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.
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.
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.
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, | 77,255 | 77,591 | ||
Loans, net of allowance for credit losses of $8,470 as of June 30, 2023 (unaudited) and | 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 | % |
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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ECB Bancorp Inc. published this content on 27 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 July 2023 18:41:58 UTC.