Exhibit 99.1
FIRST 22 West State Street
KEYSTONE Media, PA 19063
FINANCIAL, INC. 610-565-6210
FOR IMMEDIATE RELEASE
FIRST KEYSTONE FINANCIAL ANNOUNCES
FIRST QUARTER RESULTS
Media, PA February 3, 2005 - First Keystone Financial, Inc., the holding
company for First Keystone Bank (the "Bank"), announced today net income for
the quarter ended December 31, 2004 of $523,000, or $0.28 per diluted share,
compared to $743,000, or $0.37 per diluted share, for the same period last
year. The decrease in earnings resulted primarily from a decrease in gains on
sale of investment securities which were the result of the Company realizing
gains from market opportunities in the first quarter of fiscal 2004.
Excluding gains on sale of investment securities, earnings for the quarter
remained relatively the same compared to the same period last year.
Net interest income for the three months ended December 31, 2004
decreased $76,000, or 2.6%, to $2.8 million as compared to the same period in
2003. The decrease in net interest income was primarily the result of a
$75,000, or 2.0% increase, in interest expense for the quarter ended December
31, 2004. The average balance of interest-bearing liabilities increased $18.2
million, or 3.5%, which was partially offset by a decline of 4 basis points in
the weighted average rate paid on such liabilities. As a result, the
Company's net interest margin, on a tax-equivalent basis, decreased by 14
basis points in the first quarter of fiscal 2005 to 2.16%, as compared to
2.30% for the first quarter of fiscal 2004. The decline in the margin
reflected in large part the decline in the weighted average yield earned on
interest-earning assets as new assets bear lower current interest rates. On
a linked quarter basis, net interest income decreased $23,000, or 0.81%,
resulting in a reduction of the net interest margin declining one basis point
from 2.17% for the three months ended September 30, 2004. Although the yield
on interest-earning assets had improved by six basis points, the increase in
short-term interest rates had an adverse impact on the cost of interest-bearing
liabilities.
The Company's implementation of additional fee-based deposit services has
resulted in an increase of $153,000 in non-interest income for the quarter
ended December 31, 2004 or a 57.3% increase. However, non-interest income
decreased $165,000 to $899,000 for the three months ended December 31, 2004
from the same period last year primarily due to a $330,000 decrease in the
gain on sales of investments.
Non-interest expense increased $113,000 to $3.0 million for the quarter
ended December 31, 2004 as compared to the same period last year. The
increase for the quarter ended December 31, 2004 was primarily due to
increases of $57,000 and $105,000 in occupancy and equipment and other
non-interest expenses, respectively, partially offset by an $85,000 decrease
in real estate operations. The increase in occupancy and equipment expense
was related to branch expansion in the fourth quarter of 2004. Other
non-interest expenses increased due to the implementation of a training
program reconfirming the Company's commitment to improving customer service
as well as increases in general administrative expenses.
The provision for loan losses decreased $30,000, or 40.0%, to $45,000 for
the three months ended December 31, 2004 compared to the same period in the
prior year. The decrease in the provision was based on the Company's monthly
review of the credit quality of its loan portfolio, the net charge-offs
experienced during the period and other factors. Although, total non-performing
assets increased to $4.1 million at December 31, 2004 from $3.3 million at
September 30, 2004, subsequent to quarter end, $253,000 in non-performing
commercial loans have paid off and $1.3 million of commercial and construction
loans have returned to current status. The Company's ratio of non-performing
assets to total assets was 0.71% at December 31, 2004 compared to 0.57% at
September 30, 2004.
"For the first quarter of fiscal 2005, the balances in home equity loans
and lines of credit continued to grow," said Donald S. Guthrie, Chairman of
the Board. "In addition, we have expanded our business development and
commercial loan departments with the hiring of accomplished and seasoned
individuals in order to capitalize on the many business opportunities that the
Company's recent branch expansion has created," added Guthrie.
The Company's total assets decreased slightly to $568.9 million at
December 31, 2004 from $571.9 million at September 30, 2004. As part of the
Company's asset liability strategy to increase interest income while
maintaining the Company's interest rate profile, the Company sold $16.0
million of investment securities and reinvested the proceeds into
mortgage-related securities held to maturity increasing its balance of such
assets to $54.5 million at December 31, 2004 from $37.4 million at September
30, 2004. Total deposits decreased $1.9 million, or 0.6%, to $343.0 million
at December 31, 2004 from $344.9 million at September 30, 2004. Stockholders'
equity declined slightly as the Company's comprehensive income decreased by
$345,000 combined with dividend payments totaling $195,000 which were
partially offset by net income of $523,000.
First Keystone Bank, the Company's wholly owned subsidiary, serves its
customers from eight full-service offices in Delaware and Chester Counties.
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.
This press release contains financial information determined by methods other
than in accordance with accounting principles generally accepted in the
United States of America ("GAAP") as discussed below. Management of the
Company uses these non-GAAP measures in its analysis of the Company's
performance.
FIRST KEYSTONE FINANCIAL, INC.
SELECTED OPERATIONS DATA
(In thousands except per share data)
(Unaudited)
Three Months Ended
December 31,
-------------------
2004 2003
-------------------
Net interest income $2,820 $2,896
Provision for loan losses 45 75
Non-interest income 899 1,064
Non-interest expense 3,046 2,933
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Income before taxes 628 952
Income tax expense 105 209
-------------------
Net income $ 523 $ 743
===================
Basic earnings per share $ 0.29 $ 0.40
Diluted earnings per share 0.28 0.37
Dividends per share 0.11 0.11
Number of shares outstanding at end of period 1,930,754 1,890,897
Weighted average basic shares outstanding 1,785,415 1,834,220
Weighted average diluted shares outstanding 1,890,055 1,987,850
FIRST KEYSTONE FINANCIAL, INC.
SELECTED FINANCIAL DATA
(In thousands except per share data)
(Unaudited)
December 31, September 30,
2004 2004
---------------------------
<s> <c> <c>
Total assets $568,881 $571,919
Loans receivable, net 304,413 304,248
Investment and mortgage-related securities available for sale 148,291 161,235
Investment and mortgage-related securities held to maturity 59,793 42,650
Cash and cash equivalents 18,090 17,975
Deposits 343,014 344,880
Borrowings 168,343 171,149
Junior subordinated debt 21,547 21,557
Loan loss allowance 2,063 2,039
Total stockholders' equity 29,661 29,698
Book value per share $15.36 $15.41
FIRST KEYSTONE FINANCIAL, INC.
OTHER SELECTED DATA
(Unaudited)
At or for the
Three Months Ended
December 31,
------------------
2004 2003
------------------
<s> <c> <c>
Return on average assets (1) 0.37% 0.53%
Return on average equity (1) 7.07% 9.39%
Interest rate spread (1) (2) 2.15% 2.28%
Net interest margin (1) (2) 2.16% 2.30%
Ratio of interest-earning assets to interest-bearing liabilities (2) 100.38% 100.66%
Ratio of operating expenses to average assets (1) 2.14% 2.10%
Ratio of non-performing assets to total assets at end of period 0.71% 0.56%
Ratio of loan loss allowance to non-performing loans at end of period 72.13% 117.61%
(1) Annualized.
(2) Adjusted for the effects of tax-free investments. This is a non-GAAP
presentation. Management believes that presentation of its interest
rate spread and net interest margin on a tax-equivalent basis provides
useful information that is essential to a proper understanding of the
operating results of the Company's business. These disclosures should
not be viewed as a substitute for operating results determined in
accordance with GAAP nor are they necessarily comparable to non-GAAP
performance measures which may be presented by other companies. In
order to provide accurate comparisons of yields and margins for all
earning assets, the interest income earned on tax-exempt assets has been
increased to make them fully equivalent to other taxable interest income
investments. Without the adjustment for taxes, the interest rate spread
would be 2.09% and 2.20% for the quarter ended December 31, 2004 and
2003, respectively, while the net interest margin would be 2.10% and
2.22% for the quarter ended December 31, 2004 and 2003, respectively.
CONTACT: Thomas M. Kelly, President
Rose M. DiMarco, Chief Financial Officer
(610) 565-6210