First Quarter Report March 31, 2015

First Quarter Report March 31, 2015

Dear Shareholders:

Net income for the quarter ended March 31, 2015 totaled $321,000, or $0.64 per share. This represents a decrease of $26,000 compared with net income reported for the quarter ended March 31, 2014 of $347,000, or $0.70 per share. The decrease in earnings is mostly attributed to lower net interest income of $43,000 as interest income from securities decreased by $75,000, which was offset by a $23,000 increase in interest earned on loans. Noninterest income increased by $33,000 compared with the first quarter of 2014 as net securities gains totaled $55,000. Trust department income also increased by $6,000 while brokerage income and service charges on deposits decreased by $17,000 and $6,000, respectively. Noninterest expenses increased $39,000.

Loan balances increased nearly 8% during the most recent quarter and represented a noteworthy start for 2015. New loan production totaled $6.8 million with $5.1 million in commercial loans and leases and $1.2 million in residential mortgages. A strong first quarter has favorably positioned the bank’s loan portfolio to become a more significant driver of earnings. This is important as net interest spreads are expected to tighten when interest rates increase. In addition, retail deposits grew a modest $1.4 million.

During the 2015 Annual Meeting, the shareholders elected two new directors to the bank holding company Board of Directors. Dickson K. Forbes and Larry D. Loperfito were elected after having served on the board of Apollo Trust Company since last fall. The Board of Directors also elected Antonio O. DiFilippo Director Emeritus in recognition of his providing dedicated service since 1995. Also, Joseph R. Bartolomeo and Nancy M. Tarella were recently elected as new bank officers. Please do not hesitate to contact me if you would like any additional information or if you have any questions.

Sincerely,

Nelson L. Person
President & CEO