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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

 

For Quarter Ended: June 30, 2004

 

Commission File Number: 0-19345

 

ESB FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

Pennsylvania   25-1659846
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
600 Lawrence Avenue, Ellwood City, PA   16117
(Address of principal executive offices)   (Zip Code)

 

(724) 758-5584

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) Yes x No ¨

 

Number of shares of common stock outstanding as of July 31, 2004:

 

Common Stock, $0.01 par value   10,707,221 shares
(Class)   (Outstanding)

 

Table of Contents

ESB FINANCIAL CORPORATION

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION
Item 1.    Financial Statements     
     Consolidated Statements of Financial Condition as of June 30, 2004 (Unaudited) and December 31, 2003    1
     Consolidated Statements of Operations for the three and six months ended June 30, 2004 and 2003 (Unaudited)    2
     Consolidated Statement of Changes in Stockholders’ Equity For the six months ended June 30, 2004 (Unaudited)    3
     Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and 2003 (Unaudited)    4
     Notes to Unaudited Consolidated Financial Statements    6

Item 2.

    Management’s Discussion and Analysis of Results of Operations and Financial Condition    17

Item 3.

    Quantitative and Qualitative Disclosures about Market Risk    30

Item 4.

    Controls and Procedures    30
PART II - OTHER INFORMATION

Item 1.

    Legal Proceedings    31

Item 2.

    Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities    32

Item 3.

    Defaults Upon Senior Securities    32

Item 4.

    Submission of Matters to a Vote of Security Holders    32

Item 5.

    Other Information    32

Item 6.

    Exhibits and Reports on Form 8-K    33
     Signatures    34

 

Table of Contents

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

ESB Financial Corporation and Subsidiaries

Consolidated Statements of Financial Condition

As of June 30, 2004 (Unaudited) and December 31, 2003

(Dollar amounts in thousands)

 

    

June 30,

2004

    

December 31,

2003

  
     (Unaudited)        
Assets                 

Cash on hand and in banks

    $ 7,738     $ 6,351  

Interest-earning deposits

      8,260       7,472  

Federal funds sold

      2,883       1,507  
    
 

Cash and cash equivalents

      18,881       15,330  

Securities available for sale; cost of $904,836 and $914,459

      905,134       928,936  

Loans receivable, net of allowance for loan losses of $4,033 and $4,062

      331,185       322,454  

Loans held for sale

      101       —    

Accrued interest receivable

      7,533       7,630  

Federal Home Loan Bank (FHLB) stock

      32,196       30,678  

Premises and equipment, net

      9,728       9,476  

Real estate acquired through foreclosure, net

      1,215       1,164  

Real estate held for investment

      11,343       11,429  

Goodwill

      7,127       7,127  

Intangible assets

      595       705  

Prepaid expenses and other assets

      11,636       6,206  

Bank owned life insurance

      25,110       24,645  
    
 

Total assets

    $ 1,361,784     $ 1,365,780  
    
 
Liabilities and Stockholders’ Equity                 

Liabilities:

                 

Deposits

    $ 585,618     $ 603,046  

FHLB advances

      596,802       570,240  

Repurchase agreements

      47,000       47,000  

Other borrowings

      15,071       62  

Junior subordinated notes

      15,174       35,187  

Advance payments by borrowers for taxes and insurance

      2,076       1,837  

Accrued expenses and other liabilities

      11,023       11,537  
    
 

Total liabilities

      1,272,764       1,268,909  
    
 

Stockholders’ Equity:

                 

Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued

      —         —    

Common stock, $.01 par value, 30,000,000 shares authorized;

      109       109  

10,930,298 and 10,930,393 shares issued;

                 

10,717,205 and 10,785,399 shares outstanding

                 

Additional paid-in capital

      60,605       60,202  

Treasury stock, at cost; 213,093 and 144,994 shares

      (2,975 )     (2,083 )

Unearned Employee Stock Ownership Plan (ESOP) shares

      (6,006 )     (6,504 )

Unvested shares held by Management Recognition Plan (MRP)

      (377 )     (196 )

Retained earnings

      37,724       35,879  

Accumulated other comprehensive (loss) income, net

      (60 )     9,464  
    
 

Total stockholders’ equity

      89,020       96,871  
    
 

Total liabilities and stockholders’ equity

    $ 1,361,784     $ 1,365,780  
    
 

 

See accompanying notes to unaudited consolidated financial statements.

 

1

Table of Contents

ESB Financial Corporation and Subsidiaries

Consolidated Statements of Operations

For the three and six months ended June 30, 2004 and 2003 (Unaudited)

(Dollar amounts in thousands, except share data)

 

    

Three Months Ended

June 30,

   

Six Months Ended

June 30,

  
     2004
    2003
    2004
    2003
  

Interest income:

                              

Loans receivable

    $ 5,107    $ 5,495    $ 10,160    $ 11,269  

Taxable securities available for sale

      8,363      8,959      17,225      18,496  

Tax free securities available for sale

      1,228      1,104      2,420      2,275  

FHLB stock

      108      168      185      408  

Deposits with banks and federal funds sold

      13      17      29      43  
         
  
  
  

Total interest income

      14,819      15,743      30,019      32,491  
         
  
  
  

Interest expense:

                              

Deposits

      2,656      3,435      5,369      7,126  

Borrowed funds

      5,759      6,721      11,522      13,517  

Junior subordinated notes and guaranteed preferred

                              

beneficial interest in subordinated debt

      183      584      437      1,141  
         
  
  
  

Total interest expense

      8,598      10,740      17,328      21,784  
         
  
  
  

Net interest income

      6,221      5,003      12,691      10,707  

Provision for (recovery of) loan losses

      221      152      240      (30 )
         
  
  
  

Net interest income after provision for (recovery of) loan losses

      6,000      4,851      12,451      10,737  
         
  
  
  

Noninterest income:

                              

Fees and service charges

      765      418      1,199      661  

Net gain on sale of loans

      20      155      33      272  

Increase of cash surrender value of bank owned life insurance

      231      233      465      489  

Net realized gain on sale of securities available for sale

      —        331      943      766  

Income from real estate joint ventures

      485      771      830      1,091  

Other

      133      102      226      289  
         
  
  
  

Total noninterest income

      1,634      2,010      3,696      3,568  
         
  
  
  

Noninterest expense:

                              

Compensation and employee benefits

      2,911      2,826      5,734      5,497  

Premises and equipment

      445      440      883      888  

Federal deposit insurance premiums

      23      23      46      49  

Data processing

      390      337      784      664  

Amortization of intangible assets

      43      51      86      103  

Minority interest

      179      334      319      461  

Loss on early extinguishment of debt

      —        215      844      215  

Other

      820      721      1,669      1,593  
         
  
  
  

Total noninterest expense

      4,811      4,947      10,365      9,470  
         
  
  
  

Income before income taxes

      2,823      1,914      5,782      4,835  

Provision for income taxes

      461      243      982      800  
         
  
  
  

Net income

    $ 2,362    $ 1,671    $ 4,800    $ 4,035  
         
  
  
  

Net income per share

                              

Basic

    $ 0.23    $ 0.16    $ 0.47    $ 0.40  

Diluted

    $ 0.22    $ 0.15    $ 0.45    $ 0.38  

Cash dividends declared per share

    $ 0.10    $ 0.10    $ 0.20    $ 0.20  

Weighted average shares outstanding

    $ 10,213,291    $ 10,223,016    $ 10,215,910    $ 10,193,894  

Weighted average shares and share equivalents outstanding

    $ 10,580,447    $ 10,794,717    $ 10,625,428    $ 10,719,947  

 

See accompanying notes to unaudited consolidated financial statements.

 

2

Table of Contents

ESB Financial Corporation and Subsidiaries

Consolidated Statement of Changes in Stockholders’ Equity

For the six months ended June 30, 2004 (Unaudited)

(Dollar amounts in thousands)

 

     Common
stock
    Additional
paid-in
capital
    Treasury
stock
     Unearned
ESOP
shares
     Unvested
MRP
shares
     Retained
earnings
     Accumulated
other
comprehensive
income (loss)
net of tax
     Total
stockholders’
equity
  

Balance at January 1, 2004

    $ 109    $ 60,202    $ (2,083 )   $ (6,504 )   $ (196 )   $ 35,879     $ 9,464     $ 96,871