Filed by MAF Bancorp, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Chesterfield Financial Corp.
(Commission File No: 0-32589)
ON JULY 23, 2004, MAF BANCORP, INC. ISSUED THE FOLLOWING NEWS RELEASE:
FOR IMMEDIATE RELEASE
- ---------------------
For: MAF Bancorp, Inc. Contacts: Jerry A. Weberling, Chief
55th Street & Holmes Avenue Financial Officer
Clarendon Hills, IL 60514
www.mafbancorp.com (630) 887-5999
MAF BANCORP REPORTS SECOND QUARTER EARNINGS OF
$.77 PER DILUTED SHARE; LOWERS OUTLOOK FOR 2004
Clarendon Hills, Illinois, July 23, 2004 - MAF Bancorp, Inc. (MAFB) announced
today that net income for the second quarter ended June 30, 2004 totaled $26.0
million compared to $19.5 million in last year's second quarter. Earnings per
diluted share for the current quarter totaled $.77 per diluted share, compared
to $.82 per diluted share reported for the second quarter of 2003. The current
quarter's results include $.03 of charges for merger-related costs and a
previously-disclosed accounting change.
For the six months ended June 30, 2004, diluted earnings per share totaled $1.50
compared to $1.63 for the first six months of 2003. Earnings per share for the
2004 periods were impacted by the larger number of average shares outstanding as
a result of the Company's acquisition of St. Francis Capital Corporation in
December 2003 and Fidelity Bancorp in July 2003. As discussed later, the Company
currently estimates calendar 2004 results of $3.20-$3.35 per diluted share.
NET INTEREST INCOME AND NET INTEREST MARGIN
QE 6/30/04 QE 3/31/04 QE 6/30/03
---------- ---------- ----------
Net interest margin 3.05% 3.10% 2.89%
Interest rate spread 2.86% 2.90% 2.59%
Net interest income (000's) $65,170 $64,029 $40,563
AVERAGE ASSETS:
Yield on interest-earning assets 4.85% 4.94% 5.27%
Yield on loans receivable 5.05% 5.14% 5.67%
Yield on mortgage-backed securities 3.78% 3.74% 3.60%
Yield on investment securities 4.84% 5.11% 4.57%
Average interest-earning assets (000's) $8,539,108 $8,264,886 $5,613,261
AVERAGE LIABILITIES:
Cost of interest-bearing liabilities 1.99% 2.04% 2.68%
Cost of deposits 1.34% 1.34% 1.70%
Cost of borrowed funds 3.34% 3.58% 5.01%
Average interest-bearing liabilities (000's) $7,704,319 $7,472,967 $4,995,666
NET INTEREST MARGIN: 2ND QUARTER 2004 V. 1ST QUARTER 2004. The net interest
margin contracted by five basis points during the quarter. The yield on
interest-earning assets fell by 9 basis points, largely due to the decrease in
the overall yield on the loan portfolio. While loan refinancing activity has
recently
slowed and the pace of the decline in the yield on loans receivable has slowed,
new portfolio originations of adjustable-rate loans and equity lines of credit
remain priced at levels below the average portfolio yield. The net interest
margin was also impacted by the reduction from 6.5% to 6.0% in the dividend
yield earned during the quarter on an investment of approximately $390 million
in Federal Home Loan Bank of Chicago stock.
The average cost of interest-bearing liabilities also declined, but at a slower
rate than asset yields, decreasing 5 basis points over the past three months.
This decline was largely due to the decrease in the cost of borrowed funds as
the cost of new borrowings were significantly lower than the overall portfolio
cost. The average cost for deposits, the Company's primary funding source,
remained stable.
Average interest-earning assets grew at a 13.3% annualized rate during the
quarter, fueled by increases in loans receivable held in portfolio. Compared to
the first quarter of 2004, average loans receivable balances increased by $207
million to $6.67 billion. A consumer shift to adjustable-rate loans, which the
Company generally retains in portfolio, along with the continued growth in home
equity loan balances, were the primary reasons for the increase. Average
mortgage-backed securities balances also showed considerable growth, increasing
$65 million to $1.03 billion, reflecting securitization of loans receivable
offset by prepayments in the portfolio. Other categories of interest-earning
assets remained relatively stable.
The asset growth was largely matched by growth in average interest-bearing
liabilities, which increased at an annualized rate of 12.4%. The average balance
of borrowed funds rose by $184 million to $2.50 billion and represented the
primary source of funding for the asset growth during the quarter. During the
past three months, the average balance of deposits increased by $48 million to
$5.20 billion.
NET INTEREST MARGIN: 2ND QUARTER 2004 V. 2ND QUARTER 2003. Compared to the prior
year quarter, the Company's funding costs declined at a faster pace than
decreases in asset yields, and led to the 16 basis point increase in the net
interest margin. This year over year improvement in net interest margin
primarily reflects the lower cost funding added in the St. Francis merger.
LENDING PRODUCTION
QE 6/30/04 QE 3/31/04 QE 6/30/03
---------- ---------- ----------
AMOUNT % AMOUNT % AMOUNT %
------ --- ------ --- ------ ---
LOAN CATEGORY (000'S)
- ---------------------
1-4 family originations $ 838,508 65% $553,422 61% $1,178,190 85%
Multi-family 51,427 4 34,176 4 44,289 3
Equity lines of credit 282,064 22 231,983 26 135,689 10
All other 123,779 9 81,302 9 34,151 2
---------- --- -------- --- ---------- ---
Total loan originations $1,295,778 100% $900,883 100% $1,392,319 100%
========== === ======== === ========== ===
1-4 FAMILY ORIGINATIONS
- -----------------------
Fixed rate % 41% 41% 57%
Adjustable rate % 59 59 43
Refinance % 50 52 63
2
While interest rates remained attractive and at historically low levels,
refinancing activity has recently slowed, leading to the lower residential
mortgage loan volume compared to a year ago. Loan volume was higher in the
second quarter of 2004 than the first quarter due to the decrease in rates in
late March that created a flurry of refinancing activity in early April. The
subsequent rise in interest rates during the second quarter significantly
dampened mortgage loan demand. The Company currently expects 1-4 family mortgage
loan volume to be significantly lower in the second half of 2004 compared to the
first half due to a decrease in refinance activity and increased competition.
Home purchase activity in the Bank's markets remains steady. Also, the Company
continued to have success in marketing its home equity loan products. Home
equity loan balances increased to $1.12 billion at June 30, 2004 compared to
$1.04 billion at March 31, 2004 and $491 million at June 30, 2003. Home equity
loan balances represented approximately 17% of the Company's total loan
portfolio at June 30, 2004.
NON-INTEREST INCOME
QE 6/30/04 QE 3/31/04 QE 6/30/03
---------- ---------- ----------
Total non-interest income (000's) $19,082 $20,395 $16,973
Non-interest income / total revenue * 22.6% 24.2% 29.5%
* total revenue = net interest income plus non-interest income
OVERVIEW. In the current quarter, loan sale gains declined from a year ago but
mortgage servicing-related income increased and income from deposit account
service charges and brokerage commissions increased. Given the refinance boom of
a year ago, last year's second quarter results were highlighted by significant
loan sale gains, reflecting high loan sale volume occurring during a declining
interest rate environment, offset by high loan servicing amortization expense
and impairment of mortgage servicing rights. The sequential quarter decline is
primarily due to investment securities gains recorded in the first quarter of
2004.
LOAN SALES AND LOAN SERVICING
QE 6/30/04 QE 3/31/04 QE 6/30/03
---------- ---------- ----------
LOAN SALES
- ----------
Fixed-rate loans sold (000's) $208,089 $128,649 $401,358
Adjustable rate loans sold (000's) 49,403 4,832 -
-------- -------- --------
Total loans sold (000's) $257,492 $133,481 $401,358
======== ======== ========
Loan sale gains (000's) $1,676 $1,780 $8,254
Margin on loan sales 65 bp * 133 bp 206 bp
* A change in accounting treatment during the current quarter resulted in a 30
basis point reduction in margin on loan sales.
LOAN SERVICING
- --------------
Loan servicing fee income (expense) (000's) ($115) $241 ($2,040)
Valuation (impairment) recovery on
mortgage servicing rights (000's) $1,200 $555 ($940)
Capitalized mortgage servicing rights as a
percentage of loans serviced for others 75 bp 71 bp 62 bp
3
During the quarter, fixed rate loan sales increased to $208.1 million from
$128.6 million in the first quarter due to the decrease in long-term mortgage
rates in March 2004 that led to an increase in refinance volumes. In addition,
the Company began selling some of its adjustable-rate loan originations,
resulting in an overall increase of $124.0 million in loan sale volume to $257.5
million from $133.5 million in the first quarter of 2004. Profits on
adjustable-rate loan sales tend to be much less than on sales of fixed-rate
loans and as a result, the overall margin on loan sales declined. Loan sale
margins were negatively impacted by the general trend of increasing rates during
most of the quarter as well as from an accounting change. As previously
disclosed, this quarter's earnings include the adoption of SAB No. 105, which
prohibits the inclusion of estimated servicing cash flows within the valuation
of interest rate lock commitments under SFAS No. 133. The Company previously
included a portion of the value of the associated servicing cash flows when
recognizing loan commitments at inception and throughout its life. The adoption
of SAB No. 105 created an accounting change in second quarter 2004 and lowered
gain on sale by $765,000. This impact is a one-time change and will not affect
the ongoing economic value of this business. Slower than expected loan
prepayments led to a $1.2 million recovery of valuation reserves on mortgage
servicing rights.
DEPOSIT ACCOUNT SERVICE FEES
QE 6/30/04 QE 3/31/04 QE 6/30/03
---------- ---------- ----------
Deposit service charges (000's) $8,721 $7,856 $5,960
Growth rate (year over year) 46.3% 44.4% 7.8%
Growth rate (sequential quarter annualized) 44.0% 42.5% 38.3%
Deposit service fees / total revenue 10.3% 9.3% 10.4%
Checking accounts 238,500 235,600 161,300
Deposit account service fees increased considerably compared to the second
quarter of 2003, primarily due to the impact of the St. Francis and Fidelity
mergers. As a percentage of total revenue, deposit service fees remained
consistent with last year's comparable period and slightly ahead of the results
in the first quarter of this year.
REAL ESTATE DEVELOPMENT OPERATIONS
QE 6/30/04 QE 3/31/04 QE 6/30/03
---------- ---------- ----------
RE development income - total (000's) $2,509 $1,102 $1,687
Residential lot sales 64 25 31
Pending lot sales at quarter end 10 58 72
Investment in real estate held for
development or sale (000's) $38,416 $32,557 $23,280
All but one of the 64 lot sales during the quarter were residential lots in the
Company's Shenandoah subdivision in Plainfield, IL. Most of the lot sales in the
first quarter of 2004 were also in this 326-lot development, where 46 lots
remain as of June 30, 2004. The increase in the investment in real estate
compared to a year ago relates primarily to land purchases for the planned
Springbank joint venture development in Plainfield, Illinois.
4
SECURITIES SALES
QE 6/30/04 QE 3/31/04 QE 6/30/03
---------- ---------- ----------
INVESTMENT SECURITIES:
Net gains (losses) on sale (000's) ($32) $2,834 $285
MORTGAGE-BACKED SECURITIES:
Net gains on sale (000's) - $489 -
During the first quarter of 2004, the Company sold three investment securities
on which it had previously taken other-than-temporary-impairment writedowns in
2002 and 2003. The net gain from the sale of these three securities was $2.7
million.
NON-INTEREST EXPENSE
QE 6/30/04 QE 3/31/04 QE 6/30/03
---------- ---------- ----------
Total non-interest expense (000's) $45,184 $46,890 $26,744
Non-interest expense to average assets 1.96% 2.10% 1.79%
Efficiency ratio (1) 53.61% 57.82% 46.71%
(1) The efficiency ratio is calculated by dividing non-interest expense by the
sum of net interest income and non-interest income, excluding net gain/(loss) on
sale and writedown of mortgage-backed and investment securities.
Non-interest expense decreased modestly in the current quarter compared to the
first quarter of 2004, primarily the result of the beginning of some
compensation cost savings related to the St. Francis operations following the
completion, on May 31, 2004, of the data processing and other systems
conversion. Overall expenses in the current quarter also reflect approximately
$880,000 in costs related to completion of the St. Francis systems conversion,
including software programming costs and incremental incentive compensation and
overtime costs.
Compared to a year ago, all major categories of non-interest expense showed
increases due to significant growth of the Company during the past year,
including expansion into new markets. The added cost of management personnel and
infrastructure needed to facilitate this growth and to address the increased
compliance burden under new regulations also contributed to higher expenses year
over year. Compensation and benefits expense totaled $24.0 million in the
current period compared to $25.6 million in the quarter ended March 31, 2004 and
$15.7 million in the second quarter of last year. The increase compared to a
year ago was primarily due to the 2003 mergers, although normal salary
increases, higher payroll taxes, increased medical costs and staffing at new
branch offices opened during the past year also contributed to increased
compensation costs.
Office occupancy and equipment costs totaled $6.7 million in the current period
compared to $6.5 million in the first quarter of 2004 and $3.5 million a year
ago. This increase from a year ago is due primarily to the operation of 67
branch offices, compared to 43 offices operated at June 30, 2003. The additional
rent expense resulting from the 2004 consolidation of four loan operations
centers into one location also contributed to occupancy cost increases but is
designed to improve efficiencies over the long term.
5
Income tax expense totaled $12.8 million in the current quarter, an effective
income tax rate of 33.0%, compared to $11.3 million or an effective income tax
rate of 36.5% for the quarter ended June 30, 2003. The decline in the effective
income tax rate is primarily due to the tax benefits generated from St. Francis'
low income and senior housing projects.
ASSET QUALITY
QE 6/30/04 QE 3/31/04 QE 6/30/03
---------- ---------- ----------
Non-performing loans (NPL) (000's) $28,944 $30,259 $22,391
Non-performing assets (NPA) (000's) $31,152 $32,179 $32,802
NPL / total loans .43% .47% .49%
NPA / total assets .33% .35% .55%
Allowance for loan losses (ALL) (000's) $34,721 $34,437 $19,379
ALL / total loans .52% .53% .42%
ALL / NPL 120.0% 113.8% 86.5%
Provision for loan losses (000's) $280 $300 -
Net charge-offs (recoveries) (000's) ($4) $418 $92
The Company continues to maintain strong asset quality. At June 30, 2004, 93% of
non-performing loans consisted of loans secured by one-to four-family
residential properties, compared to 90% at March 31, 2004. The Company recorded
a provision for loan losses of $280,000 in the current quarter primarily due to
the growth in the loan portfolio.
BALANCE SHEET & CAPITAL
QE 6/30/04 QE 3/31/04 QE 6/30/03
---------- ---------- ----------
ASSETS:
Total assets (000's) $9,374,628 $9,077,753 $5,971,295
Loans receivable (000's) $6,730,929 $6,454,210 $4,614,757
Mortgage-backed securities (000's) $975,348 $1,045,142 $315,393
LIABILITIES AND EQUITY:
Total liabilities (000's) $8,468,564 $8,162,889 $5,445,459
Deposits (000's) $5,673,046 $5,618,127 $3,836,466
Borrowed funds (000's) $2,612,099 $2,381,838 $1,471,000
Stockholders' equity (000's) $906,064 $914,864 $525,836
OTHER:
1-4 family residential loans / total loans 60.8% 60.8% 76.9%
Core deposits / total deposits 60.6% 59.9% 59.0%
Book value per share $27.74 $27.79 $22.66
Stockholders equity / total assets 9.7% 10.1% 8.8%
Total assets increased $296.9 million over the past three months (13.1%
annualized) due primarily to growth in loans held in the portfolio. This growth
was attributable to increased ARM originations, reflecting a shift in consumer
preferences and the continued growth in home equity loan balances. Loans
receivable increased by $277 million during the quarter, which represented
annualized growth in loan
6
balances of 17.1%. The percentage of 1-4 family residential loans to total loans
remained steady at June 30, 2004 compared to March 31, 2004 but changed
considerably compared to a year ago, primarily as a result of the impact of the
St. Francis merger. The percentage of core deposits improved modestly.
Stockholders' equity decreased during the quarter as the increase from net
income of $26.0 million was partially offset by $6.9 million of dividends, and a
$16.3 million after-tax decline in the market value of securities available for
sale, due to the sharp rise in interest rates during the current quarter. In
addition, the Company repurchased 309,500 shares during the quarter at an
average price of $41.71 per share. Through June 30, 2004, a total of 1,380,000
shares have been repurchased under the Company's 1.6 million share repurchase
program at an average price of $40.04 per share. The Bank's tangible, core and
risk-based capital percentages of 6.71%, 6.71% and 10.60%, respectively, at June
30, 2004 exceeded all minimum regulatory capital requirements.
RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2004
Diluted earnings per share totaled $1.50 in the current six-month period
compared to $1.63 last year. For the six months ended June 30, 2004, net income
totaled $50.8 million compared to $38.8 million in last year's comparable
period. Net interest income totaled $129.2 million compared to $81.6 million
last year. The net interest margin expanded to 3.08% for the six months ended
June 30, 2004, compared to 2.91% for the first six months of 2003. Return on
equity for the six months ended June 30, 2004 was 11.14% compared to 15.03% for
the six months ended June 30, 2003.
Non-interest income totaled $39.5 million for the six months ended June 30,
2004, equal to 23.4% of total revenue. For the six months ended June 30, 2003,
non-interest income was $33.0 million, or 28.8% of total revenue. In the prior
year period, there was considerable loan refinancing activity resulting in gains
on sale of loans totaling $15.8 million compared to $3.5 million in the current
year. Gains on sales of mortgage-backed securities were $489,000 for the current
period compared to $5.4 million for the prior year period. Higher deposit
account service charges and a $1.8 million impairment recovery related to
servicing rights also contributed to the increase in 2004. Additionally, the
results from last year included losses from sales and writedowns of investment
securities of $5.4 million while the current period had net gains of $2.8
million.
Non-interest expense totaled $92.1 million in the current six-month period,
compared to $53.4 million reported for the six months ended June 30, 2003.
Increased compensation expense accounted for $18.3 million of the increase,
while all other categories of non-interest expense showed large increases due
generally to increased costs associated with the Company's considerable market
expansion over the past year.
RECENT DEVELOPMENTS
On June 5, 2004, the Company announced it had reached an agreement to acquire
Chesterfield Financial Corp. in a cash and stock transaction valued at
approximately $128.5 million. The Company expects this transaction to close in
the fourth quarter of 2004. At March 31, 2004, Chesterfield had assets of $361
million, deposits of $279 million and four banking facilities in the Chicago
area.
7
OUTLOOK FOR 2004
The Company indicated that it currently expects earnings for 2004 to be in the
range of $3.20-$3.35 per diluted share. The lowered earnings guidance is
primarily a function of current market dynamics. Mortgage loan demand,
particularly refinance activity which comprised a significant portion of overall
loan volume during 2003 and the beginning of 2004, has dropped significantly
following the rise in interest rates during the second quarter. These
developments have led the Company to lower its outlook on mortgage loan volume
for the balance of the year and to increase lower-yielding adjustable-rate
mortgages in its projected mortgage origination product mix. While the Company
expects to benefit from lower non-interest expenses in the second half of the
year due to completion of the St. Francis systems conversion, some of this
benefit will be offset by higher than previously anticipated costs relating to
management personnel and infrastructure improvements to accommodate the growth
of the Company, as well as from increased costs associated with compliance with
new laws affecting public companies.
As a result of lower projected loan origination volume, the Company currently
expects less earning asset growth in 2004 than previously projected, which
impacts expected net interest income. In addition, the Company expects loan sale
profits from 1-4 family originations to be less than previously projected.
Income from real estate development activities is projected to be lower than
previously estimated because of delays in receiving municipal approvals for the
Company's Springbank development. While the approvals are still expected this
year, the delay will postpone at least some of the previously anticipated lot
sale closings in this new project until 2005. The Company currently estimates
income from real estate development operations to be in the range of $6.0-$9.5
million for 2004.
The projections assume a stable housing purchase market, continued good credit
quality and completion of the Company's previously authorized stock buyback
program.
MAF Bancorp is the parent company of Mid America Bank, a federally chartered
stock savings bank. The Bank currently operates a network of 67 retail banking
offices throughout Chicago and Milwaukee and their surrounding areas. Offices in
Wisconsin operate under the name "St. Francis Bank, a division of Mid America
Bank." The Company's common stock trades on the Nasdaq Stock Market under the
symbol MAFB.
Forward-Looking Information
---------------------------
Statements contained in this news release that are not historical facts
including the statements in the "Outlook for 2004" section above, constitute
forward-looking statements (within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended), which involve significant risks and
uncertainties. The Company intends such forward-looking statements to be covered
by the safe harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and is including this
statement for purposes of invoking these safe harbor provisions. These
forward-looking statements, which are based on certain assumptions and describe
future plans, strategies and expectations of the Company, are generally
identifiable by use of the words "believe," "expect," "intend," "anticipate,"
"estimate," "project," "plan," or similar expressions. The Company's ability to
predict results or the actual effect of future plans or strategies is inherently
uncertain and actual results may differ from those predicted. The Company
undertakes no obligation to update these forward-looking statements in the
future.
Factors which could have a material adverse effect on operations and could
affect management's outlook or future prospects of the Company and its
subsidiaries include, but are not limited to, higher than expected
8
overhead, infrastructure and compliance costs needed to support growth in the
Company, difficulties implementing the Company's business model in the Milwaukee
area markets, unanticipated changes in interest rates or flattening of the yield
curve, demand for loan products, unanticipated changes in secondary mortgage
market conditions or the market for mortgage servicing rights, deposit flows,
competition, adverse federal or state legislative or regulatory developments,
monetary and fiscal policies of the U.S. Government, including policies of the
U.S. Treasury and Federal Reserve Board, difficulties or delays in completing
the acquisition of Chesterfield, higher than expected costs or unanticipated
difficulties associated with the integration of Chesterfield into MAF,
deteriorating economic conditions which could result in increased delinquencies
in MAF's or Chesterfield's loan portfolio, the quality or composition of MAF's
or Chesterfield's loan or investment portfolios, demand for financial services
and residential real estate in MAF's or Chesterfield's market area,
unanticipated slowdowns in real estate lot sales or problems in closing pending
real estate contracts, delays in real estate development projects, the possible
short-term dilutive effect of other potential acquisitions, if any, and changes
in accounting principles, policies and guidelines. These risks and uncertainties
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements.
NOTE: The following notice is included to meet certain legal requirements.
--------------------------------------------------------------------------
MAF has filed a registration statement containing a preliminary proxy
statement/prospectus and other documents regarding the proposed transaction with
Chesterfield Financial Corp. with the Securities and Exchange Commission.
CHESTERFIELD SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS,
BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT MAF AND CHESTERFIELD, AND THE
PROPOSED TRANSACTION. When available, copies of this proxy statement/prospectus
will be mailed to Chesterfield shareholders, and it and other documents filed by
MAF or Chesterfield with the SEC may be obtained free of charge at the SEC's web
site at http://www.sec.gov, or by directing a request to MAF at 55th Street &
Holmes Avenue, Clarendon Hills, IL 60514 or Chesterfield at 10801 S. Western
Avenue, Chicago, IL 60643.
Chesterfield and its directors, executive officers and certain other members of
management and employees may be soliciting proxies from their stockholders in
favor of the proposed merger. Information regarding such persons who may, under
the rules of the SEC, be considered to be participants in the solicitation of
Chesterfield's stockholders in connection with the proposed merger is set forth
in Chesterfield's proxy statement filed with the SEC on October 17, 2003
relating to its annual meeting of stockholders held on November 18, 2003.
Additional information is set forth in the preliminary proxy
statement/prospectus on file with the SEC.
9
MAF BANCORP, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2004 2003 2004 2003
---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
Interest income $ 103,378 73,925 $ 205,385 150,951
Interest expense 38,208 33,362 76,186 69,333
---------- -------- ---------- --------
Net interest income 65,170 40,563 129,199 81,618
Provision for loan losses 280 - 580 -
---------- -------- ---------- --------
Net interest income after provision for loan losses 64,890 40,563 128,619 81,618
Non-interest income:
Gain (loss) on sale and writedown of:
Loans receivable held for sale 1,676 8,254 3,456 15,802
Mortgage-backed securities - - 489 5,352
Investment securities (32) 285 2,802 (5,427)
Foreclosed real estate 50 302 196 233
Income from real estate operations 2,509 1,687 3,611 3,322
Deposit account service charges 8,721 5,960 16,577 11,399
Loan servicing fee income (expense) (115) (2,040) 126 (3,416)
Valuation recovery (allowance) on mortgage servicing rights 1,200 (940) 1,755 (940)
Brokerage commissions 1,002 648 2,098 1,379
Other 4,071 2,817 8,367 5,284
---------- -------- ---------- --------
Total non-interest income 19,082 16,973 39,477 32,988
Non-interest expense:
Compensation and benefits 24,006 15,654 49,640 31,292
Office occupancy and equipment 6,722 3,453 13,225 6,984
Advertising and promotion 2,594 1,777 5,001 3,098
Data processing 2,289 992 4,407 1,965
Other 8,842 4,498 18,330 9,331
Amortization of core deposit intangibles 731 370 1,471 749
---------- -------- ---------- --------
Total non-interest expense 45,184 26,744 92,074 53,419
---------- -------- ---------- --------
Income before income taxes 38,788 30,792 76,022 61,187
Income taxes 12,818 11,253 25,258 22,360
---------- -------- ---------- --------
Net income $ 25,970 19,539 50,764 38,827
========== ======== ========== ========
Basic earnings per share $ .79 .84 1.54 1.67
========== ======== ========== ========
Diluted earnings per share .77 .82 1.50 1.63
========== ======== ========== ========
10
MAF BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
(UNAUDITED)
JUNE 30, DECEMBER 31,
2004 2003
-------- ------------
ASSETS
- ------
Cash and due from banks $ 134,051 144,290
Interest-bearing deposits 116,443 57,988
Federal funds sold 64,410 19,684
--------- ---------
Total cash and cash equivalents 314,904 221,962
Investment securities available for sale, at fair value 347,833 365,334
Stock in Federal Home Loan Bank of Chicago, at cost 366,681 384,643
Mortgage-backed securities available for sale, at fair value 874,052 971,969
Mortgage-backed securities held to maturity (fair value $98,300) 101,296 -
Loans receivable held for sale 106,831 44,511
Loans receivable, net of allowance for losses of $34,721 and $34,555 6,624,098 6,324,596
Accrued interest receivable 32,822 31,168
Foreclosed real estate 2,204 3,200
Real estate held for development or sale 38,416 32,093
Premises and equipment, net 132,434 122,817
Other assets 133,245 130,615
Goodwill 262,443 262,488
Intangibles 37,369 38,189
--------- ---------
$9,374,628 8,933,585
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Deposits 5,673,046 5,580,455
Borrowed funds 2,612,099 2,299,427
Advances by borrowers for taxes and insurance 49,952 41,149
Accrued expenses and other liabilities 133,467 110,950
--------- ---------
Total liabilities 8,468,564 8,031,981
--------- ---------
Stockholders' equity:
Preferred stock, $.01 par value; authorized
5,000,000 shares; none outstanding - -
Common stock, $.01 par value;
80,000,000 shares authorized; 33,121,465 and 33,063,853
shares issued; 32,667,915 and 33,063,853 shares outstanding 331 331
Additional paid-in capital 497,663 495,747
Retained earnings, substantially restricted 435,897 402,402
Accumulated other comprehensive income (loss), net of tax (9,823) 2,109
Stock in Gain Deferral Plan; 243,052 and 240,879 shares 1,109 1,015
Treasury stock, at cost; 453,550 at June 30, 2004 (19,113) -
--------- ---------
Total stockholders' equity 906,064 901,604
--------- ---------
$9,374,628 8,933,585
========= =========
11
MAF BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(In thousands, except share data)
(Unaudited)
JUNE 30, DECEMBER 31, JUNE 30,
2004 2003 2003
-------- ------------ --------
Book value per share $ 27.74 $ 27.27 $ 22.66
Stockholders' equity to total assets 9.67% 10.09% 8.81%
Tangible capital ratio (Bank only) 6.71 7.16 6.96
Core capital ratio (Bank only) 6.71 7.16 6.96
Risk-based capital ratio (Bank only) 10.60 11.45 11.73
Common shares outstanding:
Actual 32,667,915 33,063,853 23,201,179
Basic (weighted average) 32,740,881 27,951,055 23,274,342
Diluted (weighted average) 33,564,045 28,836,235 23,857,888
Non-performing loans $ 28,944 $ 32,787 $ 22,391
Non-performing assets 31,152 43,684 32,802
Allowance for loan losses 34,721 34,555 19,379
Non-performing loans to total loans .43% .51% .49%
Non-performing assets to total assets .33 .49 .55
Allowance for loan losses to total loans .52 .54 .42
Mortgage loans serviced for others $ 3,308,843 $ 3,330,039 $ 2,237,178
Capitalized mortgage servicing rights, net 24,779 24,128 13,820
Core deposit intangibles 12,590 14,061 6,506
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- -------------------
2004 2003 2004 2003
---- ---- ---- ----
Average balance data:
Total assets $ 9,238,105 $ 5,966,598 $ 9,087,753 $ 5,946,390
Loans receivable 6,665,054 4,533,706 6,561,424 4,519,388
Interest-earning assets 8,539,108 5,613,261 8,401,997 5,599,867
Deposits 5,201,601 3,514,946 5,177,834 3,494,269
Interest-bearing liabilities 7,704,319 4,995,666 7,588,643 4,996,482
Stockholders' equity 910,958 522,170 911,079 516,654
Performance ratios (annualized):
Return on average assets 1.12% 1.31% 1.12% 1.31%
Return on average equity 11.40 14.97 11.14 15.03
Average yield on interest-earning assets 4.85 5.27 4.89 5.40
Average cost of interest-bearing liabilities 1.99 2.68 2.01 2.80
Interest rate spread 2.86 2.59 2.88 2.60
Net interest margin 3.05 2.89 3.08 2.91
Average interest-earning assets to average
interest-bearing liabilities 110.84% 112.36% 110.72 112.08%
Non-interest expense to average assets 1.96 1.79 2.03 1.80
Non-interest expense to average assets
and loans serviced for others 1.44 1.31 1.52 1.32
Efficiency ratio (1) 53.61 46.71 55.67 46.58
Loan originations $ 1,295,778 $ 1,392,319 $ 2,196,661 $ 2,448,220
Loans sold 257,492 401,358 390,973 878,976
Cash dividends declared per share .21 .18 .42 .36
(1) The efficiency ratio is calculated by dividing non-interest expense by
the sum of net interest income and non-interest income, excluding net
gain/(loss) on sale and writedown of mortgage-backed and investment
securities.
12