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Yardville National Bancorp Announces Fourth Quarter and 2006 Results
Tue, 01/30/2007 - 19:10 — Zangani
Yardville National Bancorp (Nasdaq: YANB - News) today reported earnings for both the fourth quarter and full year ended December 31, 2006. The company noted that in keeping with its retail banking strategy, YNB opened five new banking offices in 2006, two of them in the fourth quarter alone, and completed a restructuring of its balance sheet as announced at the end of December.
For the fourth quarter of 2006, the balance sheet restructuring was the major contributor to YNB's net loss of $8.7 million and diluted loss per share of $0.79. These results compare with net income of $4.3 million and $0.39 diluted earnings per share for the fourth quarter of 2005. For the full year, primarily due to the restructuring, net income decreased to $6.9 million from the $20.9 million reported in 2005. Diluted earnings per share for the full year decreased to $0.61 compared with $1.89 for the prior year.
Excluding the impact of the one-time charges associated with the restructuring, YNB would have reported fourth quarter net income of approximately $4.2 million or $0.36 per diluted share. Full year net income without the restructuring would have been approximately $19.7 million or $1.74 per diluted share.
"We took significant steps to strengthen our balance sheet at the end of the fourth quarter," noted YNB Chief Executive Officer Patrick M. Ryan. "We restructured a portion of our balance sheet in order to enhance the company's net interest margin and improve earnings in 2007 and beyond, which also allowed us to reduce interest rate risk and improve our liquidity position," he added.
At December 31, 2006, total deposits were $2.00 billion, a net increase of $30.6 million from December 31, 2005. Although net deposit growth was modest in 2006, strong deposit growth in its new branches enabled YNB to substantially reduce its reliance on Federal Home Loan Bank advances and more expensive wholesale funding sources and, in turn, strengthened liquidity.
"By expanding the bank's market presence in contiguous markets, YNB is able to establish new retail and commercial banking relationships," explained YNB President and Chief Operating Officer F. Kevin Tylus. "While the marketplace continues to be a competitive one, our brand of high-level personal service has helped us penetrate these markets and gain additional business," he continued. "We have successfully used our introductory product offerings to cross-sell additional products and services, and expand customer relationships," he concluded.
In the fourth quarter, YNB opened new branches in Woodbridge, Middlesex County, and Skillman, Somerset County. YNB also opened a new branch in North Brunswick, Middlesex County, in January 2007.
YNB experienced accelerated loan payoffs and intense competition for commercial loans in 2006, both contributing factors in YNB's flat net loan growth this past year. Total loans at December 31, 2006 held steady year over year, totaling $1.97 billion, the same as at the end of 2005. Nonperforming assets increased to $29.5 million, or 1.12 percent of total assets at December 31, 2006, compared to $20.3 million or 0.68 percent at September 30, 2006. Several credits were placed on nonaccrual status in December of 2006, resulting in the increase in nonperforming assets for the period.
Net loan chargeoffs for the twelve months ended December 31, 2006 totaled $9.5 million, compared with $7.9 million for 2005. YNB's provision for loan losses for 2006 was $8.8 million compared to $10.5 million for 2005. The allowance for loan losses at December 31, 2006 totaled $22.1 million, or 1.12 percent of total loans, and covered 75.9 percent of total nonperforming loans.
"As many banks have, we continue to feel the effects of the sustained inverted yield curve, which presents a challenge for the financial services industry," Mr. Ryan stated. "Stiff competition for loans and deposits continues, but as we look forward, we believe in our strength and potential for continued growth in both the commercial and retail banking sectors," he concluded.
Due in part to the balance sheet restructure completed in December, YNB maintained its 2006 tax-equivalent net interest margin at 3.05 percent, the same as 2005. The full positive effects of the restructure will be realized in the first quarter of 2007.
"The restructuring of our balance sheet should generate higher returns in future quarters," stated Stephen F. Carman, YNB Chief Financial Officer. "The anticipated improvement in our net interest margin, in 2007 and beyond, is particularly important in the current interest rate environment," he said. "We anticipate the market challenges we currently face will continue in 2007," he added, "but we plan to meet these challenges by executing our retail banking strategy and expanding our small business commercial lending efforts," he said.
At December 31, 2006, YNB's total risk-based capital was 12.2 percent, Tier 1 capital to risk-weighted assets was 11.2 percent, and Tier 1 capital to average assets was 8.9 percent. For the year, YNB paid cash dividends totaling $0.46 per share. YNB has paid dividends for the past 52 consecutive quarters.
With $2.62 billion in assets as of December 31, 2006, YNB serves individuals and small to mid-sized businesses in the dynamic New York City-Philadelphia corridor through a network of 32 branches in Mercer, Hunterdon, Somerset, Middlesex, Burlington, and Ocean counties in New Jersey and Bucks County in Pennsylvania. Headquartered in Mercer County, YNB offers a broad range of lending, deposit and other financial products and services to both commercial and retail banking customers.
Note regarding forward-looking statements
This press release and other statements made from time to time by our management contain express and implied statements relating to our future financial condition, results of operations, plans, objectives, performance, and business, which are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These may include statements that relate to, among other things, profitability, liquidity, adequacy of the allowance for loan losses, plans for growth, interest rate sensitivity, market risk, regulatory compliance, and financial and other goals. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. Actual results may differ materially from those expected or implied as a result of certain risks and uncertainties, including, but not limited to, the results of our efforts to implement our retail strategy, adverse changes in our loan portfolio and the resulting credit risk-related losses and expenses, interest rate fluctuations and other economic conditions, our ability to attract core deposits, continued relationships with major customers, competition in product offerings and product pricing, adverse changes in the economy that could increase credit- related losses and expenses, adverse changes in the market price of our common stock, proxy contests and litigation, compliance with laws and regulatory requirements, including our agreement with the Office of the Comptroller of the Currency and NASDAQ standards, and other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, as well as other risks and uncertainties detailed from time to time in statements made by our management. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
L.G. Zangani, LLC provides financial public relations services to the Company. As such, L.G. Zangani, LLC and/or its officers, agents and employees, receives remuneration for public relations and/or other services performed for the Company. This remuneration may take the form of cash, capital stock in the Company, or warrants and/or options to purchase stock in the Company.
Contact: Stephen F. Carman, VP/Treasurer (609) 631-6222 or carmans@ynb.com
Patrick M. Ryan, CEO (609) 631-6177
YNB's website http://www.ynb.com
Investor Relations website http://www.zangani.com
Yardville National Bancorp
Summary of Financial Information
(Unaudited)
Three Months Ended Twelve Months Ended
(in thousands, except per share December 31, December 31,
amounts) 2006 2005 2006 2005
Stock Information:
Weighted average shares
outstanding:
Basic 11,002 10,760 10,948 10,609
Diluted 11,002 11,199 11,350 11,057
Shares outstanding end of period 11,070 10,915
Earnings per share:
Basic $(0.79) $0.40 $0.63 $1.97
Diluted (0.79) 0.39 0.61 1.89
Dividends paid per share 0.115 0.115 0.46 0.46
Book value per share 17.03 16.35
Tangible book value per share 16.90 16.21
Closing price per share 37.72 34.65
Closing price to tangible book
value 223.20 % 213.77 %
Key Ratios:
Return on average assets (1.21)% 0.58 % 0.23 % 0.72 %
Return on average stockholders'
equity (18.09) 10.13 3.75 12.57
Net interest margin 3.01 3.03 2.97 2.98
Net interest margin (tax
equivalent) (1) 3.09 3.10 3.05 3.05
Efficiency ratio 180.37 53.41 83.05 54.69
Equity-to-assets at period end 7.16 6.00
Tier 1 leverage ratio (2) 8.89 8.32
Asset Quality Data:
Net loan charge-offs $2,892 $4,799 $9,490 $7,943
Nonperforming assets as a
percentage of total assets 1.12 % 0.63 %
Allowance for loan losses at
period end as a percent of:
Total loans 1.12 1.15
Nonperforming loans 75.89 121.97
Nonperforming assets at period
end:
Nonperforming loans $29,074 $18,613
Other real estate 385 -
Total nonperforming
assets $29,459 $18,613
(1) The net interest margin is equal to net interest income divided by
average interest earning assets. In order to make pre-tax income and
resultant yields on tax-exempt investments and loans on a basis
comparable to those on taxable investments and loans, a tax equivalent
adjustment is made to interest income.
The tax equivalent adjustment has been computed using the appropriate
Federal income tax rate for the period, and has the effect of
increasing interest income by $540,000 and $513,000 for the three
month periods and $2,154,000 and $1,974,000 for the twelve month
periods ended December 31, 2006 and 2005, respectively.
(2) Tier 1 leverage ratio is Tier 1 capital to adjusted quarterly average
assets.
Yardville National Bancorp and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months Ended Twelve Months Ended
(in thousands, except per share December 31, December 31,
amounts) 2006 2005 2006 2005
INTEREST INCOME:
Interest and fees on loans $37,400 $34,980 $148,190 $127,684
Interest on deposits with banks 734 279 1,979 1,027
Interest on securities available for
sale 7,667 9,498 34,304 36,983
Interest on investment securities:
Taxable 14 27 85 109
Exempt from Federal income tax 1,059 973 4,138 3,734
Interest on Federal funds sold 314 154 835 730
Total Interest Income 47,188 45,911 189,531 170,267
INTEREST EXPENSE:
Interest on savings account deposits 7,279 5,675 27,461 20,757
Interest on certificates of deposit
of $100,000 or more 3,036 2,416 10,706 6,992
Interest on other time deposits 7,487 5,250 26,626 16,432
Interest on borrowed funds 7,244 9,557 35,117 38,114
Interest on subordinated debentures 1,414 1,279 5,491 4,759
Total Interest Expense 26,460 24,177 105,401 87,054
Net Interest Income 20,728 21,734 84,130 83,213
Less provision for loan losses 2,575 4,830 8,850 10,530
Net Interest Income After
Provision for Loan Losses 18,153 16,904 75,280 72,683
NON-INTEREST INCOME:
Service charges on deposit accounts 668 709 2,840 2,819
Securities (losses) gains, net (6,523) 112 (6,523) 862
Income on bank owned life insurance 484 396 1,799 1,651
Other non-interest income 961 587 2,642 2,158
Total Non-Interest (Loss)
Income (4,410) 1,804 758 7,490
NON-INTEREST EXPENSE:
Salaries and employee benefits 7,152 6,352 29,800 27,654
Occupancy expense, net 1,640 1,315 6,016 4,934
Equipment expense 851 889 3,297 3,173
Loss on prepayment of FHLB advances 15,271 - 15,271 -
Other non-interest expense 4,519 4,015 16,119 13,841
Total Non-Interest Expense 29,433 12,571 70,503 49,602
(Loss) income before income tax
(benefit) expense (15,690) 6,137 5,535 30,571
Income tax (benefit) expense (7,027) 1,804 (1,355) 9,637
Net (loss) income $(8,663) $4,333 $6,890 $20,934
EARNINGS PER SHARE:
Basic $(0.79) $0.40 $0.63 $1.97
Diluted (0.79) 0.39 0.61 1.89
Weighted average shares outstanding:
Basic 11,002 10,760 10,948 10,609
Diluted 11,002 11,199 11,350 11,057
Yardville National Bancorp and Subsidiaries
Consolidated Statements of Condition
(Unaudited)
December 31,
(in thousands) 2006 2005
Assets:
Cash and due from banks $30,355 $52,686
Federal funds sold 3,265 10,800
Cash and Cash Equivalents 33,620 63,486
Interest bearing deposits with banks 32,358 16,408
Securities available for sale 402,641 741,668
Investment securities 96,072 89,026
Loans 1,972,881 1,972,840
Less: Allowance for loan losses (22,063) (22,703)
Loans, net 1,950,818 1,950,137
Bank premises and equipment, net 12,067 11,697
Other real estate 385 -
Bank owned life insurance 49,651 46,152
Other assets 44,744 38,157
Total Assets $2,622,356 $2,956,731
Liabilities and Stockholders' Equity:
Deposits
Non-interest bearing $197,126 $232,269
Interest bearing 1,806,157 1,740,448
Total Deposits 2,003,283 1,972,717
Borrowed funds
Securities sold under agreements
to repurchase 10,000 10,000
Federal Home Loan Bank advances 324,000 704,000
Subordinated debentures 62,892 62,892
Obligation for Employee Stock
Ownership Plan (ESOP) 1,688 2,250
Other 1,593 1,870
Total Borrowed Funds 400,173 781,012
Other liabilities 31,181 25,544
Total Liabilities $2,434,637 $2,779,273
Stockholders' equity:
Common stock: no par value 108,728 105,122
Surplus 2,205 2,205
Undivided profits 87,725 85,896
Treasury stock, at cost (3,160) (3,160)
Unallocated ESOP shares (1,688) (2,250)
Accumulated other comprehensive
loss, net of taxes (6,091) (10,355)
Total Stockholders' Equity 187,719 177,458
Total Liabilities and
Stockholders' Equity $2,622,356 $2,956,731
Yardville National Bancorp and Subsidiaries
Calculation of Adjusted Net Income (Loss)
(Unaudited)
(in thousands, except per share Three Months Ended Twelve Months Ended
amounts) December 31, 2006 December 31, 2006
Net (Loss) Income as Reported (8,663) 6,890
Adjustments:
Securities losses on restructure 6,523 6,523
Loss on prepayment of FHLB advances 15,271 15,271
Income tax benefit (8,977) (8,977)
Net Income - as adjusted $4,154 $19,707
EARNINGS PER SHARE - As reported
Basic $(0.79) $0.63
Diluted (0.79) 0.61
Weighted average shares outstanding -
As reported
Basic 11,002 10,948
Diluted 11,002 11,350
EARNINGS PER SHARE - As adjusted
Basic $0.38 $1.80
Diluted 0.36 1.74
Weighted average shares outstanding -
As adjusted
Basic 11,002 10,948
Diluted 11,397 11,350
The above table excludes the impact of the balance sheet restructuring
which management believes should be excluded in order to provide investors
with a clear understanding of the results of the Company's normal
operations. These items, which are included in the financial results
prepared in accordance with U.S. Generally Accepted Accounting Principles
but which are excluded from adjusted results are described more fully in
the attached press release.
Financial Summary
Average Balances, Yields and Costs
(Unaudited)
Three Months Ended
December 31, 2006
Average
Average Yield/
(in thousands) Balance Interest Cost
INTEREST EARNING ASSETS:
Interest bearing deposits with banks $55,187 $734 5.32 %
Federal funds sold 23,694 314 5.30
Securities 701,895 8,740 4.98
Loans (1) 1,974,176 37,400 7.58
Total interest earning assets $2,754,952 $47,188 6.85 %
NON-INTEREST EARNING ASSETS:
Cash and due from banks $31,033
Allowance for loan losses (22,583)
Premises and equipment, net 12,014
Other assets 77,006
Total non-interest earning assets 97,470
Total assets $2,852,422
INTEREST BEARING LIABILITIES:
Deposits:
Savings, money markets, and
interest bearing demand $938,862 $7,279 3.10 %
Certificates of deposit of
$100,000 or more 249,603 3,036 4.87
Other time deposits 624,521 7,487 4.80
Total interest bearing deposits 1,812,986 17,802 3.93
Borrowed funds 563,521 7,244 5.14
Subordinated debentures 62,892 1,414 8.99
Total interest bearing
liabilities $2,439,399 $26,460 4.34 %
NON-INTEREST BEARING LIABILITIES:
Demand deposits $204,416
Other liabilities 17,019
Stockholders' equity 191,588
Total non-interest bearing
liabilities and
stockholders' equity $413,023
Total liabilities and stockholders'
equity $2,852,422
Interest rate spread (2) 2.51 %
Net interest income and margin (3) $20,728 3.01 %
Net interest income and margin (tax
equivalent basis)(4) $21,268 3.09 %
Three Months Ended
December 31, 2005
Average
Average Yield/
(in thousands) Balance Interest Cost
INTEREST EARNING ASSETS:
Interest bearing deposits with banks $26,672 $279 4.18 %
Federal funds sold 15,494 154 3.98
Securities 867,286 10,498 4.84
Loans (1) 1,964,298 34,980 7.12
Total interest earning assets $2,873,750 $45,911 6.39 %
NON-INTEREST EARNING ASSETS:
Cash and due from banks $36,418
Allowance for loan losses (23,451)
Premises and equipment, net 11,536
Other assets 76,253
Total non-interest earning assets 100,756
Total assets $2,974,506
INTEREST BEARING LIABILITIES:
Deposits:
Savings, money markets, and
interest bearing demand $967,768 $5,675 2.35 %
Certificates of deposit of
$100,000 or more 254,718 2,416 3.79
Other time deposits 544,365 5,250 3.86
Total interest bearing deposits 1,766,851 13,341 3.02
Borrowed funds 728,896 9,557 5.24
Subordinated debentures 62,892 1,279 8.13
Total interest bearing
liabilities $2,558,639 $24,177 3.78 %
NON-INTEREST BEARING LIABILITIES:
Demand deposits $221,452
Other liabilities 23,324
Stockholders' equity 171,091
Total non-interest bearing
liabilities and
stockholders' equity $415,867
Total liabilities and stockholders'
equity $2,974,506
Interest rate spread (2) 2.61 %
Net interest income and margin (3) $21,734 3.03 %
Net interest income and margin (tax
equivalent basis)(4) $22,247 3.10 %
(1) Loan origination fees are considered an adjustment to interest
income. For the purpose of calculating loan yields, average loan
balances include nonaccrual balances with no related interest income.
(2) The interest rate spread is the difference between the average yield
on interest earning assets and average rate paid on interest bearing
liabilities.
(3) The net interest margin is equal to net interest income divided by
average interest earning assets.
(4) In order to make pre-tax income and resultant yields on tax-exempt
investments and loans on a basis comparable to those on taxable
investments and loans, a tax equivalent adjustment is made to interest
income. The tax equivalent adjustment has been computed using the
appropriate Federal income tax rate for the period, and has the effect
of increasing interest income by $540,000 and $513,000 for the three
month periods ended December 31, 2006 and 2005, respectively.
Financial Summary
Average Balances, Yields and Costs
(Unaudited)
Twelve Months Ended
December 31, 2006
Average
Average Yield/
(in thousands) Balance Interest Cost
INTEREST EARNING ASSETS:
Interest bearing deposits with banks $37,321 $1,979 5.30 %
Federal funds sold 16,475 835 5.07
Securities 782,531 38,527 4.92
Loans (1) 1,995,515 148,190 7.43
Total interest earning assets $2,831,842 $189,531 6.69 %
NON-INTEREST EARNING ASSETS:
Cash and due from banks $33,735
Allowance for loan losses (23,019)
Premises and equipment, net 11,791
Other assets 77,827
Total non-interest earning assets 100,334
Total assets $2,932,176
INTEREST BEARING LIABILITIES:
Deposits:
Savings, money markets, and
interest bearing demand $948,828 $27,461 2.89 %
Certificates of deposit of
$100,000 or more 244,662 10,706 4.38
Other time deposits 596,517 26,626 4.46
Total interest bearing deposits 1,790,007 64,793 3.62
Borrowed funds 671,656 35,117 5.23
Subordinated debentures 62,892 5,491 8.73
Total interest bearing
liabilities $2,524,555 $105,401 4.18 %
NON-INTEREST BEARING LIABILITIES:
Demand deposits $209,160
Other liabilities 14,946
Stockholders' equity 183,515
Total non-interest bearing
liabilities and
stockholders' equity $407,621
Total liabilities and stockholders'
equity $2,932,176
Interest rate spread (2) 2.51 %
Net interest income and margin (3) $84,130 2.97 %
Net interest income and margin (tax
equivalent basis)(4) $86,284 3.05 %
Twelve Months Ended
December 31, 2005
Average
Average Yield/
(in thousands) Balance Interest Cost
INTEREST EARNING ASSETS:
Interest bearing deposits with banks $30,534 $1,027 3.36 %
Federal funds sold 23,112 730 3.16
Securities 860,430 40,826 4.74
Loans (1) 1,880,166 127,684 6.79
Total interest earning assets $2,794,242 $170,267 6.09 %
NON-INTEREST EARNING ASSETS:
Cash and due from banks $32,939
Allowance for loan losses (21,823)
Premises and equipment, net 10,716
Other assets 76,561
Total non-interest earning assets 98,393
Total assets $2,892,635
INTEREST BEARING LIABILITIES:
Deposits:
Savings, money markets, and
interest bearing demand $985,346 $20,757 2.11 %
Certificates of deposit of
$100,000 or more 208,521 6,992 3.35
Other time deposits 497,530 16,432 3.30
Total interest bearing deposits 1,691,397 44,181 2.61
Borrowed funds 740,075 38,114 5.15
Subordinated debentures 62,892 4,759 7.57
Total interest bearing
liabilities $2,494,364 $87,054 3.49 %
NON-INTEREST BEARING LIABILITIES:
Demand deposits $209,179
Other liabilities 22,520
Stockholders' equity 166,572
Total non-interest bearing
liabilities and
stockholders' equity $398,271
Total liabilities and stockholders'
equity $2,892,635
Interest rate spread (2) 2.60 %
Net interest income and margin (3) $83,213 2.98 %
Net interest income and margin (tax
equivalent basis)(4) $85,187 3.05 %
(1) Loan origination fees are considered an adjustment to interest
income. For the purpose of calculating loan yields, average loan
balances include nonaccrual balances with no related interest income.
(2) The interest rate spread is the difference between the average yield
on interest earning assets and average rate paid on interest bearing
liabilities.
(3) The net interest margin is equal to net interest income divided by
average interest earning assets.
(4) In order to make pre-tax income and resultant yields on tax-exempt
investments and loans on a basis comparable to those on taxable
investments and loans, a tax equivalent adjustment is made to interest
income. The tax equivalent adjustment has been computed using the
appropriate Federal income tax rate for the period, and has the effect
of increasing interest income by $2,154,000 and $1,974,000 for the
twelve month periods ended December 31, 2006 and 2005, respectively.
L.G. Zangani, LLC provides financial public relations services to the Company. As such, L.G. Zangani, LLC and/or its officers, agents and employees, receives remuneration for public relations and/or other services performed for the Company. This remuneration may take the form of cash, capital stock in the Company, or warrants and/or options to purchase stock in the Company.
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