NEWBRIDGE BANCORP July 23, 2015
Second Quarter 2015 Highlights
- Net income totaled $6.0 million or $0.15 per share.
- Excluding acquisition related expenses, net income available to common shareholders increased 44% to $6.1 million ($0.15 per share) from $4.2 million ($0.11 per share) a year ago.
- Total assets grew $43.6 million to $2.78 billion, reflecting continued organic growth.
- Core deposits increased 16% on a year-over-year basis. At June 30, 2015, core deposits were 73% of total deposits.
- Total loans increased $56.2 million or 11.5% annualized, and now exceed $2.00 billion.
- Core efficiency improved to 65.92% from 70.44% a year ago.
- Mortgage banking revenue increased 44% from $356,000 in the first quarter to $511,000 in the second quarter.
Capital Adequacy, Shareholder Value
- Tier 1 leverage and total risk-based capital ratios remain well above regulatory well-capitalized standards at 8.92% and 12.00% respectively, with tangible common equity to risk weighted assets at 9.88%.
- Tangible book value per share increased $0.12 to $5.79 for the quarter.
- Total shareholders' common equity rose 13.8% to $255.6 million from $224.7 million a year earlier.
- A quarterly cash dividend of $.015 was paid on July 15, 2015.
NewBridge Bancorp (the "Company") today reported earnings for the three month period ended June 30, 2015. Net income available to common shareholders totaled $6.0 million, or $0.15 per diluted share, compared to $1.2 million, or $0.03 per diluted share, for the quarter ended June 30, 2014. Per share data for 2015 are impacted by the issuance of 1.735 million shares in the Premier Commercial Bank acquisition. For the three and six months ended June 30, 2015, merger expenses totaled $171,000 and $2.4 million, compared to $4.8 million and $4.9 million for 2014.
Pressley A. Ridgill, President and CEO, commented: "Building shareholder value by harvesting efficiencies from our recent mergers and added investments in the lending team remains our key focus in 2015. The added revenue from these investments is translating into improved operating performance. The core efficiency percentage fell to 66% in the second quarter from more than 70% a year ago, and our return on average assets was 0.88% for the second quarter of 2015. Operating net income, a non-GAAP measure of net income less acquisition related expense, increased 44% to $6.1 million for the three months ended June 30, 2015 and 53% for the year to $11.3 million. On an earnings per share basis, core earnings per share year-to-date of $0.29 are up 32% over the prior year."
Ridgill continued, "Our successes in the lending areas are evident in growth in earning assets and increased fee income. For the third consecutive quarter, organic loan growth exceeded an annualized rate of 11%, boosting the Company's primary source of revenue, interest on loans. Year to date, the Company originated $503 million in commercial and retail loans, a 64% increase over the prior year. Commercial production represents approximately two thirds of the activity and was balanced out by retail lending. Through six months, mortgage loans originated for sale increased 86% to $120 million which has led to a 134% increase in mortgage revenue."
Net Interest Income
Net interest income increased to $22.8 million for the second quarter of 2015, compared with $20.3 million for the quarter ended June 30, 2014 and $21.7 million for the quarter ended March 31, 2015. The increases were driven by growth in interest-earning assets, primarily loans. Total average interest-earning assets increased to $2.53 billion at June 30, 2015 from $2.21 billion at June 30, 2014.
For the second quarter of 2015, the net interest margin was 3.64%, compared with 3.70% for the second quarter of 2014 and 3.69% for the first quarter of 2015. The decline in the net interest margin reflects the continuing pressure due to the low-interest rate environment and intense pricing competition for quality lending business. Also, there has been a slight increase in the cost of interest-bearing liabilities which was 0.43% for the second quarter of 2015, up from 0.41% for the first quarter of 2015 and 0.40% for the second quarter of 2014.
Noninterest Income
Total noninterest income for the second quarter of 2015 was $4.8 million compared with $4.2 million for the second quarter of 2014. Mortgage banking revenue increased substantially to $511,000, up 112% from $241,000 a year earlier and up 44% from the first quarter of 2015, reflecting continued strong growth in mortgage loan production. Retail banking income decreased 14% to $2.3 million in the second quarter of 2015 from $2.7 million in the second quarter of 2014, but increased from $2.1 million in the first quarter of 2015. The Company also recognized $433,000 in proceeds from bank-owned life insurance due to a policy maturity in the second quarter of 2015.
Noninterest Expense
Total noninterest expense decreased 16% to $18.4 million in the second quarter. In the second quarter of 2014, noninterest expense included $4.8 million in acquisition related expenses for the Capstone Bank acquisition; whereas in the second quarter of 2015 acquisition-related expenses for Premier Commercial Bank had subsided and were only $171,000. Noninterest expense excluding acquisition-related expenses increased 6% to $18.2 million from $17.2 million, reflecting the Company's growth and investments in supporting a larger and more geographically diverse operation. Legal and professional expense in 2015 is relatively more elevated than other expense categories due to several internal projects which are now completed.
Balance Sheet
Total assets grew to $2.78 billion at June 30, 2015, up 1.6% from $2.74 billion at March 31, 2015, and up 14% from $2.43 billion at June 30, 2014.
Loans held for investment increased $56.2 million, or 11.5% annualized, to $2.00 billion compared to $1.95 billion at March 31, 2015. Loans held for sale increased 29% reflecting the continued growth in mortgage banking.
Total deposits were $1.99 billion at June 30, 2015, down $32.0 million from March 31, 2015. However, core deposits were up $4.0 million from March 31, 2015. Core transaction, savings and money market accounts were 73% of the Company's deposits and totaled $1.45 billion at June 30, 2015.
During the quarter the Company relied on borrowings to fund loan growth, with total borrowings increasing $73.6 million to $509.1 million at June 30, 2015, compared to $435.5 million at March 31, 2015.
Shareholders' equity increased to $255.6 million at June 30, 2015, up $4.4 million from March 31, 2015. Retained earnings rose $5.4 million during the quarter, due to net income of $6.0 million and the second quarter declared dividend of $586,000. Average diluted shares outstanding increased to 39,496,122 at June 30, 2015 from 38,333,841 at March 31, 2015, primarily due to the issuance of shares in the Premier Commercial Bank acquisition. The Company's tangible book value per share rose from $5.67 per share at March 31, 2015 to $5.79 at June 30, 2015.
Asset Quality
Asset quality reflected continued improvement through the second quarter of 2015. Nonperforming assets at June 30, 2015 declined to $7.8 million from $14.9 million a year earlier. The percentage of nonperforming assets to total assets declined to 0.28% at June 30, 2015, compared to 0.61% a year earlier. Total nonperforming loans declined to $5.7 million at June 30, 2015, compared to $11.3 million at June 30, 2014. As a percentage of total assets, nonperforming loans declined to 0.20% compared to 0.46% a year earlier. Net chargeoffs were $580,000 for the second quarter of 2015 and $2.1 million for the second quarter of 2014. The Company's allowance for credit losses to total loans held for investment excluding acquired loans was 1.23%, slightly down from the first quarter of 2015 and in line with a consistent quarterly decline since March 31, 2014. The ratio of the allowance for credit losses to nonperforming loans was 375% at June 30, 2015. The improvement in asset quality is reflected in the reduced provision for credit losses in 2015.
Outlook
Mr. Ridgill affirmed his optimism regarding the Company's ability to compete successfully in its attractive market areas. NewBridge operates in many key markets in both North Carolina and South Carolina which should enable good loan growth to continue for the foreseeable future. Although the net interest margin remains under pressure, the Company's strong capital and excellent asset quality should continue to support future growth which is expected to remain in double digits through 2016.
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's customers or vendors, fluctuations in interest rates, actions of government regulators, the availability of capital and personnel or general economic conditions. These forward looking statements express management's current expectations, plans or forecasts of future events, results and condition, including financial and other estimates and expectations regarding recently completed or proposed acquisitions and the general business strategy of engaging in bank acquisitions. 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.
Contact:
Ramsey K. Hamadi
Senior Executive VIce President, Chief Financial Officer
336-369-0975
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