Form 8-K - Current report

0001914605false00019146052023-10-262023-10-26

 

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 26, 2023

 

ECB BANCORP, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Maryland 001-41456 88-1502079

(State or other jurisdiction of (Commission (IRS Employer

incorporation or organization) File Number) Identification No.)

 

419 Broadway, Everett, Massachusetts 02149

(Address of principal executive offices) (Zip Code)

 

[phone]

(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

 

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On October 26, 2023, 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, 2023.

 

A copy of the press release is included as Exhibit 99.1 to this report and shall not be deemed “filed” for any purpose, nor shall the information or Exhibit 99.1 be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended.

 

 

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1		Press release dated October 26, 2023
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

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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 26, 2023 By: /s/Richard J. O'Neil, Jr.

Richard J. O’Neil, Jr.

President and Chief Executive Officer

 

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For Immediate Release

Date: October 26, 2023

Contact:		Richard J. O’Neil, Jr.
		President and Chief Executive Officer
Phone:		617-387-1110
Email:		[e-mail]

 

ECB Bancorp, Inc. Reports Third Quarter Results

EVERETT, MA, October 26, 2023 - 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 $1.34 million or $0.16 per diluted share for the quarter ended September 30, 2023 compared to a net loss of $(1.03) million or ($0.12) per diluted share for the quarter ended September 30, 2022, an increase of $2.4 million in net income. The net loss during the quarter ended September 30, 2022 was driven by the $3.2 million contribution to the Everett Co-operative Bank Charitable Foundation made in connection with our initial public offering. For the nine months ended September 30, 2023, the Company reported net income of $3.7 million or $0.43 per diluted share as compared to net income of $1.7 million, or $0.21 per diluted share for the nine months ended September 30, 2022, an increase of $1.9 million in net income.

Richard J. O’Neil, Jr., President and Chief Executive Officer, said, "During the third quarter we were pleased to report the opening of a new branch in Woburn, MA. Additionally, we commenced a share buyback program which we expect will enhance shareholder returns. We remain focused on opportunistic loan growth, prudent credit risk management and building upon our deposit product offerings and customer base. We continue to see net interest margin pressure and remain focused on managing expenses.”

NET INTEREST AND DIVIDEND INCOME

Net interest and dividend income before (benefit) provision for credit losses decreased $453,000, or 6.9% to $6.1 million for the quarter ended September 30, 2023 from $6.5 million for the quarter ended September 30, 2022. This decrease was primarily due to higher cost of funds, partially offset by an increase in the net interest earning assets. The provision for credit losses decreased $1.1 million, or 119.9% to a benefit of $184,000 for the quarter ended September 30, 2023 from an expense of $925,000 for the quarter ended September 30, 2022. The decrease in the provision for credit losses was driven by lower loan growth during the quarter ended September 30, 2023 as compared to the quarter ended September 30, 2022 as well as a shift in the mix of our loan portfolio to loan segments with lower estimated credit loss reserve requirements. The combination of these items resulted in an increase of $656,000, or 11.7%, in net interest and dividend income after (benefit) provision for credit losses for the quarter ended September 30, 2023 as compared to the quarter ended September 30, 2022.

Net interest and dividend income before provision for credit losses increased $2.0 million, or 12.0% to $18.9 million for the nine months ended September 30, 2023 from $16.8 million for the nine months ended September 30, 2022. This increase was driven by an increase in net interest earning assets partially offset by a decrease in the net interest rate spread. The provision for credit losses decreased $1.1 million, or 61.3% to $696,000 for the nine months ended September 30, 2023 from $1.8 million for the nine months ended September 30, 2022. The decrease in the provision for credit losses was driven by lower loan growth in the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The combination of these items resulted in an increase of $3.1 million or 20.8% in net interest and dividend income after provision for credit losses for the first three quarters of 2023 as compared to the first three quarters of 2022.

NONINTEREST INCOME

Noninterest income increased $94,000, or 41.2% to $322,000 for the quarter ended September 30, 2023 from $228,000 for the quarter ended September 30, 2022. This increase was primarily driven by a $72,000 gain recognized into income from a life insurance policy death benefit in the third quarter of 2023.

Noninterest income decreased $378,000, or 32.3% to $791,000 for the nine months ended September 30, 2023 from $1.2 million for the nine months ended September 30, 2022. The September 30, 2022 year to date results were benefited greatly by a $430,000 gain recognized into income from a life insurance policy death benefit in the second quarter of 2022. Additional pressure on noninterest income in the 2023 period has been the result of a decrease of $71,000 in net gain on sales of loans due to a lower number of loans sold.

 

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NONINTEREST EXPENSE

Noninterest expense decreased $2.5 million, or 34.1% to $4.8 million for the quarter ended September 30, 2023 from $7.3 million for the quarter ended September 30, 2022. Significant changes are as follows:

•

Charitable contributions decreased $3.2 million, or 99.8%, driven by a $3.2 million contribution to the Everett Co-operative Bank Charitable Foundation made in the third quarter of 2022 in connection with the Company’s initial public offering;

•

Salaries and employee benefits increased $235,000, or 8.8%, driven by merit increases and additional staffing to support our strategic plan. Partially offsetting this increase was a decrease in supplemental executive retirement plan expenses driven by increases in defined benefit plan discount rates as well as a decrease in Employee Stock Ownership Plan (“ESOP”) costs. ESOP costs decreased due to a lower average stock price and lower number of shares committed to be released in the quarter ended September 30, 2023 as compared to the quarter ended September 30, 2022; and

•

FDIC deposit insurance expense increased $152,000, or 281.5%, driven by both increases in assessment rates charged by the FDIC as well as an increase in our asset size.

•

Professional fees increased $128,000 or 72.7% driven by increased costs related to operating as a public company.

Noninterest expense decreased $45,000, or 0.3% to $14.0 million for the nine months ended September 30, 2023 from $14.1 million for the nine months ended September 30, 2022. Significant changes are as follows:

•

Charitable contributions decreased $3.2 million, or 99.5%, driven by a $3.2 million contribution to the Everett Co-operative Bank Charitable Foundation made in the third quarter of 2022 in connection with the Company’s initial public offering;

•

Salaries and employee benefits increased $1.7 million, or 23.9%, driven by merit increases, additional staffing to support our strategic plan as well as expenses related to the ESOP which did not exist in the first half of 2022. Partially offsetting these increases was a decrease in supplemental executive retirement plan expenses driven by increases in defined benefit plan discount rates. The nine months ended September 30, 2022 included a benefit of $582,000 to reflect a reduction in the liability related to our withdrawal from the defined benefit plan as well as expenses of $166,000 related to our Survivor Benefit Plan, both of which did not recur in the nine months ended September 30, 2023;

•

FDIC deposit insurance expense increased $450,000, or 276.1%, driven by both increases in assessment rates charged by the FDIC as well as an increase in our asset size; and

•

Professional fees increased $402,000 or 71.8% driven by increased costs related to operating as a public company.

INCOME TAXES

We recorded a provision for income tax expense of $440,000 for the three months ended September 30, 2023, compared to a provision for income tax benefit of $426,000 for the three months ended September 30, 2022, reflecting an effective tax rate of 24.7% and an effective tax benefit rate of 29.2%, respectively. The effective tax rate for the three month period ended September 30, 2023 benefited from $72,000 in non-taxable gains recognized into income from life insurance policy death benefits. We recorded a provision for income taxes of $1.3 million for the nine months ended September 30, 2023, compared to a provision for income taxes of $394,000 for the nine months ended September 30, 2022, reflecting effective tax rates of 25.6% and 18.4%, respectively. The effective tax rate for the nine month period ended September 30, 2022 benefited from $427,000 in non-taxable gains recognized into income from life insurance policy death benefits for the nine months ending September 30, 2022.

BALANCE SHEET

Total assets increased $149.3 million, or 14.0% from $1.06 billion at December 31, 2022 to $1.21 billion at September 30, 2023.

Total loans increased $111.7 million, or 12.6% from $885.7 million at December 31, 2022 to $997.4 million at September 30, 2023.

•

One-to-four family residential real estate loans increased $39.9 million, from $355.4 million at December 31, 2022 to $395.3 million at September 30, 2023

•

Multi-family real estate loans increased $39.2 million, from $242.0 million at December 31, 2022 to $281.2 million at September 30, 2023

•

Commercial real estate loans increased $29.4 million, from $156.2 million at December 31, 2022 to $185.7 million at September 30, 2023.

Cash and cash equivalents increased $35.3 million, or 56.9% from $62.1 million at December 31, 2022 to $97.4 million at September 30, 2023. The increase in cash and cash equivalents is driven by our focus on maintaining strong levels of liquidity.

Deposits increased $94.4 million, or 13.1% from $718.1 million at December 31, 2022 to $812.5 million at September 30, 2023.

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•

Certificates of deposit increased $122.2 million, or 38.2% from $319.8 million at December 31, 2022 to $442.0 million at September 30, 2023. Brokered certificates of deposit decreased $13.1 million, or 13.1% from $100.8 million at December 31, 2022 to $87.7 million at September 30, 2023.

•

Savings accounts increased $19.5 million, or 13.2% from $148.4 million at December 31, 2022 to $167.9 million at September 30, 2023.

•

Money market deposit accounts decreased $38.7 million, or 28.5% from $136.1 million at December 31, 2022 to $97.4 million at September 30, 2023.

•

Interest bearing checking accounts decreased $8.4 million, or 29.2% from $28.9 million at December 31, 2022 to $20.5 million at September 30, 2023.

FHLB advances increased $50.0 million, or 28.7% from $174.0 million at December 31, 2022 to $224.0 million at September 30, 2023.

Total shareholders' equity increased $2.8 million, or 1.7% to $165.5 million as of September 30, 2023 from $162.7 million as of December 31, 2022. This increase is primarily the result of earnings of $3.7 million partially offset by a $677,000 reduction in retained earnings related to the adoption of CECL and a $589,000 reduction in additional paid-in capital due to share repurchases.

ASSET QUALITY

Asset quality remains strong. The allowance for credit losses in total and as a percentage of total loans as of September 30, 2023 was $8.3 million and 0.82%, respectively, as compared to $7.2 million and 0.81%, respectively, as of December 31, 2022. For the nine months ended September 30, 2023 the Company recorded net charge offs of $0. For the nine months ended September 30, 2022 the Company recorded net recoveries of $1,000. Total non-performing assets were $1.2 million, or 0.10%, of total assets as of September 30, 2023 and $656,000, or 0.06%, of total assets as of December 31, 2022.

 

 

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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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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ECB Bancorp, Inc. and Subsidiary

Consolidated Balance Sheets

September 30, 2023(unaudited) and December 31, 2022

(in thousands except share data)

 

		September 30, 2023				December 31, 2022
ASSETS
Cash and due from banks		$	3,430			$	3,123
Short-term investments			93,957				58,927
Total cash and cash equivalents			97,387				62,050
Interest-bearing time deposits			—				300
Investments in available-for-sale securities (at fair value)			5,006				5,001
Investments in held-to-maturity securities, at cost (fair values of $65,844 at September 30,    2023 (unaudited) and $69,707 at December 31, 2022)			74,869				77,591
Loans, net of allowance for credit losses of $8,292 as of September 30, 2023 (unaudited) and    $7,200 as of December 31, 2022			997,359				885,674
Federal Home Loan Bank stock, at cost			9,571				7,293
Premises and equipment, net			3,729				3,698
Accrued interest receivable			3,390				2,632
Deferred tax asset, net			4,687				4,344
Bank-owned life insurance			14,367				14,067
Other assets			3,397				1,812
Total assets		$	1,213,762			$	1,064,462
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing		$	84,785			$	84,903
Interest-bearing			727,746				633,246
Total deposits			812,531				718,149
Federal Home Loan Bank advances			224,000				174,000
Other liabilities			11,719				9,583
Total liabilities			1,048,250				901,732
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: 9,195,989 shares and 9,175,247 shares, respectively			92				92
Additional paid-in capital			88,807				89,286
Retained earnings			83,066				80,076
Accumulated other comprehensive income			246				249
Unallocated common shares held by the Employee Stock Ownership Plan			(6,699	)			(6,973	)
Total shareholders' equity			165,512				162,730
Total liabilities and shareholders' equity		$	1,213,762			$	1,064,462
Shareholders' Equity Ratios
Book value per common share		$	18.00			$	17.74
Regulatory Capital Ratios (Everett Co-operative Bank)
Total capital to risk weighted assets			16.40	%			16.40	%
Tier 1 capital to risk weighted assets			15.34	%			15.49	%
Tier 1 capital to average assets			11.14	%			13.89	%

 

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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,
		2023				2022				2023				2022
Interest and dividend income:
Interest and fees on loans		$	12,313			$	7,150			$	35,362			$	18,095
Interest and dividends on securities			723				360				1,950				1,022
Other interest income			1,130				251				2,567				355
Total interest and dividend income			14,166				7,761				39,879				19,472
Interest expense:
Interest on deposits			5,843				1,025				14,815				2,332
Interest on Federal Home Loan Bank advances			2,237				197				6,213				310
Total interest expense			8,080				1,222				21,028				2,642
Net interest and dividend income			6,086				6,539				18,851				16,830
(Benefit) provision for credit losses			(184	)			925				696				1,800
Net interest and dividend income after (benefit) provision for credit losses			6,270				5,614				18,155				15,030
Noninterest income:
Customer service fees			123				114				371				326
Income from bank-owned life insurance			175				90				372				731
Net gain on sales of loans			9				16				13				84
Other income			15				8				35				28
Total noninterest income			322				228				791				1,169
Noninterest expense:
Salaries and employee benefits			2,914				2,679				8,623				6,960
Director compensation			139				108				379				325
Occupancy and equipment expense			243				190				695				561
Data processing			275				222				810				624
Computer software and licensing fees			88				78				216				180
Advertising and promotions			201				236				576				511
Professional fees			304				176				962				560
Federal Deposit Insurance Corporation deposit insurance			206				54				613				163
Charitable contribution			7				3,214				17				3,249
Other expense			434				346				1,125				928
Total noninterest expense			4,811				7,303				14,016				14,061
Income (loss) before income tax expense			1,781				(1,461	)			4,930				2,138
Income tax expense (benefit)			440				(426	)			1,263				394
Net income (loss)		$	1,341			$	(1,035	)		$	3,667			$	1,744
Share data:
Weighted average shares outstanding, basic			8,486,577				8,445,615				8,485,936				8,445,615
Weighted average shares outstanding, diluted			8,486,577				8,445,615				8,485,936				8,445,615
Basic earnings (loss) per share		$	0.16			$	(0.12	)		$	0.43			$	0.21
Diluted earnings (loss) per share		$	0.16			$	(0.12	)		$	0.43			$	0.21

 

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Document and Entity Information	Oct. 26, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 26, 2023
Securities Act File Number	001-41456
Entity Registrant Name	ECB BANCORP, INC.
Entity Central Index Key	0001914605
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	88-1502079
Entity Address, Address Line One	419 Broadway
Entity Address, City or Town	Everett
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02149
City Area Code	617
Local Phone Number	387-1110
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	ECBK
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false

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