Exhibit 99.1

 

October 24, 2013

 

Contact:

Ramsey Hamadi, SEVP and Chief Financial Officer

336-369-0900

 

NEWBRIDGE REPORTS INCREASED EARNINGS

 

GREENSBORO, N.C. – NewBridge Bancorp (Nasdaq: NBBC) today reported increased earnings for the quarter ended September 30, 2013 over the quarter ended September 30, 2012. Net income available to common shareholders for the third quarter of 2013 totaled $2.8 million, compared to a $33.2 million loss reported in the third quarter of 2012. Earnings per diluted common share were $0.10 compared to ($2.12) per share a year ago. For the nine-month period ended September 30, 2013, net income available to common shareholders totaled $17.7 million, compared to a loss of $32.2 million reported for the nine-month period ended September 30, 2012. Earnings per diluted common share for the nine months were $0.61 compared to ($2.06) per share reported a year ago. For the three and nine-month periods ended September 30, 2013, the Company recorded a one-time tax expense to reduce the Company’s deferred tax asset by $740,000 resulting from a reduction in North Carolina corporate tax rates; however, the nine-month period results include the reversal of a previously recorded valuation allowance against the Company’s deferred tax asset. The three and nine-month periods a year ago were affected by expense related to a plan to dispose of problem assets.

 

“NewBridge is now focused on growing our franchise organically and, as attractive opportunities become available, through acquisition partnerships and entry into new growth markets through the establishment of loan production offices. In 2012 we invested in resolving our asset quality issues. This has allowed the Company to apply its resources to initiatives we believe will enhance shareholder value. We have invested heavily in talented lenders with advanced credit acumen and histories of proven success and directed investments into the largest metropolitan areas in North Carolina, including Charlotte, Raleigh, the Piedmont Triad and the Greater Wilmington market. We have converted loan production offices to full-service branches with complete commercial lending teams in the hearts of the Charlotte and Raleigh financial districts. Consequently, it is a pleasure to report significant progress in our strategic growth efforts. For the period ended September 30th, loans held for investment increased $66.7 million, or 5.6%, and for the year to date increased $110.9 million, or 9.6%. In addition to robust organic loan growth, on October 1, 2013, the Company closed its acquisition of Security Savings Bank, a $212.5 million institution operating in the Greater Wilmington market. NewBridge Bank is now a $2.0 billion institution with 36 branches and a number of loan production offices throughout North Carolina. Already one of the largest community banks in the Piedmont Triad region of North Carolina, NewBridge Bank is now one of the largest community banks in the Greater Wilmington market,” said Pressley A. Ridgill, President and Chief Executive Officer of NewBridge.

 

 

Third Quarter 2013 Highlights

 

·

Net income available to common shareholders for the quarter ended September 30, 2013 was $2.8 million, an increase of $36.0 million compared to the same period a year ago.

 

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Pre-tax net income (excluding security gains) totaled $5.4 million for the quarter, continuing an increasing trend from $4.5 million in the first quarter and $5.0 million in the second quarter of the year.

 

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Net interest income increased $118,000 for the quarter but declined $1.9 million for the year.

 

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Provision for credit losses totaled $33,000 for the quarter and $2.0 million for the year, a decline of 94.1% from the prior year.

 

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Noninterest income increased $312,000, or 7.5%, for the quarter and $1.2 million, or 9.9%, for the year.

 

>

Other real estate owned (“OREO”) expense totaled $152,000 for the quarter and a gain of $285,000 for the year, compared to an expense of $15.6 million the prior year.

 

>

Noninterest expense (excluding OREO related expense) declined $1.8 million, or 11.2%, for the quarter and $604,000, or 1.4%, for the year.

 

·

Asset quality continued to improve.

 

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Nonperforming assets declined $12.5 million, or 46.7%, from December 31, 2012.

 

>

Nonperforming assets to total assets declined to 0.79% from 1.56% at December 31, 2012.

 

>

Allowance for credit losses increased to 220.0% of nonperforming loans from 124.7% at December 31, 2012.

 

·

Core retained loans increased 15.5% on an annualized basis compared to December 31, 2012.

 

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Core retained loans (loans held for investment less classified loans) increased $69.9 million for the quarter, or 23.8% annualized.

 

>

The Charlotte and Raleigh operations continued to provide lift to loan production.

 

 

·

Net interest margin declined 12 basis points to 3.90% for the quarter compared to the same period a year ago.

 

>

Noninterest-bearing deposits increased $16.2 million for the quarter and $35.2 million for the year, an annualized growth rate of 22.9% for the year.

 

>

Interest-bearing deposit costs declined to 0.25% for the quarter, down 10 basis points compared to the same period a year ago.

 

>

Loan yields declined 29 basis points to 4.52% for the quarter compared to the same period a year ago.

 

·

Third quarter capital levels remained high.

 

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Leverage capital was 9.47% at September 30, 2013 and 9.51% at June 30, 2013.

 

>

Tier 1 risk-based capital was 11.82% at September 30, 2013 and 11.59% at June 30, 2013.

 

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Total capital was 13.09% at September 30, 2013 and 12.87% at June 30, 2013.

 

·

On October 1, 2013, the Company announced completion of its acquisition of Security Savings Bank.

 

Net Interest Income

 

Net interest income increased $118,000 to $15.8 million for the quarter ending September 30, 2013 compared to the quarter ending September 30, 2012. For the nine-month period, net interest income declined $1.9 million to $46.3 million compared to the nine-month period ended September 30, 2012. The reduction for the year to date period was due primarily to compression of the net interest margin, which declined 18 basis points to 3.93% for the nine-month period compared to the prior year. For the three-month period, the net interest margin declined 12 basis points to 3.90%, but this was more than offset by an increase in average loans outstanding. Liability costs fell 10 basis points in the three month comparisons; however, earning asset yields fell 21 basis points. The Bank’s loan portfolio experienced the greatest decline. Loan yields were 4.52% for the 2013 third quarter, a reduction of 29 basis points compared to the same period a year ago, due to the sustained low interest rate environment. The net interest margin decreased 7 basis points from 3.97% in the 2013 second quarter to 3.90% for the 2013 third quarter due to a lower yield on new and renewed loans in the loan portfolio.

 

 

Noninterest Income

 

Noninterest income totaled $4.5 million during the third quarter, a $312,000 improvement over the prior year’s third quarter. The most recent quarter benefited from $458,000 in gains on sales of securities. The Company’s largest source of fee income is retail banking revenue, which is up 13.3% for the quarter and 10.2% for the year; however, the Company’s mortgage banking revenue has declined substantially as a large portion of our mortgage banking business consists of refinancings and was down $430,000 for the quarter. The Company’s trust and wealth management services improved 5.7% for the quarter and 7.3% for the year as the division continues to increase assets under management to $215.5 million at September 30, 2013 from $190.4 million at September 30, 2012.

 

Noninterest Expense & Taxes

 

Noninterest expense totaled $14.4 million for the third quarter and $42.0 million for the nine-month period. Compared to the prior year, noninterest expense decreased $16.5 million due primarily to lower OREO related losses and expense. Excluding the impact of OREO related expense, noninterest expense for the year to date was down $604,000. In the prior year third quarter, the Company recorded $1.9 million of one-time occupancy and other noninterest expense. Personnel expense for the quarter and year were up $539,000 and $1.6 million, respectively. The increases in personnel expense were due primarily to the hiring of commercial lenders in the Raleigh and Charlotte markets and the addition of key lending personnel in the Piedmont Triad market. In the 2013 second quarter, the Company benefited from the reversal of $6.6 million of the valuation allowance previously established against its deferred tax asset as management determined it was more likely than not that the Company would be able to fully utilize the assets associated with previous net operating losses. A key factor in the decision was the Company’s financial performance since the completion of its asset disposition plan in 2012. In addition, in the third quarter 2013, the state of North Carolina reduced its corporate income tax rates, and, as a result, the Company expensed $740,000 to adjust the value of its deferred tax assets.

 

Balance Sheet

 

Total assets increased $72.2 million for the quarter and $93.6 million for the year to $1.80 billion at September 30, 2013. Loans held for investment increased $66.7 million, or 5.6%. For the year, loans held for investment increased $110.9 million, or 9.6%. For the quarter, total deposits increased $46.5 million to $1.41 billion. Noninterest-bearing deposits increased $16.2 million, or 7.2%, for the quarter and $35.2 million, or 17.1%, for the year. Core deposits, excluding time deposits, totaled 73.5% of total deposits at September 30, 2013. Tangible common equity increased $2.3 million for the quarter and $61.0 million for the year. This change in equity was due primarily to $17.6 million of retained earnings and the addition of $56.3 million of common equity for the year from the conversion of preferred stock, which were partially offset by a $7.8 million reduction in equity from the repurchase of the TARP warrant and a $6.0 million decline in accumulated other comprehensive income for the year. The Company has decided to eliminate tax planning strategies from the calculation of the disallowed deferred tax asset used in determining the regulatory capital levels of the Company and the Bank. The Company has revised its methodology accordingly, and prior period capital percentages have been revised.

 

 

Asset Quality

 

In the third quarter of 2013, asset quality continued to improve. Nonperforming assets as a percentage of total assets declined to 0.79% from 1.56% at December 31, 2012. Nonperforming loans totaled $11.5 million, and OREO totaled $2.7 million at September 30, 2013. The allowance for credit losses was $25.4 million at September 30, 2013, or 220.0% of nonperforming loans, compared to $26.6 million, or 124.7%, at December 31, 2012. Total classified assets, which includes nonperforming assets and other potential problem assets, totaled $33.3 million, or 18.3% of the Bank’s total capital, at September 30, 2013. Classified assets totaled 30.5% of the Bank’s total capital at December 31, 2012.

 

Outlook

 

We anticipate continued robust loan growth in the remainder of 2013 and into 2014. We believe that the Company’s prior four quarters are indicators of our future core earnings potential. We also believe our acquisition of Security Savings Bank will increase the Company’s net income, and Security Savings former operations are anticipated to represent approximately 10% of next year’s earnings. For the remainder of 2013, the Company expects to have a more normalized tax expense. The low interest rate environment and intense competition for quality loans remain as our key challenges. Consequently, margin pressure is likely to continue. The yield on new and renewed loans has averaged 4.09% for the year to date period and is increasingly variable in nature. We intend to meet these challenges by continuing to grow the loan portfolio, remaining disciplined with our cost controls and continuing to maximize fee income opportunities. We will consider growth through acquisitions that are consistent with our disciplined strategic vision and present realistic opportunities for quality earnings enhancement.

 

Use of Non-GAAP Measures

 

Tangible common shareholders’ equity percentages have become a focus of some investors. Because tangible common shareholders’ equity is not formally defined by GAAP, this measure is considered to be a non-GAAP financial measure, and other entities may calculate it differently. Since analysts and banking regulators may assess our capital adequacy using tangible common shareholders’ equity, management believes that it is useful to provide investors with the ability to assess the Company’s capital adequacy on the same basis.

 

About NewBridge Bancorp

 

NewBridge Bancorp is the bank holding company for NewBridge Bank, a full service, state-chartered community bank headquartered in Greensboro, North Carolina. The stock of NewBridge Bancorp trades on the NASDAQ Global Select Market under the symbol “NBBC.”

 

As one of the largest community banks in North Carolina, NewBridge Bank serves small to midsize businesses, professionals and consumers with a comprehensive array of financial services, including retail and commercial banking, private banking, wealth management and mortgage banking. Upon the closing of the Security Savings Bank acquisition, NewBridge Bank has assets of approximately $2.0 billion and 36 branches and several loan production offices throughout North Carolina.

 

 

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. 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.

 

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FINANCIAL SUMMARY

  

		Three Months Ended September 30								Nine Months Ended September 30
		2013				2012				2013				2012
Income Statement Data
(Dollars in thousands, except share data)
Interest income:
Loans		$	13,969			$	14,084			$	41,135			$	43,587
Investment securities			3,171				3,247				9,122				10,565
Other			2				10				15				30
Total interest income			17,142				17,341				50,272				54,182
Interest expense:
Deposits			737				1,088				2,247				4,217
Borrowings from the FHLB			271				232				768				760
Other			338				343				994				1,032
Total interest expense			1,346				1,663				4,009				6,009
Net interest income			15,796				15,678				46,263				48,173
Provision for credit losses			33				28,881				2,049				34,684
Net interest income after provision for credit losses			15,763				(13,203	)			44,214				13,489
Noninterest income:
Retail banking			2,614				2,308				7,592				6,888
Mortgage banking services			302				732				1,347				1,848
Wealth management services			682				645				1,932				1,800
Gain on sale of investment securities			458				3				736				3
Bank-owned life insurance			317				326				1,107				1,171
Other			124				171				671				468
Total noninterest income			4,497				4,185				13,385				12,178
Noninterest expense:
Personnel			8,052				7,513				23,387				21,800
Occupancy			1,034				2,155				3,073				4,183
Furniture and equipment			840				832				2,510				2,495
Technology and data processing			1,032				1,039				3,071				3,074
Legal and professional			603				858				2,031				2,219
FDIC insurance			444				444				1,329				1,326
Real estate acquired in settlement of loans			152				11,066				(285	)			15,573
Other			2,254				3,225				6,878				7,786
Total noninterest expense			14,411				27,132				41,994				58,456
Income before income taxes			5,849				(36,150	)			15,605				(32,789	)
Income tax (benefit) expense			2,861				(3,700	)			(3,740	)			(2,771	)
Net income			2,988				(32,450	)			19,345				(30,018	)
Dividends and accretion on preferred stock			(208	)			(729	)			(1,616	)			(2,188	)
Net income available to common shareholders		$	2,780			$	(33,179	)		$	17,729			$	(32,206	)
Net income per share - basic		$	0.10			$	(2.12	)		$	0.68			$	(2.06	)
Net income per share - diluted		$	0.10			$	(2.12	)		$	0.61			$	(2.06	)

  

  

FINANCIAL SUMMARY

  

		2013												2012
		Third				Second				First				Fourth				Third
		Quarter				Quarter				Quarter				Quarter				Quarter
Period-End Balance Sheet
(Dollars in thousands)
Assets
Loans held for sale		$	3,744			$	5,908			$	2,439			$	9,464			$	7,074
Loans held for investment			1,266,361				1,199,711				1,169,887				1,155,421				1,168,747
Allowance for credit losses			(25,385	)			(26,395	)			(26,067	)			(26,630	)			(35,016	)
Net loans held for investment			1,240,976				1,173,316				1,143,820				1,128,791				1,133,731
Investment securities			357,537				378,011				398,382				393,815				387,376
Other earning assets			24,583				2,109				11,752				9,006				10,646
Non-earning assets			175,502				170,751				155,686				167,631				175,082
Total Assets		$	1,802,342			$	1,730,095			$	1,712,079			$	1,708,707			$	1,713,909
Liabilities and Shareholders' Equity
Noninterest-bearing deposits		$	241,246			$	225,089			$	214,642			$	206,023			$	184,942
Savings deposits			48,794				49,008				47,050				44,450				44,990
NOW accounts			413,268				425,129				425,307				424,720				429,792
Money market accounts			334,091				345,482				324,864				323,326				350,189
Time deposits			374,611				320,759				341,091				333,974				379,823
Total deposits			1,412,010				1,365,467				1,352,954				1,332,493				1,389,736
Total borrowings			209,474				185,074				138,774				159,774				163,974
Other liabilities			18,012				18,856				20,393				20,426				20,834
Shareholders' equity			162,846				160,698				199,958				196,014				139,365
Total Liabilities and Shareholders' Equity		$	1,802,342			$	1,730,095			$	1,712,079			$	1,708,707			$	1,713,909
ASSET QUALITY DATA
(Dollars in thousands)
Total nonperforming loans		$	11,537			$	13,832			$	19,414			$	21,360			$	27,694
Other real estate owned			2,695				4,508				4,781				5,355				10,465
Total nonperforming assets		$	14,232			$	18,340			$	24,195			$	26,715			$	38,159
Loans identified as impaired		$	9,607			$	10,610			$	15,772			$	16,400			$	22,644
Other nonperforming loans			1,930				3,222				3,642				4,960				5,050
Total nonperforming loans			11,537				13,832				19,414				21,360				27,694
Performing classified loans			19,086				20,086				23,521				26,498				46,842
Total classified loans		$	30,623			$	33,918			$	42,935			$	47,858			$	74,536
Other real estate owned			2,695				4,508				4,781				5,355				10,465
Total classified assets		$	33,318			$	38,426			$	47,716			$	53,213			$	85,001
Classified percentage			18.25	%			20.56	%			26.59	%			30.53	%			48.10	%
Tier 1 capital (Bank) and reserves		$	182,549			$	186,892			$	179,428			$	174,320			$	176,729
Net chargeoffs			1,043				709				1,542				9,595				19,096
Allowance for credit losses			25,385				26,395				26,067				26,630				35,016
Allowance for credit losses to loans held for investment			2.00	%			2.20	%			2.23	%			2.30	%			3.00	%
Nonperforming loans to loans held for investment			0.91				1.15				1.66				1.85				2.37
Nonperforming assets to total assets			0.79				1.06				1.41				1.56				2.23
Nonperforming loans to total assets			0.64				0.80				1.13				1.25				1.62
Net chargeoff percentage (annualized)			0.34				0.24				0.54				3.26				6.52
Allowance for credit losses to nonperforming loans			220.03				190.83				134.27				124.67				126.44

  

  

INVESTMENT PORTFOLIO

  

(Dollars in thousands)		As of September 30, 2013
		Amortized				Gross				Gross				Estimated				Average				Average
		Cost				Unrealized gain				Unrealized loss				Fair value				Yield (%)				Duration (years)
US Agency*		$	76,856			$	-			$	(3,621	)		$	73,235				2.08	%			7.53
Agency mortgage backed securities*			34,650				1,392				-				36,042				3.79				4.74
Collateralized mortgage obligations			7,248				175				(7	)			7,416				5.67				1.62
Commercial mortgage backed securities			38,597				1,256				(49	)			39,804				3.32				3.54
Covered bonds			49,928				3,101				(210	)			52,819				3.49				3.13
Corporate bonds*			110,771				3,685				(862	)			113,594				3.98				4.61
Municipal obligations*			17,446				142				(348	)			17,240				6.49	**			7.58
Federal Home Loan Bank stock			9,370				-				-				9,370
Other			7,672				759				(414	)			8,017
Total		$	352,538			$	10,510			$	(5,511	)		$	357,537				3.55	**			5.05

 

*

Includes held-to-maturity securites carried at cost with no gains or losses shown in the table above

**

Fully taxable equivalent basis

 

COMMON STOCK DATA

 

		2013												2012
		Third				Second				First				Fourth				Third
		Quarter				Quarter				Quarter				Quarter				Quarter
Market value:
End of period		$	7.29			$	5.99			$	5.89			$	4.63			$	4.84
High			9.17				6.41				6.48				4.95				5.00
Low			5.96				5.55				4.50				3.92				3.74
Book value			5.19				5.12				5.19				5.58				5.56
Tangible book value			5.10				5.02				5.09				5.38				5.35
Average shares outstanding			28,478,316				28,461,665				21,055,250				15,655,868				15,655,868
Average diluted shares outstanding			28,572,565				29,139,456				29,699,040				20,978,610				15,655,868

 

OTHER DATA

  

		Three Months Ended September 30								Nine Months Ended September 30
		2013				2012				2013				2012
Tangible common equity		$	145,311			$	83,737			$	145,311			$	83,737
Return on average assets			0.67	%			(7.53	)%			1.50	%			(2.32	)%
Return on average equity			7.36				(75.72	)			14.29				(23.80	)
Net yield on earning assets			3.90				4.02				3.93				4.11
Average loans to assets			69.73				67.95				69.26				68.00
Average loans to deposits			88.21				82.25				87.55				82.79
Average noninterest-bearing deposits to total deposits			16.54				13.41				16.20				13.51
Average equity to assets			9.15				9.94				10.52				9.73
Tangible common equity as a percentage of tangible assets			8.07				4.90				8.07				4.90
Tangible common equity as a percentage of total risk weighted assets			10.51				6.28				10.51				6.28

  

  

ANALYSIS OF YIELDS AND RATES

  

		Three Months Ended September 30, 2013												Three Months Ended September 30, 2012
		Average				Interest Income/				Average Yield/				Average				Interest Income/				Average Yield/
		Balance				Expense				Rate				Balance				Expense				Rate
(Fully taxable equivalent basis, dollars in thousands)
Earning Assets
Loans receivable		$	1,226,469			$	13,969				4.52	%		$	1,165,080			$	14,084				4.81	%
Investment securities			388,108				3,269				3.37	%			385,750				3,340				3.46	%
Other earning assets			2,213				2				0.36	%			10,430				10				0.38	%
Total Earning Assets			1,616,790				17,240				4.23	%			1,561,260				17,434				4.44	%
Non-Earning Assets			142,147												153,353
Total Assets		$	1,758,937				17,240							$	1,714,613				17,434
Interest-Bearing Liabilities
Deposits		$	1,160,483				737				0.25	%		$	1,226,510				1,088				0.35	%
Borrowings			187,837				609				1.29	%			109,185				575				2.10	%
Total Interest-Bearing Liabilities			1,348,320				1,346				0.40	%			1,335,695				1,663				0.50	%
Noninterest-bearing deposits			229,972												189,979
Other liabilities			19,644												18,442
Shareholders' equity			161,001												170,497
Total Liabilities and Shareholders' Equity		$	1,758,937				1,346							$	1,714,613				1,663
Net Interest Income						$	15,894											$	15,771
Net Interest Margin											3.90	%											4.02	%
Interest Rate Spread											3.83	%											3.94	%

  

		Nine Months Ended September 30, 2013												Nine Months Ended September 30, 2012
		Average				Interest Income/				Average Yield/				Average				Interest Income/				Average Yield/
		Balance				Expense				Rate				Balance				Expense				Rate
(Fully taxable equivalent basis, dollars in thousands)
Earning Assets
Loans receivable		$	1,192,263			$	41,135				4.61	%		$	1,177,334			$	43,587				4.95	%
Investment securities			385,586				9,409				3.25	%			382,365				10,846				3.78	%
Other earning assets			6,807				15				0.29	%			15,462				30				0.26	%
Total Earning Assets			1,584,656				50,559				4.27	%			1,575,161				54,463				4.62	%
Non-Earning Assets			136,820												156,290
Total Assets		$	1,721,476				50,559							$	1,731,451				54,463
Interest-Bearing Liabilities
Deposits		$	1,141,146				2,247				0.26	%		$	1,229,965				4,217				0.46	%
Borrowings			159,230				1,762				1.48	%			121,548				1,792				1.97	%
Total Interest-Bearing Liabilities			1,300,376				4,009				0.41	%			1,351,513				6,009				0.59	%
Noninterest-bearing deposits			220,654												192,100
Other liabilities			19,420												19,372
Shareholders' equity			181,026												168,466
Total Liabilities and Shareholders' Equity		$	1,721,476				4,009							$	1,731,451				6,009
Net Interest Income						$	46,550											$	48,454
Net Interest Margin											3.93	%											4.11	%
Interest Rate Spread											3.86	%											4.03	%

  

RISK BASED CAPITAL PERCENTAGES

 

		September 30, 2013								June 30, 2013 Revised*								June 30, 2013 As Reported
		Company				Bank				Company				Bank				Company				Bank
Total Capital			13.09	%			12.65	%			12.87	%			12.40	%			13.47	%			12.97	%
Tier 1 Capital			11.82	%			11.38	%			11.59	%			11.12	%			12.19	%			11.69	%
Leverage Capital			9.47	%			9.11	%			9.51	%			9.12	%			10.01	%			9.60	%

 

*

Second quarter capital percentages were amended to eliminate tax planning strategies from the Company’s regulatory risk based capital percentages