EXHIBIT 99.1
Press Release
Westborough Financial Services, Inc. Reports Increased Earnings for Three-
Months Ended December 31, 2003 compared to Three-Months Ended December 31,
2002
WESTBOROUGH, Mass.--(BUSINESS WIRE)-January 29, 2004--Westborough
Financial Services, Inc., (the "Company") (OTCBB: WFSM.OB) the holding
company for The Westborough Bank (the "Bank"), reported earnings per share
(dilutive) for three-months ended December 31, 2003 of $0.22 on net income
of $349 thousand, as compared to $278 thousand, or $0.18 per share
(dilutive), for three-months ended December 31, 2002. The Company's
annualized return on average assets was .54% for three-months ended
December 31, 2003 as compared to .45% for three-months ended December 31,
2002.
The increase in net income was primarily due to an increase in the
Company's net interest income. Net interest income increased by $142
thousand, or 6.9%, to $2.2 million for three-months ended December 31, 2003
as compared to $2.1 million for three-months ended December 31, 2002. The
increase in net interest income was primarily the result of a decline in
the rates of interest paid on the Company's interest-bearing liabilities,
offset, to a lesser extent, by a reduction in the rates of interest earned
on the Company's loans and investment securities. Following the general
decline in market interest rates, the rate of interest paid on interest-
bearing liabilities declined 0.89%, to 1.44%, for three-months ended
December 31, 2003, from 2.33% for three-months ended December 31, 2002. The
rate of interest earned on the Company's interest-earning assets declined
0.69%, to 4.95%, for three-months ended December 31, 2003, from 5.64% for
three-months ended December 31, 2002 and reflected the general decline in
securities re-investment interest rates and the desire of loan customers to
refinance or renegotiate their loans to lower rates. For three-months ended
December 31, 2003, the Company's net interest rate spread, which represents
the difference between the weighted average yield on interest-earning
assets and the weighted average cost of interest-bearing liabilities
increased 0.20%, to 3.51%, from 3.31% for the comparative three-months
ended December 31, 2002. Operating expenses remained relatively flat at
$1.9 million for both quarters-ended December 31, 2003 and December 31,
2002 and, expressed as a percent of average assets, operating expenses
declined to 2.95% for three-months ended December 31, 2003 as compared to
3.08% for three-months ended December 31, 2002.
Total assets declined by $2.1 million, or 0.8%, to $254.1 million at
December 31, 2003 from $256.1 million at September 30, 2003 and reflected
the internal funding of a $2.0 million decline in deposits. Total cash and
cash equivalents declined by $4.9 million, or 41.4%, to $7.0 million at
December 31, 2003 from $11.9 million at September 30, 2003 and primarily
reflects cash flows utilized to fund deposit outflows of $2.0 million,
growth in securities available for sale of $1.1 million and growth in
loans, net of $1.7 million. Regarding the growth in loans, the Company
experienced net loan growth of 1.2%. The primary categories of loan growth
were in home equity lines-of-credit, which increased approximately 11%, to
$10.6 million, and commercial loans, which increased approximately 9%, to
$20.9 million. Most other loan categories were generally flat and reflected
the general decline in home refinancing and the seasonal aspects of the
local housing market.
Total deposits declined $2.0 million, or 0.9%, to $213.9 million at
December 31, 2003 from $215.9 million at September 30, 2003. Most of this
decrease occurred in the Company's regular savings and certificates of
deposit accounts. Regular savings accounts declined 1.5%, to $115.9 million
at December 31, 2003 and certificates of deposit accounts declined 5.4%, to
$51.2 million at December 31, 2003. While management believes it is
competitive in the rates of interest offered to current and prospective
customers, the recent general improvement in the stock market most likely
motivated some customers to shift their liquid and maturing deposits to
their brokerage accounts.
Total stockholders' equity decreased by $50 thousand, or 0.2%, to
$28.7 million at December 31, 2003 from $28.7 million at September 30, 2003
primarily as a result of a $367 thousand decline in the after-tax value of
the Bank's net unrealized gain on securities available for sale and the
payment of a $79 thousand dividend to stockholders during this period. Most
of the securities available for sale are
sensitive to changes in market interest rates and, as a result of a general
increase in interest rates during this period, the underlying market value
of those securities available for sale declined accordingly. The decline in
stockholders' equity was offset, to a lesser extent, by quarter-ended
December 31, 2003 net income of $349 thousand.
Commenting upon the results, Joseph F. MacDonough, President and CEO
of the Company remarked, "I am pleased to say the Company has begun the
year on a positive note. For the quarter ended December 31, 2003, we
experienced increases in net income and return on average assets when
compared to the previous quarter ended December 31, 2002. These increases
were primarily a result of an improved net interest rate spread, coupled
with our operating expenses remaining essentially flat. The decline in
deposits was anticipated. As the national economy set a course toward
improvement, deposit dollars quickly moved to the potential for higher
returns in the stock 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 and
Grafton 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
-----------------------------
December 31, September 30,
2003 2003
-----------------------------
Condensed Consolidated Balance Sheet Data ($ in thousands) (Unaudited)
<s> <c> <c>
Total assets $254,052 $256,122
Loans, net 143,269 141,557
Investment securities 89,924 88,840
Total deposits 213,881 215,898
Federal Home Loan Bank advances 9,500 9,500
Stockholders' equity 28,668 28,718
Allowance for loan losses 941 911
Non-accrual loans 622 634
Non-performing assets 622 634
Three Months Ended
Condensed Consolidated Statement of Income ----------------------
($ in thousands, except per share data) 12/31/03 12/31/02
--------- ---------
(Unaudited)
<s> <c> <c>
Total interest and dividend income $2,969 $3,210
Total interest expense 759 1,142
------ ------
Net interest income 2,210 2,068
Provision for loan losses 30 0
------ ------
Net interest income, after provision for loan losses 2,180 2,068
------ ------
Customer service fees 175 165
Gain (loss) on sales of securities available for sale, net (1) 4
Gain on sales of mortgages 4 0
Miscellaneous 55 59
------ ------
Total other income 233 228
------ ------
Total operating expenses 1,897 1,900
------ ------
Income before provision for income taxes 516 396
Provision for income taxes 167 118
------ ------
Net income $ 349 $ 278
====== ======
Basic number of weighted average shares outstanding 1,538,835 1,527,688
Dilutive number of weighted average shares outstanding 1,560,727 1,547,905
Basic earnings per share $0.23 $0.18
Dilutive earnings per share $0.22 $0.18
Dividends declared per share $0.05 $0.05
Three Months Ended
--------------------
Performance Ratios: 12/31/03 12/31/02
-------- --------
(Unaudited)
<s> <c> <c>
Return on average assets 0.54% 0.45%
Return on average stockholders' equity 4.82% 3.91%
Dividend payout ratio (1) 22.36% 27.84%
Average stockholders' equity to average assets 11.27% 11.53%
Net interest rate spread (2) 3.51% 3.31%
Net interest margin (3) 3.69% 3.63%
Operating expenses as a percent of average assets 2.95% 3.08%
Average interest-bearing assets to average
interest-bearing liabilities 113.95% 116.22%
Efficiency ratio (4) 77.75% 82.90%
<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: December 31, September 30,
2003 2003
-----------------------------
(Unaudited)
<s> <c> <c>
Non-performing loans as a percent of loans 0.43% 0.45%
Non-performing assets as a percent of total assets 0.24% 0.25%
Allowance for loan losses as a percent of total loans
before the allowance for loan losses 0.65% 0.64%
Capital Ratio and other data:
Equity to assets at end of period 11.28% 11.21%
Number of shares outstanding at end of period 1,586,374 1,586,174
Number of:
Full-service offices (1) 5 5
Full-time equivalent employees 75 74
<FN>
<F1> The number of full service offices does not include our branch at the
Willows.
</FN>