Chesterfield Financial Corp. Reports Second Quarter Earnings; Declares Quarterly Dividend.Business Editors CHICAGO--(BUSINESS WIRE)--Jan. 26, 2004 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 $492,000, or $0.14 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 December December: see month. 31, 2003, compared to net income of $788,000, or $0.22 diluted earnings per share for the quarter ended December 31, 2002. Net income for the six months ended December 31, 2003 was $1.0 million, or $0.29 diluted earnings per share, compared to net income of $1.6 million, or $0.43 diluted earnings per share for the six months ended December 31, 2002. On January January: see month. 20, 2004, the Board of Directors of the Company 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 second quarter dividend of $0.08 per share, to be paid on March 1, 2004, to stockholders of record as of February February: see month. 13, 2004. Comparison of Operating Results for the Quarters Ended December 31, 2003 and 2002 Total interest income decreased by $703,000, or 17.0%, to $3.4 million for the quarter ended December 31, 2003, from $4.1 million for the quarter ended December 31, 2002. An increase in average interest-earning assets of $1.6 million between periods, offset by a decrease in yield on interest-earning assets to 3.99%, from 4.83% 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 securities and interest-earning deposits, caused the decline in interest income. The average balance of loans for the quarter ended December 31, 2003, decreased $14.8 million from the average balance for the quarter ended December 31, 2002, while the average balance of securities, 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 $15.1 million. Interest expense on deposits decreased by $464,000, or 31.6%, to $1.0 million for the quarter ended December 31, 2003, from $1.5 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 1.43% for the current period, from 2.11% for the same period last year, offset to some extent by a $3.8 million increase in the average balances of deposit accounts. The average balance of time deposits, which generally are paid a higher rate than other deposits, decreased $3.5 million between these two periods. Net interest income decreased by $239,000, or 8.9%, to $2.4 million for the quarter ended December 31, 2003, from $2.7 million for the same period in 2002. The net interest rate spread decreased 16 basis points, to 2.56% in 2003, from 2.72% in 2002, while the net interest margin decreased 29 basis points, to 2.83% in 2003, from 3.12% 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 122.7% in 2003, compared to 123.8% in 2002. Non-interest income decreased $201,000, or 22.8%, to $681,000 for the quarter ended December 31, 2003, from $882,000 for the same period in 2002. Insurance commissions generated by the Company's insurance agency 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 "), decreased $226,000, or 28.8%, to $560,000 in 2003, compared to $786,000 in 2002. The primary cause of this decrease was the loss of renewal commissions of more than $175,000 from a major client due to renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. competition and lower pricing in the condominium condominium In modern property law, individual ownership of one dwelling unit within a multidwelling building. Unit owners have undivided ownership interest in the land and those portions of the building shared in common. association insurance underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. business. Total non-interest expense decreased $177,000, or 7.1%, to $2.3 million for the quarter ended December 31, 2003, from $2.5 million for the quarter ended December 31, 2002. The primary cause for the decrease was a $195,000 decrease in insurance agency bad debt expense. The insurance agency bad debt expense for the quarter ended December 31, 2002, was primarily the result of a $194,000 loss 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. The agency has since recovered $20,000 of the receivable and continues to aggressively pursue collection. 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 2.57% in 2003, compared to 2.80% in 2002, and the Company's efficiency ratio was 74.7% for the current quarter, compared to 70.5% for the same period last year. The provision for income taxes of $296,000 for the quarter ended December 31, 2003, resulted in an effective tax rate of 37.6%, compared to a provision of $463,000 and a 37.0% effective tax rate for the same quarter last year. The Company's return on average assets for the quarter ended December 31, 2003, was 0.54%, compared to 0.88% for the quarter ended December 31, 2002. Return on average equity for the current quarter was 2.68%, compared to 4.39% for the same quarter last year. Comparison of Operating Results for the Six Months Ended December 31, 2003 and 2002 Total interest income decreased by $1.6 million, or 18.6%, to $6.9 million for the six months ended December 31, 2003, from $8.5 million for the six months ended December 31, 2002. An increase in average interest-earning assets of $2.0 million between periods, offset by a decrease in yield on interest-earning assets to 3.98% for the six months ended December 31, 2003, from 4.91% 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. The average balance of loans and securities for the six months ended December 31, 2003, decreased $24.8 million from the average balance for the six months ended December 31, 2002, while the average balance of interest-earning deposits and federal funds sold increased $25.6 million. Interest expense on deposits decreased by $1.1 million, or 34.1%, to $2.1 million for the six months ended December 31, 2003, from $3.1 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 1.46% for the current period, from 2.25% for the same period last year, offset to some extent by a $4.4 million increase in the average balances of deposit accounts. Net interest income decreased by $507,000, or 9.5%, to $4.8 million for the six months ended December 31, 2003, from $5.4 million for the same period in 2002. The net interest rate spread decreased 14 basis points, to 2.52% in 2003, from 2.66% in 2002, while the net interest margin decreased 31 basis points, to 2.79% in 2003, from 3.10% in 2002. The ratio of average interest-earning assets to average interest-bearing liabilities was 123.0% for the six months ended December 31, 2003, compared to 124.3% for the same period last year. Non-interest income decreased $161,000, or 10.2%, to $1.4 million for the six months ended December 31, 2003, from $1.6 million for the same period in 2002. Insurance commissions generated by the Company's insurance subsidiary decreased $193,000, or 14.1% to $1.2 million in 2003, compared to $1.4 million in 2002, primarily for the reason discussed above. Total non-interest expense decreased $69,000, or 1.5%, to $4.6 million for the six months ended December 31, 2003, from $4.7 million for the six months ended December 31, 2002. Salaries and employee benefits increased by $48,000, or 1.6%, including $26,000 from the increased fair value of Company stock released to the ESOP ESOP See: Employee Stock Ownership Plan ESOP See Employee Stock Ownership Plan (ESOP). . Other expenses increased $84,000, or 13.2%, including a $26,000 increase in loan underwriting expenses, a $10,000 increase in advertising expense, a $9,000 increase in insurance expense, and a $28,000 increase in public company administrative expenses. These increases were offset by the $194,000 decrease in insurance agency bad debt expense discussed above. The annualized ratio of non-interest expense to average assets was 2.52% in 2003, compared to 2.60% in 2002, and the Company's efficiency ratio was 73.5% for 2003, compared to 67.4% for 2002. The provision for income taxes of $629,000 for the six months ended December 31, 2003 resulted in an effective tax rate of 37.9%, compared to a provision of $904,000 and a 36.7% 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 six months ended December 31, 2003, was 0.57%, compared to 0.87% for the same period last year. Return on average equity for the six months was 2.82%, compared to 4.28% for the same period last year. Comparison of Financial Condition at December 31, 2003 and June June: see month. 30, 2003 At December 31, 2003, total assets were $362.4 million, down $6.5 million, or 1.8%, from $368.9 million at June 30, 2003. Cash and cash equivalents decreased $22.1 million, or 15.6%, to $119.6 million at December 31, 2003, compared to $141.6 million at June 30, 2003. Loans receivable at December 31, 2003 were $148.5 million, down $1.5 million, or 1.0%, from $150.0 million at June 30, 2003. Total deposits at December 31, 2003, were $281.2 million, down $979,000, or 0.4 %, from $282.2 million at June 30, 2003. 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 $221,000, or 0.15% of loans receivable as of December 31, 2003, compared to $258,000 as of June 30, 2003. The $1.3 million allowance for losses on loans to loans receivable was 0.88% as of December 31, 2003, compared to 0.87% as of June 30, 2003. 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 December 31, 2003 was $74.1 million, or 20.5% of total assets, compared to $73.3 million, or 19.9% of total assets at June 30, 2003. At December 31, 2003, there were 3,875,521 common shares outstanding with a book value of $19.12 per share, compared to 3,879,558 shares with a book value of $18.90 at June 30, 2003. 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, risks 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. -- TABLES FOLLOW--
CHESTERFIELD FINANCIAL CORP.
CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited)
Dollars in thousands
Assets December 31, June 30,
2003 2003
----------------------------------------------------------------------
Cash and due from financial institutions $10,970 $8,843
Interest-earning deposits 104,613 127,994
Federal funds sold 4,000 4,800
----------------------------------------------------------------------
Cash and cash equivalents 119,583 141,637
Securities available-for-sale 29,097 26,822
Securities held-to-maturity 40,810 26,117
Loans receivable, net of allowance for loan
losses of $1,303 at December 31, 2003 and
$1,304 at June 30, 2003 148,517 150,022
Federal Home Loan Bank stock 19,192 18,563
Premises and equipment 2,268 2,415
Goodwill 452 452
Accrued interest receivable and other assets 2,469 2,881
----------------------------------------------------------------------
Total assets $362,388 $368,909
----------------------------------------------------------------------
Liabilities and Stockholders' Equity
----------------------------------------------------------------------
Liabilities
Deposits $281,196 $282,175
Advance payments by borrowers for taxes and
insurance 1,800 2,203
Accrued expenses and other liabilities 5,273 11,222
----------------------------------------------------------------------
Total liabilities 288,269 295,600
----------------------------------------------------------------------
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 3,875,521 and 3,879,558 shares
outstanding at December 31, 2003 and June 30,
2003, respectively 43 43
Additional paid-in capital 42,613 42,399
Retained earnings 43,744 43,263
Unearned ESOP shares (2,725) (2,833)
Unearned RRP shares (1,662) (1,942)
Treasury stock, at cost, 429,217 and 425,180
shares (7,890) (7,797)
Accumulated other comprehensive income (4) 176
----------------------------------------------------------------------
Total stockholders' equity 74,119 73,309
----------------------------------------------------------------------
Total liabilities and stockholders' equity $362,388 $368,909
----------------------------------------------------------------------
CHESTERFIELD FINANCIAL CORP.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited)
Dollars in thousands, except per share data
For the three months For the six months
ended December 31, ended December 31,
----------------------------------------------------------------------
2003 2002 2003 2002
----------------------------------------------------------------------
Interest income and dividend
income
Loans, including fees $2,282 $2,811 $4,678 $5,686
Securities 545 708 1,005 1,583
Interest-earning deposits 278 333 576 680
Federal Home Loan Bank stock
dividends 331 269 629 490
Other interest income 6 24 23 48
----------------------------------------------------------------------
Total interest and dividend
income 3,442 4,145 6,911 8,487
Interest expense on deposits 1,003 1,467 2,063 3,132
----------------------------------------------------------------------
Net interest income before
provision for loan losses 2,439 2,678 4,848 5,355
Provision for loan losses - (200) - (200)
----------------------------------------------------------------------
Net interest income after
provision for loan losses 2,439 2,878 4,848 5,555
Non-interest income
Insurance commissions 560 786 1,177 1,370
Service charges on deposit
accounts 70 68 144 138
Other 51 28 97 71
----------------------------------------------------------------------
Total non-interest income 681 882 1,418 1,579
Non-interest expense
Salaries and employee benefits 1,537 1,509 3,016 2,968
Occupancy 195 201 393 395
Equipment 103 121 207 236
Data processing 97 85 193 168
Federal deposit insurance 32 33 65 66
Insurance agency bad debt
expense 4 199 9 203
Other 364 361 721 637
----------------------------------------------------------------------
Total non-interest expense 2,332 2,509 4,604 4,673
----------------------------------------------------------------------
Income before income taxes 788 1,251 1,662 2,461
Income tax expense 296 463 629 904
----------------------------------------------------------------------
Net income $492 $788 $1,033 $1,557
----------------------------------------------------------------------
----------------------------------------------------------------------
Basic earnings per share $0.14 $0.23 $0.30 $0.44
----------------------------------------------------------------------
Diluted earnings per share $0.14 $0.22 $0.29 $0.43
----------------------------------------------------------------------
Cash dividends per share $0.08 $0.05 $0.16 $0.05
----------------------------------------------------------------------
CHESTERFIELD FINANCIAL CORP.
FINANCIAL HIGHLIGHTS (unaudited)
Dollars in thousands, except share and per share data
December 31, June 30,
2003 2003
-----------------------
Selected Financial
Highlights:
-----------------------------
Total assets $362,388 $368,909
Interest-earning assets 346,229 354,318
Loans receivable, net 148,517 150,022
Deposits 281,196 282,175
Non-performing loans 221 258
Allowance for loan losses 1,303 1,304
Total stockholders' equity 74,119 73,309
Shares outstanding -
actual number 3,875,521 3,879,558
Book value per share $19.12 $18.90
Asset Quality Ratios:
-----------------------------
Non-performing loans to
loans receivable, net 0.15% 0.17%
Allowance for loan losses
to non-performing loans 5.90x 5.05x
Allowance for loan losses
to loans receivable, net 0.88% 0.87%
----------------------------------------
For the three months For the six months
ended December 31, ended December 31,
----------------------------------------
2003 2002 2003 2002
----------------------------------------
Selected Operating Ratios:
------------------------------
Return on average assets (1) 0.54% 0.88% 0.57% 0.87%
Return on average equity (1) 2.68% 4.39% 2.82% 4.28%
Interest rate spread (1) 2.56% 2.72% 2.52% 2.66%
Net interest margin (1) 2.83% 3.12% 2.79% 3.10%
Average interest-earning
assets to average
interest-bearing
liabilities 122.68% 123.76% 123.04% 124.25%
Non-interest expense to
average assets (1) 2.57% 2.80% 2.52% 2.60%
Efficiency ratio 74.74% 70.48% 73.48% 67.39%
Dividend payout ratio 57.14% 21.74% 53.33% 11.37%
Stock price this period:
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High $25.40 $20.88 $25.40 $20.88
------------------------------
Low 22.38 18.15 21.01 17.70
Close 23.75 20.46 23.75 20.46
(1) Ratio annualized
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