Willow Grove Bancorp, Inc. (the "Company") (Nasdaq/NMS:WGBC), the
holding company for Willow Grove Bank (the "Bank"), reported net
income of $1.0 million, or $0.09 per diluted share, for the first
quarter ended September 30, 2005 compared to $1.8 million, or $0.19
per diluted share in the same quarter of 2004. During the quarter,
the Company completed its acquisition of Chester Valley Bancorp and
recorded several acquisition-related charges, including $581,000 in
losses resulting from the sale of investment securities in
conjunction with the restructuring of the combined balance sheet,
$348,000 in compensation charges related to an executive contract
and severance charges, and $125,000 in merger-related customer
communications expenses. The Statement of Operations reflects only
one month of the Company's combination with Chester Valley Bancorp.
The Company's consolidated total assets were $1.6 billion at
September 30, 2005, an increase of 68.2%, or $653.8 million, from
total assets of $959.3 million at June 30, 2005. The acquisition of
Chester Valley resulted in an increase in total tangible assets of
approximately $653.4 million. Additionally, as result of the
application of purchase accounting for the acquisition, the Company
recorded an approximate $105.5 million of intangible assets,
including a $15.5 million core deposit intangible asset with the
remainder recorded as goodwill. Donna M. Coughey, President and CEO
of the Company said: "The new Willow Grove Bank is off to a great
start after closing the acquisition of Chester Valley Bancorp this
quarter. Customer acceptance of our business model for a
locally-based, customer-focused community bank is strong and we are
seeing great results from our integration activities. Even with
just one month of actual results from the combined operations, we
are confident that our projected cost savings will be achievable.
In addition, the finance department worked hard this quarter to
streamline and restructure our balance sheet. During the quarter,
we liquidated lower-yielding longer-term investment securities and
utilized a portion of the proceeds to repay higher-rate borrowings.
These actions enhanced asset sensitivity of the balance sheet and
positioned the Bank for expanding profit margins in a rising
interest rate environment." Total deposits at quarter end were $1.0
billion, compared to $602.7 million at fiscal year-end, an increase
of 71.0%. The integration of Chester Valley Bancorp's branch-based
small business lending product into the Willow Grove branches,
which is planned for the calendar quarter ending December 31, 2005,
is expected to further enhance the Bank's ability to generate new
commercial demand deposit accounts. Net interest income for the
quarter was $9.1 million, compared to $7.4 million in the prior
year's first quarter. The growth was attributed primarily to growth
in interest-earning assets balances year over year. The acquisition
of Chester Valley Bancorp increased average interest earning assets
during the quarter by approximately $200 million. The Company's net
interest margin computed on a fully tax equivalent basis was 3.46%
for the quarter, a 17 basis point increase as compared to the prior
year's first quarter. Following the close of the Chester Valley
Bancorp acquisition, our net interest margin computed on a fully
tax equivalent basis expanded to 3.51% in the month of September
from Willow Grove Bancorp's run rate of 3.03% in the first two
months of the quarter. The increase was primarily a result of the
above noted balance sheet restructuring as well as the increased
interest rate sensitivity and higher interest margin of the assets
acquired from Chester Valley Bancorp. At quarter end, total gross
loans outstanding increased to nearly $1.1 billion, which
represented an annualized growth rate of 9.3% for the combined
organization in the first quarter. Loan growth was primarily
focused in commercial business loans, commercial real estate loans
and consumer loans. Credit quality of Willow Grove Bank's loan
portfolio at quarter end continued to be solid, with a ratio of
non-performing loans to total loans of 0.44% at quarter end
compared to 0.59% one year ago. The Company's allowance for loan
losses totaled $13.5 million, or 1.28% of total loans at quarter
end, compared to $6.1 million, or 1.03% of total loans at fiscal
year-end. Non-interest income was $803,000 in the first quarter, an
increase from $767,000 in the first quarter of fiscal 2004.
Excluding securities gains and losses, non-interest income
increased to $1.4 million for the quarter ended September 30, 2005
compared to $755,000 for the comparable prior year period ended on
September 30, 2004. The rollout of Chester Valley Bancorp's cash
management products and other deposit service products as well as
the investment management and trust services to the Willow Grove
Bank customer base is expected to continue to drive growth in
non-interest income during the fiscal year ending on June 30, 2006.
Non-interest expense was $7.9 million, compared to $5.4 million in
last year's first fiscal quarter. The Company expects to generate
$2.0 million in annualized cost savings from the consolidation
activities beginning in the quarter ending December 31, 2005. The
Company also announced that its Board of Directors, at its October
25, 2005 meeting, declared a $0.12 cash dividend on each share of
common stock of the Company, payable on November 22, 2005 to
shareholders of record at the close of business on November 8,
2005. About Willow Grove Bank: Willow Grove Bancorp, Inc. is the
holding company for Willow Grove Bank, a federally chartered
savings bank. Willow Grove Bank was founded in 1909 and operates 27
branch locations in Bustleton, Dresher, Hatboro, Holland,
Huntingdon Valley, Maple Glen, North Wales, Rhawnhurst, Roslyn
Valley, Somerton, Southampton, Warminster (two), Willow Grove,
Downingtown, Exton, Frazer, Thorndale, Westtown, Airport Village,
Brandywine Square, Devon, Kennett Square, Eagle, Coatesville,
Avondale and West Chester, Pennsylvania. Additional information is
available at: www.willowgrovebank.com. Forward Looking Statements
The information contained in this press release may contain
forward-looking statements (as defined in the Securities Exchange
Act of 1934 and the regulations thereunder) which are not
historical facts or as to Willow Grove Bancorp, Inc. management's
intentions, plans, beliefs, expectations or opinions.
Forward-looking statements may be identified by the use of words
such as "believe", "expect", "anticipate", "intend", "plan",
"estimate", "could", "may", "likely", "probably" or "possibly".
These statements include, but are not limited to, statements
regarding plans, objectives and expectations with respect to future
operations and statements regarding future performance. Such
statements are subject to certain risks and uncertainties, many of
which are difficult to predict and generally beyond the control of
Willow Grove Bancorp and its management, that could cause actual
results to differ materially from those expressed in, or implied or
projected by, the forward-looking information and statements.
Uncertainties regarding the integration of Chester Valley's
operations and the anticipated cost savings, among other factors,
could cause actual results to differ materially from the
anticipated results expressed in the forward-looking statements.
Other factors that may affect the Company's future operations are
discussed in the documents filed by Willow Grove Bancorp with the
Securities and Exchange Commission ("SEC") from time to time,
including the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 2005. Additional factors that may cause the
results referenced in forward-looking statements to differ from
actual results include general economic conditions and the interest
rate yield curve, changes in deposit flows, changes in credit
quality and legislative and regulatory changes, among other things.
Copies of these documents may be obtained from Willow Grove Bancorp
upon request without charge (except for the exhibits thereto) or
can be accessed at the website maintained by the SEC at
http://www.sec.gov. Willow Grove Bancorp undertakes no obligation
to update these forward-looking statements to reflect events or
circumstances that occur after the date on which such statements
were made. -0- *T WILLOW GROVE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in
Thousands) Unaudited September 30, June 30, 2005 2005
-------------- ------------- Assets Cash in banks $16,771 $6,189
Interest-bearing deposits 26,666 14,420 --------------
------------- Total cash and cash equivalents 43,437 20,609
-------------- ------------- Trading account securities 82 53
Investment securities available for sale 230,523 162,773 Investment
securities held to maturity 120,335 164,451 Loans held for sale
5,592 1,795 Loans receivable 1,061,005 590,923 Deferred fees
(1,756) (623) Allowance for loan losses (13,545) (6,113)
-------------- ------------- Loans receivable, net 1,045,704
584,187 -------------- ------------- Accrued interest receivable
6,126 4,094 Property and equipment - net 19,639 5,659 Bank owned
life insurance 11,178 5,447 Real estate owned 437 439 Goodwill and
other intangibles 106,164 881 Other assets 15,592 8,867
-------------- ------------- Total Assets $1,604,809 $959,255
============== ============= Liabilities and Stockholders' Equity
Liabilities: Deposits $1,030,711 $602,678 Securities sold under
agreements to repurchase 24,436 - Advance payments by borrowers for
taxes and insurance 2,040 2,850 Federal Home Loan Bank advances
328,144 237,400 Trust preferred securities 10,532 - Accrued
interest payable 1,708 1,064 Other liabilities 10,222 8,220
-------------- ------------- Total Liabilities 1,407,793 852,212
-------------- ------------- Stockholders' Equity: Preferred stock
- $0.01 par value; 5,000,000 shares authorized; none issued - -
Common stock - $0.01 par value; 40,000,000 shares authorized;
16,465,922 and 11,457,602 shares issued and outstanding at
September 30, 2005 and June 30, 2005, respectively 165 115
Additional paid-in capital 176,541 86,086 Retained earnings -
substantially restricted 55,869 56,046 Treasury stock (1,726,468
and 1,730,101 shares at September 30, 2005 and June 30, 2005,
respectively, at cost) (28,085) (28,072) Accumulated other
comprehensive loss (2,063) (1,353) Obligation of deferred
compensation plan 1,076 1,076 Unallocated common stock held by:
Employee Stock Ownership Plan (ESOP) (4,795) (5,035) Recognition
and Retention Plan Trust (1,692) (1,820) --------------
------------- Total Stockholders' Equity 197,016 107,043
-------------- ------------- Total Liabilities and Stockholders'
Equity $1,604,809 $959,255 ============== ============= WILLOW
GROVE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (Dollars in Thousands, Except for Per Share Amounts)
Unaudited Three Months Ended September 30, ----------------------
2005 2004 ----------- ---------- INTEREST INCOME: Loans $11,749
$8,139 Mortgage-backed securities 2,629 2,365 Interest-bearing
deposits 39 10 Investment securities: Taxable 807 783 Non-taxable
247 214 ----------- ---------- Total interest income 15,471 11,511
----------- ---------- INTEREST EXPENSE: Deposits 3,314 2,177
Securities sold under agreements to repurchase 61 - Borrowings
2,980 1,943 ----------- ---------- Total interest expense 6,355
4,120 ----------- ---------- NET INTEREST INCOME 9,116 7,391
Provision for loan losses 513 171 ----------- ---------- Net
interest income after provision for loan losses 8,603 7,220
----------- ---------- OTHER INCOME: Investment services income 349
- Service charges and fees 827 510 Gain (loss) on the sale of:
Loans 114 46 Securities available for sale (581) 12 Other 94 199
----------- ---------- Total other income 803 767 -----------
---------- OPERATING EXPENSES: Salaries and employee benefits 4,410
3,143 Occupancy and equipment 909 641 Data processing 335 221
Advertising 153 215 Deposit insurance premiums 25 21 Other 2,115
1,109 ----------- ---------- Total operating expenses 7,947 5,350
----------- ---------- Income before income taxes 1,459 2,637
Income tax expense 458 833 ----------- ---------- NET INCOME $1,001
$1,804 =========== ========== EARNINGS PER SHARE Basic $0.09 $0.20
=========== ========== Diluted $0.09 $0.19 =========== ==========
DIVIDENDS PER SHARE PAID DURING PERIOD $0.12 $0.11 ===========
========== WEIGHTED AVERAGE SHARES OUTSTANDING Basic 10,659,590
8,992,143 =========== ========== Diluted 10,952,351 9,478,818
=========== ========== WILLOW GROVE BANCORP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS Three Months Ended September 30,
--------------- 2005 2004 ------- ------- Average interest rate
spread (1) 3.29% 2.90% Net yield on average interest-earning assets
(1) 3.46% 3.29% Ratio of average interest-earning Assets to average
interest-bearing liabilities 1.07 1.22 Non-performing assets to
total assets 0.32% 0.36% Allowance for loan loss to total loans
1.28% 1.03% Return on equity 2.88% 6.74% Return on assets 0.34%
0.77% Book value per common share $13.31 $11.17 Closing price of
common stock at end of period $15.65 $16.59 Number of full-service
offices at end of period 27 14 (1) Percentages are presented on a
taxable equivalent basis. The following details the tax equivalent
adjustments in the above table: Three Months Ended September 30,
--------------------------------------------------------- 2005 2004
---------------------------- ---------------------------- Interest
Tax Adjusted Interest Tax Adjusted Income Adjustment Income Income
Adjustment Income ----------------------------
---------------------------- (Dollars in thousands) Loans $11,749
$52 $11,801 $8,139 $- $8,139 Investments 3,722 374 4,096 3,372 95
3,467 ---------------------------- ----------------------------
Total $15,471 $426 $15,897 $11,511 $95 $11,606
============================ ============================ *T
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