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Community Savings Bankshares, Inc. Announces First Quarter Earnings.

Business Editors

NORTH PALM BEACH, Fla.--(BUSINESS WIRE)--April 19, 2001

Community Savings Bankshares, Inc. ("Bankshares" or the "Company") (Nasdaq:CMSV), the holding company for Community Savings, F. A. (the "Association") announced today that the Company earned $1.2 million or $0.15 diluted earnings per share for the first quarter of fiscal 2001 as compared to $1.6 million or $0.18 diluted earnings per share for the same period in 2000.

The Company's net interest income for the three months ended March 31, 2001 declined $235,000 to $6.9 million from $7.1 million for the same period in 2000 as the Company's interest rate spread continued to be compressed by the increases in general market rates of interest experienced throughout much of 2000. However, the recent declines in general market rates are expected to begin beneficially affecting the Company's interest rate spread during the second quarter of this year as the Association's deposit liability costs begin to decline.

During the first quarter of fiscal 2001, the Company's income was also impacted by certain events. If such events had been excluded from net income, diluted earnings per share would have been $0.18 per share for the first quarter of 2001 as compared to $0.21 per share for the same period in 2000.
-- an after-tax non-cash expense of $145,000, or $0.02 per share, for the first
quarter of 2001 relating to employee benefit costs incurred upon the retirement
of a member of the Board of Directors and a senior officer.

-- a $119,000, or $0.01 per share, after-tax loss (exclusive of interest
income) on its investment in a real estate development venture as compared to a
$231,000 after-tax loss, or $0.03 per share in the same period in 2000.


A subsidiary of the Association is involved in a real estate development venture commenced in mid-1999 to develop and sell single-family lots, and construct and sell condominiums, villa homes and carriage homes on 117 acres of land in Indian River County, Florida. The investment in and advances to the real estate development venture totaled $15.4 million at March 31, 2001. The Company recognized $379,000 in interest income related to advances made to the project during the quarter ended March 31, 2001 as compared to $296,000 for the same period in 2000 (all of which is reflected in net income or loss from real estate venture). However, offsetting this was a $192,000 net loss (exclusive of interest income) on the project for the first quarter of fiscal 2001 resulting in net income from real estate venture of $187,000. This compares to a net loss of $75,000 for the same quarter in 2000. Such losses were anticipated and are typical for projects of this type. James B. Pittard, Jr., President and Chief Executive Officer commented, "The losses incurred to date on this project reflect the expected recognition of start-up costs during the early stages of this construction project. We expect to begin recognizing net income on the project when closings begin later this year."

Total operating expense which increased $360,000 during first quarter of 2001 as compared to 2000, included a $348,000 increase in employee compensation and benefits, primarily as the result of the above-mentioned accelerated stock benefit plan expenses related to the retirements of the director and senior officer in January 2001.

At March 31, 2001, the Company's assets totaled $964.5 million, an increase of $1.8 million from December 31, 2000. During the quarter ended March 31, 2001, loans receivable increased $13.6 million, primarily in single-family loans. This increase in loans was funded by a $19.3 million decrease in the securities portfolio and a $12.1 million increase in core deposits (consisting of demand, NOW, savings and money market accounts), offset in part by decreases in certificates of deposits and borrowings totaling $4.1 million and $11.0 million, respectively.

New loan originations and purchases totaled $41.6 million during the quarter ended March 31, 2001. The resulting increase in the loan portfolio was partially offset by repayments and a decrease in loans in process totaling $31.5 million and $4.0 million, respectively. Non-performing loans, which aggregated $3.5 million at March 31, 2001, included two loans to a local builder totaling $2.3 million for the construction of golf villas. Scheduled interest payments became delinquent when slower sales than expected reduced the project's cash flows. At the present time, management does not anticipate incurring any loss of principal on these loans. Although management believes that adequate general loan loss allowances have been established, actual losses depend upon future events and, as such, further additions to the allowance for loan losses may become necessary.

The average cost of interest-bearing liabilities increased by 49 basis points for the 2001 period while the average yield on interest-earning assets increased 12 basis points. In addition, the average balance of interest-bearing liabilities increased 9% as compared to an 8% increase in the average balance of interest-earning assets as the Association funded loan growth with increased deposits and proceeds from the maturities and scheduled amortization of securities.

Mr. Pittard explained, "Our priority for 2001 is to lower the cost of our deposits to improve the net interest rate spread. During the first quarter of fiscal 2001, we stopped offering new odd-term certificates of deposits and are not aggressively matching competitors' rates. While this may cause some outflow of deposit funds, our plan is to concentrate on enhancing our relationships with new and existing depositors, including obtaining additional lower costing transaction accounts. As a result of our efforts to lower the cost of deposits in the first quarter, we expect to see an improvement in the interest rate spread over the next two quarters as maturing certificates of deposits either reprice at lower rates or are not renewed. We will supplement new deposits and loan repayments with Federal Home Loan Bank advances as needed to fund loan originations. We will continue to compete for new loan opportunities that meet our underwriting standards."

Mr. Pittard continued, "Consistent with the Company's current dividend policy, the Board of Directors declared a dividend for the quarter ended March 31, 2001 of $0.11 per share."

Statements included in this news release which are not historical facts are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Amounts herein could vary as a result of market and other factors. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," and "potential." Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, expected or anticipated revenue, results of operations and business of the Company that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include, but are not limited to, general economic conditions; changes in interest rates; deposit flows; the levels of defaults, losses and prepayments on loans held by the Company in portfolio or sold in the secondary markets; loan demand; real estate values; competition; changes in accounting principles, policies, practices or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory, and technological factors affecting the Company's operations, pricing, products and services. The forward-looking statements are made as of the date of this release, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

Financial highlights for Bankshares and the Association, its wholly-owned subsidiary, follow. The information for the three months ended March 31, 2001 and 2000 is unaudited and subject to change.


Consolidated Statements of Operations
Three Month Comparison
 Three Months Ended
 March 31, Increase
 2001 2000 (Decrease)
 ---- ---- ----------
 (Unaudited)
 (Dollars in thousands)
Interest income:
 Loans $ 13,635 $ 11,667 $ 1,968
 Securities 2,790 3,187 (397)
 Other interest and
 dividend income 655 684 (29)
 ---------- ---------- ----------
 Total interest income 17,080 15,538 1,542
 ---------- ---------- ----------
Interest expense:
 Deposits 7,772 6,054 1,718
 Advances from Federal Home Loan
 Bank and other borrowings 2,402 2,343 59
 ---------- ---------- ----------
 Total interest expense 10,174 8,397 1,777
 ---------- ---------- ----------
Net interest income 6,906 7,141 (235)
Provision for loan losses 90 150 (60)
 ---------- ---------- ----------
Net interest income after
 provision for loan losses 6,816 6,991 (175)
 ---------- ---------- ----------
Other income:
 Servicing income and
 other fees 68 89 (21)
 NOW account and other
 customer fees 886 812 74
 Net (loss) gain on
 real estate owned -- 4 (4)
 Equity in net gain (loss)
 of real estate venture 187 (75) 262
 Miscellaneous 98 101 (3)
 ---------- ---------- ----------
 Total other income 1,239 931 308
 ---------- ---------- ----------
Operating expense:
 Employee compensation
 and benefits 3,484 3,136 348
 Occupancy and equipment 1,420 1,471 (51)
 Advertising and promotion 182 235 (53)
 Federal deposit insurance premium 32 31 1
 Miscellaneous 1,062 947 115
 ---------- ---------- ----------
 Total operating expense 6,180 5,820 360
 ---------- ---------- ----------
Income before provision
 for income taxes 1,875 2,102 (227)
Provision for income taxes 641 495 146
 ---------- ---------- ----------
Net income $ 1,234 $ 1,607 $ (373)
 ========== ========== ==========

Basic earnings per share (1) $0.15 $0.19
 ===== =====
Diluted earnings per share (1) $0.15 $0.18
 ===== =====
Basic weighted average common
 shares outstanding 8,015,217 8,627,615
 ========= =========
Diluted weighted average
 common shares outstanding 8,281,477 8,893,535
 ========= =========

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


Consolidated Statements of Financial Condition
 At At
 March 31, December 31, Increase
 2001 2000 (Decrease)
 ---- ---- ---------
 (Unaudited)
 (Dollars in thousands)
ASSETS
Cash and amounts due from
 depository institutions $18,389 $17,844 $ 545
Interest-earning deposits 33,027 27,274 5,753
 ---------- ---------- ----------
 Cash and cash equivalents 51,416 45,118 6,298
Securities available for sale 115,236 131,418 (16,182)
Securities held to maturity 30,930 34,025 (3,095)
Loans receivable, net 704,873 691,294 13,579
Accrued interest receivable 3,841 4,363 (522)
Federal Home Loan Bank
 stock - at cost 8,063 8,063 -
Premises and equipment, net 26,204 25,323 881
Real estate held for investment 2,166 2,193 (27)
Investment in and advances
 to real estate venture 15,404 14,612 792
Real estate owned, net 130 170 (40)
Other assets 6,247 6,126 121
 ---------- ---------- ----------
 Total assets $964,510 $962,705 $ 1,805
 ========== ========== ==========

LIABILITIES
Deposits:
 Demand $47,688 $44,662 $ 3,026
 NOW and statement savings 81,545 79,110 2,435
 Savings 36,722 34,506 2,216
 Money market 95,606 91,214 4,392
 Certificates of deposit 427,440 431,577 (4,137)
 ---------- ---------- ----------
 Total deposits 689,001 681,069 7,932
Mortgage-backed bond, net 13,347 13,582 (235)
Advances from the Federal
 Home Loan Bank 135,679 146,714 (11,035)
Advances by borrowers for
 taxes and insurance 3,530 1,153 2,377
Other liabilities 8,435 7,724 711
 ---------- ---------- ----------
 Total liabilities 849,992 850,242 (250)
 ---------- ---------- ----------
SHAREHOLDERS' EQUITY
Common stock; March 31, 2001,
 8,579,127; December 31, 2000,
 8,542,363 shares issued
 and outstanding 10,571 10,571 -
Additional paid-in capital 94,160 94,043 117
Retained income-substantially
 restricted 40,006 40,818 (812)
Common stock purchased by
 Employee Stock Ownership Plan (3,866) (4,038) 172
Common stock issued to
 Recognition and Retention Plans (1,551) (1,907) 356
Accumulated other comprehensive
 loss (80) (855) 775
Treasury stock, at cost;
 March 31, 2001, 1,992,013;
 December 31, 2000, 2,028,777
 shares (24,722) (26,169) 1,447
 ---------- ---------- ----------
 Total shareholders' equity 114,518 112,463 2,055
 ---------- ---------- ----------
 Total liabilities and
 shareholders' equity $964,510 $962,705 $ 1,805
 ========== ========= ==========
Book value per share (1) $ 14.23 $14.11
 ========== =========

(1) Based on 8,059,412 and 7,971,802 shares outstanding or
 allocated (excludes the stock benefit plans unallocated shares) at
 March 31, 2001 and December 31, 2000, respectively. Including such
 shares, book value per share at such dates would have been $13.34
 and $13.17, respectively.

Loans Receivable

 At At
 March 31, December 31, Increase
 2001 2000 (Decrease)
 ---- ---- ---------
 (Unaudited)
 (Dollars in thousands)

Real estate loans:
 Residential 1-4 family $522,629 $511,324 $11,305
 Residential 1-4 family
 construction 106,215 113,179 (6,964)
 Multi-family 10,093 10,501 (408)
 Multi-family construction 33,235 33,960 (725)
 Land 22,094 20,216 1,878
 Commercial 36,045 37,255 (1,210)
 Commercial construction 11,465 8,170 3,295
 ---------- ---------- ----------
 Total real estate loans 741,776 734,605 7,171
 ---------- ---------- ----------
Non-real estate loans:
 Consumer 14,640 14,029 611
 Commercial business 7,253 5,454 1,799
 ---------- ---------- ----------
 Total non-real
 estate loans 21,893 19,483 2,410
 ---------- ---------- ----------
 Total loans receivable 763,669 754,088 9,581
Undisbursed loan proceeds (56,829) (60,874) 4,045
Unearned yield adjustments 1,978 1,955 23
Allowance for loan losses (3,945) (3,875) (70)
 ---------- ---------- ----------
 Total loans
 receivable, net $704,873 $ 61,294 $13,579
 ========== ========== ==========



 At or for the At or for the
Selected Financial Ratios Three Months Ended Year Ended
 March 31, December 31,
 2001 2000 2000
 ---- ---- ----
 (Unaudited)
 (Dollars in Thousands)
Performance Ratios (1):
Return on average assets 0.51% 0.72% 0.69%
Return on average equity 4.34 5.58 5.58
Net interest rate spread 2.79 3.16 2.95
Net interest margin 3.09 3.45 3.26
Non-interest income to
 average assets 0.51 0.41 0.46
Non-interest expense to
 average assets 2.56 2.59 2.42
Dividend payout ratio 74.88 58.56 58.70
Asset Quality Ratios (2):
Non-performing loans to
 net loans receivable 0.50 0.11 0.48
Non-performing assets to
 total assets 0.38 0.13 0.36
Allowance for loan losses
 to non-performing loans 112.78 607.25 116.86
Allowance for loan losses
 to net loans receivable 0.56 0.66 0.56
Capital Ratios:
Shareholders' equity
 to total assets (2) 11.87 12.77 11.68
Average equity to average assets 11.79 12.84 12.31
Other Data (2):
Non-performing loans $3,498 $ 662 $ 3,316
Non-performing assets 3,628 1,219 3,486
Allowance for loan losses 3,945 4,020 3,875

(1) Ratios are annualized for the three months ended March 31,
 2001 and 2000.
(2) End of period ratios and balances.


Average Balance Sheet
For the Three Months Ended March 31,

 2001 2000
 ------------------------------------------------
 Average Average
 Average Yield/ Average Yield/
 Balance Interest Cost Balance Interest Cost
 ------- -------- ---- ------- -------- ----

 (Dollars in thousands)

Interest-earning assets:
 Real estate loans $677,273 $13,134 7.76% $580,322 $11,191 7.71%
 Consumer and
 commercial
 business 21,531 501 9.31 20,726 476 9.19
 Securities held to
 maturity and
 available for sale 157,301 2,790 7.09 182,618 3,187 6.98
 Other investments (1) 39,268 655 6.67 43,928 684 6.23
 ------- ------ ------- ------
 Total interest-earning
 assets 895,373 17,080 7.63 827,594 15,538 7.51
 ------ ---- ------ ----
Non-interest-earning
 assets 69,989 70,096
 ------- -------
 Total assets $965,362 $897,690
 ======== ========

Interest-bearing
 liabilities:
 Deposits $685,917 $ 7,772 4.53% $623,353 $ 6,054 3.88%
 Borrowed funds 154,756 2,402 6.21 149,055 2,343 6.29
 ------- ------ ------- ------
Total interest-bearing
 liabilities 840,673 10,174 4.84 772,408 8,397 4.35
 ------ ---- ------ ----
Non-interest-bearing
 liabilities 10,841 10,026
 ------- -------
 Total liabilities 851,514 782,434
Shareholders' equity 113,848 115,256
 ------- -------
Total liabilities
 and shareholders'
 equity $965,362 $897,690
 ======== ========
Net interest income $ 6,906 $ 7,141
 ======= =======
Net interest rate
 spread (2) 2.79% 3.16%
 ===== =====
Net yield on
 interest-earning
 assets (3) 3.09% 3.45%
 ===== =====
Ratio of average
 interest-earning
 assets to Average
 interest-bearing
 liabilities 106.51% 107.14%
 ====== ======

(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.


Consolidated Statements of Operations
 Most Recent Five Quarters

 Three Months Ended
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
 2001 2000 2000 2000 2000
 -------- -------- -------- ------- --------
 (Unaudited)
 (Dollars in thousands)

Interest income:
 Loans $13,635 $13,496 $13,052 $12,350 $11,667
 Securities 2,790 3,155 3,130 3,104 3,187
 Other interest and
 dividend income 655 605 658 572 684
 -------- -------- -------- ------- --------
 Total interest
 income 17,080 17,256 16,840 16,026 15,538
Interest expense:
 Deposits 7,772 7,769 7,143 6,313 6,054
 Advances from Federal
 Home Loan Bank and
 other borrowings 2,402 2,541 2,763 2,576 2,343
 -------- -------- -------- ------- --------
 Total interest
 expense 10,174 10,310 9,906 8,889 8,397
 -------- -------- -------- ------- --------
Net interest income 6,906 6,946 6,934 7,137 7,141
Provision for loan
 losses 90 76 75 75 150
 -------- -------- -------- ------- --------
Net interest income
 after provision for
 loan losses 6,816 6,870 6,859 7,062 6,991
 -------- -------- -------- ------- --------
Other income:
 Servicing income
 and other fees 68 31 49 68 89
 NOW account and
 other customer fees 886 934 899 874 812
 Net (loss) gain on
 real estate owned - (30) (13) 21 4
 Loss on write down
 of securities
 available for sale - - - (138) -
 Gain on sale of
 securities available
 for sale - 75 - - -
 Equity in net gain
 (loss) of real
 estate venture 187 (40) 145 (125) (75)
 Net (loss) gain on
 termination of
 defined benefit - (618) (15) 922 -
 Miscellaneous 98 116 94 84 101
 -------- -------- -------- ------- --------
 Total other income 1,239 468 1,159 1,706 931
 -------- -------- -------- ------- --------
Operating expense:
 Employee compensation
 and benefits 3,484 3,108 3,130 3,099 3,136
 Occupancy and
 equipment 1,420 1,499 1,425 1,476 1,471
 Advertising and
 promotion 182 123 168 144 235
 Federal deposit
 insurance premium 32 31 32 31 31
 Miscellaneous 1,062 831 814 802 947
 -------- -------- -------- ------- --------
 Total operating
 expense 6,180 5,592 5,569 5,552 5,820
 -------- -------- -------- ------- --------
Income before
 provision for
 income taxes 1,875 1,746 2,449 3,216 2,102
Provision for
 income taxes 641 540 850 1,216 495
 -------- -------- -------- ------- --------
Net income $ 1,234 $ 1,206 $ 1,599 $ 2,000 $ 1,607
 ======== ======= ======= ======= =======
Basic earnings
 per share $ 0.15 $ 0.15 $ 0.19 $ 0.23 $ 0.19
 ====== ======= ======= ======= =======
Diluted earnings
 per share $ 0.15 $ 0.15 $ 0.18 $ 0.23 $ 0.18
 ====== ======= ======= ======= =======


The Company's Annual Meeting of Shareholders is scheduled to be held on Wednesday, April 25, 2001, at 1:30 p.m., at The Embassy Suites PGA, 4350 PGA Boulevard, Palm Beach Gardens, Florida, 33410. The only items of business scheduled to be acted on at the Annual Meeting are the election of directors and the ratification of the appointment of the Company's independent auditors.

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.
COPYRIGHT 2001 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Business Wire
Geographic Code:1USA
Date:Apr 19, 2001
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