SOURCE: Abington Bancorp, Inc.

April 30, 2010 16:30 ET

Abington Bancorp, Inc. Announces Results for the First Quarter of 2010

JENKINTOWN, PA--(Marketwire - April 30, 2010) -  Abington Bancorp, Inc. (the "Company") (NASDAQ: ABBC), the parent holding company for Abington Bank (the "Bank"), reported net income of $1.6 million for the quarter ended March 31, 2010, compared to net income of $2.2 million for the quarter ended March 31, 2009. The Company's basic and diluted earnings per share were both $0.08 for the first quarter of 2010 compared to basic and diluted earnings per share of $0.10 for the first quarter of 2009.

Mr. Robert W. White, Chairman, President and CEO of the Company, stated, "We are pleased to begin 2010 with our business soundly moving forward. During the first quarter of 2010 we increased our net interest income over both the prior year and the linked quarter, and we further increased our core deposits from record levels at the end of 2009. After reporting significant provisions for loan losses for three consecutive quarters, our provision moderated this quarter, and we are making progress in resolving our non-performing assets. We are focused on further reducing our non-performing assets throughout the year. Additionally, we remain committed to increasing the return to our shareholders through appreciation in our stock price and the continued payment of our quarterly cash dividends."

Net Interest Income
Net interest income was $8.2 million for the three months ended March 31, 2010, compared to $7.6 million for the three months ended March 31, 2009, an increase of 8.7%. The increase in our net interest income for the first quarter of 2010 compared to the first quarter of 2009 occurred as a decrease in our interest expense quarter-over-quarter exceeded the decrease in our interest income. Our average interest rate spread increased 34 basis points to 2.65% for the three months ended March 31, 2010 from 2.31% for the three months ended March 31, 2009. The improvement in our average interest rate spread occurred as a decrease in the average yield on our interest-earning assets was more than offset by a decrease in the average rate paid on our interest-bearing liabilities. Our net interest margin also increased quarter-over-quarter to 2.92% for the three months ended March 31, 2010 from 2.77% for the three months ended March 31, 2009.

Interest income for the three months ended March 31, 2010 decreased $624,000 or 4.5% over the comparable 2009 period to $13.1 million. The decrease occurred as growth in the average balance of our total interest-earning assets was more than offset by a decrease in the average yield earned on those assets. The average balance of our total interest-earning assets increased $34.8 million or 3.2% to $1.13 billion for the first quarter of 2010 from $1.10 billion for the first quarter of 2009. The increase was driven by a $30.2 million increase in the average balance of our investment securities as well as increases in the average balances of our loans receivable and other interest-earning assets of $11.6 million and $12.9 million, respectively. These increases were partially offset by a $19.9 million decrease in the average balance of our mortgage-backed securities quarter-over-quarter. The average yield earned on our total interest-earning assets decreased 38 basis points to 4.63% for the first quarter of 2010 from 5.01% for the first quarter of 2009. The decrease in the average yield earned on our interest-earning assets was primarily the result of the current interest rate environment.

Interest expense for the three months ended March 31, 2010 decreased $1.3 million or 20.9% from the comparable 2009 period to $4.9 million. The decrease in our interest expense occurred as a decrease in the average rate paid on our total interest-bearing liabilities more than offset an increase in the average balance of those liabilities. The average rate we paid on our total interest-bearing liabilities decreased 72 basis points to 1.98% for the first quarter of 2010 from 2.70% for the first quarter of 2009. The average rate we paid on our total deposits decreased 85 basis points quarter-over-quarter, driven by a 96 basis point decrease in the average rate paid on our certificates of deposit. The average balance of our total deposits increased $159.7 million or 24.3% to $816.2 million for the first quarter of 2010 from $656.5 million for the first quarter of 2009 due primarily to growth in our core deposits. The average balance of our core deposits increased $131.3 million or 58.7% to $355.1 million for the first quarter of 2010 from $223.8 million for the first quarter of 2009. Although the average rate we paid on our advances from the Federal Home Loan Bank ("FHLB") increased 77 basis points for the first quarter of 2010 compared to the first quarter of 2009, this increase was more than offset by a decrease of $91.0 million or 38.8% in the average balance of those advances quarter-over-quarter. The average rate of our FHLB advances increased in the 2010 period, as we relied less on overnight advances than we did during the 2009 period. The average rate paid on overnight advances is substantially below the average rate paid on our other, longer-term advances from the FHLB. 

Provision for Loan Losses
We recorded a provision for loan losses of $563,000 during the first quarter of 2010 compared to a provision of $117,000 during the first quarter of 2009. As has been the case in previous quarters, the majority of our provision related to loans included in our construction loan portfolio. Our loan portfolio at March 31, 2010 included an aggregate of $38.1 million of non-performing loans, defined as non-accruing loans and accruing loans 90 days or more past due, compared to $34.6 million of non-performing loans at December 31, 2009. Of our non-performing loans at March 31, 2010, $33.2 million were for construction loans (which includes land acquisition and development loans) compared to $29.3 million at December 31, 2009. The increase in our non-performing loans during the first quarter of 2010 was due primarily to the addition of one construction loan with an outstanding balance of $4.5 million at March 31, 2010 that became over 90 days past due during the quarter. This loan, which is for a mixed-use commercial/residential development in Montgomery County, Pennsylvania, had previously been classified at December 31, 2009, but did not meet the definition of non-performing as it was neither 90 days past due nor on non-accrual status at such date. At December 31, 2009, approximately $1.2 million of our allowance for loan losses was allocated to this loan. At March 31, 2010, the allowance for loan losses allocated to this loan was increased to approximately $1.4 million. At March 31, 2010 and December 31, 2009, our non-performing loans amounted to 5.00% and 4.47%, respectively, of loans receivable, and our allowance for loan losses amounted to 24.45% and 26.28%, respectively, of non-performing loans. At March 31, 2010 and December 31, 2009, our non-performing assets amounted to 4.73% and 4.64% of total assets, respectively.

During 2010, our oversight of the Company's loan portfolio, particularly its construction loans, and resolution efforts with respect to non-performing assets will be a central focus of our management team. During the first quarter of 2010, we sold three one- to four-family residential properties and reached an agreement of sale on a fourth one- to four-family residential property included in real estate owned ("REO"). The four properties had an aggregate outstanding balance of approximately $1.2 million at December 31, 2009. A net loss on real estate owned of approximately $265,000 in the aggregate was recognized on these four properties during the first quarter of 2010. Subsequent to March 31, 2010, a plan of reorganization was approved by the bankruptcy court related to two of the impaired shared national credit loans in which we participate. The approval allows the pending sale of the underlying assets to be completed, providing for settlement of the outstanding loans. The two loans, which were classified as impaired and placed on non-accrual status during 2009, had an aggregate outstanding balance of $7.2 million at March 31, 2010. At such date, no allowance for loan losses was reserved on these loans after recording $5.6 million in loan charge-offs during 2009. A net recovery of approximately $1.0 million in the aggregate is expected on the settlement of these loans, which is expected to be recognized during the second quarter of 2010 through our allowance for loan losses. While the resolution of these items is a positive step in reducing our non-performing assets, given the continuing effects of the economic recession in the Company's market area in general and, in particular, on some of the Company's larger borrowers, some of whom are in troubled financial condition and either are or may soon be involved in bankruptcy proceedings, no assurance can be given that additional provisions for loan losses or loan charge-offs may not be required in the coming quarters.

Non-Interest Income and Expenses
Our total non-interest income decreased to $355,000 for the first quarter of 2010 from $1.0 million for the first quarter of 2009. The decrease was due primarily to a $597,000 increase in net loss on real estate owned. Approximately $297,000 of this loss related to the sale of the aforementioned REO properties as well as the write-down of another REO property. The remaining expense related to additional construction, maintenance and utility expenses related to our REO properties. Our service charge income decreased $93,000 or 23.9% to $296,000 for the first quarter of 2010 from $389,000 for the first quarter of 2009 primarily as a result of a decrease in our income from overdraft charges.

Our total non-interest expenses for the first quarter of 2010 amounted to $6.0 million, representing an increase of $377,000 or 6.7% from the first quarter of 2009. The largest increase was in our deposit insurance premium expense, which increased $166,000 or 85.7% to $361,000 for the first quarter of 2010 from $194,000 for the first quarter of 2009. The increase in the insurance premium was due to an increase in our regular quarterly premium as a result of a new fee structure implemented by the FDIC. In addition, our occupancy expense and professional services expense increased $133,000 and $106,000, respectively, quarter-over-quarter. The increase in occupancy expense was due in part to higher real estate taxes, as well as services related to certain upgrades to our computer network. The increase in professional services expense was due primarily to legal fees incurred in relation to the resolution of certain non-performing loans and real estate owned.

The Company recorded an income tax expense of approximately $460,000 for the first quarter of 2010 compared to an expense of approximately $742,000 for the first quarter of 2009. Our effective tax rate improved to 22.2% for the first quarter of 2010 compared to 25.6% for the first quarter of 2009. The improvement in our effective tax rate was due largely to the increase in our tax-exempt income as a percentage of our total pre-tax income.

Statement of Financial Condition
The Company's total assets increased $28.8 million, or 2.3%, to $1.27 billion at March 31, 2010 compared to $1.24 billion at December 31, 2009. The most significant increases were in our cash and cash equivalents and our investment securities, which grew by $25.6 million and $16.8 million, respectively, during the first quarter of 2010. These increases were largely the result of our deposit growth and our loan repayments. Our net loans receivable decreased $12.3 million or 1.6% to $752.3 million at March 31, 2010 from $764.6 million at December 31, 2009. Our gross construction loans decreased $12.5 million during the first quarter of 2010, however, this was largely offset by a $10.8 million decrease in the balance of our loans-in-process. Our one- to four-family residential loans and our multi-family residential and commercial real estate loans decreased $7.5 million and $6.2 million, respectively, in the first three months of 2010.

Our total deposits increased $27.4 million or 3.2% to $877.6 million at March 31, 2010 compared to $850.2 million at December 31, 2009. The increase during the first quarter of 2010 was due to growth in both core deposits and certificate accounts, but the largest increase continued to be in our core deposits. During the first three months of 2010, our core deposits increased $20.2 million or 5.1% driven by an increase in our savings and money market accounts of $24.0 million, or 9.0%. Our certificate accounts also increased during the quarter, growing $7.2 million or 1.6%. Additionally, our other borrowed money, which is comprised of securities repurchase agreements entered into with certain commercial checking account customers, increased $5.4 million or 32.5% to $22.1 million during the first quarter of 2010. Our advances from the FHLB decreased $6.0 million or 4.1% to $140.7 million at March 31, 2010 from $146.7 million at December 31, 2009. 

Our total stockholders' equity increased to $214.4 million at March 31, 2010 from $214.2 million at December 31, 2009. The increase was due primarily to our net income for the quarter, but was substantially offset by additional purchases of treasury stock. During the first quarter of 2010 we repurchased approximately 169,000 shares of the Company's common stock for an aggregate cost of approximately $1.2 million as part of our stock repurchase plans. We have continued to repurchase our common stock based on determinations by management and the Board of Directors that the trading price of our stock, which has been below book value, provided an opportunity to utilize our current capital to repurchase shares in a manner intended to positively affect shareholder value. Our flexibility to undertake such a strategy is the result of our strong overall capital position. The Bank's regulatory capital levels continue to far exceed requirements for well capitalized institutions.

Abington Bancorp, Inc. is the holding company for Abington Bank. Abington Bank is a Pennsylvania-chartered, FDIC-insured savings bank which was originally organized in 1867. Abington Bank conducts business from its headquarters and main office in Jenkintown, Pennsylvania as well as 12 additional full service branch offices and seven limited service banking offices located in Montgomery, Bucks and Delaware Counties, Pennsylvania. As of March 31, 2010, Abington Bancorp had $1.27 billion in total assets, $877.6 million in total deposits and $214.4 million in stockholders' equity.

This news release contains certain forward-looking statements, including statements about the financial condition, results of operations and earnings outlook for Abington Bancorp, Inc. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe," "expect," "anticipate," "estimate" and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors -- many of which are beyond the Company's control -- could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. The Company's reports filed from time-to-time with the Securities and Exchange Commission describe some of these factors, including general economic conditions, changes in interest rates, deposit flows, the cost of funds, changes in credit quality and interest rate risks associated with the Company's business and operations and the adequacy of our allowance for loan losses. Other factors described include changes in our loan portfolio, changes in competition, fiscal and monetary policies and legislation and regulatory changes. Investors are encouraged to access the Company's periodic reports filed with the Securities and Exchange Commission for financial and business information regarding the Company at www.abingtonbank.com under the Investor Relations menu. We undertake no obligation to update any forward-looking statements.

ABINGTON BANCORP, INC.          
           
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION        
           
  March 31, 2010     December 31, 2009  
ASSETS              
               
Cash and due from banks $ 29,713,214     $ 18,941,066  
Interest-bearing deposits in other banks   40,637,427       25,773,173  
      Total cash and cash equivalents   70,350,641       44,714,239  
Investment securities held to maturity (estimated fair value—2010, $20,830,733; 2009, $20,787,269)   20,386,403       20,386,944  
Investment securities available for sale (amortized cost—2010, $99,363,321; 2009, $82,905,101)   101,081,838       84,317,271  
Mortgage-backed securities held to maturity (estimated fair value—2010, $72,204,755; 2009, $77,297,497)   71,627,796       77,149,936  
Mortgage-backed securities available for sale (amortized cost—2010, $139,560,016; 2009, $133,916,731)   144,298,930       138,628,592  
Loans receivable, net of allowance for loan losses (2010, $9,319,942; 2009, $9,090,353)   752,279,142       764,559,941  
Accrued interest receivable   4,523,338       4,279,032  
Federal Home Loan Bank stock—at cost   14,607,700       14,607,700  
Cash surrender value - bank owned life insurance   41,421,688       40,983,202  
Property and equipment, net   10,200,904       10,423,190  
Real estate owned   21,816,656       22,818,856  
Deferred tax asset   4,829,756       4,711,447  
Prepaid expenses and other assets   9,532,405       10,531,771  
               
TOTAL ASSETS $ 1,266,957,197     $ 1,238,112,121  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
               
LIABILITIES:              
  Deposits:              
    Noninterest-bearing $ 42,440,192     $ 45,146,650  
    Interest-bearing   835,208,423       805,053,843  
      Total deposits   877,648,615       850,200,493  
  Advances from Federal Home Loan Bank   140,733,174       146,739,435  
  Other borrowed money   22,087,766       16,673,480  
  Accrued interest payable   2,699,894       1,807,334  
  Advances from borrowers for taxes and insurance   3,690,683       3,142,470  
  Accounts payable and accrued expenses   5,663,479       5,366,909  
               
        Total liabilities   1,052,523,611       1,023,930,121  
               
COMMITMENTS AND CONTINGENCIES              
               
STOCKHOLDERS' EQUITY              
  Preferred stock, $0.01 par value, 20,000,000 shares authorized none issued   -       -  
  Common stock, $0.01 par value, 80,000,000 shares authorized; 24,460,240 shares issued; outstanding: 20,862,192 shares in 2010, 21,049,025 shares in 2009   244,602       244,602  
  Additional paid-in capital   201,991,693       201,922,651  
  Treasury stock—at cost, 3,598,044 shares in 2010, 3,411,215 shares in 2009    
(28,755,949
 
)
     
(27,446,596
 
)
     
  Unallocated common stock held by:              
    Employee Stock Ownership Plan (ESOP)   (14,089,618 )     (14,299,378 )
    Recognition & Retention Plan Trust (RRP)   (3,504,089 )     (3,918,784 )
    Deferred compensation plans trust   (1,010,698 )     (995,980 )
  Retained earnings   55,447,278       54,804,913  
  Accumulated other comprehensive income   4,110,367       3,870,572  
               
        Total stockholders' equity   214,433,586       214,182,000  
               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,266,957,197     $ 1,238,112,121  
               
               
               
ABINGTON BANCORP, INC.      
       
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS    
       
   Three Months Ended March 31,
  2010   2009
           
INTEREST INCOME:          
  Interest on loans $ 9,999,227   $ 10,028,633
  Interest and dividends on investment and mortgage-backed securities:          
    Taxable   2,697,977     3,282,931
    Tax-exempt   398,027     400,775
  Interest and dividends on other interest-earning assets   5,892     12,930
           
      Total interest income   13,101,123     13,725,269
           
INTEREST EXPENSE:          
  Interest on deposits   3,288,583     4,041,397
  Interest on Federal Home Loan Bank advances   1,554,366     2,084,584
  Interest on other borrowed money   14,292     14,578
           
      Total interest expense   4,857,241     6,140,559
           
NET INTEREST INCOME   8,243,882     7,584,710
           
PROVISION FOR LOAN LOSSES   563,445     116,691
           
NET INTEREST INCOME AFTER          
PROVISION FOR LOAN LOSSES   7,680,437     7,468,019
           
NON-INTEREST INCOME          
  Service charges   296,378     389,246
  Income on bank owned life insurance   438,486     448,554
  Net (loss) gain on real estate owned   (581,275 )   15,834
  Other income   201,741     162,906
           
      Total non-interest income   355,330     1,016,540
           
NON-INTEREST EXPENSES          
  Salaries and employee benefits   2,929,782     2,957,359
  Occupancy   712,720     579,294
  Depreciation   229,725     222,185
  Professional services   443,911     337,660
  Data processing   422,622     379,812
  Deposit insurance premium   360,503     194,147
  Advertising and promotions   107,373     74,535
  Director compensation   219,946     223,746
  Other   540,739     621,667
           
      Total non-interest expenses   5,967,321     5,590,405
           
INCOME BEFORE INCOME TAXES   2,068,446     2,894,154
           
PROVISION FOR INCOME TAXES   460,086     741,785
           
NET INCOME $ 1,608,360   $ 2,152,369
           
BASIC EARNINGS PER COMMON SHARE $ 0.08   $ 0.10
DILUTED EARNINGS PER COMMON SHARE $ 0.08   $ 0.10
           
BASIC AVERAGE COMMON SHARES OUTSTANDING:   18,995,279     20,550,141
DILUTED AVERAGE COMMON SHARES OUTSTANDING:   19,372,522     21,107,543
           
           
           
ABINGTON BANCORP, INC.          
           
UNAUDITED SELECTED FINANCIAL DATA          
           
   Three Months Ended March 31,  
  2010     2009  
           
Selected Operating Ratios(1):          
Average yield on interest-earning assets 4.63 %   5.01 %
Average rate on interest-bearing liabilities 1.98 %   2.70 %
Average interest rate spread(2) 2.65 %   2.31 %
Net interest margin(2) 2.92 %   2.77 %
Average interest-earning assets to average interest-bearing liabilities 113.25 %   120.53 %
Net interest income after provision for loan losses to non-interest expense 128.71 %   133.60 %
Total non-interest expense to average assets 1.91 %   1.87 %
Efficiency ratio(3) 69.39 %   64.99 %
Return on average assets 0.52 %   0.72 %
Return on average equity 3.00 %   3.66 %
Average equity to average assets 17.19 %   19.67 %
           
Asset Quality Ratios(4):          
Non-performing loans as a percent of total loans receivable(5) 5.00 %   1.95 %
           
Non-performing assets as a percent of total assets(5) 4.73 %   2.33 %
           
Allowance for loan losses as a percent of non-performing loans 24.45 %   55.34 %
           
Allowance for loan losses as a percent of total loans 1.22 %   1.08 %
           
Net charge-offs to average loans receivable 0.18 %   1.88 %
           
Capital Ratios(6):          
Tier 1 leverage ratio 13.22 %   14.17 %
Tier 1 risk-based capital ratio 20.54 %   22.38 %
Total risk-based capital ratio 21.70 %   23.45 %
           
(1) With the exception of end of period ratios, all ratios are based on average monthly balances during the indicated periods and, for the three-month periods ended March 31, 2010 and 2009, are annualized where appropriate.  
(2) Average interest rate spread represents the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities, and net interest margin represents net interest income as a percentage of average interest-earning assets.  
(3) The efficiency ratio represents the ratio of non-interest expense divided by the sum of net interest income and non-interest income.  
(4) Asset quality ratios are end of period ratios, except for net charge-offs to average loans receivable.  
(5) Non-performing assets consist of non-performing loans and real estate owned. Non-performing loans consist of all accruing loans 90 days or more past due and all non-accruing loans. It is our policy, with certain limited exceptions, to cease accruing interest on single-family residential mortgage loans 120 days or more past due and all other loans 90 days or more past due. Real estate owned consists of real estate acquired through foreclosure and real estate acquired by acceptance of a deed-in-lieu of foreclosure.  
(6) Capital ratios are end of period ratios and are calculated for Abington Bank per regulatory requirements.  
   
   
   
ABINGTON BANCORP, INC.                
                 
UNAUDITED SELECTED FINANCIAL DATA (continued)                
  March 31, 2010   December 31, 2009   September 30, 2009    
   
  (Dollars in Thousands)
   
Non-accruing loans:                    
    One- to four-family residential $ --   $ 237   $ 239    
    Multi-family residential and commercial real estate(1)   4,788     4,801     261    
    Construction   22,659     23,303     31,477    
    Commercial business   --     --     --    
    Home equity lines of credit   --     --     --    
    Consumer non-real estate   --     --     --    
      Total non-accruing loans   27,447     28,341     31,977    
Accruing loans 90 days or more past due:                    
    One- to four-family residential   29     110     633    
    Multi-family residential and commercial real estate   --     --     --    
    Construction   10,535     5,998     10,844    
    Commercial business   --     --     --    
    Home equity lines of credit   106     141     97    
    Consumer non-real estate   --     --     --    
      Total accruing loans 90 days or more past due   10,670     6,249     11,574    
      Total non-performing loans(2)   38,117     34,590     43,551    
Real estate owned, net   21,817     22,819     18,181    
      Total non-performing assets $ 59,934   $ 57,409   $ 61,732    
Total non-performing loans as a percentage of loans   5.00 %   4.47 %   5.53 %  
Total non-performing loans as a percentage of total assets   3.01 %   2.79 %   3.55 %  
Total non-performing assets as a percentage of total assets   4.73 %   4.64 %   5.03 %  
                     
(1) Included in this category of non-accruing loans at March 31, 2010 and December 31, 2009 is one troubled debt restructuring with a balance of $2.4 million and $2.5 million, respectively.
(2) Non-performing loans consist of non-accruing loans plus accruing loans 90 days or more past due.

Contact Information

  • Contact:
    Robert W. White,
    Chairman, President and CEO
    or
    Jack Sandoski,
    Senior Vice President and CFO
    (215) 886-8280