Northeast Pennsylvania Financial Corp. Announces 3rd Fiscal Quarter Earnings Per Share of $0.25 and Declares Dividend of $.06 Per Share.HAZLETON Hazleton (hā`zəltən), city (1990 pop. 24,730), Luzerne co., E Pa., on a mountain top in an anthracite-coal region; inc. as a borough 1856, as a city 1892. , Pa. -- Northeast “Northeastern” redirects here. For the Boston college, see Northeastern University, Boston. Northeast or north east is the ordinal direction halfway between north and east. It is the opposite of southwest. See boxing the compass. Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York Financial Corp. (the "Company") (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : NEPF NEPF (North East People Forum) is a political party in India. References See also
tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a restated net loss of $1.2 million, or $0.32 per diluted share, for the third quarter of fiscal 2003. Earnings for the nine months ended June June: see month. 30, 2004 were $4.2 million, or $1.01 per diluted share, compared to restated earnings of $395,000, or $0.10 per diluted share, for the nine months ended June 30, 2003. Certain prior period amounts set forth in this release reflect the restatements of the financial results for those periods. Results for the Company's third fiscal quarter of 2004 include: --An improvement in the net interest margin to 2.65% from 2.44% in the third fiscal quarter of 2003. --The sale of approximately $4.0 million in available-for-sale investment securities, which resulted in an after tax gain of approximately $210,000 ($0.05 per diluted share); --The sale of approximately $19.2 million of lower credit quality indirect automobile automobile, self-propelled vehicle used for travel on land. The term is commonly applied to a four-wheeled vehicle designed to carry two to six passengers and a limited amount of cargo, as contrasted with a truck, which is designed primarily for the transportation of loans, representing substantially all of the Company's lower credit quality indirect automobile loans. This transaction did not have a significant effect on the Bank's capital or results of operations since the loss on sale was offset by a $1.6 million reduction in the allowance for loan losses associated with such loans. This sale was undertaken to reduce the levelsof lower quality loans in the Bank's loan portfolio. The Bank ceased originating non-prime indirect automobile loans in October October: see month. 2003. --A 41% reduction in the level of nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. from $13.5 million at September September: see month. 30, 2003 to $7.9 million at June 30, 2004. Balance Sheet Repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. During the first and second fiscal quarters of 2004, management began to restructure the balance sheet to improve credit quality, improve its interest rate risk management and improve earnings. These activities included divesting certain fixed-rate residential mortgage loans, entering into approximately $40.0 million of derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. contracts to convert certain long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. fixed-rate Federal Home Loan Bank ("FHLB FHLB Federal Home Loan Bank ") borrowings to a variable rate, selling approximately $25.0 million of investment securities, including $15.0 million of corporate bonds that were scheduled to mature within the next 20 months and completing the sale of the Bank's Danville, Pennsylvania Danville is a borough in Montour County, Pennsylvania, USA, of which it is the county seat, on the North Branch of the Susquehanna River. Danville was the home to 8,042 people in 1900, 7,517 people in 1910, and 7,122 people in 1940. The population was 4,897 at the 2000 census. branch. The proceeds from the asset sales were used to repay certain maturing borrowings, fund the transfer of branch deposits and increase the Company's investment portfolio. During the third fiscal quarter, the Company continued its restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities by selling approximately $19.2 million of lower credit quality indirect automobile loans and $4.0 million of investment securities. The sale of indirect automobile loans was undertaken to improve asset quality. The $4.0 million sale of investment securities included certain fixed rate corporate securities with long durations. The proceeds from these activities were reinvested in high-quality shorter duration investment securities. Total assets were $880.5 million at June 30, 2004 compared to $877.6 million at March 31, 2004 and $896.3 million at September 30, 2003. Total net loans decreased by approximately $76.3 million from September 30, 2003 to June 30, 2004 as the Bank sold $16.2 million in modified fixed-rate residential mortgage loans and $19.2 million of indirect automobile loans, reduced its indirect automobile originations through more conservative pricing and underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and began working out certain classified commercial loans. This decrease was offset in part by a $72.9 million increase in the Bank's investment securities portfolio over the same period. Recent Developments In June 2004, the Board authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of 209,000 shares (approximately 5%) of the Company's outstanding common stock. As of July July: see month. 27, 2004, management has purchased 205,000 shares under this repurchase program at an average price of $17.22. In July 2004, the Bank executed a lease agreement to open a branch and business loan production office in Kingston, Pennsylvania Kingston is a borough in Luzerne County, Pennsylvania, on the Susquehanna River, opposite Wilkes Barre. Kingston was incorporated as a borough in 1858. It is part of the greater metropolitan area of the city of Wilkes-Barre. . It is expected that this banking location will be fully operational in October 2004. This location will increase the number of branches to 16 including 6 locations in Luzerne County, Pennsylvania Luzerne County is a county located in the U.S. state of Pennsylvania. It is located in the northern Anthracite area called "The Coal Region". As of the 2000 census, the population was 319,250. Its county seat is Wilkes-Barre6. . During the third fiscal quarter, the Bank renovated a satellite branch near the Laurel Mall Laurel Mall is a shopping mall in Laurel, Maryland. The mall was opened in 1979, and connected two pre-existing structures, the freestanding Montgomery Ward on the South Side and Laurel Shopping Center on the north side. in Hazleton, Pennsylvania For other places with the same name, see Hazleton (disambiguation). Hazleton is a city in Luzerne County, Pennsylvania, United States. The population was 23,329 at the 2000 census. The city has gained national attention due to its struggles with illegal immigration. to more effectively service the growing number of customers in that community. Asset Quality As of June 30, 2004, nonperforming assets totaled $7.9 million, or 0.90% of total assets, compared to $13.5 million, or 1.51% of total assets, at September 30, 2003. The $5.6 million reduction during the nine months ended June 30, 2004 was primarily the result of the balances on several nonaccruing commercial loans being reduced due to cash collections, a $753,000 reduction in the level of foreclosed assets and the successful execution of various workout Workout Informal repayment or loan forgiveness arrangement between a borrower and creditors. workout 1. The process of a debtor's meeting a loan commitment by satisfying altered repayment terms. strategies. The reduction in foreclosed assets was due to the sale of several one-to four-family properties. To continue reducing nonperforming assets, the Bank has established workout strategies for its large commercial nonaccruing loans that are designed to prudently pru·dent adj. 1. Wise in handling practical matters; exercising good judgment or common sense. 2. Careful in regard to one's own interests; provident. 3. Careful about one's conduct; circumspect. exit or collect on such loans within a reasonable timeframe. The provision for loan losses totaled $232,000 for the June 2004 quarter compared to $850,000 for the comparable quarter in 2003. The provision for loan losses totaled $1.4 million for the nine months ended June 30, 2004 compared to $1.8 million for the nine months ended June 30, 2003. The decrease in the provision for the three and nine month periods ended June 30, 2004 was due to the previously mentioned reductions in nonperforming loans, the sale of lower credit quality indirect automobile loans and decreases in total loans outstanding from $502.8 million at September 30, 2003 to $424.6 million at June 30, 2004. The allowance for loan losses totaled $8.6 million at June 30, 2004, compared to $10.2 million at March 31, 2004 and September 30, 2003. The $1.6 million reduction in the allowance was primarily due to the sale of the indirect automobile loans. The allowance for loan losses at June 30, 2004 was 2.03% of total loans outstanding compared to 2.22% at March 31, 2004 and 2.03% at September 30, 2003. Net Interest Margin The Company's net interest margin was 2.65% for the three months ended June 30, 2004 compared to 2.77% for the quarter ended March 31, 2004 and 2.44% for the comparable third fiscal quarter in 2003. The net interest margin was 2.68% for the nine months ended June 30, 2004 compared to 2.48% for the same period in 2003. This improvement was primarily the result of lower costs on FHLB advances and reductions in the average rates paid on deposits. These reductions were offset in part by reductions in yields on loans and investment securities due to the low interest rate environment and the sale of higher yielding indirect automobile loans. In November November: see month. 2003, the Bank entered into several derivative contracts, which swapped the fixed rates it pays on $40.0 million of FHLB advances to variable rates. The effect of this transaction was to reduce the average rate the Bank is paying on these borrowings. Additionally, certain long-term, fixed-rate, higher-average rate advances matured during the first nine months of fiscal 2004 and were replaced with lower rate borrowings with similar terms. Noninterest Income Noninterest income increased $814,000, or 47%, and $1.1 million, or 13%, for the three and nine month periods ended June 30, 2004, respectively, compared to the same periods in 2003. These increases were largely due to a $1.5 million impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. loss that was recorded in June 2003, offset by higher levels of gains on the sales of residential mortgage loans in 2003. Noninterest income levels for the nine months ended June 30, 2004 were also higher as a result of a $798,000 gain on the sale of a branch. The increases in 2004 were also offset by reduced insurance premium income. Noninterest Expense Noninterest expenses decreased by $1.1 million, or 16%, during the quarter ended June 30, 2004 compared to the same quarter in 2003. Expenses decreased by $2.5 million, or 12%, in the nine month period ended June 30, 2004 compared to the nine months ended June 30, 2003. The majority of this decrease was due to reductions in salaries and benefits as the Company reduced staff in June 2003 when it closed three banking offices and in September 2003 as part of a restructuring effort to better align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. the Bank's operational processes with its product offerings. Occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal also decreased as a result of the branch closings and the sale of the Bank's Danville Danville. 1 City (1990 pop. 33,828), seat of Vermilion co., E Ill., on the Vermilion River at the Ind. line; inc. 1839. It is a commercial and industrial center in a dairy, farm, and coal area. branch. Data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a costs increased between periods due to the Bank outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. its data processing to a third-party vendor in November 2003. Taxes The effective tax rates were 42%, 28% and 18% for the three month periods ended June 30, 2004, March 31, 2004 and December December: see month. 31, 2003, respectively. The effective tax rate for the nine month period ended June 30, 2004 was 30% compared to 67% for the comparable period in 2003. The effective tax rate for the three months ended June 30, 2004 was adversely affected by the filing of the Company's tax returns for prior periods, which resulted in a reduction in previously estimated tax Federal and state tax laws require a quarterly payment of estimated taxes due from corporations, trusts, estates, non-wage employees, and wage employees with income not subject to withholding. benefits. The tax rate for the nine month period ended June 30, 2003 was adversely affected by an impairment loss on an equity investment that had no tax benefit. The Company expects its effective tax rate to be approximately 30-35% in coming quarters. Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs Petro, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. said, "During the quarter, we made significant progress toward reducing the Company's levels of nonaccruing loans. We continue to improve our operational processes and core profitability is improving. The Company's strategy of becoming a high-performing financial institution while focusing on providing competitive loan and deposit products to businesses and consumers continues to take shape as part of our turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. efforts. During the quarter, we hired several experienced commercial lenders Whilst nearly all lenders offer loans on a commercial basis the term commercial lender has differed meanings around the world.
Kingston, city (1991 pop. 56,597), S Ont., Canada, on Lake Ontario, near the head of the St. Lawrence River and at the end of Rideau Canal from Ottawa. Kingston has probably the best harbor on the lake. to help us better serve customers in the metropolitan Wilkes-Barre Wilkes-Barre (wĭlks-bâr`ē), city (1990 pop. 47,523), seat of Luzerne co., E Pa., on the east bank of the Susquehanna River; settled 1769, inc. as a city 1871. area. We have made significant progress and have reorganized re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. the Company for improved financial performance; the cornerstone cornerstone Ceremonial building block, dated or otherwise inscribed, usually placed in an outer wall of a building to commemorate its dedication. Often the stone is hollowed out to contain newspapers, photographs, or other documents reflecting current customs, with a view to of our success will be our ability to grow business and retail loans and deposits while continuing to serve over 48,000 customers in our market." The Company also announced a cash dividend of $0.06 per share payable to stockholders of record as of August 12, 2004. Payment of the dividend will be made on August 26, 2004. The dividend payment continues to reflect the Company's long-term views on capital strategies. Restatements The Company's results of operations have been restated for the fiscal years from 1998 through 2002 and for the December 2002, March 2003 and June 2003 quarters to reflect the correction of accounting errors discovered in July and September 2003. These errors primarily related to the Company's indirect automobile loan portfolio, mortgage and consumer loan portfolios, employee health and welfare plans and certain operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . Northeast Pennsylvania Financial Corp. is the holding company of First Federal Bank, Higgins Higgins may refer to: People with the surname Higgins:
n. 1. Abbr. NE The direction or point on the mariner's compass halfway between due north and due east, or 45° east of due north. 2. An area or region lying in the northeast. 3. and Central Pennsylvania through fifteen full service branch office locations. Statements contained in this news release, which are not historical facts, are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , as the term is defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements are subject to risk and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
June 30, June 30,
As Restated As Restated
2004 2003 2004 2003
---------- ----------- --------- ----------
(in thousands, except per share data)
INTEREST INCOME
Interest and fees
on loans $ 6,562 $ 8,165 $ 21,168 $ 25,297
Mortgage-related
securities 2,958 1,512 6,997 5,193
Investment
securities:
Taxable 355 1,166 2,298 3,620
Tax-exempt 120 233 466 700
Other interest
income 14 - 18 -
Total interest
income 10,009 11,076 30,947 34,810
------ ------ ------ ------
INTEREST EXPENSE
Deposits 1,990 2,870 6,308 9,790
Federal Home Loan
Bank advances 2,464 2,978 7,821 8,934
Trust-preferred debt 262 267 790 784
Total interest
expense 4,716 6,115 14,919 19,508
------ ------ ------ ------
NET INTEREST INCOME 5,293 4,961 16,028 15,302
Provision for
loan losses 232 850 1,394 1,830
------ ------ ------ ------
NET INTEREST
INCOME AFTER PROVISION
FOR LOAN LOSSES 5,061 4,111 14,634 13,472
------ ------ ------ ------
NONINTEREST INCOME
Service charges and
other fees 660 684 2,226 1,958
Insurance premium
income 983 1,084 2,691 2,911
Trust fees 217 215 654 660
Gain on sale of:
Branch - - 798 -
Assets acquired
through foreclosure 32 70 54 129
Loans 88 562 751 1,165
Available for sale
securities 343 237 1,220 1,379
Impairment loss on
equity investment - (1,488) - (1,488)
Other 205 350 729 1,346
------ ------ ------ ------
Total noninterest
income 2,528 1,714 9,123 8,060
------ ------ ------ ------
NON INTEREST EXPENSE
Salaries and employee
benefits 3,203 3,577 9,500 10,286
Occupancy costs 690 797 2,076 2,453
Amortization of
intangibles 205 255 646 772
Data processing costs 295 200 824 579
Advertising 116 238 371 749
Professional fees 271 276 1,086 1,115
Federal Home Loan
Bank and other
charges 220 240 717 702
Other 824 1,370 2,588 3,668
------ ------ ------ ------
Total noninterest
expense 5,824 6,953 17,808 20,324
------ ------ ------ ------
Income (loss) before
income taxes 1,765 (1,128) 5,949 1,208
Income taxes 738 65 1,793 813
NET INCOME (LOSS) $ 1,027 $ (1,193) $ 4,156 $ 395
------ ------ ------ ------
EARNINGS (LOSS) PER SHARE:
Basic $ 0.26 $ (0.32) $ 1.06 $ 0.10
====== ====== ====== ======
Diluted $ 0.25 $ (0.32) $ 1.01 $ 0.10
====== ====== ====== ======
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
June 30, Sept. 30,
2004 2003
-------------- ------------
ASSETS
Cash and cash equivalents $ 11,900 $ 20,142
Investment securities
available-for-sale 400,393 326,626
Investment securities
held-to-maturity (estimated market
value of $2,714 at June 30, 2004 and
$3,622 at September 30, 2003) 2,716 3,555
Loans held for sale 1,100 1,073
Loans (less allowance for loan
loss of $8,630 at June 30, 2004
and $10,196 at September 30, 2003) 413,703 489,986
Accrued interest receivable 3,114 3,892
Assets acquired through foreclosure 269 1,022
Property and equipment, net 10,774 12,152
Goodwill 3,216 3,216
Intangible assets 7,394 8,595
Bank-owned life insurance 11,246 10,875
Other assets 14,713 15,161
------- -------
TOTAL ASSETS $ 880,538 $ 896,295
======= =======
LIABILITIES
Deposits 527,007 547,305
Federal Home Loan Bank advances 244,182 258,901
Trust-preferred debt 22,681 22,000
Other borrowings 20,417 529
Advances from borrowers for taxes
and insurance 1,908 1,239
Accrued interest payable 1,349 1,318
Other liabilities 5,561 6,646
TOTAL LIABILITIES 823,105 837,938
------- -------
STOCKHOLDERS' EQUITY
Preferred stock ($.01 par value;
2,000,000 authorized shares;
none issued - -
Common stock ($.01 par value;
16,000,000 shares authorized,
6,427,350 shares issued 64 64
Additional paid-in capital 62,227 61,879
Common stock acquired by stock
benefit plans (2,867) (3,772)
Retained earnings - substantially
restricted 32,252 29,368
Accumulated other comprehensive
income (loss), net (3,223) 1,730
Treasury stock, at cost
(2,255,551 shares at June 30, 2004
and 2,250,756 shares at
September 30, 2003) (31,020) (30,912)
------- -------
TOTAL STOCKHOLDER'S EQUITY 57,433 58,357
------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 880,538 $ 896,295
======= =======
See accompanying notes to the unaudited consolidated financial
statements.
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE COMPANY
(UNAUDITED)
(Dollars in Thousands, Except Per Share Data and Ratios)
June 30, March 31, Sept. 30, Sept. 30,
2004 2004 2003 2002
--------- -------- -------- --------
CAPITAL RATIOS:
Risk-based capital
Tier 1 capital 12.45% 11.70% 9.27% 9.45%
Total 13.71% 12.96% 10.52% 10.45%
Leverage 6.81% 6.84% 6.17% 5.81%
ASSET QUALITY INDICATORS:
Nonperforming assets:
Nonaccruing loans $7,643 $9,827 $12,479 $4,200
Assets acquired through
foreclosure 269 488 1,022 547
Troubled debt restructurings - - - 55
--------- -------- -------- --------
Total nonperforming
assets $7,912 $10,315 $13,501 $4,802
========= ======== ======== ========
Ratio of nonperforming
assets to total assets 0.90% 1.18% 1.51% 0.53%
========= ======== ======== ========
Ratio of allowance for
loan losses to total
loans 2.03% 2.22% 2.03% 1.10%
========= ======== ======== ========
Ratio of allowance for
loan losses to nonaccruing
loans and troubled debt
restructurings 112.91% 103.57% 81.71% 128.06%
========= ======== ======== ========
At and for the three months ended
June 30, March 31, Dec. 31, Sept. 30,
2004 2004 2003 2003
--------- -------- -------- --------
PERFORMANCE RATIOS:
Return on average
assets (1) 0.47% 0.98% 0.48% (2.08)%
Return on average
equity (1) 6.95% 13.75% 7.06% (28.06)%
Net interest margin
(1) (2) 2.65% 2.77% 2.63% 2.48%
OTHER:
Book value per share $13.77 $14.85 $14.08 $13.97
Stock price $17.15 $18.40 $19.21 $17.50
Employees 268 261 272 280
For the nine months ended
As Restated
June 30, June 30,
2004 2003
-------- -----------
PERFORMANCE RATIOS:
Return on average assets (1) 0.64% 0.06%
Return on average equity (1) 9.30% 0.82%
Net interest margin (1) (2) 2.68% 2.48%
(1) Annualized
(2) Computed on a fully tax equivalent basis
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