Business & Finance
Business and Finance
Business and Finance
Thu, July 26, 2012
Wed, July 25, 2012 Empire National Bank Announces Strong Second Quarter Earnings
July 25, 2012 12:36 ET
Empire National Bank Announces Strong Second Quarter Earnings
ISLANDIA, NY--(Marketwire - Jul 25, 2012) - Empire National Bank (
- Core earnings for the quarter ended June 30, 2012 of $504 thousand, an increase of 12.8%, or $57 thousand, over the quarter ended June 30, 2011. Core earnings are measured as pre-tax income, excluding any gains or losses on the sale of investment securities and accelerated expenses associated with the upgrade of the bank's online banking platform.
- Core earnings for the six months ended June 30, 2012 of $971 thousand, an increase of 16.0%, or $134 thousand, over the six months ended June 30, 2011.
- Reversal of the deferred tax asset valuation allowance resulting in a significant non-cash income tax benefit of approximately $2.0 million in the second quarter of 2012.
- Net income for the quarter ended June 30, 2012 of $2.7 million, an increase of $2.3 million, or 521.3% from $442 thousand for the same period in 2011.
- Net income for the six months ended June 30, 2012 of $3.1 million, an increase of $2.3 million, or 272.7% from $832 thousand for the same period in 2011.
- Total assets of $421.7 million as of June 30, 2012, an increase of $32.2 million, or 8.3%, from March 31, 2012; and an $82.0 million, or 24.1%, increase from December 31, 2011.
- Total loans of $231.7 million as of June 30, 2012, an increase of $11.2 million, or 5.1%, from March 31, 2012; and an $18.8 million, or 8.8%, increase from December 31, 2011.
- Demand deposits of $162.7 million, representing a $51.9 million, or 46.8%, increase from March 31, 2012; and a $116.9 million, or 255.2%, increase from December 31, 2011.
- Strong liquidity with $181.3 million in cash and available for sale securities and a loan to deposit ratio of 61.4%.
- Solid asset quality with non-performing assets to total assets of 0.52% which is well below peer group average.
- "Well Capitalized" regulatory capital levels, as of June 30, 2012:
- Tier 1 leverage capital ratio of 9.84%
- Tier 1 risk-based capital ratio of 14.41%
- Total risk-based capital ratio of 15.66%
- Book value per share of $9.44, as of June 30, 2012, a 22.8% increase from June 30, 2011; and a 9.8% increase from December 31, 2011.
Douglas C. Manditch, Chairman and Chief Executive Officer stated, "The continued growth we experienced in our core earnings can be attributed to growth in our core business model based on relationship banking. Our management team is continually focused on capitalizing on opportunities as they present themselves. Our financial performance for the second quarter, highlighted by strong liquidity and asset quality, contributed to our strong capital position and reflects our management team's constant focus on building shareholder value. We are very pleased with our results despite the challenging economy."
Earnings for the Second Quarter Ended June 30, 2012
Net income was $2.7 million, or $0.63 per share, for the second quarter of 2012, compared to $442 thousand for the second quarter of 2011, an increase of $2.3 million. The increase in net income was attributable to growth in the bank's core earnings of approximately $57 thousand; an increase of $1.2 million in net gains on the sale of investment securities; a one-time tax benefit resulting from the reversal of a deferred tax valuation allowance made in accordance with generally accepted accounting principles; and a partially offsetting acceleration of $240 thousand in expenses associated with the upgrade of the bank's online banking platform. As of March 31, 2012, the bank had approximately $2.0 million remaining in a net deferred tax valuation allowance. In light of the bank's substantially improved performance over the past two years and its likelihood of generating future taxable income, the bank reversed this valuation allowance which resulted in a net income tax benefit of $1.2 million during for the second quarter.
Additionally, the Bank recognized an increase in net interest income of $487 thousand. This significant increase in net income was partially offset by an increase in salaries and employee benefits, data processing and business development expenses of $348 thousand.
The increase in net interest income of $487 thousand year-over-year for the second quarter was primarily attributable to an increase in the average balance of interest earning assets of $62.3 million. The bank's net interest margin was 3.64% for the quarter ended June 30, 2012, a decrease of 9 basis points from the same period in 2011, which was due to a decrease in the bank's yield on interest earning assets of 26 basis points from 4.50% to 4.24%, coupled with an increase in the bank's cost of interest bearing liabilities of 5 basis points to 1.03% in the second quarter of 2012. The decrease in the average yield on interest earning assets was primarily due to the increased growth in securities available for sale as a percentage of average earning assets, as compared to loans over the same period.
Earnings for the Six Months Ended June 30, 2012
Net income for the six months ended June 30, 2012 was $3.1 million, an increase of $2.3 million, or 273%, as compared to the six months ended June 30, 2011. Earnings per share were $0.71 and $0.20 for the six month periods ended June 30, 2012 and 2011, respectively. For the six months ended June 30, 2012, the bank's net interest income was approximately $6.7 million, an increase of approximately $0.8 million, or 13.2%, as compared to net interest income of approximately $5.9 million for the six months ended June 30, 2011. The net interest margin was 3.68% for the six months ended June 30, 2012 as compared to 3.74% for the same six month period a year ago. The decrease in the net interest margin is due primarily to a continued historically low interest rate environment and an increase in securities available for sale as a percentage of average earning assets, as compared to loans.
Balance Sheet and Asset Quality
Total assets were $421.7 million at June 30, 2012, reflecting a $32.1 million increase from March 31, 2012. The growth in total assets was due to a $36.5 million increase in total cash and cash equivalents, augmented by the increase in outstanding loan balances of $11.2 million, and partially offset by a reduction of $17.2 million in securities available for sale. Total assets increased $82.0 million year-over-year, or 24.1%, attributable to an increase in securities available for sale of $28.2 million, or 25.4%, an increase in total cash and cash equivalents of $37.0 million, and an increase in outstanding loan balances of $16.7 million.
Non-performing assets were $2.2 million at June 30, 2012, consisting of two non-performing loans that had been restructured. Since June 30, 2012, both loans have been reclassified as performing loans and returned to an accrual basis. The bank's ratio of non-performing loans to total loans, which was 0.95% as of June 30, 2012, decreased from March 31, 2012, and remains below that of the bank's peers. The allowance for loan losses to total loans was 1.81% at June 30, 2012, as compared to 1.96% at June 30, 2011.
Total deposits were $377.3 million at June 30, 2012, a year-over-year increase of $117.8 million, or 45.4%. On a linked quarter basis, total deposits increased by $29.5 million, or 8.5%. Demand deposits increased $114.0 million, or 234.2%, year-over-year and $51.9 million, or 46.8%, on a linked quarter basis to $162.7 million at June 30, 2012. This material increase in demand deposits was attributable primarily to the bank's commitment and focus to providing financial services products and services targeted to professional practices. Notwithstanding the demand deposit growth attributable to professional practices, the bank experienced significant growth in business banking demand deposits. Savings, NOW and money market deposits increased year-over-year by $11.6 million, or 9.2%, and decreased $3.9 million, or 2.7%, on a linked quarter basis to $137.5 million at June 30, 2012.
Stockholders' equity grew from $32.4 million to $41.3 million from June 30, 2011 to June 30, 2012, primarily as a result of the bank's earnings during that period. At June 30, 2012, the bank was "well capitalized" as defined by OCC regulation, with leverage, Tier 1 risk-based and total risk-based capital ratios of 9.84%, 14.41% and 15.66%, respectively.
Opportunities and Challenges
During the second quarter, the bank upgraded and converted its online banking system for its business and consumer customers to provide customers with an innovative tool to more easily manage their money. FinanceWorks™ by Quicken and TurboTax® were among the new features included within the consumer online banking product, which was designed to enhance the experience and benefit for the bank's customers. The bank is continuing to implement several new mobile banking products designed to meet the needs of banking customers, with a view to enhancing customer retention and attracting new consumer and business customers. "The current economy presents many challenges to the banking industry; however, we remain confident that our customer service focused culture will be successful in all market conditions. This is a business based upon relationships and we plan to continue building on those relationships as we are introduced to new opportunities," remarked Thomas M. Buonaiuto, President and Chief Operating Officer.
| Balance Sheet (unaudited) | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| June 30, | March 31, | December 31, | June 30, | ||||||||||||||
| 2012 | 2012 | 2011 | 2011 | ||||||||||||||
| ASSETS | |||||||||||||||||
| Total cash and cash equivalents | $ | 42,158 | $ | 5,652 | $ | 4,388 | $ | 5,191 | |||||||||
| Securities available for sale, at fair value | 139,092 | 156,286 | 114,502 | 110,897 | |||||||||||||
| Securities, restricted | 1,697 | 1,539 | 3,002 | 3,186 | |||||||||||||
| Loans, net | 227,529 | 216,282 | 208,660 | 210,745 | |||||||||||||
| Premises and equipment, net | 6,732 | 6,851 | 6,850 | 7,257 | |||||||||||||
| Other assets and accrued interest receivable | 4,524 | 2,956 | 2,331 | 2,492 | |||||||||||||
| Total Assets | $ | 421,732 | $ | 389,566 | $ | 339,733 | $ | 339,768 | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||
| Demand Deposits | $ | 162,659 | $ | 110,805 | $ | 45,765 | $ | 48,677 | |||||||||
| Savings, N.O.W. and money market deposits | 137,484 | 141,355 | 126,335 | 125,929 | |||||||||||||
| Certificates of deposit of $100,000 or more and other time deposits | 77,111 | 95,613 | 92,920 | 84,832 | |||||||||||||
| Total Deposits | $ | 377,254 | $ | 347,773 | 265,020 | 259,438 | |||||||||||
| Short-term borrowings | - | 617 | 34,449 | 41,817 | |||||||||||||
| Other liabilities and accrued expenses | 3,146 | 2,886 | 2,832 | 6,129 | |||||||||||||
| Total Liabilities | $ | 380,400 | $ | 351,276 | 302,301 | 307,384 | |||||||||||
| Total Stockholders' Equity | 41,332 | 38,290 | 37,432 | 32,384 | |||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 421,732 | $ | 389,566 | 339,733 | 339,768 | |||||||||||
| Selected Financial Data (unaudited) | |||||||||||||||||
| Allowance for Loan Losses to Total Loans | 1.81 | % | 1.91 | % | 1.98 | % | 1.96 | % | |||||||||
| Non-performing Loans to Total Loans | 0.95 | % | 1.00 | % | 1.03 | % | 1.03 | % | |||||||||
| Non-performing Assets to Total Assets | 0.52 | % | 0.56 | % | 0.65 | % | 0.65 | % | |||||||||
| Capital Ratios (unaudited) | |||||||||||||||||
| Tier 1 Leverage Ratio | 9.84 | % | 10.44 | % | 10.80 | % | 9.43 | % | |||||||||
| Tier 1 Risk-Based Capital Ratio | 14.41 | % | 14.56 | % | 15.36 | % | 13.68 | % | |||||||||
| Total Risk-Based Capital Ratio | 15.66 | % | 15.81 | % | 16.62 | % | 14.93 | % | |||||||||
| Book Value per Share | $ | 9.44 | $ | 8.74 | $ | 8.60 | $ | 7.69 | |||||||||
| Statement of Operations (unaudited) | ||||||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||
| For the three months ended | For the six months ended | |||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||
| 2012 | 2012 | 2011 | 2012 | 2011 | ||||||||||||||||
| Interest income | $ | 4,089 | $ | 3,848 | $ | 3,652 | $ | 7,936 | $ | 7,181 | ||||||||||
| Interest expense | 574 | 650 | 624 | 1,224 | 1,254 | |||||||||||||||
| Net interest income | $ | 3,515 | $ | 3,198 | $ | 3,028 | $ | 6,712 | $ | 5,927 | ||||||||||
| Provision for loan losses | - | - | - | - | - | |||||||||||||||
| Net interest income after provision for loan losses | 3,515 | 3,198 | 3,028 | 6,712 | 5,927 | |||||||||||||||
| Net securities (losses) gains | 1,162 | - | (5 | ) | 1,162 | (5 | ) | |||||||||||||
| Other income | 152 | 153 | 125 | 303 | 243 | |||||||||||||||
| Other expense | 3,291 | 2,994 | 2,706 | 6,284 | 5,333 | |||||||||||||||
| Income before income taxes | 1,538 | 357 | 442 | 1,893 | 832 | |||||||||||||||
| Income tax benefit | 1,208 | - | - | 1,208 | - | |||||||||||||||
| Net income | $ | 2,746 | 357 | 442 | $ | 3,101 | 832 | |||||||||||||
| Basic earnings per share | $ | 0.64 | $ | 0.08 | $ | 0.10 | $ | 0.73 | $ | 0.20 | ||||||||||
| Diluted earnings per share | $ | 0.64 | $ | 0.08 | $ | 0.10 | $ | 0.73 | $ | 0.20 | ||||||||||
| Selected Financial Data (unaudited) | ||||||||||||||||||||
| Return on Average Assets | 2.74 | % | 0.40 | % | 0.52 | % | 1.64 | % | 0.51 | % | ||||||||||
| Return on Average Equity | 27.53 | % | 3.76 | % | 5.58 | % | 15.93 | % | 5.39 | % | ||||||||||
| Net Interest Margin | 3.64 | % | 3.73 | % | 3.73 | % | 3.68 | % | 3.74 | % | ||||||||||
| Efficiency Ratio | 89.75 | % | 89.34 | % | 85.83 | % | 89.58 | % | 86.44 | % | ||||||||||
| Core Earnings | $ | 504 | $ | 469 | $ | 447 | $ | 971 | $ | 837 | ||||||||||
About Empire National Bank
Empire National Bank is a Long Island-based independent bank that specializes in serving the financial needs of small and medium sized businesses, professionals, nonprofit organizations, real estate investors, and consumers. The Bank has three banking offices located in Islandia, Shirley and Port Jefferson Station. Our bankers take pride in understanding the needs of each and every customer so the bankcan deliver the highest quality service with a sense of urgency.
This release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "estimate" or "continue," or comparable terminology, are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within Empire National Bank's control. The forward-looking statements included in this report are made only as of the date of this report. We have no intention, and do not assume any obligation, to update these forward-looking statements.
