ISLANDIA, NY--(Marketwire - Jul 20, 2011) - Empire National Bank (
- Net income increased 106.5%, or $228 thousand, quarter-over-quarter to $442 thousand, or $0.10 per share, for the quarter ended June 30, 2011. Year-over-year net income increased by 162.5% to $832 thousand, or $0.20 per share, for the six months ended June 30, 2011
- Net interest income of $3.0 million, a year-over-year increase of 11.1% from the second quarter of 2010
- Demand deposits of $48.7 million, a $6.3 million, or 14.9%, increase from March 31, 2011; and a $10.7 million, or 28.2%, increase from December 31, 2010
- Average demand deposits increased $7.5 million, or 18.9%, from the second quarter 2010 to 2011 to $47.1 million
- Strong liquidity with $116.1 million in cash and available for sale securities and a loan to deposit ratio of 82.86%
- Strong asset quality with an allowance for loan and lease losses of 1.96% of total loans and non-performing loans to total loans of 1.03%
- Return on average assets of 0.52%
- Return on average equity of 5.58%
- Capital strength with Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios of 9.43%, 13.68% and 14.93%, respectively
- Efficiency ratio for the quarter of 85.83%, which represents an improvement of 1.4% from 87.08% at March 31, 2011, and of 7.2% from 92.47% at June 30, 2010
Douglas C. Manditch, Chairman and Chief Executive Officer stated, "Our second quarter results reflect the effectiveness of our business model as core earnings continue to grow. Demand deposits, which represent an important source of low-cost funding, spiked 14.9% and 28.2%, respectively, from the end of the first quarter of 2011 and the year end of 2010, while asset quality remains strong in this challenging economy."
Earnings for the Second Quarter Ended June 30, 2011
Net income was $442 thousand, or $0.10 per share, for the second quarter of 2011; compared to $214 thousand for the second quarter of 2010, an increase of $228 thousand. The increase in net income was primarily attributable to an increase in net interest income of $258 thousand, coupled with no additional provision for loan losses and an increase in other expense of $36 thousand. On a linked quarter basis, net income increased by 13.3% or $52 thousand, primarily due to an increase in net interest income of $129 thousand, which was partially offset by an increase in other expense of $79 thousand.
The increase in net interest income of $258 thousand year-over-year was primarily attributable to an increase in the average balance of interest earning assets of $39.2 million. The bank's net interest margin was 3.73% for the quarter ended June 30, 2011, a decrease of 15 basis points from the same period in 2010, due to a decrease in the bank's yield on interest earning assets of 42 basis points from 4.92% to 4.50%, which was partially offset by a decrease in the bank's cost of interest bearing liabilities of 33 basis points to 0.98% in the second quarter of 2011. The decrease in the average yield on interest earning assets was primarily due to the increased growth in securities available for sale as a percentage of average earning assets, as compared to loans over the same period. The decrease in the bank's interest bearing liabilities was attributable to an overall reduction in short-term market interest rates and funding costs.
The bank's efficiency ratio improved by 1.4% from 87.08% at March 31, 2011 to 85.83% at June 30, 2011, due to continued revenue growth and expense management, while continuing the bank's mission to deliver high quality, personalized service to its customers.
Earnings for the Six Months Ended June 30, 2011
Net income for the six months ended June 30, 2011 was $832 thousand, an increase of $515 thousand, or 162.5%, as compared to the six months ended June 30, 2010. Earnings per share was $0.20 and $0.08 for the six month periods ended June 30, 2011 and 2010, respectively. For the six months ended June 30, 2011, the bank's net interest income was approximately $5.9 million, an increase of approximately $0.6 million or 11.3%, as compared to net interest income of approximately $5.3 million for the six months ended June 30, 2010. The net interest margin was 3.74% for the six months ended as compared to 3.90% for the same six-month period a year ago. The decrease in the net interest margin is due primarily to a continued historically low interest rate environment and an increase in securities available for sale as a percentage of average earning assets, as compared to loans.
The bank's efficiency ratio for the six months ended June 30, 2011 was 86.44% as compared to 94.11% for the six months ended June 30, 2010, a change of 8.4%.
Balance Sheet and Asset Quality
Total assets were $339.8 million at June 30, 2011, reflecting a $9.9 million increase from March 31, 2011. The growth in total assets was due to a $9.4 million increase in securities available for sale, which was partially offset by a decrease in outstanding loan balances of $1.1 million. The decrease was attributable to loan payoffs during the second quarter and weak loan demand due, in large part, to the current economy. Total assets increased $34.3 million year-over-year, or 11.2%, primarily as a result of an increase in securities available for sale of $32.4 million, or 41.3%.
Non-performing assets were $2.2 million at June 30, 2011 and March 31, 2011. As of June 30, 2011, the bank had two non-performing loans that had been restructured and are presently paying as agreed under the restructured terms. Non-performing loans, at 1.03% of total loans, remain below that of the bank's peers. The allowance for loan losses to total loans was 1.96% at June 30, 2011, as compared to 1.74% at June 30, 2010.
Total deposits were $259.4 million at June 30, 2011, a year-over-year decrease of $4.7 million, or 1.8%. On a linked quarter basis, total deposits decreased by $2.6 million, or 1.0%. Demand deposits increased $6.5 million, or 15.4%, year-over-year and $6.3 million, or 14.9%, on a linked quarter basis from $42.4 million at March 31, 2011. Savings, NOW and money market deposits decreased year-over-year by $13.4 million, or 9.6%, and decreased by $11.8 million, or 8.6%, on a linked quarter basis to $125.9 million at June 30, 2011.
Stockholders' equity grew from $30.5 million at June 30, 2010 to $32.4 million at June 30, 2011. The bank was "well capitalized" at June 30, 2011, with leverage, Tier 1 risk-based and total risk-based capital ratios of 9.43%, 13.68% and 14.93%, respectively.
Opportunities and Challenges
"The current interest rate environment offers many challenges and opportunities. Our controlled growth remains focused on strong asset quality coupled with low cost, stable funding and closely monitored expense management. Our continued earnings performance reflects the culmination of all of these efforts, with a culture focused on high quality customer service," remarked Thomas Buonaiuto, President and Chief Operating Officer.
"Uncertainty seems to be driving this lack-luster economy. Loan demand continues to be weak and credit quality is certainly affected by the financial stagnation exhibited by businesses operating within our local markets," Manditch commented.
| Balance Sheet (unaudited) | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| June 30, 2011 | March 31, 2011 | December 31, 2010 | June 30, 2010 | ||||||||||||||
| ASSETS | |||||||||||||||||
| Cash and cash equivalents | $ | 5,191 | $ | 2,997 | $ | 7,853 | $ | 5,890 | |||||||||
| Securities available for sale, at fair value | 110,897 | 101,458 | 92,696 | 78,454 | |||||||||||||
| Securities, restricted | 3,186 | 2,698 | 3,263 | 1,535 | |||||||||||||
| Loans, net | 210,745 | 211,811 | 214,272 | 207,609 | |||||||||||||
| Premises and equipment, net | 7,257 | 7,415 | 7,590 | 7,984 | |||||||||||||
| Other assets and accrued interest receivable | 2,492 | 3,489 | 3,128 | 3,983 | |||||||||||||
| Total Assets | $ | 339,768 | $ | 329,868 | $ | 328,802 | $ | 305,455 | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||
| Demand Deposits | $ | 48,677 | $ | 42,372 | $ | 38,024 | $ | 42,241 | |||||||||
| Savings, N.O.W. and money market deposits | 125,929 | 137,725 | 123,727 | 139,326 | |||||||||||||
| Certificates of deposit of $100,000 or more and other time deposits | 84,832 |
81,901 |
90,439 |
82,574 |
|||||||||||||
| Total deposits | 259,438 | 261,998 | 252,190 | 264,141 | |||||||||||||
| Short-term borrowings | 41,817 | 32,220 | 44,381 | 6,875 | |||||||||||||
| Other liabilities and accrued expenses | 6,129 | 5,102 | 2,266 | 3,904 | |||||||||||||
| Total Liabilities | 307,384 | 299,320 | 298,837 | 274,920 | |||||||||||||
| Total Stockholders' Equity | 32,384 | 30,548 | 29,965 | 30,535 | |||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 339,768 | $ | 329,868 | $ | 328,802 | $ | 305,455 | |||||||||
| Selected Financial Data (unaudited) | |||||||||||||||||
| Allowance for Loan Losses to Total Loans | 1.96 | % | 1.95 | % | 1.93 | % | 1.74 | % | |||||||||
| Non-performing Loans to Total Loans | 1.03 | % | 1.04 | % | 1.02 | % | 1.07 | % | |||||||||
| Non-performing Loans to Total Assets | 0.65 | % | 0.68 | % | 0.68 | % | 0.74 | % | |||||||||
| Capital Ratios (unaudited) | |||||||||||||||||
| Tier 1 Leverage Ratio | 9.43 | % | 9.70 | % | 9.47 | % | 9.79 | % | |||||||||
| Tier 1 Risk-Based Capital Ratio | 13.68 | % | 13.42 | % | 13.31 | % | 12.51 | % | |||||||||
| Total Risk-Based Capital Ratio | 14.93 | % | 14.68 | % | 14.56 | % | 13.76 | % | |||||||||
| Statement of Operations (unaudited) | ||||||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||
| For the three months ended | For the six months ended | |||||||||||||||||||
| June 30, 2011 | March 31, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | ||||||||||||||||
| Interest income | $ | 3,652 | $ | 3,529 | $ | 3,518 | $ | 7,181 | $ | 6,741 | ||||||||||
| Interest expense | 624 | 630 | 748 | 1,254 | 1,477 | |||||||||||||||
| Net interest income | 3,028 | 2,899 | 2,770 | 5,927 | 5,264 | |||||||||||||||
| Provision for loan losses | - | - | 93 | - | 205 | |||||||||||||||
| Net interest income after provision for loan losses | 3,028 | 2,899 | 2,677 | 5,927 | 5,059 | |||||||||||||||
| Net securities (losses) gains | (5 | ) | - | 91 | (5 | ) | 196 | |||||||||||||
| Other income | 125 | 118 | 116 | 243 | 260 | |||||||||||||||
| Other expense | 2,706 | 2,627 | 2,670 | 5,333 | 5,198 | |||||||||||||||
| Net income | $ | 442 | $ | 390 | $ | 214 | $ | 832 | $ | 317 | ||||||||||
| Basic earnings per share | $ | 0.10 | $ | 0.09 | $ | 0.05 | $ | 0.20 | $ | 0.08 | ||||||||||
| Diluted earnings per share | $ | 0.10 | $ | 0.09 | $ | 0.05 | $ | 0.20 | $ | 0.08 | ||||||||||
| Selected Financial Data (unaudited) | ||||||||||||||||||||
| Return on Average Assets | 0.52 | % | 0.49 | % | 0.29 | % | 0.51 | % | 0.22 | % | ||||||||||
| Return on Average Equity | 5.58 | % | 5.18 | % | 2.89 | % | 5.39 | % | 2.16 | % | ||||||||||
| Net Interest Margin | 3.73 | % | 3.75 | % | 3.88 | % | 3.74 | % | 3.90 | % | ||||||||||
| Efficiency Ratio | 85.83 | % | 87.08 | % | 92.47 | % | 86.44 | % | 94.11 | % | ||||||||||
About Empire National Bank
Empire National Bank specializes in serving the financial needs of small and mid-sized privately owned businesses, professionals, nonprofit organizations, real estate investors, and consumers. The bank has three banking offices located in Islandia, Shirley and Port Jefferson Station. Its bankers take pride in understanding the needs of each and every 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 report 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 Empire National Bank's control. The forward looking statements included in this report are made only as of the date of this report. We have no intention, and do not assume any obligation, to update these forward looking statements.
Contact Information:
Contact:
William Franz
VP, Director of Marketing & Investor Relations
(631) 348-4444