NewBridge Bancorp Reports Increased Earnings For March Quarter 2013

GREENSBORO, N.C., April 22, 2013 (GLOBE NEWSWIRE) -- NewBridge Bancorp (Nasdaq:NBBC) today reported a sharp increase in earnings for the quarter ended March 31, 2013 over the quarter ended March 31, 2012. Net income available to common shareholders totaled $4.0 million, compared to $781,000 reported in the first quarter of 2012. Earnings per diluted common share were $0.13, an increase of 160% over the same quarter last year.

"Our first quarter results are highlighted by substantially improved earnings, significantly enhanced asset quality, core organic loan growth and a stronger capital position," said Pressley A. Ridgill, President and Chief Executive Officer of NewBridge. "Each of these accomplishments was achieved due to critical strategic events in 2012. We concluded our asset disposition plan, which resulted in a $106 million reduction of adversely classified assets in 2012 and the reduction of our classified asset percentage from 77.6% at December 31, 2011 to 30.5% at year end. The percentage at March 31, 2013 continued to decline to 26.6%. The successful execution of this plan means that our core earnings are no longer burdened with high chargeoffs and other credit related costs. We also achieved the closing of a private offering of $56 million in new preferred equity, which was converted to common equity in February 2013. This enhanced capital provides us the necessary strength to pursue other strategic options. Finally, with the reduction of the classified asset burden and our added capital strength, we intensified our focus on solid, quality loan growth. We invested in experienced commercial banking teams in Charlotte and Raleigh, the two largest banking markets in North Carolina. We also expanded lending activities within our legacy branch footprint. In the first quarter, loans held for investment increased $14.5 million, an annualized loan growth rate of 5%. Core retained loans increased $72 million over the last twelve months. A large portion of this growth came from our Charlotte and Raleigh market teams."

March Quarter 2013 Performance Highlights.

  • Net income for the first quarter was $4.7 million, an increase of 213% over the prior year's first quarter.
  • Net interest income declined 6.9% or $1.1 million.
  • Provision for credit losses declined 72% or $2.5 million.
  • Noninterest income, excluding gain on sale of investment securities, increased 53.0% or $1.6 million.
  • Noninterest expense increased 4.0% or $544,000.
  • Efficiency percentage was 71.2% for the quarter compared to 70.9% for the first quarter of 2012.
  • Asset quality continued to improve.
  • Nonperforming assets declined $2.5 million, or 9.4%, from the 2012 year end to $24.2 million.
  • Allowance for credit losses was $26.1 million, a decrease of 2.1% from 2012 year end, while the percentage of the allowance to nonperforming loans increased 9.6% to 134.27%.
  • Loans held for investment increased 5% (on an annualized basis) compared to the total at December 31, 2012.
  • Core retained loans increased $72.3 million, or 6.85% over the prior year's first quarter.
  • Charlotte and Raleigh markets were responsible for a large portion of this net growth.
  • Low-cost core deposits grew; however, loan yields continued to decline, resulting in continued pressure on the net interest margin.
  • Funding mix continued to improve as low-cost core deposits grew $13.3 million from the 2012 year end and represented 75% of total deposits at March 31, 2013.
  • Deposit costs declined to 0.28%, down 3 basis points from the fourth quarter of 2012.
  • Loan yields were down 11 basis points to 4.66% from the fourth quarter of 2012.
  • Net interest margin remained strong at 3.92%, increasing 1 basis point from the December 31, 2012 quarter.
  • Capital levels increased.
  • Already solid capital levels were enhanced by the fourth quarter 2012 equity raise of $56 million, all of which was converted into common equity in the 2013 first quarter.
  • Tangible common equity increased to 8.5% of tangible assets.
  • Tier 1 risk-based capital increased to 15.59%.
  • Leverage capital increased to 12.48%.
  • Total risk-based capital increased to 16.88%.

Net Interest Income

Net interest income declined $1.1 million to $15.1 million for the first quarter compared to the first quarter of 2012. This result was due primarily to a compression of our net interest margin, which declined 23 basis points to 3.92%. Liability costs were reduced 25 basis points; however, earning asset yields fell 48 basis points from the prior year's first quarter. In particular, investment yields declined 0.88% to 3.18% during the quarter due to the sustained low interest rate environment and our intention of keeping the investment portfolio at a relatively short duration.

Noninterest Income

Noninterest income totaled $4.8 million, a $1.8 million improvement over the prior year's first quarter. The Company recorded gains of $208,000 on sales of investment securities and $125,000 on other real estate owned (OREO). In the prior year's first quarter, the Company had no gains on sales of investments and a loss of $1.0 million on OREO. The Company also experienced higher noninterest income from retail banking revenue, wealth management services and other equity investment gains, which are reflected as other noninterest income. 

Noninterest Expense and Taxes

First quarter noninterest expense totaled $14.1 million, a 4.0% increase over the 2012 first quarter. Compensation expense increased $766,000, or 10.8%, over the prior year's first quarter.  Other noninterest expense declined $222,000, including a $157,000 reduction in OREO expense.  The increase in compensation expense was due primarily to investments in our Charlotte and Raleigh commercial banking teams and, to a lesser extent, other key banking team additions in the Triad market. The Company's effective tax rate for 2013 is 0% as we recorded the reversal of a portion of the impairment of our deferred tax asset to carry it at estimated realizable value. 

Balance Sheet

Total assets were unchanged from year end at $1.71 billion. Loans held for investment increased 1.3% from year end 2012 but were offset by declines in loans held for sale and cash and cash equivalents. Total deposits increased $20.5 million over year end 2012 to $1.4 billion. Core deposits, which exclude time deposits, increased $13.3 million, or 1.3%, and totaled 75% of total deposits at March 31, 2013. Common equity increased $60.1 million during the quarter but was partially offset by a $56.2 million decline in preferred equity. The changes within equity were due primarily to $4.0 million of retained earnings and the conversion of $56 million in preferred stock to common shares.

Core Loan Growth

Total loans held for investment were $1.17 billion at March 31, 2013 and $1.16 billion at 2012 year end. However, growth in core retained loans was $72.3 million over the trailing twelve months (an annual rate of 6.85%). Approximately 83% of the trailing twelve month increase in core retained loans resulted from the Company's market teams in Charlotte and Raleigh.
     
  2013 2012
  First First
  Quarter Quarter
Core Retained Loan Growth    
(dollars in thousands)    
Loans held for investment $ 1,169,887 $ 1,173,671
Less classified loans 42,935 118,993
Core retained loans $ 1,126,952 $ 1,054,678
     
Core retained loan growth $ 72,274  
Trailing twelve month core retained loan growth 6.85%  

  Asset Quality

In the first quarter, asset quality continued to improve. Nonperforming assets as a percentage of total assets declined to 1.41% from 1.56% at December 31, 2012. Nonperforming loans totaled $19.4 million, and OREO was $4.8 million. The allowance for credit losses was $26.1 million, or 134% of nonperforming loans, compared to $26.6 million and 125% at year end 2012. Total classified assets, which includes nonperforming assets and other potential problem assets, totaled $47.7 million, or 26.6% of the total Tier 1 capital and reserves of our banking subsidiary, NewBridge Bank (the Bank). Classified assets totaled 30.5% of the Bank's Tier 1 capital plus reserves at December 31, 2012.

Outlook

We anticipate continued asset growth in the remainder of 2013. We also believe that the Company's prior two quarters are indicators of our future core earnings potential. The low interest rate environment and intense competition for quality loans remain as our key challenges. Consequently, margin pressure is likely to continue. We intend to meet these challenges by growing the loan portfolio, remaining disciplined with our cost controls and continuing to maximize fee income opportunities. We will consider growth through acquisitions that are consistent with our disciplined strategic vision and present realistic opportunities for quality earnings enhancement.

Use of Non-GAAP Measures

Tangible common shareholders' equity ratios have become a focus of some investors. Because tangible common shareholders' equity is not formally defined by GAAP, this measure is considered to be a non-GAAP financial measure, and other entities may calculate it differently. Since analysts and banking regulators may assess our capital adequacy using tangible common shareholders' equity, management believes that it is useful to provide investors with the ability to assess the Company's capital adequacy on the same basis.

About NewBridge Bancorp

NewBridge Bancorp is the bank holding company for 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."

NewBridge Bank is the largest community bank in the 12-county Piedmont Triad Region of North Carolina and 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 37 locations throughout 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 NewBridge 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'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 NewBridge'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 undertakes no obligation to revise or update these statements following the date of this press release.
FINANCIAL SUMMARY            
             
  Three Months Ended March 31        
             
  2013 2012        
Income Statement Data            
(Dollars in thousands, except share data)            
Interest income:            
Loans  $ 13,426  $ 14,922        
Investment securities  2,991  3,585        
Other  7  15        
Total interest income  16,424  18,522        
Interest expense:            
Deposits  788  1,744        
Borrowings from the FHLB  253  259        
Other  326  347        
Total interest expense  1,367  2,350        
Net interest income  15,057  16,172        
Provision for credit losses  979  3,443        
Net interest income after provision for credit losses  14,078  12,729        
Noninterest income:            
Retail banking  2,425  2,254        
Mortgage banking services  558  563        
Wealth management services  642  594        
Gain on sale of investment securities  208  --        
Writedowns and gain (loss) on sale of real estate acquired in settlement of loans, net  125  (1,008)        
Bank-owned life insurance  460  467        
Other  380  130        
Total noninterest income  4,798  3,000        
Noninterest expense:            
Personnel  7,827  7,061        
Occupancy  1,014  1,004        
Furniture and equipment  819  778        
Technology and data processing  986  1,020        
Legal and professional  673  671        
FDIC insurance  453  441        
Real estate acquired in settlement of loans  161  318        
Other  2,212  2,308        
Total noninterest expense  14,145  13,601        
Income before income taxes  4,731  2,128        
Income tax expense  --  617        
Net income  4,731  1,511        
Dividends and accretion on preferred stock  (730)  (730)        
Net income available to common shareholders  $ 4,001  $ 781        
Net income per share - basic $0.19 $0.05        
Net income per share - diluted $0.13 $0.05        
             
FINANCIAL SUMMARY            
             
  2013 2012  
  First Fourth Third Second First  
  Quarter Quarter Quarter Quarter Quarter  
Period-End Balance Sheet            
(Dollars in thousands)            
Assets            
Loans held for sale  $ 2,439  $ 9,464  $ 7,074  $ 5,741  $ 7,676  
Loans held for investment  1,169,887  1,155,421  1,168,747  1,162,630  1,173,671  
Allowance for credit losses  (26,067)  (26,630)  (35,016)  (25,231)  (27,918)  
Net loans held for investment  1,143,820  1,128,791  1,133,731  1,137,399  1,145,753  
Investment securities  398,382  393,815  387,376  388,968  394,904  
Other earning assets  11,752  9,006  10,646  35,936  5,730  
Non-earning assets  155,686  167,631  175,082  180,392  191,905  
Total Assets  $ 1,712,079  $ 1,708,707  $ 1,713,909  $ 1,748,436  $ 1,745,968  
             
Liabilities and Shareholders' Equity            
Noninterest-bearing deposits  $ 214,642  $ 206,023  $ 184,942  $ 192,066  $ 211,246  
Savings deposits  47,050  44,450  44,990  45,371  44,118  
NOW accounts  425,307  424,720  429,792  431,390  444,439  
Money market accounts  324,864  323,326  350,189  374,217  383,256  
Time deposits  341,091  333,974  379,823  406,153  366,135  
Total deposits  1,352,954  1,332,493  1,389,736  1,449,197  1,449,194  
Total borrowings  138,774  159,774  163,974  110,774  110,774  
Other liabilities  20,393  20,426  20,834  18,914  18,954  
Shareholders' equity  199,958  196,014  139,365  169,551  167,046  
Total Liabilities and Shareholders' Equity  $ 1,712,079  $ 1,708,707  $ 1,713,909  $ 1,748,436  $ 1,745,968  
             
ASSET QUALITY DATA            
             
(Dollars in thousands)            
Total nonperforming loans  $ 19,414  $ 21,360  $ 27,694  $ 34,680  $ 43,711  
Other real estate owned  4,781  5,355  10,465  24,491  30,032  
Total nonperforming assets  $ 24,195  $ 26,715  $ 38,159  $ 59,171  $ 73,743  
             
Loans identified as impaired  $ 15,772  $ 16,400  $ 22,644  $ 32,955  $ 35,043  
Other nonperforming loans  3,642  4,960  5,050  1,725  8,668  
Total nonperforming loans  19,414  21,360  27,694  34,680  43,711  
Performing classified loans  23,521  26,498  46,842  71,673  75,282  
Total classified loans  $ 42,935  $ 47,858  $ 74,536  $ 106,353  $ 118,993  
Other real estate owned  4,781  5,355  10,465  24,491  30,032  
Total classified assets  $ 47,716  $ 53,213  $ 85,001  $ 130,844  $ 149,025  
Classified percentage 26.59% 30.53% 48.10% 63.24% 72.09%  
Tier 1 capital (Bank) and reserves  $ 179,428  $ 174,320  $ 176,729  $ 206,901  $ 206,723  
             
Net chargeoffs  1,542  9,595  19,096  5,047  4,369  
Allowance for credit losses  26,067  26,630  35,016  25,231  27,918  
Allowance for credit losses to loans held for investment 2.23% 2.30% 3.00% 2.17% 2.38%  
Nonperforming loans to loans held for investment 1.66 1.85 2.37 2.98 3.72  
Nonperforming assets to total assets 1.41 1.56 2.23 3.38 4.22  
Nonperforming loans to total assets 1.13 1.25 1.62 1.98 2.50  
Net chargeoff percentage (annualized)  0.54 3.26 6.52 1.73 1.48  
Allowance for credit losses to nonperforming loans 134.27 124.67 126.44 72.75 63.87  
             
INVESTMENT PORTFOLIO            
             
(Dollars in thousands)  As of March 31, 2013 
   Amortized   Gross   Gross   Estimated  Average Average
   Cost   Unrealized gain   Unrealized loss   Fair value   Yield (%)  Duration (years)
US Treasury  $ 20,000  $ --  $ --  $ 20,000  0.06%  0.05
US Agency  67,089  47  (416)  66,720  1.94  5.63
Agency mortgage backed securities  19,106  1,887  --  20,993  5.37  1.87
Collateralized mortgage obligations  9,353  230  (3)  9,580  5.67  2.30
Commercial mortgage backed securities  40,485  1,906  (51)  42,340  3.29  3.49
Covered bonds  49,908  3,708  (18)  53,598  3.49  3.57
Corporate bonds  148,740  6,053  (394)  154,399  3.49  3.50
Municipal obligations  17,370  563  (26)  17,907  7.04*  4.51
Federal Home Loan Bank stock  6,189  --  --  6,189    
Other  5,775  881  --  6,656    
Total  $ 384,015  $ 15,275  $ (908)  $ 398,382  3.33*  3.64
             
*Fully taxable equivalent basis            
             
COMMON STOCK DATA            
             
  2013 2012  
  First Fourth Third Second First  
  Quarter Quarter Quarter Quarter Quarter  
             
Market value:            
End of period  $ 5.89  $ 4.63  $ 4.84  $ 4.38  $ 4.79  
High  6.48  4.95  5.00  4.94  4.91  
Low  4.50  3.92  3.74  3.88  3.71  
Book value  5.19  5.58  5.56  7.48  7.32  
Tangible book value  5.09  5.38  5.35  7.27  7.09  
Average shares outstanding  21,055,250  15,655,868  15,655,868  15,655,868  15,655,868  
Average diluted shares outstanding  29,699,040  20,978,610  15,655,868  16,465,346  16,299,355  
             
OTHER DATA            
             
  Three Months Ended March 31        
             
  2013 2012        
             
Tangible common equity  $ 144,693  $ 111,055        
Return on average assets  1.13%  0.35%        
Return on average equity  9.74  3.66        
Net yield on earning assets  3.92  4.15        
Average loans to assets  68.65  68.60        
Average loans to deposits  87.38  83.37        
Average noninterest - bearing deposits to total deposits  15.66  12.90        
Average equity to assets  11.57  9.58        
Total capital as a percentage of total risk weighted assets  16.88 14.45        
Tangible common equity as a percentage of tangible assets  8.47  6.37        
Tangible common equity as a percentage of total risk weighted assets  10.79  8.02        
             
ANALYSIS OF YIELDS AND RATES          
             
  Three Months Ended March 31, 2013 Three Months Ended March 31, 2012
  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  $ 1,168,844  $ 13,426 4.66%  $ 1,191,042  $ 14,922 5.04%
Investment securities  388,546  3,091 3.18%  362,766  3,681 4.06%
Other earning assets  11,999  7 0.24%  23,978  15 0.25%
Total Earning Assets  1,569,389  16,524 4.27%  1,577,786  18,618 4.75%
Non-Earning Assets  133,234      158,397    
Total Assets  $ 1,702,623  16,524    $ 1,736,183  18,618  
             
Interest-Bearing Liabilities            
Deposits  $ 1,128,121  788 0.28%  $ 1,244,232  1,744 0.56%
Borrowings  147,572  579 1.59%  120,808  606 2.02%
Total Interest-Bearing Liabilities  1,275,693  1,367 0.44%  1,365,040  2,350 0.69%
Noninterest-bearing deposits  209,522      184,347    
Other liabilities  20,354      20,529    
Shareholders' equity  197,054      166,267    
Total Liabilities and Shareholders' Equity  $ 1,702,623  1,367    $ 1,736,183  2,350  
Net Interest Income    $ 15,157      $ 16,268  
Net Interest Margin     3.92%     4.15%
Interest Rate Spread     3.83%     4.06%
             
CONTACT: Ramsey Hamadi, SEVP and Chief Financial Officer         336-369-0900