Exhibit 99.1
Press Release
Westborough Financial Services, Inc. Reports Earnings for Three and Six-
Month Periods Ended March 31, 2003
WESTBOROUGH, Mass.--(BUSINESS WIRE)-April 29, 2003--Westborough Financial
Services, Inc., (the "Company") (OTCBB: WFSM.OB) the holding company for
The Westborough Bank (the "Bank"), reported earnings per share (dilutive)
for the quarter ended March 31, 2003 of $0.12 on net income of $179
thousand. For the current quarter ended March 31, 2003, net income
decreased by $199 thousand, or 52.7%, as compared to $378 thousand, or
$0.24 per share (dilutive), for the previous quarter ended March 31, 2002.
The decreased net income was primarily due to a decline in net interest
income and an increase in operating expenses, offset, to a lesser extent,
by an increase in other income. The rate of interest earned on the
Company's short-term investments, investment securities and loans declined
and reflects the general decline in interest rates and the desire of loan
customers to refinance or renegotiate their loans to lower rates. The level
of operating expenses increased by 4.3%, or $79 thousand and mainly
reflects an increase in occupancy and equipment expenses associated with
building and equipment depreciation for the Company's operations center, as
well as an increase in snow removal and security-related expenses. Salary
and employee benefits expenses increased by 2.6%, or $25 thousand, due
primarily to increases in employee retirement expenses associated with the
Company's defined benefit plan and also due to increases in health
insurance expenses. The Company's return on average assets was .29% for the
three-month period ended March 31, 2003 as compared to .66% for the three-
month period ended March 31, 2002. For the current quarter ended March 31,
2003, the Company's net interest margin, expressed as a percentage of
average interest-earning assets, declined by .55%, to 3.54%, from 4.09%,
for the comparative quarter ended March 31, 2002. While rates of interest
paid on interest-bearing liabilities for the current quarter ended March
31, 2003 declined by .86%, to 2.02%, from 2.88% for the comparative quarter
ended March 31, 2002, the rates of interest earned on interest-earning
assets declined by 1.26%, to 5.27%, for the current quarter ended March 31,
2003 as compared to 6.53% for the quarter ended March 31, 2002.
The Company reported earning per share (dilutive) for the current
six-month period ended March 31, 2003 of $0.30 on net income of $457
thousand. For the six-month period ended March 31, 2003, net income
declined by $252 thousand, or 35.5%, as compared to $709 thousand, or $0.45
per share (dilutive) for the previous six-month period ended March 31,
2002. The Company's return on average assets was .37% for the six-month
period ended March 31, 2003 as compared to .62% for the six-month period
ended March 31, 2002. The decrease in net income was due to a combination
of factors, primarily due to an increase in operating expenses of $186
thousand and a decline in net interest income of $67 thousand. The level of
operating expenses mainly reflects an increase in occupancy and equipment
associated with building and equipment depreciation for the Company's
operations center, as well as an increase in snow removal and security-
related expenses. Salary and employee benefits expenses increased by 3.1%,
or $58 thousand, due primarily to increases in employee retirement expenses
associated with the Company's defined benefit plan and increases in health
insurance expenses. While rates of interest paid on interest-bearing
liabilities for the six-months ended March 31, 2003 declined by .92%, to
2.18%, from 3.10% for the comparative period ended March 31, 2002, the
rates of interest earned on interest-earning assets declined by 1.08%, to
5.47%, from 6.55%, for the current six-month period ended March 31, 2003 as
compared to the similar period ended March 31, 2002. The rate of interest
earned on the Company's short-term investments, investment securities and
loans declined and reflects the general decline in interest rates and the
desire of loan customers to refinance or renegotiate their loans to lower
rates.
As a result of continued growth in deposits, the Company's total
assets increased by $11.2 million, or 4.7%, to $252.5 million at March 31,
2003 from $241.3 million at September 30, 2002. Securities available for
sale increased by $11.6 million or 15.3%, to $87.2 million, at March 31,
2003 as compared to $75.6 million at September 30, 2002. Loans declined to
$132.1 million at March 31, 2003 from $132.9 million at September 30, 2002.
As a result of the Bank's construction of a new branch office in the town
of Shrewsbury and renovations made to our existing loan servicing area,
building premises and equipment increased by $.9 million to $6.4 million at
March 31, 2003.
Total deposits increased by $10.6 million, or 5.3%, to $212.7 million
at March 31, 2003 from $202.1 million at September 30, 2002. Most of this
increase was attributable to increases in variable-rate tiered accounts and
regular savings accounts. In the current low interest rate environment,
deposit customers preferred to place their deposits in accounts with higher
liquidity. Non-performing loans increased to $659 thousand at March 31,
2003 as compared to $140 thousand at September 30, 2002 primarily as a
result of the addition of one commercial loan delinquency.
Total stockholders' equity increased by $359 thousand, to $28.3
million at March 31, 2003 from $28.0 million at September 30, 2002
primarily as a result of current period net income.
Joseph F. MacDonough, President and CEO of the Company, commenting on
the Company's performance remarked, "Efforts to improve the earnings of the
Company continue and management remains committed to increasing the balance
of the loan portfolio and believes improved earnings will result from the
addition of high-quality loans, funded by cash flows from deposits and
securities. In addition, the Company continues to focus on operating
expense control and the need to increase fee income. He further stated
that, "growth in low-cost deposits has strengthened the Company's balance
sheet and we look forward to relocating our Shrewsbury branch office, which
will enhance our ability to provide services and products to this important
market."
The Bank was founded in 1869 as a Massachusetts chartered mutual
savings bank and was reorganized into a two-tiered mutual holding company
structure on February 15, 2000. The Bank is a community and customer-
oriented, full-service financial institution offering traditional deposit
products, residential and commercial real estate mortgage loans, electronic
and Internet-based services as well as consumer and commercial loans. The
Bank operates five full service banking offices located in the towns of
Westborough, Northborough and Shrewsbury, Massachusetts. The Bank also
operates a non-public, self-contained office at the Willows, a retirement
community located in Westborough. Together, these offices serve the Bank's
primary market area consisting of Westborough, Northborough, Shrewsbury,
Grafton, Southborough and Hopkinton, Massachusetts.
Statements contained in this news release, which are not historical
facts, are forward-looking statements that are defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
are subject to risk 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 the
documents filed by the Company with the Securities and Exchange Commission.
The Company and the Bank do not undertake to update any forward-looking
statement, whether written or oral, that may be made from time to time by
or on behalf of the Company or the Bank.
For further information contact:
John L. Casagrande
Senior Vice President and Treasurer
Westborough Financial Services, Inc.
100 East Main Street
Westborough, MA 01581
508-366-4111
Westborough Financial Services, Inc. and Subsidiary
Selected Consolidated Financial and Other Data
at
--------------------------
March 31, September 30,
2003 2002
--------------------------
(unaudited)
<s> <c> <c>
Consolidated Balance Sheet Data ($ in thousands)
Total assets $252,506 $241,273
Loans, net 132,055 132,880
Investment securities 88,489 76,888
Total deposits 212,686 202,063
Federal Home Loan Bank advances 9,500 9,500
Stockholders' equity 28,348 27,989
Allowance for loan losses 928 926
Non-accrual loans 659 140
Non-performing assets 659 140
For Three Months Ended For Six Months ended
---------------------- ----------------------
Consolidated Statement of Operations ($ in thousands): 03/31/03 03/31/02 03/31/03 03/31/02
--------- --------- --------- ---------
(unaudited) (unaudited)
<s> <c> <c> <c> <c>
Total interest and dividend income $3,059 $3,501 $6,286 $7,018
Total interest expense 1,004 1,311 2,146 2,811
------ ------ ------ ------
Net Interest income 2,055 2,190 4,140 4,207
Provision for loan losses 0 0 0 8
------ ------ ------ ------
Net interest income, after provision for loan losses 2,055 2,190 4,140 4,199
------ ------ ------ ------
Customer service fees 114 108 279 264
Gain (loss) on sales of securities available for sale, net (7) (26) (3) 4
Gain on sales of mortgages 5 5 5 5
Miscellaneous 43 44 85 89
------ ------ ------ ------
Total other income 155 131 366 362
------ ------ ------ ------
Total operating expenses 1,913 1,834 3,813 3,627
------ ------ ------ ------
Income before provision for income taxes 297 487 693 934
Provision for income taxes 118 109 236 225
------ ------ ------ ------
Net Income $ 179 $ 378 $ 457 $ 709
====== ====== ====== ======
Basic number of weighted average shares outstanding 1,528,424 1,541,970 1,527,951 1,542,544
Dilutive number of weighted average shares outstanding 1,549,370 1,560,287 1,548,519 1,559,615
Basic earnings per share $0.12 $0.25 $0.30 $0.46
Dilutive earnings per share $0.12 $0.24 $0.30 $0.45
Dividends declared per share $0.05 $0.05 $0.10 $0.10
For Three Months Ended For Six Months ended
---------------------- --------------------
Performance Ratios (annualized where applicable) 03/31/03 03/31/02 03/31/03 03/31/02
-------- -------- -------- --------
<s> <c> <c> <c> <c>
Return on average assets 0.29% 0.66% 0.37% 0.62%
Return on average stockholders' equity 2.52% 5.54% 3.21% 5.23%
Dividend payout ratio (1) 43.28% 20.64% 33.88% 22.00%
Average stockholders' equity to average assets 11.40% 11.85% 11.47% 11.80%
Net interest rate spread (2) 3.25% 3.65% 3.29% 3.45%
Net interest margin (3) 3.54% 4.09% 3.60% 3.92%
Operating expenses as a percent of average assets 3.07% 3.19% 3.07% 3.16%
Average interest-bearing assets to average interest
bearing liabilities 116.87% 117.90% 116.55% 118.24%
Efficiency ratio(4) 86.48% 78.31% 84.66% 79.54%
<FN>
<F1> Dividend payout ratio represents dividends declared per share divided
by dilutive earnings per share.
<F2> Net interest rate spread represents the difference between the
weighted average yield on interest-earning assets and the weighted
average cost of interest bearing liabilities.
<F3> Net interest margin represents net interest income as a percentage
of average interest-earning assets.
<F4> Efficiency ratio represents total operating expenses divided by the
sum of net interest income, customer service fees and miscellaneous
income.
</FN>
at
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Asset Quality Ratios: March 31, September 30,
2003 2002
--------------------------
<s> <c> <c>
Non-performing loans as a percent of loans 0.50% 0.11%
Non-performing assets as a percent of total assets 0.26% 0.06%
Allowance for loan losses as a percent of total loans
before the allowance for loan losses 0.70% 0.69%
Capital Ratio and other data:
Equity to assets at end of period 11.23% 11.60%
Number of shares outstanding at end of period 1,581,574 1,581,574
Number of:
Full-service offices (1) 5 5
Full-time equivalent employees 72 76
<FN>
<F1> The number of full service offices does not include our branch at the
Willows.
</FN>