Empire National Bank Announces Significant Growth in Core First Quarter Earnings
APR 24, 2012 - 17:37 ET
FOR: EMPIRE NATIONAL BANK
ISLANDIA, NY--(Marketwire - April 24, 2012) - Empire National Bank (
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."
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.
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.