CLAS Classic Bancshares (MM)

Classic Bancshares, Inc. Reports Record Fiscal 2004 Earnings ASHLAND, Ky., June 4 /PRNewswire-FirstCall/ -- Classic Bancshares, Inc. (NASDAQ:CLAS) reported net income of $3.6 million, or $2.43 per diluted share for the twelve months ended March 31, 2004 compared to net income of $2.9 million, or $2.32 per diluted share for the twelve months ended March 31, 2003. Net income for the fourth quarter ended March 31, 2004 was $971,000 or $.63 per diluted share compared to $749,000 or $.59 per diluted share for the fourth quarter ended March 31, 2003. The Company's assets increased approximately $91.5 million from $249.9 million at March 31, 2003 to $341.4 million at March 31, 2004. The growth in the period was primarily due to the acquisition of First Federal Financial Bancorp, Inc. completed on June 20, 2003. On the date of closing, First Federal had total assets of $72.1 million, net loans of $49.5 million and deposits of $56.7 million and the Company recorded goodwill and other intangibles of approximately $3.4 million in connection with the acquisition. Aside from the acquisition, the Company experienced asset growth of approximately $16.4 million. The growth for the twelve-month period was primarily in the loan portfolio, which increased approximately $70.3 million ($20.2 million exclusive of the loans acquired from First Federal). Investment securities increased by $14.0 million ($5.7 million exclusive of the acquisition). Deposits also increased by $70.1 million ($13.1 exclusive of the acquisition). Increased deposits were used to fund loan growth during the twelve-month period. Total non-performing assets represented .7% of total assets at March 31, 2004 compared to .5% at March 31, 2003. The increase reflects primarily non- performing loans, most of which consisted of residential loans acquired from First Federal. The Company recorded a provision for loan losses of $223,000 for the twelve-month period and net charge-offs of $874,000 for the twelve- month period and acquired an allowance from First Federal of approximately $885,000 resulting in an allowance for loan losses of $2.2 million at March 31, 2004. The allowance at March 31, 2004 was equal to 149.7% of total non- performing loans and .9% of total loans receivable. President and Chief Executive Officer David B. Barbour commented, "We are pleased to report our third consecutive year of record earnings coupled with important accomplishments during the year that will enhance near- and long- term prospects for the future. Our conservative business model continues to provide a framework for dealing with uncertain and rapidly changing economic times. The successful integration of our First Federal acquisition, coupled with organic growth, resulted in a $91.5 million increase in assets to $341.4 million." "Earnings per share of $2.43 for the year ending March 31, 2004, compared to $2.32 for the prior year end represents a 4.7% increase and emphasizes management's commitment to shareholder value through balance sheet management and strong asset quality. Despite the thrift like balance sheet acquired in the First Federal acquisition, management remains committed to pricing disciplines that resulted in only a moderate compression of our net interest margin that remains at levels that meets or exceeds our peers." Net interest income increased for both the twelve-month period and the fourth quarter. Net interest income increased $2.7 million for the twelve months ended March 31, 2004 compared to the same period in 2003 and $927,000 for the fourth quarter ended March 31, 2004 compared to the same period in 2003. The increases in net interest income were primarily due to a larger earning asset base as a result of the First Federal acquisition, purchases of securities, and internal growth in loans experienced during the twelve-month period. The Company's non-interest income grew for both the twelve-month period and the quarter. Non-interest income increased $461,000 for the twelve months ended March 31, 2004 compared to the same period in 2003 and $97,000 for the fourth quarter ended March 31, 2004 compared to the same period in 2003. Non- interest income increased primarily due to an increase in fees and service charges on deposit accounts as a result of a larger deposit base. Non-interest income also increased for the twelve months due to an increase in commissions earned on the origination of secondary market loans. Although these fees increased for the twelve months, fees earned from the origination of secondary market loans has begun to slow, decreasing the amount of commissions earned during the past two quarters and possibly in future periods. The Company's secondary market activity consists only of commissions earned from a third party originator and represents a small portion of the Company's non-interest income. Non-interest expense increased for both the twelve-month period and the quarter. Non-interest expense increased approximately $2.4 million for the twelve months ended March 31, 2004 as compared to the twelve months ended March 31, 2003 and $739,000 for the fourth quarter ended March 31, 2004 compared to the same period in 2003. The increase in non-interest expenses was due to an increase in salaries and employee benefits, an increase in occupancy and equipment expense, and an increase in supplies expense. All of these expenses increased primarily due to the acquisition of First Federal. Non-interest expenses also increased due to the increased costs related to incentive-based compensation programs and benefit plans, an increase in ESOP expense due to the increase in the average market price of the Company's stock, and an increase in legal and accounting fees. Classic Bancshares, Inc. is headquartered in Ashland, Kentucky and has one subsidiary, Classic Bank. Classic Bank operates at 344 Seventeenth Street, Ashland, Kentucky with nine branch offices located in Boyd, Carter, Greenup and Johnson counties in Kentucky and Lawrence County, Ohio. When used in this press release, the words or phrases "should result," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including changes in economic condition in the Company's market area including unemployment levels and plant closings, real estate values in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company's market area and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake -- and specifically declines any obligation -- to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. SELECTED FINANCIAL DATA The following table sets forth selected financial data of Classic Bancshares, Inc. as of March 31, 2004 and March 31, 2003 and for the three and twelve months ended March 31, 2004 and 2003. March 31, March 31, 2004 2003 (In Thousands) Selected Financial Condition Data: Total Assets $341,430 $249,881 Cash and other interest bearing deposits with other financial institutions 9,211 8,148 Loans receivable, net 257,455 187,175 Securities available for sale 53,811 39,792 Goodwill and other intangible assets 8,797 5,555 Deposits 260,241 190,155 Securities sold under agreement to repurchase 9,168 4,382 FHLB advances 34,218 28,126 Stockholders' Equity 35,227 25,422 Three Months Ended Twelve Months Ended March 31, March 31, 2004 2003 2004 2003 (In Thousands) Selected Operations Data: Total interest income $4,637 $3,544 $17,301 $14,205 Total interest expense 1,352 1,186 5,397 4,970 Net interest income 3,285 2,358 11,904 9,235 Provision for loan losses 66 122 223 428 Net interest income after provision for losses on loans 3,219 2,236 11,681 8,807 Fees and service charges 436 310 1,705 1,338 Gain on sale of securities 41 61 43 72 Other noninterest income 75 84 388 265 Total noninterest income 552 455 2,136 1,675 Total noninterest expense 2,395 1,656 8,732 6,457 Income before income taxes 1,376 1,035 5,085 4,025 Income tax expense 405 286 1,460 1,104 Net income $971 $749 $3,625 $2,921 Basic earnings per share* $0.69 $0.65 $2.67 $2.53 Diluted earnings per share* $0.63 $0.59 $2.43 $2.32 At or for the At or for the Three Months Ended Twelve Months Ended March 31, March 31, 2004 2003 2004 2003 Other Data: Return on average assets (ratio of annualized net income to total average assets) 1.1% 1.2% 1.2% 1.3% Return on average equity (ratio of annualized net income to total average equity) 11.2 11.9 11.4 12.2 Net interest margin** (Federal Tax Equivalent) 4.4 4.5 4.3 4.5 Non-performing assets to total assets 0.7 0.5 0.7 0.5 Allowance for loan losses to non-performing loans 149.7 155.7 149.7 155.7 Allowance for loan losses to loans receivable, net 0.9 1.0 0.9 1.0 Non-interest expenses/ Total revenues*** 61.4 58.0 60.5 57.1 Book value per share* $25.08 $20.91 $25.08 $20.91 Tangible book value per share* $18.81 $16.34 $18.81 $16.34 Total shares outstanding 1,404,839 1,216,035 1,404,839 1,216,035 Total weighted avg. shares outstanding for Diluted EPS 1,551,821 1,274,190 1,491,886 1,258,518 Number of full service offices 10 8 10 8 Number of ATM locations 23 20 23 20 * Per share information was adjusted for all periods presented to reflect the stock dividend paid on November 17, 2003. ** Net interest income (Federal Tax Equivalent) annualized divided by average earning assets. *** Total revenues = Net interest income (Federal Tax Equivalent) + non-interest income. DATASOURCE: Classic Bancshares, Inc. CONTACT: David B. Barbour, President and Chief Executive Officer, or Lisah M. Frazier, Chief Operating Officer and Chief Financial Officer, +1-606-326-2800, or fax, +1-606-326-2801, both of Classic Bancshares, Inc. Web site: http://www.classicbank.com/

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