Cavalry Bancorp (CAVB) 8-K Cavalry Bancorp, Inc. Reports

Contact:

William S. Jones

Executive Vice President

and Chief Administrative Officer

615/849-2272

CAVALRY BANCORP, INC. REPORTS

SECOND QUARTER EARNINGS

Murfreesboro, Tennessee July 25, 2003—Cavalry Bancorp, Inc. (the “Company”) (Nasdaq NMS: CAVB) announced today second quarter and year-to-date consolidated earnings for its wholly-owned subsidiary Cavalry Banking (“the Bank”) and the Company.

Net income increased 8.95% from $1.2 million or $0.17 per share diluted for the quarter ended June 30, 2002 to $1.3 million or $0.19 per share diluted for the quarter ended June 30, 2003. Annualized return on average assets decreased from 1.14% for the quarter ended June 30, 2002 to 1.12% for the quarter ended June 30, 2003. Annualized return on average equity increased from 9.58% for the quarter ended June 30, 2002 to 9.91% for the quarter ended June 30, 2003.

Net income increased 9.10% from $2.2 million or $0.34 per share diluted for the six months ended June 30, 2002 to $2.4 million or $0.37 per share diluted for the six months ended June 30, 2003. Annualized return on average assets remained constant at 1.09% for the six months ended June 30, 2002 and 2003. Annualized return on average equity increased from 9.29% for the six months ended June 30, 2002 to 9.66% for the six months ended June 30, 2003.

The increases in net income were a result of increases in gains on sale of loans and other income. These increases were partially offset by declines in net interest income and increases in other expenses.

Total assets of the Company increased from $464.4 million at December 31, 2002 to $474.3 million at June 30, 2003. Net loans receivable increased from $300.5 million at December 31, 2002 to $321.4 million at June 30, 2003. Loans held-for-sale decreased from $17.8 million at December 31, 2002 to $11.6 million at June 30, 2003. Deposits increased from $407.8 million at December 31, 2002 to $415.3 million at June 30, 2003.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Certain of these statements contained in this release which are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including the uncertainties inherent in the process of auditing and making end-of-year adjustments to a corporation’s financial statements. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

[Selected financial data follows]

Cavalry Bancorp, Inc.

Consolidated Balance Sheets

(Unaudited)
(In thousands, except per share data)

	June 30			December 31
Assets	2003			2002
Cash and cash equivalents	$	51,528		$	73,162
Investment securities available-for-sale, at fair value		53,334			37,926
Loans held for sale,at estimated fair value		11,588			17,800
Loans receivable, net of allowances for loan losses
of $4,615 at June 30, 2003 and $4,657 at December 31, 2002		321,361			300,524
Accrued interest receivable		1,522			1,577
Office properties and equipment, net		18,922			18,108
Required investments in stock of the Federal Home Loan Bank
and Federal Reserve Bank stock at cost		2,929			2,874
Foreclosed assets, net		197			203
Bank owned life insurance		8,114			7,921
Goodwill		1,772			1,772
Other assets		3,034			2,498
Total assets		474,301			464,365
Liabilities
Liabilities:
Deposits:
Non-interest-bearing	$	68,744		$	57,343
Interest-bearing		346,585			350,409
		415,329			407,752
Advances from Federal Home Loan Bank of Cincinnati		2,916			2,944
Accrued expenses and other liabilities		3,848			3,923
Total liabilities		422,093			414,619
Shareholders' Equity
Preferred Stock, no par value
Authorized - 250,000 shares; none issued or outstanding at
June 30, 2003 and December 31, 2002		-			-
Common Stock, no par value
Authorized- 49,750,000 shares; issued and outstanding
6,820,179 and 6,830,679 at June 30, 2003, and
December 31, 2002		9,526			9,138
Retained earnings		45,309			43,543
Unallocated ESOP shares		(2,717	)		(3,057	)
Accumulated other comprehensive income, net of tax		90			122
Total Shareholders' Equity		52,208			49,746
Total Liabilities and Shareholders' Equity		474,301			464,365

Cavalry Bancorp,Inc

Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

	Three Months Ended				Six Months Ended
	June 30				June 30
		2003		2002		2003		2002
Interest and dividend income:
Loans	$	5,045	$	5,304	$	10,069	$	10,530
Investment securities		306		312		589		705
Other		101		269		227		569
Total interest and dividend income		5,452		5,885		10,885		11,804
Interest expense - deposits		1,399		1,770		2,918		3,694
Interest expense - borrowings		25		5		49		11
Total interest expense		1,424		1,775		2,967		3,705
Net interest income		4,028		4,110		7,918		8,099
Provision for loan losses		45		54		101		163
Net interest income after provision for loan losses		3,983		4,056		7,817		7,936
Non-interest income:
Servicing income		60		55		131		124
Gain on sale of loans, net		1,702		581		3,024		1,150
Gain on sale of investment securities, net		-		-		11		-
Deposit servicing fees and charges		1,192		921		2,247		1,800
Trust service fees		248		296		494		552
Insurance commissions, fees, and premiums		528		555		1,144		1,054
Other operating income		285		301		583		500
Total non-interest income		4,015		2,709		7,634		5,180
Non-interest expenses:
Salaries and employee benefits		3,877		3,018		7,536		5,810
Occupancy expense		344		302		659		572
Supplies, communications, and other office expenses		252		263		505		522
Federal insurance premiums		17		16		32		32
Advertising expense		122		176		223		263
Equipment and service bureau expense		736		707		1,431		1,331
Other operating expense		561		434		1,081		890
Total non-interest expense		5,909		4,916		11,467		9,420
Income before income tax expense		2,089		1,849		3,984		3,696
Income tax expense		811		676		1,538		1,454
Net income	$	1,278	$	1,173	$	2,446	$	2,242
Basic Earnings Per Share	$	0.20	$	0.18	$	0.38	$	0.35
Diluted Earnings Per Share	$	0.19	$	0.17	$	0.37	$	0.34
Weighted average shares outstanding - Basic		6,392,100		6,436,781		6,379,006		6,465,859
Weighted average shares outstanding - Diluted		6,694,136		6,756,723		6,640,591		6,626,098

Cavalry Bancorp, Inc.

Consolidated Financial

Highlights

(unaudited)

(dollars in thousands)

	June 30		December 31
	2003		2002		% Change
FINANCIAL CONDITION DATA:
Total assets	$	474,301	$	464,365		2.14	%
Loans receivable, net		321,361		300,524		6.93	%
Loans held-for-sale		11,588		17,800		-34.90	%
Investment securities available-for-sale		53,334		37,926		40.63	%
Cash and cash equivalents		51,528		73,162		-29.57	%
Deposits		415,329		407,752		1.86	%
Borrowings		2,916		2,944		-0.95	%
Shareholders' Equity		52,208		49,746		4.95	%

	For the quarter ending			For the six months ending
	June 30			June 30
	2003	2002	% Change	2003	2002	% Change
OPERATING DATA:
Interest and dividend income	$ 5,452	$ 5,885	-7.36%	$ 10,885	$ 11,804	-7.79%
Interest expense	1,424	1,775	-19.77%	2,967	3,705	-19.92%
Net interest income	4,028	4,110	-2.00%	7,918	8,099	-2.23%
Provision for loan losses	45	54	-16.67%	101	163	-38.04%
Net interest income
after provision for loan losses	3,983	4,056	-1.80%	7,817	7,936	-1.50%
Gains from sale of loans	1,702	581	192.94%	3,024	1,150	162.96%
Other income	2,313	2,128	8.69%	4,610	4,030	14.39%
Other expenses	5,909	4,916	20.20%	11,467	9,420	21.73%
Income before income taxes	2,089	1,849	12.98%	3,984	3,696	7.79%
Income tax expense	811	676	19.97%	1,538	1,454	5.78%
Net income	$ 1,278	$ 1,173	8.95%	$ 2,446	$ 2,242	9.10%

	For The Quarter Ending		For The Six Months Ending
	June 30,		June 30,
	2003	2002	2003	2002
KEY FINANCIAL RATIOS
Performance Ratios:
Return on average assets	1.12%	1.14%	1.09%	1.09%
Return on average shareholders' equity	9.91%	9.58%	9.66%	9.29%
Interest rate spread	3.74%	4.25%	3.73%	4.08%
Net interest margin	3.99%	4.53%	3.99%	4.44%
Average interest-earning assets
to average interest-bearing
liabilities	118.00%	113.79%	116.96%	118.75%
Non-interest expense as a
percent of average total assets	5.20%	4.78%	5.12%	4.58%
Efficiency ratio	73.47%	72.09%	73.73%	70.94%
Asset Quality Ratios:
Nonaccrual and 90 days or more
past due loans as a percent
of total loans, net	0.27%	0.23%
Nonperforming assets as a
percent of total assets	0.23%	0.23%
Allowance for loan losses as a
percent of total loans receivable	1.44%	1.55%
Net charge-offs to average
outstanding loans	0.02%	0.03%	0.04%	0.04%