NewBridge Bancorp Reports 49% Increase In Net Income To $1.5 Million

NewBridge Bancorp ( NASDAQ: NBBC), parent of NewBridge Bank, today reported results for the three month period ended March 31, 2012.

For the three months ended March 31, 2012 net income totaled $1.5 million compared to $1.0 million for the quarter ended March 31, 2011. After dividends and accretion on preferred stock, the Company reported net income available to common shareholders of $781,000, or $0.05 per diluted share, for the quarter ended March 31, 2012, compared to $282,000, or $0.02 per diluted share, for the quarter ended March 31, 2011.

Pressley A. Ridgill, President and Chief Executive Officer of NewBridge Bancorp, commented: “It is satisfying to see year-over-year operating improvement, resulting in nearly a 50% increase in net income. The positive trends include core deposit growth that exceeds our expectations, and allows us to maintain a strong and stable net interest margin that averaged 4.15% for the first quarter. Classified loans continue to decline resulting in a lower provision for credit losses that fell 43% or $2.6 million from last year’s first quarter. Mortgage and Wealth Management revenues continue to climb, while at the same time nearly $1 million of annual operating expenses have been eliminated from these two areas. Finally, our on-going focus on lowering controllable costs resulted in non-interest expense declining $793,000, or 6%, from the prior year first quarter.”

Net interest income

Despite some encouraging economic trends, soft loan demand continues to adversely affect the Company’s main source of revenue, interest income. Net interest income declined $1.2 million, or 6.9%, to $16.2 million for the quarter compared to $17.4 million a year ago. The Company’s net interest margin remained strong at 4.15% for the quarter ended March 31, 2012, declining 13 basis points from the prior year. However average loan balances declined $144.0 million, or 10.8%, over the same period. This resulted in a $2.3 million decline in interest income from loans. Interest income on investments declined 2.2%, or $80,000, due primarily to a 77 basis point decline in the average investment yield to 4.08% in the quarter ended March 31, 2012, compared to 4.85% in the same period a year ago. The decline in interest income from loans and investments was partially offset by lower interest expense on interest bearing liabilities, which fell by $1.2 million for the quarter ending March 31, 2012, compared to the prior year. This reduction in interest expense is reflected in the lower cost of interest bearing liabilities which fell 29 basis points from the prior year.

Balance Sheet

Total assets increased $11.4 million during the quarter to $1.75 billion at March 31, 2012. Loan balances declined $26.4 million to $1.17 billion during the quarter in spite of new commercial loan originations of $43.2 million, which included strong production at the recently opened Raleigh loan production office. Cash flow from loans and deposit growth was used to purchase investment securities, which increased $57.1 million during the quarter to $394.9 million. The Company had a net unrealized gain in its investment portfolio at March 31, 2012 of $5.5 million. At March 31, 2012, the weighted average duration of the investment portfolio was 3.38 years and the weighted average yield was 4.08%.

Total deposits increased $30.5 million during the quarter to $1.45 billion. Core deposits, defined as noninterest bearing demand accounts, savings, NOW and money market deposit accounts, increased 5.6%, or $57.8 million, but were partially offset by a $27.2 million decline in time deposits. Time deposits totaled $366.1 million at quarter end and represented 25% of the Company’s total deposits. Non-interest bearing deposits increased $38.9 million to $211.2 million at March 31, 2012, however a large percentage of this increase is expected to be of a temporary nature. The weighted average cost of interest bearing deposits was 0.56% during the quarter ended March 31, 2012.

Shareholders’ equity increased $3.7 million during the quarter to $167.0 million. This improvement was the result of a $2.9 million increase in comprehensive income from changes in the value of investment securities, as well as a $781,000 increase in retained earnings as a result of quarterly earnings. Tangible book value increased $0.24 during the quarter to $7.09 per share at March 31, 2012.

Noninterest Income

For the quarter ending March 31, 2012, non-interest operating income, which excludes gains and losses on sales of securities and other real estate owned (“OREO”), totaled $4.0 million or $51,000 less than non-interest operating income from the prior year period. Retail banking revenue declined $246,000 from a year ago to $2.3 million for the quarter ended March 31, 2012, however this decline was largely offset by higher mortgage and wealth management revenues, which increased $138,000 and $48,000, respectively.

Losses on the sale and write-down of OREO declined by $478,000 to $1.0 million for the quarter ended March 31, 2012, from $1.5 million for the quarter ended March 31, 2011.

There were no gains from sales of investments during the quarter ended March 31, 2012, compared to gains of $2.0 million during the quarter ended March 31, 2011.

Noninterest Expense

Noninterest expense declined $793,000, or 5.5%, to $13.6 million for the quarter just ended compared to $14.4 million for the prior year’s first quarter. The lower noninterest expense was due in large part to management’s on-going efforts to reduce controllable expense. Since the Company was formed in a merger of equals in 2007, approximately $16.5 million of annual expense has been eliminated.

Asset Quality

Total classified loans decreased 7.4%, or $9.5 million, during the quarter ended March 31, 2012, and 30%, or $51.1 million, since the peak level in September 2010. As a percentage of Tier 1 capital plus reserves, total classified assets declined to 72% at March 31, 2012, from 78% at December 31, 2011, and 93% at their peak level at September 30, 2010. Nonperforming loans increased 7.8%, or $3.2 million, during the quarter. This increase was due primarily to slower than usual movement of property into OREO during the latter part of the quarter. Since the peak level, nonperforming loans have declined 31.8%, or $20.4 million, from $64.1 million at June 30, 2009. Nonperforming loans represent 3.72% of total loans held for investment. OREO decreased $555,000 during the quarter to $30.0 million. Including OREO, total nonperforming assets increased $2.6 million to $73.7 million, or 4.22% of total assets, at March 31, 2012. The average duration that property is held in OREO is 17 months. Troubled debt restructured loans totaled $15.7 million of the $43.7 million of nonperforming loans at March 31, 2012. Accruing restructured loans totaled $6.6 million and non-accruing restructured loans totaled $9.1 million. The Company evaluates all troubled debt restructured loans at the time of the restructuring for impairment, which typically results in the asset being moved to non-accrual. The Company’s highest risk and most closely monitored nonperforming assets are non-accruing loans excluding troubled debt restructures. These loans totaled $27.9 million at March 31, 2012, down $28.3 million, or 50.3%, since their peak level at June 30, 2009. Total classified loans crested later than many of the Company’s other credit metrics, rising until the September quarter of 2010. Over the last six quarters, classified loans declined 24.8%, or $39.3 million.

The allowance for credit losses totaled $27.9 million at March 31, 2012, or 2.38% of loans held for investment. The Company’s allowance for credit losses as a percentage of nonperforming loans (the “coverage percentage”) totaled 63.9% at March 31, 2012, compared to 71.2% at December 31, 2011 and 58.1% at March 31, 2011. The Company’s allowance for credit losses consists of general reserves totaling 83.7%, and specific reserves of 16.3%. The majority of current estimated losses from the Company’s nonperforming loans have been previously recognized through charge-offs. Consequently, the Company’s allowance for credit losses is generally applicable to inherent losses within the Company’s watch list and other performing loans portfolio. Since the current adverse credit cycle began in 2007, the Company has charged off $145.1 million of loans and OREO, or 9.0% of our highest/peak level of loan balances.

The Company is well within the regulatory commercial real estate high concentration guidelines in land acquisition, development and construction (the “AD&C portfolio”) loans as well as total commercial real estate loans. At March 31, 2012, the Company’s concentration levels were 36.84% and 95.43%, respectively, of total regulatory capital which compares favorably to the interagency regulatory guidance maximum concentrations of 100% and 300%, respectively. The AD&C portfolio totaled $63 million at March 31, 2012, including $34 million of speculative residential construction and residential acquisition and development loans. This portfolio is largely graded as classified loans.

Non-GAAP Financial Information

In addition to results presented in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release includes non-GAAP financial measures such as the operating efficiency percentage and pre-tax, pre-securities gains and pre-credit related operating income. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in understanding its underlying performance, business, and performance trends and such measures help facilitate performance comparisons with others in the banking industry. Non-GAAP measures have inherent limitations, are not required to be uniformly applied, and are not audited. Readers should be aware of these limitations and should be cautious in their use of such measures. To mitigate these limitations, the Company has procedures in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and to ensure that its performance is properly reflected to facilitate consistent period-to-period comparisons. Although management believes the above non-GAAP financial measures enhance investors’ understanding of the Company’s business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures.

Please refer to the Non-GAAP Measures section later in this release for additional information.

About NewBridge Bancorp

NewBridge Bancorp is the parent company of NewBridge Bank, a full service, state chartered community bank headquartered in Greensboro, North Carolina. The stock of NewBridge Bancorp trades on the NASDAQ Global Select Market under the symbol “NBBC”.

As one of the largest community banks in the state, NewBridge Bank serves small to midsize businesses, professionals and consumers with a comprehensive array of financial services, including retail and commercial banking, private banking, wealth management, and mortgage banking. NewBridge Bank has assets of approximately $1.7 billion with 30 banking offices in North Carolina.

Disclosures About Forward Looking Statements

The discussions included in this document and its exhibits may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. For the purposes of these discussions, any statements that are not statements of historical fact may be deemed to be forward looking statements. Such statements are often characterized by the use of qualifying words such as “expects,” “anticipates,” “believes,” “estimates,” “plans,” “projects,” or other statements concerning opinions or judgments of the Company and its management about future events. The accuracy of such forward looking statements could be affected by factors including, but not limited to, the financial success or changing conditions or strategies of NewBridge Bancorp’s customers or vendors, fluctuations in interest rates, actions of government regulators, the availability of capital and personnel or general economic conditions. Additional factors that could cause actual results to differ materially from those anticipated by forward looking statements are discussed in the Company’s filings with the Securities and Exchange Commission, including without limitation its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. NewBridge Bancorp undertakes no obligation to revise or update these statements following the date of this press release.

FINANCIAL SUMMARY
           
 
Three Months Ended March 31, 2012 Three Months Ended March 31, 2011
Average Interest Income/ Average Yield/ Average Interest Income/ Average Yield/
Balance Expense Rate Balance Expense Rate
(Fully taxable equivalent basis, dollars in thousands)
Earning Assets
Loans receivable $ 1,191,042 $ 14,922 5.04 % $ 1,335,001 $ 17,236 5.24 %
Investment securities 362,766 3,681 4.08 % 314,394 3,756 4.85 %
Other earning assets   23,978   15 0.25 %   7,579   4 0.21 %
Total Earning Assets 1,577,786 18,618 4.75 % 1,656,974 20,996 5.14 %
Non-Earning Assets   158,397   146,709
Total Assets $ 1,736,183 18,618 $ 1,803,683 20,996
 
Interest-Bearing Liabilities
Deposits $ 1,244,232 1,744 0.56 % $ 1,270,805 2,687 0.86 %
Borrowings   120,808   606 2.02 %   186,886   840 1.82 %
Total Interest-Bearing Liabilities 1,365,040 2,350 0.69 % 1,457,691 3,527 0.98 %
Noninterest-bearing deposits 184,347 163,633
Other liabilities 20,529 17,121
Shareholders' equity   166,267   165,238
Total Liabilities and
Shareholders' Equity $ 1,736,183   2,350 $ 1,803,683   3,527
Net Interest Income $ 16,268 $ 17,469
Net Interest Margin 4.15 % 4.28 %
Interest Rate Spread 4.06 % 4.16 %

FINANCIAL SUMMARY
   
 
2012 2011
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
Period-End Balances
(Dollars in thousands)
Assets $ 1,745,968 $ 1,734,564 $ 1,702,660 $ 1,738,559 $ 1,784,383
Loans held for investment 1,173,671 1,200,070 1,217,058 1,244,288 1,254,630
Loans held for sale 7,676 7,851 6,894 2,754 77,584
Investment securities 394,904 337,811 295,461 292,898 276,458
Earning assets 1,581,981 1,572,095 1,549,932 1,593,857 1,617,735
Noninterest-bearing deposits 211,246 172,351 167,689 161,703 165,534
Savings deposits 44,118 40,876 40,097 40,937 41,510
NOW accounts 444,439 441,292 423,258 423,445 445,455
Money market accounts 383,256 370,773 363,340 365,109 336,784
Time deposits 366,135 393,384 401,287 435,895 466,013
Interest-bearing liabilities 1,348,722 1,379,799 1,347,756 1,354,956 1,439,236
Shareholders' equity 167,046 163,387 167,278 166,701 164,116
 
Asset Quality Data
(Dollars in thousands)
Nonperforming loans:
Commercial nonaccrual loans, not restructured $ 17,905 $ 15,773 $ 17,477 $ 17,839 $ 18,528
Commercial nonaccrual loans which
have been restructured 8,116 7,489 9,870 11,042 12,215
Non-commercial nonaccrual loans 10,038 9,569 8,789 10,075 10,997
Non-commercial nonaccrual loans which
have been restructured   990   283   133   308   683
Total nonaccrual loans 37,049 33,114 36,269 39,264 42,423
Loans past due 90 days or more and
still accruing 29 14 26 65 32
Accruing restructured loans   6,633   7,406   7,167   8,351   7,531
Total nonperforming loans 43,711 40,534 43,462 47,680 49,986
Other real estate owned   30,032   30,587   26,469   25,729   26,329
Total nonperforming assets $ 73,743 $ 71,121 $ 69,931 $ 73,409 $ 76,315
Restructured loans, performing 3,101 4,888 4,577 0 0
Net chargeoffs 4,369 3,153 3,736 4,037 5,768
Allowance for credit losses 27,918 28,844 27,750 28,040 29,057
Allowance for credit losses to total loans 2.38 % 2.40 % 2.28 % 2.25 % 2.32 %
Nonperforming loans to loans held for investment 3.72 3.38 3.57 3.83 3.98
Nonperforming assets to total assets 4.22 4.10 4.11 4.22 4.28
Nonperforming loans to total assets 2.50 2.34 2.55 2.74 2.80
Net charge-off percentage (annualized) 1.48 1.03 1.20 1.25 1.75
Allowance for credit losses to nonperforming loans 63.87 71.16 63.85 58.81 58.13
 
Loans identified as impaired $ 35,043 $ 32,591 $ 33,827 $ 37,483 $ 36,497
Other nonperforming loans   8,668   7,943   9,635   10,197   13,489
Total nonperforming loans 43,711 40,534 43,462 47,680 49,986
Performing classified loans   75,282   87,959   92,327   95,500   95,424
Total classified loans $ 118,993 $ 128,493 $ 135,789 $ 143,180 $ 145,410
 
Gross loan chargeoffs, and writedowns and losses
on other real estate owned to peak loans
during the credit cycle beginning January 1, 2007:   2007   2008   2009   2010   2011   2012 TOTAL
Gross loan chargeoffs
Commercial $ 5,052 $ 5,046 $ 11,232 $ 9,052 $ 5,045 $ 1,335 $ 36,762
Real estate - construction 825 7,339 12,227 5,379 3,985 848 30,603
Real estate - mortgage 1,300 5,012 10,110 7,260 6,822 2,368 32,872
Consumer 2,235 5,071 4,925 2,829 1,358 223 16,641
Other   0   0   0   6,200   1,387   60   7,647
Total gross loan chargeoffs $ 9,412 $ 22,468 $ 38,494 $ 30,720 $ 18,597 $ 4,834 $ 124,525
Other real estate owned writedowns and losses   4,001   3,571   1,294   5,508   5,238   1,008   20,620
Total chargeoffs, writedowns and losses $ 13,413 $ 26,039 $ 39,788 $ 36,228 $ 23,835 $ 5,842 $ 145,145
 
Peak loans at September 30, 2008 $ 1,626,504
Chargeoffs, writedowns and losses to peak loans 8.92 %

FINANCIAL SUMMARY
 
Three Months Ended March 31
 
2012 2011
Income Statement Data
(Dollars in thousands, except share data)
Interest income:
Loans $ 14,922 $ 17,236
Investment securities 3,585 3,665
Other   15     4  
Total interest income 18,522 20,905
Interest expense:
Deposits 1,744 2,687
Borrowings from the FHLB 259 348
Other   347     492  
Total interest expense   2,350     3,527  
Net interest income 16,172 17,378
Provision for credit losses   3,443     6,073  
Net interest income after provision for credit losses 12,729 11,305
Noninterest income:
Retail Banking 2,254 2,500
Mortgage banking services 563 425
Wealth management services 594 546
Gain on sale of investment securities 0 1,961
Writedowns and loss on sale of real estate
acquired in settlement of loans (1,008 ) (1,486 )
Bank-owned life insurance 467 408
Other   130     180  
Total noninterest income 3,000 4,534
Noninterest expense
Personnel 7,061 7,290
Occupancy 1,004 1,043
Furniture and equipment 778 964
Technology and data processing 1,020 983
Legal and professional 671 625
FDIC insurance 441 795
Real estate acquired in settlement of loans 318 389
Other   2,308     2,305  
Total noninterest expense   13,601     14,394  
Income (loss) before income taxes 2,128 1,445
Income taxes   617     433  
Net income (loss) 1,511 1,012
Dividends and accretion on preferred stock   (730 )   (730 )
Net income (loss) available to common shareholders $ 781   $ 282  
Net income (loss) per share - basic $ 0.05 $ 0.02
Net income (loss) per share - diluted $ 0.05 $ 0.02
 
Other Data
 
Return on average assets 0.35 % 0.23 %
Return on average equity 3.66 2.48
Net yield on earning assets 4.15 4.28
Efficiency (excluding OREO items and securities gains) 65.82 65.33
Average loans to assets 68.60 74.02
Average loans to deposits 83.37 93.07
Average noninterest - bearing deposits
to total deposits 12.90 11.41
Average equity to assets 9.58 9.16
Total capital as a percentage of total risk weighted assets 14.45 14.04
Tangible common equity as a percentage
of total risk weighted assets 8.02 7.74

INVESTMENT PORTFOLIO
     
(Dollars in thousands) As of March 31, 2012
  Amortized Gross Gross Estimated Average Average
Cost Unrealized gain Unrealized loss Fair value Yield (%) Duration (years)
US Agency $35,992 $130 ($53) $36,069 2.26 % 2.24
Mortgage backed securities 29,389 2,742 - 32,131 5.24 2.93
Collateralized mortgage obligations 21,603 137 (198) 21,542 5.61 2.27
Commercial mortgage backed securities 51,197 758 (183) 51,772 3.50 3.99
Covered bonds 66,302 2,063 - 68,365 4.22 2.88
Corporate bonds 152,561 1,475 (2,182) 151,854 3.88 3.67
Municipal obligations 19,355 569 (163) 19,761 6.37 * 5.46
Federal Home Loan Bank stock 7,185 - - 7,185
Other 5,775 450 - 6,225
Total $389,359 $8,324 ($2,779) $394,904 4.08 3.38

COMMON STOCK DATA
         
 
 
2012 2011
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
 
Market value:
End of period $4.79 $3.87 $3.90 $4.58 $4.96
High 4.91 4.20 4.99 5.13 5.50
Low 3.71 3.30 3.53 4.21 4.54
Book value 7.32 7.09 7.34 7.30 7.14
Tangible book value 7.09 6.85 7.09 7.04 6.86
Average shares outstanding 15,655,868 15,655,868 15,655,868 15,655,868 15,655,868
Average diluted shares outstanding 16,299,152 16,163,509 16,467,550 16,521,391 16,697,944

NON-GAAP MEASURES
     
 
Pre-tax, pre-securities gains and
pre-credit related operating income
Three Months Ended March 31, 2012 Three Months Ended March 31, 2011
 
Net income $ 1,511 $ 1,012
Income taxes 617 433
Less gain on sale of investment securities - (1,961 )
Real estate acquired in settlement of loans expense 318 389
Writedowns and loss on sale of real estate
acquired in settlement of loans 1,008 1,486
Provision for credit losses   3,443     6,073  
Pre-tax, pre-securities gains and
pre-credit related operating income $ 6,897   $ 7,432  
 
 
Operating efficiency percentage
Three Months Ended March 31, 2012 Three Months Ended March 31, 2011
 
Total noninterest expense $ 13,601 $ 14,394
Less real estate acquired in settlement of loans expense   (318 )   (389 )
Numerator for calculation of operating efficiency (A) $ 13,283   $ 14,005  
 
Net interest income $ 16,172 17,378
Total noninterest income 3,000 4,534
Less gain on sale of investment securities - (1,961 )
Writedowns and loss on sale of real estate
acquired in settlement of loans   1,008     1,486  
Denominator for calculation of operating efficiency (B) $ 20,180   $ 21,437  
 
Operating efficiency percentage (A/B) 65.82 % 65.33 %

Copyright Business Wire 2010

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