HARRISBURG, Pa., Oct. 19 /PRNewswire-FirstCall/ -- George H. Groves, Chairman and CEO, announced third quarter 2005 financial results for The Legacy Bank (OTC Bulletin Board: LBOH - News ). Earnings for the third quarter of 2005 totaled $471,000 or $.13 per dilutive share as compared to $653,000 or $.17 per dilutive share for the same period in 2004.
Pre-tax income increased substantially in 2005 as compared to 2004. Pre- tax income for the quarter ending September 30, 2005, was $679,000, an increase of $233,000 or 52% over the same period in 2004. For 2004, net income was significantly enhanced by income tax benefits from accumulated net operating loss deductions that were fully utilized by December 31, 2004.
Earnings for the nine-month period ended September 30, 2005, totaled $1,264,000 versus $1,565,000 for the nine-month period ended September 30, 2004. Pre-tax income for the nine-month period ending September 30, 2005, was $1,834,000, an increase of $890,000 or 94% over the same period in 2004.
Net interest income after provision for loan losses totaled $2,816,000 for the third quarter of 2005 as compared to $2,519,000 in the third quarter 2004, an increase of $297,000 or 12%. The tax-effected net interest margin ratio for the current quarter was 3.47% as compared to 3.69% for the third quarter of 2004 and 3.53% for the linked quarter ended June 30, 2005. Legacy attributed the decrease in net interest margin ratio to the continued flattening of the yield curve, the negative effects of which offset yield increases in the loan portfolio. The current yield curve reflects increases in short-term interest rates totaling 3.0% since the Federal Reserve began raising the federal funds rate in June of 2004.
The provision for loan losses totaled $200,000 for the quarter ended September 30, 2005, as compared to $189,000 for the quarter ended September 30, 2004 and $77,000 for the linked quarter ended June 30, 2005. As of September 30, 2005, the allowance for loan losses expressed as a percentage of loans was 1.15% and non-performing loans to total loans were .49%, resulting in the allowance for loan losses equal to 2.3 times the amount of non-performing loans.
Noninterest income for the third quarter of 2005 totaled $550,000, as compared to $417,000 for the same period in 2004. Of note, asset management fees were $242,000 for the current quarter, up $42,000 or 21% from the same period in 2004. Noninterest income during the current quarter also included $74,000 of income from Bank Owned Life Insurance (BOLI). The Bank began earning revenue from BOLI during the fourth quarter of 2004.
Non-interest expense totaled $2,687,000 for the third quarter of 2005, which increased from $2,490,000 for the same quarter in 2004, but decreased from $2,867,000 recorded in the linked quarter ended June 30, 2005. The decrease from the quarter ended June 30, 2005, included ongoing expense reductions that resulted from the May closing of the Humboldt office. Non- interest expense for 2005 included added expenses from key staffing enhancements required to support Legacy's growing franchise, increased account servicing costs due to substantial growth in the loan and deposit portfolios during the last year, and increased compliance costs associated with regulatory requirements.
Total assets reached $382.1 million as of September 30, 2005, as compared to $368.5 million at June 30, 2005 and $338.6 million at December 31, 2004. As of September 30, 2005, the Bank reported net loans of $280.0 million, which were up $7.2 million or 11% on an annualized basis during the quarter. Net loans also increased $31.0 million, representing 17% annualized growth, for the nine months ended September 30, 2005, with most of the growth in both periods coming in commercial loans. Legacy's marketable securities also increased $6.8 million during the current quarter, primarily due to the purchase of $6.0 million of municipal bonds which were completed to continue improving the Bank's tax efficiency.
During the quarter ended September 30, 2005, Legacy replaced $9.1 million of national-market time deposits with intermediate-term borrowings. This activity, conducted as part of Legacy's interest rate risk management process, lead to a decrease in total deposits of $6.3 million during the current quarter to $288.2 million as of September 30, 2005. In-market deposits increased $2.8 million during the quarter. For the nine-month period ended September 30, 2005, total deposits increased $43.7 million, representing 24% annualized growth.
Legacy continued to maintain a strong capital position, with total capital to assets of 9.55% as of September 30, 2005. Shareholders' equity was $36.5 million at September 30, 2005, as compared to $36.7 million at December 31, 2004. Stockholders' equity reflected share repurchases totaling $1.5 million (103,627 shares) during the current quarter and $1.6 million (109,627 shares) during the nine-month period ended September 30, 2005.
George H. Groves, Chairman and CEO of The Legacy Bank stated: "We just announced the grand opening of our new full-service office in Pottsville, Pennsylvania, which augments the Legacy Bank franchise. This office, located in the beautifully-renovated former Atkins mansion, will build on the success Legacy has enjoyed with our Pottsville trust and loan production operations. We are confident that this new office will enhance franchise value in the near and long term.
"We are also pleased with the continued progress and maturation of the Legacy franchise as evidenced by increased net interest margin and core earnings. The Bank recorded another quarter of solid growth in loans and we maintained our pricing discipline in very competitive markets. We also continued our disciplined management of investments and funding activities; strengthening the balance sheet during this challenging interest rate environment."
Mr. Groves continued: "Below the margin, the Asset Management business line continued to grow profitably. Also, Legacy reduced noninterest expenses by 6% during the quarter, a notable achievement given our asset growth. We expect Legacy Bank to finish 2005 with strong balance sheet and earnings momentum and we are preparing to further enhance franchise profitability during 2006."
The Legacy Bank, with approximately $382 million in assets, is a Pennsylvania commercial bank with 8 offices in 5 counties throughout Central Pennsylvania including Dauphin, Cumberland, Lycoming, Luzerne, and Schuylkill counties. The Bank has received Preferred Lender program status granted by the U.S. Small Business Administration (SBA). Legacy Asset Management Services, which includes Legacy Trust Company, had approximately $235 million in total assets under management at quarter end. Legacy offers a full suite of banking and asset management products and services, for individuals, small- to medium-sized and privately held businesses, as well as professionals and professional practices - all designed to assist individuals, professionals and business owners in wealth creation and preservation. The Legacy Bank offers Pennsylvania's first Department of Banking approved business deposit courier service; and provides online banking for businesses and consumers. For more information, visit the Company's web site at http://www.thelegacybank.com .
Certain statements appearing herein which are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements refer to future periods, reflecting management's current views as to likely future developments, and include the words "may," "will," "expect," "believe," "estimate," "anticipate," or similar terms. Because such forward-looking statements involve certain risks, uncertainties and other factors over which the Bank has no direct control, actual results could differ materially from those contemplated in such statements. These factors include, but are not limited to the following: general economic conditions, changes in interest rates, changes in the Bank's cost of funds, changes in government monetary policy, changes in government regulation and taxation of financial institutions, changes in the rate of inflation, changes in technology, the intensification of competition within the Bank's market area, and other similar factors. The Bank undertakes no obligation to publicly revise or update these forward-looking statements to reflect events that arise after this press release.
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