Empire Bancorp Announces First Quarter 2019 Results
ISLANDIA, N.Y., April 23, 2019 (GLOBE NEWSWIRE) — Empire Bancorp, Inc. (OTCQX: EMPK), today announced its financial results for the quarter ended March 31, 2019.
Quarterly Highlights
Financial Results
- Net income, measured on a consolidated basis for the first quarter of 2019 was $742 thousand, compared to net income of $840 thousand for the fourth quarter of 2018, and net income of $508 thousand for the first quarter of 2018.
- Diluted earnings per common share for the first quarter of 2019 were $0.10, compared to $0.11 for the fourth quarter of 2018, and $0.07 for the first quarter of 2018.
- Return on average assets and average common stockholders’ equity for the first quarter of 2019 were 0.29% and 4.15%, respectively, compared with 0.34% and 5.09%, respectively, for the fourth quarter of 2018, and 0.21% and 3.11%, respectively, for the first quarter of 2018.
Franchise Development
- Total assets were $1.05 billion at March 31, 2019, up 10.5% from $947.0 million at March 31, 2018.
- Loans outstanding totaled $675.3 million at March 31, 2019, up 25.5% from $538.2 million at March 31, 2018.
- Deposits totaled $937.6 million at March 31, 2019, up 8.9% from $861.0 million at March 31, 2018.
Continued Financial and Credit Strength
- Solid asset quality with an allowance for loan and lease losses of 0.96% of total loans and a ratio of non-performing loans to total loans of 0.36%.
- There was no provision for loan losses recorded for the first quarter of 2019, compared to a provision of $230 thousand recorded for December 31, 2018, and a provision of $227 thousand as of March 31, 2018.
- “Well capitalized” regulatory capital levels at Empire National Bank, as of December 31, 2018:
º Tier 1 leverage capital ratio of 8.81%
º Common equity tier 1 risk-based capital ratio of 13.16%
º Tier 1 risk-based capital ratio of 13.16%
º Total risk-based capital ratio of 14.09%
Balance Sheet
Assets totaled $1.05 billion at March 31, 2019, up $58.1 million, or 5.9%, from December 31, 2018, and up $99.4 million, or 10.5%, from March 31, 2018. Total cash and cash equivalents increased $34.0 million, or 323.3%, to $44.5 million from $10.5 million at December 31, 2018, and decreased $33.3 million, or 42.8%, from $77.8 million at March 31, 2018. Investment securities available for sale were $281.3 million, up $12.3 million, or 4.6%, from $269.0 million at December 31, 2018, and down $13.6 million, or 4.6%, from March 31, 2018. Gross loans were $675.3 million at March 31, 2019, an increase of $1.7 million, or 0.26%, from $673.6 million at December 31, 2018, and an increase of $137.1 million, or 25.5%, from $538.2 million at March 31, 2018.
Total deposits were $937.6 million, up $44.7 million, or 5.0%, from $892.9 million at December 31, 2018, and up $76.6 million, or 8.9%, from $861.0 million at March 31, 2018. Demand deposits were $178.1 million, up $8.8 million, or 5.2%, from $169.3 million at December 31, 2018, and up $18.0 million, or 11.2%, from $160.1 million at March 31, 2018. Savings, N.O.W. and money market deposits totaled $725.4 million, representing an increase of $36.3 million, or 5.3%, from $689.1 million at December 31, 2018, and an increase of $56.8 million, or 8.5%, from $668.6 million at March 31, 2018. The growth in these deposits year over year was fueled in large part by new and existing municipal banking relationships. Certificates of deposits of $100,000 or more and other time deposits totaled $34.1 million, down $406 thousand, or 1.2%, from December 31, 2018, and up $1.8 million, or 5.4%, from March 31, 2018.
Stockholders’ equity increased $5.1 million, or 7.1%, to $76.8 million, from December 31, 2018, and increased $10.8 million, or 16.3%, from March 31, 2018. The linked quarter increase was primarily attributable to the positive impact of a decrease in the unrealized losses on securities available for sale, net of taxes of $4.2 million, net income of $742 thousand, and a net increase of $84 thousand associated with stock compensation plans. The increase in stockholders’ equity from March 31, 2018 primarily resulted from a $5.8 million decrease in the unrealized losses on securities available, net of taxes, net income of $3.7 million, and an increase of $1.3 million associated with stock compensation plans as well as the exercise of warrants and stock options.
Net Interest Margin/Net Interest Income
Net interest income for the first quarter of 2019 decreased $172 thousand, or 2.7%, over the fourth quarter of 2018, and increased $116 thousand, or 1.9%, over the first quarter of 2018. Net interest margin was 2.56% for the three months ended March 31, 2019, down compared to 2.62% for the three months ended December 31, 2018, and down from 2.65% for the three months ended March 31, 2018.
Interest income for the first quarter of 2019 increased $92 thousand, or 1.0%, from the fourth quarter of 2018, and $1.5 million, or 18.6%, from the first quarter of 2018. The linked quarter increase was primarily the result of an increase of $56 thousand in income from deposits with banks and an increase of $32 thousand in income from loans. The yield on interest earning assets increased to 3.91% for the first quarter of 2019, compared to 3.86% for the fourth quarter of 2018, and compared to 3.47% for the first quarter of 2018. The linked quarter increase in the yield on interest earning assets was primarily attributed to an increase in both the average balance and the yield on loans, coupled with an increase of twenty-seven basis points in the yield on average deposits with banks. The increase in the yield on earning assets, as compared to the first quarter of 2018, largely resulted from the greater proportion of our average assets in average loans as well as an increase in the yield of loans.
Interest expense was $3.3 million in the first quarter of 2019, $3.0 million for the fourth quarter of 2018, and $1.9 million for the first quarter of 2018. The cost of interest bearing liabilities was 1.75% for the three months ended March 31, 2019, an increase from 1.60% for the three months ended December 31, 2018, and an increase from 1.07% for the three months ended March 31, 2018. The upward trend of the cost of interest bearing liabilities, especially within the competitive public fund deposit base, is the result of higher overall funding costs driven up by, among other things, increases in market rates.
Noninterest Income and Expense
The company recognized no security gains or losses on sales of securities for the first quarter of 2019, or the first quarter of 2018, compared to net securities losses of $50 thousand recognized in the fourth quarter of 2018.
Other income was $434 thousand at March 31, 2019, compared to $423 thousand at December 31, 2018, and compared to $412 thousand at March 31, 2018. The linked quarter increase resulted primarily from an increase of $7 thousand, or 5.9%, in customer related fees and service charges, and a $4 thousand, or 1.3%, increase in other operating income. The increase of $22 thousand, or 5.3%, compared to the first quarter of 2018 was driven by $45 thousand, or 17.1%, increase due to a gain on the sale of SBA loans and miscellaneous loan fee income, offset by $23 thousand decrease in customer related fees and service charges.
Other expense was $5.8 million at March 31, 2019, compared to $5.6 million at December 31, 2018, and compared to $5.8 million at March 31, 2018. The $238 thousand, or 4.3%, increase from the linked quarter was primarily attributable to an increase of $131 thousand, or 4.2%, in salaries and employee benefits, and an increase of $67 thousand, or 30.6%, in professional fees. These expenses were offset by a decrease in FDIC insurance of $37 thousand, or 27.8%, and a decrease of $23 thousand, or 3.5%, in occupancy and equipment expenses. Other operating expenses increased by $91 thousand, or 14.1%, over the previous quarter, as a result of increases of $61.8 thousand and $20.8 thousand in professional practice and investor relations expenses, respectively. The increase of $7 thousand, or 0.1%, in other expenses year over year was the result of an increase of $104 thousand, or 26.0%, in software services, and an increase of $52 thousand, or 22.2% in professional fees, offset by lower salaries and employee benefits of $95 thousand, or 2.9%, and lower occupancy and equipment of $54 thousand, or 7.9%.
Income Tax Rate
The effective income tax rate was 19.2% for the three months ended March 31, 2019, compared to 19.0% for the three months ended December 31, 2018, and 9.3% for the three months ended March 31, 2018. The lower tax for the three months ended March 31, 2018, was the result of excess tax benefits recognized during that quarter relative to the exercise of stock options and compensatory warrants, as well as vesting of restricted stock grants.
Solid Asset Quality/Provision for Loan Losses
There was no provision booked for the first quarter of 2019 as total loans were flat as compared to the year end balance. A provision of $230 thousand was recorded for the fourth quarter of 2018, compared to a provision of $227 thousand for the first quarter of 2018. Expressed as a percentage of outstanding loans, the allowance for loan and lease losses was 0.96% at March 31, 2019 and December 31, 2018, compared to 1.13% at March 31, 2018.
Credit quality remained solid at March 31, 2019, as the company continued to apply rigorous underwriting standards. Loans classified as nonaccrual dropped to $2.4 million at March 31, 2019, or 0.36%, of total loans outstanding, compared to $3.8 million, or 0.57%, at December 31, 2018, and compared to $5.8 million, or 1.08%, at March 31, 2018. The quarter over quarter decrease in total nonaccrual loans reflects the company’s experience and ability to work with borrowers, which contributed to the payoff of three nonaccrual loans year over year. There were no charge-offs and recoveries recorded in the first quarter of 2019, compared to no charge-offs and a recovery of $6 thousand recorded for the fourth quarter in 2018, and compared to a charge-off of $11 thousand and no recoveries recorded in the first quarter of 2018.
| Consolidated Statements of Condition (unaudited) | |||||||||||
| (dollars in thousands, except per share data) | |||||||||||
| March 31, |
December 31, |
March 31, |
|||||||||
| 2019 | 2018 | 2018 | |||||||||
| ASSETS | |||||||||||
| Total cash and cash equivalents | $ | 44,491 | $ | 10,511 | $ | 77,831 | |||||
| Securities available for sale, at fair value | 281,284 | 268,999 | 294,913 | ||||||||
| Securities held to maturity | 4,750 | 4,945 | 4,750 | ||||||||
| Securities, restricted | 3,086 | 3,170 | 2,931 | ||||||||
| Loans | 675,319 | 673,568 | 538,150 | ||||||||
| Allowance for loan losses | (6,463 | ) | (6,463 | ) | (6,091 | ) | |||||
| Loans, net | 668,856 | 667,105 | 532,059 | ||||||||
| Premises and equipment, net | 4,544 | 4,691 | 5,279 | ||||||||
| Bank-owned life insurance | 21,038 | 20,886 | 20,413 | ||||||||
| Other assets and accrued interest receivable(1) | 18,313 | 7,920 | 8,826 | ||||||||
| Total Assets | $ | 1,046,362 | $ | 988,227 | $ | 947,002 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Demand Deposits | $ | 178,068 | $ | 169,275 | $ | 160,074 | |||||
| Savings, N.O.W. and money market deposits | 725,443 | 689,050 | 668,554 | ||||||||
| Certificates of deposit of $100,000 or more | |||||||||||
| and other time deposits | 34,135 | 34,541 | 32,375 | ||||||||
| Total Deposits | 937,646 | 892,866 | 861,003 | ||||||||
| Short-term borrowings | – | 2,595 | – | ||||||||
| Subordinated debentures, net | 14,835 | 14,823 | 14,789 | ||||||||
| Other liabilities and accrued expenses(1) | 17,107 | 6,234 | 5,216 | ||||||||
| Total Liabilities | 969,588 | 916,518 | 881,008 | ||||||||
| Total Stockholders’ Equity | 76,774 | 71,709 | 65,994 | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,046,362 | $ | 988,227 | $ | 947,002 | |||||
| Selected Financial Data (unaudited) | |||||||||||
| Allowance for Loan Losses to Total Loans | 0.96 | % | 0.96 | % | 1.13 | % | |||||
| Non-performing Loans to Total Loans | 0.36 | % | 0.57 | % | 1.08 | % | |||||
| Non-performing Assets to Total Assets | 0.23 | % | 0.39 | % | 0.62 | % | |||||
| Book Value per Share | $ | 9.98 | $ | 9.37 | $ | 8.70 | |||||
| Capital Ratios (unaudited)(2) | |||||||||||
| Tier 1 Leverage Ratio | 8.81 | % | 8.93 | % | 8.80 | % | |||||
| Common Equity Tier 1 Risk-Based Capital Ratio | 13.16 | % | 13.20 | % | 15.42 | % | |||||
| Tier 1 Risk-Based Capital Ratio | 13.16 | % | 13.20 | % | 15.42 | % | |||||
| Total Risk-Based Capital Ratio | 14.09 | % | 14.15 | % | 16.52 | % | |||||
| (1) Q1 2019 increase largely driven by the adoption of ASU 2016-02, “Leases” which resulted in approximately $10.9 million of lease assets and | |||||||||||
| approximately $12.7 million of lease liabilities being added to the balance sheet; | |||||||||||
| (2) Regulatory capital ratios presented on bank-only basis. | |||||||||||
| Consolidated Statements of Operations (unaudited) | |||||||||||
| (dollars in thousands, except per share data) | |||||||||||
| For the three months ended | |||||||||||
| March 31, |
December 31, |
March 31, |
|||||||||
| 2019 | 2018 | 2018 | |||||||||
| Interest income | $ | 9,579 | $ | 9,487 | $ | 8,078 | |||||
| Interest expense | 3,307 | 3,043 | 1,922 | ||||||||
| Net interest income | 6,272 | 6,444 | 6,156 | ||||||||
| Provision for loan losses | – | 230 | 227 | ||||||||
| Net interest income after | |||||||||||
| provision for loan losses | 6,272 | 6,214 | 5,929 | ||||||||
| Net securities (losses) | – | (50 | ) | – | |||||||
| Other income(1) | 434 | 423 | 412 | ||||||||
| Other expense(1) | 5,788 | 5,550 | 5,781 | ||||||||
| Income before income taxes | 918 | 1,037 | 560 | ||||||||
| Income tax expense | 176 | 197 | 52 | ||||||||
| Net income | $ | 742 | $ | 840 | $ | 508 | |||||
| Basic earnings per share | $ | 0.10 | $ | 0.11 | $ | 0.07 | |||||
| Diluted earnings per share | $ | 0.10 | $ | 0.11 | $ | 0.07 | |||||
| Weighted average common and equivalent | |||||||||||
| shares outstanding | 7,511,729 | 7,493,115 | 7,337,335 | ||||||||
| Selected Financial Data (unaudited) | |||||||||||
| Return on Average Assets | 0.29 | % | 0.34 | % | 0.21 | % | |||||
| Return on Average Equity | 4.15 | % | 5.09 | % | 3.11 | % | |||||
| Net Interest Margin | 2.56 | % | 2.62 | % | 2.65 | % | |||||
| Efficiency Ratio | 86.31 | % | 80.82 | % | 88.02 | % | |||||
| (1) Certain reclassifications have been made to prior periods to conform to the current year presentation. | |||||||||||
About Empire Bancorp, Inc.
Empire Bancorp, Inc. is a bank holding company for Empire National Bank, a Long Island-based independent bank that specializes in serving the financial needs of small and medium sized businesses, professionals, nonprofit organizations, municipalities, real estate investors, and consumers. The bank has four full-service banking offices located in Islandia, Shirley, Port Jefferson Station, Mineola and a loan production office in Manhattan. Our bankers take pride in understanding the needs of each customer so the bank can deliver the highest quality service with a sense of urgency.
Empire Bancorp Inc. (OTCQX: EMPK) is traded on OTCQX® Best Market which is the top tier of OTC Markets Group Inc.
This release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate” or “continue,” or comparable terminology, are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within the control of the Company. The forward-looking statements included in this press release are made only as of the date of this press release. The Company has no intention, and does not assume any obligation, to update these forward-looking statements.
Contact:
William Franz – SVP, Director of Marketing & Investor Relations
(631) 348-444