EXHIBIT 99.1
(ST. FRANCIS CAPITAL CORP. LOGO)
NEWS RELEASE
FOR FURTHER INFORMATION CONTACT: SUBJECT:
Jon D. Sorenson St. Francis Capital Corporation
Chief Financial Officer Announces Third Quarter Fiscal
(262) 787-8700 Year Earnings and Quarterly Dividend
Release Time: 6:30 a.m. Central Time July 25, 2003
Brookfield, WI - July 25, 2003...... St. Francis Capital Corporation (NASDAQ:
STFR) today reported earnings for the three and nine months ended June 30, 2003,
and announced a quarterly dividend to shareholders.
Net income for the three months ended June 30, 2003 increased to $6.5
million compared with $5.1 million for the three months ended June 30, 2002.
Diluted earnings per share increased to $0.66 for the three months ended June
30, 2003 compared with $0.52 for the three months ended June 30, 2002. Net
income for the nine months ended June 30, 2003 increased to $18.9 million
compared with $16.0 million for the nine months ended June 30, 2002. Diluted
earnings per share increased to $1.92 for the nine months ended June 30, 2003
compared with $1.65 for the nine months ended June 30, 2002.
The Company also announced a cash dividend in the amount of $0.20 per
share payable on August 20, 2003 to shareholders of record as of August 11,
2003. Since dividends were instituted in 1995, the Company has paid 32
consecutive quarterly dividends.
The interest rate environment continued to have a significant impact on
quarterly results, as rates remained near 40-year lows. Mortgage loan
originations remained at very high levels and mortgage-related assets continue
to be affected by the low interest rates. Gains on the sale of mortgage loans
were $5.9 million and $16.4 million for the three and nine months ended June 30,
2003, respectively, compared with $2.3 million and $7.6 million for the same
periods in the prior year. Operating results also include charges of $1.3
million and $3.9 million ($0.08 and $0.23 per diluted share after-tax) for the
three and nine months ended June 30, 2003, respectively, related to impairment
write-downs of the Company's mortgage servicing rights (another aspect of
refinancing activity related to low rates), compared with $900,000 for the three
and nine month periods in the prior year ($0.06 per diluted share after-tax).
"The low interest rate environment which has persisted over the past
year continues to cause significant activity within the mortgage-related parts
of our income statement and balance sheet," said Thomas R. Perz, President and
Chief Executive Officer of St. Francis Capital Corporation. "Besides the clearly
observable effects of mortgage gains and the servicing impairment charge on the
income statement, our overall loan growth has been slowed by repayments within
the mortgage portfolio. In a rising rate environment, we would expect to see a
reversal of the trends spurred by lower rates in this past year."
The Company's mortgage servicing rights impairment charge results from
the requirement that servicing rights be accounted for at the lower of book
(i.e. cost) or market value. As part of the calculation of the market value of
mortgage servicing rights, the Company calculates the present value of the
future stream of servicing fee income expected to be received from its mortgage
loan servicing portfolio. This calculation relies in part on prepayment speeds
as forecast by major mortgage dealers based on a number of assumptions,
including an assumption as to the future direction of interest rates. The
Company services $869 million in mortgage loans for others, with those servicing
rights recorded at $6.4 million, net of valuation allowances, as of June 30,
2003.
Net interest income decreased $1.8 million to $11.7 million and $2.9
million to $36.0 million for the three and nine months ended June 30, 2003,
respectively, compared to $13.5 million and $38.9 million during the same
periods in the prior year. The decrease in net interest income is a result of a
decline in the Company's net interest margin, which decreased to 2.24% and 2.32%
for the three and nine months ended June 30, 2003, respectively, compared with
2.75% and 2.69% for the same periods in the prior year. The low interest rates
discussed previously also affected the Company's net interest margin as the
decline in general interest rates was reflected by a reduced yield on earning
assets. The cost of liabilities is no longer decreasing as rapidly as the
decrease in the yield on earning assets, since deposit rates are at a level
where it is difficult to reduce them further. The Company's interest rate
sensitivity as measured by its one-year interest rate gap position is also
positive, which implies an increase in net interest income in a rising rate
environment or a decrease in net interest income if rates were to continue to
fall further.
Other operating income increased to $11.1 million and $29.9 million for
the three and nine months ended June 30, 2003, respectively, compared to $5.3
million and $19.0 million for the same periods in the prior year. Other than the
aforementioned gains on the sale of loans partially offset by the mortgage
servicing rights impairment, the change was due to a variety of factors. Loan
servicing and related fees increased $791,000 to $1.6 million and $1.9 million
to $4.9 million for the three and nine months ended June 30, 2003, respectively.
The increases represent various sources of income including servicing revenues
on loans sold, prepayment penalties on early repayment of loans, modification
and other fees related to mortgage loans and annual fees on home equity lines of
credit. Depository fees increased $948,000 to $2.3 million and $1.4 million to
$5.5 million for the three and nine months ended June 30, 2003, respectively.
Increases were primarily due to increases in the Company's checking deposits and
related monthly and overdraft fees. Gains on the sale of securities increased
$979,000 to $1.3 million and $1.6 million to $2.6 million for the three and nine
months ended June 30, 2003. "We are very pleased with the increase in fee income
being earned by the Company," stated Perz, "Developing other sources of revenue
can help complement the income that results from our net interest margin."
General and administrative expenses increased to $13.3 million and
$39.2 million for the three and nine months ended June 30, 2003, respectively,
compared to $11.9 million and $35.8 million for the comparable prior year
periods. The increase is primarily due to increases in the levels of
compensation and employee benefits. Total compensation and benefits increased
$1.1 million and $2.7 million for the three and nine months ended June 30, 2003,
respectively, compared with the same periods in the prior year. The majority of
the change in compensation expense was due to increases in the Company's
mortgage lending division compensation of $591,000 and $1.7 million for the
three and nine months ended June 30, 2003, respectively, compared with the prior
year. These increases were comprised primarily of commission compensation and
additional salary and benefit compensation, which were directly related to the
extremely high level of mortgage activity fostered by the low interest rate
environment. Merger related expenses were $353,000 and $456,000 for the three
and nine months ended June 30, 2003.
Total assets at June 30, 2003 were $2.25 billion, a decrease of $85
million from September 30, 2002. Loans receivable declined $42.2 million from
September 30, 2002 primarily due to decreases in 1-4 family
mortgage loans and commercial loans partially offset by growth in the Company's
consumer loan portfolio. The Company's 1-4 family mortgage loan portfolio has
been affected by the low level of interest rates as loans have continued to pay
off or refinance. The commercial loan portfolio has decreased due to a reduction
in the Company's syndicated loan credits. Mortgage-backed securities and
investment securities decreased by $31.5 million as the Company continues its
ongoing balance sheet restructuring. For the past several years the Company has
been reducing its level of mortgage-backed and investment securities as a
percentage of its total balance sheet. Deposits declined by $59.5 million from
September 30, 2002 due to a decrease in brokered deposits of $100.2 million
partially offset by an increase in retail deposits of $40.7 million.
Non-performing assets totaled $4.2 million or 0.19% of total assets at
June 30, 2003, a slight increase from $4.1 million or 0.18% of total assets at
September 30, 2002. The provision for loan losses was $84,000 and $637,000 for
the three and nine months ended June 30, 2003, respectively, compared to
$913,000 and $2.7 million for the same periods in the prior year. Net
charge-offs were $177,000 and $677,000 for the three and nine months ended June
30, 2003, compared to net charge-offs of $143,000 and $514,000 for the same
periods during the prior year. The provision for loan losses is affected by a
number of factors including amount and condition of non-performing assets and
classified assets, the level of historical net charge-offs, the current size and
loan mix of the loan portfolio, management's view of a variety of external
factors such as the state of the economy, and other factors that may be unique
to specific credits.
On May 21, 2003 St. Francis Capital Corporation announced it has agreed
to be acquired by MAF Bancorp, Inc. (NASDAQ: MAFB) in an all-stock transaction.
Subject to regulatory approval and the approval of St. Francis and MAF
shareholders, the transaction is expected to close in the fourth quarter of
2003.
St. Francis Capital Corporation, with $2.25 billion in assets, is the
holding company for St. Francis Bank, F.S.B. The Bank operates 22 full-service
offices and three loan offices in Milwaukee, Waukesha, Washington, Ozaukee and
Walworth counties and a mortgage-banking subsidiary based in Illinois.
Certain matters discussed in this press release are "forward-looking
statements" intended to qualify for the safe harbors from liability as
established by the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements include words and phrases such as "will likely
result," "are expected to," "will continue," "is anticipated," "estimate,"
"project," "intends to" or similar expressions. Similarly, statements that
describe the Company's future plans, objectives or goals are also
forward-looking statements. The Company wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date of this press release, and to advise readers that various factors could
affect the Company's financial performance and could cause actual results for
future periods to differ materially from those anticipated or projected. Such
factors include, but are not limited to: (i) general market interest rates, (ii)
general economic conditions, (iii) legislative/regulatory changes, (iv) monetary
and fiscal policies of the U.S. Treasury and Federal Reserve, (v) changes in the
quality or composition of the Company's loan and investment portfolios, (vi)
demand for loan products, (vii) deposit flow, (viii) competition, (ix) demand
for financial services in the Company's markets, and (x) changes in accounting
principles, policies or guidelines.
###
St. Francis Capital Corporation and Subsidiary
Financial Highlights (Dollars in thousands, except per share data) (unaudited)
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<Table>
<Caption>
OPERATING DATA:
Three months ended Nine months ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
---------- ----------- ----------- -----------
Interest Income:
Loans $ 18,943 $ 21,524 59,645 66,327
Mortgage-backed and related securities 4,146 7,565 14,675 23,075
Other 2,107 1,547 4,951 3,921
---------- ----------- ----------- -----------
Total interest income 25,196 30,636 79,271 93,323
Interest Expense:
Deposits 6,033 8,309 20,020 28,465
Advances and other borrowings 7,402 7,940 22,580 23,189
---------- ----------- ----------- -----------
Total interest expense 13,435 16,249 42,600 51,654
---------- ----------- ----------- -----------
Net interest income before provision for loan losses 11,761 14,387 36,671 41,669
Provision for loan losses 84 913 637 2,733
---------- ----------- ----------- -----------
Net interest income after provision for loan losses 11,677 13,474 36,034 38,936
---------- ----------- ----------- -----------
Other Operating Income:
Loan servicing and loan related fees 1,640 849 4,865 2,957
Mortgage servicing impairment (1,330) (900) (3,855) (900)
Depository fees and service charges 2,331 1,383 5,548 4,155
Securities gains 1,301 322 2,645 1,056
Gain on sales of loans 5,858 2,273 16,434 7,550
Insurance, annuity and brokerage commissions 358 397 1,193 1,208
Income from real estate held for investment 925 782 2,714 2,331
Other income (24) 179 370 671
---------- ----------- ----------- -----------
Total other operating income 11,059 5,285 29,914 19,028
---------- ----------- ----------- -----------
General and Administrative Expenses:
Compensation and employee benefits 7,589 6,528 22,964 20,222
Office building 1,306 1,260 3,843 3,658
Furniture and equipment 1,034 976 3,106 2,926
Data processing 222 428 733 1,307
Telephone & postage 444 424 1,364 1,263
Real estate held for investment 1,072 702 2,884 2,255
Other general and administrative expenses 1,670 1,594 4,354 4,191
---------- ----------- ----------- -----------
Total general and administrative expenses 13,337 11,912 39,248 35,822
---------- ----------- ----------- -----------
Income before income tax expense 9,399 6,847 26,700 22,142
Income tax expense 2,878 1,783 7,809 6,157
---------- ----------- ----------- -----------
Net income $ 6,521 $ 5,064 $ 18,891 $ 15,985
========== =========== =========== ===========
Basic earnings per share: $ 0.69 $ 0.55 $ 2.01 $ 1.73
Diluted earnings per share: $ 0.66 $ 0.52 $ 1.92 $ 1.65
Return on average equity 13.68% 11.86% 13.55% 12.73%
Return on average assets 1.17% 0.91% 1.13% 0.97%
Net interest margin 2.24% 2.75% 2.32% 2.69%
Net interest spread 2.00% 2.52% 2.09% 2.46%
Other operating income to average assets 1.99% 0.95% 1.79% 1.16%
G&A expenses to average assets 2.40% 2.14% 2.34% 2.18%
Efficiency ratio 61.98% 61.56% 61.38% 60.06%
Efficiency ratio (adjusted for affordable housing) 58.47% 58.93% 58.24% 57.25%
Effective tax rate 30.62% 26.04% 29.25% 27.81%
Average share outstanding - Basic 9,420,265 9,291,005 9,391,007 9,233,055
Average share outstanding - Diluted 9,927,120 9,785,807 9,848,933 9,704,416
</Table>
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St. Francis Capital Corporation and Subsidiary
Financial Highlights (Dollars in thousands, except per share data) (unaudited)
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<Table>
<Caption>
FINANCIAL CONDITION:
June 30, September 30, June 30,
2003 2002 2002
------------- ------------- -------------
Cash and cash equivalents $ 44,167 $ 45,835 $ 45,060
Debt and equity securities available for sale 64,797 16,596 55,742
Mortgage-backed and related securities available for sale 537,934 618,580 571,854
Loans held for sale 83,139 65,006 32,482
Mortgage-backed and related securities 91,236 90,246 104,127
Loans receivable, net 1,215,263 1,257,466 1,264,642
Federal Home Loan Bank stock 110,943 90,784 64,974
Real estate held for investment 31,650 32,803 31,838
Foreclosed properties 847 1,908 1,865
Goodwill 12,891 12,891 13,351
Other assets 61,474 107,002 59,703
------------- ------------- -------------
Total Assets $ 2,254,341 $ 2,339,117 $ 2,245,638
============= ============= =============
Deposits $ 1,357,524 $ 1,416,979 $ 1,396,919
Advances and other borrowings 667,767 642,063 652,803
Other liabilities 35,072 100,994 21,269
------------- ------------- -------------
Total Liabilities 2,060,363 2,160,036 2,070,991
------------- ------------- -------------
Shareholders' equity 193,978 179,081 174,647
------------- ------------- -------------
Total Liabilities and Shareholders' Equity $ 2,254,341 $ 2,339,117 $ 2,245,638
============= ============= =============
Shareholders' equity to total assets 8.60% 7.66% 7.78%
Book value per share (fully diluted) $ 19.33 $ 18.31 $ 17.74
Ending shares outstanding 9,466,206 9,350,873 9,342,353
</Table>
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<Table>
<Caption>
AVERAGE BALANCE SHEET INFORMATION:
Three months ended Nine months ended
June 30, June 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Average total assets $ 2,228,338 $ 2,228,145 $ 2,239,726 $ 2,195,667
Average loans 1,299,473 1,290,450 1,313,411 1,281,348
Average earning assets 2,102,673 2,099,429 2,111,947 2,069,969
Average interest-bearing liabilities 1,921,999 1,958,181 1,944,299 1,933,373
Average shareholders' equity 191,210 171,261 186,402 167,941
</Table>
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<Table>
<Caption>
ASSET QUALITY INFORMATION:
June 30, September 30, June 30,
2003 2002 2002
------------- ------------- -------------
Non-performing loans $ 3,349 $ 2,209 $ 3,109
Foreclosed properties 847 1,908 1,865
------------- ------------- -------------
Non-performing assets $ 4,196 $ 4,117 $ 4,974
============= ============= =============
Performing troubled debt restructurings $ 1,044 $ 2,440 $ 2,833
Allowance for loan losses $ 14,172 $ 14,212 $ 13,905
Non-performing loans to gross loans 0.25% 0.16% 0.23%
Non-performing assets to total assets 0.19% 0.18% 0.35%
Allowance for loan losses to gross loans 1.04% 1.03% 1.02%
Allowance for loan losses to non-performing loans 423.17% 643.37% 447.25%
</Table>
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