ECBE Ecb Bancorp (MM)

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 %