American Financial Holdings, Inc. Announces 34.1% Increase in Second Quarter Net Income and EPS of $.45.Business Editors NEW BRITAIN New Britain, city, United States New Britain, industrial city (1990 pop. 75,491), Hartford co., central Conn.; settled c.1686, inc. 1871. The tin shops and brassworks in the city were established in the 18th cent. , Conn.--(BUSINESS WIRE)--July 31, 2002 American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Financial Holdings, Inc. (Nasdaq: AMFH), the holding company for American Savings Bank savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. , today reported second quarter 2002 earnings of $9.7 million, or $0.45 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, up 34.1% from earnings of $7.3 million, or $0.34 per diluted share for the second quarter of 2001. For the first six months of 2002, net income was a record $16.0 million, or $0.73 per diluted share, up 8.8% from net income of $14.7 million, or $0.64 per diluted share, in the prior year period. Exclusive of one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. merger related expenses of $2.9 million, net income was $18.0 million, or $0.82 per diluted share, up 28.1% from $14.7 million or $0.64 per diluted share during the first six months of 2001. The Company's Board of Directors declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a cash dividend of $0.18 per share to shareholders of record as of August 9, 2002. The dividend, which is 9.1% higher than the dividend paid during the comparable period in 2001, is payable on August 23, 2002. Commenting on the Company's second quarter 2002 earnings, Chairman, President and Chief Executive Officer Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. T. Kenney Kenney can refer to: People
Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in extremely pleased with the synergies the bank is realizing from the combined organization. Sales of investment, deposit and loan products to our new customers continue to be strong and have exceeded our expectations. Especially notable was the origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real of $140.7 million in home equity lines, with significant volume generated from our newly acquired branch markets. "Aggressive capital management continues to be a significant focus. During the first six months of this year, the bank repurchased 1.9 million shares at a cost of $54.6 million. Core balance sheet growth, exclusive of the American Bank acquisition, was strong at mid-year. Deposits grew $71.4 million, which funded a $31.0 million growth in the loan portfolio. Our acquisition, aggressive stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. and balance sheet growth has powered an increase in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. cash basis return on equity to 10.3% from 7.7% a year ago. Our goal is to achieve a double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. return in both reported and cash return on equity by the fourth quarter of 2003." Mr. Kenney stated, "Another significant highlight of our second quarter performance was the continuing quality of our loan portfolio. Asset quality remains strong with non-performing assets only $4.6 million, or 0.16% of total assets, which is exceptional as compared to industry and peer group averages. "In the current economic environment, the bank continues to be diligent dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d in measuring and managing corporate credit risk in the investment portfolio. This monitoring is part of the bank's on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" investment management process. The bank has no exposure to syndicated commercial loan investments and only holds investment grade corporate bonds." Accounting for Options In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting currently allowable, compensation costs attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the Company's stock option plan are not considered in the determination of net income since the exercise prices of the grants equal the fair value of the common stock at the grant date. The footnotes to the annual financial statements contain pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma disclosures for net income and earnings per share as if compensation expense had been recognized for stock options. Additionally, the Company's stock options are considered in the determination of weighted average shares outstanding used in the calculation of diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of . If the Company were to recognize a compensation expense for stock options granted in 2002, Management estimates that the impact on 2002 net income would be a reduction of less than $0.01 per share. At this time, Management and the Board have concluded that a change in accounting policy is not warranted. Earnings Summary for the Three Months Ended June June: see month. 30, 2002 --Fueled by the acquisition, organic growth and the execution of our investment strategy, interest and dividend income increased $8.6 million to $39.0 million in the second quarter of 2002 compared to $30.3 million in the second quarter of 2001. The increase was due to an $836.3 million rise in average interest-earning assets to $2.53 billion, partially offset by a 102 basis point decline in average yield to 6.22%, due to the lower interest rate environment. --Interest expense rose $2.2 million to $17.9 million for the three months ended June 30, 2002 compared to $15.7 million for the three months ended June 30, 2001. This increase was the net effect of a $905.9 million increase in the average balance of interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid liabilities to $2.27 billion. Average cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. dropped 145 basis points from 4.61% to 3.16%, driven by the increased level of lower-cost core deposits and the repricing Repricing To change the price of an asset. In derivatives, it sometimes refers to the exchange of options of with different strike prices. repricing of maturing certificates of deposit and borrowings to lower rates. --Net interest income rose to $21.0 million in the second quarter of 2002 compared to $14.7 million in the second quarter of 2001. Net interest margin was 3.39% in the second quarter of 2002 compared to 3.54% in the same quarter of 2001. The decline in the margin was primarily due to American Bank's lower net interest margin relative to American Savings, and the Company's stock repurchase program. Net interest margin increased two basis points from the first quarter of 2002 due to extending lower-yielding overnight investments into intermediate term investments and repricing maturing certificates of deposit and borrowings into lower rates. --Non-interest income, excluding gains on sale of investment securities, totaled $3.9 million for the three months ended June 30, 2002 compared to $2.8 million for the three months ended June 30, 2001. The growth in fee income was primarily due to increased deposit fee income resulting from the expansion of the branch network, an increase in gains on loan sales, fees from our complement of investment advisory professionals and growth of our trust service fees. Investment commissions and advisory fees were up 23.8% and trust fees were up 37.1% over the second quarter of 2001. --Non-interest expense totaled $12.3 million, or 0.43% of average assets, in the second quarter of 2002 compared to $10.5 million, or 0.56% of average assets, in the second quarter of 2001. This contributed to an efficiency ratio of 46.5% compared to 50.6% for the second quarter of 2001. The lower efficiency ratio was a reflection of exceeding our acquisition cost save target and continued focus on cost management. --In connection with the American Bank of Connecticut Connecticut, state, United States Connecticut (kənĕt`ĭkət), southernmost of the New England states of the NE United States. It is bordered by Massachusetts (N), Rhode Island (E), Long Island Sound (S), and New York (W). acquisition, the Company amortized $709,000 of its core deposit intangible (CDI CDI compact disc interactive: a system for storing a mix of software, data, audio, and compressed video for interactive use under processor control ) in the second quarter of 2002. The CDI, which totaled $14.3 million as of June 30, 2002, is being amortized using an accelerated method. --Income tax expense increased to $4.7 million in the second quarter of 2002 from $3.4 million in the second quarter of 2001. The $1.3 million increase in income taxes was primarily due to an increase in income before taxes. The effective tax rate was 32.5% for the second quarter of 2002 compared to 32.0% for the second quarter of 2001. Dividends paid by the American Savings Mortgage Servicing Mortgage servicing The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, and possible settlement of default , involved with a mortgage loan. Company to the bank are exempt from State taxes, which eliminates State tax liability. Balance Sheet Summary --Total assets rose 52.3% to $2.89 billion at June 30, 2002 from $1.90 billion at December December: see month. 31, 2001, largely due to the acquisition of American Bank and loan and deposit growth. --The Company's portfolio of securities available for sale increased to $926.6 million in the second quarter of 2002 from $536.4 million at December 31, 2001, due to the acquisition, investing of Federal Funds Federal Funds Funds deposited to regional Federal Reserve Banks by commercial banks, including funds in excess of reserve requirements. Notes: These non-interest bearing deposits are lent out at the Fed funds rate to other banks unable to meet overnight reserve into intermediate term securities and the execution of our investment strategy. --Total net loans outstanding grew $445.2 million from December 31, 2001 to $1.66 billion, a 37.0% increase. This increase was driven by the acquisition, new loan closings, and partially offset by heavy refinancing Refinancing An extension and/or increase in amount of existing debt. activity. Loan volume was especially strong during the year when compared to the same period last year due to the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. rate environment and the penetration The successful unauthorized breach of a security perimeter. See penetration test. into new markets. Mortgage closings were up 51.0% to $213.7 million, and consumer loan closings were up 52.0% to $163.6 million. Commercial mortgage and commercial loan closings increased to $37.7 million for the six months ended June 30, 2002 from $1.1 million for the six months ended June 30, 2001 in American Savings' pre-acquisition market. The acquisition of American Bank accelerated the bank's entry into the commercial banking business and was primarily responsible for the increase in closings. --In view of its asset quality, the Company did not record a provision for loan losses for the third consecutive quarter. At June 30, 2002, non-performing assets totaled $4.6 million, representing 0.16% of total assets, compared to $4.3 million, or 0.23% of total assets at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2001. Non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. accounted for $4.5 million of the second quarter total, while foreclosed real estate accounted for the remaining $95,000. The allowance for loan losses was $17.2 million at June 30, 2002, or 1.03% of total loans, and 380.41% of non-performing loans. During the quarter, in order to improve credit quality, the bank sold $3.8 million of higher risk performing loans and charged off $2.1 million which represented the specific reserve on those credits. --Total deposits rose $793.8 million to $1.92 billion from year-end 2001. The increase was attributable to $722.4 million from the American Bank acquisition and net deposit growth of $71.4 million, or 3.74%, primarily generated through the implementation of aggressive deposit acquisition campaigns initiated in the first and second quarters of 2002. Core deposits rose $525.3 million to $971.9 million representing 50.7% of total deposits compared to 39.7% of total deposits at year-end. The growth in core deposits stemmed stemmed adj. 1. Having the stems removed. 2. Provided with a stem or a specific type of stem. Often used in combination: stemmed goblets; long-stemmed roses. from a $327.4 million increase in NOW and money market accounts to $517.6 million, a $141.9 million rise in savings accounts Savings Account A deposit account intended for funds that are expected to stay in for the short term. A savings account offers lower returns than the market rates. Notes: to $367.7 million, and a $55.9 million rise in non-interest bearing accounts to $86.6 million. Certificates of deposit, which are not considered core deposits, also rose from $677.6 million to $946.2 million during the six months ended June 30, 2002, primarily due to the acquisition. --At June 30, 2002, the Company recorded tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. (defined as total shareholders' equity less goodwill and core deposit intangible) of $343.4 million, representing 11.9% of total assets, and a tangible book value of $15.36 per share based on 22,361,255 shares outstanding. At December 31, 2001, tangible shareholders' equity totaled $394.9 million, representing 20.8% of total assets and a tangible book value of $19.16 per share based on 20,612,861 shares outstanding. The reduction in equity demonstrates management's diligence Vigilant activity; attentiveness; or care, of which there are infinite shades, from the slightest momentary thought to the most vigilant anxiety. Attentive and persistent in doing a thing; steadily applied; active; sedulous; laborious; unremitting; untiring. in aggressively utilizing excess capital through stock repurchases as well as the effect of the American Bank acquisition. Under the current Board authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: plan to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. the amount of shares issued in the acquisition, as well as the effect of the American Bank acquisition, 1,706,240 shares were still available for repurchase as of June 30, 2002. During the quarter, the Company repurchased 1,124,975 shares at a cost of $32.8 million. American Savings Foundation In the first half of the year, the Board of Directors of the American Savings Foundation approved approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1.7 million in grants, contributions and scholarships, which included $825,000 in multi-year commitments to capital campaigns, and $500,000 in college scholarships for approximately 325 students. American Savings Foundation Scholars are chosen by a volunteer committee of bank employees who consider each applicant's financial need, academic potential and community service. This year, the Foundation projects it will distribute at least $2.5 million in grants, contributions and scholarships. With assets of over $70 million as of June 30, 2002, the American Savings Foundation ranks among the largest community bank foundations in the country. Conclusion The Company will continue to focus on enhancing shareholder value by expanding its product line and broadening broad·en tr. & intr.v. broad·ened, broad·en·ing, broad·ens To make or become broad or broader. broad geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. distribution, while growing the core bank franchise in its established markets and effectively executing capital management strategies. American Financial Holdings, Inc. Cash Earnings Summary Cash earnings represent reported earnings plus the non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. , net of taxes, for the expense of allocated shares in the bank's Employee Stock Ownership Plan ("ESOP ESOP See: Employee Stock Ownership Plan ESOP See Employee Stock Ownership Plan (ESOP). "), the Company's stock-based incentive plan ("SIP (1) (Session Initiation Protocol) An IP telephony signaling protocol developed by the IETF. Primarily used for voice over IP (VoIP) calls, SIP can also be used for video or any media type; for example, SIP has been used to set up multi-player Quake games. "), and in 2002 amortization of the core deposit intangible. Cash earnings is a non-GAAP (Generally Accepted Accounting Principles) measure that the Company believes is useful in assisting investors in further analyzing the Company's results of operations. Cash earnings should be viewed in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with, and as a supplement to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). results and not in lieu of Instead of; in place of; in substitution of. It does not mean in addition to. GAAP results. A reconciliation of reported earnings and cash earnings for the three months ended June 30, 2002 and 2001 is as follows:
Three Months Ended
June 30, 2002 June 30, 2001
(In thousands, except per share data)
Reported GAAP Net Income $ 9,719 $ 7,250
Add:
ESOP Expense 862 635
SIP Expense 955 901
CDI Amortization 709 0
Deduct:
Tax on ESOP (186) (107)
Tax on SIP (311) (288)
Tax on CDI Amortization (230) 0
Cash Earnings $ 11,518 $ 8,391
Resultant Cash Earnings Data:
Basic Earnings Per Share $ 0.57 $ 0.40
Diluted Earnings Per Share $ 0.54 $ 0.39
Return on Assets (annualized) 1.62% 1.78%
Return on Equity (annualized) 10.28% 7.71%
Cash earnings indicate the addition to tangible capital, which measures the Company's capacity for growth, ability to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. or pay dividends. As indicated above, cash earnings for the second quarter ended June 30, 2002 amount to $11.5 million, or $1.8 million more than reported earnings. American Financial Holdings, Inc. is the holding company for American Savings Bank. Established in 1862, American Savings is a full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. community bank that operates 34 branches in 21 communities throughout central Connecticut. It is the third largest Connecticut-based bank in both assets and deposit market share. Additional information can be found on the Company's website: www.americanfinancialholdings.com. The Company is part of the Russell 2000 Index Russell 2000 Index An index measuring the performance of the 2,000 smallest companies in the Russell 3000 Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000 serves as a benchmark for small-cap stocks in the United States. , the S&P SmallCap 600 Index and the Nasdaq Financial-100 Index. This news release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the federal securities laws. The Company intends such forward-looking statements to be covered by the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions for forward-looking statements contained in the Private Securities Reform Act of 1995, and is including this statement for purposes of these safe harbor provisions. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like "believe," "expect," "anticipate," "estimate," and "intend," or future or conditional Subject to change; dependent upon or granted based on the occurrence of a future, uncertain event. A conditional payment is the payment of a debt or obligation contingent upon the performance of a certain specified act. verbs such as "will," " would," "should," "could," or "may." Certain factors that could cause actual results to differ materially from those expected include increased competitive pressures, changes in the interest rate environment, changes in regional and general economic conditions, legislative and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. changes that adversely effect the business in which the Company is engaged, and changes in the securities markets. This news release refers to "cash earnings," which is a non-GAAP (Generally Accepted Accounting Principles) measure. The Company believes that it is useful to assist investors in further analyzing the results of operations for the Company's core business. This non-GAAP measure, however, should be viewed in addition to the Company's GAAP results and not in lieu of GAAP results.
American Financial Holdings, Inc.
Financial Summary
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
(Dollars in thousands, except per share)
SUMMARY OF OPERATIONS
Interest Income $38,966 $30,377 $75,534 $61,822
Interest Expense 17,934 15,691 35,248 31,284
Net Interest Income 21,032 14,686 40,286 30,538
Provision for
Loan Losses -- 100 -- 400
Net Interest Income
After Provision
for Loan Losses 21,032 14,586 40,286 30,138
Non-Interest Income 5,674 6,589 10,257 10,266
Non-Interest Expense 12,300 10,522 26,848 18,760
Income Before Taxes 14,406 10,653 23,695 21,644
Tax Expense 4,687 3,403 7,696 6,944
Net Income $9,719 $7,250 $15,999 $14,700
PER SHARE
Net Income - Basic $0.48 $0.35 $0.80 $0.66
Net Income - Diluted $0.45 $0.34 $0.73 $0.64
Net Operating Income
Before Merger Related
Charges (diluted) $0.45 $0.34 $0.82 $0.64
Common Stock Closing
Market Price $29.92 $23.60
End of Period Shares
Outstanding 22,361,255 22,365,771
Average Weighted
Shares Outstanding
(basic) 20,057,922 20,896,063 20,094,398 22,240,600
Average Weighted
Shares Outstanding
(diluted) 21,487,335 21,499,248 21,796,850 22,828,546
PROFITABILITY RATIOS
Return on Average
Assets (1) 1.42% 1.54% 1.37% 1.56%
Return on Average
Equity (1) 9.10 6.66 8.45 6.33
Net Yield on Earnings
Assets (t/e basis) 6.22 7.24 6.28 7.32
Efficiency Ratio (2) 46.53 50.60 47.85 47.86
Book Value per Share $19.84 $19.27
Tangible Book Value
Per Share $15.36 $19.27
TANGIBLE CAPITAL TO ASSET
RATIO FOR AMFH, INC 11.87% 22.68%
REGULATORY CAPITAL
RATIOS FOR AMERICAN
SAVINGS BANK
Tier 1 Capital to
Average Assets 8.57% 17.26%
Tier 1 Capital to
Risk Weighted Assets 13.95 27.32
Total Capital to
Risk Weighted Assets 16.01 30.56
ASSET QUALITY
Non-Accrual Loans $4,534 $3,294
Accruing Loans Past
Due 90 Days or More -- --
Foreclosed and
Repossessed Assets 95 295
Allowance for
Loan Losses 17,248 10,900
Net Charge-offs $2,101 $58 2,142 124
Non-Performing
Loans to Loans 0.27% 0.28%
Non-Performing Assets
to Total Assets 0.16 0.19
Allowance for Loan
Losses to Net Loans 1.04 0.91
Net Charge-Offs to
Average Loans 0.129% 0.005% 0.135 0.011
Allowance for Loan
Losses to
Non-Performing Loans 380.41 330.90
AVERAGE BALANCES
Investment Securities
Portfolio $956,445 $605,263 $907,452 $621,314
Loans 1,634,748 1,161,023 1,585,221 1,154,881
Earning Assets 2,532,001 1,695,673 2,432,911 1,700,805
Assets 2,859,544 1,879,154 2,740,890 1,885,710
Interest Bearing
Deposits 1,821,240 1,099,122 1,737,841 1,097,082
Stockholders' Equity 448,323 435,218 445,306 464,298
SELECTED FINANCIAL
DATA AT PERIOD END
Investment Securities
Portfolio $954,220 $591,853
Loans 1,660,014 1,197,280
Earning Assets 2,614,264 1,789,156
Assets 2,894,753 1,900,534
Deposits 1,918,066 1,122,153
Stockholders' Equity 443,648 430,885
(1) Income is annualized and exclusive of one-time merger expenses and
CDI amortization.
(2) Non-interest expense exclusive of option cost for retired
directors in 2001, and one time merger related charges and CDI
amortization in 2002, divided by the sum of net interest income
plus non-interest income less gain on sale of securities
AMERICAN FINANCIAL HOLDINGS, INC.
Consolidated Statements of Income
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
(In thousands, except per share data)
Interest and dividend income:
Real estate mortgage loans $17,260 $14,809 $34,366 $29,707
Commercial loans 3,130 17 5,718 24
Consumer loans 5,411 6,136 10,644 12,839
Mortgage-backed securities 8,182 4,121 14,356 8,380
Federal funds sold 123 208 438 478
Investment securities:
Interest-taxable 2,874 3,765 6,081 7,815
Interest-tax exempt 579 375 1,120 750
Dividends 1,407 946 2,811 1,829
Total interest and
dividend income 38,966 30,377 75,534 61,822
Interest expense:
Deposits 12,521 11,863 24,879 24,027
Federal Home Loan Bank
advances and other
borrowings 5,413 3,828 10,369 7,257
Total interest expense 17,934 15,691 35,248 31,284
Net interest income
before provision
for loan losses 21,032 14,686 40,286 30,538
Provision for loan losses -- 100 -- 400
Net interest income
after provision
for loan losses 21,032 14,586 40,286 30,138
Non-interest income:
Service charges and fees 1,750 1,206 3,383 2,195
Investment commissions
and advisory fees 779 629 1,375 1,098
Net gain on sale of
investment securities 1,793 3,838 3,167 5,158
Increase in cash surrender
value of life insurance 951 800 1,813 1,593
Other 401 116 519 222
Total non-interest
income 5,674 6,589 10,257 10,266
Non-interest expense:
Salaries and
employee benefits 6,984 6,948 13,461 11,737
Occupancy expense 1,001 656 1,956 1,348
Furniture and fixture expense 695 443 1,301 867
Outside services 881 713 1,875 1,455
Advertising 450 528 1,044 951
Other 1,580 1,234 3,030 2,402
Total operating expense 11,591 10,522 22,667 18,760
One-time
merger expenses -- -- 2,900 --
Amortization of core
deposit intangible 709 -- 1,281 --
Total non-interest
expense 12,300 10,522 26,848 18,760
Income before
income taxes 14,406 10,653 23,695 21,644
Income taxes 4,687 3,403 7,696 6,944
Net income $9,719 $7,250 $15,999 $14,700
Basic earnings per share $0.48 $0.35 $0.80 $0.66
Diluted earnings per share 0.45 0.34 0.73 0.64
American Financial Holdings, Inc.
Consolidated Balance Sheets
(Unaudited) (Unaudited)
June 30, 2002 Dec. 31, 2001
(In thousands except share and
per share data)
Assets
Cash and due from banks:
Non-interest bearing $ 34,855 $ 20,903
Interest bearing 30 1,230
Total cash and due
from banks 34,885 22,133
Federal funds sold -- 17,050
Cash and cash equivalents 34,885 39,183
Investment securities available
for sale (amortized cost of
$246,226 at June 30, 2002 and
$249,353 at December 31, 2001) 297,971 311,293
Mortgage-backed securities
available for sale (amortized
cost of $617,728 at June 30, 2002
and $217,537 at December 31, 2001) 628,620 225,101
Loans, less allowance for loan
losses of $17,248 at June 30, 2002
and $10,887 at December 31, 2001 1,660,014 1,214,847
Accrued interest and dividends receivable 15,541 11,120
Federal Home Loan Bank stock 27,629 17,279
Bank premises and equipment, net 17,403 13,490
Real estate owned 95 77
Cash surrender value of life insurance 82,971 63,144
Goodwill 85,947 --
Core deposit intangible 14,316 --
Other assets 29,361 5,062
Total Assets $2,894,753 $1,900,596
Liabilities and Stockholders' Equity
Deposits $ 1,918,066 $ 1,124,249
Mortgagors' escrow and other deposits 33,308 27,505
FHLB advances and other borrowings 468,427 311,444
Deferred income tax liability 14,929 19,321
Other liabilities 16,375 23,130
Total Liabilities 2,451,105 1,505,649
Stockholders' Equity
Preferred stock, $.01 par value;
authorized 10,000,000 shares,
none issued -- --
Common stock, $.01 par value;
authorized 120,000,000 shares,
28,871,100 shares issued;
22,361,255 shares outstanding 289 289
Additional paid-in capital 305,549 285,953
Unallocated common stock held
by ESOP (2,014,958 shares) (22,386) (22,386)
Stock-based compensation (288) (266)
Treasury stock (163,899) (188,746)
Retained earnings 285,900 278,315
Accumulated other comprehensive
income 38,483 41,788
Total Stockholders' Equity 443,648 394,947
Total Liabilities and Stockholders'
Equity $ 2,894,753 $ 1,900,596
American Financial Holdings, Inc.
Consolidated Average Balance Sheet and Yield/Rate Analysis
(Unaudited)
For the Three Months Ended
June 30, 2002 June 30, 2001
Average Average Average Average
Balance Interest Yield/ Balance Interest Yield/
Rate Rate
(Dollars in thousands)
Interest earnings
assets:
Loans (1) $1,634,748 $25,801 6.31% $1,161,023 $20,962 7.22%
Federal funds
sold 28,492 123 1.73 18,495 208 4.50
Investment
securities-
taxable 219,221 2,874 5.24 231,912 3,765 6.49
Investment
securities-
tax
exempt (2) 44,784 890 7.95 26,905 576 8.56
Equities-
tax
exempt (3) 3,761 1,260 134.01 5,350 865 64.67
Mortgage-
backed
securities 573,366 8,182 5.71 239,249 4,121 6.89
FHLB stock 27,629 257 3.72 12,739 199 6.25
Total
interest-
earning
assets 2,532,001 $39,387 6.22% 1,695,673 $30,696 7.24%
Non-interest-
earning
assets 327,543 183,481
Total
assets $2,859,544 $1,879,154
Interest-bearing
liabilities:
Deposits
Money
management
accounts $345,949 $1,800 2.08% $82,370 $637 3.09%
NOW accounts 166,379 235 0.56 87,767 185 0.84
Savings and
IRA passbook
accounts 360,636 1,429 1.58 211,239 1,052 1.99
Certificates
of deposit 948,276 9,057 3.82 717,746 9,989 5.57
Total interest-
bearing
deposits 1,821,240 12,521 2.75 1,099,122 11,863 4.32
FHLB advances
and other
borrowings 446,588 5,413 4.85 262,825 3,828 5.83
Total
interest-
bearing
liabilities 2,267,828 $17,934 3.16% 1,361,947 $15,691 4.61%
Non-interest
bearing
demand
deposits 103,486 36,416
Non-interest-
bearing
liabilities 39,907 45,573
Total
liabilities 2,411,221 1,443,936
Stockholders'
Equity 448,323 435,218
Total
liabilities
and equity $2,859,544 $1,879,154
Net interest-
earning
assets $264,173 $333,726
Net interest
income $21,453 $15,005
Interest
rate spread 3.06% 2.63%
Net interest
margin (net
interest income
as a percentage
of interest-
earning assets) 3.39% 3.54%
Ratio of interest-
earning assets to
interest-bearing
liabilities 111.65% 124.50%
Note 1- Average balances include nonaccrual loans.
Note 2- Tax exempt interest is calculated on a tax equivalent basis.
Note 3- Dividend received deduction.
American Financial Holdings, Inc.
Consolidated Average Balance Sheet and Yield Rate Analysis
(Unaudited)
For the Six Months Ended
June 30, 2002 June 30, 2001
Average Average Average Average
Balance Interest Yield/ Balance Interest Yield/
Rate Rate
(Dollars in thousands)
Interest earnings assets:
Loans (1) $1,585,221 $50,728 6.40% $1,154,881 $42,570 7.37%
Federal
funds sold 51,084 438 1.71 19,190 478 4.98
Investment
securities-
taxable 234,390 6,081 5.19 238,561 7,815 6.55
Investment
securities-
tax exempt (2) 42,477 1,722 8.11 26,901 1,155 8.59
Equities -
tax exempt (3) 4,297 2,537 118.08 5,386 1,655 61.46
Mortgage-backed
securities 488,831 14,356 5.87 243,412 8,380 6.89
FHLB stock 26,611 494 3.71 12,474 417 6.69
Total
interest-
earning
assets 2,432,911 $76,356 6.28% 1,700,805 $62,470 7.35%
Non-interest-
earning assets 307,979 184,905
Total assets $2,740,890 $1,885,710
Interest-bearing
liabilities:
Deposits
Money management
accounts $320,416 $3,409 2.13% $76,697 $1,199 3.13%
NOW accounts 156,572 439 0.56 87,618 395 0.90
Savings and
IRA passbook
accounts 339,787 2,673 1.57 208,815 2,074 1.99
Certificates
of deposit 921,066 18,358 3.99 723,952 20,359 5.62
Total
interest-
bearing
deposits 1,737,841 24,879 2.86 1,097,082 24,027 4.38
FHLB advances
and other
borrowings 421,780 10,369 4.92 247,455 7,257 5.87
Total
interest-
bearing
liabilities 2,159,621 $35,248 3.26% 1,344,537 $31,284 4.65%
Non-interest
bearing demand
deposits 95,666 31,702
Non-interest-
bearing
liabilities 40,297 45,173
Total
liabilities 2,295,584 1,421,412
Stockholders'
Equity 445,306 464,298
Total
liabilities
and equity $2,740,890 $1,885,710
Net interest-
earning assets $273,290 $356,268
Net interest
income $41,108 $31,186
Interest rate
spread 3.02% 2.70%
Net interest
margin (net
interest income
as a percentage
of interest-earning
assets) 3.38% 3.67%
Ratio of interest-
earning assets to
interest-bearing
liabilities 112.65% 126.50%
Note 1- Average balances include nonaccrual loans.
Note 2- Tax exempt interest is calculated on a tax equivalent basis.
Note 3- Dividend received deduction.
American Financial Holdings, Inc.
Consolidated Statements of Income
(Unaudited)
2002 2001
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
(Dollars in thousands, except per share data)
Interest and
dividend income:
Real estate and
mortgage loans $17,260 $17,107 $14,908 $15,410 $14,809 $14,898
Commercial
loans 3,130 2,587 59 33 17 7
Consumer loans 5,411 5,233 5,432 5,907 6,136 6,703
Mortgage-backed
securities 8,182 6,174 3,686 3,879 4,121 4,259
Federal funds sold 123 314 69 3 208 270
Investment
securities:
Interest taxable 2,874 3,207 3,331 3,586 3,765 4,050
Interest-tax
exempt 579 541 443 391 375 375
Dividends 1,407 1,404 1,031 1,038 946 883
Total interest
and dividend
income 38,966 36,567 28,959 30,247 30,377 31,445
Interest expense:
Deposits 12,521 12,357 9,801 10,677 11,863 12,164
Federal Home
Loan Bank advances
and other
short-term
borrowings 5,413 4,956 4,842 4,636 3,828 3,429
Total interest
expense 17,934 17,313 14,643 15,313 15,691 15,593
Net interest
income before
provision for
loan losses 21,032 19,254 14,316 14,934 14,686 15,852
Provision for
loan losses -- -- -- 50 100 300
Net interest
income after
provision for
loan losses 21,032 19,254 14,316 14,884 14,586 15,552
Non-interest income:
Service charges
and fees 1,750 1,633 1,393 1,216 1,206 989
Investment
commissions and
advisory fees 779 596 474 509 629 469
Net gains on
sale of investment
securities 1,793 1,374 1,673 1,381 3,838 1,320
Increase in
cash surrender
value of
life insurance 951 862 787 742 800 793
Other 401 119 120 93 116 106
Total non-interest
income 5,674 4,584 4,447 3,941 6,589 3,677
Non-interest expense:
Salaries and
employee
benefits 6,984 6,478 5,295 5,476 6,948 4,789
Occupancy expense 1,001 955 630 598 656 692
Furniture and
fixtures expense 695 605 447 436 443 424
Outside services 881 993 582 748 713 742
Advertising 450 595 215 256 528 423
Other 1,580 1,450 1,436 1,167 1,234 1,168
Total operating
expenses 11,591 11,076 8,605 8,681 10,522 8,238
One-time merger
expenses -- 2,900 -- -- -- --
Amortization of
core deposit
intangible 709 572 -- -- -- --
Total
non-interest
expense 12,300 14,548 8,605 8,681 10,522 8,238
Income before
income taxes 14,406 9,290 10,158 10,144 10,653 10,991
Income taxes 4,687 3,010 3,262 3,110 3,403 3,541
Net income $9,719 $6,280 $6,896 $7,034 $7,250 $7,450
Basic earnings
per share $0.48 $0.30 $0.38 $0.37 $0.35 $0.32
Diluted earnings
per share 0.45 0.28 0.35 0.34 0.34 0.31
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