-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NSwHGCLYu9vv8VXGKZnQ5ubOV3q9EhOKsc9AHX/qh+xpr1Lg0KLnTM9r2uG7I4b6 +8u9+m38wFckUAVkzANKWw== 0001065407-07-000225.txt : 20070214 0001065407-07-000225.hdr.sgml : 20070214 20070214172321 ACCESSION NUMBER: 0001065407-07-000225 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070214 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070214 DATE AS OF CHANGE: 20070214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST KEYSTONE FINANCIAL INC CENTRAL INDEX KEY: 0000856751 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 232576479 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-25328 FILM NUMBER: 07622762 BUSINESS ADDRESS: STREET 1: 22 WEST STATE ST CITY: MEDIA STATE: PA ZIP: 19063 BUSINESS PHONE: 610 565-6210 MAIL ADDRESS: STREET 1: 22 WEST STATE ST CITY: MEDIA STATE: PA ZIP: 19063 8-K 1 form8k.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) February 14, 2007 ______________________________ First Keystone Financial, Inc. ______________________________________________________________________________ (Exact name of registrant as specified in its charter) Pennsylvania 000-25328 23-2576479 ______________________________________________________________________________ (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 22 West State Street, Media, Pennsylvania 19063 ______________________________________________________________________________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (610) 565-6210 ____________________________ Not Applicable ______________________________________________________________________________ (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 Results of Operations and Financial Condition --------------------------------------------- On February 14, 2007, First Keystone Financial, Inc. (the "Company") reported its results of operations for the quarter ended December 31, 2006. For additional information, reference is made to the Company's press release dated February 14, 2007, which is included as Exhibit 99.1 hereto and is incorporated herein by reference thereto. The press release attached hereto is being furnished to the SEC and shall not be deemed to be "filed" for any purpose except otherwise provided herein. ITEM 9.01 Financial Statements and Exhibits --------------------------------- (a) Not applicable. (b) Not applicable. (c) Not applicable. (d) Exhibits The following exhibits are filed herewith. Exhibit Number Description ------------------- ------------------------------------------ 99.1 Press release dated February 14, 2007. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FIRST KEYSTONE FINANCIAL, INC. Date: February 14, 2007 By: /s/ Rose M. DiMarco -------------------------------- Rose M. DiMarco Chief Financial Officer 3 EX-99.1 2 pr.txt PRESS RELEASE Exhibit 99.1 FIRST 22 West State Street KEYSTONE Media, PA 19063 FINANCIAL, INC. 610-565-6210 FOR IMMEDIATE RELEASE FIRST KEYSTONE FINANCIAL ANNOUNCES FIRST QUARTER RESULTS Media, PA February 14, 2007 - First Keystone Financial, Inc., the holding company for First Keystone Bank (the "Bank"), announced today net income for the quarter ended December 31, 2006 of $88,000, or $0.04 per diluted share, compared to $445,000, or $0.23 per diluted share, for the same period last year. "The first quarter of fiscal 2007 has been quite challenging. The additional expenses incurred in order to comply with the supervisory agreements compounded by the protracted flat yield curve have continued to impact our earnings. However, we are committed to addressing the OTS' concerns as quickly as possible," stated President and Chief Executive Officer Thomas M. Kelly. "We will remain focused on the Company's strategy to be released from the supervisory agreements as soon as possible while implementing promotions to increase transaction accounts and scrutinizing expenses" continued Kelly. "To date, the Company has experienced several positives: * Strengthening its capital position by completing an equity offering in December 2006 which resulted in net proceeds of $5.8 million; and * The sale in January 2007 of a $2.4 million non-performing asset." Net interest income for the three months ended December 31, 2006 decreased $318,000, or 11.4%, to $2.5 million as compared to the same period in 2005. The decrease in net interest income was primarily the result of a $941,000, or 25.0%, increase in interest expense for the quarter ended December 31, 2006 due to a 71 basis point increase in the weighted average rate paid on interest-bearing liabilities. However, the increase in interest expense was partially offset by a $623,000, or 9.5%, increase in interest income for the quarter ended December 31, 2006 as compared to the first quarter of fiscal 2006 primarily due to a $9.0 million increase in the average balance of interest-earning assets combined with an increase of 40 basis points in its weighted yield earned on its interest-earning assets. The Company's net interest margin, on a tax-equivalent basis, decreased by 32 basis points in the first quarter of fiscal 2006 to 2.10%, as compared to 2.42% for the first quarter of fiscal 2005. On a linked quarter basis, net interest income decreased $166,000, or 6.3%. During the first quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006, the Company experienced a 16 basis point increase in the average rate paid on average interest-bearing liabilities. The net interest margin, on a tax-equivalent basis, decreased 13 basis points, due to the Company's cost of funds continuing to reprice at higher rates while our yield earned on interest-earning assets remained at the same level. At December 31, 2006, non-performing assets increased $1.2 million to $3.9 million, or 0.7%, of total assets, from $2.8 million at September 30, 2006. The increase in non-performing assets was primarily the result of a $554,000 increase in nonaccrual commercial business loans combined with a $702,000 increase in commercial loans that are 90 days past due and still accruing. The Company is aggressively pursuing exit strategies for these loans. The coverage ratio, which is the ratio of the allowance for loan losses to non- performing loans, was 242.0% and 1,215.6% at December 31, 2006 and September 30, 2006, respectively. Subsequent to quarter-end, the Company is pleased to report the sale of its only piece of real estate owned consisting of a commercial real estate property. The property, a restaurant located in Chesapeake City, Maryland, was sold for $2.7 million which will result in a pre-tax gain on the sale of $61,000 for the quarter ending March 31, 2007. Using non-performing assets as of December 31, 2006, the sale would reduce the Company's ratio of non- performing assets to total assets to 0.27% compared to 0.75% at December 31, 2006. Non-interest expense increased $144,000, or 4.8%, during the three months ended December 31, 2006 compared to the same period in 2005. The increase was primarily due to increases of $69,000 and $48,000 in professional fees and real estate owned expenses, respectively. The increase in professional fees was related to ongoing efforts to comply with the supervisory agreement. The increase in real estate owned expenses related to the maintenance of the commercial real estate located in Chesapeake City, Maryland referenced above. In addition, the Company incurred increases of $26,000 and $18,000 in federal deposit insurance premiums and data processing expenses, respectively. Total assets of the Company decreased by $2.7 million from $523.0 million at September 30, 2006 to $520.3 million at December 31, 2006. Cash and cash equivalents increased by $8.1 million to $20.9 million at December 31, 2006 from $12.8 million at September 30, 2006 primarily due to cash flows generated by repayments in the loan portfolio and, to a lesser extent, the mortgage- related securities portfolio. Loans receivable decreased by $6.2 million from $323.2 million at September 30, 2006 to $317.0 million at December 31, 2006 primarily as a result of the Company experiencing repayments within the commercial real estate loan portfolio. Deposits decreased $2.0 million, or 0.6%, from $358.8 million at September 30, 2006 to $356.8 million at December 31, 2006. The decrease in deposits resulted from a $2.6 million, or 1.5%, decrease in core deposits (which consist of passbook, money market, NOW and non-interest bearing accounts) partially offset by a $549,000, or 0.3%, increase in certificates of deposit. The decline in core deposits reflected the effects of competition as local competitors offered higher rates on these products. In addition, borrowings decreased $6.7 million, or 6.3%, from $107.2 million at September 30, 2006 as a result of excess cash flows reducing overnight borrowings. Stockholders' equity increased $5.7 million to $34.3 million primarily due to the Company's completion of the private equity offering raising net proceeds of approximately $5.8 million. The Company issued 400,000 shares of common stock from treasury resulting in a reduction in treasury stock by $6.2 million. First Keystone Bank, the Company's wholly owned subsidiary, serves its customers from eight full-service offices in Delaware and Chester Counties. Certain information in this release may constitute forward-looking statements as that term is defined in the Private Securities Litigation Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those estimated due to a number of factors. Persons are cautioned that such forward-looking statements are not guarantees of future performance and are subject to various factors, which could cause actual results to differ materially from those estimated. These factors include, but are not limited to, changes in general economic and market conditions and the development of an interest rate environment that adversely affects the interest rate spread or other income from the Company's and the Bank's investments and operations. The Company does not undertake and specifically disclaims any obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. 2 This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP") as discussed below. Management of the Company uses these non-GAAP measures in its analysis of the Company's performance. FIRST KEYSTONE FINANCIAL, INC. SELECTED OPERATIONS DATA (In thousands except per share data) (Unaudited) Three Months Ended December 31, --------------------- 2006 2005 --------------------- Net interest income $2,462 $2,780 Provision for loan losses 75 45 Non-interest income 747 775 Non-interest expense 3,137 2,993 --------------------- (Loss) income before taxes (3) 517 Income tax (benefit) expense (91) 72 --------------------- Net income $ 88 $ 445 ===================== Basic earnings per share $ 0.04 $ 0.24 Diluted earnings per share 0.04 0.23 Dividends per share -- 0.11 Number of shares outstanding at end of period 2,427,928 2,023,874 Weighted average basic shares outstanding 1,992,453 1,888,344 Weighted average diluted shares outstanding 2,011,731 1,915,801 FIRST KEYSTONE FINANCIAL, INC. SELECTED FINANCIAL DATA (In thousands except per share data) (Unaudited) December 31, September 30, 2006 2006 ---------------------------- Total assets $520,290 $522,960 Loans receivable, net 316,999 323,220 Investment and mortgage-related securities available for sale 101,985 103,416 Investment and mortgage-related securities held to maturity 39,806 41,612 Cash and cash equivalents 20,933 12,787 Deposits 356,771 358,816 Borrowings 100,526 107,241 Junior subordinated debt 21,474 21,483 Loan loss allowance 3,455 3,367 Total stockholders' equity 34,324 28,659 Book value per share $14.14 $14.13
3 FIRST KEYSTONE FINANCIAL, INC. OTHER SELECTED DATA (Unaudited) At or for the Three Months Ended December 31, ------------------ 2006 2005 ------------------ Return on average assets (1) 0.07% 0.35% Return on average equity (1) 1.22% 6.37% Interest rate spread (1) (2) 2.11% 2.42% Net interest margin (1) (2) 2.10% 2.42% Ratio of interest-earning assets to interest-bearing liabilities(2) 99.60% 99.82% Ratio of operating expenses to average assets (1) 2.41% 2.35% Ratio of non-performing assets to total assets at end of period 0.75% 0.97% Ratio of allowance for loan losses to gross loans receivable 1.08% 1.14% Ratio of loan loss allowance to non-performing loans at end of period 241.95% 68.79%
(1) Annualized. (2) Adjusted for the effects of tax-free investments. This is a non-GAAP presentation. Management believes that presentation of its interest rate spread and net interest margin on a tax-equivalent basis provides useful information that is essential to a proper understanding of the operating results of the Company's 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. In order to provide accurate comparisons of yields and margins for all earning assets, the interest income earned on tax-exempt assets has been increased to make them fully equivalent to other taxable interest income investments. Without the adjustment for taxes, the interest rate spread would be 2.05% and 2.35% for the quarter ended December 31, 2006 and 2005, respectively, while the net interest margin would be 2.04% and 2.35% for the quarter ended December 31, 2006 and 2005, respectively. CONTACT: Thomas M. Kelly, President Rose M. DiMarco, Chief Financial Officer (610) 565-6210 4 -----END PRIVACY-ENHANCED MESSAGE-----