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New Century Bancorp Inc. Reports Operating Results (10-Q)

August 14, 2009 | About:

New Century Bancorp Inc. (NCBC) filed Quarterly Report for the period ended 2009-06-30.

NEW CENTURY BANCORP INC. is the holding company for New Century Bank and has offices in Dunn Clinton Fayetteville Goldsboro Lillington Lumberton Raeford and Pembroke. New Century Bank serves these and nearby communities focusing on local businesses and consumers. Since inception New Century Bank has enjoyed exceptional support from its directors shareholders customers and the communities it serves. They focus on enhanced value and convenience through new or modified products as well as by offering new banking locations. Their mission is to remain customer- and community-focused employing a strategy of branching to attractive areas and markets that value the services and personal touch New Century Bank provides. New Century Bancorp Inc. has a market cap of $46 million; its shares were traded at around $6.74 with and P/S ratio of 1.2.

Highlight of Business Operations:

During the first six months of 2009, total assets grew by $23.2 million to $629.0 million as of June 30, 2009. Earning assets at June 30, 2009 totaled $574.0 million and consisted of $459.4 million in net loans, $91.7 million in investment securities, $20.9 million in overnight investments and interest-bearing deposits in other banks and $2.0 million in non-marketable equity securities. Total deposits and shareholders equity at the end of the second quarter were $527.6 million and $62.9 million, respectively.

As of June 30, 2009, there were $13.8 million of loans that were considered to be impaired as a result of $13.4 million being placed in non-accrual status and another $400,000 continuing to accrue interest while delinquent more than 90 days. $5.8 million of these impaired loans required a specific reserve of $2.1 million at June 30, 2009. Of the $9.1 million classified as impaired at December 31, 2008, $4.2 million required a specific reserve of $3.4 million. The allowance for loan losses was $8.5 million at June 30, 2009 or 1.82% of gross loans outstanding. This is a decrease of 10 basis points from the 1.92% of gross loans at December 31, 2008. The allowance for loan losses at June 30, 2009 represented 61.73% of impaired loans. The decrease in the allowance resulted from net charge-offs of $2.4 million during the first six months of 2009, partially offset by provisions for loan losses of $2.1 million. Most of the loans charged-off in 2009 were classified as impaired at December 31, 2008 and had been specifically reserved for as part of the allowance for loan loss calculation. It is managements assessment that the allowance for loan losses as of June 30, 2009 is appropriate in light of the risk inherent within the Companys loan portfolio.

second quarter of 2009. Interest-earning deposits in other banks were $20.9 million at June 30, 2009, a $7.1 million increase from December 31, 2008. The Companys investment securities at June 30, 2009 were $91.7 million, an increase of $8.8 million from December 31, 2008. The investment portfolio as of June 30, 2009 consisted of $44.3 million in government agency debt securities, $41.0 million in mortgage-backed securities and $6.4 million in municipal securities. The unrealized gain on these securities was $2.4 million.

At June 30, 2009, non-earning assets were $56.0 million, which reflects an increase of $9.7 million from the $45.3 million as of December 31, 2008. Non-earning assets as of June 30, 2009 included $19.2 million in cash and due from banks, bank premises and equipment of $11.7 million, goodwill of $8.7 million, core deposit intangible of $0.9 million, accrued interest receivable of $2.5 million, foreclosed real estate of $2.2 million, and other assets totaling $3.4 million. As indicated previously, goodwill amounted to $8.7 million at June 30, 2009.

Total deposits at June 30, 2009 were $527.6 million and consisted of $65.9 million in non-interest-bearing demand deposits, $78.8 million in money market and NOW accounts, $27.0 million in savings accounts, and $355.9 million in time deposits. Total deposits grew by $22.5 million from $505.1 million as of December 31, 2008. Brokered deposits totaled $3.8 million or 0.72% of quarter-end deposits.

General. During the six months ended June 30, 2009, the Company had net income of approximately $155,000 as compared with net income of approximately $314,000 for the same period in 2008. Net income per share for the first six months of 2009 was $.02 per share, basic and diluted, compared with $.05 per share, basic and diluted, for the same period in 2008. The first six months of 2009 results were impacted by a higher provision for loan losses of $2.1 million compared to $1.2 million for the same period in 2008. The Company also experienced a decrease in net interest margin of 3 basis points to 3.21% for the six months ending June 30, 2009 as compared to the same period in 2008, as a result of the continuation of low interest rates maintained the Federal Reserve policy in addressing the ongoing decline in economic conditions and concerns over the financial strength of the banking industry. Also in the first two quarters of 2009, there was $239,000 in write downs and losses on OREO as compared to $139,000 for the same period 2008. For the six months ending on June 30, 2008, there was a $357,000

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