Waypoint Financial (NASDAQ:WYPT)
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Waypoint Financial Announces Second Quarter Results and Declares
Regular Quarterly Cash Dividend
HARRISBURG, Pa., July 22 /PRNewswire-FirstCall/ -- Waypoint Financial Corp.
(NASDAQ:WYPT) today announced net income of $.30 per share, or $10.0 million,
for the quarter ended June 30, 2004 as compared to $.34 per share, or $11.4
million, for the quarter ended June 30, 2003. This also compares to $.16 per
share, or $5.2 million, for the linked quarter ended March 31, 2004, which was
affected by expenses associated with the pending acquisition of Waypoint by
Sovereign Bancorp, Inc. ("Sovereign") announced on March 9, 2004.
Waypoint also announced that the Board of Directors declared a regular
quarterly cash dividend of $.14 per share to shareholders of record as of
August 5, 2004. The dividend will be paid on August 13, 2004.
David E. Zuern, President and CEO, discussed Waypoint's business performance
during the quarter ended June 30, 2004. He stated: "Waypoint continued to
build franchise value during the quarter, with particularly strong growth noted
in commercial loans, transaction deposits, and banking fee income. 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 the Bank's loan and deposit portfolios. The commercial loan
portfolio grew $65.5 million, or 5.7%, and the consumer loan portfolio grew
$11.8 million during the quarter. Mortgage loans in portfolio decreased $25.4
million during the quarter as mortgage loan prepayments continued at a rapid
pace, though at reduced levels relative to those experienced in 2003.
Waypoint's core deposits, which include savings, transaction and money market
accounts, grew $61.6 million during the quarter, up 4.6%. Time deposits were
also up $32.6 million during the quarter.
Strong growth in banking services and account fees helped drive Waypoint's
total non-interest income to $10.9 million during the current quarter versus
$10.8 million for the quarter ended June 30, 2003. Zuern said the growth in
banking fee income came from rising account volumes, improved service
offerings, and pricing increases. This performance lifted Waypoint's core fee
income to $8.8 million this quarter, up from $7.6 million for the comparable
quarter ended June 30, 2003 and up from $7.3 million for the linked quarter
ended March 31, 2004. Core fee income includes bank service and account fees,
financial services fees and mortgage banking income. Net gains on securities
decreased to $1.3 million during the current quarter from $3.7 million in the
comparable prior quarter as Waypoint placed less reliance on this supplemental
revenue source. Zuern also noted that Waypoint continued to control costs,
limiting total noninterest expenses to $22.4 million during the current quarter
as compared to $22.8 million during the comparable prior quarter. This was
particularly noteworthy in light of the excellent growth in core fee income.
Zuern closed with comments regarding the pending acquisition of Waypoint by
Sovereign. He stated, "We are excited about combining our strong and growing
franchise with Sovereign, a Pennsylvania-based company with a very similar
commitment to a performance culture. As part of the Sovereign family, we will
offer an even broader array of products delivered with the same flexibility,
responsiveness, and local decision making that our customers expect. Both
organizations are already working together on integration tasks and sharing
expertise to ensure that this transition will be smooth for our customers."
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 66 branches. Waypoint Bank operates 57 branches
in Dauphin, York, Lancaster, Cumberland, Franklin, Lebanon, Adams, and Centre
counties in Pennsylvania and 9 branches in Baltimore, Harford, Frederick and
Washington counties in 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.
On March 9, 2004, Waypoint and 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 no later than January of 2005.
The following page 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
June, March, December,
2004 2004 2003
Basic income per share $0.31 $0.17 $0.28
Diluted income per share $0.30 $0.16 $0.27
Return on average equity (ROE) 9.85% 5.13% 8.97%
Return on average assets 0.74% 0.39% 0.67%
Net interest margin (tax equivalent) 2.22% 2.27% 2.24%
Noninterest income divided by
average assets 0.80% 1.03% 0.80%
Noninterest expense divided by
average assets 1.66% 2.33% 1.89%
Efficiency ratio 59.59% 75.36% 67.12%
Effective income tax rate 30.34% 36.70% 21.49%
Diluted average equivalent shares 32,979,567 32,741,246 32,622,332
Book value per share $11.86 $12.53 $12.10
Stockholders' equity to total assets 7.28% 7.78% 7.55%
As of or for the three months ended
September, June,
2003 2003
Basic income per share $0.31 $0.35
Diluted income per share $0.30 $0.34
Return on average equity (ROE) 9.83% 10.82%
Return on average assets 0.72% 0.84%
Net interest margin (tax equivalent) 2.28% 2.44%
Noninterest income divided by average assets 0.83% 0.80%
Noninterest expense divided by average assets 1.67% 1.67%
Efficiency ratio 59.31% 55.21%
Effective income tax rate 28.59% 30.40%
Diluted average equivalent shares 33,135,917 33,662,564
Book value per share $12.29 $12.41
Stockholders' equity to total assets 7.62% 7.42%
Selected Financial Condition Data (Unaudited, amounts in thousands)
As of the periods ended
June, March, December,
2004 2004 2003
Total assets $5,442,856 $5,371,728 $5,329,902
Loans receivable, net 2,477,915 2,426,157 2,397,640
Loans held for sale, net 13,164 17,653 17,011
Marketable securities 2,612,849 2,606,875 2,587,752
Deposits 2,799,987 2,705,787 2,720,915
Borrowings 2,144,391 2,078,626 2,110,681
Stockholders' equity 396,130 417,860 402,233
As of the periods ended
September, June,
2003 2003
Total assets $5,429,818 $5,639,363
Loans receivable, net 2,390,740 2,379,562
Loans held for sale, net 30,002 38,333
Marketable securities 2,667,038 2,878,814
Deposits 2,630,393 2,581,661
Borrowings 2,273,446 2,459,577
Stockholders' equity 413,710 418,561
Selected Operating Data (Unaudited, amounts in thousands)
For the three month periods ended
June, March, December, Sept., June,
2004 2004 2003 2003 2003
Interest income $58,636 $59,010 $59,735 $60,877 $64,550
Interest expense 31,926 31,692 32,879 33,489 34,134
Net interest income 26,710 27,318 26,856 27,388 30,416
Provision for loan losses 902 1,901 1,014 2,014 2,064
Net interest income after
provision for loan losses 25,808 25,417 25,842 25,374 28,352
Noninterest income 10,878 13,727 10,681 11,495 10,827
Noninterest expense 22,399 30,931 25,193 23,063 22,772
Income before taxes 14,287 8,213 11,330 13,806 16,407
Income tax expense 4,335 3,014 2,435 3,946 4,987
Net income $9,952 $5,199 $8,895 $9,860 $11,420
Discussion of Operating Results
Net income totaled $.30 per share for the quarter ended June 30, 2004, as
compared to net income of $.34 per share for the quarter ended June 30, 2003
and $.16 per share for the quarter ended March 31, 2004. Net income for the
current quarter was $10.0 million versus $11.4 million for the quarter ended
June 30, 2003 and $5.2 million for the linked quarter ended March 31, 2004. The
linked quarter was impacted by merger-related expenses totaling $3.0 million,
or $.09 per share.
Net interest income after provision for loan losses totaled $25.8 million for
the current quarter as compared to $28.4 million recorded during the quarter
ended June 30, 2003 and $25.4 million for the linked quarter ended March 31,
2004. 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 six months 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 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. These impacts, which were partially reduced by favorable mix
improvements in the loan and deposit portfolios, resulted in the net interest
margin ratio (tax-equivalent) decreasing to 2.22% for the current quarter.
This compared to 2.44% for the quarter ended June 30, 2003 and 2.27% for the
linked quarter ended March 31, 2004. 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 $.9 million for the current
quarter versus $2.1 million for the quarter ended June 30, 2003 and $1.9
million for the linked quarter ended March 31, 2004. 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 $10.9 million for the current quarter, as compared to
$10.8 million for the comparable prior quarter ended June 30, 2003, with
notable changes between these periods as follows:
-- Banking services and account fees totaled $5.4 million, up
$1.5 million primarily due to increased overdraft fees, service
charges, and commercial fees. These trends reflect increased
account and transaction volumes, pricing increases, and increased
service offerings.
-- Financial services fees totaled $2.3 million for both periods.
Waypoint Benefits Consulting, acquired on April 1, 2003, was
reflected in both periods and contributed an increase of
$.2 million. This increase was offset by a $.2 million decrease in
title insurance income resulting from decreased refinancing activity
in the mortgage banking market.
-- Residential mortgage banking income totaled $1.1 million, down
$.2 million from the prior period. Within this category, net gains
on the sale of loans decreased $.9 million and loan servicing
activities including valuation adjustments resulted in a net revenue
increase of $.7 million. The loan sale results reflect both a sales
volume decrease and a decrease in the average gain per dollar of
loan principal sold. Sales volume was reduced as mortgage rates
increased during the quarter and gains were reduced as lower market
volume increased competitive pricing pressures.
-- Gains on securities decreased $2.4 million in the current quarter,
primarily due to decreased sales of marketable securities. This
income category also includes gains and losses in the valuation of
an interest rate cap that does not receive hedge accounting
treatment. This valuation resulted in a gain of $1.1 million during
the current quarter and a loss of $1.1 million during the comparable
prior quarter.
-- Other income resulted in a net loss of $.2 million during the
current quarter, but this was an improvement of $1.4 million on a
comparative basis. This change resulted primarily from Waypoint's
investment in certain Small Business Investment Corporation (SBIC)
partnerships, which contributed breakeven results for the current
period versus a net loss of $1.5 million for the comparable prior
period.
Noninterest expense was $22.4 million for the quarter ended June 30, 2004
versus $22.8 million for the quarter ended June 30, 2003 and $30.9 million for
the linked quarter ended March 31, 2004. The linked quarter included borrowing
prepayment expenses of $4.7 million and merger-related expenses of $3.0
million. Notable changes in the quarter ended June 30, 2004 relative to the
quarter ended June 30, 2003 included:
-- Salaries and benefits expense totaled $12.2 million, up $.4 million.
Increases from expansion in the retail banking franchise and
increased investment in sales and marketing personnel were partially
offset by attrition in non-essential operational positions in
advance of the Sovereign integration of Waypoint.
-- Marketing expenses increased $.2 million on increased product
advertising.
-- Expenses associated with the Sovereign acquisition totaled
$.2 million, with no corresponding expenses in the comparable prior
quarter.
-- Other expenses decreased $1.2 million, which included a $.7 million
decrease in loan servicing and other non-deferrable loan costs. The
remaining decrease of $.5 million was spread over other expense
categories, which are generally being managed downward in advance of
the integration with Sovereign.
Income tax expense for the current quarter totaled $4.3 million, resulting in
an effective tax rate of 30.3% on income before taxes of $14.3 million. For the
quarter ended June 30, 2003, income taxes were $5.0 million, resulting in an
effective tax rate of 30.4% on income before taxes of $16.4 million.
Discussion of Financial Condition
Waypoint's total assets were $5.443 billion at June 30, 2004, up from $5.371
billion at March 31, 2004 and up from $5.330 billion at December 31, 2003. The
increase from March 31, 2004 came primarily in the loan portfolio, which
increased $51.8 million.
Waypoint continued to experience strong growth in its commercial loan
portfolio, which was up $65.5 million, or 5.7%, during the current quarter.
Consumer and other loans also increased $11.8 million. Partially offsetting
these increases, residential mortgage loans decreased $25.4 million during the
current quarter as Waypoint sold substantially all of its conventional
residential mortgage production and prepayments on loans held in portfolio
continued at a rapid pace, though at reduced levels relative to those
experienced in 2003. Waypoint's loan composition is presented in Table 1 which
appears later in this report.
Waypoint's deposit portfolio totaled $2.800 billion at June 30, 2004, up from
$2.706 billion at March 31, 2004, and up from $2.721 billion at December 31,
2003. Most of Waypoint's deposit growth during the quarter resulted from a
$61.6 million increase in core deposits, up 4.6%. Core deposits include
savings, transaction and money market deposit accounts. Time deposits also
increased during the quarter, up $32.6 million. Time deposits represent a
higher cost funding source than core deposits, but the increase in balances was
generated at rates that were lower than the cost of alternative wholesale
funding. The composition of the deposit portfolio is presented in Table 2
which appears later in this report.
Waypoint had $396.1 million in stockholders' equity or 7.28% of total assets at
June 30, 2004, as compared to $417.9 million or 7.78% of total assets at March
31, 2004 and $402.2 million or 7.55% of total assets at December 31, 2003.
Notable changes in stockholders' equity for the current quarter included
increases of $10.0 million from net income and $.8 million from paid in capital
and tax benefits associated with stock option exercises. Offsetting these
increases were a decrease of $27.8 million in the market value of
available-for-sale securities (net of taxes) and dividends paid to shareholders
totaling $4.5 million.
Discussion of Asset Quality
Non-performing loans totaled $18.8 million or 0.75% of total loans as of June
30, 2004 as compared to $17.4 million or 0.71% of total loans as of March 31,
2004 and $18.2 million or 0.76% of total loans as of December 31, 2003.
Waypoint's allowance for loan losses was $29.6 million or 1.18% of total loans
as of June 30, 2004 as compared to $29.3 million or 1.19% of total loans as of
March 31, 2004 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 0.10% on an annualized basis for the quarter ended June 30, 2004 as
compared to 0.17% for the quarter ended March 31, 2004 and 0.19% for the
comparable prior quarter ended June 30, 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 final 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 approval of the merger may not be obtained, or adverse regulatory
conditions may be imposed in connection with government approval of the merger;
(5) the stockholders 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
June 30, December 31,
2004 2003
(Unaudited)
(All dollar amounts in thousands)
Assets
Cash and cash equivalents $98,305 $100,016
Marketable securities 2,509,427 2,489,770
FHLB Stock 103,422 97,982
Loans receivable, net 2,477,915 2,397,640
Loans held for sale, net 13,164 17,011
Loan servicing rights 2,703 2,528
Investment in real estate and other
joint ventures 21,357 20,773
Premises and equipment, net of
accumulated depreciation of
$48,018 and $45,261 48,841 49,789
Accrued interest receivable 23,640 23,597
Goodwill 18,332 17,881
Intangible assets 2,801 2,881
Deferred tax asset, net 19,910 9,059
Bank-owned life insurance 94,585 92,522
Other assets 8,454 8,453
Total assets $5,442,856 $5,329,902
Liabilities and Shareholders' Equity
Deposits $2,799,987 $2,720,915
Other borrowings 2,144,391 2,110,681
Escrow 3,524 2,568
Accrued interest payable 8,701 10,009
Postretirement benefit obligation 2,248 2,248
Income taxes payable 3,021 2,586
Trust preferred debentures 46,392 46,392
Other liabilities 38,462 32,270
Total liabilities 5,046,726 4,927,669
Preferred stock, 10,000,000 shares
authorized but unissued
Common stock, $.01 par value,
authorized 100,000,000 shares,
42,991,487 shares issued and
33,402,460 outstanding at June 30, 2004,
43,031,041 shares issued and 33,247,630
shares outstanding at December 31, 2003 428 425
Paid in capital 356,534 353,530
Retained earnings 247,888 241,668
Accumulated other comprehensive income (24,453) (8,502)
Employee stock ownership plan (13,451) (13,423)
Recognition and retention plans (4,206) (4,206)
Paid in capital from obligations under
Rabbi Trust, 544,948 shares at
June 30, 2004 and 495,826 shares
at December 31, 2003 9,253 8,457
Treasury stock shares held in Rabbi
Trust at cost, 544,948 shares at
June 30, 2004 and 563,162 shares at
December 31, 2003 (9,253) (9,240)
Treasury stock, 9,589,027 shares at
June 30, 2004 and 9,716,075 shares at
December 31, 2003 (166,610) (166,476)
Total stockholders' equity 396,130 402,233
Total liabilities and
stockholders' equity $5,442,856 $5,329,902
WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Income
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
(In thousands, except per share data)
(Unaudited)
Interest Income:
Loans $33,918 $37,198 $67,739 $74,592
Marketable securities
and interest-earning cash 24,718 27,352 49,907 55,767
Total interest income 58,636 64,550 117,646 130,359
Interest Expense:
Deposits and escrow 12,087 13,465 24,246 27,949
Borrowed funds 19,839 20,669 39,372 41,522
Total interest expense 31,926 34,134 63,618 69,471
Net interest income 26,710 30,416 54,028 60,888
Provision for loan losses 902 2,064 2,803 4,485
Net interest income
after provision for
loan losses 25,808 28,352 51,225 56,403
Noninterest Income:
Banking service and
account fees 5,444 3,924 9,798 7,313
Financial services fees 2,284 2,348 4,696 4,393
Residential mortgage
banking 1,057 1,297 1,571 2,600
Bank-owned life insurance 1,027 1,142 2,063 2,288
Gain on securities and
derivatives, net 1,283 3,717 6,689 5,590
Other (217) (1,601) (212) (1,928)
Total noninterest income 10,878 10,827 24,605 20,256
Noninterest Expense:
Salaries and benefits 12,250 11,803 25,454 23,235
Equipment expense 1,741 1,849 3,557 3,620
Occupancy expense 1,870 1,829 3,891 3,751
Marketing 1,379 1,215 2,309 2,306
Amortization of
intangible assets 189 192 389 312
Outside services 1,303 1,312 2,723 2,579
Communications and supplies 1,335 1,296 2,615 2,622
Borrowing prepayment - - 4,704 -
Acquisition 194 - 3,159 -
Other 2,138 3,276 4,529 6,229
Total noninterest
expense 22,399 22,772 53,330 44,654
Income before income taxes 14,287 16,407 22,500 32,005
Income tax expense 4,335 4,987 7,349 9,274
Net Income $9,952 $11,420 $15,151 $22,731
Basic earnings per share $0.31 $0.35 $0.48 $0.68
Diluted earnings per share $0.30 $0.34 $0.46 $0.66
Table 1 - Loans Receivable, Net
June 30, December 31,
2004 2003
Residential mortgage loans:
One-to-four family $305,586 $347,679
Construction 16,804 25,500
Total residential mortgage loans 322,390 373,179
Commercial loans:
Commercial real estate 744,347 651,139
Commercial business 364,194 343,129
Construction and site development 106,361 103,611
Total commercial loans 1,214,902 1,097,879
Consumer and other loans:
Manufactured housing 87,552 93,323
Home equity and second mortgage 552,116 561,937
Indirect automobile 195,420 174,416
Other 116,803 106,968
Total consumer and other loans 951,891 936,644
Loans receivable, gross 2,489,183 2,407,702
Plus:
Dealer reserves 22,740 23,584
Less:
Unearned premiums (1) 6
Net deferred loan origination fees 4,456 5,209
Allowance for loan losses 29,553 28,431
Loans receivable, net $2,477,915 $2,397,640
Table 2 - Deposits
June 30, December 31,
2004 2003
Savings $239,384 $252,072
Time 1,396,074 1,408,970
Transaction 831,903 560,520
Money market 332,626 499,353
Total deposits $2,799,987 $2,720,915
Table 3a - Average Balance Sheet, quarter
For the three months ended,
June 30, 2004
Average Interest (2) Average
Balance Yield/Cost
Assets: (Dollar amounts in thousands)
Interest-earning assets:
Loans, net (1) (5) $2,480,290 $34,122 5.48%
Marketable securities 2,443,617 25,097 4.13
Other interest-earning assets 71,898 160 0.98
Total interest-earning assets 4,995,805 59,379 4.75
Noninterest-earning assets 411,252
Total assets $5,407,057
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings deposits $244,070 131 0.21
Time deposits 1,354,165 9,247 2.89
Transaction and money market 1,124,042 2,703 0.97
Escrow 3,135 6 0.79
Borrowed funds 2,231,662 19,839 3.49
Total interest-bearing liabilities 4,957,074 31,926 2.56
Noninterest-bearing liabilities 45,902
Total liabilities 5,002,976
Stockholders' equity 404,081
Total liabilities and stockholders'
equity $5,407,057
Net interest income - tax-equivalent 27,453
Interest rate spread (3) 2.19%
Net interest-earning assets $38,731
Net interest margin (4) 2.22%
Ratio of interest-earning assets
to interest-bearing liabilities 1.01 x
Adjustment to reconcile tax-equivalent
net interest income
to net interest income (722)
Net interest income $26,731
For the three months ended,
June 30, 2003
Average Interest (2) Average
Balance Yield/Cost
Assets:
Interest-earning assets:
Loans, net (1) (5) $2,420,366 $37,383 6.17%
Marketable securities 2,720,763 27,794 4.17
Other interest-earning assets 66,404 151 1.05
Total interest-earning assets 5,207,533 65,328 5.06
Noninterest-earning assets 233,851
Total assets $5,441,384
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings deposits $262,658 314 0.48
Time deposits 1,392,343 11,686 3.37
Transaction and money market 836,419 1,456 0.70
Escrow 4,400 9 0.86
Borrowed funds 2,469,623 20,669 3.32
Total interest-bearing liabilities 4,965,443 34,134 2.74
Noninterest-bearing liabilities 53,867
Total liabilities 5,019,310
Stockholders' equity 422,074
Total liabilities and stockholders'
equity $5,441,384
Net interest income - tax-equivalent 31,194
Interest rate spread (3) 2.32%
Net interest-earning assets $242,090
Net interest margin (4) 2.44%
Ratio of interest-earning assets
to interest-bearing liabilities 1.05 x
Adjustment to reconcile tax-equivalent
net interest income to
net interest income (778)
Net interest income $30,416
(1) Includes income recognized on deferred loan fees and costs of
$151,000 for the three months ended June 30, 2004, and $726,000 for
the three months ended June 30, 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 3b - Average Balance Sheet, year to date
For the six months ended,
June 30, 2004
Average Interest (2) Average
Balance Yield/Cost
Assets: (Dollar amounts in thousands)
Interest-earning assets:
Loans, net (1) (5) $2,462,645 $68,133 5.51%
Marketable securities 2,481,736 50,756 4.12
Other interest-earning assets 55,594 237 0.91
Total interest-earning assets 4,999,975 119,126 4.77
Noninterest-earning assets 359,518
Total assets $5,359,493
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings deposits $246,166 258 0.21
Time deposits 1,372,175 19,252 2.81
Transaction and money market 1,087,852 4,725 0.87
Escrow 3,022 11 0.75
Borrowed funds 2,197,973 39,372 3.52
Total interest-bearing liabilities 4,907,188 63,618 2.58
Noninterest-bearing liabilities 47,392
Total liabilities 4,954,580
Stockholders' equity 404,913
Total liabilities and stockholders'
equity $5,359,493
Net interest income - tax-equivalent 55,508
Interest rate spread (3) 2.19%
Net interest-earning assets $92,787
Net interest margin (4) 2.25%
Ratio of interest-earning assets
to interest-bearing liabilities 1.02 x
Adjustment to reconcile tax-equivalent
net interest income
to net interest income (1,480)
Net interest income $54,028
For the six months ended,
June 30, 2003
Average Interest (2) Average
Balance Yield/Cost
Assets: (Dollar amounts in thousands)
Interest-earning assets:
Loans, net (1) (5) $2,391,181 $74,944 6.28%
Marketable securities 2,719,810 56,676 4.25
Other interest-earning assets 65,286 314 1.12
Total interest-earning assets 5,176,277 131,934 5.15
Noninterest-earning assets 220,886
Total assets $5,397,163
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings deposits $260,043 628 0.49
Time deposits 1,395,538 24,706 3.57
Transaction and money market 801,614 2,597 0.65
Escrow 4,135 18 0.88
Borrowed funds 2,453,724 41,522 3.37
Total interest-bearing liabilities 4,915,054 69,471 2.83
Noninterest-bearing liabilities 49,341
Total liabilities 4,964,395
Stockholders' equity 432,768
Total liabilities and stockholders'
equity $5,397,163
Net interest income - tax-equivalent 62,463
Interest rate spread (3) 2.32%
Net interest-earning assets $261,223
Net interest margin (4) 2.45%
Ratio of interest-earning assets
to interest-bearing liabilities 1.05 x
Adjustment to reconcile tax-equivalent
net interest income
to net interest income (1,575)
Net interest income $60,888
(1) Includes income recognized on deferred loan fees and costs of
$326,000 for the six months ended June 30, 2004, and $1,359,000 for
the six months ended June 30, 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 June 30,2004
Compared to
Three Months Ended June 30, 2003
Increase (Decrease)
Volume Rate Net
(Dollar amounts in thousands)
Interest-earning assets:
Loans, net $2,424 $(5,685) $(3,261)
Marketable securities (3,049) 352 (2,697)
Other interest-earning assets 18 (9) 9
Total interest-earning assets (607) (5,342) (5,949)
Interest-bearing liabilities:
Savings deposits (20) (163) (183)
Time deposits (311) (2,128) (2,439)
Transaction and money market deposits 599 648 1,247
Escrow (2) (1) (3)
Borrowed funds (3,645) 2,815 (830)
Total interest-bearing liabilities (3,379) 1,171 (2,208)
Change in net interest income $2,772 $(6,513) $(3,741)
Six Months Ended June 30, 2004
Compared to
Six Months Ended June 30, 2003
Increase (Decrease)
Volume Rate Net
(Dollar amounts in thousands)
Interest-earning assets:
Loans, net $2,199 $(9,010) $(6,811)
Marketable securities (4,887) (1,033) (5,920)
Other interest-earning assets (44) (33) (77)
Total interest-earning assets (2,732) (10,076) (12,808)
Interest-bearing liabilities:
Savings deposits (32) (338) (370)
Time deposits (410) (5,044) (5,454)
Transaction and money market deposits 1,092 1,036 2,128
Escrow (4) (3) (7)
Borrowed funds (4,502) 2,352 (2,150)
Total interest-bearing liabilities (3,856) (1,997) (5,853)
Change in net interest income $1,124 $(8,079) $(6,955)
Table 5 - Analysis of Allowance for Loan Losses
For the Three For the Six
Months Ended Months Ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
(All dollar amounts in thousands)
Balance at beginning of the period $29,295 $27,898 $28,431 $27,506
Provision for loan losses 902 2,064 2,803 4,485
Charge-offs:
Residential mortgage loans (131) (99) (189) (319)
Commercial loans (1) (136) (97) (1,113)
Consumer and other loans (802) (1,227) (1,898) (2,502)
Total charge-offs (934) (1,462) (2,184) (3,934)
Recoveries:
Residential mortgage loans 35 68 35 81
Commercial loans 56 29 119 292
Consumer and other loans 199 221 349 388
Total recoveries 290 318 503 761
Net charge-offs (644) (1,144) (1,681) (3,173)
Balance at end of period $29,553 $28,818 $29,553 $28,818
Annualized net charge-offs
to average loans 0.10% 0.19% 0.14% 0.27%
Allowance for loan losses
as a % of total loans 1.18% 1.20% 1.18% 1.20%
Table 6 - Non-performing Assets
As of As of
June 30, 2004 December 31, 2003
(Amounts in thousands)
Non-accrual residential mortgage loans $228 $443
Non-accrual commercial loans 7,107 8,173
Non-accrual other loans 528 90
Total non-accrual loans 7,863 8,706
Loans 90 days or more delinquent and
still accruing 10,938 9,498
Total non-performing loans 18,801 18,204
Total foreclosed other assets 340 313
Total foreclosed real estate 414 472
Total non-performing assets $19,555 $18,989
Total non-performing loans to
total loans 0.75% 0.76%
Allowance for loan losses to
non-performing loans 157.19% 156.18%
Total non-performing assets to
total assets 0.36% 0.36%
Table 7 - Allocation of the Allowance for Loan Losses
As of June 30, As of December 31,
2004 2003
(All dollar amounts are in thousands)
% of Total % of Total
Amount Reserves Amount Reserves
Residential mortgage loans $651 2.20% $1,099 3.86%
Commercial loans 23,656 80.05% 20,455 71.95%
Consumer and other loans 5,246 17.75% 6,877 24.19%
Total $29,553 100.00% $28,431 100.00%
DATASOURCE: Waypoint Financial Corp.
CONTACT: James H. Moss, Chief Financial Officer of Waypoint Financial,
+1-717-909-2247
Web site: http://www.waypointbank.com/