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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 20, 1998
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NORTHEAST PENNSYLVANIA FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
Delaware 1-13793 06-1504091
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(State or other Jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
12 E. Broad Street, Hazleton, Pennsylvania 18201
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(Address of principal executive offices)
(717) 459-3700
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
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On October 20, 1998, Northeast Pennsylvania Financial Corp. (the
"Company"), issued a press release which reported earnings for the fiscal year
and quarter ended September 30, 1998.
A press release announcing the Company's third quarter earnings is
attached as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND OTHER EXHIBITS.
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Exhibit 99.1 Press Release dated October 20, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 26, 1998 By: /s/ E. Lee Beard
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E. Lee Beard
President and Chief Executive Officer
Dated: October 26, 1998 By: /s/ Patrick J. Owens, Jr.
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Patrick J. Owens, Jr.
Senior Vice President and
Chief Financial Officer
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EXHIBIT 99.1 PRESS RELEASE
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NEWS RELEASE
FOR IMMEDIATE RELEASE
DATE: OCTOBER 20, 1998
CONTACT: PATRICK J. OWENS, JR.
SENIOR VICE PRESIDENT/CFO
PHONE: (717) 459-3722 OFFICE
FAX: (717) 450-6110
NORTHEAST PENNSYLVANIA FINANCIAL CORP. REPORTS FISCAL YEAR 1998
AND FOURTH QUARTER EARNINGS.
Hazleton, Pa. . . . . E. Lee Beard, President and Chief Executive Office for
Northeast Pennsylvania Financial Corp. (the Company) (Amex; NEP), the holding
company for First Federal Bank (formerly First Federal Savings and Loan
Association of Hazleton), reported a net profit for the quarter ended September
30, 1998 of $896,000, or $.15 per share, compared to a $510,000 net loss for the
respective prior year period. Due to the Bank's recent conversion and formation
of the Company, earnings per share figures for prior year periods are not
applicable. Beard indicated that for the twelve months ended September 30, 1998,
the Company had a net loss of $47,000, or ($.01) per share (2), including the
one-time $4.8 million non-recurring pre-tax (or $3.1 million after-tax) expense
relating to the funding of First Federal Charitable Foundation, a charitable
foundation established in connection with the conversion. If the after-tax
effect of the contribution were eliminated, the Company would have had net
income of $3.1 million, or $.51 per share, for the twelve month period ended
September 30, 1998, compared to $1.4 million for the comparable prior year
period.
(continued)
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NORTHEAST PENNSYLVANIA FINANCIAL CORP. FOURTH QUARTER
EARNINGS SEPTEMBER 1998
Net interest income for the current quarter rose $1.1 million or 34.1% over the
prior year quarter and $2.6 million or 20.7% for the twelve months ended
September 30, 1998 over the prior year. These increases were primarily
attributable to the interest income from higher outstanding loan and investment
balances offset in part by higher interest expenses on outstanding Federal Home
Loan Bank (FHLB) advances. The provision for loan losses decreased $234,000 for
the current quarter over the prior year quarter due to an increase in loan loss
reserves in September 1997. This increase, as well as a $408,000 increase in the
fiscal 1998 provision for loan losses, was due to a changing loan portfolio
composition as well as efforts to give greater consideration to allowance for
loan loss ratio levels of peer group institutions. Non-performing assets have
remained relatively stable with balances of $1.3 million and $1.1 million at
September 30, 1998 and September 30, 1997, respectively.
Non-interest income for the current quarter increased $961,000 over the prior
year's quarter and $1.0 million for the current year over the prior year
primarily due to losses on sale of investment securities in 1997 in connection
with the Bank's restructuring of its securities portfolio, as well as, a 1997
writedown of assets in conjunction with an anticipated relocation of the
Columbia Mall branch. Contributing to the increase in non-interest income were
gains resulting from the sale of securities and premium income received through
Abstractors, Inc. Non-interest expense increased $366,000 or 13.8% for the
current quarter over the prior year's quarter and $977,000 or 10.3% for the
current year over the prior year, after eliminating the impact of the charitable
contribution to the Foundation. These increases were primarily a result of
additions to staff and occupancy expenses relating to the opening of the
Mountaintop branch, salary and employee benefit increases (including an ESOP
accrual), and increased promotion of loan and deposit products.
The company had total assets of $522.1 million as of September 30, 1998,
representing an increase of $152.9 million, or 41.4%, over the balance of $369.2
million as of September 30, 1997. The increases were in securities purchased and
loan originations, which were funded with the proceeds of the stock offering,
additional FHLB advances, and an increase in deposits.
(continued)
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NORTHEAST PENNSYLVANIA FINANCIAL CORP. FOURTH QUARTER
EARNINGS SEPTEMBER 1998
Northeast Pennsylvania Financial Corp. is the holding company of Abstractors
Inc., a wholly-owned title insurance agency, and First Federal Bank, which
serves the greater Hazleton area, Mountaintop, Bloomsburg, Lehighton, and all of
Schuylkill County, through ten office locations.
(continued)
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<TABLE>
<CAPTION>
SELECTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
THREE MONTHS ENDED TWELVE MONTHS ENDED
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SEPTEMBER 30 SEPTEMBER 30
OPERATING: 1998 1997 1998 1997
- --------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Total interest income $8,578 $6,825 $30,542 $26,599
Total interest expense 4,377 3,691 15,566 14,194
Provision for loan losses 281 515 1,059 651
Non-interest income 374 (587) 907 (133)
Non-interest expense 3,021 2,655 15,230 9,492
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Income (loss) before income taxes 1,273 (623) (406) 2,129
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Net income (loss) $896 $ (510) ($47) $1,381
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Earnings (loss) per share - basic .15 N/A (.01) N/A
Earnings (loss) per share - diluted .15 N/A (.01) N/A
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA: 9/30/98 6/30/98 3/31/98 9/30/97
- ------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
Total assets $522,138 $477,807 $443,402 $369,242
Total securities 220,894 173,452 128,162 83,698
Loans, net 282,706 279,696 267,540 261,469
Deposits 324,035 322,872 311,660 314,123
FHLB Advances 106,498 65,503 43,507 23,516
Total equity 87,494 84,958 83,974 28,538
Book value per share $14.80 $14.37 $14.20 N/A
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
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SEPTEMBER 30, SEPTEMBER 30,
SELECTED RATIOS: 1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Return on average assets(1) .73% (.54%) (.01%) .38%
Return on average assets, excluding Charitable
Contribution .73% N/A .72% N/A
Return on average equity(1) 4.17% (6.57%) (.08%) 4.98%
Return on average equity, excluding Charitable
Contributions 4.17% N/A 5.49% N/A
Net interest margin(1) 3.74% 3.51% 3.74% 3.49%
Allowance for loan losses to loans, net .80% .48% .80% .48%
</TABLE>
(1) Annualized for the three months ended September 30, 1998 and 1997.
(2) Earnings per share calculations are based as if all shares are outstanding
for the entire period.
