Harleysville Natl Corp Pa (MM) (NASDAQ:HNBC)
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Harleysville National Corporation Ends 2004 With Record Earnings
29 Consecutive Years of Record Earnings and 30 Consecutive Years of Dividend
Increases
HARLEYSVILLE, Pa., Jan. 18 /PRNewswire-FirstCall/ -- Harleysville National
Corporation (NASDAQ:HNBC), today announced fourth quarter 2004 earnings of
$10.1 million, a 12.7% increase over fourth quarter 2003 earnings of $9.0
million. Earnings for the year ending December 31, 2004, were $38.6 million, a
9.2% increase over earnings of $35.3 million for the year ending December 31,
2003.
The corporation's consolidated total assets were $3.02 billion at December 31,
2004, an increase of 20.5% or $513.6 million above the December 31, 2003, level
of $2.51 billion. Of this increase 9.2% or $231.3 million, was attributable to
the acquisition of Millennium Bank.
For the quarter ending December 31, 2004, diluted earnings per share of $.37
increased 5.7% over the $.35 earned during the fourth quarter of 2003, and
basic earnings per share at $.38 increased 8.6% over $.35 earned in the fourth
quarter of 2003. For the year ended December 31, 2004, diluted earnings per
share of $1.44 were 5.1% higher than the $1.37 earned during 2003, and basic
earnings per share of $1.49 for 2004 were up 5.7% from $1.41 in 2003. The
financial results for 2004 include the impact of operations from the
acquisition of Millennium Bank effective April 30, 2004, and the related
issuance of 946,000 (993,000 restated for stock dividend) common shares, as
well as the issuance of 1,295,000 common shares for a 5% stock dividend paid on
September 15, 2004. All share and per share information has been restated to
reflect this stock dividend.
Walter E. Daller, Jr., Chairman and Chief Executive Officer said, "We are
extremely pleased to once again report record earnings for Harleysville
National Corporation. This is the 29th consecutive year we have been able to
do so, and the 30th consecutive year that we have reported record dividends to
our shareholders. We have done this while growing our assets to over $3
billion - another milestone for our company - and maintaining pristine credit
quality in our loan portfolios."
Net interest income on a fully tax-equivalent basis in the fourth quarter of
2004 increased $307,000 or 1.3% over the same period in 2003 and increased $3.8
million or 4.3% for the year ending December 31, 2004, over the prior year.
This increase was primarily the result of higher earning asset volumes
partially offset by lower loan rates. The net interest margin for the fourth
quarter of 2004 was 3.34%, compared to 3.82% for the fourth quarter of 2003,
the decline being primarily due to lower loan yields and higher funding costs,
particularly increased volumes in higher-rate money market accounts. Average
earning assets increased $367.6 million or 15.3% during the fourth quarter of
2004 versus the comparable period in 2003, while average loans increased $404.3
million or 29.1% during the same period. Loans totaling $157.1 million were
acquired in the acquisition of Millennium Bank which contributed to the
increase in average loans.
Nonperforming assets, including nonaccrual loans, net assets in foreclosure and
loans 90 days or more past due were .20% of total assets at December 31, 2004,
compared to .22% at December 31, 2003. The ratio of the allowance for loan
losses to nonperforming loans (nonaccruing loans and loans 90 days or more past
due) was 317.7% at December 31, 2004, compared to 371.7% at December 31, 2003.
The lower provision for loan losses for the twelve- month period ending
December 31, 2004, compared to the same period in 2003, is reflective of
improved loan quality during the early part of the year and management's
ongoing analysis of the loan portfolio. The increase in the provision for the
fourth quarter of 2004 compared to the fourth quarter of 2003 was primarily due
to loan growth and an increase in nonperforming loans of $1.3 million.
Core deposits increased 20.6% or $269.2 million, to $1.58 billion at December
31, 2004, from $1.31 billion at December 31, 2003. Of this increase, 4.6% or
$59.8 million was due to the acquisition of Millennium Bank. Total deposits
increased $233.5 million for the same period, of which $151.2 million was
attributable to the acquisition of Millennium Bank. Average borrowings
increased $122.7 million or 41.4%, primarily to support loan growth and the
Millennium Bank acquisition.
Total noninterest income of $9.4 million for the fourth quarter of 2004
reflects an increase of $4.2 million from the comparable period in 2003,
primarily due to increases of $1.9 million in the gain on sales of investment
securities, $982,000 in trust and investment advisory fees, $586,000 in life
insurance income and $785,000 in gains related to the auto leasing portfolio,
partially offset by a $440,000 loss on the sale of equipment lease receivables.
For the year ended December 31, 2004, total noninterest income of $28.2
million increased $520,000, or 1.9% from $27.6 million for 2003. This was
mainly due to an increase of $2.7 million in trust and investment advisory fees
and an increase of $1.4 million in the gains related to the auto leasing
portfolio, partially offset by a decrease of $2.9 million in the gain on sales
of investment securities and a decrease of $868,000 in gains related to the
sale of residential mortgages, due to lower origination volume.
Noninterest expense of $16.7 million increased $2.8 million or 20.0% from $13.9
million in the fourth quarter of 2003. The increase in noninterest expense was
due to a $2.7 million increase in salaries and benefits, primarily related to
the acquisition of Millennium Bank, higher pension and healthcare costs and an
increase in bonus expense related to the corporation's improved financial
performance. In addition, deferred compensation expense for directors and
employees was $874,000 higher during the fourth quarter of 2004 over the
comparable period in 2003 while deferred loan origination expenses increased
$1.3 million. Deferred compensation expense includes a one-time after tax
expense amounting to $819,000 associated with the retirement announcement of
the Chief Executive Officer under the terms of his employment agreement. For
the year ended December 31, 2004, noninterest expense remained level at $59.6
million compared to 2003. Salary and employee benefit expense increased $5.9
million in 2004 primarily due to the Millennium acquisition and higher pension
and medical costs. Occupancy expense increased $787,000 during 2004 mostly due
to the Millennium acquisition and a new branch opening. Partially offsetting
these variances were Federal Home Loan Bank borrowings prepayment fees which
decreased $2.6 million and other expenses which decreased $4.1 million in 2004.
The decrease in other expenses was primarily due to lower off-lease vehicle
residual reserve of $2.6 million, higher loan origination expense deferrals
amounting to $3.8 million, partially offset by an increase in deferred
compensation expense for directors and employees of $717,000.
Harleysville National Corporation, with assets of $3.02 billion, is the holding
company for Harleysville National Bank (HNB). Investment Management and Trust
Services are provided through Millennium Wealth Management & Private Banking, a
division of HNB, with assets under management exceeding $1.5 billion.
Cumberland Advisors, Inc., a registered investment advisor specializing in
fixed-income money management and equities, using exchange- traded funds, is
also a part of Millennium Wealth Management & Private Banking. Harleysville
National Corporation 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 Corporation'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 Corporation's filings
with the Securities and Exchange Commission.
Harleysville National Corporation
Consolidated Selected Financial Data
(Dollars in thousands, except per share data)
December 31, 2004
(unaudited)
For the period: Three Months Ended
Dec. 31, Sept. 30, June 30,
2004 2004 2004
Interest Income $34,196 $33,366 $30,994
Interest Expense 12,735 11,286 9,674
Net Interest Income 21,461 22,080 21,320
Provision for Loan Losses 1,070 499 497
Net Interest Income after
Provision for Loan Losses 20,391 21,581 20,823
Service Charges 1,953 2,000 1,929
Gains on Sales of Investment
Securities, Net 2,036 112 641
Trust, Investment Services and
Advisory Income 1,999 1,878 1,588
Bank-Owned Life Insurance Income 627 647 521
Income on Life Insurance 586 - -
Other Income 2,194 2,056 1,608
Total Noninterest Income 9,395 6,693 6,287
Salaries, Wages and Employee Benefits 10,215 9,754 8,834
Occupancy 1,218 1,135 1,120
Furniture and Equipment 1,454 1,414 1,510
Other Expenses 3,787 2,174 3,129
Total Noninterest Expense 16,674 14,477 14,593
Income Before Income Taxes 13,112 13,797 12,517
Income Tax Expense 2,999 3,632 3,135
Net Income $10,113 $10,165 $9,382
Per Common Share Data:
Weighted Average Common Shares -
Basic 26,182,888 26,240,616 25,861,549
Weighted Average Common Shares -
Diluted 27,057,756 27,055,603 26,722,932
Net Income Per Share - Basic $0.38 $0.39 $0.37
Net Income Per Share - Diluted $0.37 $0.38 $0.35
Cash Dividend Per Share $0.22 $0.18 $0.16
Book Value $10.30 $10.19 $9.58
Market Value $26.60 $24.51 $24.38
For the period: Three Months Ended
Mar. 31, Dec. 31,
2004 2003
Interest Income $29,173 $30,287
Interest Expense 8,943 9,393
Net Interest Income 20,230 20,894
Provision for Loan Losses 489 641
Net Interest Income after
Provision for Loan Losses 19,741 20,253
Service Charges 1,925 2,081
Gains on Sales of Investment
Securities, Net 900 164
Trust, Investment Services and
Advisory Income 1,121 1,017
Bank-Owned Life Insurance Income 611 680
Income on Life Insurance - -
Other Income 1,226 1,274
Total Noninterest Income 5,783 5,216
Salaries, Wages and Employee Benefits 8,277 7,518
Occupancy 1,084 924
Furniture and Equipment 1,258 1,637
Other Expenses 3,198 3,812
Total Noninterest Expense 13,817 13,891
Income Before Income Taxes 11,707 11,578
Income Tax Expense 2,800 2,606
Net Income $8,907 $8,972
Per Common Share Data:
Weighted Average Common Shares -
Basic 25,128,032 25,029,504
Weighted Average Common Shares -
Diluted 26,033,205 26,007,148
Net Income Per Share - Basic $0.35 $0.35
Net Income Per Share - Diluted $0.34 $0.35
Cash Dividend Per Share $0.16 $0.18
Book Value $9.45 $9.07
Market Value $26.50 $28.67
For the period: Twelve Months Ended
December 31,
2004 2003
Interest Income $127,729 $119,200
Interest Expense 42,638 40,079
Net Interest Income 85,091 79,121
Provision for Loan Losses 2,555 3,200
Net Interest Income after
Provision for Loan Losses 82,536 75,921
Service Charges 7,807 7,855
Gains on Sales of Investment
Securities, Net 3,689 6,613
Trust, Investment Services and
Advisory Income 6,586 3,837
Bank-Owned Life Insurance Income 2,406 2,615
Income on Life Insurance 586 1,119
Other Income 7,084 5,599
Total Noninterest Income 28,158 27,638
Salaries, Wages and Employee Benefits 37,080 31,173
Occupancy 4,557 3,770
Furniture and Equipment 5,636 5,843
Prepayment Fee - 2,594
Other Expenses 12,288 16,249
Total Noninterest Expense 59,561 59,629
Income Before Income Taxes 51,133 43,930
Income Tax Expense 12,566 8,597
Net Income $38,567 $35,333
Per Common Share Data:
Weighted Average Common Shares -
Basic 25,855,230 24,995,054
Weighted Average Common Shares -
Diluted 26,726,180 25,855,266
Net Income Per Share - Basic $1.49 $1.41
Net Income Per Share - Diluted $1.44 $1.37
Cash Dividend Per Share $0.72 $0.62
2004 2004 2004
Asset Quality Data: 4Q 3Q 2Q
Nonaccrual Loans $4,797 $3,350 $3,245
90 + Days Past Due Loans 1,012 948 919
Nonperforming Loans 5,809 4,298 4,164
Net Assets in Foreclosure 370 347 389
Nonperforming Assets $6,179 $4,645 $4,553
Loan Loss Reserve $18,455 $17,795 $17,940
Loan Loss Reserve / Loans 1.00% 1.00% 1.07%
Loan Loss Reserve / Nonperforming Loans 317.7% 414.0% 430.8%
Nonperforming Assets / Total Assets 0.20% 0.16% 0.16%
Net Loan Charge-offs $410 $644 $698
Net Loan Charge-offs (annualized)
/ Average Loans 0.09% 0.15% 0.18%
2004 2003
Asset Quality Data: 1Q 4Q
Nonaccrual Loans $3,645 $3,343
90 + Days Past Due Loans 1,178 1,164
Nonperforming Loans 4,823 4,507
Net Assets in Foreclosure 423 935
Nonperforming Assets $5,246 $5,442
Loan Loss Reserve $16,464 $16,753
Loan Loss Reserve / Loans 1.15% 1.19%
Loan Loss Reserve / Nonperforming Loans 341.3% 371.7%
Nonperforming Assets / Total Assets 0.21% 0.22%
Net Loan Charge-offs $778 $742
Net Loan Charge-offs (annualized)
/ Average Loans 0.22% 0.21%
2004 2004 2004
Selected Ratios (annualized): 4Q 3Q 2Q
Return on Average Assets 1.36% 1.40% 1.37%
Return on Average Shareholders' Equity 15.00% 15.61% 15.06%
Yield on Earning Assets (FTE) 5.16% 5.18% 5.12%
Cost of Interest Bearing Funds 2.19% 2.01% 1.82%
Net Interest Margin (FTE) 3.34% 3.51% 3.62%
Leverage Ratio 8.91% 8.99% 9.28%
2004 2003
Selected Ratios (annualized): 1Q 4Q
Return on Average Assets 1.43% 1.41%
Return on Average Shareholders'
Equity 15.33% 16.22%
Yield on Earning Assets (FTE) 5.25% 5.38%
Cost of Interest Bearing Funds 1.86% 1.88%
Net Interest Margin (FTE) 3.73% 3.82%
Leverage Ratio 10.04% 8.77%
2004 2003
Selected Ratios (annualized): Year-to-date Year-to-date
Return on Average Assets 1.39% 1.43%
Return on Average Shareholders' Equity 15.31% 16.29%
Yield on Earning Assets (FTE) 5.18% 5.52%
Cost of Interest Bearing Funds 1.98% 2.07%
Net Interest Margin (FTE) 3.55% 3.80%
Balance Sheet (Period End): 2004 2004 2004
4Q 3Q 2Q
Assets $3,024,515 $2,976,173 $2,865,949
Earning Assets 2,845,656 2,791,891 2,678,772
Investment Securities 943,563 975,750 957,398
Loans, Net of Unearned Fees 1,845,802 1,774,189 1,683,528
Other Earning Assets 56,291 41,952 37,846
Interest-Bearing Liabilities 2,367,229 2,332,102 2,218,687
Total Deposits 2,212,563 2,209,753 2,093,101
Noninterest-Bearing Deposits 333,516 325,132 345,191
Interest-Bearing Checking 305,584 320,276 258,739
Money Market 713,039 661,480 561,823
Savings 223,039 229,992 245,768
Time, under $100,000 508,117 527,971 523,587
Time, $100,000 or greater 129,268 144,902 157,993
Total Borrowed Funds 488,182 447,481 470,777
Federal Home Loan Bank 317,750 257,750 241,750
Other Borrowings 170,432 189,731 229,027
Shareholders' Equity 270,532 266,966 251,877
Balance Sheet (Period End): 2004 2003
1Q 4Q
Assets $2,542,328 $2,510,939
Earning Assets 2,406,068 2,371,816
Investment Securities 948,749 924,874
Loans, Net of Unearned Fees 1,428,145 1,408,391
Other Earning Assets 29,174 38,551
Interest-Bearing Liabilities 1,930,052 1,940,016
Total Deposits 1,968,521 1,979,081
Noninterest-Bearing Deposits 317,566 294,121
Interest-Bearing Checking 268,110 283,607
Money Market 521,085 506,516
Savings 225,981 221,778
Time, under $100,000 481,400 491,740
Time, $100,000 or greater 154,379 181,319
Total Borrowed Funds 279,097 255,056
Federal Home Loan Bank 172,750 172,750
Other Borrowings 106,347 82,306
Shareholders' Equity 237,964 227,053
Balance Sheet (Average): 2004 2004 2004
4Q 3Q 2Q
Assets $2,957,559 $2,878,769 $2,759,563
Earning Assets 2,776,599 2,695,579 2,593,105
Investment Securities 941,704 932,330 983,420
Loans, Net of Unearned Fees 1,793,935 1,717,245 1,572,830
Other Earning Assets 40,960 46,004 36,855
Interest-Bearing Liabilities 2,308,446 2,237,681 2,136,010
Total Deposits 2,213,829 2,154,443 2,048,279
Noninterest-Bearing Deposits 324,466 329,559 316,715
Interest-Bearing Checking 317,328 285,735 274,978
Money Market 692,703 620,420 537,614
Savings 226,251 237,463 239,971
Time, under $100,000 517,167 525,701 508,275
Time, $100,000 or greater 135,914 155,565 170,726
Total Borrowed Funds 419,083 412,797 404,446
Federal Home Loan Bank 263,566 255,837 187,608
Other Borrowings 155,517 156,960 216,838
Shareholders' Equity 268,211 259,035 250,504
Balance Sheet (Average): 2004 2003
1Q 4Q
Assets $2,497,085 $2,543,616
Earning Assets 2,365,497 2,408,967
Investment Securities 910,314 983,318
Loans, Net of Unearned Fees 1,414,802 1,389,595
Other Earning Assets 40,381 36,054
Interest-Bearing Liabilities 1,931,950 1,993,653
Total Deposits 1,961,481 1,976,616
Noninterest-Bearing Deposits 280,809 279,307
Interest-Bearing Checking 280,142 280,076
Money Market 517,846 501,127
Savings 222,807 221,116
Time, under $100,000 487,379 497,281
Time, $100,000 or greater 172,498 197,709
Total Borrowed Funds 251,278 296,344
Federal Home Loan Bank 172,750 172,750
Other Borrowings 78,528 123,594
Shareholders' Equity 232,386 221,236
DATASOURCE: Harleysville National Corporation
CONTACT: Walter E. Daller Jr., Chairman and CEO, +1-215-256-8851 ext.
2300, or Gregg J. Wagner, President, +1-215-256-8851 ext. 2391, both of
Harleysville National Corporation
Web site: http://www.hncbank.com/