-----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, UcjMKRVaM0j98Qh7ZI2fELbyWJKsBgp8vZfBJ7MCcdq1lBFoeOfyWFyfCzF2p7C4 EPbk7znLqifla4HTi55Zxw== 0000950116-99-001568.txt : 19990817 0000950116-99-001568.hdr.sgml : 19990817 ACCESSION NUMBER: 0000950116-99-001568 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 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: 10-Q SEC ACT: SEC FILE NUMBER: 000-26086 FILM NUMBER: 99690756 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 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10 Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF 1934 For the quarterly period ended June 30, 1999 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF 1934 For transition period from Commission File Number: 0-26086 YARDVILLE NATIONAL BANCORP -------------------------- (Exact name of registrant as specified in its charter) New Jersey 22-2670267 - ------------------------------- -------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 3111 Quakerbridge Road, Mercerville, New Jersey 08619 ----------------------------------------------------- (Address of principal executive offices) (609) 585-5100 -------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable ------------------------------------------------------------------------------ (Former name, former address and former fiscal year, if changed from last report) 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. Yes (X) No ( ) Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of July 31, 1999 Common Stock, no par value 6,745,194 ----------------------------- ---------------------------- Class Number of shares outstanding INDEX YARDVILLE NATIONAL BANCORP AND SUBSIDIARIES PART 1 FINANCIAL INFORMATION PAGE NO. Item 1. Financial Statements Consolidated Statements of Condition June 30, 1999 and December 31, 1998 Consolidated Statements of Income Three months ended June 30, 1999 and 1998 Consolidated Statements of Income Six months ended June 30, 1999 and 1998 Consolidated Statements of Cash Flows Six months ended June 30, 1999 and 1998 Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk PART 2 OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities and Use of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES Exhibit 27.1 Financial Data Schedule Item 1. Financial Statements Yardville National Bancorp and Subsidiaries Consolidated Statements of Condition (Unaudited)
June 30, December 31, - --------------------------------------------------------------------------------------------------------- (in thousands, except for share data) 1999 1998 - --------------------------------------------------------------------------------------------------------- Assets: Cash and due from banks $ 16,225 $ 16,246 Federal funds sold 5,865 280 - --------------------------------------------------------------------------------------------------------- Cash and Cash Equivalents 22,090 16,526 - --------------------------------------------------------------------------------------------------------- Interest bearing deposits with banks 830 733 Securities available for sale 273,114 185,577 Investment securities (market value of $96,784 in 1999 and $36,203 in 1998) 101,018 36,111 Loans 553,253 491,649 Less: Allowance for loan losses (7,622) (6,768) - --------------------------------------------------------------------------------------------------------- Loans, net 545,631 484,881 Bank premises and equipment, net 7,010 6,251 Other real estate 4,676 4,957 Other assets 27,157 22,630 - --------------------------------------------------------------------------------------------------------- Total Assets $ 981,526 $ 757,666 - --------------------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity: Deposits Non-interest bearing $ 80,052 $ 75,426 Interest bearing 546,859 444,217 - --------------------------------------------------------------------------------------------------------- Total Deposits 626,911 519,643 - --------------------------------------------------------------------------------------------------------- Borrowed funds Securities sold under agreements to repurchase 154,508 87,120 Federal Home Loan Bank advances 118,305 89,316 Obligation to Employee Stock Ownership Plan (ESOP) 1,800 -- Other 1,264 1,452 - --------------------------------------------------------------------------------------------------------- Total Borrowed Funds 275,877 177,888 Company - obligated Mandatorily Redeemable Trust Preferred Securities of Subsidiary Trust holding solely junior Subordinated Debentures of the Company 11,500 11,500 Other liabilities 9,456 7,879 - --------------------------------------------------------------------------------------------------------- Total Liabilities $ 923,744 $ 716,910 - --------------------------------------------------------------------------------------------------------- Stockholders' equity Preferred stock: no par value Authorized 1,000,000 shares, none issued Common Stock: no par value Authorized 12,000,000 shares Issued 6,917,194 in 1999 and 5,138,474 shares in 1998 40,050 20,364 Surplus 2,205 2,205 Undivided profits 24,202 21,479 Treasury stock, at cost, 172,000 shares in 1999 and 170,300 shares in 1998 (3,030) (3,008) Unallocated ESOP shares (1,800) -- Accumulated other comprehensive income (3,845) (284) - --------------------------------------------------------------------------------------------------------- Total Stockholders' Equity 57,782 40,756 - --------------------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $ 981,526 $ 757,666 - ---------------------------------------------------------------------------------------------------------
See Accompanying Notes to Unaudited Consolidated Financial Statements. Yardville National Bancorp and Subsidiaries Consolidated Statements of Income (Unaudited)
Three Months Ended June 30, - ------------------------------------------------------------------------------------------------ (in thousands, except for share data) 1999 1998 - ------------------------------------------------------------------------------------------------ INTEREST INCOME: Interest and fees on loans $11,364 $ 9,394 Interest on deposits with banks 9 28 Interest on securities available for sale 3,618 2,614 Interest on investment securities: Taxable 1,018 181 Exempt from Federal income tax 327 135 Interest on Federal funds sold 234 69 - ------------------------------------------------------------------------------------------------ Total Interest Income 16,570 12,421 - ------------------------------------------------------------------------------------------------ INTEREST EXPENSE: Interest on savings account deposits 1,187 1,247 Interest on certificates of deposit of $100,000 or more 623 339 Interest on other time deposits 4,238 2,931 Interest on borrowed funds 3,156 2,060 Interest on trust preferred securities 266 266 - ------------------------------------------------------------------------------------------------ Total Interest Expense 9,470 6,843 - ------------------------------------------------------------------------------------------------ Net Interest Income 7,100 5,578 Less provision for loan losses 750 500 - ------------------------------------------------------------------------------------------------ Net Interest Income After Provision for Loan Losses 6,350 5,078 - ------------------------------------------------------------------------------------------------ NON-INTEREST INCOME: Service charges on deposit accounts 317 314 Gains on sales of mortgages, net 15 8 Securities gains, net 3 37 Other non-interest income 420 373 - ------------------------------------------------------------------------------------------------ Total Non-Interest Income 755 732 - ------------------------------------------------------------------------------------------------ NON-INTEREST EXPENSE: Salaries and employee benefits 2,437 1,997 Occupancy expense, net 321 262 Equipment expense 367 322 Other non-interest expense 1,203 1,092 - ------------------------------------------------------------------------------------------------ Total Non-Interest Expense 4,328 3,673 - ------------------------------------------------------------------------------------------------ Income before income tax expense 2,777 2,137 Income tax expense 787 755 - ------------------------------------------------------------------------------------------------ Net Income $ 1,990 $ 1,382 - ------------------------------------------------------------------------------------------------ EARNINGS PER SHARE: Basic $ 0.34 $ 0.27 Diluted $ 0.34 $ 0.27 - ------------------------------------------------------------------------------------------------ Weighted average shares outstanding: Basic 5,788 5,059 Diluted 5,815 5,083 - ------------------------------------------------------------------------------------------------
See Accompanying Notes to Unaudited Consolidated Financial Statements. 5 Yardville National Bancorp and Subsidiaries Consolidated Statements of Income (Unaudited)
Six Months Ended June 30, - ------------------------------------------------------------------------------------------------ (in thousands, except for share data) 1999 1998 - ------------------------------------------------------------------------------------------------ INTEREST INCOME: Interest and fees on loans $22,075 $18,142 Interest on deposits with banks 28 83 Interest on securities available for sale 6,471 5,054 Interest on investment securities: Taxable 1,615 458 Exempt from Federal income tax 585 237 Interest on Federal funds sold 394 138 - ------------------------------------------------------------------------------------------------ Total Interest Income 31,168 24,112 - ------------------------------------------------------------------------------------------------ INTEREST EXPENSE: Interest on savings account deposits 2,282 2,502 Interest on certificates of deposit of $100,000 or more 1,114 640 Interest on other time deposits 8,039 5,604 Interest on borrowed funds 5,684 3,977 Interest on trust preferred securities 532 532 - ------------------------------------------------------------------------------------------------ Total Interest Expense 17,651 13,255 - ------------------------------------------------------------------------------------------------ Net Interest Income 13,517 10,857 Less provision for loan losses 1,400 900 - ------------------------------------------------------------------------------------------------ Net Interest Income After Provision for Loan Losses 12,117 9,957 - ------------------------------------------------------------------------------------------------ NON-INTEREST INCOME: Service charges on deposit accounts 625 620 Gains on sales of mortgages, net 30 25 Securities gains, net 18 46 Other non-interest income 810 729 - ------------------------------------------------------------------------------------------------ Total Non-Interest Income 1,483 1,420 - ------------------------------------------------------------------------------------------------ NON-INTEREST EXPENSE: Salaries and employee benefits 4,728 3,940 Occupancy expense, net 634 495 Equipment expense 729 618 Other non-interest expense 2,582 2,124 - ------------------------------------------------------------------------------------------------ Total Non-Interest Expense 8,673 7,177 - ------------------------------------------------------------------------------------------------ Income before income tax expense 4,927 4,200 Income tax expense 1,383 1,484 - ------------------------------------------------------------------------------------------------ Net Income $ 3,544 $ 2,716 - ------------------------------------------------------------------------------------------------ EARNINGS PER SHARE: Basic $ 0.66 $ 0.54 Diluted $ 0.65 $ 0.53 - ------------------------------------------------------------------------------------------------ Weighted average shares outstanding: Basic 5,398 5,067 Diluted 5,425 5,091 - ------------------------------------------------------------------------------------------------
See Accompanying Notes to Unaudited Consolidated Financial Statements. 5 Yardville National Bancorp and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
Six months ended June 30, - ------------------------------------------------------------------------------------------------------------------ (in thousands) 1999 1998 - ------------------------------------------------------------------------------------------------------------------ Cash Flows from Operating Activities: Net Income $ 3,544 $ 2,716 Adjustments: Provision for loan losses 1,400 900 Depreciation 554 448 Amortization and accretion 345 411 Gains on sales of securities available for sale (18) (46) Loss on sales of other real estate 1 1 Write down of other real estate 278 278 Increase in other assets (2,610) (4,502) Increase in other liabilities 1,577 183 - ------------------------------------------------------------------------------------------------------------------ Net Cash Provided by Operating Activities 5,071 389 - ------------------------------------------------------------------------------------------------------------------ Cash Flows From Investing Activities: Net (increase) decrease in interest bearing deposits with banks (97) 75 Purchase of securities available for sale (122,685) (79,838) Maturities, calls, and paydowns of securities available for sale 20,374 35,731 Proceeds from sales of securities available for sale 9,019 26,562 Proceeds from maturities and paydowns of investment securities 1,786 3,821 Purchase of investment securities (66,743) (4,238) Net increase in loans (62,850) (54,257) Expenditures for bank premises and equipment (1,313) (1,207) Proceeds from sale of other real estate 702 84 - ------------------------------------------------------------------------------------------------------------------ Net Cash Used by Investing Activities (221,807) (73,267) - ------------------------------------------------------------------------------------------------------------------ Cash Flows from Financing Activities: Net increase in non-interest bearing demand, money market, and savings deposits 14,650 12,627 Net increase in certificates of deposit 92,618 40,220 Net increase in borrowed funds 97,989 31,591 Proceeds from issuance of common stock 19,686 323 Increase in unallocated ESOP shares (1,800) -- Treasury shares acquired (22) (2,965) Dividends paid (821) (704) - ------------------------------------------------------------------------------------------------------------------ Net Cash Provided by Financing Activities 222,300 81,092 - ------------------------------------------------------------------------------------------------------------------ Net increase in cash and cash equivalents 5,564 8,214 Cash and cash equivalents as of beginning of period 16,526 20,423 - ------------------------------------------------------------------------------------------------------------------ Cash and Cash Equivalents as of End of Period $ 22,090 $ 28,637 - ------------------------------------------------------------------------------------------------------------------ Supplemental Disclosure of Cash Flow Information: Cash paid during period for: Interest expense 16,919 12,279 Income taxes 982 2,035 - ------------------------------------------------------------------------------------------------------------------ Supplemental Schedule of Non-cash Investing and Financing Activities: Transfers to other real estate from loans, net of charge offs 700 407 - ------------------------------------------------------------------------------------------------------------------
See Accompanying Notes to Unaudited Consolidated Financial Statements. Yardville National Bancorp and Subsidiaries Notes to Consolidated Financial Statements Three and Six Months Ended June 30, 1999 (Unaudited) 1. Summary of Significant Accounting Policies Basis of Financial Statement Presentation: The consolidated financial statements have been prepared in conformity with generally accepted accounting principles. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenue and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses and the valuation reserve of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowance for loan losses and other real estate, management obtains independent appraisals for significant properties. The consolidated financial data as of and for the three and six months ended June 30, 1999 includes, in the opinion of management, all adjustments, consisting of only normal recurring accruals necessary for a fair presentation of such periods. The consolidated financial data for the interim periods presented is not necessarily indicative of the result of operations that might be expected for the entire year ending December 31, 1999. Consolidation The consolidated financial statements include the accounts of Yardville National Bancorp (the "Holding Company") and its subsidiaries, Yardville Capital Trust (the "Trust") and The Yardville National Bank (the "Bank"), and the Bank's wholly owned subsidiaries, Yardville National Investment Corporation, Brendan, Inc., Nancy Beth, Inc., Jim Mary, Inc., Yardville Real Estate Holding Co., Inc, YNB Financial Services, Inc., and YNB Realty Inc., (collectively, "YNB"). All significant inter-company accounts and transactions have been eliminated. Brendan, Inc., Nancy Beth, Inc. and Jim Mary, Inc. are utilized for the control and disposal of other real estate properties. Yardville Real Estate Holding Co., Inc. is utilized to hold Bank branch properties, YNB Financial Services, Inc., provides alternative investment services, and YNB Realty, Inc., a real estate investment trust, is utilized to more effectively manage a portion of the Bank's real estate related loans. Allowance for Loan Losses The provision for loan losses charged to operating expense is determined by management and based upon a periodic review of the loan portfolio, past experience, the economy, and other factors that may affect a borrower's ability to repay the loan. This provision is based on management's estimates, and actual losses may vary from these estimates. These estimates are reviewed and 7 adjustments, as they become necessary, are reported in the periods in which they become known. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions, particularly in New Jersey. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank's allowance for loan losses and the valuation of other real estate. Such agencies may require the Bank to recognize additions to the allowance or adjustments to the carrying value of other real estate based on their judgement about information available at the time of their examination. Company - Obligated Mandatorily Redeemable Trust Preferred Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures of the Company (Trust Preferred Securities) On October 16, 1997, Yardville Capital Trust, a statutory business trust and a wholly owned subsidiary of the Holding Company, issued $11,500,000 of 9.25% Trust Preferred Securities to the public and $356,000 of 9.25% Common Securities to the Holding Company. Proceeds from the issuance of the Trust Preferred Securities were immediately used by the Trust to purchase $11,856,000 of 9.25% Subordinated Debentures maturing November 1, 2027 from the Holding Company. The Trust exists for the sole purpose of issuing Trust Preferred Securities and investing the proceeds in Subordinated Debentures of the Holding Company. These Subordinated Debentures constitute the sole assets of the Trust. 2. Earnings Per Share Weighted average shares for the basic net income per share calculation for the three months ended June 30, 1999 and 1998 were 5,788,000 and 5,059,000 respectively. For the diluted net income per share computation, potential common stock of 27,000 and 24,000 are included for the three months ended June 30, 1999 and 1998, respectively. Weighted average shares for the basic net income per share calculation for the six months ended June 30, 1999 and 1998 were 5,398,000 and 5,067,000 respectively. For the diluted net income per share computation, potential common stock of 27,000 and 24,000 are included for the six months ended June 30, 1999 and 1998, respectively. 8 3. Comprehensive Income Listed below is the statement of comprehensive income for three and six months ended June 30, 1999 and 1998.
Comprehensive Income Three Months Ended June 30, - ----------------------------------------------------------------------------------------------- (in thousands) 1999 1998 - ----------------------------------------------------------------------------------------------- Net Income $ 1,990 $ 1,382 - ----------------------------------------------------------------------------------------------- Other comprehensive income Net change in unrealized loss for the period, net of tax (2,921) (53) Reclassification of realized net gain on sale of securities available for sale, net of tax 2 24 - ----------------------------------------------------------------------------------------------- Holding loss arising during the period, net of tax and reclassification (2,919) (29) - ----------------------------------------------------------------------------------------------- Reclassification adjustment for realized net gain, net of tax (2) (24) - ----------------------------------------------------------------------------------------------- Other comprehensive income for the period, net of tax (2,921) (53) - ----------------------------------------------------------------------------------------------- Total comprehensive income $ (931) $ 1,329 - ----------------------------------------------------------------------------------------------- Comprehensive Income Six Months Ended June 30, - ----------------------------------------------------------------------------------------------- (in thousands) 1999 1998 - ----------------------------------------------------------------------------------------------- Net Income $ 3,544 $ 2,716 - ----------------------------------------------------------------------------------------------- Other comprehensive income Net change in unrealized loss for the period, net of tax (3,561) (302) Reclassification of realized net gain on sale of securities available for sale, net of tax 30 12 - ----------------------------------------------------------------------------------------------- Holding loss arising during the period, net of tax and reclassification (3,549) (292) - ----------------------------------------------------------------------------------------------- Reclassification adjustment for realized net gain, net of tax (12) (30) - ----------------------------------------------------------------------------------------------- Other comprehensive income for the period, net of tax (3,561) (302) - ----------------------------------------------------------------------------------------------- Total comprehensive income $ (17) $ 2,414 - -----------------------------------------------------------------------------------------------
4. Employee Stock Ownership Plan The Bank established an Employee Stock Ownership Plan and related trust ("ESOP") for eligible employees. The ESOP is a tax-qualified plan subject to the requirements of the Employee Retirement Income Security Act of 1974 (ERISA). Employees with twelve months of employment with the Bank and who have worked at least 1,000 hours are eligible to participate. The ESOP borrowed $2,000,000 from an unaffiliated financial institution and purchased 155,340 shares of common shares, no par value, of the Holding Company. Shares purchased by the 9 ESOP are held in a suspense account pending allocation among participants as the loan is repaid. All shares in the plan are accounted for under SOP 93-6. Compensation expense is recognized based on the fair value of the stock when it is committed to be released. Compensation expense amounted to $88,000 for the three months and $175,000 for the six months ended June 30, 1999. The fair value of unearned shares at June 30, 1999 is $1,941,750. Unallocated shares are deducted from common shares outstanding for earnings per share purposes with shares which are committed to be released during the year added back into weighted average shares outstanding. 10 YARDVILLE NATIONAL BANCORP AND SUBSIDIARIES (YNB) Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations This financial review presents management's discussion and analysis of the financial condition and results of operation. It should be read in conjunction with the 1998 Annual Report to stockholders and Form 10-K for the fiscal year ended December 31, 1998 as well as with the unaudited consolidated financial statements and the accompanying notes in this Form 10-Q. This Form 10-Q report contains express and implied statements relating to the future financial condition, results of operations, plans, objectives, performance, and business of YNB, which are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements that relate to, among other things, profitability, liquidity, loan loss reserve adequacy, plans for growth, interest rate sensitivity, market risk, and year 2000 issues, 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, changes in economic conditions, interest rate fluctuations, continued levels of loan quality and origination volume, successful implementation of year 2000 technology changes by YNB, its vendors and suppliers, competitive product and pricing pressures within YNB's markets, continued relationships with major customers including sources for loans and deposits, personal and corporate customers' bankruptcies, legal and regulatory barriers and structure, inflation, and technological changes, as well as other risks and uncertainties detailed from time to time in the filings of YNB with the Securities and Exchange Commission. Financial Condition Assets Total consolidated assets at June 30, 1999 were $981,526,000, an increase of $223,860,000 or 29.6% compared to $757,666,000 at December 31, 1998. The growth in YNB's asset base, during the first six months of 1999, was primarily due to increases in loans (primarily commercial loans), available for sale securities, and investment securities. The increase in the loan portfolio was the product of an ongoing consistent strategy to improve the profitability of the organization through relationship banking and of consolidation in YNB's market place. Management anticipates continued loan opportunities due to this consolidation. YNB's asset base includes US agency securities of approximately $236,430,000 purchased utilizing primarily repurchase agreements and Federal Home Loan Bank advances (Investment Growth Strategy). The Investment Growth Strategy at June 30, 1999 increased $94,230,000 or 66.3% from the reported total of $142,200,000 at December 31, 1998. The primary goals of the Investment Growth Strategy, improving return on equity and earnings per share, continue to be achieved. 11 Federal funds sold At June 30, 1999 Federal funds sold totaled $5,865,000 compared to $280,000 at December 31, 1998. Average Federal funds sold for the first six months of 1999 was $16,824,000 compared to $4,996,000 for the same period in 1998. The higher amount of Federal funds sold at June 30, 1999 was due to increased certificate of deposit (CD) balances raised to fund loan growth and effectively manage liquidity. Management remains focused on maintaining adequate liquidity to fund loan growth and to improve the liquidity profile of YNB. Securities The following tables present the amortized cost and market value of YNB's securities portfolios as of June 30, 1999 and December 31, 1998.
Available For Sale Securities June 30, 1999 December 31, 1998 - ------------------------------------------------------------------------------------------------------------- Amortized Market Amortized Market (in thousands) Cost Value Cost Value - ------------------------------------------------------------------------------------------------------------- U.S. Treasury and other U.S. government agency securities $ 116,482 $ 113,632 $ 55,051 $ 55,039 Mortgage-backed securities 149,765 146,834 120,410 119,986 Corporate obligations 2,612 2,477 2,867 2,867 All other securities 10,171 10,171 7,685 7,685 - ------------------------------------------------------------------------------------------------------------- Total $ 279,030 $ 273,114 $ 186,013 $ 185,577 - ------------------------------------------------------------------------------------------------------------- Investment Securities June 30, 1999 December 31, 1998 - ------------------------------------------------------------------------------------------------------------- Amortized Market Amortized Market (in thousands) Cost Value Cost Value - ------------------------------------------------------------------------------------------------------------- Obligations of U.S. government agencies $ 63,184 $ 60,143 $ 4,994 $ 4,935 Obligations of state and political subdivisions 29,303 28,305 20,773 20,982 Mortgage-backed securities 8,531 8,336 10,344 10,286 - ------------------------------------------------------------------------------------------------------------- Total $ 101,018 $ 96,784 $ 36,111 $ 36,203 - -------------------------------------------------------------------------------------------------------------
Securities represented 38.1% of total assets at June 30, 1999 and 29.3% at December 31, 1998. Total securities increased $152,444,000 or 68.8% at June 30, 1999 to $374,132,000, compared to $221,688,000 at year-end 1998. The available for sale portfolio represents 73.0% of the total security holdings of YNB at June 30, 1999, compared to 83.7% at year-end 1998. The net unrealized loss on available for sale securities as of June 30, 1999 was $5,916,000, compared to a net unrealized loss of $436,000 at December 31, 1998. Net unrealized loss, net of tax effect, totaling $3,845,000 was reported in Accumulated Other Comprehensive Income in Stockholders' Equity at June 30, 1999, compared to a net unrealized loss of $284,000 reported at December 31, 1998. The increase in the unrealized loss on available for sale securities is 12 primarily due to the rise in interest rates from December 31, 1998 to June 30, 1999 and the increased size of the available for sale securities portfolio. Securities available for sale increased $87,537,000 or 47.2% at June 30, 1999 when compared to the December 31, 1998 balance of $185,577,000. The largest area of increase was in U.S. Treasury and U.S. agency bonds, which increased $58,593,000 and is the major factor for the increase in securities available for sale. The increase was primarily due to an increase of $13,919,000 in US treasury bonds and a $38,000,000 increase in shorter-term callable agency bonds purchased to improve the liquidity profile of YNB. The callable agency bonds have maturity terms of 3.5 years or less. The other category of significant growth was in mortgage backed securities which increased $26,848,000 net of paydowns. This growth was almost entirely related to the Investment Growth Strategy and includes $29,805,000 in floating rate U.S. agency collaterlized mortgage obligations. Investment securities increased $64,907,000 or 179.7% to $101,018,000 at June 30, 1999 from $36,111,000 at December 31, 1998. The increase was due to a $58,190,000 increase in U.S. agency callable bonds primarily related to the Investment Growth Strategy and a $8,530,000 increase in tax free municipal bonds. Offsetting these increases was a $1,813,000 reduction in mortgage-backed securities reflecting paydowns. The Investment Growth Strategy increased $94,230,000 over the year-end 1998 level. The largest increase was in US agency callable bonds which increased $65,190,000 and account for 69.2% of the total increase. The next largest growth was in floating rate US agency collateralized mortgage obligations that increased $29,803,000. Modest growth was also recorded in fixed rate mortgage backed securities up $4,436,000 net of paydowns. Offsetting this increase, was a $5,220,000 decrease in adjustable rate mortgage backed securities. At June 30, 1999, the investment growth strategy was comprised of 77.2% of fixed rate securities and 22.8% of adjustable or floating rate securities compared to 79.4% fixed rate securities and 20.6% adjustable rate securities at year end 1998. Loans Total loans, net of unearned income, increased $61,604,000 or 12.5% at June 30, 1999 to $553,253,000 from $491,649,000 at December 31, 1998. This growth reflects favorably when compared to the $53,483,000 in loan growth for the same period of 1998. YNB's loan portfolio represented 56.4% of total assets at June 30, 1999 compared to 64.9% at December 31, 1998. YNB's lending focus continues to be on commercial and industrial loans, and commercial real estate loans. The consolidation in YNB's market place and management's philosophy of relationship banking are key factors in continued strong loan growth. Strong competition from both bank and nonbank competitors could result in comparatively lower yields on new and established lending relationships. In addition, borrowers' concerns over the economy, real estate prices and interest rates could all be factors in future loan growth levels. Management anticipates continued loan growth for the second half of 1999. Providing the needed funding to meet loan demand remains a high priority. Continued profitable loan growth is a key factor in meeting earnings growth goals. In May, 1999, the Holding Company sold 1,610,000 shares of its common stock in a public offering, raising $17,620,000. This capital offering has resulted in 13 an increase in the legal lending limit of the Bank and will allow for increased lending to existing customers as well as the ability to compete for larger loan relationships.
- -------------------------------------------------------------------------------------------------- (in thousands) 6/30/99 12/31/98 Change % change - -------------------------------------------------------------------------------------------------- Commercial real estate $ 183,208 $ 166,725 $ 16,483 9.9% Real estate - mortgage Residential 100,953 93,540 7,413 7.9 Home equity 23,067 23,474 (407) (1.7) Commercial and industrial 161,377 133,263 28,114 21.1 Real Estate - construction 48,721 38,386 10,335 26.9 Consumer 25,531 24,531 1,000 4.1 Other loans 10,396 11,730 (1,334) (11.4) - -------------------------------------------------------------------------------------------------- Total loans $ 553,253 $ 491,649 $ 61,604 12.5% - --------------------------------------------------------------------------------------------------
The table above lists the loan growth by type for the period of December 31, 1998 to June 30, 1999. Commercial and industrial loans had the greatest growth increasing $28,113,000 in the period and accounting for 45.6% of the total increase in outstanding loans. Commercial real estate loans had the second greatest growth, increasing $16,483,000 and accounting for 26.7% of the total increase in outstanding loans. All other loan types increased with the exception of Home equity and Other loans, which decreased $407,000 and $1,334,000, respectively. The strong loan growth recorded in the first half of 1999 was the result of the continuing opportunities available to YNB due to consolidation in the market place. Liabilities The following table provides information concerning YNB's deposit base at June 30, 1999 and December 31, 1998.
- ---------------------------------------------------------------------------------------------- (in thousands) 6/30/99 12/31/98 Change % Change - ---------------------------------------------------------------------------------------------- Non-interest bearing demand deposits $ 80,052 $ 75,426 $ 4,626 6.1% Interest bearing demand deposits 59,387 51,672 7,715 14.9 Money market deposits 44,045 44,661 (616) (1.4) Savings deposits 80,462 77,537 2,925 3.8 Certificates of deposit of $100,000 or over 49,685 29,525 20,160 68.3 Other time deposits 313,280 240,822 72,458 30.1 - ---------------------------------------------------------------------------------------------- Total $ 626,911 $ 519,643 $ 107,268 20.6% - ----------------------------------------------------------------------------------------------
YNB's deposit base is the principal source of funds supporting interest-earning assets. Total deposits increased $107,268,000 or 20.6% to $626,911,000 at June 30, 1999 compared to $519,643,000 at December 31, 1998. Certificates of deposit were competitively priced throughout the first six months of 1999 to fund new loan growth and improve liquidity. Growth in YNB's deposit base in 1999 continued to be principally in certificates of deposit. Certificates of deposit increased $83,900,000 or 31.0% to $354,247,000 at June 30, 1999 from $270,347,000 at December 31, 1998. Growth in certificates of deposit accounted for 78.2% of the total 14 increase in deposits for the first six months of 1999. This strong growth rate has resulted in certificates of deposit increasing to 56.5% of total deposits at June 30, 1999 from 52.0% at year-end 1998. This increasing reliance on higher cost certificates of deposit to fund asset growth is a major factor in the continued decrease in YNB's net interest margin. In March of 1998, YNB began to market its certificates of deposit through a nationwide computer based service. This service allows YNB to have access to a wider market to raise needed funding. At June 30, 1999, YNB had $62,300,000 in outstanding certificates of deposit raised through this service. This includes $37,600,000 raised in the first six months of 1999. Management anticipates that this market will continue to play an important role in funding future asset growth. Noninterest bearing demand deposits increased $4,626,000 or 6.1% to $80,052,000 as of June 30, 1999 when compared to $75,426,000 at December 31, 1998. This increase is partially due to the normal fluctuations in demand deposit balances but also reflects management's ongoing efforts to capture the deposit relationships of both new and existing customers. A more meaningful measurement of non-interest deposits results from a comparision of average balances. For the six months ended June 30, 1999 average noninterest bearing demand deposits were $74,457,000 an increase of $8,682,000 when compared to the same period in 1998. Interest bearing demand deposits increased $7,715,000 or 14.9% to $59,387,000 at June 30, 1999 from $51,672,000 at year-end 1998. This growth resulted from management's focus on attracting lower cost deposits to fund earning asset growth. This focus on lower cost funding is also reflected in the $2,925,000 or 3.8% increase in savings deposits, which totaled $80,462,000 at June 30, 1999 compared to $77,537,000 at year end. Offsetting these increases was a modest decline in money market balances caused by a decrease in business money markets partially offset by an increase in personal money markets. While it is management's desire to fund earning asset growth with the lowest cost deposits, core deposit growth levels, excluding certificates of deposit, are not adequate to meet current or projected loan demand. This has resulted in an increased reliance on higher rate certificates of deposit to provide the required funding. In a rising rate environment, this reliance will cause the cost of funding earning assets to increase. YNB continues to seek lower cost funding sources. One source is opening new branches to serve a wider market area. In April 1999, YNB opened its 11th branch, which is located in Newtown, Bucks County, Pennsylvania. This branch opens a new market for YNB. Bucks County, Pennsylvania is located directly across the Delaware River from Mercer County, New Jersey, where all of YNB's other branches are currently located. There are also plans to open a branch in Burlington County, New Jersey which is located directly south of Mercer County. Ib addition, a third new branch is planned in 1999. This branch will be located in the YNB Corporate headquarters building. The headquarters building is to be located in Hamilton Township, Mercer County New Jersey. We expect these new branches will improve YNB's ability to generate lower cost deposits and create additional lending opportunities. With the consolidation in YNB's market place, additional opportunities for new branches in both Pennsylvania and New Jersey are possible and management is currently evaluating additional branch locations to be opened in 2000. 15 Borrowed Funds Borrowed funds totaled $275,877,000 at June 30, 1999 compared to $177,888,000 at December 31, 1998. Approximately $235,508,000 or 85.4% of borrowed funds at June 30, 1999 are related to the Investment Growth Strategy. The increase for the first six months of 1999 was $97,989,000 or 55.1%. The majority of the increase was in securities sold under agreements to repurchase and Federal Home Loan Bank advances used to fund the purchase of Investment Growth Strategy assets. Management continues to closely monitor the mix of funding used to support the Investment Growth Strategy. As Investment Growth Strategy funding matures or is called, management will replace it with funding that will reduce the overall interest rate risk profile of YNB. Management anticipates that funding costs associated with borrowed funds will increase as shorter term repurchase agreement mature and callable funding at below market rates are called. At June 30, 1999 $142,500,000 or 60.5% of the Investment Growth Strategy funding was in callable funding compared to $76,500,000 or 81.2% at December 31, 1998. Securities sold under agreements to repurchase totaled $154,508,000 at June 30, 1999 compared to $87,120,000 at December 31, 1998. $61,500,000 or 39.8% of the repurchase agreements outstanding at June 30, 1999 were callable compared to $61,500,000 or 70.6% at December 31, 1998. Callable repurchase agreements have terms of five to ten years and call dates of one year. All of the growth recorded in repurchase agreements in the first six months of 1999 was in repurchase agreements with terms of less than one year. With the recent rise in interest rates, management anticipates that repurchase agreement costs will rise as shorter-term repurchase agreements mature and are replaced at higher market rates. YNB had Federal Home Loan Bank of New York (FHLB) advances outstanding of $118,305,000 at June 30, 1999 compared to $89,316,000 at December 31, 1998. YNB continues to utilize callable FHLB advances to fund both Investment Growth Strategy purchases as well as other earning assets. At June 30, 1999 callable advances totaled $113,500,000 or 95.9% of advances outstanding compared to $83,500,000 or 93.4% at December 31, 1998. Callable FHLB advances have terms of ten years and are callable after periods ranging from one to five years. There are $41,000,000 in callable advances with call dates in 1999. Management anticipates that, if rates continue to rise, some or all of these advances will be called and will have to be replaced with higher costing advances. The callable FHLB Advances and repurchase agreements have allowed YNB to lower its borrowing costs, while at the same time extending the maturity of borrowings. In the event that rates rise, the callable borrowings will be called. In the event of falling interest rates, callable borrowings will not be called and could remain outstanding until maturity. There have been no calls of callable borrowings in 1999, but, if interest rates continue to rise, there could be calls of both FHLB advances and securities sold under agreement to repurchase. This could result in higher borrowing costs and increased borrowed fund expenses. Borrowed funds included $1,800,000 related to the ESOP. The ESOP purchased 155,340 shares of common stock of the Holding Company with a loan from a nonaffiliated financial institution. The financing is for a term of five years with an interest rate of 7.00% and a maturity date in 16 2004. The interest rate is fixed for the period of the loan and the loan will be repaid in equal monthly installments over the term of the loan. The shares purchased by the ESOP were used as collateral for the loan. The Holding Company guarantees the repayment of the loan. YNB has the ability to borrow up to $37,845,000 from the FHLB through its line of credit program, subject to collateral requirements. In addition, YNB is eligible to borrow up to 30% of assets under the FHLB advance program subject to FHLB stock requirements, collateral requirements and other restrictions. YNB also maintains unsecured federal funds lines with four commercial banks totaling $23,000,000 for daily funding needs. YNB's funding strategy is to rely on deposits to fund new loan growth whenever possible and to rely on borrowed funds as a secondary funding source for loans. Company - Obligated Mandatorily Redeemable Trust Preferred Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures of the Company (Trust Preferred Securities) On October 16, 1997, YNB through its subsidiary Yardville Capital Trust completed the sale of $11,500,000 9.25%, Trust Preferred Securities to the public. For regulatory capital purposes the entire amount of the issue is treated as Tier 1 capital at the Holding Company level. Capital On May 18, 1999, the Holding Company completed the sale of 1,610,000 shares of its common stock in an underwritten secondary public offering. The common stock was offered at a price of $12.00 per share and generated gross proceeds of $19,320,000. Net proceeds after the underwriting discount and other offering costs was approximately $17,620,000. Of the net proceeds $17,501,000 was contributed to the Bank to support future asset growth. Stockholders' equity at June 30, 1999 totaled $57,782,000, an increase of $17,026,000 or 41.8% compared to $40,756,000 at December 31, 1998. This net increase resulted from the following factors: (i) Net income of $3,544,000 less cash dividend payments of $821,000. (ii) The unrealized loss on available for sale securities was $284,000 at December 31, 1998 compared to an unrealized loss of $3,845,000 at June 30, 1999. This shift resulted in a $3,561,000 reduction in stockholders' equity. (iii) Proceeds of $66,000 from exercised options, $2,000,000 from the issuance of common shares to the ESOP and approximately $17,620,000 from the capital offering. (iv) Repurchase of 1,700 shares of common shares for $22,000, which increased treasury shares to 172,000 and the cost of total stock repurchases to $3,030,000. (v) Commitment to ESOP of $1,800,000, representing the balance of the loan used to finance the purchase of common stock by the ESOP. The improvement in the capital ratios from December 31, 1998 to June 30, 1999 was primarily due to the capital offering completed in May. Management remains committed to keeping YNB a well-capitalized institution under the prompt corrective action rules. 17 The following table sets forth regulatory capital ratios for the Holding Company and the Bank as of June 30, 1999 and December 31, 1998 Amount Ratios - ------------------------------------------------------------------------------ dollars in thousands 6/30/99 12/31/98 6/30/99 12/31/98 - ------------------------------------------------------------------------------ Risk-based capital: Tier 1: Holding Company $ 73,127 $ 52,531 11.8% 9.9% Bank 73,106 50,948 11.8 9.6 - ------------------------------------------------------------------------------ Total: Holding Company 80,749 59,151 13.0 11.2 Bank 80,728 56,341 13.0 10.8 - ------------------------------------------------------------------------------ Tier 1 leverage: Holding Company 73,127 52,531 8.3 7.7 Bank $ 73,106 $ 50,948 8.3% 8.5% - ------------------------------------------------------------------------------ The minimum regulatory capital requirements for financial institutions require institutions to have a Tier 1 leverage ratio of 4.0%; a Tier 1 risk-based asset capital ratio of 4.0% and a total risked based capital ratio of 8.0%. To be considered "well capitalized" an institution must have a minimum Tier 1 capital and total risk-based capital ratio of 6.0% and 10.0%, respectively, and a minimum Tier 1 leverage ratio of 5.0%. At June 30, 1999, the ratios of the Holding Company and the Bank exceeded the ratios required to be considered well capitalized. On October 28, 1997, the Holding Company's Board of Directors authorized management to repurchase up to 172,000 shares of the Holding Company's common stock in the open market in compliance with Rule 10b-18 under the Securities Exchange Act of 1934. As of June 30, 1999, as part of an overall capital plan, 172,000 shares had been repurchased at an average price of $17.62. 18 Credit Quality The following table sets forth nonperforming assets and risk elements in YNB's loan portfolio by type as of June 30, 1999 and December 31, 1998. Nonperforming Assets - ----------------------------------------------------------------------- (in thousands) 6/30/99 12/31/98 - ----------------------------------------------------------------------- Nonaccrual loans: Commercial and industrial $ 857 $ 232 Real estate - mortgage 569 570 Real estate - construction -- 684 Consumer 31 31 Other 312 529 - ----------------------------------------------------------------------- Total 1,769 2,046 - ----------------------------------------------------------------------- Restructured loans 610 634 - ----------------------------------------------------------------------- Loans 90 days or more past due: Commercial and industrial 3 -- Real estate - mortgage 1,199 1,093 Consumer 89 100 - ----------------------------------------------------------------------- Total 1,291 1,193 - ----------------------------------------------------------------------- Total nonperforming loans 3,670 3,873 - ----------------------------------------------------------------------- Other real estate 4,676 4,957 - ----------------------------------------------------------------------- Total nonperforming assets $ 8,346 $ 8,830 - ----------------------------------------------------------------------- At June 30, 1999, nonperforming loans, consisting of loans 90 days and more past due, restructured loans and nonaccrual loans, totaled $3,670,000, a $203,000 or 5.2% decrease from the $3,873,000 at December 31, 1998. Nonperforming loans as a percentage of total loans was 0.66% compared to 0.79% at year-end. This decline was caused by both a decrease in nonperforming loans and an increase in loans outstanding. Other real estate (O.R.E.) at June 30, 1999 totaled $4,676,000, a $281,000 or 5.7% decrease when compared to $4,957,000 at December 31, 1998. Management uses an active strategy to liquidate these assets and re-deploy the proceeds into earning assets. One other real estate property totaling $1,800,000 is under contract of sale. Nonperforming assets at June 30, 1999 totaled $8,346,000 a $484,000 or a 5.5% decrease from the $8,830,000 level at December 31, 1998. Total nonperforming assets as a percentage of total assets was 0.85% at June 30, 1999 compared to 1.17% at December 31, 1999. This decrease was due to a drop in both nonperforming loans and other real estate as well as an increase in assets. YNB continues to actively manage nonperforming assets with the goal of reducing these assets in relationship to the total loan portfolio. Whenever possible, existing nonperforming loan relationships are being restructured in an effort to return these loans to performing status. 19 Allowance for Loan Losses The allowance for loan losses totaled $7,622,000 at June 30, 1999, an increase of $854,000 from the $6,768,000 at year-end 1998. The provision for loan losses for the first six months of 1999 was $1,400,000 compared to $900,000 for the same period of 1998. Gross chargeoffs were $590,000 for the first six months of 1999 compared to $394,000 for the same period in 1998. Gross recoveries were $45,000 for the first six months of 1999 compared to $27,000 for the same period in 1998. Annualized chargeoffs as a percentage of average loans was 0.20% for the six months ended June 30, 1999 compared to 0.18% for the year ended December 31, 1999. Management maintains the allowance for loan losses at a level determined in accordance with management's documented allowance adequacy methodology, It is management's assessment, based on management's estimates, that the allowance is adequate in relation to the credit risk exposure levels. One measure of the adequacy of the allowance for loan losses is the ratio of allowance for loan losses to total loans. This ratio was 1.38% at both June 30, 1999 and December 31, 1998. Another measure of the adequacy of the allowance for loan losses is the ratio of the allowance for loan losses to total nonperforming loans. This ratio was 207.7% at June 30, 1999 compared to 174.7% at December 31, 1998. The balance of the allowance for loan losses is determined by an overall analysis of the loan portfolio and reflects an amount, which in management's judgement is adequate to provide for potential loan losses. Results of Operations Net Income YNB reported net income of $3,544,000 for the six months ended June 30, 1999, an increase of $828,000 or 30.5% over the same period in 1998. The increase in net income for the six months ended June 30, 1999, compared to the same period in 1998, is primarily attributed to higher net interest income, offset by a higher provision for loan losses and increased non-interest expense. Basic earnings per share for the six months ended June 30, 1999 increased $0.12 or 22.2% to $0.66 from $0.54 for the same period in 1998. Diluted earnings per share increased $0.12 or 22.6% to $0.65 for the six months ended June 30, 1999 from $0.53 for same period in 1998. On a quarterly basis, net income for the second quarter of 1999 was $1,990,000 and represented a $608,000 or 44.0% increase over the net income for the same period of 1998. On a per share basis, basic and diluted earnings per share for the second quarter of 1999 were $0.34, an increase of $0.07 or 25.9% when compared to the second quarter of 1998. The increase in net income and earnings per share for the quarter is due to the reasons discussed above. Net Interest Income YNB's net interest income for the first six months of 1999 was $13,517,000, an increase of $2,660,000 or 24.5% from the same period in 1998. The principal factor contributing to this increase was an increase in interest income of $7,056,000 resulting from increased loan and 20 securities balances offset by an increase of $4,396,000 in interest expense. This increase in interest expense was primarily due to higher volume of time deposits and borrowed funds. The net interest margin (tax equivalent basis) which is net income divided by average earning assets, for the six months ended June 30, 1999, was 3.30% a 36 basis point or 9.8% decline compared to 3.66% for the same period in 1998. The principal factors causing the narrowing of the net interest margin were lower yields on and increased levels of securities and loans, and higher volumes of certificates of deposit and borrowed funds. The net interest margin for the 1999 and 1998 comparative periods was also negatively impacted by the Investment Growth Strategy. The targeted spread on this strategy is 75 basis points after tax. Because of the targeted spread on this strategy, there will be a negative impact to the net interest margin and return on assets. The balance outstanding in the Investment Growth Strategy at June 30, 1999, was approximately $236,500,000 compared to $137,730,000 at June 30, 1998. Conversely, this strategy increases both return on average equity and earnings per share, the primary goals of the strategy. On a quarterly basis, net interest income was $7,100,000, an increase of $1,522,000 or 27.3% when compared to the second quarter of 1998. The net interest margin (tax equivalent basis) for the three months ended June 30, 1999 was 3.26%, a 38 basis point or 10.4% decrease from the same period in 1998. The reasons for the decline are the same as discussed above. Interest Income For the six months ended June 30, 1999 total interest income was $31,168,000, an increase of $7,056,000, or 29.3% when compared to interest income of $24,112,000 for the same period in 1998. This increase is due to higher average balances in both loans and securities, which is partially offset by lower yields on both earning asset types. Average loans increased $120,473,000 or 29.2% while the yield declined 51 basis points to 8.28% from 8.79%. The decline in loan yields reflects strong competition for loans in YNB's market as well as a 75 basis point drop in the prime rate in the last four months of 1998. A significant portion of YNB's commercial loans has interest rates indexed to the prime rate. Interest and fees on loans for the six months ended June 30, 1999 increased $3,933,000 or 21.7% to $22,075,000 from $18,142,000 for the same period in 1998. Average securities outstanding for the six months ended June 30, 1999 increased $103,595,000 or 56.5% to $287,056,000 when compared to the $183,461,000 for the same period of 1998. Over the same period, the yield on the securities portfolio decreased 23 basis points to 6.04% from 6.27%. These factors resulted in interest on securities increasing $2,922,000 to $8,671,000 for the six months ended June 30, 1999 compared to $5,749,000 for the same period in 1998. Overall, the yield on YNB's interest earning asset portfolio decreased 52 basis points to 7.44% for the six months ended June 30, 1999 from the 7.96% for the same period in 1998. For the second quarter of 1999, total interest income was $16,570,000, an increase of $4,149,000 or 33.4% when compared to the $12,421,000 for the second quarter of 1998. The increase was due to higher average balances of both loans and securities offset by lower yields on both asset types. The overall yield on earning assets for the second quarter of 1999 was 7.41% a 55 basis 21 point drop from the 7.96% reported for the same period of 1998. The decline in yield was primarily due to the lower prime rate of interest and the increased level of lower yielding securities. Interest Expense Total interest expense increased $4,396,000 or 33.2% to $17,651,000 for the first six months of 1999 compared to $13,255,000 for the same period in 1998. The increase in interest expense for the comparable time periods resulted from a larger deposit base, led by higher costing time deposits, and an increase in borrowed funds, Offsetting these higher balances were lower rates on deposits and borrowed funds. The average rate paid on interest bearing liabilities for the six months ended June 30, 1999 decreased 25 basis points to 4.71% from 4.96% for the same period of 1998. Interest on other time deposits under $100,000 increased $2,435,000 to $8,039,000 for the six months ended June 30, 1999 from $5,604,000 for the same period in 1998. This increase was caused by an increase in the average outstanding balance of $100,664,000 to $296,327,000 for the six months ended June 30, 1999, when compared to the outstanding average balance of $195,663,000 for the six months ended June 30, 1998. Offsetting this increase was a 30 basis point drop in the cost of time deposits under $100,000 to 5.43% for the first six months of 1999 from 5.73% for the same period of 1998. Interest expense on certificates of deposit under $100,000 accounted for 45.5% of total interest expense and 55.4% of the total increase in interest expense. During the first six months of 1999, YNB offered attractive rates on CDs locally and nationwide to fund loan growth and improve the liquidity profile of YNB. Interest expense on borrowed funds increased $1,707,000 to $5,684,000 for the first six months of 1999 when compared to $3,977,000 for the same period in 1998. The increase was caused by a $79,273,000 increase in the average balance outstanding for the six months ended June 30, 1999 when compared to the same period in 1998. The rate paid on borrowed funds declined 47 basis points for the six months ended June 30, 1999 to 5.14% from the 5.61% for the same period last year. The primary cause for the increase in interest expense on borrowed funds is the higher level of borrowings used to fund the Investment Growth Strategy. The shifting of borrowed funds out of fixed term products into convertible products at lower interest rates and, to a lesser extent, lower yields on term repurchase agreements, caused the overall decrease in rate. Total interest expense for the second quarter of 1999 increased $2,627,000 or 38.4% to $9,470,000 from $6,843,000 for the same period in 1998. The overall cost of interest bearing liabilities decreased 22 basis points to 4.75% from 4.97% for the second quarter of 1998. The reasons for the increase in interest expense for the second quarter are the same as discussed above. While YNB seeks to fund asset growth with lower cost savings, money market, interest bearing checking and non-interest bearing demand deposits, this is not always possible, as asset growth rates continue to exceed the growth rate in these deposit types. To meet the required funding needs, YNB anticipates continued reliance on higher cost retail CDs and, to a lesser extent, 22 borrowed funds. The ability of YNB to continue to lower the cost of interest bearing liabilities is dependent on market conditions. If interest rates should continue to rise, YNB's interest expense will also increase. Provision for Loan Losses YNB provides for possible loan losses by a charge to current operations. The provision for loan losses for the six months ended June 30, 1999 was $1,400,000, a 55.6% increase over the $900,000 provision recorded for the same period of 1998. For the three months ended June 30, 1999 the provision for possible loan losses was $750,000, a $250,000 or 50.0% increase from the second quarter of 1998. The increase in the provision for both the quarter and year to date comparisons was primarily due to the strong loan growth. Management believes that the reserve for loan losses is adequate in relation to the credit risk exposure levels. Non-interest Income Total non-interest income for the first six months of 1999 was $1,483,000, an increase of $63,000 or 4.4% over non-interest income of $1,420,000 for the same period in 1998. The increase was primarily due to growth in other non-interest income, offset by a decrease in the gains on sale of securities. Other non-interest income increased $81,000 or 11.1% for the first six months of 1999 compared to the same period in 1998. The increase is principally due to additional income derived from bank owned life insurance assets, which totaled $380,000 and represents a $38,000 or 11.1% increase over the $342,000 for the same period last year and accounts for 46.9% of the increase in total non-interest income. The increase is due to higher average balances of life insurance assets and a higher yield. The income earned on these assets is used to offset expenses on deferred compensation programs. Other categories of non-interest income reflect modest growth due to the increased size of YNB. For the three months ended June 30, 1999 total non-interest income increased $23,000 or 3.1% due to the factors discussed above. Of particular importance was the drop in gains on sale of securities, which decreased $34,000, or 91.9%. Excluding the impact of this decline, the increase in total non-interest income would have been $57,000 or 8.2%. The ability of YNB to generate higher levels of non-interest income remains a critical factor in increasing net income. Management continues to closely evaluate both traditional and non-traditional sources of new non-interest income as part of a longer-term strategy to increase earnings. Non-interest Expense Total non-interest expense increased $1,496,000 or 20.8% to $8,673,000 for the first six months 1999 compared to $7,177,000 for the same period in 1998. The increase in non-interest expenses was due to increases in salary and employee benefits, equipment expense, occupancy expense and other non-interest expense. Total non-interest expenses, on an annualized basis, as a 23 percentage of average assets were 1.97% for the first six months of 1999 compared to 2.23% for the same period of 1998. The improvement in this ratio is due to the strong asset growth in the first six months of the year. YNB's efficiency ratio for the first six months of 1999 was 57.8%, a decrease from the 58.5% for the same period in 1998. The efficiency ratio is computed by dividing total operating expenses by net interest income and other income. An increase in the efficiency ratio indicates that more resources are being utilized to generate the same or greater volume of income while a decrease would indicate a more efficient allocation of resources. Salary and employee benefits increased $788,000 or 20.0% to $4,728,000 for the first six months of 1999 compared to $3,940,000 for the same period in 1998. Salary and benefits expense accounted for 54.5% of total non-interest expenses for the first six months of 1999. Salary expense increased $494,000 reflecting increased staffing levels associated with the Pennington and Newtown branches and new hires in other areas of YNB and normal salary increases. Benefit expense increased $294,000 or 37.2%. In 1999, YNB created the ESOP for the benefit of employees. The compensation expense portion of the ESOP was $175,000 and accounted for 22.2% of the total increase in salary and employee benefits for the quarter and 59.5% of the increase in benefit expense. Equipment expense increased $111,000 or 18.0% to $729,000 for the first six months of 1999 from $618,000 for the same period in 1998. The equipment costs increase reflects the continuing efforts of YNB to maintain and upgrade technology in order to provide the highest quality service, increase productivity, and address Year 2000 issues. Equipment costs included depreciation on equipment, which increased $106,000 and accounted for 95.6% of the total increase in equipment expense for the period. Occupancy expense for the first six months of 1999 was $634,000, an increase of $139,000 or 28.1% compared to $495,000 for the same period in 1998. The increase was primarily due to higher costs associated with the lease payments and other operating costs of the Pennington and Newtown branches opened in August 1998 and April 1999, respectively. Total rent expense on leased properties increased $55,000 and accounted for 39.6% of the total increase for the period. Another component of occupancy expense that had a significant increase was repairs and maintenance, which increased $41,000. Other non-interest expenses increased $458,000 or 21.6% to $2,582,000 for the first six months of 1999 when compared to the $2,124,000 for the same period in 1998. The increase in other non-interest expenses accounts for 30.6% of the increase in total non-interest expenses. Expenses, including write downs, related to other real estate owned increased $245,000 or 213.0% for the six months ended June 30, 1999 when compared to the same period in 1998. This increase accounted for 53.5% of the total increase in other non-interest expenses and 16.4% of the increase in total non-interest expense. Marketing expenses increased $122,000 or 49.4% to $369,000 for the six months ended June 30, 1999 when compared to the same period last year. This increase reflects the costs associated with increased marketing efforts related to attracting deposits and increased costs of marketing to the wider market area now serviced by YNB. For the three months ended June 30, 1999 total non-interest expense increased $655,000 or 17.8% to $4,328,000 from $3,673,000 for the same period in 1998. Total non-interest expense, 24 on an annualized basis, as a percentage of average assets was 1.84% for the three months ended June 30, 1999 compared to 2.21% for the same period in 1998. YNB's efficiency ratio for the three months ended June 30, 1999 was 55.1%, an improvement over the 58.2% for the same period in 1998. Salary and employee benefit expense increased $440,000 or 22.0% to $2,437,000 from $1,997,000 for the same period in 1998. The increase in salary and employee benefit expenses accounted for 67.2% of the total increase in non-interest expense for the three months ended June 30, 1999 when compared to the same period in 1998. Occupancy expense increased $59,000 or 22.5% to $321,000 from $262,000 for the same period in 1998. Equipment expense increased $45,000 or 14.0% to $367,000 from $322,000 for the same period in 1998. Other non-interest expense increased $111,000 or 10.2% to $1,203,000 from $1,092,000 for the same period last year. The reasons for the increase in non-interest expense for the quarter are the same as discussed above. Income Tax Expense The effective income tax rate for the three and six months ended June 30, 1999 was 28.3% and 28.1% respectively, as compared to 35.3% for the same periods in 1998. The decrease in the effective tax rate was primarily due to the use of a state income tax planning strategy initiated in 1998. Management anticipates that this strategy will continue to reduce state income tax expense in 1999. Higher levels of tax-free income also reduced Federal income taxes in 1999 when compared to 1998. Total income tax expense for the six months ended June 30, 1999 was $1,383,000, a decrease of $101,000 or 6.8% from the $1,484,000 for the same period in 1998. The reduction in tax expense resulted from the lower effective tax rate offsetting the increase in taxable income. For the three months ended June 30, 1999 tax expense was $787,000 a $32,000 or 4.2% increase from the $755,000 for the same period in 1998. The increase was due to higher taxable income partially offset by the lower tax rate. 25 Year 2000 (Y2K) General Issues surrounding Y2K arise out of the fact that many existing computer programs use only two digits to identify a year in the date field. Additionally, Y2K is not just a computer issue, but involves communication, building and environmental systems as well as office equipment. Y2K readiness can be affected to the extent that other entities such as loan customers and key vendors are unsuccessful in addressing this issue. Y2K issues affect virtually all aspects of YNB's organization. YNB began taking a proactive approach to this issue in 1997. YNB's response includes a written compliance plan. Management has also prepared a cash contingency plan designed to insure that YNB has adequate liquidity to meet anticipated deposit outflows that could occur towards the end of 1999. Management believes that the level of resources committed to the project is adequate and the oversight provided by senior management and the Board of Directors is appropriate. YNB is on schedule with its Y2K compliance plan. State of Readiness YNB has identified six distinct areas for its Y2K compliance efforts. The Technology Committee, which consists of four directors and all of the executive management team, and the System and Operations committee are the primary groups coordinating YNB's Y2K efforts. The Board of Directors receives monthly reporting on the progress of YNB's Y2K compliance efforts. In addition, YNB receives guidance from the Federal Financial Institutions Examination Council (FFIEC), the formal interagency group responsible for uniform principles, standards, and procedures for the examination of financial institutions by the federal regulatory agencies, and participates in scheduled federal Year 2000 examinations. These examinations are being conducted to assess each financial institution's Year 2000 efforts. Core Computer Systems: YNB utilizes Information Technology System's (ITI) software for processing all deposit, loan and general ledger activity. In June 1998, YNB completed preliminary testing of all loan and deposit functions at a remote disaster recovery site utilizing Y2K testing software purchased from ITI. Results of the preliminary testing were satisfactory. Due to the recent hardware upgrades, YNB successfully completed testing on deposit, loan functions and general ledger in April of 1999. Management does not anticipate any major Y2K compliance problems with the ITI system. Significant Alliances: YNB depends on many outside vendors and suppliers to function efficiently. However, management has identified three systems that have significant Y2K compliance issues due to their reliance on computer hardware and software. These systems are the Federal Reserve Bank's Fed Line wire system, the MAC network which supports YNB's automatic teller machines (ATM) and Automated Clearing House (ACH) which YNB uses to process direct deposit activities including payrolls. YNB requires vendors and suppliers to provide representations that their systems are Y2K compliant and has a system in place to track vendors' Y2K compliance efforts. Testing of the Fed Line wire system, the MAC network and ACH transactions has been successfully completed 26 YNB has also identified our provider of mortgage servicing, Wendover Financial Services Corporation, as a significant alliance. Wendover is a subsidiary of Electronic Data Systems, which is one of the largest service providers of data processing applications in the United States. Wendover utilizes software provided by ALLTEL Incorporated. YNB has been provided detailed plans and strategies from both companies regarding Y2K compliance. ALLTEL has advised YNB that their systems are Y2K compliant at December 31, 1998. Based on reports received June 11, 1999, management has determined that Wendover is in compliance with FFIEC Y2K servicer guidelines. Management does not anticipate any major Y2K compliance problems with either Wendover Financial Services or ALLTEL. End User Computing: YNB's plan to ensure compliance of desktop computers throughout the company includes the replacement of non-compliant computers and related software. All mission critical personal computers are now Y2K complaint. YNB is in the process of testing non-mission critical personal computers and replacing them as necessary. YNB has determined that some personal computers, in non-mission critical areas, will only function if the internal clocks are manually reset to January 1, 2000. Management has successfully tested these computers by manually resetting the date to January 1, 2000 and determined that the computers function correctly once the date is changed. Rather than replace these personal computers, YNB has a plan in place to manually reset the dates on the affected personal computers to January 1, 2000. Management does not anticipate any major Y2K complaince issues with its personal computers. Technical Infrastructure: The most critical part of YNB's technical infrastructure is the communication network hardware and software that links all of YNB's departments and branches to the ITI system and allows them to process deposit, loan and general ledger activities. To ensure Y2K compliance the network was successfully tested at each location. Management does not anticipate any significant Y2K compliance issues with its network. Physical Property and Infrastructures: YNB's physical properties and infrastructures include energy and security systems as well as date sensitive equipment. Testing in this area is complete and management does not anticipate any significant Y2K issues resulting from this area. Commercial Loan Relationships: YNB has identified its commercial loan customers as a potential area of YNB's Y2K exposure. To the extent that a borrower's financial position is weakened as a result of Y2K issues, credit quality could be adversely affected. Management has reviewed the commercial loan portfolio to identify loan types having significant Y2K exposure. Loan calling officers are in the process of contacting loan customers and assessing their Y2K exposure and compliance efforts. All significant new commercial loan applications include an assessment of the Y2K exposure and compliance efforts of the customer. While YNB continues to closely monitor its commercial loan customers, management cannot predict whether its customers will be successful in becoming Y2K complaint. 27 Y2K Program Status Core Computer Systems Plan: 100% compliant by 3/31/99. Present Status: 100% completed. Significant Alliances Plan: 100% ready* by 6/30/99. Present Status: 100% completed. End User Computing Plan: 100% compliant by 6/30/99. Present Status: 100% completed. Technical Infrastructure Plan: 100% compliant by 6/30/99. Present Status: 100% completed. Physical Properties and Plan: 100% compliant by 3/31/99. Infrastructure Present Status: 100% completed. Commercial Loan Customers Plan: 100% ready* by 6/30/99. Present Status: 100% completed. *Ready means having a comprehensive Y2K program in place and a plan that will achieve compliance before January 1, 2000. Y2K Costs YNB's Y2K related costs for 1998 were approximately $810,000. This includes approximately $615,000 in equipment related purchases that will be depreciated over five years. The remaining expense includes additional compensation expense and costs related to testing and upgrading systems. Management anticipates 1999 expenditures to decline significantly as most of the significant hardware and software purchases have been completed. Total Y2K costs are projected to be between $50,000 and $100,000 in 1999. As of June 30, 1999, YNB has expensed approximately $30,000 in Y2K related costs. This level could rise in the event that unanticipated Y2K compliance issues are uncovered. Y2K Contingency Plans YNB has established Y2K contingency plans as part of its overall disaster recovery plan. These plans identify all mission critical systems and include strategies to overcome Y2K related problems. These plans continue to be reviewed and will be modified from time to time based on the results of the ongoing Y2K compliance efforts. Management believes that the contingency plans should allow YNB to continue to operate in the event of Y2K disruptions with a minimum of disruption and moderate increased costs. 28 Y2K Risks The most reasonable worst case scenario for YNB with respect to the Y2K problem is an adverse affect on the credit quality of its commercial loan portfolio. This could be caused by the inability of customers to service their bank debt due to their own Y2K problems or that of their key customers or suppliers. This could result in lower interest income and higher loan chargeoffs should the Y2K problems become very serious. Management cannot predict the number of customers that will experience Y2K related problems or the amount of revenue that could be lost due to them. In addition, without electrical power and telephone communication it would be very difficult for YNB to effectively operate. Item 3: Quantitative and Qualitative Disclosure about Market Risk There have been no material changes in YNB's market risk from December 31, 1998 except as discussed below. For information regarding YNB's market risk refer to the Company's 1998 Annual Report to stockholders. Changes in Earning Risk Net interest income over the next twelve-month period indicates a reduction in the risk to lower rates (-200 basis points) at June 30, 1999 than reported at December 31, 1998. Comparing the simulation results of this low rate scenario to the flat rate interest rate scenario indicates a -2.1% change in net interest income compared to -6.7% at year end 1998. The 1998 results reflect rate change of up or down 300 basis points. At the same time, YNB exposure to higher rates (+200 basis points) shifted to a -0.8% change in net interest income compared to a 1.8% at year-end 1998. The cumulative one-year gap turned negative $81,549,000 or -8.3% of assets at June 30, 1999 compared to positive $12,718,000 or 1.7% of assets at year-end 1998. The dollar change in the gap was $94,268,000. The most important reasons for this change in short-term earnings risk profile include: 1. The addition of $125,547,000 in securities with repricing or maturity dates beyond one year. 2. The origination of $46,615,000 in loans with repricing or maturity dates beyond one year. Changes in Market risk Management measures market risk by changes in the Economic Value of Portfolio Equity (EVPE) as a percentage of total assets with rate shifts of +/- 200 basis points. EVPE analysis is an indication of long-term market risks in the balance sheet. It measures the present value of asset and liability cash flows based on current inventory and market rates to determine the present value of equity. The present value of equity is subsequently measured by shifting interest rates by +/- 200 basis points to observe the variances as a percentage of total assets. It is management's intention to maintain modest changes in this measure with a target of below 3%. 29 At June 30, 1999, the EVPE changes by -4.26% for rate shifts of +200 and -0.14% for rate shifts of -200 basis points. The non-symmetry of the results is indicative of the callable funding booked in 1998. This compares to changes of - -2.35% and -2.74% respectively at December 31, 1998. The primary causes for this increase to rising rates are listed below: Liability durations had a significant impact falling to 1.40 years at June 30, 1999 from 1.84 years at December 31, 1998. This resulted from increased use of shorter-term repurchase agreements to hedge income risks to lower interest rates. In addition, the recent upward shift in the yield curve has shortened the expected conversion dates of callable funding. Asset durations increased to 2.46 years at June 30, 1999 from 1.99 years at December 31, 1998. The primary cause of this lengthening of assets was an increase in the investment duration to 4.69 years from 4.12 years. This lengthening resulted from purchases of long-term tax-free municipal bonds, callable bonds and slower prepayment speeds extending the average lives of mortgage backed securities. The EVPE change to rising rates of -4.26% exceeds the target limit of 3.0%. Management is currently implementing a strategy to lower the ratio below the 3.0% limit by the end of 1999. This strategy involves the extending the duration of liabilities. This will be accomplished by offering longer term certificates of deposit and extending the duration on borrowed funds. This strategy is dependent on YNB's ability to sell longer-term certificates of deposit to its customers. On the asset side, new security purchases will have a shorter duration than the existing portfolio. This should result in a gradual lowering of the investment portfolio duration. If interest rates continue to rise the existing portfolio duration will continue to increase as the duration of fixed rate mortgage backed securities and callable bonds increase and this could have the result of causing the duration of the investment portfolio to continue to extend. Lowering the change in EVPE to the 3.0% limit will be dependent on management's ability to lower the duration of the investment portfolio while at the same time extending the duration of the funding liabilities. PART II: OTHER INFORMATION Item 1: Legal Proceedings Not Applicable. Item 2: Changes in Securities and Use of Proceeds Not Applicable. Item 3: Defaults Upon Senior Securities 30 Not Applicable. Item 4: Submission of Matters to a Vote of Securities Holders Not Applicable. Item 5: Other Information Not Applicable Item 6: Exhibits and Reports on Form 8-K See attached exhibits. There were no Form 8-K reports filed during the quarter for which this report is filed. 31 INDEX TO EXHIBITS
Exhibit Number Description Page - ------------------------------------------------------------------------------------------------------------------- (G) 3.1 Restated Certificate of Incorporation of the Company, as amended by the Certificate of Amendment thereto filed on March 6, 1998. (B) 3.2 By-Laws of the Company (B) 4.1 Specimen Share of Common Stock (I) 4.2 See Exhibits 3.1 and 3.2 for the Registrant's Certificate of Incorporation and By-Laws, which contain provisions defining the rights of stockholders of the Registrant. (I) 4.3 Amended and Restated Trust Agreement dated October 16, 1997, among the Registrant, as depositor, Wilmington Trust Company, as property trustee, and the Administrative Trustees of Yardville Capital Trust. (I) 4.4 Indenture dated October 16, 1997, between the Registrant and Wilmington Trust Company, as trustee, relating to the Registrant's 9.25% Subordinated Debentures due 2027. (I) 4.5 Preferred Securities Guarantee Agreement dated as of October 16, 1997, between the Registrant and Wilmington Trust Company, as trustee, relating to the Preferred Securities of Yardville Capital Trust. (L) 10.1 Employment Contract between Registrant and Patrick M. Ryan. (L) 10.2 Employment Contract between Registrant and Jay G. Destribats (L) 10.3 Employment Contract between Registrant and Stephen F. Carman (L) 10.4 Employment Contract between Registrant and James F. Doran (L) 10.5 Employment Contract between Registrant and Richard A. Kauffman (L) 10.6 Employment Contract between Registrant and Mary C. O'Donnell (L) 10.7 Employment Contract between Registrant and Frank Durand III (D) 10.8 Salary Continuation Plan for the Benefit of Patrick M. Ryan
32 INDEX TO EXHIBITS (continued)
Exhibit Number Description Page - ------------------------------------------------------------------------------------------------------------------- (D) 10.9 Salary Continuation Plan for the Benefit of Jay G. Destribats (E) 10.10 1988 Stock Option Plan (L) 10.11 Employment Contract between Registrant and Thomas L. Nash (A) 10.12 Directors' Deferred Compensation Plan (B) 10.13 Lease Agreement between Jim Cramer and the Bank dated November 3, 1993 (L) 10.14 Lease between Gardeners Property Partnership and the Bank (A) 10.15 Agreement between the Lalor Urban Renewal Limited Partnership and the Bank dated October, 1994 (C) 10.16 Survivor Income Plan for the Benefit of Stephen F. Carman (C) 10.17 Lease Agreement between Devon Inc. and the Bank dated as of February 9, 1996 (F) 10.18 1997 Stock Option Plan (L) 10.19 Employment Contract between Registrant and Howard N. Hall (L) 10.20 Employment Contract between Registrant and Sarah J. Strout (L) 10.21 Employment Contract between Registrant and Nina D. Melker (L) 10.22 Employment Contract between Registrant and Timothy J. Losch (G) 10.23 Survivor Income Plan for the Benefit of Timothy J. Losch (G) 10.24 Lease Agreement between the Ibis Group and the Bank dated July 1997 (H) 10.25 Lease Agreement between Hilton Realty Co. of Princeton and the bank dated March 31, 1998.
33 INDEX TO EXHIBITS (continued)
Exhibit Number Description Page - ------------------------------------------------------------------------------------------------------------------- (H) 10.26 1994 Stock Option Plan. (J) 10.27 Lease agreement between Crestwood Construction and the Bank dated May 25, 1998 (K) 10.29 Yardville National Bank Employee Stock Ownership Plan (L) 10.30 Lease Agreement between Sycamore Street Associates and the Bank dated October 30, 1998 (L) 10.31 List of Subsidiaries of the Registrant 27.1 Financial Data Schedule - ------------------------------------------------------------------------------------------------------------------ (A) Incorporated by reference to the Registrant's Annual Report on Form 10-KSB/A filed on July 25, 1995 ---------------------------------------------------------------------------------- (B) Incorporated by reference to the Registrant's Registration Statement on Form SB-2 (Registration No. 33-78050) (C) Incorporated by reference to the Registrant's Annual Report on Form 10-KSB for fiscal year ended December 31, 1995 (D) Incorporate by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (E) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997, as amended by Form 10-Q/A filed on August 15, 1997 (F) Incorporated by reference to the Registrant's Registration Statement on Form S-8 (Registration No. 333-28193) (G) Incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (H) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1998, as amended by Form 10-Q/A filed June 9, 1998 (I) Incorporated by reference to the Registrant's Registration Statement on Form S-2 (Registration Nos. 333-35061 and 333-35061-01) (J) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1998. (K) Incorporated by reference to the Registration Statement on Form S-8 (Registration No. 333-71741). (L) Incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 as amended by Form 10-K/A filed on April 20, 1999.
34 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 --------------------------------- (Registrant) Date: August 16, 1999 By: /s/ Stephen F. Carman ----------------------------- ------------------------------ Stephen F. Carman Executive Vice President and Chief Financial Officer 36 EX-27 2 FINANCIAL DATA SCHEDULE
9 6-MOS DEC-31-1999 JUN-30-1999 16,225 830 5,865 0 273,114 101,018 96,784 545,253 7,622 981,526 626,911 274,077 9,723 13,300 0 0 40,050 17,465 57,515 22,075 8,671 422 31,168 11,435 17,651 13,571 1,400 18 8,673 4,927 4,927 0 0 3,544 0.66 0.65 7.44 1,769 1,291 610 0 7,172 590 45 7,622 7,622 0 0
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