Chesterfield Financial Corp. Reports Second Quarter Earnings; Declares Quarterly Dividend.Business Editors CHICAGO--(BUSINESS WIRE)--Jan. 28, 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 $788,000, or $0.22 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, 2002, compared to net income of $874,000, or $0.22 diluted earnings per share for the quarter ended December 31, 2001. Net income for the six months ended December 31, 2002 was $1.6 million, or $0.43 diluted earnings per share, compared to net income of $1.8 million, or $0.45 diluted earnings per share for the six months ended December 31, 2001. On January January: see month. 21, 2003, 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 $0.06 per share, to be paid on March 3, 2003, to stockholders of record as of February February: see month. 14, 2003. On November November: see month. 25, 2002, the Company announced the completion of the stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program begun on July July: see month. 25, 2002, and its intent to initiate INITIATE. A right which is incomplete. By the birth of a child, the husband becomes tenant by the curtesy initiate, but his estate is not consummate until the death of the wife. 2 Bouv. Inst. n. 1725. a new program 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 additional shares of the Company's common stock. During the quarter ended December 31, 2002, the Company repurchased 68,224 shares at a cost of $1.3 million, or an average cost of $18.95 per share. During the six months ended December 31, 2002, the Company repurchased 343,424 shares at a cost of $6.3 million, or an average cost of $18.28 per share. No shares have been repurchased under the November 25th program. Comparison of Operating Results for the Quarters Ended December 31, 2002 and 2001 Total interest income decreased by $801,000, or 16.2%, to $4.1 million for the quarter ended December 31, 2002, from $4.9 million for the quarter ended December 31, 2001. A decrease in average interest-earning assets of $2.9 million between periods, combined with a decrease in yield on interest-earning assets to 4.83%, from 5.71% 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. lower yielding interest-earning deposits, caused the decline in interest income. The average balance of securities for the quarter ended December 31, 2002, decreased $39.7 million from the average balance for the quarter ended December 31, 2001, 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 $35.9 million. Interest expense on deposits decreased by $648,000, or 30.6%, to $1.5 million for the quarter ended December 31, 2002, from $2.1 million for the same period in 2001. 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 2.11% for the current period, from 3.13% for the same period last year, offset to some extent by a $7.0 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 $3.7 million between these two periods. Net interest income decreased by $153,000, or 5.4%, to $2.7 million for the quarter ended December 31, 2002, from $2.8 million for the same period in 2001. The net interest rate spread increased 14 basis points, to 2.72% in 2002, from 2.58% in 2001, while the net interest margin decreased 15 basis points, to 3.12% in 2002, from 3.27% in 2001. 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 123.8% in 2002, compared to 128.0% in 2001. From August 1997 through December 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 as a negative loan loss provision. As of December 31, 2002, the four remaining loans with principal balances of $196,000 are on non-accrual status. Management has reviewed the four remaining loans and determined that no additional loan loss provision is required. Non-interest income increased $205,000, or 30.3%, to $882,000 for the quarter ended December 31, 2002, from $677,000 for the same period in 2001. Insurance commissions generated by the Company's insurance subsidiary increased $223,000, or 39.6%, to $786,000 in 2002, compared to $563,000 in 2001. Total non-interest expense increased $350,000, or 16.2%, to $2.5 million for the quarter ended December 31, 2002, from $2.2 million for the quarter ended December 31, 2001. The primary causes for the increase were a $181,000, or 15.0% increase in salaries and employee benefits, which included an $80,000 increase in expense from the amortization of shares granted in November 2001 under the Company's 2001 Recognition and Retention Plan ("RRP RRP n abbr (= recommended retail price) → PVP m "), and a $194,000 increase in insurance agency bad debt expense. The increase in insurance agency bad debt expense was 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 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 "). The agency continues to aggressively pursue collection of this receivable. Management has reviewed all similar commercial premium receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and determined that no additional bad debt provisions are required. 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 2.80% in 2002, compared to 2.42% in 2001, and the Company's efficiency ratio was 70.5% for the current quarter, compared to 61.5% for the same period last year. The provision for income taxes of $463,000 for the quarter ended December 31, 2002, resulted in an effective tax rate of 37.0%, compared to a provision of $475,000 and a 35.2% 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 December 31, 2002, was 0.88%, compared to 0.98% for the quarter ended December 31, 2001. Return on average equity for the current quarter was 4.39%, compared to 4.51% for the same quarter last year. Comparison of Operating Results for the Six Months Ended December 31, 2002 and 2001 Total interest income decreased by $1.6 million, or 16.1%, to $8.5 million for the six months ended December 31, 2002, from $10.1 million for the six months ended December 31, 2001. An increase in average interest-earning assets of $2.5 million between periods, combined with a decrease in yield on interest-earning assets to 4.91% for the six months ended December 31, 2002, from 5.90% for the same period last year, and a change in the mix of interest-earning assets favoring lower yielding interest-earning deposits, caused the decline in interest income. The average balance of securities for the six months ended December 31, 2002, decreased $33.3 million from the average balance for the six months ended December 31, 2001, while the average balance of interest-earning deposits and federal funds sold increased $27.1 million. Interest expense on deposits decreased by $1.5 million, or 32.2%, to $3.1 million for the six months ended December 31, 2002, from $4.6 million for the same period in 2001. The decrease was primarily attributable to reductions in deposit rates paid, with the average cost of funds decreasing to 2.25% for the current period, from 3.45% for the same period last year, offset to some extent by a $10.5 million increase in the average balances of deposit accounts. Net interest income decreased by $144,000, or 2.6%, to $5.4 million for the six months ended December 31, 2002, from $5.5 million for the same period in 2001. The net interest rate spread increased 21 basis points, to 2.66% in 2002, from 2.45% in 2001, while the net interest margin decreased 11 basis points, to 3.10% in 2002, from 3.21% in 2001. The ratio of average interest-earning assets to average interest-bearing liabilities was 124.3% for the six months ended December 31, 2002, compared to 128.2% for the same period last year. Non-interest income increased $321,000, or 25.5%, to $1.6 million for the six months ended December 31, 2002, from $1.3 million for the same period in 2001. Insurance commissions generated by the Company's insurance subsidiary increased $332,000, or 32.0% to $1.4 million in 2002, compared to $1.0 million in 2001. Total non-interest expense increased $666,000, or 16.6%, to $4.7 million for the six months ended December 31, 2002, from $4.0 million for the six months ended December 31, 2001. The primary causes for the increase were a $444,000, or 19.4% increase in salaries and employee benefits, which included a $223,000 increase in expense from the amortization of shares granted in November 2001 under the Company's 2001 RRP, and the $194,000 increase in insurance agency bad debt expense discussed above. The annualized ratio of non-interest expense to average assets was 2.60% in 2002, compared to 2.27% in 2001, and the Company's efficiency ratio was 67.4% for 2002, compared to 59.3% for 2001. The provision for income taxes of $904,000 for the six months ended December 31, 2002 resulted in an effective tax rate of 36.7%, compared to a provision of $951,000 and a 34.6% 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, 2002, was 0.87%, compared to 1.02% for the same period last year. Return on average equity for the six months was 4.28%, compared to 4.66% for the same period last year. Comparison of Financial Condition at December 31, 2002 and June June: see month. 30, 2002 At December 31, 2002, total assets were $360.1 million, down $3.3 million, or 0.9%, from $363.3 million at June 30, 2002. Cash and cash equivalents increased $5.1 million, or 5.4%, to $99.8 million at December 31, 2002, compared to $94.7 million at June 30, 2002. Loans receivable at December 31, 2002 were $158.7 million, down $11.2 million, or 6.6%, from $169.9 million at June 30, 2002. Total deposits at December 31, 2002, were $278.7 million, up $580,000, or 0.2 %, from $278.1 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 $223,000, or 0.14% of loans receivable as of December 31, 2002, compared to $222,000 as of June 30, 2002. The $1.4 million allowance for losses on loans to loans receivable was 0.87% as of December 31, 2002, compared to 0.93% as of June 30, 2002. During the current six-month period the Company recorded recoveries on previously charged-off loans of $3,000. 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, 2002 was $72.5 million, or 20.1% 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 programs. At December 31, 2002, there were 3,896,314 common shares outstanding with a book value of $18.61 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
Assets December June
31, 30,
2002 2002
------------------------------------------------ --------- -----------
Cash and due from financial institutions $ 8,945 $ 7,559
Interest-earning deposits 85,061 83,367
Federal funds sold 5,800 3,800
------------------------------------------------ --------- -----------
Cash and cash equivalents 99,806 94,726
Securities available-for-sale 20,277 17,374
Securities held-to-maturity 56,358 57,483
Loans receivable, net of allowance for loan
losses of $1,379 at December 31, 2002 and
$1,576 at June 30, 2002 158,685 169,881
Federal Home Loan Bank stock 17,779 17,342
Premises and equipment 2,487 2,529
Accrued interest receivable and other assets 4,680 4,005
------------------------------------------------ --------- -----------
Total assets $360,072 $363,340
------------------------------------------------ --------- -----------
Liabilities and Stockholders' Equity
------------------------------------------------ --------- -----------
Liabilities
Deposits $278,706 $278,126
Advance payments by borrowers for taxes and
insurance 2,287 2,622
Accrued expenses and other liabilities 6,587 5,851
------------------------------------------------ --------- -----------
Total liabilities 287,580 286,599
------------------------------------------------ --------- -----------
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 3,896,314 and 4,239,738 shares
outstanding at December 31, 2002 and June 30,
2002, respectively 43 43
Additional paid-in capital 42,282 42,153
Retained earnings 42,468 41,085
Unearned ESOP shares (2,945) (3,056)
Unearned RRP shares (2,209) (2,496)
Treasury stock, at cost (7,444) (1,167)
Accumulated other comprehensive income 297 179
------------------------------------------------ --------- -----------
Total stockholders' equity 72,492 76,741
------------------------------------------------ --------- -----------
Total liabilities and stockholders' equity $360,072 $363,340
------------------------------------------------ --------- -----------
CHESTERFIELD FINANCIAL CORP.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited)
Dollars in thousands, except per share data
For the three For the six
months ended months ended
December 31, December 31,
------------------------------------- --------------- ---------------
2002 2001 2002 2001
------------------------------------- ------- ------- ------- -------
Interest income and dividend income
Loans, including fees $ 2,811 $ 2,958 $ 5,686 $ 5,945
Securities 708 1,395 1,583 2,835
Interest-earning deposits 333 319 680 899
Federal Home Loan Bank stock
dividends 269 245 490 370
Other interest income 24 29 48 69
------------------------------------- ------- ------- ------- -------
Total interest and dividend income 4,145 4,946 8,487 10,118
Interest expense on deposits 1,467 2,115 3,132 4,619
------------------------------------- ------- ------- ------- -------
Net interest income before provision
for loan losses 2,678 2,831 5,355 5,499
Provision for loan losses (200) - (200) -
------------------------------------- ------- ------- ------- -------
Net interest income after provision
for loan losses 2,878 2,831 5,555 5,499
Non-interest income
Insurance commissions 786 563 1,370 1,038
Service charges on deposit accounts 68 77 138 151
Other 28 37 71 69
------------------------------------- ------- ------- ------- -------
Total non-interest income 882 677 1,579 1,258
Non-interest expense
Salaries and employee benefits 1,391 1,210 2,737 2,293
Occupancy 201 210 395 400
Equipment 121 127 236 267
Data processing 85 83 168 162
Federal deposit insurance 33 30 66 60
Insurance agency bad debt expense 199 5 203 9
Other 479 494 868 86
------------------------------------- ------- ------- ------- -------
Total non-interest expense 2,509 2,159 4,673 4,007
------------------------------------- ------- ------- ------- -------
Income before income taxes 1,251 1,349 2,461 2,750
Income tax expense 463 475 904 951
------------------------------------- ------- ------- ------- -------
Net income $ 788 $ 874 $1,557 $1,799
------------------------------------- ------- ------- ------- -------
Basic earnings per share $0.23 $0.22 $0.44 $0.45
------------------------------------- ------- ------- ------- -------
Diluted earnings per share $0.22 $0.22 $0.43 $0.45
------------------------------------- ------- ------- ------- -------
CHESTERFIELD FINANCIAL CORP.
FINANCIAL HIGHLIGHTS (unaudited)
Dollars in thousands, except share and per share data
December 31, June 30,
2002 2002
---------- -----------
Selected Financial Highlights:
------------------------------
Total assets $ 360,072 $ 363,340
Interest-earning assets 343,960 349,247
Loans receivable, net 158,685 169,881
Deposits 278,706 278,126
Non-performing loans 223 222
Allowance for loan losses 1,379 1,576
Total stockholders' equity 72,492 76,741
Shares outstanding - actual number 3,896,314 4,239,738
Book value per share $ 18.61 $ 18.10
Asset Quality Ratios:
---------------------
Non-performing loans to loans receivable,
net 0.14% 0.13%
Allowance for loan losses to non-performing 6.18x 7.10x
loans
Allowance for loan losses to loans
receivable, net 0.87% 0.93%
--------------- ---------------
For the three For the six
months ended months ended
December 31, December 31,
--------------- ---------------
2002 2001 2002 2001
------- ------- ------- -------
Selected Operating Ratios:
--------------------------
Return on average assets (1) 0.88% 0.98% 0.87% 1.02%
Return on average equity (1) 4.39% 4.51% 4.28% 4.66%
Interest rate spread (1) 2.72% 2.58% 2.66% 2.45%
Net interest margin (1) 3.12% 3.27% 3.10% 3.21%
Average interest-earning assets
to average interest-bearing
liabilities (1) 123.8% 128.0% 124.3% 128.2%
Non-interest expense to average
assets (1) 2.80% 2.42% 2.60% 2.27%
Efficiency ratio 70.5% 61.5% 67.4% 59.3%
Stock price this period:
------------------------
High $ 20.88 $ 16.64 $ 20.88 $ 16.64
Low 18.15 14.80 17.70 13.55
Close 20.46 16.35 20.46 16.35
(1) Ratio annualized
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