ISLANDIA, NY--(Marketwired - Jan 29, 2015) - Empire Bancorp, Inc. (
- Net income for the year ended December 31, 2014 of $1.8 million, a $558 thousand or 43.4% increase from the year ended December 31, 2013
- Increase in earnings before income taxes for the year of $1.5 million, or 67.8%, due primarily to asset growth and expansion of net interest margin
- Total loans of $379.7 million, a $85.2 million, or 28.9%, increase from December 31, 2013
- Total assets of $508.1 million, a $41.0 million, or 8.8%, increase from December 31, 2013
- Total demand deposits of $189.2 million, a $11.9 million, or 6.7%, increase from December 31, 2013
- Solid asset quality with a ratio of non-performing loans to total loans of 0.31%
- Strong bank-level capital levels as of December 31, 2014, reflecting results of fourth quarter capital raise
- Tier 1 leverage capital ratio of 12.65%
- Tier 1 risk-based capital ratio of 16.02%
- Total risk-based capital ratio of 17.17%
Douglas C. Manditch, Chairman and Chief Executive Officer stated, "Repositioning our balance sheet in 2014 resulted in solid core performance. Profits before income taxes increased in excess of $1.5 million or approximately 68%, generated largely by an increase in net interest income of $2.4 million or 16.8%, which was due primarily to our loan growth. Our provision for loan losses reflects our low level of loan delinquencies as we continue to diligently uphold our conservative underwriting standards. As of year-end, our percentage of non‐performing assets comprised 0.23% of total assets, still remaining significantly below many of our peers."
Mr. Manditch continued, "In 2014, the State of New York enacted significant changes to its corporate tax code by merging the bank code into general corporate tax law. As a result of the change in the law, we have to write down our state deferred tax asset in the amount of $386 thousand, which reduces current earnings. Although the change in law results in a current period write-down, we expect that the change in tax law to be beneficial to us over the long term by reducing our state tax liability."
Thomas M. Buonaiuto, President and Chief Operating Officer noted, "During 2015, we are well positioned to increase market share at our existing branch locations. Our service model affords us enviable customer retention rates, and we are strategizing to refine and sharpen our sales model and product offerings. Our branches in Islandia, Shirley and Port Jefferson Station, coupled with our state of the art remote deposit services, provide additional opportunities for loan and deposit growth. Additionally, we are just starting to tap the prospects of our branch located on Old Country Road in Mineola. The recent capital offering places us in a position of greater strength to execute our ideas for improving our customer experience. "
Earnings for the Fourth Quarter Ended December 31, 2014
Net interest income increased $566 thousand, or 14.9%, over the fourth quarter of 2013 as average interest earning assets increased to $476.7 million as of December 31, 2014, an increase of $27.2 million or 6.1%. Net interest margin was 3.64% for the three months ended December 31, 2014, an increase of 28 basis points from 3.36% for the three months ended December 31, 2013. The yield on interest earning assets for the fourth quarter of 2014 averaged 3.96%, as compared to 3.76% for the fourth quarter of 2013. The increase in yield on earning assets was primarily attributable to a deliberate shift in asset mix from investment securities to loans. The cost of interest bearing liabilities averaged 0.60% for the fourth quarter of 2014, a decrease from 0.74% as compared to the fourth quarter of 2013. Based upon growth of the loan portfolio, a provision of $48 thousand was recorded for the fourth quarter of 2014. No provision for loan losses was recorded in the fourth quarter 2013.
The Company recognized a net gain of $23 thousand during the fourth quarter of 2014 on the sale of investment securities, as compared to a loss of $152 thousand during the fourth quarter of 2013. Excluding net gains and losses on sales of investment securities, quarterly noninterest income decreased $65 thousand, or 24.2%, from the fourth quarter of 2013. Professional practice revenues represented $63 thousand of that decrease. Other expenses increased $354 thousand, or 10.7%. The change was primarily attributable to increased salaries and other benefits expense largely associated with costs of additional personnel as well as increases in advertising and business development costs. Total other expenses increased approximately $76 thousand, or 20.9%, as compared to the same quarter in 2014 largely due to expenses relative to attracting, recognizing and retaining staff.
Income tax expense increased from $256 thousand for the fourth quarter of 2013 to $772 thousand for the fourth quarter of 2014, primarily as a result of a change in state income tax laws that resulted in the elimination of a $386 thousand deferred tax asset. The Company expects to realize a benefit in future periods as a result of the tax law change. Excluding the impact of deferred tax asset write down, income tax expense for the quarter increased $144 thousand, or 39.9%, as a result in the growth of pre-tax earnings. Earnings before income taxes increased $274 thousand, or 44.4%, to $891 thousand, as compared to $617 thousand for the fourth quarter of 2013. As a result of the impact of the tax law change described above, net income for the fourth quarter of 2014 decreased $242 thousand to $119 thousand, as compared to $316 thousand for the fourth quarter of 2013.
Earnings for the Year Ended December 31, 2014
Net income for the year ended December 31, 2014 was $1.8 million or $0.41 per diluted share, compared to $1.3 million or $0.29 per share for the year ended December 31, 2013, an increase of $558 thousand. This increase in net income was negatively impacted by the write off of approximately $386 thousand for the book value of the state deferred tax assets as discussed above. Excluding the impact of this write down, the Company's net income increased $944 thousand or 73.4%.
Net interest income increased $2.4 million, or 16.8%, over the year ended December 31, 2013 as average interest earning assets increased to $475.5 million as of December 31, 2014, an increase of $36.9 million or 8.4%. Net interest margin was 3.55% for the year, an increase from 3.29% for the year ended December 31, 2013. The yield on interest earning assets for the year averaged 3.90%, as compared to an average of 3.70% for the year ended December 31, 2013. The increase in yield on earning assets was primarily attributable to a deliberate shift in asset mix from investment securities to loans. The cost of interest bearing liabilities averaged 0.66% for the year ended 2014, a decrease from an average of 0.74% for year ended December 31, 2013. Based upon growth of the loan portfolio, a provision for loan losses of $243 thousand was recorded for the year ended 2014. No provision for loan losses was recorded for the year ended December 31, 2013.
For the year ended December 31, 2014 the Company recognized net gains on sales of investment securities of $27 thousand as compared to net losses of $149 recognized for the year ended December 31, 2013. Excluding the impact of net gains and losses on sales of investment securities, total other income decreased $41 thousand, or 3.9%, largely resulting from a decline in professional practice revenue. Total other expenses increased approximately $771 thousand, or 5.9%, as compared to the prior year. The increase was primarily attributable to an increase in salaries and employee benefits expense of $399 thousand, or 6.3%, over the year ended December 31, 2013, which was largely due to base salary increases, new employees hired to support growth and branch expansion, and an increase in employee benefit costs. Software services increased $188 thousand, or 13.2%, largely from the introduction of the bank's call center as well as other software enhancements. Net occupancy and equipment costs increased $174 thousand, or 8.0%, primarily resulting from the expenses associated with the bank's new Mineola branch. The combined effective tax rate for 2014, excluding the impact of the write off of the state deferred tax asset, decreased to 41.8% from 43.6% for the year ended December 31, 2013.
Balance Sheet and Asset Quality
Total assets were $508.1 million at December 31, 2014, an increase of $41.0 million, or 8.8%, from December 31, 2013, which was primarily attributable to an increase in outstanding loan balances of $85.2 million, or 29.3%, partially offset by a decrease of $52.0 million, or 34.1%, in securities available for sale. Management remains confident in the credit quality of the Company's assets. The Company's ratio of non-performing loans to total loans decreased 50 basis points from December 31, 2013 to December 31, 2014. The allowance for loan losses totaled 1.17% of total loans as of December 31, 2014.
Total deposits were $395.1 million at December 31, 2014, an increase of $4.2 million over December 31, 2013. Demand deposits increased $11.9 million or 6.7% since the prior fiscal year end. Savings, NOW and money market deposits increased $2.8 million, or 2.0%, from December 31, 2013 to $142.3 million as of December 31, 2014. Certificates of deposit of $100,000 were relatively flat as compared to the prior year end. Other time deposits decreased by $10.6 million, or 35.6%, over December 31, 2013. Short-term borrowings, which primarily represent Federal Home Loan Bank borrowings, increased $11.6 million, or 33.6%, from December 31, 2013.
Stockholders' equity increased to $62.4 million at December 31, 2014 from $38.5 million at December 31, 2013, primarily as a result of the Company's private placement, which was completed on December 19, 2014 and generated net proceeds, after offering expenses, of approximately $18.7 million. Operating earnings, as well as the reduction in the amount of the ending available for sale securities portfolio and the related reduced net unrealized loss on these investments net of taxes, also contributed to the increase in stockholders' equity. At December 31, 2014, the Company's banking subsidiary was "well capitalized" as defined by OCC regulation, with leverage, Tier 1 risk-based and total risk-based capital ratios of 12.65%, 16.02% and 17.17%, respectively.
Chairman and Chief Executive Officer Manditch remarked further, "We believe that the success of our private placement in the fourth quarter demonstrates investor confidence in our ability to enhance shareholder value. The increased equity base allows us to support anticipated asset and loan growth in forthcoming years, which we believe will drive earnings growth."
| Consolidated Statements of Condition (unaudited) | |||||||||
| (dollars in thousands) | |||||||||
| December 31, | December 31, | ||||||||
| 2014 | 2013 | ||||||||
| ASSETS | |||||||||
| Total cash and due from banks | $ | 17,985 | $ | 5,966 | |||||
| Securities available for sale, at fair value | 100,617 | 152,639 | |||||||
| Securities held to maturity | - | 300 | |||||||
| Securities, restricted | 3,962 | 3,450 | |||||||
| Loans, net | 375,199 | 290,227 | |||||||
| Premises and equipment, net | 5,989 | 6,743 | |||||||
| Other assets and accrued interest receivable | 4,317 | 7,743 | |||||||
| Total Assets | $ | 508,069 | $ | 467,068 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Demand Deposits | $ | 189,204 | $ | 177,252 | |||||
| Savings, N.O.W. and money market deposits | 142,286 | 139,524 | |||||||
| Certificates of deposit of $100,000 or more and other time deposits | 63,635 | 74,155 | |||||||
| Total Deposits | $ | 395,125 | $ | 390,931 | |||||
| Short-term borrowings | 46,105 | 34,500 | |||||||
| Other liabilities and accrued expenses | 4,418 | 3,177 | |||||||
| Total Liabilities | 445,648 | 428,608 | |||||||
| Total Stockholders' Equity | 62,421 | 38,460 | |||||||
| Total Liabilities and Stockholders' Equity | $ | 508,069 | $ | 467,068 | |||||
| Selected Financial Data (unaudited) | |||||||||
| Allowance for Loan Losses to Total Loans | 1.17 | % | 1.44 | % | |||||
| Non-performing Loans to Total Loans | 0.31 | % | 0.81 | % | |||||
| Non-performing Assets to Total Assets | 0.23 | % | 0.51 | % | |||||
| Capital Ratios (unaudited)* | |||||||||
| Tier 1 Leverage Ratio | 12.65 | % | 9.10 | % | |||||
| Tier 1 Risk-Based Capital Ratio | 16.02 | % | 12.78 | % | |||||
| Total Risk-Based Capital Ratio | 17.17 | % | 14.03 | % | |||||
| Book Value per Share | $ | 9.07 | $ | 8.78 | |||||
| *Regulatory capital ratios presented on bank-only basis | |||||||||
| Consolidated Statements of Operations (unaudited) | ||||||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||
| For the three months ended | For the year ended | |||||||||||||||||||
| December 31, 2014 | September 30, 2014 | December 31, 2013 | December 31, 2014 | December 31, 2013 | ||||||||||||||||
| Interest income | $ | 4,752 | $ | 4,675 | $ | 4,259 | $ | 18,540 | $ | 16,216 | ||||||||||
| Interest expense | 377 | 381 | 450 | 1,677 | 1,779 | |||||||||||||||
| Net interest income | $ | 4,375 | $ | 4,294 | $ | 3,809 | $ | 16,863 | $ | 14,437 | ||||||||||
| Provision for loan losses | 48 | 75 | - | 243 | - | |||||||||||||||
| Net interest income after provision for loan losses | 4,327 | 4,219 | 3,809 | 16,620 | 14,437 | |||||||||||||||
| Net securities gains (losses) | 23 | - | (152 | ) | 27 | (149 | ) | |||||||||||||
| Other income | 204 | 256 | 269 | 1,006 | 1,047 | |||||||||||||||
| Other expense | 3,663 | 3,361 | 3,309 | 13,825 | 13,054 | |||||||||||||||
| Income before income taxes | 891 | 1,114 | 617 | 3,828 | 2,281 | |||||||||||||||
| Income tax expense | 772 | 452 | 256 | 1,984 | 995 | |||||||||||||||
| Net income | $ | 119 | $ | 662 | $ | 361 | $ | 1,844 | $ | 1,286 | ||||||||||
| Basic earnings per share | $ | 0.03 | $ | 0.15 | $ | 0.08 | $ | 0.42 | $ | 0.29 | ||||||||||
| Diluted earnings per share | $ | 0.02 | $ | 0.15 | $ | 0.08 | $ | 0.41 | $ | 0.29 | ||||||||||
| Selected Financial Data (unaudited) | ||||||||||||||||||||
| Return on Average Assets | 0.10 | % | 0.53 | % | 0.31 | % | 0.38 | % | 0.30 | % | ||||||||||
| Return on Average Equity | 1.08 | % | 6.20 | % | 3.76 | % | 4.43 | % | 9.10 | % | ||||||||||
| Net Interest Margin | 3.64 | % | 3.50 | % | 3.36 | % | 3.55 | % | 3.29 | % | ||||||||||
| Efficiency Ratio | 80.02 | % | 73.86 | % | 81.13 | % | 77.37 | % | 84.31 | % | ||||||||||
About Empire Bancorp, Inc.
Empire Bancorp, Inc. is a bank holding company for Empire National Bank, 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 four banking offices located in Islandia, Shirley, Port Jefferson Station and Mineola, New York. Our bankers take pride in understanding the needs of each customer so the bank can 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 press release 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 the control of the Company. The forward-looking statements included in this press release are made only as of the date of this press release. The Company has no intention, and does not assume any obligation, to update these forward-looking statements.
Contact Information:
Contact:
William Franz
VP, Director of Marketing & Investor Relations
(631) 348-4444