ECB Bancorp, Inc. Reports First Quarter Results - Form 8-K

ECB Bancorp, Inc. Reports First Quarter Results

EVERETT, MA, April 25, 2024 - ECB Bancorp, Inc. (NASDAQ-ECBK) (the "Company"), the holding company for Everett Co-operative Bank (the "Bank"), a state-chartered co-operative bank headquartered in Everett, Massachusetts, today reported net income of $621,000 or $0.07 per diluted share for the quarter ended March 31, 2024 compared to $901,000 or $0.11 per diluted share for the quarter ended March 31, 2023, a decrease of $280,000 in net income.

Richard J. O'Neil, Jr., President and Chief Executive Officer, said, "During the first quarter we grew loans and deposits by 3.0% and 3.9%, respectively. We remain focused on steady, opportunistic growth within our core customer base as well as continued penetration into the city of Woburn and the surrounding area. Our net interest margin continues to be under pressure due to high interest rates and the continued inversion of the yield curve, but our credit quality remains very strong. We continued to increase book value per share through our share buyback program."

NET INTEREST AND DIVIDEND INCOME

Net interest and dividend income before provision for credit losses decreased $463,000, or 7.3% to $5.9 million for the quarter ended March 31, 2024 from $6.4 million for the quarter ended March 31, 2023. This decrease was primarily due to a decrease in the net interest margin, as increases in earning asset yields were more than offset by increased funding costs. Our net interest margin for the quarter ended March 31, 2024 was 1.84% as compared to 2.38% for the quarter ended March 31, 2023. The provision for credit losses decreased $732,000, or 83.3% to $147,000 for the quarter ended March 31, 2024 from $879,000 for the quarter ended March 31, 2023. The decrease in the provision for credit losses was driven by lower loan growth during the quarter ended March 31, 2024 as compared to the quarter ended March 31, 2023. The combination of these items resulted in an increase of $269,000, or 4.9%, in net interest and dividend income after provision for credit losses for the quarter ended March 31, 2024 as compared to the quarter ended March 31, 2023.

NONINTEREST INCOME

Noninterest income increased $78,000, or 34.1% to $307,000 for the quarter ended March 31, 2024 from $229,000 for the quarter ended March 31, 2023. The increase was driven by $35,000 in net gain on sales of loans in the quarter ended March 31, 2024 as there were no loan sales during the quarter ended March 31, 2023.

NONINTEREST EXPENSE

Noninterest expense increased $735,000, or 16.3% to $5.2 million for the quarter ended March 31, 2024 from $4.5 million for the quarter ended March 31, 2023. Significant changes are as follows:

INCOME TAXES

We recorded a provision for income tax expense of $211,000 for the three months ended March 31, 2024, compared to a provision for income tax expense of $319,000 for the three months ended March 31, 2023, reflecting an effective tax rate of 25.4% and 26.1%, respectively.

BALANCE SHEET

Total assets increased $23.1 million, or 1.8%, to $1.30 billion at March 31, 2024 from $1.28 billion at December 31, 2023.

Total net loans increased $31.2 million, or 3.0%, to $1.07 billion at March 31, 2024 from $1.04 billion at December 31, 2023.

Cash and cash equivalents decreased $6.7 million, or 5.6%, to $112.4 million at March 31, 2024 from $119.0 million at December 31, 2023. The decrease in cash and cash equivalents was driven by loan growth.

Deposits increased $33.4 million, or 3.9%, to $901.6 million at March 31, 2024 from $868.2 million at December 31, 2023.

FHLB advances decreased $10.0 million, or 4.3%, to $224.0 million at March 31, 2024 from $234.0 million at December 31, 2023.

Total shareholders' equity increased $888,000, or 0.5%, to $165.8 million as of March 31, 2024 from $164.9 million as of December 31, 2023. This increase is primarily the result of earnings of $621,000 and an increase of $453,000 in accumulated other comprehensive income ("AOCI"). The increase in AOCI was driven by an increase in the fair value of cash flow hedges entered into during the quarter ended March 31, 2024. Partially offsetting these increases to shareholders' equity was a decrease in additional paid-in capital of $276,000. This decrease was driven by $629,000 in shares repurchased under our share repurchase plan, partially offset by an an increase in APIC of $443,000 related to stock based compensation and ESOP shares committed to be be released. Our book value per share increased by $0.19 to $17.94 at March 31, 2024 from $17.75 at December 31, 2023.

ASSET QUALITY

Asset quality remains strong. The allowance for credit losses in total and as a percentage of total loans as of March 31, 2024 was $8.7 million and 0.80%, respectively, as compared to $8.6 million and 0.82%, respectively, as of December 31, 2023. For the quarters ended March 31, 2024 and March 31, 2023 the Company did not record any net charge offs. Total non-performing assets were $1.2 million, or 0.09%, of total assets as of March 31, 2024 and $1.2 million, or 0.09%, of total assets as of December 31, 2023.

Company Profile

ECB Bancorp, Inc. is headquartered in Everett, Massachusetts and is the holding company for Everett Co-operative Bank. The Bank provides financial services to individuals, families, municipalities and businesses through its three full-service branch offices located in Everett, Lynnfield and Woburn, Massachusetts. The Company's common stock is traded on the NASDAQ Capital Market under the symbol "ECBK." For more information, visit the Company's website at www.everettbank.com.

Forward-looking statements

Certain statements herein constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on the beliefs and expectations of management, as well as the assumptions made using information currently available to management. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions. As a result, actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, the Company's ability to continue to increase loans and deposit growth, legislative and regulatory changes that adversely affect the businesses in which the Company is engaged and changes in the securities market. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company disclaims any intent or obligation to update any forward-looking statements, whether in response to new information, future events or otherwise, except as may be required by law.

ECB Bancorp, Inc. and Subsidiary

Consolidated Balance Sheets

March 31, 2024 (unaudited) and December 31, 2023

(in thousands except share data)

ECB Bancorp, Inc. and Subsidiary

Consolidated Statements of Income

(unaudited)

(in thousands except share data)