Harleysville Natl Corp Pa (MM) (NASDAQ:HNBC)
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Third Quarter Earnings Up 15.6% at Harleysville National
Corporation
HARLEYSVILLE, Pa., Oct. 13 /PRNewswire-FirstCall/ -- Harleysville National
Corporation (HNC) (NASDAQ:HNBC), today announced third quarter 2004 earnings of
$10.2 million, a 15.6% increase over third quarter 2003 earnings of $8.8
million. Earnings for the nine-month period ending September 30, 2004, were
$28.5 million, a 7.9% increase over earnings of $26.4 million for the
nine-month period ending September 30, 2003.
The Company's consolidated total assets were $2.98 billion at September 30,
2004, an increase of 18.0% or $453.2 million above the September 30, 2003,
level of $2.52 billion. Of this increase, 9.2% or $231.3 million was
attributable to the acquisition of Millennium Bank.
For the quarter ending September 30, 2004, diluted earnings per share of $.38
increased 11.8% over the $.34 earned during the third quarter of 2003, and
basic earnings per share at $.39 increased 8.3% over $.36 earned in the third
quarter of 2003. For the nine-month period ended September 30, 2004, diluted
earnings per share of $1.07 were 4.9% higher than the $1.02 earned during the
nine months of 2003, and basic earnings per share of $1.11 were up 4.7% from
$1.06 during the nine months of 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 common shares, as well as
the issuance of 1,295,000 shares for a 5% stock dividend payable September 15,
2004. All share and per share information has been restated to reflect this
stock dividend.
"We are certainly pleased to announce a double-digit percentage increase in
earnings. And, we are especially happy to report core loan growth, which
exceeded 15.2% for the most recent twelve months," said Walter E. Daller, Jr.,
President and CEO of HNC.
Net interest income on a fully tax-equivalent basis in the third quarter of
2004 increased $2.5 million or 11.7% over the same period in 2003 and increased
$4.5 million or 6.9% from the nine-month period ending September 30, 2003. This
increase was primarily the result of higher earning asset volumes. The net
interest margin for the third quarter of 2004 was 3.51%, compared to 3.71% for
the third quarter of 2003, the decline being primarily due to the decline in
loan yields. Average earning assets increased $397 million or 17.3% during the
third quarter of 2004 versus the comparable period in 2003, while average loans
increased $362.9 million or 26.8%. Loans totaling $157.1 million were acquired
in the acquisition of Millennium Bank.
The company also experienced an improvement in loan quality during the third
quarter of 2004, compared to the third and fourth quarters of 2003.
Nonperforming assets decreased in the third quarter of 2004 by $1.5 million and
$912,000 from the third and fourth quarters of 2003, respectively. The ratio
of the allowance for loan losses to nonperforming loans (nonaccruing loans and
loans 90 days or more past due) was 425.4% at September 30, 2004, compared to
371.7% at December 31, 2003, and 326.5% at September 30, 2003. Nonperforming
assets, including nonaccrual loans, net assets in foreclosure and loans 90 days
or more past due was .15% of total assets at September 30, 2004, an improvement
from .22% at December 31, 2003, and .24% at September 30, 2003. The lower
provision for loan losses for the three and nine-month periods ending September
30, 2004, compared to the same periods in 2003, is reflective of the improved
loan quality and management's continued analysis.
Core deposits increased 21.1% or $267.7 million, to $1.54 billion at September
30, 2004, from $1.27 billion at September 30, 2003. Of this increase, 4.7% or
$59.8 million was due to the acquisition of Millennium Bank. Total deposits
increased $218.9 million for the same period of which $151.2 million was due to
the acquisition of Millennium Bank. Borrowings increased $183.7 million or
69.6% primarily due to loan growth and the Millennium Bank acquisition.
Trust and investment advisory services income for the quarter ending September
30, 2004 increased $924,000 or 96.9% from the same period a year ago. Of this
amount, $676,000 or 70.9% was attributable to the acquisition of Millennium
Bank. Total noninterest income of $6.7 million for the current quarter
reflects an increase of $1.4 million from the comparable period in 2003,
primarily due to an increase of $924,000 in trust and investment advisory fees
and an increase of $680,000 in the gains related to the auto leasing portfolio,
partially offset by a $247,000 decrease in the gain on sales of investment
securities. For the first nine months of 2004, total noninterest income of
$18.8 million decreased $3.7 million, or 16.3% from $22.4 million in the
comparable period last year. This was mainly due to a decrease of $4.8 million
on the sale of investment securities and a $1.1 million decrease in life
insurance income, partially offset by an increase of $1.8 million in trust and
investment advisory income and an increase of $680,000 in the gains related to
the auto leasing portfolio.
Noninterest expense of $14.5 million increased $1.4 million or 10.5% from $13.1
million in the third quarter of 2003. The increase in noninterest expense was
due to a $1.8 million increase in salaries and benefits primarily related to
the acquisition of Millennium and a $427,000 increase in amortization of
mortgage servicing rights, partially offset by a decrease in other expenses of
$947,000. The decrease in other expenses was due to higher deferred loan
expenses of $1.3 million, offset by an increase of $398,000 in marketing costs.
For the first nine months of 2004, noninterest expense decreased $2.9 million,
or 6.2%, to $42.9 million from $45.7 million in 2003. This decrease was mainly
due to lower off-lease vehicle residual reserve of $2.6 million, a decrease of
$2.6 million in Federal Home Loan Bank borrowings prepayment fees, and higher
loan origination expense deferrals amounting to $2.4 million, partially offset
by an increase of $3.2 million in salary and employee benefit expense and
$493,000 in occupancy expense, mostly related to the Millennium acquisition and
a new branch opening.
Harleysville National Corporation, with assets of $2.98 billion, is the holding
company for Harleysville National Bank (HNB). Investment Management and Trust
Services are provided through the Millennium Wealth Management and Private
Banking Group, a division of HNB, with assets under management exceeding $1.4
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 the Millennium Wealth Management and
Private Banking Group. 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 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
(Dollars in thousands, except per share data)
September 30, 2004
(unaudited)
For the period: Three Months Ended
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2004 2004 2004 2003 2003
Interest
Income $33,366 $30,994 $29,173 $30,287 $28,439
Interest
Expense 11,286 9,674 8,943 9,393 9,216
Net Interest
Income 22,080 21,320 20,230 20,894 19,223
Provision for
Loan Losses 499 497 489 641 630
Net Interest
Income after
Provision for
Loan Losses 21,581 20,823 19,741 20,253 18,593
Service Charges 2,000 1,929 1,925 2,081 2,007
Gains on Sales
of Investment
Securities, Net 112 641 900 164 359
Trust, Investment
Services and
Advisory Income 1,878 1,588 1,121 1,017 954
Bank-Owned Life
Insurance Income 647 521 611 680 673
Other Income 2,056 1,608 1,226 1,274 1,259
Total Noninterest
Income 6,693 6,287 5,783 5,216 5,252
Salaries, Wages and
Employee
Benefits 9,754 8,834 8,277 7,518 7,938
Occupancy 1,135 1,120 1,084 924 941
Furniture and
Equipment 1,414 1,510 1,258 1,637 1,525
Other Expenses 2,174 3,129 3,198 3,812 2,694
Total Noninterest
Expense 14,477 14,593 13,817 13,891 13,098
Income Before
Income Taxes 13,797 12,517 11,707 11,578 10,747
Income Tax
Expense 3,632 3,135 2,800 2,606 1,952
Net Income $10,165 $9,382 $8,907 $8,972 $8,795
Per Common Share Data:
Weighted Average
Common Shares
- Basic 26,240,616 25,861,549 25,128,032 25,029,504 25,003,053
Weighted Average
Common Shares
- Diluted 27,055,603 26,722,932 26,033,205 26,007,148 25,816,995
Net Income Per
Share - Basic $0.39 $0.37 $0.35 $0.35 $0.36
Net Income Per
Share - Diluted $0.38 $0.35 $0.34 $0.35 $0.34
Cash Dividend
Per Share $0.18 $0.16 $0.16 $0.18 $0.15
Book Value $10.19 $9.58 $9.45 $9.07 $8.75
Market Value $24.51 $24.38 $26.50 $28.67 $22.28
For the period: Nine Months Ended
September 30,
2004 2003
Interest Income $93,533 $88,913
Interest Expense 29,903 30,686
Net Interest Income 63,630 58,227
Provision for Loan Losses 1,485 2,559
Net Interest Income after
Provision for Loan Losses 62,145 55,668
Service Charges 5,854 5,774
Gains on Sales of Investment Securities, Net 1,653 6,449
Trust, Investment Services and Advisory Income 4,587 2,820
Bank-Owned Life Insurance Income 1,779 1,935
Income on Life Insurance - 1,119
Other Income 4,890 4,325
Total Noninterest Income 18,763 22,422
Salaries, Wages and Employee Benefits 26,865 23,655
Occupancy 3,339 2,846
Furniture and Equipment 4,182 4,206
Prepayment Fee - 2,594
Other Expenses 8,501 12,437
Total Noninterest Expense 42,887 45,738
Income Before Income Taxes 38,021 32,352
Income Tax Expense 9,567 5,991
Net Income $28,454 $26,361
Per Common Share Data:
Weighted Average Common Shares - Basic 25,745,214 24,983,586
Weighted Average Common Shares - Diluted 26,614,877 25,782,847
Net Income Per Share - Basic $1.11 $1.06
Net Income Per Share - Diluted $1.07 $1.02
Cash Dividend Per Share $0.50 $0.44
Asset Quality 2004 2004 2004 2003 2003
Data: 3Q 2Q 1Q 4Q 3Q
Nonaccrual Loans $3,235 $3,245 $3,645 $3,343 $3,962
90 + Days Past
Due Loans 948 919 1,178 1,164 1,200
Nonperforming
Loans 4,183 4,164 4,823 4,507 5,162
Net Assets in
Foreclosure 347 389 423 935 893
Nonperforming
Assets $4,530 $4,553 $5,246 $5,442 $6,055
Loan Loss
Reserve $17,795 $17,940 $16,464 $16,753 $16,854
Loan Loss
Reserve / Loans 1.00% 1.07% 1.15% 1.19% 1.22%
Loan Loss Reserve
/ Nonperforming
Loans 425.4% 430.8% 341.3% 371.7% 326.5%
Nonperforming Assets
/ Total Assets 0.15% 0.16% 0.21% 0.22% 0.24%
Net Loan
Charge-offs $644 $698 $778 $742 $1,313
Net Loan Charge-offs
(annualized)
/ Average Loans 0.15% 0.18% 0.22% 0.21% 0.39%
Selected Ratios 2004 2004 2004 2003 2003
(annualized): 3Q 2Q 1Q 4Q 3Q
Return on
Average Assets 1.40% 1.37% 1.43% 1.41% 1.44%
Return on Average
Shareholders'
Equity 15.61% 15.06% 15.33% 16.22% 16.11%
Return on Average
Shareholders'
Realized Equity * 15.40% 15.17% 15.97% 16.56% 16.65%
Yield on Earning
Assets (FTE) 5.18% 5.12% 5.25% 5.38% 5.31%
Cost of Interest
Bearing Funds 2.01% 1.82% 1.86% 1.88% 1.95%
Net Interest
Margin (FTE) 3.51% 3.62% 3.73% 3.82% 3.71%
Leverage Ratio 8.99% 9.28% 10.04% 8.77% 8.97%
* Excluding unrealized gain (loss) on investment securities available for sale.
2004 2003
Selected Ratios (annualized): Year-to-date Year-to-date
Return on Average Assets 1.40% 1.44%
Return on Average Shareholders' Equity 15.42% 16.32%
Return on Average Shareholders'
Realized Equity * 15.57% 16.99%
Yield on Earning Assets (FTE) 5.19% 5.51%
Cost of Interest Bearing Funds 1.90% 2.14%
Net Interest Margin (FTE) 3.62% 3.74%
* Excluding unrealized gain (loss) on investment securities available for sale.
Balance Sheet
(Period End): 2004 2004 2004 2003 2003
3Q 2Q 1Q 4Q 3Q
Assets $2,976,173 $2,865,949 $2,542,328 $2,510,939 $2,523,002
Earning Assets 2,791,891 2,678,772 2,406,068 2,371,816 2,386,477
Investment
Securities 975,750 957,398 948,749 924,874 915,832
Loans, Net of
Unearned Fees 1,774,189 1,683,528 1,428,145 1,408,391 1,377,682
Other Earning
Assets 41,952 37,846 29,174 38,551 92,963
Interest-Bearing
Liabilities 2,332,102 2,218,687 1,930,052 1,940,016 1,970,774
Total Deposits 2,209,753 2,093,101 1,968,521 1,979,081 1,990,832
Noninterest-
Bearing
Deposits 325,132 345,191 317,566 294,121 283,886
Interest-Bearing
Checking 320,276 258,739 268,110 283,607 276,941
Money Market 661,480 561,823 521,085 506,516 490,341
Savings 229,992 245,768 225,981 221,778 217,969
Time, under
$100,000 527,971 523,587 481,400 491,740 506,976
Time, $100,000 or
greater 144,902 157,993 154,379 181,319 214,719
Total Borrowed
Funds 447,481 470,777 279,097 255,056 263,828
Federal Home
Loan Bank 257,750 241,750 172,750 172,750 168,750
Other
Borrowings 189,731 229,027 106,347 82,306 95,078
Shareholders'
Equity 266,965 251,877 237,964 227,053 218,878
Balance Sheet
(Average): 2004 2004 2004 2003 2003
3Q 2Q 1Q 4Q 3Q
Assets $2,878,769 $2,759,563 $2,497,085 $2,543,616 $2,436,763
Earning
Assets 2,695,579 2,593,105 2,365,497 2,408,967 2,298,565
Investment
Securities 932,330 983,420 910,314 983,318 898,886
Loans, Net of
Unearned
Fees 1,717,245 1,572,830 1,414,802 1,389,595 1,354,394
Other Earning
Assets 46,004 36,855 40,381 36,054 45,285
Interest-Bearing
Liabilities 2,237,681 2,136,010 1,931,950 1,993,653 1,888,489
Total
Deposits 2,154,443 2,048,279 1,961,481 1,976,616 1,906,373
Noninterest-
Bearing
Deposits 329,559 316,715 280,809 279,307 278,267
Interest-Bearing
Checking 285,735 274,978 280,142 280,076 241,283
Money Market 620,420 537,614 517,846 501,127 479,375
Savings 237,463 239,971 222,807 221,116 219,778
Time, under
$100,000 525,701 508,275 487,379 497,281 508,256
Time, $100,000
or greater 155,565 170,726 172,498 197,709 179,414
Total Borrowed
Funds 412,797 404,446 251,278 296,344 260,383
Federal Home
Loan Bank 255,837 187,608 172,750 172,750 164,728
Other
Borrowings 156,960 216,838 78,528 123,594 95,655
Shareholders'
Equity 259,035 250,504 232,386 221,236 218,396
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.harleysvillebank.com/