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Yardville National Bancorp Announces Earnings for First Quarter of 2007
Mon, 04/30/2007 - 19:59 — Zangani
Yardville National Bancorp, (Nasdaq: YANB) today reported net income for the first quarter of 2007 of $5.1 million or $0.45 per diluted share. This was a slight decrease of 0.8 and 2.2 percent, respectively, from the $5.2 million or $0.46 per diluted share reported at March 31, 2006.
"As expected, we experienced improvement in the net interest margin this quarter compared to the fourth quarter and the full year of 2006," said YNB Chief Executive Officer Patrick M. Ryan. "This was primarily the result of our fourth quarter 2006 balance sheet restructuring," he explained. "Ongoing pressure on net interest income due to the prolonged inverted yield curve and higher non-interest expenses, partially offset by the benefits of our balance sheet restructuring and a lower provision for loan losses, were the principal reasons for our modestly lower first quarter 2007 results compared to the same period in 2006," Mr. Ryan continued. "In addition, the very competitive banking environment - both for commercial loans and for retail deposits - contributes further to the downward pressure on the margin, a situation being experienced by many financial institutions," he added.
During the first quarter of 2007, YNB continued its focus on attracting lower cost retail deposits by opening new branches in contiguous marketplaces, establishing its brand, and increasing the number of depositors and deposits. After opening five new branches in 2006, YNB began 2007 by opening its third branch in Middlesex County on Route 130 in North Brunswick. The ongoing expansion of YNB's footprint has been coupled with innovative product and brand marketing efforts designed to increase business and consumer deposits in a very competitive market. YNB's total deposits at March 31, 2007 grew to $2.06 billion from $1.97 billion at the same date a year ago.
"Over the last twelve months, deposits generated through our branch network have substantially reduced our reliance on more expensive wholesale funding sources - a key strategic objective of YNB," explained YNB President and Chief Operating Officer F. Kevin Tylus. "The success of our retail strategy is reflected in an increase of $87.2 million in total deposits at March 31, 2007 from the same date a year ago," he went on. "YNB's relationship-based community banking model, which includes expanding our branches into new markets, is a key component in this strategy," he stated. "We have additional branches planned for the remainder of 2007, and we would expect them to contribute to YNB's value in the future," he concluded.
"Without question, a generally slower loan environment and increased competition related to rates and terms is impacting our loan growth," Mr. Ryan added. "Although total loans at December 31, 2006 held steady from the same date the prior year, we were pleased to see a modest increase in the first quarter of 2007 compared with total loans at year-end 2006," he noted. Total loans at March 31, 2007 reached $2.00 billion compared to $1.99 billion at March 31, 2006. "While our loan growth may continue to be at a slower pace than it has been historically, YNB intends to maintain and enhance our focus on our traditional strengths - commercial and small business lending - as key components in our strategy to weather this extremely competitive environment," Mr. Ryan said.
YNB's CEO also noted that YNB does not do any "sub-prime lending," an area that has received considerable press lately and has contributed to problems for a number of other financial institutions. "That just isn't our market," he said, "and we are not in that business and have no plans to be."
Nonperforming assets decreased to $26.1 million, or 0.98 percent of total assets at March 31, 2007, compared to $29.5 million, or 1.12 percent of total assets at December 31, 2006. Compared with March 31, 2006, nonperforming assets increased $9.9 million, or 61.1 percent. The allowance for loan losses at March 31, 2007 totaled $24.7 million, or 1.24 percent of total loans and covered 95.9 percent of total nonperforming loans, compared with $22.4 million, or 1.13 percent, covering 138.1 percent of total nonperforming loans at March 31, 2006.
"The restructuring of our balance sheet produced improvement in our net interest margin to 3.37 percent for the three months ended March 31, 2007, compared to 3.09 for the prior quarter," noted YNB Chief Financial Officer Stephen F. Carman. "However, the combined effect of the challenging yield curve and ongoing strong competition for commercial loans and retail deposits limited our margin improvement in the first quarter and resulted in slightly lower net interest income than we planned. In addition," he said, "non- interest expenses associated with our retail strategy and legal, audit, and regulatory expenses were higher during the first quarter of 2007, compared to the same quarter last year. We expect these expenses and market challenges to remain with us throughout 2007," Mr. Carman concluded.
All of YNB's capital ratios remain above regulatory requirements. At March 31, 2007, total risk-based capital was 12.3 percent, Tier 1 capital to risk- based assets was 11.2 percent, and Tier 1 capital to average assets was 9.8 percent. On March 28, YNB paid its shareholders a cash dividend of $0.115 per share. The company has paid dividends for the past 53 consecutive quarters.
With $2.68 billion in assets as of March 31, 2007, YNB serves individuals and small to mid-sized businesses in the dynamic New York City-Philadelphia corridor through a network of 33 branches in Mercer, Hunterdon, Somerset, Middlesex, Burlington, and Ocean counties in New Jersey and Bucks County in Pennsylvania. Headquartered in Mercer County, YNB emphasizes commercial lending and offers a broad range of lending, deposit and other financial products and services.
Yardville National Bancorp
Summary of Financial Information
(Unaudited)
(in thousands, except per share amounts) Three Months Ended March 31,
2007 2006
Stock Information:
Weighted average shares outstanding:
Basic 11,043 10,884
Diluted 11,417 11,313
Shares outstanding end of period 11,084 10,954
Earnings per share:
Basic $0.46 $0.47
Diluted 0.45 0.46
Dividends paid per share 0.115 0.115
Book value per share 17.26 16.36
Tangible book value per share 17.14 16.21
Closing price per share 36.31 36.80
Closing price to tangible book value 211.84 % 227.02 %
Key Ratios:
Return on average assets 0.78 % 0.71 %
Return on average stockholders' equity 10.84 11.55
Net interest margin 3.28 3.00
Net interest margin (tax equivalent)(1) 3.37 3.08
Efficiency ratio 65.88 58.49
Equity-to-assets at period end 7.13 6.03
Tier 1 leverage ratio (2) 9.78 8.62
Asset Quality Data:
Net loan charge-offs $528 $2,661
Nonperforming assets as a percentage
of total assets 0.98 0.55
Allowance for loan losses at period
end as a percent of:
Total loans 1.24 1.13
Nonperforming loans 95.93 138.13
Nonperforming assets at period end:
Nonperforming loans $25,732 $16,211
Other real estate 385 -
Total nonperforming assets $26,117 $16,211
(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
$555,000 and $601,000 for the three month periods ended March 31, 2007
and 2006, 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)
(in thousands, except per share amounts) Three Months Ended March 31,
2007 2006
INTEREST INCOME:
Interest and fees on loans $37,136 $35,421
Interest on deposits with banks 218 230
Interest on securities available for sale 5,383 8,962
Interest on investment securities:
Taxable 20 23
Exempt from Federal income tax 1,065 1,010
Interest on Federal funds sold 77 128
Total Interest Income 43,899 45,774
INTEREST EXPENSE:
Interest on savings account deposits 7,097 6,147
Interest on certificates of deposit
of $100,000 or more 3,199 2,284
Interest on other time deposits 7,847 5,520
Interest on borrowed funds 3,711 9,304
Interest on subordinated debentures 1,391 1,306
Total Interest Expense 23,245 24,561
Net Interest Income 20,654 21,213
Less provision for loan losses 650 2,350
Net Interest Income After
Provision for Loan Losses 20,004 18,863
NON-INTEREST INCOME:
Service charges on deposit accounts 617 659
Securities gains, net 7 -
Income on bank owned life insurance 442 421
Other non-interest income 676 581
Total Non-Interest Income 1,742 1,661
NON-INTEREST EXPENSE:
Salaries and employee benefits 7,802 7,651
Occupancy expense, net 1,786 1,427
Equipment expense 839 796
Other non-interest expense 4,328 3,504
Total Non-Interest Expense 14,755 13,378
Income before income tax expense 6,991 7,146
Income tax expense 1,863 1,978
Net Income $5,128 $5,168
EARNINGS PER SHARE:
Basic $0.46 $0.47
Diluted 0.45 0.46
Weighted average shares outstanding:
Basic 11,043 10,884
Diluted 11,417 11,313
Yardville National Bancorp and Subsidiaries
Consolidated Statements of Condition
(Unaudited)
March 31, December 31,
(in thousands) 2007 2006 2006
Assets:
Cash and due from banks $31,007 $38,165 $30,355
Federal funds sold 18,130 16,675 3,265
Cash and Cash Equivalents 49,137 54,840 33,620
Interest bearing deposits with banks 57,458 18,226 32,358
Securities available for sale 392,693 722,530 402,641
Investment securities 97,149 92,786 96,072
Loans 1,996,851 1,990,285 1,972,881
Less: Allowance for loan losses (24,685) (22,392) (24,563)
Loans, net 1,972,166 1,967,893 1,948,318
Bank premises and equipment, net 12,243 11,436 12,067
Other real estate owned 385 - 385
Bank owned life insurance 50,093 46,573 49,651
Other assets 45,628 43,892 45,619
Total Assets $2,676,952 $2,958,176 $2,620,731
Liabilities and Stockholders' Equity:
Deposits
Non-interest bearing $192,086 $210,646 $197,126
Interest bearing 1,868,098 1,762,373 1,806,157
Total Deposits 2,060,184 1,973,019 2,003,283
Borrowed funds
Securities sold under agreements to
repurchase 10,000 10,000 10,000
Federal Home Loan Bank advances 314,000 704,000 324,000
Subordinated debentures 62,892 62,892 62,892
Obligation for Employee Stock
Ownership Plan (ESOP) 1,547 2,109 1,688
Other 632 695 1,593
Total Borrowed Funds 389,071 779,696 400,173
Other liabilities 36,917 27,065 31,181
Total Liabilities $2,486,172 $2,779,780 $2,434,637
Stockholders' equity:
Common stock: no par value 109,096 105,937 108,728
Surplus 2,205 2,205 2,205
Undivided profits 89,954 89,807 86,100
Treasury stock, at cost (3,160) (3,160) (3,160)
Unallocated ESOP shares (1,547) (2,109) (1,688)
Accumulated other comprehensive loss (5,768) (14,284) (6,091)
Total Stockholders' Equity 190,780 178,396 186,094
Total Liabilities and
Stockholders' Equity $2,676,952 $2,958,176 $2,620,731
Financial Summary
Average Balances, Yields and Costs
(Unaudited)
Three Months Ended
March 31, 2007
Average
Average Yield /
(in thousands) Balance Interest Cost
INTEREST EARNING ASSETS:
Interest bearing deposits with banks $16,943 $218 5.15 %
Federal funds sold 5,916 77 5.21
Securities 495,584 6,468 5.22
Loans (1) 2,000,722 37,136 7.42
Total interest earning assets $2,519,165 $43,899 6.97 %
NON-INTEREST EARNING ASSETS:
Cash and due from banks $30,784
Allowance for loan losses (24,236)
Premises and equipment, net 12,277
Other assets 82,510
Total non-interest earning assets 101,335
Total assets $2,620,500
INTEREST BEARING LIABILITIES:
Deposits:
Savings, money markets, and
interest bearing demand $908,637 $7,097 3.12 %
Certificates of deposit of
$100,000 or more 261,455 3,199 4.89
Other time deposits 650,059 7,847 4.83
Total interest bearing deposits 1,820,151 18,143 3.99
Borrowed funds 336,888 3,711 4.41
Subordinated debentures 62,892 1,391 8.85
Total interest bearing
liabilities $2,219,931 $23,245 4.19 %
NON-INTEREST BEARING LIABILITIES:
Demand deposits $190,760
Other liabilities 20,523
Stockholders' equity 189,286
Total non-interest bearing
liabilities and
stockholders' equity $400,569
Total liabilities and stockholders'
equity $2,620,500
Interest rate spread (2) 2.78 %
Net interest income and margin (3) $20,654 3.28 %
Net interest income and margin (tax
equivalent basis)(4) $21,209 3.37 %
Three Months Ended
March 31, 2006
Average
Average Yield /
(in thousands) Balance Interest Cost
INTEREST EARNING ASSETS:
Interest bearing deposits with banks $19,747 $230 4.66 %
Federal funds sold 11,674 128 4.39
Securities 825,547 9,995 4.84
Loans (1) 1,975,212 35,421 7.17
Total interest earning assets $2,832,180 $45,774 6.46 %
NON-INTEREST EARNING ASSETS:
Cash and due from banks $36,033
Allowance for loan losses (23,202)
Premises and equipment, net 11,715
Other assets 71,078
Total non-interest earning assets 95,624
Total assets $2,927,804
INTEREST BEARING LIABILITIES:
Deposits:
Savings, money markets, and
interest bearing demand $956,632 $6,147 2.57 %
Certificates of deposit of
$100,000 or more 237,477 2,284 3.85
Other time deposits 553,489 5,520 3.99
Total interest bearing deposits 1,747,598 13,951 3.19
Borrowed funds 717,677 9,304 5.19
Subordinated debentures 62,892 1,306 8.31
Total interest bearing
liabilities $2,528,167 $24,561 3.89 %
NON-INTEREST BEARING LIABILITIES:
Demand deposits $210,775
Other liabilities 9,880
Stockholders' equity 178,982
Total non-interest bearing
liabilities and stockholders'
equity $399,637
Total liabilities and stockholders'
equity $2,927,804
Interest rate spread (2) 2.57 %
Net interest income and margin (3) $21,213 3.00 %
Net interest income and margin (tax
equivalent basis)(4) $21,814 3.08 %
(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 $555,000 and $601,000 for the three
month periods ended March 31, 2007 and 2006, respectively.
Financial Summary
Average Balances, Yields and Costs
(Unaudited)
Three Months Ended
March 31, 2007
Average
Average Yield /
(in thousands) Balance Interest Cost
INTEREST EARNING ASSETS:
Interest bearing deposits with banks $16,943 $218 5.15 %
Federal funds sold 5,916 77 5.21
Securities 495,584 6,468 5.22
Loans (1) 2,000,722 37,136 7.42
Total interest earning assets $2,519,165 $43,899 6.97 %
NON-INTEREST EARNING ASSETS:
Cash and due from banks $30,784
Allowance for loan losses (24,236)
Premises and equipment, net 12,277
Other assets 82,510
Total non-interest earning assets 101,335
Total assets $2,620,500
INTEREST BEARING LIABILITIES:
Deposits:
Savings, money markets, and
interest bearing demand $908,637 $7,097 3.12 %
Certificates of deposit of
$100,000 or more 261,455 3,199 4.89
Other time deposits 650,059 7,847 4.83
Total interest bearing deposits 1,820,151 18,143 3.99
Borrowed funds 336,888 3,711 4.41
Subordinated debentures 62,892 1,391 8.85
Total interest bearing
liabilities $2,219,931 $23,245 4.19 %
NON-INTEREST BEARING LIABILITIES:
Demand deposits $190,760
Other liabilities 20,523
Stockholders' equity 189,286
Total non-interest bearing
liabilities and
stockholders' equity $400,569
Total liabilities and stockholders'
equity $2,620,500
Interest rate spread (2) 2.78 %
Net interest income and margin (3) $20,654 3.28 %
Net interest income and margin (tax
equivalent basis)(4) $21,209 3.37 %
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 %
(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 $555,000 and $540,000 for the three
month periods ended March 31, 2007 and December 31, 2006,
respectively.
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: adverse changes in our loan quality and the resulting credit risk-related losses and expenses; levels of our loan origination volume; the results of our efforts to implement our retail strategy and attract core deposits; compliance with laws and regulatory requirements, including our formal agreement with the Office of the Comptroller of the Currency, and compliance with NASDAQ standards; interest rate changes and other economic conditions; proxy contests and litigation; 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; 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 except as may be required by applicable law or regulation.
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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