LARL Laurel Capital

Laurel Capital Group Announces Earnings for the Year and Fourth Quarter of Fiscal 2004 ALLISON PARK, Pa., Aug. 31 /PRNewswire-FirstCall/ -- Laurel Capital Group, Inc. (NASDAQ:LARL) today reported net income for the fiscal year ended June 30, 2004 of $1.7 million or $.85 per diluted share compared to net income of $2.5 million or $1.28 per diluted share for the year ended June 30, 2003. The $847,000 or 33.4% decrease in net income for the year reflects the effect of a decrease in net interest income combined with higher operating expenses, partially offset by an increase in other operating income and a decrease in income tax expense. The increase in other operating income consisted primarily of income from the Bank's investment in Bank Owned Life Insurance and an increase in service fees collected. The increase in operating expenses was primarily attributed to expenses incurred from the operation of two additional branch offices and the amortization of the core deposit intangible, which were both obtained as part of the acquisition of SFSB Holding Company on March 28, 2003, increasing the number of full-service offices to eight. For fiscal 2004, the Company's return on average assets (ROA) was .55% and return on average stockholders' equity was 6.19% compared to .89% and 9.32%, respectively, for fiscal 2003. Laurel Capital Group, Inc. also reported net income for the quarter ended June 30, 2004 of $431,000 or $.22 per diluted share compared to $556,000 or $.28 per diluted share for the quarter ended June 30, 2003. The 22.5% decrease in net income was primarily attributable to a decrease in net interest income, which was partially offset by an increase in other income and a decrease in other operating and income tax expenses. Non-performing assets, which consist of loans delinquent 90 days and over, increased $1.2 million to $2.2 million or .72% of total assets at June 30, 2004 compared to $956,000 or .30% of total assets at June 30, 2003. The increase in non-performing loans was primarily due to three commercial loans having an average balance of $239,000 and two single-family loans having an average balance of $227,000 becoming non-performing. Management does not believe that the current level of non-performing loans pose a material risk to the Company. In commenting on the Company's performance, Edwin R. Maus, President and Chief Executive Officer, stated that "The challenging interest rate and economic environment continues to inhibit the Company's operations and ability to generate earnings growth in a conservative manner. Notwithstanding these challenges, we believe we are positioned to take advantage of changes in these environments as they occur." At June 30, 2004, Laurel Capital Group, Inc. had total assets of $299.4 million, loans receivable, net of $173.3 million and total deposits of $246.2 million. Additionally, stockholders' equity amounted to $27.1 million or $14.06 per share compared to $27.7 million or $14.71 per share at June 30, 2003. Laurel Capital Group, Inc., headquartered in Allison Park, PA, is the holding company for Laurel Savings Bank. Laurel Savings Bank is a 117-year- old, Pennsylvania-chartered, FDIC-insured savings bank with eight full-service offices located in Allegheny and Butler counties offering a wide variety of financial services and products to customers throughout the Pittsburgh metropolitan area. The Company's filings with the Securities and Exchange Commission are available electronically on the Internet and can be found at http://www.sec.gov/edgar/searchedgar/webusers.htm . This news release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risk and uncertainties, which could cause actual results to differ materially from those currently anticipated due to a number of factors. Such factors include, but are not limited to, changes in interest rates which could affect net interest margins and net interest income, the possibility that increased demand or prices for the Company's financial services and products may not occur, changing economic and competitive conditions, technological developments, and other risks and uncertainties, including those detailed in the Company's filings with the Securities and Exchange Commission. LAUREL CAPITAL GROUP, INC. Selected Consolidated Financial Data June 30, 2004 (Dollars in thousands, except per share data) At or For The Year Ended: (Unaudited) June 30, June 30, 2004 2003 Earnings Interest Income $13,066 $15,197 Interest Expense 6,130 7,651 Net Interest Income Before Provision for Loan Losses 6,936 7,546 Provision for Loan Losses 12 12 Net Interest Income after Provision for Loan Losses 6,924 7,534 Net Gain on Sale of Investment and Mortgage-Backed Securities 35 4 Gain on Sale of Loans Held for Sale 14 11 Other Income 1,460 909 Operating Expenses 6,150 4,799 Income before Income Taxes 2,283 3,659 Provision for Income Taxes 596 1,125 Net Income $1,687 $2,534 Profitability Ratios (annualized where applicable) Return on Average Assets 0.55% 0.89% Return on Average Stockholders' Equity 6.19% 9.32% Yield on Interest-Earning Assets 4.51% 5.51% Cost of Interest-Bearing Liabilities 2.36% 3.18% Average Interest Rate Spread 2.15% 2.33% Net Interest Margin 2.39% 2.74% Operating Expenses to Average Assets 2.01% 1.68% Efficiency Ratio (1) 73.53% 56.38% Per Common Share Data Shares Outstanding (at period end) 1,928,604 1,882,231 Average Shares Outstanding-Basic 1,897,091 1,880,815 Average Shares Outstanding- Diluted 1,985,116 1,981,934 Earnings Per Share-Basic $0.89 $1.35 Earnings Per Share-Diluted $0.85 $1.28 Cash Dividends Paid $0.80 $0.76 Book Value (period end) $14.06 $14.71 Market Value (period end closing sales price) $21.150 $21.240 Fiscal 2004 (Dollars in thousands, except per share data) At or For The Three Months Ended: (Unaudited) June 30, March 31, December 31, September 30, 2004 2004 2003 2003 Earnings Interest Income $3,115 $3,316 $3,168 $3,467 Interest Expense 1,427 1,471 1,532 1,700 Net Interest Income Before Provision for Loan Losses 1,688 1,845 1,636 1,767 Provision for Loan Losses 3 3 3 3 Net Interest Income after Provision for Loan Losses 1,685 1,842 1,633 1,764 Net Gain on Sale of Investment and Mortgage-Backed Securities 0 22 13 0 Gain on Sale of Loans Held for Sale 7 0 1 6 Other Income 363 339 344 414 Operating Expenses 1,480 1,577 1,583 1,510 Income before Income Taxes 575 626 408 674 Provision for Income Taxes 144 193 55 204 Net Income $431 $433 $353 $470 Profitability Ratios (annualized where applicable) Return on Average Assets 0.57% 0.57% 0.46% 0.60% Return on Average Stockholders' Equity 6.34% 6.32% 5.20% 6.85% Yield on Interest- Earning Assets 4.37% 4.65% 4.40% 4.64% Cost of Interest- Bearing Liabilities 2.28% 2.32% 2.37% 2.48% Average Interest Rate Spread 2.09% 2.33% 2.03% 2.16% Net Interest Margin 2.36% 2.59% 2.27% 2.36% Operating Expenses to Average Assets 1.96% 2.09% 2.08% 2.53% Efficiency Ratio (1) 72.94% 72.59% 79.86% 69.23% Per Common Share Data Shares Outstanding (at period end) 1,928,604 1,925,228 1,879,354 1,885,410 Average Shares Outstanding- Basic 1,922,740 1,904,878 1,879,262 1,883,871 Average Shares Outstanding- Diluted 1,985,426 1,992,913 1,974,863 1,985,873 Earnings Per Share -Basic $0.22 $0.23 $0.19 $0.25 Earnings Per Share -Diluted $0.22 $0.22 $0.18 $0.24 Cash Dividends Paid $0.20 $0.20 $0.20 $0.20 Book Value (period end) $14.06 $14.29 $14.42 $14.59 Market Value (period end closing sales price) $21.150 $23.740 $24.750 $20.690 Fiscal 2003 (Dollars in thousands, At or For The Three Months Ended: except per share data) (Unaudited) June 30, March 31, 2003 2003 Earnings Interest Income $3,884 $3,564 Interest Expense 1,818 1,776 Net Interest Income Before Provision for Loan Losses 2,066 1,788 Provision for Loan Losses 3 3 Net Interest Income after Provision for Loan Losses 2,063 1,785 Net Gain on Sale of Investment and Mortgage-Backed Securities 0 0 Gain on Sale of Loans Held for Sale 4 0 Other Income 267 203 Operating Expenses 1,541 1,183 Income before Income Taxes 793 805 Provision for Income Taxes 237 238 Net Income $556 $567 Profitability Ratios (annualized where applicable) Return on Average Assets 0.72% 0.83% Return on Average Stockholders' Equity 8.04% 8.29% Yield on Interest-Earning Assets 5.11% 5.47% Cost of Interest-Bearing Liabilities 2.71% 3.16% Average Interest Rate Spread 2.40% 2.31% Net Interest Margin 2.72% 2.72% Operating Expenses to Average Assets 1.99% 1.73% Efficiency Ratio (1) 65.20% 59.37% Per Common Share Data Shares Outstanding (at period end) 1,882,231 1,882,664 Average Shares Outstanding-Basic 1,881,398 1,881,271 Average Shares Outstanding-Diluted 1,978,759 1,976,353 Earnings Per Share -Basic $0.30 $0.30 Earnings Per Share -Diluted $0.28 $0.29 Cash Dividends Paid $0.19 $0.19 Book Value (period end) $14.71 $14.55 Market Value (period end closing sales price) $21.240 $19.010 (1) Total operating expenses (excluding net income or (loss) on other real estate owned) divided by total operating income (excluding gains on sale of assets available for sale). Gains and losses on the sales of assets available for sale are excluded since they are generally considered by the Company's management to be non-recurring in nature. Similarly, net income or loss on other real estate owned is excluded since it is generally considered by the Company's management to be non- recuring in nature. The efficiency ratio is not a financial measurement required by Generally Accepted Accounting Principles in the United States of America. However, the Company believes such information is useful to investors in evaluating the Company's operation. As a result of rounding, the sum of quarterly amounts may not equal the year-to-date amounts. LAUREL CAPITAL GROUP, INC. Selected Consolidated Financial Data June 30, 2004 (Dollars in thousands) Fiscal 2004 (Unaudited) June 30, March 31, Dec. 31, Sept. 30, 2004 2004 2003 2003 Balance Sheet Data (As Of) Total Assets $299,375 $301,251 $302,725 $307,278 Mortgage Loans 133,920 127,900 118,205 114,799 Commercial and Other Loans 1,475 2,269 2,254 3,012 Consumer Loans 37,896 38,247 39,551 40,172 Total Loans Receivable, Net 173,291 168,416 160,010 157,983 Cash and Investment Securities 87,554 99,038 113,575 120,175 Mortgage-Backed Securities 21,024 15,452 10,640 10,397 Savings Deposits 246,179 247,677 248,803 251,236 FHLB Advances 21,609 21,610 21,612 24,632 Stockholders' Equity 27,125 27,519 27,145 27,509 Asset Quality (As Of) Non-Performing Loans $2,156 $1,741 $1,595 $1,142 Non-Performing Assets 2,156 1,753 1,608 1,157 Allowance for Loan Losses 2,032 2,017 1,984 2,005 Net Loan Charge-Offs (Recoveries) (14) (5) 28 4 Non-Performing Loans to Total Loans, Net 1.24% 1.03% 1.00% 0.72% Allowance for Loan Losses/ Total Loans 1.17% 1.20% 1.24% 1.27% Allowance for Loan Losses/ Non-Performing Loans 94.25% 115.85% 124.39% 175.57% Net Loan Charge-Offs (Recoveries)/Avg Loans 0.0084% -0.0030% 0.0170% 0.0023% Ratios (As Of) Dividend Payout Ratio 94.13% 95.24% 95.24% 83.33% Average Equity to Average Assets 8.89% 8.87% 8.77% 8.68% Core Capital - Tier I 7.76% 7.70% 7.63% 7.22% Risk-Based Capital -Tier I 15.65% 15.30% 15.39% 14.82% Risk-Based Capital -Tier II 16.90% 16.60% 16.69% 16.08% Leverage Multiple (2) 11.04x 10.95x 11.15x 11.17x Other Data (As Of) Shareholders of Record 383 387 393 395 Number of Full-Service Banking Offices 8 8 8 8 (2) Assets divided by stockholder equity. LAUREL CAPITAL GROUP, INC. Selected Consolidated Financial Data June 30, 2004 (Dollars in thousands) Fiscal 2003 (Unaudited) June 30, March 31, Dec. 31, Sept. 30, 2003 2003 2002 2002 Balance Sheet Data (As Of) Total Assets $322,783 $316,755 $271,146 $276,414 Mortgage Loans 133,518 143,151 133,499 140,174 Commercial and Other Loans 3,012 1,052 1,904 2,030 Consumer Loans 44,672 42,968 35,074 34,900 Total Loans Receivable, Net 181,202 187,171 170,477 177,104 Cash and Investment Securities 109,168 99,668 85,594 85,169 Mortgage-Backed Securities 13,505 16,031 9,927 9,612 Savings Deposits 265,580 259,388 218,761 224,092 FHLB Advances 24,672 24,713 21,618 21,619 Stockholders' Equity 27,684 27,385 27,202 27,113 Asset Quality (As Of) Non-Performing Loans $956 $953 $149 $275 Non-Performing Assets 956 1,083 304 404 Allowance for Loan Losses 2,006 2,014 1,794 1,791 Net Loan Charge-Offs (Recoveries) 18 8 15 15 Non-Performing Loans to Total Loans, Net 0.53% 0.51% 0.09% 0.16% Allowance for Loan Losses/ Total Loans 1.11% 1.08% 1.05% 1.01% Allowance for Loan Losses/ Non-Performing Loans 209.83% 211.33% 1204.03% 651.27% Net Loan Charge-Offs (Recoveries)/Avg Loans 0.0103% 0.0062% 0.0086% 0.0084% Ratios (As Of) Dividend Payout Ratio 59.38% 57.00% 53.52% 54.29% Average Equity to Average Assets 9.52% 9.82% 9.74% 9.63% Core Capital - Tier I 7.51% 8.45% 9.57% 9.31% Risk-Based Capital -Tier I 13.82% 11.65% 18.68% 17.73% Risk-Based Capital -Tier II 15.04% 12.69% 19.98% 18.97% Leverage Multiple (2) 11.66x 11.57x 9.97x 10.19x Other Data (As Of) Shareholders of Record 401 402 406 410 Number of Full-Service Banking Offices 8 8 6 6 (2) Assets divided by stockholder equity. DATASOURCE: Laurel Capital Group, Inc. CONTACT: Edwin R. Maus, President-CEO, +1-412-487-7404 ext. 303, or email, , or John A. Howard, Jr., Sr. Vice-President-CFO, +1-412-487-7404 ext. 311, or email, , both of Laurel Capital Group, Inc.

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