ECBE Ecb Bancorp

ECB Bancorp, Inc. (NYSE-Amex:ECBE) (“ECB” or the “Company”) today reported its financial results for the three months ended March 31, 2012.

2012 First Quarter Financial Highlights

For the three months ended March 31, 2012, net income totaled $377,000 compared to a net loss of ($1,084,000) for the three months ended March 31, 2011. After adjusting for $265,000 in TARP preferred stock dividends and the accretion of warrant discount, net income available to common shareholders for the three months ended March 31, 2012 was $112,000 or $0.04 per diluted share compared to a loss of ($1,349,000) or ($0.47) per diluted share for the three months ended March 31, 2011.

Other Financial Highlights include:

• Consolidated assets remained relatively flat at $916,274,000 at March 31, 2012 versus $916,571,000 at March 31, 2011.
• Loans decreased (10.1%) to $491,383,000 at March 31, 2012 compared to $546,641,000 at March 31, 2011.
• Deposits decreased (1.8%) to $772,597,000 at March 31, 2012 from $786,754,000 at March 31, 2011.
• Net interest income decreased (3.5%) to $6,528,000 for the three months ended March 31, 2012 from $6,768,000 for the same three-month period a year ago.
• There was no provision for loan losses charged to operations for the three months ended March 31, 2012 compared to $3,930,000 for same period last year. Our allowance modeling indicates that no additional provision was necessary, primarily due to the decrease in total loans outstanding, reduced charge-off levels, and adjustments for loan loss migrations within the portfolio as previously announced. For the quarter ended March 31, 2012, net charge-offs totaled $706,000 or .57% annualized of average loans, down (64%) compared to first quarter 2011, which totaled $1,958,503 in net charge-offs representing 1.4% annualized of average loans.

A. Dwight Utz, President and Chief Executive Officer, stated, “We are beginning to experience more stability in our loan portfolio both with total outstanding loans and what we project related to loan charge-offs. Our net interest margin (NIM) rebounded from 3.10% averaged in 4th quarter 2011 to 3.22% for first quarter 2012. This growth in net interest margin is primarily a result of a decrease in our cost of funds. It should be noted we absorbed approximately $174,000 of one-time expenses in the first quarter related to the termination of the private placement offering and acquisition of branches as previously announced in first quarter.”

Thomas M. Crowder, Executive Vice President and Chief Financial Officer, stated, “We believe we have positioned our balance sheet to grow our NIM in 2012 based on twelve more months of low interest rates as announced by the Federal Reserve earlier this year. The continuation of this environment should result in a further reduction in our cost of funds and combined with a higher yield from our investment portfolio through a slight increase in our investment portfolio duration, should result in a further increase in our net interest margin.”

Mr. Utz concluded, “We believe, compared to other community banks in North Carolina, ECB is positioned to capitalize upon opportunities that become available based upon improving trends in the economy. Our Board of Directors and leadership team look forward to returning to a more normalized earnings environment in 2012 and all remain confident in the long-term success of ECB to create value for our shareholders. We remain committed to our overarching goal and our vision, which is “We design financial roadmaps that substantively enrich and simplify lives.”

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 March 31, 2012, December 31, 2011 and March 31, 2011 (Dollars in thousands, except per share data)           March 31, December 31, March 31, 2012 2011* 2011 Assets (unaudited) (unaudited) Non-interest bearing deposits and cash $ 11,959 $ 18,363 $ 10,176 Interest bearing deposits 61 63 30 Overnight investments   50     6,305     -   Total cash and cash equivalents   12,070     24,731     10,206     Investment securities

Available-for-sale, at market value (cost of $347,116 and $338,685 at March 31, 2011 and December 31, 2011, respectively)

348,810 339,450 304,975   Loans held for sale 3,310 2,866 623   Loans 491,383 496,542 546,641 Allowance for loan losses   (11,385 )   (12,092 )   (15,219 ) Loans, net   479,998     484,450     531,422     Real estate and repossessions acquired in settlement of loans, net 7,906 6,573 7,258 Federal Home Loan Bank common stock, at cost 4,279 3,456 4,571 Bank premises and equipment, net 26,286 26,289 26,716 Accrued interest receivable 4,984 5,308 4,808 Bank owned life insurance 11,879 11,778 9,028 Other assets   16,752     16,376     16,964   Total $ 916,274   $ 921,277   $ 916,571     Liabilities and Shareholders' Equity Deposits Demand, noninterest bearing $ 134,828 $ 135,732 $ 106,898 Demand, interest bearing 277,520 270,119 251,474 Savings 57,656 55,517 36,314 Time   302,593     336,277     392,068   Total deposits   772,597     797,645     786,754     Accrued interest payable 457 519 639 Short-term borrowings 39,218 11,679 17,421 Long-term obligations 18,000 25,500 27,500 Other liabilities   4,834     5,491     5,044   Total liabilities   835,106     840,834     837,358     Shareholders' equity

Preferred stock, Series A

17,495 17,454 17,329 Common stock, par value $3.50 per share 9,974 9,974 9,974 Capital surplus 25,875 25,873 25,858 Warrant 878 878 878 Retained earnings 26,038 25,926 27,006 Accumulated other comprehensive income (loss)   908     338     (1,832 ) Total shareholders' equity   81,168     80,443     79,213   Total $ 916,274   $ 921,277   $ 916,571     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 Operation For the three months ended March 31, 2012 and 2011 (Dollars in thousands, except per share data)       Three months ended March 31, 2012 2011 Interest income: (unaudited) (unaudited) Interest and fees on loans $ 6,369 $ 7,357 Interest on investment securities: Interest exempt from federal income taxes 235 128 Taxable interest income 1,882 1,937 Dividend income 11 9 Other interest income   2     7   Total interest income   8,499     9,438   Interest expense: Deposits: Demand accounts 406 557 Savings 95 53 Time 1,270 1,811 Short-term borrowings 81 69 Long-term obligations   119     180   Total interest expense   1,971     2,670     Net interest income 6,528 6,768 Provision for loan losses   -     3,930   Net interest income after provision for loan losses   6,528     2,838     Noninterest income: Service charges on deposit accounts 857 765 Other service charges and fees 329 244 Mortgage origination fees 406 326 Net gain on sale of securities 45 26 Income from bank owned life insurance 101 74 Other operating income   1     (4 ) Total noninterest income   1,739     1,431     Noninterest expenses: Salaries 2,919 2,564 Retirement and other employee benefits 1,103 676 Occupancy 530 483 Equipment 590 559 Professional fees 219 271 Supplies 74 51 Communications/Data lines 198 169 FDIC insurance 204 326 Data processing and related expenses 396 70

Net cost of real estate and repossessions acquired in settlement of loans

684 18 Other outside services 100 181 Other operating expenses   901     876   Total noninterest expenses   7,918     6,244   Income (loss) before income taxes 349 (1,975 ) Income tax benefit   (28 )   (891 ) Net income (loss)   377     (1,084 ) Preferred stock dividends 224 224 Accretion of discount   41     41   Income (loss) available to common shareholders $ 112     ($1,349 )   Net income (loss) per share - basic $ 0.04     ($0.47 ) Net income (loss) per share - diluted $ 0.04     ($0.47 ) Weighted average shares outstanding - basic  

2,849,841

   

2,849,841

  Weighted average shares outstanding - diluted  

2,849,841

   

2,849,841

     

ECB Bancorp, Inc.

Supplemental Quarterly Financial Data (Unaudited)

(Dollars in thousands, except per share data)

            3/31/2012 12/31/2011 9/30/2011 6/30/2011 3/31/2011 Income Statement Data: Interest income $ 8,499 $ 8,818 $ 9,189 $ 9,632 $ 9,438 Interest expense   1,971     2,283     2,566     2,587     2,670   Net interest income 6,528 6,535 6,623 7,045 6,768 Provision for loan losses - 2,252 1,028 1,273 3,930 Net after provision expense 6,528 4,283 5,595 5,772 2,838 Noninterest income 1,739 2,262 2,568 2,539 1,431 Noninterest expense 7,918 9,416 7,539 6,657 6,244 Income (loss) before income taxes 349 (2,871 ) 624 1,654 (1,975 ) Income tax expense (benefit)   (28 )   (1,259 )   97     509     (891 ) Net income (loss) 377 (1,612 ) 527 1,145 (1,084 ) Preferred stock dividend & accretion of discount   265     266     267     265     265   Net income (loss) available to common shareholders $ 112   $ (1,878 ) $ 260   $ 880   $ (1,349 )   Per Share Data and Shares Outstanding: Net income (loss) - basic $ 0.04 $ (0.66 ) $ 0.09 $ 0.31 $ (0.47 ) Net income (loss) - diluted 0.04 (0.66 ) 0.09 0.31 (0.47 ) Cash dividends - 0.05 - 0.07 0.07 Book value at period end 22.34 22.10 23.10 22.79 21.71 Dividend payout ratio 0.00 % -7.58 % 0.00 % 22.58 % -14.89 %

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 $ 916,274 $ 921,277 $ 923,695 $ 941,463 $ 916,571 Loans - gross 491,383 496,542 521,626 542,687 546,641 Allowance for loan losses 11,385 12,092 12,214 15,448 15,219 Investment securities 348,810 339,450 327,066 298,116 304,975 Interest earning assets 847,893 848,682 858,914 880,814 856,840 Premises and equipment, net 26,286 26,289 26,137 26,740 26,716 Total deposits 772,597 797,645 796,609 812,774 786,754 Short-term borrowings 39,218 11,679 13,528 13,711 17,421 Long-term obligations 18,000 25,500 25,500 27,500 27,500 Shareholders' equity 81,168 80,443 83,248 82,320 79,213   Selected Performance Ratios (annualized): Return on average assets 0.16 % -0.70 % 0.22 % 0.49 % -0.48 % Return on average shareholders' equity 1.86 % -7.85 % 2.56 % 5.71 % -5.38 % Net interest margin 3.22 % 3.10 % 3.06 % 3.35 % 3.30 % Efficiency ratio 93.4 % 105.3 % 81.0 % 68.6 % 75.0 %   Asset Quality Ratios: Non accruing loans to period-end loans 3.82 % 3.08 % 3.98 % 3.37 % 3.07 % Performing TDR's loans to period- end loans 2.34 % 2.07 % 1.51 % 1.27 % 0.97 % Total Non performing loans to period-end loans 6.17 % 5.15 % 5.49 % 4.65 % 4.04 % Allowance for loan losses to period-end loans 2.32 % 2.44 % 2.34 % 2.85 % 2.78 % Allowance for loan losses to nonperforming loans 37.6 % 47.3 % 42.7 % 61.3 % 68.9 % Net charge-offs to average loans (annualized) 0.57 % 1.85 % 3.18 % 0.77 % 1.40 %   Capital Ratios: Tangible equity to total assets 6.95 % 6.84 % 7.13 % 6.90 % 6.75 % Equity-to-assets ratio 8.86 % 8.73 % 9.01 % 8.74 % 8.64 % Leverage Capital Ratio 8.23 % 8.25 % 8.34 % 8.39 % 8.42 % Tier 1 Capital Ratio 12.39 % 12.59 % 12.59 % 12.20 % 11.97 % Total Capital Ratio 13.65 % 13.85 % 13.85 % 13.46 % 13.24 %