MIDDLEBORO, Mass., Aug. 18 /PRNewswire-FirstCall/ -- Mayflower Co-operative Bank (Nasdaq National Market: MFLR) today reported net income of $300,000 or $.14 per share for its first quarter ended July 31, 2006 as compared to earnings of $485,000 or $.23 per share for the same quarter last year. Diluted earnings per share for the first quarter were $.14 compared to $.23 for the first quarter of last year.
Net interest income for the quarter decreased by $108,000 or 5.5% as the Bank continued to be impacted by the flat yield curve, which has resulted in funding costs rising more rapidly than asset yields. Additionally, depositor preference for short-term certificates of deposit, rather than savings and money market accounts, has further increased the Bank's cost of funds and has resulted in certificates of deposit comprising a greater percentage of total deposits. Average interest earning assets climbed from $226.1 million at July 31, 2005 to $233.0 million at July 31, 2006, and average interest bearing liabilities grew from $218.4 million at July 31, 2005 to $224.2 million at July 31, 2006. Gains from the sale of residential mortgages were $24,000, as compared to $122,000 for the quarter ended July 31, 2005. Additionally, customer service fees increased by $30,000 as a result of increases in returned check and surcharge income. Loan origination and other loan fees increased by $14,000 due to decreased prepayment speeds resulting in slower amortization of the mortgage servicing asset, while other income increased by $5,000.
Total operating expenses increased from $1.5 million for the quarter ended July 31, 2005 to $1.7 million for the quarter ended July 31, 2006, an increase of $161,000 or 10.7%. This increase was primarily attributable to salary and benefit expense, which increased by $79,000 for the quarter ended July 31, 2006 as compared to the prior year quarter, primarily as a function of certain additions to staff to support strategic initiatives and increases in benefit costs bank-wide. Other expenses increased by $97,000 due in part to legal and consulting expenses incurred in connection with the proposed holding company reorganization.
Since the end of the April 30, 2006 fiscal year, total assets of the Bank grew by $124,000 to $245.7 million as of July 31, 2006. Total premises and equipment increased by $1.2 million, primarily due to the land acquisition in West Wareham, Massachusetts for a new branch facility, and net loans receivable grew by $931,000 to $140.2 million at July 31, 2006. Investment securities decreased by $1.2 million as a result of scheduled amortizations, with those funds used to fund loan demand and other Bank operations.
Total deposits decreased to $198.9 million, a drop of $1.6 million since the conclusion of the prior fiscal year on April 30, 2006. This decrease was primarily due to decreases in savings and money market accounts of $3.8 million and $1.3 million, respectively, offset by an increase in certificate of deposit balances of $3.8 million. The reduction in deposits has resulted in an increased use of borrowed funds, which grew by $1.4 million during the period.
Total stockholders' equity was $18.9 million at July 31, 2006 or 7.67% of total assets. This compares to stockholders' equity of $18.6 million or 7.57% of total assets at April 30, 2006. The increase in total equity was due to net income of $300,000 for the quarter ended July 31, 2006, augmented by $110,000 as the result of the exercise of certain employee stock options. Additionally, stockholders' equity increased due to a decrease in the unrealized loss on Bank securities classified as available-for-sale, from a net unrealized loss of $887,000 at April 30, 2006 to a net unrealized loss of $830,000 at July 31, 2006. These increases were offset by the payment of dividends totaling $.10 per share or $208,000.
In conjunction with these announcements, Edward M. Pratt, President and Chief Executive Officer of the Bank also reported that the Bank's Board of Directors has declared a quarterly cash dividend of $.10 per share to be payable on September 12, 2006, to shareholders of record as of September 5, 2006.
Mr. Pratt continued, "The combination of a difficult interest rate environment and a significantly slower real estate market negatively impacted our results in the first quarter. We remain optimistic that our performance will improve during the second half of our fiscal year as the economy settles and the impact of our retail branching initiatives bear fruit. We continue to believe that the investment in our retail network and the financial strength of the Bank will enhance shareholders' investments in Mayflower."
Mayflower Co-operative Bank is a Massachusetts State Chartered Cooperative Bank specializing in residential and commercial lending and traditional banking and deposit services. The Bank currently serves southeastern Massachusetts from its Main Office in Middleboro and maintains additional full-service offices in Bridgewater, Wareham, Rochester, Plymouth and Lakeville, Massachusetts. All of the Bank's deposits are insured by the Federal Deposit Insurance Corporation (FDIC) and by the Share Insurance Fund (SIF) of Massachusetts.
(See accompanying Selected Consolidated Financial Information)
This earnings report may contain certain forward-looking statements, which are based on management's current expectations regarding economic, legislative and regulatory issues that may impact the Bank's earnings in future periods. Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, 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 Bank's operations, pricing, products and services.
Mayflower Co-operative Bank and Subsidiaries
Selected Consolidated Financial Information
(Dollars in thousands, except per share information)
July 31, April 30,
2006 2006
Total assets $245,727 $245,603
Loans receivable, net 140,161 139,230
Federal funds sold 33 453
Investment securities:
Held for investment 38,938 39,996
Available for sale, net 48,221 48,335
Deposits 198,947 200,534
Borrowed funds 26,599 25,197
Stockholders' equity 18,851 18,592
Equity to assets ratio 7.67% 7.57%
Book value per share $9.01 $8.96
Three months ended
July 31,
2006 2005
Statement of operations
Interest and dividend income $3,344 $3,015
Interest expense 1,487 1,050
Net interest income 1,857 1,965
Provision for loan losses (30) (30)
Gain on sales of loans 24 122
Other non interest income 279 230
Operating expenses (1,665) (1,504)
Income before income taxes 465 783
Income taxes 165 298
Net income $300 $485
Earnings per share - basic $0.14 $0.23
Earnings per share - diluted $0.14 $0.23
Dividends per share $0.10 $0.10
Weighted average shares
outstanding 2,081,028 2,071,932
Annualized return on
average assets 0.49% 0.81%
Annualized return on
average equity 6.49% 10.47%
Net interest spread 3.09% 3.41%
Net interest margin 3.19% 3.48%
Mayflower Co-operative Bank and Subsidiaries
Analysis of Loans Past Due
(Dollars in thousands)
July 31, April 30, July 31,
Loans past due over 90 days: 2006 2006 2005
Residential mortgages $- $- $-
Commercial and construction
mortgages - - -
Commercial time and demand loans - - -
Consumer and other loans - - -
$- $- $-
Loans past due over 90 days as a
percentage of:
Net loans receivable - - -
Total assets - - -
Non-performing assets
**Non-accrual loans $- $- $-
Non-accrual investments (book
value) - - -
Real estate acquired by
foreclosure - - -
$- $- $-
Non-performing assets as a
percentage of:
Total assets - - -
Allowance for loan losses $1,730 $1,704 $1,638
Allowance as a percentage of net
loans 1.23% 1.22% 1.27%
** includes loans which are contractually past due
90 days or more and/or loans less than 90 days
past due on which the Bank has ceased
accruing interest
