Waypoint Financial Announces First Quarter Results and Declares
Regular Quarterly Cash Dividend HARRISBURG, Pa., April 22
/PRNewswire-FirstCall/ -- Waypoint Financial Corp. today announced
net income of $.16 per share, or $5.2 million, for the quarter
ended March 31, 2004 as compared to $.33 per share, or $11.3
million, for the quarter ended March 31, 2003 and $.27, or $8.9
million, for the linked quarter ended December 31, 2003. The
current quarter was negatively impacted by acquisition-related
expenses totaling $3.0 million, or $.09 per share. Waypoint also
announced that the Board of Directors declared a regular quarterly
cash dividend of $.14 per share to shareholders of record as of May
6, 2004. The dividend will be paid on May 14, 2004. On March 9,
2004, Waypoint and Sovereign Bancorp, Inc. ("Sovereign") announced
that they had reached a definitive agreement for Sovereign to
acquire Waypoint. Under the terms of the agreement, shareholders of
Waypoint will be entitled to receive $28.00 in cash, 1.262 shares
of Sovereign common stock, or a combination thereof per Waypoint
share, subject to election and allocation procedures which are
intended to ensure that, in the aggregate, 70% of Waypoint shares
will be exchanged for Sovereign common stock and 30% will be
exchanged for cash. The acquisition is expected to close in the
fourth quarter of 2004. Regarding the agreement with Sovereign,
David E. Zuern, President and CEO, said, "We are excited about
joining Sovereign, a Pennsylvania-based company with a very similar
commitment to a performance culture focused on customers, employees
and community as well as shareholders. We expect to offer an even
broader array of products delivered with the same flexibility,
responsiveness, and local decision making that our customers
expect." Zuern went on to discuss Waypoint's business performance
during the quarter ended March 31, 2004. He stated: "Waypoint
continued to build franchise value during the quarter through solid
growth in commercial loans, transaction deposits, banking fees, and
financial services fees. Also, Waypoint's key credit quality
indicators showed continued improvement from levels which were
already sound." Zuern reported that Waypoint continued to show
progress in changing the composition of asset and liability
portfolios. The commercial loan portfolio grew $51.5 million, or
4.7%, and the consumer loan portfolio grew $3.5 million during the
quarter. Mortgage loans in portfolio decreased $25.3 million during
the quarter as mortgage loan prepayments reaccelerated in response
to lowering mortgage market rates. Waypoint's core deposits, which
include savings, transaction and money market accounts, grew $30.4
million during the quarter, up 2.3%, and time deposits, a higher
cost funding source, decreased $45.5 million for the quarter.
Waypoint also decreased its higher-rate borrowings by $32.1 million
to further improve its liability composition. As a result,
Waypoint's net interest margin improved 3 basis points to 2.27%,
despite the margin challenges facing financial institutions from
continued historically-low interest rates. Zuern added that
Waypoint's fee income from bank service and account fees, financial
services fees and mortgage banking income aggregated to $7.3
million this quarter, up from $6.8 million for the comparable
quarter ended March 31, 2003 and up from $7.0 million in the fourth
quarter of 2003. Increases in banking services and account fees and
financial services fees were partially offset by reductions in
mortgage banking income. Waypoint's total non- interest income was
$13.7 million during the current quarter versus $9.4 million for
the comparable prior quarter, including net gains on securities
totaling $5.4 million and $1.9 million, respectively. Security
gains were up during the current quarter primarily due to net gains
on securities sold in conjunction with the prepayment of fixed-rate
borrowings. The resulting gains offset the related prepayment
expense while maintaining an appropriate interest rate risk
position. Zuern also noted that Waypoint's noninterest expense was
negatively impacted by $3.0 million in expenses associated with the
Sovereign acquisition and $4.7 million in prepayment expenses to
extinguish certain higher-rate borrowings. Excluding these items,
non-interest expenses compared favorably to the linked quarter
ended December 31, 2003. Noninterest expense for the linked quarter
included a one-time impairment charge of $1.1 million on real
estate used in operations. Waypoint Financial Corp. is a $5.4
billion bank holding company whose primary operating subsidiary is
Waypoint Bank, which is headquartered in Harrisburg, Pennsylvania
with a network of 65 branches. Waypoint Bank operates 57 branches
in Dauphin, York, Lancaster, Cumberland, Franklin, Lebanon, Adams,
and Centre counties in Pennsylvania and 8 branches in Baltimore,
Harford and Washington counties in northern Maryland. Waypoint
offers a full range of financial services including banking for
retail, commercial and small business customers, mortgages, trust
and investment, brokerage, and insurance services to more than
125,000 household and business customers. The following contains a
summary of selected financial data for the most recent five fiscal
quarters. Selected Ratios and Other Data (Unaudited) As of or for
the three months ended March, December, September, June, March,
2004 2003 2003 2003 2003 Basic income per share $0.17 $0.28 $0.31
$0.35 $0.33 Diluted income per share $0.16 $0.27 $0.30 $0.34 $0.33
Return on average equity (ROE) 5.13% 8.97% 9.83% 10.82% 10.35%
Return on average assets 0.39% 0.67% 0.72% 0.84% 0.84% Net interest
margin (tax equivalent) 2.27% 2.24% 2.28% 2.44% 2.47% Noninterest
income divided by average assets 1.03% 0.80% 0.83% 0.80% 0.70%
Noninterest expense divided by average assets 2.33% 1.89% 1.67%
1.67% 1.63% Efficiency ratio 75.36% 67.12% 59.31% 55.21% 54.84%
Effective income tax rate 36.70% 21.49% 28.59% 30.40% 27.48%
Diluted average equivalent shares 32,854,416 32,622,332 33,135,917
33,662,564 34,768,749 Book value per share $12.53 $12.10 $12.29
$12.41 $12.21 Stockholders' equity to total assets 7.78% 7.55%
7.62% 7.42% 7.47% Selected Financial Condition Data (Unaudited,
amounts in thousands) As of the periods ended March, December,
September, June, March, 2004 2003 2003 2003 2003 Total assets
$5,371,728 $5,329,902 $5,429,818 $5,639,363 $5,602,738 Loans
receivable, net 2,426,157 2,397,640 2,390,740 2,379,562 2,338,478
Loans held for sale, net 17,653 17,011 30,002 38,333 33,666
Marketable securities 2,606,875 2,587,752 2,667,038 2,878,814
2,913,329 Deposits 2,705,787 2,720,915 2,630,393 2,581,661
2,452,834 Borrowings 2,078,626 2,110,681 2,273,446 2,459,577
2,531,514 Stockholders' equity 417,860 402,233 413,710 418,561
418,622 Selected Operating Data (Unaudited, amounts in thousands)
For the three month periods ended March, December, September, June,
March, 2004 2003 2003 2003 2003 Interest income $59,010 $59,735
$60,877 $64,550 $65,809 Interest expense 31,692 32,879 33,489
34,134 35,337 Net interest income 27,318 26,856 27,388 30,416
30,472 Provision for loan losses 1,901 1,014 2,014 2,064 2,421 Net
interest income after provision for loan losses 25,417 25,842
25,374 28,352 28,051 Noninterest income 13,727 10,681 11,495 10,827
9,429 Noninterest expense 30,931 25,193 23,063 22,772 21,882 Income
before taxes 8,213 11,330 13,806 16,407 15,598 Income tax expense
3,014 2,435 3,946 4,987 4,286 Net income $5,199 $8,895 $9,860
$11,420 $11,312 Discussion of Operating Results Net income totaled
$.16 per share for the quarter ended March 31, 2004, as compared to
net income of $.33 per share for the quarter ended March 31, 2003
and $.27 per share for the quarter ended December 31, 2003. Net
income for the current quarter was $5.2 million versus $11.3
million for the quarter ended March 31, 2003 and $8.9 million for
the quarter ended December 31, 2003. The current quarter was
negatively impacted by acquisition-related expenses totaling $3.0
million, or $.09 per share. Net interest income before provision
for loan losses totaled $27.3 million for the current quarter as
compared to $30.5 million recorded during the quarter ended March
31, 2003 and $26.9 million for the quarter ended December 31, 2003.
The decrease in net interest income from the comparable prior
period came primarily from the cumulative effects of record high
prepayments during 2003 and in the first quarter of 2004 on
mortgage loans and mortgage- backed securities. In the current
environment, yields on new loan and security assets acquired into
portfolio are at substantially lower rates relative to assets being
replaced. This trend is exacerbated by aggressive pricing by key
competitors in Waypoint's market for both loans and deposits, which
results in spread compression. Also, FHLB dividends were down $.5
million during the current quarter relative to the comparable prior
quarter due to reductions in the dividend rate paid by the FHLB of
Pittsburgh. As a result of these various impacts, the net interest
margin ratio (tax- equivalent) decreased to 2.27% for the current
quarter as compared to 2.47% for the quarter ended March 31, 2003.
Reflecting the effect of Waypoint's asset and liability mix
improvements, net interest margin increased 3 basis points relative
to the linked quarter ended December 31, 2003. See Table 3 which
appears later in this release for a detailed schedule of Waypoint's
average portfolio balances and interest rates. Also, see Table 4
for a rate/volume analysis of Waypoint's net interest income.
Pursuant to management's evaluation of the adequacy of Waypoint's
allowance for loan losses, the provision for loan losses totaled
$1.9 million for the current quarter versus $2.4 million for the
quarter ended March 31, 2003 and $1.0 million for the quarter ended
December 31, 2003. Please see the Discussion of Asset Quality that
appears later in this section and Tables 5, 6, and 7 following the
financial statements for additional information regarding credit
quality. Noninterest income was $13.7 million for the current
quarter, as compared to $9.4 million for the quarter ended March
31, 2003 and $10.7 million for the quarter ended December 31, 2003.
Notable changes in the current quarter versus the quarter ended
March 31, 2003 included: -- Banking services and account fees
totaled $4.4 million, up $1.0 million from the comparable prior
quarter primarily due to increased overdraft fees, service charges,
and ATM fees. These trends reflect both increased account and
transaction volumes as well as improved fee collections. --
Financial services fees increased to $2.4 million, up $.4 million.
Within this category, insurance fees were $1.6 million, up $.4
million. This increase in insurance fees included $.8 million from
Waypoint Benefits Consulting, acquired on April 1, 2003, which was
partially offset by a decrease of $.4 million in title insurance
fees. -- Residential mortgage banking income totaled $.5 million,
down $.8 million from the prior period. Within this category, net
gains on the sale of loans decreased to $.7 million from $1.9
million and loan servicing activities including valuation
adjustments resulted in a net loss of $.2 million, which compared
to a loss of $.6 million in the prior period. The loan sale results
reflect primarily a sales volume decrease in the current quarter
relative to the quarter ended March 31, 2003, which was enhanced by
carryover from year-end 2002. -- Gains on securities were up $3.5
million in the current quarter, primarily resulting from security
sales associated with liability restructuring wherein $125.0
million of fixed-rate FHLB advances were prepaid. In addition, the
net gain for the current quarter included a loss of $1.5 million on
the valuation of an interest rate cap that does not receive hedge
accounting treatment. -- Other income was breakeven in the
aggregate, which included a $.3 million loss on low income housing
tax credit investments, offset by other miscellaneous income.
Noninterest expense was $30.9 million for the quarter ended March
31, 2004 and included borrowing prepayment expenses of $4.7 million
and acquisition expenses of $3.0 million, up from $21.9 million for
the quarter ended March 31, 2003. Noninterest expense was $25.2
million for the linked quarter ended December 31, 2003 and included
a one-time impairment charge of $1.1 million on real estate used in
operations. Notable changes in the quarter ended March 31, 2004
relative to the quarter ended March 31, 2003 included: -- Salaries
and benefits expense totaled $13.2 million, up $1.8 million
primarily due to expansion in the retail banking franchise,
increased investment in sales and marketing personnel, the
acquisition of Waypoint Benefits Consulting and annual merit
raises. -- Other expenses were $2.4 million, down $.6 million
primarily on decreased loan servicing and other non-deferrable loan
costs. Offsetting the decrease in other expenses was an increase of
$.2 million in external auditing and accounting fees. Income tax
expense for the current quarter totaled $3.0 million, or an
effective tax rate of 36.7% on income before taxes of $8.2 million.
The effective tax rate for the current quarter reflected
acquisition expenses that are nondeductible for tax purposes
totaling $3.0 million. For the quarter ended March 31, 2003, income
taxes were $4.3 million or an effective tax rate of 27.6% on income
before taxes of $15.6 million. Discussion of Financial Condition
Waypoint's total assets were $5.372 billion at March 31, 2004, down
from $5.603 billion at March 31, 2003 and up from $5.330 billion at
December 31, 2003. The decrease from March 31, 2003 came primarily
in cash and securities, which decreased $339.8 million during the
twelve months ended March 31, 2004. Cash and securities included
$70.9 million of securities in process at March 31, 2004. Waypoint
continued to experience strong growth in its commercial portfolio,
which was up $51.5 million during the current quarter. Consumer and
other loans also increased $3.5 million. Partially offsetting these
increases, residential mortgage loans decreased $25.3 million
during the current quarter as Waypoint sold substantially all of
its conventional residential mortgage production and prepayments
continued at a historically high level on mortgage loans held in
portfolio. Waypoint's loan portfolio is presented in Table 1 which
appears later in this report. Waypoint's deposit portfolio totaled
$2.706 billion at March 31, 2004, up from $2.453 billion at March
31, 2003, but down from $2.721 billion at December 31, 2003. Within
the deposit portfolio, Waypoint experienced substantial growth in
its core deposits, which grew $30.4 million during the quarter, up
2.3%. This was offset by a decrease of $45.5 million in time
deposits, a higher cost funding source. The composition of the
deposit portfolio is presented in Table 2 which appears later in
this report. Waypoint's portfolio of customer repurchase agreements
totaled $52.7 million at March 31, 2004 as compared to $51.7
million at March 31, 2003 and $56.1 million at December 31, 2003.
Waypoint offers this investment product to its commercial customers
as part of a broad range of products and services targeted to this
profitable market segment. Customer repurchase agreements represent
a lower-cost source of funding for Waypoint and are included in
borrowings on the Statement of Financial Condition. The average
cost of these funds were 0.75% for each of the quarters ended March
31, 2004 and December 31, 2003 and 0.98% for the quarter ended
March 31, 2003. Waypoint had $417.9 million in stockholders'
equity, or 7.78% of total assets, at March 31, 2004, as compared to
$418.6 million or 7.47% at March 31, 2003 and $402.2 million or
7.55% at December 31, 2003. Notable changes in stockholders' equity
for the current quarter included increases of $5.2 million in net
income, paid in capital and tax benefits from stock option
exercises totaling $3.3 million and an increase of $11.9 million in
the market value of available-for-sale securities (net of taxes).
Offsetting these increases were dividends paid to shareholders
totaling $4.5 million. Discussion of Asset Quality Non-performing
loans totaled $17.4 million or 0.71% of total loans as of March 31,
2004 as compared to $17.8 million or .79% of total loans at March
31, 2003 and $18.2 million or 0.76% of total loans as of December
31, 2003. Waypoint's allowance for loan losses was $29.3 million or
1.19% of total loans as of March 31, 2004, as compared to $27.9
million or 1.18% of total loans at March 31, 2003 and $28.4 million
or 1.17% of total loans as of December 31, 2003. Net loan
charge-offs as a percentage of average loans outstanding totaled
0.17% on an annualized basis for the quarter ended March 31, 2004
as compared to 0.34% for the quarter ended March 31, 2003 and 0.31%
for the quarter ended December 31, 2003. See Tables 5, 6 and 7
which appear later in this release for more information on asset
quality. Note on Forward-Looking Statements Statements contained in
this news release which are not historical facts are
forward-looking statements, as that term is defined in the Private
Securities Litigation Reform Act of 1995. Amounts herein could vary
as a result of market and other factors. Such forward-looking
statements are subject to risks and uncertainties which could cause
actual results to differ materially from those currently
anticipated due to a number of factors, which include, but are not
limited to, factors discussed in documents filed by the Corporation
with the Securities and Exchange Commission from time to time. Such
forward-looking statements may be identified by the use of such
words as "believe," "expect," "anticipate," "should," "planned,"
"estimated," and "potential." Examples of forward-looking
statements include, but are not limited to, estimates with respect
to the financial condition, expected or anticipated revenue,
results of operations and business of the Corporation that are
subject to various factors which could cause actual results to
differ materially from these estimates. These factors include, but
are not limited to, general economic conditions, changes in
interest rates, deposit flows, loan demand, real estate values, and
competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulation; and other
economic, competitive, governmental, regulatory, and technological
factors affecting the Corporation's operations, pricing, products
and services. This filing contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, with respect to the financial condition, results of
operations and business of Waypoint Financial Corp. pending
consummation of the merger of Seacoast Financial Services
Corporation with and into Sovereign Bancorp, Inc. and the merger of
Waypoint with and into Sovereign that are subject to various
factors which could cause actual results to differ materially from
such projections or estimates. Such factors include, but are not
limited to, the following: (1) the respective businesses of
Seacoast and Waypoint may not be combined successfully with
Sovereign's businesses, or such combinations may take longer to
accomplish than expected; (2) expected cost savings from each of
the mergers cannot be fully realized or realized within the
expected timeframes; (3) operating costs, customer loss and
business disruption following the mergers, including adverse
effects on relationships with employees, may be greater than
expected; (4) governmental approvals of each of the mergers may not
be obtained, or adverse regulatory conditions may be imposed in
connection with government approvals of the mergers, (5) the
stockholders of Seacoast may fail to approve the merger of Seacoast
with and into Sovereign and the shareholders of Waypoint may fail
to approve the merger of Waypoint with and into Sovereign; (6)
adverse governmental or regulatory policies may be enacted; (7) the
interest rate environment may adversely impact the expected
financial benefits of the mergers, and compress margins and
adversely affect net interest income; (8) the risks associated with
continued diversification of assets and adverse changes to credit
quality; (9) competitive pressures from other financial service
companies in Seacoast's, Waypoint's and Sovereign's markets may
increase significantly; and (10) the risk of an economic slowdown
that would adversely affect credit quality and loan originations.
Other factors that may cause actual results to differ from
forward-looking statements are described in Waypoint's filings with
the Securities and Exchange Commission. Waypoint does not undertake
or intend to update any forward-looking statements. Sovereign and
Waypoint will be filing documents concerning the merger with the
Securities and Exchange Commission, including a registration
statement on Form S-4 containing a prospectus/proxy statement which
will be distributed to shareholders of Waypoint. Investors are
urged to read the registration statement and the proxy
statement/prospectus regarding the proposed transaction when it
becomes available and any other relevant documents filed with the
SEC, as well as any amendments or supplements to those documents,
because they will contain important information. Investors will be
able to obtain a free copy of the proxy statement/prospectus, as
well as other filings containing information about Sovereign and
Waypoint, free of charge on the SEC's Internet site
(http://www.sec.gov/). In addition, documents filed by Sovereign
with the SEC, including filings that will be incorporated by
reference in the prospectus/proxy statement, can be obtained,
without charge, by directing a request to Sovereign Bancorp, Inc.,
Investor Relations, 1130 Berkshire Boulevard, Wyomissing,
Pennsylvania 19610 (Tel: 610-988-0300). In addition, documents
filed by Waypoint with the SEC, including filings that will be
incorporated by reference in the prospectus/proxy statement, can be
obtained, without charge, by directing a request to Waypoint
Financial Corp., 235 North Second Street, Harrisburg, Pennsylvania
17101, Attn: Richard C. Ruben, Executive Vice President and
Corporate Secretary (Tel: 717-236-4041). Directors and executive
officers of Waypoint may be deemed to be participants in the
solicitation of proxies from the shareholders of Waypoint in
connection with the merger. Information about the directors and
executive officers of Waypoint and their ownership of Waypoint
common stock is set forth in Waypoint's proxy statement for its
2004 annual meeting of shareholders, as filed with the SEC on April
20, 2004. Additional information regarding the interests of those
participants may be obtained by reading the prospectus/proxy
statement regarding the proposed merger transaction when it becomes
available. INVESTORS SHOULD READ THE PROSPECTUS/PROXY STATEMENT AND
OTHER DOCUMENTS TO BE FILED WITH THE SEC CAREFULLY BEFORE MAKING A
DECISION CONCERNING THE MERGER. WAYPOINT FINANCIAL CORP. AND
SUBSIDIARIES Consolidated Statements of Financial Condition March
31, December 31, 2004 2003 (Unaudited) (All dollar amounts in
thousands) Assets Cash and cash equivalents $85,633 $100,016
Marketable securities 2,511,070 2,489,770 FHLB Stock 95,805 97,982
Loans receivable, net 2,426,157 2,397,640 Loans held for sale, net
17,653 17,011 Loan servicing rights 2,283 2,528 Investment in real
estate and other joint ventures 20,417 20,773 Premises and
equipment, net of accumulated depreciation of $46,648 and $45,261
49,566 49,789 Accrued interest receivable 23,376 23,597 Goodwill
18,332 17,881 Intangible assets 2,996 2,881 Deferred tax asset, net
2,313 9,059 Bank-owned life insurance 93,558 92,522 Other assets
22,569 8,453 Total assets $5,371,728 $5,329,902 Liabilities and
Shareholders Equity Deposits $2,705,787 $2,720,915 Other borrowings
2,078,626 2,110,681 Escrow 2,976 2,568 Accrued interest payable
9,599 10,009 Postretirement benefit obligation 2,248 2,248 Income
taxes payable 4,576 2,586 Trust preferred debentures 46,392 46,392
Other liabilities 103,664 32,270 Total liabilities 4,953,868
4,927,669 Preferred stock, 10,000,000 shares authorized but
unissued Common stock, $ .01 par value, authorized 100,000,000
shares, 42,947,816 shares issued and 33,358,789 outstanding at
March 31, 2004, 43,031,041 shares issued and 33,247,630 shares
outstanding at December 31, 2003 428 425 Paid in capital 356,628
353,530 Retained earnings 242,411 241,668 Accumulated other
comprehensive income 3,387 (8,502) Employee stock ownership plan
(13,395) (13,423) Recognition and retention plans (4,206) (4,206)
Paid in capital from obligations under Rabbi Trust, 495,826 shares
at March 31, 2004 and 495,826 shares at December 31, 2003 8,457
8,457 Treasury stock shares held in Rabbi Trust at cost, 563,162
shares at March 31, 2004 and 563,162 shares at December 31, 2003
(9,240) (9,240) Treasury stock, 9,589,027 shares at March 31, 2004
and 9,716,075 shares at December 31, 2003 (166,610) (166,476) Total
stockholders' equity 417,860 402,233 Total liabilities and
stockholders' equity $5,371,728 $5,329,902 WAYPOINT FINANCIAL CORP.
AND SUBSIDIARIES Consolidated Statements of Income Three Months
Ended March 31, 2004 2003 (Unaudited) (All dollar amounts in
thousands, except per share data) Interest Income: Loans $33,821
$37,394 Marketable securities and interest- earning cash 25,189
28,415 Total interest income 59,010 65,809 Interest Expense:
Deposits and escrow 12,159 14,484 Borrowed funds 19,533 20,853
Total interest expense 31,692 35,337 Net interest income 27,318
30,472 Provision for loan losses 1,901 2,421 Net interest income
after provision for loan losses 25,417 28,051 Noninterest Income:
Banking service and account fees 4,354 3,389 Financial services
fees 2,412 2,045 Residential mortgage banking 514 1,303 Bank-owned
life insurance 1,036 1,146 Gain on securities and derivatives, net
5,406 1,873 Other 5 (327) Total noninterest income 13,727 9,429
Noninterest Expense: Salaries and benefits 13,204 11,432 Equipment
expense 1,816 1,771 Occupancy expense 2,021 1,922 Marketing 930
1,091 Amortization of intangible assets 200 120 Outside services
1,420 1,267 Communications and supplies 1,280 1,326 Borrowing
prepayment 4,704 - Acquisition 2,965 - Other 2,391 2,953 Total
noninterest expense 30,931 21,882 Income before income taxes 8,213
15,598 Income tax expense 3,014 4,286 Net Income $5,199 $11,312
Basic earnings per share $0.17 $0.33 Diluted earnings per share
$0.16 $0.33 Table 1 - Loans Receivable, Net March 31, December 31,
2004 2003 Residential mortgage loans: One-to-four family $327,014
$347,679 Construction 20,826 25,500 Total residential mortgage
loans 347,840 373,179 Commercial loans: Commercial real estate
687,823 651,139 Commercial business 356,530 343,129 Construction
and site development 105,035 103,611 Total commercial loans
1,149,388 1,097,879 Consumer and other loans: Manufactured housing
90,344 93,323 Home equity and second mortgage 556,775 561,937
Indirect automobile 179,294 174,416 Other 113,691 106,968 Total
consumer and other loans 940,104 936,644 Loans receivable, gross
2,437,332 2,407,702 Plus: Dealer reserves 22,973 23,584 Less:
Unearned premiums 4 6 Net deferred loan origination fees 4,849
5,209 Allowance for loan losses 29,295 28,431 Loans receivable, net
$2,426,157 $2,397,640 Table 2 - Deposits March 31, December 31,
2004 2003 Savings $246,999 $252,072 Time 1,363,492 1,408,970
Transaction 694,314 560,520 Money market 400,982 499,353 Total
deposits $2,705,787 $2,720,915 Table 3 - Average Balance Sheet,
quarter For the three months ended, March 31, 2004 Average Average
Balance Interest(2) Yield/Cost Assets: (Dollar amounts in
thousands) Interest-earning assets: Loans, net (1) (5) $2,444,999
$34,011 5.54% Marketable securities 2,519,856 25,659 4.12 Other
interest-earning assets 39,290 96 0.89 Total interest-earning
assets 5,004,145 59,766 4.78 Noninterest-earning assets 307,784
Total assets $5,311,929 Liabilities and stockholders' equity:
Interest-bearing liabilities: Savings deposits $248,261 127 0.21
Time deposits 1,390,185 10,005 2.89 Transaction and money market
1,051,663 2,022 0.77 Escrow 2,910 5 0.70 Borrowed funds 2,164,285
19,533 3.55 Total interest-bearing liabilities 4,857,304 31,692
2.59 Noninterest-bearing liabilities 48,882 Total liabilities
4,906,186 Stockholders' equity 405,743 Total liabilities and
stockholders' equity $5,311,929 Net interest income -
tax-equivalent 28,074 Interest rate spread (3) 2.19% Net
interest-earning assets $146,841 Net interest margin (4) 2.27%
Ratio of interest-earning assets to interest-bearing liabilities
1.03 x Adjustment to reconcile tax- equivalent net interest income
to net interest income (756) Net interest income $27,318 For the
three months ended, March 31, 2003 Average Average Balance
Interest(2) Yield/Cost Assets: (Dollar amounts in thousands)
Interest-earning assets: Loans, net (1)(5) $2,361,672 $37,394 6.39%
Marketable securities 2,718,846 28,882 4.36 Other interest-earning
assets 64,155 163 1.19 Total interest-earning assets 5,144,673
66,439 5.24 Noninterest-earning assets 207,778 Total assets
$5,352,451 Liabilities and stockholders' equity: Interest-bearing
liabilities: Savings deposits $257,399 314 0.45 Time deposits
1,398,769 13,020 3.78 Transaction and money market 766,422 1,141
0.60 Escrow 3,866 9 0.89 Borrowed funds 2,437,649 20,853 3.41 Total
interest-bearing liabilities 4,864,105 35,337 2.92
Noninterest-bearing liabilities 48,645 Total liabilities 4,912,750
Stockholders' equity 439,701 Total liabilities and stockholders'
equity $5,352,451 Net interest income - tax-equivalent 31,102
Interest rate spread (3) 2.32% Net interest-earning assets $280,568
Net interest margin (4) 2.47% Ratio of interest-earning assets to
interest-bearing liabilities 1.06 x Adjustment to reconcile tax-
equivalent net interest income to net interest income (630) Net
interest income $30,472 (1) Includes income recognized on deferred
loan fees and costs of $175,000 for the three months ended March
31, 2004, and $633,000 for the three months ended March 31, 2003.
(2) Interest income and yields are shown on a tax equivalent basis
using an effective tax rate of 35%. (3) Represents the difference
between the average yield on interest- earning assets and the
average cost on interest-bearing liabilities. (4) Represents the
annualized net interest income before the provision for loan losses
divided by average interest-earning assets. (5) Includes loans on
nonaccrual status and loans held for sale. Table 4 - Rate/Volume
Analysis of Changes in Tax-equivalent Net Interest Income Three
Months Ended March 31, 2004 Compared to Three Months Ended March
31, 2003 Increase (Decrease) Volume Rate Net (Dollar amounts in
thousands) Interest-earning assets: Loans, net $1,366 $(4,749)
$(3,383) Marketable securities (1,839) (1,384) (3,223) Other
interest-earning assets (41) (26) (67) Total interest-earning
assets (514) (6,159) (6,673) Interest-bearing liabilities: Savings
deposits (12) (175) (187) Time deposits (77) (2,938) (3,015)
Transaction and money market deposits 500 381 881 Escrow (2) (2)
(4) Borrowed funds (2,198) 878 (1,320) Total interest-bearing
liabilities (1,789) (1,856) (3,645) Change in net interest income
$1,275 $(4,303) $(3,028) Table 5 - Analysis of Allowance for Loan
Losses For the Three For the Three For the Twelve Months Ended
Months Ended Months Ended March 31, March 31, December 31, 2004
2003 2003 (All dollar amounts in thousands) Balance at beginning of
the period $28,431 $27,506 $27,506 Provision for loan losses 1,901
2,421 7,513 Charge-offs: Residential mortgage loans (58) (220)
(595) Commercial loans (96) (977) (2,732) Consumer and other loans
(1,095) (1,275) (4,596) Total charge-offs (1,249) (2,472) (7,923)
Recoveries: Residential mortgage loans - 13 139 Commercial loans 63
263 389 Consumer and other loans 149 167 807 Total recoveries 212
443 1,335 Net charge-offs (1,037) (2,029) (6,588) Balance at end of
period $29,295 $27,898 $28,431 Annualized net charge-offs to
average loans 0.17% 0.34% 0.27% Allowance for loan losses as a % of
total loans 1.19% 1.18% 1.17% Table 6 - Non-performing Assets As of
As of March 31, 2004 December 31, 2003 (Amounts in thousands)
Non-accrual residential mortgage loans $438 $443 Non-accrual
commercial loans 8,276 8,173 Non-accrual other loans 402 90 Total
non-accrual loans 9,116 8,706 Loans 90 days or more delinquent and
still accruing 8,318 9,498 Total non-performing loans 17,434 18,204
Total foreclosed other assets 340 313 Total foreclosed real estate
414 472 Total non-performing assets $18,188 $18,989 Total
non-performing loans to total loans 0.71% 0.76% Allowance for loan
losses to non-performing loans 168.03% 156.18% Total non-performing
assets to total assets 0.34% 0.36% Table 7 - Allocation of the
Allowance for Loan Losses As of March 31, 2004 As of December 31,
2003 (All dollar amounts are in thousands) % of Total % of Total
Amount Reserves Amount Reserves Residential mortgage loans $942
3.22% $1,099 3.86% Commercial loans 22,216 75.83% 20,455 71.95%
Consumer and other loans 6,137 20.95% 6,877 24.19% Total $29,295
100.00% $28,431 100.00% DATASOURCE: Waypoint Financial Corp.
CONTACT: James H. Moss, Chief Financial Officer, Waypoint
Financial, +1-717-909-2247 Web site: http://www.waypointbank.com/
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