EXHIBIT 99.1
CHESTER VALLEY BANCORP INC.
REPORTS EARNINGS OF $1.5 MILLION FOR ITS' FIRST QUARTER
FOR IMMEDIATE RELEASE
MONDAY OCTOBER 25, 2004
CONTACT: JOSEPH T. CROWLEY
TREASURER & CHIEF FINANCIAL OFFICER
(610) 269-9700 EXT. 3085
Downingtown - Chester Valley Bancorp Inc. announces that the Company posted
earnings of $1.522 million or $0.29 per diluted share for its' first quarter
ended September 30, 2004. This compared to earnings of $1.514 million or $0.29
per diluted share for the quarter ended September 30, 2003.
While earnings were relatively stable from period to period, the Company
reported net interest income of $5.114 million for the quarter ended September
30, 2004, an 8.6% increase over the comparable quarter in the prior year. After
years of pressure and a resulting decline in the Company's net interest margin,
the Federal Reserve Bank's recent rate hikes totaling .75%, have positively
impacted the Company's net interest margin. The net interest margin (computed on
a fully tax equivalent basis) increased to 3.47% during the quarter from 3.41%
for the fourth quarter ended June 30, 2004. Future increases in short-term
interest rates should have a positive impact on the Company's earnings, as the
Company continues to be asset sensitive.
Non-interest income increased to $2.089 million for the quarter ended September
30, 2004, a 3.7% increase over the quarter ended September 30, 2003. The
increases occurred primarily in investment services income, including trust fees
along with an increase in deposit fees resultant from a growth in transaction
type deposit accounts (i.e. Consumer and business checking, money market and
savings).
The above noted increases were largely offset by an increase in operating
expenses, primarily in compensation and benefits. In addition to normal salary
increases for the year, the Company has made a significant investment in its
future. The Company expanded its retail brokerage business personnel in
September 2004. Additionally, on a yearly comparison, the Bank hired seven
lending and private-banking relationship managers who became available as a
result of the recent consolidation within the local community banking market. In
addition the Bank expanded its branch network through the Coatesville branch
acquisition from PNC National Bank in March 2004 and the purchase of the
Firstrust deposits in Exton. Additionally, the Bank opened a loan production
office in Plymouth Meeting, Montgomery County, Pennsylvania, an area that was
largely impacted by the afore-mentioned consolidation; and a Private Client
office in West Chester Borough to better serve the complex needs of affluent
clients and the professionals who handle their business affairs.
At September 30, 2004, total assets increased to $644.7 million as compared to
total assets of $642.1 million at June 30, 2004. At September 30, 2004, loans
receivable, net increased by 1.3% to $400.1 million as compared to $395.1
million at June 30, 2004. Excluding residential mortgage loans, which continued
to decline, the loan portfolio grew $9.4 million or 2.9% from June 30, 2004.
Additionally, in anticipation of a rising interest rate environment, the Company
focused its' retail sales personnel on variable rate home equity lines, rather
than lock the Bank into longer-term fixed rate assets.
The asset growth was funded with both deposits and Federal Home Loan Bank
advance borrowings. Although the outstanding loan balances increased by just
1.3%, the Company closed $22.3 million in construction and commercial loans, of
which $20.1 million are lines of credit, much of which is expected to fund
during the next quarter. Undrawn commercial and construction loans increased by
$11.2 million between June 30, 2004 and September 30, 2004. Additionally, at
September 30, 2004, the Company had a pipeline of commercial and construction
loans of approximately $40.0 million, which were at various stages of the
commitment and customer acceptance process. The ultimate closing of these loans
is dependent upon a number of factors including but not limited to; (a)
competition within the marketplace, (b) changes in interest rates during the
process and (c) other factors impacting the customer. In October 2004, the
Company received a $750 thousand principal pay-down on an approximate $2.9
non-performing commercial mortgage. Additionally, the borrower prepaid interest
as a condition to the Bank's extension of the maturity date on the remaining
balance of the loan.
Donna Coughey, President and CEO stated, "While loan demand has increased, the
competition within our market is intense. Despite this competition, our loan
closings were strong and the future funding of lines of credit closed during the
quarter, as well as the restructuring of the loan portfolio achieved through
June 30, 2004 will positively impact future earnings. Additionally, our
successful acquisition of the Exton deposits from Firstrust bank, the recent
announcement of our pending acquisition of the Avondale branch from PNC National
Bank and the opening of a de novo branch in Oxford illustrate our commitment and
ability to enhance our existing branch networks through both external
acquisitions as well as internal growth. We are excited about the recent opening
of our Plymouth Meeting loan production office which we believe will provide us
with a stronger presence in a market that has been impacted by the recent
consolidation within the local community banking industry."
Chester Valley Bancorp Inc. is the parent company of both First Financial Bank
and Philadelphia Corporation for Investment Services. First Financial's
executive offices are located in Downingtown, Pennsylvania with branches in
Exton, Frazer, Thorndale, Westtown, Airport Village, Brandywine Square, Devon,
Kennett Square, Eagle Square, Coatesville and West Chester. Philadelphia
Corporation has offices in Wayne and Philadelphia.
Chester Valley Bancorp stock is traded on the NASDAQ market under the symbol
"CVAL".
This press release, contains certain "forward looking statements", either
express or implied, which concern anticipated future operations of the Company.
While these statements represent management's current judgment on what the
future may hold and management believe these judgments are reasonable, actual
results may differ materially due to numerous important factors that are
described in the Company's filing on the Form-10-K for the year ended June 30,
2004. The Company assumes no duty to update these statements should actual
events differ from expectations.
CHESTER VALLEY BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands)
Unaudited
SEPTEMBER 30, JUNE 30,
2004 2004
------------- ---------
ASSETS
Cash in banks $ 9,977 $ 12,844
Interest-bearing deposits 12,410 15,352
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TOTAL CASH AND CASH EQUIVALENTS 22,387 28,196
--------- ---------
Trading account securities 7 8
Investment securities available for sale 132,777 130,089
Investment securities held to maturity (fair value -
September 30, 2004, $57,938
June 30, 2004, $57,779) 57,740 59,384
Loans held for sale 963 538
Loans receivable 406,991 401,965
Deferred fees (476) (508)
Allowance for loan losses (6,386) (6,331)
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Loans receivable, net 400,129 395,126
--------- ---------
Accrued interest receivable 3,026 2,652
Property and equipment - net 13,041 13,009
Bank owned life insurance 5,472 5,414
Real estate owned 54 54
Goodwill and other intangibles 1,816 1,555
Other assets 7,281 6,083
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TOTAL ASSETS $ 644,693 $ 642,108
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 429,049 $ 427,103
Securities sold under agreements to repurchase 18,265 27,216
Advance payments by borrowers for taxes and insurance 479 1,433
Federal Home Loan Bank advances 130,239 120,963
Trust preferred securities 10,310 10,310
Accrued interest payable 668 679
Other liabilities 1,609 2,147
--------- ---------
TOTAL LIABILITIES 590,619 589,851
--------- ---------
Stockholders' Equity:
Preferred stock - $1.00 par value;
5,000,000 shares authorized; none issued -- --
Common stock - $1.00 par value;
10,000,000 shares authorized;
5,139,165 and 4,876,484 shares issued and outstanding
at September 30, 2004 and June 30, 2004, respectively 5,139 4,876
Additional paid-in capital 41,166 36,247
Retained earnings - partially restricted 9,433 13,303
Treasury stock (612 and 583 shares at September 30, 2004 and June 30,
2004, respectively, at cost) (13) (13)
Accumulated other comprehensive income (loss) (1,651) (2,156)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 54,074 52,257
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 644,693 $ 642,108
========= =========
CHESTER VALLEY BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except for Per Share Amounts)
Unaudited
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
2004 2003
---------- ----------
INTEREST INCOME:
Loans $ 5,851 $ 6,094
Mortgage-backed securities 413 342
Interest-bearing deposits 19 8
Investment securities:
Taxable 1,288 546
Non-taxable 320 437
---------- ----------
TOTAL INTEREST INCOME 7,891 7,427
---------- ----------
INTEREST EXPENSE:
Deposits 1,317 1,430
Securities sold under agreements to repurchase 46 32
Short-term borrowings 86 27
Long-term borrowings 1,328 1,230
---------- ----------
TOTAL INTEREST EXPENSE 2,777 2,719
---------- ----------
NET INTEREST INCOME 5,114 4,708
Provision for loan losses 102 380
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 5,012 4,328
---------- ----------
OTHER INCOME:
Investment services income 1,031 984
Service charges and fees 794 771
Gain on the sale of:
Loans 71 72
Available for sale 77 75
Other 116 112
---------- ----------
Total other income 2,089 2,014
---------- ----------
OPERATING EXPENSES:
Salaries and employee benefits 2,931 2,440
Occupancy and equipment 736 709
Data processing 254 233
Advertising 81 29
Deposit insurance premiums 16 15
Other 1,041 961
---------- ----------
TOTAL OPERATING EXPENSES 5,059 4,387
---------- ----------
Income before income taxes 2,042 1,955
Income tax expense 520 441
---------- ----------
NET INCOME $ 1,522 $ 1,514
========== ==========
EARNINGS PER SHARE (1)
Basic $ 0.30 $ 0.30
========== ==========
Diluted $ 0.29 $ 0.29
========== ==========
DIVIDENDS PER SHARE PAID DURING PERIOD (1) $ 0.11 $ 0.10
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING (1)
Basic 5,122,108 5,044,667
========== ==========
Diluted 5,276,146 5,209,283
========== ==========
(1) Earnings per share, dividends per share and weighted average shares
outstanding have been restated to reflect the effects of the 5% stock
dividends paid in September 2004 and 2003.
CHESTER VALLEY BANCORP INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------
2004 2003
-------- --------
Average interest rate spread (2) 3.42% 3.47%
Net yield on average interest-earning assets (2) 3.47% 3.51%
Ratio of average interest-earning
assets to average interest-bearing liabilities 1.04 x 1.04 x
Non-performing assets to total assets 0.64% 0.79%
Allowance for loan loss to total loans 1.60% 1.46%
Return on equity 11.49% 12.25%
Return on assets 0.94% 1.02%
Book value per common share (1) $10.52 $ 9.84
Closing price of common stock at end of
period (1) $19.78 $20.82
Number of full-service offices at end of period 12 10
(1) Per share amounts have been restated to reflect the effects of the 5%
stock dividend paid in September 2004.
(2) Percentages are presented on a taxable equivalent basis.
The following details the tax equivalent adjustments in the above table:
Three Months Ended September 30,
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2004 2003
------------------------------------------ ------------------------------------------
INTEREST TAX ADJUSTED INTEREST TAX ADJUSTED
INCOME ADJUSTMENT INCOME INCOME ADJUSTMENT INCOME
------------------------------------------ ------------------------------------------
(Dollars in thousands)
Loans $ 5,851 $ 19 $ 5,870 $ 6,094 $ 14 $ 6,108
Investments 2,040 120 2,160 1,333 163 1,496
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Total $ 7,891 $ 139 $ 8,030 $ 7,427 $ 177 $ 7,604
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