Chesterfield Financial Corp. Reports Fourth Quarter Earnings Declares Increased Quarterly Dividend.Business Editors CHICAGO--(BUSINESS WIRE)--July 22, 2003 Chesterfield Chesterfield, city (1991 pop. 73,352) and district, Derbyshire, central England. An important industrial center, Chesterfield produces mining equipment, railroad cars, metal products, glass, and pottery. Financial Corp. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CFSL CFSL Cavitation-Field Sonoluminescence ), the parent company of Chesterfield Federal Savings and Loan Association Federal Savings and Loan Association An institution chartered by the federal government whose primary function is to collect savings deposits and to provide mortgage loans. of Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , today reported net income of $583,000, or $0.16 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 for the quarter ended June June: see month. 30, 2003, compared to net income of $741,000, or $0.19 diluted earnings per share for the quarter ended June 30, 2002. Net income for the year ended June 30, 2003 was $2.8 million, or $0.83 diluted earnings per share, compared to net income of $3.3 million, or $0.83 diluted earnings per share for the year ended June 30, 2002. On July July: see month. 15, 2003, the Board of Directors of the Company increased the quarterly dividend by $0.02 per share, to $0.08 per share, to be paid on September September: see month. 2, 2003, to stockholders of record as of August 15, 2003. Comparison of Operating Results for the Quarters Ended June 30, 2003 and 2002 Total interest income decreased by $688,000, or 15.6%, to $3.7 million for the quarter ended June 30, 2003, from $4.4 million for the quarter ended June 30, 2002. A decrease in yield on interest-earning assets to 4.26%, from 5.05% for the same quarter last year, and a change in the mix of interest-earning assets favoring favoring an animal is said to be favoring a leg when it avoids putting all of its weight on the limb. A part of being lame in a limb. shorter term, lower yielding interest-earning deposits, caused the decline in interest income. Management chose not to commit funds to intermediate-term Intermediate-term Typically one-ten years. intermediate-term Of or relating to an investment with an expected holding period somewhere between short-term and long-term. investments, given the current low level of interest rates. The average balance of securities for the quarter ended June 30, 2003, decreased $16.6 million from the average balance for the quarter ended June 30, 2002, while the average balance of interest-earning deposits and 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 sold increased $31.4 million. Interest expense on deposits decreased by $511,000, or 29.8%, to $1.2 million for the quarter ended June 30, 2003, from $1.7 million for the same period in 2002. The decrease was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to reductions in deposit rates paid, with the 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. decreasing to 1.70% for the current period, from 2.47% for the same period last year, offset to some extent by a $6.3 million increase in the average balances of deposit accounts, primarily passbook savings and NOW accounts Net interest income decreased by $177,000, or 6.6%, to $2.5 million for the quarter ended June 30, 2003, from $2.7 million for the same period in 2002. The net interest rate spread decreased two basis points, to 2.56% in 2003, from 2.58% in 2002, while the net interest margin decreased 21 basis points, to 2.88% in 2003, from 3.09% in 2002. The ratio of average interest-earning assets to average interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid liabilities was 123.2% in 2003, compared to 126.0% in 2002. Total non-interest expense increased $48,000, or 2.2%, for the quarter ended June 30, 2003, compared to the quarter ended June 30, 2002. Salaries and employee benefits increased $35,000, or 2.7%, for the quarter ended June 30, 2003, compared to the quarter ended June 30, 2002. The 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. ratio of non-interest expense to average assets was 2.43% in 2003, compared to 2.39% in 2002 and the Company's efficiency ratio was 70.2% for the current quarter, compared to 65.0% for the same period last year. The provision for income taxes of $358,000 for the quarter ended June 30, 2003, resulted in an effective tax rate of 38.0%, compared to a provision of $423,000 and a 36.3% effective tax rate for the same quarter last year. The increase in the effective income tax rate results primarily from increased state income taxes due to reduced amounts of U.S. Government and Agency interest income. The Company's return on average assets for the quarter ended June 30, 2003, was 0.64%, compared to 0.82% for the quarter ended June 30, 2002. Return on average equity for the current quarter was 3.23%, compared to 3.88% for the same quarter last year. Comparison of Operating Results for the Years Ended June 30, 2003 and 2002 Total interest income decreased by $3.0 million, or 15.9%, to $16.0 million for the year ended June 30, 2003, from $19.0 million for the year ended June 30, 2002. A decrease in yield on interest-earning assets to 4.62% for the year ended June 30, 2003, from 5.50% for the same period last year, and a change in the mix of interest-earning assets favoring shorter term, lower yielding interest-earning deposits, caused the decline in interest income. Management chose not to commit funds to intermediate-term investments, given the current low level of interest rates. The average balance of securities for the year ended June 30, 2003, decreased $28.2 million from the average balance for the year ended June 30, 2002, while the average balance of interest-earning deposits and federal funds sold increased $29.5 million. Interest expense on deposits decreased by $2.5 million, or 30.6%, to $5.6 million for the year ended June 30, 2003, from $8.1 million for the same period in 2002. The decrease was primarily attributable to reductions in deposit rates paid, with the average cost of funds decreasing to 2.00% for the current year, from 2.98% for the prior year, offset to some extent by a $8.1 million increase in the average balances of deposit accounts. Net interest income decreased by $538,000, or 4.9%, to $10.4 million for the year ended June 30, 2003, from $10.9 million for fiscal 2002. The net interest rate spread increased 10 basis points, to 2.62% in 2003, from 2.52% in 2002, while the net interest margin decreased 16 basis points, to 3.00% in 2003, from 3.16% in 2002. The ratio of average interest-earning assets to average interest-bearing liabilities was 123.8% for the year ended June 30, 2003, compared to 127.3% for the same period last year. From August 1997 through December December: see month. 1999, the Company originated $508,900 of community development loans (thirteen loans) to a real estate development company to acquire vacant lots and deteriorated buildings for future development. The Company has closely monitored these loans since 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 and established $300,000 in specific valuation reserves on these loans through provisions for loan losses recorded in 1998, 1999, 2000, and 2001. During October October: see month. 2002 nine of these parcels were sold and the entire principal balances of the related loans were recovered. Therefore, $200,000 of the $300,000 specific valuation reserve was recovered during the quarter ended December 31, 2002, as a negative loan loss provision. A further review by management of the four remaining loans during the quarter ended March 31, 2003, indicated an additional $75,000 of the specific valuation reserve could be recovered. These loans, with principal balances of $196,000, or $171,000 net of the specific valuation reserve, remain non-accrual loans. Non-interest income increased $366,000, or 14.8%, to $2.8 million for the year ended June 30, 2003, from $2.5 million for the same period in 2002. Insurance commissions generated by the Association's insurance subsidiary, Chesterfield Insurance Services LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("CIS Cis (sĭs), same as Kish (1.) (1) (CompuServe Information Service) See CompuServe. (2) (Card Information S "), increased $433,000, or 21.1% to $2.5 million in 2003, compared to $2.0 million in 2002. Other non-interest income decreased $50,000, or 36.2%, to $88,000 for the year ended June 30, 2003, compared to $138,000 for the year ended June 30, 2002, primarily due to a $105,000 loss on the Company's equity investment in a community development company, partially offset by a $51,000 increase in agency fees and other service charges by CIS. Total non-interest expense increased $715,000, or 8.5%, to $9.1 million for the year ended June 30, 2003, from $8.4 million for the year ended June 30, 2002. The primary causes for the increase included a $562,000, or 11.5% increase in salaries and employee benefits, which included a $209,000 increase in expense from the amortization of shares granted in November November: see month. 2001 under the Company's 2001 Recognition and Retention Plan, a $43,000 increase in employee stock ownership plan expense due to the increased fair value of shares released to participants, and a $28,000 increase in health insurance premiums. Data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a expenses increased $48,000, or 14.3%, to $384,000 for 2003, compared to $336,000 in 2002, primarily due to additional software costs associated with upgrading internal systems. Equipment expense decreased $163,000, or 26.3%, to $458,000 in 2003, compared to $621,000 in 2002, primarily due to a $90,000 acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. of depreciation expense recorded in 2002, and the subsequent replacement of computer equipment with newer, more cost effective systems, resulting in a $53,000 reduction in depreciation expense for fiscal 2003. Insurance agency bad debt expense increased $184,000, to $202,000 in fiscal 2003 compared to $18,000 in fiscal 2002, primarily the result of a $194,000 provision for an insurance premium receivable from a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. commercial client of the CIS. During the current quarter CIS recovered $20,000 of this provision. The agency continues to aggressively pursue collection of this receivable. Other miscellaneous expenses increased $61,000, or 3.7%, to $1.7 million for the year ended June 30, 2003, compared to $1.6 million for the year ended June 30, 2002, and included a $42,000 increase in insurance and surety bond surety bond An insurance fee required before a duplicate security is issued to replace one that has been lost. The fee is approximately 4% of the market value of the security to be replaced. premiums for the current year. The annualized ratio of non-interest expense to average assets was 2.52% in 2003, compared to 2.35% in 2002, and the Company's efficiency ratio was 68.8% for 2003, compared to 62.6% for 2002. The provision for income taxes of $1.6 million for the year ended June 30, 2003 resulted in an effective tax rate of 37.3%, compared to a provision of $1.8 million and a 35.2% effective tax rate for the same period last year. The increase in the effective income tax rate results primarily from increased state income taxes due to reduced amounts of U.S. Government and Agency interest income. The Company's return on average assets for the year ended June 30, 2003, was 0.77%, compared to 0.91% for the same period last year. Return on average equity for the year was 3.82%, compared to 4.26% for the same period last year. Comparison of Financial Condition at June 30, 2003 and 2002 At June 30, 2003, total assets were $368.9 million, an increase of $5.6 million, or 1.5%, compared to $363.3 million at June 30, 2002. Cash and cash equivalents increased $46.9 million, or 49.5%, to $141.6 million at June 30, 2003, compared to $94.7 million at June 30, 2002. Securities decreased $22.0 million, or 29.3%, to $52.9 million at June 30, 2003, compared to $74.9 million at June 30, 2002, primarily because management chose not to commit funds to intermediate-term investments, given the current low level of interest rates. Loans receivable at June 30, 2003 were $150.0 million, down $19.9 million, or 11.7%, compared to $169.9 million at June 30, 2002. The Company's 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. were $258,000, or 0.17% of loans receivable as of June 30, 2003, compared to $222,000, or 0.13% of loans receivable as of June 30, 2002. The $1.3 million allowance for losses on loans was 0.87% of loans receivable as of June 30, 2003, compared to 0.93% as of June 30, 2002. During the current year the Company recorded recoveries on previously charged-off loans of $3,000. Accrued expenses Accrued Expense An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection. and other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. increased $5.4 million in fiscal 2003, primarily due to pending settlement of a $5.1 million securities purchase on June 30, 2003. Total deposits at June 30, 2003, were $282.2 million, up $4.1 million, or 1.5%, compared to $278.1 million at June 30, 2002. Passbook 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: , seven-day Adj. 1. seven-day - lasting through a week; "her weeklong vacation" weeklong long - primarily temporal sense; being or indicating a relatively great or greater than average duration or passage of time or a duration as specified; "a long life"; "a long boring notice accounts, NOW and money market accounts increased $9.9 million, or 5.2%, to $200.0 million at June 30, 2003, compared to $190.1 million at June 30, 2002. Time deposits decreased $5.8 million, or 6.6%, to $82.2 million, from $88.0 million during this same period. On November 25, 2002, the Company announced its intent 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. up to 188,000 shares of the Company's common stock. To date, 20,200 shares have been repurchased under the November 25th program. During the year ended June 30, 2003, the Company repurchased 363,624 shares of its common stock at a cost of $6.7 million, or an average cost of $18.41 per share. Total stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. as of June 30, 2003 was $73.3 million, or 19.9% of total assets, compared to $76.7 million, or 21.1% of total assets at June 30, 2002. The decrease in stockholders' equity was primarily due to the stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. programs. At June 30, 2003, there were 3,879,558 common shares outstanding with a book value of $18.90 per share, compared to 4,239,738 shares with a book value of $18.10 at June 30, 2002. This news release contains 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. that are subject to numerous assumptions, risk and uncertainties. Actual results could differ materially from those contained in or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements for a variety of factors including: (1) developments in general economic conditions, including interest rate and currency fluctuations, market fluctuations and perceptions, and inflation; (2) changes in the economy which could materially change anticipated credit quality trends and the ability to generate loans and deposits; (3) a failure of the capital markets to function consistently within customary levels; (4) a delay in or an inability to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution strategic initiatives designed to grow revenues and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. manage expenses; (5) legislative developments, including changes in laws concerning taxes, banking, securities, insurance and other aspects of the industry; (6) changes in the competitive environment for financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. organizations and the Company's ability to adapt to such changes.
CHESTERFIELD FINANCIAL CORP.
CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited)
Dollars in thousands
June 30, June 30,
Assets 2003 2002
----------------------------------------------------------------------
Cash and due from financial institutions $8,843 $7,559
Interest-earning deposits 127,994 83,367
Federal funds sold 4,800 3,800
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Cash and cash equivalents 141,637 94,726
Securities available-for-sale 26,822 17,374
Securities held-to-maturity 26,117 57,483
Loans receivable, net of allowance for loan losses
of $1,304 at June 30, 2003 and $1,576 at
June 30, 2002 150,022 169,881
Federal Home Loan Bank stock 18,563 17,342
Premises and equipment 2,415 2,529
Accrued interest receivable and other assets 3,333 4,005
----------------------------------------------------------------------
Total assets $368,909 $363,340
----------------------------------------------------------------------
Liabilities and Stockholders' Equity
----------------------------------------------------------------------
Liabilities
Deposits $282,175 $278,126
Advance payments by borrowers for taxes and
insurance 2,203 2,622
Accrued expenses and other liabilities 11,222 5,851
----------------------------------------------------------------------
Total liabilities 295,600 286,599
Stockholders' Equity
Preferred stock, $.01 par value per share, 1,000,000
shares authorized, no shares issued and
outstanding - -
Common stock, $.01 par value per share, 7,000,000
shares authorized; 4,304,738 shares issued; and
3,879,558 and 4,239,738 shares outstanding at
June 30, 2003 and June 30, 2002, respectively 43 43
Additional paid-in capital 42,398 42,153
Retained earnings 43,263 41,085
Unearned ESOP shares (2,833) (3,056)
Unearned RRP shares (1,941) (2,496)
Treasury stock, at cost (7,797) (1,167)
Accumulated other comprehensive income 176 179
----------------------------------------------------------------------
Total stockholders' equity 73,309 76,741
----------------------------------------------------------------------
Total liabilities and stockholders' equity $368,909 $363,340
----------------------------------------------------------------------
CHESTERFIELD FINANCIAL CORP.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited)
Dollars in thousands, except per share data
For the three For the year
months ended ended June 30,
June 30,
----------------------------------------------------------------------
2003 2002 2003 2002
----------------------------------------------------------------------
Interest income and dividend income
Loans, including fees $2,551 $2,959 $10,894 $11,794
Securities 509 823 2,677 4,721
Interest-earning deposits 352 392 1,364 1,628
Federal Home Loan Bank stock dividends 291 216 1,005 797
Other interest income 19 20 87 107
----------------------------------------------------------------------
Total interest and dividend income 3,722 4,410 16,027 19,047
Interest expense on deposits 1,203 1,714 5,620 8,102
----------------------------------------------------------------------
Net interest income before provision for
loan losses 2,519 2,696 10,407 10,945
Provision for loan losses - - (275) -
----------------------------------------------------------------------
Net interest income after provision for
loan losses 2,519 2,696 10,682 10,945
Non-interest income
Insurance commissions 525 530 2,482 2,049
Service charges on deposit accounts 66 66 271 288
Other 43 36 88 138
----------------------------------------------------------------------
Total non-interest income 634 632 2,841 2,475
Non-interest expense
Salaries and employee benefits 1,351 1,316 5,448 4,886
Occupancy 200 186 794 775
Equipment 112 131 458 621
Data processing 98 91 384 336
Federal deposit insurance 33 34 132 128
Insurance agency bad debt expense (15) 4 202 18
Other 433 402 1,693 1,632
----------------------------------------------------------------------
Total non-interest expense 2,212 2,164 9,111 8,396
----------------------------------------------------------------------
Income before income taxes 941 1,164 4,412 5,024
Income tax expense 358 423 1,646 1,766
----------------------------------------------------------------------
Net income $583 $741 $2,766 $3,258
----------------------------------------------------------------------
Basic earnings per share $0.17 $0.19 $0.84 $0.84
----------------------------------------------------------------------
Diluted earnings per share $0.16 $0.19 $0.83 $0.83
----------------------------------------------------------------------
CHESTERFIELD FINANCIAL CORP.
FINANCIAL HIGHLIGHTS (unaudited)
Dollars in thousands, except share and per share data
June 30, June 30,
2003 2002
------------------------------
Selected Financial Highlights:
------------------------------
Total assets $368,909 $363,340
Interest-earning assets 354,318 349,247
Loans receivable, net 150,022 169,881
Deposits 282,175 278,126
Non-performing loans 258 222
Allowance for loan losses 1,304 1,576
Total stockholders' equity 73,309 76,741
Shares outstanding -
actual number 3,879,558 4,239,738
Book value per share $18.90 $18.10
Asset Quality Ratios:
--------------------------
Non-performing loans to loans receivable, net 0.17% 0.13%
Allowance for loan losses to non-
performing loans 5.05x 7.10x
Allowance for loan losses to loans
receivable, net 0.87% 0.93%
--------------------------------------------
For the three
months ended For the year
June 30, ended June 30,
--------------------------------------------
2003 2002 2003 2002
--------------------------------------------
Selected Operating Ratios (1):
-----------------------------
Return on average assets 0.64% 0.82% 0.77% 0.91%
Return on average equity 3.23% 3.88% 3.82% 4.26%
Interest rate spread 2.56% 2.58% 2.62% 2.52%
Net interest margin 2.88% 3.09% 3.00% 3.16%
Average interest-earning
assets to average
interest-bearing
liabilities 123.17% 125.96% 123.78% 127.33%
Non-interest expense to
average assets 2.43% 2.39% 2.52% 2.35%
Efficiency ratio 70.16% 65.02% 68.77% 62.56%
Stock price information:
--------------------------
High $21.70 $18.20 $21.70 $18.20
Low 20.10 17.26 17.70 13.55
Close 21.15 18.14 21.15 18.14
(1) Quarterly ratios annualized.
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