MAFB Maf Bancorp (MM)

MAF Bancorp Reports First Quarter Earnings of $.72 Per Share CLARENDON HILLS, Ill., April 20 /PRNewswire-FirstCall/ -- MAF Bancorp, Inc. (NASDAQ:MAFB) reported net income for the first quarter ended March 31, 2005 of $24.2 million, or $.72 per diluted share, compared to $24.8 million, or $.73 per diluted share, in last year's first quarter. First quarter results met management's plan, and the Company continues to target annual earnings per share growth of 8% to 10% in 2005. Net Interest Income and Net Interest Margin QE 3/31/05 QE 12/31/04 QE 3/31/04 Net interest margin 3.04% 3.07% 3.10% Interest rate spread 2.82% 2.85% 2.90% Net interest income (000's) $67,539 $67,530 $64,029 Average assets: Yield on interest-earning assets 5.04% 4.99% 4.94% Yield on loans receivable 5.22% 5.16% 5.14% Yield on mortgage-backed securities 4.05% 3.88% 3.74% Yield on investment securities 5.00% 5.26% 5.11% Average interest-earning assets (000's) $8,899,553 $8,804,297 $8,264,886 Average liabilities: Cost of interest-bearing liabilities 2.22% 2.14% 2.04% Cost of deposits 1.62% 1.51% 1.34% Cost of borrowed funds 3.50% 3.44% 3.58% Average interest-bearing liabilities (000's) $8,045,667 $7,915,439 $7,472,967 Net Interest Margin: March 2005 v. December 2004. The net interest margin declined during the quarter as deposits and other borrowings repriced faster than asset yields as short-term interest rates rose. The six basis point improvement in the yield on loans receivable was primarily the result of an increase in the yield on the equity line of credit portfolio, which in a rising rate environment, reprices more quickly than other components of the loan portfolio. The 11 basis point rise in the cost of deposits is largely due to higher rates on money market accounts and certificates of deposit driven by the higher short-term interest rates and more aggressive deposit pricing as the Company competes for deposit growth in its markets. As previously disclosed, the Company expects that the flatter yield curve and increased competition for deposits will pressure its net interest margin throughout 2005. The increases in average interest-earning assets and liabilities during the quarter were the result of the acquisition of Chesterfield Financial Corp., which closed on October 31, 2004. Average interest-earning assets grew $95 million or 1.1% during the quarter, with growth occurring primarily in the balance of mortgage-backed securities, which increased $191 million, or 18%, primarily to redeploy proceeds from loan sales and the redemption of stock in the Federal Home Loan Bank of Chicago. Average loans receivable balances declined by $50.9 million during the quarter as loan origination volumes were lower than in the fourth quarter of 2004, the Bank experienced some large, expected paydowns on business banking loans and growth in equity line of credit balances has slowed from the strong growth in 2004. The growth in average interest-earning assets during the quarter was primarily funded by deposits. Compared to the fourth quarter of 2004, the average balance of interest-bearing deposits rose by $131 million, or 2.4%, to $5.48 billion during the first quarter of 2005. Net Interest Margin: March 2005 v. March 2004. On a year-over-year basis, the net interest margin declined by six basis points. Compared to the prior year quarter, the Company's average asset yields in the current quarter were 10 basis points higher, while the average cost of interest-bearing liabilities increased by 18 basis points. Average interest-earning assets and average-interest bearing liabilities both grew by 7.7% over the past year, due both to the Chesterfield acquisition and organic balance sheet growth. Lending Production QE 3/31/05 QE 12/31/04 QE 3/31/04 Amount % Amount % Amount % Originations by Loan Category (000's) 1-4 family $414,729 50.4% $510,301 48.2% $553,422 61.4% Equity lines of credit(1) 281,004 34.1 320,797 30.3 231,983 25.8 Multi-family 32,667 4.0 32,717 3.1 34,176 3.8 Commercial real estate and commercial business loans 49,030 6.0 103,710 9.8 49,034 5.4 Construction and land 37,807 4.5 81,424 7.7 27,984 3.1 Other 8,387 1.0 9,966 0.9 4,284 0.5 Total loan originations $823,624 100.0% $1,058,915 100.0% $900,883 100.0% 1-4 family originations Fixed rate % 32% 33% 41% Adjustable rate % 68 67 59 Refinance % 40 35 51 (1) Represents total disbursements during the quarter on all home equity lines, including amounts related to lines newly originated during the quarter and lines previously outstanding. This does not reflect any unused amounts that remain available at quarter end. Total 1-4 family residential mortgage loan volume was down 19% during the past three months compared to the fourth quarter of 2004, and more than 25% lower than in the first quarter of 2004, trends that are consistent with the overall slowdown in the mortgage industry. Home equity volumes were also down in the current quarter, but home equity balances remained steady at $1.32 billion at March 31, 2005 compared to $1.34 billion at December 31, 2004, despite the sale of $76.8 million of equity line of credit balances during the quarter. Home equity balances at March 31, 2004 were $1.04 billion. Home equity loans are primarily floating-rate assets and represent approximately 19% of the Company's total loan portfolio at March 31, 2005, compared to 16% at March 31, 2004. Non-Interest Income QE 3/31/05 QE 12/31/04 QE 3/31/04 Total non-interest income (000's) $17,835 $17,293 $20,395 Non-interest income / total revenue(1) 20.9% 20.4% 24.2% (1) total revenue = net interest income plus non-interest income Overview. As anticipated, the Company had no real estate development income during the first quarter of 2005 which, together with lower investment securities gains, resulted in a $2.6 million decline in non-interest income for the current quarter compared to the first quarter of 2004. Higher gains on sale of loans in the current period offset some of the declines in other non-interest income areas. Loan Sales and Loan Servicing QE 3/31/05 QE 12/31/04 QE 3/31/04 Loan Sales 1-4 family mortgage loans: Fixed-rate (000's) $145,525 $154,490 $128,649 Adjustable rate (000's) 8,364 55,590 4,832 Total (000's) 153,889 210,080 133,481 Equity lines of credit (000's) 76,843 - - Total loans sold (000's) $230,732 $210,080 $133,481 Gain on sale of 1-4 family mortgages (000's) $1,946 $2,860 $1,780 Gain on sale of equity lines of credit (000's) 1,930 - - Total loan sale gains (000's) $3,876 $2,860 $1,780 Margin on 1-4 family loan sales (basis points) 126 136 133 Margin on equity lines of credit sale (basis points) 251 - - Loan Servicing Loan servicing fee income (000's) $681 $521 $241 Valuation recovery on mortgage servicing rights (000's) 125 317 555 Capitalized mortgage servicing rights as a percentage of loans serviced for others (basis points) 69 71 71 The Company is expanding its wholesale equity line of credit production and expects to continue sales of these single-service loan types during 2005 if favorable pricing trends continue. The decline in traditional loan sale volume during the quarter was due primarily to the overall slowdown in residential lending. Deposit Account Service Fees QE 3/31/05 QE 12/31/04 QE 3/31/04 Deposit service charges (000's) $ 7,646 $ 8,687 $7,856 Deposit service fees / total revenue 9.0% 10.2% 9.3% Number of checking accounts (period end) 246,500 245,000 235,600 While deposit account service fees remained relatively stable with fees recorded in last year's first quarter, on a sequential quarter basis this revenue source was down 12%, reflecting heavy competition for consumer checking accounts and declines in consumer overdraft activity. Real Estate Development Operations QE 3/31/05 QE 12/31/04 QE 3/31/04 Real estate development income - total (000's) $- $1,396 $ 1,102 Residential lot sales - 22 25 Pending lot sales at quarter end 169 - 58 Investment in real estate held for development or sale (000's) $40,173 $35,091 $32,557 The Company had no real estate development income during the quarter as it continued its development work in the new Springbank development in Plainfield, IL. As previously disclosed, the Company expects the initial lot sales in Springbank to begin closing in the second half of the year. The Company has offered initial lots for sale to builders in the first phase of the development and has experienced healthy demand to date. At March 31, 2005, 169 lots were under contract for sale. Securities Sales and Writedowns QE 3/31/05 QE 12/31/04 QE 3/31/04 Investment securities: Net gains (losses) on sale and writedowns (000's) $498 $(1,983) $2,834 Mortgage-backed securities: Net gains on sale (000's) - 11 $489 There was minimal securities sale activity during the current quarter. The loss in the fourth quarter of last year was attributable to a $2.0 million other-than-temporary impairment writedown on the carrying value of $8.8 million of floating-rate Freddie Mac preferred stock investments. In last year's first quarter, three investment securities on which other-than- temporary impairment writedowns had been taken in prior years were sold at substantial gains. Non-Interest Expense QE 3/31/05 QE 12/31/04 QE 3/31/04 Total non-interest expense (000's) $48,155 $46,511 $46,890 Non-interest expense to average assets 1.99% 1.95% 2.10% Efficiency ratio(1) 56.74% 53.59% 57.82% (1) The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income and non-interest income, excluding net gain/(loss) on sale and writedown of mortgage-backed and investment securities. 1st Quarter 2005 v. 4th Quarter 2004. Total non-interest expense increased by $1.6 million compared to the fourth quarter of 2004 as compensation expense increases were offset by declines in other categories. Compensation and benefits expense increased by $2.9 million during the first quarter, primarily due to higher incentive and employment tax expenses. Other non-interest expenses declined by $1.2 million due primarily to lower losses from fraud, bad checks and debit card writeoffs. 1st Quarter 2005 v. 1st Quarter 2004. Compared to a year ago, total non- interest expenses increased by $1.3 million, or 2.7%. Modest advances in compensation, occupancy and other expenses were partially offset by declines in advertising. Income tax expense totaled $13.0 million in the current quarter, equal to an effective income tax rate of 35.0%, an increase from the 33.8% reported in the fourth quarter of 2004 and the 33.4% effective rate reported for the quarter ended March 31, 2004. In the 2004 quarterly periods, the effective tax rate was lower due to the resolution of certain prior years' income tax matters. Asset Quality QE 3/31/05 QE 12/31/04 QE 3/31/04 Non-performing loans (NPL) (000's) $30,309 $31,473 $30,259 Non-performing assets (NPA) (000's) $31,779 $32,960 $32,179 NPL / total loans .44% .46% .47% NPA / total assets .33% .34% .35% Allowance for loan losses (ALL) (000's) $36,249 $36,255 $34,437 ALL / total loans .53% .53% .53% ALL / NPL 119.6% 115.2% 113.8% Provision for loan losses (000's) $- $285 $300 Net charge-offs (000's) $6 $263 $418 The Company continues to maintain strong asset quality. Asset quality ratios were basically unchanged compared to the quarter ended December 31, 2004 and the year ago period. At March 31, 2005, 91% of non-performing loans consisted of loans secured by one-to four-family residential properties, slightly higher than the 89% reported at December 31, 2004. Balance Sheet & Capital 3/31/05 12/31/04 3/31/04 Assets: Total assets (000's) $9,710,873 $9,681,384 $9,077,753 Loans receivable (000's) 6,831,830 6,881,780 6,454,210 Mortgage-backed securities (000's) 1,314,000 1,193,189 1,045,142 Liabilities and Equity: Total liabilities (000's) $8,757,803 $8,706,998 $8,162,889 Deposits (000's) 6,014,946 5,935,708 5,618,127 Borrowed funds (000's) 2,575,155 2,600,667 2,381,838 Stockholders' equity (000's) 953,070 974,386 914,864 Other: 1-4 family residential loans / total loans 59.1% 58.7% 60.7% Core deposits / total deposits 58.9% 59.6% 59.9% Book value per share $29.27 $29.28 $27.79 Stockholders' equity / total assets 9.8% 10.1% 10.1% Deposits increased by $79.2 million in the quarter equal to an annualized growth rate of 5.3%. Total assets increased by $29.5 million over the past three months. At March 31, 2005, 1-4 family residential loans (exclusive of home equity loans) comprised 59.1% of total loans. Commercial real estate and commercial business loans represented 9.4% of the loan portfolio at March 31, 2005, only slightly lower than the 9.5% at December 31, 2004. Stockholders' equity declined by $21.3 million in the quarter largely due to the expenditure of $27.8 million for the repurchase of Company stock. The Company repurchased 644,000 shares during the quarter at an average price of $43.16 per share. There remained 700,000 shares authorized for repurchase under the Company's 1.2 million share repurchase program announced in January 2005. Stockholders' equity was also impacted by the $10.8 million decline in the fair value of the Company's available for sale securities portfolio resulting from the substantial increase in short-term interest rates during the quarter. The Bank's tangible, core and risk-based capital percentages of 7.43%, 7.43% and 11.79%, respectively, at March 31, 2005, exceeded minimum and well-capitalized regulatory capital requirements. Following March 31, 2005, the Company formed a special purpose finance subsidiary, and the subsidiary issued $30 million in trust preferred securities on April 15, 2005. The trust preferred securities mature in 30 years and are callable at par in five years at the Company's option. The Company will pay interest on the indebtedness at 3 month LIBOR plus 1.75%, resetting quarterly. The proceeds were used to repay amounts drawn on the Company's existing $55 million line of credit, which remains available for general corporate proposes, including the Company's stock repurchase program. MAF Bancorp is the parent company of Mid America Bank, a federally chartered stock savings bank. The Bank currently operates a network of 72 retail banking offices throughout Chicago and Milwaukee and their surrounding areas. Offices in Wisconsin operate under the name "St. Francis Bank, a division of Mid America Bank." The Company's common stock trades on the Nasdaq Stock Market under the symbol MAFB. Forward-Looking Information Statements contained in this news release that are not historical facts, constitute forward-looking statements (within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended), which involve significant risks and uncertainties. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. These forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," "plan," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain and actual results may differ from those predicted. The Company undertakes no obligation to update these forward- looking statements in the future. Factors which could have a material adverse effect on operations and could affect management's outlook or future prospects of the Company and its subsidiaries include, but are not limited to, higher than expected overhead, infrastructure and compliance costs, unanticipated changes in interest rates or further flattening of the yield curve, less than anticipated balance sheet growth, demand for loan products, unanticipated changes in secondary mortgage market conditions, deposit flows, competition, adverse federal or state legislative or regulatory developments, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and Federal Reserve Board, deteriorating economic conditions which could result in increased delinquencies in MAF's loan portfolio, the quality or composition of MAF's loan or investment portfolios, demand for financial services and residential real estate in MAF's market area, delays in real estate development projects, the possible short-term dilutive effect of other potential acquisitions, if any, and changes in accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. MAF BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) Three Months Ended March 31, 2005 2004 (Unaudited) Interest income $111,524 102,007 Interest expense 43,985 37,978 Net interest income 67,539 64,029 Provision for loan losses -- 300 Net interest income after provision for loan losses 67,539 63,729 Non-interest income: Net gain on sale of: Loans receivable held for sale 3,876 1,780 Mortgage-backed securities -- 489 Investment securities 498 2,834 Foreclosed real estate 134 146 Income from real estate operations -- 1,102 Deposit account service charges 7,646 7,856 Other loan fees 1,140 1,527 Loan servicing fee income, net 681 241 Valuation recovery on mortgage servicing rights 125 555 Brokerage commissions 1,015 1,096 Other 2,720 2,769 Total non-interest income 17,835 20,395 Non-interest expense: Compensation and benefits 26,630 25,634 Office occupancy and equipment 6,981 6,503 Advertising and promotion 2,022 2,407 Data processing 2,044 2,118 Other 9,741 9,488 Amortization of core deposit intangibles 737 740 Total non-interest expense 48,155 46,890 Income before income taxes 37,219 37,234 Income taxes 13,042 12,440 Net income 24,177 24,794 Basic earnings per share .73 .75 Diluted earnings per share .72 .73 MAF BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in thousands) March 31, December 31, 2005 2004 (Unaudited) Assets Cash and due from banks $124,281 $148,055 Interest-bearing deposits 33,597 56,089 Federal funds sold 83,774 42,854 Total cash and cash equivalents 241,652 246,998 Investment securities available for sale, at fair value 400,102 388,959 Stock in Federal Home Loan Bank of Chicago, at cost 233,916 278,916 Mortgage-backed securities available for sale, at fair value 1,038,672 948,168 Mortgage-backed securities held to maturity (fair value $268,927 and $244,615) 275,328 245,021 Loans receivable held for sale 28,660 39,521 Loans receivable, net 6,839,419 6,878,514 Allowance for loan losses (36,249) (36,255) Loans receivable, net of allowance for loan losses 6,803,170 6,842,259 Accrued interest receivable 35,790 34,888 Foreclosed real estate 1,470 1,487 Real estate held for development or sale 40,173 35,091 Premises and equipment, net 139,502 140,898 Other assets 129,560 135,249 Goodwill 305,166 305,166 Intangibles 37,712 38,763 $9,710,873 $9,681,384 Liabilities and Stockholders' Equity Liabilities: Deposits 6,014,946 5,935,708 Borrowed funds 2,575,155 2,600,667 Advances by borrowers for taxes and insurance 44,757 43,285 Accrued expenses and other liabilities 122,945 127,338 Total liabilities 8,757,803 8,706,998 Stockholders' equity: Preferred stock, $.01 par value; authorized 5,000,000 shares; none outstanding -- -- Common stock, $.01 par value; 80,000,000 shares authorized; 33,634,642 shares issued; 32,558,252 and 33,273,235 shares outstanding 336 336 Additional paid-in capital 526,052 522,047 Retained earnings, substantially restricted 486,050 468,408 Accumulated other comprehensive income (loss), net of tax (12,508) (1,676) Stock in Gain Deferral Plan; 245,467 shares at December 31, 2004 -- 1,211 Treasury stock, at cost; 1,076,390 and 361,407 shares (46,860) (15,940) Total stockholders' equity 953,070 974,386 $9,710,873 $9,681,384 MAF BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (In thousands, except share data) (Unaudited) March 31, December 31, March 31, 2005 2004 2004 Book value per share $29.27 $29.28 27.79 Tangible book value per share 19.52 19.72 19.42 Stockholders' equity to total assets 9.81% 10.06% 10.08% Tangible stockholders' equity to tangible assets 6.77 7.01 7.26 Tangible capital ratio (Bank only) 7.43 7.14 7.11 Core capital ratio (Bank only) 7.43 7.14 7.11 Risk-based capital ratio (Bank only) 11.79 11.30 11.43 Common shares outstanding: Actual 32,558,252 33,273,235 32,915,327 Basic (weighted average for quarter) 32,937,772 33,165,321 33,063,842 Diluted (weighted average for quarter) 33,685,672 33,961,253 33,931,769 Non-performing loans $30,309 $31,473 30,259 Non-performing assets 31,779 32,960 32,179 Allowance for loan losses 36,249 36,255 34,437 Non-performing loans to total loans .44% .46% .47% Non-performing assets to total assets .33 .34 .35 Allowance for loan losses to total loans .53 .53 .53 Mortgage loans serviced for others $3,659,359 $3,641,445 3,368,439 Capitalized mortgage servicing rights, net 25,383 25,697 23,808 Core deposit intangibles 12,329 13,066 13,321 Three Months Ended March 31, 2005 2004 Average balance data: Total assets $9,658,497 $8,937,401 Loans receivable 6,910,358 6,457,794 Interest-earning assets 8,899,553 8,264,886 Interest-bearing deposits 5,476,756 5,154,067 Interest-bearing liabilities 8,045,667 7,472,967 Stockholders' equity 968,343 911,200 Performance ratios (annualized): Return on average assets 1.00% 1.11% Return on average equity 9.99 10.88 Average yield on interest-earning assets 5.04 4.94 Average cost of interest-bearing liabilities 2.22 2.04 Interest rate spread 2.82 2.90 Net interest margin 3.04 3.10 Average interest-earning assets to average interest-bearing liabilities 110.61 110.60 Non-interest expense to average assets 1.99 2.10 Non-interest expense to average assets and loans serviced for others 1.45 1.53 Efficiency ratio (1) 56.74 57.82 Loan originations $823,624 $900,883 Loans sold 230,732 133,481 Cash dividends declared per share .23 .21 (1) The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income and non-interest income, excluding net gain/(loss) on sale and writedown of mortgage-backed and investment securities. DATASOURCE: MAF Bancorp, Inc. CONTACT: Jerry A. Weberling, Chief Financial Officer, +1-630-887-5999, or Michael J. Janssen, SVP, +1-630-986-7544, both of MAF Bancorp, Inc. Web site: http://www.mafbancorp.com/

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