EXHIBIT 99.1
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FOR IMMEDIATE RELEASE
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For Additional Information Contact:
David B. Barbour, President and Chief Executive Officer
Lisah M. Frazier, Chief Operating Officer and Chief Financial Officer
(606) 326-2800 Fax (606) 326-2801 www.classicbank.com
CLASSIC BANCSHARES, INC. REPORTS FISCAL 2004 SECOND QUARTER EARNINGS
Ashland, Kentucky, -- November 3, 2003 -- Classic Bancshares, Inc.
(NASDAQ - CLAS) reported net income of $1.7 million, or $1.16 per diluted share
for the six months ended September 30, 2003 compared to net income of $1.4
million, or $1.10 per diluted share for the six months ended September 30, 2002.
Net income for the second quarter ended September 30, 2003 was $905,000, or $.59
per diluted share compared to $729,000 or $.58 per diluted share for the second
quarter ended September 30, 2002.
The Company's assets increased approximately $83.2 million from $249.9
million at March 31, 2003 to $333.1 million at September 30, 2003. The growth
for the period was primarily due to the acquisition of First Federal Financial
Bancorp, Inc. completed on June 20, 2003. On the date of closing, First Federal
had total assets of $72.1 million, net loans of $49.5 million and deposits of
$56.7 million and the Company recorded goodwill and other intangibles of
approximately $3.5 million in connection with the acquisition. Aside from the
acquisition, the Company experienced asset growth of approximately $7.6 million.
The growth for the six-month period was primarily in the loan portfolio, which
increased approximately $62.6 million ($12.4 million exclusive of the loans
acquired from First Federal). Investment securities increased by $6.1 million as
a result of the acquisition but decreased exclusive of the First Federal
acquisition as a result of maturities, calls and principal repayments with the
proceeds from the activity in the investment portfolio funding the loan growth.
Deposits also increased by $71.2 million (including $14.1 exclusive of the
acquisition). Increased deposits were used to fund loan growth during the
six-month period.
Total non-performing assets represented 1.0% of total assets at
September 30, 2003 compared to .5% at March 31, 2003. The increase was a result
of the non-performing assets, most of which consisted of residential loans,
acquired from First Federal. The Company recorded a provision for loan losses of
$92,000 for the six-month period and net charge-offs of $321,000 for the
six-month period and acquired an allowance from First Federal of approximately
$885,000 resulting in an allowance for loan losses of $2.6 million at September
30, 2003. The allowance at September 30, 2003 was equal to 100% of total
non-performing loans, 82% of non-performing assets and 1.0% of total loans
receivable.
President and Chief Executive Officer David B. Barbour commented, "We
are pleased that the first full quarter of operating results since our First
Federal acquisition has resulted in solid earnings per share. On the negative
side, non-performing assets increased dramatically as a result of the
acquisition, although in line with our original estimates. Through our
pre-acquisition due diligence, we identified the problem credits within First
Federal's portfolio and have taken a proactive stance to resolve these credits
at the earliest date, as well as reserving them appropriately. Asset quality,
other than certain loans identified at First Federal, continues to exhibit the
stringent underwriting criteria employed by the Company. We fully expect
improvements in asset quality in the coming months as well as earnings synergies
from the First Federal acquisition."
Mr. Barbour continued, "While our net interest margin was affected by
the incorporation of First Federal's balance sheet, the resulting margin was in
line with management's expectations. Restructuring of First Federal's thrift
balance sheet will provide the Company with opportunities for improvements in
net interest margin."
Net interest income increased for both the six-month period and the
second quarter. Net interest income increased $915,000 for the six months ended
September 30, 2003 compared to the same period in 2002 and $729,000 for the
second quarter ended September 30, 2003 compared to the same period in 2002. The
increases in net interest income were primarily due to a larger earning asset
base as a result of the First Federal acquisition and internal growth in loans
experienced during the six-month period.
The Company's non-interest income grew for both the six-month period
and the quarter. Non-interest income increased $319,000 for the six months ended
September 30, 2003 compared to the same period in 2002 and $183,000 for the
second quarter ended September 30, 2003 compared to the same period in 2002.
Non-interest income increased primarily due to an increase in fees and service
charges on deposit accounts as a result of a larger deposit base.
Non-interest expense increased for both the six-month period and the
quarter. Non-interest expense increased approximately $953,000 for the six
months ended September 30, 2003 as compared to the six months ended September
30, 2002 and $649,000 for the second quarter ended September 30, 2003 compared
to the same period in 2002. The increase in non-interest expenses was due to an
increase in salaries and employee benefits, an increase in occupancy and
equipment expense, and an increase in supplies expense. All of these expenses
increased primarily due to the acquisition of First Federal. Non-interest
expenses also increased due to the increased costs related to incentive-based
compensation programs, an increase in ESOP expense due to the increase in the
average market price of the Company's stock, an increase in supplies expense and
an increase in legal and accounting fees.
Classic Bancshares, Inc. previously announced that the Company would
pay a 10% stock dividend and a quarterly cash dividend of $.08 per share. The
stock dividend will be payable on November 17, 2003 to shareholders of record on
November 3, 2003. The cash dividend will be payable on November 20, 2003 to
shareholders of record on November 6, 2003. Per share information was adjusted
to reflect the stock dividend for all periods presented.
Classic Bancshares, Inc. is headquartered in Ashland, Kentucky and has
one subsidiary, Classic Bank. Classic Bank operates at 344 Seventeenth Street,
Ashland, Kentucky with nine branch offices located in Boyd, Carter, Greenup and
Johnson counties in Kentucky and Lawrence County, Ohio.
When used in this press release, the words or phrases "should result,"
"will likely result", "are expected to", "will continue", "is anticipated",
"estimate", "project" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks and
uncertainties, including changes in economic condition in the Company's market
area including unemployment levels and plant closings, real estate values in the
Company's market area, changes in policies by regulatory agencies, fluctuations
in interest rates, demand for loans in the Company's market area and
competition, that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. The Company
wishes to caution readers not to place undue reliance on such forward-looking
statements, which speak only as of the date made. The Company wishes to advise
readers that the factors listed could affect the Company's financial performance
and could cause the Company's actual results for future periods to differ
materially from any opinions or statements expressed with respect to future
periods in any current statements.
The Company does not undertake-and specifically declines any
obligation-to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated
events.
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SELECTED FINANCIAL DATA
The following table sets forth selected financial data of Classic
Bancshares, Inc. as of September 30, 2003 and March 31, 2003 and for the three
and six months ended September 30, 2003 and 2002.
SEPTEMBER 30, MARCH 31,
2003 2003
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(In Thousands)
SELECTED FINANCIAL CONDITION DATA:
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Total Assets $ 333,137 $ 249,881
Cash and other interest bearing deposits with
other financial institutions 16,382 8,148
Loans receivable, net 249,753 187,175
Investment securities, Available for sale 32,637 30,196
Mortgage-backed securities, Available for sale 13,222 9,596
Goodwill & other intangibles 9,108 5,555
Deposits 261,374 190,155
Securities sold under agreement to repurchase 9,282 4,382
FHLB advances 27,344 28,126
Stockholders' Equity 32,615 25,422
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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2003 2002 2003 2002
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(In Thousands)
SELECTED OPERATIONS DATA:
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Total interest income $ 4,455 $ 3,557 $ 8,113 $ 7,080
Total interest expense 1,454 1,285 2,660 2,542
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Net interest income 3,001 2,272 5,453 4,538
Provision for loan losses 46 50 92 210
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Net interest income after provision
for losses on loans 2,955 2,222 5,361 4,328
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Fees and service charges 451 341 850 645
Gain on sale of securities 1 -- 1 4
Other noninterest income 127 55 224 107
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Total noninterest income 579 396 1,075 756
Total noninterest expense 2,263 1,614 4,141 3,188
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Income before income taxes 1,271 1,004 2,295 1,896
Income tax expense (benefit) 366 275 645 513
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Net income $ 905 $ 729 $ 1,650 $ 1,383
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Basic earnings per share $ 0.64 $ 0.63 $ 1.28 $ 1.20
Fully diluted earnings per share $ 0.59 $ 0.58 $ 1.16 $ 1.10
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AT OR FOR THE AT OR FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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2003 2002 2003 2002
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OTHER DATA:
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Return on average assets (ratio of annualized
net income to total average assets) 1.1% 1.3% 1.1% 1.2%
Return on average equity (ratio of annualized
net income to total average equity) 11.2 12.3 11.2 11.6
Net interest margin* (Federal Tax Equivalent) 4.1 4.5 4.3 4.6
Non-performing assets to total assets 1.0 0.4 1.0 0.4
Allowance for loan losses to non-performing loans 100.3 249.6 100.3 249.6
Allowance for loan losses to loans receivable, net 1.0 1.0 1.0 1.0
Non-interest expenses/ Total revenues** 61.4 58.2 61.2 57.9
Book value per share $ 23.13 $ 19.73 $ 23.13 $ 19.73
Tangible book value per share $ 16.67 $ 15.17 $ 16.67 $ 15.17
Total shares outstanding 1,409,891 1,216,035 1,409,891 1,216,035
Total weighted avg. shares outstanding for EPS 1,538,752 1,256,317 1,424,144 1,260,322
Number of full service offices 10 8 10 8
Number of ATM locations 23 18 23 18
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* Net interest income (Federal Tax Equivalent) annualized divided by average
earning assets.
** Total revenues = Net interest income (Federal Tax Equivalent)
+ non-interest income.
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