SOURCE: Empire Bancorp, Inc.

Empire Bancorp, Inc.

October 21, 2014 15:59 ET

Empire Bancorp Announces Third Quarter Operating Results

ISLANDIA, NY--(Marketwired - Oct 21, 2014) - Empire Bancorp, Inc. (OTCQB: EMPK), today announced its operating results for the third quarter of 2014. Highlights for the quarter ended September 30, 2014 include:

  • Net income of $1.7 million, an $800 thousand, or 86.5%, increase from the nine months ended September 30, 2013 and a $48 thousand, or 7.8%, increase from the three months ended June 30, 2014;
  • Total loans of $351.3 million, a $79.2 million, or 29.1%, increase from September 30, 2013;
  • Total assets of $514.8 million, a $44.7 million, or 9.5%, increase from September 30, 2013;
  • Demand deposits of $194.1 million, a $28.6 million, or 17.2%, increase from September 30, 2013;
  • Solid asset quality with an allowance for loan and lease losses of 1.26% of total loans and a ratio of non-performing loans to total loans of 0.23%;
  • Book value per share of $9.70 as of September 30, 2014;
  • "Well capitalized" regulatory capital levels, as of September 30, 2014:
    • Tier 1 leverage capital ratio of 8.72 %
    • Tier 1 risk-based capital ratio of 11.66%
    • Total risk-based capital ratio of 12.84%

Douglas C. Manditch, Chairman and Chief Executive Officer, stated, "During the quarter, we achieved the significant milestone of $500 million in assets. The additional scale allows us to better leverage our existing infrastructure to improve efficiency by spreading our fixed costs, including occupancy and compliance, over a larger base of assets. At the same time, we remain vigilant on maintaining solid asset quality. As of quarter-end, our non‐performing assets comprised 0.16% of total assets, a percentage significantly lower than many of our peers. Buildup of assets opens up additional ways for us to compete successfully against the big banks, nonbanks and credit unions widespread in our markets. 

Net income for the third quarter of 2014 totaled $662 thousand rising $300 thousand or 82.9% over the prior year's third quarter income of $362 thousand. Our net income growth for the third quarter was driven primarily by the continued growth in our assets, coupled by the continued shift in asset composition from investment securities to loans. With respect to our loan portfolio, we have held firm to our pricing and credit standards, which we believe that certain of our competitors are sacrificing to secure asset growth."

Earnings for the Three Months Ended September 30, 2014

Net income was $662 thousand, or $0.15 per share, for the third quarter of 2014, compared to $362 thousand, or $0.08 per share, for the third quarter of 2013, representing an increase of $300 thousand, or $0.07 per share. 

Net interest income increased $625 thousand, or 17.0%, over the same period last year as average interest earning assets increased to $487.3 million as of September 30, 2014, an increase of $35.3 million or 7.8%. Net interest margin was 3.50% for the three months ended September 30, 2014, an increase from 3.22% for the three months ended September 30, 2013. The yield on interest earning assets for the third quarter of 2014 averaged 3.81%, as compared to 3.62% for the third 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 0.59% for the third quarter of 2014, a decrease from 0.70% as compared to the third quarter of 2013 and a decrease from 0.69% over the second quarter of 2014. Based upon growth of the loan portfolio, a provision of $75 thousand was recorded for the third quarter of 2014. No provision for loan losses was recorded in the third quarter 2013.

Total other income increased $7 thousand, or 2.8%, largely from increased collection of customer-related fees partially offset by a decline in professional practice revenue. Total other expenses increased approximately $87 thousand, or 2.7%, as compared to the same period in 2013. The change was primarily attributable to increased net occupancy and equipment costs of $91.0 thousand, or 17.5%, primarily resulting from the expenses associated with the bank's new Mineola branch. Software services increased $60 thousand, or 17.1%, largely from the introduction of various customer service and sales enhancements. FDIC insurance increased by $37.0 thousand or 123.3% as a result of increased average assets in the current year. Professional fees increased by $27.0 thousand, or 21.6%. Largely offsetting these increases is a decrease in salaries and employee benefits expense of $87 thousand, or 5.4% as a result of temporarily unfilled positions during the quarter. The combined effective tax rate for the third quarter of 2014 decreased to 40.6% from 43.8% for the third quarter of 2013.

Earnings for the Nine Months Ended September 30, 2014

Net income was $1.7 million, or $0.39 per share, for the nine months of 2014, compared to $925 thousand, or $0.21 per share, for the nine months of 2013, representing an increase of $800 thousand or 86.5%. 

Net interest income increased $1.9 million, or 17.5%, over the same period in 2013 as average interest earning assets increased to $475.1 million as of September 30, 2014, an increase of $40.2 million or 9.2%. Net interest margin was 3.51% for the nine months ended September 30, 2014, an increase from 3.27% for the nine months ended September 30, 2013. The yield on interest earning assets for the nine months as of September 30, 2014 averaged 3.88%, as compared to an average of 3.68% for the nine months ended September 30, 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 0.67% for the nine months of 2014, a decrease from an average of 0.74% for nine months ended September 30, 2013. Based upon growth of the loan portfolio, a provision of $195 thousand was recorded for the nine months of 2014. No provision for loan losses was recorded in the first nine months of 2013.

Total other income increased $24 thousand, or 3.1%, largely from increased collection of customer-related fees, partially offset by a decline in professional practice revenue. Total other expenses increased approximately $413 thousand, or 4.2%, as compared to the same period in 2013. The increase was primarily attributable to an increase in salaries and employee benefits expense of $205.0 thousand, or 4.3%, over the first nine months of 2014, which was largely due to base salary increases, new employees hired to support growth and branch expansion, and an increase in employee benefit costs. Net occupancy and equipment costs increased $169.0 thousand, or 10.7%, primarily resulting from the expenses associated with the bank's new Mineola branch. Professional fees decreased by $46 thousand, or 10.1%, primarily as a result of the elimination of expenses associated with the formation of the holding company during 2013. Software services increased $162.0 thousand, or 15.9%, largely from the introduction of the bank's call center as well as other software enhancements. The combined effective tax rate for the first nine months of 2014 decreased to 41.3% from 44.4% for the first nine months of 2013.

Balance Sheet and Asset Quality

Total assets were $514.8 million at September 30, 2014, an increase of $44.7 million over September 30, 2013, or 9.5%, which was primarily attributable to an increase in outstanding loan balances of $79.1 million, or 29.5%, partially offset by a decrease of $33.9 million, or 19.3%, in securities available for sale. The ratio of non-performing loans to total loans improved to 0.23% as of September 30, 2014, as compared to 0.90% as of September 30, 2013 and 0.27% as of June 30, 2014. The allowance for loan losses totaled 1.26% of total loans as of September 30, 2014. 

Total deposits were $411.5 million at September 30, 2014, an increase of $39.2 million over September 30, 2013, or 10.5%. Demand deposits increased $28.5 million, or 17.2%, over September 30, 2013. Savings, NOW and money market deposits increased $16.0 million, or 11.5%, from September 30, 2013 to a total of $155.3 million at quarter end. Certificates of deposit of $100,000 or more and other time deposits increased by $2.5 million, or 6.3%, over September 30, 2013. Short-term borrowings, which primarily represent Federal Home Loan Bank borrowings, increased $1.4 million, or 2.5%, from September 30, 2013, and $33.5 million, or 144.4%, from June 30, 2014.

Stockholders' equity increased to $42.5 million at September 30, 2014 from $39.2 million at September 30, 2013, primarily as a result of operating earnings as well as changes in the net unrealized loss on available for sale securities, net of taxes. At September 30, 2014, the bank was "well capitalized" as defined by OCC regulation, with leverage, Tier 1 risk-based and total risk-based capital ratios of 8.72%, 11.66% and 12.84%, respectively.

Opportunities and Challenges

"Our organizational commitment centers on responsiveness and flexibility. We have built a clean balance sheet through a culture of risk management and operational excellence. Our product offerings keep pace with our larger competitors, providing technology often tailored to meet specific customer needs. Our focus moving forward is on revenue generation, profit planning and measured growth. Our strategy is to maintain a simple, stable business model that leverages our strengths and supports a solid stream of earnings," commented Thomas M. Buonaiuto, President and Chief Operating Officer. 

                         
Balance Sheet (unaudited)            
(dollars in thousands)            
                         
    September 30,     June 30,     December 31,     September 30,  
    2014     2014     2013     2013  
ASSETS                                
Total cash and cash equivalents   $ 10,247     $ 8,347     $ 5,966     $ 8,454  
Securities available for sale, at fair value     141,309       146,388       152,639       175,224  
Securities held to maturity     -       -       300       300  
Securities, restricted     4,427       3,048       3,450       4,340  
Loans, net     346,931       320,811       290,227       267,816  
Premises and equipment, net     6,231       6,479       6,743       6,688  
Other assets and accrued interest receivable     5,612       5,662       7,743       7,275  
  Total Assets   $ 514,757     $ 490,735     $ 467,068     $ 470,097  
                                 
LIABILITIES AND STOCKHOLDERS' EQUITY                                
Demand Deposits   $ 194,142     $ 202,087     $ 177,252     $ 165,566  
Savings, N.O.W. and money market deposits     155,328       154,110       139,524       139,301  
Certificates of deposit of $100,000 or more and other time deposits    
62,012
     
64,980
     
74,155
     
67,435
 
  Total Deposits   $ 411,482     $ 421,177     $ 390,931     $ 372,302  
Short-term borrowings     56,664       23,163       34,500       55,320  
Other liabilities and accrued expenses     4,128       4,229       3,177       3,251  
Total Liabilities   $ 472,274     $ 448,569     $ 428,608     $ 430,873  
Total Stockholders' Equity     42,483       42,166       38,460       39,224  
Total Liabilities and Stockholders' Equity   $ 514,757     $ 490,735     $ 467,068     $ 470,097  
                                 
Selected Financial Data (unaudited)                                
Allowance for Loan Losses to Total Loans     1.26 %     1.33 %     1.44 %     1.56 %
Non-performing Loans to Total Loans     0.23 %     0.27 %     0.81 %     0.90 %
Non-performing Assets to Total Assets     0.16 %     0.18 %     0.51 %     0.52 %
                                 
Capital Ratios (unaudited)                                
Tier 1 Leverage Ratio     8.72 %     8.72 %     9.01 %     8.85 %
Tier 1 Risk-Based Capital Ratio     11.66 %     12.37 %     12.78 %     13.54 %
Total Risk-Based Capital Ratio     12.84 %     13.61 %     14.03 %     14.79 %
                                 
Book Value per Share   $ 9.70     $ 9.63     $ 8.78     $ 8.96  
                                 
                       
Statement of Operations (unaudited)       
(dollars in thousands, except per share data)       
                       
    For the three months ended   For the nine months ended  
    September 30,   June 30,   September 30,   September 30,   September 30,  
    2014   2014   2013   2014   2013  
Interest income   $ 4,675   $ 4,739   $ 4,119   $ 13,788   $ 11,958  
Interest expense     381     453     450     1,301     1,329  
Net interest income   $ 4,294   $ 4,286   $ 3,669   $ 12,487   $ 10,629  
Provision for loan losses     75     120     -     195     -  
Net interest income after provision for loan losses    
4,219
   
4,166
   
3,669
   
12,292
   
10,629
 
Net securities (losses) gains     -     4     -     4     4  
Other income     256     267     249     801     777  
Other expense     3,361     3,390     3,274     10,159     9,746  
Income before income taxes     1,114     1,047     644     2,938     1,664  
Income tax expense     452     433     282     1,213     739  
Net income   $ 662   $ 614   $ 362   $ 1,725   $ 925  
                                 
Basic earnings per share   $ 0.15   $ 0.14   $ 0.08   $ 0.39   $ 0.21  
Diluted earnings per share   $ 0.15   $ 0.14   $ 0.08   $ 0.39   $ 0.21  
                                 
Selected Financial Data (unaudited)                                
Return on Average Assets     0.53 %   0.50 %   0.31 %   0.47 %   0.28 %
Return on Average Equity     6.20 %   5.99 %   3.80 %   5.63 %   3.05 %
Net Interest Margin     3.50 %   3.59 %   3.22 %   3.51 %   3.27 %
Efficiency Ratio     73.86 %   74.46 %   83.55 %   76.46 %   85.44 %
                                 

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