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Alliance Financial Corp. (ALNC) filed Quarterly Report for the period ended 2011-06-30.
Alliance Financial Corp. has a market cap of $136.4 million; its shares were traded at around $28.01 with a P/E ratio of 10.7 and P/S ratio of 1.7. The dividend yield of Alliance Financial Corp. stocks is 4.2%. Alliance Financial Corp. had an annual average earning growth of 4.8% over the past 10 years.
This is the annual revenues and earnings per share of ALNC over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of ALNC.
Highlight of Business Operations:
Net income for the quarter ended June 30, 2011 increased 16.3% to $3.5 million or $0.73 per diluted share compared to $3.0 million or $0.64 per diluted share in the year-ago quarter. The return on average assets and return on average shareholders’ equity were 0.95% and 10.45%, respectively, for the second quarter of 2011, compared to 0.83% and 9.62%, respectively, for the second quarter of 2010.
Net income for the six months ended June 30, 2011 increased 18.2% to $6.8 million or $1.43 per diluted share, compared to $5.7 million or $1.23 per diluted share in the year-ago period. The return on average assets and return on average shareholders’ equity were 0.93% and 10.36%, respectively, for the first half of 2011, compared to 0.80% and 9.28%, respectively, for the first half of 2010.
The net interest margin on a tax-equivalent basis was 3.53% in the second quarter of 2011, compared with 3.56% in the second quarter of 2010 and 3.44% in the first quarter of 2011. The decrease in the net interest margin compared with the second quarter of 2010 was the result of a decrease in the tax-equivalent earning asset yield of 34 basis points in the second quarter compared with the year-ago quarter, which was offset by a decrease in the cost of interest-bearing liabilities of 34 basis points over the same period.
Average interest-earning assets were $1.3 billion in the second quarter, which was an increase of 1.7% from the year-ago quarter. Growth in the investment securities portfolio, which typically has lower yields than loans, has been a contributing factor in the decline in the yield on earning assets. Investment securities comprised 27.5% of average interest-earning assets in the second quarter of 2011, compared to 24.6% in the year-ago quarter. Total average loans and leases were 65.6% of total interest-earning assets in the second quarter of 2011, compared to 68.6% in the year-ago quarter. Competition, sluggish demand and low market interest rates have all been contributing factors to the decline in our loan portfolios, along with the continuing amortization of the lease portfolio.
Between September 2007 and December 2008, the Federal Reserve reduced its target fed funds rate from 5.25% to between zero and 0.25%, where the target rate remains. The Federal Reserve’s monetary policy, volatility in equity markets, economic recession and federal government economic stimulus efforts, among other factors, have caused yields on U.S. Treasury securities to drop to exceptionally low levels throughout much of the past three years. This persistently low interest rate environment has caused an ongoing decline over the past three years in the returns on our interest-earning assets, consistent with much of the financial industry. Yields on our securities portfolio and on our commercial loans and consumer loans were most affected by the low interest rate environment, due to the significant annual amortization in these portfolios as a result of their relatively shorter duration. Also, our commercial loan and consumer loan portfolios are more sensitive to changes in interest rates due to the variable rate characteristics of a portion of these portfolios. The tax-equivalent yield on our securities portfolio decreased 35 basis points and 46 basis points, respectively in the quarter and six months ended June 30, 2011 compared to the year-ago periods. The yield on our commercial loans decreased 34 basis points and 39 basis points, respectively, in the quarter and six months ended June 30, 2011 compared to the year-ago periods. The yield on our consumer (including indirect) loans decreased 55 basis points and 56 basis points, respectively, in the quarter and six months ended June 30, 2011 compared to the year-ago periods.
Our liability mix changed favorably during 2010 and into 2011 as we continued to focus on increasing our transaction account balances and as we did not offer premium rates on time accounts during this period. Our effort to increase our transaction account balances has been enhanced by retail and municipal depositors’ reluctance to lock up funds in time accounts which pay very low, yet competitive rates, and by the buildup of cash on corporate customers’ balance sheets. The aggregate average balance of transaction accounts (including non-interest bearing demand deposits) was $812.8 million in the second quarter, which was an increase of $47.4 million or 6.2% from the year-ago quarter. Average transaction account balances comprised 70.5% of total average deposits in the second quarter, compared with 67.2% in the second quarter of 2010. Average time account balances in the second quarter were $339.6 million or 29.5% of total average deposits in the second quarter, compared with $373.4 million or 32.8% in the year-ago quarter. Average transaction account balances comprised 70.5% of total average deposits in the first half of 2011, compared to 66.8% in the first half of 2010. Average time account balances in the first half of 2011 were 29.5% of total average deposits, compared with 33.1% in the year-ago period. Our ability to gather transaction deposits over the past year has been greatly enhanced by our strong financial position and earnings performance, enhanced product offerings including upgraded treasury management and internet banking platforms, and a high positive awareness of our brand in our markets and by environmental factors such as equity market volatility and risk aversion among retail investors.
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