ECB Bancorp, Inc. ECBK Q2 2026 earnings

(1) Noninterest expense divided by net interest and dividend income + noninterest income (non-GAAP).

CEO COMMENTARY

Richard J. O’Neil, Jr., President and Chief Executive Officer, said, "We are pleased to report on another quarter of strong financial performance, reflecting the continued success of our disciplined approach to community banking and the dedication of our employees. These results demonstrate the strength of our franchise and our ability to grow and expand our footprint profitably in a competitive environment. As we look ahead, we remain focused on supporting our customers and communities, preparing for our planned expansion into the Medford market through the upcoming opening of our new branch, and building on our momentum through continued growth in loans, deposits, and customer relationships."

BALANCE SHEET

Total assets were $1.67 billion at June 30, 2026, as compared to $1.65 billion at March 31, 2026, or an increase of $21.2 million, or 1.3%.

Cash and cash equivalents were $124.0 million at June 30, 2026, as compared to $111.3 million at March 31, 2026, or an increase of $12.7 million, or 11.4%. The increase in cash and cash equivalents was driven by an increase in Federal Home Loan Bank advances that exceeded growth in the loan portfolio for the quarter.

Interest-earning time deposits were $14.2 million at June 30, 2026, as compared to $11.5 million at March 31, 2026, or an increase of $2.7 million, or 23.9%. This increase was due to purchases of new short-term interest-earning time deposits.

Investments in securities available for sale were $40.1 million at June 30, 2026, as compared to $37.1 million at March 31, 2026, or an increase of $3.0 million, or 8.1%. This increase was due to purchases of new securities.

Investments in securities held to maturity were $50.5 million at June 30, 2026, as compared to $51.6 million at March 31, 2026, or a decrease of $1.2 million, or 2.3%. This decrease was due to maturities and principal paydowns of securities.

Total gross loans were $1.404 billion at June 30, 2026, as compared to $1.402 billion at March 31, 2026, or an increase of $1.5 million, or 0.1%. Loan production remained solid during the quarter, however, gross originations were largely offset during the quarter by higher than normal loan payoffs and loan sales.

• Commercial real estate loans increased $9.5 million, or 2.8%, to $344.8 million at June 30, 2026 from $335.4 million at March 31, 2026.
• Home equity lines of credit increased $2.3 million, or 4.4%, to $54.5 million at June 30, 2026 from $52.2 million at March 31, 2026.
• Construction loans increased $1.2 million, or 1.3%, to $95.8 million at June 30, 2026 from $94.5 million at March 31, 2026.
• Consumer loans increased $5,000, or 3.0%, to $170,000 at June 30, 2026 from $165,000 at March 31, 2026.
• One-to-four family residential real estate loans decreased $3.2 million, or 0.6%, to $488.3 million at June 30, 2026 from $491.5 million at March 31, 2026.
• Multi-family real estate loans decreased $3.5 million, or 0.8%, to $417.6 million at June 30, 2026 from $421.1 million at March 31, 2026.
• Commercial loans decreased $4.8 million, or 61.4%, to $3.0 million at June 30, 2026 from $7.9 million at March 31, 2026.

Total deposits were $1.19 billion at June 30, 2026, as compared to $1.20 billion at March 31, 2026, or a decrease of $6.7 million, or 0.6%. Deposits excluding brokered deposits increased $18.3 million during the quarter.

• Demand deposit accounts increased $22.6 million, or 28.1%, to $102.8 million at June 30, 2026 from $80.2 million at March 31, 2026.
• Money market deposit accounts increased $12.7 million, or 6.0%, to $226.3 million at June 30, 2026 from $213.5 million at March 31, 2026.
• Interest-bearing checking accounts decreased $8.0 million, or 31.1%, to $17.7 million at June 30, 2026 from $25.7 million at March 31, 2026.
• Savings accounts decreased $8.0 million, or 9.5%, to $76.3 million at June 30, 2026 from $84.3 million at March 31, 2026.
• Certificates of deposit decreased $26.0 million, or 3.3%, to $769.7 million at June 30, 2026 from $795.6 million at March 31, 2026.

FHLB advances were $285.0 million at June 30, 2026, as compared to $260.8 million at March 31, 2026, or an increase of $24.2 million, or 9.3%.

Total shareholders' equity was $179.9 million as of June 30, 2026, as compared to $175.9 million as of March 31, 2026, or an increase of $4.0 million, or 2.2%. This increase is primarily the result of earnings of $3.3 million and an increase in accumulated other comprehensive income ("AOCI") of $856,000. The increase in AOCI was driven by an increase in the fair value of cash flow hedges. Our book value per share increased by $0.51 to $20.56 at June 30, 2026 from $20.05 at March 31, 2026.

NET INTEREST AND DIVIDEND INCOME

Net interest and dividend income before provision for credit losses was $10.0 million for the quarter ended June 30, 2026, as compared to $9.8 million for the prior quarter, representing an increase of $201,000, or 2.0%. The increase was primarily driven by higher average loan balances and higher average short-term investment balances, partially offset by an increase in the average interest-bearing deposit balances and FHLB advances. The resulting net interest margin decreased 4 basis points to 2.45% for the quarter ended June 30, 2026 as compared to 2.49% for the prior quarter. The linked-quarter decrease was largely attributable to lower loan prepayment fee income relative to the first quarter, which had benefited from elevated loan prepayment fees. The provision for credit losses was $61,000 for the quarter ended June 30, 2026, as compared to $153,000 for the prior quarter. The lower provision primarily reflected lower loan growth in the second quarter as well as lower reserve requirements, reflecting the continued strong credit quality of the portfolio. This was partially offset by higher provision for off balance sheet commitments due to higher levels of loan commitments for the quarter ended June 30, 2026 as compared to the prior quarter. The combination of these items resulted in net interest and dividend income after provision for credit losses of $10.0 million for the quarter ended June 30, 2026, as compared to $9.7 million for the prior quarter, or an increase of $293,000, or 3.0%.

NONINTEREST INCOME

Noninterest income was $304,000 for the quarter ended June 30, 2026, as compared to $327,000 for the prior quarter, or a decrease of $23,000, or 7.0%. This was driven by lower net gains on loan sales.

NONINTEREST EXPENSE

Noninterest expense was $5.8 million for the quarter ended June 30, 2026, as compared to $5.7 million for the prior quarter, or an increase of $67,000, or 1.2%. Advertising and promotions expenses were $317,000 for the quarter ended June 30, 2026, as compared to $198,000 for the prior quarter, or an increase of $119,000, or 60.1%. The increase was primarily driven by the engagement of a new marketing firm as part of the Company's efforts to enhance its brand presence, expand marketing initiatives, and support long-term business development objectives. Professional fees were $248,000 for the quarter ended June 30, 2026, as compared to $447,000 for the prior quarter, or a decrease of $199,000, or 44.5%. The decrease was primarily attributable to lower consulting and professional service expenses during the second quarter, as the prior quarter included elevated audit-related fees and consulting expenses associated with various strategic and operational initiatives.

INCOME TAXES

We recorded a provision for income tax expense of $1.2 million for the quarter ended June 30, 2026, as compared to a provision for income tax expense of $1.1 million for the prior quarter, reflecting effective tax rates of 27.0% and 26.8%, respectively.

ASSET QUALITY

Asset quality remains strong. The allowance for credit losses on loans in total and as a percentage of total loans as of June 30, 2026 was $10.2 million and 0.73%, respectively, as compared to $10.4 million and 0.74%, respectively, as of March 31, 2026. For the quarter ended June 30, 2026, the Company recorded $2,000 in net charge offs, as compared to $0 for the prior quarter. Total non-performing assets were $1.5 million, or 0.09%, of total assets as of June 30, 2026, as compared to $1.2 million, or 0.07%, of total assets as of March 31, 2026.

Company Profile

ECB Bancorp, Inc. is headquartered in Everett, Massachusetts and is the holding company for Everett Co-operative Bank. The Bank provides financial services to individuals, families, municipalities and businesses through its three full-service branch offices located in Everett, Lynnfield, and Woburn, Massachusetts. The Company's common stock is traded on the NASDAQ Capital Market under the symbol "ECBK." For more information, visit the Company's website at www.everettbank.com.

Forward-looking statements

Certain statements herein constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on the beliefs and expectations of management, as well as the assumptions made using information currently available to management. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions. As a result, actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, the Company's ability to continue to increase loans and deposit growth, legislative and regulatory changes that adversely affect the businesses in which the Company is engaged and changes in the securities market. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company disclaims any intent or obligation to update any forward-looking statements, whether in response to new information, future events or otherwise, except as may be required by law.

ECB Bancorp, Inc. and Subsidiary

Consolidated Balance Sheets

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(dollars in thousands except share data)

ECB Bancorp, Inc. and Subsidiary

Consolidated Statements of Income

(unaudited)

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