NEWBRIDGE BANCORP January 28, 2015
Fourth Quarter 2014 Highlights (Quarterly, Year-Over-Year)
- Net income available to common shareholders totaled $4.3 million, up from $1.2 million
- Net income per diluted share rose to $0.11, up from $0.04
- Net interest income grew 26% to $21.3 million
- Noninterest-bearing deposits increased 33%, or $78.3 million, and total core deposits grew 16%
- Loans held for investment increased by 4.8%, or $83.4 million, during the fourth quarter
- Return on average equity was 7.33%, up from 3.45%
- Tangible book value per share increased to $5.50, up from $5.04
Year-End 2014 Financial Highlights (December 31, 2014 vs. December 31, 2013)
- Total assets increased by $555.0 million to $2.5 billion, driven by acquisitive and organic growth
- Total loans held for investment were $1.8 billion, up from $1.4 billion
- Nonperforming assets declined to 0.41% of total assets from 0.87%
- Wealth management revenues increased 13.6%
Capital Adequacy, Shareholder Value (December 31, 2014 vs. December 31, 2013)
- Tier one leverage and total risk-based capital ratios increased to 8.57% and 12.23%, respectively, from 8.30% and 11.67%
- Tangible common equity to tangible assets increased to 8.21% from 7.33%
- Total shareholders common equity increased to $231.4 million from $151.8 million
Key 2014 Accomplishments
- Acquired CapStone Bank resulting in expanded operations in Raleigh, N.C.
- Established middle market banking group, reorganized commercial banking operation into specialized teams
- Named nation's #4 lender in the U.S. Treasury Department's State Small Business Credit Initiative
- Opened Charleston and Greenville, S.C. loan production offices
- Expanded operations in Charlotte and Winston-Salem, N.C.
- Strengthened capital structure, redeeming preferred stock and issuing subordinated debt
- Announced planned acquisition of Premier Commercial Bank, a $173 million asset bank based in Greensboro, N.C., to add commercial banking clients and assets, and residential mortgage banking in several North Carolina markets. The acquisition is expected to close in first quarter 2015.
Greensboro, N.C. - NewBridge Bancorp (the "Company") today reported earnings for the three and twelve month periods ended December 31, 2014. Net income available to common shareholders totaled $4.3 million, or $0.11 per diluted share, for the quarter, compared to $1.2 million, or $0.04 per diluted share, for the quarter ended December 31, 2013. For the twelve months ended December 31, 2014, net income available to common shareholders totaled $13.6 million compared to $18.9 million for the prior year period. Acquisition related expenses totaled $171,000 for the quarter and $5.1 million for the year ended December 31, 2014 compared to $2.2 million for the quarter and year ended December 31, 2013. Results for 2013 were positively affected by a tax benefit of $3.2 million that resulted from a reversal of a deferred tax asset valuation allowance of $10.5 million. Pre-tax core net operating income, a non-GAAP measure that excludes tax provision and acquisition related expenses, increased 41% to $26.9 million for the twelve months ended December 31, 2014, from $19.1 million in the prior year.
Pressley A. Ridgill, President and CEO, commented: "It was an eventful year for NewBridge as we strengthened our foundation for anticipated future growth through prudent acquisitions, organic market expansion, and by optimizing our operating structure. We added teams of highly experienced commercial bankers with the potential to significantly increase revenue. Asset growth of 28% year-over-year reflects our successful strategy to increase our geographic footprint in key selected markets. We have expanded beyond our focus in the Triad region of North Carolina to serve the most rapidly growing commercial markets in North and South Carolina. We enhanced the productivity and efficiency of our commercial and retail banking teams and continue to build upon our low-cost core deposit franchise. The addition of a middle market banking team has been transformative, significantly bolstering our current and projected growth rates. This team has also dramatically improved and expanded our treasury management operations, enabling us to better serve larger corporations in our markets."
Net Interest Income
Net interest income increased 26.0%, or $4.4 million, to $21.3 million for the quarter ended December 31, 2014 compared to the quarter ended December 31, 2013. This increase was due primarily to a rise in the average balance of earning assets, primarily loans, following the acquisition of CapStone Bank and organic growth during the past year. For the twelve months ended December 31, 2014, net interest income increased to $78.7 million compared to the $63.2 million for the prior year period. For the twelve months ended December 31, 2014, net interest margin declined 19 basis points to 3.70%, compared to the prior year period. Strong interest expense management helped mitigate margin pressure in a continued low interest rate environment.
Noninterest Income
Total noninterest income for the fourth quarter of 2014 was the same as for the fourth quarter of 2013. Quarterly wealth management revenue grew to $771,000 from $638,000, or 20.8%, while retail banking decreased $121,000, or 4.6%, to $2.5 million and mortgage banking decreased $80,000, or 26.9%, to $217,000. For the twelve months ended December 31, 2014, total noninterest income was $16.7 million compared to $17.5 million for the prior year. Retail banking revenues in 2014 increased $196,000, or 1.9%, wealth management revenue climbed $349,000, or 13.6%, and other sources of noninterest income increased $268,000, or 31.6%. Mortgage banking revenue decreased $774,000, or 47.1%, to $870,000 from $1.6 million during the same period last year due to a significantly lower level of mortgage loan production resulting from increases in mortgage interest rates. The Company recognized gains on the sale of investment securities of $736,000 during 2013 while no gains or losses were recognized in 2014.
Noninterest Expense
For the quarter, noninterest expense increased 1.2%, or $218,000, to $18.6 million; this includes $171,000 in acquisition related expenses and a 14.1% increase in personnel expenses, primarily reflecting additional employees from acquisition and new hires as the Company increased its presence within several markets. The quarter's noninterest expense also reflected an elevated level of several categories of expense including legal and professional fees, other real estate owned write-downs, marketing expense and mortgage buyback and other miscellaneous losses compared to previous quarters of 2014. In total, the excess of these expenses over the previous three quarters averages were $367,000 after-tax, or $0.01 per share. For the year, noninterest expense was $72.7 million, an increase of $12.3 million, or 20.4%, compared to 2013, and included $5.1 million in acquisition related expenses.
Spence H. Broadhurst, Senior EVP and Chief Banking Officer, commented: "We made significant investments during the year to build our team of talented, experienced bankers to serve a greatly expanded market. Simultaneously, we made numerous organizational changes to generate increased productivity and efficiency. We realigned our retail banking operations, which included prudent headcount reductions and improved product and service cross-selling and training. We also revamped our commercial banking organizational structure to align small business, commercial and industrial, real estate and middle market lending into specialized teams. We expect the investments in personnel and operating enhancements to drive revenue growth in the coming periods."
Balance Sheet
Total assets grew $77.5 million during the quarter and $555.0 million during the year to $2.52 billion at December 31, 2014. Loans held for investment increased $83.4 million, or 4.8%, for the fourth quarter and $387.7 million, or 27.4%, during the twelve month period, to $1.8 billion at December 31, 2014. The Company's success in expanding its loan portfolio is attributed to a balanced strategy of organic and acquired loan growth. In the most recent quarter, the middle market team, which focuses on commercial and industrial loan customers with revenues between $25 million and $250 million, had new loan production totaling $99.7 million, which included $75.7 million of credit relationships previously existing with the team. The Company's investment portfolio increased during the year to $496.8 million at December 31, 2014, compared to $368.9 million a year earlier. Growth in the investment portfolio was primarily attributable to increases in U.S. government agency issued securities and select corporate debt securities. At December 31, 2014 the average duration of the investment portfolio declined to 4.08 years from 4.96 years at year-end 2013, and remains liquid, with an average yield of 3.38%.
Total liabilities increased $74.6 million during the quarter and $490.4 million during the twelve month period, including a $278.6 million increase in deposits. Total deposits were $1.83 billion at December 31, 2014. Core transaction, savings and money market accounts were 70% of the Company's deposits and totaled $1.28 billion at December 31, 2014. Noninterest-bearing deposits increased $8.9 million, or 2.9%, to $319.3 million during the quarter ending December 31, 2014. Time deposits were $549.4 million at December 31, 2014, compared to $451.9 million at December 31, 2013. The average cost of interest bearing liabilities declined to 0.40% at December 31, 2014, from 0.43% at year-end 2013. Total borrowings were $438.5 million at December 31, 2014, compared to $229.8 million at December 31, 2013, with the increase primarily reflecting the Company's use of attractively priced Federal Home Loan Bank borrowings as part of its overall funding strategy. The Company's average cost of borrowings in 2014 was 0.99%, down from 1.50% in 2013.
In March 2014, the Company issued $15.5 million of subordinated debt. The subordinated debt was issued as an efficient form of regulatory tier 2 eligible capital, and the proceeds were used to redeem the remaining TARP preferred stock. The weighted average cost of the subordinated debt is 7.25%; however, the after tax cost to common shareholders is below 5.00%.
Shareholders' equity increased to $231.4 million at December 31, 2014, compared to $166.8 million at December 31, 2013. Retained earnings increased $4.3 million and common equity increased $2.9 million during the fourth quarter. Key events in 2014 that impacted shareholders equity included a first quarter decline of $10.0 million due to the redemption of $15.0 million of preferred stock, partially offset by total comprehensive income of $1.8 million during the quarter, and a $64.2 million increase in the second quarter of 2014 as a result of the acquisition of CapStone Bank and the exercise of stock options previously issued by CapStone Bank. The Company's tangible book value rose from $5.04 per share at December 31, 2013 to $5.50 at December 31, 2014.
Asset Quality
Asset quality reflected continued improvement throughout 2014. Nonperforming assets at December 31, 2014 declined to $10.3 million from $17.0 million a year earlier. The percentage of nonperforming assets to total assets declined to 0.41% at December 31, 2014, compared to 0.87% a year earlier. Total nonperforming loans declined to $7.2 million at December 31, 2014, compared to $9.4 million at December 31, 2013. As a percentage of total assets, nonperforming loans decreased by 19 basis points, or 39.6% at December 31, 2014, compared to a year earlier. Net chargeoffs were $439,000 for the three month period ending December 31, 2014, or 0.10% of loans on an annualized basis. Net chargeoffs decreased from $4.8 million in 2013 to $3.3 million in 2014. The allowance for credit losses was $22.1 million at December 31, 2014, or 1.23% of total loans held for investment and 306.6% of nonperforming loans.
Outlook
Mr. Ridgill commented on the outlook for NewBridge: "As the Company expanded in 2014, we further established our position as a prudently managed regional franchise in key markets throughout the Carolinas. Improvements in our retail banking operation are expected to take root in the coming year, and we expect to see tangible organic growth in the newer geographic markets we have entered. The addition of our middle market commercial banking team, expansion of the Bank's treasury management capabilities, and enhanced commercial banking operational structure are expected to demonstrate continued momentum. Concerning additional expansion efforts, we anticipate completing the Premier Commercial Bank acquisition in the first quarter of 2015 and then will focus on integration and gaining efficiencies from the recent initiatives. We operate the Bank with guiding principles that promote excellence throughout the organization, and we expect these deep rooted values to deliver consistent growth in shareholder value."
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 headquartered 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. NewBridge Bank has assets of approximately $2.5 billion and 40 branches and several loan production offices.
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.
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Contact:
Ramsey Hamadi
Senior Executive Vice President and Chief Financial Officer
336-369-0900
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