UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11 K
ANNUAL REPORT UNDER SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] Annual Report Pursuant to Section 15(d) of the Securities Exchange Act
of 1934 For the fiscal year ended: December 31, 2001.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES ACT OF 1934.
For transition period from
Commission File Number: 0-26086
A. Full title of plan and the address of the plan, if different from that of the
issuer named below:
YARDVILLE NATIONAL BANK
EMPLOYEES' RETIREMENT/SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
Yardville National Bank
2465 Kuser Road, Hamilton, New Jersey 08690
REQUIRED INFORMATION
Financial Statements Page
Independent Auditors' Report
Statements of Net Assets Available for Benefit as of
December 31, 2001 and December 31, 2000.
Statements of Changes in Net Assets Available for Benefits for
the Years ended December 31, 2001 and December 31, 2000.
Notes to Financial Statements
Signature of Plan Administrator
YARDVILLE NATIONAL BANK
EMPLOYEES' RETIREMENT SAVINGS PLAN
Financial Statements and Schedules
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
YARDVILLE NATIONAL BANK
EMPLOYEES' RETIREMENT SAVINGS PLAN
Index
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits - December 31, 2001 and 2000 2
Statements of Changes in Net Assets Available for Benefits -
Years ended December 31, 2001 and 2000 3
Notes to Financial Statements - December 31, 2001 and 2000 4
Schedules
1 Schedule H, Line 4(i) - Schedule of Assets Held for Investment Purposes at
End of Year - December 31, 2001 8
2 Schedule H, Line 4(j) - Schedule of Reportable Transactions 9
Independent Auditors' Report
The Trustees
Yardville National Bank
Employees' Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of Yardville National Bank Employees' Retirement Savings Plan as of December 31,
2001 and 2000, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits as of December 31,
2001 and 2000, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes at end of year and reportable transactions for the year
then ended are presented for the purpose of additional analysis and are not a
required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in the audit of the 2001 basic financial statements and, in
our opinion, are fairly stated in all material respects in relation to the 2001
basic financial statements taken as a whole.
June 4, 2002
YARDVILLE NATIONAL BANK
EMPLOYEES' RETIREMENT SAVINGS PLAN
Statements of Net Assets
Available for Benefits
December 31, 2001 and 2000
2001 2000
---------------- ----------------
Assets - investment funds (note 6) $ 4,730,386 4,160,726
Participant loans (note 3) 168,319 125,294
---------------- ----------------
Net assets available for benefits $ 4,898,705 4,286,020
================ ================
See accompanying notes to financial statements.
2
YARDVILLE NATIONAL BANK
EMPLOYEES' RETIREMENT SAVINGS PLAN
Statements of Changes in Net Assets
Available for Benefits
Years ended December 31, 2001 and 2000
2001 2000
---------------- ----------------
Additions to net assets:
Contributions (note 2):
Employee contributions $ 604,511 676,437
Employer contributions net of forfeitures 179,328 151,567
---------------- ----------------
Total contributions 783,839 828,004
---------------- ----------------
Investment (loss) income:
Net (depreciation) appreciation in
fair value of investments (note 6) (65,046) (88,396)
Interest and dividends 22,633 44,430
---------------- ----------------
Net investment (loss) income (42,413) (43,966)
---------------- ----------------
Interest income from employee loan repayments 15,930 7,679
---------------- ----------------
Total additions 757,356 791,717
Deductions from net assets - distributions to
participants (note 2) (144,671) (56,121)
---------------- ----------------
Net increase in net assets
available for benefits 612,685 735,596
Net assets available for benefits:
Beginning of year 4,286,020 3,550,424
---------------- ----------------
End of year $ 4,898,705 4,286,020
================ ================
See accompanying notes to financial statements.
3
YARDVILLE NATIONAL BANK
EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared on an accrual
basis and present the net assets available for benefits and the changes
in those net assets.
Administrative Expenses
Administrative expenses are paid by Yardville National Bank (the Bank).
Investment Valuation and Income Recognition
The Yardville National Bank Employees' Retirement Savings Plan's (the
Plan) investments are stated at fair value except for its investment
contracts, which are valued at contract value. Contract value is
estimated to approximate fair value. Shares of mutual funds are valued at
quoted market prices, which represent the net asset value of shares held
by the Plan at year end. The Bank's stock is valued at its quoted market
price. Participant notes receivable are valued at cost which approximates
fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
Risks and Uncertainties
The assets of the Plan are primarily financial instruments, which are
monetary in nature. Accordingly, interest rates have a more significant
impact on the Plan's performance than do the effects of general levels of
inflation. Interest rates generally do not move in the same direction or
with the same magnitude as prices of goods and services as measured by
the consumer price index. Investments are subject to risk conditions of
the individual funds' objectives, stock market performance, interest
rates, economic conditions, and world affairs.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
the plan administrator to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of additions and deductions during the reporting period.
Actual results could differ from those estimates.
Impact of Accounting Changes
On January 1, 2001, the Plan adopted Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended in June 1999 by SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of SFAS No. 133," and in June 2000 by SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging
Activities" (collectively SFAS No. 133). The adoption of the above
statements did not have a significant impact on the financial statements
of the Plan.
4 (Continued)
YARDVILLE NATIONAL BANK
EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(2) Description of Plan
The following description of the Plan provides only general information.
Participants should refer to the plan agreement for a more complete
description of the Plan's provisions.
General
The Plan is a participant-directed, defined contribution plan that was
initiated in 1987 and is administered by the Bank. The Plan is subject
to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
In 1990, the employer transferred assets of the Plan to Mutual Benefit
Life Insurance Company (Mutual Benefit). On July 16, 1991, Mutual
Benefit was placed in rehabilatory conservatorship. This action
resulted in a freeze on payments from discontinued group annuity
contracts. The Bank withdrew all nongroup annuity contract funds and
transferred them, as well as future contributions, to a Yardville
National Bank Imprest account until a new plan administrator was
chosen. In October 1992, the Bank temporarily transferred all
available funds and future contributions to a Metropolitan Life Group
Annuity Contract for the remainder of the fiscal year. In 1994, MBL
Life Assurance Corporation assumed these contracts under a
rehabilitation plan (the Rehabilitation Plan). The Rehabilitation Plan
guaranteed at least 3.5% interest and full cash values if participants
elected to leave their money with Mutual Benefit until the end of 1999
or $.55 on the dollar if they withdrew. A plan with new investment
options, but the same plan provisions, was developed in May 1996 with
Metropolitan Life Insurance Company (Metropolitan Life). In 1996, the
participants made their elections and all but two elected to leave
their money with Mutual Benefit (now MBL Life Assurance Corporation)
until the end of 1999. In May 1999, all funds were released and
transferred to Metropolitan Life.
Metropolitan Life Insurance Company's Recordkeeping Services were
taken over by Benefit Services Corporation (a wholly-owned subsidiary
of Metropolitan Life) in August 1998. As a result of the transfer, the
Bank amended the Plan to include new investment options and plan
provisions. The funds with Metropolitan Life were initially
transferred to similar funds of Benefit Services Corporation during
the August 1998 conversion. Subsequent to the initial transfer of
funds, participants may redirect fund balances in 1% increments.
Investment Options
The participant contributions and bank matching contributions may be
allocated to various investment funds, guaranteed investment accounts
and/or the Yardville National Bank Stock Fund at the discretion of the
participant.
Benefits and Contributions
Eligible participants include employees of the Bank who have attained
the age of 19, are not resident aliens or collectively bargained
employees, and have worked one month following their date of hire and
have completed one year of service, as defined. As of December 31,
2001, there are 390 participants in the Plan. Benefits are determined
based on accumulated participants' and employer's contributions and
related investment earnings or losses on those contributions. The
participant can contribute up to 12%
5 (Continued)
YARDVILLE NATIONAL BANK
EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
of base compensation, as defined. The Bank's contributions are equal
to 50% of the participants' contributions, up to 6% of base
compensation. The employer may also make discretionary contributions.
Each year the employer's Board of Directors will determine if a
discretionary contribution will be made to the Plan. Each member's
share of this contribution is based on the relationship their
compensation bears to the total compensation of employees
participating in the Plan. At the plan administrator's discretion,
employees are entitled to contribute rollovers from other qualified
plans. Any forfeited amounts reduce the employer's contributions to
the Plan, and any remaining forfeitures are reallocated to
participants.
Vesting
All participants are fully vested in their voluntary contributions and
related investment earnings or losses. In event of death, disability,
or retirement, matching contributions and related investment earnings
or losses are also considered fully vested to the participant. Vesting
in the remainder of the account is based on years of service, as
defined, with full vesting being attained after five years. In the
event of termination of employment, the non-vested portion of the
account is used to reduce future employer contributions.
Funding
Employee contributions are funded through biweekly payroll deductions,
and employer matching is funded each pay period.
Payment of Benefits
Upon normal retirement at age 65 or termination of employment, a
participant may elect to receive a lump-sum amount equal to his or her
vested account balance at termination date, various annuity option,
or, by agreement with the plan administrator, a lump-sum payment at
any date prior to the April 1 following the taxable year he or she
attains, or would have attained, age 59-1/2. The benefit to which a
participant is entitled is the benefit which can be provided from the
participant's vested account balance.
(3) Loan Policy
Employees participating in the Plan are eligible to receive loans from
the Plan. Loans that are granted to the participant are subject to the
following conditions:
o The minimum amount of any loan shall have a minimum term of 12
months. The maximum loan amount is determined under federal
tax and pension laws. This is generally the lesser of $50,000,
reduced by the highest outstanding loan balance within the
prior 12 months, or 50% of the vested account balance.
The interest rate on a loan will be a reasonable rate of interest based
on interest rates that institutions in the business of making loans would
charge under similar circumstances.
6 (Continued)
YARDVILLE NATIONAL BANK
EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(4) Plan Termination
Although it has not expressed any intent to do so, the employer has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
plan termination, participants will fully vest and receive the value of
their accounts as a lump-sum distribution.
(5) Federal Income Taxes
The Internal Revenue Service (IRS) issued its latest determination letter
on July 28, 1987 which stated that the Plan and its underlying trust, as
then designed, qualify under the applicable provisions of the Internal
Revenue Code (the Code) and, therefore, are exempt from federal income
taxes. Subsequently, the Plan has been amended and submitted to the IRS
for a new determination letter. In the opinion of the Plan's trustees,
the Plan and its underlying trust have operated within the terms of the
Plan and should remain qualified under the applicable provisions of the
Code.
(6) Investments
During 2001 and 2000, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
(depreciated) appreciated in value as follows:
2001 2000
------------------- -------------------
Mutual funds $ (89,241) (106,212)
Investment contracts 3,354 (10,760)
Common stock 20,841 28,576
------------------- -------------------
$ (65,046) (88,396)
=================== ===================
The following table represents the fair value of individual investments
which exceed 5% of the Plan's net assets as of December 31, 2001 and
2000:
2001 2000
-------------------- --------------------
American Century Strat. Allocation $ 568,914 --
MetLife/AUM Medium-Term (Balanced
Lifestyle Option) Portfolio -- 608,297
American Century - 20th Century Ultra 250,704 235,778
MetLife Stock Market Index Guarantee
Account 730,246 861,794
MetLife Migration Pooled GIC 2,234,241 1,799,010
Yardville National Bank Stock 439,328 340,128
==================== ====================
7
Schedule 1
YARDVILLE NATIONAL BANK
EMPLOYEES' RETIREMENT SAVINGS PLAN
Schedule H, Line 4(i) - Schedule of Assets Held for Investment Purposes
at End of Year
December 31, 2001
Number Current
of shares value
---------------- ---------------
American Century Strat. Allocation 96,263 $ 568,914
American Century - 20th Century Ultra 9,070 250,704
Harris Associates - Oakmark 5,165 182,164
State Street Research Mid Cap 6,102 103,557
Janus Worldwide 3,257 142,771
Loomis Sayles Small Cap Value 3,761 78,461
MetLife Stock Market Index Guarantee Account 1,748 730,246
MetLife Migration Pooled GIC 173,990 2,234,241
Yardville National Bank Stock 40,435 439,328
Loans to participants (8.25% to 10.50%) 168,319 168,319
================ ---------------
$ 4,898,705
===============
8
Schedule 2
YARDVILLE NATIONAL BANK
EMPLOYEES' RETIREMENT SAVINGS PLAN
Schedule H, Item 4(j) - Schedule of Reportable Transactions
Year ended December 31, 2001
Identity of issuer
and description of Transaction Number of Purchase Sales Cost Net gain
investment type transactions price proceeds of asset (loss)
- ----------------------- -------------- --------------- -------------- --------------- -------------- ---------------
MetLife/AUM Medium
Term (Balanced
Lifestyle Option)
Portfolio Sale 1 $ -- 532,439 541,512 (9,073)
American Century
Strat. Allocation Purchase 1 532,439 -- -- --
=============== ============== =============== ============== ===============
9
SIGNATURE OF PLAN ADMINISTRATOR
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
Yardville National Bank
Employees' Retirement/Savings Plan
Dated: June 28, 2002 By: /s/ Kathleen A. Fone
-------------------------------------
Kathleen A. Fone
Plan Administrator
Senior Vice President Human Resources