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MAF Bancorp Reports First Quarter Earnings of $.73 Per Diluted Share.

Article Excerpt
MAF Bancorp, Inc. (MAFB) announced today that net income for the first quarter ended March 31, 2004 totaled $24.8 million compared to $19.3 million in last year's first quarter. Earnings per diluted share for the current quarter totaled $.73 per diluted share, compared to $.81 per diluted share reported for the first quarter of 2003. While net income in the current quarter increased, earnings per share was impacted by the larger number of average shares outstanding as a result of the completion of the St. Francis Capital Corporation merger in December 2003 and the Fidelity Bancorp merger in July 2003.

The quarter-over-quarter decline in earnings per share was anticipated since, as previously reported, most of the expected cost savings from the St. Francis merger will not begin until the completion of the data processing conversion, scheduled for the end of May 2004. In addition, the Company currently expects most of its real estate development profits to be earned in later quarters of 2004. As discussed later, the Company currently estimates calendar 2004 results of $3.45-$3.55 per diluted share, an increase of 6%-9% over 2003 results.

Net Interest Income and Net Interest Margin QE 3/31/04 QE 12/31/03 QE 3/31/03 Net interest margin 3.10% 3.07% 2.94% Net interest income (000's) $64,029 $52,952 $41,055 Average assets: Yield on interest-earning assets 4.94% 5.05% 5.52% Yield on loans receivable 5.14% 5.27% 5.95% Yield on mortgage-backed securities 3.74% 3.74% 4.33% Yield on investment securities 5.11% 4.70% 4.25% Average interest-earning assets (000's) $8,264,886 $6,906,311 $5,586,324 Average liabilities: Cost of interest-bearing liabilities 2.04% 2.20% 2.92% Cost of deposits 1.34% 1.34% 1.98% Cost of borrowed funds 3.58% 4.17% 5.06% Average interest-bearing liabilities (000's) $7,472,967 $6,206,339 $4,997,307

Net Interest Margin: March 2004 v. December 2003. The modest increase in the net interest margin during the past three months was the result of a slight improvement in the interest rate spread. The spread improvement resulted from a 16 basis point decline in the cost of interest-bearing liabilities that offset an 11 basis point decline in the yield on interest- earning assets.

The decline in the average yield on interest-earning assets was largely due to the 13 basis point decrease in the yield on loans receivable. The pace of decline in the loan portfolio yield has continued to slow, however, as refinancing activity has abated during the past two quarters.

The decline in the average cost of interest-bearing liabilities during the current quarter was attributable to a 59 basis point reduction in the cost of borrowed funds, which declined because of downward repricing of maturing borrowings, the addition of floating-rate borrowings and the impact of having a full three months of lower borrowing costs on liabilities added in connection with the St. Francis merger. The cost of deposits, which had been a primary driver of net interest margin improvements in recent quarters, remained the same during the past quarter.

The St. Francis merger was the primary reason for the substantial increase in the balance of most average interest-earning asset and interest-bearing liability categories, as the December 2003 quarter reflected the results of St. Francis for only one month. Compared to the fourth quarter of 2003, average loans receivable balances increased by $888 million (16%) to $6.46 billion, average mortgage-backed securities advanced by $404 million (72%) to $963 million and average investment securities were higher by $138 million (23%), totaling $747 million.

Similar to the growth in average interest-earning assets, the expansion of average interest-bearing liabilities was largely due to the full quarter effect from St. Francis. For the quarter, average deposits increased by $823 million (19%) to $5.15 billion while...