Empire National Bank Announces Third Quarter Earnings

Empire National Bank Announces Third Quarter Earnings 
ISLANDIA, NY -- (Marketwire) -- 11/05/12 --  Empire National Bank
(OTCQB: EMPK), today announced its operating results for the third
quarter of 2012. Highlights for the quarter include: 


 
--  Total assets of $438.0 million as of September 30, 2012, an increase
    of $16.3 million, or 3.9%, from June 30, 2012; and a $98.3 million, or
    28.9%, increase from December 31, 2011.
--  Total loans of $242.2 million as of September 30, 2012, an increase of
    $10.5 million, or 4.5%, from June 30, 2012; and a $29.3 million, or
    13.8%, increase from December 31, 2011.
--  Demand deposits of $171.6 million, representing a $8.9 million, or
    5.5%, increase from June 30, 2012; and a $125.8 million, or 274.7%,
    increase from December 31, 2011.
--  Net income for the nine months ended September 30, 2012 of $3.2
    million, an increase of $68 thousand, or 2.1%, from $3.2 million for
    the same period in 2011.
--  Net income for the quarter ended September 30, 2012 of $145 thousand,
    a decrease of $2.2 million as compared to net income for the quarter
    ended September 30, 2011. Net securities gains totaled $94 thousand
    for the quarter ended September 30, 2012 as compared to $1.9 million
    for the quarter ended September 30, 2011.
--  Strong liquidity driven by core deposit growth resulting in $188.1
    million in cash and available for sale securities.
--  "Well Capitalized" regulatory capital levels, as of September 30,
    2012:
    --  Tier 1 leverage capital ratio of 9.42%
    --  Tier 1 risk-based capital ratio of 14.49%
    --  Total risk-based capital ratio of 15.74%
--  Increasing book value per share at $9.74, as of September 30, 2012, a
    15.8% increase from September 30, 2011; and a 13.3% increase from
    December 31, 2011.

  
Douglas C. Manditch, Chairman and Chief Executive Officer stated, "We
are pleased with our continued growth and ability to leverage our
shareholder equity during this very challenging economic period,
which has been characterized by slow growth, economic uncertainty and
an extended low interest rate environment driven by Federal Reserve
monetary policy. Our balance sheet reflects the deliberate expansion
of both our loan portfolio and core deposit base. W
e remain steadfast
and confident in the quality of our loan portfolio, which has been
built on our culture of conservative and sensible underwriting
guidelines. We are closely managing our investment securities
portfolio, as well as the pricing of our loan portfolio in this
competitive environment, remaining mindful that this prolonged
environment of low interest rates could change rapidly and
considerably. When prudent, we are willing to sacrifice short term
rewards to better position our balance sheet to produce long term
value for our investors."  
Earnings for the Third Quarter Ended September 30, 2012 
Net income was $145 thousand, or $0.03 per share, for the third
quarter of 2012, compared to $2.3 million for the third quarter of
2011, a decrease of $2.2 million. The decrease in net income was
primarily attributable to reductions in security gains of $1.8
million. The bank recognized an increase in net interest income of
$357 thousand, which was attributable to growth in average earning
assets, partially offset by a reduction in the bank's net interest
margin.  
The decrease in the net interest margin was due primarily to the
continued historically low interest rate environment, challenging
economic conditions and an increase in securities available for sale
and due from banks as a percentage of average earning assets, as
compared to loans. The increase in net interest income was partially
offset by an increase in salaries and employee benefits primarily
associated with the continued growth of the bank, as well as from
costs largely attributable to our commitment and focus to providing
financial products and services targeted to professional practices.
In addition, the bank's provision for loan losses increased $285
thousand during the third quarter of 2012, as compared to same period
in 2011, reflecting the overall growth in the loan portfolio and
management's assessment of the adequacy of the loan loss allowance.
As of September 30, 2012, the bank maintained an allowance for loan
losses ratio to total loans of 1.85%. For the first time since its
inception, the bank recognized income tax expense of $130 thousand
associated with its results of operations for this quarter.  
Manditch also stated, "The bank's net interest margin was 3.36% for
the quarter ended September 30, 2012, a significant decrease of 50
basis points, or 13%, from the same period in 2011. The weak economy
and the extended low interest rate environment continues to make
profitable deployment of funds more challenging, further diminishing
our net interest margin. These conditions have also resulted in an
extremely competitive marketplace for high quality loans, including
those currently on our balance sheet that we seek to retain, creating
downward pressure on our loan yields and interest income. This
interest rate environment, which affects our entire industry, also
continues downward pressure on our expanded securities portfolio with
an even more exaggerated result." 
Earnings for the Nine Months Ended September 30, 2012 
Net income for the nine months ended September 30, 2012 was $3.2
million, an increase of $68 thousand, or 2.1%, as compared to the
nine months ended September 30, 2011. Earnings per share were $0.74
and $0.76 for the nine month periods ended September 30, 2012 and
2011, respectively. The increase in net income was primarily
attributable to increases in the bank's net interest income and
income tax benefit. For the nine months ended September 30, 2012, the
bank's net interest income was approximately $10.1 million, an
increase of approximately $1.1 million, or 12.7%, as compared to net
interest income of approximately $9.0 million for the nine months
ended September 30, 2011. The net interest margin was 3.57% for the
nine months ended September 30, 2012 as compared to 3.78% for the
same nine month period a year ago. The decrease in the net interest
margin was due primarily to the continued historically low interest
rate environment, challenging economic conditions and an increase in
securities available for sale and total due from banks as a
percentage of average earning assets, as compared to loans. The
increase in net income was partially offset by a decrease of
approximately $676 thousand in net securities gains and an increase
of approximately $1.3 million in other expense. The increase in other
expense was primarily attributable to salaries and employee benefits
principally associated with the continued growth of the bank, and
from costs largely attributable to our commitment and focus to
providing financial products and services targeted to professional
practices.  
Balance Sheet and Asset Quality 
Total assets were $438.0 million at September 30, 2012, reflecting an
increase of 3.9% from $421.7 million at June 30, 2012 and an increase
of 28.9% from $339.7 million at December 31, 2011. The growth in
total assets was primarily due to increases in net loan balances,
securities available for sale, and total cash and cash equivalents.
Net loans grew 4.5% from $227.5 million at June 30, 2012 and 13.9%
from $208.7 million at December 31, 2011. Available for sale
securities grew 3.2% from $139.1 million at June 30, 2012 and 25.4%
at December 31, 2011. Cash and cash equivalents have increa
sed $40.1
million since December 31, 2011.  
Non-performing assets, consisting of two non-performing loans, were
$3.0 million at September 30, 2012. At September 30, 2012, the bank's
ratio of non-performing loans to total loans was 1.24%, and its ratio
of non-performing assets to total assets was 0.69%, remaining below
those of the bank's peers. The allowance for loan losses to total
loans was 1.85% at September 30, 2012, as compared to 1.81% at June
30, 2012. 
Total deposits were $388.6 million at September 30, 2012, a
year-over-year increase of $123.6 million, or 46.6%. On a linked
quarter basis, total deposits increased by $11.3 million, or 3.0%.
Demand deposits increased $125.9 million, or 274.9%, year-over-year
and $8.9 million, or 5.5%, on a linked quarter basis to $171.6
million at September 30, 2012.  
Stockholders' equity grew from $37.4 million to $42.7 million from
December 31, 2011 to September 30, 2012, primarily as a result of the
bank's earnings during that period. At September 30, 2012, the bank
was "well capitalized" as defined by OCC regulation, with leverage,
Tier 1 risk-based and total risk-based capital ratios of 9.42%,
14.49% and 15.74%, respectively. 
Opportunities and Challenges 
"Continued margin compression has made this environment very
challenging. The competitive, low interest rate environment has
forced downward pressure on commercial lending yields. Although
deposit rates have also decreased, we continue to manage our cost of
funds, in such a way to remain competitive in our market. With a
customer-centric and relationship banking business model, we continue
to channel our resources on the development of products and services
that serve small businesses and professional practices. During the
third quarter, we upgraded our business online banking product and
introduced several new mobile banking products designed to make
banking easier and more convenient for our customers and potential
prospects," remarked Thomas M. Buonaiuto, President and Chief
Operating Officer. 


 
                                                                            
Balance Sheet (unaudited)                                                   
(dollars in thousands)                                                      
                                  September    June    December   September 
                                   30, 2012  30, 2012   31, 2011   30, 2011 
                                  ---------  --------  ---------  --------- 
ASSETS                                                                      
Total cash and due from banks     $  44,470  $ 42,158  $   4,388  $   3,722 
Securities available for sale, at                                           
 fair value                         143,589   139,092    114,502     84,060 
Securities, restricted                1,788     1,697      3,002      1,431 
Loans, net                          237,730   227,529    208,660    211,491 
Premises and equipment, net           6,612     6,732      6,850      7,153 
Other assets and accrued interest                                           
 receivable                           3,813     4,524      2,331      2,274 
                                  ---------  --------  ---------  --------- 
  Total Assets                    $ 438,002  $421,732  $ 339,733  $ 310,131 
                                  =========  ========  =========  ========= 
                                                                            
LIABILITIES AND STOCKHOLDERS'                                               
 EQUITY                                                                     
Demand Deposits                   $ 171,625  $162,659  $  45,765  $  46,915 
Savings, N.O.W. and money market                                            
 deposits                           147,367   137,484    126,335    128,901 
Certificates of deposit of                                                  
 $100,000 or more and other time                                            
 deposits                            69,589    77,111     92,920     89,032 
                                  ---------  --------  ---------  --------- 
  Total Deposits                  $ 388,581  $377,254    265,020    264,848 
Short-term borrowings                     -         -     34,449      2,810 
Other liabilities and accrued                                               
 expenses                             6,758     3,146      2,832      7,027 
                                  ---------  --------  ---------  --------- 
Total Liabilities                 $ 395,339  $380,400    302,301    274,685 
                                  ---------  --------  ---------  --------- 
Total Stockholders' Equity           42,663    41,332     37,432     35,446 
                                  ---------  --------  ---------  --------- 
Total Liabilities and                                                       
 Stockholders' Equity             $ 438,002  $421,732    339,733    310,131 
                                  =========  ========  =========  ========= 
                                                                            
Selected Financial Data                                                     
 (unaudited)                                                                
Allowance for Loan Losses to                                                
 Total Loans                           1.85%     1.81%      1.98%      1.96%
Non-performing Loans to Total                                               
 Loans                                 1.24%     0.95%      1.03%      1.03%
Non-performing Assets to Total                                              
 Assets                                0.69%     0.52%      0.65%      0.71%
                                                                            
Capital Ratios (unaudited)                                                  
Tier 1 Leverage Ratio                  9.42%     9.84%     10.80%     10.54%
Tier 1 Risk-Based Capital Ratio       14.49%    14.41%     15.36%     14.71%
Total Risk-Based Capital Ratio        15.74%    15.66%     16.62%     15.97%
                                                                            
Book Value per Share              $    9.74  $   9.44  $    8.60  $    8.41 
                                                                            
                                                                            
Statement of Operations (unaudited)                                         
(dollars in thousands, except per share data)                               
                                                                            
                                                        For the nine months 
                         For the three months ended            ended        
                      -------------------------------  -------------------- 
                      September    June     September  September  September 
                       30, 2012   30, 2012   30, 2011   30, 2012   30, 2011 
                      ---------  ---------  ---------  ---------  --------- 
Interest income       $   3,989  $   4,089  $   3,678  $  11,926  $  10,859 
Interest expense            572        574        618      1,796      1,872 
                      ---------  ---------  ---------  ---------  --------- 
Net interest income   $   3,417  $   3,515  $   3,060  $  10,130  $   8,987 
Provision for loan                                                          
 losses                     285          -          -        285          - 
Net interest income                                                         
 after provision for                                                        
 loan losses              3,132      3,515      3,060      9,845      8,987 
Net securities                                                              
 (losses) gains              94      1,162       1937      1,256      1,932 
Other income                146        152        129        451        372 
Other expense             3,097      3,291       2778      9,382      8,111 
                      ---------  ---------  ---------  ---------  --------- 
Income before income                                                        
 taxes                      275      1,538       2348      2,170     
 3,180 
Income tax (expense)                                                        
 benefit                   (130)     1,208          -      1,078          - 
                      ---------  ---------  ---------  ---------  --------- 
Net income            $     145  $   2,746  $   2,348  $   3,248      3,180 
                      =========  =========  =========  =========  ========= 
                                                                            
Basic earnings per                                                          
 share                $    0.03  $    0.63  $    0.56  $    0.74  $    0.76 
Diluted earnings per                                                        
 share                $    0.03  $    0.63  $    0.56  $    0.74  $    0.76 
                                                                            
Selected Financial                                                          
 Data (unaudited)                                                           
Return on Average                                                           
 Assets                    0.14%      2.74%      2.84%      1.09%      1.29%
Return on Average                                                           
 Equity                    1.39%     27.53%     27.19%     10.81%     13.21%
Net Interest Margin        3.36%      3.64%      3.86%      3.57%      3.78%
Efficiency Ratio          86.88%     89.75%     87.10%     88.67%     86.66%

 
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: 
William Franz 
VP, Director of Marketing & Investor Relations
(631) 348-4444 
 
 
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