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GREATER ATLANTIC FINANCIAL CORP.
10700 Parkridge Boulevard - Suite P50 - Reston, Virginia 20191 - (703) 391-1300
- Fax: (703) 391-1506
NEWS RELEASE
Date: July 31, 2003
Contact: David E. Ritter
(703) 390-0344
GREATER ATLANTIC FINANCIAL RELEASES
THIRD QUARTER RESULTS
Reston, Virginia - July 31, 2003 - Charles W. Calomiris, Chairman of the Board
of Greater Atlantic Financial Corp. (NASDAQ: GAFC), the holding company for
Greater Atlantic Bank, announced today that the Company had net earnings for the
three months ended June 30, 2003, of $298,000 or $.09 per diluted share compared
to net earnings of $169,000 or $.06 per diluted share earned for the three
months ended June 30, 2002. For the nine months ended June 30, 2003, the Company
had net earnings of $1.2 million or $.34 per diluted share, compared to net
earnings of $496,000 or $.16 per share for the comparable period one year ago.
In commenting on the results, Carroll E. Amos, President and Chief Executive
Officer, said, "aided by an increase in loan originations and sales at the
Bank's mortgage banking subsidiary, our earnings increased by 76% and 145%,
respectively, from those achieved for the comparable three- and nine- month
periods one year ago. In commenting further, Mr. Amos stated that, "we were also
able to get a good start on the September 2003 quarter as the Bank's mortgage
banking subsidiary originated approximately $89.0 million in loans in the month
of June for sale in July."
Mr. Amos noted that earnings were negatively impacted during the quarter as
loans receivable, net, decreased by $4.2 million from the level held at the
quarter ended March 31, 2003 as a result of repayments and prepayments of $11.1
million in the bank's single-family loan portfolio, offset in part by increases
of $3.7 million in the commercial lending portfolio and $3.2 million in the
consumer loan portfolio. Continuing, Mr. Amos said that, "in addition to the
overall reduction in loans receivable, net, the repayment of the higher yielding
single family loans compressed the bank's net interest margin and that
compression was not offset by the higher margins on the commercial and consumer
loan originations."
07/31/03 Greater Atlantic Financial Corp. Page 1 of 7
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Net interest income during the quarter ended June 30, 2003, amounted to $1.9
million, a decrease of $37,000 from the comparable period one year ago, as the
$23.3 million increase in the Bank's average interest earning assets was offset
by a 11 basis point decrease in net interest margin. The decrease was from 1.68%
for the quarter ended June 30, 2002, to 1.57% for the current quarter.
Contributing to the decline in the net interest margin was the prepayment of
higher yielding interest earning assets during the quarter.
For the nine months ended June 30, 2003, net interest income amounted to $6.1
million, an increase of $260,000 or 4 per cent over the comparable 2002 period.
The increase during the nine months ended June 30, 2003 resulted primarily from
a $79.1 million increase in the Bank's average interest earning assets offset in
part by a 24 basis point decrease in net interest margin from 1.91% for the nine
months ended June 30, 2002 to 1.67% for the nine months ended June 30, 2003. The
prepayment of higher yielding interest-earning assets, was the primary reason
for the decline in net interest margin as the yield on interest earning assets
declined by 81 basis points from 5.17% for the nine months ended June 30, 2002
to 4.36% for the nine months ended June 30, 2003. The decline in the yield on
interest earning assets was offset in part by a 63 basis point decrease in the
cost of interest-bearing liabilities.
Noninterest income for the three months ended June 30, 2003, increased 97
percent or $2.2 million from the three months ended June 30, 2002. The increase
in the period was primarily attributable to a $2.1 million increase in gain on
sale of loans by Greater Atlantic Mortgage Corporation coupled with an increase
of $99,000 in service fees on loans and deposits.
For the nine months ended June 30, 2003, noninterest income amounted to $12.5
million, an increase of $5.9 million or 89 percent when compared to the nine
months ended June 30, 2002. That increase is primarily attributable to an
increase in gain on sale of loans of $5.6 million, as loan sales increased over
the comparable period one year ago, coupled with an increase of $414,000 in
service fees on loans and deposits, offset in part by a $115,000 decrease in
gain on sales of investment securities.
Noninterest expense increased $2.1 million or 53 percent to $6.0 million for the
three months ended June 30, 2003 from the comparable period one year ago. The
increase was primarily attributable to a $1.7 million increase in noninterest
expense at the Bank's mortgage banking subsidiary for the three months ended
June 30, 2003 from the comparable period one year ago as a result of increased
loan origination and sales activity. While the Bank's increase of $374,000 in
noninterest expense was distributed over various noninterest expense categories,
the increase at the mortgage company level was primarily in compensation, other
operating expense, professional services and advertising of $1.3 million,
$110,000, $110,000 and $108,000, respectively.
Noninterest expense for the nine months ended June 30, 2003, amounted to $16.6
million, an increase of $5.2 million or 45% from the $11.4 million incurred in
the nine months ended June 30, 2002. The increase was primarily attributable to
a $4.4 million increase in expenses at the Bank's mortgage banking subsidiary as
a result of increased lending activity. The increase in the Bank's noninterest
expense of $803,000 was a result of the Bank's continued growth. While the
Bank's increase in noninterest expense was distributed over various categories,
the increase
07/31/03 Greater Atlantic Financial Corp. Page 2 of 7
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in noninterest expense at the Mortgage Corporation level was primarily in
compensation, other operating expense, professional services, and advertising of
$3.6 million, $289,000, $195,000 and $134,000, respectively.
Non-performing assets were $1.8 million at June 30, 2003, or .35 per cent of
total assets, compared to $380,000 or .08 percent of total assets at June 30,
2002. The increase in non-performing assets from the year ago period was due
primarily to the non-performing status of a previously disclosed commercial
business loan with a current balance of $926,000. The Bank is in the process of
liquidating that loan from the cash flow of the collateral securing the loan.
The Bank decreased its provision for loan losses by $44,000 in the three-month
period ended June 30, 2003 from the provision made for the three-month period
ended June 30, 2002, due primarily to a reduction in the required provision for
that loan during the current quarter. The $240,000 increase in the provision in
the nine months ended June 30, 2003 over the comparable period one year ago was
primarily due to the additional provision that was required for that loan in the
quarter ended December 31, 2002.
At June 30, 2003, Greater Atlantic Financial Corp. had total assets of $527.8
million, an increase of $29.9 million or 6 percent from the $497.9 million
recorded at the close of the comparable period one year ago. Loans receivable,
net, at June 30, 2003, amounted to $251.5 million, a $764,000 increase from the
$250.7 million held at June 30, 2002. Deposits amounted to $284.0 million at
June 30, 2003 an increase of $18.8 million from the $265.2 million held one year
ago. Stockholders' equity at June 30, 2003 amounted to $21.6 million or $7.18
per share. The company's net earnings of $1.2 million for the nine months ended
June 30, 2003, was the primary contributor to the $.40 per share increase in
book value per share from September 30, 2002, the Company's fiscal year end.
Other comprehensive income increased by $12,000 during the same period and had
no impact on the increased book value per share calculation as of June 30, 2003.
Greater Atlantic Financial Corp. conducts its business operations through its
wholly-owned subsidiary, Greater Atlantic Bank and the Bank's independent
wholly-owned subsidiary, Greater Atlantic Mortgage Corporation. The Bank offers
traditional banking services to customers through nine branches located in
Washington, D.C., Rockville and Pasadena, Maryland, and Front Royal, New Market,
Reston, South Riding, Sterling and Winchester, Virginia.
07/31/03 Greater Atlantic Financial Corp. Page 3 of 7
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PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
THIS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
FEDERAL SECURITIES LAWS. THESE STATEMENTS ARE NOT HISTORICAL FACTS, BUT
STATEMENTS BASED ON THE COMPANY'S CURRENT EXPECTATIONS REGARDING ITS BUSINESS
STRATEGIES AND THEIR INTENDED RESULTS AND ITS FUTURE PERFORMANCE.
FORWARD-LOOKING STATEMENTS ARE PRECEDED BY TERMS SUCH AS "EXPECTS," "BELIEVES,"
"ANTICIPATES," "INTENDS" AND SIMILAR EXPRESSIONS.
FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE. NUMEROUS
RISKS AND UNCERTAINTIES COULD CAUSE OR CONTRIBUTE TO THE COMPANY'S ACTUAL
RESULTS, PERFORMANCE AND ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM THOSE
EXPRESSED OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MAY CAUSE
OR CONTRIBUTE TO THESE DIFFERENCES INCLUDE, WITHOUT LIMITATION, GENERAL ECONOMIC
CONDITIONS, INCLUDING CHANGES IN MARKET INTEREST RATES AND CHANGES IN MONETARY
AND FISCAL POLICIES OF THE FEDERAL GOVERNMENT; LEGISLATIVE AND REGULATORY
CHANGES; THE COMPANY'S ABILITY TO REMEDY ANY COMPUTER MALFUNCTIONS THAT MAY
RESULT FROM THE ADVENT OF THE YEAR 2000; AND OTHER FACTORS DISCLOSED
PERIODICALLY IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION.
BECAUSE OF THE RISKS AND UNCERTAINTIES INHERENT IN FORWARD-LOOKING STATEMENTS,
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THEM, WHETHER INCLUDED IN
THIS REPORT OR MADE ELSEWHERE FROM TIME TO TIME BY THE COMPANY OR ON ITS BEHALF.
THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS.
07/31/03 Greater Atlantic Financial Corp. Page 4 of 7
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GREATER ATLANTIC FINANCIAL CORP.
THIRD QUARTER RESULTS
(NASDAQ:GAFC)
(DOLLARS IN THOUSANDS EXCEPT EARNINGS PER SHARE)
At or for the At or for the
Three Months Ended Nine Months Ended
June 30, June 30,
---------------------- ---------------------
CONSOLIDATED STATEMENT OPERATIONS 2003 2002 2003 2002
---------- ---------- ---------- ----------
INTEREST INCOME
Loans $ 3,500 $ 3,519 $ 10,900 $ 10,209
Investments 1,571 2,013 5,117 5,706
---------- ---------- --------- ---------
TOTAL INTEREST INCOME 5,071 5,532 16,017 15,915
INTEREST EXPENSE
Deposits 1,557 1,975 5,140 6,463
Borrowed money 1,612 1,618 4,753 3,588
---------- --------- --------- ---------
TOTAL INTEREST EXPENSE 3,169 3,593 9,893 10,051
---------- --------- --------- ---------
NET INTEREST INCOME 1,902 1,939 6,124 5,864
PROVISION FOR LOAN LOSSES 66 110 779 539
---------- ---------- --------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,836 1,829 5,345 5,325
NONINTEREST INCOME
Gain on sale of loans 4,067 1,939 11,327 5,753
Fees and service charges 333 234 1,118 704
Gain on sale of investment securities 51 81 35 150
Loss on sale of real estate owned (9) - (9) -
Other operating income (1) 5 13 5
---------- ---------- --------- ---------
TOTAL NONINTEREST INCOME 4,441 2,259 12,484 6,612
NONINTEREST EXPENSE
Compensation and employee benefits 3,264 1,843 9,405 5,575
Occupancy 494 436 1,467 1,318
Professional services 370 211 846 526
Advertising 405 250 786 637
Deposit insurance premium 12 11 35 32
Furniture, fixtures and equipment 282 210 819 621
Data processing 342 304 967 846
Provision for loss on real estate owned - - - -
Other real estate owned expenses 2 - 5 -
Other operating 808 654 2,285 1,874
---------- ---------- --------- ---------
TOTAL NONINTEREST EXPENSE 5,979 3,919 16,615 11,429
---------- ---------- ---------- ---------
Income (loss) before income tax provision 298 169 1,214 508
Income tax provision - - - 12
---------- ---------- --------- ---------
NET EARNINGS $ 298 $ 169 $ 1,214 $ 496
========== ========== ========= =========
07/31/03 Greater Atlantic Financial Corp. Page 6 of 7
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Greater Atlantic Financial Corp.
Third Quarter Results
(NASDAQ:GAFC)
(Dollars in Thousands Except Earnings Per Share)
At or for the At or for the
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------- ---------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Per Share Data:
Net income (loss)
Basic $ 0.10 $ 0.06 $ 0.40 $ 0.16
Diluted 0.09 0.06 0.34 0.16
Book value $ 7.18 $ 6.80 $ 7.18 $ 6.80
Weighted average shares outstanding
Basic 3,012,434 3,012,434 3,012,434 3,009,742
Diluted 4,413,922 3,036,593 4,412,702 3,031,190
Average Financial Condition Data:
Total assets $ 501,387 $ 478,225 $ 505,828 $ 425,986
Investment securities 165,472 174,006 162,769 150,177
Mortgage-backed securities 41,377 39,388 44,858 34,644
Total loans receivable, net 277,548 247,667 281,636 225,359
Total deposits 270,045 252,687 275,174 239,208
Total stockholders' equity 20,963 21,668 20,769 21,486
Selected Financial Ratios(1)
Return on average assets 0.24% 0.14% 0.32% 0.16%
Return on average equity 5.71% 3.12% 7.79% 3.08%
Yield on earning assets 4.19% 4.80% 4.36% 5.17%
Cost of funds 2.74% 3.32% 2.84% 3.47%
Net interest rate spread 1.45% 1.48% 1.52% 1.70%
Net interest rate margin 1.57% 1.68% 1.67% 1.91%
07/31/03 Greater Atlantic Financial Corp. Page 6 of 7
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Greater Atlantic Financial Corp
Third Quarter Results
(NASDAQ:GAFC)
(Dollars in Thousands Except Earnings Per Share)
At or for the
Nine Months Ended
June 30,
-----------------------
2003 2002
---------- ----------
Financial Condition Data:
Total assets $ 527,799 $ 497,949
Total loans receivable, net 251,450 250,686
Mortgage-loans held for sale 22,121 8,137
Investments 157,929 171,610
Mortgage-backed securities 72,168 48,561
Total deposits 283,973 265,197
FHLB advances 124,150 115,200
Other borrowings 84,396 84,667
Convertible preferred securities 9,346 9,346
Total stockholders' equity 21,630 20,472
Asset Quality Data:
Non-performing assets to total assets 0.35% 0.08%
Non-performing loans to total loans 0.63% 0.15%
Net charge-offs to average total loans 0.26% 0.01%
Allowance for loan losses to:
Total loans 0.62% 0.52%
Non-performing loans 98.15% 351.32%
Non-performing loans $ 1,782 $ 380
Non-performing assets $ 1,836 $ 380
Allowance for loan losses $ 1,749 $ 1,335
Capital Ratios of the Bank:
Leverage ratio 5.97% 5.84%
Tier 1 risk-based capital ratio 12.58% 13.03%
Total risk-based capital ratio 13.23% 13.62%
07/31/03 Greater Atlantic Financial Corp. Page 7 of 7