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NewBridge Bancorp cuts its quarterly cash dividend
Pressley Ridgill, the president and chief executive of NewBridge, said he was disappointed in second-quarter results that were affected by “weakness in the economy.”
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Published: August 2, 2008
NewBridge Bancorp's struggles with its loan portfolio and decreasing profits led the bank to slash its quarterly cash dividend yesterday.
The bank, based in Greensboro, reported after the stock market closed that it had a net income of $260,000 in the second quarter, compared to $1.7 million in the second quarter of 2007.
Diluted earnings fell by 18 cents to 2 cents a share. The average-earnings forecast of analysts surveyed by Zacks Investment Research was 16 cents.
NewBridge reported that nonperforming assets were $31.9 million June 30 -- more than triple assets of $10.5 million from a year ago.
The bank also raised its provision for loan losses to $5.6 million from $1.2 million a year ago.
"We are obviously disappointed with our second-quarter results, which have been impacted by weakness in the economy," Pressley Ridgill, the president and chief executive of NewBridge, said in a statement.
"While we will continue to make loans to quality commercial and retail borrowers, we are also continuing our efforts to reduce operating expense levels by carefully evaluating every aspect of our banking operations," Ridgill said.
"We are taking a number of steps to prepare the company to emerge from this economic downturn in a strong competitive position," he said.
That includes reducing its quarterly cash dividend to 5 cents from 17 cents. The dividend is payable Oct. 15 to shareholders registered on Oct. 1.
The board of directors also cut in half the fee members receive for attending meetings. Most members had received $1,000 for each meeting attended, the chairman had received $2,000 and the lead independent director had received $1,500, according to a regulatory filing.
"The determination to reduce the cash dividend is one of the most difficult decisions we have had to make," Ridgill said. "Our overriding concern remains the long-term success and vitality of our company.
"The directors believe that they should contribute to the lowering of expenses, which should enhance the company's return to higher profitability," he said.
Analysts said that NewBridge is not alone in struggling with nonperforming assets, particularly construction and residential loans, and having to raise its loan-loss provision.
Those factors contributed to the majority of community banks serving the Triad that report either a lower profit or a loss for the second quarter.
"NewBridge's lower second-quarter results reflect the difficult operating conditions that virtually all banks are facing today," said Buddy Howard, an analyst with Equity Research Services of Raleigh.
"With respect to the dividend reduction, I believe the decision was largely based on the board's commitment to maintain a strong capital base that can position the company for growth once they emerge from this downturn," Howard said.
"The severity of the dividend cut was likely motivated by the wish to only reduce it once," he said.
The earnings report wasn't all bad for NewBridge.
Its income from loans increased to $16.7 million from $10.2 million a year ago. Its income from fees rose to $6.8 million from $3.4 million a year ago.
However, $2.1 million of the increase came from gains on the sales of investment securities.
Total assets were $2.06 billion on June 30.
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
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