Read Larry Connors' blog – Short Term Trading Strategies
--Provision expense exceeded charged-off loans by $8.3 million for the first half of 2009, resulting in an increase in the allowance for credit losses to 2.89% of total loans
--Changes in the liability management strategy lead to a 28 basis point improvement in the net interest margin during the quarter. Management anticipates continued growth in the net interest margin in the second half of 2009
--Management sees a flattening in the rise of criticized assets as watch list assets remain unchanged from the first quarter
NewBridge Bancorp (NASDAQ:NBBC) ("NewBridge" or the "Company"), the parent company of NewBridge Bank (the "Bank"), today reported financial results for the three and six month periods ended June 30, 2009. For the three months ended June 30, 2009, net loss was $5.9 million and net loss available to common shareholders was $6.6 million, or $0.42 per diluted share, compared to net income of $260,000, or $0.02 per diluted share, in the second quarter of 2008. For the six months ended June 30, 2009, net loss was $9.5 million and net loss available to common shareholders was $10.9 million, or $0.70 per diluted share, compared to net income of $3.3 million, or $0.21 per diluted share, in the first six months of 2008.
Results for the three and six months ended June 30, 2009 period were negatively impacted by an industry-wide FDIC special assessment, which amounted to an additional expense of $970,000 in the second quarter, or $0.03 after tax per diluted common share. In addition, earnings for the second quarter were negatively impacted by expense related to the termination of a lease and for pension plan expense, which totaled $480,000 pre-tax, or $0.02 after tax per diluted common share. The Company's pension plans were frozen previously; however, declines in the value of the plans' assets resulted in an expense in the second quarter.
Pressley A. Ridgill, President and Chief Executive Officer of NewBridge, commented: "Our net losses for the three and six month periods were due primarily to the elevated provision expense, which totaled $19.4 million through June 30, 2009. Through six months, the Company had net loan charge-offs of $11.1 million which resulted in an $8.3 million build in our allowance for credit losses. The allowance for credit losses totals $44.1 million, or 2.89% of total loans, and is approximately four times the record charge-offs we have experienced year-to-date. We believe our reserve levels place us among industry leaders in terms of proactively recognizing inherent losses in our portfolio. Our high reserve levels combined with a strong total risk based capital position of 12.25% at June 30, 2009, provide compelling evidence that we are well positioned to weather the current economic storm."
"While the asset quality trends continued to decline from the linked quarter in 2009, we believe we are beginning to experience a number of positive trends that will greatly benefit the Company in future periods. First, we are starting to experience some relief from the rise in non-performing assets as our watch list assets remained unchanged in recent months and non-accruing loans declined in recent months from $60.9 million in April to $58.8 million in May to $56.2 million at June 30, 2009. In addition, recent changes to our liability management disciplines are leading to immediate benefits to our net interest income and net interest margin. While our net interest margin fell 8 basis points from the linked quarter to 2.91%, we experienced a 28 basis point improvement during the quarter as the margin increased from 2.79% in April to 2.90% in May to 3.07% during the month of June. The improvement in the net interest margin was due primarily to improved pricing disciplines on deposits, which benefit the Company as time deposits mature. Management anticipates the Company's net interest margin will be further enhanced over the next two quarters as $652 million of time deposits are scheduled to mature prior to December 31, 2009. These deposits are expected to reprice down by as much as 200 basis points from their current weighted average rate of 3.36%. As a $2 billion Bank, every 10 basis points of margin enhancement means roughly $2 million of annual improvement in our pre-tax earnings. Finally, we are pleased with recent changes in interest rate risk management tools, which are allowing us to better analyze opportunities within our organization. We believe these changes will lead to improved operating efficiency, through wider margins. In addition, improvements in our budget and financial modeling processes will help reduce operating expenses and enhance revenue opportunities."
"Quality loan demand remains sluggish due to the depth of the current recession; however, our loan pipeline improved steadily during the quarter. Principal paydowns on loans exceeded new originations, resulting in a 3.1%, or $49 million, decline in loan balances. During the quarter, the Company originated $64.0 million of new loans. While we are continuing to focus on building quality core loan relationships, our first order of business is ensuring that we improve the quality of our existing portfolio. In this market, we believe there are opportunities to offset the decline in quality loan demand through investments. Investment securities increased 3.2% during the quarter to $315.0 million."
Operating Results
For the second quarter of 2009, net interest income decreased by $2.6 million to $13.9 million from $16.5 million in the year-ago period and for the six months ended June 30, 2009 net interest income was $27.8 million, compared to $33.7 million for the first six months of 2008. These declines were primarily due to substantial decreases in the Company's net interest margin, which fell from 3.52% for the second quarter and 3.65% for the six months ending June 30, 2008, to 2.91% for the second quarter and 2.94% for the six months ending June 30, 2009. The declines in net interest margin were somewhat due to irrational deposit pricing that occurred in our markets last fall, as a number of financial institutions entered a period of liquidity crisis. The Company anticipates that its net interest margin will experience significant improvement over the next two quarters. During this period, over 70% of time deposits will mature and reprice down from a current weighted average interest rate of 3.36%. In addition, the Company is also experiencing improving asset yields on variable rate loans, as a significant amount of these loans are maturing and repricing up with floors and higher fixed rates.
Noninterest income for the quarter ended June 30, 2009 decreased to $4.7 million, versus $6.8 million for the same period in 2008, and for the six months ended June 30, 2009 noninterest income was $8.7 million, compared to $11.4 million for the first six months of 2008. Noninterest income in the second quarter and first six months of 2008 included $2.1 million and $2.5 million, respectively, in gains on the sale of investment securities. Noninterest expense for the second quarter of 2009 was $18.1 million, an increase of $0.8 million from $17.3 million in the second quarter of 2008. For the first six months of 2009, noninterest expense was $34.1 million, a decrease of $0.2 million from $34.3 million in the first six months of 2008. Personnel expense decreased to $15.3 million in the first six months of 2009 from $18.2 million in the first six months of 2008, or 15.8%, primarily as a result of a reduction in the number of employees. The Company also reduced costs in the areas of advertising, telephone, travel and printing and supplies expense, achieving our goal of reducing controllable expenses. These savings were offset by a substantial increase in FDIC insurance premiums, which grew from $118,000 in the first six months of 2008 to $2.9 million in the first six months of 2009, including a special assessment of $970,000 recorded in the second quarter of 2009.
Asset Quality
The provision for credit losses during the second quarter of 2009 was $10.9 million versus $5.6 million for the second quarter of 2008, and for the six months ended June 30 2009, the provision was $19.4 million, compared to $6.0 million in the same period of 2008. The increases from 2008 were primarily the result of the weakness in the regional and national economy. In North Carolina, unemployment rates have doubled in the last 12 months, rising from approximately 5% to more than 10%. In certain counties in our geographic market area, unemployment rates have risen to as high as 14%. In these areas, we have customers who have been perpetually good customers with a strong willingness to repay their obligations, but currently are unable to do so. We believe it will greatly benefit these customers and the Bank to continue working towards repayment resolutions. Nonperforming assets, which include nonaccrual loans, accruing loans 90 days or more past due, OREO and renegotiated debt, totaled $80.1 million at June 30 2009, versus $48.6 million at December 31, 2008 and $31.9 million at June 30, 2008. The increase from the 2008 year-end total was primarily driven by an $18.2 million increase in non-accrual loans, as well as a $7.0 million increase in OREO, reflecting continued deterioration in real estate markets and the weak economic environment. The allowance for credit losses at June 30, 2009 was $44.1 million, or 2.89% of outstanding loans, compared to $35.8 million, or 2.23% of outstanding loans, at December 31, 2008, and $31.3 million, or 1.99% of outstanding loans, at June 30, 2008.
Balance Sheet
As of June 30, 2009, total assets were approximately $2.07 billion, down $13.3 million, or 0.6%, from $2.08 billion at December 31, 2008, and up slightly from $2.06 billion at the year-ago date. Loans as of June 30, 2009 were $1.53 billion, a decrease of $78.0 million, or 4.9%, from $1.60 billion at December 31, 2008, and a decrease of $47.6 million, or 3.0% from $1.57 billion at June 30, 2008. The decrease in loans was due to principal reductions and loan payoffs exceeding new loan opportunities.
Deposits as of June 30, 2009 were $1.66 billion, which was basically unchanged from $1.66 billion at December 31, 2008 and down 1.0% from $1.68 billion at June 30, 2008. Federal Home Loan Bank borrowings at June 30, 2009 were $140.7 million, up $1.7 million, or 1.2%, from $139.0 million at December 31, 2008.
Capital
Shareholders' equity declined $12.0 million to $167.2 million at June 30, 2009 from $179.2 million at December 31, 2008. The decrease in shareholders' equity from year end was primarily the result of the net loss available to common shareholders recorded in the first six months of 2009, as well as changes in unrealized gains and losses on investment securities.
The Company and the Bank continue to maintain capital levels that exceed the established regulatory guidelines for a "well capitalized" classification. As of June 30, 2009, the Company had a leverage ratio of 8.83%, a Tier 1 risk based ratio of 10.98%, and a total risk based ratio of 12.25%. The Company holds $10.0 million of the $52.4 million received by it from the TARP Capital Purchase Program which could be invested in the Bank to increase the Bank's total risk based capital ratio from the present level of 11.55%. As of June 30, 2009, the Bank had unused lines of credit exceeding $138 million from various financial institutions.
Outlook
Mr. Ridgill expressed management's belief that "the Company is well positioned for significant improvement in operating results, as declining interest expense will be reflected in sizable margin enhancement. In addition, we are seeing some early signs of improvement in asset quality. If these trends continue, we believe our strong reserve levels will allow us to quickly reduce credit related costs. Despite making positive reductions in current year overhead costs, our efficiency ratio remains unacceptably high. We are taking a fresh look at aggressively targeting inefficient products, business lines and operations within our organization. We believe this process will result in remedial steps that will bring our efficiency better in line with our peers. We look forward to providing additional details in our future releases."
"In summary, we have highlighted a few positive trends; however, the depth of the current recession causes lingering uncertainty about our near term credit related costs. Because of our already high reserve levels, the positive trends in net interest margin and diligent work in reducing operating costs, we anticipate that future operating results will improve, resulting in a thriving Bank franchise that is positioned to execute on an extraordinary opportunity."
About NewBridge Bancorp
NewBridge Bancorp is the parent company of NewBridge Bank, which is a full service state chartered community bank with headquarters in Greensboro, North Carolina. NewBridge Bank also offers financial planning and investment alternatives, such as mutual funds and annuities, through Raymond James Financial Services, Inc., a registered broker dealer.
NewBridge Bank ranks among the 10 largest banks in North Carolina with assets of approximately $2.1 billion, and based on deposit market share is the largest community bank in the Piedmont Triad region of North Carolina. The Bank has 37 banking offices in the Piedmont Triad region of North Carolina, the Wilmington, NC area and the area surrounding Harrisonburg, VA. The stock of NewBridge Bancorp trades on the NASDAQ Global Select Market under the symbol "NBBC."
Disclosures About Forward Looking Statements
The discussions included in this document and its exhibits may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. For the purposes of these discussions, any statements that are not statements of historical fact may be deemed to be forward looking statements. Such statements are often characterized by the use of qualifying words such as "expects," "anticipates," "believes," "estimates," "plans," "projects," or other statements concerning opinions or judgments of NewBridge and its management about future events. The accuracy of such forward looking statements could be affected by factors including, but not limited to, the financial success or changing conditions or strategies of NewBridge Bancorp's customers or vendors, fluctuations in interest rates, actions of government regulators, the availability of capital and personnel or general economic conditions. Additional factors that could cause actual results to differ materially from those anticipated by forward looking statements are discussed in NewBridge's filings with the Securities and Exchange Commission, including without limitation its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. NewBridge undertakes no obligation to revise or update these statements following the date of this press release.
FINANCIAL SUMMARY
Three Months Ended June 30, 2009 Three Months Ended June 30, 2008
Average Interest Income/ Average Yield/ Average Interest Income/ Average Yield/
Balance Balance
Expense Rate Expense Rate
(Fully taxable equivalent basis, dollars in thousands)
Earning Assets
Loans receivable $ 1,552,215 $ 21,174 5.47 % $ 1,566,968 $ 25,288 6.47 %
Investment securities 315,331 3,942 5.01 % 354,877 4,835 5.46 %
Other earning assets 109,622 99 0.36 % 7,329 84 4.60 %
Total Earning Assets 1,977,168 25,215 5.12 % 1,929,174 30,207 6.28 %
Non-Earning Assets 128,399 177,168
Total Assets 2,105,567 25,215 2,106,342 30,207
Interest-Bearing Liabilites
Deposits 1,526,442 9,010 2.37 % 1,459,705 10,845 2.98 %
Borrowings 225,731 1,846 3.28 % 267,964 2,435 3.64 %
Total Interest-Bearing Liabilites 1,752,173 10,856 2.49 % 1,727,669 13,280 3.08 %
Demand deposits 158,709 168,535
Other liablilites 22,207 15,256
Shareholders' equity 172,478 194,882
Total Liabilities and
Shareholders' Equity 2,105,567 10,856 2,106,342 13,280
Net Interest Income 14,359 16,927
Net Interest Margin 2.91 % 3.52 %
Interest Rate Spread 2.63 % 3.20 %
Six Months Ended June 30, 2009 Six Months Ended June 30, 2008
Average Interest Income/ Average Yield/ Average Interest Income/ Average Yield/
Balance Balance
Expense Rate Expense Rate
Earning Assets
Loans receivable $ 1,574,540 $ 43,254 5.54 % $ 1,539,849 $ 52,294 6.85 %
Investment securities 304,872 7,650 5.06 % 360,294 10,036 5.62 %
Other earning assets 98,548 162 0.33 % 7,983 179 4.52 %
Total Earning Assets 1,977,960 51,066 5.21 % 1,908,126 62,509 6.61 %
Non-Earning Assets 130,862 181,859
Total Assets 2,108,822 51,066 2,089,985 62,509
Interest-Bearing Liabilites
Deposits 1,523,497 18,578 2.46 % 1,463,491 23,022 3.17 %
Borrowings 234,124 3,672 3.16 % 245,240 4,903 4.03 %
Total Interest-Bearing Liabilites 1,757,621 22,250 2.55 % 1,708,731 27,925 3.30 %
Demand deposits 156,791 168,833
Other liablilites 21,003 17,303
Shareholders' equity 173,407 195,118
Total Liabilities and
Shareholders' Equity 2,108,822 22,250 2,089,985 27,925
Net Interest Income 28,816 34,584
Net Interest Margin 2.94 % 3.65 %
Interest Rate Spread 2.65 % 3.31 %
FINANCIAL SUMMARY
2009 2008
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
Period-End Balances
(Dollars in thousands)
Assets $ 2,065,297 $ 2,136,621 $ 2,078,627 $ 2,108,294 $ 2,062,979
Loans 1,526,550 1,575,452 1,604,525 1,626,504 1,574,141
Investment securities 314,999 305,280 288,571 272,298 233,926
Earning assets 1,927,843 1,949,362 1,947,964 1,917,535 1,822,541
Noninterest-bearing deposits 160,827 159,440 149,583 174,217 176,510
Interest-bearing deposits 1,500,627 1,545,688 1,513,880 1,451,075 1,501,325
Interest-bearing liabilities 1,713,320 1,783,521 1,729,695 1,739,899 1,681,203
Shareholders' equity 167,248 173,727 179,236 184,151 187,733
Asset Quality Data
(Dollars in thousands)
Nonperforming loans:
Past due 90 days or more and
still accruing $ 3,754 $ 3,038 $ 1,277 $ 413 $ 1,053
Nonaccrual loans 56,210 53,022 38,029 33,865 24,381
Restructured loans 4,062 4,078 250 260 267
Total nonperforming loans 64,026 60,138 39,556 34,538 25,701
Other real estate owned 16,030 12,345 9,080 7,587 6,201
Total nonperforming assets $ 80,056 $ 72,483 $ 48,636 $ 42,125 $ 31,902
Net chargeoffs 7,783 3,290 9,759 4,952 4,596
Allowance for credit losses 44,104 41,034 35,806 30,984 31,281
Allowance for credit losses
to total loans 2.89 % 2.60 % 2.23 % 1.90 % 1.99 %
Nonperforming loans to total loans 4.19 3.82 2.47 2.12 1.63
Nonperforming assets to total assets 3.88 3.39 2.34 2.00 1.55
Nonperforming loans to total assets 3.10 2.81 1.90 1.64 1.25
Net charge-off percentage (annualized) 2.04 0.84 2.43 1.22 1.17
Allowance for credit losses
to nonperforming loans 0.69 X 0.68 X 0.91 X 0.90 X 1.22 X
FINANCIAL SUMMARY
Three Months Ended June 30 Six Months Ended June 30
2009 2008 2009 2008
Income Statement Data
(Dollars in thousands, except share data)
Interest income:
Loans $ 21,174 $ 25,288 $ 43,254 $ 52,294
Other 3,551 4,455 6,841 9,366
Total interest income 24,725 29,743 50,095 61,660
Interest expense 10,856 13,280 22,250 27,925
Net interest income 13,869 16,463 27,845 33,735
Provision for credit losses 10,853 5,567 19,371 6,026
Net interest income after
provision for credit losses 3,016 10,896 8,474 27,709
Noninterest income 4,726 6,802 8,740 11,350
Noninterest expense 18,093 17,303 34,076 34,289
Income (loss) before income taxes (10,351 ) 395 (16,862 ) 4,770
Income taxes (4,440 ) 135 (7,372 ) 1,500
Net income (loss) (5,911 ) 260 (9,490 ) 3,270
Dividends and accretion on preferred stock (729 ) - (1,459 ) -
Net income (loss) available
to common shareholders ($6,640 ) $ 260 ($10,949 ) $ 3,270
Net income (loss) per share:
Basic ($0.42 ) $ 0.02 ($0.70 ) $ 0.21
Diluted ($0.42 ) $ 0.02 ($0.70 ) $ 0.21
Other Data
Return on average assets (1.13 ) % 0.05 % (0.91 ) % 0.31
Return on average equity (13.75 ) 0.54 (11.04 ) 3.35
Net yield on earning assets 2.91 3.57 2.94 3.65
Efficiency 94.16 73.20 90.09 74.65
Average loans to assets 73.72 74.39 74.66 73.68
Average loans to deposits 92.11 96.24 93.71 94.33
Average noninterest - bearing deposits
to total deposits 9.42 10.35 9.33 10.34
Average equity to assets 8.19 9.25 8.22 9.34
Total risk-based capital ratio 12.25 10.38 12.25 10.38
COMMON STOCK DATA
2009 2008
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
Market value:
End of period $ 2.07 $ 2.11 $ 2.38 $ 4.51 $ 6.90
High 2.70 3.04 6.00 9.11 9.60
Low 1.39 0.94 2.01 3.90 6.76
Book value 7.34 7.75 8.10 11.76 11.99
Tangible book value 6.98 7.38 7.71 8.15 8.39
Dividend - - - 0.05 0.17
Shares outstanding at period-end 15,655,868 15,655,868 15,655,868 15,655,868 15,655,868
Average shares outstanding 15,655,868 15,655,868 15,655,868 15,655,868 15,655,868
SOURCE: NewBridge Bancorp
NewBridge Bancorp Ramsey Hamadi, EVP and Chief Financial Officer, 336-369-0900
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302
© Copyright 2009 The Connors Group, Inc.