New Century Bancorp Reports Year-End 2009 Results
DUNN, N.C., Jan. 29 /PRNewswire-FirstCall/ --
- Prior to write-off of goodwill, Company's net income for 2009 was $232,000, or $.03 per share.
- $8.6 million write- off of goodwill from 2006 purchase of Progressive State Bank negatively impacts results.
- Deposit growth for 2009 was 7.0%.
- Loan growth for the year was 4.5%.
- Net interest margin increased 14 basis points to 3.41% for the year.
- Non-interest expenses declined 2.5%, despite an increase in FDIC insurance premium expense from $525,000 in 2008 to $1.3 million in 2009.
- Results were accomplished without TARP (Troubled Asset Relief Program) funds.
New Century Bancorp (the "Company"Nasdaq: NCBC), the holding company for New Century Bank, today reported financial results for 2009. The write-off of goodwill resulted in a decrease in earnings for the Company from net income of $232,000 before the write-off to a net loss of ($8.4 million) afterwards. This compares to the net loss of ($193,000) for 2008, a year during which there were no write-offs of goodwill. Basic and diluted net income per share for 2009 prior to the goodwill write-off was $.03 compared to a net (loss) per share of ($1.24) after consideration of the write-off. This compares to the net (loss) per share of ($0.03) for 2008.
Goodwill Impairment
Goodwill, a measure of the difference between the price paid for an acquisition and the fair value of its assets, is being examined and subsequently charged-off in part or in whole by many financial institutions due to the effects of the prolonged economic downturn on financial stocks. At year-end 2009, New Century wrote-off $8.67 million in goodwill, an intangible asset, which resulted from the purchase of Progressive State Bank in 2006. The goodwill impairment charge, a one-time, non-cash, accounting transaction, does not affect the liquidity, tangible capital, or regulatory capital ratios of the Company.
Financial Results
Total assets for the Company at year-end 2009 were $630.6 million, total deposits were $540.3 million, and total loans were $481.2 million, compared to total assets of $605.8 million, total deposits of $505.1 million, and total loans of $460.6 million at year-end 2008, increases of 4.1%, 7.0%, and 4.5%, respectively.
"While the write-off of goodwill resulted in New Century Bancorp reporting a loss for the year," said William L. Hedgepeth, president and CEO of New Century Bancorp and New Century Bank, "We are pleased with our core operating results in light of the fact that unlike many banks, we did not accept TARP funds; even though we, like all banks, faced a number of financial challenges. In addition, we are pleased with a number of positive indicators for the future. Those indicators include strong loan and deposit growth, increasing margins, and lower non-interest expenses.
Earnings for the year also were impacted by the addition of $5.5 million to the Company's provision for loan losses, compared to $4.3 million in 2008; OREO losses of $565,000 compared to $239,000 in 2008; and, the payment of FDIC insurance premiums totaling $1.3 million, compared to only $525,000 in 2008.
"In order to recognize operating efficiencies, we consolidated our operations in Clinton, NC into one office. In preparing for the future, we recently invested in and expanded our ability to serve our customers through installing a new core processor and by developing a new website, with added capabilities. While the past few years have been difficult, we continue to meet the lending needs of our customers and communities, to expand and develop our staff, and to approach the future through a disciplined approach.
"The Company remains 'well-capitalized,' which is the highest regulatory standard. While there are challenges ahead—such as high unemployment levels, there is also a great deal of opportunity. As our market area and our nation begin to come out of the recession, we plan to be in the position to be part of it and to help lead the way for our customers."
New Century Bank is headquartered in Dunn and has offices in Dunn, Clinton, Fayetteville (2), Goldsboro, Lillington, Lumberton, Pembroke, and Raeford.
The information as of and for the year ended December 31, 2009, as presented is unaudited. The above release presents financial information excluding the goodwill impairment charge (non-GAAP). The goodwill impairment charge is included in the financial results presented in accordance with generally accepted accounting principles (GAAP). The Company believes that the exclusion of goodwill impairment in expressing net income and earnings per share data provides a more meaningful base for period-to-period comparisons which will assist investors in analyzing the operating results of the Company and predicting operating performance. Non-GAAP measures are not in accordance with, or a substitute for, measures prepared in accordance with GAAP, and may be different from non-GAAP measures used by other companies. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations that would be reflected in measures determined in accordance with GAAP. Non-GAAP measures should only be used to evaluate our results of operations in conjunction with corresponding GAAP measures. This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements regarding certain of our goals and expectations with respect to earnings, earnings per share, revenue, expenses and the growth rate in such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, and (ii) statements preceded by, followed by or that include the words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," "projects," "outlook" or similar expressions. The actual results might differ materially from those projected in the forward-looking statements for various reasons, including, but not limited to, our ability to manage growth, our limited operating history, substantial changes in financial markets, regulatory changes, changes in interest rates, loss of deposits and loan demand to other savings and financial institutions, and changes in real estate values and the real estate market. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Company's SEC filings, including its periodic reports under the Securities Exchange Act of 1934, as amended, copies of which are available upon request from the Company.
New Century Bancorp, Inc.
Selected Financial Information and Other Data
($ in thousands, except per share data)
At or for the three months ended
--------------------------------
December September June March December
31, 30, 30, 31, 31,
2009 2009 2009 2009 2008
-------- --------- ---- ----- --------
Summary of
Operations:
Total interest
income $8,378 $8,223 $8,009 $8,252 $8,348
Total Interest
expense 2,821 3,170 3,459 3,673 3,991
------- ----- ----- ----- -----
Net interest
income 5,557 5,053 4,550 4,579 4,357
Provision for
loan losses 995 2,377 1,414 685 2,142
----- ----- ----- ----- -----
Net interest
income after
provision 4,562 2,676 3,136 3,894 2,215
Noninterest
income 821 812 792 1,040 890
Goodwill
Impairment 8,674 - - - -
Noninterest
expense 4,796 4,075 4,428 4,275 4,258
----- ----- ----- ----- -----
Income (loss)
before income
taxes (8,087) (587) (500) 659 (1,153)
Provision for
income taxes
(benefit) 141 (218) (247) 251 (487)
------ ------ ------ ---- ------
Net income
(loss) $(8,228) $(369) $(253) $408 $(666)
======== ====== ====== ==== ======
Share and Per
Share Data:
Earnings (loss)
per share-
basic $(1.20) $(0.05) $(0.04) $0.06 $(0.10)
Earnings
(loss)per
share-
diluted (1.20) (0.05) (0.04) 0.06 (0.10)
Book value per
share 7.96 9.22 9.21 9.23 9.17
Tangible book
value per
share 7.83 7.82 7.80 7.82 7.76
Ending shares
outstanding 6,837,952 6,837,742 6,836,149 6,831,149 6,831,149
Weighted
average shares
outstanding:
Basic 6,837,863 6,837,292 6,831,973 6,831,149 6,829,731
Diluted 6,837,863 6,837,292 6,831,973 6,835,476 6,829,731
Selected
Performance
Ratios:
Return on
average
assets -5.09% -0.23% -0.16% 0.27% -0.43%
Return on
average
equity -51.24% -2.30% -1.60% 2.61% -4.27%
Net interest
margin 3.70% 3.52% 3.16% 3.26% 3.07%
Efficiency
ratio (1) 75.20% 69.48% 82.89% 76.08% 81.15%
Period End
Balance Sheet
Data:
Loans, net
of unearned
income $481,176 $472,578 $467,872 $469,794 $460,626
Total Earning
Assets 588,536 591,973 573,951 584,030 560,534
Goodwill and
other intangible
assets 853 9,565 9,603 9,642 9,680
Total Assets 630,635 636,810 629,000 628,748 605,767
Deposits 540,262 533,350 527,621 523,537 505,119
Short term debt 20,564 25,693 23,461 27,408 23,175
Long term debt 12,372 12,372 12,372 12,372 12,372
Shareholders'
equity 54,409 63,013 62,947 63,059 62,659
Selected Average
Balances:
Gross Loans $476,845 $469,668 $469,581 $468,062 $458,100
Total Earning
Assets 595,250 570,059 577,774 570,221 562,415
Goodwill and
other intangible
assets 9,451 9,584 9,622 9,660 9,699
Total Assets 641,254 634,312 630,180 616,026 607,685
Deposits 538,643 532,427 526,894 513,079 508,911
Short term debt 23,498 23,020 24,606 24,458 21,659
Long term debt 12,372 12,372 12,372 12,372 12,372
Shareholders'
equity 63,710 63,588 63,615 63,421 61,868
Asset Quality
Ratios:
Nonperforming
loans $15,965 $16,003 $13,352 $7,739 $8,630
Other real
estate owned 2,530 2,346 2,196 2,333 2,799
Allowance for
loan losses 10,359 10,317 8,519 7,792 8,860
Nonperforming
loans (2) to
period-end
loans 3.32% 3.39% 2.85% 1.65% 1.87%
Allowance for
loan losses
to period-
end loans 2.15% 2.18% 1.82% 1.66% 1.92%
Delinquency
Ratio (3) 0.41% 1.61% 0.51% 0.98% 0.32%
Net loan charge-
offs to average
loans 0.79% 0.49% 0.59% 1.52% 0.39%
At or for the twelve months ended
---------------------------------
December 31, December 31, December 31,
------------ ------------ ------------
2009 2008 2007
------------ ------------ ------------
Summary of Operations:
Total interest
income $32,861 $35,233 $41,598
Total interest
expense 13,122 17,372 20,653
------ ------ ------
Net interest income 19,739 17,861 20,945
Provision for loan
losses 5,472 4,283 5,974
----- ----- -----
Net interest income
after provision 14,267 13,578 14,971
Noninterest income 2,610 3,128 3,978
Goodwill Impairment 8,674 - -
Noninterest expense 16,717 17,138 16,337
------ ------ ------
Income (loss) before
income taxes (8,514) (432) 2,612
Provision for
income taxes
(benefit) (73) (239) 953
--- ---- ---
Net income (loss) $(8,441) $(193) $1,659
======= ===== ======
Share and Per Share
Data:
Earnings (loss) per
share- basic $(1.24) $(0.03) $0.25
Earnings (loss) per
share- diluted (1.24) (0.03) 0.24
Book value per
share 7.96 9.17 9.09
Tangible book value
per share 7.83 7.76 7.63
Ending shares
outstanding 6,837,952 6,831,149 6,730,874
Weighted average
Shares outstanding:
Basic 6,834,595 6,809,437 6,603,631
Diluted 6,834,595 6,809,437 6,844,426
Selected Performance
Ratios:
Return on average
assets -1.34% -0.03% 0.28%
Return on average
equity -13.28% -0.31% 2.77%
Net interest margin 3.41% 3.27% 3.93%
Efficiency ratio (1) 74.80% 81.65% 65.55%
Period End Balance
Sheet Data:
Loans, net of
unearned income $481,176 $460,626 $442,875
Total Earning
Assets 588,536 560,534 543,167
Goodwill and other
intangible assets 853 9,680 9,834
Total Assets 630,635 605,767 591,025
Deposits 540,262 505,119 498,123
Short term debt 20,564 23,175 16,967
Long term debt 12,372 12,372 12,372
Shareholders'
equity 54,409 62,659 61,173
Selected Average
Balances:
Gross Loans $471,059 $451,558 $449,799
Total Earning
Assets 578,372 554,798 539,526
Goodwill and other
intangible assets 9,578 9,756 9,910
Total Assets 630,521 599,912 583,809
Deposits 527,844 504,188 493,989
Short term debt 23,891 18,615 15,672
Long term debt 12,372 12,372 12,372
Shareholders'
equity 63,584 62,107 59,888
Asset Quality Ratios:
Nonperforming loans $15,965 $8,536 $5,041
Other real estate
owned 2,530 2,799 542
Allowance for loan
losses 10,359 8,860 8,314
Nonperforming loans
(2) to period-end
loans 3.32% 1.85% 1.13%
Allowance for loan
losses to period-
end loans 2.15% 1.92% 1.88%
Delinquency Ratio (3) 0.41% 0.32% 1.31%
Net loan charge-
offs to average
loans 0.84% 0.82% 1.15%
(1) Efficiency ratio is calculated as non-interest expenses divided
by the sum of net interest income and non-interest income.
(2) Nonperforming loans consist of non-accrual loans and
restructured loans.
(3) Delinquency Ratio includes 30-89 days past due and excludes
non-accrual loans.
SOURCE New Century Bancorp
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