WGBC Willow Grove Bancorp

WAYNE, Pa., Aug. 14 /PRNewswire-FirstCall/ -- Willow Grove Bancorp, Inc. (the "Company") (NASDAQ:WGBC), the holding company for Willow Grove Bank (the "Bank"), reported net income of $3.8 million for the quarter ended June 30, 2006, a 125% increase over net income of $1.7 million for the comparable quarter of 2005. Earnings per diluted share were $0.26 for the fourth quarter ended June 30, 2006, a 44% increase over $0.18 per diluted share in the comparable quarter of 2005. The Company's operating results continued to benefit from the acquisition of Chester Valley Bancorp, which was consummated effective after the close of business on August 31, 2005. The fourth quarter 2006 earnings per diluted share reflect the issuance of 4,977,256 shares of the Company's common stock in connection with the acquisition of Chester Valley Bancorp. The Company's consolidated total assets were $1.6 billion at June 30, 2006, an increase of $618.5 million compared to the consolidated total assets at June 30, 2005. Compared to March 31, 2006, consolidated total assets declined by $25.9 million or 2%. Approximately 61% of this decline resulted from a reduction of approximately $15.7 million in the investment securities portfolio. Donna M. Coughey, President and CEO of the Company said: "I am extremely pleased that we achieved record earnings for the year. Although consolidated total assets declined by 2% on a linked quarter basis, the targeted growth segments, commercial loans and consumer loans, grew at 32% and 10%, respectively, throughout the course of the year. This was offset by a 17% reduction in the construction loan portfolio as projects sold out ahead of original projections and new building is at a slower pace. Additionally, the commercial real estate portfolio experienced a 2% decline during the year due to the repayment of several classified loans, including $5.4 million in the current quarter. The net result of the cash generated from the reduction in consolidated total assets was utilized to repay higher priced borrowings from the Federal Home Loan Bank. "Filling key positions was a major focus for the quarter. The Montgomery County commercial lending team is in place and a new Small Business Administration Lending Unit has been hired. The manager of Retail Banking position is filled as well as six new Business Development Officers to sell commercial deposits and small business loans. All branch personnel have completed the first phase of sales training and all line personnel have sales goals that focus on loans, core deposits and fee income. We continue to focus the sales force on cross selling to existing customers. To date, the efforts have been successful in generating approximately $14 million in new money market balances, and investment services income reached $899 thousand for this quarter as compared to $705 thousand for the March 31, 2006 quarter." Chief Financial Officer, Joe Crowley highlighted the following with respect to the Company's results at and for the quarter ended June 30, 2006: -- Total assets declined approximately $25.9 million as compared to March 31, 2006 with 61% of the decline occurring within the investment portfolio; -- Loans receivable, net decreased by $14.8 million as compared to March 31, 2006 as construction loans declined $9.0 million and $5.4 million in classified loans were repaid; -- Total deposits increased by approximately $10.6 million as compared to March 31, 2006. Demand deposit and NOW accounts grew by $4.4 million or a 6% annualized rate. Money market accounts grew an additional $29.2 million while savings and certificates of deposits declined in the aggregate by $23.0 million. The Company will continue to focus its efforts on core deposit growth; -- The Company refinanced certain of its Federal Home Loan Bank borrowings with $20.0 million in repurchase agreements at an approximate 50 basis point reduction in cost; -- Additional higher costing Federal Home Loan Bank borrowings were repaid with proceeds from the increased deposits and the reduced level of assets; -- Net income for the quarter was $3.8 million or $0.26 per diluted share. For the year, net income was $12.6 million or $0.92 per diluted share, a record for the Company; -- The Company's net interest margin computed on a fully tax equivalent basis contracted slightly to 3.72% for the quarter ended June 30, 2006 as compared to 3.74% for the quarter ended March 31, 2006. The contraction resulted primarily from competitive pricing pressures on deposits; as well as a reduction in the higher yielding construction and commercial loan portfolios; -- Other income increased by approximately $802 thousand on a linked quarter basis, due to an increase in loan fees and service charges of $621 thousand as fee waivers were significantly reduced and the bank received a prepayment penalty on a commercial loan repayment; -- Operating expenses totaled $10.3 million for the quarter, an increase of approximately $787 thousand as compared to the March 31, 2006 quarter. $200 thousand of the increase occurred in occupancy and equipment as the current quarter reflects the full impact of the sale/leaseback of certain branch locations as well as the move to the new headquarters building. Additionally, advertising costs increased $200 thousand as marketing was increased to existing customers in cross-sell promotions and $352 thousand was incurred in consulting costs associated with Sarbanes-Oxley 404 compliance as well as assistance in the Company's strategic planning process. The Company will host a conference call on Tuesday, August 15, 2006 at 10:00 a.m. Eastern Time to discuss fourth quarter fiscal 2006 results, followed by a brief question and answer session. All interested parties are invited to listen to the conference call, which will be broadcast through a webcast on the Company's website. To access the call, please visit the Company's website at http://www.willowgrovebank.com/. An online archive of the webcast will be available within two hours of the conclusion of the call and will remain available through Friday, September 1, 2006. Participants may also participate by calling 973-321-1023 at 9:55 a.m. Eastern Time on August 15, 2006, and referencing ID #7717982. A taped replay of the conference call will be available within two hours of the conclusion of the call and will remain available through Tuesday, August 29, 2006. The number to call for the taped replay is 973-341-3080 and the conference PIN is #7717982. 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 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. Actual results may differ materially from the anticipated results expressed in the forward-looking statements. 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. 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 1,791 1,795 Loans receivable 1,082,633 590,923 Deferred fees and other discounts (1,170) (623) Allowance for loan losses (14,447) (6,113) Loans receivable, net 1,067,016 584,187 Accrued interest receivable 6,647 4,094 Property and equipment, net 10,919 5,659 Bank owned life insurance 11,483 5,447 Real estate owned 51 439 Core deposit intangible, net 12,975 33 Goodwill 93,193 848 Other assets 16,215 8,867 Total Assets $1,577,753 $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 8,991 8,220 Total Liabilities 1,373,228 852,212 Total Stockholders' Equity 204,575 107,043 Total Liabilities and Stockholders' Equity $1,577,753 $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 195 197 915 1,232 Net interest income after provision for loan losses 13,040 7,603 48,377 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 5,630 2,454 18,622 9,778 Income tax expense 1,793 745 6,058 3,052 NET INCOME $3,837 $1,709 $12,564 $6,726 EARNINGS PER SHARE Basic $0.27 $0.19 $0.94 $0.74 Diluted $0.26 $0.18 $0.92 $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 This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles ("GAAP"). The Company's management uses these non-GAAP measures in its analysis of the Company's performance. These non-GAAP measures consist of adjusting the yield on tax-exempt loans and securities to a tax-equivalent basis. Management believes that presentation of financial measures on a tax- equivalent basis provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures, which may be presented by other companies. Average Balance Sheet For The Three Months Ended (Dollars in June 30, 2006 June 30, 2005 thousands, Average Interest Average Average Interest Average unaudited) Balance Yield/Cost Balance Yield/Cost Total loans $1,090,185 $18,384 6.67% $590,594 $9,183 6.24% Investment securities 334,676 4,334 5.12 369,929 3,828 4.12 Total interest- earning assets 1,424,861 22,718 6.31 960,523 13,011 5.43 Total deposits 970,694 5,133 2.12 526,982 2,725 2.07 Total borrowings 396,572 4,193 4.24 261,200 2,396 3.68 Total interest- bearing liabilities 1,367,266 9,326 2.74 788,182 5,121 2.61 Net interest income/net interest spread $13,392 3.57% $7,890 2.82% Net interest margin 3.72% 3.30% Ratio of average interest-earning assets to average interest-bearing liabilities 104% 122% Tax equivalent adjustments $157 $90 Average Balance Sheet For The Twelve Months Ended (Dollars in June 30, 2006 June 30, 2005 thousands, Average Interest Average Average Interest Average unaudited) Balance Yield/Cost Balance Yield/Cost Total loans $996,513 $65,759 6.60% $567,677 $34,536 6.08% Other interest- earning assets 347,410 16,561 4.77 380,631 15,530 4.08 Total interest- earning assets 1,343,923 82,320 6.13 948,308 50,066 5.28 Total deposits 926,092 17,648 1.91 529,476 9,931 1.88 Total borrowings 356,665 14,590 4.09 252,528 8,818 3.46 Total interest- bearing liabilities 1,282,757 32,238 2.51 782,004 18,749 2.39 Net interest income/ net interest spread $50,082 3.62% $31,317 2.88% Net interest margin 3.73% 3.30% Ratio of average interest-earning assets to average interest-bearing liabilities 105% 121% Tax equivalent adjustments $790 $387 OTHER SELECTED DATA (unaudited): Three-months Ended Twelve-months Ended June 30, June 30, 2006 2005 2006 2005 Average interest rate spread 3.57% 2.82% 3.62% 2.88% Net yield on average interest-earning assets 3.72% 3.30% 3.73% 3.30% Ratio of average interest- earning assets to average interest-bearing liabilities 1.04 X 1.22 x 1.05 x 1.21 x Non-performing assets to total assets 1.21% 0.70% 1.21% 0.46% Return on average equity 7.64% 6.33% 7.75% 6.28% Number of full-service offices at end of period 28 14 28 14 DATASOURCE: Willow Grove Bancorp, Inc. CONTACT: Donna M. Coughey, CEO, or Joseph T. Crowley, CFO, both of Willow Grove Bancorp, Inc., +1-610-995-1700 Web site: http://www.willowgrovebank.com/

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