YANB Yardville Natl Bancorp (MM)

HAMILTON, N.J., Oct. 25 /PRNewswire-FirstCall/ -- Yardville National Bancorp (NASDAQ:YANB) reported net income for the third quarter of $1.7 million, compared to $5.3 million earned for the same period of 2006, while diluted earnings per share for the quarter were $0.15, compared with $0.47 for the third quarter of 2006. For the first nine months of 2007, YNB reported a decline in net income to $10.2 million, compared with $15.6 million for the same period in 2006. Diluted earnings per share for the nine months ended September 30, 2007 were $0.90, compared to $1.37 for the same period in 2006. The decline in earnings was due to a reduction in net interest income partly reflecting the current lending environment, higher non-interest expenses and a higher provision for loan losses. These were partially offset by lower income tax expense and higher non-interest income. Expenses associated with merger-related matters also contributed to the lower earnings result. At September 30, 2007 total loans were $1.93 billion, a decrease of 3.0 percent from $2.00 billion at September 30, 2006. Non-performing assets were up $5.9 million to $26.3 million at September 30, 2007, compared to $20.3 million at September 30, 2006, though approximately $3.0 million less than the prior quarter. Total non-performing assets were 1.01 percent of total assets at September 30, 2007, compared with 0.68 percent of total assets at September 30, 2006. The allowance for loan losses to total loans was 1.41 percent of total loans, covering 104.2 percent of total non-performing loans at September 30, 2007. Net loan chargeoffs declined to $4.4 million for the first nine months of 2007 compared to $6.6 million for the same period last year. During the third quarter, YNB opened branches in Cranbury, Middlesex County, and Lawrenceville, Mercer County. At September 30, 2007, YNB had total deposits of $1.95 billion, compared to $2.03 billion at September 30, 2006. The deposit decline was partially due to the planned run-off of non-core deposits. At September 30, 2007, YNB's total risk-based capital was 13.1 percent, Tier 1 capital to risk-weighted assets was 11.9 percent, and Tier 1 capital to average assets was 10.4 percent. For 2007, YNB paid total cash dividends of $0.46 per share. On October 19, 2007, YNB shareholders approved a proposal for the above- referenced merger with The PNC Financial Services Group, Inc. (NYSE:PNC). Regulatory approval has been received for the merger transaction and it is expected to close on October 26, 2007. YNB had $2.59 billion in assets at September 30, 2007, with 35 branches serving individuals and businesses in Mercer, Hunterdon, Burlington, Middlesex, Somerset and Ocean counties in New Jersey and Bucks County in Pennsylvania. Forward-looking Statements This press release and other statements made from time to time by Yardville's management contain express and implied statements relating to Yardville's future financial condition, results of operations, plans, objectives, performance, and business, which are considered forward-looking statements. These may include statements that relate to, among other things, profitability, liquidity, adequacy of the allowance for loan losses, plans for growth, interest rate sensitivity, market risk, regulatory compliance, and financial and other goals. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our expectations may not be achieved. Actual results may differ materially from those expected or implied as a result of certain risks and uncertainties, including risks and uncertainties detailed from time to time in our filings with the SEC, as well as other risks and uncertainties detailed from time to time in statements made by our management. Yardville assumes no obligation to update or supplement forward-looking statements except as may be required by applicable law or regulation. L.G. Zangani, LLC provides financial public relations services to the Company. As such, L.G. Zangani, LLC and/or its officers, agents and employees, receives remuneration for public relations and/or other services performed for the Company. This remuneration may take the form of cash, capital stock in the Company, or warrants and/or options to purchase stock in the Company. Contact: Kevin Tylus, President and COO, (609) 631-6196 Leonardo G. Zangani (908) 788-9660 YNB's website http://www.ynb.com/ Investor Relations website http://www.zangani.com/ Yardville National Bancorp Summary of Financial Information (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, (in thousands, except per share amounts) 2007 2006 2007 2006 Stock Information: Weighted average shares outstanding: Basic 11,251 10,965 11,127 10,911 Diluted 11,504 11,345 11,440 11,314 Shares outstanding end of period 11,406 11,033 Earnings per share: Basic $0.15 $0.49 $0.92 $1.43 Diluted 0.15 0.47 0.90 1.37 Dividends paid per share 0.115 0.115 0.345 Book value per share 17.16 17.51 Tangible book value per share 17.05 17.38 Closing price per share 33.63 35.66 Closing price to tangible book value 197.24 % 205.18 % Key Ratios: Return on average assets 0.27 % 0.72 % 0.53 % 0.70 % Return on average stockholders' equity 3.58 11.46 7.16 11.47 Net interest margin 3.12 2.95 3.17 2.96 Net interest margin (tax equivalent) (1) 3.21 3.02 3.26 3.03 Efficiency ratio 68.00 58.50 68.79 59.89 Equity-to-assets at period end 7.53 6.41 Tier 1 leverage ratio (2) 10.39 8.82 Asset Quality Data: Net loan charge-offs $2,032 $2,835 $4,353 $6,598 Nonperforming assets as a percentage of total assets 1.01 0.68 % Allowance for loan losses at period end as a percent of: Total loans 1.41 1.12 Nonperforming loans 104.17 112.89 Nonperforming assets at period end: Nonperforming loans $26,266 $19,825 Other real estate - 502 Total nonperforming assets $26,266 $20,327 (1) The net interest margin is equal to net interest income divided by average interest earning assets. In order to make pre-tax income and resultant yields on tax-exempt investments and loans on a basis comparable to those on taxable investments and loans, a tax equivalent adjustment is made to interest income. The tax equivalent adjustment has been computed using the appropriate Federal income tax rate for the period, and has the effect of increasing interest income by $570,000 and $544,000 for the three month periods and $1,692,000 and $1,614,000 for the nine months ended September 30, 2007 and 2006, respectively. (2) Tier 1 leverage ratio is Tier 1 capital to adjusted quarterly average assets. Yardville National Bancorp and Subsidiaries Consolidated Statements of Income (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, (in thousands, except per share amounts) 2007 2006 2007 2006 INTEREST INCOME: Interest and fees on loans $35,565 $38,062 $108,651 $110,790 Interest on deposits with banks 97 679 993 1,245 Interest on securities available for sale 5,621 8,833 16,383 26,637 Interest on investment securities: Taxable 16 22 52 71 Exempt from Federal income tax 1,137 1,044 3,304 3,079 Interest on Federal funds sold 136 241 476 521 Total Interest Income 42,572 48,881 129,859 142,343 INTEREST EXPENSE: Interest on savings account deposits 7,182 7,061 21,443 20,182 Interest on certificates of deposit of $100,000 or more 2,941 2,886 9,463 7,670 Interest on other time deposits 8,178 7,176 24,401 19,139 Interest on borrowed funds 3,751 9,177 10,981 27,873 Interest on subordinated debentures 1,412 1,411 4,203 4,077 Total Interest Expense 23,464 27,711 70,491 78,941 Net Interest Income 19,108 21,170 59,368 63,402 Less provision for loan losses 4,700 2,125 7,150 6,275 Net Interest Income After Provision for Loan Losses 14,408 19,045 52,218 57,127 NON-INTEREST INCOME: Service charges on deposit accounts 642 736 1,917 2,172 Securities gains, net 581 - 588 - Income on bank owned life insurance 472 454 1,386 1,315 Other non-interest income 513 524 1,942 1,681 Total Non-Interest Income 2,208 1,714 5,833 5,168 NON-INTEREST EXPENSE: Salaries and employee benefits 7,462 7,425 23,237 22,648 Occupancy expense, net 1,944 1,581 5,605 4,376 Equipment expense 770 794 2,450 2,446 Other non-interest expense 4,319 3,586 13,558 11,600 Total Non-Interest Expense 14,495 13,386 44,850 41,070 Income before income tax expense 2,121 7,373 13,201 21,225 Income tax expense 399 2,045 2,959 5,672 Net Income $1,722 $5,328 $10,242 $15,553 EARNINGS PER SHARE: Basic $0.15 $0.49 $0.92 $1.43 Diluted 0.15 0.47 0.90 1.37 Weighted average shares outstanding: Basic 11,251 10,965 11,127 10,911 Diluted 11,504 11,345 11,440 11,314 Yardville National Bancorp and Subsidiaries Consolidated Statements of Condition (Unaudited) September 30, December 31, (in thousands) 2007 2006 2006 Assets: Cash and due from banks $28,252 $30,656 $30,355 Federal funds sold 13,400 26,465 3,265 Cash and Cash Equivalents 41,652 57,121 33,620 Interest bearing deposits with banks 23,750 67,544 32,358 Securities available for sale 401,142 707,239 402,641 Investment securities 102,919 95,509 96,072 Loans 1,934,903 1,995,003 1,972,881 Less: Allowance for loan losses (27,360) (22,380) (24,563) Loans, net 1,907,543 1,972,623 1,948,318 Bank premises and equipment, net 12,645 11,697 12,067 Other real estate owned - 502 385 Bank owned life insurance 51,037 49,168 49,651 Other assets 51,482 42,250 45,619 Total Assets $2,592,170 $3,003,653 $2,620,731 Liabilities and Stockholders' Equity: Deposits Non-interest bearing $181,656 $216,746 $197,126 Interest bearing 1,765,307 1,815,459 1,806,157 Total Deposits 1,946,963 2,032,205 2,003,283 Borrowed funds Securities sold under agreements to repurchase 10,000 10,000 10,000 Federal Home Loan Bank advances 343,000 674,000 324,000 Subordinated debentures 62,892 62,892 62,892 Obligation for Employee Stock Ownership Plan (ESOP) 1,125 1,828 1,688 Other 1,953 1,221 1,593 Total Borrowed Funds 418,970 749,941 400,173 Other liabilities 31,112 29,111 31,181 Total Liabilities $2,397,045 $2,811,257 $2,434,637 Stockholders' equity: Common stock: no par value 115,365 107,682 108,728 Surplus 2,205 2,205 2,205 Undivided profits 91,165 97,659 86,100 Treasury stock, at cost (3,160) (3,160) (3,160) Unallocated ESOP shares (1,125) (1,828) (1,688) Accumulated other comprehensive loss (9,325) (10,162) (6,091) Total Stockholders' Equity 195,125 192,396 186,094 Total Liabilities and Stockholders' Equity $2,592,170 $3,003,653 $2,620,731 Financial Summary Average Balances, Yields and Costs (Unaudited) Three Months Ended September 30, 2007 Average Average Yield / (in thousands) Balance Interest Cost INTEREST EARNING ASSETS: Interest bearing deposits with banks $14,593 $97 2.66 % Federal funds sold 10,808 136 5.03 Securities 508,861 6,774 5.32 Loans (1) 1,914,303 35,565 7.43 Total interest earning assets $2,448,565 $42,572 6.95 % NON-INTEREST EARNING ASSETS: Cash and due from banks $30,289 Allowance for loan losses (25,128) Premises and equipment, net 12,769 Other assets 85,720 Total non-interest earning assets 103,650 Total assets $2,552,215 INTEREST BEARING LIABILITIES: Deposits: Savings, money markets, and interest bearing demand $895,285 $7,182 3.21 % Certificates of deposit of $100,000 or more 232,763 2,941 5.05 Other time deposits 651,416 8,178 5.02 Total interest bearing deposits 1,779,464 18,301 4.11 Borrowed funds 313,537 3,751 4.79 Subordinated debentures 62,892 1,412 8.98 Total interest bearing liabilities $2,155,893 $23,464 4.35 % NON-INTEREST BEARING LIABILITIES: Demand deposits $185,626 Other liabilities 18,363 Stockholders' equity 192,333 Total non-interest bearing liabilities and stockholders' equity $396,322 Total liabilities and stockholders' equity $2,552,215 Interest rate spread (2) 2.60 % Net interest income and margin (3) $19,108 3.12 % Net interest income and margin (tax equivalent basis)(4) $19,678 3.21 % Three Months Ended September 30, 2006 Average Average Yield / (in thousands) Balance Interest Cost INTEREST EARNING ASSETS: Interest bearing deposits with banks $48,451 $679 5.61 % Federal funds sold 18,250 241 5.28 Securities 799,020 9,899 4.96 Loans (1) 2,006,680 38,062 7.59 Total interest earning assets $2,872,401 $48,881 6.81 % NON-INTEREST EARNING ASSETS: Cash and due from banks $32,730 Allowance for loan losses (23,450) Premises and equipment, net 11,811 Other assets 79,990 Total non-interest earning assets 101,081 Total assets $2,973,482 INTEREST BEARING LIABILITIES: Deposits: Savings, money markets, and interest bearing demand $936,087 $7,061 3.02 % Certificates of deposit of $100,000 or more 252,200 2,886 4.58 Other time deposits 619,723 7,176 4.63 Total interest bearing deposits 1,808,010 17,123 3.79 Borrowed funds 689,532 9,177 5.32 Subordinated debentures 62,892 1,411 8.97 Total interest bearing liabilities $2,560,434 $27,711 4.33 % NON-INTEREST BEARING LIABILITIES: Demand deposits $212,068 Other liabilities 15,031 Stockholders' equity 185,949 Total non-interest bearing liabilities and stockholders' equity $413,048 Total liabilities and stockholders' equity $2,973,482 Interest rate spread (2) 2.48 % Net interest income and margin (3) $21,170 2.95 % Net interest income and margin (tax equivalent basis)(4) $21,714 3.02 % (1) Loan origination fees are considered an adjustment to interest income. For the purpose of calculating loan yields, average loan balances include nonaccrual balances with no related interest income. (2) The interest rate spread is the difference between the average yield on interest earning assets and average rate paid on interest bearing liabilities. (3) The net interest margin is equal to net interest income divided by average interest earning assets. (4) In order to make pre-tax income and resultant yields on tax-exempt investments and loans on a basis comparable to those on taxable investments and loans, a tax equivalent adjustment is made to interest income. The tax equivalent adjustment has been computed using the appropriate Federal income tax rate for the period and has the effect of increasing interest income by $570,000 and $544,000 for the three month periods ended September 30, 2007 and 2006, respectively. Financial Summary Average Balances, Yields and Costs (Unaudited) Nine Months Ended September 30, 2007 Average Average Yield / (in thousands) Balance Interest Cost INTEREST EARNING ASSETS: Interest bearing deposits with banks $25,548 $993 5.18 % Federal funds sold 14,567 476 4.36 Securities 502,032 19,739 5.24 Loans (1) 1,952,928 108,651 7.42 Total interest earning assets $2,495,075 $129,859 6.94 % NON-INTEREST EARNING ASSETS: Cash and due from banks $30,754 Allowance for loan losses (24,858) Premises and equipment, net 12,477 Other assets 84,117 Total non-interest earning assets 102,490 Total assets $2,597,565 INTEREST BEARING LIABILITIES: Deposits: Savings, money markets, and interest bearing demand $902,460 $21,443 3.17 % Certificates of deposit of $100,000 or more 252,883 9,463 4.99 Other time deposits 659,916 24,401 4.93 Total interest bearing deposits 1,815,259 55,307 4.06 Borrowed funds 321,505 10,981 4.55 Subordinated debentures 62,892 4,203 8.91 Total interest bearing liabilities $2,199,656 $70,491 4.27 % NON-INTEREST BEARING LIABILITIES: Demand deposits $187,605 Other liabilities 19,634 Stockholders' equity 190,670 Total non-interest bearing liabilities and stockholders' equity $397,909 Total liabilities and stockholders' equity $2,597,565 Interest rate spread (2) 2.67 % Net interest income and margin (3) $59,368 3.17 % Net interest income and margin (tax equivalent basis)(4) $61,060 3.26 % Nine Months Ended September 30, 2006 Average Average Yield / (in thousands) Balance Interest Cost INTEREST EARNING ASSETS: Interest bearing deposits with banks $31,366 $1,245 5.29 % Federal funds sold 14,068 521 4.94 Securities 809,409 29,787 4.91 Loans (1) 2,002,629 110,790 7.38 Total interest earning assets $2,857,472 $142,343 6.64 % NON-INTEREST EARNING ASSETS: Cash and due from banks $34,635 Allowance for loan losses (23,165) Premises and equipment, net 11,716 Other assets 78,102 Total non-interest earning assets 101,288 Total assets $2,958,760 INTEREST BEARING LIABILITIES: Deposits: Savings, money markets, and interest bearing demand $952,150 $20,182 2.83 % Certificates of deposit of $100,000 or more 243,014 7,670 4.21 Other time deposits 587,183 19,139 4.35 Total interest bearing deposits 1,782,347 46,991 3.52 Borrowed funds 707,701 27,873 5.25 Subordinated debentures 62,892 4,077 8.64 Total interest bearing liabilities $2,552,940 $78,941 4.12 % NON-INTEREST BEARING LIABILITIES: Demand deposits $210,741 Other liabilities 14,255 Stockholders' equity 180,824 Total non-interest bearing liabilities and stockholders' equity $405,820 Total liabilities and stockholders' equity $2,958,760 Interest rate spread (2) 2.52 % Net interest income and margin (3) $63,402 2.96 % Net interest income and margin (tax equivalent basis)(4) $65,016 3.03 % (1) Loan origination fees are considered an adjustment to interest income. For the purpose of calculating loan yields, average loan balances include nonaccrual balances with no related interest income. (2) The interest rate spread is the difference between the average yield on interest earning assets and average rate paid on interest bearing liabilities. (3) The net interest margin is equal to net interest income divided by average interest earning assets. (4) In order to make pre-tax income and resultant yields on tax-exempt investments and loans on a basis comparable to those on taxable investments and loans, a tax equivalent adjustment is made to interest income. The tax equivalent adjustment has been computed using the appropriate Federal income tax rate for the period and has the effect of increasing interest income by $1,692,000 and $1,614,000 for the nine month periods ended September 30, 2007 and 2006, respectively. DATASOURCE: Yardville National Bancorp CONTACT: Kevin Tylus, President and COO, Yardville National Bancorp, +1- 609-631-6196; Leonardo G. Zangani, of L.G. Zangani, LLC for Yardville National Bancorp, +1-908-788-9660 Web site: http://www.ynb.com/

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