EX-99.1PRESS RELEASE 2 earningspressrelease.htm 2005 EARNINGS PRESS RELEASE 2005 Earnings Press Release
 


FOR IMMEDIATE RELEASE
CONTACT:  Gregg J. Wagner, President and CEO
PHONE: 215-513-2391


HARLEYSVILLE NATIONAL CORPORATION
REPORTS RECORD 2005 EARNINGS

30 Consecutive Years of Earning Growth and 31 Consecutive Years of Dividend Increases 

HARLEYSVILLE, PA (January 19, 2006) - Harleysville National Corporation (NASDAQ: HNBC), today announced net income for the year ending December 31, 2005, of $38.8 million compared to $38.6 million for the year ending December 31, 2004. Fourth quarter 2005 net income was $9.8 million, as compared to $10.1 million for the fourth quarter of 2004. The Corporation’s consolidated total assets were $3.12 billion at December 31, 2005, an increase of 3.1% or $92.8 million over $3.02 billion in total assets reported at December 31, 2004. Of this increase, 4.6% or $140.0 million was due to loan growth, partially offset by a net decrease in cash and investments of 1.8% or $54.1 million.
 
For the quarter ending December 31, 2005, diluted earnings per share of $.35 remained level with the earnings during the fourth quarter of 2004 and basic earnings per share were $.36 compared with $.37 for the same period last year. For the year ended December 31, 2005, diluted earnings per share were $1.38 compared to $1.37 for 2004 and basic earnings per share were $1.41 for 2005 compared to $1.42 in 2004. The financial results for 2005 include the issuance of 1,310,000 shares of the Corporation’s common stock for a 5% stock dividend payable September 15, 2005. All share and per share information has been restated to reflect this stock dividend.


-5-

“We are pleased to continue our history of record earnings for Harleysville National Corporation. This is the 30th consecutive year we have been able to do so, and the 31st straight year that we have reported record dividends to our shareholders. Maintaining our strong performance and delivering value to customers, shareholders and the communities we serve will be our principal focus throughout 2006,” said Gregg J. Wagner, President and Chief Executive Officer.

DETAILED REVIEW OF FINANCIAL RESULTS
 
Net interest income on a fully tax-equivalent basis in the fourth quarter of 2005 remained level with the same period in 2004 and increased $962,000 or 1.0% for the year ending December 31, 2005, over the prior year. During the fourth quarter of 2005, higher loan volume and loan rates were offset by higher deposit and borrowing rates resulting in level net interest income. The increase in net interest income for the year was mainly attributed to higher loan volume, partially offset by higher deposit rates. The net interest margin for the fourth quarter of 2005 was 3.16%, compared to 3.23% for the third quarter of 2005 and 3.34% for the fourth quarter of 2004. The decrease in the net interest margin from 2004 levels is primarily due to higher funding costs, particularly in money market deposit accounts and short-term borrowings. Average earning assets increased $148.6 million or 5.4% during the fourth quarter of 2005 versus the comparable period in 2004. Average loans grew by $167.8 million or 9.4% during the same period, partially offset by a decrease in investment securities of $44.7 million or 4.7%.
 
Nonperforming assets (including nonaccrual loans, net assets in foreclosure and loans 90 days or more past due) were .27% of total assets at December 31, 2005, compared to .20% at December 31, 2004. The increase in nonperforming assets at December 31, 2005, in relation to December 31, 2004, was mainly due to commercial mortgage loans for one borrower totaling $1.5 million and commercial business loans for four borrowers totaling $1.1 million which have been placed on nonaccrual of interest. The increase in the provision for the three and twelve-month periods ending December 31, 2005, compared to the same periods in 2004, was primarily due to inherent risk related to loan growth and the increase in nonperforming loans.
 

-6-


Core deposits increased 2.1% or $33.6 million, to $1.61 billion at December 31, 2005, up from $1.58 billion at December 31, 2004. Total deposits increased $152.9 million, or 6.9% for the same period, which was primarily attributable to the growth in core deposit checking products and time deposits of $100,000 or greater.
 
Total noninterest income of $7.6 million for the fourth quarter of 2005 reflects a decrease of $1.8 million or 19.5% from the comparable period in 2004. For the year ended December 31, 2005, noninterest income rose $1.8 million or 6.5%, up from $28.2 million for 2004. The fourth quarter decrease was primarily due to a reduction of $589,000 in trust and investment advisory fees related to the sale of Cumberland Advisors, Inc., which took place in the second quarter of this year, lower gains on sales of investment securities of $289,000 and life insurance income of $586,000 recognized in 2004. The increase in noninterest income for the year ended December 31, 2005, over 2004, was attributed to gains of $1.1 million on sales of investment securities, key-man life insurance income of $434,000 and gains of $690,000 and $287,000 on the sales of Harleysville National Bank’s McAdoo branch and Cumberland Advisors, Inc., respectively, during the second quarter of 2005, partially offset by a decrease of $409,000 in life insurance income.
 
Noninterest expense of $14.8 million for the fourth quarter of 2005 decreased $1.9 million or 11.4% from $16.7 million in the fourth quarter of 2004, and increased $2.9 million or 4.9% for the year ended December 31, 2005, in comparison to the same periods in 2004. Salaries and benefits expense decreased $1.6 million during the fourth quarter of 2005 from the comparable period in 2004 primarily related to the sale of Cumberland Advisors, Inc. and lower bonus expense. Salaries and benefits expense increased $361,000 for the year of 2005 over 2004, primarily due to the acquisition of Millennium Bank, increased staffing levels resulting from growth and higher pension and healthcare costs partially offset by lower bonus expense. Occupancy expense increased $619,000 in 2005 over 2004, mostly due to the Millennium acquisition and a new branch opening. Other expense increased $2.6 million during 2005 mainly due to increased expenses for advertising and professional fees (Sarbanes-Oxley related) as well as lower loan origination expense deferrals related to decreased loan origination volume.
 
-7-
 
 
Harleysville National Corporation, with assets in excess of $3 billion, is the holding company for Harleysville National Bank (HNB). Investment Management and Trust Services are provided through Millennium Wealth Management and Private Banking, a division of HNB. Harleysville National Corporation stock is traded under the symbol "HNBC" and is commonly quoted under Nasdaq National Market Issues. For more information, visit the Harleysville National Corporation website at www.hncbank.com
 
 
 
This press release may contain forward-looking statements as defined in 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 Corporation’s financial services and products may not occur, changing economic and competitive conditions, technological developments, and other risks and uncertainties, including those detailed in the Corporation’s filings with the Securities and Exchange Commission.
 
-8-
Harleysville National Corporation
                                      
Consolidated Selected Financial Data(1)
                                      
(Dollars in thousands, except per share data)
                                      
December 31, 2005
                                      
(unaudited)
                                      
                                       
For the period:
 Three Months Ended
                  
 
    
Dec. 31, 
 
 
Sep. 30,
 
 
Jun. 30,
 
 
Mar. 31,
 
 
Dec. 31,
 
 
 
 
 
 
 
2005
 
 
2005
 
 
2005
 
 
2005
 
 
2004
        
Interest Income
  
$
41,008
  
$
38,570
  
$
36,889
  
$
35,272
  
$
34,196
        
Interest Expense
    
19,148
   
16,826
   
15,042
   
13,602
   
12,735
       
Net Interest Income
    
21,860
   
21,744
   
21,847
   
21,670
   
21,461
       
Provision for Loan Losses
    
1,351
   
650
   
650
   
750
   
1,070
       
Net Interest Income after
                                      
    Provision for Loan Losses
    
20,509
   
21,094
   
21,197
   
20,920
   
20,391
       
                                       
Service Charges
    
2,089
   
2,112
   
2,044
   
1,957
   
1,953
       
Gains on Sales of Investment Securities, Net
    
1,747
   
1,898
   
226
   
923
   
2,036
       
Gain on Sale of Branch
    
-
   
-
   
690
   
-
   
-
       
Trust, Investment Services and Advisory Income
    
1,410
   
1,261
   
2,051
   
1,929
   
1,999
       
Bank-Owned Life Insurance Income
    
599
   
497
   
645
   
493
   
627
       
Income on Life Insurance
    
-
   
-
   
177
   
-
   
586
       
Other Income
    
1,720
   
1,962
   
1,919
   
1,641
   
2,194
       
    Total Noninterest Income
    
7,565
   
7,730
   
7,752
   
6,943
   
9,395
       
                                       
Salaries, Wages and Employee Benefits
    
8,572
   
9,189
   
10,180
   
9,500
   
10,215
       
Occupancy
    
1,265
   
1,277
   
1,243
   
1,391
   
1,218
       
Furniture and Equipment
    
947
   
963
   
1,151
   
1,170
   
1,256
       
Other Expenses
    
3,986
   
3,884
   
4,319
   
3,442
   
3,985
       
    Total Noninterest Expense
    
14,770
   
15,313
   
16,893
   
15,503
   
16,674
       
                                       
Income Before Income Taxes
    
13,304
   
13,511
   
12,056
   
12,360
   
13,112
       
Income Tax Expense
    
3,493
   
3,349
   
2,366
   
3,195
   
2,999
       
    Net Income
  
$
9,811
  
$
10,162
  
$
9,690
  
$
9,165
  
$
10,113
        
Per Common Share Data:
                                     
Weighted Average Common Shares - Basic
    
27,430,277
   
27,521,780
   
27,552,322
   
27,559,493
   
27,492,032
       
Weighted Average Common Shares - Diluted
    
27,935,571
   
28,075,455
   
28,113,870
   
28,316,146
   
28,410,643
       
Net Income Per Share - Basic
  
$
0.36
  
$
0.37
  
$
0.35
  
$
0.33
  
$
0.37
        
Net Income Per Share - Diluted
  
$
0.35
  
$
0.36
  
$
0.35
  
$
0.32
  
$
0.35
        
Cash Dividend Per Share
 
$
0.23
  
$
0.18
  
$
0.17
  
$
0.17
  
$
0.21
        
Book Value
  
$
9.96
  
$
10.04
  
$
10.00
  
$
9.75
  
$
9.81
        
Market Value
  
$
19.10
  
$
21.94
  
$
22.06
  
$
20.24
  
$
25.33
        
                                       
For the period:
    
Twelve Months Ended
                      
   
December 31,
                        
 
    
2005
    
2004
                          
Interest Income
  
$
151,739
  
$
127,729
                          
Interest Expense
    
64,618
   
42,638
                         
Net Interest Income
    
87,121
   
85,091
                         
Provision for Loan Losses
    
3,401
   
2,555
                         
Net Interest Income after
                                      
    Provision for Loan Losses
    
83,720
   
82,536
                         
                                       
Service Charges
    
8,202
   
7,807
                         
Gains on Sales of Investment Securities, Net
    
4,794
   
3,689
                         
Gain on Sale of Branch
    
690
   
-
                         
Trust, Investment Services and Advisory Income
    
6,651
   
6,586
                         
Bank-Owned Life Insurance Income
    
2,234
   
2,406
                         
Income on Life Insurance
    
177
   
586
                         
Other Income
    
7,242
   
7,084
                         
    Total Noninterest Income
    
29,990
   
28,158
                         
                                       
Salaries, Wages and Employee Benefits
    
37,441
   
37,080
                         
Occupancy
    
5,176
   
4,557
                         
Furniture and Equipment
    
4,231
   
4,863
                         
Other Expenses
    
15,631
   
13,061
                         
    Total Noninterest Expense
    
62,479
   
59,561
                         
                                       
Income Before Income Taxes
    
51,231
   
51,133
                         
Income Tax Expense
    
12,403
   
12,566
                         
    Net Income
  
$
38,828
  
$
38,567
                          
                                       
-9-
Per Common Share Data:
                                     
Weighted Average Common Shares - Basic
    
27,515,630
   
27,147,992
                         
Weighted Average Common Shares - Diluted
    
28,085,920
   
28,062,489
                         
Net Income Per Share - Basic
  
$
1.41
  
$
1.42
                          
Net Income Per Share - Diluted
  
$
1.38
  
$
1.37
                          
Cash Dividend Per Share
 
$
0.75
  
$
0.68
                          
                                       
     
2005
 
 
2005
 
 
2005
 
 
2005
 
 
2004
        
Asset Quality Data:
    
4Q
 
 
3Q
 
 
2Q
 
 
1Q
 
 
4Q
        
Nonaccrual Loans
  
$
7,493
  
$
6,388
  
$
3,531
  
$
4,572
  
$
4,705
        
90 + Days Past Due Loans
    
846
   
1,125
   
679
   
599
   
981
       
Nonperforming Loans
    
8,339
   
7,513
   
4,210
   
5,171
   
5,686
       
Net Assets in Foreclosure
    
29
   
469
   
459
   
411
   
370
       
Nonperforming Assets
  
$
8,368
  
$
7,982
  
$
4,669
  
$
5,582
  
$
6,056
        
Loan Loss Reserve
  
$
19,865
  
$
19,205
  
$
18,890
  
$
18,724
  
$
18,455
        
Loan Loss Reserve / Loans
    
1.00
%
  
0.99
%
  
1.00
%
  
1.00
%
  
1.00
%
      
Loan Loss Reserve / Nonperforming Loans
    
238.2
%
  
255.6
%
  
448.7
%
  
362.1
%
  
324.6
%
      
Nonperforming Assets / Total Assets
    
0.27
%
  
0.26
%
  
0.15
%
  
0.19
%
  
0.20
%
      
Net Loan Charge-offs
  
$
691
  
$
335
  
$
484
  
$
481
  
$
410
        
Net Loan Charge-offs (annualized)
                                     
             / Average Loans
    
0.14
%
  
0.07
%
  
0.10
%
  
0.11
%
  
0.09
%
      
                                       
     
2005
 
 
2005
 
 
2005
 
 
2005
 
 
2004
        
Selected Ratios (annualized):
    
4Q
 
 
3Q
 
 
2Q
 
 
1Q
 
 
4Q
        
Return on Average Assets
    
1.25
%
  
1.32
%
  
1.29
%
  
1.25
%
  
1.36
%
      
Return on Average Shareholders' Equity
    
14.25
%
  
14.64
%
  
14.30
%
  
13.69
%
  
15.00
%
      
Yield on Earning Assets (FTE)
    
5.76
%
  
5.56
%
  
5.48
%
  
5.34
%
  
5.16
%
      
Cost of Interest Bearing Funds
    
3.09
%
  
2.79
%
  
2.57
%
  
2.37
%
  
2.19
%
      
Net Interest Margin (FTE)
    
3.16
%
  
3.23
%
  
3.34
%
  
3.37
%
  
3.34
%
      
Leverage Ratio
    
9.70
%
  
9.83
%
  
9.06
%
  
8.99
%
  
8.91
%
      
                                       
     
2005
 
 
2004
                          
Selected Ratios (annualized):
    
Year-to-date
 
 
Year-to-date
 
                        
Return on Average Assets
    
1.28
%
  
1.39
%
                        
Return on Average Shareholders' Equity
    
14.22
%
  
15.31
%
                        
Yield on Earning Assets (FTE)
    
5.54
%
  
5.18
%
                        
Cost of Interest Bearing Funds
    
2.71
%
  
1.98
%
                        
Net Interest Margin (FTE)
    
3.27
%
  
3.55
%
                        
                                       
Balance Sheet (Period End):
    
2005
 
 
2005
 
 
2005
 
 
2005
 
 
2004
        
   
4Q 
 
 
3Q
 
 
2Q
 
 
1Q
 
 
4Q
        
Assets
  
$
3,117,359
  
$
3,120,138
  
$
3,032,588
  
$
3,002,572
  
$
3,024,515
        
Earning Assets
    
2,924,156
   
2,920,126
   
2,837,263
   
2,817,956
   
2,845,656
       
   Investment Securities
    
901,208
   
900,345
   
893,587
   
907,379
   
943,563
       
   Loans
    
1,985,493
   
1,941,866
   
1,891,692
   
1,865,641
   
1,845,802
       
   Other Earning Assets
    
37,455
   
77,915
   
51,984
   
44,936
   
56,291
       
Interest-Bearing Liabilities
    
2,441,185
   
2,464,440
   
2,349,820
   
2,343,177
   
2,367,229
       
Total Deposits
    
2,365,457
   
2,349,559
   
2,223,304
   
2,237,567
   
2,212,563
       
   Noninterest-Bearing Deposits
    
363,440
   
335,614
   
360,695
   
332,525
   
333,516
       
   Interest-Bearing Checking
    
387,374
   
399,482
   
331,201
   
352,132
   
305,584
       
   Money Market
    
667,952
   
677,507
   
676,260
   
679,872
   
713,039
       
   Savings
    
190,033
   
196,242
   
209,865
   
222,553
   
223,039
       
   Time, under $100,000
    
538,564
   
529,302
   
508,313
   
523,782
   
508,010
       
   Time, $100,000 or greater
    
218,094
   
211,412
   
136,970
   
126,703
   
129,375
       
Total Borrowed Funds
    
439,168
   
450,495
   
487,211
   
438,135
   
488,182
       
   Federal Home Loan Bank
    
297,750
   
292,750
   
272,750
   
272,750
   
317,750
       
   Other Borrowings
    
141,418
   
157,745
   
214,461
   
165,385
   
170,432
       
Shareholders' Equity
    
273,232
   
275,627
   
275,484
   
268,724
   
270,532
       
                                       
Balance Sheet (Average):
    
2005
 
 
2005
 
 
2005
 
 
2005
 
 
2004
        
 
    
4Q 
 
 
3Q
 
 
2Q
 
 
1Q
 
 
4Q
 
      
Assets
  
$
3,117,686
  
$
3,054,895
  
$
3,006,076
  
$
2,976,361
  
$
2,957,559
        
Earning Assets
    
2,925,231
   
2,866,964
   
2,823,832
   
2,801,817
   
2,776,599
       
   Investment Securities
    
897,032
   
903,924
   
900,457
   
910,981
   
941,704
       
   Loans
    
1,961,722
   
1,912,551
   
1,879,028
   
1,845,408
   
1,793,935
       
   Other Earning Assets
    
66,477
   
50,489
   
44,347
   
45,428
   
40,960
       
Interest-Bearing Liabilities
    
2,458,400
   
2,388,883
   
2,344,504
   
2,328,569
   
2,308,446
       
Total Deposits
    
2,353,430
   
2,260,962
   
2,226,609
   
2,196,584
   
2,213,829
       
   Noninterest-Bearing Deposits
    
338,768
   
343,658
   
339,234
   
321,912
   
324,466
       
   Interest-Bearing Checking
    
385,985
   
350,425
   
342,133
   
325,081
   
317,328
       
   Money Market
    
680,365
   
675,550
   
675,052
   
688,602
   
692,703
       
   Savings
    
192,961
   
206,161
   
216,287
   
222,853
   
226,251
       
   Time, under $100,000
    
534,390
   
514,590
   
508,723
   
513,986
   
517,167
       
   Time, $100,000 or greater
    
220,961
   
170,578
   
145,180
   
124,150
   
135,914
       
Total Borrowed Funds
    
443,738
   
471,579
   
457,129
   
453,897
   
419,083
       
   Federal Home Loan Bank
    
294,435
   
277,967
   
272,750
   
292,917
   
263,566
       
   Other Borrowings
    
149,303
   
193,612
   
184,379
   
160,980
   
155,517
       
Shareholders' Equity
    
273,135
   
275,450
   
271,735
   
271,531
   
268,211
       
-10-
Average Balance Sheets and Interest Rates - Fully-Taxable Equivalent Basis
                        
                                       
 
    
Three Months Ended December 31, 2005 
  
Three Months Ended December 31, 2004
   
Average 
          
Average
 
 
Average
 
 
 
 
 
Average
 
 
    
Balance 
    
Interest
    
Rate
 
 
Balance
 
 
Interest
 
 
Rate
  
Assets
                                      
Earning assets:
                                      
   Investment securities
                                      
     Taxable investments
  
$
670,968
  
$
6,561
    
3.88
%
$
696,839
  
$
6,201
    
3.54
%
     Non-taxable investments (2)
    
226,064
   
3,508
   
6.16
%
  
244,865
   
4,180
   
6.79
%
    Total investment securities
    
897,032
   
10,069
   
4.45
%
  
941,704
   
10,381
   
4.39
%
Federal funds sold and deposits in banks
    
66,477
   
643
   
3.84
%
  
40,960
   
193
   
1.87
%
Loans(2)
    
1,961,722
   
31,752
   
6.42
%
  
1,793,935
   
25,464
   
5.65
%
    Total earning assets
    
2,925,231
   
42,464
   
5.76
%
  
2,776,599
   
36,038
   
5.16
%
Noninterest-earning assets
    
192,455
               
180,960
             
    Total assets
  
$
3,117,686
              
$
2,957,559
              
                                       
Liabilities and Shareholders' Equity
                                      
Interest-bearing liabilities:
                                      
   Interest-bearing deposits:
                                      
   Savings and money market
  
$
1,259,311
    
7,084
   
2.23
%
$
1,236,282
    
3,728
   
1.20
%
   Time
    
755,351
   
7,200
   
3.78
%
  
653,081
   
5,332
   
3.25
%
    Total interest-bearing deposits
    
2,014,662
   
14,284
   
2.81
%
  
1,889,363
   
9,060
   
1.91
%
Borrowed funds
    
443,738
   
4,864
   
4.35
%
  
419,083
   
3,675
   
3.49
%
    Total interest-bearing liabilities
    
2,458,400
   
19,148
   
3.09
%
  
2,308,446
   
12,735
   
2.19
%
Noninterest-bearing liabilities:
                                      
   Demand deposits
    
338,768
               
324,466
             
   Other liabilities
    
47,383
               
56,436
             
      Total noninterest-bearing liabilities
    
386,151
               
380,902
             
    Total liabilities
    
2,844,551
               
2,689,348
             
Shareholders' equity
    
273,135
               
268,211
             
    Total liabilities and shareholders' equity
  
$
3,117,686
              
$
2,957,559
              
                                       
Net interest spread
                
2.67
%
              
2.97
%
Effect of noninterest-bearing sources
                
0.49
%
              
0.37
%
Net interest income/margin on earning assets
        
$
23,316
    
3.16
%
      
$
23,303
    
3.34
%
Less tax equivalent adjustment
          
1,456
               
1,842
       
Net interest income
        
$
21,860
              
$
21,461
        
                                       
   
Twelve Months Ended December 31, 2005 
    
Twelve Months Ended December 31, 2004
  
   
Average 
 
 
 
 
 
Average
 
 
Average
 
 
 
 
 
Average
 
 
    
Balance
 
 
Interest
 
 
Rate
 
 
Balance
 
 
Interest
 
 
Rate
  
Assets
                                      
Earning assets:
                                      
   Investment securities
                                      
     Taxable investments
  
$
648,630
  
$
23,923
    
3.69
%
$
702,183
  
$
23,891
    
3.40
%
     Non-taxable investments (2)
   
254,433
   
16,183
   
6.36
%
  
239,727
   
17,015
   
7.10
%
    Total investment securities
    
903,063
   
40,106
   
4.44
%
  
941,910
   
40,906
   
4.34
%
Federal funds sold and deposits in banks
    
51,740
   
1,637
   
3.16
%
  
41,064
   
524
   
1.28
%
Loans(2) (3)
    
1,900,023
   
116,354
   
6.12
%
  
1,625,419
   
93,725
   
5.77
%
    Total earning assets
    
2,854,826
   
158,097
   
5.54
%
  
2,608,393
   
135,155
   
5.18
%
Noninterest-earning assets
    
184,360
               
165,012
             
    Total assets
  
$
3,039,186
              
$
2,773,405
              
                                       
Liabilities and Shareholders' Equity
                                      
Interest-bearing liabilities:
                                      
   Interest-bearing deposits:
                                      
     Savings and money market
  
$
1,240,403
    
22,319
   
1.80
%
$
1,113,734
    
9,871
   
0.89
%
     Time
    
683,466
   
24,330
   
3.56
%
  
668,301
   
20,902
   
3.13
%
    Total interest-bearing deposits
    
1,923,869
   
46,649
   
2.42
%
  
1,782,035
   
30,773
   
1.73
%
   Borrowed funds
    
456,599
   
17,969
   
3.94
%
  
372,141
   
11,865
   
3.19
%
    Total interest-bearing liabilities
    
2,380,468
   
64,618
   
2.71
%
  
2,154,176
   
42,638
   
1.98
%
   Noninterest-bearing liabilities:
                                      
     Demand deposits
    
335,962
               
312,963
             
     Other liabilities
    
49,782
               
54,303
             
        Total noninterest-bearing liabilities
    
385,744
               
367,266
             
    Total liabilities
    
2,766,212
               
2,521,442
             
Shareholders' equity
    
272,974
               
251,963
             
    Total liabilities and shareholders' equity
  
$
3,039,186
              
$
2,773,405
              
                                       
Net interest spread
                
2.83
%
              
3.20
%
Effect of noninterest-bearing sources
                
0.44
%
              
0.35
%
Net interest income/margin on earning assets
        
$
93,479
    
3.27
%
      
$
92,517
    
3.55
%
Less tax equivalent adjustment
          
6,358
               
7,426
       
Net interest income
        
$
87,121
              
$
85,091
        
                                       
(1) Certain prior period amounts have been reclassified to conform to current period presentation.
    
(2) The interest earned on nontaxable investment securities and loans is shown on a tax equivalent basis (tax rate of 35%).
    
(3) Nonaccrual loans have been included in the appropriate average loan balance category, but interest on nonaccrual loans has not been
       
included for purposes of determining interest income.
          
-11-