Newport Bancorp, Inc. Reports Results for Fourth Quarter and Year-End of 2012

NEWPORT, R.I., Jan. 25, 2013 /PRNewswire/ -- Newport Bancorp, Inc. (the "Company") (Nasdaq: NFSB), the holding company for Newport Federal Savings Bank (the "Bank"), today announced earnings for the quarter and year ended December 31, 2012.   For the quarter ended December 31, 2012, the Company reported net income of $489,000, or $0.14 per diluted share, compared to net income of $432,000, or $0.13 per diluted share, for the quarter ended December 31, 2011.  For the year ended December 31, 2012, the Company reported net income of $1.6 million, or $0.46 per diluted share, compared to net income of $1.5 million, or $0.44 per diluted share for the year ended December 31, 2011.

During the year ended December 31, 2012, the Company's assets decreased by $4.5 million, or 1.0%, to $449.4 million.  The decrease in assets was concentrated in securities, which decreased by $13.9 million, or 38.4%, and a $1.2 million, or 8.3%, decrease in premises and equipment, offset in part by a $5.0 million, or 16.0%, increase in cash and cash equivalents and a $6.5 million, or 1.9%, increase in net loans.  The decrease in securities was attributable to principal payments received on the mortgage-backed securities, which contributed to the increase in cash and cash equivalents.  The decrease in net premises and equipment is attributable to the sale of the former Westerly, Rhode Island branch and normal depreciation and amortization.  The loan portfolio increase was attributable to an increase in residential mortgages (an increase of $20.7 million, or 9.9%), partially offset by decreases in home equity loans and lines (a decrease of $2.6 million, or 13.3%), commercial mortgages (a decrease of $10.1 million, or 8.5%), commercial loans (a decrease of $118,000, or 10.6%), and construction loans (a decrease of $899,000, or 17.9%).

For the year ended December 31, 2012, deposit balances increased by $24.9 million, or 9.4%.  The increase in deposits occurred in NOW/Demand accounts (an increase of $18.1 million, or 16.0%), savings accounts (an increase of $6.3 million, or 19.5%) and time deposit accounts (an increase of $5.1 million, or 7.2%), partially offset by a decrease in money market accounts (a decrease of $4.6 million, or 9.4%).

Total stockholders' equity at December 31, 2012 was $53.2 million compared to $51.7 million at December 31, 2011.  The increase was primarily attributable to net income and stock-based compensation credits.

Net interest income decreased to $3.4 million for the quarter ended December 31, 2012 from $3.7 million for the quarter ended December 31, 2011, a decrease of 7.1%.  Net interest income for the year ended December 31, 2012 was $13.8 million, compared to $14.9 million for the year ended December 31, 2011, a decrease of 7.6%.  The decrease in net interest income during the 2012 periods was primarily due to a decrease in the interest earned on loans and securities, partially offset by a decrease in the expense from deposits and borrowings.  

The average yield on interest-earning assets for the year ended December 31, 2012 was 4.75%, compared to 5.25% for the year ended December 31, 2011.  This decline in the yield was partially offset by an increase in the average balance of interest-earning assets, resulting in a decrease of $1.9 million of income earned on such assets.  The average cost of interest-bearing liabilities decreased to 1.54% for the year ended December 31, 2012 from 1.76% for the year ended December 31, 2011, resulting in a $751,000 decrease in total interest expense.  The average balance of interest-bearing deposits increased $4.3 million, or 1.9%, for the year ended December 31, 2012, as the average cost of interest-bearing deposits decreased by 26 basis points in the year ended December 31, 2012, resulting in a $560,000 decrease in interest expense on such deposits. For the year ended December 31, 2012, the interest rate spread decreased to 3.21% from 3.50% for the year ended December 31, 2011, a decrease of 29 basis points.

Non-performing assets totaled $2.2 million, or 0.48% of total assets, at December 31, 2012, compared to $2.7 million, or 0.61% of total assets, at December 31, 2011.  Non-performing assets at December 31, 2012 consisted of four commercial real estate loans totaling $1.6 million, two one-to-four family residential real estate loans totaling $518,000 and one home equity loan totaling $56,000.  Net charge-offs for the quarter ended December 31, 2012 and December 31, 2011 totaled $28,000 and $51,000, respectively.  Net charge-offs for the years ended December 31, 2012 and 2011 were $696,000 and $1.1 million, respectively.  The loan loss provision for the fourth quarter of 2012 was $221,000, compared to $92,000 for the fourth quarter of 2011.  The loan loss provision for the years ended December 31, 2012 and December 31, 2011 was $1.0 million and $1.1 million, respectively.  Management reviews the level of the allowance for loan losses on a quarterly basis and establishes the provision for loan losses based upon the volume and types of lending, delinquency levels, loss experience, the amount of impaired and classified loans, economic conditions and other factors related to the collectability of the loan portfolio.  The 2012 provision decreased compared to the 2011 provision due to changes in the loan portfolio mix, a decrease in non-performing loans and a decrease in charge-offs, offset by loan growth and an increase in allocated reserves for loans that have been restructured.

Non-interest income for the fourth quarter of 2012 totaled $737,000, an increase of $160,000, or 27.7%, compared to the fourth quarter of 2011.  For the year ended December 31, 2012, non-interest income totaled $2.5 million, an increase of $71,000, or 3.0%, compared to the year ended December 31, 2011.  The increase in non-interest income between the two years and two quarters was primarily due to an increase in bank-owned life insurance income as a result of life insurance proceeds, partially offset by a decrease in customer service fees earned on checking accounts.

Non-interest expenses decreased to $3.3 million for the quarter ended December 31, 2012 from $3.5 million for the quarter ended December 31, 2011, a decrease of 6.2%.  The decrease between periods is attributable to decreases in salaries and employee benefits, marketing costs and other general and administrative expenses, partially offset by increases in data processing costs, professional fees and FDIC insurance costs.  For the year ended December 31, 2012, non-interest expenses totaled $13.0 million, a $961,000 decrease, or 6.9%, compared to the year ended December 31, 2011.  The decrease in total non-interest expense between the two years is attributable to decreases in salaries and employee benefits, marketing costs and other general and administrative expenses, partially offset by increases in data processing costs and professional fees.  The decrease in salaries and benefits is primarily due to a decrease in salary costs and a reduction in the stock-based compensation expense associated with option grants and restricted stock awards.  The accelerated method of expense recognition was adopted at the inception of the equity incentive plan on October 1, 2007, resulting in a higher stock-based compensation expense in the 2011 period compared to the 2012 period.  The decrease in marketing costs is a result of a continued effort by management to reduce advertising and marketing expenses. The decrease in other general and administrative expenses is primarily due to decreases in foreclosed real estate and stationery and office supply expenses. 

This news release may contain forward-looking statements, which can be identified by the use of words such as "believes," "expects," "anticipates," "estimates" or similar expressions.  Such forward-looking statements and all other statements that are not historic facts are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors.  These factors include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets, changes in deposit flows and changes in the quality or composition of the Company's loan or investment portfolios.  Additionally, other risks and uncertainties may be described in the Company's annual report on Form 10-K, its quarterly reports on Form 10-Q or its other reports filed with the Securities and Exchange Commission which are available through the SEC's website at www.sec.gov.  Should one or more of these risks materialize, actual results may vary from those anticipated, estimated or projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.  Except as may be required by applicable law or regulation, the Company assumes no obligation to update any forward-looking statements.


 

 

NEWPORT BANCORP, INC.
CONSOLIDATED BALANCE SHEETS

 

ASSETS


December 31,



2012


2011


                                                                                                                (Unaudited)

                                                                                                       (Dollars in thousands, except per share data)


Cash and due from banks

$  20,311


$  19,739


Short-term investments

15,732


11,335


      Cash and cash equivalents

36,043


31,074







Securities held to maturity, at amortized cost

22,307


36,220


Federal Home Loan Bank stock, at cost

5,588


5,730


 

Loans

359,069


352,201


Allowance for loan losses

(4,031)


(3,709)


        Loans, net

355,038


348,492


 

Premises and equipment

 

13,489


14,706


Accrued interest receivable

1,118


1,268


Net deferred tax asset

2,848


2,809


Bank-owned life insurance

11,456


11,088


Foreclosed real estate

-


839


Prepaid FDIC insurance

423


734


Other assets

1,103


949







      Total assets

$449,413


$453,909




LIABILITIES AND STOCKHOLDERS' EQUITY

 


Deposits

$289,674


$264,769


Long-term borrowings

102,797


133,696


Accrued expenses and other liabilities

3,787


3,790


      Total liabilities

396,258


402,255







Preferred stock, $.01 par value; 1,000,000 shares authorized;

       none issued

-


-


Common stock, $.01 par value; 19,000,000 shares authorized;
      4,878,349 shares issued

49


49


Additional paid-in capital

50,085


50,282


Retained earnings

21,843


20,282


Unearned compensation (208,143 and 272,786 shares at





    December 31, 2012 and December 31, 2011, respectively)

(2,081)


(2,413)


Treasury stock, at cost (1,378,627 shares and 1,371,943 shares





    at December 31, 2012 and December 31, 2011, respectively)

(16,741)


(16,546)


        Total stockholders' equity

53,155


51,654


        Total liabilities and stockholders' equity

$449,413


$453,909









 

 

NEWPORT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME



Three Months Ended

December 31,


Years Ended

December 31,


2012


2011


2012


2011


(Unaudited)

(Dollars in thousands, except per share data)









Interest and dividend income:








        Loans

$4,317


$4,661


$17,800


$19,176

        Securities

319


471


1,510


2,041

        Other interest-earning assets

25


17


75


48

                Total interest and dividend income

4,661


5,149


19,385


21,265









Interest expense:








        Deposits

284


360


1,190


1,750

        Short-term borrowings

-


-


-


3

        Long-term borrowings

987


1,139


4,390


4,578

                Total interest expense

1,271


1,499


5,580


6,331









Net interest income

3,390


3,650


13,805


14,934

Provision for loan losses

221


92


1,019


1,121









                Net interest income, after provision for loan losses

3,169


3,558


12,786


13,813









Non-interest income:








         Customer service fees

478


462


1,880


1,929

         Bank-owned life insurance

254


97


532


383

         Miscellaneous

5


18


45


74

                Total non-interest income

737


577


2,457


2,386









Non-interest expenses:








        Salaries and employee benefits

1,739


1,974


6,885


7,699

        Occupancy and equipment

546


538


2,192


2,185

        Data processing

435


397


1,682


1,564

        Professional fees

187


102


670


535

        Marketing

121


181


577


711

        FDIC Insurance

78


17


339


343

        Other general and administrative

147


260


661


930

                Total non-interest expenses

3,253


3,469


13,006


13,967









Income before income taxes

653


666


2,237


2,232









Provision for income taxes

164


234


676


782









Net income

$489


$432


$1,561


$1,450

















Weighted-average shares outstanding:








      Basic

3,287,243


3,317,328


3,306,817


3,315,369

      Diluted

3,389,758


3,317,328


3,358,452


3,329,082

















Earnings per share:








      Basic

$0.15


$0.13


$0.47


$0.44

      Diluted

$0.14


$0.13


$0.46


$0.44

 

 

SOURCE Newport Bancorp, Inc.



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