Chester Valley Bancorp (NASDAQ:CVAL)
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Chester Valley Bancorp Inc. Reports Earnings of $1.5 Million For
Its First Quarter
DOWNINGTOWN, Pa., Oct. 25 /PRNewswire-FirstCall/ -- Chester Valley Bancorp
Inc. (NASDAQ:CVAL) announces that the Company posted earnings of $1.522 million
or $0.29 per diluted share for its first quarter ended September 30, 2004. This
compared to earnings of $1.514 million or $0.29 per diluted share for the
quarter ended September 30, 2003.
While earnings were relatively stable from period to period, the Company
reported net interest income of $5.114 million for the quarter ended September
30, 2004, an 8.6% increase over the comparable quarter in the prior year. After
years of pressure and a resulting decline in the Company's net interest margin,
the Federal Reserve Bank's recent rate hikes totaling .75%, have positively
impacted the Company's net interest margin. The net interest margin (computed
on a fully tax equivalent basis) increased to 3.47% during the quarter from
3.41% for the fourth quarter ended June 30, 2004. Future increases in
short-term interest rates should have a positive impact on the Company's
earnings, as the Company continues to be asset sensitive.
Non-interest income increased to $2.089 million for the quarter ended September
30, 2004, a 3.7% increase over the quarter ended September 30, 2003. The
increases occurred primarily in investment services income, including trust
fees along with an increase in deposit fees resultant from a growth in
transaction type deposit accounts (i.e. Consumer and business checking, money
market and savings).
The above noted increases were largely offset by an increase in operating
expenses, primarily in compensation and benefits. In addition to normal salary
increases for the year, the Company has made a significant investment in its
future. The Company expanded its retail brokerage business personnel in
September 2004. Additionally, on a yearly comparison, the Bank hired seven
lending and private-banking relationship managers who became available as a
result of the recent consolidation within the local community banking market.
In addition the Bank expanded its branch network through the Coatesville branch
acquisition from PNC National Bank in March 2004 and the purchase of the
Firstrust deposits in Exton. Additionally, the Bank opened a loan production
office in Plymouth Meeting, Montgomery County, Pennsylvania, an area that was
largely impacted by the afore-mentioned consolidation; and a Private Client
office in West Chester Borough to better serve the complex needs of affluent
clients and the professionals who handle their business affairs.
At September 30, 2004, total assets increased to $644.7 million as compared to
total assets of $642.1 million at June 30, 2004. At September 30, 2004, loans
receivable, net increased by 1.3% to $400.1 million as compared to $395.1
million at June 30, 2004. Excluding residential mortgage loans, which continued
to decline, the loan portfolio grew $9.4 million or 2.9% from June 30, 2004.
Additionally, in anticipation of a rising interest rate environment, the
Company focused its retail sales personnel on variable rate home equity lines,
rather than lock the Bank into longer-term fixed rate assets.
The asset growth was funded with both deposits and Federal Home Loan Bank
advance borrowings. Although the outstanding loan balances increased by just
1.3%, the Company closed $22.3 million in construction and commercial loans, of
which $20.1 million are lines of credit, much of which is expected to fund
during the next quarter. Undrawn commercial and construction loans increased
by $11.2 million between June 30, 2004 and September 30, 2004. Additionally,
at September 30, 2004, the Company had a pipeline of commercial and
construction loans of approximately $40.0 million, which were at various stages
of the commitment and customer acceptance process. The ultimate closing of
these loans is dependent upon a number of factors including but not limited to;
(a) competition within the marketplace, (b) changes in interest rates during
the process and (c) other factors impacting the customer. In October 2004, the
Company received a $750 thousand principal pay-down on an approximate $2.9
non-performing commercial mortgage. Additionally, the borrower prepaid
interest as a condition to the Bank's extension of the maturity date on the
remaining balance of the loan.
Donna Coughey, President and CEO stated, "While loan demand has increased, the
competition within our market is intense. Despite this competition, our loan
closings were strong and the future funding of lines of credit closed during
the quarter, as well as the restructuring of the loan portfolio achieved
through June 30, 2004 will positively impact future earnings. Additionally, our
successful acquisition of the Exton deposits from Firstrust bank, the recent
announcement of our pending acquisition of the Avondale branch from PNC
National Bank and the opening of a de novo branch in Oxford illustrate our
commitment and ability to enhance our existing branch networks through both
external acquisitions as well as internal growth. We are excited about the
recent opening of our Plymouth Meeting loan production office which we believe
will provide us with a stronger presence in a market that has been impacted by
the recent consolidation within the local community banking industry."
Chester Valley Bancorp Inc. is the parent company of both First Financial Bank
and Philadelphia Corporation for Investment Services. First Financial's
executive offices are located in Downingtown, Pennsylvania with branches in
Exton, Frazer, Thorndale, Westtown, Airport Village, Brandywine Square, Devon,
Kennett Square, Eagle Square, Coatesville and West Chester. Philadelphia
Corporation has offices in Wayne and Philadelphia.
Chester Valley Bancorp stock is traded on the NASDAQ market under the symbol
"CVAL".
This press release contains certain "forward-looking statements", either
express or implied, which concern anticipated future operations of the Company.
While these statements represent management's current judgment on what the
future may hold and management believe these judgments are reasonable, actual
results may differ materially due to numerous important factors that are
described in the Company's filing on the Form-10-K for the year ended June 30,
2004. The Company assumes no duty to update these statements should actual
events differ from expectations.
CHESTER VALLEY BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands)
Unaudited
September 30, June 30,
2004 2004
Assets
Cash in banks
Interest-bearing deposits $ 9,977 $ 12,410
12,844 15,352
Total cash and cash equivalents 22,387 28,196
Trading account securities 7 8
Investment securities available for sale 132,777 130,089
Investment securities held to maturity (fair value -
September 30, 2004, $57,938
June 30, 2004, $57,779) 57,740 59,384
Loans held for sale 963 538
Loans receivable 406,991 401,965
Deferred fees (476) (508)
Allowance for loan losses (6,386) (6,331)
Loans receivable, net 400,129 395,126
Accrued interest receivable 3,026 2,652
Property and equipment - net 13,041 13,009
Bank owned life insurance 5,472 5,414
Real estate owned 54 54
Goodwill 1,171 1,171
Other intangible assets 645 384
Other assets 7,281 6,083
Total Assets $ 644,693 $ 642,108
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 429,049 $ 427,103
Securities sold under agreements to repurchase 18,265 27,216
Advance payments by borrowers for taxes and
insurance 479 1,433
Federal Home Loan Bank advances 130,239 120,963
Trust preferred securities 10,310 10,310
Accrued interest payable 668 679
Other liabilities 1,609 2,147
Total Liabilities 590,619 589,851
Stockholders' Equity:
Preferred stock - $1.00 par value;
5,000,000 shares authorized; none issued
Common stock - $1.00 par value;
10,000,000 shares authorized;
5,139,165 and 4,876,484 shares issued and outstanding
at September 30, 2004 and June 30, 2004,
respectively 5,139 4,876
Additional paid-in capital 41,166 36,247
Retained earnings - partially restricted 9,433 13,303
Treasury stock (612 and 583 shares at September 30,
2004 and June 30, 2004, respectively, at cost) (13) (13)
Accumulated other comprehensive income (loss) (1,651) (2,156)
Total Stockholders' Equity 54,074 52,257
Total Liabilities and Stockholders' Equity $ 644,693 $ 642,108
CHESTER VALLEY BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except for Per Share Amounts)
Unaudited
Three Months Ended September 30,
2004 2003
INTEREST INCOME:
Loans $5,851 $6,094
Mortgage-backed securities 413 342
Interest-bearing deposits 19 8
Investment securities:
Taxable 1,288 546
Non-taxable 320 437
Total interest income 7,891 7,427
INTEREST EXPENSE:
Deposits 1,317 1,430
Securities sold under agreements to repurchase 46 32
Short-term borrowings 86 27
Long-term borrowings 1,328 1,230
Total interest expense 2,777 2,719
NET INTEREST INCOME 5,114 4,708
Provision for loan losses 102 380
Net interest income after provision for loan
losses 5,012 4,328
OTHER INCOME:
Investment services income 1,031 984
Service charges and fees 794 771
Gain on the sale of:
Loans 71 72
Available for sale 77 75
Other 116 112
Total other income 2,089 2,014
OPERATING EXPENSES:
Salaries and employee benefits 2,931 2,440
Occupancy and equipment 736 709
Data processing 254 233
Advertising 81 29
Deposit insurance premiums 16 15
Other 1,041 961
Total operating expenses 5,059 4,387
Income before income taxes 2,042 1,955
Income tax expense 520 441
NET INCOME $1,522 $1,514
EARNINGS PER SHARE (1)
Basic $0.30 $0.30
Diluted $0.29 $0.29
DIVIDENDS PER SHARE PAID DURING PERIOD (1) $0.11 $0.10
WEIGHTED AVERAGE SHARES OUTSTANDING (1)
Basic 5,122,108 5,044,667
Diluted 5,276,146 5,209,283
(1) Earnings per share, dividends per share and weighted average shares
outstanding have been restated to reflect the effects of the 5% stock dividends
paid in September 2004 and 2003.
CHESTER VALLEY BANCORP INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
Three Months Ended
September 30,
2004 2003
Average interest rate spread (2) 3.42% 3.47%
Net yield on average interest-earning assets (2) 3.47% 3.51%
Ratio of average interest-earning
assets to average interest-bearing liabilities 1.04 x 1.04 x
Non-performing assets to total assets 0.64% 0.79%
Allowance for loan loss to total loans 1.60% 1.46%
Return on equity 11.49% 12.25%
Return on assets 0.94% 1.02%
Book value per common share (1) $10.52 $9.84
Closing price of common stock at end of period
(1) $19.78 $20.82
Number of full-service offices at end of period 12 10
(1) Per share amounts have been restated to reflect the effects of the 5%
stock dividend paid in September 2004.
(2) Percentages are presented on a taxable equivalent basis.
The following details the tax equivalent adjustments in the above table:
Three Months Ended September 30,
2004 2003
Interest Tax Adjusted Interest Tax Adjusted
Income Adjustment Income Income Adjustment Income
(Dollars in thousands)
Loans $5,851 $19 $5,870 $6,094 $14 $6,108
Investments 2,040 120 2,160 1,333 163 1,496
Total $7,891 $ 139 $8,030 $7,427 $ 177 $7,604
DATASOURCE: Chester Valley Bancorp Inc.
CONTACT: Joseph T. Crowley, Treasurer & Chief Financial Officer, Chester
Valley Bancorp, +1-610-269-9700 ext. 3085