8-K
ECB Bancorp, Inc. /MD/ (ECBK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 24, 2024
ECB BANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Maryland | 001-41456 | 88-1502079 |
|---|---|---|
| (State or Other Jurisdiction | (Commission | (IRS Employer |
| of Incorporation or Organization) | File Number) | Identification No.) |
419 Broadway, Everett, Massachusetts 02149
(Address of principal executive offices) (Zip Code)
(617) 387-1110
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | ECBK | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On October 24, 2024, ECB Bancorp, Inc., the holding company for Everett Co-operative Bank, issued a press release announcing its financial results at and for the three and nine months ended September 30, 2024.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| 99.1 | Press release dated October 24, 2024 |
|---|---|
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
| ECB BANCORP, INC. | ||
|---|---|---|
| Date: October 24, 2024 | By: | /s/Brandon N. Lavertu |
| Brandon N. Lavertu | ||
| Chief Financial Officer |
EX-99.1
For Immediate Release
Date: October 24, 2024
| Contact: | Richard J. O’Neil, Jr. |
|---|---|
| President and Chief Executive Officer | |
| Phone: | 617-387-1110 |
| Email: | rjoneil@everettbank.com |
ECB Bancorp, Inc. Reports Third Quarter Results
EVERETT, MA, October 24, 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 $1.1 million, or $0.14 per diluted share, for the quarter ended September 30, 2024, compared to $1.3 million, or $0.16 per diluted share, for the quarter ended September 30, 2023. For the nine months ended September 30, 2024, the Company reported net income of $2.5 million, or $0.30 per diluted share, as compared to net income of $3.7 million, or $0.43 per diluted share, for the nine months ended September 30, 2023.
Richard J. O’Neil, Jr., President and Chief Executive Officer, said, "We remain focused on orderly and diligent balance sheet growth and maintaining strong asset quality. We are committed to thoughtfully managing expenses and are focused on enhancing franchise value every day. The third quarter marks the one-year anniversary of the opening of our Woburn, MA branch. As of September 30th, 2024 our Woburn team has grown deposits to $68 million and we have established many new banking relationships. Our retail and lending teams continue to strengthen our existing relationships and attract new customers to our brand and expanded offerings."
NET INTEREST AND DIVIDEND INCOME
Net interest and dividend income before provision for credit losses was $6.3 million for the quarter ended September 30, 2024, or an increase of $205,000, or 3.4%, from $6.1 million for the quarter ended September 30, 2023. This increase was primarily due to an increase in average interest-earning assets, partially offset by a decrease in net interest margin. The net interest margin for the quarter ended September 30, 2024 was 1.85% as compared to 2.00% for the quarter ended September 30, 2023. The provision for credit losses was $46,000 for the quarter ended September 30, 2024 compared to a benefit of $184,000 for the quarter ended September 30, 2023. The combination of these items resulted in a decrease of $25,000, or 0.4%, in net interest and dividend income after provision for credit losses for the quarter ended September 30, 2024 as compared to the quarter ended September 30, 2023.
Net interest and dividend income before provision for credit losses was $18.2 million for the nine months ended September 30, 2024, or a decrease of $646,000, or 3.4%, from $18.9 million for the nine months ended September 30, 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 nine months ended September 30, 2024 was 1.83% as compared to 2.18% for the nine months ended September 30, 2023. The provision for credit losses decreased $211,000, to $485,000 for the nine months ended September 30, 2024, from $696,000 for the nine months ended September 30, 2023. The combination of these items resulted in a decrease of $435,000, or 2.4%, in net interest and dividend income after provision for credit losses for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.
NONINTEREST INCOME
Noninterest income was $304,000 for the quarter ended September 30, 2024, or a decrease of $18,000, or 5.6%, from $322,000 for the quarter ended September 30, 2023. The decrease was driven by lower income from bank-owned life insurance as the third quarter of 2023 included a $72,000 gain recognized into income from a life insurance policy death benefit. Partially offsetting this decrease were increases in both net gains on sales of loans and customer service fees.
Noninterest income was $898,000 for the nine months ended September 30, 2024, or an increase of $107,000, or 13.5%, from $791,000 for the nine months ended September 30, 2023. The increase was driven by increases in net gains on sales of loans and customer service fees.
NONINTEREST EXPENSE
Noninterest expense was $5.0 million for the quarter ended September 30, 2024, or an increase of $200,000, or 4.2%, from $4.8 million for the quarter ended September 30, 2023. Significant changes are as follows:
Salaries and employee benefits increased $288,000, or 9.9%, driven by $245,000 in stock based compensation recorded during the quarter ended September 30, 2024 related to the 2023 Equity Incentive Plan. There were no stock based
compensation costs recorded during the quarter ended September 30, 2023 as the employee stock awards were granted in the fourth quarter of 2023;
Director compensation increased $70,000, or 50.4%, driven by $83,000 in stock based compensation recorded during the quarter ended September 30, 2024 as compared to $20,000 in stock based compensation recorded during the quarter ended September 30, 2023. The director stock awards were granted at the end of the third quarter of 2023;
Advertising and promotions decreased $42,000, or 20.9%. We have strategically reduced certain advertising costs in an effort to manage overall noninterest expenses; and
Professional fees decreased $64,000, or 21.1%, primarily due to higher legal and consulting costs during the 2023 period related to operating as a new publicly traded company.
Noninterest expense was $15.2 million for nine months ended September 30, 2024, or an increase of $1.2 million, or 8.3%, from $14.0 million for the nine months ended September 30, 2023. Significant changes are as follows:
- Salaries and employee benefits increased $1.0 million, or 11.8%, driven by $729,000 in stock based compensation recorded during the nine months ended September 30, 2024, related to the 2023 Equity Incentive Plan. There were no stock based compensation costs during the nine months ended September 30, 2023 related to this plan as the employee stock awards were granted in the fourth quarter of 2023;
- Director compensation increased $247,000, or 65.2%, driven by $248,000 in stock based compensation recorded in the nine months ended September 30, 2024 as compared to $20,000 in stock based compensation costs recorded during the nine months ended September 30, 2023. The director stock awards were granted at the end of the third quarter of 2023;
- Occupancy and equipment costs increased $93,000, or 13.4%, primarily due to our new branch in Woburn, MA.
- Advertising and promotions decreased $180,000, or 31.3%. We have strategically reduced certain advertising costs in an effort to manage overall noninterest expenses; and
- Professional fees decreased $131,000, or 13.6%, primarily due to higher legal and consulting costs during the 2023 period related to operating as a new publicly traded company.
INCOME TAXES
We recorded a provision for income tax expense of $405,000 for the quarter ended September 30, 2024, compared to a provision for income tax expense of $440,000 for the quarter ended September 30, 2023, reflecting effective tax rates of 26.3% and 24.7%, respectively.
We recorded a provision for income tax expense of $887,000 for the nine months ended September 30, 2024, compared to a provision for income tax expense of $1.3 million for the nine months ended September 30, 2023, reflecting effective tax rates of 25.8% and 25.6%, respectively.
BALANCE SHEET
Total assets increased $77.6 million, or 6.1%, to $1.36 billion at September 30, 2024 from $1.28 billion at December 31, 2023.
Total gross loans increased $75.9 million, or 7.2%, to $1.12 billion at September 30, 2024 from $1.05 billion at December 31, 2023.
- Multi-family real estate loans increased $39.6 million, or 13.8%, to $327.0 million at September 30, 2024 from $287.4 million at December 31, 2023.
- Commercial real estate loans increased $26.3 million, or 13.4%, to $222.7 million at September 30, 2024 from $196.4 million at December 31, 2023.
- Residential real estate loans increased $9.2 million, or 2.3%, to $419.4 million at September 30, 2024 from $410.1 million at December 31, 2023.
- Home equity lines of credit increased $6.1 million, or 18.2%, to $39.4 million at September 30, 2024 from $33.4 million at December 31, 2023.
- Commercial loans increased $5.3 million, or 57.4%, to $14.5 million at September 30, 2024 from $9.2 million at December 31, 2023.
- Construction loans decreased $10.6 million, or 9.5%, to $101.4 million at September 30, 2024 from $112.0 million at December 31, 2023.
Deposits increased $76.1 million, or 8.8%, to $944.3 million at September 30, 2024 from $868.2 million at December 31, 2023.
- Certificates of deposit increased $83.0 million, or 16.7%, to $581.5 million at September 30, 2024 from $498.5 million at December 31, 2023.
- Money market deposit accounts increased $32.1 million, or 24.4%, to $163.4 million at September 30, 2024 from $131.4 million at December 31, 2023.
- Savings accounts decreased $31.5 million, or 22.8%, to $106.4 million at September 30, 2024 from $137.8 million at December 31, 2023.
- Demand deposit accounts decreased $4.3 million, or 5.5%, to $74.1 million at September 30, 2024 from $78.3 million at December 31, 2023.
- Interest-bearing checking accounts decreased $3.2 million, or 14.5%, to $18.9 million at September 30, 2024 from $22.2 million at December 31, 2023.
Total shareholders' equity increased $1.1 million, or 0.7%, to $166.0 million as of September 30, 2024 from $164.9 million as of December 31, 2023. This increase is primarily the result of net income of $2.5 million. Partially offsetting the increase in shareholders' equity was a decrease in accumulated other comprehensive income ("AOCI") of $910,000 and a decrease in additional paid-in capital of $761,000. The decrease in AOCI was driven by a decrease in the fair value of cash flow hedges entered into during the nine months ended September 30, 2024. The decrease in additional paid in capital was driven by $1.8 million in shares repurchased under our share repurchase plan, partially offset by an increase in additional paid in capital of $1.1 million related to stock based compensation and ESOP shares committed to be released. The book value per share increased $0.39 to $18.14 at September 30, 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 September 30, 2024 was $9.0 million and 0.81%, respectively, as compared to $8.6 million and 0.82%, respectively, as of December 31, 2023. For the nine months ended September 30, 2024 and September 30, 2023 the Company recorded net charge offs of $3,000 and $0, respectively. Total non-performing assets were $1.1 million, or 0.08%, of total assets as of September 30, 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
September 30, 2024 (unaudited) and December 31, 2023
(in thousands except share data)
| December 31, 2023 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Cash and due from banks | 4,783 | $ | 3,786 | ||
| Short-term investments | 114,847 | 115,250 | |||
| Total cash and cash equivalents | 119,630 | 119,036 | |||
| Interest-bearing time deposits | 200 | — | |||
| Investments in available-for-sale securities (at fair value) | 4,163 | 5,003 | |||
| Investments in held-to-maturity securities, at amortized cost (fair values of 72,841 at September 30, 2024 and 70,590 at December 31, 2023) | 77,233 | 76,979 | |||
| Loans held-for-sale | 703 | — | |||
| Loans, net of allowance for credit losses of 9,068 at September 30, 2024 and 8,591 at December 31, 2023 | 1,114,943 | 1,039,789 | |||
| Federal Home Loan Bank stock, at cost | 9,850 | 9,892 | |||
| Premises and equipment, net | 3,587 | 3,754 | |||
| Accrued interest receivable | 4,164 | 3,766 | |||
| Deferred tax asset, net | 5,592 | 4,767 | |||
| Bank-owned life insurance | 14,826 | 14,472 | |||
| Other assets | 3,063 | 2,877 | |||
| Total assets | 1,357,954 | $ | 1,280,335 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Deposits: | |||||
| Noninterest-bearing | 74,059 | $ | 78,342 | ||
| Interest-bearing | 870,266 | 789,872 | |||
| Total deposits | 944,325 | 868,214 | |||
| Federal Home Loan Bank advances | 234,000 | 234,000 | |||
| Other liabilities | 13,580 | 13,220 | |||
| Total liabilities | 1,191,905 | 1,115,434 | |||
| Shareholders' Equity: | |||||
| Preferred Stock, par value 0.01; Authorized: 1,000,000 shares; Issued and outstanding: 0 shares and 0 shares, respectively | — | — | |||
| Common Stock, par value 0.01; Authorized: 30,000,000 shares; Issued and outstanding: 9,152,280 shares and 9,291,810 shares, respectively | 92 | 93 | |||
| Additional paid-in capital | 86,670 | 87,431 | |||
| Retained earnings | 86,399 | 83,854 | |||
| Accumulated other comprehensive (loss) income | (781 | ) | 129 | ||
| Unearned compensation - ESOP | (6,331 | ) | (6,606 | ) | |
| Total stockholders' equity | 166,049 | 164,901 | |||
| Total liabilities and stockholders' equity | 1,357,954 | $ | 1,280,335 | ||
| Shareholders' Equity Ratios | |||||
| Book value per common share | 18.14 | $ | 17.75 | ||
| Regulatory Capital Ratios (Everett Co-operative Bank) | |||||
| Total capital to risk weighted assets | 16.80 | % | 17.30 | % | |
| Tier 1 capital to risk weighted assets | 15.72 | % | 16.22 | % | |
| Tier 1 capital to average assets | 10.67 | % | 11.31 | % |
All values are in US Dollars.
ECB Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(unaudited)
(in thousands except share data)
| Three months ended | Nine months ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | ||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||
| Interest and dividend income: | |||||||||
| Interest and fees on loans | $ | 14,849 | $ | 12,313 | $ | 42,468 | $ | 35,362 | |
| Interest and dividends on securities | 803 | 723 | 2,346 | 1,950 | |||||
| Other interest income | 1,503 | 1,130 | 4,420 | 2,567 | |||||
| Total interest and dividend income | 17,155 | 14,166 | 49,234 | 39,879 | |||||
| Interest expense: | |||||||||
| Interest on deposits | 8,795 | 5,843 | 24,479 | 14,815 | |||||
| Interest on Federal Home Loan Bank advances | 2,069 | 2,237 | 6,550 | 6,213 | |||||
| Total interest expense | 10,864 | 8,080 | 31,029 | 21,028 | |||||
| Net interest and dividend income | 6,291 | 6,086 | 18,205 | 18,851 | |||||
| Provision (benefit) for credit losses | 46 | (184 | ) | 485 | 696 | ||||
| Net interest and dividend income after provision (benefit) for credit losses | 6,245 | 6,270 | 17,720 | 18,155 | |||||
| Noninterest income: | |||||||||
| Customer service fees | 142 | 123 | 426 | 375 | |||||
| Income from bank-owned life insurance | 119 | 175 | 353 | 372 | |||||
| Net gain on sales of loans | 27 | 9 | 80 | 13 | |||||
| Other income | 16 | 15 | 39 | 31 | |||||
| Total noninterest income | 304 | 322 | 898 | 791 | |||||
| Noninterest expense: | |||||||||
| Salaries and employee benefits | 3,202 | 2,914 | 9,643 | 8,623 | |||||
| Director compensation | 209 | 139 | 626 | 379 | |||||
| Occupancy and equipment expense | 250 | 243 | 788 | 695 | |||||
| Data processing | 288 | 275 | 883 | 810 | |||||
| Computer software and licensing | 109 | 111 | 318 | 282 | |||||
| Advertising and promotions | 159 | 201 | 396 | 576 | |||||
| Professional fees | 240 | 304 | 831 | 962 | |||||
| Federal Deposit Insurance Corporation deposit insurance | 189 | 206 | 561 | 613 | |||||
| Other expense | 365 | 418 | 1,140 | 1,076 | |||||
| Total noninterest expense | 5,011 | 4,811 | 15,186 | 14,016 | |||||
| Income before income tax expense | 1,538 | 1,781 | 3,432 | 4,930 | |||||
| Income tax expense | 405 | 440 | 887 | 1,263 | |||||
| Net income | $ | 1,133 | $ | 1,341 | $ | 2,545 | $ | 3,667 | |
| Share data: | |||||||||
| Weighted average shares outstanding, basic | 8,240,602 | 8,486,577 | 8,268,550 | 8,485,936 | |||||
| Weighted average shares outstanding, diluted | 8,343,736 | 8,486,577 | 8,354,170 | 8,485,936 | |||||
| Basic earnings per share | $ | 0.14 | $ | 0.16 | $ | 0.31 | $ | 0.43 | |
| Diluted earnings per share | $ | 0.14 | $ | 0.16 | $ | 0.30 | $ | 0.43 |