ISLANDIA, NY--(Marketwired - Oct 26, 2015) - Empire Bancorp, Inc. (
- Net income of $1.9 million for the nine months ended September 30, 2015, an increase of $152 thousand, or 8.8%, from the nine months ended September 30, 2014;
- Total loans of $427.0 million, a $75.7 million, or 21.5%, increase from September 30, 2014;
- Total assets of $576.0 million, a $61.2 million, or 11.9%, increase from September 30, 2014;
- Total deposits of $506.8 million, a $95.3 million, or 23.2%, increase from September 30, 2014;
- Solid asset quality with an allowance for loan and lease losses of 1.18% of total loans and a ratio of non-performing loans to total loans of 0.14%;
- "Well capitalized" regulatory capital levels, as of September 30, 2015:
- Tier 1 leverage capital ratio of 11.45%
- Common equity tier 1 risk based capital ratio of 15.41%
- Tier 1 risk-based capital ratio of 15.41%
- Total risk-based capital ratio of 16.61%
Douglas C. Manditch, Chairman and Chief Executive Officer stated, "This quarter yielded vigorous asset growth with total assets at $576 million as of September 30, 2015. Growth in total loans of 21.5% over the past year consisted primarily of multifamily and other commercial real estate loans. Our underwriting of these credits remains conservative, taking into consideration the fundamentals driving real estate valuation in our primary markets. Manhattan and Brooklyn continue to experience record climbing real estate values coupled with falling vacancy rates. Demand for properties remains high. Our net income growth during 2015 has been largely driven by our asset growth, as well as the expansion of our net interest margin. Our net interest margin of 3.90% for the first nine months of 2015, as compared to 3.51% for the first nine months of 2014, reflects the continuing influx of revenue from loan prepayment penalties which exceed $1.4 million year to date. As these prepayment fees may decrease with changes in market conditions, asset growth must outpace the downward pressure on the net interest margin. We continue to diversify our deposit base and sources of liquidity in support of our asset growth. This past quarter we began actively soliciting municipal deposits, which contributed to our recognizing $80.3 million growth of total deposits since June 30, 2015."
Earnings for the Three Months Ended September 30, 2015
Net income was $623 thousand, or $0.09 per diluted share, for the third quarter of 2015, compared to $662 thousand, or $0.15 per share, for the third quarter of 2014, representing a decrease of $39 thousand, or 5.9%.
Net interest income increased $823 thousand, or 19.2%, over the same period last year as average interest earning assets increased to $541.4 million as of September 30, 2015, an increase of $54.1 million or 11.1%. Net interest margin was 3.75% for the three months ended September 30, 2015, an increase from 3.50% for the three months ended September 30, 2014. The yield on interest earning assets for the third quarter of 2015 averaged 4.06%, as compared to 3.81% for the third quarter of 2014. The increase in yield on earning assets was primarily attributable to prepayment fees on loan payoffs as well as an increase of $80.8 million in quarterly average loan balances year over year. The cost of interest bearing liabilities averaged 0.57% for the third quarter of 2015, a decrease from 0.59% for the third quarter of 2014 and a decrease from 0.62% for the second quarter of 2015. Based upon growth and composition of the loan portfolio, a provision of $260 thousand was recorded for the third quarter of 2015, up from $75 thousand for the third quarter of 2014.
Total other income increased $30 thousand, or 11.7%, largely from increased collection of loan fees for loan payoffs, partially offset by a decline in customer related fees. Total other expenses increased approximately $808 thousand, or 24.0%, as compared to the same period in 2014. The increase was primarily attributable to an increase in salaries and employee benefits expense of $616 thousand, or 40.5% over the third quarter of 2014, due to base salary increases and the hiring of new employees to support growth and strategic plans. Net occupancy and equipment costs increased $85.0 thousand, or 13.9%, primarily resulting from the increased foot print of the bank's main office lease and the opening of a loan and deposit production office in Manhattan. Software services decreased $48 thousand, or 11.7%, largely from a reduction in negotiated contract services. Increase in other expenses also reflected the New York State and New York City capital based charges introduced in 2015. The elimination of the state income tax reduced the Company's combined effective income tax rate from 40.6% to 36.0%.
Earnings for the Nine Months Ended September 30, 2015
Net income was $1.9 million, or $0.27 diluted per share, for the nine months of 2015, compared to $1.7 million, or $0.39 per share, for the nine months of 2014, an increase of $152 thousand, or 8.8%.
Net interest income increased $2.3 million, or 18.3%, over the same period in 2014 as average interest earning assets increased to $505.7 million as of September 30, 2015, an increase of $30.6 million or 6.4%. Net interest margin was 3.90% for the nine months ended September 30, 2015, an increase from 3.51% for the nine months ended September 30, 2014. The yield on interest earning assets for the nine months as of September 30, 2015 averaged 4.22%, as compared to an average of 3.88% for the nine months ended September 30, 2014. The increase in yield on earning assets was primarily attributable to a deliberate shift in asset mix from investment securities to loans, which was partially offset by a lower average yield on loans. The impact of the prepayment fees on loan payoffs, which increased by $1.2 million over the first nine months of 2014, offset the lower loan yields. The cost of interest bearing liabilities averaged 0.60% for the nine months of 2015, a decrease from an average of 0.67% for nine months ended September 30, 2014. Based upon the growth of the loan portfolio, a provision of $617 thousand was recorded for the first nine months of 2015 as compared to $195 thousand for first nine months of 2014.
Total other income increased $3 thousand, or 4.1%, largely from increased collection of loan fees associated with loan payoffs, offset by a decline in customer related fees. Total other expenses increased approximately $1.8 million, or 18.0%, as compared to the same period in 2014. The increase was primarily attributable to an increase in salaries and employee benefits expense of $1.1 million, or 22.3%, over the first nine months of 2014, which was largely due to base salary increases and new employees hired to support growth and strategic plans. Net occupancy and equipment costs increased $175.0 thousand, or 10.0%, primarily resulting from the expenses associated with the expansion of office space in the bank's main office and the opening of a loan and deposit production office in Manhattan. Professional fees increased by $76 thousand, or 18.5%, primarily as a result of additional services associated with the Company's strategic growth. Increases in other operating expenses reflected both New York State and New York City capital based charges. The combined effective tax rate for the first nine months of 2015 decreased to 35.9% from 41.3% for the first nine months of 2014.
Balance Sheet and Asset Quality
Total assets were $576.0 million at September 30, 2015, an increase of $61.2 million over September 30, 2014, or 11.9%, which was primarily attributable to an increase in outstanding total loan balances of $75.7 million, or 21.5%, funded in part by a decrease of $50.8 million, or 35.9%, in securities available for sale.
Linked-quarter growth in total assets was approximately $59.0 million, or 11.4%, while growth in total loans was approximately $25.4 million, or 6.3%. The ratio of non-performing loans to total loans improved to 0.14% as of September 30, 2015, as compared to 0.16% as of June 30, 2015 and 0.23% as of September 30, 2014. The allowance for loan losses totaled 1.18% of total loans as of September 30, 2015.
Total deposits were $506.8 million at September 30, 2015, an increase of $95.3 million or 23.2% over September 30, 2014, and an increase of $80.3 million or 18.8% over June 30, 2015. Demand deposits increased $4.8 million, or 2.5%, over September 30, 2014. On a linked quarter basis, demand deposits increased $18.6 million, or 10.3%.
Savings, NOW and money market deposits increased $109.0 million, or 70.2%, from September 30, 2014 to a total of $264.3 million at quarter end. Linked-quarter growth in these deposits was approximately $73.8 million, or 38.7%, from $190.5 million at June 30, 2015. The growth in these deposits was driven in large part by new municipal banking relationships.
Certificates of deposit of $100,000 or more and other time deposits, which represent the Company's highest cost deposits, decreased by $18.5 million, or 29.8%, over September 30, 2014. Certificates of deposit and other time deposits decreased $12.0 million, or 21.7% from June 30, 2015.
At September 30, 2015, the Company had no outstanding short-term borrowings, as compared to outstanding balances of $56.7 million and $22.6 million at September 30, 2014 and June 30, 2015, respectively, which primarily represented Federal Home Loan Bank borrowings.
Stockholders' equity increased to $64.5 million at September 30, 2015 from $42.5 million at September 30, 2014, primarily as a result of net proceeds of $18.7 million from the Company's private placement completed in the fourth quarter of 2014. Operating earnings as well as changes in the net unrealized gain and loss on available for sale securities, net of taxes also contributed to the increase in stockholders equity. During the third quarter, the Company also converted all of its issued and outstanding Series A preferred stock for an equivalent number of shares of the Company's non-voting common stock. At September 30, 2015, the bank was "well capitalized" as defined by OCC regulation, with Tier 1 leverage, Common equity tier 1 risk-based, Tier 1 risk based and total risk-based capital ratios of 11.45%, 15.41%, 15.41% and 16.61% respectively.
Opportunities and Challenges
"Reinforcing our business development team to foster new business relationships on Long Island as well as in New York City sparked an uptick in non-interest expenses. During this past quarter, we expanded our office space in Islandia to house additional banking professionals. As we approach 2016, we are charting the best path to deploy these investments to create shareholder value," commented Thomas M. Buonaiuto, President and Chief Operating Officer.
| Balance Sheet (unaudited) | ||||||||||||||||
| (dollars in thousands) | ||||||||||||||||
| September 30, | June 30, | December 31, | September 30, | |||||||||||||
| 2015 | 2015 | 2014 | 2014 | |||||||||||||
| ASSETS | ||||||||||||||||
| Total cash and cash equivalents | $ | 49,616 | $ | 11,596 | $ | 17,985 | $ | 10,247 | ||||||||
| Securities available for sale, at fair value | 90,518 | 93,906 | 100,617 | 141,309 | ||||||||||||
| Securities, restricted | 2,522 | 3,543 | 3,962 | 4,427 | ||||||||||||
| Loans, net | 422,009 | 396,811 | 375,199 | 346,931 | ||||||||||||
| Premises and equipment, net | 6,758 | 6,290 | 5,989 | 6,231 | ||||||||||||
| Other assets and accrued interest receivable | 4,563 | 4,812 | 4,317 | 5,612 | ||||||||||||
| Total Assets | $ | 575,986 | $ | 516,958 | $ | 508,069 | $ | 514,757 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||
| Demand Deposits | $ | 198,975 | $ | 180,398 | $ | 189,204 | $ | 194,142 | ||||||||
| Savings, N.O.W. and money market deposits | 264,317 | 190,492 | 142,286 | 155,328 | ||||||||||||
| Certificates of deposit of $100,000 or more and other time deposits | 43,536 | 55,625 | 63,635 | 62,012 | ||||||||||||
| Total Deposits | $ | 506,828 | $ | 426,515 | $ | 395,125 | $ | 411,482 | ||||||||
| Short-term borrowings | - | 22,593 | 46,105 | 56,664 | ||||||||||||
| Other liabilities and accrued expenses | 4,630 | 4,641 | 4,418 | 4,128 | ||||||||||||
| Total Liabilities | $ | 511,458 | $ | 453,749 | $ | 445,648 | $ | 472,274 | ||||||||
| Total Stockholders' Equity | 64,528 | 63,209 | 62,421 | 42,483 | ||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 575,986 | $ | 516,958 | $ | 508,069 | $ | 514,757 | ||||||||
| Selected Financial Data (unaudited) | ||||||||||||||||
| Allowance for Loan Losses to Total Loans | 1.18 | % | 1.19 | % | 1.17 | % | 1.26 | % | ||||||||
| Non-performing Loans to Total Loans | 0.14 | % | 0.16 | % | 0.31 | % | 0.23 | % | ||||||||
| Non-performing Assets to Total Assets | 0.11 | % | 0.13 | % | 0.23 | % | 0.16 | % | ||||||||
| Capital Ratios (unaudited)(1)(2) | ||||||||||||||||
| Tier 1 Leverage Ratio | 11.45 | % | 12.63 | % | 12.65 | % | 8.72 | % | ||||||||
| Common Equity Tier 1 Risk-Based Capital Ratio | 15.41 | % | 15.97 | % | N/A | N/A | ||||||||||
| Tier 1 Risk-Based Capital Ratio | 15.41 | % | 15.97 | % | 16.02 | % | 11.66 | % | ||||||||
| Total Risk-Based Capital Ratio | 16.51 | % | 17.17 | % | 17.17 | % | 12.84 | % | ||||||||
| Book Value per Share, as converted (3) | $ | 9.38 | $ | 9.19 | $ | 9.07 | $ | 9.70 | ||||||||
| (1) Regulatory capital ratios presented on bank-only basis. | ||||||||||||||||
| (2) Capital ratios at September 30 and June 30, 2015 are calculated under Basel III guidelines. | ||||||||||||||||
| (3) Book value, as converted, treats the Series A preferred stock as having been converted into common stock because it has been structured as a nonvoting common stock equivalent. | ||||||||||||||||
| Statement of Operations (unaudited) | |||||||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||
| For the three months ended | For the nine months ended | ||||||||||||||||||
| September 30, 2015 | June 30, 2015 |
September 30, 2014 | September 30, 2015 | September 30, 2014 | |||||||||||||||
| Interest income | $ | 5,542 | $ | 5,394 | $ | 4,675 | $ | 15,952 | $ | 13,788 | |||||||||
| Interest expense | 425 | 382 | 381 | 1,185 | 1,301 | ||||||||||||||
| Net interest income | $ | 5,117 | $ | 5,012 | $ | 4,294 | $ | 14,767 | $ | 12,487 | |||||||||
| Provision for loan losses | 260 | 230 | 75 | 617 | 195 | ||||||||||||||
| Net interest income after provision for loan losses | 4,857 | 4,782 | 4,219 | 14,150 | 12,292 | ||||||||||||||
| Net securities (losses) gains | - | - | - | (71 | ) | 4 | |||||||||||||
| Other income | 286 | 279 | 256 | 834 | 801 | ||||||||||||||
| Other expense | 4,169 | 4,022 | 3,361 | 11,986 | 10,159 | ||||||||||||||
| Income before income taxes | 974 | 1,039 | 1,114 | 2,927 | 2,938 | ||||||||||||||
| Income tax | 351 | 372 | 452 | 1,050 | 1,213 | ||||||||||||||
| Net income | $ | 623 | $ | 667 | $ | 662 | $ | 1,877 | $ | 1,725 | |||||||||
| Basic earnings per share | $ | 0.10 | $ | 0.12 | $ | 0.15 | $ | 0.32 | $ | 0.39 | |||||||||
| Diluted earnings per share | $ | 0.09 | $ | 0.10 | $ | 0.15 | $ | 0.27 | $ | 0.39 | |||||||||
| Weighted average common shares outstanding (1) | 6,063,054 | 5,723,720 | 4,379,970 | 5,838,074 | 4,379,970 | ||||||||||||||
| Weighted average common and common equivalent shares outstanding (1) | 6,882,015 | 6,879,970 | 4,379,970 | 6,879,970 | 4,379,970 | ||||||||||||||
| Selected Financial Data (unaudited) | |||||||||||||||||||
| Return on Average Assets | 0.44 | % | 0.53 | % | 0.53 | % | 0.48 | % | 0.47 | % | |||||||||
| Return on Average Equity | 3.88 | % | 4.21 | % | 6.20 | % | 3.96 | % | 5.63 | % | |||||||||
| Net Interest Margin | 3.75 | % | 4.11 | % | 3.50 | % | 3.90 | % | 3.51 | % | |||||||||
| Efficiency Ratio | 77.16 | % | 76.02 | % | 73.86 | % | 76.84 | % | 76.46 | % | |||||||||
| (1) During the third quarter, the Company converted all of its issued and outstanding Series A preferred stock for an equivalent number of shares of the Company's non-voting common stock. | |||||||||||||||||||
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, and a loan and deposit production office located in Manhattan, NY. 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