NEWS RELEASE
CONTACT: R. Jerry Giles, Chief Financial Officer
TELEPHONE #: 540-886-0796
DATE: July 27, 2005
FOR IMMEDIATE RELEASE
COMMUNITY FINANCIAL REPORTS RECORD FIRST QUARTER EARNINGS
STAUNTON, VIRGINIA
Community Financial Corporation (NASDAQ: CFFC), a holding company whose sole subsidiary is Community Bank, Staunton, Virginia, today reported earnings for the first quarter of its fiscal year ending March 31, 2006. For the quarter ended June 30, 2005, Community Financial reported earnings of $1,119,000 or $0.51 per diluted share, compared to $892,000 or $0.41 per diluted share for the same period last year, a 24% increase in diluted earnings per share. The increase in net income for the current quarter compared to the June 30, 2005 quarter was due to an increase in net interest income of approximately $385,000. The return on equity for the June 30, 2005 quarter was 14.02% compared to 12.21% for the June 30, 2004 quarter. The return on assets was 1.11% compared to 1.03% for the same period last fiscal year.
The increase in net interest income is attributed primarily to an increase of $55.0 million in average loans receivable for the quarter ended June 30, 2005 compared to June 30, 2004. Total interest income increased during the June 30, 2005 quarter compared to the June 30, 2004 quarter as a result of the increase in the volume of interest earning assets and the increase in rates earned on these assets. Total interest expense increased by $858,000 for the 2005 period compared to the same period in 2004 as a result of the increase in the interest rates paid on interest-bearing liabilities and the increase in the volume of interest-bearing liabilities. Average deposits increased from $262.6 million for the June 30, 2004 quarter to $279.0 million for the current quarter. Average borrowings increased to $91.1 million for the June 30, 2005 period from $50.4 million for the June 30, 2004 quarter. Our interest rate spread decreased by 21 basis points to 3.62% for the quarter ended June 30, 2005 compared to 3.83% for the same period in 2004.
Non-interest income increased $117,000 to $794,000 for the quarter ended June 30, 2005 from $677,000 for the June 30, 2004 quarter. The increase in non-interest income for the current quarter compared to the June 30, 2004 period was due primarily to an increase in loan fees and service charges. Non-interest expenses increased $175,000 to $2.6 million for the June 30, 2005 quarter from $2.4 million for the June 30, 2004 quarter. The increase in non-interest expenses was due to increased compensation expense related primarily to increased loan personnel.
Loans outstanding, net of allowances, at June 30, 2005 totaled $341.5 million, an increase of $4.7 million from $336.8 million at March 31, 2005. Deposits increased to $283.4 million at June 30, 2005 from $275.4 million at March 31, 2005, an $8.0 million increase. Borrowings decreased $4.3 million from $91.7 million at March 31, 2005 to $87.4 million at June 30, 2005. At June 30, 2005, non-performing loans totaled approximately $569,000 or ..14% of assets compared to $548,000 or .14% of assets at March 31, 2005. Our allowance for loan losses to total loans at June 30, 2005 was .91% compared to .89% at March 31, 2005. At June 30, 2005, our allowance for loan losses to non-performing loans was 552.1%.
After reviewing the Company's financial position and operating results the Board of Directors approved and declared an $0.11 per share dividend payable August 24, 2005, to stockholders of record as of August 10, 2005. Stockholder's equity totaled $32.6 million at June 30, 2005, which represents a book value of $15.58 per share.
At June 30, 2005, Community Bank exceeded all regulatory capital requirements and continued to be classified as a "well capitalized" institution. Community Bank, the wholly owned subsidiary of Community Financial, is headquartered in Staunton, Virginia and has offices in Waynesboro, Stuarts Draft, Raphine, Verona and Virginia Beach. Community Financial Corporation is traded on the Nasdaq National Market, under the symbol CFFC.
Except for the historical information in this press release, the matters discussed may be deemed to be forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties, including, but not limited to, changes in economic conditions in the Company's market areas, changes in the financial condition or business prospects of the Company's borrowers, changes in policies by regulatory agencies, the impact of competitive loan products, loan demand risks, fluctuations in interest rates and the relationship between long and short term rates, operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. Actual strategies and results in future periods may differ materially from those currently expected. These forward-looking statements represent the company's judgment as of the date of this release . The Company disclaims, however, any intent or obligation to update these forward-looking statements.
