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NEWS RELEASE
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FOR IMMEDIATE RELEASE
DATE: October 25, 2000
CONTACT: Patrick J. Owens, Jr.
Treasurer
PHONE: (570) 459-3722 office
FAX: (570) 450-6110
NORTHEAST PENNSYLVANIA FINANCIAL CORP. REPORTS
EARNINGS FOR THE QUARTER ENDED SEPTEMBER 30, 2000 AND
FISCAL YEAR 2000.
Hazleton, Pa........ E. Lee Beard, President and Chief Executive Officer for
Northeast Pennsylvania Financial Corp. (the "Company") (Amex: NEP), the holding
company for First Federal Bank (the "Bank"), reported net income for the quarter
ended September 30, 2000 of $516,000, or $.11 basic and diluted earnings per
share, compared to $973,000 net income, or $.19 basic and $.18 diluted earnings
per share for the respective prior year period. For the twelve months ended
September 30, 2000, the Company had net income of $3.9 million, or $.84 basic
and $.81 diluted earnings per share compared to $4.6 million net income, or $.84
basic and $.80 diluted earnings per share for the twelve months ended September
30, 1999.
The reduction in earnings this quarter is directly related to an increase in the
Bank's provision for loan losses for the quarter to $882,000. The increase was
the result of the impairment, as of September 30, 2000, of a borrowers ability
to repay a $2 million commercial loan which was discovered by the Bank in early
October 2000. This commercial loan is secured by a portfolio of NASDAQ traded
securities whose value has fluctuated greatly in recent periods. Mrs. Beard
indicated that, if it were not for the impact of this impaired loan, net income
for the quarter ended September 30, 2000 would have been $981,000, or $.21 basic
and $.20 diluted earnings per
(continued)
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NORTHEAST PENNSYLVANIA FINANCIAL CORP. FOURTH QUARTER EARNINGS SEPTEMBER 2000
share. For the twelve months ended September 30, 2000, the Company would have
reported $4.4 million, or $.94 basic and $.91 diluted earnings per share.
Net interest income for the current quarter declined $51,000, or 1.1% over the
prior year quarter and increased $763,000, or 4.3% for the year ended September
30, 2000 over the prior year. The increase over prior year end was primarily
attributable to interest income from higher outstanding loan and investment
balances offset in part by higher interest expenses on deposits and outstanding
Federal Home Loan Bank ("FHLB") advances. The provision for loan losses
increased $478,000 for the current quarter over the prior year quarter and
$720,000 for current year over prior year. Increases to the provision resulted
from the effect of the previously mentioned commercial loan which went into
default. As a result of this default, non-performing assets increased to $3.7
million, or .58% of total assets at September 30, 2000 as compared to $1.5
million, or .24% of total assets at September 30, 1999.
Non-interest income for the current quarter increased $144,000 over the prior
year's quarter primarily due to increases in service and fee income, premium
income from Abstractors, Inc., and trust fee income from Northeast Pennsylvania
Trust Co. The increase of $28,000 in non-interest income for the year relates
primarily to income earned from Northeast Pennsylvania Trust Co.
Non-interest expense increased $71,000, or 1.9% for the current quarter over the
prior year's quarter and $1.1 million, or 8.5% for the current year over the
prior year. These increases were primarily a result of salary and employee
benefit increases (specifically for additional Northeast Pennsylvania Trust Co.
employees), increased occupancy expenses resulting from branch and company
expansion and an increase in loan expense.
Total assets decreased $21.4 million, or 3.3% during the current quarter from
$658.5 million to $637.1 million at September 30, 2000. The decrease was
primarily a result of a $21.8 million, or 10.4% decrease in securities due to
the sale of investment securities during the quarter. The majority of the
securities sold were tax free municipal bonds. The sale of these securities did
not result in net losses to the Company. The allowance for loan loss increased
$800,000 from $3.4
(continued)
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NORTHEAST PENNSYLVANIA FINANCIAL CORP. FOURTH QUARTER EARNINGS SEPTEMBER 2000
million at June 30, 2000 to $4.2 million at September 30, 2000. The increase in
the allowance for loan loss was due to the need to reserve for the commercial
loan which went into default. The decrease of $88.0 million in FHLB advances was
the result of repayments funded by a $58.3 million increase in deposits as well
as the cash received from the sale of securities. Total equity increased $1.9
million as a result of a decrease in unrealized loss on available for sale
securities combined with earnings for the quarter.
Mrs. Beard announced plans to resume the stock repurchase program which was
previously approved in February 2000. Currently, the company still has 333,565
shares to repurchase. All repurchases will be made depending on market and
financial conditions.
During the quarter, Northeast Pennsylvania Financial Corp. announced it had
signed a letter of intent to acquire Higgins Insurance Associates, Inc. The
insurance agency is headquartered in Pottsville, Pennsylvania and has been
serving customers throughout Schuylkill and Luzerne counties since 1946. Mrs.
Beard stated that NEP received approval on October 24, 2000, from the Office of
Thrift Supervision, for the acquisition of Security of Pennsylvania Financial
Corp. She indicated that the effective merger date is expected to be
November 10, 2000. Security is the holding company of Security Savings
Association of Hazleton. Two of Security's offices will be closed upon merger.
The Company estimates that, after the merger, earnings per share for fiscal 2001
will be in excess of $1.00 per share.
Mrs. Beard announced today that the Annual Meeting of Shareholders will be held
on January 31, 2001 at 11:00 a.m. at Genetti's Best Western Motor Lodge, Route
309 North, Hazleton, Pennsylvania.
Northeast Pennsylvania Financial Corp. is the holding company of Abstractors,
Inc., a wholly-owned title insurance agency, Northeast Pennsylvania Trust Co.,
and First Federal Bank, which serves greater Northeastern and Central
Pennsylvania through thirteen full service office locations and a loan
production office.
(continued)
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NORTHEAST PENNSYLVANIA FINANCIAL CORP. FOURTH QUARTER EARNINGS SEPTEMBER 2000
Statements contained in this news release, which are not historical facts, are
forward looking statements, as the term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risk and uncertainties which could cause actual results to differ materially
from those currently anticipated due to a number of factors, which include, but
are not limited to, factors discussed in documents filed by the Company with the
Securities and Exchange Commission from time to time.
(continued)
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NORTHEAST PENNSYLVANIA FINANCIAL CORP. FOURTH QUARTER EARNINGS SEPTEMBER 2000
NORTHEAST PENNSYLVANIA FINANCIAL CORP.
SELECTED FINANCIAL INFORMATION
(Dollars in Thousands, Except Per Share data and ratios)
THREE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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OPERATING DATA: 2000 1999 2000 1999
--------------- -------- -------- -------- ----------
Total interest income $11,654 $10,175 $ 45,146 $ 37,674
Total interest expense 7,085 5,555 26,531 19,822
-------- -------- -------- ----------
Net interest income 4,569 4,620 18,615 17,852
Provision for loan losses 882 404 1,467 747
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Net interest income after provision
for loan losses 3,687 4,216 17,148 17,105
Non-interest income 589 445 1,896 1,868
Non-interest expense 3,719 3,648 14,527 13,395
-------- -------- -------- ----------
Income before income taxes 557 1,013 4,517 5,578
-------- -------- -------- ----------
Income taxes 41 40 581 1,013
-------- -------- -------- ----------
Net income $ 516 $ 973 $ 3,936 $ 4,565
========= ========= ======== =========
Earnings per share - basic $0.11 $0.19 $0.84 $0.84
Earnings per share - diluted $0.11 $0.18 $0.81 $0.80
Weighted average shares
outstanding - basic 4,656,843 5,112,958 4,667,366 5,433,922
Weighted average shares
outstanding - diluted 4,851,713 5,354,971 4,861,246 5,676,712
BALANCE SHEET DATA: 9/30/00 6/30/00 3/31/00 12/31/99 9/30/99
------------------- -------- -------- -------- -------- -------
Total assets $637,126 $658,529 $669,576 $635,652 $612,029
Total securities 187,810 209,638 228,611 224,267 220,167
Loans, net 415,105 412,835 409,888 382,947 364,190
Deposits 413,152 354,803 372,850 375,158 375,983
FHLB advances 137,461 225,465 220,970 182,975 155,980
Total equity 72,975 71,105 71,535 72,893 75,476
Book value per share $15.03* $14.68* $14.53* $14.10* $14.08*
*Book value calculation adjusted for ESOP shares committed to be released and
stock awards granted.
AVERAGE BALANCE SHEET DATA** 9/30/00 9/30/99
---------------------------- --------- --------
Average total assets $648,494 $596,848
Average total earning assets 624,148 575,885
Average loans, net 417,771 353,708
Average stockholder's equity 72,005 76,180
** Numbers represent quarterly data
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NORTHEAST PENNSYLVANIA FINANCIAL CORP. FOURTH QUARTER EARNINGS SEPTEMBER 2000
THREE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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SELECTED RATIOS: 2000 1999 2000 1999
---------------- -------- -------- -------- ---------
Return on average assets (1) .61% .76% .61% .83%
Return on average equity (1) 5.47 5.76 5.44 5.78
Net interest margin (1) 3.13 3.55 3.26 3.65
Allowances for loan losses to loans .99 .80 .99 .80
(1) Annualized
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(continued)
