ECBE Ecb Bancorp

ECB Bancorp, Inc. (NYSE-AMEX:ECBE) (“ECB” or the “Company”) today announced its results for the twelve months and three months ended December 31, 2011.

2011 Annual and Fourth Quarter Financial Highlights

For the twelve months ended December 31, 2011, net income was a loss of ($1,024,000), a decrease of (219%) compared to net income for the twelve months ended December 31, 2010 of $860,000. After adjusting for $1,063,000 in preferred stock dividends and accretion of warrant discount, the net loss attributable to common shareholders for the twelve months ended December 31, 2011 was ($2,087,000) or ($0.73) per diluted share compared to a net loss of ($203,000) or ($0.07) per diluted share for the year 2010. The 2011 loss attributable to common shareholders represents a higher loss than was reported in 2010 primarily due to a decrease in net gains on sales of securities, fees incurred in connection with the terminated private placement offering and increased data processing fees. As we previously reported in February 2012, ECB mutually agreed to terminate its announced private placement of $79.7 million in common equity. This action resulted in the recognition in 2011 of certain costs and expenses related to the capital raise that totaled $1.7 million in the aggregate. This expense contributed significantly to the annual and three months reported loss ended December 31, 2011.

For the three months ended December 31, 2011, the net loss totaled ($1,612,000), or a (43.4%) increase in net loss from the ($1,124,000) in net loss for the three months ended December 31, 2010. After adjusting for $266,000 in preferred stock dividends and the accretion of warrant discount, the net loss charged to common shareholders for the three months ended December 31, 2011 was ($1,878,000) or ($0.66) per diluted share, an increase in net loss of (35.1%) compared to the loss of ($1,390,000) or ($0.49) per diluted share for the three months ended December 31, 2010.

Other Financial Highlights include:

• Consolidated assets increased .2% to $921,277,000 at December 31, 2011 from $919,869,000 at December 31, 2010.
• Loans decreased (12.5%) to $496,542,000 at December 31, 2011 compared to $567,631,000 at December 31, 2010.
• Deposits increased 1.5% to $797,645,000 at December 31, 2011 from $785,941,000 at December 31, 2010.
• Net interest income decreased (3.4%) to $26,971,000 for the twelve months ended December 31, 2011 from $27,919,000 for the same period a year ago.
• Total interest expense for the twelve months ending December 31, 2011 declined (15.0%) to $10,106,000 from $11,888,000 for the same period in 2010.
• Non-interest income for the twelve months ended December 31, 2011 net of securities gains was $6,169,000, a decrease of (4.9%) compared to $6,487,000 of non-interest income net of securities gains for the same period in 2010.

• Provision for loan losses charged to operations for the twelve months ended December 31, 2011 totaled $8,483,000, a decrease of (34.6%) compared to the $12,980,000 provision charged to operations for the same period in 2010.

Dwight Utz, President and Chief Executive Officer, stated: “2011 was an important year in implementing some key structural changes to our organization. We completed the conversion of our core operating system, expanded our Enterprise Risk function, enhanced our loan loss modeling process and established a Customer Care Center to enhance our overall customer service contact points. Our Board of Directors and leadership team were disappointed that our efforts to enhance the Bank’s capital position through an agreed upon private placement of $79.7 million in common equity was unsuccessful because the regulatory approvals required to complete the private placement offering had not been received by all of the investors as of the termination date. As you know this also resulted in the termination of our acquisition of all deposits and selected assets associated with seven Gateway branches, predominately in the Raleigh/Chapel Hill MSA.”

Mr. Utz concluded: “With these issues addressed early this year, we expect 2012 to be a transitional year for ECB as we continue to build on our improved banking platform and look forward to the return of more normalized earnings and credit quality. It is important to confirm that our Company is well capitalized. Our Board of Directors and leadership team remain committed to the long-term success of our Company.”

Thomas M. Crowder, Executive Vice President and Chief Financial Officer, stated: “We expect rates to continue to remain low for the rest of 2012 and continue to see our cost of funding decline as we move through the first half of 2012. This should assist us in continuing to expand our Net Interest Margin to more normal levels in 2012.”

About ECB Bancorp, Inc.

ECB Bancorp, Inc. is a bank holding company, headquartered in Engelhard, North Carolina, whose wholly-owned subsidiary, The East Carolina Bank, is a state-chartered, independent community bank insured by the FDIC. The Bank provides a full range of financial services through its 25 offices covering eastern North Carolina from Currituck to Ocean Isle Beach and Greenville to Hatteras. The Bank also provides mortgages, insurance services through the Bank’s licensed agents, and investment and brokerage services offered through a third-party broker-dealer. The Company’s common stock is listed on NYSE-Amex under the symbol “ECBE”. More information can be obtained by visiting ECB's web site at www.myecb.com.

“Safe Harbor Statement” Under the Private Securities Litigation Reform Act of 1995

Statements in this Press Release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments, expectations or beliefs about future events or results, and other statements that are not descriptions of historical facts, may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company’s Annual Report on Form 10-K and in other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “feels”, “believes”, “estimates”, “predicts”, “forecasts”, “potential” or “continue”, or similar terms or the negative of these terms, or other statements concerning opinions or judgments of the Company’s management about future events. Factors that could influence the accuracy of such forward-looking statements include, but are not limited to: pressures on the Company’s earnings, capital and liquidity resulting from current and future conditions in the credit and equity markets; the financial success or changing strategies of the Company’s customers; actions of government regulators or changes in laws, regulations or accounting standards that adversely affect our business; changes in the interest rate environment and the level of market interest rates that reduce our net interest margins and/or the values of loans we make and securities we hold; weather and similar conditions, particularly the effect of hurricanes on the Company’s banking and operations facilities and on the Company’s customers and the communities in which it does business; continued or unexpected increases in credit losses in the Company’s loan portfolio; continued adverse conditions in general economic conditions and real estate values in our banking market (particularly as those conditions affect our loan portfolio, the abilities of our borrowers to repay their loans, and the values of loan collateral); and other developments or changes in our business that we do not expect. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. All forward-looking statements attributable to the Company are expressly qualified in their entirety by the cautionary statements in this paragraph. The Company has no obligation, and does not intend, to update these forward-looking statements.

  ECB BANCORP, INC. AND SUBSIDIARY Consolidated Balance Sheets December 31, 2011 and 2010 (Dollars in thousands, except per share data)           December 31,       December 31, 2011* 2010* Assets Non-interest bearing deposits and cash $18,363 $11,731 Interest-bearing deposits 63 20 Overnight investments 6,305   8,415   Total cash and cash equivalents 24,731   20,166     Investment securities

Available-for-sale, at market value (cost of $338,685 and $275,883 at December 31, 2011 and 2010, respectively)

339,450 273,229   Loans held for sale 2,866 4,136   Loans 496,542 567,631 Allowance for loan losses (12,092 ) (13,247 ) Loans, net 484,450   554,384     Real estate and repossessions acquired in settlement of loans, net 6,573 4,536 Federal Home Loan Bank common stock, at cost 3,456 4,571 Bank premises and equipment, net 26,289 26,636 Accrued interest receivable 5,308 5,243 Bank owned life insurance 11,778 8,954 Other assets 16,376   18,014   Total $921,277   $919,869     Liabilities and Shareholders' equity Deposits Demand, non-interest-bearing $135,732 $104,932 Demand, interest-bearing 270,119 262,977 Savings 55,517 29,938 Time 336,277   388,094   Total deposits 797,645   785,941     Accrued interest payable 519 631 Short-term borrowings 11,679 11,509 Long-term obligations 25,500 34,500 Other liabilities 5,491   6,394   Total liabilities 840,834   838,975     Shareholders' equity Preferred stock, Series A 17,454 17,288 Common stock, par value $3.50 per share 9,974 9,974 Capital surplus 25,873 25,852 Warrant 878 878 Retained earnings 25,926 28,554 Accumulated other comprehensive income (loss) 338   (1,652 ) Total shareholders' equity 80,443   80,894   Total $921,277   $919,869     Common shares outstanding 2,849,841 2,849,841 Common shares authorized ($3.50 par value) 50,000,000 10,000,000 Preferred shares outstanding 17,949 17,949 Preferred shares authorized 2,000,000 2,000,000 Non-voting common shares authorized 2,000,000 -       * Derived from audited consolidated financial statements.     ECB BANCORP, INC. AND SUBSIDIARY Consolidated Results of Operations

For the three and twelve months ended December 31, 2011 and 2010

(Dollars in thousands, except per share data)         Three months ended     Twelve months ended December 31, December 31, 2011     2010 2011*     2010* Interest income: Interest and fees on loans $6,870 $7,683 $28,652 $30,745 Interest on investment securities: Interest exempt from federal income taxes 134 204 485 1,541 Taxable interest income 1,801 1,945 7,862 7,464 Dividend income 7 4 34 44 Other interest income 6   4   44   13   Total interest income 8,818   9,840   37,077   39,807   Interest expense: Deposits: Demand accounts 400 482 1,973 1,527 Savings 98 39 310 91 Time 1,573 2,144 6,925 9,392 Short-term borrowings 69 58 284 241 Long-term obligations 143   203   614   637   Total interest expense 2,283   2,926   10,106   11,888     Net interest income 6,535 6,914 26,971 27,919 Provision for loan losses 2,252   4,337   8,483   12,980   Net interest income after provision for loan losses 4,283   2,577   18,488   14,939     Noninterest income: Service charges on deposit accounts 833 860 3,262 3,418 Other service charges and fees 241 251 1,225 1,419 Mortgage origination fees 267 427 1,300 1,283 Net gain on sale of securities 749 2,037 2,631 5,508 Income from bank owned life insurance 102 74 324 297 Other operating (expense) income 70   12   58   70   Total noninterest income 2,262   3,661   8,800   11,995     Noninterest expenses: Salaries 2,742 2,639 10,869 9,832 Retirement and other employee benefits 716 742 2,814 2,924 Occupancy 508 492 2,041 1,876 Equipment 551 618 2,173 2,160 Professional fees 604 250 1,386 936 Supplies 60 56 238 221 Communications/Data lines 173 176 710 663 FDIC insurance 178 412 941 1,445 Other outside services 165 177 602 528

Net cost of real estate and repossessions acquired in settlement of loans

696 611 1,438 1,104 Contract early termination fees - 1,141 - 1,141 Securities purchase agreement termination fees 1,686 - 1,686 - Data processing and related expenses 501 76 1,062 295 Other operating expenses 836   917   3,896   3,715   Total noninterest expenses 9,416   8,307   29,856   26,840   (Loss) income before income taxes (2,871 ) (2,069 ) (2,568 ) 94 Income tax benefit (1,259 ) (945 ) (1,544 ) (766 ) Net income (loss) (1,612 ) (1,124 ) (1,024 ) 860   Preferred stock dividends 224 224 897 897 Accretion of discount 42   42   166   166   Loss available to common shareholders ($1,878 ) ($1,390 ) ($2,087 ) ($203 )   Net loss per share - basic ($0.66 ) ($0.49 ) ($0.73 ) ($0.07 ) Net loss per share - diluted ($0.66 ) ($0.49 ) ($0.73 ) ($0.07 ) Weighted average shares outstanding - basic 2,849,841   2,849,841   2,849,841   2,849,594   Weighted average shares outstanding - diluted 2,849,841   2,849,841   2,849,841   2,849,594       * Derived from audited consolidated financial statements.     ECB Bancorp, Inc. Supplemental Quarterly Financial Data (Unaudited) (Dollars in thousands, except per share data)         12/31/2011     9/30/2011     6/30/2011     3/31/2011     12/31/2010 Income Statement Data: Interest income $ 8,818 $ 9,189 $ 9,632 $ 9,438 $ 9,840 Interest expense   2,283     2,566     2,587     2,670     2,926   Net interest income 6,535 6,623 7,045 6,768 6,914 Provision for loan losses 2,252 1,028 1,273 3,930 4,337 Net after provision expense 4,283 5,595 5,772 2,838 2,577 Noninterest income 2,262 2,568 2,539 1,431 3,661 Noninterest expense 9,416 7,539 6,657 6,244 8,307 Income (loss) before income taxes (2,871 ) 624 1,654 (1,975 ) (2,069 ) Income tax expense (benefit)   (1,259 )   97     509     (891 )   (945 ) Net income (loss) (1,612 ) 527 1,145 (1,084 ) (1,124 ) Preferred stock dividend & accretion of discount   266     267     265     265     266   Net income (loss) available to common shareholders $ (1,878 ) $ 260   $ 880   $ (1,349 ) $ (1,390 )   Per Share Data and Shares Outstanding: Net income - basic $ (0.66 ) $ 0.09 $ 0.31 $ (0.47 ) $ (0.49 ) Net income - diluted (0.66 ) 0.09 0.31 (0.47 ) (0.49 ) Cash dividends 0.05 - 0.07 0.07 0.07 Book value at period end 22.10 23.10 22.79 21.71 22.32 Dividend payout ratio -7.58 % 0.00 % 22.58 % -14.89 % -14.29 %

Weighted-average number of common shares outstanding:

Basic 2,849,841 2,849,841 2,849,841 2,849,841 2,849,841 Diluted 2,849,841 2,849,841 2,849,841 2,849,841 2,849,841 Shares outstanding at period end 2,849,841 2,849,841 2,849,841 2,849,841 2,849,841   Balance Sheet Data: Total assets $ 921,277 $ 923,695 $ 941,463 $ 916,571 $ 919,869 Loans - gross 496,542 521,626 542,687 546,641 567,631 Allowance for loan losses 12,092 12,214 15,448 15,219 13,247 Investment securities 339,450 327,066 298,116 304,975 273,229 Interest earning assets 848,682 858,914 880,814 856,840 858,002 Premises and equipment, net 26,289 26,137 26,740 26,716 26,636 Total deposits 797,645 796,609 812,774 786,754 785,941 Short-term borrowings 11,679 13,528 13,711 17,421 11,509 Long-term obligations 25,500 25,500 27,500 27,500 34,500 Shareholders' equity 80,443 83,248 82,320 79,213 80,894   Selected Performance Ratios (annualized): Return on average assets -0.70 % 0.22 % 0.49 % -0.48 % -0.48 % Return on average shareholders' equity -7.85 % 2.56 % 5.71 % -5.38 % -5.15 % Net interest margin 3.10 % 3.06 % 3.35 % 3.30 % 3.23 % Efficiency ratio 105.3 % 81.0 % 68.6 % 75.0 % 77.3 %   Asset Quality Ratios: Nonperforming loans to period-end loans 5.15 % 5.49 % 4.65 % 4.04 % 3.89 % Allowance for loan losses to period-end loans 2.44 % 2.34 % 2.85 % 2.78 % 2.33 % Allowance for loan losses to nonperforming loans 47.3 % 42.7 % 61.3 % 68.9 % 60.0 % Net charge-offs to average loans (annualized) 1.85 % 3.18 % 0.77 % 1.40 % 2.99 %   Capital Ratios: Tangible equity to total assets 6.84 % 7.13 % 6.90 % 6.75 % 6.91 % Equity-to-assets ratio 8.73 % 9.01 % 8.74 % 8.64 % 8.79 % Leverage Capital Ratio 8.25 % 8.34 % 8.39 % 8.42 % 8.66 % Tier 1 Capital Ratio 12.59 % 12.59 % 12.20 % 11.97 % 12.08 % Total Capital Ratio 13.85 % 13.85 % 13.46 % 13.24 % 13.34 %