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
FOURTH QUARTER AND YEAR END RESULTS
Media, PA November 12, 2003 - (NASDAQ: FKFS) First Keystone
Financial, Inc., the holding company for First Keystone Bank (the
"Bank") announced today earnings for the quarter and year ended
September 30, 2003. Net income for the fourth quarter was
$600,000, or $0.29 per diluted share, compared to $645,000, or
$0.32 per diluted share, for the same period last year. For the
year ended September 30, 2003, the Company earned $2.7 million, or
$1.35 diluted per share as compared to $2.7 million, or $1.34 per
diluted share for the prior fiscal year.
Net interest income for the three months and fiscal year ended
September 30, 2003 decreased $623,000, or 17.5%, and $705,000, or
5.2%, respectively, by comparison to the same periods a year ago.
For the quarter ended September 30, 2003, interest income decreased
$1.0 million, or 13.4%, which was partially offset by a decrease in
interest expense of $370,000, or 9.6%. For the three and twelve
months ended September 30, 2003, the decline in net interest income
was primarily due to the decrease in interest income resulting from
the reduction in the weighted average yield earned on interest-
earning assets being greater than the increased interest income due
to increased balances in interest earning assets.
The Company's net interest margin decreased to 2.33% and 2.64%
for the three and twelve months ended September 30, 2003 from 3.05%
and 2.95% for the same periods last year. On a linked quarter
basis, the net interest margin decreased 11 basis points from 2.44%
for the three months ended June 30, 2003. The net interest margin
compression during the quarter was primarily a result of high levels
of repayments from loan refinancings combined with the accelerated
premium amortization of mortgage-related securities.
"Although the prolonged historically low interest rate
environment has put increasing pressure on our net interest margin
and earnings, the Company has still maintained earnings while
increasing our core deposit base and non-interest income. With the
economy showing signs of improvement, we expect that commercial loan
demand will increase thereby improving our margins and returns. The
Company continues to focus on increasing non-interest related income
and gaining market share. Our expansion of our Willowdale branch to
a free standing full service office will increase market presence in
the rapidly expanding southern Chester County market while the
addition of our Aston Branch solidifies our market presence in the
Delaware County Area," Donald S. Guthrie, Chairman and Chief
Executive Officer of the Company said.
Non-interest income increased $93,000 and $883,000 for the
three and twelve months ended September 30, 2003 from the same
period last year. The increase in the fourth quarter was primarily
due to an increase in service charges and other fees and in the cash
surrender value of certain insurance policies held by the Bank to
fund retirement benefit plans partially offset by a decrease in the
gain on sales of loan and other income.
Non-interest expense decreased $595,000, or 16.4%, and
$215,000, or 1.8%, for the quarter and year ended September 30, 2003
respectively, compared to the same periods last year. The decrease
for the quarter ended September 30, 2003 was primarily attributable
to a settlement of a lawsuit which occurred in the prior year's
quarter. In addition, non-interest expense during the fourth
quarter decreased $55,000 and $121,000 in data processing and other
non-interest expenses, respectively, partially offset by increases
of $47,000, $33,000 and $30,000 in compensation and employee
benefits, occupancy and equipment and professional fees,
respectively.
The Company's total assets increased to $558.7 million at
September 30, 2003 from $518.3 million at September 30, 2002.
Mortgage-related securities available for sale increased to $124.7
million, a $39.0 million, or 45.5%, increase at September 30, 2003
mainly due to the Company's reinvestment of cash flows from the loan
and investment securities portfolio and leveraging the assets from
fiscal year 2002. Such growth was funded through deposit growth
and, to a lesser extent, the use of Federal Home Loan Bank advances.
The asset growth was partially offset by a decrease in loans
receivable from $288.8 million to $286.5 million at September 30,
2003. Total deposits increased $31.9 million, or 9.6%, to $362.6
million at September 30, 2003 from $330.8 million at September 30,
2002. At September 30, 2003, core deposits increased by 29.3
million, or 19.0%, to $183.9 million compared to September 30, 2002.
Stockholders' equity decreased slightly primarily due to the
repurchase of stock and the payment of dividends offset partially by
net income of $2.7 million.
Total non-performing assets were $3.0 million at September 30,
2003 as compared to $4.0 million at June 30, 2003 and $5.4 million
at September 30, 2002. The Company's ratio of non-performing
assets to total assets was 0.53% at September 30, 2003 compared to
1.04% at September 30, 2002. Included in the non-performing assets
at September 30, 2002 was a $1.3 million commercial real estate
loan which subsequent to year-end has returned to current status.
Certain information in this release may constitute forward-
looking statements as that term is defined in the Private
Securities Litigation Act of 1995. Such forward-looking statements
are subject to risks and uncertainties that could cause actual
results to differ materially from those estimated due to a number
of factors. 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 Bank, the Company's wholly owned subsidiary,
serves its customers from seven full-service offices in Delaware
and Chester Counties.
FIRST KEYSTONE FINANCIAL, INC.
SELECTED OPERATIONS DATA
(In thousands except per share data)
(Unaudited)
Three Months Ended Fiscal Year Ended
September 30, September 30,
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2003 2002 2003 2002
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<s> <c> <c> <c> <c>
Net interest income $2,937 $3,560 $12,876 $13,581
Provision for loan losses 130 135 715 540
Non-interest income 952 859 3,106 2,223
Non-interest expense 3,027 3,622 11,875 12,090
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Income before taxes 732 662 3,392 3,174
Income tax expense 132 17 653 448
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Net income $600 $645 $2,739 $2,726
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Basic earnings per share $0.32 $0.34 $1.44 $1.42
Diluted earnings per share 0.29 0.32 1.35 1.34
Dividends per share 0.10 0.09 0.40 0.36
Number of shares outstanding at end of period 1,925,337 2,008,611 1,925,337 2,008,611
Weighted average basic shares outstanding 1,889,132 1,901,737 1,901,682 1,915,818
Weighted average diluted shares outstanding 2,035,757 2,026,408 2,028,992 2,033,918
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SELECTED FINANCIAL DATA
(In thousands except per share data)
(Unaudited)
September 30, September 30,
2003 2002
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<s> <c> <c>
Total assets $558,695 $518,346
Loans receivable, net 286,471 288,776
Investment securities and mortgage-related securities 202,356 166,298
Cash and cash equivalents 22,049 24,623
Deposits 362,644 330,765
Borrowings 136,270 126,384
Loan loss allowance 1,986 2,358
Company-obligated mandatorily redeemable preferred securities 20,843 20,880
Total stockholders' equity 32,388 32,795
Book value per share $16.82 $16.33
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OTHER SELECTED DATA
(Unaudited)
At or for the At or for the
Three Months Ended Fiscal Year Ended
September 30, September 30,
-------------------------------------
2003 2002 2003 2002
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<s> <c> <c> <c> <c>
Return on average assets (1) 0.44% 0.51% 0.51% 0.54%
Return on average equity (1) 7.48% 8.20% 8.39% 8.77%
Interest rate spread (1) (2) 2.19% 2.84% 2.46% 2.72%
Net interest margin (1) (2) 2.33% 3.05% 2.64% 2.95%
Interest-earning assets/interest-bearing liabilities 105.33% 106.61% 106.06% 106.54%
Operating expenses to average assets (1) 2.20% 2.89% 2.22% 2.41%
Ratio of non-performing assets to total assets at
end of period 0.53% 1.04% 0.53% 1.04%
Ratio of loan loss allowance to non-performing assets
at end of period 66.73% 43.78% 66.73% 43.78%
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(1) Annualized for the three month periods.
(2) Adjusted for the effects of tax-free investments.