ECBE Ecb Bancorp (MM)

ECB Bancorp, Inc. (NASDAQ:ECBE) (“ECB” or the “Company”) today announced its results for the three and six months ended June 30, 2011.

2011 Second Quarter Financial Highlights

For the three months ended June 30, 2011, net income totaled $1,145,000, a 19.6 % increase from the $957,000 in net income for the three months ended June 30, 2010. After adjusting for $265,000 in preferred stock dividends and the accretion of warrant discount, net income available to common shareholders for the three months ended June 30, 2011 was $880,000 or $0.31 per diluted share, an increase of 29.2 % compared to $692,000 or $0.24 per diluted share for the three months ended June 30, 2010.

For the six months ended June 30, 2011, net income was $61,000, which compares to net income for the six months ended June 30, 2010 of $1,444,000. After adjusting for $530,000 in preferred stock dividends and accretion of warrant discount, loss charged to common shareholders for the six months ended June 30, 2011 was $469,000 or $0.16 per basic and diluted share, compared to income available to common shareholders of $0.32 per basic and diluted share for the prior year period.

Other Financial Highlights include:

• Consolidated assets increased 2.1% to $941,463,000 at June 30, 2011 from $921,840,000 at June 30, 2010.
• Loans decreased 4.8% to $542,687,000 at June 30, 2011 compared to $570,174,000 at June 30, 2010.
• Deposits increased 2.6 % to $812,774,000 at June 30, 2011 from $792,454,000 at June 30, 2010.
• Net interest income remained virtually unchanged for the three months ended June 30, 2011 and 2010 at $7,045,000 and $7,033,000 respectively. For the six months ended June 30, 2011, net interest income decreased 1.5% to $13,813,000 compared to $14,028,000 for the first six months of 2010.
• Non-interest income for the three months ended June 30, 2011 was $2,539,000 an increase of 36.1% compared to $1,866,000 for the same three month period a year ago. For the six months ended June 30, 2011, non-interest income decreased 12.4% to $3,970,000 compared to $4,534,000 for the same period in 2010.

• Provision for loan losses charged to operations for the three months ended June 30, 2011 totaled $1,273,000, a decrease of 67.6% compared to $3,930,000 charged to operations for the first quarter ended March 31, 2011.

As discussed in ECB's Form 10-Q for the first quarter, during April the Bank's board approved a resolution at the request of the FDIC which, among other things, provides for the Bank to establish a policy regarding cash dividends it pays to ECB and requires that the Bank's board document an analysis of the amount of any dividend it proposes to pay to ECB each quarter and obtain its banking regulators' approval before the dividend is paid. Because dividends from the Bank are ECB's primary source of funds with which to pay dividends to its shareholders, that resolution affects ECB's ability to pay dividends and the timing of its Board's consideration of dividends. As of the date of this press release, ECB's Board has not made a determination as to the declaration of a dividend to its shareholders for the second quarter.

A. Dwight Utz, President and Chief Executive Officer, stated: “During the second quarter we were pleased to execute two very important events that will position our company to move forward with its strategic growth initiatives. The first event was the conversion of our core processing system. The completion of this project will give us the technology and systems capabilities to move forward with our growth strategy. The second event was the commitment of certain institutional investors to acquire $75 million of ECB Bancorp common stock at $16.00 per share, subject to regulatory and shareholder approvals. This additional capital will also support ECB’s future growth strategy. An important post quarter end announcement earlier this month was the execution of a definitive agreement to purchase deposits and certain assets of four branches in the Raleigh, Cary, Chapel Hill markets and one branch in Plymouth, NC and one branch in Wilmington, NC from the Bank of Hampton Roads. All these events will give us the platform and the ability to diversify our geographic footprint and position ECB to be a more significant financial services provider in North Carolina going forward.”

Thomas M. Crowder, Executive Vice President and Chief Financial Officer stated: “With the capital commitment from our institutional investors we are also moving forward in requesting regulatory approval to repay TARP upon the close of our capital raise.”

Mr. Utz concluded: “The future of ECB Bancorp is financially sound, and the leadership team is moving prudently to continue executing our strategic growth of the ECB franchise over the coming quarters and years, combining organic growth with continued focus on acquiring attractively priced deposits and assets in strong markets.”

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 approval required for the private placement and assumption of deposits 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 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.

                    ECB BANCORP, INC. AND SUBSIDIARY Consolidated Balance Sheets June 30, 2011, December 31, 2010 and June 30, 2010 (Dollars in thousands, except per share data)     June 30, December 31, June 30,   2011   2010*   2010   Assets Non-interest bearing deposits and cash $ 13,633 $ 11,731 $ 12,075 Interest bearing deposits 61 20 867 Overnight investments   34,475     8,415     16,605   Total cash and cash equivalents   48,169     20,166     29,547     Investment securities Available-for-sale, at market value (cost of $297,407, $275,883 and $263,225 at June 30, 2011, December 31, and June 30, 2010, respectively) 298,116 273,229 268,064   Loans held for sale 1,444 4,136 1,584   Loans 542,687 567,631 570,174 Allowance for loan losses   (15,448 )   (13,247 )   (10,462 ) Loans, net   527,239     554,384     559,712     Real estate and repossessions acquired in settlement of loans, net 7,050 4,536 4,644 Federal Home Loan Bank common stock, at cost 4,032 4,571 5,116 Bank premises and equipment, net 26,740 26,636 25,294 Accrued interest receivable 4,507 5,243 4,647 Bank owned life insurance 9,102 8,954 8,805 Other assets   15,064     18,014     14,427   Total $ 941,463   $ 919,869   $ 921,840     Liabilities and Shareholders' equity Deposits Demand, noninterest bearing $ 123,672 $ 104,932 $ 106,033 Demand, interest bearing 262,259 262,977 205,263 Savings 41,520 29,938 22,017 Time   385,323     388,094     459,141   Total deposits   812,774     785,941     792,454     Accrued interest payable 648 631 1,017 Short-term borrowings 13,711 11,509 22,408 Long-term obligations 27,500 34,500 14,500 Other liabilities   4,510     6,394     4,543   Total liabilities   859,143     838,975     834,922     Shareholders' equity Preferred stock, Series A 17,370 17,288 17,205 Common stock, par value $3.50 per share 9,974 9,974 9,974 Capital surplus 25,863 25,852 25,836 Warrants 878 878 878 Retained earnings 27,886 28,554 30,069 Accumulated other comprehensive income (loss)   349     (1,652 )   2,956   Total shareholders' equity   82,320     80,894     86,918   Total $ 941,463   $ 919,869   $ 921,840     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 six months ended June 30, 2011 and 2010 (Dollars in thousands, except per share data)                   Three months ended Six months ended June 30, June 30,   2011     2010   2011     2010 Interest income: Interest and fees on loans $ 7,329 $ 7,790 $ 14,686 $ 15,422 Interest on investment securities: Interest exempt from federal income taxes 117 490 245 952 Taxable interest income 2,163 1,673 4,100 3,570 Dividend income 9 7 18 34 Other interest income   14     5   21     7 Total interest income   9,632     9,965   19,070     19,985 Interest expense: Deposits: Demand accounts 505 322 1,062 639 Savings 74 15 127 27 Time 1,790 2,412 3,601 4,901 Short-term borrowings 73 61 142 117 Long-term obligations   145     122   325     273 Total interest expense   2,587     2,932   5,257     5,957   Net interest income 7,045 7,033 13,813 14,028 Provision for loan losses   1,273     1,780   5,203     4,780 Net interest income after provision for loan losses   5,772     5,253   8,610     9,248   Noninterest income: Service charges on deposit accounts 828 893 1,593 1,716 Other service charges and fees 330 433 574 698 Mortgage origination fees 452 293 778 505 Net gain on sale of securities 858 152 884 1,441 Income from bank owned life insurance 74 74 148 148 Other operating (expense) income   (3 )   21   (7 )   26 Total noninterest income   2,539     1,866   3,970     4,534   Noninterest expenses: Salaries 2,826 2,326 5,390 4,645 Retirement and other employee benefits 784 712 1,460 1,442 Occupancy 522 447 1,005 904 Equipment 513 486 1,072 953 Professional fees 271 211 542 499 Supplies 78 68 129 120 Telephone 189 157 358 340 FDIC insurance 201 345 527 678 Other outside services 162 110 343 228 Net cost of real estate and repossessions acquired in settlement of loans 79 47 97 381 Other operating expenses   1,032     1,007   1,978     1,964 Total noninterest expenses   6,657     5,916   12,901     12,154 Income (loss) before income taxes 1,654 1,203 (321 ) 1,628 Income tax expense (benefit)   509     246   (382 )   184 Net income   1,145     957   61     1,444 Preferred stock dividends 224 224 448 448 Accretion of discount   41     41   82     82 Income (loss) available to common shareholders $ 880   $ 692   ($469 ) $ 914   Net income (loss) per share - basic $ 0.31   $ 0.24   ($0.16 ) $ 0.32 Net income (loss) per share - diluted $ 0.31   $ 0.24   ($0.16 ) $ 0.32 Weighted average shares outstanding - basic   2,849,841     2,849,841   2,849,841     2,849,343 Weighted average shares outstanding - diluted   2,849,841     2,849,936   2,849,841     2,849,407     ECB Bancorp, Inc. Supplemental Quarterly Financial Data (Unaudited) (Dollars in thousands, except per share data)                       6/30/2011     3/31/2011     12/31/2010     9/30/2010     6/30/2010   Income Statement Data: Interest income $ 9,632 $ 9,438 $ 9,840 $ 9,982 $ 9,965 Interest expense   2,587     2,670     2,926     3,005     2,932   Net interest income 7,045 6,768 6,914 6,977 7,033 Provision for loan losses 1,273 3,930 4,337 3,863 1,780 Net after provision expense 5,772 2,838 2,577 3,114 5,253 Noninterest income 2,539 1,431 3,661 3,800 1,866 Noninterest expense 6,657 6,244 8,307 6,379 5,916 Income (loss) before income taxes 1,654 (1,975 ) (2,069 ) 535 1,203 Income tax expense (benefit)   509     (891 )   (945 )   (5 )   246   Net income (loss) 1,145 (1,084 ) (1,124 ) 540 957 Preferred stock dividend & accretion of discount   265     265     266     267     265   Net income (loss) available to common shareholders $ 880   $ (1,349 ) $ (1,390 ) $ 273   $ 692     Per Share Data and Shares Outstanding: Net income - basic $ 0.31 $ (0.47 ) $ (0.49 ) $ 0.10 $ 0.24 Net income - diluted 0.31 (0.47 ) (0.49 ) 0.10 0.24 Cash dividends - 0.07 0.07 0.07 0.07 Book value at period end 22.79 21.71 22.32 24.70 24.46 Dividend payout ratio 0.00 % -14.89 % -14.29 % 70.00 % 29.17 % 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 2,849,936 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 $ 941,463 $ 916,571 $ 919,869 $ 932,209 $ 921,840 Loans - gross 542,687 546,641 567,631 575,003 570,174 Allowance for loan losses 15,448 15,219 13,247 13,187 10,462 Investment securities 298,116 304,975 273,229 263,946 268,064 Interest earning assets 880,814 856,840 858,002 877,540 862,410 Premises and equipment, net 26,740 26,716 26,636 25,897 25,294 Total deposits 812,774 786,754 785,941 790,592 792,454 Short-term borrowings 13,711 17,421 11,509 13,534 22,408 Long-term obligations 27,500 27,500 34,500 34,500 14,500 Shareholders' equity 82,320 79,213 80,894 87,632 86,918   Selected Performance Ratios (annualized): Return on average assets 0.49 % -0.48 % -0.48 % 0.23 % 0.43 % Return on average shareholders' equity 5.71 % -5.38 % -5.15 % 2.44 % 4.48 % Net interest margin 3.35 % 3.30 % 3.23 % 3.31 % 3.52 % Efficiency ratio 68.60 % 75.00 % 77.28 % 57.83 % 63.94 %   Asset Quality Ratios: Nonperforming loans to period-end loans 4.65 % 4.04 % 3.89 % 3.59 % 3.37 % Allowance for loan losses to period-end loans 2.85 % 2.78 % 2.33 % 2.29 % 1.83 % Allowance for loan losses to nonperforming loans 61 % 69 % 60 % 64 % 54 % Net charge-offs to average loans (annualized) 0.77 % 1.40 % 2.99 % 0.79 % 1.83 %   Capital Ratios: Tangible equity to total assets 6.90 % 6.75 % 6.91 % 7.55 % 7.56 % Equity-to-assets ratio 8.74 % 8.64 % 8.79 % 9.40 % 9.43 % Leverage Capital Ratio 8.38 % 8.42 % 8.66 % 8.79 % 9.26 % Tier 1 Capital Ratio 12.17 % 11.97 % 12.08 % 12.37 % 12.78 % Total Capital Ratio 13.45 % 13.24 % 13.34 % 13.63 % 14.03 %