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Community Savings Bankshares, Inc. Announces 29% Increase in Diluted Earnings Per Share for First Quarter.

Business Editors

NORTH PALM BEACH, Fla.--(BUSINESS WIRE)--April 14, 2000

Community Savings Bankshares, Inc. ("Bankshares" or the "Company") (Nasdaq:CMSV) announced today that diluted earnings per share increased to $0.18, or 29%, for the quarter ended March 31, 2000 from $0.14 for the quarter ended March 31, 1999, partially as a result of the stock repurchase program. Net income increased $222,000, or 16%, for the first quarter of 2000 to $1.6 million, from $1.4 million in the same quarter of 1999.

The increase in net income was primarily the result of an increase in net interest income, offset by an increase in non-interest expense. Interest income which totaled $15.5 million increased 11% for the first quarter of 2000, as compared to the same period in 1999, primarily due to a 5% increase in the average balance of interest-earning assets, as well as a 40 basis point increase in the average yield earned on those assets. Loans secured by real estate were primarily responsible for these increases. An 18% increase in interest expense to $8.4 million for the first quarter of 2000 as compared to the same period in 1999 was primarily due to a 24 basis point increase in the average cost paid on interest-bearing liabilities, as well as an 11% increase in the average balance of such liabilities.

Quarter end assets totaled $905.8 million, an increase of $12.8 million from December 31, 1999. Interest-earning deposits increased $18.2 million during the quarter ended March 31, 2000, as compared to December 31, 1999. These interest-earning deposits, as well as growth in the deposit portfolio, will be used to fund loan commitments. During this same time period, loans receivable decreased $2.2 million, deposits increased $22.5 million and borrowings decreased $11.7 million.

New loan originations totaled $46.7 million during the quarter ended March 31, 2000. This increase was offset by repayments totaling $48.0 million which included the payoff of a $21.0 million loan secured by land. Based on existing commitments for the second quarter of 2000, management anticipates the average balance of net loans receivable will increase. Loan quality continued to exceed industry standards with non-performing loans at 0.11% of net loans receivable at March 31, 2000.

James B. Pittard, Jr., President and Chief Executive Officer commented, "We believe our success as a community-oriented financial institution depends on building long-term relationships with our customers while meeting their current financial needs. Our goals for 2000 include aggressively pursuing new loan opportunities with our customers, funding the resulting increase in our asset base with deposit growth. While we will still look for suitable locations for new branch offices, we will also evaluate the effectiveness of our existing branch network. We will continue to focus on improving our efficiency ratio, through cost reduction and enhanced fee income strategies. As part of the continued implementation of this strategy, the Board of Directors of Community Savings, F. A. (the "Association") has taken steps to terminate the Association's defined benefit plan and replace it with a 401(k) defined contribution plan. As a result of the termination of the defined benefit plan, the Company expects to recognize a one-time gain in the second quarter estimated to be approximately $1.0 million. However, in connection with the final settlement of the plan, which will not occur until receipt of a favorable termination letter from the Internal Revenue Service, the Company expects to incur in the fourth quarter a settlement expense currently estimated to amount to $500,000."

Mr. Pittard continued, "As part of our capital management plan and our continuing commitment to build shareholder value, we received regulatory approval in November 1999 to repurchase 1,005,187 shares of common stock in the open market. During the quarter ended March 31, 2000, we repurchased 154,100 shares at an aggregate cost of $1.8 million (an average price of $11.85 per share). The remaining 111,087 shares to be repurchased are expected to be repurchased during 2000. In addition, consistent with the Company's policy, the Board of Directors declared a dividend for the quarter ended March 31, 2000 of $0.11 per share."

Certain information in this press release may constitute forward-looking information that involves risks and uncertainties that could cause actual results to differ materially from those estimated. Persons are cautioned that such forward-looking statements are not guarantees of future performance and are subject to various factors which could cause actual results to differ materially from those estimated. These factors include, but are not limited to, changes in general economic and market conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, demand for loan and deposit products and the development of an interest rate environment that adversely affects the interest rate spread or other income from Bankshares' investments and operations.

Financial highlights for Bankshares and the Association, its wholly owned subsidiary, follow. The information for the three months ended March 31, 2000 and 1999 is unaudited and subject to change.

Selected Financial Ratios Three Months Ended Year Ended
 March 31, December 31,
 2000 1999 1999
 ---- ---- ----
 (Unaudited)
 (Dollars in thousands)
Performance Ratios (1):
Return on average assets 0.72% 0.66% 0.76%
Return on average equity 5.58 4.14 5.02
Net interest rate spread 3.16 3.00 3.19
Net interest margin 3.45 3.48 3.62
Non-interest income to average
 assets 0.41 0.46 0.45
Non-interest expense to average
 assets 2.59 2.66 2.68
Dividend payout ratio 58.56 83.61 62.98
Asset Quality Ratios (2):
Non-performing loans to net
 loans receivable 0.11 0.18 0.17
Non-performing assets to total
 assets 0.13 0.21 0.17
Allowance for loan losses to
 non-performing loans 607.25 333.79 377.57
Allowance for loan losses to
 net loans receivable 0.66 0.60 0.64
Capital Ratios:
Shareholders' equity to total
 assets (2) 12.77 15.98 12.96
Average equity to average
 assets 12.84 15.88 15.15
Other Data:
Non-performing loans $ 662 $1,030 $1,039
Non-performing assets 1,219 1,771 1,533
Allowance for loan losses 4,020 3,438 3,923

(1) Ratios annualized for the three months ended March 31, 2000 and
 1999

(2) End of period ratios


Consolidated Statements of Financial Condition

 At At
 March 31, December 31, Increase
 2000 1999 (Decrease)
 ---- ---- ----------
 (Unaudited)
 (Dollars in thousands)
ASSETS
Cash and amounts due from
 depository institutions $ 18,976 $ 22,057 $(3,081)
Interest-earning deposits 41,394 23,182 18,212
 --------- --------- --------
 Cash and cash equivalents 60,370 45,239 15,131
Securities available for
 sale 144,444 144,840 (396)
Securities held to maturity 37,787 38,802 (1,015)
Loans receivable, net 606,198 608,369 (2,171)
Accrued interest receivable 3,346 3,788 (442)
Federal Home Loan Bank
 stock - at cost 7,009 7,009 --
Premises and equipment, net 24,740 24,939 (199)
Real estate held for
 investment 1,872 1,872 --
Investment in and advances
 to real estate venture 12,943 11,633 1,310
Real estate owned, net 557 494 63
Other assets 6,513 5,989 524
 --------- --------- --------
 Total assets $905,779 $892,974 $12,805
 --------- --------- --------
 --------- --------- --------
LIABILITIES
Deposits:
 Demand $ 43,058 $ 39,429 $ 3,629
 NOW and statement savings 85,490 76,073 9,417
 Savings 35,847 34,466 1,381
 Money market 94,990 100,299 (5,309)
 Certificates of deposit 377,019 363,676 13,343
 --------- --------- --------
 Total deposits 636,404 613,943 22,461
Mortgage-backed bond, net 14,277 14,508 (231)
Advances from the Federal
 Home Loan Bank 128,750 140,186 (11,436)
Advances by borrowers for
 taxes and insurance 3,486 1,403 2,083
Other liabilities 7,173 7,233 (60)
 --------- --------- --------
 Total liabilities 790,090 777,273 12,817

SHAREHOLDERS' EQUITY
Common stock; 2000,
 9,289,808; 1999, 9,319,873
 shares issued and
 outstanding 10,571 10,571 --
Additional paid-in capital 93,816 93,744 72
Retained income -
 substantially restricted 38,695 37,869 826
Common stock purchased by
 Employee Stock Ownership
 Plan (4,551) (4,722) 171
Common stock issued to
 Recognition and Retention
 Plans (2,442) (2,586) 144
Accumulated other
 comprehensive income (3,432) (3,358) (74)
Treasury stock, at cost;
 2000, 1,281,332;
 1999, 1,251,267 shares (16,968) (15,817) (1,151)
 --------- --------- --------
 Total shareholders'
 equity 115,689 115,701 (12)
 --------- --------- --------
 Total liabilities and
 shareholders' equity $905,779 $892,974 $12,805
 --------- --------- --------
 --------- --------- --------
Book value per share (1) $ 13.43 $ 13.50
 --------- --------- --------
 --------- --------- --------

(1) Based on 8,612,261 and 8,609,146 shares outstanding or allocated
 (excludes unallocated ESOP shares) at March 31, 2000 and
 December 31, 1999, respectively.


Consolidated Statements of Operations

 Three Months Ended
 March 31, Increase
 2000 1999 (Decrease)
 ---- ---- ----------
 (Unaudited)
 (Dollars in thousands)
Interest income:
 Loans $11,667 $10,424 $1,243
 Securities 3,187 2,483 704
 Other interest and
 dividend income 684 1,095 (411)
 --------- --------- --------
 Total interest income 15,538 14,002 1,536
Interest expense:
 Deposits 6,054 5,525 529
 Advances from Federal Home
 Loan
 Bank and other borrowings 2,343 1,621 722
 --------- --------- --------
 Total interest expense 8,397 7,146 1,251
 --------- --------- --------
Net interest income 7,141 6,856 285
Provision for loan losses 150 322 (172)
 --------- --------- --------
Net interest income after
 provision for loan losses 6,991 6,534 457
 --------- --------- --------
Other income:
 Servicing income and other
 fees 89 80 9
 NOW account and other
 customer fees 812 851 (39)
 Net gain (loss) on real
 estate owned 4 (12) 16
 Miscellaneous 26 59 (33)
 --------- --------- --------
 Total other income 931 978 (47)
 --------- --------- --------
Operating expense:
 Employee compensation
 and benefits 3,136 2,860 276
 Occupancy and equipment 1,471 1,534 (63)
 Advertising and promotion 235 288 (53)
 Federal deposit insurance
 premium 31 88 (57)
 Miscellaneous 947 831 116
 --------- --------- --------
 Total operating expense 5,820 5,601 219
 --------- --------- --------
Income before provision
 for income taxes 2,102 1,911 191
Provision for income taxes 495 526 (31)
 --------- --------- --------
Net income $ 1,607 $ 1,385 $ 222
 --------- --------- --------
 --------- --------- --------

Basic earnings per share (1) $ 0.19 $ 0.14
 --------- ---------
 --------- ---------
Diluted earnings per
 share (1) $ 0.18 $ 0.14
 --------- ---------
 --------- ---------
Basic weighted average
 common shares outstanding 8,627,615 9,920,292
 --------- ---------
 --------- ---------
Diluted weighted average
 common shares outstanding 8,893,535 10,177,050
 --------- ---------
 --------- ---------

(1) Represents net income divided by the weighted average shares
 outstanding for the periods presented.


Average Balance Sheet

 For the Three Months Ended March 31,
 2000 1999
 ------------------------ ------------------------
 Average Average
 Average Yield/ Average Yield/
 Balance Interest Cost Balance Interest Cost
 ------- -------- ---- ------- -------- ----
 (Unaudited)
 (Dollars In Thousands)
Interest-earning
assets:
 Real estate loans $580,322 $ 11,191 7.71% $522,109 $ 9,971 7.64%
 Consumer and
 commercial
 business 20,726 476 9.19 22,516 453 8.05
 Securities held to
 maturity and
 available for
 sale 182,618 3,187 6.98 150,095 2,483 6.62
 Other
 investments (1) 43,928 684 6.23 92,967 1,095 4.71
 ------- -------- ---- ------- -------- ----
 Total
 interest-earning
 assets 827,594 15,538 7.51 787,687 14,002 7.11
 ------- -------- ---- ------- -------- ----
Non-interest-earning
 assets 70,096 54,035
 ------- -------
 Total assets $897,690 $841,722
 ------- -------
 ------- -------
Interest-bearing
liabilities:
 Deposits $623,353 $ 6,054 3.88% $589,932 $ 5,525 3.75%
 Borrowed funds 149,055 2,343 6.29 106,365 1,621 6.10
 ------- -------- ---- ------- -------- ----
 Total
 interest-bearing
 liabilities 772,408 8,397 4.35 696,297 7,146 4.11
 ------- -------- ---- ------- -------- ----
Non-interest-bearing
 liabilities 10,026 11,730
 ------- -------
 Total
 liabilities 782,434 708,027
Shareholders'
 equity 115,256 133,695
 ------- -------
Total liabilities
 and shareholders'
 equity $897,690 $841,722
 ------- -------
 ------- -------
Net interest income $ 7,141 $ 6,856
 -------- --------
 -------- --------
Net interest rate spread (2) 3.16% 3.00%
 ---- ----
 ---- ----
Net yield on interest-earning
 assets (3) 3.45% 3.48%
 ---- ----
 ---- ----
Ratio of average
 interest-earning
 assets to average
 interest-bearing
 liabilities 107.14% 113.13%
 ---- ----
 ---- ----

(1) Includes interest-earning deposits and Federal Home Loan Bank
 stock.

(2) Net interest-rate spread represents the difference between the
 weighted average yield earned on interest-earning assets and the
 weighted average rate paid on interest-bearing liabilities.

(3) Net yield on interest-earning assets represents net interest
 income as a percentage of average interest-earning assets.


Community Savings Bankshares, Inc., a Delaware-chartered stock holding company, is the parent holding company for Community Savings, F.A. Chartered in 1955, the Association is a federal stock savings and loan association, the deposits of which are insured by the Federal Deposit Insurance Corporation. Headquartered in North Palm Beach, Florida, the Association serves customers in Palm Beach, Martin, St. Lucie and Indian River counties from 21 full-service offices. Please visit www.communitysavings.com for more information about the Company and the Association's loan and deposit products and services - including Online Banking.
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No portion of this article can be reproduced without the express written permission from the copyright holder.
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