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| 8-K - FORM 8K - Newport Bancorp Inc | form8k-117870_newp.htm |
EXHIBIT 99.1
Press Release
For Immediate Release
Contact: Bruce Walsh, Senior Vice-President and Chief Financial Officer
(401) 847-5500
Newport Bancorp, Inc. Reports Results for Third Quarter and First Nine Months of 2011
Newport, Rhode Island, October 21, 2011. Newport Bancorp, Inc. (the “Company”) (Nasdaq: NFSB), the holding company for Newport Federal Savings Bank (the “Bank”), today announced third quarter earnings for 2011. For the quarter ended September 30, 2011, the Company reported net income of $278,000, or $0.08 per diluted share, compared to net income of $411,000, or $0.12 per diluted share for the quarter ended September 30, 2010. For the nine months ended September 30, 2011, the Company reported net income of $1.0 million, or $0.31 per basic share and $0.30 per diluted share, compared to net income of $1.0 million, or $0.29 per diluted share for the nine months ended September 30, 2010.
During the first nine months of 2011, the Company’s assets increased by $8.9 million, or 2.0%, to $458.6 million. The increase in assets was primarily concentrated in cash and cash equivalents, which increased by $20.2 million, or 215.4%, partially offset by a $7.4 million, or 15.8%, decrease in securities and a $4.2 million, or 1.2%, decrease in net loans. 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 decrease was attributable to a decrease in multi-family mortgages (a decrease of $4.7 million, or 20.7%), home equity loans and lines (a decrease of $3.1 million, or 13.3%), commercial mortgages (a decrease of $2.5 million, or 2.4%) and a decrease in commercial loans (a decrease of $483,000, or 29.5%), partially offset by an increase in residential mortgages (an increase of $5.2 million or 2.6%) and construction loans (an increase of $1.3 million, or 26.1%).
Deposit balances increased by $5.9 million, or 2.3%. The increase in deposits occurred in NOW/Demand accounts (an increase of $3.0 million, or 2.7%), savings accounts (an increase of $2.6 million, or 8.7%) and time deposit accounts (an increase of $2.0 million or 2.8%), partially offset by a decrease in money market accounts (a decrease of $1.6 million, or 3.2%).
Total stockholders’ equity at September 30, 2011 was $51.3 million compared to $49.7 million at December 31, 2010. The increase was primarily attributable to net income and stock-based compensation credits.
Net interest income decreased to $3.7 million for the quarter ended September 30, 2011 from $3.8 million for the quarter ended September 30, 2010, a decrease of 2.1%. Net interest income was $11.3 million for the nine months ended September 30, 2011 and September 30, 2010. The decrease in the quarterly net interest income 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.
As a result of the continued low interest rate environment, the average cost of interest-bearing liabilities decreased to 1.75% for the quarter ended September 30, 2011 from 1.99% for the quarter ended September 30, 2010, resulting in a $239,000 decrease in total interest expense. The average balance of interest-bearing deposits decreased in the third quarter of 2011 from the third quarter of 2010 by $6.2 million, or 2.69%, and the average cost of interest-bearing deposits decreased by 34 basis points, resulting in a $205,000 decrease in interest expense on such deposits. The average balance of interest-earning assets decreased slightly by $47,000 in the third quarter of 2011, compared to the third quarter of 2010. The average yield on interest-earning assets decreased to 5.30% in the third quarter of 2011, compared to 5.62% for the third quarter of 2010. The Company’s third quarter 2011 interest rate spread decreased to 3.56% from 3.63% in the third quarter of 2010, a decrease of 7 basis points.
The average cost of interest-bearing liabilities decreased to 1.79% for the nine months ended September 30, 2011 from 2.08% for the nine months ended September 30, 2010, resulting in a $832,000 decrease in total interest expense. The average balance of interest-bearing deposits decreased in the first nine months of 2011, compared to the first nine months of 2010 by $2.0 million, or 0.90%. The average cost of interest-bearing deposits decreased by 34 basis points in the nine months ended September 30, 2011, resulting in a $588,000 decrease in interest expense on such deposits. The average yield on interest-earning assets for the nine months ended September 30, 2011 was 5.31%, compared to 5.53% for the same period in 2010. For the nine months ended September 30, 2011, the interest rate spread increased to 3.53% from 3.45% in 2010, an increase of 8 basis points.
Non-performing assets totaled $1.9 million, or 0.42% of total assets, at September 30, 2011, compared to $208,000, or 0.05% of total assets, at December 31, 2010. Non-performing assets at September 30, 2011 consisted of two multi-family real estate mortgage loans totaling $1.1 million, one $550,000 residential mortgage loan and $255,000 of foreclosed real estate. Net charge-offs were $525,000 and $412,000 for the quarters ended September 30, 2011 and 2010, respectively. The loan loss provision for the three and nine months ended September 30, 2011 was $507,000 and $1.0 million respectively, compared to $387,000 and $781,000 for the three and nine months ended September 30, 2010, 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 increased during the first nine months of 2011 compared to the first nine months of 2010, due to an increase in problem loans and charge-offs, partially offset by a decrease in the loan portfolio.
Non-interest income for the three and nine months ended September 30, 2011 totaled $650,000 and $1.8 million, respectively, compared to $606,000 and $1.5 million for the three and nine months ended September 30, 2010, respectively. The $44,000, or 7.3%, increase in non-interest income for the third quarter of 2011 from the third quarter of 2010 is attributable to a $43,000 increase in fees earned on checking accounts. The $260,000, or 16.8%, increase in non-interest income for the first nine months of 2011 compared to the same period in 2010 is primarily due to the $70,000 increase in fees earned on checking accounts and no loss on sales of securities available for sale recorded in the first nine months of 2011, as compared to the $188,000 net realized loss on sales of securities available for sale recorded in 2010. The loss on sales of securities available for sale in the first nine months of 2010 was due to the sale of the Bank’s entire holdings in one mutual fund, which resulted in a $267,000 realized loss, partially offset by gains on sales of other securities available for sale.
Total non-interest expenses totaled $3.4 million for each of the quarters ended September 30, 2011 and September 30, 2010. For the nine months ended September 30, 2011, non-interest expenses totaled $10.5 million, an increase of $89,000, or 0.9%, compared to the same period in 2010. The increase in non-interest expenses for the first nine months of 2011 compared to the first nine months of 2010 is attributable to increases in occupancy and equipment expense, data processing fees, professional fees and foreclosed real estate, offset by decreases in salaries and employee benefits, marketing costs and FDIC insurance costs. The increase in occupancy and equipment expense and data processing fees is due to the overall increase in operating costs and an increase in depreciation expense in 2011 as a result of a relocation of an existing branch in the beginning of 2011. The increase in the foreclosed real estate expense is a result of an overall increase in foreclosed real estate assets. The decrease in salaries and benefits is primarily due to 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 2010 period compared to the 2011 period. The decrease in marketing costs is a result of management’s strategy to curtail marketing expenditures in 2011.
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,
2011
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December 31,
2010
|
|||||||
|
(Unaudited)
(Dollars in thousands, except share data)
|
||||||||
|
Cash and due from banks
|
$ | 29,454 | $ | 8,194 | ||||
|
Short-term investments
|
112 | 1,181 | ||||||
|
Cash and cash equivalents
|
29,566 | 9,375 | ||||||
|
Securities held to maturity, at amortized cost
|
39,594 | 47,021 | ||||||
|
Federal Home Loan Bank stock, at cost
|
5,730 | 5,730 | ||||||
|
Loans
|
355,493 | 359,721 | ||||||
|
Allowance for loan losses
|
(3,668 | ) | (3,672 | ) | ||||
|
Loans, net
|
351,825 | 356,049 | ||||||
|
Premises and equipment
|
14,820 | 14,477 | ||||||
|
Accrued interest receivable
|
1,389 | 1,413 | ||||||
|
Net deferred tax asset
|
2,810 | 2,600 | ||||||
|
Bank-owned life insurance
|
10,991 | 10,705 | ||||||
|
Foreclosed real estate
|
255 | 100 | ||||||
|
Prepaid FDIC insurance
|
744 | 1,052 | ||||||
|
Other assets
|
852 | 1,163 | ||||||
|
Total assets
|
$ | 458,576 | $ | 449,685 | ||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Deposits
|
$ | 266,981 | $ | 261,050 | ||||
|
Short-term borrowings
|
- | 3,000 | ||||||
|
Long-term borrowings
|
136,727 | 132,236 | ||||||
|
Accrued expenses and other liabilities
|
3,523 | 3,696 | ||||||
|
Total liabilities
|
407,231 | 399,982 | ||||||
|
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
|
50,696 | 50,435 | ||||||
|
Retained earnings
|
19,850 | 18,832 | ||||||
|
Unearned compensation (317,992 and 338,030 shares at
|
||||||||
|
September 30, 2011 and December 31, 2010, respectively)
|
(2,501 | ) | (2,864 | ) | ||||
|
Treasury stock, at cost (1,389,572 shares)
|
(16,749 | ) | (16,749 | ) | ||||
|
Total stockholders’ equity
|
51,345 | 49,703 | ||||||
|
Total liabilities and stockholders’ equity
|
$ | 458,576 | $ | 449,685 | ||||
NEWPORT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
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|||||||||||||||
|
2011
|
2010
|
2011
|
2010
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|||||||||||||
|
(Unaudited)
(Dollars in thousands, except share data)
|
||||||||||||||||
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Interest and dividend income:
|
||||||||||||||||
|
Loans
|
$ | 4,801 | $ | 5,032 | $ | 14,515 | $ | 15,057 | ||||||||
|
Securities
|
489 | 583 | 1,570 | 1,844 | ||||||||||||
|
Other interest-earning assets
|
15 | 10 | 31 | 16 | ||||||||||||
|
Total interest and dividend income
|
5,305 | 5,625 | 16,116 | 16,917 | ||||||||||||
|
Interest expense:
|
||||||||||||||||
|
Deposits
|
419 | 624 | 1,390 | 1,978 | ||||||||||||
|
Short-term borrowings
|
- | - | 3 | - | ||||||||||||
|
Long-term borrowings
|
1,153 | 1,187 | 3,439 | 3,686 | ||||||||||||
|
Total interest expense
|
1,572 | 1,811 | 4,832 | 5,664 | ||||||||||||
|
Net interest income
|
3,733 | 3,814 | 11,284 | 11,253 | ||||||||||||
|
Provision for loan losses
|
507 | 387 | 1,029 | 781 | ||||||||||||
|
Net interest income, after provision for loan losses
|
3,226 | 3,427 | 10,255 | 10,472 | ||||||||||||
|
Non-interest income:
|
||||||||||||||||
|
Customer service fees
|
519 | 476 | 1,467 | 1,397 | ||||||||||||
|
Net gain (loss) on sales of securities available for sale
|
- | 16 | - | (188 | ) | |||||||||||
|
Bank-owned life insurance
|
92 | 101 | 286 | 303 | ||||||||||||
|
Miscellaneous
|
39 | 13 | 56 | 37 | ||||||||||||
|
Total non-interest income
|
650 | 606 | 1,809 | 1,549 | ||||||||||||
|
Non-interest expenses:
|
||||||||||||||||
|
Salaries and employee benefits
|
1,839 | 1,925 | 5,725 | 5,791 | ||||||||||||
|
Occupancy and equipment
|
537 | 474 | 1,647 | 1,423 | ||||||||||||
|
Data processing
|
406 | 371 | 1,167 | 1,120 | ||||||||||||
|
Professional fees
|
147 | 118 | 433 | 352 | ||||||||||||
|
Marketing
|
151 | 227 | 530 | 755 | ||||||||||||
|
Foreclosed real estate
|
49 | 18 | 107 | 59 | ||||||||||||
|
FDIC insurance
|
92 | 102 | 326 | 346 | ||||||||||||
|
Other general and administrative
|
186 | 191 | 563 | 563 | ||||||||||||
|
Total non-interest expenses
|
3,407 | 3,426 | 10,498 | 10,409 | ||||||||||||
|
Income before income taxes
|
469 | 607 | 1,566 | 1,612 | ||||||||||||
|
Provision for income taxes
|
191 | 196 | 548 | 599 | ||||||||||||
|
Net income
|
$ | 278 | $ | 411 | $ | 1,018 | $ | 1,013 | ||||||||
|
Weighted-average shares outstanding:
|
||||||||||||||||
|
Basic
|
3,321,079 | 3,387,850 | 3,314,766 | 3,510,245 | ||||||||||||
|
Diluted
|
3,331,446 | 3,387,850 | 3,369,618 | 3,510,245 | ||||||||||||
|
Earnings per share:
|
||||||||||||||||
|
Basic
|
$ | 0.08 | $ | 0.12 | $ | 0.31 | $ | 0.29 | ||||||||
|
Diluted
|
$ | 0.08 | $ | 0.12 | $ | 0.30 | $ | 0.29 | ||||||||