Harleysville Natl Corp Pa (MM) (NASDAQ:HNBC)
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Harleysville National Corp. Ends 2003 With Record Earnings
HARLEYSVILLE, Pa., Jan. 12 /PRNewswire-FirstCall/ -- Harleysville National
Corporation (HNC) , today announced record fourth quarter 2003 earnings of
$8,972,000, a 7.8% increase over fourth quarter 2002 earnings of $8,323,000.
Net income for the year ending December 31, 2003, was $35,333,000, a 7.3%
increase over the $32,927,000 for the comparable period in 2002. This increase
resulted in 28 consecutive years of record earnings for HNC.
For the quarter ending December 31, 2003, diluted earnings per share of $.37
were 8.8% higher than the $.34 earned during the fourth quarter of 2002, and
basic earnings per share at $.37 were up 5.7% from $.35 in the fourth quarter of
2002. For the year ending December 31, 2003, diluted earnings per share of
$1.44 were up 7.5% from the $1.34 in the comparable period last year. Basic
earnings per share of $1.48 for the year ending December 31, 2003, were 7.2%
higher than the $1.38 in 2002.
"We have once again maintained strong returns and improved loan quality," said
Walter E. Daller, Jr., Chairman, President and CEO of HNC. "2003 was a
challenging year and we are pleased that HNC managed to maintain its long-
running record of increased earnings," he added.
Net interest income in the fourth quarter of 2003 increased $1,611,000 or 8.4%
over the same period in 2002. This rise in net interest income was due to an
increase in earning asset volumes and a rise in the net interest margin. The
fourth quarter 2003 net interest margin of 3.82% surpassed the 3.64% net
interest margin recorded in the same period in 2002. The higher net interest
margin was the result of a reduction in funding rates and an increase in loan
volumes. The fourth quarter of 2003 net interest margin was also higher than
the third quarter of 2003 net interest margin of 3.71%.
"During the last few months, we have seen signs that the economy is
strengthening. We have achieved good returns during the recent economic
downturn, and feel we are well positioned as the economy improves," said Daller.
"During the second half of 2003, the annualized growth in loans was 10.8% and
we are encouraged by an improvement in the net interest margin during the fourth
quarter," he added.
The loan balance at December 31, 2003 of $1,408,391,000 increased 5.6% from the
December 31, 2002 balance of $1,333,292,000. The growth in loans during 2003 was
impacted by planned declines in both the indirect vehicle loan and vehicle
leasing portfolios. Net of these two portfolios, total loans grew 12.2%, led by
increases in commercial related and home equity loans.
HNC continued to experience improvement in its asset quality during 2003.
Nonperforming assets, including nonaccrual loans, net assets in foreclosure and
loans 90 days or more past due was .22% of total assets at December 31, 2003,
compared to .27% at December 31, 2002. The ratio of the allowance for loan
losses to nonperforming loans was 371.7% at December 31, 2003, compared to
272.8% at December 31, 2002, and 326.5% at September 30, 2003.
During 2003, HNC continued its efforts to grow funding through core deposits.
While total deposits remained relatively flat, lower rate core deposits grew
$95,648,000, or 7.9% and higher rate certificates of deposits were reduced by
$96,389,000, or 12.5%.
Other operating income of $5,216,000 earned in the fourth quarter of 2003 was
$224,000 less than the fourth quarter of 2002 as a result of lower security
gains, residential mortgage sale gains and bank-owned life insurance income.
Offsetting these decreases were increases in deposit service charges and higher
trust and investment services income. The higher deposit service charges were
primarily related to higher overdraft fees and the increase in trust and
investment services income resulted from higher retail investment fees.
The fourth quarter 2003 other operating expenses of $13,891,000 increased
$288,000, or 2.1% from the fourth quarter of 2002. Salaries increased $336,000,
or 4.7% and furniture and equipment expenses grew $137,000, or 9.1%. A $182,000
reduction in other expenses was the result of a decrease in the off-lease
vehicle residual reserve expense, partially offset by increases in deferred
compensation expenses and legal fees. Occupancy expense decreased $3,000, or
0.3%.
Providing Real Life Financial Solutions, Harleysville National Corporation (HNC)
has assets in excess of $2.5 billion and operates 41 banking offices in 10
counties throughout Eastern Pennsylvania through its three subsidiary banks -
Harleysville National Bank and Trust Company, Citizens National Bank and
Security National Bank. Investment Management and Trust Services are provided
throughout the company by Harleysville National Bank and Trust Company.
Harleysville National Corporation's stock is traded under the symbol "HNBC" and
is commonly quoted under Nasdaq National Market Issues. For more information,
visit the HNC Web site at http://www.hncbank.com/.
This press release may contain forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. Actual results and trends
could differ materially from those set forth in such statements due to various
factors. Such factors include the possibility that increased demand or prices
for the Company's financial services and products may not occur, changing
economic and competitive conditions, technological developments, and other risks
and uncertainties, including those detailed in the company's filings with the
Securities and Exchange Commission.
Harleysville National Corporation
Consolidated Selected Financial Data
December 31, 2003
(unaudited)
For the period: Three Months Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2003 2003 2003 2003 2002
Interest Income $30,287 $28,439 $29,889 $30,585 $32,371
Interest Expense 9,393 9,216 10,084 11,386 13,088
Net Interest
Income 20,894 19,223 19,805 19,199 19,283
Provision For
Loan Losses 641 630 1,320 609 969
Net Interest
Income After
Provision For Loan
Losses 20,253 18,593 18,485 18,590 18,314
Service Charges 2,081 2,007 1,937 1,830 1,929
Security Gains, Net 164 359 4,774 1,316 282
Trust and Investment
Services Income 1,017 954 978 888 955
Bank-Owned Life
Insurance Income 680 673 631 631 789
Income on Life
Insurance - - - 1,119 -
Other Income 1,274 1,259 1,639 1,427 1,485
Total Other
Income 5,216 5,252 9,959 7,211 5,440
Salaries, Wages and
Employee
Benefits 7,518 7,938 7,876 7,841 7,182
Occupancy 924 941 882 1,023 927
Furniture and
Equipment 1,637 1,525 1,376 1,305 1,500
Prepayment Fee - - 2,594 - -
Other Expenses 3,812 2,694 4,399 5,344 3,994
Total Other Operating
Expenses 13,891 13,098 17,127 15,513 13,603
Income Before Income
Taxes 11,578 10,747 11,317 10,288 10,151
Income Tax
Expense 2,606 1,952 2,216 1,823 1,828
Net Income $8,972 $8,795 $ 9,101 $8,465 $8,323
Per Common Share Data: *
Weighted Average
Common Shares
- Diluted 24,768,712 24,587,614 24,540,648 24,469,511 24,552,398
Weighted Average
Common Shares
- Basic 23,837,623 23,812,431 23,779,235 23,770,390 23,829,011
Net Income Per
Share - Diluted $0.37 $0.36 $0.37 $0.34 $0.34
Net Income Per
Share - Basic $0.37 $0.37 $0.38 $0.36 $0.35
Cash Dividend
Per Share $0.190 $0.160 $ 0.152 $0.152 $0.168
Book Value $9.52 $9.18 $9.42 $9.06 $8.67
Market Value $30.10 $23.39 $ 21.55 $19.46 $21.22
* Adjusted for a five-for-four common stock split effective September 15,
2003.
For the period: Twelve Months Ended
December 31,
2003 2002
Interest Income $119,200 $132,630
Interest Expense 40,079 52,610
Net Interest Income 79,121 80,020
Provision For Loan Losses 3,200 4,370
Net Interest Income After
Provision For Loan Losses 75,921 75,650
Service Charges 7,855 6,923
Security Gains, Net 6,613 3,475
Trust and Investment Services Income 3,837 3,764
Bank-Owned Life Insurance Income 2,615 2,689
Income on Life Insurance 1,119 -
Other Income 5,599 5,672
Total Other Income 27,638 22,523
Salaries, Wages and Employee Benefits 31,173 29,813
Occupancy 3,770 3,829
Furniture and Equipment 5,843 5,535
Prepayment Fee 2,594 -
Other Expenses 16,249 17,120
Total Other Operating Expenses 59,629 56,297
Income Before Income Taxes 43,930 41,876
Income Tax Expense 8,597 8,949
Net Income $35,333 $32,927
Per Common Share Data: *
Weighted Average Common
Shares - Diluted 24,624,063 24,625,609
Weighted Average Common
Shares - Basic 23,804,813 23,902,223
Net Income Per Share - Diluted $1.44 $1.34
Net Income Per Share - Basic $1.48 $1.38
Cash Dividend Per Share $0.654 $0.564
* Adjusted for a five-for-four common stock split effective September 15,
2003.
2003 2003 2003 2003 2002
Asset Quality Data: 4Q 3Q 2Q 1Q 4Q
Nonaccrual Loans $3,343 $3,962 $ 4,146 $4,492 $5,109
90 + Days Past
Due Loans 1,164 1,200 1,681 1,406 1,193
Nonperforming
Loans 4,507 5,162 5,827 5,898 6,302
Net Assets In
foreclosure 935 893 729 485 390
Nonperforming
Assets $5,442 $6,055 $ 6,556 $6,383 $6,692
Loan Loss
Reserve $16,753 $16,854 $17,538 $16,902 $17,190
Loan Loss
Reserve /
Loans 1.19% 1.22% 1.31% 1.26% 1.29%
Loan Loss
Reserve /
Nonperforming
Loans 371.7% 326.5% 301.0% 286.6% 272.8%
Nonperforming
Assets / Total
Assets 0.22% 0.24% 0.27% 0.26% 0.27%
Net Loan
Charge-offs $742 $1,313 $684 $898 $918
Net Loan
Charge-offs
(annualized)
/ Average
Loans 0.21% 0.39% 0.20% 0.27% 0.28%
Selected Ratios 2003 2003 2003 2003 2002
(annualized): 4Q 3Q 2Q 1Q 4Q
Return on Average
Assets 1.41% 1.44% 1.49% 1.38% 1.34%
Return on Average
Shareholders'
Equity 16.22% 16.11% 16.67% 16.18% 16.10%
Return on Average
Shareholders'
Realized
Equity * 16.56% 16.65% 17.53% 16.78% 16.81%
Yield on Earning
Assets (FTE) 5.38% 5.31% 5.57% 5.65% 5.86%
Cost of Interest
Bearing Funds 1.88% 1.95% 2.12% 2.34% 2.64%
Net Interest
Margin (FTE) 3.82% 3.71% 3.82% 3.68% 3.64%
Leverage Ratio 8.77% 8.97% 8.73% 8.49% 8.19%
* Excluding unrealized gain (loss) on investment securities available for
sale.
2003 2002
Selected Ratios (annualized): Year-to-date Year-to-date
Return on Average Assets 1.43% 1.43%
Return on Average Shareholders' Equity 16.29% 16.60%
Return on Average Shareholders'
Realized Equity * 16.87% 17.06%
Yield on Earning Assets (FTE) 5.52% 6.41%
Cost of Interest Bearing Funds 2.07% 2.89%
Net Interest Margin (FTE) 3.80% 4.00%
Leverage Ratio
* Excluding unrealized gain (loss) on investment securities available for
sale.
Balance Sheet
(Period End): 2003 2003 2003 2003 2002
4Q 3Q 2Q 1Q 4Q
Assets $2,510,939 $2,523,002 $2,406,132 $ 2,470,414 $ 2,490,864
Earning
Assets 2,371,816 2,386,477 2,244,720 2,324,511 2,346,669
Securities 924,874 915,832 866,191 959,095 971,467
Loans,
Net 1,408,391 1,377,682 1,335,919 1,337,130 1,333,292
Other Earning
Assets 38,551 92,963 42,610 28,286 41,910
Total
Deposits 1,979,081 1,990,832 1,873,218 1,953,466 1,979,822
Non-Interest
Bearing
Deposits 294,121 283,886 291,454 270,759 269,781
Interest
Bearing
Checking 283,607 276,941 218,200 234,660 249,646
Money
Market 506,516 490,341 483,326 507,913 488,944
Savings 221,778 217,969 220,001 212,967 202,003
Time, under
$100,000 491,740 506,976 503,850 516,994 526,885
Time,
$100,000 or
greater 181,319 214,719 156,387 210,173 242,563
Other
Borrowings 255,056 263,828 254,563 247,919 253,906
Federal Home
Loan Bank 172,750 168,750 153,750 162,750 162,750
Other
Borrowings 82,306 95,078 100,813 85,169 91,156
Shareholders'
Equity 226,991 218,878 223,849 215,109 206,206
Balance Sheet
(Daily Average):
2003 2003 2003 2003 2002
4Q 3Q 2Q 1Q 4Q
Assets $2,543,616 $2,436,763 $2,435,580 $ 2,450,397 $ 2,491,372
Earning
Assets 2,408,967 2,298,565 2,305,590 2,321,612 2,360,479
Securities 983,318 898,886 948,782 970,336 1,000,651
Loans,
Net 1,389,595 1,354,394 1,342,758 1,329,093 1,337,848
Other
Earning
Assets 36,054 45,285 14,050 22,183 21,980
Total
Deposits 1,976,616 1,906,373 1,889,663 1,938,766 1,966,489
Non-Interest
Bearing
Deposits 279,307 278,267 260,688 242,793 244,785
Interest Bearing
Checking 280,076 241,283 223,152 235,502 248,302
Money
Market 501,127 479,375 493,561 498,328 476,107
Savings 221,116 219,778 216,445 207,512 201,157
Time, under
$100,000 497,281 508,256 510,703 523,089 529,515
Time,
$100,000 or
greater 197,709 179,414 185,114 231,542 266,623
Other
Borrowings 296,344 260,383 274,567 252,411 263,062
Federal Home
Loan Bank 172,750 164,728 164,794 162,750 162,750
Other
Borrowings 123,594 95,655 109,773 89,661 100,312
Shareholders'
Equity 221,236 218,396 218,363 209,241 206,739
DATASOURCE: Harleysville National Corporation
CONTACT: Walter E. Daller Jr., Chairman, President and CEO of
Harleysville National Corporation, +1-215-256-8851 ext. 2300
Web site: http://www.hncbank.com/