New Century Bancorp Reports Year-End 2009 Results

Jan 29, 2010, 19:52 ET from New Century Bancorp

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.

www.newcenturybanknc.com

SOURCE New Century Bancorp



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