SOURCE: Abington Bancorp, Inc.

April 29, 2011 16:30 ET

Abington Bancorp, Inc. Announces Results for the First Quarter of 2011

JENKINTOWN, PA--(Marketwire - Apr 29, 2011) - Abington Bancorp, Inc. (the "Company") (NASDAQ: ABBC), the parent holding company for Abington Bank (the "Bank"), reported net income of $1.5 million for the quarter ended March 31, 2011, compared to net income of $1.6 million for the quarter ended March 31, 2010. The Company's basic and diluted earnings per share were each $0.08 for the first quarter of 2011 and 2010.

On January 26, 2011, the Company announced the signing of a definitive merger agreement with Susquehanna Bancshares, Inc., ("Susquehanna") pursuant to which the Company will be merged with Susquehanna in a stock transaction that was valued at approximately $273 million (the "Merger"). Under the terms of the merger agreement, shareholders the Company will receive 1.32 shares of Susquehanna common stock for each share of Company common stock. The Bank's 20 branches in the suburban counties surrounding Philadelphia will join Susquehanna Bank's network of 221 branches in Pennsylvania, New Jersey, Maryland and West Virginia. The combined company will have approximately $15 billion in assets, including $10 billion in loans, and $10 billion in deposits. The Merger is subject to shareholder and regulatory approvals and other customary closing conditions.

Mr. Robert W. White, Chairman, President and CEO of the Company, stated, "We are excited about the upcoming merger with Susquehanna, which we expect to close later this year. We believe that the merger will add value for our stockholders, and that the combined company will benefit our existing customers in the form of additional products and services and a larger branch network."

Net Interest Income

Net interest income was $8.0 million for the three months ended March 31, 2011, representing a decrease of $206,000 or 2.5% over the first three months of 2010. The decrease occurred as lower interest expense was more than offset by a reduction in interest income. Our average interest rate spread improved to 2.72% for the first quarter of 2011 from 2.65% for the first quarter of 2010 as a decrease in the average rate paid on our interest-bearing liabilities exceeded the decrease in the average yield earned on our interest-earning assets. Our net interest margin improved to 2.94% for the first three months of 2011 from 2.92% for the three months of 2010.

Interest income for the three months ended March 31, 2011 decreased $1.4 million or 10.7% over the comparable 2010 period to $11.7 million. The decrease occurred as a result of a decline in both the average balance of our total interest-earning assets and the average yield earned on those assets. Although the average balances of our investment and mortgage-backed securities increased quarter-over-quarter, as did the balance of our other interest-earning assets, these increases were more than offset by a decrease in the average balance of our loan portfolio of $75.5 million or 9.9% quarter-over-quarter. The average yield earned on our total interest-earning assets decreased 35 basis points to 4.28% for the first quarter of 2011 compared to 4.63% for the first quarter of 2010 due to primarily to declines in the average yield earned on investment and mortgage-backed securities.

Interest expense for the three months ended March 31, 2011 decreased $1.2 million or 24.5% from the comparable 2010 period to $3.7 million. The decrease occurred as a result of a decline in both the average balance of our total interest-bearing liabilities and the average rate paid on those liabilities. The average balance of our total interest-bearing liabilities decreased $39.1 million or 4.0% to $940.8 million for the first quarter of 2011 from $979.9 million for the first quarter of 2010. The decrease was due primarily to a decrease in the average balance of our advances from the Federal Home Loan Bank ("FHLB") of $49.4 million or 34.3% and our certificates of deposit of $33.8 million or 7.3%, quarter-over-quarter. This was partially offset by an increase in the average balance of our core deposits of $12.3 million quarter-over-quarter. The average rate we paid on our total interest-bearing liabilities decreased 42 basis points to 1.56% for the first quarter of 2011 from 1.98% for the first quarter of 2010 due to declines in the average rate paid on our advances from the FHLB of 61 basis points and our deposits of 27 basis points.

Provision for Loan Losses and Asset Quality

No provision for loan losses was recorded during the first quarter of 2011. A provision of $563,000 was recorded during the first quarter of 2010. The provision for loan losses is charged to expense as necessary to bring our allowance for loan losses to a sufficient level to cover known and inherent losses in the loan portfolio. Management determined that no provision was required during the first quarter of 2011 based on our evaluation of the overall adequacy of the allowance for loan losses in relation to the loan portfolio, and in consideration of a number of factors including a decrease in the outstanding balance of our loans receivable and the resolution or charge-off of certain large-balance, non-performing loans in recent periods.

Our non-accrual loans increased slightly during the first quarter of 2011 to $7.1 million at March 31, 2011 from $7.0 million at December 31, 2010. The increase was due primarily to the addition of one commercial real estate loan with an outstanding balance of $185,000 at March 31, 2011. Our total non-performing loans, defined as non-accruing loans and accruing loans 90 days or more past due, decreased to $8.2 million at March 31, 2011 from $9.0 million at December 31, 2010. This was primarily a result of certain of our past due accruing loans becoming current in their payments during the quarter. At March 31, 2011 and December 31, 2010, our non-performing loans amounted to 1.19% and 1.29%, respectively, of loans receivable, and our allowance for loan losses amounted to 52.68% and 47.27%, respectively, of non-performing loans. At March 31, 2011 and December 31, 2010, our non-performing assets amounted to 2.71% and 2.62% of total assets, respectively.

Non-Interest Income and Expenses

Our total non-interest income increased to $694,000 for the first quarter of 2011 from $355,000 for the first quarter of 2010. The increase was due primarily to a $386,000 improvement in our net loss on REO quarter-over-quarter. The larger net loss during the 2010 period was the result of a higher level of write-downs and losses on sales during that period.

Our total non-interest expenses for the first quarter of 2011 amounted to $6.9 million, representing an increase of $969,000 or 16.2% from the first quarter of 2010. The largest increase was in our expense for professional services, which increased $527,000 or 118.7% quarter-over-quarter. The increase was due primarily to additional legal and consulting expenses related to our proposed merger with Susquehanna, including expenses related to certain shareholder lawsuits. Also contributing to the increase in our total non-interest expenses were increases in our salaries and employee benefits and deposit insurance premium expenses, which increased $167,000 and $158,000, respectively, quarter-over-quarter.

The Company recorded an income tax expense of approximately $253,000 for the first quarter of 2011 compared to an income tax expense of approximately $460,000 for the first quarter of 2010. Our effective tax rate improved to 14.1% for the first quarter of 2011 compared to 22.2% for the first quarter of 2010 largely as a result of the tax benefit related to the exercise of stock options by certain of our employees during the quarter.

Statement of Financial Condition

The Company's total assets decreased $73.7 million, or 5.9%, to $1.17 billion at March 31, 2011 compared to $1.25 billion at December 31, 2010. The most significant decreases were in cash and cash equivalents, which decreased $29.9 million during the quarter, investment and mortgage-backed securities, which decreased $27.2 million in the aggregate during the quarter, and loans receivable, which decreased $16.4 million during the quarter. These decreases occurred as repayments of securities and loans during the quarter were used primarily to reduce our liabilities.

Our total deposits decreased $51.1 million or 5.7% to $848.9 million at March 31, 2011 compared to $900.1 million at December 31, 2010. The decrease during the first quarter of 2011 was due to decreases in all categories of deposits, including a decrease in our savings and money market accounts of $18.9 million and a decrease in our certificates of deposit of $19.5 million. Our advances from the FHLB decreased $26.0 million or 23.7% to $83.9 million at March 31, 2011 from $109.9 million at December 31, 2010, as we continued to repay existing balances.

Our total stockholders' equity increased to $212.9 million at March 31, 2011 from $211.9 million at December 31, 2010. Contributing to the increase was the reissuance of approximately 87,000 shares of treasury stock with a cost basis of approximately $831,000 in conjunction with the exercise of stock options by certain of our employees during the quarter. Additionally, our retained earnings increased $416,000 as our net income for the period was partially offset by the payment of our quarterly cash dividend of $0.06 per share of common stock. Limiting the effects of these increases was a reduction in our accumulated other comprehensive income of $666,000 resulting from a decrease in the aggregate fair value of our available for sale investment and mortgage-backed securities.

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, 2011, Abington Bancorp had $1.17 billion in total assets, $848.9 million in total deposits and $212.9 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.

Additional Information and Where to Find It

Susquehanna has filed with the SEC a registration statement on Form S-4 concerning the Merger. The registration statement included a prospectus for the offer and sale of Susquehanna common stock to the Company's shareholders as well as a joint proxy statement of each of the Company and Susquehanna for the solicitation of proxies from their respective shareholders for use at the meetings at which the Merger will be voted upon. The Joint Proxy Statement/Prospectus and other documents filed by Susquehanna with the SEC contain important information about Susquehanna, the Company and the Merger. We urge investors and the Company's shareholders to read carefully the Joint Proxy Statement/Prospectus and other documents filed with the SEC, including any amendments or supplements also filed with the SEC. The Company's shareholders in particular should read the Joint Proxy Statement/Prospectus carefully before making a decision concerning the Merger. Investors and shareholders can obtain a free copy of the Joint Proxy Statement/Prospectus -- along with other filings containing information about Susquehanna -- at the SEC's website at http://www.sec.gov. Copies of the Joint Proxy Statement/Prospectus, and the filings with the SEC incorporated by reference in the Joint Proxy Statement/Prospectus, can also be obtained free of charge by directing a request to Abington Bancorp, Inc., 180 Old York Road, Jenkintown, Pennsylvania 19046, Attention Robert W. White, President, telephone (215) 886-8280.

The Company, Susquehanna and certain of their directors and executive officers may, under the rules of the SEC, be deemed to be "participants" in the solicitation of proxies from shareholders in connection with the Merger. Information concerning the interests of the persons who may be considered "participants" in the solicitation as well as additional information concerning the Company's and Susquehanna's directors and executive officers is set forth in the Joint Proxy Statement/Prospectus. Information concerning the Company's and Susquehanna's directors and executive officers is also set forth in their respective proxy statements and annual reports on Form 10-K (including any amendments thereto), previously filed with the SEC.

ABINGTON BANCORP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                                             December 31,
                                            March 31, 2011       2010
                                            --------------  --------------
ASSETS
Cash and due from banks                     $   18,405,431  $   17,917,261
Interest-bearing deposits in other banks        29,386,046      59,769,447
                                            --------------  --------------
      Total cash and cash equivalents           47,791,477      77,686,708
Investment securities held to maturity
 (estimated fair value -- 2011,
 $20,953,406; 2010, $20,806,340)                20,384,241      20,384,781
Investment securities available for sale
 (amortized cost -- 2011, $107,946,969;
 2010, $124,245,038)                           108,284,090     124,903,901
Mortgage-backed securities held to maturity
 (estimated fair value -- 2011,
 $53,948,263; 2010, $58,338,548)                52,715,892      56,872,188
Mortgage-backed securities available for
 sale (amortized cost -- 2011, $158,923,851;
 2010, $164,632,654)                           161,748,148     168,172,796
Loans receivable, net of allowance for loan
 losses (2011, $4,301,401; 2010, $4,271,618)   680,029,837     696,443,502
Accrued interest receivable                      4,231,694       4,102,984
Federal Home Loan Bank stock--at cost           13,183,400      13,877,300
Cash surrender value - bank owned life
 insurance                                      43,175,786      42,744,766
Property and equipment, net                      9,561,814       9,751,694
Real estate owned                               23,628,145      23,588,139
Deferred tax asset                               3,770,146       3,631,218
Prepaid expenses and other assets                4,884,941       4,938,037
                                            --------------  --------------
TOTAL ASSETS                                $1,173,389,611  $1,247,098,014
                                            ==============  ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
  Deposits:
    Noninterest-bearing                     $   38,789,486  $   49,807,778
    Interest-bearing                           810,158,125     850,251,190
                                            --------------  --------------
      Total deposits                           848,947,611     900,058,968
  Advances from Federal Home Loan Bank          83,867,458     109,874,674
  Other borrowed money                          16,367,141      15,881,449
  Accrued interest payable                       2,098,902         912,321
  Advances from borrowers for taxes and
   insurance                                     3,042,039       2,956,425
  Accounts payable and accrued expenses          6,200,955       5,504,215
                                            --------------  --------------
           Total liabilities                   960,524,106   1,035,188,052
                                            --------------  --------------
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: 20,231,550 shares
   in 2011, 20,166,742 shares in 2010              244,602         244,602
  Additional paid-in capital                   202,723,230     202,517,175
  Treasury stock--at cost, 4,228,690 shares
   in 2011, 4,293,498 shares in 2010           (34,394,607)    (34,949,051)
  Unallocated common stock held by:
    Employee Stock Ownership Plan (ESOP)       (13,250,578)    (13,460,338)
    Recognition & Retention Plan Trust (RRP)    (2,337,547)     (2,589,310)
    Deferred compensation plans trust           (1,061,718)     (1,045,153)
  Retained earnings                             58,935,362      58,519,670
  Accumulated other comprehensive income         2,006,761       2,672,367
                                            --------------  --------------
           Total stockholders' equity          212,865,505     211,909,962
                                            --------------  --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $1,173,389,611  $1,247,098,014
                                            ==============  ==============





ABINGTON BANCORP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                     Three Months Ended
                                                          March 31,
                                                  ------------------------
                                                      2011         2010
                                                  -----------  -----------
INTEREST INCOME:
  Interest on loans                               $ 8,987,401  $ 9,999,227
  Interest and dividends on investment and
    mortgage-backed securities:
      Taxable                                       2,321,562    2,697,977
      Tax-exempt                                      377,634      398,027
  Interest and dividends on other
   interest-earning assets                             16,534        5,892
                                                  -----------  -----------
           Total interest income                   11,703,131   13,101,123
INTEREST EXPENSE:
  Interest on deposits                              2,769,310    3,288,583
  Interest on Federal Home Loan Bank advances         874,912    1,554,366
  Interest on other borrowed money                     21,378       14,292
                                                  -----------  -----------
           Total interest expense                   3,665,600    4,857,241
                                                  -----------  -----------
NET INTEREST INCOME                                 8,037,531    8,243,882
PROVISION FOR LOAN LOSSES                                   -      563,445
                                                  -----------  -----------
NET INTEREST INCOME AFTER PROVISION FOR
 LOAN LOSSES                                        8,037,531    7,680,437
                                                  -----------  -----------
NON-INTEREST INCOME
  Service charges                                     273,931      296,378
  Income on bank owned life insurance                 431,020      438,486
  Net loss on real estate owned                      (195,577)    (581,275)
  Other income                                        185,054      201,741
                                                  -----------  -----------
           Total non-interest income                  694,428      355,330
                                                  -----------  -----------
NON-INTEREST EXPENSES
  Salaries and employee benefits                    3,096,957    2,929,782
  Occupancy                                           748,662      712,720
  Depreciation                                        196,760      229,725
  Professional services                               970,642      443,911
  Data processing                                     448,740      422,622
  Deposit insurance premium                           518,025      360,503
  Advertising and promotions                          169,657      107,373
  Director compensation                               142,916      219,946
  Other                                               643,868      540,739
                                                  -----------  -----------
           Total non-interest expenses              6,936,227    5,967,321
                                                  -----------  -----------
INCOME BEFORE INCOME TAXES                          1,795,732    2,068,446
PROVISION FOR INCOME TAXES                            253,279      460,086
                                                  -----------  -----------
NET INCOME                                        $ 1,542,453  $ 1,608,360
                                                  ===========  ===========

BASIC EARNINGS PER COMMON SHARE                   $      0.08  $      0.08
DILUTED EARNINGS PER COMMON SHARE                 $      0.08  $      0.08

BASIC AVERAGE COMMON SHARES OUTSTANDING:           18,510,508   18,995,279
DILUTED AVERAGE COMMON SHARES OUTSTANDING:         19,313,058   19,372,522




ABINGTON BANCORP, INC.

UNAUDITED SELECTED FINANCIAL DATA

                                                 Three Months
                                                    Ended           Year
                                                  March 31,         Ended
                                              ------------------  December
                                                2011      2010    31, 2010
                                              -------   --------  --------

Selected Operating Ratios(1):
Average yield on interest-earning assets         4.28%      4.63%     4.55%
Average rate on interest-bearing liabilities     1.56%      1.98%     1.83%
Average interest rate spread(2)                  2.72%      2.65%     2.72%
Net interest margin(2)                           2.94%      2.92%     2.95%
Average interest-earning assets to average
 interest-bearing liabilities                  116.25%    113.25%   114.32%
Net interest income after provision
 for loan losses to non-interest expense       115.87%    128.71%   130.70%
Total non-interest expense to average assets     2.30%      1.91%     1.97%
Efficiency ratio(3)                             79.44%     69.39%    68.81%
Return on average assets                         0.51%      0.52%     0.61%
Return on average equity                         2.90%      3.00%     3.60%
Average equity to average assets                17.62%     17.19%    17.00%

Asset Quality Ratios(4):
Non-performing loans as a percent of
 total loans receivable(5)                       1.19%      5.00%     1.29%
Non-performing assets as a percent of
 total assets(5)                                 2.71%      4.73%     2.62%
Allowance for loan losses as a percent of
 non-performing loans                           52.68%     24.45%    47.27%
Allowance for loan losses as a percent of
 total loans                                     0.63%      1.22%     0.61%
Net charge-offs to average loans receivable     (0.02)%     0.18%     0.81%

Capital Ratios(6):
Tier 1 leverage ratio                           14.55%     13.22%    13.84%
Tier 1 risk-based capital ratio                 24.17%     20.54%    23.31%
Total risk-based capital ratio                  24.76%     21.70%    23.89%


(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, 2011 and 2010, 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   December    March
                                              31, 2011  31, 2010  31, 2010
                                              --------  --------  --------
                                                 (Dollars in Thousands)
Non-accruing loans:
  One- to four-family residential             $     --  $     --  $     --
  Multi-family residential and commercial real
   estate(1)                                     1,514     1,348     4,788
  Construction                                   5,547     5,664    22,659
  Commercial business                               --        --        --
  Home equity lines of credit                       --        --        --
  Consumer non-real estate                          --        --        --
                                              --------  --------  --------
    Total non-accruing loans                     7,061     7,012    27,447
                                              --------  --------  --------
Accruing loans 90 days or more past due:
  One- to four-family residential(2)             1,028     1,211        29
  Multi-family residential and commercial real
   estate                                           --       725        --
  Construction                                      14        14    10,535
  Commercial business                               --        --        --
  Home equity lines of credit                       62        76       106
  Consumer non-real estate                          --        --        --
                                              --------  --------  --------
    Total accruing loans 90 days or more
     past due                                    1,104     2,026    10,670
                                              --------  --------  --------
    Total non-performing loans(3)                8,165     9,038    38,117
                                              --------  --------  --------
Real estate owned, net                          23,628    23,588    21,817
                                              --------  --------  --------
    Total non-performing assets                 31,793    32,626    59,934
                                              --------  --------  --------
Performing troubled debt restructurings:
  One- to four-family residential(4)               219       583        --
  Multi-family residential and commercial real
   estate                                        8,410     8,417        --
  Construction                                   3,439        --        --
  Commercial business                               --        --        --
  Home equity lines of credit                       --        --        --
  Consumer non-real estate                          --        --        --
                                              --------  --------  --------
    Total performing troubled debt
     restructurings                             12,068     9,000        --
                                              --------  --------  --------
    Total non-performing assets and
     performing troubled debt restructurings  $ 43,861  $ 41,626  $ 59,934
                                              ========  ========  ========
Total non-performing loans as a
 percentage of loans                              1.19%     1.29%     5.00%
                                              ========  ========  ========
Total non-performing loans as a
 percentage of total assets                       0.70%     0.72%     3.01%
                                              ========  ========  ========
Total non-performing assets as a
 percentage of total assets                       2.71%     2.62%     4.73%
                                              ========  ========  ========

(1) Included in this category of non-accruing loans at March 31, 2011,
    December 31, 2010 and March 31, 2010 is one troubled debt restructuring
    with a balance of $1.3 million, $1.3 million, and $2.4 million at such
    date, respectively.
(2) Included in this category of non-accruing loans at March 31, 2011 is
    one troubled debt restructuring with a balance of $219,000 at such
    date.
(3) Non-performing loans consist of non-accruing loans plus accruing loans
    90 days or more past due.
(4) Two performing troubled debt restructurings ("TDRs") included in
    one- to four-family residential real estate loans with an aggregate
    outstanding balance of $583,000 at March 31, 2010 were identified as a
    result of enhanced procedures, although no such balances were
    previously reported at such date.

Contact Information

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