ISLANDIA, N.Y., April 24, 2017 (GLOBE NEWSWIRE) -- Empire Bancorp, Inc. (OTCQB:EMPK), today announced its financial results for the quarter March 31, 2017.
“Over the past year we generated asset growth exceeding $100 million, which contributed to increased earnings of $382 thousand or 78.6% over the first quarter of 2016,” stated Douglas C. Manditch, Chairman and Chief Executive Officer. “Active balance sheet management resulted in an increase in net interest income exceeding $1 million over the first three months of 2016. Using funding largely from our municipal deposit client base, we grew our loan portfolio by approximately $30 million and our investment securities by $71 million year over year. During February we completed our ninth year of operations, and with a solid team of seasoned bankers and an established infrastructure, we are well prepared to progress forward to our next milestones.”
Quarterly Highlights
Financial Results
- Net income, measured on a consolidated basis, for the first quarter of 2017 was $868 thousand, compared with $843 thousand for the fourth quarter of 2016 and $486 thousand for the first quarter of 2016. The provision for loan losses was $130 thousand in the first quarter of 2017, as compared to $300 thousand in the fourth quarter of 2016 and $175 thousand for the first quarter of 2016.
- Diluted earnings per common share for the first quarter of 2017 were $0.12, compared with $0.12 for the fourth quarter of 2016 and $0.07 for the first quarter of 2016.
- Return on average assets and average common stockholders' equity for the first quarter of 2017 were 0.44% and 5.51%, respectively, compared with 0.44% and 5.04%, respectively, for the fourth quarter of 2016, and 0.30% and 2.99%, respectively, for the first quarter of 2016.
- Net income at Empire National Bank for the first quarter of 2017, which excludes the impact of subordinated debt interest expense and other holding company operating expenses, was $1.1 million, compared with $1.0 million for the fourth quarter of 2016 and $683 thousand for the first quarter of 2016.
Franchise Development
- Total assets were $797.0 million at March 31, 2017, up from $696.4 million or 14.4% at March 31, 2016.
- Loans outstanding totaled $501.3 million at March 31, 2017, up from $471.5 million or 6.3% at March 31, 2016.
- Deposits totaled $705.9 million at March 31, 2017, up from $595.4 million or 18.6% at March 31, 2016.
Continued Financial and Credit Strength
- Strong asset quality with an allowance for loan and lease losses of 1.18% of total loans and a ratio of non-performing loans to total loans of 0.46%.
- “Well capitalized” regulatory capital levels at Empire National Bank, as of March 31, 2017:
- Tier 1 leverage capital ratio of 9.96%
- Common equity tier 1 risk-based capital ratio of 15.82%
- Tier 1 risk-based capital ratio of 15.82%
- Total risk-based capital ratio of 17.00%
"Our customers and shareholders may have noticed our television commercials that recently began running on the Long Island cable network. Testimonials genuinely reflecting the views and experiences of our customers convey our story to a wide yet targeted audience. We are already realizing results from our branding efforts, and we are proud to showcase a selection of our satisfied customers who recognize and value our superior service standard," commented Thomas M. Buonaiuto, President and Chief Operating Officer.
Balance Sheet
Assets totaled $797.0 million at March 31, 2017, up $15.6 million, or 2.0%, from December 31, 2016 and up $100.6 million, or 14.4%, from March 31, 2016. Investment securities available for sale were $272.8 million at the recent quarter-end, up $8.1 million, or 3.0%, from December 31, 2016 and up $68.3 million or 33.4% from March 31, 2016. The significant increase in investment securities was primarily attributable to the increase in deposits from March 31, 2017, as discussed below. Gross loans increased 1.4% to $501.3 million from $494.3 million at December 31, 2016 and increased 6.3% from $471.5 million at March 31, 2016.
Total deposits were $705.9 million at March 31, 2017, up $35.2 million, or 5.3%, from December 31, 2016 and up $110.5 million, or 18.6%, from March 31, 2016. Demand deposits were $177.0 million, flat from December 31, 2016, and down $16.5 million, or 8.5%, from March 31, 2016. Savings, N.O.W. and money market deposits totaled $507.3 million at March 31, 2017, an increase of $41.4 million, or 8.9%, over December 31, 2016, and $145.0 million, or 40.0%, from March 31, 2016. The growth in these deposits was driven in large part by new and existing municipal banking relationships. Higher cost certificates of deposit of $100,000 or more and other time deposits continued to trend downward as a percentage of total deposits at March 31, 2017, representing 3.1% of total deposits, compared to 6.7% at March 31, 2016.
Stockholders’ equity rose to $64.7 million at March 31, 2017 from $63.0 million at December 31, 2016 while decreasing from $66.0 million at March 31, 2016. The linked quarter increase was primarily attributable to net income of $868 thousand as well as the reduced net unrealized loss on securities available for sale, net of taxes. The decrease in stockholders’ equity from March 31, 2016 primarily resulted from the increase in the net unrealized loss on securities available for sale, net of taxes of $4.9 million, partially offset by net income of $3.2 million. At March 31, 2017, the bank was “well capitalized” as defined by OCC regulation, with tier 1 leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios of 9.96%, 15.82%, 15.82% and 17.00% respectively.
Net Interest Margin/Net Interest Income
Net interest income for the first quarter of 2017 increased $372 thousand, or 6.6%, over the fourth quarter of 2016 and $1.0 million, or 20.1%, over the first quarter of 2016. Net interest margin was 3.13% for the three months ended March 31, 2017, an increase from 3.00% for the three months ended December 31, 2016, and a decrease from 3.18% for the three months ended March 31, 2016.
Interest income for the first quarter of 2017 increased $373 thousand, or 5.7%, from the fourth quarter of 2016, and $1.1 million, or 19.6%, from the first quarter of 2016. The linked quarter increase was mostly attributable to an increase in income from securities available for sale and loan income by $196 thousand and $119 thousand, respectively. The yield on interest earning assets increased to 3.59% for the first quarter of 2017 compared to 3.46% for the fourth quarter of 2016 and decreased from 3.66% for the first quarter of 2016. The increase quarter over quarter was attributed to an increase in average balance of interest earnings assets coupled with an increase in the average rate of return on interest earning assets. The decrease in yield on earning assets, as compared to the first quarter of 2016, primarily resulted from the growth in the percentage of earning assets held as investment securities, which generated an average yield less than loans.
Interest expense was $881 thousand in the most recent quarter and $880 thousand for the fourth quarter of 2016, as compared to $755 thousand for the first quarter of 2016. The cost of interest bearing liabilities was 0.66% for the three months ended March 31, 2017; a decrease from 0.69% from the three months ended December 31, 2016, and a decrease from 0.78% for the three months ended March 31, 2016. The decreases were largely driven by increased municipal deposits, which carry a lower cost of funds as compared to maturing certificate of deposits.
Noninterest Income and Expense
Other income decreased to $308 thousand in the recently completed quarter compared with $399 thousand in the fourth quarter of 2016, and increased from $283 thousand in the first quarter of 2016. The linked quarter decrease resulted primarily from net securities gains of $131 thousand in the fourth quarter of 2016, and the year over year increase resulted primarily from net securities losses of $18 thousand in the first quarter of 2016. There were no securities gains or losses in the first quarter of 2017.
Other expense in the first quarter of 2017 totaled $4.9 million, compared with $4.4 million in the fourth quarter of 2016 and first quarter of 2016. Salaries and employee benefits expense increased $305 thousand or 13.0% over the previous quarter, and $333 thousand or 14.4% over the first quarter of 2016, largely due to base salary increases and benefit plans to support strategic plans and employee recognition and retention. Net occupancy and equipment costs increased $42 thousand, or 6.3%, over the first quarter of 2016 as a result of opening an office in Manhattan. Advertising and business development increased $60 thousand, or 26.0%, over the first quarter of 2016. Professional fees increased $59 thousand, or 43.7%, over the linked quarter and $6 thousand, or 3.2%, over the first quarter of 2016 principally as a result of additional services associated with the company’s organic growth. Increases in other expenses also reflected costs associated with the collateralization of municipal deposits, education and training of employees as well as director compensation.
Strong Asset Quality/Provision for Loan Losses
Credit quality remained strong with loans classified as nonaccrual at $2.3 million, or 0.46% of total loans outstanding at March 31, 2017, compared with $2.4 million, or 0.48%, at December 31, 2016 and $536 thousand, or 0.11%, at March 31, 2016.
Based on management’s assessment of the adequacy of the allowance for loan and lease losses, a provision of $130 thousand was recorded for the first quarter of 2017, as compared with $300 thousand for the fourth quarter of 2016 and $175 thousand for the first quarter of 2016. Expressed as a percentage of outstanding loans, the allowance for loan and lease losses was 1.18% at March 31, 2017, compared with 1.17% at December 31, 2016 and 1.15% at March 31, 2016.
There were no recorded charge-offs or recoveries in the first quarter of 2017 or 2016. In the final quarter of 2016, there were no net charge-offs but there were net recoveries of $11 thousand.
About Empire Bancorp, Inc.
Empire Bancorp, Inc. is a bank holding company for Empire National Bank, a Long Island-based independent bank that specializes in serving the financial needs of small and medium sized businesses, professionals, nonprofit organizations, municipalities, real estate investors, and consumers. The bank has four full-service banking offices located in Islandia, Shirley, Port Jefferson Station, Mineola and a private banking branch office in Manhattan. Our bankers take pride in understanding the needs of each 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 press release 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 the control of the Company. The forward-looking statements included in this press release are made only as of the date of this press release. The Company has no intention, and does not assume any obligation, to update these forward-looking statements.
Consolidated Statements of Condition (unaudited) | ||||||||||||
(dollars in thousands, except per share data) | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2017 | 2016 | 2016 | ||||||||||
ASSETS | ||||||||||||
Total cash and cash equivalents | $ | 8,122 | $ | 6,354 | $ | 10,762 | ||||||
Securities available for sale, at fair value | 272,788 | 264,734 | 204,473 | |||||||||
Securities held to maturity | 3,000 | 3,000 | - | |||||||||
Securities, restricted | 2,960 | 4,131 | 3,287 | |||||||||
Loans | 501,309 | 494,274 | 471,549 | |||||||||
Allowance for loan losses | (5,929 | ) | (5,799 | ) | (5,443 | ) | ||||||
Loans, net | 495,380 | 488,475 | 466,106 | |||||||||
Premises and equipment, net | 6,006 | 6,052 | 6,508 | |||||||||
Other assets and accrued interest receivable | 8,766 | 8,689 | 5,264 | |||||||||
Total Assets | $ | 797,022 | $ | 781,435 | $ | 696,400 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
Demand Deposits | $ | 177,044 | $ | 177,299 | $ | 193,505 | ||||||
Savings, N.O.W. and money market deposits | 507,314 | 465,890 | 362,353 | |||||||||
Certificates of deposit of $100,000 or more | ||||||||||||
and other time deposits | 21,564 | 27,494 | 39,589 | |||||||||
Total Deposits | $ | 705,922 | $ | 670,683 | $ | 595,447 | ||||||
Short-term borrowings | 578 | 26,477 | 9,956 | |||||||||
Subordinated debentures, net | 14,746 | 14,735 | 14,711 | |||||||||
Other liabilities and accrued expenses | 11,092 | 6,548 | 10,311 | |||||||||
Total Liabilities | $ | 732,338 | $ | 718,443 | $ | 630,425 | ||||||
Total Stockholders' Equity | 64,684 | 62,992 | 65,975 | |||||||||
Total Liabilities and Stockholders' Equity | $ | 797,022 | $ | 781,435 | $ | 696,400 | ||||||
Selected Financial Data (unaudited) | ||||||||||||
Allowance for Loan Losses to Total Loans | 1.18 | % | 1.17 | % | 1.15 | % | ||||||
Non-performing Loans to Total Loans | 0.46 | % | 0.48 | % | 0.11 | % | ||||||
Non-performing Assets to Total Assets | 0.29 | % | 0.30 | % | 0.08 | % | ||||||
Book Value per Share | $ | 9.16 | $ | 9.07 | $ | 9.51 | ||||||
Capital Ratios (unaudited)(1) | ||||||||||||
Tier 1 Leverage Ratio | 9.96 | % | 10.22 | % | 11.57 | % | ||||||
Common Equity Tier 1 Risk-Based Capital Ratio | 15.82 | % | 16.26 | % | 16.16 | % | ||||||
Tier 1 Risk-Based Capital Ratio | 15.82 | % | 16.26 | % | 16.16 | % | ||||||
Total Risk-Based Capital Ratio | 17.00 | % | 17.46 | % | 17.32 | % | ||||||
(1) Regulatory capital ratios presented on bank-only basis | ||||||||||||
Consolidated Statements of Operations (unaudited) | ||||||||||||
(dollars in thousands, except per share data) | ||||||||||||
For the three months ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2017 | 2016 | 2016 | ||||||||||
Interest income | $ | 6,919 | $ | 6,546 | $ | 5,784 | ||||||
Interest expense | 881 | 880 | 755 | |||||||||
Net interest income | $ | 6,038 | $ | 5,666 | $ | 5,029 | ||||||
Provision for loan losses | 130 | 300 | 175 | |||||||||
Net interest income after | ||||||||||||
provision for loan losses | 5,908 | 5,366 | 4,854 | |||||||||
Other income | 308 | 399 | 283 | |||||||||
Other expense | 4,896 | 4,449 | 4,377 | |||||||||
Income before income taxes | 1,320 | 1,316 | 760 | |||||||||
Income tax expense | 452 | 473 | 274 | |||||||||
Net income | $ | 868 | $ | 843 | $ | 486 | ||||||
Basic earnings per share | $ | 0.12 | $ | 0.12 | $ | 0.07 | ||||||
Diluted earnings per share | $ | 0.12 | $ | 0.12 | $ | 0.07 | ||||||
Weighted average common and equivalent | ||||||||||||
shares outstanding | 7,139,139 | 6,899,655 | 6,894,203 | |||||||||
Selected Financial Data (unaudited) | ||||||||||||
Return on Average Assets | 0.44 | % | 0.44 | % | 0.30 | % | ||||||
Return on Average Equity | 5.51 | % | 5.04 | % | 2.99 | % | ||||||
Net Interest Margin | 3.13 | % | 3.00 | % | 3.18 | % | ||||||
Efficiency Ratio | 77.15 | % | 74.99 | % | 82.13 | % | ||||||