Abington Bancorp, Inc. (the "Company") (NASDAQ: ABBC), the parent
holding company for Abington Bank (the "Bank"), reported net income
of $1.5 million for the quarter ended March 31, 2011, compared to
net income of $1.6 million for the quarter ended March 31, 2010.
The Company's basic and diluted earnings per share were each $0.08
for the first quarter of 2011 and 2010.
On January 26, 2011, the Company announced the signing of a
definitive merger agreement with Susquehanna Bancshares, Inc.,
("Susquehanna") pursuant to which the Company will be merged with
Susquehanna in a stock transaction that was valued at approximately
$273 million (the "Merger"). Under the terms of the merger
agreement, shareholders the Company will receive 1.32 shares of
Susquehanna common stock for each share of Company common stock.
The Bank's 20 branches in the suburban counties surrounding
Philadelphia will join Susquehanna Bank's network of 221 branches
in Pennsylvania, New Jersey, Maryland and West Virginia. The
combined company will have approximately $15 billion in assets,
including $10 billion in loans, and $10 billion in deposits. The
Merger is subject to shareholder and regulatory approvals and other
customary closing conditions.
Mr. Robert W. White, Chairman, President and CEO of the Company,
stated, "We are excited about the upcoming merger with Susquehanna,
which we expect to close later this year. We believe that the
merger will add value for our stockholders, and that the combined
company will benefit our existing customers in the form of
additional products and services and a larger branch network."
Net Interest Income
Net interest income was $8.0 million for the three months ended
March 31, 2011, representing a decrease of $206,000 or 2.5% over
the first three months of 2010. The decrease occurred as lower
interest expense was more than offset by a reduction in interest
income. Our average interest rate spread improved to 2.72% for the
first quarter of 2011 from 2.65% for the first quarter of 2010 as a
decrease in the average rate paid on our interest-bearing
liabilities exceeded the decrease in the average yield earned on
our interest-earning assets. Our net interest margin improved to
2.94% for the first three months of 2011 from 2.92% for the three
months of 2010.
Interest income for the three months ended March 31, 2011
decreased $1.4 million or 10.7% over the comparable 2010 period to
$11.7 million. The decrease occurred as a result of a decline in
both the average balance of our total interest-earning assets and
the average yield earned on those assets. Although the average
balances of our investment and mortgage-backed securities increased
quarter-over-quarter, as did the balance of our other
interest-earning assets, these increases were more than offset by a
decrease in the average balance of our loan portfolio of $75.5
million or 9.9% quarter-over-quarter. The average yield earned on
our total interest-earning assets decreased 35 basis points to
4.28% for the first quarter of 2011 compared to 4.63% for the first
quarter of 2010 due to primarily to declines in the average yield
earned on investment and mortgage-backed securities.
Interest expense for the three months ended March 31, 2011
decreased $1.2 million or 24.5% from the comparable 2010 period to
$3.7 million. The decrease occurred as a result of a decline in
both the average balance of our total interest-bearing liabilities
and the average rate paid on those liabilities. The average balance
of our total interest-bearing liabilities decreased $39.1 million
or 4.0% to $940.8 million for the first quarter of 2011 from $979.9
million for the first quarter of 2010. The decrease was due
primarily to a decrease in the average balance of our advances from
the Federal Home Loan Bank ("FHLB") of $49.4 million or 34.3% and
our certificates of deposit of $33.8 million or 7.3%,
quarter-over-quarter. This was partially offset by an increase in
the average balance of our core deposits of $12.3 million
quarter-over-quarter. The average rate we paid on our total
interest-bearing liabilities decreased 42 basis points to 1.56% for
the first quarter of 2011 from 1.98% for the first quarter of 2010
due to declines in the average rate paid on our advances from the
FHLB of 61 basis points and our deposits of 27 basis points.
Provision for Loan Losses and Asset Quality
No provision for loan losses was recorded during the first
quarter of 2011. A provision of $563,000 was recorded during the
first quarter of 2010. The provision for loan losses is charged to
expense as necessary to bring our allowance for loan losses to a
sufficient level to cover known and inherent losses in the loan
portfolio. Management determined that no provision was required
during the first quarter of 2011 based on our evaluation of the
overall adequacy of the allowance for loan losses in relation to
the loan portfolio, and in consideration of a number of factors
including a decrease in the outstanding balance of our loans
receivable and the resolution or charge-off of certain
large-balance, non-performing loans in recent periods.
Our non-accrual loans increased slightly during the first
quarter of 2011 to $7.1 million at March 31, 2011 from $7.0 million
at December 31, 2010. The increase was due primarily to the
addition of one commercial real estate loan with an outstanding
balance of $185,000 at March 31, 2011. Our total non-performing
loans, defined as non-accruing loans and accruing loans 90 days or
more past due, decreased to $8.2 million at March 31, 2011 from
$9.0 million at December 31, 2010. This was primarily a result of
certain of our past due accruing loans becoming current in their
payments during the quarter. At March 31, 2011 and December 31,
2010, our non-performing loans amounted to 1.19% and 1.29%,
respectively, of loans receivable, and our allowance for loan
losses amounted to 52.68% and 47.27%, respectively, of
non-performing loans. At March 31, 2011 and December 31, 2010, our
non-performing assets amounted to 2.71% and 2.62% of total assets,
respectively.
Non-Interest Income and Expenses
Our total non-interest income increased to $694,000 for the
first quarter of 2011 from $355,000 for the first quarter of 2010.
The increase was due primarily to a $386,000 improvement in our net
loss on REO quarter-over-quarter. The larger net loss during the
2010 period was the result of a higher level of write-downs and
losses on sales during that period.
Our total non-interest expenses for the first quarter of 2011
amounted to $6.9 million, representing an increase of $969,000 or
16.2% from the first quarter of 2010. The largest increase was in
our expense for professional services, which increased $527,000 or
118.7% quarter-over-quarter. The increase was due primarily to
additional legal and consulting expenses related to our proposed
merger with Susquehanna, including expenses related to certain
shareholder lawsuits. Also contributing to the increase in our
total non-interest expenses were increases in our salaries and
employee benefits and deposit insurance premium expenses, which
increased $167,000 and $158,000, respectively,
quarter-over-quarter.
The Company recorded an income tax expense of approximately
$253,000 for the first quarter of 2011 compared to an income tax
expense of approximately $460,000 for the first quarter of 2010.
Our effective tax rate improved to 14.1% for the first quarter of
2011 compared to 22.2% for the first quarter of 2010 largely as a
result of the tax benefit related to the exercise of stock options
by certain of our employees during the quarter.
Statement of Financial Condition
The Company's total assets decreased $73.7 million, or 5.9%, to
$1.17 billion at March 31, 2011 compared to $1.25 billion at
December 31, 2010. The most significant decreases were in cash and
cash equivalents, which decreased $29.9 million during the quarter,
investment and mortgage-backed securities, which decreased $27.2
million in the aggregate during the quarter, and loans receivable,
which decreased $16.4 million during the quarter. These decreases
occurred as repayments of securities and loans during the quarter
were used primarily to reduce our liabilities.
Our total deposits decreased $51.1 million or 5.7% to $848.9
million at March 31, 2011 compared to $900.1 million at December
31, 2010. The decrease during the first quarter of 2011 was due to
decreases in all categories of deposits, including a decrease in
our savings and money market accounts of $18.9 million and a
decrease in our certificates of deposit of $19.5 million. Our
advances from the FHLB decreased $26.0 million or 23.7% to $83.9
million at March 31, 2011 from $109.9 million at December 31, 2010,
as we continued to repay existing balances.
Our total stockholders' equity increased to $212.9 million at
March 31, 2011 from $211.9 million at December 31, 2010.
Contributing to the increase was the reissuance of approximately
87,000 shares of treasury stock with a cost basis of approximately
$831,000 in conjunction with the exercise of stock options by
certain of our employees during the quarter. Additionally, our
retained earnings increased $416,000 as our net income for the
period was partially offset by the payment of our quarterly cash
dividend of $0.06 per share of common stock. Limiting the effects
of these increases was a reduction in our accumulated other
comprehensive income of $666,000 resulting from a decrease in the
aggregate fair value of our available for sale investment and
mortgage-backed securities.
Abington Bancorp, Inc. is the holding company for Abington Bank.
Abington Bank is a Pennsylvania-chartered, FDIC-insured savings
bank which was originally organized in 1867. Abington Bank conducts
business from its headquarters and main office in Jenkintown,
Pennsylvania as well as 12 additional full service branch offices
and seven limited service banking offices located in Montgomery,
Bucks and Delaware Counties, Pennsylvania. As of March 31, 2011,
Abington Bancorp had $1.17 billion in total assets, $848.9 million
in total deposits and $212.9 million in stockholders' equity.
This news release contains certain forward-looking statements,
including statements about the financial condition, results of
operations and earnings outlook for Abington Bancorp, Inc.
Forward-looking statements can be identified by the fact that they
do not relate strictly to historical or current facts. They often
include words such as "believe," "expect," "anticipate," "estimate"
and "intend" or future or conditional verbs such as "will,"
"would," "should," "could" or "may." Forward-looking statements, by
their nature, are subject to risks and uncertainties. A number of
factors -- many of which are beyond the Company's control -- could
cause actual conditions, events or results to differ significantly
from those described in the forward-looking statements. The
Company's reports filed from time-to-time with the Securities and
Exchange Commission describe some of these factors, including
general economic conditions, changes in interest rates, deposit
flows, the cost of funds, changes in credit quality and interest
rate risks associated with the Company's business and operations
and the adequacy of our allowance for loan losses. Other factors
described include changes in our loan portfolio, changes in
competition, fiscal and monetary policies and legislation and
regulatory changes. Investors are encouraged to access the
Company's periodic reports filed with the Securities and Exchange
Commission for financial and business information regarding the
Company at www.abingtonbank.com under the Investor Relations menu.
We undertake no obligation to update any forward-looking
statements.
Additional Information and Where to Find It
Susquehanna has filed with the SEC a registration statement on
Form S-4 concerning the Merger. The registration statement included
a prospectus for the offer and sale of Susquehanna common stock to
the Company's shareholders as well as a joint proxy statement of
each of the Company and Susquehanna for the solicitation of proxies
from their respective shareholders for use at the meetings at which
the Merger will be voted upon. The Joint Proxy Statement/Prospectus
and other documents filed by Susquehanna with the SEC contain
important information about Susquehanna, the Company and the
Merger. We urge investors and the Company's shareholders to read
carefully the Joint Proxy Statement/Prospectus and other documents
filed with the SEC, including any amendments or supplements also
filed with the SEC. The Company's shareholders in particular should
read the Joint Proxy Statement/Prospectus carefully before making a
decision concerning the Merger. Investors and shareholders can
obtain a free copy of the Joint Proxy Statement/Prospectus -- along
with other filings containing information about Susquehanna -- at
the SEC's website at http://www.sec.gov. Copies of the Joint Proxy
Statement/Prospectus, and the filings with the SEC incorporated by
reference in the Joint Proxy Statement/Prospectus, can also be
obtained free of charge by directing a request to Abington Bancorp,
Inc., 180 Old York Road, Jenkintown, Pennsylvania 19046, Attention
Robert W. White, President, telephone (215) 886-8280.
The Company, Susquehanna and certain of their directors and
executive officers may, under the rules of the SEC, be deemed to be
"participants" in the solicitation of proxies from shareholders in
connection with the Merger. Information concerning the interests of
the persons who may be considered "participants" in the
solicitation as well as additional information concerning the
Company's and Susquehanna's directors and executive officers is set
forth in the Joint Proxy Statement/Prospectus. Information
concerning the Company's and Susquehanna's directors and executive
officers is also set forth in their respective proxy statements and
annual reports on Form 10-K (including any amendments thereto),
previously filed with the SEC.
ABINGTON BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31,
March 31, 2011 2010
-------------- --------------
ASSETS
Cash and due from banks $ 18,405,431 $ 17,917,261
Interest-bearing deposits in other banks 29,386,046 59,769,447
-------------- --------------
Total cash and cash equivalents 47,791,477 77,686,708
Investment securities held to maturity
(estimated fair value -- 2011,
$20,953,406; 2010, $20,806,340) 20,384,241 20,384,781
Investment securities available for sale
(amortized cost -- 2011, $107,946,969;
2010, $124,245,038) 108,284,090 124,903,901
Mortgage-backed securities held to maturity
(estimated fair value -- 2011,
$53,948,263; 2010, $58,338,548) 52,715,892 56,872,188
Mortgage-backed securities available for
sale (amortized cost -- 2011, $158,923,851;
2010, $164,632,654) 161,748,148 168,172,796
Loans receivable, net of allowance for loan
losses (2011, $4,301,401; 2010, $4,271,618) 680,029,837 696,443,502
Accrued interest receivable 4,231,694 4,102,984
Federal Home Loan Bank stock--at cost 13,183,400 13,877,300
Cash surrender value - bank owned life
insurance 43,175,786 42,744,766
Property and equipment, net 9,561,814 9,751,694
Real estate owned 23,628,145 23,588,139
Deferred tax asset 3,770,146 3,631,218
Prepaid expenses and other assets 4,884,941 4,938,037
-------------- --------------
TOTAL ASSETS $1,173,389,611 $1,247,098,014
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing $ 38,789,486 $ 49,807,778
Interest-bearing 810,158,125 850,251,190
-------------- --------------
Total deposits 848,947,611 900,058,968
Advances from Federal Home Loan Bank 83,867,458 109,874,674
Other borrowed money 16,367,141 15,881,449
Accrued interest payable 2,098,902 912,321
Advances from borrowers for taxes and
insurance 3,042,039 2,956,425
Accounts payable and accrued expenses 6,200,955 5,504,215
-------------- --------------
Total liabilities 960,524,106 1,035,188,052
-------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value,
20,000,000 shares authorized none issued - -
Common stock, $0.01 par value, 80,000,000
shares authorized; 24,460,240 shares
issued; outstanding: 20,231,550 shares
in 2011, 20,166,742 shares in 2010 244,602 244,602
Additional paid-in capital 202,723,230 202,517,175
Treasury stock--at cost, 4,228,690 shares
in 2011, 4,293,498 shares in 2010 (34,394,607) (34,949,051)
Unallocated common stock held by:
Employee Stock Ownership Plan (ESOP) (13,250,578) (13,460,338)
Recognition & Retention Plan Trust (RRP) (2,337,547) (2,589,310)
Deferred compensation plans trust (1,061,718) (1,045,153)
Retained earnings 58,935,362 58,519,670
Accumulated other comprehensive income 2,006,761 2,672,367
-------------- --------------
Total stockholders' equity 212,865,505 211,909,962
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,173,389,611 $1,247,098,014
============== ==============
ABINGTON BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
------------------------
2011 2010
----------- -----------
INTEREST INCOME:
Interest on loans $ 8,987,401 $ 9,999,227
Interest and dividends on investment and
mortgage-backed securities:
Taxable 2,321,562 2,697,977
Tax-exempt 377,634 398,027
Interest and dividends on other
interest-earning assets 16,534 5,892
----------- -----------
Total interest income 11,703,131 13,101,123
INTEREST EXPENSE:
Interest on deposits 2,769,310 3,288,583
Interest on Federal Home Loan Bank advances 874,912 1,554,366
Interest on other borrowed money 21,378 14,292
----------- -----------
Total interest expense 3,665,600 4,857,241
----------- -----------
NET INTEREST INCOME 8,037,531 8,243,882
PROVISION FOR LOAN LOSSES - 563,445
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 8,037,531 7,680,437
----------- -----------
NON-INTEREST INCOME
Service charges 273,931 296,378
Income on bank owned life insurance 431,020 438,486
Net loss on real estate owned (195,577) (581,275)
Other income 185,054 201,741
----------- -----------
Total non-interest income 694,428 355,330
----------- -----------
NON-INTEREST EXPENSES
Salaries and employee benefits 3,096,957 2,929,782
Occupancy 748,662 712,720
Depreciation 196,760 229,725
Professional services 970,642 443,911
Data processing 448,740 422,622
Deposit insurance premium 518,025 360,503
Advertising and promotions 169,657 107,373
Director compensation 142,916 219,946
Other 643,868 540,739
----------- -----------
Total non-interest expenses 6,936,227 5,967,321
----------- -----------
INCOME BEFORE INCOME TAXES 1,795,732 2,068,446
PROVISION FOR INCOME TAXES 253,279 460,086
----------- -----------
NET INCOME $ 1,542,453 $ 1,608,360
=========== ===========
BASIC EARNINGS PER COMMON SHARE $ 0.08 $ 0.08
DILUTED EARNINGS PER COMMON SHARE $ 0.08 $ 0.08
BASIC AVERAGE COMMON SHARES OUTSTANDING: 18,510,508 18,995,279
DILUTED AVERAGE COMMON SHARES OUTSTANDING: 19,313,058 19,372,522
ABINGTON BANCORP, INC.
UNAUDITED SELECTED FINANCIAL DATA
Three Months
Ended Year
March 31, Ended
------------------ December
2011 2010 31, 2010
------- -------- --------
Selected Operating Ratios(1):
Average yield on interest-earning assets 4.28% 4.63% 4.55%
Average rate on interest-bearing liabilities 1.56% 1.98% 1.83%
Average interest rate spread(2) 2.72% 2.65% 2.72%
Net interest margin(2) 2.94% 2.92% 2.95%
Average interest-earning assets to average
interest-bearing liabilities 116.25% 113.25% 114.32%
Net interest income after provision
for loan losses to non-interest expense 115.87% 128.71% 130.70%
Total non-interest expense to average assets 2.30% 1.91% 1.97%
Efficiency ratio(3) 79.44% 69.39% 68.81%
Return on average assets 0.51% 0.52% 0.61%
Return on average equity 2.90% 3.00% 3.60%
Average equity to average assets 17.62% 17.19% 17.00%
Asset Quality Ratios(4):
Non-performing loans as a percent of
total loans receivable(5) 1.19% 5.00% 1.29%
Non-performing assets as a percent of
total assets(5) 2.71% 4.73% 2.62%
Allowance for loan losses as a percent of
non-performing loans 52.68% 24.45% 47.27%
Allowance for loan losses as a percent of
total loans 0.63% 1.22% 0.61%
Net charge-offs to average loans receivable (0.02)% 0.18% 0.81%
Capital Ratios(6):
Tier 1 leverage ratio 14.55% 13.22% 13.84%
Tier 1 risk-based capital ratio 24.17% 20.54% 23.31%
Total risk-based capital ratio 24.76% 21.70% 23.89%
(1) With the exception of end of period ratios, all ratios are based on
average monthly balances during the indicated periods and, for the
three-month periods ended March 31, 2011 and 2010, are annualized where
appropriate.
(2) Average interest rate spread represents the difference between the
average yield on interest-earning assets and the average rate paid on
interest-bearing liabilities, and net interest margin represents net
interest income as a percentage of average interest-earning assets.
(3) The efficiency ratio represents the ratio of non-interest expense
divided by the sum of net interest income and non-interest income.
(4) Asset quality ratios are end of period ratios, except for net
charge-offs to average loans receivable.
(5) Non-performing assets consist of non-performing loans and real estate
owned. Non-performing loans consist of all accruing loans 90 days or more
past due and all non-accruing loans. It is our policy, with certain
limited exceptions, to cease accruing interest on single-family residential
mortgage loans 120 days or more past due and all other loans 90 days or
more past due. Real estate owned consists of real estate acquired through
foreclosure and real estate acquired by acceptance of a deed-in-lieu of
foreclosure.
(6) Capital ratios are end of period ratios and are calculated for Abington
Bank per regulatory requirements.
ABINGTON BANCORP, INC.
UNAUDITED SELECTED FINANCIAL DATA (continued)
March December March
31, 2011 31, 2010 31, 2010
-------- -------- --------
(Dollars in Thousands)
Non-accruing loans:
One- to four-family residential $ -- $ -- $ --
Multi-family residential and commercial real
estate(1) 1,514 1,348 4,788
Construction 5,547 5,664 22,659
Commercial business -- -- --
Home equity lines of credit -- -- --
Consumer non-real estate -- -- --
-------- -------- --------
Total non-accruing loans 7,061 7,012 27,447
-------- -------- --------
Accruing loans 90 days or more past due:
One- to four-family residential(2) 1,028 1,211 29
Multi-family residential and commercial real
estate -- 725 --
Construction 14 14 10,535
Commercial business -- -- --
Home equity lines of credit 62 76 106
Consumer non-real estate -- -- --
-------- -------- --------
Total accruing loans 90 days or more
past due 1,104 2,026 10,670
-------- -------- --------
Total non-performing loans(3) 8,165 9,038 38,117
-------- -------- --------
Real estate owned, net 23,628 23,588 21,817
-------- -------- --------
Total non-performing assets 31,793 32,626 59,934
-------- -------- --------
Performing troubled debt restructurings:
One- to four-family residential(4) 219 583 --
Multi-family residential and commercial real
estate 8,410 8,417 --
Construction 3,439 -- --
Commercial business -- -- --
Home equity lines of credit -- -- --
Consumer non-real estate -- -- --
-------- -------- --------
Total performing troubled debt
restructurings 12,068 9,000 --
-------- -------- --------
Total non-performing assets and
performing troubled debt restructurings $ 43,861 $ 41,626 $ 59,934
======== ======== ========
Total non-performing loans as a
percentage of loans 1.19% 1.29% 5.00%
======== ======== ========
Total non-performing loans as a
percentage of total assets 0.70% 0.72% 3.01%
======== ======== ========
Total non-performing assets as a
percentage of total assets 2.71% 2.62% 4.73%
======== ======== ========
(1) Included in this category of non-accruing loans at March 31, 2011,
December 31, 2010 and March 31, 2010 is one troubled debt restructuring
with a balance of $1.3 million, $1.3 million, and $2.4 million at such
date, respectively.
(2) Included in this category of non-accruing loans at March 31, 2011 is
one troubled debt restructuring with a balance of $219,000 at such
date.
(3) Non-performing loans consist of non-accruing loans plus accruing loans
90 days or more past due.
(4) Two performing troubled debt restructurings ("TDRs") included in
one- to four-family residential real estate loans with an aggregate
outstanding balance of $583,000 at March 31, 2010 were identified as a
result of enhanced procedures, although no such balances were
previously reported at such date.
Contact: Robert W. White Chairman, President and CEO or Jack
Sandoski, Senior Vice President and CFO (215) 886-8280
Abington Bancorp, Inc. (MM) (NASDAQ:ABBC)
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