Waypoint Financial (NASDAQ:WYPT)
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Waypoint Financial Announces First Quarter Results and Declares
Regular Quarterly Cash Dividend
HARRISBURG, Pa., April 22 /PRNewswire-FirstCall/ -- Waypoint Financial Corp.
today announced net income of $.16 per share, or $5.2 million, for the quarter
ended March 31, 2004 as compared to $.33 per share, or $11.3 million, for the
quarter ended March 31, 2003 and $.27, or $8.9 million, for the linked quarter
ended December 31, 2003. The current quarter was negatively impacted by
acquisition-related expenses totaling $3.0 million, or $.09 per share.
Waypoint also announced that the Board of Directors declared a regular
quarterly cash dividend of $.14 per share to shareholders of record as of May
6, 2004. The dividend will be paid on May 14, 2004.
On March 9, 2004, Waypoint and Sovereign Bancorp, Inc. ("Sovereign") announced
that they had reached a definitive agreement for Sovereign to acquire Waypoint.
Under the terms of the agreement, shareholders of Waypoint will be entitled to
receive $28.00 in cash, 1.262 shares of Sovereign common stock, or a
combination thereof per Waypoint share, subject to election and allocation
procedures which are intended to ensure that, in the aggregate, 70% of Waypoint
shares will be exchanged for Sovereign common stock and 30% will be exchanged
for cash. The acquisition is expected to close in the fourth quarter of 2004.
Regarding the agreement with Sovereign, David E. Zuern, President and CEO,
said, "We are excited about joining Sovereign, a Pennsylvania-based company
with a very similar commitment to a performance culture focused on customers,
employees and community as well as shareholders. We expect to offer an even
broader array of products delivered with the same flexibility, responsiveness,
and local decision making that our customers expect."
Zuern went on to discuss Waypoint's business performance during the quarter
ended March 31, 2004. He stated: "Waypoint continued to build franchise value
during the quarter through solid growth in commercial loans, transaction
deposits, banking fees, and financial services fees. Also, Waypoint's key
credit quality indicators showed continued improvement from levels which were
already sound."
Zuern reported that Waypoint continued to show progress in changing the
composition of asset and liability portfolios. The commercial loan portfolio
grew $51.5 million, or 4.7%, and the consumer loan portfolio grew $3.5 million
during the quarter. Mortgage loans in portfolio decreased $25.3 million during
the quarter as mortgage loan prepayments reaccelerated in response to lowering
mortgage market rates. Waypoint's core deposits, which include savings,
transaction and money market accounts, grew $30.4 million during the quarter,
up 2.3%, and time deposits, a higher cost funding source, decreased $45.5
million for the quarter. Waypoint also decreased its higher-rate borrowings by
$32.1 million to further improve its liability composition. As a result,
Waypoint's net interest margin improved 3 basis points to 2.27%, despite the
margin challenges facing financial institutions from continued historically-low
interest rates.
Zuern added that Waypoint's fee income from bank service and account fees,
financial services fees and mortgage banking income aggregated to $7.3 million
this quarter, up from $6.8 million for the comparable quarter ended March 31,
2003 and up from $7.0 million in the fourth quarter of 2003. Increases in
banking services and account fees and financial services fees were partially
offset by reductions in mortgage banking income. Waypoint's total non-
interest income was $13.7 million during the current quarter versus $9.4
million for the comparable prior quarter, including net gains on securities
totaling $5.4 million and $1.9 million, respectively. Security gains were up
during the current quarter primarily due to net gains on securities sold in
conjunction with the prepayment of fixed-rate borrowings. The resulting gains
offset the related prepayment expense while maintaining an appropriate interest
rate risk position.
Zuern also noted that Waypoint's noninterest expense was negatively impacted by
$3.0 million in expenses associated with the Sovereign acquisition and $4.7
million in prepayment expenses to extinguish certain higher-rate borrowings.
Excluding these items, non-interest expenses compared favorably to the linked
quarter ended December 31, 2003. Noninterest expense for the linked quarter
included a one-time impairment charge of $1.1 million on real estate used in
operations.
Waypoint Financial Corp. is a $5.4 billion bank holding company whose primary
operating subsidiary is Waypoint Bank, which is headquartered in Harrisburg,
Pennsylvania with a network of 65 branches. Waypoint Bank operates 57 branches
in Dauphin, York, Lancaster, Cumberland, Franklin, Lebanon, Adams, and Centre
counties in Pennsylvania and 8 branches in Baltimore, Harford and Washington
counties in northern Maryland. Waypoint offers a full range of financial
services including banking for retail, commercial and small business customers,
mortgages, trust and investment, brokerage, and insurance services to more than
125,000 household and business customers.
The following contains a summary of selected financial data for the most recent
five fiscal quarters.
Selected Ratios and Other Data (Unaudited)
As of or for the three months ended
March, December, September, June, March,
2004 2003 2003 2003 2003
Basic income
per share $0.17 $0.28 $0.31 $0.35 $0.33
Diluted income
per share $0.16 $0.27 $0.30 $0.34 $0.33
Return on average
equity (ROE) 5.13% 8.97% 9.83% 10.82% 10.35%
Return on average
assets 0.39% 0.67% 0.72% 0.84% 0.84%
Net interest
margin (tax
equivalent) 2.27% 2.24% 2.28% 2.44% 2.47%
Noninterest income
divided by
average assets 1.03% 0.80% 0.83% 0.80% 0.70%
Noninterest expense
divided by
average assets 2.33% 1.89% 1.67% 1.67% 1.63%
Efficiency ratio 75.36% 67.12% 59.31% 55.21% 54.84%
Effective income
tax rate 36.70% 21.49% 28.59% 30.40% 27.48%
Diluted average
equivalent
shares 32,854,416 32,622,332 33,135,917 33,662,564 34,768,749
Book value
per share $12.53 $12.10 $12.29 $12.41 $12.21
Stockholders'
equity to
total assets 7.78% 7.55% 7.62% 7.42% 7.47%
Selected Financial Condition Data (Unaudited, amounts in thousands)
As of the periods ended
March, December, September, June, March,
2004 2003 2003 2003 2003
Total assets $5,371,728 $5,329,902 $5,429,818 $5,639,363 $5,602,738
Loans receivable,
net 2,426,157 2,397,640 2,390,740 2,379,562 2,338,478
Loans held
for sale, net 17,653 17,011 30,002 38,333 33,666
Marketable
securities 2,606,875 2,587,752 2,667,038 2,878,814 2,913,329
Deposits 2,705,787 2,720,915 2,630,393 2,581,661 2,452,834
Borrowings 2,078,626 2,110,681 2,273,446 2,459,577 2,531,514
Stockholders'
equity 417,860 402,233 413,710 418,561 418,622
Selected Operating Data (Unaudited, amounts in thousands)
For the three month periods ended
March, December, September, June, March,
2004 2003 2003 2003 2003
Interest income $59,010 $59,735 $60,877 $64,550 $65,809
Interest expense 31,692 32,879 33,489 34,134 35,337
Net interest income 27,318 26,856 27,388 30,416 30,472
Provision for loan
losses 1,901 1,014 2,014 2,064 2,421
Net interest income
after provision for
loan losses 25,417 25,842 25,374 28,352 28,051
Noninterest income 13,727 10,681 11,495 10,827 9,429
Noninterest expense 30,931 25,193 23,063 22,772 21,882
Income before taxes 8,213 11,330 13,806 16,407 15,598
Income tax expense 3,014 2,435 3,946 4,987 4,286
Net income $5,199 $8,895 $9,860 $11,420 $11,312
Discussion of Operating Results
Net income totaled $.16 per share for the quarter ended March 31, 2004, as
compared to net income of $.33 per share for the quarter ended March 31, 2003
and $.27 per share for the quarter ended December 31, 2003. Net income for the
current quarter was $5.2 million versus $11.3 million for the quarter ended
March 31, 2003 and $8.9 million for the quarter ended December 31, 2003. The
current quarter was negatively impacted by acquisition-related expenses
totaling $3.0 million, or $.09 per share.
Net interest income before provision for loan losses totaled $27.3 million for
the current quarter as compared to $30.5 million recorded during the quarter
ended March 31, 2003 and $26.9 million for the quarter ended December 31, 2003.
The decrease in net interest income from the comparable prior period came
primarily from the cumulative effects of record high prepayments during 2003
and in the first quarter of 2004 on mortgage loans and mortgage- backed
securities. In the current environment, yields on new loan and security assets
acquired into portfolio are at substantially lower rates relative to assets
being replaced. This trend is exacerbated by aggressive pricing by key
competitors in Waypoint's market for both loans and deposits, which results in
spread compression. Also, FHLB dividends were down $.5 million during the
current quarter relative to the comparable prior quarter due to reductions in
the dividend rate paid by the FHLB of Pittsburgh. As a result of these various
impacts, the net interest margin ratio (tax- equivalent) decreased to 2.27% for
the current quarter as compared to 2.47% for the quarter ended March 31, 2003.
Reflecting the effect of Waypoint's asset and liability mix improvements, net
interest margin increased 3 basis points relative to the linked quarter ended
December 31, 2003. See Table 3 which appears later in this release for a
detailed schedule of Waypoint's average portfolio balances and interest rates.
Also, see Table 4 for a rate/volume analysis of Waypoint's net interest income.
Pursuant to management's evaluation of the adequacy of Waypoint's allowance for
loan losses, the provision for loan losses totaled $1.9 million for the current
quarter versus $2.4 million for the quarter ended March 31, 2003 and $1.0
million for the quarter ended December 31, 2003. Please see the Discussion of
Asset Quality that appears later in this section and Tables 5, 6, and 7
following the financial statements for additional information regarding credit
quality.
Noninterest income was $13.7 million for the current quarter, as compared to
$9.4 million for the quarter ended March 31, 2003 and $10.7 million for the
quarter ended December 31, 2003. Notable changes in the current quarter versus
the quarter ended March 31, 2003 included:
-- Banking services and account fees totaled $4.4 million, up
$1.0 million from the comparable prior quarter primarily due to
increased overdraft fees, service charges, and ATM fees. These
trends reflect both increased account and transaction volumes as well
as improved fee collections.
-- Financial services fees increased to $2.4 million, up $.4 million.
Within this category, insurance fees were $1.6 million, up
$.4 million. This increase in insurance fees included $.8 million
from Waypoint Benefits Consulting, acquired on April 1, 2003, which
was partially offset by a decrease of $.4 million in title insurance
fees.
-- Residential mortgage banking income totaled $.5 million, down
$.8 million from the prior period. Within this category, net gains
on the sale of loans decreased to $.7 million from $1.9 million and
loan servicing activities including valuation adjustments resulted in
a net loss of $.2 million, which compared to a loss of $.6 million in
the prior period. The loan sale results reflect primarily a sales
volume decrease in the current quarter relative to the quarter ended
March 31, 2003, which was enhanced by carryover from year-end 2002.
-- Gains on securities were up $3.5 million in the current quarter,
primarily resulting from security sales associated with liability
restructuring wherein $125.0 million of fixed-rate FHLB advances were
prepaid. In addition, the net gain for the current quarter included
a loss of $1.5 million on the valuation of an interest rate cap that
does not receive hedge accounting treatment.
-- Other income was breakeven in the aggregate, which included a
$.3 million loss on low income housing tax credit investments, offset
by other miscellaneous income.
Noninterest expense was $30.9 million for the quarter ended March 31, 2004 and
included borrowing prepayment expenses of $4.7 million and acquisition expenses
of $3.0 million, up from $21.9 million for the quarter ended March 31, 2003.
Noninterest expense was $25.2 million for the linked quarter ended December 31,
2003 and included a one-time impairment charge of $1.1 million on real estate
used in operations. Notable changes in the quarter ended March 31, 2004
relative to the quarter ended March 31, 2003 included:
-- Salaries and benefits expense totaled $13.2 million, up $1.8 million
primarily due to expansion in the retail banking franchise, increased
investment in sales and marketing personnel, the acquisition of
Waypoint Benefits Consulting and annual merit raises.
-- Other expenses were $2.4 million, down $.6 million primarily on
decreased loan servicing and other non-deferrable loan costs.
Offsetting the decrease in other expenses was an increase of
$.2 million in external auditing and accounting fees.
Income tax expense for the current quarter totaled $3.0 million, or an
effective tax rate of 36.7% on income before taxes of $8.2 million. The
effective tax rate for the current quarter reflected acquisition expenses that
are nondeductible for tax purposes totaling $3.0 million. For the quarter
ended March 31, 2003, income taxes were $4.3 million or an effective tax rate
of 27.6% on income before taxes of $15.6 million.
Discussion of Financial Condition
Waypoint's total assets were $5.372 billion at March 31, 2004, down from $5.603
billion at March 31, 2003 and up from $5.330 billion at December 31, 2003. The
decrease from March 31, 2003 came primarily in cash and securities, which
decreased $339.8 million during the twelve months ended March 31, 2004. Cash
and securities included $70.9 million of securities in process at March 31,
2004.
Waypoint continued to experience strong growth in its commercial portfolio,
which was up $51.5 million during the current quarter. Consumer and other
loans also increased $3.5 million. Partially offsetting these increases,
residential mortgage loans decreased $25.3 million during the current quarter
as Waypoint sold substantially all of its conventional residential mortgage
production and prepayments continued at a historically high level on mortgage
loans held in portfolio. Waypoint's loan portfolio is presented in Table 1
which appears later in this report.
Waypoint's deposit portfolio totaled $2.706 billion at March 31, 2004, up from
$2.453 billion at March 31, 2003, but down from $2.721 billion at December 31,
2003. Within the deposit portfolio, Waypoint experienced substantial growth in
its core deposits, which grew $30.4 million during the quarter, up 2.3%. This
was offset by a decrease of $45.5 million in time deposits, a higher cost
funding source. The composition of the deposit portfolio is presented in Table
2 which appears later in this report.
Waypoint's portfolio of customer repurchase agreements totaled $52.7 million at
March 31, 2004 as compared to $51.7 million at March 31, 2003 and $56.1 million
at December 31, 2003. Waypoint offers this investment product to its
commercial customers as part of a broad range of products and services targeted
to this profitable market segment. Customer repurchase agreements represent a
lower-cost source of funding for Waypoint and are included in borrowings on the
Statement of Financial Condition. The average cost of these funds were 0.75%
for each of the quarters ended March 31, 2004 and December 31, 2003 and 0.98%
for the quarter ended March 31, 2003.
Waypoint had $417.9 million in stockholders' equity, or 7.78% of total assets,
at March 31, 2004, as compared to $418.6 million or 7.47% at March 31, 2003 and
$402.2 million or 7.55% at December 31, 2003. Notable changes in stockholders'
equity for the current quarter included increases of $5.2 million in net
income, paid in capital and tax benefits from stock option exercises totaling
$3.3 million and an increase of $11.9 million in the market value of
available-for-sale securities (net of taxes). Offsetting these increases were
dividends paid to shareholders totaling $4.5 million.
Discussion of Asset Quality
Non-performing loans totaled $17.4 million or 0.71% of total loans as of March
31, 2004 as compared to $17.8 million or .79% of total loans at March 31, 2003
and $18.2 million or 0.76% of total loans as of December 31, 2003. Waypoint's
allowance for loan losses was $29.3 million or 1.19% of total loans as of March
31, 2004, as compared to $27.9 million or 1.18% of total loans at March 31,
2003 and $28.4 million or 1.17% of total loans as of December 31, 2003. Net
loan charge-offs as a percentage of average loans outstanding totaled 0.17% on
an annualized basis for the quarter ended March 31, 2004 as compared to 0.34%
for the quarter ended March 31, 2003 and 0.31% for the quarter ended December
31, 2003. See Tables 5, 6 and 7 which appear later in this release for more
information on asset quality.
Note on Forward-Looking Statements
Statements contained 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 Corporation 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 Corporation 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, loan demand, real estate values, and
competition; changes in accounting principles, policies, or guidelines; changes
in legislation or regulation; and other economic, competitive, governmental,
regulatory, and technological factors affecting the Corporation's operations,
pricing, products and services.
This filing contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, with respect to the financial
condition, results of operations and business of Waypoint Financial Corp.
pending consummation of the merger of Seacoast Financial Services Corporation
with and into Sovereign Bancorp, Inc. and the merger of Waypoint with and into
Sovereign that are subject to various factors which could cause actual results
to differ materially from such projections or estimates. Such factors include,
but are not limited to, the following: (1) the respective businesses of
Seacoast and Waypoint may not be combined successfully with Sovereign's
businesses, or such combinations may take longer to accomplish than expected;
(2) expected cost savings from each of the mergers cannot be fully realized or
realized within the expected timeframes; (3) operating costs, customer loss and
business disruption following the mergers, including adverse effects on
relationships with employees, may be greater than expected; (4) governmental
approvals of each of the mergers may not be obtained, or adverse regulatory
conditions may be imposed in connection with government approvals of the
mergers, (5) the stockholders of Seacoast may fail to approve the merger of
Seacoast with and into Sovereign and the shareholders of Waypoint may fail to
approve the merger of Waypoint with and into Sovereign; (6) adverse
governmental or regulatory policies may be enacted; (7) the interest rate
environment may adversely impact the expected financial benefits of the
mergers, and compress margins and adversely affect net interest income; (8) the
risks associated with continued diversification of assets and adverse changes
to credit quality; (9) competitive pressures from other financial service
companies in Seacoast's, Waypoint's and Sovereign's markets may increase
significantly; and (10) the risk of an economic slowdown that would adversely
affect credit quality and loan originations. Other factors that may cause
actual results to differ from forward-looking statements are described in
Waypoint's filings with the Securities and Exchange Commission. Waypoint does
not undertake or intend to update any forward-looking statements.
Sovereign and Waypoint will be filing documents concerning the merger with the
Securities and Exchange Commission, including a registration statement on Form
S-4 containing a prospectus/proxy statement which will be distributed to
shareholders of Waypoint. Investors are urged to read the registration
statement and the proxy statement/prospectus regarding the proposed transaction
when it becomes available and any other relevant documents filed with the SEC,
as well as any amendments or supplements to those documents, because they will
contain important information. Investors will be able to obtain a free copy of
the proxy statement/prospectus, as well as other filings containing information
about Sovereign and Waypoint, free of charge on the SEC's Internet site
(http://www.sec.gov/). In addition, documents filed by Sovereign with the SEC,
including filings that will be incorporated by reference in the
prospectus/proxy statement, can be obtained, without charge, by directing a
request to Sovereign Bancorp, Inc., Investor Relations, 1130 Berkshire
Boulevard, Wyomissing, Pennsylvania 19610 (Tel: 610-988-0300). In addition,
documents filed by Waypoint with the SEC, including filings that will be
incorporated by reference in the prospectus/proxy statement, can be obtained,
without charge, by directing a request to Waypoint Financial Corp., 235 North
Second Street, Harrisburg, Pennsylvania 17101, Attn: Richard C. Ruben,
Executive Vice President and Corporate Secretary (Tel: 717-236-4041). Directors
and executive officers of Waypoint may be deemed to be participants in the
solicitation of proxies from the shareholders of Waypoint in connection with
the merger. Information about the directors and executive officers of Waypoint
and their ownership of Waypoint common stock is set forth in Waypoint's proxy
statement for its 2004 annual meeting of shareholders, as filed with the SEC on
April 20, 2004. Additional information regarding the interests of those
participants may be obtained by reading the prospectus/proxy statement
regarding the proposed merger transaction when it becomes available. INVESTORS
SHOULD READ THE PROSPECTUS/PROXY STATEMENT AND OTHER DOCUMENTS TO BE FILED WITH
THE SEC CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER.
WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
March 31, December 31,
2004 2003
(Unaudited)
(All dollar amounts in thousands)
Assets
Cash and cash equivalents $85,633 $100,016
Marketable securities 2,511,070 2,489,770
FHLB Stock 95,805 97,982
Loans receivable, net 2,426,157 2,397,640
Loans held for sale, net 17,653 17,011
Loan servicing rights 2,283 2,528
Investment in real estate and other
joint ventures 20,417 20,773
Premises and equipment, net of
accumulated depreciation of $46,648 and
$45,261 49,566 49,789
Accrued interest receivable 23,376 23,597
Goodwill 18,332 17,881
Intangible assets 2,996 2,881
Deferred tax asset, net 2,313 9,059
Bank-owned life insurance 93,558 92,522
Other assets 22,569 8,453
Total assets $5,371,728 $5,329,902
Liabilities and Shareholders Equity
Deposits $2,705,787 $2,720,915
Other borrowings 2,078,626 2,110,681
Escrow 2,976 2,568
Accrued interest payable 9,599 10,009
Postretirement benefit obligation 2,248 2,248
Income taxes payable 4,576 2,586
Trust preferred debentures 46,392 46,392
Other liabilities 103,664 32,270
Total liabilities 4,953,868 4,927,669
Preferred stock, 10,000,000 shares
authorized but unissued
Common stock, $ .01 par value,
authorized 100,000,000 shares,
42,947,816 shares issued and 33,358,789
outstanding at March 31, 2004, 43,031,041
shares issued and 33,247,630 shares
outstanding at December 31, 2003 428 425
Paid in capital 356,628 353,530
Retained earnings 242,411 241,668
Accumulated other comprehensive income 3,387 (8,502)
Employee stock ownership plan (13,395) (13,423)
Recognition and retention plans (4,206) (4,206)
Paid in capital from obligations under
Rabbi Trust, 495,826 shares at
March 31, 2004 and 495,826 shares at
December 31, 2003 8,457 8,457
Treasury stock shares held in Rabbi
Trust at cost, 563,162 shares at
March 31, 2004 and 563,162 shares
at December 31, 2003 (9,240) (9,240)
Treasury stock, 9,589,027 shares at
March 31, 2004 and 9,716,075 shares
at December 31, 2003 (166,610) (166,476)
Total stockholders' equity 417,860 402,233
Total liabilities and
stockholders' equity $5,371,728 $5,329,902
WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Income
Three Months Ended March 31,
2004 2003
(Unaudited)
(All dollar amounts in thousands,
except per share data)
Interest Income:
Loans $33,821 $37,394
Marketable securities and interest-
earning cash 25,189 28,415
Total interest income 59,010 65,809
Interest Expense:
Deposits and escrow 12,159 14,484
Borrowed funds 19,533 20,853
Total interest expense 31,692 35,337
Net interest income 27,318 30,472
Provision for loan losses 1,901 2,421
Net interest income after
provision for loan losses 25,417 28,051
Noninterest Income:
Banking service and account fees 4,354 3,389
Financial services fees 2,412 2,045
Residential mortgage banking 514 1,303
Bank-owned life insurance 1,036 1,146
Gain on securities and derivatives, net 5,406 1,873
Other 5 (327)
Total noninterest income 13,727 9,429
Noninterest Expense:
Salaries and benefits 13,204 11,432
Equipment expense 1,816 1,771
Occupancy expense 2,021 1,922
Marketing 930 1,091
Amortization of intangible assets 200 120
Outside services 1,420 1,267
Communications and supplies 1,280 1,326
Borrowing prepayment 4,704 -
Acquisition 2,965 -
Other 2,391 2,953
Total noninterest expense 30,931 21,882
Income before income taxes 8,213 15,598
Income tax expense 3,014 4,286
Net Income $5,199 $11,312
Basic earnings per share $0.17 $0.33
Diluted earnings per share $0.16 $0.33
Table 1 - Loans Receivable, Net
March 31, December 31,
2004 2003
Residential mortgage loans:
One-to-four family $327,014 $347,679
Construction 20,826 25,500
Total residential mortgage loans 347,840 373,179
Commercial loans:
Commercial real estate 687,823 651,139
Commercial business 356,530 343,129
Construction and site development 105,035 103,611
Total commercial loans 1,149,388 1,097,879
Consumer and other loans:
Manufactured housing 90,344 93,323
Home equity and second mortgage 556,775 561,937
Indirect automobile 179,294 174,416
Other 113,691 106,968
Total consumer and other loans 940,104 936,644
Loans receivable, gross 2,437,332 2,407,702
Plus:
Dealer reserves 22,973 23,584
Less:
Unearned premiums 4 6
Net deferred loan origination fees 4,849 5,209
Allowance for loan losses 29,295 28,431
Loans receivable, net $2,426,157 $2,397,640
Table 2 - Deposits
March 31, December 31,
2004 2003
Savings $246,999 $252,072
Time 1,363,492 1,408,970
Transaction 694,314 560,520
Money market 400,982 499,353
Total deposits $2,705,787 $2,720,915
Table 3 - Average Balance Sheet, quarter
For the three months ended,
March 31, 2004
Average Average
Balance Interest(2) Yield/Cost
Assets: (Dollar amounts in thousands)
Interest-earning assets:
Loans, net (1) (5) $2,444,999 $34,011 5.54%
Marketable securities 2,519,856 25,659 4.12
Other interest-earning assets 39,290 96 0.89
Total interest-earning assets 5,004,145 59,766 4.78
Noninterest-earning assets 307,784
Total assets $5,311,929
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings deposits $248,261 127 0.21
Time deposits 1,390,185 10,005 2.89
Transaction and money market 1,051,663 2,022 0.77
Escrow 2,910 5 0.70
Borrowed funds 2,164,285 19,533 3.55
Total interest-bearing liabilities 4,857,304 31,692 2.59
Noninterest-bearing liabilities 48,882
Total liabilities 4,906,186
Stockholders' equity 405,743
Total liabilities and stockholders'
equity $5,311,929
Net interest income - tax-equivalent 28,074
Interest rate spread (3) 2.19%
Net interest-earning assets $146,841
Net interest margin (4) 2.27%
Ratio of interest-earning assets
to interest-bearing liabilities 1.03 x
Adjustment to reconcile tax-
equivalent net interest income to
net interest income (756)
Net interest income $27,318
For the three months ended,
March 31, 2003
Average Average
Balance Interest(2) Yield/Cost
Assets: (Dollar amounts in thousands)
Interest-earning assets:
Loans, net (1)(5) $2,361,672 $37,394 6.39%
Marketable securities 2,718,846 28,882 4.36
Other interest-earning assets 64,155 163 1.19
Total interest-earning assets 5,144,673 66,439 5.24
Noninterest-earning assets 207,778
Total assets $5,352,451
Liabilities and stockholders'
equity:
Interest-bearing liabilities:
Savings deposits $257,399 314 0.45
Time deposits 1,398,769 13,020 3.78
Transaction and money market 766,422 1,141 0.60
Escrow 3,866 9 0.89
Borrowed funds 2,437,649 20,853 3.41
Total interest-bearing liabilities 4,864,105 35,337 2.92
Noninterest-bearing liabilities 48,645
Total liabilities 4,912,750
Stockholders' equity 439,701
Total liabilities and stockholders'
equity $5,352,451
Net interest income - tax-equivalent 31,102
Interest rate spread (3) 2.32%
Net interest-earning assets $280,568
Net interest margin (4) 2.47%
Ratio of interest-earning assets
to interest-bearing liabilities 1.06 x
Adjustment to reconcile tax-
equivalent net interest income to
net interest income (630)
Net interest income $30,472
(1) Includes income recognized on deferred loan fees and costs of
$175,000 for the three months ended March 31, 2004, and $633,000 for
the three months ended March 31, 2003.
(2) Interest income and yields are shown on a tax equivalent basis using
an effective tax rate of 35%.
(3) Represents the difference between the average yield on interest-
earning assets and the average cost on interest-bearing liabilities.
(4) Represents the annualized net interest income before the provision
for loan losses divided by average interest-earning assets.
(5) Includes loans on nonaccrual status and loans held for sale.
Table 4 - Rate/Volume Analysis of Changes in Tax-equivalent Net Interest
Income
Three Months Ended March 31, 2004
Compared to
Three Months Ended March 31, 2003
Increase (Decrease)
Volume Rate Net
(Dollar amounts in thousands)
Interest-earning assets:
Loans, net $1,366 $(4,749) $(3,383)
Marketable securities (1,839) (1,384) (3,223)
Other interest-earning assets (41) (26) (67)
Total interest-earning assets (514) (6,159) (6,673)
Interest-bearing liabilities:
Savings deposits (12) (175) (187)
Time deposits (77) (2,938) (3,015)
Transaction and money market
deposits 500 381 881
Escrow (2) (2) (4)
Borrowed funds (2,198) 878 (1,320)
Total interest-bearing liabilities (1,789) (1,856) (3,645)
Change in net interest income $1,275 $(4,303) $(3,028)
Table 5 - Analysis of Allowance for Loan Losses
For the Three For the Three For the Twelve
Months Ended Months Ended Months Ended
March 31, March 31, December 31,
2004 2003 2003
(All dollar amounts in thousands)
Balance at beginning of the
period $28,431 $27,506 $27,506
Provision for loan losses 1,901 2,421 7,513
Charge-offs:
Residential mortgage loans (58) (220) (595)
Commercial loans (96) (977) (2,732)
Consumer and other loans (1,095) (1,275) (4,596)
Total charge-offs (1,249) (2,472) (7,923)
Recoveries:
Residential mortgage loans - 13 139
Commercial loans 63 263 389
Consumer and other loans 149 167 807
Total recoveries 212 443 1,335
Net charge-offs (1,037) (2,029) (6,588)
Balance at end of period $29,295 $27,898 $28,431
Annualized net charge-offs to
average loans 0.17% 0.34% 0.27%
Allowance for loan losses as a %
of total loans 1.19% 1.18% 1.17%
Table 6 - Non-performing Assets
As of As of
March 31, 2004 December 31, 2003
(Amounts in thousands)
Non-accrual residential mortgage
loans $438 $443
Non-accrual commercial loans 8,276 8,173
Non-accrual other loans 402 90
Total non-accrual loans 9,116 8,706
Loans 90 days or more delinquent and
still accruing 8,318 9,498
Total non-performing loans 17,434 18,204
Total foreclosed other assets 340 313
Total foreclosed real estate 414 472
Total non-performing assets $18,188 $18,989
Total non-performing loans to
total loans 0.71% 0.76%
Allowance for loan losses to
non-performing loans 168.03% 156.18%
Total non-performing assets to
total assets 0.34% 0.36%
Table 7 - Allocation of the Allowance for Loan Losses
As of March 31, 2004 As of December 31, 2003
(All dollar amounts are in thousands)
% of Total % of Total
Amount Reserves Amount Reserves
Residential mortgage loans $942 3.22% $1,099 3.86%
Commercial loans 22,216 75.83% 20,455 71.95%
Consumer and other loans 6,137 20.95% 6,877 24.19%
Total $29,295 100.00% $28,431 100.00%
DATASOURCE: Waypoint Financial Corp.
CONTACT: James H. Moss, Chief Financial Officer, Waypoint Financial,
+1-717-909-2247
Web site: http://www.waypointbank.com/