New Century Bancorp Q2 net loss at $253,000

New Century Bancorp (the “Company”) (Nasdaq: NCBC), the holding company for New Century Bank, reported a net loss for the quarter ended June 30, 2009, of ($253,000) compared to net income of $404,000 for the same period in 2008. Basic and diluted earnings (loss) per share were ($0.04) for second quarter 2009 compared to $0.06 for second quarter 2008.

Earnings for the quarter were adversely impacted by an increase in the provision for loan losses resulting from an increase in nonaccrual loans and the impairment reserves related to those loans. During the second quarter, nonperforming loans increased to $13.4 million, largely due to five loan relationships, each over $500,000 and totaling $4.7 million, that were reclassified from past due to nonaccrual. Excluding nonaccruals, total past due loans improved on a linked quarter basis from 0.98% at March 31, 2009 to 0.51% at June 30, 2009.

The Company was further affected by two unusual items: a special insurance premium assessment from the Federal Deposit Insurance Corporation (FDIC) and a one-time write-off of $51,000 on the loss in value of stock in the parent company of Silverton Bank, Atlanta, GA. In June 2009, the FDIC required a special insurance assessment from all FDIC-insured banks. For New Century Bank, this resulted in a special assessment of $285,766, bringing year-to-date total insurance premiums paid for 2009 to $639,144 compared to total FDIC insurance premiums for the same period in 2008 of $224,499, an increase of $414,645 or 185%. Excluding the special assessment, non-interest expenses were lower in both the three and six month periods ending June 30, 2009, compared to the same periods one year earlier.

For the first six months of 2009, net income for New Century Bancorp was $155,000 compared to net income for the first six months of 2008 of $314,000. At this time, the Company’s annual goodwill impairment evaluation process is underway. Pending the results of this evaluation, second quarter results as reported could be adversely impacted.

As of June 30, 2009, the Company reported total assets of $629.0 million, total deposits of $527.6 million and total loans of $467.9 million. As of June 30, 2008, these figures stood at total assets of $598.8 million, total deposits of $505.4 million, and total loans of $452.0 million, for increases of 5.04%, 4.39%, and 3.50%, respectively, in a year-to-year comparison. At December 31, 2008, total assets were $605.8 million, total deposits were $505.1 million and total loans were $460.6 million, meaning New Century experienced increases for the first six months of 2009 of 3.83%, 4.45%, and 1.57%, respectively.

“Although loan demand softened in the past quarter, overall we are satisfied with loan growth year-to-date,” said William L. Hedgepeth II, president and CEO of New Century Bancorp and New Century Bank. “While the Company had a net loss for the quarter, year-to-date we were able to report positive net income and in light of continuing difficult economic conditions, we are pleased with this result. We use a disciplined approach to creating strong customer relationships and to lowering controllable operating expenses and this should give us a strong foundation for positive growth and profitability in the future.

“The housing and real estate markets continue to be impacted by a weak economy and to present challenges regarding property values and credit quality. This is reflected in the increase in our loan loss provision and loan charge-offs during the first six months of 2009. We continue to focus on monitoring and improving the quality of our loan portfolio.

“New Century is well-capitalized, which is the highest regulatory standard. Because of our capital position, the Company made the decision not to participate in the U.S. Government’s TARP (Troubled Asset Relief Program) Capital Purchase Plan, as has already been reported. We are committed to maintaining a sound capital position and ample liquidity, meeting the borrowing needs of the markets we serve, and positioning the Company for future growth.

“During the quarter, we celebrated the 9th anniversary of the opening of New Century Bank on May 24, 2000. We appreciate the support of our board of directors, our shareholders, our customers, and the communities we serve. To all of you, and to our employees, especially all of you who have been with us from the very beginning–thank you.”

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