EXHIBIT 99.1
Press Release
Westborough Financial Services, Inc. Reports Earnings for Three and Nine-
Month Periods Ended June 30, 2003
WESTBOROUGH, Mass.--(BUSINESS WIRE)-July 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 June 30, 2003 of $0.15 on net income of $227
thousand. For the current quarter ended June 30, 2003, net income increased
by $23 thousand, or 11.3%, as compared to $204 thousand, or $0.13 per share
(dilutive), for the quarter ended June 30, 2002. The Company's return on
average assets was 0.36% for the quarter ended June 30, 2003 as compared to
0.35% for the quarter ended June 30, 2002. The increased net income was
primarily due to increases in gains from the sale of securities and income
from customer service fees, offset, to a lesser extent, by a decline in net
interest income. During the most recent quarter ended June 30, 2003, the
Bank sold securities and realized net pre-tax gains of $132 thousand, as
compared to net pre-tax losses of $10 thousand for the comparative quarter
ended June 30, 2002. Income from customer service fees increased by $78
thousand, or 88.6%, to $166 thousand for the quarter ended June 30, 2003 as
compared to $88 thousand for the quarter ended June 30, 2002 primarily from
an increase in fees on the use of ATM's and increased fees on the sale of
non-deposit investment products. The Bank's net interest income declined
by $156 thousand, or 7.4%, to $2.0 million for quarter ended June 30, 2003
as compared to $2.1 million for the quarter ended June 30, 2002. The
decline in net interest income was due primarily to a decline in the rate
of interest earned on the Bank's investments and loans, offset, to a lesser
extent, by a decline in the rate of interest paid on the Bank's deposits
and borrowing. 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. For the current
quarter ended June 30, 2003, the Company's net interest margin, expressed
as a percentage of average interest-earning assets, declined by .58%, to
3.35%, from 3.93%, for the comparative quarter ended June 30, 2002. While
rates of interest paid on interest-bearing liabilities for the current
quarter ended June 30, 2003 declined by .90%, to 1.81%, from 2.71% for the
comparative quarter ended June 30, 2002, the rates of interest earned on
interest-earning assets declined by 1.37%, to 4.91%, for the current
quarter ended June 30, 2003 as compared to 6.28% for the comparative
quarter ended June 30, 2002.
For the nine-month period ended June 30, 2003, the Company reported
earnings per share (dilutive) of $0.44 on net income of $684 thousand. For
the nine-months ended June 30, 2003, net income decreased by $229 thousand,
or 25.1%, as compared to $913 thousand, or $0.59 per share (dilutive), for
the comparative nine-months ended June 30, 2002. The Company's return on
average assets was .37% for the nine-month period ended June 30, 2003 as
compared to .53% for the nine-month period ended June 30, 2002. The
decrease in net income was due primarily to a decline in the Bank's net
interest income and an increase in operating expenses, offset, to a lesser
extent, by an increase in net gains on the sale of securities and an
increase in income from customer service fees. The decline in net interest
income was due primarily to a decline in the rate of interest earned on the
Bank's investments and loans, offset, to a lesser extent, by a decline in
the rate of interest paid on the Bank's deposits and borrowing. 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. For the nine-months ended June 30, 2003, the
Company's net interest margin, expressed as a percentage of average
interest-earning assets, declined by .39%, to 3.54%, from 3.93%, for the
comparative period ended June 30, 2002. While the rate of interest paid on
interest-bearing liabilities for the nine-months ended June 30, 2003
declined by .90%, to 2.07%, from 2.97% for the comparative period ended
June 30, 2002, the rate of interest earned on interest-earning assets for
the nine-month period ended June 30, 2003 declined by 1.15%, to 5.31%, from
6.46% for the comparative period ended June 30, 2002.
As a result of continued growth in deposits, the Company's total
assets increased by $11.3 million, or 4.7%, to $252.5 million at June 30,
2003 from $241.3 million at September 30, 2002. Securities available for
sale increased by $8.8 million, or 11.7%, to $84.5 million, at June 30,
2003 as compared to $75.6 million at September 30, 2002. Loans increased
by $5.5 million, or 4.2%, to $138.4 million at June 30, 2003 from $132.9
million at September 30, 2002 primarily as a result of increased lending on
residential properties. 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
$1.2 million, or 21.9%, to $6.7 million at June 30, 2003.
Total deposits increased by $10.2 million, or 5.1%, to $212.3 million
at June 30, 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 $664 thousand at June 30,
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 $737 thousand, to $28.7
million at June 30, 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 the relocation of our Maple Avenue branch office has enhanced our
ability to provide services and products to the Shrewsbury 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
-------------------------
June 30, September 30,
2003 2002
-------- -------------
Consolidated Balance Sheet Data ($ in thousands) (unaudited)
<s> <c> <c>
Total assets $252,530 $241,273
Loans, net 138,425 132,880
Investment securities 85,719 76,888
Total deposits 212,283 202,063
Federal Home Loan Bank advances 9,500 9,500
Stockholders' equity 28,726 27,989
Allowance for loan losses 928 926
Non-accrual loans 664 140
Non-performing assets 664 140
For Three Months Ended For Nine Months ended
----------------------- -----------------------
Consolidated Statement of Income ($ in thousands): 06/30/03 06/30/02 06/30/03 06/30/02
-------- -------- -------- --------
(unaudited) (unaudited)
<s> <c> <c> <c> <c>
Total interest and dividend income $ 2,877 $ 3,387 $ 9,163 $ 10,405
Total interest expense 913 1,267 3,059 4,078
--------- --------- --------- ---------
Net Interest income 1,964 2,120 6,104 6,327
Provision for loan losses 0 0 0 8
--------- --------- --------- ---------
Net interest income, after provision for loan losses 1,964 2,120 6,104 6,319
--------- --------- --------- ---------
Customer service fees 166 88 445 352
Gain (loss) on sales of securities available for sale, net 132 (10) 129 (6)
Gain on sales of mortgages 24 0 29 5
Miscellaneous 49 42 134 131
--------- --------- --------- ---------
Total other income 371 120 737 482
--------- --------- --------- ---------
Total operating expenses 2,008 1,991 5,821 5,618
--------- --------- --------- ---------
Income before provision for income taxes 327 249 1,020 1,183
Provision for income taxes 100 45 336 270
--------- --------- --------- ---------
Net Income $ 227 $ 204 $ 684 $ 913
========= ========= ========= =========
Basic number of weighted average shares outstanding 1,534,061 1,536,853 1,528,857 1,541,457
Dilutive number of weighted average shares outstanding 1,554,311 1,556,574 1,546,989 1,559,496
Basic earnings per share $0.15 $0.13 $0.45 $0.59
Dilutive earnings per share $0.15 $0.13 $0.44 $0.59
Dividends declared per share $0.05 $0.05 $0.15 $0.15
For Three Months Ended For Nine Months ended
----------------------- -----------------------
Performance Ratios (annualized where applicable) 06/30/03 06/30/02 06/30/03 06/30/02
-------- -------- -------- --------
<s> <c> <c> <c> <c>
Return on average assets 0.36% 0.35% 0.37% 0.53%
Return on average stockholders' equity 3.20% 3.02% 3.21% 4.49%
Dividend payout ratio (1) 34.24% 38.15% 33.93% 25.62%
Average stockholders' equity to average assets 11.25% 11.54% 11.47% 11.72%
Net interest rate spread (2) 3.11% 3.57% 3.25% 3.49%
Net interest margin (3) 3.35% 3.93% 3.54% 3.93%
Operating expenses as a percent of average assets 3.19% 3.40% 3.13% 3.24%
Average interest-bearing assets to average interest
bearing liabilities 115.84% 115.47% 116.55% 117.30%
Efficiency ratio (4) 92.15% 88.49% 87.10% 82.50%
<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: June 30, September 30,
2003 2002
-------- -------------
<s> <c> <c>
Non-performing loans as a percent of loans 0.48% 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 0.67% 0.69%
Capital Ratio and other data:
Equity to assets at end of period 11.38% 11.60%
Number of shares outstanding at end of period 1,584,374 1,581,574
Number of:
Full-service offices (1) 5 5
Full-time equivalent employees 71 76
<FN>
<F1> The number of full service offices does not include our branch at the
Willows.
</FN>