Ecb Bancorp (ECBE) 8-K ECB Bancorp, Inc. Reports Increase in Third Quarter Earnings

Exhibit 99.1

PRESS RELEASE

October 20, 2006

CONTACT:	ECB Bancorp, Inc.
	Gary M. Adams/Chief Financial Officer
	(252) 925-5525
	(252) 925-8491 facsimile
	Gary.Adams@ecbbancorp.com

FOR IMMEDIATE RELEASE

ECB Bancorp, Inc. Reports Increase in Third Quarter Earnings

ENGELHARD, N.C.-ECB Bancorp, Inc. (NASDAQ:ECBE) (“ECB” or the “Company”) today announced its results for the three and nine months ended September 30, 2006.

Net income rose 13.5% for the three months ended September 30, 2006 to $1,551,000 or $0.53 per diluted share, generating an annualized Return on Average Assets (ROAA) of 1.07% and an annualized Return on Average Equity (ROAE) of 10.21% compared to net income for the 2005 third quarter of $1,367,000 or $0.67 per diluted share, generating an annualized ROAA of 1.02% and an annualized ROAE of 16.18%.

For the nine months ended September 30, 2006, net income rose 13.4% to $4,064,000, or $1.53 per diluted share, generating an annualized ROAA of 0.95% and an annualized ROAE of 10.28%, compared to net income for the nine months ended September 30, 2005 of $3,585,000, or $1.75 per diluted share, generating an annualized ROAA of 0.92% and an annualized ROAE of 14.51%.

Other Financial Highlights include:

• Net interest income rose 11.2% to $15,534,000 in the first nine months of 2006 from the year ago period. For the 2006 third quarter, net interest income rose 8.8% to $5,405,000 compared to the third quarter of 2005.

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• Consolidated assets increased 10.4% to $599,298,000 at September 30, 2006 from $542,782,000 at September 30, 2005.

• Loans increased 14.1% to $422,975,000 at September 30, 2006 from $370,875,000 at September 30, 2005.

• Deposits increased 3.8% to $474,232,000 at September 30, 2006 from $457,059,000 at September 30, 2005.

• Non-interest income increased 0.4% to $4,382,000 in the first nine months in 2006. For the 2006 third quarter, non-interest income decreased 1.2% to $1,518,000 from the 2005 third quarter.

• Declared quarterly dividend of $0.17 per share, or $0.68 per share on an annualized basis, representing a 6.3% increase over our 2005 annualized dividend.

Arthur H. Keeney, III, President and CEO stated: “The Company successfully sold an additional 862,500 shares of common equity in late March 2006 for $26.5 million to support the Bank’s various strategic initiatives for expansion and growth over the next several years. The impact of the sale of these shares on the Company’s per share (basic and diluted) and ROAE results are reflected in the 2006 third quarter and nine months financial results.

Mr. Keeney continued: “Along with many others, we have noticed a modest slowdown in the generation of non-interest bearing deposits during the first nine months of 2006 in addition to some net interest income compression as deposits repriced more rapidly than loans. This is principally due to the Federal Reserve’s continued rate hikes throughout the year in the effort to control inflationary pressures in the economy. However, although there has been some softness in several of our market areas, our net interest margin has continued to hold up well. We are pleased with our performance and believe that our loan portfolio quality statistics will remain above our peer averages.

“During the fourth quarter of 2006, we will begin the construction of two additional branches in the Greenville area which will give us four locations in this growing eastern North Carolina community. In addition, it is our intent to convert an existing loan production office in Ocean Isle Beach, NC (Brunswick County) to a full-service branch in the first quarter of 2007. As we have mentioned in the past, ECB has continued to acquire properties in several of our key existing markets which we expect will become full service ECB branches over the next year or two. We will make further announcements with more specific information about additional growth plans in early 2007.

“We remain optimistic that 2006 will be another good year for ECB as we continue to focus on organic growth, high asset quality, profitability and shareholder value.”

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About ECB Bancorp, Inc.

ECB Bancorp, Inc. is a bank holding company, headquartered in Engelhard, North Carolina, whose wholly-owned subsidiary, The East Carolina Bank, is a state-chartered, independent community bank insured by the FDIC. The Bank provides a full range of financial services through its 20 offices covering eastern NC from Currituck to Wilmington and Greenville to Hatteras. ECB also provides mortgages, insurance services through the Bank’s licensed agents, and investment and brokerage services offered through a third-party broker-dealer. The Company’s common stock is listed on The Nasdaq Global Market under the symbol “ECBE”. More information can be obtained by visiting ECB’s web site atwww.ecbbancorp.com.

“Safe Harbor Statement” Under the Private Securities Litigation Reform Act of 1995

Statements in this Press Release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments, expectations or beliefs about future events or results, and other statements that are not descriptions of historical facts, may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in the Company’s Annual Report on Form 10-K and in other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “forecasts”, “potential” or “continue,” or similar terms or the negative of these terms, or other statements concerning opinions or judgments of the Company’s management about future events.

Factors that could influence the accuracy of such forward-looking statements include, but are not limited to, the financial success or changing strategies of the Company’s customers, actions of government regulators, the level of market interest rates, weather and similar conditions, particularly the effect of hurricanes on the Company’s banking and operations facilities and on the Company’s customers and the communities in which it does business, and general economic conditions. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. All forward-looking statements attributable to the Company are expressly qualified in their entirety by the cautionary statements in this paragraph. The Company has no obligations, and does not intend, to update these forward-looking statements.

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See 3 pages of financial information attached

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ECB BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets

September 30, 2006, December 31, 2005 and September 30, 2005

(Dollars in thousands, except per share data)

	September 30, 2006			December 31, 2005*			September 30, 2005
	(unaudited)						(unaudited)
Assets
Non-interest bearing deposits and cash	$	15,053		$	17,927		$	22,210
Interest bearing deposits		878			912			1,409
Overnight investments		6,775			—			—
Total cash and cash equivalents		22,706			18,839			23,619
Investment securities
Available-for-sale, at market value (cost of $116,678, $107,084 and $114,345 at September 30, 2006, December 31, 2005, and September 30, 2005, respectively)		114,449			104,723			113,285
Loans		422,975			386,786			370,875
Allowance for loan losses		(4,858	)		(4,650	)		(4,588	)
Loans, net		418,117			382,136			366,287
Real estate & repossessions acquired in settlement of loans, net		315			—			—
Federal Home Loan Bank common stock, at cost		2,354			1,948			1,948
Bank premises and equipment, net		21,181			18,859			18,193
Accrued interest receivable		4,524			3,562			3,543
Bank owned life insurance		7,663			7,436			7,371
Other assets		7,989			10,183			8,536
Total	$	599,298		$	547,686		$	542,782
Liabilities and Shareholders’ Equity
Deposits
Demand, noninterest bearing	$	99,100		$	98,890		$	105,792
Demand, interest bearing		87,738			94,423			89,384
Savings		21,400			22,818			23,162
Time		265,994			249,077			238,721
Total deposits		474,232			465,208			457,059
Accrued interest payable		2,240			1,524			1,408
Short-term borrowings		46,184			23,598			27,513
Long-term obligations		10,310			18,310			18,310
Other liabilities		4,704			4,481			4,097
Total liabilities		537,670			513,121			508,387
Shareholders’ equity
Common stock, par value $3.50 per share; authorized 10,000,000 shares; issued and outstanding 2,902,242 at September 30, 2006 and 2,040,042 at December 31, 2005 and September 30, 2005		10,119			7,140			7,140
Capital surplus		26,572			5,408			5,408
Retained earnings		26,308			23,724			22,782
Deferred compensation - restricted stock		—			(255	)		(283	)
Accumulated other comprehensive loss		(1,371	)		(1,452	)		(652	)
Total shareholders’ equity		61,628			34,565			34,395
Total	$	599,298		$	547,686		$	542,782

* Derived from audited consolidated financial statements.

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ECB BANCORP, INC. AND SUBSIDIARY

Consolidated Income Statements

For three and nine months ended September 30, 2006 and 2005

	Three months ended September 30,				Nine months ended September 30,
	2006		2005		2006		2005
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Interest income:
Interest and fees on loans	$	8,176	$	6,316	$	22,923	$	17,181
Interest on investment securities:
Interest exempt from federal income taxes		263		288		795		861
Taxable interest income		855		794		2,505		2,290
Dividend income		—		—		—		37
FHLB stock dividends		24		24		100		57
Other Interest		49		110		270		188
Total interest income		9,367		7,532		26,593		20,614
Interest expense:
Deposits:
Demand accounts		357		135		901		373
Savings		27		29		83		87
Time		2,971		1,887		8,397		4,688
Short-term borrowings		161		109		377		343
Long-term obligations		446		405		1,301		1,157
Total interest expense		3,962		2,565		11,059		6,648
Net interest income		5,405		4,967		15,534		13,966
Provision for loan losses		50		150		450		340
Net interest income after provision for loan losses		5,355		4,817		15,084		13,626
Noninterest income:
Service charges on deposit accounts		656		837		2,269		2,471
Other service charges and fees		769		600		1,812		1,523
Net gain on sale of securities		—		—		—		90
Income from bank owned life insurance		70		65		227		190
Other operating income		23		35		74		89
Total noninterest income		1,518		1,537		4,382		4,363
Noninterest expenses:
Salaries		1,901		1,713		5,519		4,962
Retirement and other employee benefits		681		663		2,013		1,976
Occupancy		408		381		1,218		1,061
Equipment		424		430		1,292		1,299
Professional fees		78		114		157		385
Supplies		78		90		236		252
Telephone		133		121		370		386
Postage	��	53		51		167		157
Other operating expenses		835		792		2,527		2,411
Total noninterest expenses		4,591		4,355		13,499		12,889
Income before income taxes		2,282		1,999		5,967		5,100
Income taxes		731		632		1,903		1,515
Net Income	$	1,551	$	1,367	$	4,064	$	3,585
Net income per share – basic	$	0.54	$	0.68	$	1.54	$	1.78
Net income per share – diluted	$	0.53	$	0.67	$	1.53	$	1.75
Weighted average shares outstanding - basic		2,886,440		2,014,874		2,638,050		2,014,878
Weighted average shares outstanding - diluted		2,910,721		2,047,098		2,663,337		2,047,607

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ECB Bancorp, Inc.

Supplemental Quarterly Financial Data (Unaudited)

(Dollars in thousands, except per share data)

	9/30/2006			6/30/2006			3/31/2006			12/31/2005			9/30/2005
	Actual			Actual			Actual			Actual			Actual
Income Statement Data:
Interest income	$	9,367		$	8,929		$	8,297		$	7,989		$	7,532
Interest expense		3,962			3,667			3,430			3,003			2,565
Net interest income		5,405			5,262			4,867			4,986			4,967
Provision for loan losses		50			200			200			417			150
Net after provision expense		5,355			5,062			4,667			4,569			4,817
Noninterest income		1,518			1,549			1,315			1,862			1,538
Noninterest expense		4,591			4,506			4,402			4,575			4,355
Income before income taxes		2,282			2,105			1,580			1,856			2,000
Income taxes		731			690			482			587			633
Net income	$	1,551		$	1,415		$	1,098		$	1,269		$	1,367
Per Share Data and Shares Outstanding:
Net income – basic	$	0.54		$	0.49		$	0.51		$	0.63		$	0.68
Net income – diluted		0.53			0.49			0.51			0.62			0.67
Cash dividends		0.17			0.17			0.17			0.16			0.16
Book value at period end		21.23			20.45			20.43			16.94			16.86
Dividend payout ratio		31.48	%		34.69	%		33.33	%		25.40	%		23.53	%
Weighted-average number of common shares outstanding:
Basic		2,886,440			2,885,988			2,133,275			2,014,874			2,014,874
Diluted		2,910,721			2,910,804			2,150,583			2,045,044			2,047,098
Shares outstanding at period end		2,902,242			2,902,242			2,902,542			2,040,042			2,040,042
Balance Sheet data:
Total assets	$	599,298		$	579,137		$	581,771		$	547,686		$	542,782
Loans - gross		422,975			413,432			394,986			386,786			370,875
Allowance for loan losses		4,858			4,999			4,852			4,650			4,588
Investments		114,449			104,672			104,241			104,723			113,285
Interest earning assets		540,625			520,851			526,576			494,369			486,108
Premises and equipment, net		21,181			21,452			19,509			18,859			18,193
Total deposits		474,232			478,254			482,487			465,208			457,059
Short-term borrowings		46,184			17,052			16,238			23,598			27,513
Long-term obligations		10,310			18,310			18,310			18,310			18,310
Shareholders’ equity		61,628			59,340			59,286			34,565			34,395
Selected Performance Ratios: (annualized) :
Return on average assets		1.07	%		0.99	%		0.79	%		0.93	%		1.02	%
Return on average shareholders’ equity		10.21	%		9.54	%		11.51	%		14.72	%		16.18	%
Net interest margin		4.21	%		4.19	%		4.06	%		4.16	%		4.20	%
Efficiency ratio		64.71	%		64.41	%		69.30	%		65.17	%		65.13	%
Asset Quality Ratios:
Nonperforming loans to period-end loans		0.12	%		0.12	%		0.02	%		0.02	%		0.04	%
Allowance for loan losses to period-end loans		1.15	%		1.21	%		1.23	%		1.20	%		1.24	%
Allowance for loan losses to nonperforming loans		904	%		1,013	%		7,960	%		7,154	%		2,753	%
Net charge-offs (recoveries) to average loans (annualized)		(0.05	%)		0.05	%		0.00	%		0.23	%		0.01	%
Capital Ratios:
Equity-to-assets ratio		10.28	%		10.25	%		10.19	%		6.31	%		6.34	%
Leverage Capital ratio		12.63	%		12.54	%		12.69	%		8.43	%		8.35	%
Tier 1 Capital ratio		14.92	%		15.12	%		15.46	%		10.32	%		10.46	%
Total Capital ratio		15.91	%		16.17	%		16.51	%		11.36	%		11.53	%

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