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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): July 18, 2023
ENB Financial Corp
(Exact name of Registrant as specified in its charter)
Pennsylvania |
|
000-53297 |
|
51-0661129 |
(State or other
jurisdiction of
incorporation) |
|
(Commission
File Number) |
|
(IRS Employer
Identification No.) |
31 E. Main St.,
Ephrata, PA | |
17522-0457 |
(Address of principal executive offices) | |
(Zip Code) |
(717) 733-4181
(Registrant’s telephone number, including
area code)
N/A
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see
General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
None |
N/A |
N/A |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ¨
CURRENT REPORT ON FORM 8-K
Item 2.02 |
Results of Operations
and Financial Condition |
The
Registrant issued a press release regarding earnings for the second quarter of 2023 on July 18, 2023 attached as Exhibit 99 and incorporated
herein by reference.
The
information furnished under this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99, shall not be deemed “filed”
for purposes of the Securities Exchange Act of 1934, as amended.
Item 9.01 |
Financial Statements and Exhibits |
(d) Exhibits
The
following exhibits are filed in this Current Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
ENB FINANCIAL CORP |
|
(Registrant) |
|
|
|
Dated: July 19, 2023 |
By: |
/s/ Rachel G. Bitner |
|
|
Rachel G. Bitner |
|
|
Treasurer |
|
|
(Principal Financial Officer) |
Exhibit 99
FOR IMMEDIATE RELEASE |
Contact: Rachel Bitner |
|
Phone: 717-733-4181 |
ENB
Financial Corp Reports Second Quarter 2023 Results
(July 18, 2023) -- Ephrata, PA –
ENB Financial Corp (OTCQX: ENBP), the bank holding company for Ephrata National Bank, reports net income for the second quarter of 2023
of $1,797,000, a $761,000, or 29.7% decrease, from the $2,558,000 earned during the second quarter of 2022. Net income for the six months
ended June 30, 2023, was $4,238,000, a $1,511,000, or 26.3% decrease, from the $5,749,000 earned for the six months ended June 30, 2022.
Basic and diluted earnings per share for the second quarter of 2023 and 2022 were $0.32 and $0.46, respectively and year-to-date earnings
per share were $0.75 in 2023 compared to $1.03 in 2022.
The Corporation’s earnings were
negatively impacted by several factors through the second quarter 2023 including higher interest expense, higher provision for credit
losses, lower operating income, and higher operating expenses as detailed in the paragraphs that follow. These negative trends were partially
offset by higher interest and dividend income.
The Corporation’s net interest
income (NII) increased by $1,683,000, or 14.1%, and $4,766,000, or 21.0% for the three and six months ended June 30, 2023, compared to
the same periods in 2022. The increase in NII primarily resulted from an increase in interest income on loans of $5,431,000, or 57.0%,
and $10,313,000 or 56.2%, for the three and six months ended June 30, 2023, compared to the same periods in 2022, and an increase in interest
income on securities of $465,000, or 15.1%, and $1,838,000 or 33.2%, for the three and six months ended June 30, 2023, compared to the
same periods in 2022. Conversely, interest expense on deposits and borrowings increased by $4,539,000, or 578.2%, and $7,869,000 or 536.0%,
for the three and six months ended June 30, 2023, compared to the same periods in the prior year due to the rapid market rate increases
causing pressure on deposit retention and rates.
The Corporation recorded a provision
for credit losses of $815,000 for the second quarter of 2023, compared to a provision of $650,000 for the second quarter of 2022. For
the year-to-date period, provision expense was $2,072,000, an increase of $1,322,000, compared to provision expense of $750,000 recorded
for the six months ended June 30, 2022. The Corporation adopted ASU 2016-13 Financial Instruments – Credit Losses: Measurement
of Credit Losses on Financial Instruments as of January 1, 2023. This required standard implements a methodology that reflects
credit losses that are expected to occur over the remaining life of the financial asset. This new current expected credit loss model (CECL)
is based on possible economic scenarios as well as qualitative factors specific to the Corporation. During the first half of 2023, there
was a significant change in the forward credit outlook due to a high interest rate environment and the Corporation also grew its loan
portfolio by $105 million during the first half of 2023, and downgraded a $5 million loan relationship to substandard requiring a higher
provision related to this relationship. The allowance as a percentage of total loans was 1.30% as of June 30, 2023, and 1.31% as of June
30, 2022.
Other income decreased by $597,000,
or 19.8%, and $1,619,000, or 24.2%, for the three and six months ended June 30, 2023, compared to the same periods in the prior year.
This was primarily due to an increase in losses on securities sold. The Corporation sold investment securities to fund higher yielding
loan growth during 2023 which resulted in realized losses of $954,000 for the quarter, and $1,364,000 for the year-to-date period. Additionally,
the Corporation recorded unrealized losses on the Corporation’s bank stock portfolio of $106,000 for the three months ended June
30, 2023, and $302,000 for the six months ended June 30, 2023. Combined, losses on securities transactions increased by $930,000 for the
quarter and $1,667,000 for the year-to-date period in 2023 compared to the prior year.
Total operating expenses increased by
$1,725,000, or 15.0%, and $3,481,000 or 15.8%, for the three and six months ended June 30, 2023, compared to the same periods in 2022.
Salary and benefit expenses, which make up the largest portion of operating expenses, increased by $1,194,000, or 17.8%, and $2,137,000,
or 16.2% for the three and six months ended June 30, 2023, compared to the same periods in 2022, due to the competitive labor market,
increased healthcare costs, and the cost to hire and retain qualified talent. Other operating expenses outside of salaries and benefits
increased primarily due to increases related to technology investments.
The Corporation’s annualized return
on average assets (ROA) and return on average stockholders’ equity (ROE) for the second quarter of 2023 decreased to 0.39% and 6.85%,
respectively, from 0.60% and 9.55% for the second quarter of 2022. For the six months ended June 30, 2023, the Corporation’s annualized
ROA was 0.46%, compared to 0.68% in 2022, while the ROE was 8.27%, compared to 9.70% in 2022.
As of June 30, 2023, the Corporation
had total assets of $1.90 billion, up 7.5%; total loans of $1.30 billion, up 24.5%; total deposits of $1.66 billion, up 4.9%; and total
stockholders’ equity of $106.3 million, up 4.9%, from balances at June 30, 2022.
ENB Financial Corp, headquartered in Ephrata,
PA, is the bank holding company for its wholly-owned subsidiary Ephrata National Bank. Ephrata National Bank operates from thirteen full-service
locations in Lancaster County, southeastern Lebanon County, and southern Berks County, Pennsylvania, with the headquarters located at
31 E. Main Street, Ephrata, PA. Ephrata National Bank has been serving the community since 1881. For more information about ENB Financial
Corp, visit the Corporation’s web site at www.enbfc.com.
Notice Regarding Forward Looking Statements
This news release may constitute forward-looking statements for purposes
of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown
risk, uncertainties and other factors which may cause the actual results of ENB Financial Corp to be materially different from future
results expressed or implied by such forward-looking statements. These forward-looking statements can be identified by use of terminology
such as “expect”, “plan”, “anticipate”, “believe”, “estimate”, and similar
words that are intended to identify such forward-looking statements. These forward-looking statements are based on management’s
current expectations, assumptions, estimates, and projections about the Corporation, the financial services industry, and the economy.
The Private Securities Reform Act of 1995 provides safe harbor in the event the projected future operations are not met. There are a
number of future factors such as changes in fiscal or monetary policy, or changes in the economic climate that will influence the Corporation’s
future operations. These factors are difficult to predict with regard to how likely and to what degree or significance that they would
occur. Actual results may differ materially from what may have been forecasted in the forward-looking statements. We are not obligated
to publicly update any forward-looking statements to reflect the effects of subsequent events.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION (Unaudited)
(in thousands, except per share and percentage data)
| |
June 30, | | |
% | |
Balance Sheet | |
2023 | | |
2022 | | |
Change | |
| |
| | |
| | |
| |
Securities | |
$ | 465,023 | | |
$ | 587,913 | | |
| -20.9 | % |
Total loans | |
| 1,296,502 | | |
| 1,041,440 | | |
| 24.5 | % |
Allowance for credit losses | |
| 16,833 | | |
| 13,606 | | |
| 23.7 | % |
Total assets | |
| 1,903,652 | | |
| 1,770,345 | | |
| 7.5 | % |
Deposits | |
| 1,655,951 | | |
| 1,578,280 | | |
| 4.9 | % |
Total borrowings | |
| 131,193 | | |
| 83,926 | | |
| 56.3 | % |
Stockholders' equity | |
| 106,334 | | |
| 101,401 | | |
| 4.9 | % |
| |
Three Months Ended | | |
Six Months Ended | |
Income Statement | |
June 30, | | |
June 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
| | |
| | |
| | |
| |
Net interest income | |
$ | 13,657 | | |
$ | 11,974 | | |
$ | 27,461 | | |
$ | 22,695 | |
Provision for credit losses | |
| 815 | | |
| 650 | | |
| 2,072 | | |
| 750 | |
Noninterest income | |
| 2,422 | | |
| 3,019 | | |
| 5,076 | | |
| 6,695 | |
Noninterest expense | |
| 13,202 | | |
| 11,477 | | |
| 25,566 | | |
| 22,085 | |
Income before taxes | |
| 2,062 | | |
| 2,866 | | |
| 4,899 | | |
| 6,555 | |
Provision for income taxes | |
| 265 | | |
| 308 | | |
| 661 | | |
| 806 | |
Net Income | |
| 1,797 | | |
| 2,558 | | |
| 4,238 | | |
| 5,749 | |
| |
| | | |
| | | |
| | | |
| | |
Per Share Data | |
| | | |
| | | |
| | | |
| | |
Earnings per share | |
| 0.32 | | |
| 0.46 | | |
| 0.75 | | |
| 1.03 | |
Dividends per share | |
| 0.17 | | |
| 0.17 | | |
| 0.34 | | |
| 0.34 | |
| |
| | | |
| | | |
| | | |
| | |
Earnings Ratios | |
| | | |
| | | |
| | | |
| | |
Return on average assets (ROA) | |
| 0.39 | % | |
| 0.60 | % | |
| 0.46 | % | |
| 0.68 | % |
Return on average stockholders equity (ROE) | |
| 6.85 | % | |
| 9.55 | % | |
| 8.27 | % | |
| 9.70 | % |
Net Interest margin | |
| 3.01 | % | |
| 2.96 | % | |
| 3.04 | % | |
| 2.85 | % |
Efficency ratio | |
| 76.3 | % | |
| 74.3 | % | |
| 68.8 | % | |
| 73.6 | % |
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