<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF
1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF
1934
For transition period from
Commission File Number: 0-26086
YARDVILLE NATIONAL BANCORP
--------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2670267
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2465 Kuser Road, Hamilton, New Jersey 08690
-------------------------------------------
(Address of principal executive offices)
(609) 585-5100
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
----------------------------------------------------
(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 the latest practicable date. As of August 10, 2000, the
following class and number of shares were outstanding:
Common Stock, no par value 7,442,534
-------------------------- ----------------------------
Class Number of shares outstanding
<PAGE>
INDEX
YARDVILLE NATIONAL BANCORP AND SUBSIDIARIES
PART 1 FINANCIAL INFORMATION PAGE NO.
--------------------------------------------------------------------------------
Item 1. Financial Statements
Consolidated Statements of Condition
June 30, 2000 and December 31, 1999
Consolidated Statements of Income
Three months ended June 30, 2000 and 1999
Consolidated Statements of Income
Six months ended June 30, 2000 and 1999
Consolidated Statements of Cash Flows
Six months ended June 30, 2000 and 1999
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
PART 2 OTHER INFORMATION
-----------------------------------
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
Exhibit 27.1 Financial Data Schedule
2
<PAGE>
Item 1. Financial Statements
Yardville National Bancorp and Subsidiaries
Consolidated Statements of Condition
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
-------------------------------------------------------------------------------------------------------
(in thousands, except share data) 2000 1999
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash and due from banks 19,359 $ 17,582
Federal funds sold 82,625 8,035
-------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents 101,984 25,617
-------------------------------------------------------------------------------------------------------
Interest bearing deposits with banks 1,131 955
Securities available for sale 343,793 309,298
Investment securities (market value of $100,422 in 2000 and
$100,121 in 1999) 108,087 108,167
Loans 724,906 646,737
Less: Allowance for loan losses (9,776) (8,965)
-------------------------------------------------------------------------------------------------------
Loans, net 715,130 637,772
Bank premises and equipment, net 9,228 9,400
Other real estate 2,330 2,585
Other assets 31,570 29,804
-------------------------------------------------------------------------------------------------------
Total Assets $1,313,253 $1,123,598
-------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity:
Deposits
Non-interest bearing $ 101,620 $ 90,219
Interest bearing 762,830 653,588
-------------------------------------------------------------------------------------------------------
Total Deposits 864,450 743,807
-------------------------------------------------------------------------------------------------------
Borrowed funds
Securities sold under agreements to repurchase 15,000 45,000
Federal Home Loan Bank advances 320,281 250,293
Obligation for Employee Stock Ownership Plan (ESOP) 1,400 1,600
Other 1,241 1,796
-------------------------------------------------------------------------------------------------------
Total Borrowed Funds 337,922 298,689
Company - obligated Mandatorily Redeemable Trust Preferred
Securities of Subsidiary Trust holding solely junior
Subordinated Debentures of the Company 26,500 11,500
Other liabilities 15,190 10,777
-------------------------------------------------------------------------------------------------------
Total Liabilities $1,244,062 $1,064,773
-------------------------------------------------------------------------------------------------------
Stockholders' equity
Preferred stock: no par value
Authorized 1,000,000 shares, none issued
Common Stock: no par value
Authorized 12,000,000 shares
Issued 7,614,534 in 2000 and 6,917,794 shares in 1999 46,884 40,052
Surplus 2,205 2,205
Undivided profits 31,136 27,462
Treasury stock, at cost, 172,000 shares in 2000 and 1999 (3,030) (3,030)
Unallocated ESOP shares (1,400) (1,600)
Accumulated other comprehensive loss (6,604) (6,264)
-------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 69,191 58,825
-------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $1,313,253 $1,123,598
-------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements.
3
<PAGE>
Yardville National Bancorp and Subsidiaries
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------------------------------------------------------------------------------
(in thousands, except per share amounts) 2000 1999
----------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $15,629 $11,364
Interest on deposits with banks 21 9
Interest on securities available for sale 6,012 3,618
Interest on investment securities:
Taxable 1,178 1,018
Exempt from Federal income tax 389 327
Interest on Federal funds sold 549 234
----------------------------------------------------------------------------------------------
Total Interest Income 23,778 16,570
----------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on savings account deposits 1,850 1,187
Interest on certificates of deposit of $100,000 or more 1,461 623
Interest on other time deposits 5,933 4,238
Interest on borrowed funds 4,790 3,156
Interest on trust preferred securities 298 266
----------------------------------------------------------------------------------------------
Total Interest Expense 14,332 9,470
----------------------------------------------------------------------------------------------
Net Interest Income 9,446 7,100
Less provision for loan losses 900 750
----------------------------------------------------------------------------------------------
Net Interest Income After Provision for Loan Losses 8,546 6,350
----------------------------------------------------------------------------------------------
NON-INTEREST INCOME:
Service charges on deposit accounts 384 317
Gains on sales of mortgages, net 11 15
Securities gains, net 40 3
Other non-interest income 457 420
----------------------------------------------------------------------------------------------
Total Non-Interest Income 892 755
----------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE:
Salaries and employee benefits 2,848 2,437
Occupancy expense, net 610 321
Equipment expense 476 367
Other non-interest expense 1,775 1,203
----------------------------------------------------------------------------------------------
Total Non-Interest Expense 5,709 4,328
----------------------------------------------------------------------------------------------
Income before income tax expense 3,729 2,777
Income tax expense 1,100 787
----------------------------------------------------------------------------------------------
Net Income $ 2,629 $ 1,990
----------------------------------------------------------------------------------------------
EARNINGS PER SHARE:
Basic $ 0.39 $ 0.34
Diluted $ 0.39 $ 0.34
----------------------------------------------------------------------------------------------
Weighted average shares outstanding:
Basic 6,723 5,788
Diluted 6,740 5,815
----------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements.
4
<PAGE>
Yardville National Bancorp and Subsidiaries
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------------------------------------------------------------------------
(in thousands, except per share amounts) 2000 1999
-----------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $29,983 $22,075
Interest on deposits with banks 36 28
Interest on securities available for sale 11,458 6,471
Interest on investment securities:
Taxable 2,368 1,615
Exempt from Federal income tax 773 585
Interest on Federal funds sold 762 394
-----------------------------------------------------------------------------------------------
Total Interest Income 45,380 31,168
-----------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on savings account deposits 3,438 2,282
Interest on certificates of deposit of $100,000 or more 2,672 1,114
Interest on other time deposits 11,395 8,039
Interest on borrowed funds 9,120 5,684
Interest on trust preferred securities 564 532
-----------------------------------------------------------------------------------------------
Total Interest Expense 27,189 17,651
-----------------------------------------------------------------------------------------------
Net Interest Income 18,191 13,517
Less provision for loan losses 1,700 1,400
-----------------------------------------------------------------------------------------------
Net Interest Income After Provision for Loan Losses 16,491 12,117
-----------------------------------------------------------------------------------------------
NON-INTEREST INCOME:
Service charges on deposit accounts 761 625
(Losses) gains on sales of mortgages, net (10) 30
Securities (losses) gains, net (5) 18
Other non-interest income 879 810
-----------------------------------------------------------------------------------------------
Total Non-Interest Income 1,625 1,483
-----------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE:
Salaries and employee benefits 5,656 4,728
Occupancy expense, net 1,232 634
Equipment expense 944 729
Other non-interest expense 3,199 2,582
-----------------------------------------------------------------------------------------------
Total Non-Interest Expense 11,031 8,673
-----------------------------------------------------------------------------------------------
Income before income tax expense 7,085 4,927
Income tax expense 2,060 1,383
-----------------------------------------------------------------------------------------------
Net Income $ 5,025 $ 3,544
-----------------------------------------------------------------------------------------------
EARNINGS PER SHARE:
Basic $ 0.75 $ 0.66
Diluted $ 0.75 $ 0.65
-----------------------------------------------------------------------------------------------
Weighted average shares outstanding:
Basic 6,691 5,398
Diluted 6,708 5,425
-----------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements.
5
<PAGE>
Yardville National Bancorp and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
---------------------------------------------------------------------------------------------------------
(in thousands) 2000 1999
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 5,025 $ 3,544
Adjustments:
Provision for loan losses 1,700 1,400
Depreciation 758 554
ESOP fair value adjustment (55) --
Amortization and accretion 126 345
Losses (gains) on sales of securities available for sale 5 (18)
Loss on sales of other real estate 15 1
Write down of other real estate 179 278
Increase in other assets (1,583) (2,610)
Increase in other liabilities 4,415 1,577
---------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 10,585 5,071
---------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Net (increase) decrease in interest bearing deposits with banks (176) (97)
Purchase of securities available for sale (92,366) (122,685)
Maturities, calls, and paydowns of securities available for sale 15,782 20,374
Proceeds from sales of securities available for sale 41,460 9,019
Proceeds from maturities and paydowns of investment
securities 2,123 1,786
Purchase of investment securities (2,070) (66,743)
Net increase in loans (79,262) (62,850)
Expenditures for bank premises and equipment (586) (1,313)
Proceeds from sale of other real estate 265 702
---------------------------------------------------------------------------------------------------------
Net Cash Used by Investing Activities (114,830) (221,807)
---------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Net increase in non-interest bearing demand,
money market, and savings deposits 41,732 14,650
Net increase in certificates of deposit 78,911 92,618
Net increase in borrowed funds 39,233 97,989
Proceeds from issuance of trust preferred securities 15,000 --
Proceeds from issuance of common stock 6,887 19,686
Decrease (increase) in unallocated ESOP shares 200 (1,800)
Treasury shares acquired -- (22)
Dividends paid (1,351) (821)
---------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 180,612 222,300
---------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 76,367 5,564
Cash and cash equivalents as of beginning of period 25,617 16,526
---------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents as of End of Period $ 101,984 $ 22,090
---------------------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information:
Cash paid during period for:
Interest expense 24,429 16,919
Income taxes 1,162 982
---------------------------------------------------------------------------------------------------------
Supplemental Schedule of Non-cash Investing and Financing
Activities:
Transfers to other real estate from loans, net of charge offs 204 700
---------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements.
6
<PAGE>
Yardville National Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
Three and Six Months Ended June 30, 2000
(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 revenue and expenses for the period. Actual results could differ
significantly from those estimates. 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 other real estate, management
obtains independent appraisals for significant properties.
The consolidated financial data as of and for the three and six months ended
June 30, 2000 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 result of operations that might
be expected for the entire year ending December 31, 2000.
Consolidation
The consolidated financial statements include the accounts of Yardville National
Bancorp (the "Holding Company") and its subsidiaries, Yardville Capital Trust
(the "Trust"), Yardville Capital Trust II (the "Trust II") and The Yardville
National Bank (the "Bank"), and the Bank's wholly owned subsidiaries, Yardville
National Investment Corporation, Brendan, Inc., Nancy Beth, Inc., Jim Mary,
Inc., Yardville Real Estate Corporation, YNB Financial Services, Inc., YNB
Realty Inc., and Capital Development, Inc., (collectively, "YNB"). All
significant inter-company accounts and transactions have been eliminated.
Brendan, Inc., Nancy Beth, Inc. and Jim Mary, Inc. are utilized for the control
and disposal of other real estate properties. Yardville Real Estate Corporation
is utilized to hold Bank branch properties, YNB Financial Services, Inc.,
provides alternative investment services, and YNB Realty, Inc., a real estate
investment trust, is utilized to more effectively manage a portion of the Bank's
real estate related loans. Capital Development is utilized for nontraditional
lending opportunities.
Allowance for Loan Losses
The provision for loan losses charged to operating expense is determined by
management and based upon a periodic review of the loan portfolio, past
experience, the economy, and other factors that may affect a borrower's ability
7
<PAGE>
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
adjustments, as they become necessary, are reported in the periods in which they
become known. Management believes that the allowance for loan losses is
adequate. While management uses available information to recognize losses on
loans, 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 loan losses 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 judgement
about information available at the time of their examination.
Company - Obligated Mandatorily Redeemable Trust Preferred Securities of
Subsidiary Trust Holding Solely Junior Subordinated Debentures of the Company
(Trust Preferred Securities)
On June 23, 2000, Yardville Capital Trust II, a statutory business trust and a
wholly owned subsidiary of the Holding Company, issued $15,000,000 of 9.50%
Trust Preferred Securities to one nonaffiliated financial institution and
$464,000 of Common Securities to the Holding Company. Proceeds from the issuance
of the Trust Preferred Securities were immediately used by the Trust to purchase
$15,464,000 of 9.50% Subordinated Debentures due June 22, 2030 from the Holding
Company. The Trust exists for the sole purpose of issuing Trust Preferred
Securities and investing the proceeds in Subordinated Debentures of the Holding
Company. These Subordinated Debentures constitute the sole assets of the Trust.
On October 16, 1997, Yardville Capital Trust, a statutory business trust and a
wholly owned subsidiary of the Holding Company, issued $11,500,000 of 9.25%
Trust Preferred Securities to the public and $356,000 of 9.25% Common Securities
to the Holding Company. Proceeds from the issuance of the Trust Preferred
Securities were immediately used by the Trust to purchase $11,856,000 of 9.25%
Subordinated Debentures maturing November 1, 2027 from the Holding Company. The
Trust exists for the sole purpose of issuing Trust Preferred Securities and
investing the proceeds in Subordinated Debentures of the Holding Company. These
Subordinated Debentures constitute the sole assets of the Trust.
2. Earnings Per Share
Weighted average shares for the basic net income per share calculation for the
three months ended June 30, 2000 and 1999 were 6,723,000 and 5,788,000
respectively. For the diluted net income per share computation, potential common
stock of 17,000 and 27,000 are included for the three months ended June 30, 2000
and 1999, respectively.
Weighted average shares for the basic net income per share calculation for the
six months ended June 30, 2000 and 1999 were 6,691,000 and 5,398,000
respectively. For the diluted net income per share computation, potential common
stock of 17,000 and 27,000 are included for the six months ended June 30, 2000
and 1999, respectively.
8
<PAGE>
3. Comprehensive Income
Listed below is the statement of comprehensive income for three and six months
ended June 30, 2000 and 1999.
<TABLE>
<CAPTION>
Comprehensive Income Three Months Ended June 30, 2000
-----------------------------------------------------------------------------------------------------
(in thousands) 2000 1999
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Income $2,629 $ 1,990
-----------------------------------------------------------------------------------------------------
Other comprehensive income (loss)
Net change in unrealized loss for the period,
net of tax 1,628 (2,921)
Reclassification of realized net gain on sale of
securities available for sale, net of tax 26 2
-----------------------------------------------------------------------------------------------------
Holding gain (loss) arising during the period,
net of tax and reclassification 1,654 (2,919)
-----------------------------------------------------------------------------------------------------
Reclassification adjustment for realized net
gain, net of tax (26) (2)
-----------------------------------------------------------------------------------------------------
Other comprehensive income (loss)
for the period, net of tax 1,628 (2,921)
-----------------------------------------------------------------------------------------------------
Total comprehensive income (loss) $4,257 $ (931)
=====================================================================================================
Comprehensive Income Six Months Ended June 30, 2000
-----------------------------------------------------------------------------------------------------
(in thousands) 2000 1999
-----------------------------------------------------------------------------------------------------
Net Income $5,025 $ 3,544
-----------------------------------------------------------------------------------------------------
Other comprehensive income (loss)
Net change in unrealized loss for the period,
net of tax (340) (3,561)
Reclassification of realized net (loss) gain on sale of
securities available for sale, net of tax (3) 12
-----------------------------------------------------------------------------------------------------
Holding loss arising during the period,
net of tax and reclassification (343) (3,549)
-----------------------------------------------------------------------------------------------------
Reclassification adjustment for realized net
loss (gain), net of tax 3 (12)
-----------------------------------------------------------------------------------------------------
Other comprehensive loss for the period, net of tax (340) (3,561)
-----------------------------------------------------------------------------------------------------
Total comprehensive income (loss) $4,685 $ (17)
=====================================================================================================
</TABLE>
4. Employee Stock Ownership Plan
The Bank established an Employee Stock Ownership Plan and related trust ("ESOP")
for eligible employees. The ESOP is a tax-qualified plan subject to the
requirements of the Employee Retirement Income Security Act of 1974 (ERISA).
Employees with twelve months of employment with the Bank and who have worked at
least 1,000 hours are eligible to participate. The ESOP borrowed $2,000,000 from
an unaffiliated financial institution and purchased 155,340 shares of common
stock, no par value, of the Holding Company. Shares purchased by the ESOP are
held in a suspense account pending allocation among participants as the loan is
repaid.
9
<PAGE>
Compensation expense is recognized based on the fair value of the stock when it
is committed to be released. Compensation expense amounted to approximately
$66,000 and $88,000 for the three months and approximately $120,000 and $175,000
for the six months ended June 30, 2000 and 1999 respectively. The fair value of
unearned shares at June 30, 2000 is $1,320,390.
Unallocated shares are deducted from common shares outstanding for earnings per
share purposes with shares which are committed to be released during the year
added back into weighted average shares outstanding.
YARDVILLE NATIONAL BANCORP AND SUBSIDIARIES (YNB)
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
This financial review presents management's discussion and analysis of the
financial condition and results of operations. It should be read in conjunction
with the 1999 Annual Report to stockholders and Form 10-K for the fiscal year
ended December 31, 1999 as well as with the unaudited consolidated financial
statements and the accompanying notes in this Form 10-Q.
This Form 10-Q report contains express and implied statements relating to the
future financial condition, results of operations, plans, objectives,
performance, and business of YNB, which are considered forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These include statements that relate to, among other things,
profitability, liquidity, loan loss reserve adequacy, plans for growth, interest
rate sensitivity, market risk, and financial and other goals. Actual results may
differ materially from those expected or implied as a result of certain risks
and uncertainties, including, but not limited to, changes in economic
conditions, interest rate fluctuations, continued levels of loan quality and
origination volume, competitive product and pricing pressures within YNB's
markets, continued relationships with major customers including sources for
loans and deposits, personal and corporate customers' bankruptcies, legal and
regulatory barriers and structure, inflation, and technological changes, as well
as other risks and uncertainties detailed from time to time in the filings of
YNB with the U.S. Securities and Exchange Commission.
Financial Condition
Assets
Total consolidated assets at June 30, 2000 were $1,313,253,000 an increase of
$189,655,000 or 16.9% compared to $1,123,598,000 at December 31, 1999. The
growth in YNB's asset base during the six months of 2000 was primarily due to
increases in loans, Federal funds sold, and available for sale securities. The
increase in the loan portfolio was the product of an ongoing consistent strategy
to improve the profitability of the organization through relationship banking.
With consolidation in its markets YNB has established its niche as the
preeminent business community bank in Mercer County specializing in commercial
lending. YNB's asset base includes US agency securities of approximately
$242,000,000 purchased utilizing primarily Federal Home Loan Bank advances
10
<PAGE>
(Investment Growth Strategy). The Investment Growth Strategy securities at June
30, 2000 increased approximately $14,200,000 or 6.2% from the reported total of
$228,400,000 at December 31, 1999. The primary goals of the Investment Growth
Strategy, improving return on average equity and earnings per share, continue to
be achieved.
Federal funds sold
At June 30, 2000 Federal funds sold totaled $82,625,000 compared to $8,035,000
at December 31, 1999. The higher amount of Federal funds sold at June 30, 2000
was primarily due to increased certificate of deposit (CD) balances, private
trust preferred and private equity capital offering proceeds and borrowed funds
raised to fund loan growth and effectively manage liquidity. The average Federal
funds sold balance for the first six months of 2000 was $24,820,000 compared to
$16,824,000 for the same period in 1999. Management remains focused on
maintaining adequate liquidity to fund loan growth and to enhance the liquidity
profile of YNB.
Securities
The following tables present the amortized cost and market value of YNB's
securities portfolios as of June 30, 2000 and December 31, 1999.
<TABLE>
<CAPTION>
Available For Sale Securities June 30, 2000 December 31, 1999
------------------------------------------------------------------------------------------------------------------
Amortized Market Amortized Market
(in thousands) Cost Value Cost Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of other U.S.
government agencies $129,336 $124,544 $117,496 $112,731
Mortgage-backed securities 197,508 191,968 170,775 166,164
Corporate obligations 8,849 9,020 5,783 5,522
All other securities 18,261 18,261 24,881 24,881
------------------------------------------------------------------------------------------------------------------
Total $353,954 $343,793 $318,935 $309,298
==================================================================================================================
Investment Securities June 30, 2000 December 31, 1999
------------------------------------------------------------------------------------------------------------------
Amortized Market Amortized Market
(in thousands) Cost Value Cost Value
------------------------------------------------------------------------------------------------------------------
Obligations of other U.S.
government agencies $ 69,184 $ 63,893 $ 69,184 $ 63,992
Obligations of state and
political subdivisions 33,243 31,143 31,892 29,281
Mortgage-backed securities 5,660 5,386 7,091 6,848
------------------------------------------------------------------------------------------------------------------
Total $108,087 $100,422 $108,167 $100,121
==================================================================================================================
</TABLE>
Securities represented 34.4% of total assets at June 30, 2000 and 37.2% at
December 31, 1999. Total securities increased $34,415,000 or 8.2% at June 30,
11
<PAGE>
2000 to $451,880,000, compared to $417,465,000 at year-end 1999. The available
for sale portfolio represents 76.1% of the total security holdings of YNB at
June 30, 2000, compared to 74.1% at year-end 1999.
The net unrealized loss on available for sale securities was $10,161,000 as of
June 30, 2000 and was $9,637,000 at December 31, 1999. Net unrealized loss, net
of tax effect, was $6,604,000 as reported in Accumulated other comprehensive
loss in Stockholders' Equity at June 30, 2000, and $6,264,000 reported at
December 31, 1999. The increase in the net unrealized loss on available for sale
securities is primarily due to the changes in interest rates from December 31,
1999 to June 30, 2000 and the increased size of the available for sale
securities portfolio.
Securities available for sale increased $34,495,000 or 11.2% at June 30, 2000
when compared to the December 31, 1999 balance of $309,298,000. The largest
increase was in mortgage-backed securities, which increased $25,804,000.
Mortgage-backed securities purchased were primarily comprised of floating rate
CMO's which increased by $31,059,000 and that increase was offset by paydowns in
fixed and adjustable rate mortgage backed securities. Floating rate CMO's have
been purchased to improve the performance of the investment portfolio in a
rising rate environment. U.S. Treasury and other U.S. agency obligations
increased $11,813,000 or 10.5%. The growth was primarily in shorter term
callable bonds purchased to enhance YNB's liquidity profile.
Investment securities decreased $80,000 to $108,087,000 at June 30, 2000 from
$108,167,000 at December 31, 1999. The decrease was due to a modest increase in
obligations of state and political subdivisions offset by principal paydowns on
mortgage backed securities.
The Investment Growth Strategy securities increased $14,206,000 over the
year-end 1999 level. The largest increase was in floating rate US agency
collateralized mortgage obligations, which increased $14,955,000. The next
largest growth was in US agency callable bonds that increased $5,000,000.
Reductions were recorded in fixed rate mortgage backed securities, which
decreased by $3,989,000 as a result of paydowns and floating rate mortgage
backed securities, which decreased, by $1,760,000 as a result of paydowns. At
June 30, 2000, the Investment Growth Strategy portfolio was comprised of 73.7%
of fixed rate securities and 26.3% of adjustable or floating rate securities
compared to 77.8% fixed rate securities and 22.2% adjustable rate securities at
year end 1999.
Loans
Total loans, net of unearned income, increased $78,169,000 or 12.1% at June 30,
2000 to $724,906,000 from $646,737,000 at December 31, 1999. This growth
exceeded the growth experienced in the first six months of 1999 of $61,604,000.
YNB's loan portfolio represented 55.2% of total assets at June 30, 2000 compared
to 57.6% at December 31, 1999. YNB's lending focus continues to be on commercial
and industrial loans, and commercial real estate loans. The ability of YNB to
enter into larger loan relationships and management's philosophy of relationship
banking are key factors in continued strong loan growth. Strong competition from
both bank and nonbank competitors could result in comparatively lower yields on
new and established lending relationships. In addition, borrowers' concerns over
the economy, real estate prices and interest rates could all be factors in
slowing future loan growth. Management anticipates continued loan growth for the
12
<PAGE>
second half of 2000 but at a lower rate than the first half of 2000. Continued
profitable loan growth is a key factor in meeting earnings growth goals.
<TABLE>
<CAPTION>
Loan Portfolio Composition
--------------------------------------------------------------------------------------------------------
(in thousands) 6/30/00 12/31/99 Change % change
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial real estate $310,390 $294,413 $15,977 5.4%
Real estate - mortgage
Residential 141,317 120,556 1 17.2
Home equity 24,196 23,581 615 2.6
Commercial and industrial 136,807 114,388 22,419 19.6
Real Estate - construction 79,934 59,457 20,477 34.4
Consumer 22,403 22,879 (476) 2.1
Other loans 9,859 11,463 (1,604) 14.0
-------------------------------------------------------------------------------------------------------
Total loans $724,906 $646,737 $78,169 12.1%
=======================================================================================================
</TABLE>
The table above lists loan growth by type for the period of December 31, 1999 to
June 30, 2000. In June of 2000, management completed a review of the collateral
related to loans on the commercial loan system and reclassified loans to more
accurately reflect portfolio classifications. This resulted in commercial and
industrial, real estate construction and consumer loans decreasing and real
estate residential and commercial real estate loans increasing. The December 31,
1999 numbers have been reclassified to reflect the new classifications at June
30, 2000.
Commercial and industrial loans had the greatest growth increasing $22,419,000
or 19.6%. Commercial real estate loans increased $15,977,000 or 5.4% and Real
estate construction loans increased $20,477,000 or 34.4%. These three loan
categories increased $58,893,000 and accounted for 75.3% of the total loan
growth for the period. YNB continued success in generating these types of loans
is based on several factors. First, management's focus on commercial related
lending has resulted in YNB's growing reputation as a business lender in our
market place. Second, the consolidation in YNB's market continues to generate
new loan business and YNB's increased legal lending limit allows for larger
loans to both new and existing customers.
Real estate residential loans are primarily composed of 1-4 family residential
loans, multi family residential loans, fixed rate home equity loans and business
loans secured by residential real estate. Growth in this portfolio remained
strong in the first six months of 2000 with an increase in the outstanding
balance of $20,761,000 or 17.2% for the period June 30, 2000 from year end 1999.
Residential mortgage loans represented $68,633,000 or 48.6% of the total at June
30, 2000 compared to $60,942,000 or 50.6% of the total at year-end 1999. Growth
in residential mortgages was $7,691,000 and accounted for 37.0% of the total
increase for the period. All other loan types in this category had positive loan
growth. Home equity loans increased $615,000 or 2.6%. Consumer loans and other
loans were the only loan types to decrease. The total decrease was $2,080,000
for the period. Strong competition for quality consumer loans is a key factor in
the modest reduction in outstanding consumer loans.
13
<PAGE>
Deposit liabilities
The following table provides information concerning YNB's deposit base at June
30, 2000 and December 31, 1999.
<TABLE>
<CAPTION>
Deposits
---------------------------------------------------------------------------------------------------------
(in thousands) 6/30/00 12/31/99 Change % Change
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Non-interest bearing demand
deposits $101,620 $ 90,219 $ 11,401 12.6%
Interest bearing demand deposits 67,383 61,483 5,900 9.6
Money market deposits 85,589 57,143 28,446 49.8
Savings deposits 76,279 80,300 (4,021) 5.0
Certificates of deposit of $100,000
or over 112,399 72,528 39,871 55.0
Other time deposits 421,180 382,134 39,046 10.2
---------------------------------------------------------------------------------------------------------
Total $864,450 $743,807 $120,643 16.2%
=========================================================================================================
</TABLE>
YNB's deposit base is the principal source of funds supporting interest-earning
assets. Total deposits increased $120,643,000 or 16.2% to $864,450,000 at June
30, 2000 compared to $743,807,000 at December 31, 1999. In January 2000, YNB
increased the rates on its Premier Money Market Accounts for both business and
personal customers and launched an aggressive advertising and calling campaign
to promote the higher rates. Management's goal is to fund asset growth with
lower costing and more stable money market account balances instead of higher
costing certificates of deposit. Certificates of deposit were also competitively
priced in the first and second quarter of 2000 to fund new loan growth and
improve liquidity. Certificates of deposits continue to be an important source
of funding for YNB in 2000. Certificates of deposit of $100,000 or over
increased $39,871,000 or 55.0% to $112,399,000 from $72,528,000 at December 31,
1999 and accounted for 33.0% of the total deposit growth for the period. Other
time deposits increased $39,046,000 or 10.2% to $421,180,000 from $382,134,000
at December 31, 1999. Growth in time deposits accounted for 65.4% of the total
increase in deposits for the first six months of 2000. Certificates of deposit
accounted for 61.7% of total deposits at June 30, 2000 compared to 61.1% at
year-end 1999. Management continues to initiate marketing strategies designed to
attract lower cost deposits. YNB also markets its certificates of deposit
through a nationwide computer based service. This service allows YNB to have
access to a wider market to raise needed funding. At June 30, 2000, YNB had
approximately $153,000,000 in outstanding certificates of deposit raised through
this service. This includes $52,400,000 raised in the first six months of 2000.
Management anticipates that this market will continue to play an important role
in funding future asset growth.
Non-interest bearing demand deposits increased $11,401,000 or 12.6% to
$101,620,000 at June 30, 2000 when compared to $90,219,000 at December 31, 1999.
This increase is primarily due to management's ongoing efforts to capture and
expand the deposit relationships of both new and existing consumer and business
customers. YNB recently introduced and is aggressively marketing a totally free
checking account for personal depositors. This account has been well received
and its growth accounts for a portion of the increased non-interest bearing
deposit balances and provides YNB with increased opportunities to cross sell
other products.
14
<PAGE>
Interest bearing demand deposits increased $5,900,000 or 9.6% to $67,383,000 at
June 30, 2000 from $61,483,000 at year-end 1999. In addition, money market
balances increased $28,446,000 or 49.8% to $85,589,000 at June 30, 2000 from
$57,143,000 at December 31, 1999. This increase resulted from higher rates paid
and the aggressive marketing campaign of the Premier Money Market Account
conducted by YNB. Savings deposits decreased $4,021,000 or 5.0% to $76,279,000
at June 30, 2000 from $80,300,000 at December 31, 1999. A key factor for this
decline was the migration of accounts from lower yielding savings to higher
yielding money market accounts.
While it is management's intention to fund earning asset growth with the lowest
cost deposits, core deposit growth levels, excluding certificates of deposit,
are not adequate to meet current or projected loan demand. YNB's ability to
generate lower cost deposits could affect achieving earnings targets. The
continuing reliance on higher cost certificates of deposit to fund asset growth
is a major factor in the continued pressure on YNB's net interest margin.
YNB continues to seek lower cost funding sources. In January 2000, YNB
introduced YNB Online, PC based home and business banking service. This service
will allow customers to have greater access to their accounts and should help to
make YNB's deposit products more competitive in the market place. Another source
of low cost funds is the opening of new branches to serve a wider market area.
In April 2000, YNB opened its first supermarket branch located in Ewing
Township, New Jersey. Management believes that this branch should be a strong
source of both core deposits and consumer loans. In addition, management
continues to seek additional branch sites. YNB currently has regulatory approval
to open three additional branches by the end of 2000. One of these branches will
be located in Lawrence Township, Mercer County, New Jersey and will fill a gap
in YNB's existing market coverage. The other two branches will expand YNB into
the neighboring counties of Burlington and Hunterdon. The Burlington County
branch will be located in Bordentown, New Jersey and allow YNB to better serve a
market where it already does business. The Hunterdon County branch will be
located in Flemington, New Jersey. Management intends to continue to seek and
evaluate opportunities for additional branches both inside and outside of its
core Mercer County market place. Management believes that expanding the branch
network to tap new deposit markets is the best solution for generating lower
cost funds to support asset growth.
Borrowed Funds
Borrowed funds totaled $337,922,000 at June 30, 2000, an increase of $39,233,000
or 13.1% when compared to $298,689,000 at December 31, 1999. The growth in
Federal Home Loan Bank advances (FHLB) used to fund the investment growth
strategy and to replace called or matured securities sold under agreements to
repurchase accounted for the increase in borrowed funds. Approximately
$239,000,000 or 70.7% of borrowed funds at June 30, 2000 are related to the
Investment Growth Strategy. In determining funding, as Investment Growth
Strategy funding matures or is called, management evaluates several factors: the
future outlook for interest rates, interest rate risk, the trade off between
maximizing current income or preserving longer term earnings and other relevant
factors. Management anticipates that funding costs associated with borrowed
funds will increase as shorter term repurchase agreements mature and callable
funding at below market rates is called. At June 30, 2000, $222,000,000 or
15
<PAGE>
93.7% of the Investment Growth Strategy funding was in callable funding compared
to $220,000,000 or 97.8% at December 31, 1999.
Securities sold under agreements to repurchase totaled $15,000,000 at June 30,
2000 compared to $45,000,000 at December 31, 1999. $10,000,000 or 66.7% of the
repurchase agreements outstanding at June 30, 2000 were callable compared to
$40,000,000 or 88.9% at December 31, 1999. Management has been shifting funding
from repurchase agreements to callable FHLB advances due to lower funding costs
available at the FHLB. With the increase in interest rates since the end of
1999, management anticipates that repurchase agreement costs will rise as
shorter-term repurchase agreements mature and below market rate callable
repurchase agreements are called and are replaced at higher market rates.
YNB had FHLB advances outstanding of $320,281,000 at June 30, 2000, an increase
of $69,988,000 or 28.0% when compared to $250,293,000 at December 31, 1999. YNB
continues to utilize callable FHLB advances to fund both Investment Growth
Strategy purchases as well as other earning assets. In the first half of 2000,
as advances were called or matured, management replaced this funding with
callable funding having relatively shorter call periods. This has helped to
reduce the impact of higher rates on borrowing costs. At June 30, 2000 callable
advances totaled $292,500,000 or 91.3% of advances outstanding compared to
$239,500,000 or 95.7% at December 31, 1999. Callable FHLB advances have terms of
ten years and are callable after periods ranging from three months to five
years. There is $114,500,000 in callable advances with call dates in 2000
outstanding as of June 30, 2000. Management anticipates that, if rates continue
to rise, some or all of these advances will be called and will have to be
replaced with higher costing advances.
Borrowed funds included $1,400,000 related to the ESOP. The ESOP purchased
155,340 shares of the common stock, no par value, of the Holding Company with a
loan from a nonaffiliated financial institution. The financing is for a term of
five years with an interest rate of 7.00% and a maturity date in 2004. The
interest rate is fixed for the period of the loan, and the loan will be repaid
in equal monthly installments over the term of the loan. The shares purchased by
the ESOP were used as collateral for the loan. The Holding Company guarantees
the repayment of the loan.
YNB has the ability to borrow up to $37,845,000 from the FHLB through its line
of credit program, subject to collateral requirements. In addition, YNB is
eligible to borrow up to 30% of assets under the FHLB advance program subject to
FHLB stock requirements, collateral requirements and other restrictions. YNB
also maintains unsecured federal funds lines with four commercial banks totaling
$25,000,000 for daily funding needs. YNB's funding strategy is to rely on
deposits to fund new loan growth whenever possible and to rely on borrowed funds
as a secondary funding source for loans.
16
<PAGE>
Company - Obligated Mandatorily Redeemable Trust Preferred Securities of
Subsidiary Trust Holding Solely Junior Subordinated Debentures of the Company
(Trust Preferred Securities)
On June 23, 2000, the Holding Company through the Trust II, completed the sale
of $15,000,000 of 9.50% Trust Preferred Securities to a nonaffiliated financial
institution. As of June 30, 2000, $25,265,000 or 95.3% of the $26,500,000 in
trust preferred securities outstanding qualify as Tier I capital. The remaining
$1,235,000 is treated as Tier II capital. Management anticipates that all Trust
Preferred outstanding at June 30, 2000 will qualify for Tier I capital within
the next 12 months.
On October 16, 1997, the Holding Company through the Trust, completed the sale
of $11,500,000, of 9.25% Trust Preferred Securities to the public. For
regulatory capital purposes the entire amount of the issue is treated as Tier 1
capital at the Holding Company level.
17
<PAGE>
Capital
On June 23, 2000, the Holding Company completed the private placement of 68,500
units, each unit consisting of 10 shares of common stock and 1 common stock
purchase warrant. The units were sold to a limited number of investors and
generated gross proceeds of $6,850,000. Net proceeds after offering costs was
$6,835,000.
$21,300,000 of the total proceeds raised by the trust preferred and equity
offerings was contributed to the Bank to support future asset growth.
Stockholders' equity at June 30, 2000 totaled $69,191,000, an increase of
$10,366,000 or 17.6%, compared to $58,825,000 at December 31, 1999. This net
increase resulted from the following factors:
(i) YNB earned net income of $5,025,000 for the period and paid cash dividends
of $1,351,000.
(ii) The unrealized loss on available for sale securities was $6,604,000 at
June 30, 2000 compared to an unrealized loss of $6,264,000 at December 31,
1999. This increase in the unrealized loss resulted in a $340,000
reduction in stockholders' equity.
(iii) YNB received $52,000 in proceeds from exercised options and $6,835,000
from the equity capital offering. Offsetting these increases was a $55,000
decrease associated with the fair market value adjustment related to the
allocation of shares from the employee stock option plan.
(iv) A reduction in commitment to ESOP of $200,000 to $1,400,000 at June 30,
2000 from $1,600,000 resulted in an increase of $200,000 in Stockholders'
equity.
While total Stockholders' equity increased $10,366,000, Tier one regulatory
capital increased $24,471,000 or 32.0% and total regulatory capital increased
$26,517,000 or 31.0%. The following table sets forth regulatory capital ratios
for the Holding Company and the Bank as of June 30, 2000 and December 31, 1999.
<TABLE>
<CAPTION>
Amount Ratios
--------------------------------------------------------------------------------------------------------
dollars in thousands 06/30/00 12/31/99 06/30/00 12/31/99
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Risk-based capital:
Tier 1:
Holding Company $101,060 $76,579 11.9% 10.3%
Bank 101,153 76,279 11.9 10.2
--------------------------------------------------------------------------------------------------------
Total:
Holding Company 112,071 85,544 13.2 11.5
Bank 110,929 85,244 13.1 11.4
--------------------------------------------------------------------------------------------------------
Tier 1 leverage:
Holding Company 101,060 76,579 8.4 7.9
Bank $101,153 $76,279 8.3% 7.8%
--------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
The minimum regulatory capital requirements for financial institutions require
institutions to have a Tier 1 leverage ratio of 4.0%; a Tier 1 risk-based
capital ratio of 4.0% and a total risked based capital ratio of 8.0%. To be
considered "well capitalized" an institution must have a minimum Tier 1 capital
and total risk-based capital ratio of 6.0% and 10.0%, respectively, and a
minimum Tier 1 leverage ratio of 5.0%. At June 30, 2000, the ratios of the
Holding Company and the Bank exceeded the ratios required to be considered well
capitalized. It is management's goal to provide YNB with adequate capital to
continue to support asset growth and maintain both the Bank and Holding Company
as well capitalized institutions.
Credit Quality
The following table sets forth nonperforming assets and risk elements in YNB's
loan portfolio by type as of June 30, 2000 and December 31, 1999.
<TABLE>
<CAPTION>
Nonperforming Assets
---------------------------------------------------------------------------------------------------
(in thousands) 06/30/00 12/31/99
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Nonaccrual loans:
Commercial and industrial $ 993 $ 676
Real estate - mortgage 2,321 1,189
Consumer 9 12
Other -- 312
---------------------------------------------------------------------------------------------------
Total 3,323 2,189
---------------------------------------------------------------------------------------------------
Restructured loans 723 540
---------------------------------------------------------------------------------------------------
Loans 90 days or more past due:
Commercial and industrial 539 46
Real estate - mortgage 669 277
Consumer 26 26
---------------------------------------------------------------------------------------------------
Total 1,234 349
---------------------------------------------------------------------------------------------------
Total nonperforming loans 5,280 3,078
---------------------------------------------------------------------------------------------------
Other real estate 2,330 2,585
---------------------------------------------------------------------------------------------------
Total nonperforming assets $ 7,610 $` 5,663
---------------------------------------------------------------------------------------------------
Allowance for loan losses to total loans, end of
period 1.35% 1.39%
Allowance for loan losses to nonperforming
loans, end of period 185.15% 291.26%
===================================================================================================
</TABLE>
At June 30, 2000, nonperforming loans, which are loans 90 days and more past
due, restructured loans and nonaccrual loans, totaled $5,280,000, a $2,202,000
or 71.6% increase from the $3,078,000 at December 31, 1999. The increase in
nonperforming loans was primarily due to a $1,132,000 increase in nonaccrual
Real Estate loans and a $885,000 increase in loans 90 days or more past due
since year end 1999. One loan relationship totaling $1,775,000 accounted for
80.6% of the increase in nonperforming loans since year-end 1999. Nonperforming
loans as a percentage of total loans at June 30, 2000 was 0.73% an increase from
the 0.48% ratio at December 31, 1999 but in line with the 0.66% at June 30,
1999.
19
<PAGE>
Other real estate at June 30, 2000 totaled $2,330,000, a $255,000 or 9.9%
decrease when compared to $2,585,000 at December 31, 1999.
Nonperforming assets at June 30, 2000 totaled $7,610,000 a $1,947,000 or 34.4%
increase from the $5,663,000 level at December 31, 1999. Total nonperforming
assets as a percentage of total assets were 0.58% at June 30, 2000 compared to
0.50% at December 31, 1999. The increase in nonperforming assets resulted from
the higher level of nonperforming loans partially offset by a reduction in other
real estate.
Allowance for Loan Losses
The allowance for loan losses totaled $9,776,000 at June 30, 2000, an increase
of $811,000 from the $8,965,000 at year-end 1999. The provision for loan losses
for the first six months of 2000 was $1,700,000 compared to $1,400,000 for the
same period of 1999. Gross chargeoffs were $975,000 for the first six months of
2000 compared to $590,000 for the same period in 1999. Gross recoveries were
$86,000 for the first six months of 2000 compared to $45,000 for the same period
in 1999. Annualized net chargeoffs as a percentage of average loans were 0.26%
for the first six months of 2000 and 0.17% for the year ended December 31, 1999.
Management maintains the allowance for loan losses at a level determined in
accordance with management's documented allowance adequacy methodology. It is
management's assessment, based on management's estimates, that the allowance is
adequate in relation to the credit risk exposure levels. One measure of the
adequacy of the allowance for loan losses is the ratio of allowance for loan
losses to total loans. This ratio was 1.35% at June 30, 2000 compared to 1.39%
at December 31, 1999. Another measure of the adequacy of the allowance for loan
losses is the ratio of the allowance for loan losses to total nonperforming
loans. This ratio was 185.15% at June 30, 2000 compared to 291.26% at December
31, 1999.
Results of Operations
Net Income
YNB reported net income of $5,025,000 for the six months ended June 30, 2000, an
increase of $1,481,000 or 41.8% over the $3,544,000 for the same period in 1999.
The increase in net income for the first six months of 2000 compared to the same
period in 1999 is attributable to higher net interest income and increased
non-interest income offset by increased non-interest expenses and, to a lesser
extent, a higher provision for loan losses. Basic earnings per share for the six
months ended June 30, 2000 increased $0.09 or 13.6% to $0.75 compared to $0.66
for the same period in 1999. Diluted earnings per share for the six months ended
June 30, 2000 was $0.75, an increase of $0.10 or 15.4% when compared to $0.65
for the same period of 1999.
On a quarterly basis, net income for the second quarter of 2000 was $2,629,000
and represented a $639,000 or 32.1% increase over net income for the same period
in 1999. On a per share basis, basic and diluted earnings per share for the
second quarter of 2000 were $0.39, an increase of $0.05 or 14.7% when compared
to the second quarter of 1999. The reasons for the increase are the same as
discussed above.
20
<PAGE>
Net Interest Income
YNB's net interest income for the first six months of 2000 was $18,191,000, an
increase of $4,674,000 or 34.6% from the same period in 1999. The principal
factor contributing to this increase was an increase in interest income of
$14,212,000 resulting from increased loan and securities balances and higher
yields offset by an increase of $9,538,000 in interest expense. This increase in
interest expense was primarily due to both higher average balances of time
deposits and borrowed funds and higher interest rates on all deposit types and
borrowed funds.
The net interest margin (tax equivalent basis) which is net interest income
divided by average interest earning assets, for the first six months of 2000,
was 3.23% a 7 basis point or 2.1% decline compared to 3.30% for the same period
in 1999. The principal factors causing the narrowing of the net interest margin
were the more rapid increase in the cost of interest bearing liabilities as
compared to the increased yield on interest earning assets. Total interest
bearing liability costs increased 52 basis points as compared to a 42 basis
point increase in the yield on interest earning assets.
On a quarterly basis, net interest income was $9,446,000 an increase of
$2,346,000 or 33.0% when compared to the second quarter of 1999. The net
interest margin (tax equivalent basis) for the three months ended June 30, 2000
was 3.24% a 2 basis point or 0.6% decrease from the same period in 1999. The
reasons for the decline are the same as discussed above.
The net interest margin for the 2000 and 1999 comparative periods was also
negatively impacted by the Investment Growth Strategy. The securities in the
Investment Growth Strategy at June 30, 2000, were approximately $242,600,000
compared to $236,400,000 at June 30, 1999. The targeted spread on this strategy
is 75 basis points after tax. Because of the targeted spread on this strategy,
there is a negative impact to the net interest margin and return on average
assets. Conversely, this strategy is designed to increase both return on average
equity and earnings per share, the primary goals of the strategy. The goals of
this strategy continue to be achieved.
Interest Income
For the first six months of 2000 total interest income was $45,380,000, an
increase of $14,212,000 or 45.6% when compared to interest income of $31,168,000
for the same period in 1999. This increase is due to higher average balances in
both loans and securities and higher yields on both earning asset types. Average
loans increased $146,566,000 or 27.5% and the yield increased 54 basis points to
8.82% from 8.28%. The increased loan yields reflected the higher prime rate of
interest as well as higher overall interest rates in the first half of 2000
compared to the same period in 1999. Interest and fees on loans for the six
months ended June 30, 2000 increased $7,908,000 or 35.8% to $29,983,000 from
$22,075,000 for the same period in 1999. Average securities outstanding for the
six months ended June 30, 2000 increased $161,887,000 or 56.4% to $448,943,000
when compared to the $287,056,000 for the same period of 1999. Over the same
period, the yield on the securities portfolio increased 46 basis points to 6.50%
from 6.04%. These factors resulted in interest on securities increasing
$5,928,000 or 68.4% to $14,599,000 for the six months ended June 30, 2000
21
<PAGE>
compared to $8,671,000 for the same period in 1999. Overall, the yield on YNB's
interest earning asset portfolio increased 42 basis points to 7.86% for the six
months ended June 30, 2000 from the 7.44% for the same period in 1999.
For the second quarter of 2000, total interest income was $23,778,000, an
increase of $7,208,000 or 43.5% when compared to $16,570,000 for the second
quarter of 1999. The increase was due to both higher average balances of both
loans and securities and higher yields on both asset types. The overall yield on
earning assets for the second quarter of 2000 was 7.96% a 55 basis point
increase from the 7.41% for the same period of 1999. The increase in yield was
primarily due to the higher prime rate of interest and higher yields on the
securities portfolio.
Interest Expense
Total interest expense increased $9,538,000 or 54.0% to $27,189,000 for the
first six months of 2000 compared to $17,651,000 for the same period in 1999.
The increase in interest expense for the comparable time periods is primarily
from higher levels of time deposits and borrowed funds. In addition to the
higher balances, the rates paid on both deposits and borrowed funds increased
due to the higher rates experienced in 2000 when compared to 1999. The average
rate paid on interest bearing liabilities for the six months ended June 30, 2000
increased 52 basis points to 5.23% from 4.71% for the same period of 1999.
Interest on other time deposits under $100,000 increased $3,356,000 to
$11,395,000 for the six months ended June 30, 2000 from $8,039,000 for the same
period in 1999. This increase was caused by both an increase of $99,645,000 in
the average outstanding balance to $395,972,000 for the six months ended June
30, 2000, when compared to the outstanding average balance of $296,327,000 for
the six months ended June 30, 1999 and an increase of 33 basis points in the
cost to 5.76% from 5.43% for the same period as described above. Interest
expense on certificates of deposit under $100,000 accounted for 41.9% of total
interest expense for the six months ended June 30, 2000 and 35.2% of the total
increase in interest expense for that period. During the first six months of
2000, YNB offered attractive rates on CDs locally and nationwide to fund loan
growth and enhance the liquidity profile of YNB.
Interest on certificates of deposit (CDs) of $100,000 or more increased
$1,558,000 or 139.9% to $2,672,000 for the six months ended June 30, 2000 from
$1,114,000 for the same period in 1999. The increase was caused by an increase
in the average outstanding balance of $45,005,000 or 102.8% to $88,805,000 for
the six months ended June 30, 2000 when compared to the outstanding average
balance of $43,800,000 for the six months ended June 30, 1999. The cost of
certificates of deposit of $100,000 or more increased 93 basis points to 6.02%
for the first six months of 2000 from 5.09% for the same period in 1999. Besides
attracting CDs of $100,000 or more in its markets, YNB also utilizes a software
program which allows YNB to market its CDs nationwide. YNB anticipates that
attracting CDs of $100,000 or more will continue to play an important part in
funding future earning asset growth.
Interest expense on borrowed funds increased $3,436,000 or 60.5% to $9,120,000
for the first six months of 2000 when compared to $5,684,000 for the same period
22
<PAGE>
in 1999. The increased expense was caused by a $104,302,000 increase in the
average balance outstanding in the first six months of 2000 to $325,344,000 when
compared to the $221,042,000 for the same period in 1999. The rate paid on
borrowed funds increased 47 basis points for the six months ended June 30, 2000
to 5.61% from the 5.14% for the same period last year. The primary causes for
the increase in interest expense on borrowed funds are higher rates and the
higher level of borrowings used to fund both the Investment Growth Strategy and
other earning asset growth. The higher interest rate environment in 2000 has
resulted in increased costs as existing below market callable FHLB advances and
repurchase agreements are called and are replaced at current market level rates.
Management anticipates that if interest rates continue to rise the cost of
borrowed funds will also increase.
Interest expense on savings, money markets and interest bearing demand accounts
increased $1,156,000 or 50.7% to $3,438,000 for the first six months of 2000
when compared to the $2,282,000 for the same period in 1999. Early in January
2000, YNB redesigned its Premier Money Market Account for both personal and
business customers. The most significant change was an increase, on a tiered
basis, in the rate paid to be more competitive in the market place. This had the
immediate impact of increasing the cost of existing money market balances and
was a key factor in the increased cost on these deposit types. Money market
accounts are historically less expensive than CDs and present more opportunities
to cross sell other bank products and services. YNB has already experienced
substantial growth in Premier Money Market balances due to the higher rate and
aggressive marketing campaign conducted to promote the product. The cost of
savings, money markets and interest bearing demand deposits increased 59 basis
points to 3.17% for the first six months of 2000 when compared to 2.58% for the
same period in 1999. At the same time, the average balance of these deposit
types increased $40,059,000 or 22.6% to $217,070,000 for the first six months of
2000 from $177,011,000 for the same period in 1999.
Total interest expense for the second quarter of 2000 increased $4,862,000 or
51.3% to $14,332,000 from $9,470,000 for the same period in 1999. The overall
cost of interest bearing liabilities increased 58 basis points to 5.33% from
4.75% for the second quarter of 1999. The reasons for the increase in interest
expense for the second quarter are the same as discussed above.
While YNB seeks to fund asset growth with lower cost savings, money market,
interest bearing checking and non-interest bearing demand deposits, this is not
always possible, as asset growth rates continue to exceed the growth rate in
these deposit types. To attract lower cost deposits to fund asset growth,
management has launched several new products including YNB Online, an improved
Premier Money Market account and a new free checking product. Management
anticipates that over time, these new products, along with additional branches
in new markets should result in lower cost core deposits providing a higher
percentage of the new funding than has been experienced recently. This
anticipated improvement in the deposit mix will help to control interest expense
going forward. However, the ability of YNB to lower the cost of interest bearing
liabilities is dependent on market conditions. If interest rates should continue
to rise, YNB's interest expense will also increase.
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<PAGE>
Provision for Loan Losses
YNB provides for possible loan losses by a charge to current operations. The
provision for loan losses for the six months ended June 30, 2000 was $1,700,000,
a $300,000 or 21.4% increase over the $1,400,000 provision recorded for the same
period of 1999.
For the three months ended June 30, 2000 the provision for loan losses was
$900,000, a $150,000 or 20.0% increase from the same period in 1999. The
increase in the provision for both the quarter and year to date comparisons was
primarily due to strong loan growth and to a lesser extent, increased net charge
offs. Management believes that the reserve for loan losses is adequate in
relation to the credit risk exposure levels.
Non-interest Income
Total non-interest income for the first six months of 2000 was $1,625,000, an
increase of $142,000 or 9.6% over non-interest income of $1,483,000 for the same
period in 1999. The increase was due principally to increased service charges on
deposit accounts.
Service charges on deposit accounts increased $136,000 or 21.8% to $761,000 for
the six months ended June 30, 2000 compared to $625,000 for the same period in
1999. This increase accounted for 95.8% of the total increase in non-interest
income for the period. This increase reflects the continuing growth in core
deposits as well as better collection efforts.
Other non-interest income increased $69,000 or 8.5% to $879,000 for the six
months ended June 30, 2000 from $810,000 for the same period in 1999. Increases
in ATM fees and income on Bank owned life insurance assets accounted for the
increase. The single largest component of other non-interest income was income
derived from bank owned life insurance assets, which totaled $411,000 for the
first six months of 2000 as compared to $380,000 for the same period in 1999.
This income represented 46.8% and 46.9% of total other non-interest income for
the first six months of 2000 and 1999 respectively. The income earned on these
assets is used to offset expenses on deferred compensation programs.
For the three months ended June 30, 2000 total non-interest income increased
$137,000 or 18.1% to $892,000 from $755,000 for the same period in 1999. The key
factors for the increase are the same as discussed above with service charges on
deposit accounts increasing $67,000 and accounting for 48.9% of the total
increase in non-interest income.
Non-interest income represented 3.5% of YNB's total revenue in the first six
months of 2000 and 3.6% of total revenue for the second quarter of 2000 compared
to 4.5% and 4.4% for the same periods in 1999. The reduction in these ratios was
caused by the growth rate of interest income exceeding the growth rate of
non-interest income. Management continues to closely evaluate both traditional
and non-traditional sources of new non-interest income as part of a longer-term
strategy to increase earnings.
24
<PAGE>
Non-interest Expense
Total non-interest expense increased $2,358,000 or 27.2% to $11,031,000 for the
first six months of 2000 compared to $8,673,000 for the same period in 1999. The
increase in non-interest expense was primarily due to increases in salaries and
employee benefits, occupancy, and other non-interest expenses. Total
non-interest expenses, on an annualized basis, as a percentage of average assets
were 1.83% for the first six months of 2000 compared to 1.97% for the same
period of 1999. The improvement in this ratio is due to the strong asset growth
experienced by YNB. YNB's efficiency ratio for the first six months of 2000 was
55.7%, a decrease from the 57.8% for the same period in 1999. The efficiency
ratio is computed by dividing total operating expenses by net interest income
and other income. An increase in the efficiency ratio indicates that more
resources are being utilized to generate the same or greater volume of income
while a decrease would indicate a more efficient allocation of resources.
Salary and employee benefits increased $928,000 or 19.6% to $5,656,000 for the
first six months of 2000 compared to $4,728,000 for the same period in 1999.
Salary and benefits expense accounted for 51.3% of total non-interest expenses
for the first six months of 2000. Salary expense increased $813,000 or 22.2%
reflecting increased staffing levels throughout YNB as the organization
continues to grow and normal salary increases. Benefit expense increased
$115,000 or 10.8%. The increase in salary and benefit expense in the first six
months of 2000 accounted for 39.4% of the total increase in non-interest expense
when the first six months of 2000 is compared to the same period in 1999.
Occupancy expense for the first six months of 2000 was $1,232,000, an increase
of $598,000 or 94.3% compared to $634,000 for the same period in 1999. Total
rent expense on leased properties increased $311,000 and accounted for 52.0% of
the total increase for the period. The primary cause for the increase in rent
expense, as well as the total increase in occupancy expense, were the expenses
associated with YNB's corporate headquarters building. YNB first occupied the
building in October of 1999.
Equipment expense increased $215,000 or 29.5% to $944,000 for the first six
months of 2000 from $729,000 for the same period in 1999. The increase in
equipment costs reflects the continuing efforts of YNB to maintain and upgrade
technology in order to provide the highest quality products and service and
increase productivity. Equipment costs included depreciation on equipment, which
totaled $571,000 for the first six months of 2000 reflecting an increase of
$129,000 or 29.2% from the $442,000 for the same period in 1999. The increase in
depreciation accounted for 60.0% of the total increase in equipment expense. A
significant portion of the increased equipment expense related to the equipment
costs associated with YNB's new corporate headquarters.
Other non-interest expenses increased $617,000 or 23.9% to $3,199,000 for the
first six months of 2000 when compared to the $2,582,000 for the same period in
1999. A key factor for the increase in other non-interest expenses related to
$411,000 in costs associated with the restructuring of one commercial loan
relationship. This expense accounted for 66.6% of the total increase in other
non-interest expense and 17.4% of the increase in total non-interest expense.
While most expense categories that are included in other non-interest expenses
increased the total increase was reduced by a $98,000 decline in expenses
related to other real estate owned to $256,000 in the first six months of 2000
compared to $354,000 for the same period in 1999. Management closely monitors
25
<PAGE>
non-interest expenses and seeks to control the growth of these expenses.
However, as YNB continues to grow, the costs associated with properly managing
the organization will also continue to increase.
For the three months ended June 30, 2000 total non-interest expense increased
$1,381,000 or 31.9% to $5,709,000 from 4,328,000 for the same period in 1999. A
key factor in the increase was the aforementioned loan restructuring charge
which totaled $311,000 for the quarter which accounted for 22.5% of the total
increase for the period. Total non-interest expense on an annualized basis, as a
percentage of average assets was 1.83% for the three months ended June 30, 2000
and in line with the 1.84% for the same period in 1999. YNB's efficiency ratio
for the three months ended June 30, 2000 was 55.2% and in line with the 55.1%
for the same period in 1999. Salary and benefit expense increased $411,000 or
16.9% to $2,848,000 from $2,437,000 for the same period in 1999. Occupancy
expense increased $289,000 or 90.0% to $610,000 from $321,000 for the same
period in 1999. Equipment expense increased $109,000 or 29.7% to $467,200 from
$367,000 for the same period in 1999. Other non-interest expense increased
$572,000 or 47.5% to $1,775,000 from $1,203,000 for the same period in 1999. The
above mentioned loan restructuring of $311,000 accounted for 54.4% of the total
increase in other non-interest expense. The other reasons for the increase in
non-interest expense for the quarter are the same as discussed above.
Income Tax Expense
The effective income tax rate for the six months ended June 30, 2000 was 29.1%
compared to 28.1% for the same period in 1999. The modest increase in the tax
rate resulted from the growth in tax-free income not keeping pace with the
growth in overall income. Total income tax expense for the six months ended June
30, 2000 was $2,060,000, an increase of $677,000 from the $1,383,000 for the
same period in 1999. The increase in tax expense resulted from higher taxable
income and a higher effective tax rate.
The effective income tax rate for the three months ended June 30, 2000 was 29.5%
compared to 28.3% for the same period in 1999. Total income tax expense for the
three months ended June 30, 2000 was $1,100,000, an increase of $313,000 from
the $787,000 for the same period in 1999. The reasons for the increase are the
same as these discussed above.
26
<PAGE>
Item 3: Quantitative and Qualitative Disclosure about Market Risk
There have been no material changes in YNB's market risk from December 31, 1999
except as discussed below. For information regarding YNB's market risk refer to
the Company's 1999 Annual Report to stockholders.
Changes in Earnings Risk
Net interest income over the next twelve-month period indicates an increased
risk to lower rates (-200 basis points) at June 30, 2000 than reported at
December 31, 1999. Comparing the simulation results of this low rate scenario to
the flat rate interest rate scenario indicates a change in net interest income
of -5.1% compared to -2.5% at year end 1999. At the same time, YNB's exposure to
higher rates (+200 basis points) increased modestly to a 2.6% change in net
interest income compared to a 1.5% change at year-end 1999. The cumulative
one-year gap remained a negative $57,364,000 or -4.4% of total assets at June
30, 2000 compared to a negative $152,280,000 or 13.6% of assets at year-end
1999. The dollar change in the gap was $94,916,000.
Changes in Market risk
Management measures longer-term market risk through the Economic Value of
Portfolio Equity ("EVPE"). The present value of asset and liability cash flows
are subjected to rate shocks of plus or minus 200 basis points. The variance in
the residual, or economic value of equity is measured as a percentage of total
assets. This variance is managed within a negative 3% boundary.
At June 30, 2000, the EVPE changes by -3.51% for rate shifts of +200 and -1.01%
for rate shifts of -200 basis points. The non-symmetry of the results is
indicative of the callable funding utilized to fund earning asset growth. This
compares to changes of -3.67% and -0.01% respectively at December 31, 1999 and
-4.26% and -0.14% at June 30, 1999.
The primary causes for this change in risk to rising rates since year-end 1999
are discussed below:
Asset duration decreased to 2.11 years at June 30, 2000 from 2.39 years at
December 31, 1999. The primary cause for this decrease in duration was a
reduction in the duration of the investment portfolio to 3.43 years at June 30,
2000 from 3.79 years at December 31, 1999.
Liability duration also decreased to 1.21 years at June 30, 2000 from 1.37 years
at December 31, 1999. This decline was caused by the shortening of the duration
of both total deposits and borrowed funds since the end of 1999.
Management has initiated strategies designed to bring this measurement back
within policy guidelines.
27
<PAGE>
PART II: OTHER INFORMATION
Item 1: Legal Proceedings
Not Applicable.
Item 2: Changes in Securities and Use of Proceeds
Not Applicable.
Item 3: Defaults Upon Senior Securities
Not Applicable.
Item 4: Submission of Matters to a Vote of Securities Holders
The annual stockholders meeting of Yardville National Bancorp was held May 2,
2000. The matters voted at that meeting were reported in the 1st quarter 10Q.
Item 5: Other Information
Not Applicable
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K. There were no Form 8-K reports filed during the quarter
for which this report is filed.
28
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description Page
--------------------------------------------------------------------------------
(G) 3.1 Restated Certificate of Incorporation of the Company,
as amended by the Certificate of Amendment thereto
filed on March 6, 1998.
(B) 3.2 By-Laws of the Company
(B) 4.1 Specimen Share of Common Stock
(I) 4.2 See Exhibits 3.1 and 3.2 for the Registrant's
Certificate of Incorporation and By-Laws, which
contain provisions defining the rights of
stockholders of the Registrant.
(I) 4.3 Amended and Restated Trust Agreement dated October
16, 1997, among the Registrant, as depositor,
Wilmington Trust Company, as property trustee, and
the Administrative Trustees of Yardville Capital
Trust.
(I) 4.4 Indenture dated October 16, 1997, between the
Registrant and Wilmington Trust Company, as trustee,
relating to the Registrant's 9.25% Subordinated
Debentures due 2027.
(I) 4.5 Preferred Securities Guarantee Agreement dated as of
October 16, 1997, between the Registrant and
Wilmington Trust Company, as trustee, relating to the
Preferred Securities of Yardville Capital Trust.
(L) 10.1 Employment Contract between Registrant and Patrick M.
Ryan.
(L) 10.2 Employment Contract between Registrant and Jay G.
Destribats
(L) 10.3 Employment Contract between Registrant and Stephen F.
Carman
(M) 10.4 Employment Contract between Registrant and James F.
Doran
(M) 10.5 Employment Contract between Registrant and Richard A.
Kauffman
(M) 10.6 Employment Contract between Registrant and Mary C.
O'Donnell
(M) 10.7 Employment Contract between Registrant and Frank
Durand III
(D) 10.8 Salary Continuation Plan for the Benefit of Patrick
M. Ryan
29
<PAGE>
INDEX TO EXHIBITS (continued)
Exhibit
Number Description Page
--------------------------------------------------------------------------------
(D) 10.9 Salary Continuation Plan for the Benefit of Jay G.
Destribats
(E) 10.10 1988 Stock Option Plan
(M) 10.11 Employment Contract between Registrant and Thomas L.
Nash
(A) 10.12 Directors' Deferred Compensation Plan
(B) 10.13 Lease Agreement between Jim Cramer and the Bank dated
November 3, 1993
(L) 10.14 Lease between Gardeners Property Partnership and the
Bank
(A) 10.15 Agreement between the Lalor Urban Renewal Limited
Partnership and the Bank dated October, 1994
(C) 10.16 Survivor Income Plan for the Benefit of Stephen F.
Carman
(C) 10.17 Lease Agreement between Devon Inc. and the Bank dated
as of February 9, 1996
(N) 10.18 1997 Stock Option Plan, as amended effective May 2,
2000.
(M) 10.19 Employment Contract between Registrant and Howard N.
Hall
(M) 10.20 Employment Contract between Registrant and Sarah J.
Strout
(M) 10.21 Employment Contract between Registrant and Nina D.
Melker
(L) 10.22 Employment Contract between Registrant and Timothy J.
Losch
(G) 10.23 Survivor Income Plan for the Benefit of Timothy J.
Losch
(G) 10.24 Lease Agreement between the Ibis Group and the Bank
dated July 1997
(H) 10.25 Lease Agreement between Hilton Realty Co. of
Princeton and the bank dated March 31, 1998.
30
<PAGE>
INDEX TO EXHIBITS (continued)
Exhibit
Number Description Page
--------------------------------------------------------------------------------
(H) 10.26 1994 Stock Option Plan.
(J) 10.27 Lease agreement between Crestwood Construction and
the Bank dated May 25, 1998
(K) 10.29 Yardville National Bank Employee Stock Ownership
Plan, As amended
(L) 10.30 Lease Agreement between Sycamore Street Associates
and the Bank dated October 30, 1998
10.31 List of Subsidiaries of the Registrant
(M) 10.32 Employment Contract between Registrant and Kathleen
A. Fone
10.33 Lease agreement between Samuel and Margaret Marrazzo
and the Bank dated April 1, 2000
27.1 Financial Data Schedule
-------------------------------------------------------------------------
(A) Incorporated by reference to the Registrant's Annual
Report on Form 10-KSB/A filed on July 25, 1995
(B) Incorporated by reference to the Registrant's
Registration Statement on Form SB-2 (Registration No.
33-78050)
(C) Incorporated by reference to the Registrant's Annual
Report on Form 10-KSB for fiscal year ended December
31, 1995
(D) Incorporate by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1996
(E) Incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997, as amended by Form 10-Q/A filed
on August 15, 1997
(F) Incorporated by reference to the Registrant's
Registration Statement on Form S-8 (Registration No.
333-28193)
(G) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1997
31
<PAGE>
(H) Incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1998, as amended by Form 10-Q/A filed
June 9, 1998
(I) Incorporated by reference to the Registrant's
Registration Statement on Form S-2 (Registration Nos.
333-35061 and 333-35061-01)
(J) Incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1998.
(K) Incorporated by reference to the Registration
Statement on Form S-8 (Registration No. 333-71741).
(L) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1998 as amended by Form 10-K/A filed on
April 20, 1999.
(M) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1999.
(N) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended
March 31, 2000.
32
<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, 2000 By: /s/ Stephen F. Carman
---------------------------- ------------------------------------
Stephen F. Carman
Executive Vice President and
Chief Financial Officer
33
