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Yardville National Bancorp Announces Earnings for Second Quarter of 2007
Fri, 07/27/2007 - 16:20 — Zangani
Yardville National Bancorp, (Nasdaq: YANB - News) today reported net income for the second quarter of 2007 of $3.1 million or $0.27 per diluted share. This compares to $5.1 million or $0.45 per diluted share reported at June 30, 2006. For the first six months of 2007, YNB's net income was $8.3 million, or $0.72 per diluted share, compared with $10.2 million or $0.90 per diluted share for the first six months of 2006.
Impacting YNB's results for the three- and six-month periods were higher non-interest expenses and lower net interest income.
The higher non-interest expenses for the second quarter of 2007 and for the first six months are primarily attributable to legal and other expenses related to YNB's consideration of strategic alternatives. For the second quarter, non-interest expenses were $15.6 million compared to $14.3 million for the same quarter in 2006. These expenses rose 9.6% to $30.4 million for the six months ended June 30, 2007, compared to $27.7 million at June 30, 2006. The legal and other expenses related to the search for strategic alternatives totaled approximately $900,000 and $1.2 million for the second quarter and first six months of 2007, respectively. On June 6, 2007, YNB entered into an agreement to be acquired by The PNC Financial Services Group, Inc. (NYSE: PNC - News).
YNB's net interest income for the second quarter was negatively impacted by decreases in commercial loans and higher retail deposit costs. Higher deposit costs were a primary factor in YNB's decrease in the tax equivalent net interest margin for the second quarter, as the margin moved from 3.37% in the first quarter of 2007 to 3.21% for the second quarter. For the first half of 2007, YNB's tax equivalent net interest margin was 3.29% compared to 3.04% for the first half of 2006. The December 2006 balance sheet restructure was the principal contributing factor to the margin improvement year over year.
Despite a 1.4% decline in average total loans due to increased competition on rates and terms, the sluggishness of the real estate market, and higher paydowns of existing loan relationships, overall loan income increased for the first six months of 2007 compared to the same period in 2006 due to higher yields. The higher cost of deposits was the principal factor in the decline of net interest income of $2.0 million, or 4.7% for the first six months of 2007 compared to the first six months of 2006.
Nonperforming assets at June 30, 2007 totaled $28.5 million, or 1.11% of total assets, and the allowance for loan losses was 1.30% of total loans covering 87.88% of nonperforming loans. Nonperforming assets at year-end 2006 were $29.5 million.
Average deposits increased $42.2 million for the first six months of 2007 compared to the same period in 2006, as YNB reduced its reliance on more expensive wholesale funding sources during this period. YNB continues its focus on attracting new retail relationships and expanding its small business sector by opening new branches in contiguous marketplaces. Additional branches in Lawrence Township near Princeton and in Cranbury, Middlesex County, both in New Jersey, opened for business early in the third quarter. The former is an excellent fill-in to YNB's northern Mercer County presence, while the latter connects southern Middlesex with the northeastern sector of Mercer County in a growing market populated by new businesses and an expanding population of affluent retirees.
"Our transaction with PNC is proceeding on schedule, and pending the shareholder vote and regulatory approvals, is anticipated to close in the fourth quarter of this year," explained YNB President and Chief Operating Officer F. Kevin Tylus. "Transition teams are in place and working well together toward our objective of a seamless integration of our two companies with little or no disruption for customers," he added.
All of YNB's capital ratios remain above regulatory requirements. Total risk-based capital was 13.0%, Tier 1 capital to risk-based assets was 11.9%, and Tier 1 capital to average assets was 9.9%. YNB has paid dividends to its shareholders for the past 54 consecutive quarters.
With $2.56 billion in assets as of June 30, 2007, YNB serves individuals and small- to mid-sized businesses in the dynamic New York City-Philadelphia corridor. As of July 23, 2007, YNB had a network of 35 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.
Cautionary Statement Regarding Forward-Looking Statements
This press release and other statements made from time to time by YNB's management contain express and implied statements relating to YNB's future financial condition, results of operations, plans, objectives, performance, and business, which are considered forward-looking statements. 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, our expectations may not 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 United States Securities and Exchange Commission (the "SEC"), as well as other risks and uncertainties detailed from time to time in statements made by our management. YNB assumes no obligation to update or supplement forward-looking statements except as may be required by applicable law or regulation.
Additional Information About The PNC Merger
PNC and YNB have filed with the SEC a Registration Statement on Form S-4 that includes a preliminary version of a proxy statement of YNB that also constitutes a preliminary prospectus of PNC. The S-4 has not yet become effective. The parties will file other relevant documents concerning the proposed transaction with the SEC. Following the S-4 being declared effective by the SEC, YNB intends to mail the final proxy statement to its shareholders. Such final documents, however, are not currently available. WE URGE INVESTORS TO READ THE FINAL PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS, IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors may obtain these documents, if and when they become available, free of charge at the SEC's Web site (www.sec.gov). In addition, documents filed with the SEC by PNC will be available free of charge from Shareholder Relations at (800) 843-2206. Documents filed with the SEC by YNB will be available free of charge from YNB by contacting Howard N. Hall, Assistant Treasurer's Office, 2465 Kuser Road, Hamilton, NJ 08690, or by calling (609) 631-6223.
The directors, executive officers, and certain other members of management and employees of YNB are participants in the solicitation of proxies in favor of the merger from the shareholders of YNB. Information about the directors and executive officers of YNB is set forth in its Annual Report on Form 10-K filed on March 30, 2007 for the year ended December 31, 2006, as amended by the Form 10-K/A filed on May 10, 2007. Additional information regarding the interests of such participants will be included in the proxy statement/prospectus and the other relevant documents filed with the SEC when they become available.
For further information, contact: Stephen F. Carman, CFO
(609) 631-6222 or carmans@ynb.com
or consult Investor Relations on YNB's website: http://www.ynb.com
Yardville National Bancorp
Summary of Financial Information
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except per share
amounts) 2007 2006 2007 2006
Stock Information:
Weighted average shares
outstanding:
Basic 11,088 10,938 11,065 10,911
Diluted 11,416 11,339 11,411 11,326
Shares outstanding end of period 11,191 11,004
Earnings per share:
Basic $0.28 $0.46 $0.75 $0.94
Diluted 0.27 0.45 0.72 0.90
Dividends paid per share 0.115 0.115 0.230 0.230
Book value per share 16.94 16.29
Tangible book value per share 16.82 16.15
Closing price per share 34.15 35.73
Closing price to tangible book
value 203.03 % 221.24 %
Key Ratios:
Return on average assets 0.48 % 0.68 % 0.63 % 0.69 %
Return on average stockholders'
equity 6.58 11.39 8.70 11.47
Net interest margin 3.12 2.93 3.20 2.96
Net interest margin (tax
equivalent) (1) 3.21 3.01 3.29 3.04
Efficiency ratio 72.60 62.71 69.17 60.60
Equity-to-assets at period end 7.38 5.90
Tier 1 leverage ratio (2) 9.93 8.65
Asset Quality Data:
Net loan charge-offs $1,793 $1,102 $2,321 $3,763
Nonperforming assets as a
percentage of total assets 1.11 0.80 %
Allowance for loan losses at
period end as a
percent of:
Total loans 1.30 1.13
Nonperforming loans 87.88 97.66
Nonperforming assets at period
end:
Nonperforming loans $28,099 $23,643
Other real estate 385 502
Total nonperforming
assets $28,484 $24,145
(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 $567,000 and $535,000 for the three month periods and
$1,122,000 and $1,070,000 for the six months ended June 30, 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)
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except per share
amounts) 2007 2006 2007 2006
INTEREST INCOME:
Interest and fees on loans $35,950 $37,307 $73,086 $72,728
Interest on deposits with banks 678 336 896 566
Interest on securities available for
sale 5,379 8,842 10,762 17,804
Interest on investment securities:
Taxable 16 26 36 49
Exempt from Federal income tax 1,102 1,025 2,167 2,035
Interest on Federal funds sold 263 152 340 280
Total Interest Income 43,388 47,688 87,287 93,462
INTEREST EXPENSE:
Interest on savings account deposits 7,164 6,974 14,261 13,121
Interest on certificates of deposit of
$100,000 or more 3,323 2,500 6,522 4,784
Interest on other time deposits 8,376 6,443 16,223 11,963
Interest on borrowed funds 3,519 9,392 7,230 18,696
Interest on subordinated debentures 1,400 1,360 2,791 2,666
Total Interest Expense 23,782 26,669 47,027 51,230
Net Interest Income 19,606 21,019 40,260 42,232
Less provision for loan losses 1,800 1,800 2,450 4,150
Net Interest Income After
Provision for Loan Losses 17,806 19,219 37,810 38,082
NON-INTEREST INCOME:
Service charges on deposit accounts 658 777 1,275 1,436
Securities gains, net - - 7 -
Income on bank owned life insurance 472 440 914 861
Other non-interest income 753 576 1,429 1,157
Total Non-Interest Income 1,883 1,793 3,625 3,454
NON-INTEREST EXPENSE:
Salaries and employee benefits 7,973 7,572 15,775 15,223
Occupancy expense, net 1,875 1,368 3,661 2,795
Equipment expense 841 856 1,680 1,652
Other non-interest expense 4,911 4,510 9,239 8,014
Total Non-Interest Expense 15,600 14,306 30,355 27,684
Income before income tax expense 4,089 6,706 11,080 13,852
Income tax expense 958 1,649 2,821 3,627
Net Income $3,131 $5,057 $8,259 $10,225
EARNINGS PER SHARE:
Basic $0.28 $0.46 $0.75 $0.94
Diluted 0.27 0.45 0.72 0.90
Weighted average shares outstanding:
Basic 11,088 10,938 11,065 10,911
Diluted 11,416 11,339 11,411 11,326
Yardville National Bancorp and Subsidiaries
Consolidated Statements of Condition
(Unaudited)
December
June 30, 31,
(in thousands) 2007 2006 2006
Assets:
Cash and due from banks $33,552 $35,839 $30,355
Federal funds sold 23,725 12,475 3,265
Cash and Cash Equivalents 57,277 48,314 33,620
Interest bearing deposits with banks 6,789 62,368 32,358
Securities available for sale 408,356 701,007 402,641
Investment securities 103,139 92,753 96,072
Loans 1,900,657 2,034,781 1,972,881
Less: Allowance for loan losses (24,692) (23,090) (24,563)
Loans, net 1,875,965 2,011,691 1,948,318
Bank premises and equipment, net 12,384 11,578 12,067
Other real estate owned 385 502 385
Bank owned life insurance 50,565 48,713 49,651
Other assets 47,246 46,982 45,619
Total Assets $2,562,106 $3,023,908 $2,620,731
Liabilities and Stockholders' Equity:
Deposits
Non-interest bearing $196,499 $215,373 $197,126
Interest bearing 1,803,289 1,831,610 1,806,157
Total Deposits 1,999,788 2,046,983 2,003,283
Borrowed funds
Securities sold under agreements to
repurchase 10,000 10,000 10,000
Federal Home Loan Bank advances 263,000 694,000 324,000
Subordinated debentures 62,892 62,892 62,892
Obligation for Employee Stock
Ownership Plan (ESOP) 1,406 1,969 1,688
Other 1,391 1,296 1,593
Total Borrowed Funds 338,689 770,157 400,173
Other liabilities 34,643 28,293 31,181
Total Liabilities $2,373,120 $2,845,433 $2,434,637
Stockholders' equity:
Common stock: no par value 110,882 107,096 108,728
Surplus 2,205 2,205 2,205
Undivided profits 91,799 93,599 86,100
Treasury stock, at cost (3,160) (3,160) (3,160)
Unallocated ESOP shares (1,406) (1,969) (1,688)
Accumulated other comprehensive
loss (11,334) (19,296) (6,091)
Total Stockholders' Equity 188,986 178,475 186,094
Total Liabilities and
Stockholders' Equity $2,562,106 $3,023,908 $2,620,731
Financial Summary
Average Balances, Yields and Costs
(Unaudited)
Three Months Ended
June 30, 2007
Average
Average Yield /
(in thousands) Balance Interest Cost
INTEREST EARNING ASSETS:
Interest bearing deposits with banks $45,107 $678 6.01 %
Federal funds sold 26,977 263 3.90
Securities 501,651 6,497 5.18
Loans (1) 1,943,760 35,950 7.40
Total interest earning assets $2,517,495 $43,388 6.89 %
NON-INTEREST EARNING ASSETS:
Cash and due from banks $31,190
Allowance for loan losses (25,212)
Premises and equipment, net 12,385
Other assets 84,123
Total non-interest earning
assets 102,486
Total assets $2,619,981
INTEREST BEARING LIABILITIES:
Deposits:
Savings, money markets, and
interest bearing demand $903,457 $7,164 3.17 %
Certificates of deposit of
$100,000 or more 264,432 3,323 5.03
Other time deposits 678,273 8,376 4.94
Total interest bearing deposits 1,846,162 18,863 4.09
Borrowed funds 314,091 3,519 4.48
Subordinated debentures 62,892 1,400 8.90
Total interest bearing
liabilities $2,223,145 $23,782 4.28 %
NON-INTEREST BEARING LIABILITIES:
Demand deposits $186,429
Other liabilities 20,016
Stockholders' equity 190,391
Total non-interest bearing
liabilities and
stockholders' equity $396,836
Total liabilities and stockholders'
equity $2,619,981
Interest rate spread (2) 2.61 %
Net interest income and margin (3) $19,606 3.12 %
Net interest income and margin (tax
equivalent basis)(4) $20,173 3.21 %
Three Months Ended
June 30, 2006
Average
Average Yield /
(in thousands) Balance Interest Cost
INTEREST EARNING ASSETS:
Interest bearing deposits with banks $25,899 $336 5.19 %
Federal funds sold 12,280 152 4.95
Securities 803,661 9,893 4.92
Loans (1) 2,025,995 37,307 7.37
Total interest earning assets $2,867,835 $47,688 6.65 %
NON-INTEREST EARNING ASSETS:
Cash and due from banks $35,143
Allowance for loan losses (22,842)
Premises and equipment, net 11,622
Other assets 83,236
Total non-interest earning
assets 107,159
Total assets $2,974,994
INTEREST BEARING LIABILITIES:
Deposits:
Savings, money markets, and
interest bearing demand $963,732 $6,974 2.89 %
Certificates of deposit of
$100,000 or more 239,367 2,500 4.18
Other time deposits 588,335 6,443 4.38
Total interest bearing deposits 1,791,434 15,917 3.55
Borrowed funds 715,894 9,392 5.25
Subordinated debentures 62,892 1,360 8.65
Total interest bearing
liabilities $2,570,220 $26,669 4.15 %
NON-INTEREST BEARING LIABILITIES:
Demand deposits $209,379
Other liabilities 17,853
Stockholders' equity 177,542
Total non-interest bearing
liabilities and
stockholders' equity $404,774
Total liabilities and stockholders'
equity $2,974,994
Interest rate spread (2) 2.50 %
Net interest income and margin (3) $21,019 2.93 %
Net interest income and margin (tax
equivalent basis)(4) $21,554 3.01 %
(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 $567,000 and $535,000 for the three
month periods ended June 30, 2007 and 2006, respectively.
Financial Summary
Average Balances, Yields and Costs
(Unaudited)
Six Months Ended
June 30, 2007
Average
Average Yield /
(in thousands) Balance Interest Cost
INTEREST EARNING ASSETS:
Interest bearing deposits with banks $31,025 $896 5.78 %
Federal funds sold 16,446 340 4.13
Securities 498,618 12,965 5.20
Loans (1) 1,972,241 73,086 7.41
Total interest earning assets $2,518,330 $87,287 6.93 %
NON-INTEREST EARNING ASSETS:
Cash and due from banks $30,987
Allowance for loan losses (24,724)
Premises and equipment, net 12,331
Other assets 83,316
Total non-interest earning
assets 101,910
Total assets $2,620,240
INTEREST BEARING LIABILITIES:
Deposits:
Savings, money markets, and
interest bearing demand $906,047 $14,261 3.15 %
Certificates of deposit of
$100,000 or more 262,943 6,522 4.96
Other time deposits 664,166 16,223 4.89
Total interest bearing deposits 1,833,156 37,006 4.04
Borrowed funds 325,489 7,230 4.44
Subordinated debentures 62,892 2,791 8.88
Total interest bearing
liabilities $2,221,537 $47,027 4.23 %
NON-INTEREST BEARING LIABILITIES:
Demand deposits $188,595
Other liabilities 20,269
Stockholders' equity 189,839
Total non-interest bearing
liabilities and
stockholders' equity $398,703
Total liabilities and stockholders'
equity $2,620,240
Interest rate spread (2) 2.70 %
Net interest income and margin (3) $40,260 3.20 %
Net interest income and margin (tax
equivalent basis)(4) $41,382 3.29 %
Six Months Ended
June 30, 2006
Average
Average Yield /
(in thousands) Balance Interest Cost
INTEREST EARNING ASSETS:
Interest bearing deposits with banks $22,823 $566 4.96 %
Federal funds sold 11,977 280 4.68
Securities 814,604 19,888 4.88
Loans (1) 2,000,604 72,728 7.27
Total interest earning assets $2,850,008 $93,462 6.56 %
NON-INTEREST EARNING ASSETS:
Cash and due from banks $35,588
Allowance for loan losses (23,022)
Premises and equipment, net 11,669
Other assets 77,157
Total non-interest earning
assets 101,392
Total assets $2,951,400
INTEREST BEARING LIABILITIES:
Deposits:
Savings, money markets, and
interest bearing demand $960,182 $13,121 2.73 %
Certificates of deposit of
$100,000 or more 238,422 4,784 4.01
Other time deposits 570,913 11,963 4.19
Total interest bearing deposits 1,769,517 29,868 3.38
Borrowed funds 716,785 18,696 5.22
Subordinated debentures 62,892 2,666 8.48
Total interest bearing
liabilities $2,549,194 $51,230 4.02 %
NON-INTEREST BEARING LIABILITIES:
Demand deposits $210,077
Other liabilities 13,867
Stockholders' equity 178,262
Total non-interest bearing
liabilities and
stockholders' equity $402,206
Total liabilities and stockholders'
equity $2,951,400
Interest rate spread (2) 2.54 %
Net interest income and margin (3) $42,232 2.96 %
Net interest income and margin (tax
equivalent basis)(4) $43,302 3.04 %
(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 $1,122,000 and $1,070,000 for the six
month periods ended June 30, 2007 and 2006, 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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