Ecb Bancorp (ECBE) 8-K ECB Bancorp, Inc. Reports 2010 Third Quarter Results

EXHIBIT 99.1

October 25, 2010

CONTACT:	ECB Bancorp, Inc.
	Thomas M. Crowder, Chief Financial Officer
	(252) 925-5520
	(252) 925-8491 facsimile

FOR IMMEDIATE RELEASE

ECB Bancorp, Inc. Reports 2010 Third Quarter Results

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, 2010.

2010 Third Quarter Financial Highlights

For the three months ended September 30, 2010, net income totaled $540,000, a 56.1% increase from the $346,000 in net income for the three months ended September 30, 2009. After adjusting for $267,000 in preferred stock dividends and the accretion of warrant discount, net income available to common shareholders for the three months ended September 30, 2010 was $273,000 or $0.10 per diluted share, an increase of 228.9% compared to $83,000 or $0.03 per diluted share for the three months ended September 30, 2009.

In the three months ending September 30, 2010 ECB Bancorp recognized $2,030,000 in net gains from sales in the investment portfolio versus $444,000 of recognized net gains in the same period 2009. These gains resulted from the continued repositioning of the investment portfolio to reduce its volatility in preparation for a future anticipated rise in interest rates and a reduction in exposure to the municipal bond sector of our portfolio.

For the nine months ended September 30, 2010, net income was $1,984,000, a decrease of 17.3% compared to net income for the nine months ended September 30, 2009 of $2,399,000. After adjusting for $797,000 in preferred stock dividends and accretion of warrant discount, net income available to common shareholders for the nine months ended September 30, 2010 was $1,187,000 or $0.42 per diluted share compared to $1,661,000 or $0.58 per diluted share for the prior year period.

Other Financial Highlights include:

• Consolidated assets increased 8.6% to $932,209,000 at September 30, 2010 from $858,737,000 at September 30, 2009.

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• Loans increased 0.2% to $575,003,000 at September 30, 2010 compared to $573,837,000 at September 30, 2009.

• Deposits increased 13.5% to $790,592,000 at September 30, 2010 from $696,633,000 at September 30, 2009.

• Net interest income decreased 1.4 % to $6,977,000 for the three months ended September 30, 2010 from $7,076,000 for the same three-month period a year ago. For the nine months ended September 30, 2010, net interest income increased 6.5% to $21,005,000 compared to $19,730,000 for the first nine months of 2009.

• Non-interest income for the three months ended September 30, 2010 net of securities gains was $1,770,000, an increase of 19.4% compared to $1,482,000 of non-interest income net of securities gains for the same three-month period in 2009. For the nine months ended September 30, 2010, non-interest income net of securities gains increased 5.9% to $4,863,000 compared to $4,593,000 for the same period in 2009.

• Provision for loan losses charged to operations for the three months ended September 30, 2010 totaled $3,863,000, an increase of 44.4% compared to the $2,675,000 provision charged to operations for the third quarter ended September 30, 2009.

• During the third quarter of 2010, the Company declared a common stock dividend of $0.07 per share, or $0.28 per share on an annualized basis, which was unchanged from the $0.07 dividend, paid in the second quarter of 2010.

A. Dwight Utz, President and Chief Executive Officer, stated: “Although ECB has faired better than many other banks during these difficult times, we continue to see some credit weakness and increased credit losses. We believe the economy is slowly showing signs of recovery with the tourist industry indicating very positive summer results on the North Carolina coast”.

Thomas M. Crowder, Executive Vice President and Chief Financial Officer stated: “We continue to manage our balance sheet to prepare for eventual rising interest rates, but now believe those rate increases have most likely been pushed off into late 2011 by the slow economic recovery.”

Mr. Utz concluded: “The third quarter saw ECB Bancorp continuing to grow its assets over second quarter primarily through modest renewed loan growth. With our focus on small business credit, we are hopeful that with an economic recovery lead by small business, we will begin to see sustained growth in our loan portfolio leading into 2011.”

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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 24 offices covering eastern North Carolina from Currituck to Ocean Isle Beach and Greenville to Hatteras. The Bank 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.myecb.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”, “feels”, “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, pressures on the Company’s earnings, capital and liquidity resulting from current and future conditions in the credit and equity markets, the financial success or changing strategies of the Company’s customers, actions of government regulators or changes in laws, regulations or accounting standards that adversely affect our business, changes in the interest rate environment and the level of market interest rates that reduce our net interest margins and/or the values of loans we make and securities we hold, 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, continued or unexpected increases in credit losses in the Company’s loan portfolio, continued adverse conditions in general economic conditions and the real estate values in our banking market (particularly as those conditions affect our loan portfolio, the abilities of our borrowers to repay their loans, and the values of loan collateral), and other developments or changes in our business that we do not expect. 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 obligation, and does not intend, to update these forward-looking statements.

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See 3 pages of financial information attached

ECB BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets

September 30, 2010, December 31, 2009 and September 30, 2009

(Dollars in thousands, except per share data)

	September 30,			December 31,			September 30,
	2010			2009*			2009
	(unaudited)						(unaudited)
Assets
Non-interest bearing deposits and cash	$	8,666		$	9,076		$	13,925
Interest bearing deposits		20			870			871
Overnight investments		31,720			7,865			1,600
Total cash and cash equivalents		40,406			17,811			16,396
Investment securities
Available-for-sale, at market value (cost of $258,148, $237,594 and $213,714 at September 30, 2010, December 31, 2009 and September 30 2009, respectively)		263,946			239,332			218,591
Loans held for sale		2,103			—			—
Loans		575,003			577,791			573,837
Allowance for loan losses		(13,187	)		(9,725	)		(7,800	)
Loans, net		561,816			568,066			566,037
Real estate and repossessions acquired in settlement of loans, net		5,253			5,443			6,039
Federal Home Loan Bank common stock, at cost		4,749			5,116			5,116
Bank premises and equipment, net		25,897			25,329			25,400
Accrued interest receivable		5,176			4,967			5,082
Bank owned life insurance		8,879			8,657			8,593
Other assets		13,984			13,999			7,483
Total	$	932,209		$	888,720		$	858,737
Liabilities and Shareholders’ Equity
Deposits
Demand, noninterest bearing	$	105,628		$	93,492		$	102,335
Demand, interest bearing		215,346			141,956			117,769
Savings		25,972			19,595			19,958
Time		443,646			499,687			456,571
Total deposits		790,592			754,730			696,633
Accrued interest payable		982			1,121			1,466
Short-term borrowings		13,534			22,910			46,989
Long-term obligations		34,500			21,000			21,000
Other liabilities		4,969			4,584			4,713
Total liabilities		844,577			804,345			770,801
Shareholders’ equity
Preferred stock, Series A		17,246			17,122			17,080
Common stock, par value $3.50 per share		9,974			9,968			9,968
Capital surplus		25,844			25,803			25,792
Warrant		878			878			878
Retained earnings		30,144			29,555			31,238
Accumulated other comprehensive income		3,546			1,049			2,980
Total shareholders’ equity		87,632			84,375			87,936
Total	$	932,209		$	888,720		$	858,737
Common shares outstanding		2,849,841			2,847,881			2,847,881
Common shares authorized		10,000,000			10,000,000			10,000,000
Preferred shares outstanding		17,949			17,949			17,949
Preferred shares authorized		2,000,000			2,000,000			2,000,000

* Derived from audited consolidated financial statements.

ECB BANCORP, INC. AND SUBSIDIARY

Consolidated Income Statements

For the three and nine months ended September 30, 2010 and 2009

(Dollars in thousands, except per share data)

	Three months ended						Nine months ended
	September 30,						September 30,
	2010			2009			2010		2009
	(unaudited)			(unaudited)			(unaudited)		(unaudited)
Interest income:
Interest and fees on loans	$	7,640		$	7,807		$	23,062	$	22,820
Interest on investment securities:
Interest exempt from federal income taxes		385			354			1,337		1,005
Taxable interest income		1,949			2,122			5,519		6,959
Dividend income		6			37			40		67
Other interest income		2			—			9		3
Total interest income		9,982			10,320			29,967		30,854
Interest expense:
Deposits:
Demand accounts		406			224			1,045		609
Savings		25			12			52		34
Time		2,347			2,742			7,248		9,510
Short-term borrowings		66			95			183		403
Long-term obligations		161			171			434		538
Other interest expense		—			—			—		30
Total interest expense		3,005			3,244			8,962		11,124
Net interest income		6,977			7,076			21,005		19,730
Provision for loan losses		3,863			2,675			8,643		5,425
Net interest income after provision for loan losses		3,114			4,401			12,362		14,305
Noninterest income:
Service charges on deposit accounts		842			932			2,558		2,724
Other service charges and fees		470			330			1,168		947
Mortgage origination brokerage fees		351			153			856		680
Net gain on sale of securities		2,030			444			3,471		1,032
Income from bank owned life insurance		75			82			223		246
Other operating income		32			(15	)		58		(4	)
Total noninterest income		3,800			1,926			8,334		5,625
Noninterest expenses:
Salaries		2,548			2,061			7,193		6,135
Retirement and other employee benefits		740			416			2,182		1,869
Occupancy		480			474			1,384		1,403
Equipment		589			465			1,542		1,284
Professional fees		187			123			686		522
Supplies		45			53			165		164
Telephone		147			168			487		458
FDIC insurance		355			306			1,033		1,216
Other outside services		123			98			351		338
Net cost of real estate and repossessions acquired in settlement of loans		112			1,081			493		1,187
Other operating expenses		1,053			890			3,017		2,459
Total noninterest expenses		6,379			6,135			18,533		17,035
Income before income taxes		535			192			2,163		2,895
Income taxes		(5	)		(154	)		179		496
Net income		540			346			1,984		2,399
Preferred stock dividends		225			224			673		630
Accretion of discount		42			39			124		108
Income available to common shareholders	$	273		$	83		$	1,187	$	1,661
Net income per share - basic	$	0.10		$	0.03		$	0.42	$	0.58
Net income per share - diluted	$	0.10		$	0.03		$	0.42	$	0.58
Weighted average shares outstanding - basic		2,849,841			2,845,343			2,849,511		2,843,962
Weighted average shares outstanding - diluted		2,849,841			2,847,053			2,849,554		2,845,630

ECB Bancorp, Inc.

Supplemental Quarterly Financial Data (Unaudited)

(Dollars in thousands, except per share data)

	09/30/2010			06/30/2010			03/31/2010			12/31/2009			09/30/2009
Income Statement Data:
Interest income	$	9,982		$	9,965		$	10,020		$	10,051		$	10,320
Interest expense		3,005			2,932			3,025			3,033			3,244
Net interest income		6,977			7,033			6,995			7,018			7,076
Provision for loan losses		3,863			1,780			3,000			5,675			2,675
Net after provision expense		3,114			5,253			3,995			1,343			4,401
Noninterest income		3,800			1,866			2,668			3,024			1,926
Noninterest expense		6,379			5,916			6,238			6,117			6,135
Income (loss) before income taxes		535			1,203			425			(1,750	)		192
Income tax expense (benefit)		(5	)		246			(62	)		(853	)		(154	)
Net income (loss)		540			957			487			(897	)		346
Preferred stock dividend & accretion of discount		267			265			265			265			263
Net income (loss) available to common shareholders	$	273		$	692		$	222		$	(1,162	)	$	83
Per Share Data and Shares Outstanding:
Net income - basic	$	0.10		$	0.24		$	0.08		$	(0.41	)	$	0.03
Net income - diluted		0.10			0.24			0.08			(0.41	)		0.03
Cash dividends		0.0700			0.0700			0.0700			0.1825			0.1825
Book value at period end		24.70			24.46			23.56			23.62			24.88
Dividend payout ratio		73.07	%		28.83	%		87.50	%		-44.51	%		608.33	%
Weighted-average number of common shares outstanding:
Basic		2,849,841			2,849,841			2,848,839			2,847,881			2,845,343
Diluted		2,849,841			2,849,936			2,848,969			2,847,881			2,847,053
Shares outstanding at period end		2,849,841			2,849,841			2,849,841			2,847,881			2,847,881
Balance Sheet Data:
Total assets	$	932,209		$	921,840		$	897,754		$	888,720		$	858,737
Loans - gross		575,003			570,174			577,964			577,791			573,837
Allowance for loan losses		13,187			10,462			11,329			9,725			7,800
Investment securities		263,946			268,064			197,520			239,332			218,591
Interest earning assets		877,540			862,410			841,344			830,974			800,015
Premises and equipment, net		25,897			25,294			25,114			25,329			25,400
Total deposits		790,592			792,454			772,927			754,730			696,633
Short-term borrowings		13,534			22,408			20,877			22,910			46,989
Long-term obligations		34,500			14,500			14,500			21,000			21,000
Shareholders’ equity		87,632			86,918			84,292			84,375			87,936
Selected Performance Ratios (annualized):
Return on average assets		0.23	%		0.43	%		0.22	%		-0.41	%		0.16	%
Return on average shareholders’ equity		2.44	%		4.48	%		2.28	%		-4.09	%		1.59	%
Net interest margin		3.31	%		3.52	%		3.55	%		3.56	%		3.58	%
Efficiency ratio		57.83	%		63.94	%		62.39	%		59.20	%		66.25	%
Asset Quality Ratios:
Nonperforming loans to period-end loans		3.59	%		3.37	%		3.19	%		2.54	%		2.18	%
Allowance for loan losses to period-end loans		2.29	%		1.83	%		1.96	%		1.68	%		1.36	%
Allowance for loan losses to nonperforming loans		64	%		54	%		61	%		66	%		62	%
Net charge-offs to average loans (annualized)		0.79	%		1.83	%		0.97	%		2.61	%		0.47	%
Capital Ratios:
Equity-to-assets ratio		9.40	%		9.43	%		9.39	%		9.49	%		10.24	%
Leverage Capital Ratio		8.79	%		9.26	%		9.26	%		9.59	%		9.81	%
Tier 1 Capital Ratio		12.37	%		12.78	%		12.69	%		12.77	%		13.16	%
Total Capital Ratio		13.63	%		14.03	%		13.95	%		14.02	%		14.37	%