Newport Bancorp, Inc. Reports Results for Third Quarter and First Nine Months of 2012

NEWPORT, R.I., Oct. 19, 2012 /PRNewswire/ -- Newport Bancorp, Inc. (the "Company") (Nasdaq: NFSB), the holding company for Newport Federal Savings Bank (the "Bank"), today announced third quarter earnings for 2012.  For the quarter ended September 30, 2012, the Company reported net income of $417,000, or $0.13 per basic share and $0.12 per diluted share, compared to net income of $278,000, or $0.08 per share (basic and diluted), for the quarter ended September 30, 2011.  For the nine months ended September 30, 2012, the Company reported net income of $1.1 million, or $0.32 per share (basic and diluted), compared to net income of $1.0 million, or $0.31 per basic share and $0.30 per diluted share for the nine months ended September 30, 2011.  

During the first nine months of 2012, the Company's assets increased by $17.7 million, or 3.9%, to $471.6 million.  The increase in assets was primarily concentrated in net loans, which increased by $18.4 million, or 5.3%, and cash and cash equivalents, which increased by $3.4 million, or 10.9%, partially offset by a $2.5 million, or 6.9%, decrease in securities and a $1.0 million, or 6.8%, decrease in net premises and equipment.  The increase in cash and cash equivalents is due to principal payments received on mortgage-backed securities and an increase in deposits and borrowings. The loan portfolio increase was attributable to an increase in residential mortgages (an increase of $24.6 million, or 11.8%), partially offset by decreases in home equity loans and lines (a decrease of $1.6 million, or 8.4%), commercial mortgages (a decrease of $3.2 million, or 2.6%) and construction loans (a decrease of $1.3 million, or 26.3%).  The decrease in net premises and equipment is attributable to normal depreciation and amortization and the sale of the former Westerly, Rhode Island branch, with a carrying value of $415,000, resulting in a gain of $15,000.                       

For the nine months ended September 30, 2012, deposit balances increased by $13.5 million, or 5.1%. The increase in deposits occurred in NOW/Demand accounts (an increase of $15.2 million, or 13.5%) and savings accounts (an increase of $4.6 million, or 14.2%), partially offset by decreases in money market accounts (a decrease of $2.4 million, or 5.0%) and time deposit accounts (a decrease of $3.9 million, or 5.5%).

Total stockholders' equity at September 30, 2012 was $52.6 million compared to $51.7 million at December 31, 2011.  The increase was primarily attributable to net income and stock-based compensation credits, partially offset by share buybacks under the Company's stock repurchase plan.

Net interest income decreased to $3.4 million for the quarter ended September 30, 2012 from $3.7 million for the quarter ended September 30, 2011, a decrease of 7.7%.  Net interest income for the nine months ended September 30, 2012 was $10.4 million, compared to $11.3 million for nine months ended September 30, 2011, a decrease of $869,000, or 7.7%.  The decrease in net interest income for the three and nine months ended September 30, 2012 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 decreased to 4.70% in the third quarter of 2012, compared to 5.30% for the third quarter of 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 $434,000 of income earned on such assets.  The average cost of interest-bearing liabilities decreased to 1.56% for the quarter ended September 30, 2012 from 1.75% for the quarter ended September 30, 2011, resulting in a $148,000 decrease in total interest expense.  The average balance of interest-bearing deposits increased $4.3 million, or 1.92%, for the third quarter of 2012 compared to the third quarter of 2011, as the average cost of interest-bearing deposits decreased by 25 basis points, resulting in a $134,000 decrease in interest expense on such deposits. The Company's third quarter 2012 interest rate spread decreased to 3.14% from 3.56% in the third quarter of 2011, a decrease of 42 basis points.

The average yield on interest-earning assets for the nine months ended September 30, 2012 was 4.79%, compared to 5.31% for the same period in 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 $1.4 million of income earned on such assets.  The average cost of interest-bearing liabilities decreased to 1.58% for the nine months ended September 30, 2012 from 1.79% for the nine months ended September 30, 2011, resulting in a $523,000 decrease in total interest expense.  The average balance of interest-bearing deposits increased $3.3 million, or 1.47%, for the first nine months of 2012, as the average cost of interest-bearing deposits decreased by 30 basis points in the nine months ended September 30, 2012, resulting in a $484,000 decrease in interest expense on such deposits. For the nine months ended September 30, 2012, the interest rate spread decreased to 3.21% from 3.53% in 2011, a decrease of 32 basis points.

Non-performing assets totaled $4.2 million, or 0.88% of total assets, at September 30, 2012, compared to $2.7 million, or 0.61% of total assets, at December 31, 2011.  Non-performing assets at September 30, 2012 consisted of seven commercial real estate mortgage loans totaling $3.4 million, two one-to-four family residential real estate mortgage loans totaling $521,000, one home equity loan totaling $57,000, and $157,000 of foreclosed real estate.  Net charge-offs were $7,000 and $525,000 for the quarters ended September 30, 2012 and 2011, respectively. Net charge-offs for the nine month periods ended September 30, 2012 and 2011 amounted to $669,000 and $1.0 million, respectively.  The loan loss provision for the three and nine months ended September 30, 2012 was $176,000 and $798,000 respectively, compared to $507,000 and $1.0 million for the three and nine months ended September 30, 2011, 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 provision decreased during the first nine months of 2012 compared to the first nine months of 2011, due to changes in the loan portfolio mix, a decrease in non-impaired classified loans under watch by management 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 three and nine months ended September 30, 2012 totaled $592,000 and $1.7 million, respectively, compared to $650,000 and $1.8 million for the three and nine months ended September 30, 2011, respectively.   The $58,000, or 8.9%, decrease in non-interest income for the third quarter of 2012 from the third quarter of 2011 is primarily attributable to a $43,000 decrease in customer services fees earned on checking accounts. The $89,000, or 4.9%, decrease in non-interest income for the first nine months of 2012 compared to the same period in 2011 is primarily due to the $65,000 decrease in customer service fees earned on checking accounts.

Non-interest expenses totaled $3.2 million for the quarter ended September 30, 2012 compared to $3.4 million for the quarter ended September 30, 2011. The decrease between periods is attributable primarily to decreases in salaries and employee benefits and other general and administrative expenses. For the nine months ended September 30, 2012, non-interest expenses totaled $9.8 million, a decrease of $745,000, or 7.1%, compared to the same period in 2011.  The decrease in non-interest expenses for the first nine months of 2012 when compared to the first nine months of 2011 is attributable primarily to decreases in salaries and employee benefits and other general and administrative expenses.  The decrease in salaries and benefits for both the three and nine month periods 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 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 ("SEC") 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




September 30,

2012


December 31,

 2011



(Unaudited)

(Dollars in thousands, except share data)



Cash and due from banks

$  25,539


$  19,739


Short-term investments

8,912


11,335


Cash and cash equivalents

34,451


31,074







Securities held to maturity, at amortized cost

33,735


36,220


Federal Home Loan Bank stock, at cost

5,588


5,730


 

Loans

370,700


352,201


Allowance for loan losses

(3,838)


(3,709)


        Loans, net

366,862


348,492


 

Premises and equipment

13,702


14,706


Accrued interest receivable

1,251


1,268


Net deferred tax asset

2,809


2,809


Bank-owned life insurance

11,366


11,088


Foreclosed real estate

157


839


Prepaid FDIC insurance

503


734


Other assets

1,143


949


       Total assets

$471,567


$453,909




LIABILITIES AND STOCKHOLDERS' EQUITY

 


Deposits

$278,272


$264,769


Long-term borrowings

136,772


133,696


Accrued expenses and other liabilities

3,909


3,790


       Total liabilities

418,953


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

50,453


50,282


Retained earnings

21,354


20,282


Unearned compensation (252,832 and 272,786 shares at





    September 30, 2012 and December 31, 2011, respectively)

(2,146)


(2,413)


Treasury stock, at cost (1,409,535 shares and 1,371,943 shares





    at September 30, 2012 and December 31, 2011, respectively)

(17,096)


(16,546)


        Total stockholders' equity

52,614


51,654


        Total liabilities and stockholders' equity

$471,567


$453,909










 

 

NEWPORT BANCORP, INC.



CONSOLIDATED STATEMENTS OF INCOME








Three Months Ended

September 30,


Nine Months Ended

September 30,


2012


2011


2012


2011


(Unaudited)

(Dollars in thousands, except share data)









Interest and dividend income:








        Loans

$4,492


$4,801


$13,483


$14,515

        Securities

364


489


1,191


1,570

        Other interest-earning assets

15


15


50


31

                Total interest and dividend income

4,871


5,305


14,724


16,116









Interest expense:








        Deposits

285


419


906


1,390

        Short-term borrowings

-


-


-


3

        Long-term borrowings

1,139


1,153


3,403


3,439

                Total interest expense

1,424


1,572


4,309


4,832









Net interest income

3,447


3,733


10,415


11,284

Provision for loan losses

176


507


798


1,029









                Net interest income, after provision for loan losses

3,271


3,226


9,617


10,255









Non-interest income:








         Customer service fees

476


519


1,402


1,467

        Bank-owned life insurance

91


92


279


286

         Miscellaneous

25


39


39


56

                Total non-interest income

592


650


1,720


1,809









Non-interest expenses:








        Salaries and employee benefits

1,675


1,839


5,146


5,725

        Occupancy and equipment

554


537


1,646


1,647

        Data processing

445


406


1,247


1,167

        Professional fees

147


147


483


433

        Marketing

145


151


456


530

       FDIC insurance

113


92


261


326

        Other general and administrative

155


235


514


670

                Total non-interest expenses

3,234


3,407


9,753


10,498









Income before income taxes

629


469


1,584


1,566









Provision for income taxes

212


191


512


548









Net income

$417


$278


$1,072


$1,018









Weighted-average shares outstanding:








       Basic

3,311,469


3,321,079


3,313,979


3,314,766

       Diluted

3,364,158


3,331,446


3,348,655


3,369,618









Earnings per share:








       Basic

$0.13


$0.08


$0.32


$0.31

       Diluted

$0.12


$0.08


$0.32


$0.30

                                                                                                                                                 

SOURCE Newport Bancorp, Inc.



RELATED LINKS
http://www.newportfederal.com

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