Table of Contents
SECURITIES AND EXCHANGE COMMISSION
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
New Jersey (State or other jurisdiction of | 22-2670267 (IRS Employer Identification No.) | |
incorporation or organization) |
As of August 8, 2005, the following class and number of shares were outstanding:
Common Stock, no par value | 10,604,683 | ||
Class | Number of shares outstanding |
YARDVILLE NATIONAL BANCORP AND SUBSIDIARIES
Table of Contents
EXPLANATORY NOTE
The unaudited consolidated financial statements included in the Quarterly Report on Form 10-Q of Yardville National Bancorp (the “Registrant”) for the quarterly period ended June 30, 2005, filed with the Securities and Exchange Commission on August 15, 2005, were not reviewed by KPMG LLP, the Registrant’s independent registered public accounting firm. This Amendment No. 1 on Form 10-Q/A is being filed to confirm that all procedures required in connection with the filing of interim financial statements included in quarterly reports on Form 10-Q have now been completed by KPMG LLP, and that no changes have been made to the financial statements previously filed.
Table of Contents
(Unaudited)
June 30, | December 31, | |||||||
(in thousands) | 2005 | 2004 | ||||||
Assets: | ||||||||
Cash and due from banks | $ | 33,334 | $ | 32,115 | ||||
Federal funds sold | 75,670 | 6,769 | ||||||
Cash and Cash Equivalents | 109,004 | 38,884 | ||||||
Interest bearing deposits with banks | 23,204 | 41,297 | ||||||
Securities available for sale | 751,536 | 802,525 | ||||||
Investment securities (market value of $86,095 in 2005 and $79,954 in 2004) | 83,588 | 78,257 | ||||||
Loans | 1,895,917 | 1,782,592 | ||||||
Less: Allowance for loan losses | (21,720 | ) | (20,116 | ) | ||||
Loans, net | 1,874,197 | 1,762,476 | ||||||
Bank premises and equipment, net | 10,318 | 10,431 | ||||||
Bank owned life insurance | 45,306 | 44,501 | ||||||
Other assets | 33,260 | 27,546 | ||||||
Total Assets | $ | 2,930,413 | $ | 2,805,917 | ||||
Liabilities and Stockholders’ Equity: | ||||||||
Deposits | ||||||||
Non-interest bearing | $ | 218,042 | $ | 202,196 | ||||
Interest bearing | 1,694,921 | 1,607,808 | ||||||
Total Deposits | 1,912,963 | 1,810,004 | ||||||
Borrowed funds | ||||||||
Securities sold under agreements to repurchase | 10,000 | 10,000 | ||||||
Federal Home Loan Bank advances | 750,000 | 742,000 | ||||||
Subordinated debentures | 62,892 | 62,892 | ||||||
Obligation for Employee Stock Ownership Plan (ESOP) | 189 | 377 | ||||||
Other | 1,311 | 753 | ||||||
Total Borrowed Funds | 824,392 | 816,022 | ||||||
Other liabilities | 22,390 | 19,733 | ||||||
Total Liabilities | $ | 2,759,745 | $ | 2,645,759 | ||||
Stockholders’ equity: | ||||||||
Preferred stock: no par value | ||||||||
Authorized 1,000,000 shares, none issued | ||||||||
Common stock: no par value | ||||||||
Authorized 20,000,000 shares | ||||||||
Issued 10,752,518 shares in 2005 and 10,691,213 shares in 2004 | 93,078 | 91,658 | ||||||
Surplus | 2,205 | 2,205 | ||||||
Undivided profits | 78,686 | 69,860 | ||||||
Treasury stock, at cost: 180,594 shares | (3,160 | ) | (3,160 | ) | ||||
Unallocated ESOP shares | (189 | ) | (377 | ) | ||||
Accumulated other comprehensive income (loss) | 48 | (28 | ) | |||||
Total Stockholders’ Equity | 170,668 | 160,158 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 2,930,413 | $ | 2,805,917 | ||||
1
Table of Contents
(Unaudited)
Three Months Ended | ||||||||
June 30, | ||||||||
(in thousands, except per share amounts) | 2005 | 2004 | ||||||
INTEREST INCOME: | ||||||||
Interest and fees on loans | $ | 31,117 | $ | 24,149 | ||||
Interest on deposits with banks | 194 | 59 | ||||||
Interest on securities available for sale | 9,154 | 8,631 | ||||||
Interest on investment securities: | ||||||||
Taxable | 30 | 32 | ||||||
Exempt from Federal income tax | 919 | 786 | ||||||
Interest on Federal funds sold | 155 | 44 | ||||||
Total Interest Income | 41,569 | 33,701 | ||||||
INTEREST EXPENSE: | ||||||||
Interest on savings account deposits | 4,995 | 2,984 | ||||||
Interest on certificates of deposit of $100,000 or more | 1,400 | 983 | ||||||
Interest on other time deposits | 3,692 | 3,047 | ||||||
Interest on borrowed funds | 9,600 | 8,879 | ||||||
Interest on subordinated debentures | 1,156 | 840 | ||||||
Total Interest Expense | 20,843 | 16,733 | ||||||
Net Interest Income | 20,726 | 16,968 | ||||||
Less provision for loan losses | 2,100 | 1,975 | ||||||
Net Interest Income After Provision for Loan Losses | 18,626 | 14,993 | ||||||
NON-INTEREST INCOME: | ||||||||
Service charges on deposit accounts | 687 | 787 | ||||||
Securities gains, net | 283 | — | ||||||
Income on bank owned life insurance | 361 | 491 | ||||||
Other non-interest income | 596 | 438 | ||||||
Total Non-Interest Income | 1,927 | 1,716 | ||||||
NON-INTEREST EXPENSE: | ||||||||
Salaries and employee benefits | 7,034 | 5,643 | ||||||
Occupancy expense, net | 1,186 | 1,077 | ||||||
Equipment expense | 757 | 816 | ||||||
Other non-interest expense | 3,263 | 3,047 | ||||||
Total Non-Interest Expense | 12,240 | 10,583 | ||||||
Income before income tax expense | 8,313 | 6,126 | ||||||
Income tax expense | 2,677 | 1,664 | ||||||
Net Income | $ | 5,636 | $ | 4,462 | ||||
EARNINGS PER SHARE: | ||||||||
Basic | $ | 0.53 | $ | 0.43 | ||||
Diluted | $ | 0.51 | $ | 0.41 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 10,552 | 10,444 | ||||||
Diluted | 11,006 | 10,803 | ||||||
2
Table of Contents
(Unaudited)
Six Months Ended | ||||||||
June 30, | ||||||||
(in thousands, except per share amounts) | 2005 | 2004 | ||||||
INTEREST INCOME: | ||||||||
Interest and fees on loans | $ | 59,919 | $ | 47,248 | ||||
Interest on deposits with banks | 351 | 110 | ||||||
Interest on securities available for sale | 18,170 | 16,796 | ||||||
Interest on investment securities: | ||||||||
Taxable | 56 | 75 | ||||||
Exempt from Federal income tax | 1,804 | 1,564 | ||||||
Interest on Federal funds sold | 302 | 126 | ||||||
Total Interest Income | 80,602 | 65,919 | ||||||
INTEREST EXPENSE: | ||||||||
Interest on savings account deposits | 9,450 | 5,552 | ||||||
Interest on certificates of deposit of $100,000 or more | 2,593 | 1,957 | ||||||
Interest on other time deposits | 6,886 | 6,293 | ||||||
Interest on borrowed funds | 18,820 | 17,753 | ||||||
Interest on subordinated debentures | 2,263 | 1,650 | ||||||
Total Interest Expense | 40,012 | 33,205 | ||||||
Net Interest Income | 40,590 | 32,714 | ||||||
Less provision for loan losses | 3,600 | 4,425 | ||||||
Net Interest Income After Provision for Loan Losses | 36,990 | 28,289 | ||||||
NON-INTEREST INCOME: | ||||||||
Service charges on deposit accounts | 1,348 | 1,650 | ||||||
Securities gains, net | 476 | 586 | ||||||
Income on bank owned life insurance | 804 | 977 | ||||||
Other non-interest income | 1,016 | 877 | ||||||
Total Non-Interest Income | 3,644 | 4,090 | ||||||
NON-INTEREST EXPENSE: | ||||||||
Salaries and employee benefits | 13,863 | 11,475 | ||||||
Occupancy expense, net | 2,375 | 2,167 | ||||||
Equipment expense | 1,533 | 1,610 | ||||||
Other non-interest expense | 6,327 | 5,618 | ||||||
Total Non-Interest Expense | 24,098 | 20,870 | ||||||
Income before income tax expense | 16,536 | 11,509 | ||||||
Income tax expense | 5,287 | 3,169 | ||||||
Net Income | $ | 11,249 | $ | 8,340 | ||||
EARNINGS PER SHARE: | ||||||||
Basic | $ | 1.07 | $ | 0.80 | ||||
Diluted | $ | 1.02 | $ | 0.77 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 10,535 | 10,435 | ||||||
Diluted | 10,991 | 10,799 | ||||||
3
Table of Contents
(Unaudited)
Six Months Ended June 30, | ||||||||
(in thousands) | 2005 | 2004 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net Income | $ | 11,249 | $ | 8,340 | ||||
Adjustments: | ||||||||
Provision for loan losses | 3,600 | 4,425 | ||||||
Depreciation | 1,180 | 1,212 | ||||||
ESOP fair value adjustment | 140 | 54 | ||||||
Amortization of deposit intangible | 102 | 102 | ||||||
Amortization and accretion on securities | 104 | 1,145 | ||||||
Gain on sales of securities available for sale | (476 | ) | (586 | ) | ||||
Gain on sale of bank branch | — | 5 | ||||||
Increase in other assets | (6,661 | ) | (3,462 | ) | ||||
Increase in other liabilities | 2,657 | 4,928 | ||||||
Net Cash Provided by Operating Activities | 11,895 | 16,163 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Net decrease in interest bearing deposits with banks | 18,093 | 5,754 | ||||||
Purchase of securities available for sale | (91,276 | ) | (280,106 | ) | ||||
Maturities, calls and paydowns of securities available for sale | 72,342 | 136,166 | ||||||
Proceeds from sales of securities available for sale | 70,411 | 109,341 | ||||||
Purchase of investment securities | (6,040 | ) | (6,585 | ) | ||||
Proceeds from maturities and paydowns of investment securities | 710 | 5,411 | ||||||
Net increase in loans | (115,321 | ) | (188,397 | ) | ||||
Expenditures for bank premises and equipment | (1,067 | ) | (450 | ) | ||||
Proceeds from sale of bank branch | — | 641 | ||||||
Net Cash Used in Investing Activities | (52,148 | ) | (218,225 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Net increase in demand, money market, and savings deposits | 39,547 | 207,691 | ||||||
Net increase in certificates of deposit | 63,412 | 1,888 | ||||||
Net increase (decrease) in borrowed funds | 8,370 | (1,145 | ) | |||||
Proceeds from issuance of subordinated debentures | — | 15,464 | ||||||
Proceeds from issuance of common stock | 1,280 | 698 | ||||||
Decrease in unallocated ESOP Shares | 188 | 189 | ||||||
Cash dividends paid to stockholders | (2,424 | ) | (2,404 | ) | ||||
Net Cash Provided by Financing Activities | 110,373 | 222,381 | ||||||
Net increase in cash and cash equivalents | 70,120 | 20,319 | ||||||
Cash and cash equivalents as of beginning of year | 38,884 | 33,155 | ||||||
Cash and Cash Equivalents as of End of Year | $ | 109,004 | $ | 53,474 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid during the year for: | ||||||||
Interest | $ | 19,689 | $ | 33,696 | ||||
Income taxes | 9,201 | 385 | ||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Transfers from loans to other real estate, net of charge offs | $ | 200 | $ | — | ||||
4
Table of Contents
Three and Six Months Ended June 30, 2005
5
Table of Contents
6
Table of Contents
For the three months ended June 30, | ||||||||
(in thousands, except per share amounts) | 2005 | 2004 | ||||||
Net income as reported: | $ | 5,636 | $ | 4,462 | ||||
Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards, net of related tax effects | 275 | 134 | ||||||
Pro forma net income | $ | 5,361 | $ | 4,328 | ||||
Earnings per share: | ||||||||
Basic: | ||||||||
As reported | $ | 0.53 | $ | 0.43 | ||||
Pro forma | 0.51 | 0.41 | ||||||
Diluted: | ||||||||
As reported | $ | 0.51 | $ | 0.41 | ||||
Pro forma | 0.49 | 0.40 | ||||||
7
Table of Contents
For the six months ended June 30, | ||||||||
(in thousands, except per share amounts) | 2005 | 2004 | ||||||
Net income as reported: | $ | 11,249 | $ | 8,340 | ||||
Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards, net of related tax effects | 365 | 268 | ||||||
Pro forma net income | $ | 10,884 | $ | 8,072 | ||||
Earnings per share: | ||||||||
Basic: | ||||||||
As reported | $ | 1.07 | $ | 0.80 | ||||
Pro forma | 1.03 | 0.77 | ||||||
Diluted: | ||||||||
As reported | $ | 1.02 | $ | 0.77 | ||||
Pro forma | 0.99 | 0.75 | ||||||
Three months | Six months | |||||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||||
Number of options granted | 36,000 | 30,000 | 52,000 | 32,500 | ||||||||||||||
Expected annual dividend rate | $ | 0.46 | $ | 0.46 | $ | 0.46 | $ | 0.46 | ||||||||||
Risk free rate | 3.8 | % | 3.8 | % | 4.0 | % | 3.3 | % | ||||||||||
Expected average option life (yrs) | 5.0 | 4.0 | 7.0 | 4.3 | ||||||||||||||
Expected volatility | 27.9 | % | 29.0 | % | 31.3 | 22.5 | % | |||||||||||
Fair value of options granted | $ | 7.92 | $ | 6.76 | $ | 9.02 | $ | 6.71 | ||||||||||
For the three months ended June 30, | ||||||||
(in thousands) | 2005 | 2004 | ||||||
Net income | $ | 5,636 | $ | 4,462 | ||||
Other comprehensive income (loss) | ||||||||
Net change in unrealized gain (loss) for the period, net of tax | 7,438 | (14,952 | ) | |||||
Less reclassification of realized net gain on sale of securities available for sale, net of tax | 184 | — | ||||||
Holding gain (loss) arising during the period, net of tax and reclassification | 7,254 | (14,952 | ) | |||||
Total comprehensive income (loss) | $ | 12,890 | $ | (10,490 | ) | |||
8
Table of Contents
For the six months ended June 30, | ||||||||
(in thousands) | 2005 | 2004 | ||||||
Net income | $ | 11,249 | $ | 8,340 | ||||
Other comprehensive income (loss) | ||||||||
Net change in unrealized gain (loss) for the period, net of tax | 385 | (9,105 | ) | |||||
Less reclassification of realized net gain on sale of securities available for sale, net of tax | 309 | 387 | ||||||
Holding gain (loss) arising during the period, net of tax and reclassification | 76 | (9,492 | ) | |||||
Total comprehensive income (loss) | $ | 11,325 | $ | (1,152 | ) | |||
For the six | For the six | |||||||
months ended | months ended | |||||||
(in thousands) | June 30, 2005 | June 30, 2004 | ||||||
Balance as of beginning of period | $ | 56,863 | $ | 72,888 | ||||
Additions | 5,332 | 6,740 | ||||||
Reductions | 3,497 | 7,516 | ||||||
Balance as of end of the period | $ | 58,698 | $ | 72,112 | ||||
9
Table of Contents
As of:June 30, 2005 | ||||||||||||||||
(dollars in thousands) | Hedged | Notional | Swap Fixed | Swap Variable | ||||||||||||
Maturity | Liability | Amounts | Interest Rates | Interest Rates | ||||||||||||
Pay Floating Swaps 2006 | Time deposits | $ | 125,000 | 2.73% - 3.10 | % | 3.23% - 3.36 | % | |||||||||
As of: December 31, 2004 | ||||||||||||||||
(dollars in thousands) | Hedged | Notional | Swap Fixed | Swap Variable | ||||||||||||
Maturity | Liability | Amounts | Interest Rates | Interest Rates | ||||||||||||
Pay Floating Swaps 2006 | Time deposits | $ | 125,000 | 2.73% - 3.10 | % | 2.26% - 2.41 | % | |||||||||
10
Table of Contents
11
Table of Contents
12
Table of Contents
13
Table of Contents
Average Balances, Yields and Costs
(Unaudited)
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
June 30, 2005 | June 30, 2004 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Average | Yield / | Average | Yield / | |||||||||||||||||||||
(in thousands) | Balance | Interest | Cost | Balance | Interest | Cost | ||||||||||||||||||
INTEREST EARNING ASSETS: | ||||||||||||||||||||||||
Interest bearing deposits with banks | $ | 25,177 | $ | 194 | 3.08 | % | $ | 25,230 | $ | 59 | 0.94 | % | ||||||||||||
Federal funds sold | 21,067 | 155 | 2.94 | 18,146 | 44 | 0.97 | ||||||||||||||||||
Securities | 857,958 | 10,103 | 4.71 | 879,623 | 9,449 | 4.30 | ||||||||||||||||||
Loans (1) | 1,859,969 | 31,117 | 6.69 | 1,594,495 | 24,149 | 6.06 | ||||||||||||||||||
Total interest earning assets | $ | 2,764,171 | $ | 41,569 | 6.02 | % | $ | 2,517,494 | $ | 33,701 | 5.35 | % | ||||||||||||
NON-INTEREST EARNING ASSETS: | ||||||||||||||||||||||||
Cash and due from banks | $ | 31,868 | $ | 28,847 | ||||||||||||||||||||
Allowance for loan losses | (21,274 | ) | (18,488 | ) | ||||||||||||||||||||
Premises and equipment, net | 10,401 | 11,244 | ||||||||||||||||||||||
Other assets | 76,715 | 78,071 | ||||||||||||||||||||||
Total non-interest earning assets | 97,710 | 99,674 | ||||||||||||||||||||||
Total assets | $ | 2,861,881 | $ | 2,617,168 | ||||||||||||||||||||
INTEREST BEARING LIABILITIES: | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Savings, money markets, and interest bearing demand | $ | 987,686 | $ | 4,995 | 2.02 | % | $ | 870,158 | $ | 2,984 | 1.37 | % | ||||||||||||
Certificates of deposit of $100,000 or more | 180,410 | 1,400 | 3.10 | 157,867 | 983 | 2.49 | ||||||||||||||||||
Other time deposits | 479,910 | 3,692 | 3.08 | 453,126 | 3,047 | 2.69 | ||||||||||||||||||
Total interest bearing deposits | 1,648,006 | 10,087 | 2.45 | 1,481,151 | 7,014 | 1.89 | ||||||||||||||||||
Borrowed funds | 756,815 | 9,600 | 5.07 | 737,275 | 8,879 | 4.82 | ||||||||||||||||||
Subordinated debentures | 62,892 | 1,156 | 7.35 | 49,662 | 840 | 6.77 | ||||||||||||||||||
Total interest bearing liabilities | $ | 2,467,713 | $ | 20,843 | 3.38 | % | $ | 2,268,088 | $ | 16,733 | 2.95 | % | ||||||||||||
NON-INTEREST BEARING LIABILITIES: | ||||||||||||||||||||||||
Demand deposits | $ | 205,839 | $ | 182,637 | ||||||||||||||||||||
Other liabilities | 22,644 | 23,387 | ||||||||||||||||||||||
Stockholders’ equity | 165,685 | 143,056 | ||||||||||||||||||||||
Total non-interest bearing liabilities and stockholders’ equity | $ | 394,168 | $ | 349,080 | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,861,881 | $ | 2,617,168 | ||||||||||||||||||||
Interest rate spread (2) | 2.64 | % | 2.40 | % | ||||||||||||||||||||
Net interest income and margin (3) | $ | 20,726 | 3.00 | % | $ | 16,968 | 2.70 | % | ||||||||||||||||
Net interest income and margin (tax equivalent basis)(4) | $ | 21,217 | 3.07 | % | $ | 17,360 | 2.76 | % | ||||||||||||||||
(1) | Loan origination fees are considered an adjustment to interest income. For the purpose of calculating loan yields, average loan balances include nonaccrual loans with no related interest income. | |
(2) | The interest rate spread is the difference between the average yield on interest earning assets and the average rate paid on interest bearing liabilities. | |
(3) | The net interest margin is equal to net interest income divided by average interest earning assets. | |
(4) | In order to present pre-tax income and resultant yields on tax-exempt investments and loans on a basis comparable to those on taxable investments and loans, a tax equivalent adjustment is made to interest income. The tax equivalent adjustment has been computed using a Federal income tax rate of 35% and has the effect of increasing interest income by $491,000 and $392,000 for the three month periods ended June 30, 2005 and 2004, respectively. |
14
Table of Contents
Average Balances, Yields and Costs
(Unaudited)
Six Months Ended | Six Months Ended | |||||||||||||||||||||||
June 30, 2005 | June 30, 2004 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Average | Yield / | Average | Yield / | |||||||||||||||||||||
(in thousands) | Balance | Interest | Cost | Balance | Interest | Cost | ||||||||||||||||||
INTEREST EARNING ASSETS: | ||||||||||||||||||||||||
Interest bearing deposits with banks | $ | 25,304 | $ | 351 | 2.77 | % | $ | 22,772 | $ | 110 | 0.97 | % | ||||||||||||
Federal funds sold | 22,612 | 302 | 2.67 | 25,814 | 126 | 0.98 | ||||||||||||||||||
Securities | 854,363 | 20,030 | 4.69 | 863,642 | 18,435 | 4.27 | ||||||||||||||||||
Loans (1) | 1,829,458 | 59,919 | 6.55 | 1,548,310 | 47,248 | 6.10 | ||||||||||||||||||
Total interest earning assets | $ | 2,731,737 | $ | 80,602 | 5.90 | % | $ | 2,460,538 | $ | 65,919 | 5.36 | % | ||||||||||||
NON-INTEREST EARNING ASSETS: | ||||||||||||||||||||||||
Cash and due from banks | $ | 31,378 | $ | 27,582 | ||||||||||||||||||||
Allowance for loan losses | (20,925 | ) | (18,072 | ) | ||||||||||||||||||||
Premises and equipment, net | 10,417 | 11,747 | ||||||||||||||||||||||
Other assets | 76,130 | 73,190 | ||||||||||||||||||||||
Total non-interest earning assets | 97,000 | 94,447 | ||||||||||||||||||||||
Total assets | $ | 2,828,737 | $ | 2,554,985 | ||||||||||||||||||||
INTEREST BEARING LIABILITIES: | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Savings, money markets, and interest bearing demand | $ | 982,877 | $ | 9,450 | 1.92 | % | $ | 821,177 | $ | 5,552 | 1.35 | % | ||||||||||||
Certificates of deposit of $100,000 or more | 174,735 | 2,593 | 2.97 | 154,604 | 1,957 | 2.53 | ||||||||||||||||||
Other time deposits | 474,814 | 6,886 | 2.90 | 453,925 | 6,293 | 2.77 | ||||||||||||||||||
Total interest bearing deposits | 1,632,426 | 18,929 | 2.32 | 1,429,706 | 13,802 | 1.93 | ||||||||||||||||||
Borrowed funds | 745,537 | 18,820 | 5.05 | 737,450 | 17,753 | 4.81 | ||||||||||||||||||
Subordinated debentures | 62,892 | 2,263 | 7.20 | 48,545 | 1,650 | 6.80 | ||||||||||||||||||
Total interest bearing liabilities | $ | 2,440,855 | $ | 40,012 | 3.28 | % | $ | 2,215,701 | $ | 33,205 | 3.00 | % | ||||||||||||
NON-INTEREST BEARING LIABILITIES: | ||||||||||||||||||||||||
Demand deposits | $ | 202,412 | $ | 172,851 | ||||||||||||||||||||
Other liabilities | 22,725 | 20,890 | ||||||||||||||||||||||
Stockholders’ equity | 162,745 | 145,543 | ||||||||||||||||||||||
Total non-interest bearing liabilities and stockholders’ equity | $ | 387,882 | $ | 339,284 | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,828,737 | $ | 2,554,985 | ||||||||||||||||||||
Interest rate spread (2) | 2.62 | % | 2.36 | % | ||||||||||||||||||||
Net interest income and margin (3) | $ | 40,590 | 2.97 | % | $ | 32,714 | 2.66 | % | ||||||||||||||||
Net interest income and margin (tax equivalent basis)(4) | $ | 41,549 | 3.04 | % | $ | 33,516 | 2.72 | % | ||||||||||||||||
(1) | Loan origination fees are considered an adjustment to interest income. For the purpose of calculating loan yields, average loan balances include nonaccrual loans with no related interest income. | |
(2) | The interest rate spread is the difference between the average yield on interest earning assets and the average rate paid on interest bearing liabilities. | |
(3) | The net interest margin is equal to net interest income divided by average interest earning assets. | |
(4) | In order to present pre-tax income and resultant yields on tax-exempt investments and loans on a basis comparable to those on taxable investments and loans, a tax equivalent adjustment is made to interest income. The tax equivalent adjustment has been computed using a Federal income tax rate of 35% and has the effect of increasing interest income by $959,000 and $802,000 for the six month periods ended June 30, 2005 and 2004, respectively. |
15
Table of Contents
16
Table of Contents
17
Table of Contents
18
Table of Contents
19
Table of Contents
Six Months Ended June 30, | ||||||||
(in thousands) | 2005 | 2004 | ||||||
Salaries and employee benefits | $ | 13,863 | $ | 11,475 | ||||
Occupancy expense, net | 2,375 | 2,167 | ||||||
Equipment expense | 1,533 | 1,160 | ||||||
Marketing | 1,125 | 750 | ||||||
Outside services and processing | 736 | 582 | ||||||
Communication and postage | 502 | 469 | ||||||
Directors and committee fees | 499 | 785 | ||||||
Audit and examination fees | 452 | 386 | ||||||
Stationery and supplies | 443 | 348 | ||||||
Insurance | 288 | 238 | ||||||
Attorney’s fees | 238 | 212 | ||||||
Amortization of subordinated debenture expense | 136 | 115 | ||||||
FDIC insurance premium | 131 | 115 | ||||||
Deposit intangible amortization | 102 | 102 | ||||||
ORE expense | 50 | 5 | ||||||
Other | 1,605 | 1,511 | ||||||
Total | $ | 24,098 | $ | 20,870 | ||||
20
Table of Contents
21
Table of Contents
22
Table of Contents
(in thousands) | 06/30/05 | 12/31/04 | Change | |||||||||
Commercial real estate | ||||||||||||
Investor occupied | $ | 625,485 | $ | 594,799 | $ | 30,686 | ||||||
Owner occupied | 225,176 | 215,313 | 9,863 | |||||||||
Construction and development | 214,296 | 190,546 | 23,750 | |||||||||
Commercial and industrial | ||||||||||||
Lines of credit | 347,250 | 301,163 | 46,087 | |||||||||
Term | 160,634 | 169,829 | (9,195 | ) | ||||||||
Demand | 460 | 374 | 86 | |||||||||
Residential | ||||||||||||
1-4 family | 162,162 | 159,306 | 2,856 | |||||||||
Multi-family | 30,704 | 22,717 | 7,987 | |||||||||
Consumer | ||||||||||||
Home equity | 84,974 | 86,295 | (1,321 | ) | ||||||||
Installment | 32,846 | 32,149 | 697 | |||||||||
Other | 11,930 | 10,101 | 1,829 | |||||||||
Total loans | $ | 1,895,917 | $ | 1,782,592 | $ | 113,325 | ||||||
23
Table of Contents
24
Table of Contents
25
Table of Contents
(in thousands) | 6/30/05 | 12/31/04 | 6/30/04 | |||||||||
Nonaccrual loans: | ||||||||||||
Commercial real estate | $ | 1,377 | $ | 910 | $ | 1,034 | ||||||
Commercial and industrial | 5,281 | 7,867 | 8,323 | |||||||||
Residential | 45 | 51 | 357 | |||||||||
Consumer | 260 | 281 | 38 | |||||||||
Total | 6,963 | 9,109 | 9,752 | |||||||||
Restructured Loans | ||||||||||||
Commercial and industrial | — | — | 1,257 | |||||||||
Total | — | — | 1,257 | |||||||||
Loans 90 days or more past due: | ||||||||||||
Residential | 914 | 791 | 416 | |||||||||
Consumer | 40 | 108 | 401 | |||||||||
Total | 954 | 899 | 817 | |||||||||
Total nonperforming loans | 7,917 | 10,008 | 11,826 | |||||||||
Total nonperforming assets | $ | 7,917 | $ | 10,008 | $ | 11,826 | ||||||
26
Table of Contents
27
Table of Contents
Three Months Ended | Six Months Ended | |||||||||||||||
(in thousands) | 6/30/05 | 6/30/04 | 6/30/05 | 6/30/04 | ||||||||||||
Allowance balance, beginning of period | $ | 21,226 | $ | 18,162 | $ | 20,116 | $ | 17,295 | ||||||||
Charge offs: | ||||||||||||||||
Commercial and industrial | (1,571 | ) | (1,400 | ) | (1,859 | ) | (2,905 | ) | ||||||||
Residential | — | (158 | ) | — | (254 | ) | ||||||||||
Consumer | (103 | ) | (76 | ) | (244 | ) | (101 | ) | ||||||||
Total charge offs | (1,674 | ) | (1,634 | ) | (2,103 | ) | (3,260 | ) | ||||||||
Recoveries: | ||||||||||||||||
Commercial and industrial | 6 | 28 | 10 | 52 | ||||||||||||
Residential | 43 | — | 43 | — | ||||||||||||
Consumer | 19 | 13 | 54 | 32 | ||||||||||||
Total recoveries | 68 | 41 | 107 | 84 | ||||||||||||
Net charge offs | (1,606 | ) | (1,593 | ) | (1,996 | ) | (3,176 | ) | ||||||||
Provision charged to operations | 2,100 | 1,975 | 3,600 | 4,425 | ||||||||||||
Allowance balance, end of period | $ | 21,720 | $ | 18,544 | $ | 21,720 | $ | 18,544 | ||||||||
Allowance for loan losses to total loans | 1.15 | % | 1.14 | % | ||||||||||||
Nonperforming loans to total loans | 0.42 | 0.73 | ||||||||||||||
Net charge offs to average loans | 0.22 | 0.41 | ||||||||||||||
Allowance for loan losses to nonperforming loans | 274.35 | % | 156.81 | % | ||||||||||||
28
Table of Contents
As of June 30, 2005 | As of December 31, 2004 | |||||||||||||||||||||||
Percent | Percent of | Percent | Percent of | |||||||||||||||||||||
Reserve | of | loans to | Reserve | of | loans to | |||||||||||||||||||
(in thousands) | Amount | Allowance | Total loans | Amount | Allowance | Total loans | ||||||||||||||||||
Commercial real estate | $ | 10,510 | 48.3 | % | 56.2 | % | $ | 10,312 | 51.3 | % | 56.2 | % | ||||||||||||
Commercial and industrial | 9,505 | 43.8 | 26.8 | 8,575 | 42.6 | 26.4 | ||||||||||||||||||
Residential | 1,208 | �� | 5.6 | 10.2 | 611 | 3.0 | 10.2 | |||||||||||||||||
Consumer | 497 | 2.3 | 6.8 | 618 | 3.1 | 7.2 | ||||||||||||||||||
Total | $ | 21,720 | 100.0 | % | 100.0 | % | $ | 20,116 | 100.0 | % | 100.0 | % | ||||||||||||
29
Table of Contents
Securities Available For Sale | June 30, 2005 | December 31, 2004 | ||||||||||||||
Amortized | Market | Amortized | Market | |||||||||||||
(in thousands) | Cost | Value | Cost | Value | ||||||||||||
U.S. Treasury obligations | $ | 2,016 | $ | 1,974 | $ | 2,016 | $ | 1,938 | ||||||||
U.S. government - sponsored agencies | 256,857 | 255,658 | 236,846 | 235,441 | ||||||||||||
Mortgage-backed securities | ||||||||||||||||
Issued by FNMA/FHLMC | 412,492 | 412,481 | 470,993 | 470,787 | ||||||||||||
Issued by GNMA | 17,683 | 17,740 | 20,339 | 20,597 | ||||||||||||
Corporate obligations | 21,138 | 22,407 | 31,723 | 33,111 | ||||||||||||
Federal Reserve Bank Stock | 3,776 | 3,776 | 3,551 | 3,551 | ||||||||||||
Federal Home Loan Bank Stock | 37,500 | 37,500 | 37,100 | 37,100 | ||||||||||||
Total | $ | 751,462 | $ | 751,536 | $ | 802,568 | $ | 802,525 | ||||||||
Investment Securities | June 30, 2005 | December 31, 2004 | ||||||||||||||
Amortized | Market | Amortized | Market | |||||||||||||
(in thousands) | Cost | Value | Cost | Value | ||||||||||||
Obligations of state and political subdivisions | $ | 81,750 | $ | 84,209 | $ | 76,142 | $ | 77,785 | ||||||||
Mortgage-backed securities, issued by FNMA/FHLMC | 1,838 | 1,886 | 2,115 | 2,169 | ||||||||||||
Total | $ | 83,588 | $ | 86,095 | $ | 78,257 | $ | 79,954 | ||||||||
30
Table of Contents
31
Table of Contents
(in thousands) | 6/30/05 | 12/31/04 | ||||||
Non-interest bearing demand deposits | $ | 218,042 | $ | 202,196 | ||||
Interest bearing demand deposits | 416,444 | 542,186 | ||||||
Money market deposits | 304,237 | 332,072 | ||||||
Savings deposits | 270,848 | 93,571 | ||||||
Certificates of deposit of $100,000 or more | 201,553 | 166,983 | ||||||
Other time deposits | 501,839 | 472,996 | ||||||
Total | $ | 1,912,963 | $ | 1,810,004 | ||||
32
Table of Contents
33
Table of Contents
34
Table of Contents
(i) | YNB earned net income of $11.2 million and declared and paid cash dividends of $2.4 million for the six months ended June 30, 2005. |
(ii) | The net unrealized gain on securities available for sale was $48,000 at June 30, 2005 compared to a net unrealized loss of $28,000 at December 31, 2004. The shift from an unrealized loss to an unrealized gain resulted in a $76,000 increase in stockholders’ equity. |
(iii) | Proceeds and related tax benefit of $994,000 was received from the exercise of stock options and $286,000 was received in reinvested dividends and optional purchases associated with our Dividend Reinvestment and Stock Purchase Plan. We also recorded a $140,000 increase in stockholders’ equity associated with the fair market value adjustment related to the allocation of shares to employee accounts in our ESOP. |
(iv) | Unallocated ESOP shares decreased by $188,000 to $189,000 at June 30, 2005 from $377,000 at December 31, 2004. |
35
Table of Contents
Amount | Ratios | |||||||||||||||
(amounts in thousands) | 6/30/05 | 12/31/04 | 6/30/05 | 12/31/04 | ||||||||||||
Risk-based capital: | ||||||||||||||||
Tier 1: | ||||||||||||||||
Holding Company | $ | 225,783 | $ | 211,759 | 10.1 | % | 10.1 | % | ||||||||
Bank | 208,907 | 190,642 | 9.5 | 9.1 | ||||||||||||
Total: | ||||||||||||||||
Holding Company | $ | 251,620 | $ | 239,480 | 11.3 | % | 11.4 | % | ||||||||
Bank | 230,627 | 210,758 | 10.5 | 10.1 | ||||||||||||
Tier 1 leverage: | ||||||||||||||||
Holding Company | $ | 225,783 | $ | 211,759 | 8.0 | % | 8.0 | % | ||||||||
Bank | 208,907 | 190,642 | 7.2 | 6.8 | ||||||||||||
36
Table of Contents
Percentage Change in Net Interest Income | ||||||||
Changes in market interest rates (in basis points) | Next 12 months | Next 24 months | ||||||
As of: June 30, 2005 | ||||||||
+200 | 3.4 | % | 1.0 | % | ||||
Flat | — | — | ||||||
-200 | -4.9 | % | -10.0 | % | ||||
As of: December 31, 2004 | ||||||||
+200 | 2.8 | % | 0.6 | % | ||||
Flat | — | — | ||||||
-200 | -2.4 | % | -1.0 | % |
37
Table of Contents
Percentage Change in EVE | ||||||||
Changes in market interest rates in basis points (Rate Shock) | 6/30/05 | 12/31/04 | ||||||
+200 | -9.7 | % | -17.2 | % | ||||
-200 | -27.4 | % | -21.8 | % |
38
Table of Contents
39
Table of Contents
Votes for | Votes against | |||||||
Jay G. Destribats | 7,829,271 | 1,003,166 | ||||||
James E. Bartolomei | 7,885,582 | 946,855 | ||||||
Gilbert W. Lugossy | 7,769,424 | 1,063,013 | ||||||
Christopher S. Vernon | 7,787,117 | 1,045,320 | ||||||
Robert L. Workman | 7,885,082 | 947,355 |
George D. Muller | 7,881,185 | 951,252 |
Elbert G. Basolis, Jr. | Lorraine Buklad | |||
Anthony M. Giampetro, M.D. | Sidney L. Hofing | |||
Samuel D. Marrazzo | Louis R. Matlack, Ph. D. | |||
Patrick M. Ryan | Martin Tuchman | |||
F. Kevin Tylus |
Votes for: 5,502,576 | Votes against 814,077 | Abstain 54,661 | Non-vote 2,461,133 |
40
Table of Contents
41
Table of Contents
YARDVILLE NATIONAL BANCORP | ||||||
(Registrant) | ||||||
Date: August 17, 2005 | Stephen F. Carman | |||||
Stephen F. Carman | ||||||
Vice President and Treasurer |
42
Table of Contents
Exhibit | ||
Number | Description | |
*10.1 | Employment contract between the Bank and Joanne C. O’Donnell | |
*10.2 | Real property lease between the Bank and WWM Properties LLC for our branch to be located at Route 571 and Southfield Road, West Windsor, New Jersey | |
*10.3 | Real property lease between the Bank and MYNB LLC for our branch to be located at 301 West Trenton Avenue, Falls Township, Pennsylvania | |
31.1 | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer | |
31.2 | Rule 13a-14(a)/15d-14(a) Certification of Vice President and Treasurer | |
32.1 | Section 1350 Certification of Chief Executive Officer | |
32.2 | Section 1350 Certification of Vice President and Treasurer |
* | Previously filed. |
E-1