SOURCE: Empire National Bank

Empire National Bank

April 24, 2012 17:36 ET

Empire National Bank Announces Significant Growth in Core First Quarter Earnings

ISLANDIA, NY--(Marketwire - Apr 24, 2012) - Empire National Bank (OTCQB: EMPK), today announced its operating results for the first quarter of 2012. Highlights for the quarter include:

  • Core earnings for the quarter ended March 31, 2012 were $460 thousand, an increase of 17.9%, or $70 thousand, over the quarter ended March 31, 2011. Core earnings are measured as pre-tax income, excluding any gains or losses on the sale of investment securities and accelerated expenses associated with the upgrade of the bank's online banking platform.
  • Total assets of $389.6 million, a $59.7 million, or 18.1%, increase from March 31, 2011; and a $49.9 million, or 14.7% increase from December 31, 2011.
  • Total loans of $220.5 million, a $4.5 million, or 2.1%, increase from March 31, 2011; and a $7.6 million, or 3.6% increase from December 31, 2011.
  • Demand deposits of $110.8 million, representing a $68.4 million, or 161.3%, increase from March 31, 2011; and a $65.0 million, or 141.9% increase from December 31, 2011.
  • Strong liquidity with $161.9 million in cash and available for sale securities and a loan to deposit ratio of 63.4%.
  • Solid asset quality with an allowance for loan and lease losses of 1.91% of total loans and a ratio of non-performing loans to total loans of 1.00%.
  • "Well Capitalized" regulatory capital levels, as of March 31, 2012
    • Tier 1 leverage capital ratio of 10.44%
    • Tier 1 risk-based capital ratio of 14.56%
    • Total risk-based capital ratio of 15.81%
  • Book value per share of $8.74, as of March 31, 2012, a 20.6% increase from March 31, 2011; and a 1.6% increase from December 31, 2011.

Douglas C. Manditch, Chairman and Chief Executive Officer, stated, "We are very pleased with the continued growth in core earnings of the bank. Our financial performance for the first quarter highlights our strong liquidity, solid asset quality and well capitalized position, which positions us to take advantage of market opportunities and continue to expand our branch footprint on Long Island. We were pleased to see an increase in loan demand during the first quarter as we continue to seek opportunities to deploy our balance sheet to meet the credit needs of our local business customers."

Earnings

Net income was $357 thousand, or $0.08 per share, for the first quarter of 2012, compared to $390 thousand for the first quarter of 2011, a decrease of $33 thousand. The decrease in net income was attributable to the acceleration of approximately $103 thousand in expenses associated with the upgrade of the bank's online banking systems in the first quarter of 2012. The bank also experienced an increase in salaries and employee benefits due primarily to the addition of several new employees hired to support growth. These overhead expense increases were partially offset by a $299 thousand increase in net interest income and an increase of $35 thousand, or approximately 29.7%, in non-interest income.

The increase in net interest income of $299 thousand year-over-year was primarily attributable to an increase in the average balance of interest earning assets of $31.0 million. The bank's net interest margin was 3.73% for the quarter ended March 31, 2012, a decrease of 2 basis points from the same period in 2011, due to a decrease in the bank's yield on interest earning assets of 7 basis points from 4.56% to 4.49%, which was partially offset by a decrease in the bank's cost of interest bearing liabilities of 3 basis points to 1.00% in the first quarter of 2012. 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.

Balance Sheet and Asset Quality

Total assets were $389.6 million at March 31, 2012, reflecting a $49.9 million increase from December 31, 2011. The growth in total assets was due to a $41.8 million increase in securities available for sale, augmented by the increase in outstanding loan balances of $7.6 million. Total assets increased $59.7 million year-over-year, or 18.1%, attributable to an increase in securities available for sale of $54.8 million, or 54.0% and an increase in outstanding loan balances of $4.5 million.

Non-performing assets were $2.2 million at December 31, 2011 and March 31, 2012, consisting of two non-performing loans that had been restructured. One loan is currently paying under its original terms and the other loan is presently paying as agreed under the restructured terms. The bank's ratio of non-performing loans to total loans, which was 1.00% as of March 31, 2012, decreased from December 31, 2011 and March 31, 2011, respectively, and remains below that of the bank's peers. The allowance for loan losses to total loans was 1.91% at March 31, 2012, as compared to 1.95% at March 31, 2011.

Total deposits were $347.8 million at March 31, 2012, a year-over-year increase of $85.8 million, or 32.7%. On a linked quarter basis, total deposits increased by $82.8 million, or 31.2%. Demand deposits increased $68.4 million, or 161.3%, year-over-year and $65.0 million, or 141.9%, on a linked quarter basis to $110.8 million at March 31, 2012. This material increase in demand deposits was attributable primarily to the bank's commitment and focus to providing financial services products and services targeted to professional practices. Notwithstanding the demand deposit growth attributable to professional practices, the bank experienced double-digit growth in business banking demand deposits. The increase in demand deposits enabled the bank to reduce its utilization of short-term borrowings from the Federal Home Loan Bank as a source of liquidity.

Savings, NOW and money market deposits increased year-over-year by $3.7 million, or 2.7%, and $15.1 million, or 12.0%, on a linked quarter basis to $141.4 million at March 31, 2012.

Stockholders' equity grew from $30.5 million to $38.3 million from March 31, 2011 to March 31, 2012, primarily as a result of the bank's earnings during that period. At March 31, 2012, the bank was "well capitalized" as defined by OCC regulation, with leverage, Tier 1 risk-based and total risk-based capital ratios of 10.44%, 14.56% and 15.81%, respectively.

Opportunities and Challenges

Following the end of the first quarter, the bank announced that the Office of the Comptroller of the Currency, its primary regulator, had terminated the supervisory agreement originally entered into with the bank on October 21, 2010. "The recent news from our regulators comes at a good time, as we begin 2012. We have continued to focus our efforts on building the long term value of our brand. Most recently, we announced the upgrade of our online banking platform and website. We believe that through the continued enhancement of our electronic banking products, coupled with our reputation for delivering high quality customer-service, the bank will continue to realize significant growth in new customer relationships. As we move forward, our challenge will be to continue to negotiate this interest rate environment while growing the commercial loan portfolio," remarked Thomas M. Buonaiuto, President and Chief Operating Officer.

Balance Sheet (unaudited)
(dollars in thousands)
March 31, 2012 December 31, 2011 March 31, 2011
ASSETS
Cash and cash equivalents $ 5,652 $ 4,388 $ 2,997
Securities available for sale, at fair value 156,286 114,502 101,458
Securities, restricted 1,539 3,002 2,698
Loans, net 216,282 208,660 211,811
Premises and equipment, net 6,851 6,850 7,415
Other assets and accrued interest receivable 2,956 2,331 3,489
Total Assets $ 389,566 $ 339,733 $ 329,868
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $ 110,805 $ 45,765 $ 42,372
Savings, N.O.W. and money market deposits 141,355 126,335 137,725
Certificates of deposit of $100,000 or more and other time deposits 95,613 92,920 81,901
Total deposits 347,773 265,020 261,998
Short-term borrowings 617 34,449 32,220
Other liabilities and accrued expenses 2,886 2,832 5,102
Total Liabilities 351,276 302,301 299,320
Total Stockholders' Equity 38,290 37,432 30,548
Total Liabilities and Stockholders' Equity $ 389,566 $ 339,733 $ 329,868
Selected Financial Data (unaudited)
Asset Quality
Allowance for Loan Losses to Total Loans 1.91 % 1.98 % 1.95 %
Non-performing Loans to Total Loans 1.00 % 1.03 % 1.04 %
Non-performing Loans to Total Assets 0.56 % 0.65 % 0.68 %
Capital Ratios
Tier 1 Leverage Ratio 10.44 % 10.80 % 9.70 %
Tier 1 Risk-Based Capital Ratio 14.56 % 15.36 % 13.42 %
Total Risk-Based Capital Ratio 15.81 % 16.62 % 14.68 %
Book Value per share $ 8.74 $ 8.60 $ 7.25
Statement of Operations (unaudited)
(dollars in thousands, except per share data)
For the three months ended
March 31, 2012 December 31, 2011 March 31, 2011
Interest income $ 3,848 $ 3,905 $ 3,529
Interest expense 650 644 630
Net interest income $ 3,198 $ 3,261 $ 2,899
Provision for loan losses - - -
Net interest income after
provision for loan losses 3,198 3,261 2,899
Net securities gains - 186 -
Other income 153 141 118
Other expense 2,994 2,879 2,627
Income before income taxes 357 709 390
Income tax benefit - 719 -
Net Income $ 357 $ 1,428 $ 390
Basic earnings per share $ 0.08 $ 0.34 $ 0.09
Diluted earnings per share $ 0.08 $ 0.34 $ 0.09
Selected Financial Data (unaudited)
Return on Average Assets 0.40 % 1.67 % 0.49 %
Return on Average Equity 3.76 % 15.81 % 5.18 %
Net Interest Margin 3.73 % 3.95 % 3.75 %
Efficiency Ratio 89.34 % 84.62 % 87.08 %
Core Earnings $ 460 $ 635 $ 390

About Empire National Bank

Empire National Bank is 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 three banking offices located in Islandia, Shirley and Port Jefferson Station. Our 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