ECBK ECB Bancorp Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): July 27, 2023

 

ECB BANCORP, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Maryland 001-41456 88-1502079

(State or other jurisdiction of (Commission (IRS Employer

incorporation or organization) File Number) Identification No.)

 

419 Broadway, Everett, Massachusetts 02149

(Address of principal executive offices) (Zip Code)

 

(617) 387-1110

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ECBK	The Nasdaq Stock Market LLC

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.02 Results of Operations and Financial Condition

 

On July 27, 2023, ECB Bancorp, Inc., the holding company for Everett Co-operative Bank, issued a press release announcing its financial results at and for the three and six months ended June 30, 2023.

 

A copy of the press release is included as Exhibit 99.1 to this report and shall not be deemed “filed” for any purpose, nor shall the information or Exhibit 99.1 be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended.

 

 

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1		Press release dated July 27, 2023
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

 

ECB BANCORP, INC.

Date: July 27, 2023 By: /s/Richard J. O'Neil, Jr.

Richard J. O’Neil, Jr.

President and Chief Executive Officer

 

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For Immediate Release

Date: July 27, 2023

Contact:		Richard J. O’Neil, Jr.
		President and Chief Executive Officer
Phone:		617-387-1110
Email:		rjoneil@everettbank.com

ECB Bancorp, Inc. Reports Second Quarter Results

EVERETT, MA, July 27, 2023 - ECB Bancorp, Inc. (NASDAQ-ECBK) (the “Company”), the holding company for Everett Co-operative Bank (the “Bank”), a state-chartered co-operative bank headquartered in Everett, Massachusetts, today reported net income of $1.43 million, or $0.17 per diluted share, for the quarter ended June 30, 2023 compared to net income of $1.40 million for the quarter ended June 30, 2022, an increase of 2.1%. For the six months ended June 30, 2023, the Company reported net income of $2.3 million, or $0.27 per diluted share, as compared to net income of $2.8 million for the six months ended June 30, 2022, a decrease of 16.3%. Earnings per share data is not applicable for the three and six months ended June 30, 2022 as the Company had no shares outstanding.

Richard J. O’Neil, Jr., President and Chief Executive Officer, said, "As we continue in our second fiscal year of being a publicly traded company and executing on our strategic plan, strong loan growth and prudent credit risk management continue to drive earnings. Competition for deposits in our market and the current economic environment have negatively impacted our margin. Despite these funding cost pressures, growth in our balance sheet has enabled us to maintain earnings while we continue to build out our infrastructure.”

 

NET INTEREST AND DIVIDEND INCOME

Net interest and dividend income before provision for credit losses for the quarter ended June 30, 2023 was $6.4 million as compared to $5.4 million for the quarter ended June 30, 2022, or a 19.3% increase. The provision for credit losses for the quarter ended June 30, 2023 was $0 as compared to $754,000 for the quarter ended June 30, 2022 or a 100.0% decrease. The decrease in the provision for credit losses was driven by lower loan growth during the quarter ended June 30, 2023 as compared to the quarter ended June 30, 2022 as well as a benefit to the provision resulting from a reduction in our off-balance sheet loan commitments. In 2022, the provision for off-balance sheet commitments was recorded within other non-interest expenses. The combination of these items resulted in an increase of $1.8 million, or 38.7%, in net interest and dividend income after provision for credit losses for the quarter ended June 30, 2023 as compared to the quarter ended June 30, 2022.

Net interest and dividend income before provision for credit losses for the six months ended June 30, 2023 was $12.8 million as compared to $10.3 million for the six months ended June 30, 2022, or a 24.1% increase. The provision for credit losses for the six months ended June 30, 2023 was $879,000 as compared to $875,000 for the six months ended June 30, 2022, or a 0.5% increase. The increase in the provision for credit losses was driven by growth in loan segments with higher loss allocations in the six months ended June 30, 2023 as compared to the six months ended June 30, 2022, partially offset by a benefit to the provision resulting from a reduction in our off-balance sheet loan commitments. The combination of these items resulted in an increase of $2.5 million, or 26.3%, in net interest and dividend income after provision for credit losses for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.

NONINTEREST INCOME

Noninterest income for the quarter ended June 30, 2023 was $240,000 compared to $690,000 for the quarter ended June 30, 2022 or a decrease of 65.2%. Noninterest income for the 2022 quarter included a gain of $440,000 recognized into income from life insurance policy death benefits which did not recur in the 2023 quarter. Noninterest income for the six months ended June 30, 2023 was $470,000 as compared to $941,000 for the six months June 30, 2022 or a decrease of 50.1%, reflecting the $440,000 life insurance policy death benefits in the second quarter of 2022 as well as reduced net gains on sales of loans of $63,000 due to a lower number of loans sold.

 

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NONINTEREST EXPENSE

Noninterest expense for the quarter ended June 30, 2023 was $4.7 million as compared to $3.6 million for the quarter ended June 30, 2022, or an increase of 31.6%. The increase resulted primarily from the following:

Noninterest expense for the six months ended June 30, 2023 was $9.2 million as compared to $6.8 million for the six months ended June 30, 2022 or an increase of 36.3%. The increase resulted primarily from the following:

INCOME TAXES

We recorded a provision for income taxes of $503,000 for the quarter ended June 30, 2023, compared to a provision for income taxes of $325,000 for the quarter ended June 30, 2022, reflecting effective tax rates of 26.1% and 18.9%, respectively. We recorded a provision for income taxes of $823,000 and $820,000 for the six months ended June 30, 2023 and 2022, respectively, reflecting effective tax rates of 26.1% and 22.8%, respectively. The lower effective tax rate in both the quarter and six month period ended June 30, 2022 was driven by $440,000 in non-taxable gains recognized into income from life insurance policy death benefits.

BALANCE SHEET

At June 30, 2023, total assets were $1.2 billion, an increase of $133.0 million, or 12.5%, from $1.06 billion at December 31, 2022. The Company experienced net loan growth of $111.0 million, or 12.5%, from December 31, 2022 to June 30, 2023. Commercial real estate, multi-family real estate and one-to-four family residential real estate loans increased $39.4 million, $29.7 million and $30.8 million, respectively. The asset growth was primarily funded by growth in deposits as well as Federal Home Loan Bank advances.

At June 30, 2023, deposits totaled $787.0 million, an increase of $68.8 million or 9.6% from $718.1 million at December 31, 2022. The increase in deposits was primarily the result of an increase in certificates of deposit of $89.0 million and an increase in savings accounts of $24.1 million, partially offset by a decrease in money market deposit accounts of $38.5 million.

Total stockholders' equity increased $1.9 million, or 1.2%, to $164.6 million as of June 30, 2023 from $162.7 million as of December 31, 2022. The increase was primarily the result of earnings of $2.3 million partially offset by a $677,000 reduction in retained earnings related to the adoption of CECL.

ASSET QUALITY

At June 30, 2023, our allowance for credit losses was $8.5 million, representing 0.84% of total loans compared to $7.2 million and 0.81% of total loans, at December 31, 2022. For the six months ended June 30, 2023 and the six months ended June 30, 2022 the Company did not record any net charge offs. Total non-performing assets were $923,000, or 0.08%, of total assets as of June 30, 2023 and $656,000, or 0.06%, of total assets as of December 31, 2022.

 

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Company Profile

ECB Bancorp, Inc. is headquartered in Everett, Massachusetts and is the holding company for Everett Co-operative Bank. The Bank provides financial services to individuals, families, municipalities and businesses through its two full-service branch offices located in Everett and Lynnfield, Massachusetts. The Company's common stock is traded on the NASDAQ Capital Market under the symbol "ECBK." For more information, visit the Company's website at www.everettbank.com.

 

Forward-looking statements

Certain statements herein constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on the beliefs and expectations of management, as well as the assumptions made using information currently available to management. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions. As a result, actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, the Company's ability to continue to increase loans and deposit growth, legislative and regulatory changes that adversely affect the businesses in which the Company is engaged and changes in the securities market. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company disclaims any intent or obligation to update any forward-looking statements, whether in response to new information, future events or otherwise, except as may be required by law.

 

 

 

 

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ECB Bancorp, Inc. and Subsidiary

Consolidated Balance Sheets

(unaudited)

(in thousands except share data)

 

		June 30, 2023				December 31, 2022
ASSETS
Cash and due from banks		$	3,148			$	3,123
Short-term investments			76,718				58,927
Total cash and cash equivalents			79,866				62,050
Interest-bearing time deposits			—				300
Investments in available-for-sale securities (at fair value)			5,007				5,001
Investments in held-to-maturity securities, at cost (fair values of $69,663 at June 30,    2023 and $69,707 at December 31, 2022)			77,255				77,591
Loans, net of allowance for credit losses of $8,470 as of June 30, 2023 (unaudited) and    $7,200 as of December 31, 2022			996,699				885,674
Federal Home Loan Bank stock, at cost			9,892				7,293
Premises and equipment, net			3,657				3,698
Accrued interest receivable			3,038				2,632
Deferred tax asset, net			4,659				4,344
Bank-owned life insurance			14,264				14,067
Other assets			3,133				1,812
Total assets		$	1,197,470			$	1,064,462
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing		$	87,030			$	84,903
Interest-bearing			699,937				633,246
Total deposits			786,967				718,149
Federal Home Loan Bank advances			234,000				174,000
Other liabilities			11,874				9,583
Total liabilities			1,032,841				901,732
Shareholders' Equity:
Preferred Stock, par value $0.01; Authorized: 1,000,000 shares; Issued and outstanding: 0 shares; and 0 shares, respectively			—				—
Common Stock, par value $0.01; Authorized: 30,000,000 shares; Issued and outstanding: 9,175,247 shares and 9,175,247 shares, respectively			92				92
Additional paid-in capital			89,355				89,286
Retained earnings			81,725				80,076
Accumulated other comprehensive income			248				249
Unallocated common shares held by the Employee Stock Ownership Plan			(6,791	)			(6,973	)
Total shareholders' equity			164,629				162,730
Total liabilities and shareholders' equity		$	1,197,470			$	1,064,462
Shareholders' Equity Ratios
Book value per common share		$	17.94			$	17.74
Regulatory Capital Ratios (Everett Co-operative Bank)
Total capital to risk weighted assets			15.25	%			16.40	%
Tier 1 capital to risk weighted assets			14.24	%			15.49	%
Tier 1 capital to average assets			11.20	%			13.89	%

 

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ECB Bancorp, Inc. and Subsidiary

Consolidated Statements of Income

(unaudited)

(in thousands except share data)

 

		Three months ended								Six months ended
		June 30,								June 30,
		2023				2022				2023				2022
Interest and dividend income:
Interest and fees on loans		$	12,122			$	5,678			$	23,049			$	10,941
Interest and dividends on securities			667				330				1,227				662
Other interest income			862				88				1,437				104
Total interest and dividend income			13,651				6,096				25,713				11,707
Interest expense:
Interest on deposits			5,055				647				8,973				1,307
Interest on Federal Home Loan Bank advances			2,197				83				3,975				113
Total interest expense			7,252				730				12,948				1,420
Net interest and dividend income			6,399				5,366				12,765				10,287
Provision for credit losses			-				754				879				875
Net interest and dividend income after provision for credit losses			6,399				4,612				11,886				9,412
Noninterest income:
Customer service fees			128				112				248				212
Income from bank-owned life insurance			99				539				197				640
Net gain on sales of loans			5				23				5				68
Other income			8				16				20				21
Total noninterest income			240				690				470				941
Noninterest expense:
Salaries and employee benefits			2,823				2,293				5,709				4,280
Director compensation			119				109				240				217
Occupancy and equipment expense			265				198				484				378
Data processing			256				166				459				331
Computer software and licensing fees			54				50				96				95
Advertising and promotions			208				138				376				275
Professional fees			295				213				658				384
Federal Deposit Insurance Corporation assessment			282				64				407				109
Other expense			409				350				778				685
Total noninterest expense			4,711				3,581				9,207				6,754
Income before income tax expense			1,928				1,721				3,149				3,599
Income tax expense			503				325				823				820
Net income		$	1,425			$	1,396			$	2,326			$	2,779
Share data:
Weighted average shares outstanding, basic			8,490,128			N/A					8,485,610			N/A
Weighted average shares outstanding, diluted			8,490,128			N/A					8,485,610			N/A
Basic earnings per share		$	0.17			N/A				$	0.27			N/A
Diluted earnings per share		$	0.17			N/A				$	0.27			N/A

 

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v3.23.2

Document and Entity Information	Jul. 27, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jul. 27, 2023
Securities Act File Number	001-41456
Entity Registrant Name	ECB BANCORP, INC.
Entity Central Index Key	0001914605
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	88-1502079
Entity Address, Address Line One	419 Broadway
Entity Address, City or Town	Everett
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02149
City Area Code	617
Local Phone Number	387-1110
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	ECBK
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false

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