ECB Bancorp, Inc. Reports 2012 Second Quarter Results

ECB Bancorp, Inc. (NYSE-Amex:ECBE) (“ECB” or the “Company”) today reported its financial results for the three and six months ended June 30, 2012.

2012 Second Quarter Financial Highlights

For the three months ended June 30, 2012, net income totaled $588,000 compared to net income of $1,145,000 for the three months ended June 30, 2011. After adjustments for $266,000 in TARP preferred stock dividends and the accretion of warrant discount, net income available to common shareholders for the three months ended June 30, 2012 was $322,000 or $0.11 per diluted share compared to net income of $880,000 or $0.31 per diluted share for the three months ended June 30, 2011. For the six months ended June 30, 2012 net income totaled $965,000 compared to $61,000 for the six months ended June 30, 2011. Income available to common shareholders was $434,000 or $0.15 per diluted share compared to a net loss of ($469,000) or ($0.16) per share for the six months ended June 30, 2011.

Other Financial Highlights include:
  • Consolidated assets increased 2.5% or $22,989,000 to $944,266,000 at June 30, 2012 from $921,277,000 at December 31, 2011.
  • Loans increased 1.9% or $9,715,000 to $506,257,000 at June 30, 2012 from $496,542,000 at December 31, 2011.
  • Deposits decreased (0.2%) to $795,488,000 at June 30, 2012 from $797,645,000 at December 31, 2011.
  • Net interest income increased 2.0% to $6,658,000 for the three months ended June 30, 2012 from $6,528,000 for the previous three-month period ending March 31, 2012.

The provision for loan loss totaled $866,000 for the three months ended June 30, 2012 down (31.9%) from $1,273,000 for the same period in 2011. Year to date loan loss provision as of June 30, 2012 totaled $866,000 down (83.3%) from $5,203,000 for the six months ended June 30, 2011. The decrease for the three and six month periods reflects the decrease in total loans outstanding, reduced charge-off levels for the six month period, and adjustments for loan loss migrations within the portfolio as previously announced.

A. Dwight Utz, President and Chief Executive Officer, stated, “Based on various indicators during the second quarter, we expect 2012 to be a transitional year that moves ECB towards more consistent earnings performance. Although we continue to see pressure from a low and flat interest rate environment, our loan portfolio has begun to show some growth. We are encouraged that a number of our small business clients are predicting growth in their earnings streams, particularly in our coastal markets where tourism drives growth.”

Thomas M. Crowder, Executive Vice President and Chief Financial Officer stated: “We have maintained our net interest margin while growing our balance sheet by $28 million during the quarter ended June 30, 2012. We continue to focus on enhancing the earnings in our investment portfolio, although the current interest rate environment makes this a difficult task. If we continue to experience a lower cost of funds and loan growth, we expect to maintain or even expand our net interest margin from its current 3.23% level during the second half of this year.”

Mr. Utz concluded, “As 2012 progresses, we believe we will be able to show improved earnings and modest growth from both a loan and asset perspective. ECB and our leadership team remain committed to becoming the pre-eminent community bank in eastern North Carolina.”

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 NYSE-Amex 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 2011 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 and Board of Directors 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 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.

See 3 pages of financial information attached
           
ECB BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
June 30, 2012, December 31, 2011 and June 30, 2011 (unaudited)
(Dollars in thousands, except per share data)
 
 
June 30, December 31, June 30,
  2012   2011*   2011  
Assets
Non-interest bearing deposits and cash $ 16,890 $ 18,363 $ 13,633
Interest bearing deposits 61 63 61
Overnight investments   7,670     6,305     34,475  
Total cash and cash equivalents   24,621     24,731     48,169  
 
Investment securities
Available-for-sale, at market value (cost of $346,271, $338,685
$297,407 at June 30, 2012, December 31, 2011 and June 30, 2011 respectively) 350,779 339,450 298,116
 
Loans held for sale 3,059 2,866 1,444
 
Loans 506,257 496,542 542,687
Allowance for loan losses   (10,780 )   (12,092 )   (15,448 )
Loans, net   495,477     484,450     527,239  
 
Real estate and repossessions acquired in settlement of loans, net 7,661 6,573 7,050
Federal Home Loan Bank common stock, at cost 3,899 3,456 4,032
Bank premises and equipment, net 26,111 26,289 26,740
Accrued interest receivable 5,030 5,308 4,507
Bank owned life insurance 11,981 11,778 9,102
Other assets   15,648     16,376     15,064  
Total $ 944,266   $ 921,277   $ 941,463  
 
Liabilities and Shareholders' equity
Deposits
Demand, noninterest bearing $ 146,326 $ 135,732 $ 123,672
Demand, interest bearing 305,298 270,119 262,259
Savings 58,562 55,517 41,520
Time   285,302     336,277     385,323  
Total deposits   795,488     797,645     812,774  
 
Accrued interest payable 469 519 648
Short-term borrowings 42,101 11,679 13,711
Long-term obligations 18,000 25,500 27,500
Other liabilities   4,948     5,491     4,510  
Total liabilities   861,006     840,834     859,143  
 
Shareholders' equity
Preferred stock, Series A 17,536 17,454 17,370
Common stock, par value $3.50 per share 9,974 9,974 9,974
Capital surplus 25,857 25,873 25,863
Warrants 878 878 878
Retained earnings 26,360 25,926 27,886
Accumulated other comprehensive income   2,655     338     349  
Total shareholders' equity   83,260     80,443     82,320  
Total $ 944,266   $ 921,277   $ 941,463  
 
Common shares outstanding 2,849,841 2,849,841 2,849,841
Common shares authorized 50,000,000 50,000,000 10,000,000
Preferred shares outstanding 17,949 17,949 17,949
Preferred shares authorized 2,000,000 2,000,000 2,000,000
Non-voting common shares authorized 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 six months ended June 30, 2012 and 2011 (unaudited)
(Dollars in thousands, except per share data)
 
Three months ended Six months ended
June 30, June 30,
2012 2011 2012 2011
Interest income:
Interest and fees on loans $6,404 $7,329 $12,773 $14,686
Interest on investment securities:
Interest exempt from federal income taxes 249 117 484 245
Taxable interest income 1,774 2,163 3,656 4,100
Dividend income 14 9 25 18
Other interest income 4 14 6 21
Total interest income 8,445 9,632 16,944 19,070
Interest expense:
Deposits:
Demand accounts 390 505 796 1,062
Savings 60 74 155 127
Time 1,166 1,790 2,436 3,601
Short-term borrowings 95 73 176 142
Long-term obligations 76 145 195 325
Total interest expense 1,787 2,587 3,758 5,257
 
Net interest income 6,658 7,045 13,186 13,813
Provision for loan losses 866 1,273 866 5,203
Net interest income after provision for loan losses 5,792 5,772 12,320 8,610
 
Noninterest income:
Service charges on deposit accounts 945 828 1,802 1,593
Other service charges and fees 518 330 847 574
Mortgage origination fees 376 452 782 778
Net gain on sale of securities 279 858 324 884
Income from bank owned life insurance 102 74 203 148
Other operating (expense) income 1 (3) 2 (7)
Total noninterest income 2,221 2,539 3,960 3,970
 
Noninterest expenses:
Salaries 2,865 2,826 5,784 5,390
Retirement and other employee benefits 815 784 1,918 1,460
Occupancy 518 522 1,048 1,005
Equipment 603 513 1,193 1,072
Professional fees 343 271 562 542
Supplies 41 78 115 129
Communications/Data lines 184 189 382 358
FDIC insurance 203 201 407 527
Other outside services 92 162 192 343
Data processing and related expenses 346 83 742 153

Net cost of real estate and repossessions acquired
in settlement of loans 463 79 1,147 97
Other operating expenses 784 949 1,685 1,825
Total noninterest expenses 7,257 6,657 15,175 12,901
Income (loss) before income taxes 756 1,654 1,105 (321)
Income tax expense (benefit) 168 509 140 (382)
Net income 588 1,145 965 61
Preferred stock dividends 225 224 449 448
Accretion of discount 41 41 82 82
Income (loss) available to common shareholders $322 $880 $434 ($469)
 
Net income (loss) per share - basic $0.11 $0.31 $0.15 ($0.16)
Net income (loss) per share - diluted $0.11 $0.31 $0.15 ($0.16)
Weighted average shares outstanding - basic 2,849,841 2,849,841 2,849,841 2,849,841
Weighted average shares outstanding - diluted 2,849,841 2,849,841 2,849,841 2,849,841
 
ECB Bancorp, Inc.
Supplemental Quarterly Financial Data (Unaudited)
  (Dollars in thousands, except per share data)
           
  6/30/2012     3/31/2012     12/31/2011     9/30/2011     6/30/2011  
Income Statement Data:
Interest income $ 8,445 $ 8,499 $ 8,818 $ 9,189 $ 9,632
Interest expense   1,787     1,971     2,283     2,566     2,587  
Net interest income 6,658 6,528 6,535 6,623 7,045
Provision for loan losses 866 - 2,252 1,028 1,273
Net after provision expense 5,792 6,528 4,283 5,595 5,772
Noninterest income 2,221 1,739 2,262 2,568 2,539
Noninterest expense 7,257 7,918 9,416 7,539 6,657
Income (loss) before income taxes 756 349 (2,871 ) 624 1,654
Income tax expense (benefit)   168     (28 )   (1,259 )   97     509  
Net income (loss) 588 377 (1,612 ) 527 1,145
Preferred stock dividend & accretion of discount   266     265     266     267     265  
Net income (loss) available to common shareholders $ 322   $ 112   $ (1,878 ) $ 260   $ 880  
 
Per Share Data and Shares Outstanding:
Net income - basic $ 0.11 $ 0.04 $ (0.66 ) $ 0.09 $ 0.31
Net income - diluted 0.11 0.04 (0.66 ) 0.09 0.31
Cash dividends - - 0.05 - 0.07
Book value at period end 23.06 22.34 22.10 23.10 22.79
Dividend payout ratio 0.00 % 0.00 % -7.58 % 0.00 % 22.58 %
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 $ 944,266 $ 916,274 $ 921,277 $ 923,695 $ 941,463
Loans - gross 506,257 491,383 496,542 521,626 542,687
Allowance for loan losses 10,780 11,385 12,092 12,214 15,448
Investment securities 350,779 348,810 339,450 327,066 298,116
Interest earning assets 871,725 847,893 848,682 858,914 880,814
Premises and equipment, net 26,111 26,286 26,289 26,137 26,740
Total deposits 795,488 772,597 797,645 796,609 812,774
Short-term borrowings 42,101 39,218 11,679 13,528 13,711
Long-term obligations 18,000 18,000 25,500 25,500 27,500
Shareholders' equity 83,260 81,168 80,443 83,248 82,320
 
Selected Performance Ratios (annualized):
Return on average assets 0.26 % 0.16 % -0.70 % 0.22 % 0.49 %
Return on average shareholders' equity 2.87 % 1.86 % -7.85 % 2.56 % 5.71 %
Net interest margin 3.23 % 3.22 % 3.10 % 3.06 % 3.35 %
Efficiency ratio 79.8 % 93.4 % 105.3 % 81.0 % 68.6 %
 
Asset Quality Ratios:
Non-accruing loans to period-end loans 3.60 % 3.82 % 3.08 % 3.98 % 3.37 %
Performing TDR's loans to period-end loans 2.06 % 2.34 % 2.07 % 1.51 % 1.27 %
Nonperforming loans to period-end loans 5.66 % 6.17 % 5.15 % 5.49 % 4.65 %
Allowance for loan losses to period-end loans 2.13 % 2.32 % 2.44 % 2.34 % 2.85 %
Allowance for loan losses to nonperforming loans 37.6 % 37.6 % 47.3 % 42.7 % 61.3 %
Net charge-offs to average loans (annualized) 1.18 % 0.57 % 1.85 % 3.18 % 0.77 %
 
Capital Ratios:
Tangible equity to total assets 6.96 % 6.95 % 6.84 % 7.13 % 6.90 %
Equity-to-assets ratio 8.82 % 8.86 % 8.73 % 9.01 % 8.74 %
Leverage Capital Ratio 8.25 % 8.23 % 8.25 % 8.34 % 8.39 %
Tier 1 Capital Ratio 12.09 % 12.39 % 12.59 % 12.59 % 12.20 %
Total Capital Ratio 13.35 % 13.65 % 13.85 % 13.85 % 13.46 %

Copyright Business Wire 2010

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