Attached files
| file | filename |
|---|---|
| 8-K - QNB CORP | v209264_8k.htm |
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PO
Box 9005
Quakertown
PA 18951-9005
215.538.5600
1.800.491.9070
www.QNB.com
|
FOR IMMEDIATE
RELEASE
QNB
CORP. REPORTS RECORD NET INCOME FOR 2010
FOURTH
QUARTER EARNINGS INCREASE 46.6%
QUAKERTOWN, PA (January 27,
2011) QNB Corp. (the “Company” or “QNB”) (OTC Bulletin Board: QNBC), the parent
company of QNB Bank (the “Bank”), reported net income for the fourth quarter of
2010 of $1,810,000, or $0.58 per share on a diluted basis. This represents a
46.6% increase compared to net income of $1,235,000, or $0.40 per share on a
diluted basis, for the same period in 2009. Fourth quarter 2010 net income
increased $191,000, or 11.8%, compared to third quarter 2010’s
results.
For the
year ended December 31, 2010, net income was $7,217,000, or $2.32 per share on a
diluted basis, and represents a record year for the Company. In the year 2009,
the Company had net income of $4,227,000, or $1.36 per share on a diluted basis.
Net income expressed as an annualized rate of return on average shareholders’
equity was 12.53% for the year ended December 31, 2010 compared with 7.73% for
the year 2009.
Results
for both the fourth quarter and year ended December 31, 2010 compared to the
same periods in 2009 reflect significantly higher net interest income, resulting
from an increase in the net interest margin and strong growth in loans and
deposits, a slight reduction in the provision for loan losses and significantly
lower other-than-temporary impairment (OTTI) charges on investment
securities.
“We are
very proud of the Company’s record performance for the year, especially given
the challenging economic environment in which we operated. Our financial
performance reflects strong core earnings resulting from strong deposit and loan
growth coupled with an improved net interest margin. I am also pleased to report
that both the Bank and the Company remain ‘well capitalized’ by all regulatory
standards.”, stated Thomas J. Bisko, Chief Executive Officer.
Mr. Bisko
continued, “I am also extremely proud to report that we continue to successfully
execute our plan as expressed in the theme of our 2009 Annual Report: ‘Building
Relationships—QNB, a community bank committed to relationship banking.’ This is
reflected in both the record number of new customers brought into the QNB family
in 2010, as well as by the continuation and growth of our relationships with our
existing customers. I look forward to 2011 with optimism.”
Net
Interest Income and Net Interest Margin
The
positive trend of increasing net interest income continued in the fourth
quarter. Net interest income increased $1,040,000, or 18.0%, to $6,813,000 for
the fourth quarter of 2010 compared to the fourth quarter of 2009. Net interest
income for the fourth quarter of 2010 also reflects an improvement of $172,000,
or 2.6%, compared to the third quarter of 2010. The net interest margin was
3.75% for the fourth quarter of 2010 which was level with the third quarter of
2010 and higher than the 3.43% for the fourth quarter of 2009.
The
improvement in net interest income and the net interest margin compared with the
fourth quarter of 2009 primarily resulted from the impact of lower deposit costs
partially offset by lower yields on investment securities. The interest rate
paid on interest-bearing deposits declined by 60 basis points to 1.29% for the
fourth quarter of 2010 compared to the fourth quarter of 2009. The decline in
the rate paid on deposits largely resulted from the repricing of time deposits
at lower market rates. The average rate paid on time deposits declined 78 basis
points from 2.72% for the fourth quarter of 2009 to 1.94% for the fourth quarter
of 2010. In comparison, the average rate earned on investment securities
declined from 4.52% for the fourth quarter of 2009 to 3.79% for the fourth
quarter of 2010, a decline of 73 basis points while the average yield on loans
declined only two basis points from 5.88% to 5.86%.
Average
earning assets grew by $54,884,000, or 7.6%, with average loans increasing 8.3%
and average investment securities increasing 10.8% when comparing the fourth
quarter of 2010 to the same period in 2009. The growth in loans was mainly
related to real estate secured commercial loans and to a lesser degree
commercial and industrial loans and tax-exempt loans. On the funding side,
average deposits increased $67,697,000, or 10.9%, with average transaction
accounts increasing $76,138,000, or 31.1%. The growth in transaction accounts is
largely due to the success of QNB’s newest high-rate deposit product, Online
eSavings. The Online eSavings account was introduced in the second quarter of
2009 and continues to experience significant growth. This product had balances
totaling $67,435,000 as of December 31, 2010 compared to $52,661,000 at
September 30, 2010 and $19,944,000 at December 31, 2009.
For the
year ended December 31, 2010, net interest income totaled $25,913,000, an
increase of $4,212,000, or 19.4%, over the year 2009. When comparing the two
years, average loans and investment securities increased 9.2% and 8.3%,
respectively, and average total deposits increased 12.0%. The net interest
margin for 2010 was 3.72% compared to 3.42% for 2009, with lower deposit costs
being the primary factor in the improvement.
Asset
Quality, Provision for Loan Loss and Allowance for Loan Loss
QNB
closely monitors the quality of its loan portfolio and as a result of loan
growth, increases in non-performing, delinquent and classified loans and
continued concerns related to current economic conditions, has increased the
allowance for loan losses to reflect these conditions.
Total
non-performing assets were $11,634,000 as of December 31, 2010 compared with
$7,032,000 as of December 31, 2009. Included in this classification are
non-performing loans, other real estate owned (OREO) other repossessed assets
and non-performing pooled trust preferred securities. Total non-performing
loans, which represent loans on non-accrual status, loans past due more than 90
days and still accruing interest, and restructured loans were $9,872,000, or
2.05% of total loans, at December 31, 2010, compared to $6,102,000, or 1.36% of
total loans, at December 31, 2009. This is a slight improvement from the
$9,908,000 reported at September 30, 2010. OREO and repossessed assets were
$90,000 at December 31, 2010 and included one commercial property for $75,000
that is under agreement of sale. OREO and repossessed assets were $67,000 at
December 31, 2009. Non-performing trust preferred securities are carried at fair
value and were $1,672,000 and $863,000 at December 31, 2010 and 2009,
respectively. The higher carrying value is solely due to the increase in fair
value.
Total
delinquent loans, which include loans that are thirty days or more past due and
non-accrual loans, increased to 3.02% of total loans at December 31, 2010,
compared with 2.17% of total loans at December 31, 2009.
QNB
recorded a provision for loan losses of $1,200,000 in the fourth quarter of 2010
compared with $1,550,000 in the fourth quarter of 2009. Net loan charge-offs
were $377,000, or 0.32% annualized of total average loans for the fourth quarter
of 2010 compared with $906,000, or 0.82% annualized for the fourth quarter of
2009.
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6
For the
year 2010 the provision for loan losses was $3,800,000, a slight decrease from
the $4,150,000 recorded in 2009. Net loan charge-offs were $1,062,000, or 0.23%
of total average loans for 2010 compared with $1,769,000, or 0.41% of total
average loans for 2009.
QNB’s
allowance for loan losses of $8,955,000 represents 1.86% of total loans at
December 31, 2010 compared to an allowance for loan losses of $6,217,000, or
1.38% of total loans at December 31, 2009.
Non-Interest
Income
Total
non-interest income was $1,176,000 for the fourth quarter of 2010, a decrease of
$395,000 compared with the same period in 2009. Activity in the investment
securities portfolio is the primary reason for the decrease in total
non-interest income as the fourth quarter of 2010 included net losses of $23,000
in the fourth quarter of 2010 compared to net gains of $476,000 in the fourth
quarter of 2009. During the fourth quarter of 2010 QNB recorded an
other-than-temporary impairment (OTTI) charge of $33,000 on an equity security.
This compares to credit-related OTTI charges of $241,000 in the fourth quarter
of 2009 on its holdings of pooled trust preferred securities and a $6,000 charge
on an equity security. Also during the fourth quarter of 2010 there was $10,000
of net gains realized on the sale of securities compared to $723,000 of gains in
the same quarter of 2009.
The
decrease in non-interest income was also attributable to fees for services to
customers decreasing $87,000 when comparing the fourth quarter of 2010 to the
same 2009 quarter. The decrease was primarily caused by lower overdraft charges
as a result of the implementation of new rules under Regulation E and a
reduction in the per item fee charged to customers. Offsetting this decrease
were increases in ATM and debit card income of $57,000 and net gains on the sale
of residential mortgages of $97,000, due to an increase in volume.
Total
non-interest income for the twelve-month periods ended December 31, 2010 and
2009 was $4,339,000 and $3,885,000, respectively. Net losses on investment
securities for 2010 were $1,000 compared to net losses of $454,000 during 2009.
The net loss for 2010 was comprised of OTTI charges of $310,000 which was almost
entirely offset by net gains on the sales of securities of $309,000. This
compares to OTTI charges of $1,523,000 and net gains on the sales of securities
of $1,069,000 in 2009.
Fees for
services to customers declined $172,000 when comparing the year ended December
31, 2010 to 2009. Net gains on the sale of loans declined $139,000 to $494,000
for 2010, largely a result of a decline in the volume of loans sold. Partially
offsetting these decreases was an increase of $212,000 in ATM and debit card
income which reflects the growth in ATM and debit card transactions during 2010.
When comparing the two years, merchant income increased $36,000 and net losses
on the sale of other real estate owned and repossessed assets declined from
$134,000 in 2009 to $2,000 for the year ended December 31, 2010.
Non-Interest
Expense
Total
non-interest expense was $4,564,000 for the fourth quarter of 2010, an increase
of $217,000, or 5.0%, from the same quarter of 2009. The largest contributing
factor to the increase in non-interest expense was an increase of $89,000, or
26.9%, in net occupancy expense. The majority of the increase relates to lease
expense for the permanent Wescosville branch opened in October 2010 and an
increase in building repair and maintenance costs. Marketing expense increased
$64,000 primarily related to several large donations and community event
sponsorships as well as expenses related to the grand opening of the permanent
Wescosville branch. Comparing the fourth quarter of 2010 to 2009, third-party
services decreased $70,000. Prior year included expenses associated with the use
of an executive search consultant and higher legal fees. Taxes, insurance and
maintenance costs related to a property carried in other real estate owned
contributed $79,000 to the increase in non-interest expenses for the
quarter.
Page 3 of
6
Total
non-interest expense was $17,401,000 for the twelve-month period ended December
31, 2010. This represents an increase of $815,000, or 4.9%, from 2009.
Contributing to the increase in total non-interest expense was higher salary and
benefit expense which increased $474,000, or 5.6%, comparing the year ended
December 31, 2010 with 2009. An accrual for incentive compensation contributed
$211,000 to the increase with the remainder primarily attributable to normal
merit increases. Net occupancy expenses increased $192,000, or 14.3%. The
majority of the increase related to lease expense for the permanent Wescosville
branch as well as increases in utility costs, building repairs and maintenance
expenses and security related expenses. Similar to the fourth quarter, marketing
expense increases related to the opening of the permanent Wescosville branch and
an increase in donations over 2009 levels.
FDIC
insurance premiums decreased $170,000, or 14.0%, to $1,041,000 for the year
ended December 31, 2010. The higher expense in the prior year was the result of
the special assessment levied on all insured institutions by the FDIC in the
second quarter of 2009 in order to replenish its Deposit Insurance Fund. QNB’s
portion of the special assessment was $332,000. Significant growth in deposits
during 2010 combined with a slightly higher assessment rate has resulted in an
increase in the ongoing quarterly assessment expense. Expenses related to
foreclosures, repossessions and the ongoing expenses of other real estate owned
increased $89,000 when comparing the year 2010 with 2009. In 2010 costs related
to appraisals and title searches on loans, particularly classified loans,
increased $59,000. These expenses result from the Company’s ongoing efforts to
obtain the most recent and relevant information to analyze classified loan
risks.
About
the Company
QNB Corp.
is the holding company for QNB Bank, which is headquartered in Quakertown,
Pennsylvania. QNB Bank currently operates nine branches in Bucks, Montgomery and
Lehigh Counties and offers commercial and retail banking services in the
communities it serves. In addition, the Company provides retail brokerage
services through Raymond James Financial Services, Inc. and title insurance as a
member of Laurel Abstract Company LLC. More information about QNB Corp and QNB
Bank is available at www.qnb.com.
Forward
Looking Statement
This
press release may contain forward-looking statements as defined in the Private
Securities Litigation Act of 1995. Actual results and trends could differ
materially from those set forth in such statements due to various factors. Such
factors include the possibility that increased demand or prices for the
Company’s financial services and products may not occur, changing economic and
competitive conditions, technological developments, and other risks and
uncertainties, including those detailed in the Company’s filings with the
Securities and Exchange Commission, including "Item lA. Risk Factors," set forth
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2009. You should not place undue reliance on any forward-looking statements.
These statements speak only as of the date of this press release, even if
subsequently made available by the Company on its website or otherwise. The
Company undertakes no obligation to update or revise these statements to reflect
events or circumstances occurring after the date of this press
release.
Page 4 of
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QNB
Corp.
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Consolidated
Selected Financial Data (unaudited)
|
||||||||||||||||||||
|
(Dollars
in thousands)
|
||||||||||||||||||||
|
Balance
Sheet (Period End)
|
12/31/10
|
9/30/10
|
6/30/10
|
3/31/10
|
12/31/09
|
|||||||||||||||
|
Assets
|
$ | 809,186 | $ | 791,236 | $ | 776,115 | $ | 770,881 | $ | 762,426 | ||||||||||
|
Investment
securities (AFS & HTM)
|
293,231 | 282,098 | 264,719 | 266,104 | 260,209 | |||||||||||||||
|
Loans
receivable
|
482,182 | 477,940 | 474,678 | 456,217 | 449,421 | |||||||||||||||
|
Allowance
for loan losses
|
(8,955 | ) | (8,132 | ) | (7,009 | ) | (6,357 | ) | (6,217 | ) | ||||||||||
|
Net
loans
|
473,227 | 469,808 | 467,669 | 449,860 | 443,204 | |||||||||||||||
|
Deposits
|
694,976 | 674,247 | 657,970 | 662,371 | 634,103 | |||||||||||||||
|
Demand,
non-interest bearing
|
55,377 | 53,100 | 59,235 | 55,537 | 53,930 | |||||||||||||||
|
Interest-bearing
demand, money market and savings
|
329,368 | 309,688 | 281,448 | 282,205 | 259,077 | |||||||||||||||
|
Time
|
310,231 | 311,459 | 317,287 | 324,629 | 321,096 | |||||||||||||||
|
Short-term
borrowings
|
29,786 | 31,173 | 34,059 | 21,831 | 28,433 | |||||||||||||||
|
Long-term
debt
|
20,308 | 20,311 | 20,000 | 25,000 | 35,000 | |||||||||||||||
|
Shareholders'
equity
|
61,090 | 62,682 | 61,128 | 58,224 | 56,426 | |||||||||||||||
|
Asset
Quality Data (Period End)
|
||||||||||||||||||||
|
Non-accrual
loans
|
$ | 7,183 | $ | 8,094 | $ | 7,180 | $ | 3,664 | $ | 3,086 | ||||||||||
|
Loans
past due 90 days or more and still accruing
|
268 | 199 | 62 | 14 | 759 | |||||||||||||||
|
Restructured
loans
|
2,421 | 1,615 | 506 | 2,217 | 2,257 | |||||||||||||||
|
Non-performing
loans
|
9,872 | 9,908 | 7,748 | 5,895 | 6,102 | |||||||||||||||
|
Other
real estate owned and repossessed assets
|
90 | 12 | 40 | 51 | 67 | |||||||||||||||
|
Non-accrual
pooled trust preferred securities
|
1,672 | 1,497 | 1,539 | 986 | 863 | |||||||||||||||
|
Non-performing
assets
|
$ | 11,634 | $ | 11,417 | $ | 9,327 | $ | 6,932 | $ | 7,032 | ||||||||||
|
Allowance
for loan losses
|
$ | 8,955 | $ | 8,132 | $ | 7,009 | $ | 6,357 | $ | 6,217 | ||||||||||
|
Non-performing
loans / Loans
|
2.05 | % | 2.07 | % | 1.63 | % | 1.29 | % | 1.36 | % | ||||||||||
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Non-performing
assets / Assets
|
1.44 | % | 1.44 | % | 1.20 | % | 0.90 | % | 0.92 | % | ||||||||||
|
Allowance
for loan losses / Loans
|
1.86 | % | 1.70 | % | 1.48 | % | 1.39 | % | 1.38 | % | ||||||||||
Page 5 of
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QNB
Corp.
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||||||||||||||||||||||||||||
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Consolidated
Selected Financial Data (unaudited)
|
||||||||||||||||||||||||||||
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(Dollars
in thousands, except per share data)
|
For
the three months ended,
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For
the twelve months ended,
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||||||||||||||||||||||||||
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For
the period:
|
12/31/10
|
9/30/10
|
6/30/10
|
3/31/10
|
12/31/09
|
12/31/10
|
12/31/09
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|||||||||||||||||||||
|
Interest
income
|
$ | 9,189 | $ | 9,117 | $ | 9,049 | $ | 8,828 | $ | 8,937 | $ | 36,183 | $ | 35,368 | ||||||||||||||
|
Interest
expense
|
2,376 | 2,476 | 2,614 | 2,804 | 3,164 | 10,270 | 13,667 | |||||||||||||||||||||
|
Net
interest income
|
6,813 | 6,641 | 6,435 | 6,024 | 5,773 | 25,913 | 21,701 | |||||||||||||||||||||
|
Provision
for loan losses
|
1,200 | 1,200 | 700 | 700 | 1,550 | 3,800 | 4,150 | |||||||||||||||||||||
|
Net
interest income after provision for loan losses
|
5,613 | 5,441 | 5,735 | 5,324 | 4,223 | 22,113 | 17,551 | |||||||||||||||||||||
|
Non-interest
income:
|
||||||||||||||||||||||||||||
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Fees
for services to customers
|
368 | 392 | 406 | 405 | 455 | 1,571 | 1,743 | |||||||||||||||||||||
|
ATM
and debit card
|
326 | 317 | 314 | 271 | 269 | 1,228 | 1,016 | |||||||||||||||||||||
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Net
(loss) gain on investment securities available-for-sale
|
(23 | ) | (47 | ) | (67 | ) | 136 | 476 | (1 | ) | (454 | ) | ||||||||||||||||
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Other
|
505 | 342 | 374 | 320 | 371 | 1,541 | 1,580 | |||||||||||||||||||||
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Total
non-interest income
|
1,176 | 1,004 | 1,027 | 1,132 | 1,571 | 4,339 | 3,885 | |||||||||||||||||||||
|
Non-interest
expense:
|
||||||||||||||||||||||||||||
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Salaries
and employee benefits
|
2,286 | 2,409 | 2,167 | 2,137 | 2,254 | 8,999 | 8,525 | |||||||||||||||||||||
|
Net
occupancy and furniture and fixture
|
757 | 681 | 648 | 651 | 656 | 2,737 | 2,563 | |||||||||||||||||||||
|
FDIC
insurance premiums
|
262 | 268 | 257 | 254 | 244 | 1,041 | 1,211 | |||||||||||||||||||||
|
Other
|
1,259 | 1,120 | 1,169 | 1,076 | 1,193 | 4,624 | 4,287 | |||||||||||||||||||||
|
Total
non-interest expense
|
4,564 | 4,478 | 4,241 | 4,118 | 4,347 | 17,401 | 16,586 | |||||||||||||||||||||
|
Income
before income taxes
|
2,225 | 1,967 | 2,521 | 2,338 | 1,447 | 9,051 | 4,850 | |||||||||||||||||||||
|
Provision
for income taxes
|
415 | 349 | 558 | 512 | 212 | 1,834 | 623 | |||||||||||||||||||||
|
Net
income
|
$ | 1,810 | $ | 1,618 | $ | 1,963 | $ | 1,826 | $ | 1,235 | $ | 7,217 | $ | 4,227 | ||||||||||||||
|
Share
and Per Share Data:
|
||||||||||||||||||||||||||||
|
Net
income - basic
|
$ | 0.58 | $ | 0.52 | $ | 0.63 | $ | 0.59 | $ | 0.40 | $ | 2.32 | $ | 1.37 | ||||||||||||||
|
Net
income - diluted
|
$ | 0.58 | $ | 0.52 | $ | 0.63 | $ | 0.59 | $ | 0.40 | $ | 2.32 | $ | 1.36 | ||||||||||||||
|
Book
value
|
$ | 19.52 | $ | 20.13 | $ | 19.67 | $ | 18.79 | $ | 18.24 | $ | 19.52 | $ | 18.24 | ||||||||||||||
|
Cash
dividends
|
$ | 0.24 | $ | 0.24 | $ | 0.24 | $ | 0.24 | $ | 0.24 | $ | 0.96 | $ | 0.96 | ||||||||||||||
|
Average
common shares outstanding - basic
|
3,119,039 | 3,108,535 | 3,099,852 | 3,094,534 | 3,090,868 | 3,105,565 | 3,094,624 | |||||||||||||||||||||
|
Average
common shares outstanding - diluted
|
3,131,934 | 3,123,262 | 3,113,467 | 3,102,503 | 3,099,614 | 3,113,922 | 3,103,433 | |||||||||||||||||||||
|
Selected
Ratios:
|
||||||||||||||||||||||||||||
|
Return
on average assets
|
0.89 | % | 0.82 | % | 1.02 | % | 0.99 | % | 0.66 | % | 0.93 | % | 0.59 | % | ||||||||||||||
|
Return
on average shareholders' equity
|
12.08 | % | 11.01 | % | 13.83 | % | 13.31 | % | 8.92 | % | 12.53 | % | 7.73 | % | ||||||||||||||
|
Net
interest margin (tax equivalent)
|
3.75 | % | 3.75 | % | 3.74 | % | 3.64 | % | 3.43 | % | 3.72 | % | 3.42 | % | ||||||||||||||
|
Efficiency
ratio (tax equivalent)
|
53.76 | % | 55.00 | % | 53.48 | % | 54.20 | % | 55.92 | % | 54.11 | % | 60.88 | % | ||||||||||||||
|
Average
shareholders' equity to total average assets
|
7.41 | % | 7.43 | % | 7.39 | % | 7.42 | % | 7.37 | % | 7.42 | % | 7.70 | % | ||||||||||||||
|
Net
loan charge-offs
|
$ | 377 | $ | 77 | $ | 48 | $ | 560 | $ | 906 | $ | 1,062 | $ | 1,769 | ||||||||||||||
|
Net
loan charge-offs (annualized) / Average loans
|
0.32 | % | 0.07 | % | 0.04 | % | 0.50 | % | 0.82 | % | 0.23 | % | 0.41 | % | ||||||||||||||
|
Balance
Sheet (Average)
|
||||||||||||||||||||||||||||
|
Assets
|
$ | 802,144 | $ | 784,500 | $ | 769,539 | $ | 749,547 | $ | 745,551 | $ | 776,599 | $ | 710,580 | ||||||||||||||
|
Investment
securities (AFS & HTM)
|
280,111 | 262,160 | 258,226 | 252,439 | 252,742 | 263,307 | 243,104 | |||||||||||||||||||||
|
Loans
receivable
|
475,828 | 474,903 | 466,100 | 451,064 | 439,534 | 467,063 | 427,924 | |||||||||||||||||||||
|
Deposits
|
690,469 | 669,756 | 662,048 | 640,790 | 622,772 | 665,913 | 594,328 | |||||||||||||||||||||
|
Shareholders'
equity
|
59,436 | 58,327 | 56,905 | 55,635 | 54,957 | 57,589 | 54,710 | |||||||||||||||||||||
|
Contacts:
|
Thomas
J. Bisko, CEO
|
Bret
H. Krevolin, CFO
|
|
215-538-5600
x-5612
|
215-538-5600
x-5716
|
|
|
tbisko@qnb.com
|
bkrevolin@qnb.com
|
Page 6 of
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