11-K 1 eleven-k.txt FORM 11-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT UNDER SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2002. [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF 1934. For transition period from Commission File Number: 0-26086 A. Full title of plan and the address of the plan, if different from that of the issuer named below: YARDVILLE NATIONAL BANK EMPLOYEES' RETIREMENT/SAVINGS PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Yardville National Bancorp 2465 Kuser Road, Hamilton, New Jersey 08690 1 REQUIRED INFORMATION Financial Statements Page Independent Auditors' Report 1 Statements of Net Assets Available for Benefits - December 31, 2002 and December 31, 2001. 2 Statements of Changes in Net Assets Available for Benefits - Years ended December 31, 2002 and December 31, 2001. 3 Notes to Financial Statements 4 Signature of Plan Administrator 9 Exhibits 23 Consent of KPMG LLP 99 Certification 2 YARDVILLE NATIONAL BANK EMPLOYEES' RETIREMENT SAVINGS PLAN Financial Statements and Schedules December 31, 2002 and 2001 (With Independent Auditors' Report Thereon) YARDVILLE NATIONAL BANK EMPLOYEES' RETIREMENT SAVINGS PLAN Index
Page Independent Auditors' Report 1 Statements of Net Assets Available for Benefits - December 31, 2002 and 2001 2 Statements of Changes in Net Assets Available for Benefits - Years ended December 31, 2002 and 2001 3 Notes to Financial Statements 4 Schedules 1 Schedule H, Line 4(i) - Schedule of Assets Held for Investment Purposes at End of Year - December 31, 2002 8
Independent Auditors' Report The Trustees Yardville National Bank Employees' Retirement Savings Plan: We have audited the accompanying statements of net assets available for benefits of Yardville National Bank Employees' Retirement Savings Plan as of December 31, 2002 and 2001, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits as of December 31, 2002 and 2001, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held for investment purposes at end of year is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the 2002 basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the 2002 basic financial statements taken as a whole. KPMG LLP June 13, 2003 Short Hills, New Jersey 1 YARDVILLE NATIONAL BANK EMPLOYEES' RETIREMENT SAVINGS PLAN Statements of Net Assets Available for Benefits December 31, 2002 and 2001
2002 2001 ------------------- ------------------- Assets - investment funds (note 6) $ 5,284,013 4,730,386 Participant loans (note 3) 208,756 168,319 Receivables: Employer Contributions 914 -- ------------------- ------------------- Net assets available for benefits $ 5,493,683 4,898,705 =================== =================== See accompanying notes to financial statements.
2 YARDVILLE NATIONAL BANK EMPLOYEES' RETIREMENT SAVINGS PLAN Statements of Changes in Net Assets Available for Benefits Years ended December 31, 2002 and 2001
2002 2001 ------------------- ------------------- Additions to net assets: Contributions (note 2): Employee contributions $ 604,643 604,511 Employer contributions net of forfeitures 211,533 179,328 ------------------- ------------------- Total contributions 816,176 783,839 ------------------- ------------------- Investment loss: Net depreciation in fair value of investments (note 6) (123,059) (65,046) Interest and dividends 20,053 22,633 ------------------- ------------------- Net investment loss (103,006) (42,413) Interest income from employee loan repayments 15,701 15,930 ------------------- ------------------- Total additions 728,871 757,356 ------------------- ------------------- Deductions from net assets: Distributions to participants (note 2) (133,893) (144,671) ------------------- ------------------- Net increase in net assets available for benefits 594,978 612,685 Net assets available for benefits: Beginning of year 4,898,705 4,286,020 ------------------- ------------------- End of year $ 5,493,683 4,898,705 =================== =================== See accompanying notes to financial statements.
3 YARDVILLE NATIONAL BANK EMPLOYEES' RETIREMENT SAVINGS PLANS December 31, 2002 and 2001 Notes to Financial Statements (1) Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared on an accrual basis and present the net assets available for benefits and the changes in those net assets. Administrative Expenses Administrative expenses are paid by The Yardville National Bank (the Bank). Investment Valuation and Income Recognition The investments of the Yardville National Bank Employees' Retirement Savings Plan (the Plan) are stated at fair value except for its investment contracts, which are valued at contract value. Contract value is estimated to approximate fair value. Shares of mutual funds are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year end. The stock of Yardville National Bancorp ("YNB"), the parent corporation of the Bank, is valued at its quoted market price. Participant notes receivable are valued at cost which approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Risks and Uncertainties The assets of the Plan are primarily financial instruments, which are monetary in nature. Accordingly, interest rates have a more significant impact on the Plan's performance than do the effects of general levels of inflation. Interest rates generally do not move in the same direction or with the same magnitude as prices of goods and services as measured by the consumer price index. Investments are subject to risk conditions of the individual funds' objectives, stock market performance, interest rates, economic conditions, and world affairs. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates. 4 YARDVILLE NATIONAL BANK EMPLOYEES' RETIREMENT SAVINGS PLANS December 31, 2002 and 2001 Notes to Financial Statements (2) Description of Plan The following description of the Plan provides only general information. Participants should refer to the plan agreement for a more complete description of the Plan's provisions. General The Plan is a participant-directed, Federal income tax deferred defined contribution plan that was initiated in 1987 and is administered by the Bank. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). In 1990, the employer transferred assets of the Plan to Mutual Benefit Life Insurance Company (Mutual Benefit). On July 16, 1991, Mutual Benefit was placed in rehabilatory conservatorship. This action resulted in a freeze on payments from discontinued group annuity contracts. The Bank withdrew all nongroup annuity contract funds and transferred them, as well as future contributions, to a Yardville National Bank Imprest account until a new plan administrator was chosen. In October 1992, the Bank temporarily transferred all available funds and future contributions to a Metropolitan Life Group Annuity Contract for the remainder of the fiscal year. In 1994, MBL Life Assurance Corporation assumed these contracts under a rehabilitation plan (the Rehabilitation Plan). The Rehabilitation Plan guaranteed at least 3.5% interest and full cash values if participants elected to leave their money with Mutual Benefit until the end of 1999 or $0.55 on the dollar if they withdrew. A plan with new investment options, but the same plan provisions, was developed in May 1996 with Metropolitan Life Insurance Company (Metropolitan Life). In 1996, the participants made their elections and all but two elected to leave their money with Mutual Benefit (now MBL Life Assurance Corporation) until the end of 1999. In May 1999, all funds were released and transferred to Metropolitan Life. Metropolitan Life Insurance Company's Recordkeeping Services were taken over by Benefit Services Corporation (a wholly owned subsidiary of Metropolitan Life) in August 1998. As a result of the transfer, the Bank amended the Plan to include new investment options and plan provisions. The funds with Metropolitan Life were initially transferred to similar funds of Benefit Services Corporation during the August 1998 conversion. Subsequent to the initial transfer of funds, participants may redirect fund balances in 1% increments. Investment Options The participant contributions and Bank matching contributions may be allocated to various investment funds, guaranteed investment accounts and/or the Yardville National Bank Stock Fund at the discretion of the participant. Benefits and Contributions Eligible participants include employees of the Bank who have attained the age of 19, are not resident aliens or collectively bargained employees. Eligible participants can begin making contributions on the first day of the month following their date of hire. Participants are eligible to receive employer matching and discretionary contributions when they have completed one year of service, as defined. As of December 31, 2002, there were 273 participants in the Plan. Benefits are determined based on accumulated participants' and employer's contributions and related investment earnings or losses on those contributions. The participant can contribute up to 25% of base compensation, as defined. The Bank's contributions are equal to 50% of the participants' contributions, up to 6% of base compensation. The Bank may also make discretionary contributions. Each year the Bank's board of directors will determine if a discretionary contribution will be made to the Plan. Each member's share of this contribution is based on the relationship his or her compensation bears to the total compensation of employees participating in the Plan. At the plan administrator's discretion, employees are entitled to contribute rollovers from other qualified plans. Any forfeited amounts reduce the employer's contributions to the Plan, and any remaining forfeitures are reallocated to participants. 5 YARDVILLE NATIONAL BANK EMPLOYEES' RETIREMENT SAVINGS PLANS December 31, 2002 and 2001 Notes to Financial Statements Vesting All participants are fully vested in their voluntary contributions and related investment earnings or losses. In event of death, disability, or retirement, matching contributions and related investment earnings or losses are also considered fully vested to the participant. Vesting in the remainder of the account is based on years of service, as defined, with full vesting being attained after five years. In the event of termination of employment, the non-vested portion of the account is used to reduce future employer contributions. Funding Employee contributions are funded through biweekly payroll deductions, and employer matching is funded each pay period. Payment of Benefits Upon normal retirement at age 65 or termination of employment, a participant may elect to receive a lump-sum amount equal to his or her vested account balance at termination date, various annuity options, or, by agreement with the plan administrator, a lump-sum payment at any date prior to the April 1 following the taxable year he or she attains, or would have attained, age 59-1/2. The benefit to which a participant is entitled is the benefit which can be provided from the participant's vested account balance. (3) Loan Policy Employees participating in the Plan are eligible to receive loans from the Plan. Loans that are granted to the participant are subject to the following conditions: o The minimum amount of any loan shall have a minimum term of 12 months. The maximum loan amount is determined under federal tax and pension laws. This is generally the lesser of $50,000, reduced by the highest outstanding loan balance within the prior 12 months, or 50% of the vested account balance. The interest rate on a loan will be a reasonable rate of interest based on interest rates that institutions in the business of making loans would charge under similar circumstances. (4) Plan Termination Although it has not expressed any intent to do so, the employer has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, participants will fully vest and receive the value of their accounts as a lump-sum distribution. (5) Federal Income Taxes The Internal Revenue Service (IRS) issued its latest determination letter on July 28, 1987 which stated that the Plan and its underlying trust, as then designed, qualify under the applicable provisions of the Internal Revenue Code (the Code) and, therefore, are exempt from federal income taxes. Subsequently, the Plan has been amended and submitted to the IRS for a new determination letter. In the opinion of the Plan's trustees, the Plan and its underlying trust have operated within the terms of the Plan and should remain qualified under the applicable provisions of the Code. 6 YARDVILLE NATIONAL BANK EMPLOYEES' RETIREMENT SAVINGS PLANS December 31, 2002 and 2001 Notes to Financial Statements (6) Investments During 2002 and 2001, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) (depreciated) appreciated in value as follows: 2002 2001 ------------ ----------- Mutual funds $ (440,500) (89,241) Investment contracts 137,275 3,354 Common Stock 180,166 20,841 ------------ ----------- $ (123,059) (65,046) ============ =========== The following table represents the fair value of individual investments which exceed 5% of the Plan's net assets as of December 31, 2002 and 2001: 2002 2001 ------------- ----------- American Century Strat. Allocation $ 547,558 568,914 American Century -- 20th Century Ultra 235,264 250,704 MetLife Stock Market Index Guarantee Account 604,717 730,246 MetLife Migration Pooled GIC 2,621,756 2,234,241 YNB Stock Fund 694,322 439,328 (7) Subsequent Event The Plan has, since August 1998, included an option for participants to invest in a fund (the "Stock Fund") that has acquired shares of the common stock of YNB in the open market. In connection with the addition of the Stock Fund to the Plan, YNB inadvertently did not register with the Securities and Exchange Commission the Plan interests or the shares of common stock acquired by the Stock Fund and may not have distributed certain information to participants on a timely basis as required by securities laws. After being advised of those requirements, we promptly completed the registration and distributed the required information to our Plan participants. In November 2002, the Stock Fund was discontinued. In May 2003, the Plan sold 39,515 shares of YNB common stock representing all the shares in the Stock Fund to the YNB employee stock ownership Plan trust for $754,737. The participants then reallocated these funds to the other investment options in the Plan. 7 Schedule 1 YARDVILLE NATIONAL BANK EMPLOYEES' RETIREMENT SAVINGS PLAN Schedule H, Line 4(i) - Schedule of Assets Held for Investment Purposes at End of Year December 31, 2002 Number Current of shares value ------------- -------------- American Century Strat. Allocation 104,297 $ 547,558 American Century - 20th Century Ultra 11,107 235,264 Harris Associates - Oakmark 6,263 188,379 State Street Research Mid Cap 9,699 125,112 Janus Worldwide 4,744 152,414 Loomis Sayles Small Cap Value 6,340 114,491 MetLife Stock Market Index Guarantee Account 1,863 604,717 MetLife Migration Pooled GIC 192,702 2,621,756 YNB Stock Fund 45,597 694,322 Loans to participants (8.25% to 10.50%) - 208,756 -------------- $ 5,492,769 ============== See accompanying independent auditors' report. 8 SIGNATURE OF PLAN ADMINISTRATOR The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Yardville National Bank Employees' Retirement/Savings Plan Dated: June 27, 2003 By: Kathleen A. Fone --------------------------- Kathleen A. Fone Plan Administrator Senior Vice President Human Resources 9