<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
THIS PAPER DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE 901(d) OF
REGULATION S-T.
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For transition period from to
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Commission File Number: 0-26086
YARDVILLE NATIONAL BANCORP
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(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2670267
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3111 Quakerbridge Road, Mercerville, New Jersey 08619
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(Address of principal executive offices) (Zip Code)
(609) 585-5100
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if
changed from last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes(X) No( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of August 1, 1996
Common Stock, no par value 2,433,333
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Class Number of shares outstanding
<PAGE>
INDEX
YARDVILLE NATIONAL BANCORP AND SUBSIDIARY
PART I FINANCIAL INFORMATION PAGE NO.
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Item 1. Financial Statements
Consolidated Statements of Condition
June 30, 1996 and December 31, 1995 3
Consolidated Statements of Income
Three months and six months ended
June 30, 1996 and 1995 4
Consolidated Statements of Cash Flows
Six months ended June 30, 1996
and 1995 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-15
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
Exhibit 27.1 Financial Data Schedule 18
<PAGE>
Yardville National Bancorp and Subsidiary
Consolidated Statements of Condition
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
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(in thousands, except share data) 1996 1995
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<S> <C> <C>
ASSETS:
Cash and due from banks $ 11,091 $ 10,040
Federal funds sold 325 2,795
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Cash and Cash Equivalents 11,416 12,835
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Interest bearing deposits 3,357 1,033
Securities available for sale 108,789 98,469
Investment securities (market value of $32,827 in 1996
and $35,037 in 1995) 33,740 35,384
Loans 285,755 245,054
Less: Allowance for loan losses (4,262) (3,677)
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Loans, net 281,493 241,377
Bank premises and equipment, net 5,392 4,026
Other real estate 738 625
Other assets 14,244 9,366
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Total Assets $ 459,169 $ 403,115
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits
Non-interest bearing $ 50,240 $ 46,682
Interest bearing 266,818 256,290
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Total Deposits 317,058 302,972
Borrowed funds
Securities sold under agreements to repurchase 78,905 54,830
Other 26,672 10,391
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Total Borrowed Funds 105,577 65,221
Other liabilities 3,451 3,205
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Total Liabilities $ 426,086 $ 371,398
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Stockholders' equity
Preferred stock: no par value
Authorized 1,000,000 shares, none issued
Common stock: no par value
Authorized 6,000,000 shares
Issued and outstanding 2,432,328 shares in 1996
and 2,349,592 shares in 1995 17,230 16,409
Surplus 2,205 2,205
Undivided Profits 14,455 12,997
Unrealized gain (loss) - securities available for sale (807) 106
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Total Stockholders' Equity 33,083 31,717
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Total Liabilities and Stockholders' Equity $ 459,169 $ 403,115
===========================================================================================================
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements.
<PAGE>
Yardville National Bancorp and Subsidiary
Consolidated Statements of Income
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
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(in thousands, except per share amounts) 1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 6,191 $ 5,260 $ 12,078 $ 10,102
Interest on deposits with banks 32 6 66 11
Interest on securities available for sale 1,608 470 3,011 850
Interest on securities:
Taxable 395 458 805 926
Exempt from Federal income tax 97 94 193 188
Interest on Federal funds sold 29 182 86 271
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Total Interest Income 8,352 6,470 16,239 12,348
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Interest Expense:
Interest on savings account deposits 990 1,052 1,962 2,059
Interest on certificates of deposit of $100,000 or more 190 191 393 454
Interest on other time deposits 1,631 1,456 3,248 2,539
Interest on borrowed funds 1,281 274 2,256 447
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Total Interest Expense 4,092 2,973 7,859 5,499
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Net Interest Income 4,260 3,497 8,380 6,849
Less provision for loan losses 450 180 715 360
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Net Interest Income After Provision for Loan Losses 3,810 3,317 7,665 6,489
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Non-Interest Income:
Service charges on deposit accounts 294 260 584 530
Gains on sales of mortgages, net - 15 - 14
Security gains (losses), net (25) 3 (46) 3
Other non-interest income 256 203 497 408
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Total Non-Interest Income 525 481 1,035 955
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Non-Interest Expense:
Salaries and employee benefits 1,619 1,410 3,200 2,797
Occupancy expense, net 225 174 445 338
Equipment 180 124 357 237
Other non-interest expense 773 862 1,613 1,716
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Total Non-Interest Expense 2,797 2,570 5,615 5,088
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Income before income tax expense 1,538 1,228 3,085 2,356
Income tax expense 547 436 1,102 808
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Net Income $ 991 $ 792 $ 1,983 $ 1,548
============================================================================================================
Earnings Per Share:
Primary $ 0.41 $ 0.43 $ 0.81 $ 0.83
Fully diluted $ 0.41 $ 0.43 $ 0.81 $ 0.83
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Weighted average shares outstanding 2,422 2,019 2,389 1,961
============================================================================================================
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements.
<PAGE>
Yardville National Bancorp and Subsidiary
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
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(in thousands) 1996 1995
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<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 1,983 $ 1,548
Adjustments:
Provision for Loan Losses 715 360
Depreciation 346 213
Amortization and accretion 309 69
(Gain) loss on sale of securities available for sale 46 (3)
Writedown of other real estate 35 14
Increase in other assets (4,268) (1,735)
Increase in other liabilities 246 892
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(2,571) (190)
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Net Cash Provided by Operating Activities (588) 1,358
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Cash Flows from Investing Activities:
Net (increase) decrease in interest bearing deposits (2,324) 289
Proceeds from maturities and paydowns of
investment securities 2,004 1,540
Purchase of securities available for sale (56,346) (24,538)
Proceeds from sale of securities available for sale 28,181 1,700
Purchase of investment securities (453) -
Maturities, calls & paydowns of securities
available for sale 16,061 609
Net increase in loans (41,121) (24,469)
Expenditures for bank premises and equipment (1,712) (432)
Proceeds from sale of O.R.E. 141 255
Capital improvements to O.R.E. - (12)
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Net Cash Used by Investing Activities (55,569) (45,058)
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Cash Flows from Financing Activities:
Net increase in non-interest bearing
demand, money market, and saving deposits 9,893 9,256
Net increase in certificates of deposit 4,193 18,499
Net increase in other borrowed funds 40,356 14,800
Proceeds from issuance of common stock 821 7,995
Dividends paid (525) (280)
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Net Cash Provided by Financing Activities 54,738 50,270
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Net increase (decrease) in cash and cash equivalents (1,419) 6,570
Cash and cash equivalents at beginning of period 12,835 11,100
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Cash and Cash Equivalents at End of Period $ 11,416 $ 17,670
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Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest expense $ 7,709 $ 4,582
Income taxes 1,555 1,013
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</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements.
<PAGE>
Yardville National Bancorp and Subsidiary
Notes to Consolidated Financial Statements
Six Months Ended June 30, 1996
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Financial Statement Presentation
The consolidated financial statements have been prepared in conformity
with generally accepted accounting principles. In preparing the financial
statements, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities as of the date of the balance
sheet and revenues and expenses for the period. Actual results could differ
significantly from those estimates.
The consolidated financial data as of and for the six months ended June
30, 1996 and 1995 includes, in the opinion of management, all adjustments,
consisting of only normal recurring accruals, necessary for a fair presentation
of such periods. The consolidated financial data for the interim periods
presented is not necessarily indicative of the results of operations that might
be expected for the entire year ending December 31, 1996.
Material estimates that are particularly susceptible to significant
change in the near-term relate to the determination of the allowance for loan
losses and the valuation of real estate acquired in connection with foreclosures
or in satisfaction of loans. In connection with the determination of the
allowance for loan losses and the valuation of other real estate, management
obtains independent appraisals for significant properties.
Consolidation
The consolidated financial statements include the accounts of Yardville
National Bancorp (the "Corporation") and its sole subsidiary, the Yardville
National Bank (the "Bank") and Yardville's wholly owned subsidiary, The
Yardville National Investment Corporation. All significant intercompany accounts
and transactions have been eliminated.
<PAGE>
Allowance for Loan Losses
For financial reporting purposes, the provision for loan losses charged to
operating expense is determined by management and is based upon a periodic
review of the loan portfolio, past experience, the economy, and other factors
that may affect the borrower's ability to repay the loan. This provision is
based on management's estimates, and actual losses may vary from these
estimates. These estimates are reviewed and, as adjustments become necessary,
they are reported in the periods in which they become known. Management believes
that the allowance for losses on loans is adequate. While management uses
available information to recognize losses on loans and other real estate, future
additions to the allowance may be necessary based on changes in economic
conditions, particularly in New Jersey. In addition, various regulatory
agencies, as an integral part of their examination process, periodically review
the Bank's allowance for losses on loans and the valuation of other real estate.
Such agencies may require the Bank to recognize additions to the allowance or
adjustments to the carrying value of other real estate based on their judgments
about information available to them at the time of their examination.
Impaired Loans
At June 30, 1996, the Bank's investment in impaired commercial loans totaled
$1,681,000 and the total allowance for loan losses related to those loans
amounted to $352,000. Of the total investment in impaired loans, $1,641,000 had
related allowance for credit losses of $352,000 and the remaining $40,000 had no
related allowance for credit losses. For purposes of this statement residential
mortgages and consumer loans are not included as they are part of a homogeneous
group.
<PAGE>
YARDVILLE NATIONAL BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This financial review presents Management's discussion and analysis of financial
condition and results of operations. It should be read in conjunction with the
consolidated financial statements and the accompanying notes. The term
"Yardville" as used herein refers to the Company together with its sole
subsidiary, the Bank.
FINANCIAL CONDITION
Assets
Total consolidated assets at June 30, 1996 totaled $459,169,000 an increase of
$56,054,000 or 13.9%, compared to $403,115,000 at December 31, 1995. The growth
in Yardville's asset base during the first six months of 1996 was, in part, the
product of a strategy to improve the profitability of the organization through
relationship banking and the origination of quality loans in Yardville's
marketplace. Yardville's asset base includes investments of approximately
$65,000,000 purchased utilizing repurchase agreements.
Securities
Total securities increased by $8,676,000 in the first six months of 1996
compared to year end 1995. U.S. Government securities held in the available for
sale portfolio, were purchased with maturities of two years or less, to improve
short term liquidity in the second quarter. Throughout the first half of 1996
the investment portfolio has provided funding for loan growth from security
sales and calls as well as principal paydowns from mortgage-backed securities.
At June 30, 1996 the amortized cost of investment securities classified as held
to maturity was $33,740,000 compared to $35,384,000 at December 31, 1995, a
decrease of $1,644,000 or 4.6%.
Net unrealized losses as of June 30, 1996 in Yardville's available for sale
securities portfolio were $1,344,000. Net unrealized losses of $807,000, net of
tax effect, were reported as a reduction of stockholders' equity at June 30,
1996. The available for sale portfolio, except those securities purchased
utilizing repurchase agreements, provides a secondary source of liquidity.
Federal Funds
At June 30, 1996 Federal funds sold totaled $325,000, a decrease of $2,470,000
as compared to $2,795,000 at December 31, 1995. Management continues to focus on
strategies to maintain adequate short term liquidity levels.
<PAGE>
Loans
Total loans, net of unearned discounts, increased by $40,701,000 or 16.6%, to
$285,755,000 at June 30, 1996 compared to $245,054,000 at year end 1995.
Yardville's loan portfolio represented 62.2% of assets at June 30, 1996 compared
to 60.8% of assets at December 31, 1995.
Yardville's lending focus continues to be centered on commercial loans,
owner-occupied commercial mortgage loans and tenanted commercial real estate
loans.
Yardville showed positive results throughout its loan portfolio for the six
months ended June 30, 1996 as a result of management's emphasis on customer
service and relationships and taking advantage of opportunities associated with
consolidation in the banking industry, particularly in Yardville's markets.
On a component basis, for the six month period ended June 30, 1996, commercial
loan balances increased 25.8%. Real estate - commercial mortgages and real
estate - residential mortgages increased 36.1% and 10.6%, respectively, for the
first six months of 1996. The increase in actual dollars in these loans since
year end 1995 is $26,427,000 and $7,763,000 respectively. The increase in real
estate-mortgage loans in the first six months of 1996 is reflective, in part, of
a lower mortgage interest rate environment. Consumer loan balances increased
less than 1% through the first six months of 1996.
Liabilities
Yardville's deposit base is the principal source of funds supporting interest
earning assets. Total deposits amounted to $317,058,000 at June 30, 1996
compared to $302,972,000 at December 31, 1995, an increase of $14,086,000 or
4.6%.
Growth in Yardville's deposit base continues in higher yielding certificates of
deposit (CD's) and premium money market accounts, both higher cost funding
sources.
Average time deposits, including CD's of $100,000 or more, increased $11,705,000
or 9.8% to total $130,863,000 for the six month period ended June 30, 1996 as
compared to $119,158,000 at December 31 1995. Interest bearing and non-interest
bearing deposits have increased 4.1% and 7.6%, respectively, as of June 30, 1996
compared to year end 1995. At June 30, 1996 interest bearing and non-interest
bearing deposits totaled $266,818,000 and $50,240,000, respectively.
Borrowed funds totaled $105,577,000 at June 30, 1996 compared to $65,221,000 at
December 31, 1995. The growth in the first six months of 1996 was principally
due to the increase of $24,075,000 in repurchase agreements and an additional
$15,000,000 in Federal Home Loan Bank (FHLB) advances to strengthen short term
liquidity and support core deposits in funding balance sheet growth.
Through June 30, 1996 Yardville has $25,000,000 outstanding in FHLB advances all
with a maturity of less than 1 year.
<PAGE>
Yardville has the availability to borrow up to $20,000,000 from the FHLB through
its line of credit program. In addition, the bank is eligible to borrow up to
30% of assets under the FHLB advance program subject to FHLB stock level
requirements, collateral requirements and individual advance proposals based on
FHLB credit standards. Yardville also has the ability to borrow at the Federal
Reserve discount window along with agreements to use two unsecured federal funds
lines of credit with two of its correspondent banks for daily funding needs.
Management's strategy, however, is to further build the bank's core deposit base
to fund asset growth, however, borrowed funds will be utilized to meet short
term liquidity needs and as an additional source of funding for the loan and
investment portfolios.
Capital
Total stockholders' equity of $33,083,000 at June 30, 1996 increased $1,366,000
or 4.3% from $31,717,000 at December 31, 1995. This increase resulted from (i)
earnings of $1,983,000 over the first six months of 1996 (less dividend payments
of $525,000 for the first and second quarter of 1996) and a negative equity
adjustment of $913,000 for the unrealized loss on securities available for sale
as of June 30, 1996 (ii) proceeds of $546,000 from exercised options and (iii)
proceeds of $275,000 from warrants exercised that were issued in connection with
Yardville's 1993 Private Placement Capital Offering and 1994 Shareholders'
Rights Offering.
Yardville's leverage ratio was 7.4% at June 30, 1996 compared to 7.8% at
December 31, 1995. At June 30, 1996 tier I and total tier I and II capital to
risk weighted assets were 11.0% and 12.2%, respectively. The risk based capital
levels at year end 1995 were 12.0% and 13.2% for tier I and total risk based
capital, respectively.
The minimum regulatory requirements require financial institutions to have a
leverage ratio of 3.0%, a tier I risk-based ratio of 4.0% and a total tier I and
tier II ratio of 8.0%. A bank is considered "well capitalized" if it has a
minimum Tier 1 and total risk-based capital ratios of 6% and 10%, respectively,
and a minimum Tier 1 leverage ratio of 5%.
Credit risk
At June 30, 1996, nonperforming loans, consisting of loans 90 days or more past
due and nonaccruing loans totaled $2,780,000 compared to $2,819,000 at December
31, 1995. Other real estate owned at June 30, 1996 totaled $738,000 compared to
$625,000 at December 31, 1995.
Total nonperforming assets increased $74,000 or 2.1% to $3,518,000 at June 30,
1996 compared to $3,444,000 at year end 1995. Nonperforming assets as a
percentage of total loans were 1.23% at June 30, 1996. Yardville continues to
actively manage nonperforming assets with the goal of reducing these assets in
relation to the entire portfolio.
<PAGE>
The allowance for loan losses increased to $4,262,000 or 1.49% of total loans
at June 30, 1996 compared to $3,677,000, or 1.50% of total loans, at year end
1995. The provision for loan losses through June 30, 1996 was $715,000
reflective of the continued growth in the loan portfolio. Yardville had net loan
charge-offs of $131,000 for that time period. At June 30, 1996 the allowance for
loan losses covered 153.3% of nonperforming loans and 121.1% of nonperforming
assets. The allowance for loan losses, in management's judgment, is adequate to
provide for potential losses.
<PAGE>
RESULTS OF OPERATIONS
Net Income
Yardville reported net income of $1,983,000 for the six months ended June 30,
1996, an increase of $435,000 or 28.1%, from net income of $1,548,000 reported
for the same time period in 1995. On a per share basis, the net income was $0.81
for the first six months of 1996 compared to $0.83 for the first six months of
1995 on a fully diluted basis. The slight decrease in earnings per share is due
to the larger number of shares outstanding for the comparable periods. On June
13, 1996, all outstanding warrants, from prior capital offerings, expired.
On a quarterly basis, the income for the second quarter of 1996 was $991,000 or
$0.41 per share on a fully diluted basis, compared with $792,000 or $0.43 per
share for the same quarter a year ago. The increase in net income for the
quarterly and year-to-date comparisons was primarily attributable to an increase
in net interest income partially offset by increases in the provision for loan
losses and non-interest expenses.
Net Interest Income
Yardville's net interest income for the six months ended June 30, 1996 was
$8,380,000, an increase of $1,531,000 or 22.4% over the $6,849,000 for the
comparable 1995 period. The principal factors contributing to the increase in
net interest income for the six months ended June 30, 1996 was an increase in
interest income of $3,891,000 resulting from a substantial increase in loan
volume and securities available for sale, offset by an increase in interest
expense of $2,360,000 due to increases in deposits and borrowed funds and the
related interest expense.
The net interest margin (tax equivalent basis) between yields on average
interest earning assets and costs of average funding sources was 4.22% at June
30, 1996 compared to 4.77% at June 30, 1995. The decrease in the net interest
margin for the comparable period was principally due to two factors. In the
second half of 1995 management instituted a strategy to increase net interest
income by purchasing investments using repurchase agreements. At June 30, 1996
approximately $65,000,000 had been purchased. The targeted spread on this
strategy was 75 basis points after tax. This strategy, while successful in
increasing net interest income, had a negative impact on the net interest
margin. Increased competition and the subsequent decrease in loan yields also
accounted, in part, for the reduction in the net interest margin.
On a quarterly comparison, net interest income was $4,260,000 for the second
quarter of 1996, an increase of $763,000 or 21.8% from net interest income of
$3,497,000 for the second quarter of 1995. The 1996 increase was the result of
an increase in average earning assets of $114,725,000 combined with a decrease
in net interest margin of 55 basis points.
<PAGE>
Interest Income
For the six month period ended June 30, 1996 total interest income of
$16,239,000 increased $3,891,000 or 31.5% as compared to $12,348,000 reported
for the same period a year earlier. On a quarterly comparison, the second
quarter of 1996 experienced an increase of $1,882,000 or 29.1% in interest
income compared to the same period a year earlier. The increase in interest
income is due to the higher volume of average loan and securities assets.
Average loans increased $53,330,000 or 25.1% for the six months ended June 30,
1996 compared to the same 1995 period. The average yield on the loan portfolio
decreased 42 basis points for the comparable period in a lower rate competitive
marketplace.
Interest income on securities increased $2,045,000 or 104.1%, for the first six
months of 1996, due to a 45 basis point increase in average yield and an
increase of $61,705,000 in average balances for the six months ended June 30,
1996 as compared to the same period a year earlier. On a quarterly comparison
interest on securities increased 105.5% for the same reasons discussed above.
Interest on Federal funds sold decreased $185,000 for the six month period ended
June 30, 1996 due to decreases in average balances of $5,861,000 and decreases
in average yields of 62 basis points.
Overall, the yield on Yardville's interest earning assets decreased 41 basis
points to 8.07% for the period ended June 30, 1996 from 8.48% for the period
ended June 30, 1995 for the combined reasons discussed above.
Interest Expense
Total interest expense increased $2,360,000 or 42.9% to $7,859,000 for the six
months ended June 30, 1996 compared to $5,499,000 reported for the six months
ended June 30, 1995. The increase in interest expense for the comparable time
periods is the result of a larger deposit base and significantly greater levels
of borrowed funds. Deposit products continue to be competitively priced to
increase the bank's deposit base and provide a source of funds for asset growth.
Average interest bearing liabilities amounted to $341,499,000 for the six months
ended June 30, 1996 compared to $245,167,000 for the six months ended June 30,
1995. Increases in deposit account relationships, attributable in part to
increased commercial loan activity and community presence, are reflected in the
results. Average time deposits, a higher costing funding source, increased
$19,624,000 or 17.6% for the first six months of 1996 compared to the first six
months of 1995.
For the second quarter of 1996, total interest expense increased $1,119,000 or
37.6% as compared to the second quarter of a year earlier. The increase in
interest expense for the comparable quarters is due to higher levels of time
deposits and borrowed funds.
<PAGE>
Interest expense on borrowed funds increased significantly during both the
quarterly and year-to-date periods when comparing 1996 to 1995. For the
year-to-date comparison interest expense increased $1,809,000 primarily as a
result of significantly higher average balances. Repurchase agreements were used
during the period to purchase investments and short term borrowings totaling
$25,000,000 from the Federal Home Loan Bank were utilized to provide liquidity
and as a source of funds for asset growth.
Provision For Loan Losses
Yardville provides for possible loan losses by a charge to current operations.
The provision for loan losses for the six months and three months ended June 30,
1996 was $715,000 and $450,000, respectively compared to $360,000 and $180,000,
respectively for the six months and three months ended June 30, 1995. The
year-to-date and quarterly 1996 provisions are reflective of the continued
substantial growth in the loan portfolio. Management believes that the allowance
for loan losses is adequate in relation to credit risk exposure levels.
Non-Interest Income
Total non-interest income was $1,035,000 for the first six months of 1996
compared to $955,000 for the same period in 1995. The increase of $80,000 or
8.4% is attributable to increased service charge and other non-interest income
offset by security losses.
Service charges on deposit accounts increased $54,000 or 10.2% for the first six
months of 1996 as compared to the same period a year earlier. The increase in
service charge income was the product of a larger deposit base and the fee
income associated with it. Yardville realized $46,000 in losses on the sale of
securities, net, in the first six months of 1996 versus a gain of $3,000 on the
sale of securities, net, in the first six months of 1995. Other non-interest
income increased $89,000 or 21.8% in the first six months of 1996 versus the
first six months of 1995. This increase was principally due to additional fee
income derived from life insurance assets.
For the second quarter comparison, the results were similar. Total non-interest
income for the second quarter of 1996 increased 9.1% over the same period a year
earlier. The increase experienced during the second quarter of 1996 was in
service charges on deposit accounts and other non-interest income with
respective increases of 13.1% and 26.1%.
Non-Interest Expense
Total non-interest expense increased $527,000 or 10.4% to $5,615,000 for the
first six months of 1996 compared to $5,088,000 for the first six months of
1995. The increase in non-interest expense is the result of increases in
salaries and employee benefits. To a lesser extent occupancy and equipment
expense increased, offset by decreases in other non-interest expenses.
<PAGE>
Salaries and employee benefits were $3,200,000 for the first six months of 1996,
an increase of $403,000 or 14.4% compared to the same six month period of 1995.
The increase resulted from additional staffing required as Yardville has grown
for the comparable time periods and annual salary compensation increases.
Employee benefits also increased 19.9% for the comparable time periods. Full
time equivalent staff increased to 152 at June 30, 1996 from 145 at June 30,
1995.
Net occupancy expenses increased $107,000 or 31.7% for the first six months of
1996 as compared to the same period in 1995 as the result of significantly
increased snow removal costs and the additional occupancy costs associated with
new branch offices. Equipment expense increased $120,000 or 50.6% for the same
period primarily due to increased depreciation costs associated with new
furniture and fixtures in Yardville's new branches and computer equipment
required for the implementation of a new in-house computer system in late
February 1996.
Other non-interest expenses totaled $1,613,000 for the six months ended June 30,
1996, a decrease of $103,000 or 6.0%, from the comparable 1995 period. The
decrease in other non-interest expense is primarily the result of eliminated
FDIC insurance premiums offset by increases in professional fees and stationary
and supplies costs associated with a growing branch network.
When comparing the second quarter of 1996 with the second quarter of 1995, the
results are very similar. Non-interest expenses increased $227,000 or 8.8%
versus the same period a year earlier. Salary and employee benefits increased
$209,000 or 14.8%. Net occupancy and equipment expenses increased 29.3% and
45.2%, respectively. Other non-interest expenses decreased 10.3% in the second
quarter of 1996 compared to the same period in 1995. The quarterly comparison
increase is due to the same factors discussed in the year-to-date review above.
<PAGE>
PART II OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
A. The following exhibits are filed with this Form 10-QSB for the fiscal
quarter ended June 30, 1996 by Yardville National Bancorp:
INDEX TO EXHIBITS
No. Exhibits Page
--- -------- ----
* 3.1 Restated Certificate of Incorporation of
the Registrant
++ 3.2 By-Laws of the Registrant
++ 4.1 Specimen of Share of Common Stock
++ 4.2 Form of Class A Warrant
27.1 Financial Data Schedule 18
* Incorporated by reference to the Issuer's Annual Report on Form 10-KSB for
the Fiscal Year Ended December 31, 1994, as amended by Form 10-KSB/A filed
on July 25, 1995.
++ Incorporated by reference to the Issuer's Registration Statement on
Form SB-2 (Registration No. 33-78050)
B. No reports on FORM 8-K were filed by the registrant during the quarter ended
June 30, 1996.
<PAGE>
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 thereunto duly authorized.
YARDVILLE NATIONAL BANCORP
--------------------------
(Registrant)
Date : August 14, 1996 By : /s/ Stephen F. Carman
-------------------- --------------------------------
Stephen F. Carman
Executive Vice President
and Chief Financial Officer
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