Exhibit 99.1
FIRST 22 West State Street
KEYSTONE Media, PA 19063
FINANCIAL, INC. 610-565-6210
FOR IMMEDIATE RELEASE
FIRST KEYSTONE FINANCIAL ANNOUNCES
THIRD QUARTER RESULTS
Media, PA -- (BUSINESS WIRE) -- August 14, 2007 - First Keystone Financial,
Inc. (NASDAQ: FKFS), the holding company for First Keystone Bank (the "Bank"),
reported today net income for the quarter ended June 30, 2007 of $115,000, or
$0.05 per diluted share, compared to $267,000, or $0.14 per diluted share, for
the same period last year. Net income for the nine months ended June 30, 2007
was $370,000, or $0.17 per diluted share, as compared to $730,000, or $0.38
per diluted share, for the same period in 2006.
Net interest income for the three months ended June 30, 2007 decreased
$337,000, or 11.9%, to $2.5 million as compared to the same period in 2006.
The decrease in net interest income was primarily the result of a $318,000, or
7.5%, increase in interest expense for the quarter ended June 30, 2007 due to
a 45 basis point increase in the weighted average rate paid on interest-bearing
liabilities, primarily deposits. The Company's net interest margin decreased
by 21 basis points in the third quarter of fiscal 2007 to 2.12%, as compared
to 2.33% for the third quarter of fiscal 2006 reflecting the continued
compression being experienced in the interest rate environment.
On a linked quarter basis, net interest income decreased $114,000, or 4.4%.
During the third quarter of fiscal 2007, as compared to the second quarter of
fiscal 2007, the Company experienced a 13 basis point decrease in the yield
earned on average interest-earning assets as well as a 2 basis point increase
in the rates paid on interest-bearing liabilities combined with a slight
increase in the average balance of net interest-earning assets. The Company
experienced a slight compression of its interest rate margin on a linked
quarter basis.
At June 30, 2007, non-performing assets increased $575,000 million to
$3.2 million from $2.6 million at March 31, 2007 and $429,000 from $2.7 million
at September 30, 2006. During the quarter, the increase in non-performing
assets was a result of an increase of $389,000 in non-accrual loans and
$552,000 in commercial business loans that are 90 days delinquent and still
accruing. At June 30, 2007, the Company's ratio of non-performing assets to
total assets was 0.60% compared to 0.49% at March 31, 2007.
For the three months ended June 30, 2007 as compared to the three months
ended June 30, 2006, the provision for loan loss increased $19,000 to $100,000.
The provision for loan loss was based on the Company's quarterly review of the
credit quality of its loan portfolio, the level of criticized and classified
assets, the amount of net charge-offs during the third quarter of fiscal 2007
and other factors. The Company's coverage ratio, which is the ratio of the
allowance for loan losses to non-performing loans, was 102.47% and 136.57% at
June 30, 2007 and March 31, 2007, respectively.
For the quarter ended June 30, 2007, non-interest income increased $58,000
to $726,000 as compared to the same period last year. The increase was
primarily the result of a $35,000, or 8.7%, increase in service charges and
other fees resulting from higher fees being charged. In addition, the Company
recognized an increase of $24,000 gain on sales of SBA loans held for sale.
Non-interest expense decreased $135,000 to $3.0 million for the quarter
ended June 30, 2007 as compared to the same period last year. The decrease
for the quarter ended June 30, 2007 was primarily due to decreases of $145,000
and $43,000 in professional fees and advertising, respectively, partially
offset by increases of $27,000 and $44,000 in salaries and employee benefits
and other non-interest expense, respectively.
The Company recognized income tax benefits of $30,000 and $19,000 for the
quarters ended June 30, 2007 and 2006, respectively. The increase in the
income tax benefit for the 2007 period was primarily related to the decrease
in taxable income for such period.
The Company's total assets increased slightly by $1.6 million from
$523.0 million at September 30, 2006 to $524.6 million at June 30, 2007. Cash
and cash equivalents increased by $28.1 million to $40.9 million at June 30,
2007 from $12.8 million at September 30, 2006 primarily due to increased cash
balances on hand, loan repayments and, to a lesser extent, mortgage-related
securities repayments. Loans receivable decreased by $18.9 million from
$323.2 million at September 30, 2006 to $304.3 million at June 30, 2007
primarily as a result of the Company experiencing repayments within the
commercial real estate loan portfolio. Deposits increased $4.1 million, or
1.1%, from $358.8 million at September 30, 2006 to $362.9 million at June 30,
2007. The increase in deposits resulted from a $6.5 million, or 3.5%,
increase in certificates of deposit partially offset by a $3.1 million, or 2.4%,
decrease in core deposits (which consist of passbook, money market, NOW and
non-interest bearing accounts). In addition, the junior subordinated
debentures decreased $6.2 million, or 28.9%, from $21.5 million at September
30, 2006 resulting from the redemption of a portion of the Company's junior
subordinated debentures with the proceeds raised by the private equity
offering completed in December 2006.
Stockholders' equity increased $5.4 million to $34.0 million at June 30,
2007 from September 30, 2006 primarily due to the Company's completion of the
private equity offering which raised net proceeds of approximately $5.8
million. The Company issued 400,000 shares of common stock from treasury
resulting in a reduction in treasury stock by $6.2 million.
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 continuation 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.
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FIRST KEYSTONE FINANCIAL, INC.
SELECTED OPERATIONS DATA
(In thousands except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------------------------
2007 2006 2007 2006
------------------------------------------
<s> <s> <c> <c> <c>
Net interest income $ 2,505 $ 2,842 $ 7,585 $ 8,450
Provision for loan losses 100 81 275 651
Non-interest income 726 668 2,326 2,242
Non-interest expense 3,046 3,181 9,436 9,400
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Income before taxes 85 248 200 641
Income tax benefits (30) (19) (170) (89)
------------------------------------------
Net income $ 115 $ 267 $ 370 $ 730
==========================================
Basic earnings per share $ 0.05 $ 0.14 $ 0.17 $ 0.39
Diluted earnings per share 0.05 0.14 0.17 0.38
Dividends per share -- -- -- 0.11
Number of shares outstanding at end of period 2,432,498 2,024,074 2,432,498 2,024,074
Weighted average basic shares outstanding 2,307,671 1,892,876 2,200,013 1,890,601
Weighted average diluted shares outstanding 2,325,708 1,915,564 2,218,253 1,913,431
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FIRST KEYSTONE FINANCIAL, INC.
SELECTED FINANCIAL DATA
(In thousands except per share data)
(Unaudited)
June 30, September 30,
2007 2006
-------------------------
<s> <c> <c>
Total assets $524,586 $522,960
Loans receivable, net 304,286 323,220
Investment and mortgage-related securities available for sale 106,903 103,416
Investment and mortgage-related securities held to maturity 36,364 41,612
Cash and cash equivalents 40,893 12,787
Deposits 362,931 358,816
Borrowings 104,398 107,241
Junior subordinated debt 15,270 21,483
Loan loss allowance 3,234 3,367
Total stockholders' equity 34,045 28,659
Book value per share $14.73 $14.13
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FIRST KEYSTONE FINANCIAL, INC.
OTHER SELECTED DATA
(Unaudited)
At or for the At or for the
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------------------------
2007 2006 2007 2006
--------------------------------------
<s> <c> <c> <c> <c>
Return on average assets (1) 0.09% 0.20% 0.10% 0.19%
Return on average equity (1) 1.33% 3.91% 1.51% 3.50%
Interest rate spread (1) 2.05% 2.35% 2.09% 2.36%
Net interest margin (1) 2.12% 2.33% 2.12% 2.35%
Interest-earning assets/interest-bearing liabilities 101.62% 99.47% 100.94% 99.75%
Operating expenses to average assets (1) 2.39% 2.43% 2.46% 2.43%
Ratio of non-performing assets to total assets at
end of period 0.60% 0.60% 0.60% 0.60%
Ratio of allowance for loan losses to gross loans
receivable 1.05% 0.90% 1.05% 0.90%
Ratio of loan loss allowance to non-performing loans
at end of period 102.47% 637.18% 102.47% 637.18%
(1) Annualized.
CONTACT: Thomas M. Kelly, President
Rose M. DiMarco, Chief Financial Officer
(610) 565-6210
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