By Susan A. Baird
PBN Web Editor
NEWPORT – Newport Bancorp Inc. (Nasdaq: NFSB), parent of Newport Federal Savings Bank, posted a second-quarter profit of $162,000. That represented a 42.96-percent decline from the year-ago quarter’s $284,000, but a 118.92-percent improvement from the 2008 first quarter’s $74,000.
Second-quarter earnings per diluted share dipped to 4 cents from the year-ago 6 cents, while first-half earnings fell to 6 cents per diluted share from the 2007 period’s 12 cents.
Total interest and dividend income for the period ended June 30 rose to $5.40 million, an increase of 23.70 percent from the 2007 second quarter. The company cited an “increase in interest earned on loans and securities” that was “partially offset by increased expense from borrowings used to fund the asset growth,” the company said Friday in its after-market report
Newport Fed’s net interest margin narrowed slightly to 3.46 percent, a decline of 4 basis points from the 3.50-percent margin of the 2007 second quarter. The bank’s yield on interest-earning assets fell to 6.06 percent, from the year-ago period’s 6.16 percent. But that decline was partly offset by a similar decline in the cost of interest-bearing liabilities, which fell to 3.18 percent from the year-ago 3.60 percent “as a result of the low-interest-rate environment in 2008.”
Non-interest income was essentially unchanged at $596,000, just 0.33 percent below the year-ago period’s $598,000. A slight increase in income from bank-owned life insurance was more than offset by a decrease in income from checking-account fees.
But non-interest expenses rose 28.17 percent to $3.23 million, led by personnel costs, which rose 42.34 percent to $1.97 million, and marketing expenses, which rose 20.66 percent to $327,000. The company cited “the stock-based compensation expense associated with option grants and restricted stock awards recorded in the first six months of 2008,” under an employee incentive plan launched in October.
“There were no non-performing assets at June 30,” the company said. By comparison, non-performing assets amounted to 0.24 percent of total assets on March 31 and 0.25 percent on Dec. 31. Yet Newport Fed increased its provision against loan losses to $115,000 for the second quarter – an increase of 3.60 percent from the preceding quarter’s $111,000 provision (READ MORE) and 144.68 percent from the year-ago $47,000 – citing its growing loan portfolio.
Total assets grew to $400.50 million on June 30, a 10.86-percent increase from the level on Dec. 31. Net loans increased 7.49 percent compared with year’s end to $315.04 million, led by growth in residential mortgages (+9.8 percent, or $17.4 million) and commercial real estate loans (+6.5 percent, or $5.0 million), the bank said.
That growth was fueled by increases in deposit balances, which rose to $225.31 million, an increase of $32.03 million, or 16.57 percent, compared with Dec. 31; and Federal Home Loan Bank borrowings, which rose $17.4 million, or 9.8 percent, the company said.
Second-quarter deposit growth was focused in NOW/demand accounts (+31.8 percent, or $18.8 million); money market accounts (+37.0 percent, or $10.6 million); and time-deposit accounts (+3.8 percent, or $3.0 million,) the bank said. Those increases were partly offset by a decline in savings account deposits (-1.7 percent, or $453,000). “Emphasis on promoting the bank’s high-interest-earning rewards checking account is responsible for the majority of the increase in the NOW/Demand deposit category,” the company said, while growth in money-market accounts “is primarily due to a single $7.0 million deposit on the last day of the quarter.”
Also late Friday, the company announced plans for the repurchase of up to 440,270 shares, or 10 percent, of its common stock. The buyback program will be the third since Newport Fed went public in 2006. Its second share-repurchase program – involving 231,721 shares, or 5 percent, of outstanding common stock – was completed early this month. (READ MORE)
The new round of buybacks – “through open-market purchases or privately negotiated transactions – will be made from time to time depending on market conditions and other factors. … Repurchased shares will be held in treasury,” the company said.
Newport Bancorp Inc. (Nasdaq: NFSB) is the holding company for Newport Federal Savings Bank – a $400.5 million institution created by the 2005 merger of Newport Fed and Westerly Savings Bank, that converted from a mutual bank to a shareholder-owned institution in mid-2006. Newport Fed has five branches, all in Rhode Island. Additional information is available at www.NewportFederal.com.
