1st Aug 2007 15:46
Leumi International Investments NV01 August 2007 BANK LEUMI LE-ISRAEL B.M. - (GUARANTOR - GUARANTEED EURO MEDIUM TERM NOTE PROGRAMME OF LEUMI INTERNATIONAL INVESTMENTS N.V.) Translation of Immediate Report Bank Leumi le-Israel B.M. Registration No. 520018078 Securities of the Corporation are listed on The Tel Aviv Stock Exchange Abbreviated Name: Leumi Leumi House, 34 Yehuda Halevi Street, Tel Aviv 65546 Phone: + 972 3 5148111, + 972 3 5149419; Facsimile: + 972 3 5149732 Electronic Mail: jennifer@bll.co.il 1 August 2007 To: Israel Securities Authority (www.isa.gov.il) The Tel Aviv Stock Exchange (www.tase.co.il) Immediate Report regarding an Event or Matter falling outside the Ordinary Course of Business of the Corporation Pursuant to Regulation 36(a) of the Securities (Periodic and Immediate Reports) Regulations, 1970 Nature of the Event: Financial Statements - Bank Leumi USA Bank Leumi le-Israel B.M. announces that a subsidiary of the Bank, Bank LeumiUSA approved its financial statements as at 30 June 2007. See attached Notice in this regard Date and time at which the corporation first became aware of the event ormatter: 1 August 2007 at 15:00.________________________________________________________________ Name of Electronic Reporter: Jennifer Janes, Position: Executive Vice President,Group SecretaryPOB 2 Tel Aviv 61000, Phone: + 972 3 5149419, Facsimile: + 972 3 5149732,Electronic Mail: jennifer@bll.co.il Press Release Contact: Bank Leumi USA Leslie B. Kahle 917-542-2355 leslie.kahle@leumiusa.com BANK LEUMI USA REPORTS SECOND QUARTER 2007 RESULTS Net Income $6.4 Million Total Assets $5.9 Billion ROE YTD 7.15% New York, NY, August 1, 2007 - Bank Leumi USA (BLUSA) today reported results forthe second quarter of 2007 and for the six months ended June 30, 2007. Net income for the quarter was $6.4 million compared with $2.6 million(adjusted) for the second quarter of 2006. The improvement in net income wasprimarily due to growth in the loan portfolio combined with increased revenuesfrom private banking. Net income for the six months ended June 30, 2007 was$13.9 million compared with $5.3 million (adjusted) for the same period lastyear.(1) Assets at June 30, 2007 of $5.9 billion were $155 million higher than the assetsat December 31, 2006, reflecting growth in both the loan portfolio and privatebanking revenue. "We are pleased with our second quarter and six months financial results.Despite the challenges we continue to face in a very competitive market, we haveseen an increase of 37% in net income (excluding the effects of the restatementof hedge accounting). We have maintained a strong balance sheet with highquality loans and investments. We believe that stabilizing interest rates,coupled with the addition of key business developers and improvements to ourtechnology infrastructure will continue to positively impact our performanceduring the remainder of the year," stated Mr. Uzi Rosen, chief executive officerof Bank Leumi USA. "We are also pleased to announce the appointment of our newChief Risk Officer, Raymond P. Cooney, who will be responsible for the overallrisk management of the bank," he added. Net Interest Income Net interest income for the 6 months ended June 30 increased $5.4 million to$52.2 million compared to the same period of 2006. This is primarilyattributable to growth in the loan portfolio. Non-Interest Income Non-interest income totaled $23.1 million for the first six months of 2007. Thisrepresents an increase of $13.3 million from the same period last year and wasprimarily due to an increase in fee income from private banking activities,reduction in the loss on trading derivatives, and recognition of a revaluationgain on CD's elected under Statement of Financial Accounting Standard ("SFAS")No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities." Non-Interest Expense Non-interest expense totaled $54.5 million through June 30, 2007, an increase of$5 million or 10.0% compared to the same period last year. This increase isprimarily due to higher employee related expenses and professional service fees. Loans and Allowance for Loan Losses The loan portfolio of $3.24 billion at June 30, 2007 was higher than the yearend 2006 loan portfolio of $3.06 billion. The Allowance for Loan Losses was $63.6 million as of June 30, 2007. Thisrepresents a ratio of 1.96% of total loans and is more than 5 times the level ofnon-performing loans. Equity and Capital Adequacy Shareholders' Equity was $439 million as of June 30, 2007, compared to $416million as of year end 2006. This change is due to six months income of $13.9million, an adjustment to opening retained earnings at January 1, 2007 of $5.9million, net of tax, related to adoption of SFAS 159, and the reversal ofunrealized losses on available for sale securities, net of tax, for $3.1million. The bank's tier 1 risk-based, total risk-based and leverage capital ratios were8.43%, 11.30% and 7.36%, respectively, as of June 30, 2007, and remain in excessof regulatory requirements. Bank Leumi USA is an FDIC-insured commercial bank that provides financialservices to middle-to upper-middle market firms, international businesses, andnot-for-profit organizations through offices in New York, Illinois, Californiaand Florida. BLUSA offers U.S. and international private banking services aswell as a full range of securities and insurance products through its brokeragesubsidiary, Leumi Investment Services Inc. BLUSA is the largest subsidiary ofthe Leumi Group, founded in 1902. (1)Adjusted for the correction of an error related to the "short cut" method ofhedge accounting under SFAS No. 133 for certain Certificates of Deposit andrelated swap transactions entered into during the period 2002 through 2005 . Bank Leumi USA and Subsidiaries Consolidated Statements of Financial Condition (Dollars in Thousands) as of June 30, 2007 as of December 31, 2006Assets Cash and Due from Banks $ 30,710 $ 83,782 Federal Funds Sold 140,000 25,000 Time Deposits with Banks 225,500 25,500 Securities 1,997,014 2,287,466 Loans 3,244,065 3,063,162Less: Allowance for LoanLosses 63,596 63,123 -------- --------Loans - Net 3,180,469 3,000,039 Bank Premises and Equipment 20,473 21,744 Other Assets 311,284 307,151 --------- --------- Total Assets $ 5,905,450 $ 5,750,682 ============= ============= Liabilities Non-interest Bearing Deposits $ 423,862 $ 493,384Interest-Bearing Deposits 4,530,426 4,293,479 Other Borrowings 250,000 310,000Other Liabilities 161,813 137,335Long-Term 100,000 100,000 Shareholders' Equity 439,349 416,484 --------- --------- Total Liabilities and Shareholders' Equity $5,905,450 $5,750,682 ============ ============ Bank Leumi USA and Subsidiaries Consolidated Statements of Income (Dollars in Thousands) For the six months period ended June 30, 2007 June 30, 2006* Interest Income $ 163,770 $ 147,810 Interest Expense 111,561 100,956 -------- ------- Net Interest Income 52,209 46,854 Non-Interest Income 23,060 9,714 Non-Interest Expense 54,457 49,500 ------- ------ Income before Income Taxes 20,812 7,068 Income Tax Expense 6,927 1,792 ----- ------ Net Income $ 13,885 $ 5,276 ======== ======= *Adjusted for the correction of an error related to the "short cut" method ofhedge accounting under SFAS No. 133 for certain Certificates of Deposit andrelated swap transactions entered into during the period 2002 through 2005. 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