Willow Grove Bancorp, Inc. Revises Fourth Quarter 2006 Provision for Loan Losses and Results17 September 2006
Willow Grove Bancorp, Inc. (the "Company") (Nasdaq: WGBC), the holding company for Willow Grove Bank (the "Bank"), announced today that it is revising its fourth quarter 2006 results to reflect a higher provision for loan losses.
On August 14, 2006, the Company reported net income of $3.8 million, or $0.26 per diluted share for the quarter ended June 30, 2006. The results included a provision for loan losses of $195,000. Subsequently, based on additional information regarding one borrower, the provision for loan losses was increased to $2.5 million. As a result of the addition to the provision for loan losses, net income for the quarter ended June 30, 2006 was reduced to $2.3 million or $0.16 per diluted share.
The increase in the fourth quarter provision is due to two commercial loans to a single borrower, which became delinquent subsequent to June 30, 2006. The loans were originally classified as substandard at June 30, 2006. Upon additional investigation subsequent to June 30, 2006, management became aware that the borrower's revenue shortfall, while initially expected to be short-term, is long-term in nature and the value of the collateral securing the loans was significantly below the outstanding balance of the loans.
The level of the provision for loan losses made in connection with the loans reflects the amount necessary to maintain the Company's allowance for loan losses at a level deemed adequate, based upon management's current analysis of losses inherent within the loan portfolio at June 30, 2006.
Donna M. Coughey, President and CEO of the Company said: "Today's actions to bolster our loan loss reserves and revise our fourth quarter results stems from operational issues specific to a single borrower. We will aggressively pursue all avenues for repayment of the debt to minimize the financial impact to the Company. Overall, we believe we are taking a conservative approach to our commercial lending activities by aggressively reserving for credit issues we have identified."
Willow Grove Bank continues to meet all applicable regulatory capital requirements including those included in the OTS letter approving the merger with Chester Valley Bancorp. The additional provision for loan losses will be included in the financial statements at and for the year ended June 30, 2006 to be included in the Company's Annual Report on Form 10-K report, which management expects to file sometime during the week of September 18, 2006.
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 28 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, Wayne and West Chester, Pennsylvania.
Additional information is available at: http://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, the Company's provisions for loan losses, the intended filing date of the Company's Annual Report on Form 10-K for the year ended June 30, 2006 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. 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.
WILLOW GROVE BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands, Unaudited)
June 30, June 30,
2006 2005
Assets
Cash in banks $32,930 $6,189
Interest-bearing deposits 4,289 14,420
Total cash and cash equivalents 37,219 20,609
Investment securities - trading 902 53
Federal Home Loan Bank Stock 16,856 14,256
Investment securities available for sale 196,925 148,517
Investment securities held to maturity 105,561 164,451
Loans held for sale 2,635 1,795
Loans receivable 1,081,789 590,923
Deferred fees and other discounts (1,170) (623)
Allowance for loan losses (16,737) (6,113)
Loans receivable, net 1,063,882 584,187
Accrued interest receivable 6,647 4,094
Property and equipment, net 10,064 5,659
Bank owned life insurance 11,483 5,447
Real estate owned 51 439
Core deposit intangible, net 12,975 33
Goodwill 93,702 848
Other assets 17,825 8,867
Total Assets $1,576,727 $959,255
Liabilities and Stockholders' Equity
Liabilities:
Deposits $985,238 $602,678
Securities sold under agreements
to repurchase 53,152 --
Advance payments by borrowers for taxes
and insurance 4,776 2,850
Federal Home Loan Bank advances 282,717 237,400
Trust preferred securities 36,149 --
Accrued interest payable 2,205 1,064
Other liabilities 9,425 8,220
Total Liabilities 1,373,662 852,212
Total Stockholders' Equity 203,065 107,043
Total Liabilities and Stockholders' Equity $1,576,727 $959,255
WILLOW GROVE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except for Per Share Amounts, Unaudited)
Three Months Ended Twelve Months Ended
June 30, June 30,
2006 2005 2006 2005
INTEREST INCOME:
Loans $18,271 $ 9,183 $65,472 $34,536
Investments
securities
and interest-
bearing deposits 4,290 3,738 16,058 15,143
Total interest
income 22,561 12,921 81,530 49,679
INTEREST EXPENSE:
Deposits 5,133 2,725 17,648 9,931
Securities sold under
agreements to
repurchase 530 - 1,056 -
Borrowings 3,663 2,396 13,534 8,818
Total interest
expense 9,326 5,121 32,238 18,749
NET INTEREST INCOME 13,235 7,800 49,292 30,930
Provision for loan
losses 2,485 197 3,205 1,232
Net interest income
after provision
for loan losses 10,750 7,603 46,087 29,698
OTHER INCOME:
Investment services
income, net 899 - 2,634 -
Service charges
and fees 1,747 674 5,000 2,418
Gain (loss) on sale of:
Loans 39 116 374 597
Available for sale
securities 38 61 (919) 73
Other 157 48 558 389
Total other income 2,880 899 7,647 3,477
OPERATING EXPENSES:
Salaries and employee
benefits 5,097 3,189 20,106 13,062
Occupancy & equipment 1,977 680 6,011 2,646
Data processing 239 242 1,220 960
Advertising 472 316 1,504 978
Deposit insurance
premiums 32 22 124 85
Amortization of
intangible assets 576 15 1,928 57
Professional fees 599 783 2,587 1,441
Other 1,298 801 3,922 4,168
Total operating
expenses 10,290 6,048 37,402 23,397
Income before
income taxes 3,340 2,454 16,332 9,778
Income tax expense 991 745 5,256 3,052
NET INCOME $ 2,349 $ 1,709 $11,076 $ 6,726
EARNINGS PER SHARE
Basic $0.17 $0.19 $0.83 $0.74
Diluted $0.16 $0.18 $0.81 $0.71
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic 14,219,096 8,994,737 13,271,077 8,945,778
Diluted 14,584,247 9,494,444 13,611,051 9,379,991
Source: prnewswire
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