form10ka.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

Amendment No. 1

(Mark One)

R	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2006.
Or
£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission file number 000-26086

YARDVILLE NATIONAL BANCORP

(Exact name of registrant as specified in its charter)

New Jersey	22-2670267
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2465 Kuser Road, Hamilton, New Jersey	08690
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (609) 585-5100

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common stock, no par value	Nasdaq Global Select Market
(Title of Class)	(Name of Each Exchange on Which Registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

£ Yes R No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

o Yes R No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. R Yes£ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer þ Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yesþ No

The aggregate market value of voting common stock held by non-affiliates, computed using the closing sales price on the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2006), was $260,958,414.

An aggregate of 11,081,409 shares of common shares were outstanding as of March 22, 2007

EXPLANATORY NOTE

This Amendment No. 1 to Annual Report on Form 10-K/A amends Yardville National Bancorp's Annual Report on Form 10-K for the fiscal year ended December 31, 2006, filed with the Securities and Exchange Commission on March 30, 2007. Specifically, this amendment amends Part III, Item 11, to revise the presentation of pension benefits and the change in pension value to reflect accrued benefits, as opposed to the accrued liability for projected benefits, and to reflect full years of service, as opposed to rounded years of service, to make conforming changes to the summary compensation table, to correct and revise the presentation of certain amounts set forth in the table of potential payments upon termination or change-in-control, to add and revise certain footnotes to the executive compensation tables, and to correct certain other typographical errors and similar items in Part III. We have not amended or updated any other information included in the Form 10-K filed March 30, 2007.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance.

Directors

Our Certificate of Incorporation and By-Laws provide that the number of directors will not be less than five or more than twenty-five and permits the exact number to be determined from time to time by the board. The board has fixed the number of directors at twelve. The directors of the Company also serve as directors of the Bank.

Pursuant to our Certificate of Incorporation, the directors of the Company are divided into three classes, as nearly equal in number as possible, and each class has a three-year term. Class terms expire on a rolling basis, so that typically one class of directors is elected each year. In November 2006, Christopher S. Vernon resigned and, consistent with the board’s past practices, the number of directors constituting the entire board was reduced from thirteen to twelve. The board’s nominating and governance committee will make a recommendation regarding the current size and composition of the board, as well as recommendations for director candidates to be nominated by the board, in accordance with its charter. Additional information regarding the director nominees will be included in our proxy statement for the 2007 annual meeting of shareholders.

Information about our current board of directors is contained below.

Elbert G. Basolis, Jr.

Age: 45

Director Since: 1996 Term Expires: 2007

Elbert G. Basolis, Jr. has served as Vice Chairman of the Board of the Company and the Bank since 2002. Mr. Basolis is President and an Owner of Garrison Enterprises Inc., an underground utility contracting business, established in 1963.

Anthony M. Giampetro, M.D.

Age: 71

Director Since: 1994 Term Expires: 2007

Anthony M. Giampetro, M.D. is a physician in private practice.

Patrick M. Ryan

Age: 62

Director Since: 1992 Term Expires: 2007

Patrick M. Ryan has served as the Chief Executive Officer of both the Company and the Bank since November 1992 and served as the President of both the Company and the Bank from November 1992 until January 2006. Mr. Ryan is a past member of the Federal Reserve Bank of Philadelphia’s Community Bank Advisory Council and currently serves on the Board of Governors of Rutgers, the State University of New Jersey, and the Board of Trustees of the New Jersey Bankers Association.

Martin Tuchman

Age: 66

Director Since: 2000 Term Expires: 2007

Martin Tuchman has served as the Chairman of the Board and Chief Executive Officer of Interpool, Inc., a chassis and leasing company, since 1993.

F. Kevin Tylus

Age: 52

Director Since: 1992 Term Expires: 2007

F. Kevin Tylus has served as the President of the Company and the Bank since January 2006 and as the Chief Operating Officer of the Company and the Bank since February 2005. Mr. Tylus also served as Senior Executive Vice President of the Company and the Bank between October 2004 and January 2006, and served as Chief Administrative Officer from October 2004 to January 2005. Prior to joining the Bank, Mr. Tylus served as Regional President of Great-West Life and Annuity from January 2003 to September 2004, and Subsidiary President and Corporate Senior Vice President of CIGNA Corporation from November 1999 to December 2002.

Jay G. Destribats

Age: 72

Director Since: 1990 Term Expires: 2008

Jay G. Destribats has served as the Chairman of the Board of both the Company and the Bank since 1990. He also was a Partner in the law firm now known as Destribats, Campbell, DeSantis, Magee and Staub (Counselors at Law) until July 1999 and is now Of Counsel.

Gilbert W. Lugossy

Age: 71

Director Since: 1991 Term Expires: 2008

Gilbert W. Lugossy served as a member of the New Jersey State Parole Board from April 1990 to April 1997 and is now retired.

James E. Bartolomei

Age: 47

Director Since: 2004 Term Expires: 2008

James E. Bartolomei is the managing partner of Bartolomei Pucciarelli, LLC, a CPA firm.

Robert L. Workman

Age: 44

Director Since: 2004 Term Expires: 2008

Robert L. Workman is currently the owner and a senior partner of Workman & Skertic, a CPA firm.

Samuel D. Marrazzo

Age: 59

Director Since: 2003 Term Expires: 2009

Samuel D. Marrazzo is the owner and operator of Marrazzo’s Market in Ewing, New Jersey. Mr. Marrazzo is also a member of the Executive Committee of Retail Marketing Group, LLC, an organization of supermarket owners with oversight responsibility for negotiation and implementation of supply agreements worth more than $120 million per year.

Louis R. Matlack, Ph.D.

Age: 72

Director Since: 1997 Term Expires: 2009

Louis R. Matlack, Ph.D. was a Principal of Matlack Mediation, a mediation services firm, from 1988 to 2000 and is now retired. Prior to founding his mediation services firm, he was an executive at Scott Paper Company for 12 years and President and CEO of George D. Wetherill & Co., Inc. for five years prior to that.

George D. Muller

Age: 63

Director Since: 2005 Term Expires: 2009

George D. Muller is the President of Flemington Glass Enterprises, Inc. He formerly served as a director of Flemington National Bank & Trust for 20 years, and as its chairman for three years. Before joining the YNB Board, he was chairman of the Business Development Board of Carnegie Bank. He currently provides consulting services for Riedel Crystal, a glass company, and serves as a Freeholder of Hunterdon County, New Jersey.

No director was selected pursuant to any arrangement or understanding between him and any other person or persons.

No director, other than Martin Tuchman and Robert L. Workman, both of whom are directors of Interpool, Inc., is a director of any company other than YNB with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940, naming such company.

Executive Officers

The following table sets forth the name and age of each current executive officer of the Company and the Bank. Select biographical information concerning these individuals appears below the table. The executive officers are appointed to their respective offices annually.

Name	Age	Position
Jay G. Destribats	72	Chairman of the Board of Directors of the Company and the Bank
Patrick M. Ryan	62	Chief Executive Officer of the Company and the Bank
F. Kevin Tylus	52	President and Chief Operating Officer of the Company and the Bank
Stephen F. Carman	50	Vice President and Treasurer of the Company and Executive Vice President and Chief Financial Officer of the Bank
Edward J. Dietzler	42	First Senior Vice President and Capital Markets Officer of the Bank
Timothy J. Losch	56	Executive Vice President and Chief Market Development and Community Relations Officer of the Bank
Stephen R. Walker	63	Executive Vice President and Chief Information Officer of the Bank
Brian K. Gray	44	First Senior Vice President and Chief Retail Services and Marketing Officer of the Bank
Howard N. Hall	47	Assistant Treasurer of the Company and First Senior Vice President and Investments and Financial Planning Officer of the Bank
Daniel J. O’Donnell	44	Secretary of the Company and Executive Vice President and Chief Legal Officer of the Bank
Joanne C. O’Donnell	48	First Senior Vice President and Chief Credit Administration Officer of the Bank
John P. Samborski	62	First Senior Vice President and Chief Lending Officer of the Bank
Patrick L. Ryan	31	First Senior Vice President and Market Manager of the Bank

See page 3 for a description of the business background of Messrs. Destribats, Ryan and Tylus.

Stephen F. Carman has served as Vice President of the Company since November 2002 and Treasurer of the Company since May 1992. He has served as Executive Vice President and Chief Financial Officer of the Bank since November 1992 and served as Secretary of the Company from May 1992 to April 2002.

Edward J. Dietzler has served as First Senior Vice President and Capital Markets Officer of the Bank since April 2004 and served as Senior Vice President and Capital Markets Officer of the Bank from May 2003 to April 2004. Prior to joining the Bank, Mr. Dietzler served as Director of Risk Management of GMAC Mortgage Company from 1997 to 2003.

Timothy J. Losch has served as Executive Vice President and Chief Market Development and Community Relations Officer of the Bank since February 2005 and served as Executive Vice President and Chief Operating Officer from June 1997 to January 2005.

Stephen R. Walker has served as Executive Vice President and Chief Information Officer of the Bank since January 2003 and served as First Senior Vice President and Chief Information Officer from June 2002 to December 2002. Prior to joining the Bank, he served at Merrill Lynch as First Vice President and Chief Technology Officer from 2000 to 2002.

Brian K. Gray has served as First Senior Vice President and Chief Retail Services and Marketing Officer of the Bank since January 2006. He served as First Senior Vice President and Retail Banking and Marketing Officer of the Bank from October 2003 to December 2005, as Senior Vice President and Retail Banking and Marketing Officer of the Bank from January 2003 to September 2003 and as Senior Vice President and Marketing Officer of the Bank from January 2001 to December 2002.

Howard N. Hall has served as Assistant Treasurer of the Company since April 2002 and as First Senior Vice President and Investments and Financial Planning Officer of the Bank since March 2005. He served as First Senior Vice President and Investments Officer from January 2003 to March 2005 and as First Senior Vice President and Controller of the Bank from February 2000 to January 2003.

Daniel J. O’Donnell has served as Secretary of the Company since April 2002 and as Executive Vice President and Chief Legal Counsel of the Bank since July 2005. He served as First Senior Vice President and General Counsel of the Bank from January 2003 to July 2005 and as Senior Vice President and General Counsel of the Bank from January 2001 to December 2002.

Joanne C. O’Donnell has served as First Senior Vice President and Chief Credit Administration Officer of the Bank since April 2005. She served as Senior Vice President and Chief Credit Administration Officer of the Bank from April 2004 to March 2005, as Senior Vice President and Credit Administration Manager of the Bank from October 2003 to April 2004 and as Vice President and Credit Department Manager of the Bank from January 1999 to September 2003.

John P. Samborski has served as First Senior Vice President and Chief Lending Officer of the Bank since April 2004. He served as First Senior Vice President and Credit Officer of the Bank from January 2003 to April 2004 and as Senior Vice President and Credit Officer of the Bank from October 2001 to January 2003. Prior to joining the Bank, Mr. Samborski served as Vice President of Citizens Bank of New Hampshire from August 1991 to October 2001.

Patrick L. Ryan has served as First Senior Vice President and Market Manager since November 2006. He served as Senior Vice President and Strategic Planning, Corporate Development and Emerging Markets Manager of the Bank from January 2006 to October 2006. He served as Senior Vice President and Strategic Planning Officer of the Bank from January 2005 to December 2005. Prior to joining the Bank, he served as a consultant for Bain and Company from September 2003 to December 2004 after graduating from the Tuck School of Business at Dartmouth in June 2003. Prior to business school, he worked as a Business Development Associate at Medsite, Inc. in 2000 and 2001. Patrick L. Ryan is the son of director and Chief Executive Officer Patrick M. Ryan.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s officers and directors and persons who own more than ten percent of a registered class of the Company’s equity securities (“ten-percent holders”) to file reports of ownership and changes in ownership with the SEC. Officers, directors and ten-percent holders are required by regulation to furnish the Company with copies of all Section 16(a) forms they file.

To the Company’s knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended December 31, 2006, each of the Company’s officers, directors and greater than ten-percent holders complied with all Section 16(a) filing requirements applicable to him or it, except that one report on Form 4 was untimely filed in 2006 by Elbert G. Basolis, Jr. (reporting two acquisitions of shares through our Dividend Reinvestment Plan, in which Mr. Basolis had a direct interest, and two acquisitions of shares as part of a distribution of shares from Garrison Enterprises, Inc., in which Mr. Basolis had direct and indirect interests) and one report on Form 4 was untimely filed in 2006 by Eugene C. McCarthy (reporting three acquisitions by exercise of stock options and three sales of shares).

Code of Ethics

The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer and other senior financial officers. Our code of ethics is posted in the “Investor,” or “Investor Relations,” section on our Internet web site, www.ynb.com.

Director Nominee Procedures

There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s board of directors. A shareholder who wishes to nominate any individual as a director shall notify the Secretary of the Company at 2465 Kuser Road, Hamilton, New Jersey 08690 by registered mail, return receipt requested. Any such notice by a shareholder shall specify (a) the name of the shareholder who will make the nomination or on whose behalf the nomination will be made, (b) the names of all other shareholders who are acting directly or indirectly with the nominating shareholder or have an understanding directly or indirectly with the nominating shareholder, (c) the number of shares which the shareholder reasonably anticipates may be voted in favor of the nominee, and (d) the name, address and business background of any nominee.

Audit Committee

Our board of directors has designated an audit committee for the purpose of overseeing our accounting and financial reporting processes and audits of our financial statements. As of the date of this annual report, the members of the audit committee are Mr. Bartolomei, who serves as chairperson, Mr. Workman, who serves as vice chairperson, and Messrs. Matlack and Muller. Our board of directors has determined that Mr. Bartolomei is an “audit committee financial expert,” as defined under applicable SEC rules, is independent, as independence for audit committee members is defined in applicable Nasdaq rules, and that Mr. Bartolomei possesses the requisite “financial sophistication” required under applicable Nasdaq rules.

Item 11.

Executive Compensation.

Compensation Discussion and Analysis

Our Compensation Philosophy

Our compensation philosophy starts from the premise that the success of the Company depends, in large part, on the dedication and commitment of the people we place in key operating positions to drive our business strategy. We strive to satisfy the demands of our business model by providing our management team with incentives tied to the successful implementation of our corporate objectives. However, we recognize that the Company operates in a competitive environment for talent. Therefore, our approach to compensation considers the full range of compensation techniques that enable us to compare favorably with our peers as we seek to attract and retain key personnel.

We ground our compensation philosophy on three basic principles:

·	*Meeting the Demands of the Market* - Our goal is to compensate our employees at competitive levels that position us as an employer of choice among our peers who provide similar financial services in the markets we serve.

·	*Aligning with Shareholders* - We use equity compensation as a component of our compensation mix to develop a culture of ownership among our key personnel and to align their individual financial interests with the interests of our shareholders.

·	*Driving Performance* - We structure compensation around the attainment of company-wide financial and individual performance targets that return positive results to our bottom line.

We use specific compensation decisions to communicate desired results to our key personnel, to influence the process of decision making among our key personnel to produce the desired results and to reward key personnel when they achieve the desired results. We believe this approach creates accountability for the individual performance of key personnel within the structure of our business plan by allowing management to understand the basis upon which their performance will be evaluated.

Our compensation program relies on four primary elements: (i) base compensation or base salary; (ii) cash-based, short-term incentive compensation; (iii) equity-based, long-term incentive compensation and (iv) executive benefits and perquisites. We believe that we can meet the objectives of our compensation philosophy by achieving a balance among these four elements that is competitive with our industry peers and creates appropriate incentives for our management team. To achieve the necessary balance, our Compensation Committee works closely with nationally recognized independent compensation consultants (see below) who provide their special expertise on competitive compensation practices and help us to benchmark our compensation program to our peers and to “best practices” in our sector.

Base Compensation. The salaries of our executive and other officers are reviewed at least annually to assess their performance, to evaluate our competitive position on base pay and to make any necessary adjustments. Our goal is to maintain salary levels for our officers at a level consistent with base pay received by those in comparable positions at our peers. To further that goal, we obtain peer group information from our independent compensation consultants (see below). We also evaluate salary levels at the time of promotion or other change in responsibilities. Individual performance and retention risk are also considered as part of our annual assessment. Typically, salary adjustments occur in January or at other appropriate times during the year.

Short-Term Cash-Based Incentive Compensation. Our current short-term incentive program is a cash-based plan that is designed to reward the attainment of annual company-wide financial objectives at specified levels and individual performance relative to the specific tasks we expect an officer to accomplish during the year. All award levels are expressed as a percentage of base compensation. Our objective is to drive annual performance at both the Company and individual levels to the highest attainable levels by establishing threshold, target and maximum goals tied to increasing levels of incentive compensation. We establish Company and individual targets, taking into account our annual budget and management’s strategic objectives for the year. We assess the attainment of individual targets by considering actual results against specific targeted objectives, whether the objective represented a significant stretch for the individual and organization and whether unanticipated circumstances, either positive or negative, affected the outcome. In general, our intent is not to exercise discretion in the determination of awards. However, in appropriate circumstances, the Compensation Committee may take into account external or extraordinary factors that influenced or affected a specific outcome, whether relating to a Company or individual target, and make adjustments that reflect an equitable result. A more detailed discussion of the 2006 program follows later in this Compensation Discussion and Analysis.

Long-Term Equity-Based Compensation. Our long-term incentive compensation program is designed to align our management with shareholder interests and focuses our management team on the long-term performance of the Company. By increasing the equity holdings of our management team, we provide them with a continuing stake in our long-term success. The frequency, nature and size of awards under our equity-based program are based on a number of factors including competitive practice, executive performance, Company performance and the expense to the Company.

Retirement Benefits; Employee Welfare Benefits. We offer our employees tax-qualified retirement and savings plans. Our primary retirement vehicles include our employee stock ownership plan and our 401(k) plan; however, effective for 2007, our named executive officers are no longer eligible to participate in the employee stock ownership plan. In addition to retirement programs, we provide our employees with coverage under medical, dental, life insurance and disability plans on terms consistent with industry practice. We also provide employees with access to a flexible spending plan to pay their share of the cost of such coverage on a pre-tax basis. Certain of our officers, including our CEO and COO, have entered into split dollar life insurance agreements that provide additional life insurance protection while employed by the company.

Our named executive officers also participate in our Second Amended and Restated Supplemental Executive Retirement Plan, as amended, referred to as our “SERP,” which provides benefits based on a stated percentage of the participating officer’s final average cash compensation. Upon termination of employment at or after a specified normal retirement age, which ranges from age 60 to age 70 depending on the individual participant, the participant will receive a retirement benefit equal to a specified percentage (ranging from 20% to 60% depending on the individual participant) of his average cash compensation in the three calendar years out of the current year and the five years proceeding his retirement that produce the highest average, provided that such amount may not exceed the amount determined as of the date a participant attains his normal retirement age without regard to whether he remains employed after such date. The benefit is payable, at the participant’s election, in the form of 180 monthly installment payments or an actuarially equivalent lump sum and each participant has elected the lump sum. If a participant terminates employment prior to normal retirement age, the normal retirement benefit would be reduced proportionately to reflect the participant’s age and years of participation in the SERP as of his termination date. No benefits are payable under the SERP if a participant’s employment is terminated for cause.

Under our SERP, in the event of a participant’s death while in active service with the Company or the Bank, his beneficiaries would be entitled to receive a benefit calculated as if the participant had attained normal retirement age prior to his death. If a participant dies after payments under the SERP have begun, his beneficiaries would receive all remaining payments. In the event of a participant’s disability while employed by the Bank, the SERP would provide him with a monthly payment through his normal retirement date equal to 100 percent of his final average compensation reduced by social security disability benefits and benefits payable under the Bank’s long-term disability program. The SERP disability benefit would be reduced to the normal retirement benefit percentage when the disabled participant reaches his normal retirement date.

If, during the three-year period following a change in control of the Company (as defined in the SERP), a participant’s employment is involuntarily terminated or the participant voluntarily terminates employment in certain circumstances that amount to a constructive termination, the participant would be entitled to receive the normal retirement benefit without regard to his age and service at termination and based on his final average compensation prior to termination. Under the SERP, events constituting a constructive termination include a reduction in the participant’s position, authority, compensation or benefits or a required relocation of his place of employment more than 35 miles from its location prior to the change in control.

Additional information regarding the SERP is included below in the Pension Benefits table and the related footnotes, as well as the “Payments Upon Termination or Change-In-Control.”

Perquisites. We provide certain of our officers, including our named executive officers with perquisites that further their ability to promote the Company’s business interests in our markets and to reflect competitive practices for similarly situated officers employed by our peers. We review these perquisites periodically and make adjustments as necessary.

Role of the Compensation Committee

We rely on the Compensation Committee to develop the broad outline of our compensation program and to monitor the success of the program in achieving the objectives of our compensation philosophy. The Committee, which consists of four independent directors, is also responsible for the administration of our compensation programs and policies, including the administration of our cash- and stock-based incentive plans.

The Committee operates under the mandate of a formal charter that establishes a framework for the fulfillment of the Committee’s responsibilities. The Committee and the Board review the Charter annually to ensure that the scope of the Charter is consistent with the Committee’s designated role. Under the Charter, the Committee is charged with general responsibility for the oversight and administration of our compensation program. The Charter vests in the Committee principal responsibility for determining the compensation of the CEO based on the Committee’s evaluation of his performance. The Charter also authorizes the Committee to engage consultants and other professionals without management approval to the extent deemed necessary to discharge its responsibilities.

During 2006, the Compensation Committee met 13 times, including 13 executive sessions attended by Committee members only. The members of the Committee included George D. Muller, Chairperson, Elbert G. Basolis, Jr., James E. Bartolomei and Anthony M. Giampetro, M.D.

Peer Group Analysis

A critical element of our compensation process and a key driver of specific compensation decisions for our management team is a comparative analysis of our compensation mix and levels relative to a peer group of publicly traded financial institutions. A guiding principle of our compensation philosophy is the maintenance of a competitive compensation program relative to the companies with which we compete for talent. In 2006, our peer group was selected with the assistance of our independent compensation consultants on the basis of a several factors, including geographic proximity, size, and operating characteristics.

Role of the Compensation Consultant

Since 2005, the Compensation Committee has worked with independent compensation consultants at Pearl Meyer & Company, a division of Clark Consulting, to benchmark our compensation program against our peers and to afford us their expertise in structuring our compensation program. The Committee has also retained Muldoon Murphy & Aguggia, LLP as counsel to the Committee to provide executive compensation and benefits advice. These advisors are retained directly by the Committee and serve at the pleasure of the Committee. From time to time, the Committee also reviews with Pearl Meyer consultants developments in the compensation area to ensure that our program is consistent with prevailing practice in our industry. During 2006, Pearl Meyer prepared a comprehensive executive compensation review that covered all aspects of compensation for our senior management team, including our CEO, CFO and other named executive officers. In 2006, representatives of Pearl Meyer attended four Committee meetings, either in person or by telephone.

Role of Management

Our CEO and other named executive officers develop recommendations regarding the appropriate mix and level of compensation for their subordinates. The recommendations consider the objectives of our compensation philosophy and the range of compensation programs authorized by the Compensation Committee. The CEO meets with the Compensation Committee to discuss the recommendations and also reviews with the Committee his recommendations concerning the compensation of our other named executive officers. Our CEO does not participate in Committee discussions or the review of Committee documents relating to the determination of his compensation.

Tax and Accounting Considerations

In consultation with our advisors, we evaluate the tax and accounting treatment of each of our compensation programs at the time of adoption and on an annual basis to ensure that we understand the financial impact of each program on the Company. Our analysis includes a review of recently adopted and pending changes in tax and accounting requirements. As part of our review, we consider modifications and/or alternatives to existing programs to take advantage of favorable changes in the tax or accounting environment or to avoid adverse consequences. During 2006, we continued to consider the implications of two significant developments in the tax and accounting area - the new Section 409A rules applicable to nonqualified deferred compensation and the revised accounting treatment for equity compensation under FAS 123R. We are continuing to implement changes in plan design or compensation practices to address these developments as they are interpreted and put in practice.

To preserve maximum flexibility in the design and implementation of our compensation program, we have not adopted a formal policy that requires all compensation to be tax deductible for purposes of Section 162(m) of the Internal Revenue Code, which limits the deductibility of certain compensation paid to our named executive officers. However, to the greatest extent possible, it is our intent to structure our compensation programs in a tax efficient manner for the Company.

Employment Agreements

We currently maintain employment agreements with key management personnel, including our named executive officers that provide for the payment of severance benefits in specified circumstances. A detailed description of the terms of those agreements and the severance benefits payable to each named executive officers is set forth below in the “Discussion of Summary Compensation and Grant of Plan-Based Awards Tables.” However, in May 2006, the Board of Directors provided notice to our named executive officers that the term of their existing agreements, which established an initial three-year term with automatic one-year extensions absent prior notice from either party, would not be extended beyond the expiration of the current term. All of the agreements will expire in approximately 18 months. The Board’s action, which

followed a review of the terms of the agreements by the Compensation Committee, did not reflect any specific evaluation of the performance of the affected officers. Rather, the Board determined, consistent with the Committee’s recommendation, that it would be in the best interests of the Company and its shareholders, to develop an agreement based on uniform terms that better reflected the Company’s current compensation philosophy. Specifically, the Board believed that the existing agreements did not provide the Board and the Compensation Committee with sufficient flexibility to vary the nature or scope of an executive’s role and the components of an executive’s compensation package from year-to-year based on changes in the Company’s needs and/or the executive’s performance. It is expected that at some point prior to the expiration of the existing agreements, a new form of employment agreement will be developed for our executive officers containing terms that are mutually agreeable to the Company and the named executive officers.

Stock Compensation Grant and Award Practices; Timing Issues

Our Compensation Committee considers whether to make stock option grants and/or award other forms of equity on an annual basis, typically in conjunction with the annual review process for our officers. However, grants or awards may be made at other times during the year based on specific circumstances such as a new hire, a specific contractual commitment or a change in position or responsibility. The Compensation Committee considers the recommendations of our CEO and other executive officers with respect to awards contemplated for their subordinates. However, the Committee is solely responsible for the development of the schedule of grants or awards made to the CEO and the other executive officers.

As a general matter, the Compensation Committee’s process is independent of any consideration of the timing of the release of material nonpublic information, including with respect to the determination of grant dates or the stock option exercise prices. Similarly, the Company has never timed the release of material nonpublic information with the purpose or intent to affect the value of executive compensation. In general, the release of such information reflects long-established timetables for the disclosure of material nonpublic information such as earnings reports or, with respect to other events reportable under federal securities laws, the applicable requirements of such laws with respect to timing of disclosure.

We set the exercise price of stock options solely by reference to the applicable provisions of our stock compensation plans. Under our current plan, which was approved by shareholders in 2005, the exercise price of an option is equal to the closing sale price of our stock on the grant date. The grant date is generally the date of Committee action. To date, no awards have been made under our current equity plan.

Stock Ownership Requirements

We have not adopted formal stock ownership requirements for our senior officers and Board members beyond the minimum requirements applicable under federal banking regulations. As a practical matter, our officers and directors hold significant interests in our stock, which they have accumulated through participation in stock compensation programs and individual purchases. See “Ownership of Certain Beneficial Owners and Management.” However, we will continue to evaluate the practices among our peer companies with respect to stock ownership guidelines to assess the current state of “best practices” regarding such guidelines.

2006 Compensation Program Highlights

Base Salary Adjustments

In 2006, consistent with our continuing emphasis on variable compensation as a significant component of total compensation, the base annual salaries of our named executive officers were maintained without increase except for Mr. O'Donnell. During 2006 Mr. O'Donnell’s salary was adjusted to reflect his additional responsibilities and to make his salary commensurate with industry peer levels. In 2007, Mr. Ryan and Mr. Destribat's base annual salary was maintained without increase while Mr. Tylus, Mr. Carman and Mr. O'Donnell received minimum or cost-of-living adjustments.

2006 Short-Term Incentive Program

In 2006, we revised our cash-based, short-term incentive program to emphasize a reward based on a weighted mix of financial and individual performance objectives. We developed the program in consultation with our Pearl Meyer consultants, taking into account the findings of their review of competitive practices among our peers and industry best practices. While specific bonus targets had been utilized in prior years, the Committee determined that a formal program based on the attainment of pre-established financial and individual performance objectives would better serve the objectives of the Company’s overall compensation philosophy. The program established reward opportunities based on the attainment of target levels for each objective. Under the 2006 program, the attainment of targeted levels of a key financial measure -- earnings per share (“EPS”) -- accounted for 75% and 60% of the total award for our CEO and our President/COO, respectively. The balance of the award, or 25% and 40%, respectively, was tied to the attainment of individual performance objectives. Similar financial and individual performance targets were established for each of our other named executive officers. With respect to the EPS metric, the Committee designated a target level and then established a minimum threshold for bonus eligibility 10% below the target and a “stretch” target for enhanced bonus opportunities at 20% over the EPS target. Individual performance targets for our named executive officers focused on a series of strategic and operational initiatives.

In January 2007, the Compensation Committee exercised its discretionary authority to adjust the applicable financial performance target to eliminate the short-term impact on earnings of actions taken in the fourth quarter of 2006 to restructure the Company’s balance sheet. The Committee determined that, without an adjustment to the 2006 financial performance target, the incentive value of the plan would be significantly diminished for key management personnel who took the steps necessary to reposition the Company for higher financial performance over the long-term and that the willingness of key personnel to undertake similar strategic initiatives in the future could be compromised.

In January 2007, the Committee evaluated the Company’s financial performance relative to the adjusted EPS target and the performance of our named executive officers relative to their individual performance goals. A key consideration in the Committee’s evaluation was the rate of progress toward full compliance with the requirements of the Bank’s supervisory agreement with the Office of the Comptroller of the Currency. The agreement, which was entered in August 2005, focused on certain deficiencies in operations and management oversight and required corrective action within specific guidelines mandated by the OCC. Accordingly, based on the adjusted financial performance objectives and the Committee’s evaluation of each executive’s individual performance, the Committee authorized the payment of a portion of the awards based on the achievement of certain individual performance goals. Company performance goals were not achieved. The Committee exercised its discretion to bifurcate the portion of the awards related to individual performance by providing for payment of 60% to 85% of the total award during the first quarter of 2007 and making payment of the balance of the award contingent on the attainment of certain additional Company performance goals, namely the termination of the Bank’s formal agreement with the OCC, by December 31, 2007. If those goals are not achieved, the balance of the award will be forfeited.

2006 Long-Term Incentive Program

We did not make any equity compensation awards to our named executive officers in 2006. This decision reflected the Compensation Committee’s determination that consideration of equity awards for senior management should be postponed pending further progress toward compliance with the requirement’s of the Bank’s supervisory agreement. In addition, the Committee concluded that it would be in the best interests of the Company to allow adequate time to evaluate the impact of revised accounting rules for equity compensation, to analyze trends in prevailing practices among our peers, and to develop a strategy for delivering equity compensation in a cost-efficient manner. However, we believe that the absence of awards in 2006 reflects the convergence of specific circumstances, and we expect that equity compensation will remain an important component of our long-term incentive strategy in future years.

Named Executive Officers

Our principal executive officer is Patrick M. Ryan, Chief Executive Officer, and our principal financial officer is Stephen F. Carman, Executive Vice President and Chief Financial Officer. During 2006, the three most highly compensated executive officers other than Messers. Ryan and Carman were Messrs. Tylus, Destribats and O’Donnell. Messers. Ryan, Carman, Tylus, Destribats and O’Donnell are sometimes referred to as the “named executive officers.”

The following tables set forth certain information regarding the compensation of our named executive officers.

Summary Compensation Table

Name and Principal Position	Year	Salary ($)	Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(1)	All Other Compensation ($)(2)	Total ($)

Patrick M. Ryan	2006	460,000	27,600	336,040	22,613	846,253
Chief Executive Officer of the Company and the Bank
Stephen F. Carman	2006	202,000	22,725	38,933	15,008	278,666
Vice President and Treasurer of the Company, Executive Vice President and Chief Financial Officer of the Bank
F. Kevin Tylus	2006	315,000	46,856	97,694	195,857	655,407
President and Chief Operating Officer of the Company and the Bank

Jay G. Destribats	2006	270,000	4,536	174,734	31,176	480,446
Chairman of the Company and the Bank
Daniel J. O’Donnell	2006	185,000	29,563	-0-	12,197	226,760
Secretary of the Company, Executive Vice President and Chief Legal Counsel of the Bank

(1) For Messrs. Ryan, Carman, and Destribats, the amounts set forth reflect the aggregate change in the actuarial present value of the named executive officer’s accumulated benefit under our SERP from December 31, 2005 to December 31, 2006. Mr. O’Donnell became a participant in the SERP in May 2006. Due to the fact that Mr. O’Donnell has less than one year of service under the SERP at December 31, 2006, he did not have an accumulated benefit as of such date. For Mr. Tylus, the amount set forth includes $91,149 as a result of the aggregate change in the actuarial present value of Mr. Tylus’s accumulated benefit under our SERP from December 31, 2005 to December 31, 2006. For this purpose, in accordance with SEC rules, the present value was determined using the same assumptions applicable for valuing SERP benefits for purposes of our financial statements. See “Pension Benefits” below. The balance of the amount set forth for Mr. Tylus is $6,545 attributable to above-market earnings on Mr. Tylus’s balance under the Directors’ Deferred Fee Plan, which results from the period during which Mr. Tylus was a non-employee director. Under the terms of the Directors’ Deferred Fee Plan, interest is credited at the prime rate plus two percent. During 2006, interest was credited at 9.25%.

(2) All other compensation consists of the following amounts.

Name	Year	Company Matching 401(k) Contributions	Group Term Replacement Insurance(a)	ESOP(b)	Payments For Unused Sick and Vacation	Other Contractual Payments(c)	Perquisites(d)	Compensation ($)

Patrick M. Ryan	2006	7,500	3,207	8,368	3,538	-	-	22,613
Stephen F. Carman	2006	6,230	463	6,761	1,554	-	-	15,008
F. Kevin Tylus	2006	7,500	-	8,368	2,423	167,000	10,566	195,857
Jay G. Destribats	2006	5,631	7,014	8,368	-	-	10,163	31,176
Daniel J. O’Donnell	2006	5,637	368	6,192	-	-	-	12,197

(a) The amounts indicated represent the current economic value of the premiums paid by the Company, which premiums will be recovered by us in the future when such insurance policies mature.

(b) The amounts indicated represent an estimate of the value of the shares of common stock to be allocated to the named executive officers under our Employee Stock Ownership Plan for the 2006 fiscal year based on an estimate of the number of shares to be allocated to each named executive officer multiplied by the closing price of the Company’s common stock on December 31, 2006.

(c) Represents an amount payable to Mr. Tylus under the terms of his employment agreement. See the discussion below the 2006 Grant of Plan-Based Awards table, below.

(d) Mr. Tylus’s perquisites consist of $7,565 country club dues and $3,001 for personal use of Company automobiles. Mr. Destribats’s perquisites consist of $8,807 country club dues and $1,356 for personal use of Company automobiles.

2006 Grants of Plan-Based Awards

		Estimated Future Payouts
		Under Non-Equity Incentive
		Plan Awards

	Grant	Threshold	Target	Maximum
Name	Date	($)	($)	($)

Patrick M. Ryan	10/17/06	138,000	184,000	230,000
Stephen F. Carman	10/17/06	45,450	60,600	75,750
F. Kevin Tylus	10/17/06	82,845	110,250	137,970
Jay G. Destribats	10/17/06	30,510	40,500	50,760
Daniel J. O’Donnell	10/17/06	41,625	55,500	69,375

Discussion of Summary Compensation and Grant of Plan-Based Awards Tables

We have written employment agreements with each of our named executive officers. The employment agreements are substantially similar; each provides for a three year term, renewable annually on an automatic basis unless one of the parties provides at least sixty days notice of non-renewal. Commencing in May 2006, the Company and the Bank notified each of the named executive officers that his employment agreement would not be automatically extended beyond the scheduled expiration of its current term. The Company’s Compensation Committee and Board approved the notices to the executive officers in an effort to improve the Company’s compensation practices. Specifically, the Compensation Committee and Board believe the Company will now have more clearly defined opportunities to review the executive officers’ employment agreements and make any modifications appropriate to further the Company’s compensation goals and objectives. As a result of the Company’s notices, each such employment agreement will expire at the end of its current term during 2008.

The employment agreements provide for the payment of base salary and for each named executive officer’s participation in bonus programs and employee benefit plans, as well as for reimbursement for business expenses and an automobile allowance. In addition, Mr. Tylus’s agreement provides him with compensation for certain benefits which he agreed to forego as a result of his decision to leave his former employer and join the Company. During 2006, Mr. Tylus received a cash payment of $167,000 pursuant to this provision of his agreement. The payment is included in the Summary Compensation Table above in other compensation. Mr. Tylus is scheduled to receive equal payments in 2007 and 2008, in cash or restricted stock at the discretion of the Company.

The employment agreements require the named executive officers to devote their full time, attention, skill and efforts to the faithful performance of their duties; however, the named executive officers may serve as directors of or hold other offices or positions with organizations that do not present conflicts of interest with the Company, the Bank or their affiliates. In addition, the named executive officers agree to maintain the confidentiality of non-public information related to Bank operations and finances. Upon a termination of employment “without just cause” or “with good reason” (as discussed below), the named executive officers’ obligations of loyalty and confidentiality remain in effect and the named executive officers further agree not to serve as directors, officers or employees of any competing financial institutions within fifty miles from the main office of the Bank, nor to interfere with the Bank’s or the Company’s relationship with existing employees, for a period of six months following such termination. See “Potential Payments Upon Termination or Change-In-Control,” below, for additional information regarding amounts payable upon termination.

During 2006, the Compensation Committee of our Board of Directors developed a non-equity incentive plan for our named executive officers and other executive officers. The plan was finalized and target awards were determined in October 2006. Target awards were based on attaining Company and individual performance goals for 2006, as well as Company performance goals that continued into 2007. The 2006 Company performance goals were not achieved. Mr. Destribats achieved the threshold level of individual goals; Messrs. Ryan and Carman achieved the target level of individual goals and Messrs. Tylus and O’Donnell achieved the stretch level of individual goals. As discussed above under the heading “2006 Short-Term Incentive Program” in the “Compensation Discussion and Analysis,” above, only a portion of these amounts were fully earned in 2006, as the balance of such amounts remained subject to the achievement of Company performance goals during 2007. Only the portions earned in 2006 are reflected in the Summary Compensation Table, above.

Outstanding Equity Awards At December 31, 2006

	Number of
	Securities
	Underlying
	Unexercised	Option	Option
	Options (#)	Exercise	Expiration
Name	Exercisable	Price ($)	Date
Patrick M. Ryan	52,926	$17.20	2/4/2008
	70,856	$10.94	12/20/2010

Stephen F. Carman	32,800	$17.20	2/4/2008
	20,000	$10.94	12/20/2010

F. Kevin Tylus	25,000	$29.80	10/7/2014

Jay G. Destribats	41,000	$17.20	2/4/2008
	50,000	$10.94	12/20/2010

Daniel J. O’Donnell	6,000	$12.06	1/2/2011

2006 Pension Benefits

Name	Plan Name (1)	Number of Years Credit Service (#)(2)	Present Value of Accumulated Benefits ($)(3)
Patrick M. Ryan	SERP	12	3,015,034
Stephen F. Carman	SERP	10	305,091
F. Kevin Tylus	SERP	1	91,149
Jay G. Destribats	SERP	12	2,862,918
Daniel J. O’Donnell	SERP	-0-	-0-

(1)	The above table provides estimates of the present value of benefits the Executives have accumulated under the Second Amended and Restated Supplemental Executive Retirement Plan of Yardville National Bank, as of December 31, 2006.

(2)

The number years of credit service reflects the number of years since the named executive officers’ respective eligibility dates. Each of the named executive officers has a greater number of years of service to the Company and the Bank. Mr. O’Donnell became a participant in the SERP in May 2006. Due to the fact that Mr. O’Donnell has less than one year of service under the SERP at December 31, 2006, he did not have an accumulated benefit as of such date.

(3)

The present value of accumulated benefits is determined based on the respective named executive officer’s estimated retirement benefit at normal retirement age, which is equal to a specified percentage (ranging from 40% to 60% depending on the individual participant) of the named executive officer’s average cash compensation in the three calendar years out of the then-current year and the five years proceeding his retirement that produce the highest average. The benefit is payable, at the participant’s election, in the form of 180 monthly installment payments or an actuarially equivalent lump sum. Each participant has elected a lump sum. An Internal Revenue Code section 417(e) interest rate of 4.73% (the November 2005 30-year Treasury Bond yield) was used to convert the installment payments to a lump sum, and a FAS 87 interest rate of 5.5% and no pre-retirement mortality was assumed in discounting deferred payments in determining the present value of accumulated benefits.

Potential Payments Upon Termination or Change-In-Control

Upon the death of a named executive officer during the employment agreement term, his estate would receive any compensation due through the last day of the calendar month of death. In the event of a named executive officer’s retirement in accordance with the Company’s or the Bank’s existing retirement plans, the employment agreement would terminate with no further payments made to the named executive officer pursuant to his contract. If the named executive officer became disabled, he would receive any disability benefits provided for under his SERP. However, if the SERP was no longer in effect, the agreement would provide a disability benefit of 100% of monthly base salary and continued coverage under all benefit plans in which the named executive officer participated prior to his disability. Disability payments and benefits would continue through the earliest of the named executive officer’s death, attainment of age 65, or the third anniversary of his termination of employment. Disability payments would be reduced, however, by any benefits payable under any other disability programs sponsored by the Company or the Bank.

The Company or the Bank may terminate a named executive officer at any time for “just cause” (as defined in the employment agreements), subject to the named executive officer’s right to appear, with counsel, before the Board prior to such termination. The named executive officer would receive no severance payments or benefits under the employment agreement upon his termination for just cause. The named executive officer may voluntarily terminate his employment upon the provision of 60 days notice, but upon such termination, he would receive only his compensation and vested benefits through the date of termination.

Under the employment agreements, the named executive officers would receive certain severance benefits upon termination by the Bank or the Company without just cause or upon voluntary termination “with good reason.” “Good reason,” as defined under the employment agreements, includes any of the following: (1) a material reduction in the named executive officer’s responsibilities, authority, or reporting structure within the Company or the Bank; (2) assignment of duties inconsistent with the named executive officer’s skills and experience; (3) failure to be nominated or renominated to the Board (applicable only to Messrs. Destribats, Ryan and Tylus); (4) reduction in salary or benefits contrary to the terms of the employment agreement, or a reduction in salary or benefits following a change in control (as defined in the employment agreement); (5) a termination of benefit plans or of the named executive officer’s participation in such plans (outside of a good faith, across-the-board reduction of general application) in a manner that effectively reduces their aggregate value; and (6) a requirement that the named executive officer relocate by more than 35 miles from the current main office of the Bank. In addition, during the period beginning on the effective date of a change in control and continuing for one year thereafter, the named executive officer may voluntarily terminate employment for any reason and such termination will be treated as a termination with good reason. Upon involuntary termination without just cause, or upon termination with good reason, the named executive officer would receive a severance payment equal to his annual base salary and bonus for the remaining term of the agreement, with the amount determined by reference to his highest annual base salary during any of the twelve months preceding termination and his highest cash bonus during any of the three years preceding termination. The named executive officer also would continue to participate in Company or Bank-sponsored health and welfare benefit plans, or receive the cash equivalent of such coverage, for a period of thirty-six months.

If the Company or the Bank terminate the named executive officer without just cause, or if the executive terminates employment with good reason within the period beginning six months before and ending three years after a change in control, the named executive officer would receive a severance payment equal to three times the sum of his highest annual base salary and highest bonus paid during the preceding three calendar years. The named executive officer would also continue to receive health and welfare benefit coverage, or the cash equivalent, for thirty-six months following termination of employment. In the event that payments made to the named executive officer under the employment agreements result in an “excess parachute payment” as defined under Section 280G of the Internal Revenue Code, an excise tax would be imposed on the named executive officer and the Company would be denied a deduction for such excess amounts. Under the employment agreements, the Company would indemnify the named executive officer for any such excise taxes and any additional income, employment, and excise taxes imposed as a result of the initial tax indemnification. The Company and the Bank would also indemnify the named executive officers with respect to any legal claims arising from their employment or Board service, if applicable, for a six-year period following termination of the employment agreements. Although the Company and the Bank are jointly liable for any payments due, the Company also guarantees the Bank’s payment obligations under the employment agreements.

Name	Termination Event ¹	Lump Sum Severance ($)²		Continued Health and Life Insurance Coverage (present value) ($)³		Incremental Pension Benefit (present value) ($) ⁴		Tax Gross-up Payment ($) ⁵		Total ($)
Patrick M. Ryan	Death⁶	0		0		1,000,483	⁷	0		1,000,483

	Disability ⁸	0		33,032	⁹	1,719,818	¹⁰	0		1,752,850

	Voluntary ¹¹	0		0		0	¹²	0		0

	Without Cause or With Good Reason ¹³	1,208,065	¹⁴	39,721	⁹	0	¹²	0		1,247,786

	Change in Control ¹⁵	2,213,607	²	39,721	⁹	1,000,483	¹⁶	911,291	¹⁷	4,165,102

Stephen F. Carman	Death⁶	0		0		673,602	⁷	0		673,602

	Disability ⁸	0		31,489	⁹	2,013,242	¹⁰	0		2,044,731

	Voluntary ¹¹	0		0		0	¹²	0		0

	Without Cause or With Good Reason ¹³	388,025	¹⁴	31,489	⁹	0	¹²	0		419,513

	Change in Control ¹⁵	711,000	²	31,489	⁹	673,602	¹⁶	390,868	¹⁷	1,806,959

F. Kevin Tylus	Death⁶	0		0		2,470,633	⁷	0		2,470,633

	Disability ⁸	0		33,646	⁹	4,968,291	¹⁰	0		5,001,937

	Voluntary ¹¹	0		0		0	¹²	0		0

	Without Cause or With Good Reason ¹³	772,785	¹⁴	33,646	⁹	0	¹²	0		806,430

	Change in Control ¹⁵	1,416,018	²	33,646	⁹	2,470,633	¹⁶	1,518,325	¹⁷	5,438,622

Jay G. Destribats	Death⁶	0		0		0	⁷	0		0

	Disability ⁸	0		0		0	¹⁰	0		0

	Voluntary ¹¹	0		0		0	¹²	0		0

	Without Cause or With Good Reason ¹³	745,345	¹⁴	21,042		0	¹²	0		766,387

	Change in Control ¹⁵	1,365,738	²	21,042		0	¹⁶	550,550	¹⁷	1,937,330

Daniel J. O'Donnell	Death⁶	0		0		818,074	⁷	0		818,074

	Disability ⁸	0		31,204	⁹	2,723,328	¹⁰	0		2,754,531

	Voluntary ¹¹	0		0		0	¹²	0		0

	Without Cause or With Good Reason ¹³	337,191	¹⁴	31,204	⁹	0	¹²	0		368,395

	Change in Control ¹⁵	643,689	²	31,204	⁹	818,074	¹⁶	636,704	¹⁷	2,129,687

Potential Payments Upon Termination of Employment

(1)

The following chart provides an estimate of certain payments due Messrs. Ryan, Carman, Tylus, Destribats, and O’Donnell upon certain hypothetical Termination Events. Although these events have not occurred, for purposes of the estimates we have assumed the Termination Events occurred on December 31, 2006.

(2)

Under the Change-in-Control provisions of the Employment Agreements of Messrs. Ryan, Carman, Tylus, Destribats, and O’Donnell, if the Company or the Bank terminates the Executive’s employment “Without Just Cause” or the Executive voluntarily terminates his employment “With Good Reason” within six (6) months before or three (3) years after a Change-in-Control, the Executive is entitled to severance pay equal to three (3) times the sum of the Executive’s highest annual rate of base salary during the thirty-six (36) month period preceding the effective date of the Change-in-Control and the highest annual bonus or similar incentive compensation paid to the Executive or accrued on the Executive’s behalf during the three (3) most recently completed calendar years preceding the Change-in-Control. If at any other time the Executive is terminated Without Just Cause or the Executive terminates With Good Reason, the Executive receives his annual base pay and the bonus that would have been paid for the remaining term of the Employment Agreement, determined by reference to the highest annual rate of base pay in effect in any of the twelve (12) months immediately preceding the date of termination and the highest annual cash bonus paid in any of the three (3) preceding calendar years.

(3)

Under the Employment Agreements of Messrs. Ryan, Carman, Tylus, Destribats, and O’Donnell, the Executive shall for a thirty-six (36) month period, continue to participate in any benefits plans of the Company and the Bank that provide health (including medical and dental) or life insurance or similar coverage under the same terms and conditions if the Executive’s employment is terminated by the Company or the Bank Without Just Cause or by the Executive With Good Reason. Under the Employment Agreements, during the Executive’s Disability, the Executive and his dependents shall, to the greatest extent possible, continue to be covered under all benefit plans (including, without limitation, retirement plans, and medical, dental and life insurance plans) of the Company and the Bank on the same terms and conditions until the earlier of: (i) date of Executive’s death; (ii) the date he attains age 65; or (iii) three (3) years.

(4)

The Second Amended and Restated Supplemental Executive Retirement Plan (“SERP”) provides benefits based on a stated target percentage of the Executive’s highest annual compensation received during the three (3) calendar years out of the current and preceding five (5) calendar years. The stated target percentages are: 60% for Messrs. Ryan, Tylus and Destribats, and 40% for Messrs. Carman and O’Donnell. The Executive vests in the full SERP benefit upon the following events: (a) attainment of his or her normal retirement age, which ranges from age 60 to age 70, (b) disability, (c) death and (d) Change-in-Control. Upon the Executive’s termination of employment for any other reason, other than With Cause, the Executive’s vested benefits should be equal to the Executive’s accrued benefit as of the date of termination. The SERP benefit is payable, at the Executive’s election, in the form of one hundred eighty (180) monthly installments or an actuarial equivalent lump sum. The amount of the Executive’s incremental SERP benefit payable upon a Termination Event, as shown in the table, is the value of the total SERP benefit payable reduced by the Executive’s Present Value of Accumulated Benefit disclosed in the Pension Benefits Table.

(5)

Under the Employment Agreements of Messrs. Ryan, Carman, Tylus, Destribats and O’Donnell, the Executive is entitled to a “Gross-Up Payment” if any payment, benefit or distribution made or provided by the Company or the Bank or for the benefit of the Executive would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest or penalties incurred because of the excise tax. The Gross-Up Payment shall be in an amount such that after payment by the Executive of all taxes (including the excise tax and any interest and penalties) imposed on the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the excise tax imposed upon the other payments. For purposes of determining the Gross-Up Payment, we have assumed that the amount of the Gross-Up Payment has been certified by a public accounting firm.

(6)

The SERP provides the beneficiaries of the Executive a death benefit equal to 100% of the monthly retirement benefit that the Executive would have been entitled to receive, calculated as if the Executive had retired on his or her normal retirement date (without regard to the Executive’s actual age or years of service) immediately prior to his or her death. The benefit is payable to the beneficiaries in the form elected by the Executive. Messrs. Ryan, Carman, Destribats, and O’Donnell have entered into split dollar life insurance agreements that provide additional life insurance protection. The values shown in the table do not reflect the death benefits payable to the named Executive’s beneficiaries by the Company’s insurer. The economic value of the life insurance coverage for the year 2006 is included in the Summary Compensation Table under the column “All Other Compensation.”

(7)

This figure represents the actuarial present value of the payments to the Executive’s beneficiaries under the SERP, reduced by the Present Value of Accumulated Benefit disclosed in the Pension Benefits Table. Benefits are determined using the following assumptions: (i) lump sum values are determined under Internal Revenue Code Section 417(e) using 30 year Treasury Bond yield as of November 2005 of 4.73%; (ii) no pre-retirement mortality; and (iii) a FAS discount rate of 5.50%.

(8)

Under the Employment Agreements of Messrs. Ryan, Carman, Tylus, Destribats, and O’Donnell, “Disability” means the Executive’s suffering a sickness, accident or injury which has been determined by the carrier of any individual or group disability insurance policy or by the Social Security Administration to be a disability rendering the Executive totally or permanently disabled. In the event of such Disability, the Executive’s obligation to perform services under the Employment Agreement will terminate.

(9)

The present value of continued health and dental benefits is based on the cost of employer-provided coverage in 2007, the assumption that such cost will increase by 9% effective January 1, 2008 and by 8% effective January 1, 2009, and a discount rate of 6%. The present value of continued life insurance coverage for the Executives for three (3) years is assumed to be equal to three (3) times the annual economic value of insurance coverage described in footnote 2 of the Summary Compensation Table, in the case of Messrs. Ryan, Carman, Destribats, and O’Donnell, or three (3) times the cost of coverage under the Bank’s group-term life insurance plan, in the case of Mr. Tylus. The present value of benefits provided upon Disability is determined in a similar manner, except that Mr. Ryan’s benefits will terminate in less than three (3) years, when he attains age 65, and Mr. Destribats will receive no benefits, because he has already attained age 65. It is assumed that, in case of Disability, no continued benefits will be provided under the Company’s or the Bank’s retirement plans other than the SERP.

(10)

This figure represents the actuarial present value of 100% of the Executive’s final average earnings until his or her normal retirement age, followed by a target retirement benefit commencing at normal retirement age, reduced by the Present Value of Accumulated Benefit disclosed in the Pension Benefits Table. Benefits are determined using the following assumptions: (I) lump sum values are determined under Internal Revenue Code Section 417(e) using 30 year Treasury Bond yield as of November 2005 of 4.73%; (ii) no pre-retirement mortality; and (iii) a FAS discount rate of 5.50%.

(11)	Under the Employment Agreements of Messrs. Ryan, Carman, Tylus, Destribats and O’Donnell, if the Executive voluntarily terminates employment, the Executive will receive only his compensation, vested rights and employee benefits up to the date of the termination.

(12)

This figure represents the actuarial present value of the Executive’s accrued benefit under the SERP as of the date of termination of employment, deferred until normal retirement age, reduced by the Present Value of Accumulated Benefit disclosed in the Pension Benefits Table. Benefits are determined using the following assumptions: (i) lump sum values are determined under Internal Revenue Code Section 417(e) using 30 year Treasury Bond yield as of November 2005 of 4.73%; (ii) no pre-retirement mortality; and (iii) a FAS discount rate of 5.50%.

(13)

Under the Employment Agreements of Messrs. Ryan, Carman, Tylus, Destribats, and O’Donnell, the Company or the Bank may terminate the Executive’s employment at any time for a reason other than Just Cause (a termination “Without Just Cause”) and the Executive may terminate the Employment Agreement at any time within ninety (90) days following an event constituting “Good Reason”. Termination “With Just Cause” means termination because of the Executive’s dishonesty, incompetence, willful misconduct, breach of fiduciary duty, failure to perform duties, willful violation of any law or regulation (other than a traffic violation or similar offenses) or material breach of the Employment Agreement. “Good Reason” generally means termination by the Executive after the Company’s or the Bank’s material breach of any of their respective obligations under the Employment Agreement.

(14)

This figure represents the annual base pay and the bonus that would have been paid to the Executive for the remaining term of the Employment Agreement, determined by reference to the highest annual rate of base pay in effect in any of the twelve (12) months immediately preceding the date of termination and the highest annual cash bonus paid in any of the three (3) preceding calendar years.

(15)

Change-in-Control means any of the following: (1) the Company merges into or consolidates with another corporation, or merges another corporation into the Company and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who are stockholders of the Company immediately before the merger or consolidation; (2) acquisition of significant share ownership by the filing of a Schedule 13D or another form or schedule required to be filed under Sections 13D or 14D of the Securities Exchange Act of 1934, if the schedule discloses that the person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s voting securities; (3) during any period of two consecutive years individuals who constitute the Company’s Broad of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; or (4) the Company sells to a third party all or substantially all of the Company’s assets. Under the Employment Agreements of Messrs. Ryan, Carman, Tylus, Destribats and O’Donnell, during the twelve (12) month period beginning on the effective date of a Change-in-Control and continuing through the first anniversary of such date, the Executive’s may voluntarily terminate his employment under the Employment Agreement for any reason and such termination shall constitute termination With Good Reason. Under the SERP, each Executive will vest in his targeted retirement benefit upon a Change-in-Control. Under the SERP, if during the three (3) year period following a Change-in-Control, the employment of an Executive is involuntarily terminated (other than for Cause) or if the Executive’s employment is constructively terminated, the Executive shall be deemed to have retired as of his termination date at or after his or her normal retirement date (without regard to his or her actual age or service as of such date) and shall be entitled to receive a retirement benefit in an amount equal to the Executive’s target benefit (with the target benefit to be determined based on the final average earnings of the Executive as of the date of termination).The values disclosed in the table assume that each Executive is terminated Without Just Cause immediately after the Change-in-Control.

(16)

This figure represents the actuarial present value of the Executive’s SERP benefit, payable immediately, reduced by the Present Value of Accumulated Benefit disclosed in the Pension Benefits Table. Benefits are determined using the following assumptions: (i) lump sum values are determined under Internal Revenue Code Section 417(e) using 30 year Treasury Bond yield as of November 2005 of 4.73%; and (ii) no pre-retirement mortality.

(17)

This figure represents the reimbursement to the Executive for the 20% excise tax that will be required for the excess parachute payments, pursuant to IRS regulations and federal and state income and Medicare taxes on the Gross-Up Payment at the assumed aggregate rate of 43.0%. It is assumed, for this purpose, the amount of the Gross-Up Payment and the assumptions used to determine the amount, have been made by a certified public accounting firm.

Director Compensation

The following table presents certain information regarding the compensation of our directors.

2006 Director Compensation

Name	Fees Earned or Paid in Cash ($)(1)	Option Awards ($)(2)	Change in Pension Value And Nonqualified Deferred Compensation Earnings ($)(3)	All Other Compensation ($)(4)	Total ($)
James E. Bartolomei	61,900	14,416	3,147	20,950	100,413
Elbert G. Basolis, Jr.	50,100	14,416	15,693	25,050	105,259
Anthony M. Giampetro, M.D.	50,400	14,416	13,558	16,000	94,374
Gilbert W. Lugossy	52,800	14,416	8,574	13,200	88,990
Samuel D. Marrazzo	35,200	14,416	-	-	49,616
Louis R. Matlack, Ph.D.	48,600	14,416	11,166	16,000	90,182
George D. Muller	71,701	14,416	339	8,488	94,944
Martin Tuchman	48,500	14,416	9,724	24,250	96,890
Christopher S. Vernon(5)	31,500	14,416	6,294	13,750	65,960
Robert L. Workman	54,900	14,416	4,126	27,450	100,892

(1)	Includes amounts deferred under the Directors’ Deferred Fee Plan.

(2)

The amounts shown in this column reflect the dollar amount recognized for financial statement purposes for the fiscal year ended December 31, 2006 in accordance with FAS 123(R). The assumptions used in the calculation of this amount are included in Footnote 1 to our audited financial statements for the fiscal year ended December 31, 2006 included in our Annual Report on Form 10-K filed with the SEC on March 30, 2007. At December 31, 2006, our non-employee directors had outstanding, exercisable options to purchase shares of the Company’s common stock as follows: Mr. Bartolomei: 6,000 shares; Mr. Basolis: 12,000 shares; Dr. Giampetro: 6,000 shares; Mr. Lugossy 12,000 shares; Mr. Marrazzo: 9,000 shares; Mr. Matlack: 12,000 shares; Mr. Muller: 6,000 shares; Mr. Tuchman: 12,000 shares; Mr. Vernon: 12,000 shares; and Mr. Workman: 6,000 shares.

(3)	Represents the above-market earnings on balances under the Directors’ Deferred Fee Plan. Under the terms of the Directors’ Deferred Fee Plan, interest is credited at the prime rate plus two percent annually. During 2006, interest was credited at 9.25%.

(4)	Represents the Company’s match of 50% of fees deferred by directors under the Directors’ Deferred Fee Plan.

(5)	Mr. Vernon resigned from the Board of Directors on November 16, 2006.

Our non-employee directors are compensated through a combination of retainers and meeting fees. Directors who are also employees of the company do not receive additional compensation for service on the Board. Non-employee directors also participate in our 2003 Stock Option Plan for Non-Employee Directors, referred to as the “2003 Director Plan,” and are eligible to participate in our 2005 Equity Incentive Plan. In accordance with the terms of the 2003 Director Plan, each non-employee director on the day following our annual meeting of shareholders received an option to purchase 3,000 shares of the Company’s common stock. The level and mix of director compensation is revised by the Compensation Committee on a periodic basis to ensure consistency with the objectives of our overall compensation philosophy. Our review of director compensation also considers the increased liability of directors at publicly traded companies due to changes in the regulatory environment and the heightened scrutiny of corporate governance practices. Accordingly, certain directors, receive additional compensation to reflect their service as committee chairs. In addition to the foregoing, our directors may participate in our Directors’ Deferred Fee Plan, which is an elective deferred compensation program which allows each director to defer some or all of their current cash compensation. Directors who elect to defer current compensation receive a matching contribution from the Company of 50% of the amount deferred. Deferral account balances are credited with interest at the prime rate plus two percent.

During 2006, non-employee directors of the Company were paid $100 for each Company Board of Directors meeting attended which was not held on the same day as a Bank Board of Directors meeting, a fee of $1,000 per Bank Board of Directors meeting and an annual retainer fee of $20,000. With respect to meetings of committees of the Board of the Company or the Bank, non-employee members were paid $400 per meeting and chairpersons were paid $500 per meeting, with the exception of the members of the Audit Committee, who were paid $500 per month and the Audit Committee chairperson, who was paid $750 per meeting. On July 26, 2006, the board of directors of the Bank approved a monthly fee of $2,500 for services to be provided by Mr. Muller, as Chairman of the Bank’s Compliance Committee, which services are anticipated to include weekly meetings with management, and the board of directors of the Company approved an annual fee of $6,000 for services to be provided by Mr. Bartolomei as Chairman of the Company’s Audit Committee. The approved fees are in lieu of the additional fees which would have been payable to Messrs. Muller and Bartolomei as Chairman of the Compliance Committee and Audit Committee, respectively.

Compensation Committee Interlocks and Insider Participation

George D. Muller, Elbert G. Basolis, Jr., James E. Bartolomei and Anthony M. Giampetro, M.D. served as members of the Compensation Committee during 2006. None of Dr. Giampetro and Messrs. Basolis, Bartolomei and Muller have served as executives of the Company. There are no compensation committee interlocks between the Company and any other entity involving the Company’s or such entity’s executive officers or board members.

Compensation Committee Report

The compensation committee of our board of directors has reviewed and discussed the “Compensation Discussion and Analysis” set forth above with our management and, based on such review and discussions, the compensation committee recommended to our board of directors that the “Compensation Discussion and Analysis” set forth above be included in this annual report on Form 10-K.

SUBMITTED BY THE COMPENSATION COMMITTEE

George D. Muller, Chairperson

Anthony M. Giampetro, M.D., Vice Chairperson

James E. Bartolomei

Elbert G. Basolis, Jr.

March 26, 2007

The foregoing Compensation Committee Report shall not be deemed to be incorporated by reference into any filing made by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, notwithstanding any general statement contained in any such filing incorporating this annual report on Form 10-K by reference, except to the extent the Company incorporates such report by specific reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Equity Compensation Plan Information

The following table sets forth information, as of the end of the fiscal year ended December 31, 2006, with respect to compensation plans under which the Company is authorized to issue shares of Common Stock.

Plan Category	Number of Shares to Be Issued upon Exercise of Outstanding Options, Warrants and Rights		Weighted-average Exercise Price of Outstanding Options, Warrants and Rights	Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column)
Equity compensation plans approved by security holders(1)	755,335	$	18.13	708,554
Equity compensation plans not approved by security holders	—		—	—
Total	755,335	$	18.13	708,554

____________

(1)	These plans consist of the Yardville National Bancorp 1997 Stock Option Plan, the 2003 Director Plan and the 2005 Equity Incentive Plan.

Security Ownership of Certain Beneficial Owners and Management

The following table shows, as of March 22, 2007, the number of shares of Common Stock beneficially owned by:

·	each person who is known by us to be the beneficial owner of more than five percent of the Common Stock outstanding;

·	each director;

·	each named executive officer (as that term is defined on page 13 of this annual report, under the heading “Named Executive officers”); and

·	our directors and all of our executive officers as a group.

Name of Beneficial Owner (1)	Number of Shares Beneficially Owned (2)(3)(4)	Percent of Common Stock (5)
Lawrence B. Seidman (6)	993,435	8.97%
Private Capital Management (7)	553,658	5.00%
Jeffrey L. Gendell (8)	743,086	6.71%
Jay G. Destribats (9)	194,384	1.74%
Patrick M. Ryan (10)	415,822	3.71%
F. Kevin Tylus (11)	228,417	2.06%
Stephen F. Carman (12)	84,567	*
Daniel J. O’Donnell	7,078	*
James E. Bartolomei	10,131	*
Elbert G. Basolis, Jr. (13)	64,002	*
Anthony M. Giampetro, M.D. (14)	64,919	*
Gilbert W. Lugossy (15)	25,579	*
Samuel D. Marrazzo	37,491	*
Louis R. Matlack, Ph.D. (16)	60,315	*
George D. Muller (17)	11,480	*
Martin Tuchman (18)	588,591	5.28%
Robert L. Workman (19)	10,472	*
Directors and executive officers as a group (22 persons) (20)	1,706,984	14.65%

* Less than 1%

(1)	Unless otherwise indicated, the address of each person identified below is c/o Yardville National Bancorp, 2465 Kuser Road, Hamilton, New Jersey 08690.

(2)

The number of beneficially owned shares includes shares over which the named person, directly or indirectly through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote, or direct the voting of, such security; or investment power, which includes the power to dispose of, or to direct the disposition of, such security. All shares of a named person are deemed to be subject to that person’s sole voting and investment power unless otherwise indicated.

(3)

Includes shares subject to options granted under the Company’s stock option plans exercisable within sixty (60) days of March 22, 2007, as follows: Mr. Destribats - 91,000 shares; Mr. Ryan - 123,782 shares; Mr. Tylus - 25,000 shares; Mr. Carman - 52,800 shares; Mr. O’Donnell - 6,000 shares; Mr. Bartolomei - 6,000 shares; Mr. Basolis, Jr. - 12,000 shares; Dr. Giampetro - 6,000 shares; Mr. Lugossy - 12,000 shares; Mr. Marrazzo - 9,000 shares; Mr. Matlack - 12,000 shares; Mr. Muller - 6,000 shares; Mr. Tuchman - 12,000 shares; Mr. Workman - 6,000 shares, and all directors and executive officers as a group — an aggregate of 524,732 shares.

(4)

Includes shares in the Yardville National Bank Employee Stock Ownership Plan Trust (the “ESOP”) as follows: Mr. Destribats - 4,252 shares for his own account (and 48,132 shares over which Mr. Destribats, as a trustee of the ESOP, shares voting rights with Mr. Ryan and Mr. Tylus); Mr. Ryan - 4,252 shares for his own account (and 48,132 shares over which Mr. Ryan, as a trustee, shares voting rights with Mr. Destribats and Mr. Tylus); Mr. Tylus - 222 shares for his own account (and 48,132 shares over which Mr. Tylus, as a trustee shares voting rights with Mr. Destribats and Mr. Ryan) Mr. Carman - 3,455 shares for his own account; and Mr. O’Donnell - 1,120 shares for his own account;

(5)

Shares of the Common Stock which a person has a right to acquire pursuant to the exercise of stock options and warrants held by that person that are exercisable within 60 days of March 22, 2007 are deemed to be outstanding for the purpose of computing the percentage ownership of that person, but are not deemed outstanding for computing the percentage ownership of any other person.

(6)	Information with respect to beneficial ownership is based on a Schedule 13D/A filed with the SEC on February 15, 2007 by Lawrence B. Seidman and certain of his affiliates. The address of Lawrence B. Seidman is 100 Misty Lane, Parsippany, New Jersey 07054.

(7)	Information with respect to beneficial ownership is based on a Schedule 13G/A filed with the SEC on February 14, 2007. Private Capital Management’s address is 8889 Pelican Bay Blvd., Naples, Florida 34108.

(8)	Information with respect to beneficial ownership is based on a Form 13F filed with the SEC on February 13, 2007 by Jeffrey L. Gendell and certain of his affiliates. The business address of Jeffrey L. Gendell is 55 Railroad Avenue, 3rd Floor, Greenwich, Connecticut 06830.

(9)	Includes 3,000 shares held by Mr. Destribats’ spouse.

(10)	Includes 1,287 shares held by Mr. Ryan as custodian for his children, 55 shares held by Mr. Ryan’s son, and 6,224 shares held by Mr. Ryan’s spouse as to which Mr. Ryan disclaims beneficial ownership.

(11)	Includes 143,233 shares held jointly with Mr. Tylus’ spouse, 1,584 shares owned by Mr. Tylus’ spouse as to which Mr. Tylus disclaims beneficial ownership and 3,381 shares held by Mr. Tylus as custodian for his children.

(12)	Includes 3,037 shares held jointly with Mr. Carman’s spouse and 225 shares held by Mr. Carman as custodian for his child.

(13)	Includes 24,448 shares held as executor for the estate of Elbert G. Basolis, Sr. and 94 shares held by Mr. Basolis, Jr. and his spouse as custodians for their children.

(14)	Includes 9,986 shares held in the name of Bellarmino-Giampetro-Scheuerman pension plan.

(15)	Includes 3,234 shares held jointly with Mr. Lugossy’s spouse.

(16)	Includes 6,199 shares held in the Matlack Family Trust under which Mr. Matlack is a co-trustee.

(17)	Includes 400 shares held jointly with Mr. Muller’s spouse.

(18)	Includes 2,000 shares held by the Tuchman Foundation, 15,300 shares in a retirement account in the name of Mr. Tuchman’s spouse and 50,000 shares issuable upon exercise of stock warrants held by Mr. Tuchman. Mr. Tuchman’s address is 211 College Road East, Princeton, New Jersey 08540.

(19)	Includes 1,836 shares held by Mr. Workman’s spouse and 200 shares held by Mr. Workman’s son.

(20)	Includes executive officers as in effect on March 22, 2007 and does not include changes in management since that date.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The Bank has made, and it is expected that it will continue to make in the future, loans to our directors and executive officers and their family members, and to firms, corporations, and other entities in which they and their family members maintain interests. None of these loans were nonaccrual, past due, restructured or potential problems at December 31, 2006. All such loans were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Company or the Bank and, in the opinion of management, did not involve more than the normal risk of collectibility or present other unfavorable features.

The following is a summary of additional material relationships or transactions with the Company’s directors, nominees for director, executive officers and their affiliates.

In April 2000, the Bank signed a five-year lease with 3 five-year renewal options for its branch in Marrazzo’s Thriftway in West Trenton, New Jersey. The lease automatically renews unless the Company provides written notice to the landlord at least 90 days prior to the end of the initial or renewal term. The Company evaluates several factors in determining whether to renew a branch lease including, the financial performance of the branch, cost of the new lease in relation to current rates for comparable properties as well as availability of superior locations in the immediate market area. The current term expires March 31, 2010. The aggregate amount of all periodic payments due on or after January 1, 2006 through the expiration of the current term is $105,850 not including any additional common area maintenance expenses. The property is owned by Serenity Point LLC, a limited liability company of which Mr. Marrazzo, a director of the Company and the Bank, is the sole member. Mr. Marrazzo also owns and operates Marrazzo’s Thriftway. The lease was executed prior to Mr. Marrazzo becoming a member of the Board.

In January 2005, the Bank signed a five-year lease with two five-year renewal options for its maintenance department center. To renew the lease, the Company must provide written notice to the landlord at least 3 months prior to the expiration date of the initial or renewal term. The Company evaluates several factors in determining whether to renew this lease including the need for a maintenance center and costs of comparable locations in relation to the costs of the existing location. This property is owned by Lalor Storage LLC, a limited liability company of which Christopher S. Vernon, a former director of the Company and the Bank, is a 75% owner. The aggregate amount of all periodic payments due on or after January 1, 2006 through the expiration of the current term is approximately $244,000 inclusive of related common area maintenance expenses. On November 16, 2006, Director Vernon voluntarily resigned from the boards of director of both the Company and the Bank.

In January 2006, the Bank signed a one-year lease effective December 1, 2005 for a temporary location for its Cream Ridge Branch located in Plumsted Township, New Jersey. This temporary lease terminated upon the Bank’s move to a full service branch located on a pad site adjacent to the temporary location. Both facilities are owned by Vernon Holdings 101837 LLC. Christopher S. Vernon, a former director of the Company and the Bank, has a 100% ownership interest in Vernon Holdings 101837 LLC. The aggregate amount of all periodic payments due on or after January 1, 2006 through the expiration of the temporary lease was $31,350 including additional common area maintenance expenses. On September 15, 2006 the Bank signed a lease with Vernon Holdings 101837, LLC for its permanent branch location in the Cream Ridge Mews Shopping Center in Plumsted Township, New Jersey. This lease provides for an initial term of ten years, as well as two options for renewal terms of five years each. To renew the lease, the Company must provide written notice to the landlord at least 6 months prior to the expiration date of the initial or renewal term. The Company evaluates several factors in determining whether to renew a branch lease including, the financial performance of the branch, cost of the new lease in relation to current rates for comparable properties as well as availability of superior locations in the immediate market area. During the first year of the lease, the Bank is obligated to pay monthly fixed rent of $6,250. In each subsequent lease year during the initial term, the fixed rent will increase in proportion to the Consumer Price Index and in each lease year during any renewal terms, will increase by three percent. Throughout the initial term and any renewal terms, the Bank shall be obligated to pay or reimburse the landlord for all real estate taxes and insurance premiums allocated to the leased premise as well as utilities and maintenance expenses. The aggregate amount of all periodic payments due on or after January 1, 2006 through the expiration of the existing term is approximately $899,250 not including a share of common area expenses. On November 16, 2006, Director Vernon voluntarily resigned from the boards of director of both the Company and the Bank.

In January 2005, Patrick L. Ryan, the son of Patrick M. Ryan, the Chief Executive Officer of the Holding Company and the Bank, joined the Bank in the position of Senior Vice President and Strategic Planning Officer. In November 2006, Patrick L. Ryan was promoted to First Senior Vice President and Market Manager. His employment agreement with the Bank includes a base salary of $152,000 together with benefits consistent with those provided to other officers of the same level.

Review, Approval or Ratification of Transactions with Related Persons

The Company’s policies and procedures for the review, approval, or ratification of transactions with related persons are divided into two categories based on the type of transaction. All loans to related persons are covered by written policies and procedures designed to meet the requirements of Federal Reserve Board Regulation O. All other transactions with related persons are covered by separate written policies and procedures.

The policies and procedures regarding loans to related persons, or to firms, corporations, and other entities in which they maintain interests, are designed to ensure that such loans are subject to the same credit standards and terms as loans to unrelated persons, comply with all regulatory limits and reporting requirements and do not involve more than the normal risk of repayment or provide other unfavorable features. The Bank’s board of directors is responsible for applying such policies and procedures.

The policies and procedures regarding all other transactions with related persons, or to firms, corporations, and other entities in which they maintain interests, are designed to ensure that such transactions are legal, are beneficial to the Company, pose no ethical questions or conflicts of interest and are consistent with safe and sound banking practices. With respect to fees or other payments to persons, or to firms, corporations, and other entities in which they maintain interests, such fees or payments must be appropriate based on the type, level, quality and value of the goods or services being received, compensate the provider only for goods and services that meet legitimate needs of the Company and be made only to providers with the requisite expertise. The audit committee is responsible for applying the policies and procedures regarding all transactions other than loans.

As noted above, in November 2006, Patrick L. Ryan was promoted to First Senior Vice President and Market Manager. His promotion and salary were reviewed in accordance with the Bank’s regular procedures for promotions and salary increases for officers of his level. The audit committee did not review his promotion or salary increase.

Director Independence

Our Board of Directors has determined that directors James E. Bartolomei, Elbert G. Basolis, Jr., Anthony M. Giampetro, Gilbert W. Lugossy, Samuel D. Marrazzo, Louis R. Matlack, George D. Muller, Martin Tuchman and Robert L. Workman are independent in compliance with Nasdaq listing standards. In addition, each member of our audit committee was determined to be independent in compliance with the additional, more stringent requirements applicable to audit committee members under Nasdaq listing standards. The members of the Board of Directors who have been determined not to be independent are Jay G. Destribats, Patrick M. Ryan and F. Kevin Tylus.

Item 14.

Principal Accounting Fees and Services.

The following table presents the aggregate fees, billed or expected to be billed, for the years ended December 31, 2006 and 2005 for professional audit services rendered by KPMG LLP for the audit of the Company’s annual financial statements for those years. Also presented are fees billed for other services rendered by KPMG LLP.

Fee Category	2006 Fees ($)	2005 Fees ($)
Audit Fees (1)	650,000	471,000
Audit-Related Fees (2)	30,000	25,000
Tax Fees (3)	—	—
All Other Fees (4)	7,500	7,500
Total Fees	687,500	503,500

(1)

Audit Fees consist of fees billed for professional services rendered by KPMG LLP for the audits of the Company’s financial statements and internal control over financial reporting as of and for the fiscal years ended December 31, 2006 and 2005 and the review of the Company’s quarterly reports on Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.

(2)

Audit-Related Fees consist of fees billed for professional services rendered for audit-related services including consultations on other financial accounting and reporting related matters.

(3) No tax services were rendered by KPMG LLP.

(4) All Other Fees consist of fees billed for all other services not included above.

The Audit Committee’s Charter includes a formal policy concerning the pre-approval of audit and non-audit services (including the fees and terms thereof) to be provided by the independent registered accounting firm of the Company, subject to the de minimis exception for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, as amended, which are approved by the Audit Committee prior to the completion of the audit. The policy requires that all services to be performed by KPMG LLP, including audit services, audit-related services and permitted non-audit services, be pre-approved by the Audit Committee. The Chairperson of the Audit Committee is authorized to execute any engagement letter or agreement with KPMG LLP for and on behalf of the Company. All services rendered by KPMG LLP are permissible under applicable laws and regulations, and the Audit Committee pre-approved all audit, audit-related and non-audit services performed by KPMG LLP during fiscal 2006. The Audit Committee has considered whether the provision of services after the audit services (as specified above) is compatible with maintaining KPMG LLP’s independence and has determined that provision of such services has not adversely affected KPMG LLP’s independence.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	YARDVILLE NATIONAL BANCORP

	By:	Patrick M. Ryan
		Patrick M. Ryan
		Chief Executive Officer
May 10, 2007

Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Jay G. Destribats	Chairman of the Board and Director	May 10, 2007
Jay G. Destribats

/s/ Patrick M. Ryan	Director and Chief Executive Officer	May 10, 2007
Patrick M. Ryan

/s/ F. Kevin Tylus	Director, President and Chief Operating Officer	May 10, 2007
F. Kevin Tylus

/s/ Stephen F. Carman	Vice President, Treasurer, Principal Financial Officer and Principal	May 10, 2007
Stephen F. Carman	Accounting Officer

/s/ James E. Bartolomei	Director	May 10, 2007
James E. Bartolomei

/s/ Elbert G. Basolis, Jr.	Director	May 10, 2007
Elbert G. Basolis, Jr.

/s/ Anthony M. Giampetro	Director	May 10, 2007
Anthony M. Giampetro

/s/ Gilbert W. Lugossy	Director	May 10, 2007
Gilbert W. Lugossy

/s/ Samuel D. Marrazzo	Director	May 10, 2007
Samuel D. Marrazzo

/s/ Louis R. Matlack	Director	May 10, 2007
Louis R. Matlack

/s/ George D. Muller	Director	May 10, 2007
George D. Muller

/s/ Martin Tuchman	Director	May 10, 2007
Martin Tuchman

/s/ Robert L. Workman	Director	May 10, 2007
Robert L. Workman

EXHIBIT INDEX

Exhibit Number		Description
3.1	(A)	Restated Certificate of Incorporation of the Company, as corrected by the Certificate of Correction thereto filed on July 6, 1995 and as amended by the Certificate of Amendment thereto filed on March 6, 1998.
3.2	(B)	Certificate of Amendment to the Restated Certificate of Incorporation of the Company filed on June 6, 2003.
3.3	(C)	Amended and Restated By-Laws of the Company
4.1	(D)	Specimen Share of Common Stock
4.2		The Registrant will furnish to the Commission upon request copies of the following documents relating to the Registrant’s Series A 9.50% Junior Subordinated Deferrable Interest Debentures due June 22, 2030: (i) Amended and Restated Declaration of Trust dated June 23, 2000, among the Registrant, The Bank of New York, as property trustee, and the Administrative Trustees of Yardville Capital Trust II; (ii) Indenture dated as of June 23, 2000, between the Registrant and The Bank of New York, as trustee, relating to the Registrant’s Series A 9.50% Junior Subordinated Deferrable Interest Debentures due June 22, 2030; and (iii) Series A Capital Securities Guarantee Agreement dated as of June 23, 2000, between the Registrant and The Bank of New York, as trustee, relating to the Series A Capital Securities of Yardville Capital Trust II.
4.3		The Registrant will furnish to the Commission upon request copies of the following documents relating to the Registrant’s Series A 10.18% Junior Subordinated Deferrable Interest Debentures due June 8, 2031: (i) Amended and Restated Declaration of Trust dated March 28, 2001, among the Registrant, Wilmington Trust Company, as property trustee, and the Administrative Trustees of Yardville Capital Trust III; (ii) Indenture dated as of March 28, 2001, between the Registrant and Wilmington Trust Company, as trustee, relating to the Registrant’s Series A 10.18% Junior Subordinated Deferrable Interest Debentures due June 8, 2031; and (iii) Series A Capital Securities Guarantee Agreement dated as of March 28, 2001, between the Registrant and Wilmington Trust Company, as trustee, relating to the Series A Capital Securities of Yardville Capital Trust III.
4.4		The Registrant will furnish to the Commission upon request copies of the following documents relating to the Registrant’s Floating Rate Junior Subordinated Deferrable Interest Debentures due March 1, 2033: (i) Amended and Restated Declaration of Trust dated February 19, 2003, among the Registrant, Wilmington Trust Company, as property trustee, and the Administrative Trustees of Yardville Capital Trust IV; (ii) Indenture dated as of February 19, 2003, between the Registrant and Wilmington Trust Company, as trustee, relating to the Registrant’s Floating Rate Junior Subordinated Deferrable Interest Debentures due March 1, 2033; and (iii) Capital Securities Guarantee Agreement dated as of February 19, 2003, between the Registrant and Wilmington Trust Company, as trustee, relating to the Floating Rate Capital Securities of Yardville Capital Trust IV.
4.5		The Registrant will furnish to the Commission upon request copies of the following documents relating to the Registrant’s Floating Rate Junior Subordinated Deferrable Interest Debentures due October 8, 2033: (i) Amended and Restated Declaration of Trust among the Registrant, Wilmington Trust Company, as property trustee, and the Administrative Trustees of Yardville Capital Trust V; (ii) Indenture between the Registrant and Wilmington Trust Company, as trustee, relating to the Registrant’s Floating Rate Junior Subordinated Deferrable Interest Debentures due October 8, 2033; and (iii) Capital Securities Guarantee Agreement between the Registrant and Wilmington Trust Company, as trustee, relating to the Floating Rate Capital Securities of Yardville Capital Trust V.
4.6		The Registrant will furnish to the Commission upon request copies of the following documents relating to the Registrant’s Floating Rate Junior Subordinated Deferrable Interest Debentures due July 23, 2034: (i) Amended and Restated Declaration of Trust among the Registrant, Wilmington Trust Company, as property trustee, and the Administrative Trustees of Yardville Capital Trust VI; (ii) Indenture between the Registrant and Wilmington Trust Company, as trustee, relating to the Registrant’s Floating Rate Junior Subordinated Deferrable Interest Debentures due July 23, 2034; and (iii) Capital Securities Guarantee Agreement between the Registrant and Wilmington Trust Company, as trustee, relating to the Floating Rate Capital Securities of Yardville Capital Trust VI.

E - 1

Exhibit Number		Description
10.1	(E)	Employment Contract between the Bank and Kathleen O. Blanchard*
10.2	(F)	Employment Agreement among Registrant, the Bank, and Stephen F. Carman*
10.3	(F)	Employment Agreement among Registrant, the Bank, and Jay G. Destribats*
10.4	+	Employment Agreement between the Bank and Edward J. Dietzler*
10.5	(E)	Employment Contract between the Bank and Brian K. Gray*
10.6	(E)	Employment Contract between the Bank and Howard N. Hall*
10.7	(F)	Employment Agreement among Registrant, the Bank, and Timothy J. Losch*
10.8	(G)	Employment Contract between the Bank and Daniel J. O’Donnell*
10.9	(H)	Employment Contract between the Bank and Joanne C. O’Donnell*
10.10	(F)	Employment Agreement among Registrant, the Bank, and Patrick M. Ryan*
10.11	+	Employment Agreement between the Bank and Patrick L. Ryan*
10.12	(E)	Employment Contract between the Bank and John P. Samborski*
10.13	(I)	Employment Agreement among Registrant, the Bank, and F. Kevin Tylus*
10.14	(F)	Employment Agreement among Registrant, the Bank, and Stephen R. Walker*
10.15	(E)	Second Amended and Restated Supplemental Executive Retirement Plan*
10.16	(B)	Amendment to the Second Amended and Restated Supplemental Executive Retirement Plan
10.17	(J)	[Second] Amendment to the Second Amended and Restated Supplemental Executive Retirement Plan
10.18	+	Amendment to the Second Amended and Restated Supplemental Executive Retirement Plan
10.19	(A)	1988 Stock Option Plan*
10.20	(K)	Directors’ Deferred Fee Plan*
10.21	(L)	1997 Stock Option Plan and Form of Stock Option Agreement*
10.22	+	Amended and Restated Yardville National Bank Employee Stock Ownership Plan*
10.23	(M)	Yardville National Bancorp 2003 Stock Option Plan for Non-Employee Directors*
10.24	+	Yardville National Bancorp 2003 Stock Option Plan for Non-Employee Directors — Form of Stock Option Agreement*
10.25	(N)	2005 Equity Incentive Plan*
10.26	(E)	Real property lease between Crestwood Construction, LLC and the Bank dated May 25, 1998
10.27	+	Real property lease between Danch Farm, LLC and the Bank dated January 18, 2006
10.28	(O)	Real property sublease between the Bank and Samuel Marrazzo and Margaret Marrazzo, predecessors in interest to Serenity Point LLC, for our branch located at 1400 Parkway Avenue, Ewing, New Jersey
10.29	(E)	Real property lease between the Bank and Lalor Storage LLC for our maintenance center
10.30	(B)	Real property lease between the Bank and Vernon Holdings 101837 LLC for the lease of our temporary location at 403 Route 539, Cream Ridge, New Jersey
10.31	(P)	Real property lease between the Bank and Vernon Holdings 101837 LLC for the lease of our branch located at 403 Route 539, Cream Ridge, New Jersey
10.32	(E)	Yardville National Bank’s Change in Control Severance Compensation Plan*
21	+	List of Subsidiaries of the Registrant
23	+	Consent of KPMG, LLP
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification of Vice President and Treasurer
32.1	+	Section 1350 Certification of Chief Executive Officer
32.2	+	Section 1350 Certification of Vice President and Treasurer
99.1	(Q)	Agreement by and between the Bank and the Office of the Comptroller of the Currency

E - 2

Exhibit Number	Description
(A)	Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, filed with the SEC on May 2, 2003
(B)	Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, filed with the SEC on March 16, 2006
(C)	Incorporated by reference to the Registrant’s Current Report on Form 8-K dated January 25, 2006, filed with the SEC on January 31, 2006
(D)	Incorporated by reference to the Registrant’s Registration Statement on Form SB-2 (Registration No. 33-78050)
(E)	Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed with the SEC on March 31, 2005
(F)	Incorporated by reference to Amendment No. 1 to the Registrant’s Quarterly Report on Form 10-Q/A for the fiscal quarter ended September 30, 2004, filed with the SEC on December 13, 2004
(G)	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2005, filed with the SEC on November 9, 2005
(H)	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2005, filed with the SEC on August 15, 2005
(I)	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004, filed with the SEC on November 9, 2004
(J)	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2006, filed with the SEC on August 9, 2006
(K)	Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the SEC on March 15, 2004
(L)	Incorporated by reference to the Registrant’s Registration Statement on Form S-8 (Registration No. 333-28193), filed with the SEC on May 30, 1997
(M)	Incorporated by reference to the Company’s Definitive Proxy Statement on Schedule 14A for the 2003 Annual Meeting of Shareholders, filed with the SEC on April 30, 2003
(N)	Incorporated by reference to the Company’s Definitive Proxy Statement on Schedule 14A for the 2005 Annual Meeting of Shareholders, filed with the SEC on May 6, 2005
(O)	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2004, filed with the SEC on May 10, 2004
(P)	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006, filed with the SEC on November 9, 2006
(Q)	Incorporated by reference to the Registrant’s Current Report on Form 8-K dated August 31, 2005, filed with the SEC on September 2, 2005
*	Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10-K.
+	Previously filed.

E - 3

Date:	May 10, 2007	By:	Patrick M. Ryan
		Name:	Patrick M. Ryan
		Title:	Chief Executive Officer