F.N.B.
Annual Report 2008

Plain-text annual report

A N NU A L R E PO RT 2 0 08 Your Way Forward NewBridge Bancorp Dear Shareholder: This past year will long be regarded as one of the most challenging years in the history of banking and NewBridge Bancorp ("NewBridge" or the "Company"). Financial institutions with almost legendary reputations failed as a result of a subprime crisis that was built upon greed and the excessive granting of credit. Money was too easy, and it fueled an onslaught of speculative investment, often by borrowers whose perceptions of risk had been distorted by a meteoric rise in real estate values. Those high returns prompted additional speculation, creating a cycle that continued to grow until it simply became unsustainable. We now find ourselves operating in an environment of reaction. Asset values – not just in real estate but in almost every category – are slipping. Credit availability – a key driver of the economy – has contracted, as many capital-constrained institutions have been forced to shrink their balance sheets or tighten underwriting criteria to the point that lending activity has been greatly curtailed. Delinquencies have increased, consumers have pulled back, and businesses have retrenched by terminating employees, further frightening already highly traumatized consumers and investors. Our Financial Results Reflected the Turmoil in the Economy In this environment, it is not surprising that we struggled from a financial standpoint in 2008. Including a non-cash, after-tax charge of approximately $50.4 million for impairment of goodwill, our net loss available to common shareholders for 2008 was $57.1 million, or $3.64 per diluted share. Excluding the impairment charge, the Company’s net loss available to common shareholders was $6.6 million, or $0.42 per diluted share, in 2008, which was only modestly worse than a corresponding figure of $5.7 million, or $0.49 per diluted share, for 2007. Apart from the impairment charge, the primary cause of our net loss in 2008 was the unusually high provision for credit losses, which was $25.3 million in 2008 versus $19.0 million in 2007. Another contributing factor was a tighter net interest margin, largely the result of the Federal Reserve’s lowering of interest rates during the year. Earnings before the impairment charge and the provision for loan losses would have been positive, and an improvement from the comparable figure in 2007. A more detailed discussion of our financial results can be found on pages 27 to 46 of our Annual Report on Form 10-K under Management’s Discussion and Analysis of Financial Condition and Results of Operations. We Have Positioned Our Bank to Emerge From this Recession Stronger than Before Succeeding in this challenging environment requires that we maintain a strong capital position, contain costs, continue to lend and increase our communication with our borrowers, both those who are current in their loan repayments and those who are not. We are doing all of these. For example, as is discussed more fully below, we recently strengthened the Company’s capital position by participating in the U.S. Treasury’s Troubled Assets Relief Program (“TARP”), solidifying the Bank’s “well capitalized” regulatory standing. We also made tremendous strides in cutting costs by reducing full time equivalent employees from 594 at the end of 2007 to 520 at the end of 2008. We expanded our loan portfolio, and met with many borrowers throughout the year to better ensure that their loans remain current. We believe these steps will allow us to come out of this recession even stronger than before. Our Capital Position Was Significantly Strengthened in 2008 One of the most significant achievements of the year was the strengthening of our capital position. In the fourth quarter of 2008, we issued $52,372,000 of Fixed Rate Cumulative Perpetual Preferred Stock and a related common stock warrant to the U.S. Treasury Department under its TARP Capital Purchase Program. The Treasury only allowed institutions it expects to be survivors of this crisis to participate in the Program, and we consider it a vote of confidence to have been one of the recipients of the Treasury’s investments. Including the approximately $52 million in TARP funds, tangible shareholders’ equity grew to $173.2 million at December 31, 2008, a 27% increase from $136.4 million at December 31, 2007. NewBridge Bank’s (the "Bank") capital ratios remain quite strong. At December 31, 2008, the Bank had a leverage ratio of 8.0%, a Tier 1 risk-based ratio of 9.5%, and a total risk-based ratio of 10.8%, versus minimum required ratios of 5%, 6%, and 10%, respectively, to meet the “well capitalized” regulatory classification. Additionally, as of year end 2008, the Bank had unused lines of credit exceeding $190 million. Moreover, at year end the Company had $26.4 million in funds from the Treasury’s investment which could be used to further enhance the Bank’s capital ratios. We Took a Bold Step By Charging Off Goodwill Another positive step we took in terms of capitalization was to eliminate goodwill from our financial statements. This goodwill, which was primarily associated with the July 2007 merger of FNB Financial Services Corporation into LSB Bancshares, Inc., was an intangible asset that was “tested” periodically to ensure that its value had not fallen below its original amount. After carefully considering numerous factors, including a valuation by an independent third party, we concluded that there were several advantages to proactively taking the step to write off this non-cash asset. Doing so more conservatively portrays our financial position, which remains quite strong, substantially eliminating the difference between stated book value and tangible book value. This non-cash accounting charge better aligns professional investors’ perspectives of book value with what is reflected on our financial statements, and removes the uncertainty relating to the timing of such an impairment charge. We Maintained Our Commitment to Growth, Particularly in Loans While some banks participating in the TARP have been criticized for not making loans, we continue to finance sound projects of borrowers who have the credit worthiness, capacity to repay and character to justify our confidence in them. In fact, despite rapid paydowns, our total loan portfolio grew 8% to $1.60 billion at December 31, 2008 from $1.49 billion at December 31, 2007. We also achieved growth in other key areas of the balance sheet, such as deposits and total assets. Improving Asset Quality Remains a Top Priority While we continue to adhere to strict underwriting standards, we have not been immune to economic pressures affecting asset quality. Nonperforming assets, which include nonaccrual loans, accruing loans more than 90 days past due, OREO and renegotiated debt, totaled $48.6 million at December 31, 2008, versus $42.1 million at September 30, 2008 and $17.2 million at December 31, 2007. Although we are disappointed with this increase, one of our advantages in working through these credits, particularly relative to many of the larger banks, is the strength of our customer relationships, which allows us greater flexibility in structuring workouts. Furthermore, we have acted aggressively to boost reserves. At the end of 2008, the allowance for credit losses was $35.8 million, or 2.23% of outstanding loans, compared to $30.4 million, or 2.04% of outstanding loans, at December 31, 2007. Our Outlook is One of Cautious Optimism From a macroeconomic standpoint, there are still many challenges before us. As I write these words, unemployment continues to rise, consumer confidence is at an all time low and stock market valuations remain severely depressed. However, some good things are occurring as well. As a nation, we are beginning to save, and as consumer debt is paid down, emergency funds are being replenished. Spending will eventually recover, and when it does, it is likely to be at a more sustainable level. And we have also learned an important lesson about the dangers of a frenzy of speculation and the loss of perspective that often accompanies market bubbles. These are lessons that need to be learned and remembered. As for NewBridge, we are positioned to succeed. We expect to emerge from this crisis in a stronger position and confronted by a less crowded market of competitors. A number of our competitors – particularly some of the larger banks – have been acquired or are no longer aggressively expanding in our markets. While banking will undoubtedly remain competitive, the exit of certain players is likely to result in a more rational assessment of risk and therefore, a healthier pricing environment for our products and services. In closing, please know that I am fully aware of the erosion in the value of your investment. As a fellow shareholder, I have suffered just as many of you have. Your Board and Management are focused on returning our Company to profitability, regaining our earnings momentum and restoring the value of your investment. We appreciate your support and look forward, as we hope you do, to 2009 as a year of recovery and success. Very truly yours, Pressley A. Ridgill President and Chief Executive Officer Board of Directors Robert F. Lowe Chairman, NewBridge Bancorp and NewBridge Bank. Barry Z. Dodson Vice Chairman, NewBridge Bancorp and NewBridge Bank; certified public accountant and owner of Barry Z. Dodson, CPA, PLLC. Pressley A. Ridgill President, Chief Executive Officer and Director, NewBridge Bancorp and NewBridge Bank. Michael S. Albert Vice President—Marketing/ Consultant, Stanley Benefit Services, Inc. Gary G. Blosser President and co-owner, Shenandoah Landscape Services, Inc.; President and owner of Glen-Gary, Inc. J. David Branch Ophthalmologist in private practice. C. Arnold Britt President and owner, Carolina Apothecary, Inc., Belmont Pharmacy, Inc. and RxCare, Inc. Robert C. Clark President and owner, FTS/Leesona Corporation (manufacturer, textile machinery); member, Winston-Salem City Council. Alex A. Diffey, Jr. Independent banking consultant; previously Interim Chief Credit Officer of FNB Southeast between October 2005 and January 2007. Joseph H. Kinnarney Doctor of Veterinary Medicine; President and owner, Reidsville Veterinary Hospital, Inc., Bel-Air Veterinary Hospital, Mebane Veterinary Hospital and Greensboro Pet Spa & Resort, Inc. Robert V. Perkins President and co-owner, NAI Piedmont Triad (commercial real estate services); member, Greensboro City Council. Mary E. Rittling President, Davidson County Community College. Burr W. Sullivan Retired; former consultant, Graphic Printing Services; former President and owner, Dorsett Printing and Lithograph Corporation. E. Reid Teague President and owner, Eden Oil Co., Inc. John W. Thomas, III President, Riverwood, Inc. (specialty furniture manufacturer); former President and Chief Executive Officer, Thomas Built Buses, Inc. Elizabeth S. Ward Chief Financial Officer and Treasurer, The Moses H. Cone Memorial Hospital. John F. Watts Owner, Watts Realty. G. Alfred Webster Retired; Director and Chair of the Executive Committee, Unifi, Inc.; former Executive Vice President, Unifi, Inc. Kenan C. Wright President, The Wright Co. of N.C., Inc. (general contractor). Julius S. Young, Jr. President, Jay Young Management, Inc. (asset management). Disclosures About Forward-Looking Statements The discussions included in this document and its exhibits may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. For the purposes of these discussions, any statements that are not statements of historical fact may be deemed to be forward-looking statements. Such statements are often characterized by the use of qualifying words such as “expects,” “anticipates,” “believes,” “estimates,” “plans,” “projects,” or other statements concerning opinions or judgments of NewBridge and its management about future events. The accuracy of such forward-looking statements could be affected by factors including, but not limited to, changes in economic conditions, the financial condition of our customers, interest rate fluctuations, competitive product and pricing pressures within our markets, acquisitions and integrations of acquired businesses, technological changes, changes in law and regulations, changes in fiscal, monetary, regulatory and tax policies, monetary fluctuations, actions of government regulators, and the availability of capital and personnel. Additional factors that could cause actual results to differ materially from those anticipated by forward-looking statements are discussed in NewBridge’s filings with the Securities and Exchange Commission, including without limitation its Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. NewBridge undertakes no obligation to revise or update these statements following the date of this document. Annual Report on Form 10-K Copies of the Company’s Annual Report to the Securities and Exchange Commission on Form 10-K will be provided at no charge. Contact: Angelika I. Gambetta, Vice President, Investor and Shareholder Relations, NewBridge Bank. Common Stock Listing: NASDAQ: NBBC Many thanks to all of our dedicated employees (and bridge builders)* Karen Adkins Kim Allen Jordan Allred Kofi Amadi Johanna Araque Cathy Atkins Melissa Atkins Bryna Aydelotte Janice Bacon Ken Banner Ben Barbee Ed Barber Pat Barker David Barksdale Amy Barnes Vickie Barnhardt Angelia Barnhill Edgar Barrientos Mindy Batchelor Jennifer Bates Amy Battle Pattie Bayliff Jerry Beasley Dee Beck Kent Beck Wassila Bedja Bonnie Belaj Sonya Belcher Amy Bell Angela Bell Samantha Benfield Darlene Bennett Cathy Berrier Coretta Bigelow Wendi Binkley Stephanie Blair Judy Blake Samantha Blankenship Pam Boles Wanda Booth Jennifer Bowers Tammy Bowles Deric Brady Crystal Bragg Stephanie Breeden Ginger Bridges Pattie Brinkle Jason Brooks Amy Brown Kellie Brown Melinda Brown Rosetta Brown Sabrina Brown Tammy Brown John Bruggman Wes Budd Susan Buffkin Randy Bullin Suzanne Bullotta Susan Burke Dennis Burnette Morgan Bush Rick Byrd Janet Call Amanda Callahan Sara Camp Theresa Campbell Viva Campbell Lisa Carpenter Candi Carter Gloria Carter BJ Case Leslie Cash April Cassidy Grace Castro Robin Cecil Jeff Chandler Carolyn Charette Aubrey Chatham Traci Chisholm Frank Chorpenning Lisa Christensen Barbara Clarke Michelle Clarke Jane Clodfelter Dick Cobb Kelly Coble Amy Coe Karen Coe Megan Collins Sharon Collins Carol Columbus Pamela Cook Mia Cooper Kay Cooper Donna Cope Robin Corum Sue Cowan Brian Cox Crystal Cox Wendy Cox Donna Craigg John Cranor Vickie Craun Lynn Creech Chris Crockett Cora Cunningham Nan Dagenhardt Cecil Dalton Holly Daniels Jenna Daniels Angel Davis Catherine Davis Chad Davis Kyle Ann Davis-Dunn Stephanie DeJournette Shannon Donathan Holly Dorton Helen Doss Diana Dotson Phyllis Dougherty Ashley Driggers Liz Dunican Nicole Dunn Pat Dunning Debbie Durham Kristen Durham Linda Durham Donna Durrett Lauren Edmonds Derek Edwards JJ Elliott Pam Ellis Grant Emrick Chris England Christine England Angela English Frances Estes Lakeisha Estes Tim Evans Clay Everett Amy Everhart Heidi Everhart Kaley Everhart Angel Ezzell Natalie Faircloth Vangie Farlow Crystal Finley Bailey Finney Oneita Flanegin Maureen Flannery Amber Floyd Pat Floyd Joseph Forrest Hope Fortune Shaylen Foust Lynn Fowler Deb Frank *Includes full-time and part-time employees Eric Freeman Whitney Freeman Shirley French Julie Frey Julie Fricault Ashley Fritts Pat Fritts Lola Fry Jessica Frye Linda Fulk Angelika Gambetta Sherry Garrett Tanya Gatewood Erica Gentry Jillian Gibson Phil Gibson Rebecca Gibson Brittany Ginn Albert Gobble Greg Godsey Phil Grande Danielle Graves Eve Green Serelyn Green Melissa Gregory Brenda Griffin Doris Griffin Mona Griffin Dorothy Griffith Shirley Gross Robin Hager Natalie Haire Larry Hall Cheryl Hancock Sheila Handy Lisa Hanks Dee Harden DeeDee Harper Andrea Harris Betty Hartman Robin Hartman Connie Hathaway Barbara Hayes Matt Hearn Heidi Heath Rebecca Heath Amber Hedrick Ashley Hedrick Nissa Hegler Donna Hench Mike Hendricks Jeff Hendrix Sara Hensley Chassidy Hepler Chad Hester Ronald Hewitt Donna Hill Holly Hill Kelli Hill Shaun Hill Glenda Hobbs Nathan Hockersmith Deann Holmes Debra Holmes Alane Holste Deborah Honeycutt Robin Horn Bill Hudson Jerry Hudson Rhonda Huffman Tonya Hull Robin Huneycutt Gladys Hunt Landa Hunt Anita Hunter Carrie Hutchens Christy Hutchens Jay Hutchens Tony Hyde Buzz Jackson Katrina Jackson Tracey James Teresa Jankosky Ryan Jenkins Brandon Johnson Mark Johnson Joann Jordan Betty Joyce Tiffany Junious Hannah Kallam Dora Kanoy Elizabeth Kearns Lynn Kelley Lacy Kennedy Maxine Kennedy Mike Kidd David Kilpatrick Wayne Kimbrell Erica Kimsey Cynthia Kistler Gene Klump John Knox John Kolessar Joretta Koontz Bill Kosin Irene Kyere Carl Labonge April Lackey Sheryl Lambeth Alex Lane Missy Langley Anna Lanier Nathaniel Lanier Kenny Lanning Irene Law Amanda Laws Melanie Laws Bukra Lazimi Matt Leggett Jerrie Leonard Tracy Leonard Brian Lewis Tanya Lewis Sharon Lindsey Cynthia Lindsley Robert Lineback Toni Linker Liz Livingston Courtney Lollis Alan Lomax Leslie Long Janell Lynch Margaret Maddox Donna Markowitz Ryan Marks Cindy Martin Jennifer Martin Kamelda Martin Sterlin Martin Steve Martin Courtney Martiny Terri Maxcy Tracy May Wendy Mayfield Linda Maynard Joel Maynor Jesse McBride Aundria McCandies Jackie McClanahan Nancy McCollum Paul McCombie John McDaniel Andy McDowell Deborah McDuffie Jason McGath Meg McGee Jo Marie McKinney Randy Mercer Teresa Metcalf Savanah Mick Chris Mickey Erin Miller Michael Miller Rebecca Miller Kay Milliken Laverne Miner Missy Minor Misty Mixon Sherri Mize Derek Mobley Janet Mooney Deborah Moore Janice Moore Deborah Morris Ruby Morris Eric Morrison Andrew Morton Kellie Mowbray Bud Munnelly Julie Murr Christy Musgrave Heather Myers Patty Myers Amy Nance Tom Nance Suzanne Nazim Keith Neely Dianne Nelson Lynn Nelson Tonya Nelson Kathy Newbold Lois Nichols Cindy Norman Cyenthia Nunn Karen Oddon Mickey Ogle Stacy Oldham Justin Oliver Jed Orman Beth Orman Jimmy Orrell Kevin Ott Debbie Overby Steve Owen Julie Padon Janet Pagans Doug Page Grace Parker Justin Parker Match Parker Yates Parker Ed Parrish Ginger Patterson Merriett Payne Tammy Peace Melanie Pearman Jeff Peeler Neris Pena Michelle Pennington-Walker Jo Peoples Andy Perryman Susette Pfannes Evalyn Pheysey Felita Phipps Andrea Pierce Glenda Pierce Debbie Pitts Cayce Poindexter Sarah Poling Melissa Pollock Rhonda Potter Eddie Potts Ked Powell Megan Pressley Tammy Pressley Jessica Price Nicholas Priddy Tammi Privott Gail Proctor Shirley Putnam Judy Queen Alison Raffetto Dava Rayle Lisa Reaser Larry Reddick Susan Reece Gail Register Tammy Reid Bertha Reyes Cassandra Rich Ginger Richardson Pressley Ridgill Judy Rinere Brooks Roach Hall Roberts Janet Roberts Amy Robinson Ashley Roe Lee Rogers Pam Rose Amber Roseberry Jessica Rudisill Jennifer Russell Wendy Russell Kristin Salimeno Elaine Salmons Angie Sams Melissa Sands Pattie Satterfield Helen Scales Yvette Scales Deanna Schipman Pic Schrum Teena Scott Bryanne Scyphers Cheryl Searles Mary Segars Tammy Sharpe Mitzi Sharron Robert Shaw Lisa Shawver Mike Shelton Annita Shivdyal Marilyn Silk Tom Simms Don Singleton Christy Sink Gerald Sink Lisa Sink Ron Sink Zach Sink Charles Skara Sandra Slade Sheila Slaydon Angie Smith Arthur Smith Billy Smith Candy Smith Ella Smith Jamie Smith Jack Smith Jessica Smith Lenny Smith Marcus Smith Melissa Smith Nikki Smith Pat Smith Rita Smith Stan Smith Wendy Smith Nathan Snelling Pete Snider Mandy Sorge Heather Southers Rachel Steinhaus Leigh Ann Sterling NewBridge Bancorp 1501 Highwoods Blvd., Suite 400 Greensboro, NC 27410 336-369-0900 www.newbridgebank.com Jennie Still Jamie Stowe Deana Strader Robert Sullivan James Taylor Tammy Teeple Sandy Thomas Allison Thomason Jody Thomasson Tamika Thompson Tom Thompson Christine Thornburg Aimee Tilley Karen Tilley Carlene Toler Marcia Trantham Amber Trotter Natalie Troxler Becky Tucker Sandra Turner Lisa Tussey Donna Tuttle Pam Tuttle Angie Tysinger Bernice Tysinger Kristen Tysinger Jill Vale Laura Varner Stuart Vaughn Edna Wade Melissa Walds Lori Walker Melissa Walker Stacy Walker Tara Walker Judy Wall Joe Wallace Robert Walser Rodney Walser Ann Warren Tammy Warren Vickie Washburn Warren Watts Kris Weatherford Sarah Weaver Jennifer Weavil Rick Webster Kim Wehrle Marshan Weifenbach Jennifer Welch Marsha Wells Grayson Whitt Julie Whitt Phyllis Wicker Cathy Wilkerson Edgar Wilkerson Debbie Williams Dax Williamson Dana Wilmouth Angela Wilson April Wilson Belinda Wilson Martha Wilson Michelle Wilson Katie Wittke Judy Womble Melinda Wood Shannon Wright Ellen Yahya Kaitlan Yale Jan Yates Melissa Yates Susan Yokeley William Young Tracy Younts 

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