22.10 23.10 22.79 21.71 22.32
Dividend payout ratio -7.58 % 0.00 % 22.58 % -14.89 % -14.29 %

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 $ 921,277 $ 923,695 $ 941,463 $ 916,571 $ 919,869
Loans - gross 496,542 521,626 542,687 546,641 567,631
Allowance for loan losses 12,092 12,214 15,448 15,219 13,247
Investment securities 339,450 327,066 298,116 304,975 273,229
Interest earning assets 848,682 858,914 880,814 856,840 858,002
Premises and equipment, net 26,289 26,137 26,740 26,716 26,636
Total deposits 797,645 796,609 812,774 786,754 785,941
Short-term borrowings 11,679 13,528 13,711 17,421 11,509
Long-term obligations 25,500 25,500 27,500 27,500 34,500
Shareholders' equity 80,443 83,248 82,320 79,213 80,894
 
Selected Performance Ratios (annualized):
Return on average assets -0.70 % 0.22 % 0.49 % -0.48 % -0.48 %
Return on average shareholders' equity -7.85 % 2.56 % 5.71 % -5.38 % -5.15 %
Net interest margin 3.10 % 3.06 % 3.35 % 3.30 % 3.23 %
Efficiency ratio 105.3 % 81.0 % 68.6 % 75.0 % 77.3 %
 
Asset Quality Ratios:
Nonperforming loans to period-end loans 5.15 % 5.49 % 4.65 % 4.04 % 3.89 %
Allowance for loan losses to period-end loans 2.44 % 2.34 % 2.85 % 2.78 % 2.33 %
Allowance for loan losses to nonperforming loans 47.3 % 42.7 % 61.3 % 68.9 % 60.0 %
Net charge-offs to average loans (annualized) 1.85 % 3.18 % 0.77 % 1.40 % 2.99 %
 
Capital Ratios:
Tangible equity to total assets 6.84 % 7.13 % 6.90 % 6.75 % 6.91 %
Equity-to-assets ratio 8.73 % 9.01 % 8.74 % 8.64 % 8.79 %
Leverage Capital Ratio 8.25 % 8.34 % 8.39 % 8.42 % 8.66 %
Tier 1 Capital Ratio 12.59 % 12.59 % 12.20 % 11.97 % 12.08 %
Total Capital Ratio 13.85 % 13.85 % 13.46 % 13.24 % 13.34 %
 

Copyright Business Wire 2010

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