Banknorth reports record earnings; Net Income Up 8%
PORTLAND, Maine Oct. 18, 2004 -- Banknorth Group, Inc. (NYSE: BNK) today reported record
quarterly net income of $97.8 million for the third quarter ended
September 30, 2004, up 8% from net income of $90.3 million for the third
quarter a year ago. On a per diluted share basis, net income was 55 cents
for the third quarter of 2004 and 55 cents for the third quarter of 2003.
Exclusive of merger and consolidation costs, income was $102.1 million for
the quarter ended September 30, 2004, up 12% from $90.8 million for the
quarter ended September 30, 2003. On a per diluted share basis, income
exclusive of merger and consolidation costs was 58 cents for the quarter
ended September 30, 2004, up 5.5% from 55 cents for the quarter ended
September 30, 2003.
For the nine months ended September 30, 2004, net income was up 10% over
the first nine months of last year to $283.9 million from $259.2 million.
On a per diluted share basis, net income for the first nine months of 2004
increased 4% to $1.65 from $1.59 for the first nine months of 2003.
For the nine months ended September 30, 2004, income excluding merger and
consolidation costs was up 11% to $292.0 million from $263.6 million for
the same period a year ago. On a per diluted share basis, income excluding
merger and consolidation costs for the first nine months of 2004 increased
5% to $1.70 from $1.62 for the first nine months of 2003.
"I am pleased to continue our track record of delivering record quarterly
earnings, said William J. Ryan, Banknorth Chairman, President and Chief
Executive Officer. It was a good quarter with solid loan and deposit
growth despite only a slight increase in our net interest margin, added
Mr. Ryan.
The Company also announced today a balance sheet de-leveraging whereby
the
Company has sold approximately $1.2 billion of securities and prepaid a
similar amount of borrowings both of which had a duration of approximately
3.5 years. The transaction will result in an after-tax charge of
approximately $52.5 million ($80.8 million pre-tax) in the 4th quarter of
2004. We continuously review our balance sheet and given the current
interest rate environment, the de-leveraging made good economic sense at
this time. said Mr. Ryan. On a pro forma basis, the de-leveraging
should enhance shareholder value by improving the Companys annual net
interest margin by approximately 24 basis points, pre-tax earnings by
approximately $24.5 million, return on assets by approximately 12 basis
points and return on equity by approximately 79 basis points.
In
addition, on a pro forma basis, the de-leveraging will decrease the
Companys securities as a percent of total assets by 3%. The yield on the
securities portfolio sold was 2.76% while the interest rate on the
borrowings paid off was 4.77%. Total loans and leases at September 30,
2004 increased by 16% over the levels at September 30, 2003, led by
increases in commercial business loans and leases of 18%, commercial real
estate mortgages of 16% and consumer loans and leases of 14%. Exclusive
of acquisitions, total loans and leases increased by 8% which included a
14% increase in commercial business loans, a 6% increase in commercial
real estate mortgages and a 10% increase in consumer loans and leases.
Total deposits at September 30, 2004 increased by 9% over the levels at
September 30, 2003 primarily as a result of increases in noninterest
bearing deposits of 23% and retail money market and NOW accounts of 14%
and net of a decline in retail certificates of deposit of 6%.
Exclusive
of acquisitions, total deposits increased by 0.6% which included a 12%
increase in noninterest bearing deposits and a 5% increase in retail money
market and NOW accounts, which more than offset an 11% decline in retail
certificates of deposit. The Companys net interest margin during the
three months ended September 30, 2004 was 3.68%, up 5 basis points from
3.63% for the quarter ended September 30, 2003 and up slightly from 3.66%
for the quarter ended June 30, 2004.
The margin did not expand
significantly due in part to a flattening of the yield curve in the third
quarter of 2004. Noninterest income for the quarter ended September 30,
2004 increased by 3% from the quarter ended September 30, 2003, primarily
as a result of a 26% increase in trust and investment management services
income, a 23% increase in both merchant and electronic banking services
income and investment planning services income, and a 14% increase in
insurance commissions. These increases in noninterest income were
partially offset by a decline in both net gains on sales of securities of
13% and other noninterest income of 30%. For the nine month period ended
September 30, 2004, noninterest income declined 5% to $269.2 million from
$282.7 million for the same period a year ago, due primarily to declines
in net gains on sales of securities and other noninterest income.
Excluding merger and consolidation expenses, noninterest expense for the
quarter ended September 30, 2004 increased by 12% from the quarter ended
September 30, 2003.
Excluding both the impact of acquisitions and merger
and consolidation costs, noninterest expense was up 5% for the third
quarter of 2004 as compared to the third quarter of 2003. Asset quality
remained sound with total nonperforming assets declining to $68.1 million
at September 30, 2004 from $70.4 million at September 30, 2003.
Nonperforming loans as a percentage of total loans and leases declined to
.36% at September 30, 2004 from .42% at September 30, 2003. Net
charge-offs amounted to $8.8 million during the third quarter of 2004 and
were essentially flat from the second quarter of 2004. As a percentage of
average loans, net chargeoffs declined slightly to 19 basis points during
the three months ended September 30, 2004. At September 30, 2004, the
Company's Tier 1 leverage capital ratio was 6.95% and its total risk based
capital ratio was 11.62% as compared to 6.56% and 11.29%, respectively, at
September 30, 2003. Tangible equity to tangible assets at September 30,
2004 was 5.89%, up 43 basis points from 5.46% at September 30, 2003.
Shareholders' equity at September 30, 2004 was $3.0 billion, up from $2.5
billion at September 30, 2003. At September 30, 2004, the Companys book
value per share was $17.50 and its tangible book value per share was $9.34
up from $15.32 and $8.32, respectively, at September 30, 2003. At
September 30, 2004, Banknorth Group Inc., headquartered in Portland,
Maine, had assets of $29 billion.
The pending acquisition of BostonFed
Bancorp, Inc., expected to close in the first quarter of 2005, is
projected to increase Banknorth's assets by more than $1.5 billion. The
Company's banking subsidiary, Banknorth, N.A., operates banking divisions
in Connecticut (Banknorth Connecticut); Maine (Peoples Heritage Bank);
Massachusetts (Banknorth Massachusetts); New Hampshire (Bank of New
Hampshire); New York (Evergreen Bank); and Vermont (Banknorth Vermont).
The Company and Banknorth, N.A. also operate subsidiaries and divisions in
insurance, money management, merchant services, mortgage banking,
government banking and other financial services and offers investment
products in association with PrimeVest Financial Services, Inc. The
Company's website is at www.banknorth.com . On
August 26, 2004, Banknorth Group, Inc. and TD Bank Financial Group (NYSE
and TSE: TD) announced that they entered into a definitive agreement for
TD to acquire 51% of the outstanding shares of Banknorth, subject to
receipt of required regulatory and shareholder approvals and other
customary conditions.
Note: This news release contains financial
information determined by methods other than in accordance with accounting
principles generally accepted in the United States of America (GAAP).
The Companys management uses these non-GAAP measures in its analysis of
the Companys performance. These measures typically adjust GAAP
performance measures to exclude the effects of charges and expenses
related to the consummation of mergers and acquisitions and costs related
to the integration of merged entities, as well as the amortization of
intangible assets in the case of cash basis performance measures. These
non-GAAP measures also may exclude other significant gains or losses that
are unusual in nature, such as security gains and prepayment penalties.
Because these items and their impact on the Companys performance are
difficult to predict, management believes that presentations of financial
measures excluding the impact of these items provide useful supplemental
information that is essential to a proper understanding of the operating
results of the Companys core businesses. 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.
This news release contains certain forward-looking statements with respect
to the financial condition, results of operations and business of
Banknorth. Forward-looking statements are subject to various factors which
could cause actual results to differ materially from these estimates.
These factors include, but are not limited, to, changes in general
economic conditions, interest rates, deposit flows, loan demand,
competition, legislation or regulation and accounting principles, policies
or guidelines, as well as other economic, competitive, governmental,
regulatory and accounting and technological factors affecting Banknorths
operations. In addition, acquisitions may result in large one-time charges
to income, may not produce revenue enhancements or cost savings at levels
or within time frames originally anticipated and may result in unforeseen
integration difficulties. Investors are encouraged to access Banknorths
periodic reports filed with the Securities and Exchange Commission for
financial and business information regarding Banknorth, including
information which could affect Banknorths forward-looking statements.
CONTACT: Banknorth Group, Inc. Jeffrey Nathanson, 207-761-8517
SOURCE: Banknorth Group, Inc.