Harleysville National Corp - Filing of certain prospectuses and communications in connection with business combination tra (425)
October 23 2007 - 1:23PM
Edgar (US Regulatory)
Filed by Harleysville National
Corporation
pursuant to Rule 425
Subject Company: East Penn Financial
Corporation
Registration Statement No. 333-145820
October 23,
2007
PRESS RELEASE
FOR IMMEDIATE RELEASE
Contact:
|
Theresa M. Wasko,
Treasurer and Chief Financial Officer
|
Telephone Number:
|
610-965-5959
|
E-mail:
|
twasko@eastpennbank.com
|
EAST PENN FINANCIAL
CORPORATION
ANNOUNCES THIRD QUARTER EARNINGS
(October 22, 2007) EMMAUS, PA -
East
Penn Financial Corporation
(NASDAQ Capital
Market: EPEN)
reported net income of
$2,401,000 for the nine months ended September 30, 2007, a decrease of $178,000,
or 6.9%, as compared with net income of $2,579,000 for the nine months ended
September 30, 2006. Diluted earnings per share were $0.38 per share for the
first nine months of 2007 as compared with $0.41 per share for the same period
in 2006. For the third quarter ended September 30, 2007, East Penns net income
was $711,000 as compared with $900,000 for the third quarter of 2006, a decline
of $189,000, or 21.0%. Earnings and per share data reflect the impact of
expenses incurred as a result of the pending merger of East Penn Financial
Corporation and its subsidiary with Harleysville National Corporation. On May
16, 2007, a joint press release was issued announcing the signing of a
definitive agreement, dated as of May 15, 2007, for East Penn Financial
Corporation and its wholly owned subsidiary, East Penn Bank, to merge with and
into Harleysville National Corporation. On a year to date basis, the Company
recorded $555,000 (or $366,000 after tax) in merger related expenses, of which
$296,000 (or $195,000 after tax) of those expenses were recorded in the third
quarter.
Brent L.
Peters, Chairman of the Board, President and Chief Executive Officer, commented:
Excluding the impact of merger related expenses on our financial results, our
earnings trend continues to be favorable. If we were to eliminate such expenses
from our operating results, net income for the first nine months of 2007 would
have been $2,767,000, or 7.3%, ahead of net income for the first nine months of
2006 and $906,000 for the third quarter of 2007, or 0.7%, ahead of net income
for the third quarter of 2006. Our financial performance for this year
demonstrates our efforts to remain focused in growing our core banking business,
improving our efficiency and safeguarding our asset quality.
The
balance sheet continues to grow with assets increasing 3.4% to $440.4 million as
of September 30, 2007 from $425.9 million as of September 30, 2006. Despite
competitive pressures, asset growth was attributable to loan growth of 7.1%,
which was primarily funded from deposit and cash management account growth of
6.3%. This growth was achieved even with the Banks payment of $11 million in
borrowings that have matured since September 30, 2006. In addition, the Bank
remains steadfast in maintaining the quality of its assets. Non-performing
assets were 0.30% of total assets at September 30, 2007 as compared with 0.24%
at September 30, 2006. Net charge-offs as a percentage of average loans
decreased to 0.04% for the third quarter of 2007 as compared with 0.06% for the
third quarter of 2006.
The net
interest margin calculated on a fully tax-equivalent basis for the third quarter
ended September 30, 2007 was 3.46%, representing a 14 basis point decrease as
compared with the net interest margin of 3.60% for the third quarter ended
September 30, 2006. However, in comparing the second and third quarters of 2007,
the net interest margin improved by four basis points from 3.42% at June 30,
2007. The improvement in the margin is attributable to increased yields from
interest earning assets, which offset the increase in cost of funds associated
with interest bearing liabilities.
Other
income decreased $20,000, or 3.3% in the third quarter of 2007 as compared with
the same period in 2006. There were no extraordinary transactions that
contributed to this decrease.
For the
three months ended September 30, 2007, other expenses increased $229,000, or
8.3%, to $3,002,000 compared to $2,773,000 for the three months ended September
30, 2006. The increase resulted primarily from recording expenses incurred as a
result of the impending merger.
East Penn
Financial Corporation is a locally owned and managed bank holding company
headquartered in Emmaus, Pennsylvania. Its principal banking subsidiary is East
Penn Bank, a community bank that has been serving the Lehigh Valley through its
nine branch locations. In accordance with the terms of the merger with
Harleysville National Corporation, the Company plans to hold a special meeting
of shareholders on November 1, 2007 at 6 pm at the Allen Organ Company, 3370
Route 100, Macungie, Pennsylvania to consider and vote upon the merger
agreement. Upon shareholder approval, the merger is currently expected to be
effective on or about November 16, 2007.
Additional information about East Penn
Financial Corporation is available on its website at
www.eastpennbank.com
.
This press release may contain
forward-looking statements as defined by the Private Securities Litigation
Reform 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 Companys financial services
and products may not occur, changing economic and competitive conditions,
technological developments, and other risks and uncertainties, including those
detailed in East Penn Financial Corporations filings with the Securities and
Exchange Commission.
Harleysville National Corporation
has filed a registration statement (including a prospectus) with the SEC for the
offering to which this communication relates. Before you invest, you should read
the prospectus in that registration statement and other documents Harleysville
has filed with the SEC for more complete information about the issuer and this
offering. You may get these documents for free by visiting EDGAR on the SEC Web
site at www.sec.gov. Alternatively, Harleysville will arrange to send you the prospectus if you request it by
calling toll-free 1-800-423-3955, Extension 62305. You may also request these
documents by e-mail addressed to Harleysville at lchemnitz@hncbank.com. These
documents are also available by accessing Harleysvilles website at http://www/hncbank.com
and clicking Investor Information, then clicking Documents, and clicking the
most recent Registration Statement under Other Filings.
East Penn Financial Corporation
Consolidated Selected Financial Information
|
|
September 30,
|
(in thousands,
except share data)
|
|
2007
|
|
2006
|
|
|
(Unaudited)
|
Balance Sheet
Data:
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
440,418
|
|
|
$
|
425,945
|
|
Securities available
for sale
|
|
|
64,961
|
|
|
|
69,213
|
|
Mortgages held for sale
|
|
|
372
|
|
|
|
1,556
|
|
Total loans (net of
unearned discount)
|
|
|
337,366
|
|
|
|
315,140
|
|
Allowance for loan losses
|
|
|
(3,409
|
)
|
|
|
(3,235
|
)
|
Premises and equipment,
net
|
|
|
9,213
|
|
|
|
10,010
|
|
|
Non-interest bearing deposits
|
|
|
44,069
|
|
|
|
45,577
|
|
Interest bearing
deposits
|
|
|
328,694
|
|
|
|
310,003
|
|
Total deposits
|
|
|
372,763
|
|
|
|
355,580
|
|
Federal
funds purchased and securities
|
|
|
|
|
|
|
|
|
sold under agreements to
repurchase
|
|
|
11,660
|
|
|
|
6,183
|
|
Other borrowings
|
|
|
19,000
|
|
|
|
30,000
|
|
Junior
subordinated debentures
|
|
|
8,248
|
|
|
|
8,248
|
|
|
Stockholders' equity
|
|
|
26,366
|
|
|
|
24,044
|
|
|
Common
shares outstanding
|
|
|
6,334,354
|
|
|
|
6,304,262
|
|
Book value per
share
|
|
$
|
4.16
|
|
|
$
|
3.81
|
|
|
|
Three Months
|
|
Nine Months
|
|
|
Ended September 30,
|
|
Ended September 30,
|
(in thousands, except
share data)
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Statement of Income Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest
income
|
|
|
$6,505
|
|
|
$6,165
|
|
|
$19,282
|
|
|
$17,449
|
Total
interest expense
|
|
|
3,152
|
|
|
2,780
|
|
|
9,395
|
|
|
7,436
|
Net interest
income
|
|
|
3,353
|
|
|
3,385
|
|
|
9,887
|
|
|
10,013
|
|
Provision for loan losses
|
|
|
135
|
|
|
90
|
|
|
270
|
|
|
299
|
Net interest income after
provision
|
|
|
3,218
|
|
|
3,295
|
|
|
9,617
|
|
|
9,714
|
Other
income
|
|
|
579
|
|
|
599
|
|
|
1,819
|
|
|
1,809
|
Other
expenses
|
|
|
3,002
|
|
|
2,773
|
|
|
8,624
|
|
|
8,293
|
Net income before taxes
|
|
|
795
|
|
|
1,121
|
|
|
2,812
|
|
|
3,230
|
Income tax
expense
|
|
|
84
|
|
|
221
|
|
|
411
|
|
|
651
|
Net income
|
|
|
$711
|
|
|
$900
|
|
|
$2,401
|
|
|
$2,579
|
Basic earnings per share
(1)
|
|
|
$0.11
|
|
|
$0.14
|
|
|
$0.38
|
|
|
$0.41
|
Diluted earnings per share
(2)
|
|
|
$0.11
|
|
|
$0.14
|
|
|
$0.38
|
|
|
$0.41
|
Cash dividends per common
share
|
|
|
$0.12
|
|
|
$0.11
|
|
|
$0.24
|
|
|
$0.22
|
|
Nine Months
|
|
Ended
September 30,
|
|
2007
|
|
2006
|
|
(Unaudited)
|
|
(Unaudited)
|
Selected Financial Ratios:
|
|
|
|
Annualized return on
average equity
|
12.69%
|
|
15.21%
|
Annualized return on average assets
|
0.73%
|
|
0.84%
|
Net interest margin
(3)
|
3.44%
|
|
3.71%
|
Efficiency ratios:
|
|
|
|
Operating expenses as a percentage of
revenues (3)
|
68.36%
|
|
66.12%
|
Operating expenses as a percentage of
average
assets
|
2.61%
|
|
2.70%
|
Tier 1 leverage
capital
|
7.91%
|
|
7.72%
|
Net
loans (4) as a percent of deposits
|
90.50%
|
|
88.63%
|
Average equity to average
assets
|
5.73%
|
|
5.53%
|
|
Selected Asset Quality Ratios:
|
|
|
|
Allowance for loan losses
/ Total loans (4)
|
1.01%
|
|
1.03%
|
Allowance for loan losses /
|
|
|
|
Non-performing assets (5)
|
261.23%
|
|
310.76%
|
Non-accrual loans / Total
loans (4)
|
0.32%
|
|
0.16%
|
Non-performing assets (5) / Total assets
|
0.30%
|
|
0.24%
|
Net charge-offs / Average
loans (4)
|
0.04%
|
|
0.06%
|
(1) Based upon the weighted average number
of shares of common stock outstanding for the applicable periods.
(2) Based upon the weighted average number
of shares plus dilutive potential common share equivalents outstanding for the
applicable periods.
(3) Calculated on a fully tax-equivalent
basis.
(4) The term loans includes loans held
in the portfolio, including non-accruing loans, and excludes loans held for
sale.
(5) Includes non-accrual loans.
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