-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QTStOl6Ot6bOSIroWpPV+gaVG5ebOjK5tucQDsG0XxWuzz17au6kgwl/whIg2QYm S7elLIXwMYwq1yveb5ojZg== 0000950116-03-000168.txt : 20030128 0000950116-03-000168.hdr.sgml : 20030128 20030128142047 ACCESSION NUMBER: 0000950116-03-000168 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030127 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: YARDVILLE NATIONAL BANCORP CENTRAL INDEX KEY: 0000787849 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 222670267 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26086 FILM NUMBER: 03527586 BUSINESS ADDRESS: STREET 1: 3111 QUAKERBRIDGE RD CITY: MERCERVILLE STATE: NJ ZIP: 08619 BUSINESS PHONE: 6095855100 MAIL ADDRESS: STREET 1: 3111 QUAKERBRIDGE RD CITY: MERCERVILLE STATE: NJ ZIP: 08619 8-K 1 eight-k.txt 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): January 27, 2003 YARDVILLE NATIONAL BANCORP (Exact name of issuer as specified in charter) NEW JERSEY 0-26086 22-2670267 (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation or file Identification Organization) number) Number) 2465 KUSER ROAD HAMILTON, NEW JERSEY 08690 (Address of principal executive offices) (609) 585-5100 (Registrant's telephone number, including area code) Item 5 - Other Events. As is more fully described in the attached press release that is incorporated herein by reference, on January 27, 2003, Yardville National Bancorp reported financial results for the fourth quarter and fiscal year ended December 31, 2002. Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits Exhibit No. Description ----------- ----------- 99 Yardville National Bancorp Press Release dated January 27, 2003 Signatures Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. YARDVILLE NATIONAL BANCORP Date: January 27, 2003 By: /s/ Stephen F. Carman --------------------- Stephen F. Carman Vice President and Treasurer Index to Exhibits Exhibit No. Description - ----------- ----------- 99 Yardville National Bancorp Press Release dated January 27, 2003 EX-99 3 ex99.txt EXHIBIT 99 Exhibit 99 L.G. ZANGANI, LLC (908)788-9660 Fax: (908)788-4024 -------------------------------- Nine Main Street, Flemington, NJ 08822 E-mail: office@zangani.com Web site: http://www.zangani.com For Release: IMMEDIATELY Contact: Stephen F.Carman, EVP/CFO (609) 631-6222 Kevin Nally, LG Zangani LLC (908) 788-9660 YARDVILLE NATIONAL BANCORP REPORTS 64% INCREASE IN 2002 EARNINGS AND DECLARES QUARTERLY CASH DIVIDEND YARDVILLE, N.J., January 27, 2003 ..... Yardville National Bancorp (NASDAQ: YANB) today announced that net income for 2002 increased $5.4 million to $14.0 million, a 63.7% rise from the $8.6 million reported in 2001. Earnings per share on a diluted basis increased 51.4% to $1.68 per share in 2002 from $1.11 in the prior year. Management noted that a significant portion of the increase in 2002 net income and earnings per share was attributable to an increase in net interest income of 28.6% and the $2.2 million expense associated with the early retirement of debt in the fourth quarter of 2001. Earnings per share on a diluted basis increased 29.2% in 2002 compared to 2001, excluding the early retirement of debt expense. For the quarter ended December 31, 2002, net income increased to $3.3 million from the $934,000 reported in the same period a year ago. Earnings per share on a diluted basis were $0.38 for the fourth quarter of 2002, compared with $0.12 per diluted share for the fourth quarter of 2001. The early retirement of debt expense in the fourth quarter of 2001 adversely impacted quarterly diluted earnings per share by $0.18. "This was a very eventful year for us," said President and Chief Executive Officer Patrick M. Ryan. "We successfully completed a common stock offering in December 2002 which, net of offering expenses, raised approximately $34 million. YNB is continuing to expand in our northern region, which includes Hunterdon and Middlesex counties in New Jersey, and we plan to open our first branch in Somerset County, New Jersey in April or May. In addition, new products were introduced in the fourth quarter, and we continued work on improving our net interest margin," he added. YNB maintained its excellent growth trend in both retail deposit generation and commercial loans in the concluding quarter of 2002. Total deposits at December 31, 2002 increased to $1.27 billion, a 16.4% increase over total deposits of $1.09 billion at December 31, 2001. At December 31, 2002, total loans outstanding increased 18.6% to total $1.20 billion compared with $1.01 billion a year ago. Management believes that overall loan quality remains strong. Nonperforming assets decreased $132,000 to $7.3 million at December 31, 2002 compared to $7.4 million at the end of 2001. As a percent of total assets, nonperforming assets decreased to 0.33% at December 31, 2002 compared to 0.38% at December 31, 2001. The allowance for loan losses at December 31, 2002 totaled $16.8 million, or 1.41% of total loans, covering 268.1% of total nonperforming loans. This compares to the allowance for loan losses at December 31, 2001 of $13.5 million, or 1.34% of total loans, covering 264.2% of total nonperforming loans. The increase in the allowance for loan losses as a percent of total loans in 2002 was primarily attributable to the growth in the loan portfolio. -MORE- YARDVILLE NATIONAL BANCORP REPORTS 64% INCREASE IN 2002 EARNINGS Page 2 "We are using our full range of capabilities to attract new customers and serve existing ones in Mercer, Hunterdon, Burlington, Middlesex, Bucks, and soon Somerset County, as well as other targeted markets," explained YNB Chairman Jay G. Destribats. "Our recently upgraded Internet banking site has provided enhanced services to existing and new customers, and we believe our new cash management products will attract more local businesses." As part of its ongoing strategic positioning of the institution's investment portfolio in relation to changes in the interest rate environment, YNB realized $3.1 million in net securities gains in 2002. This compares with net securities gains of $3.2 million for 2001. YNB's capital ratios at December 31, 2002 continued to exceed the minimum regulatory requirements in order to be considered a well-capitalized institution. YNB also announced that its Board of Directors declared a cash dividend of $0.115 per share payable on February 24, 2003 to shareholders of record as of February 10, 2003. This represents an increase in the cash dividend of 4.5% from the previous quarter of $0.11 and marks the 37th consecutive quarter in which YNB has paid a cash dividend to its shareholders. YNB paid total cash dividends of $0.44 in 2002. With $2.2 billion in assets as of December 31, 2002, YNB serves individuals and small- to mid-sized businesses in the dynamic New York City-Philadelphia corridor through a network of 19 branches in Mercer, Hunterdon, Burlington and Middlesex counties in New Jersey and Bucks County in Pennsylvania. Headquartered in Mercer County for 78 years, YNB emphasizes commercial lending and offers a broad range of lending, deposit and other financial products and services. Note Regarding Forward-Looking Statements This press release and other statements made from time to time by our management contain express and implied statements relating to our future financial condition, results of operations, plans, objectives, performance, and business, which are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These may include statements that relate to, among other things, profitability, liquidity, loan loss reserve adequacy, plans for growth, interest rate sensitivity, market risk, regulatory compliance, and financial and other goals. Actual results may differ materially from those expected or implied as a result of certain risks and uncertainties, including, but not limited to, the results of our efforts to implement our retail strategy, adverse changes in our loan portfolio and the resulting credit risk-related losses and expenses, interest rate fluctuations and other economic conditions, our ability to attract core deposits, continued relationships with major customers, competition in product offerings and product pricing, adverse changes in the economy that could increase credit-related losses and expenses, compliance with laws, regulatory requirements and Nasdaq standards, other risks and uncertainties detailed from time to time in our filings with the SEC, as well as other risks and uncertainties detailed from time to time in statements made by our management. L.G. Zangani, LLC provides financial public relations service to the Company. As such, L.G. Zangani, LLC and/or its officers, agents and employees, receives remuneration for public relations and/or other services performed for the Company. This remuneration may take the form of cash, capital stock in the Company, or warrants and/or options to purchase stock in the Company. Yardville National Bancorp Summary of Financial Information (Unaudited)
Three Months Ended Twelve Months Ended December 31, December 31, - ------------------------------------------------------------------------------------------------------------------------------------ (in thousands, except per share amounts) 2002 2001 2002 2001 - ------------------------------------------------------------------------------------------------------------------------------------ Stock Information: Weighted average shares outstanding: Basic 8,409 7,980 8,124 7,601 Diluted 8,621 8,021 8,319 7,678 Shares outstanding end of period 10,396 8,043 Earnings per share: Basic $ 0.39 $ 0.12 $ 1.72 $ 1.13 Diluted 0.38 0.12 1.68 1.11 Dividends paid per share 0.11 0.11 0.44 0.44 Book value per share 14.08 11.68 Closing price per share 17.24 12.50 Closing price to book 122.44 % 107.02 % Key Ratios: Return on average assets 0.60 % 0.19 % 0.67 % 0.48 % Return on average stockholders' equity 12.24 3.78 13.68 9.86 Net interest margin (tax equivalent) 2.33 2.07 2.36 2.17 Equity-to-assets at period end 6.54 4.80 Tier 1 leverage ratio (1) 8.16 6.92 Asset Quality Data: Net loan charge-offs $ 794 $ 144 $ 1,096 $ 1,317 Nonperforming assets as a percentage of total assets 0.33 % 0.38 % Allowance for loan losses at period end as a percent of: Total loans 1.41 1.34 Nonperforming loans 268.11 264.23 Nonperforming assets at period end: Nonperforming loans $ 6,274 $ 5,125 Other real estate 1,048 2,329 ------------ ------------ Total nonperforming assets $ 7,322 $ 7,454 ============ ============
(1) Tier 1 leverage ratio is Tier 1 capital to adjusted average assets Yardville National Bancorp and Subsidiaries Consolidated Statements of Income (Unaudited)
Three Months Ended Twelve Months Ended December 31, December 31, - ------------------------------------------------------------------------------------------------------------------------------------ (in thousands, except per share amounts) 2002 2001 2002 2001 - ------------------------------------------------------------------------------------------------------------------------------------ INTEREST INCOME: Interest and fees on loans $ 20,190 $ 17,757 $ 75,395 $ 70,408 Interest on deposits with banks 16 24 60 171 Interest on securities available for sale 9,455 10,071 40,498 39,866 Interest on investment securities: Taxable 59 479 690 3,722 Exempt from Federal income tax 594 567 2,345 2,016 Interest on Federal funds sold 206 397 1,157 2,765 - ------------------------------------------------------------------------------------------------------------------------------------ Total Interest Income 30,520 29,295 120,145 118,948 - ------------------------------------------------------------------------------------------------------------------------------------ INTEREST EXPENSE: Interest on savings account deposits 2,742 2,603 11,228 9,931 Interest on certificates of deposit of $100,000 or more 1,241 1,623 5,184 7,581 Interest on other time deposits 4,278 5,959 17,747 27,085 Interest on borrowed funds 9,353 9,092 36,403 35,264 Interest on trust preferred securities 775 775 3,100 2,952 - ------------------------------------------------------------------------------------------------------------------------------------ Total Interest Expense 18,389 20,052 73,662 82,813 - ------------------------------------------------------------------------------------------------------------------------------------ Net Interest Income 12,131 9,243 46,483 36,135 Less provision for loan losses 1,450 1,525 4,375 3,925 - ------------------------------------------------------------------------------------------------------------------------------------ Net Interest Income After Provision for Loan Losses 10,681 7,718 42,108 32,210 - ------------------------------------------------------------------------------------------------------------------------------------ NON-INTEREST INCOME: Service charges on deposit accounts 562 485 2,203 1,857 Securities gains, net 562 1,043 3,084 3,182 Bank owned life insurance 418 524 1,678 1,784 Other non-interest income 330 242 1,339 1,214 - ------------------------------------------------------------------------------------------------------------------------------------ Total Non-Interest Income 1,872 2,294 8,304 8,037 - ------------------------------------------------------------------------------------------------------------------------------------ NON-INTEREST EXPENSE: Salaries and employee benefits 4,773 3,892 17,890 14,923 Occupancy expense, net 939 785 3,507 2,817 Equipment expense 688 546 2,423 2,021 Early retirement of debt expense -- 2,217 -- 2,217 Other non-interest expense 1,658 1,642 7,224 7,074 - ------------------------------------------------------------------------------------------------------------------------------------ Total Non-Interest Expense 8,058 9,082 31,044 29,052 - ------------------------------------------------------------------------------------------------------------------------------------ Income before income tax expense 4,495 930 19,368 11,195 Income tax expense (benefit) 1,212 (4) 5,364 2,642 - ------------------------------------------------------------------------------------------------------------------------------------ Net Income $ 3,283 $ 934 $ 14,004 $ 8,553 - ------------------------------------------------------------------------------------------------------------------------------------ EARNINGS PER SHARE: Basic $ 0.39 $ 0.12 $ 1.72 $ 1.13 Diluted 0.38 0.12 1.68 1.11 - ------------------------------------------------------------------------------------------------------------------------------------ Weighted average shares outstanding: Basic 8,409 7,980 8,124 7,601 Diluted 8,621 8,021 8,319 7,678 - ------------------------------------------------------------------------------------------------------------------------------------
Yardville National Bancorp and Subsidiaries Consolidated Statements of Condition (Unaudited)
December 31, - -------------------------------------------------------------------------------------------- (in thousands) 2002 2001 - -------------------------------------------------------------------------------------------- Assets: Cash and due from banks $ 28,608 $ 27,771 Federal funds sold 72,485 38,960 - -------------------------------------------------------------------------------------------- Cash and Cash Equivalents 101,093 66,731 - -------------------------------------------------------------------------------------------- Interest bearing deposits with banks 2,501 2,320 Securities available for sale 820,665 746,483 Investment securities 54,690 65,753 Loans 1,195,143 1,007,973 Less: Allowance for loan losses (16,821) (13,542) - -------------------------------------------------------------------------------------------- Loans, net 1,178,322 994,431 Bank premises and equipment, net 12,208 10,910 Other real estate 1,048 2,329 Other assets 60,931 54,432 - -------------------------------------------------------------------------------------------- Total Assets $ 2,231,458 $ 1,943,389 - -------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity: Deposits Non-interest bearing $ 126,183 $ 114,405 Interest bearing 1,146,103 978,285 - -------------------------------------------------------------------------------------------- Total Deposits 1,272,286 1,092,690 - -------------------------------------------------------------------------------------------- Borrowed funds Securities sold under agreements to repurchase 10,000 10,000 Federal Home Loan Bank advances 746,000 695,008 Obligation for Employee Stock Ownership Plan (ESOP) 400 800 Other 1,311 1,305 - -------------------------------------------------------------------------------------------- Total Borrowed Funds 757,711 707,113 - -------------------------------------------------------------------------------------------- Trust preferred securities 32,500 32,500 Other liabilities 23,022 17,841 - -------------------------------------------------------------------------------------------- Total Liabilities $ 2,085,519 $ 1,850,144 - -------------------------------------------------------------------------------------------- Stockholders' equity: Common stock: no par value 89,297 54,334 Surplus 2,205 2,205 Undivided profits 50,633 40,175 Treasury stock, at cost (3,154) (3,030) Unallocated ESOP shares (400) (800) Accumulated other comprehensive income 7,358 361 - -------------------------------------------------------------------------------------------- Total Stockholders' Equity 145,939 93,245 - -------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $ 2,231,458 $ 1,943,389 - --------------------------------------------------------------------------------------------
Financial Summary Average Balances, Rates Paid and Yields
Three Months Ended Three Months Ended December 31, 2002 December 31, 2001 - ------------------------------------------------------------------------------------------------------------------------------------ Average Average Average Yield / Average Yield / (in thousands) Balance Interest Rate Balance Interest Rate - ------------------------------------------------------------------------------------------------------------------------------------ INTEREST EARNING ASSETS: Deposits with other banks $ 2,707 $ 16 2.36% $ 3,131 $ 24 3.07% Federal funds sold 56,823 206 1.45 73,832 397 2.15 Securities 904,314 10,108 4.47 791,327 11,117 5.62 Loans (1) 1,171,590 20,190 6.89 976,609 17,757 7.27 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest earning assets $2,135,434 $ 30,520 5.72% $1,844,899 $ 29,295 6.35% - ------------------------------------------------------------------------------------------------------------------------------------ NON-INTEREST EARNING ASSETS: Cash and due from banks $ 24,149 $ 21,386 Allowance for loan losses (16,274) (12,473) Premises and equipment, net 11,867 10,771 Other assets 50,897 54,528 - ------------------------------------------------------------------------------------------------------------------------------------ Total non-interest earning assets 70,639 74,212 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $2,206,073 $1,919,111 - ------------------------------------------------------------------------------------------------------------------------------------ INTEREST BEARING LIABILITIES: Deposits: Savings, money markets and interest bearing demand $ 578,849 $ 2,742 1.89% $ 372,228 $ 2,603 2.80% Certificates of deposit of $100,000 or more 149,628 1,241 3.32 137,269 1,623 4.73 Other time deposits 423,508 4,278 4.04 457,179 5,959 5.21 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest bearing deposits 1,151,985 8,261 2.87 966,676 10,185 4.21 Borrowed funds 758,000 9,353 4.94 687,374 9,092 5.29 Trust preferred securities 32,500 775 9.54 32,500 775 9.54 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest bearing liabilities $1,942,485 $ 18,389 3.79% $1,686,550 $ 20,052 4.76% - ------------------------------------------------------------------------------------------------------------------------------------ NON-INTEREST BEARING LIABILITIES: Demand deposits $ 127,479 $ 111,907 Other liabilities 28,841 21,925 Stockholders' equity 107,268 98,729 - ------------------------------------------------------------------------------------------------------------------------------------ Total non-interest bearing liabilities and stockholders' equity $ 263,588 $ 232,561 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and stockholders' equity $2,206,073 $1,919,111 - ------------------------------------------------------------------------------------------------------------------------------------ Interest rate spread (2) 1.93% 1.59% - ------------------------------------------------------------------------------------------------------------------------------------ Net interest income and margin (3) $ 12,131 2.27% $ 9,243 2.00% - ------------------------------------------------------------------------------------------------------------------------------------ Net interest income and margin (tax equivalent basis)(4) $ 12,447 2.33% $ 9,536 2.07% - ------------------------------------------------------------------------------------------------------------------------------------
(1) Loan origination fees are considered an adjustment to interest income. For the purpose of calculating loan yields, average loan balances include nonaccrual loans with no related interest income. (2) The interest rate spread is the difference between the average yield on interest earning assets and the average rate paid on interest bearing liabilities. (3) The net interest margin is equal to net interest income divided by average interest earning assets. (4) In order to make pre-tax income and resultant yields on tax exempt investments and loans comparable to those on taxable investments and loans, a tax equivalent adjustment is made equally to interest income and interest expense with no effect on after tax income. The tax equivalent adjustment has been computed using a Federal income tax rate of 34% and has increased interest income by $316,000 and $293,000 for the three month periods ended December 31, 2002 and 2001, respectively. Financial Summary Average Balances, Rates Paid and Yields
Twelve Months Ended Twelve Months Ended December 31, 2002 December 31, 2001 - ------------------------------------------------------------------------------------------------------------------------------------ Average Average Average Yield / Average Yield / (in thousands) Balance Interest Rate Balance Interest Rate - ------------------------------------------------------------------------------------------------------------------------------------ INTEREST EARNING ASSETS: Deposits with other banks $ 2,887 $ 60 2.08% $ 3,816 $ 171 4.48% Federal funds sold 71,415 1,157 1.62 74,624 2,765 3.71 Securities 865,070 43,533 5.03 747,172 45,604 6.10 Loans (1) 1,085,306 75,395 6.95 891,957 70,408 7.89 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest earning assets $2,024,678 $ 120,145 5.93% $ 1,717,569 $ 118,948 6.93% - ------------------------------------------------------------------------------------------------------------------------------------ NON-INTEREST EARNING ASSETS: Cash and due from banks $ 22,965 $ 21,026 Allowance for loan losses (14,771) (11,583) Premises and equipment, net 11,363 10,081 Other assets 51,198 52,288 - ------------------------------------------------------------------------------------------------------------------------------------ Total non-interest earning assets 70,755 71,812 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $2,095,433 $ 1,789,381 - ------------------------------------------------------------------------------------------------------------------------------------ INTEREST BEARING LIABILITIES: Deposits: Savings, money markets and interest bearing demand $ 505,487 $ 11,228 2.22% $ 318,595 $ 9,931 3.12% Certificates of deposit of $100,000 or more 148,119 5,184 3.50 129,340 7,581 5.86 Other time deposits 434,356 17,747 4.09 453,747 27,085 5.97 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest bearing deposits 1,087,962 34,159 3.14 901,682 44,597 4.95 Borrowed funds 735,201 36,403 4.95 644,690 35,264 5.47 Trust preferred securities 32,500 3,100 9.54 31,048 2,952 9.51 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest bearing liabilities $1,855,663 $ 73,662 3.97% $ 1,577,420 $ 82,813 5.25% - ------------------------------------------------------------------------------------------------------------------------------------ NON-INTEREST BEARING LIABILITIES: Demand deposits $ 118,154 $ 104,577 Other liabilities 19,232 20,617 Stockholders' equity 102,384 86,767 - ------------------------------------------------------------------------------------------------------------------------------------ Total non-interest bearing liabilities and stockholders' equity $ 239,770 $ 211,961 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and stockholders' equity $2,095,433 $ 1,789,381 - ------------------------------------------------------------------------------------------------------------------------------------ Interest rate spread (2) 1.96% 1.68% - ------------------------------------------------------------------------------------------------------------------------------------ Net interest income and margin (3) $ 46,483 2.30% $ 36,135 2.10% - ------------------------------------------------------------------------------------------------------------------------------------ Net interest income and margin (tax equivalent basis)(4) $ 47,728 2.36% $ 37,197 2.17% - ------------------------------------------------------------------------------------------------------------------------------------
(1) Loan origination fees are considered an adjustment to interest income. For the purpose of calculating loan yields, average loan balances include nonaccrual loans with no related interest income. (2) The interest rate spread is the difference between the average yield on interest earning assets and the average rate paid on interest bearing liabilities. (3) The net interest margin is equal to net interest income divided by average interest earning assets. (4) In order to make pre-tax income and resultant yields on tax exempt investments and loans comparable to those on taxable investments and loans, a tax equivalent adjustment is made equally to interest income and interest expense with no effect on after tax income. The tax equivalent adjustment has been computed using a Federal income tax rate of 34% and has increased interest income by $1,245,000 and $1,062,000 for the twelve month periods ended December 31, 2002 and 2001, respectively. -----END PRIVACY-ENHANCED MESSAGE-----