EXHIBIT 99.1
NEWS
RELEASE
For further information contact:
Santo P. Pasqualucci
President & CEO
(508) 548-3500
FOR IMMEDIATE RELEASE
- ---------------------
January 26, 2003
FALMOUTH BANCORP, INC. EARNINGS RESULTS FOR THE
QUARTER ENDED DECEMBER 31, 2003
Falmouth, Massachusetts, January 26, 2003
Falmouth Bancorp, Inc. (AMEX: FCB) (the Company), a Delaware
corporation, the holding company for Falmouth Co-operative Bank, announced
today the Company's results of operations for the first quarter ended
December 31, 2003. For the three months ended December 31, 2003 the Company
reported net income of $1,000 as compared to $375,000 for the three months
ended December 31, 2002. The decrease of $374,000 was due primarily to a
decrease in net interest income of $60,000 combined with a decrease in the
gain on mortgages sold of $285,000. The reduction in net interest income was
the result of compression of the net interest margin due to continuing
historically low interest rates. The decrease in gain on mortgages sold is
the result of a decreases in loan demand coupled with the Bank's decision to
retain some of its current production for investment. The Company's basic
earnings per share decreased to $0.00 at December 31, 2003 from $0.43 at
December 31, 2002. Diluted earnings per share decreased to $0.00 from $0.43.
The Company had average shares outstanding of 892,837 at December 31,
2003, as compared to 870,641 average shares outstanding at December 31,
2002. At December 31, 2003, the Company had repurchased 538,023 shares, or
37.0% of its stock, leaving 916,727 shares issued and outstanding.
The Company's total assets decreased by $8.0 million, or 4.8%, from
$166.1 million at September 30, 2003 to $158.1 million at December 31, 2003.
Total deposits decreased $8.0 million or 5.5%, from $145.5 million at
September 30, 2003 to $137.5 million at December 31, 2003. This decrease was
due, in part, to seasonal withdrawals from demand deposits accounts, money
market accounts and certificates of deposit; and, in part, to changing
market conditions during the period. Total net loans were $87.7 million or
63.7% of total deposits at December 31, 2003, as compared to $83.3 million
or 57.2% of total deposits at September 30, 2002, representing an increase
of $4.4 million for the quarter. This increase was due, in part, to the
Bank's decision to selectively retain some of its current higher yielding
loan production for
portfolio rather than selling it on the secondary market. Investment
securities were $61.9 million or 39.2% of total assets at December 31, 2003,
as compared to $70.6 million or 42.5% of total assets at September 30, 2003.
Investment securities decreased $8.7 million or 12.03%, in part, due to
maturing and called investment securities. The proceeds were used to fund
loans held for investment and deposit outflows.
Net Income. The Company's net income for the three months ended
December 31, 2003 was $1,000, as compared to $375,000 for the three months
ended December 31, 2002. The decrease in net income of $374,000 was due, in
part, to a decrease in interest and dividend income of $315,000 that was
offset, in part, by a decrease in interest expense of $255,000. Other key
factors included a decrease in other income of $200,000, an increase in
other expenses of $240,000 and a decrease in income taxes of $126,000. The
increase in other expenses was related, in part, to costs associated with
potential merger activities. The annualized return on average assets (ROA)
for the three months ended December 31, 2003 was 0.00%, a decrease of 96
basis points, as compared to 0.96% for the same period of the prior year.
Interest and dividend income decreased, primarily as the result of low
interest rates. The decrease in interest expense was primarily due to a
reduction in the general level of interest rates and a decline in the volume
of deposits.
Net Interest and Dividend Income. Net interest and dividend income was
$1.11 million for the three-month period ended December 31, 2003 and $1.17
million for the three months ended December 31, 2002. A $60,000 decrease was
the result of a $315,000 decrease in interest and dividend income, offset by
a $255,000 decrease in interest expense. The net interest margin for the
three months ended December 31, 2003 was 2.86%, a decrease of 28 basis
points, as compared to 3.14% for the three months ended December 31, 2002.
The decrease in net interest margin was primarily the result of a decrease
in the yield on interest earning assets.
Other Income. Other income for the three-month period ended December
31, 2003 was $193,000, as compared to $393,000 for the three months ended
December 31, 2002. The $200,000 decrease was primarily the result of an
increase in service charge income of $10,000, an increase in net gains on
sales of investment securities of $93,000, and an increase in loan servicing
fee income of $9,000. This was offset, in part, by an decrease in gains on
sales of mortgage loans of $285,000 and a decrease in other income of
$27,000.
Operating Expenses. Operating expenses for the three months ended
December 31, 2003 were $1,202,000, as compared to $962,000 for the three
months ended December 31, 2002. The $240,000 increase was primarily due to
the combination of an increase in salaries and employee benefits of $78,000,
an increase occupancy expense of $18,000, an increase in equipment expense
of $7,000, an increase in data processing expense of $41,000, an increase in
legal and professional costs of $76,000, and an increase in other expenses
of $57,000, combined with a decrease in the writedowns of mortgage servicing
assets of $38,000. The annualized ratio of operating expenses to average
total assets for the three months ended December 31, 2003 was 3.04%, as
compared to 2.53% for the three-month period ended December 31, 2002, an
increase of 51 basis points.
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 December 31, 2003 the Bank had total
assets of $158.1 million and deposits of $137.6 million. The Bank conducts
business through its main office located at 20 Davis Straits, Falmouth,
Massachusetts 02540, and branch locations in North Falmouth, East Falmouth
and Bourne, Massachusetts. 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
-------------------------------------
December 31, 2003 and September 30, 2003
----------------------------------------
December 31, September 30,
2003 2003
---- ----
(Unaudited)
<s> <c> <c>
ASSETS
- ------
Cash, due from banks and interest bearing deposits $ 1,527,997 $ 3,335,059
Federal funds sold 2,146,192 4,037,306
------------ ------------
Total cash and cash equivalents 3,674,189 7,372,365
Investments in available-for-sale securities (at fair value) 36,344,767 37,179,799
Investments in held-to-maturity securities (fair
values of $24,709,897 as of December 31, 2003
and $32,556,554 as of September 30, 2003) 24,709,980 32,549,241
Federal Home Loan Bank stock, at cost 878,000 878,000
Loans, net 87,665,181 83,319,478
Premises and equipment 1,992,932 1,911,894
Accrued interest receivable 1,395,336 1,333,910
Cooperative Central Bank Reserve Fund Deposit 395,395 395,395
Other assets 1,053,453 1,178,108
------------ ------------
Total assets $158,109,233 $166,118,190
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits:
Noninterest-bearing $ 20,579,585 $ 20,425,557
Interest-bearing 116,999,733 125,109,413
------------ ------------
Total deposits 137,579,318 145,534,970
Securities sold under agreements to repurchase - -
Federal Home Loan Bank advances 2,562,070 2,582,885
Other liabilities 112,228 256,956
------------ ------------
Total liabilities 140,253,616 148,374,811
------------ ------------
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 14,147,775 14,093,713
Retained earnings 13,740,559 13,858,343
Unallocated Employee Stock Ownership Plan shares (191,068) (213,114)
Treasury stock (538,023 shares as of December 31, 2003;
541,023 shares as of September 30, 2003) (9,525,535) (9,578,649)
Unearned compensation (340,994) (340,994)
Accumulated other comprehensive loss 10,333 (90,467)
------------ ------------
Total stockholders' equity 17,855,617 17,743,379
------------ ------------
Total liabilities and stockholders' equity $158,109,233 $166,118,190
============ ============
FALMOUTH BANCORP, INC. AND SUBSIDIARIES
---------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
Three Months Ended December 31, 2003 and 2002
---------------------------------------------
(Unaudited)
2003 2002
---- ----
<s> <c> <c>
Interest and dividend income:
Interest and fees on loans $1,252,631 $1,494,869
Interest and dividends on securities:
Taxable 285,210 338,112
Dividends on marketable equity securities 18,908 20,447
Other interest 11,525 30,420
---------- ----------
Total interest and dividend income 1,568,274 1,883,848
---------- ----------
Interest expense:
Interest on deposits 429,570 653,351
Interest on securities sold under agreement
to repurchase - 1,983
Interest on Federal Home Loan Bank advances 32,848 62,453
---------- ----------
Total interest expense 462,418 717,787
---------- ----------
Net interest and dividend income 1,105,856 1,166,061
Provision for loan losses - -
---------- ----------
Net interest and dividend income after
provision for loan losses 1,105,856 1,166,061
---------- ----------
Other income:
Service charges on deposit accounts 60,745 50,365
Securities gains (losses), net 16,802 (76,587)
Net gains on sales of loans 40,432 325,311
Loan servicing fees 15,112 6,600
Other income 60,524 87,800
---------- ----------
Total other income 193,615 393,489
---------- ----------
Other expense:
Salaries and employee benefits 565,334 487,679
Occupancy expense 59,139 40,981
Equipment expense 52,213 44,824
Data processing expense 129,605 88,705
Directors' fees 19,365 18,610
Legal and professional fees 132,619 56,320
Writedowns of mortgage servicing rights 16,061 53,855
Other expenses 227,550 170,608
---------- ----------
Total other expenses 1,201,886 961,582
---------- ----------
Income before income taxes 97,585 597,968
Income taxes 96,441 222,850
---------- ----------
Net income $ 1,144 $ 375,118
========== ==========
Comprehensive income $ 101,944 $ 537,687
========== ==========
Earnings per common share $ 0.00 $ 0.43
========== ==========
Earnings per common share, assuming dilution $ 0.00 $ 0.41
========== ==========