Exhibit 99.1
NEWS
RELEASE
For further information contact:
Santo P. Pasqualucci
President & CEO
(508) 548-3500
FOR IMMEDIATE RELEASE
- ---------------------
July 25, 2003
FALMOUTH BANCORP, INC. EARNINGS RESULTS FOR THE
QUARTER AND NINE MONTHS ENDED JUNE 30, 2003
Falmouth, Massachusetts, July 25, 2003, - Falmouth Bancorp, Inc.
(AMEX: FCB) (the Company), a Delaware corporation, the holding company for
Falmouth Bank (the "Bank"), announced today the Company's results of
operations for the third quarter ended June 30, 2003. For the three months
ended June 30, 2003, the Company reported net income of $569,000, as
compared to net income of $428,000 for the three months ended June 30, 2002.
For the nine months ended June 30, 2003, the Company reported net income of
$372,000 as compared to net income of $1,286,000 for the nine months ended
June 30, 2002. The decrease was primarily due to recently enacted
legislation by the Commonwealth of Massachusetts eliminating, retroactively
to 1999, the 95% state income tax dividend exclusion previously allowed for
the transfer of income from the Bank's real estate investment trust
subsidiary to the Bank. Additionally, the Bank realized losses on
investment securities of $457,000 over the past nine months. After close
analysis and other tax considerations, management chose to divest itself of
selected investment securities. The Company's basic earnings per share
after extraordinary items increased to $0.65 for the three months ended June
30, 2003, from $0.49 for the three months ended June 30, 2002, an increase
of $0.16. Diluted earnings per share after extraordinary items increased to
$0.62 from $0.46 for the same period of the previous year, an increase of
$0.16.
The Company's total assets increased by $9.4 million or 6.11% for the
nine months ended June 30, 2003, from $154.5 million at September 30, 2002
to $163.9 million at June 30, 2003. Total deposits increased $9.7 million
or 7.35%, from $131.7 million at September 30, 2002 to $141.4 million at
June 30, 2003. This increase was due, in part to seasonal deposits in NOW
accounts and regular savings accounts during the period. Total net loans
were $83.8 million or 59.3% of total deposits at June 30, 2003, as compared
to $95.0 million or 72.1% of total deposits at September 30, 2002,
representing a decrease of $11.2 million for the period. This decrease was
due, in part, to the large number of 1-4 family mortgages that were re-
written, due to lower market rates, and then sold by the Bank on the
secondary market with the loan servicing retained. Investment securities
were $65.3 million or 39.8% of total assets at June 30, 2003, as compared to
$47.7 million or 30.8% of total assets at September 30, 2002. Investment
securities increased $17.7 million or 37.0% due, in part, to the
reinvestment of cash flows generated from loan
payoffs and sold loans into short-term securities.
Net Income. The Company's net gain, after an extraordinary item, for
the three months ended June 30, 2003 was $569,000, as compared to net income
of $428,000 for the three months ended June 30, 2002. The increase in net
income of $141,000 was due, in part, to a decrease in interest and dividend
income of $603,000 that was offset, in part, by a decrease in interest
expense of $220,000. Other key factors include the reduction of $295,000 of
a one-time charge to earnings of $572,000 (classified as an extraordinary
item on the March 31, 2003 consolidated statements of income) that is
related to a dispute and subsequent settlement between the Bank and the
Commonwealth of Massachusetts concerning the tax treatment of dividends
received of the Bank's real estate investment trust subsidiary; an increase
in total other expenses of $227,000 and a decrease in income taxes of
$148,000. The annualized return on average assets (ROA) for the three
months ended June 30, 2003 was 1.43%, an increase of 30 basis points, as
compared to 1.13% for the same period in the prior year. The annualized
return on average equity (ROE) for the three months ended June 30, 2003 was
13.27%, as compared to 10.20% for the same period of the previous year.
Interest and dividend income decreased, primarily as the result of low
interest rates, loan payoffs, and loan sales during the period. The decrease
in interest expense was primarily due to a reduction in the general level of
interest rates while total deposits rose slightly.
Interest and Dividend Income. Total interest and dividend income for
the three months ended June 30, 2003 was $1.6 million, a decrease of
$603,000, as compared to $2.2 million for the three-month period ended June
30, 2002. The decrease was attributed to a decrease in interest and fees on
loans of $592,000, which was the result of generally lower interest rates on
loans held for investment, offset by a decrease in interest and dividends on
debt securities of $17,000 and an increase in other interest of $8,000.
Other Income. Total other income for the three-month period ended
June 30, 2003 was $412,000, as compared to $135,000 for the three months
ended June 30, 2002. The $277,000 increase was primarily the result of an
increase in net gains on mortgages sold of $165,000, an increase in services
charges on deposit accounts of $10,000, an increase in loan servicing fee
income of $23,000 an increase in other income of $10,000, and a reduction in
realized losses on investments securities of $69,000.
Operating Expenses. Total operating expenses for the three months
ended June 30, 2003 were $1.1 million, as compared to $873,000 for the three
months ended June 30, 2002. The $227,000 increase was primarily due to the
combination of an increase in salaries and employee benefits of $18,000, an
increase in occupancy expense of $4,000, an increase in equipment expense of
$4,000, an increase in Directors' fees of $7,000, an increase in data
processing expense of $7,000, and an increase in other expenses of $207,000,
combined with a decrease in legal and professional costs of $21,000. The
increase in other expenses was primarily the result of the amortization and
impairment of mortgage-servicing rights due to the large number of loans
service for others that have been re-financed and the general market for
mortgage servicing rights. The annualized ratio of operating expenses to
average total assets for the three months ended June
30, 2003 was 2.75%, as compared to 2.31% for the three-month period ended
June 30, 2002, an increase of 44 basis points.
The Company's net income, after an extraordinary item, for the nine
months ended June 30, 2003 was $372,000 as compared to net income of
$1,286,000 at June 30, 2002. The decrease in net income of $914,000 was
due, in part, to a decrease in interest and dividend income of $1,460,000
that was offset, in part, by a decrease in interest expense of $708,000.
Other key factors included a one-time charge to earnings of $277,000,
classified as an extraordinary item on the consolidated statements of
income, that was the result of tax legislation recently enacted by the
Commonwealth of Massachusetts related to the Company's real estate
investment trust subsidiary; an increase in total other income of $213,000,
an increase in total other expenses of $534,00 and a decrease in income
taxes of $326,000. The Bank made no allocation to its allowance for loan
loss account for the nine months ended June 30, 2003 compared to $110,000 for
nine months period ended June 30, 2002. The loan loss provision was
decreased due to the reduction in the Bank's loan portfolio due to the sale
of loans. It had been increased in the previous year to better align the
reserve with the size and risk associated with the portfolio at that time.
At June 30, 2003, the Bank had no loans 90 days or more delinquent. The
Bank's allowance for loan losses was 1.11% of total loans at June 30, 2003.
The annualized return on average assets (ROA) for the nine months ended
June 30, 2003 was 0.31%, as compared to 1.15% for the same period in the
prior year. The annualized return on average equity (ROE) for the nine
months ended June 30, 2003 was 2.90%, as compared to 10.09% for the nine
months ended June 30, 2002.
Falmouth Bancorp, Inc. is a publicly owned bank holding company and
the parent corporation of Falmouth Co-operative Bank, a Massachusetts
chartered stock co-operative bank offering traditional retail and commercial
financial products and services. At June 30, 2003, the Bank had total
assets of $163.9 million and deposits of $141.4 million. The Bank conducts
business through its main office located at 20 Davis Straits, Falmouth,
Massachusetts 02540, and its two branch locations in North and East
Falmouth. The telephone number is (508) 548-3500.
Forward Looking Statements
- --------------------------
This press release contains certain forward-looking statements
consisting of estimates with respect to the financial condition, results of
operations and business of the Company and the Bank that are subject to
various factors which could cause actual results to differ materially from
these estimates. These factors include, but are not limited to: general
and local economic conditions; changes in interest rates, deposit flows,
demand for mortgages and other loans, real estate values, and competition;
changes in accounting principles, policies, or guidelines; changes in
legislation or regulation; and other economic, competitive, governmental,
regulatory, and technological factors affecting our operations, pricing,
products and services. We undertake no obligation to publicly update
forward-looking statements, whether as a result of new information, future
events or otherwise.
FALMOUTH BANCORP, INC. AND SUBSIDIARIES
---------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
June 30, 2003 and September 30, 2002
------------------------------------
June 30, September 30,
2003 2002
-------- -------------
(unaudited)
<s> <c> <c>
ASSETS
Cash, due from banks, and interest bearing deposits $ 6,128,166 $ 2,916,804
Federal funds sold 3,931,558 4,505,780
------------ ------------
Total cash and cash equivalents 10,059,724 7,422,584
Investments in available-for-sale securities (at
fair value) 34,052,054 18,712,954
Investments in held-to-maturity securities (fair
values of $30,397,848 as of June 30, 2003 and
$28,034,474 as of September 30, 2002) 30,375,569 28,060,267
Federal Home Loan Bank stock, at cost 878,000 878,000
Loans, net 83,832,032 95,009,955
Premises and equipment 1,784,722 1,792,016
Accrued interest receivable 1,340,733 1,114,924
Cooperative Central Bank Reserve Fund Deposit 395,395 395,395
Other assets 1,237,521 1,134,907
------------ ------------
Total Assets $163,955,750 $154,521,002
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-Interest-bearing $ 19,403,451 $ 17,552,180
Interest-bearing 121,996,357 114,164,879
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Total deposits 141,399,808 131,717,059
Securities sold under agreements to repurchase 1,246,812 471,872
Federal Home Loan Bank advances 3,607,146 5,178,175
Other liabilities 272,689 761,663
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Total Liabilities 146,526,455 138,128,769
------------ ------------
Minority preferred stockholders' equity in a
subsidiary company of Falmouth Bank 50,500 53,500
------------ ------------
Stockholders' equity:
Preferred stock, par value $.01 per share,
authorized 500,000 shares; none issued
Common stock, par value $.01 per share,
authorized 2,500,000 shares; issued 1,454,750 shares 14,547 14,547
Paid-in capital 14,030,959 13,981,543
Retained earnings 13,755,005 13,735,221
Unallocated Employee Stock Ownership Plan shares (235,160) (301,299)
Treasury stock (549,108 shares as of June 30, 2003;
553,971 shares as of September 30, 2002) (9,721,792) (9,807,890)
Unearned compensation (340,994) (477,088)
Accumulated other comprehensive loss (123,770) (806,301)
------------ ------------
Total stockholders' equity 17,378,795 16,338,733
------------ ------------
Total liabilities and stockholders' equity $163,955,750 $154,521,002
============ ============
FALMOUTH BANCORP, INC. AND SUBSIDIARIES
---------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(unaudited)
Three Months Ended Nine Months Ended
-------------------------- --------------------------
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
-------- -------- -------- --------
<s> <c> <c> <c> <c>
Interest and dividend income:
Interest and fees on loans $1,269,363 $1,860,975 $4,086,068 $5,779,848
Interest and dividends on securities:
Taxable 300,894 318,263 950,528 723,753
Dividends on marketable equity securities 16,819 19,209 58,109 61,931
Dividends on Cooperative Bank Investment
and Liquidity Funds - - - 551
Other interest 37,531 29,302 101,452 90,541
---------- ---------- ---------- ----------
Total interest and dividend income 1,624,607 2,227,749 5,196,157 6,656,624
---------- ---------- ---------- ----------
Interest expense:
Interest on deposits 500,461 714,616 1,714,925 2,378,554
Interest on securities sold under agreement
to repurchase 4,125 857 9,334 4,256
Interest on Federal Home Loan Bank advances 53,819 62,799 177,916 227,337
---------- ---------- ---------- ----------
Total interest expense 558,405 778,272 1,902,175 2,610,147
---------- ---------- ---------- ----------
Net interest and dividend income 1,066,202 1,449,477 3,293,982 4,046,477
Provision for loan losses - 30,000 - 110,000
---------- ---------- ---------- ----------
Net interest income after provision for
loan losses 1,066,202 1,419,477 3,293,982 3,936,477
---------- ---------- ---------- ----------
Other income:
Service charges on deposit accounts 53,664 43,450 147,308 136,221
Securities gains (losses), net (1,211) (70,020) (456,703) (52,958)
Net gains on sales of loans 243,531 78,560 855,304 338,086
Loan servicing fees 40,969 18,320 105,141 42,248
Other income 75,102 64,526 222,547 196,736
---------- ---------- ---------- ----------
Total other income 412,055 134,836 873,597 660,333
---------- ---------- ---------- ----------
Other expense:
Salaries and employee benefits 453,147 434,746 1,447,633 1,286,498
Occupancy expense 42,033 38,182 127,447 120,363
Equipment expense 48,844 44,706 138,537 144,294
Data processing expense 111,270 103,849 309,028 291,562
Directors' fees 24,815 17,900 62,100 52,950
Legal and professional fees 34,835 55,559 125,748 150,277
Other expenses 384,889 178,147 887,552 518,102
---------- ---------- ---------- ----------
Total other expenses 1,099,833 873,089 3,098,045 2,564,046
---------- ---------- ---------- ----------
Income before income taxes 378,424 681,224 1,069,534 2,032,764
Income taxes 105,295 253,667 420,465 746,292
---------- ---------- ---------- ----------
Net income before extraordinary item 273,129 427,557 649,069 1,286,472
Extraordinary item (net of tax expense
of $146,221 for the 3 month period ended
June 30, 2003 and net of tax benefit of
$153,799 for the 9 month period ended
June 30, 2003) 295,389 - (276,959) -
---------- ---------- ---------- ----------
Net income (loss) after extraordinary item $ 568,518 $ 427,557 $ 372,110 $1,286,472
========== ========== ========== ==========
FALMOUTH BANCORP, INC. AND SUBSIDIARIES
---------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(Continued)
(unaudited)
Three Months Ended Nine Months Ended
---------------------- --------------------------
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
-------- -------- -------- --------
<s> <c> <c> <c> <c>
Comprehensive income (loss) $691,448 $218,728 $1,054,641 $1,114,146
======== ======== ========== ==========
Earnings per common share before
extraordinary item $ 0.31 $ 0.49 $ 0.74 $ 1.46
Earnings(loss) per common share on
extraordinary item .34 - (.31) -
-------- -------- ---------- ----------
Earnings (loss) per common share after
extraordinary item $ 0.65 $ 0.49 $ 0.43 $ 1.46
======== ======== ========== ==========
Earnings per common share before
extraordinary item, assuming dilution $ 0.30 $ 0.46 $ 0.70 $ 1.39
Earnings (loss) per common share on
extraordinary item, assuming dilution .32 - (.30) -
-------- -------- ---------- ----------
Earnings (loss) per common share after
extraordinary item, assuming dilution $ 0.62 $ 0.46 $ 0.40 $ 1.39
======== ======== ========== ==========