Exhibit 99.1
FIRST 22 West State Street
KEYSTONE Media, PA 19063
FINANCIAL, INC. 610-565-6210
FOR IMMEDIATE RELEASE
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CONTACT: THOMAS M. KELLY, PRESIDENT
(610) 565-6210
FIRST KEYSTONE FINANCIAL ANNOUNCES
SECOND QUARTER RESULTS
Media, PA April 30, 2003 - Donald S. Guthrie, Chairman and
Chief Executive Officer of First Keystone Financial, Inc. (Nasdaq:
FKFS) reported today net income for the quarter ended March 31, 2003
of $693,000, or $0.34 per diluted share, compared to $684,000, or
$0.34 per diluted share, for the same period last year. Net income
for the six months ended March 31, 2003 was $1.5 million, or $0.73
per diluted share, as compared to $1.3 million, or $0.66 per diluted
share, for the same period in 2002.
For the three and six months ended March 31, 2003, net interest
income increased $138,000, or 4.2%, and $528,000, or 8.3%,
respectively. During the second quarter of fiscal 2003, the Bank's
interest-bearing liabilities, consisting of deposits and borrowings,
continued to reprice downward more frequently than its interest-
earning assets, consisting primarily of loans and investment
securities. Interest expense for the quarter ended March 31, 2003
decreased $581,000 compared to the quarter ended March 31, 2002 due
to a 68 basis point decrease in the weighted average rate paid on
interest-bearing liabilities, partially offset by a $23.3 million
increase in the average balance of such liabilities. The decline in
interest expense was offset, in part, by a decline in interest income
for the quarter ended March 31, 2003 of $453,000 compared to the
quarter ended March 31, 2002 due to a decrease in the average yield
earned of 69 basis points, partially offset by a $25.3 million
increase in the average balance of interest-earning assets.
The Company's interest rate spread remained at 2.62% for the
three months ended March 31, 2003 as compared to the same period last
year. However, the net interest margin decreased to 2.81% for the
second quarter of fiscal 2003 from 2.86% for the same period last
year.
On a linked quarter basis, net interest income decreased
$110,000 in the second quarter of fiscal 2003 compared to the first
quarter of fiscal 2003. In addition, the net interest margin
decreased 17 basis points from 2.98% for the three months ended
December 31, 2002. During the second quarter of fiscal 2003 as
compared to the first, the Company experienced a 33 basis point
decrease in the yield earned on average interest-earning assets which
was partially offset by a 17 basis point decline in the rates paid on
interest-bearing liabilities. The compression in the net interest
margin was primarily the result of reinvesting at current low
interest rates the high cash flows resulting from the increased level
of prepayments of mortgage-related securities and the calls on
investment securities resulting from the low interest rate
environment. The Company, based on the current interest rate
environment, expects the compression of its net interest margin to
continue.
Total non-performing assets decreased to $3.6 million at March
31, 2003 from $4.1 million at December 31, 2002, and from $5.4 million
at September 30, 2002. The decrease during the quarter was primarily
due to a decrease in non-performing residential loans combined with a
decrease in the amount of real estate owned. As a result, the
Company's ratio of non-performing assets to total assets decreased to
0.67% at March 31, 2003 compared to 0.77% at December 31, 2002 and
1.04% at September 30, 2002.
For the quarter ended March 31, 2003, non-interest income
increased $90,000, or 20.0%, from the same period last year. Non-
interest income increased $248,000, or 27.3%, for the six months
ended March 31, 2003 by comparison to the same period last year. The
increase was primarily the result of an increase in the gain on sale
of loans as the Company continues to sell newly originated 30 year
fixed-rate single-family residential loans in the secondary market in
order to manage interest rate risk.
Non-interest expense for the quarter ended March 31, 2003
increased $153,000, or 5.6%, from the same period last year primarily
due to compensation and employee benefit expenses and other non-
interest expenses. The increase in compensation and employee benefit
expenses was due to the hiring of additional personnel, higher costs
of employee benefit plans and general compensation increases. Other
non-interest expense increased $115,000, or 26.0%, primarily due to
expenses relating in large part to the workout of three non-
performing commercial real estate loans aggregating $2.4 million.
Non-interest expense for the six months ended March 31, 2003
increased $410,000, or 7.6%, by comparison to the same period in the
prior year.
The Company's total assets increased to $542.7 million at March
31, 2003 from $518.3 million at September 30, 2002. The asset growth
was primarily attributable to a $36.5 million, or 42.7%, increase in
mortgage-related securities available for sale to $122.2 million at
March 31, 2003 from $85.7 million at September 30, 2002 partially
offset by a $6.6 million, or 26.6%, decrease in cash and cash equivalents
and a $6.1 million, or 7.6%, decrease in investment securities available
for sale. Such growth was funded through deposit growth and, to a
lesser extent, the use of Federal Home Loan Bank advances. Total
deposits increased $15.5 million, or 4.7%, to $346.2 million at March 31,
2003 from $330.8 million at September 30, 2002.
First Keystone Federal Savings Bank, the Company's wholly owned
subsidiary, serves its customers from seven full-service offices
located in Delaware and Chester Counties.
Certain information in this release may constitute forward-
looking information that involves risks and uncertainties that could
cause actual results to differ materially from those estimated.
Persons are cautioned that such forward-looking statements are not
guarantees of future performance and are subject to various factors,
which could cause actual results to differ materially from those
estimated. These factors include, but are not limited to, changes in
general economic and market conditions and the development of an
interest rate environment that adversely affects the interest rate
spread or other income from the Company's and the Bank's investments
and operations. The Company does not undertake and specifically
disclaims any obligation to publicly release the result of any
revisions which may be made to any forward-looking statements to
reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such statements.
FIRST KEYSTONE FINANCIAL, INC.
SELECTED OPERATIONS DATA
(In thousands except per share data)
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
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2003 2002 2003 2002
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Net interest income $3,400 $3,262 $6,909 $6,381
Provision for loan losses 195 135 390 270
Non-interest income 540 450 1,155 907
Non-interest expense 2,909 2,756 5,833 5,423
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Income before taxes 836 821 1,841 1,595
Income tax expense 143 137 367 257
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Net income $ 693 $ 684 $1,474 $1,338
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Basic earnings per share $ 0.36 $ 0.35 $ 0.77 $ 0.70
Diluted earnings per share 0.34 0.34 0.73 0.66
Dividends per share 0.10 0.09 0.20 0.18
Number of shares outstanding at end of period 1,985,847 2,053,631 1,985,847 2,053,631
Weighted average basic shares outstanding 1,912,579 1,927,878 1,909,516 1,918,475
Weighted average diluted shares outstanding 2,044,182 2,040,416 2,026,365 2,024,696
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SELECTED FINANCIAL DATA
(In thousands except per share data)
(Unaudited)
March 31, September 30,
2003 2002
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Total assets $542,651 $518,346
Loans receivable, net 288,562 288,776
Investment securities and mortgage-related securities available for sale 196,730 166,298
Cash and cash equivalents 18,069 24,623
Deposits 346,243 330,765
Borrowings 137,520 126,237
Loan loss reserve 2,720 2,358
Company-obligated mandatorily redeemable preferred securities 20,861 20,880
Total stockholders' equity 32,561 32,795
Book value per share $16.40 $16.33
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OTHER SELECTED DATA
(Unaudited)
At or for the At or for the
Three Months Ended Six Months Ended
March 31, March 31,
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2003 2002 2003 2002
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Return on average assets (1) 0.53% 0.55% 0.57% 0.54%
Return on average equity (1) 8.40% 8.88% 8.99% 8.62%
Interest rate spread (1) (2) 2.62% 2.62% 2.71% 2.55%
Net interest margin (1) (2) 2.81% 2.86% 2.90% 2.79%
Interest-earning assets/interest-bearing liabilities 106.72% 106.64% 106.37% 106.41%
Operating expenses to average assets (1) 2.21% 2.22% 2.24% 2.17%
Ratio of non-performing assets to total assets
at end of period 0.67% 0.88% 0.67% 0.88%
Ratio of loan loss reserve to non-performing assets
at end of period 75.35% 48.70% 75.35% 48.70%
(1) Annualized.
(2) Adjusted for the effect of tax-free investments.