EX-99 2 exhibit9909302003.txt PRESS RELEASE OF REGISTRANT DATED OCT. 22, 2003 Exhibit 99.1 ____________ Interchange Financial Services Corporation Reports 31% Increase in Net Income for 3rd Quarter SADDLE BROOK, N.J.--(BUSINESS WIRE)--Oct. 22, 2003 -IFCJ Reports Net Income Increase of 27.4% and Diluted EPS Increase of 9.5%, Year-to-Date- Interchange Financial Services Corporation (the "Company") (Nasdaq:IFCJ), holding company of Bergen County's fast growing community bank, Interchange Bank (the "Bank"), today reported third quarter 2003 net income of approximately $4.5 million, up 30.5% from $3.5 million in the third quarter of 2002 and up 27.4% for the year. Despite average diluted shares outstanding increasing approximately 30.3% for the three-month period September 30, 2003 as compared to 2002, diluted earnings per share was $0.35 for each period. Diluted earnings per share was in line with internal expectations and demonstrates the continued success in integrating Bridge View Bank ("Bridge View"). Diluted earnings per share for the nine months was $1.04, an increase of 9.5% from the same period a year earlier. The third quarter represented the first full quarter which included the results of Bridge View, a commercial bank operating in Bergen County. Year to date results include Bridge View from the date of acquisition, April 30, 2003 at which time Bridge View had total assets of approximately $291 million, $184 million of loans and $259 million of deposits. Commenting on the Company's third quarter performance, President and Chief Executive Officer, Anthony Abbate stated, "After an acquisition, institutions typically experience a decline in deposit growth. Interchange has continued to demonstrate strong growth this quarter in core deposits, despite the acquisition. We also are increasing our marketing in the former Bridge View area by selectively targeting this new customer base with special offers and incentives, with the goal of becoming the preferred destination for consumer banking and the primary source of small business loans in northern New Jersey." The Company generated a 1.34% return on average assets and a 12.93% return on average stockholders' equity for the third quarter 2003 versus 1.51% and 18.22%, respectively, for the third quarter 2002. The change in return on average assets was a result of core deposit growth outpacing deployment of those funds into higher yielding loans and retaining an average life on the investment portfolio of approximately 2 years. Return on average stockholders' equity declined as a function of the acquisition of Bridge View. "Our success in growing our core deposit base continues to produce a low cost funding source. This low cost funding source positions us to achieve our long-term objectives and meet the expected commercial loan demand from our customers," stated Abbate. For the three and nine-month periods ended September 30, 2003, non-interest income was $3.3 million and $7.8 million, respectively. This represents an increase of $1.6 million or 88% and $3.0 million or 63%, respectively, as compared to the same periods in 2002. Excluding net gains on sales of securities non-interest income increased $1.3 million or 82% for the three months and $3.0 million or 69% for the nine months. Of these increases, approximately $843 thousand, or 66% for the three months and $2.2 million, or 75% for the nine-month period resulted from the Company's organic growth. The improvement for the three and nine month periods ended September 30, 2003, as compared to the same periods last year was largely attributable to an increase in bank owned life insurance income; gains on sales of loans, mainly through the Mortgage Partnership Finance Program with the Federal Home Loan Bank; and growth in service charges on deposits. Net gains on sale of securities were relatively flat for the nine-month period and represented an increase of $287 thousand for the three-month period ended September 30, 2003 when compared to the same periods in the prior year. Non-interest expense for the quarter amounted to $8.8 million, an increase of $2.4 million or 38.4% as compared to same quarter in 2002. For the nine-month period, non-interest expense amounted to $23.0 million, an increase of $4.2 million or 22.6% as compared to the same period last year. The increase for each reporting period was due largely to the additional operating costs resulting from the merger with Bridge View. Also contributing to non-interest expense growth for the three and nine-months, ended September 30, 2003, as compared to the same period in 2002, were normal increases related to salaries and benefits as well as occupancy expenses. At September 30, 2003, total loans were approximately $783.7 million, an increase of $168.0 million, or 27.3% as compared to December 31, 2002. This increase was principally due to the Bridge View acquisition. The Company's non-performing assets were $8.2 million at September 30, 2003 as compared to $6.1 at December 31, 2002 representing 1.04% and 1.00%, respectively, of the total loans and foreclosed assets outstanding at the end of the respective periods. The Allowance for Loan and Lease Losses ("ALLL") totaled $9.4 million at September 30, 2003 and represented 118.1% of non-performing loans and leases and 1.19% of total loans and leases. In addition, in the quarter ended September 30, 2003 the Company recorded a provision for loan and lease losses of $485 thousand as compared to $405 thousand for the third quarter of 2002. Post-Earnings Conference Call The Bank will hold a conference call on Thursday, October 23, 2003, at 10 a.m. (Eastern Time) to discuss the financial results for its third fiscal quarter ending September 30, 2003. This webcast can be accessed through the Bank's Web site, www.interchangebank.com on the investor relations page, as well as the web address www.companyboardroom.com. The replay will begin shortly after the completion of the live call and will be available for approximately two weeks. About Interchange Bank Headquartered in Saddle Brook, NJ, Interchange Bank is one of Bergen County's largest independent commercial banks and a wholly owned subsidiary of Interchange Financial Services Corporation (Nasdaq:IFCJ). A thought leader in the industry, the Bank was among the first to implement a broad range of innovative services, including 24-hour, 7-day-a-week online banking and bill paying services, online stock trading, and the ability to apply for a loan online with an instant credit decision. Mutual funds and annuities are offered through the Bank's investment services. With $1.3 billion in assets and 29 branches, the Bank focuses its efforts on the local communities from which it derives deposits and generates loans. Through Interchange Bank's subsidiary, Interchange Capital Company, L.L.C., cost effective equipment leasing solutions are available to small- and middle market companies. For additional information, please visit the company's Web site at www.interchangebank.com. In addition to discussing historical information, certain statements included in or incorporated into this report relate to the financial condition, results of operations and business of the Company which are not historical facts, but which are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used herein, the words "anticipate," "believe," "estimate," "expect," "will" and other similar expressions are generally intended to identify such forward-looking statements. Such statements are intended to be covered by the safe harbor provisions for forward-looking statements contained in such Act, and we are including this statement for purposes of invoking these safe harbor provisions. These forward-looking statements include, but are not limited to, statements about the operations of the Company, the adequacy of the Company's allowance for losses associated with the loan portfolio, the prospects of continued loan and deposit growth, and improved credit quality. The forward-looking statements in this report involve certain estimates or assumptions, known and unknown risks and uncertainties, many of which are beyond the control of the Company, and reflect what we currently anticipate will happen in each case. What actually happens could differ materially from what we currently anticipate will happen due to a variety of factors, including, among others, (i) increased competitive pressures among financial services companies; (ii) changes in the interest rate environment, reducing interest margins or increasing interest rate risk; (iii) deterioration in general economic conditions, internationally, nationally, or in the State of New Jersey; (iv) the occurrence of acts of terrorism, such as the events of September 11, 2001, or acts of war; (v) legislation or regulatory requirements or changes adversely affecting the business of the Company, and (vi) losses in the Company's leasing subsidiary exceeding management's expectations, (vii) the risk that the businesses of the Company and Bridge View will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (viii) expected revenue synergies from the Company's acquisition of Bridge View may not be fully realized or realized within the expected time frame; (ix) revenues following the Company's acquisition of Bridge View may be lower than expected; (x) deposit attrition, operating costs, customer loss and business disruption following the Company's acquisition of Bridge View, including, without limitation, difficulties in maintaining relationships with employees, may be greater than expected and (xi) other risks detailed in reports filed by the Company with the Securities and Exchange Commission.. Readers should not place undue expectations on any forward-looking statements. We are not promising to make any public announcement when we consider forward-looking statements in this document to be no longer accurate, whether as a result of new information, what actually happens in the future or for any other reason. INTERCHANGE FINANCIAL SERVICES CORPORATION CONSOLIDATED FINANCIAL HIGHLIGHTS CONSOLIDATED BALANCE SHEETS (dollars in thousands)
September December 30, 31, 2003 2002 Change __________ ________ ________ (unaudited) Assets Cash and due from banks $35,368 $23,266 52.0 % Interest earning deposits 15,020 - - Federal funds sold - 10,650 (100.0) Securities 410,217 252,512 62.5 Loans and leases Commercial 485,999 338,530 43.6 Commercial Lease Financing 24,967 26,356 (5.3) Consumer 272,720 250,755 8.8 __________ ________ ________ 783,686 615,641 27.3 Allowance for loan and lease losses -9,355 -7,207 29.8 __________ _________ ________ Net loans 774,331 608,434 27.3 Premises and equipment, net 20,428 10,512 94.3 Foreclosed real estate and other repossessed assets 251 176 42.6 Bank Owned Life Insurance 21,589 21,274 1.5 Goodwill and other intangible assets 59,904 1,678 3,470.0 Accrued interest receivable and other assets 12,036 7,830 53.7 __________ _________ ________ Total assets $1,349,144 $936,332 44.1 ========== ========= ======== Liabilities Deposits $1,164,783 $815,672 42.8 Borrowings 28,619 27,390 4.5 Accrued interest payable and other liabilities 14,713 12,590 16.9 __________ ___________ _______ Total liabilities 1,208,115 855,652 41.2 __________ ___________ _______ Total stockholders' equity 141,029 80,680 74.8 __________ ___________ _______ Total liabilities and stockholders' equity $1,349,144 $936,332 44.1 ========== =========== =======
INTERCHANGE FINANCIAL SERVICES CORPORATION CONSOLIDATED FINANCIAL HIGHLIGHTS CONSOLIDATED INCOME STATEMENTS (dollars in thousands) Three Months Ended Nine Months Ended September 30, September 30, ___________________________________ _______________________________________ 2003 2002 Change 2003 2002 Change ___________ ___________ __________ ____________ __________ __________ (unaudited) (unaudited) (unaudited) (Unaudited) Interest income: Interest and fees on loans $13,044 $11,561 12.8 % $36,370 $33,915 7.2 % Interest on federal funds sold 68 45 51.1 252 165 52.7 Interest on interest earning deposits 36 - - 57 - - Interest and dividends on securities: Taxable interest income 2,507 2,563 (2.2) 7,119 7,665 (7.1) Interest income exempt from federal income taxes 254 161 57.8 654 436 50.0 Dividends 56 40 40.0 165 134 23.1 ___________ ___________ __________ ____________ _________ __________ Total interest income 15,965 14,370 11.1 44,617 42,315 5.4 ___________ ___________ __________ ____________ _________ __________ Interest expense: Interest on deposits 3,204 3,991 (19.7) 10,027 12,688 (21.0) Interest on borrowings 167 319 (47.6) 544 872 (37.6) ___________ ___________ ___________ ____________ _________ __________ Total interest expense 3,371 4,310 (21.8) 10,571 13,560 (22.0) ___________ ___________ ___________ ____________ _________ _________ Net interest income 12,594 10,060 25.2 34,046 28,755 18.4 Provision for loan and lease losses 485 405 19.8 1,280 885 44.6 ___________ ___________ ___________ ____________ _________ _________ Net interest income after provision for loan & lease losses 12,109 9,655 25.4 32,766 27,870 17.6 ___________ ___________ ___________ ____________ _________ _________ Non-interest income: Service fees on deposit accounts 998 659 51.4 2,559 1,922 33.1 Net gain on sale of securities 501 214 134.1 520 495 5.1 Other 1,836 902 103.5 4,744 2,396 98.0 ___________ ___________ ___________ ____________ _________ _________ Total non-interest income 3,335 1,775 87.9 7,823 4,813 62.5 ___________ ___________ ___________ ____________ _________ _________
CONSOLIDATED INCOME STATEMENTS (continued) (dollars in thousands) Three Months Ended Nine Months Ended September 30, September 30, ___________________________________ _______________________________________ 2003 2002 Change 2003 2002 Change ___________ ___________ ___________ ____________ __________ __________ (unaudited) (unaudited) (unaudited) (Unaudited) Non-interest expense: Salaries and benefits 4,707 3,505 34.3 12,528 10,067 24.4 Net occupancy 1,282 843 52.1 3,305 2,576 28.3 Furniture and equipment 373 267 39.7 979 857 14.2 Advertising and promotion 400 258 55.0 1,137 1,047 8.6 Other 1,996 1,453 37.4 5,032 4,203 19.7 ___________ ___________ ___________ ____________ _________ _________ Total non- interest expense 8,758 6,326 38.4 22,981 18,750 22.6 ___________ ___________ ___________ ____________ _________ _________ Income before income taxes 6,686 5,104 31.0 17,608 13,933 26.4 Income taxes 2,175 1,647 32.1 5,554 4,471 24.2 ___________ ___________ ___________ ____________ _________ _________ Net income $4,511 $3,457 30.5 $12,054 $9,462 27.4 ============ =========== =========== ============ ========= ========= Basic earnings per common share $0.35 $0.35 - $1.05 $0.96 9.4 Diluted earnings per common share $0.35 $0.35 - $1.04 $0.95 9.5
INTERCHANGE FINANCIAL SERVICES CORPORATION CONSOLIDATED FINANCIAL HIGHLIGHTS Analysis of Net Interest Income for the quarter ended September 30, (dollars in thousands) 2003 2002 (unaudited) ______________________________ ________________________________ Average Average Average Average Balance Interest Rate Balance Interest Rate ________ ________ ________ _________ _________ __________ Assets Interest earning assets: Loans (1) $788,705 $13,094 6.64 % $627,092 $11,599 7.40 % Taxable securities (4) 325,435 2,563 3.15 211,099 2,603 4.93 Tax-exempt securities (2) (4) 29,873 365 4.89 13,620 221 6.49 Interest earning deposits 13,996 36 1.03 - - - Federal funds sold 30,571 68 0.89 10,261 45 1.75 _________ _________ ________ _______ ________ _________ Total interest- earning assets 1,188,580 16,126 5.43 862,072 14,468 6.71 Non-interest earning assets: Cash and due from banks 42,652 19,561 Allowance for loan and lease losses (9,704) (6,477) Other assets 120,090 37,809 ___________ ________ Total assets $1,341,618 $912,965 =========== ======== Liabilities and stockholders' equity Interest-bearing liabilities Interest bearing deposits $946,970 3,204 1.35 $674,038 3,991 2.37 Borrowings 27,436 167 2.43 34,749 319 3.66 ___________ _______ _____ ______________ _____ ______ Total interest- bearing liabilities 974,406 3,371 1.38 708,787 4,310 2.43 ___________ _______ _____ ______________ _____ ______ Non-interest bearing liabilities Demand deposits 211,765 116,028 Other liabilities 15,901 12,245 __________ _____________ Total liabilities (3) 1,202,072 837,060 Stockholders' equity 139,546 75,905 __________ _____________ Total liabilities and stockholders' equity $1,341,618 $912,965 =========== ========= Net interest income (tax-equivalent basis) 12,755 4.05 10,158 4.28 Tax-equivalent basis adjustment (161) (98) __________ _______ Net interest income $12,594 $10,060 ========== ======== Analysis of Net Interest Income for the quarter ended September 30, (continued) (dollars in thousands) 2003 2002 (unaudited) ______________________________ ________________________________ Average Average Average Average Balance Interest Rate Balance Interest Rate ________ ________ ________ _________ _________ __________ Net interest income as a percent of interest- earning assets (tax- equivalent basis) 4.29 % 4.71 % _______________________________________________________________________________________________ (1) Nonaccrual loans and any related interest recorded have been included in computing the average rate earned on the loan portfolio. When applicable, tax exempt loans are computed on a fully taxable equivalent basis using the corporate federal tax rate of 34%. (2) Computed on a fully taxable equivalent basis using the corporate federal tax rate of 34%. (3) All deposits are in domestic bank offices. (4) The average balances are based on historical cost and do not reflect unrealized gains or losses. INTERCHANGE FINANCIAL SERVICES CORPORATION CONSOLIDATED FINANCIAL HIGHLIGHTS Analysis of Net Interest Income for the nine months ended September 30, (dollars in thousands) 2003 2002 (unaudited) _______________________________ ____________________________
Average Average Average Average Balance Interest Rate Balance Interest Rate _________ ________ ________ ________ _________ __________ Assets Interest earning assets Loans (1) $712,480 $36,489 6.83 % $609,248 $34,030 7.45 % Taxable securities (4) 270,379 7,284 3.59 195,056 7,799 5.33 Tax-exempt securities (2) (4) 26,529 916 4.60 16,048 597 4.96 Interest earning deposits 7,427 57 1.02 - - - Federal funds sold 31,145 252 1.08 12,828 165 1.71 _________ ________ ________ ________ ________ ________ Total interest- earning assets 1,047,960 44,998 5.73 833,180 42,591 6.82 ________ ________ Non-interest earning assets Cash and due from banks 34,229 20,289 Allowance for loan and lease losses (8,515) (6,460) Other assets 88,642 37,714 _________ ________ Total assets $1,162,316 $884,723 ========= ======== Liabilities and stockholders' equity Interest- bearing liabilities Interest bearing deposits $836,922 10,027 1.60 $657,584 12,688 2.57 Borrowings 26,238 544 2.76 28,045 872 4.15 _________ _______ ________ ________ Total interest- bearing liabilities 863,160 10,571 1.63 685,629 13,560 2.64 ________ ________ Non-interest bearing liabilities Demand deposits 170,000 114,824 Other liabilities 15,308 12,136 _________ _________ Total liabilities (3) 1,048,468 812,589 Stockholders' equity 113,848 72,134 __________ _________ Total liabilities and stockholders' equity $1,162,316 $884,723 ========== ========= Net interest income (tax- equivalent basis) 34,427 4.10 29,031 4.18 Tax-equivalent basis adjustment (381) (276) _______ _______ Net interest income $34,046 $28,755 ======== ======= Net interest income as a percent of interest-earning assets (tax- equivalent basis) 4.38 % 4.65 % ---------------------------------------------------------------------- (1) Nonaccrual loans and any related interest recorded have been included in computing the average rate earned on the loan portfolio. When applicable, tax exempt loans are computed on a fully taxable equivalent basis using the corporate federal tax rate of 34%. (2) Computed on a fully taxable equivalent basis using the corporate federal tax rate of 34%. (3) All deposits are in domestic bank offices. (4) The average balances are based on historical cost and do not reflect unrealized gains or losses.
INTERCHANGE FINANCIAL SERVICES CORPORATION CONSOLIDATED FINANCIAL HIGHLIGHTS STATEMENT OF CONDITION - SELECTED DATA (Period Ending)
September June 30, 3 September 12 30, month 30, month 2003 2003 Change 2002 Change __________ __________ ___________ __________ _______ (unaudited) (unaudited) (unaudited) Loans $783,686 $805,084 (2.7)% $624,571 25.5 % Securities 410,217 344,945 18.9 229,900 78.4 Earning assets 1,208,923 1,160,759 4.1 865,321 39.7 Total Assets 1,349,144 1,312,101 2.8 920,912 46.5 Deposits 1,164,783 1,136,826 2.5 790,282 47.4 Borrowings 28,619 21,420 33.6 39,049 (26.7) Shareholders' equity 141,029 138,003 2.2 79,033 78.4 Leverage ratio 6.14 % 6.65 % 8.10 % Risk weighted ratios: Tier 1 9.32 8.91 11.85 Total 10.44 10.03 12.93 Asset quality Quarter ended ____________________________________________________________ Net charge offs $667 $149 347.7 % $128 421.1 % Loan loss allowance (9,355) (9,537) (1.9) (6,707) 39.5 Nonperforming loans $7,923 $6,832 16.0 $3,675 115.6 Foreclosed real estate & other repossessed assets 251 172 45.9 358 (29.9) ___________ __________ ___________ __________ _______ Total Nonperforming assets ("NPA") $8,174 $7,004 16.7 $4,033 102.7 =========== ========== =========== ========== ======= Ratio's ___________________ Net charge offs as % of average loans (annualized) 0.34 % 0.08 % 0.08 % Loan loss allowance as % of period-end loans 1.19 1.18 1.07 Loan loss allowance as % of nonperforming loans 118.1 139.6 182.5 NPA's as a percent of loans + foreclosed assets 1.04 0.87 0.65 Nine Months Ended ______________________________________ September September 12 30, 30, month 2003 2002 Change ____________ ____________ ___________ Net charge offs $1,061 $747 $314 Net charge offs as % of average loans (annualized) 0.20 % 0.16 % 0.04 %
INTERCHANGE FINANCIAL SERVICES CORPORATION CONSOLIDATED FINANCIAL HIGHLIGHTS
PROFITABILITY (dollars in thousands, except per share data) Quarter ended ____________________________________________________________ September June September 12 30, 30, 3 month 30, month 2003 2003 Change 2002 Change ____________ ____________ _______ ___________ ________ (unaudited) (unaudited) (unaudited) Net interest income (taxable equivalent) $12,755 $11,711 8.9 % $10,158 25.6 % Provision for loan and lease losses 485 530 (8.5) 405 19.8 Net gain on sale of securities 501 19 2,536.8 214 134.1 Non-interest income, excluding net gain on sale of securities 2,834 2,626 7.9 1,561 81.6 Non-interest expense 8,758 7,697 13.8 6,326 38.4 Net income $4,511 $4,187 7.7 $3,457 30.5 Basic earnings per common share $0.35 $0.35 - % $0.35 - % Diluted earnings per common share 0.35 0.35 - 0.35 - Dividends declared per common share 0.11 0.11 - 0.10 10.0 Special dividends declared per common share - 0.00 - - - Book value per common share - end of period $11.02 $10.79 2.1 $8.04 37.1 Shares outstanding - end of period 12,793,445 12,793,801 (0.0) 9,824,958 30.2 Weighted average shares outstanding Basic 12,771,860 11,818,163 8.1 9,823,841 30.0 Diluted 12,970,359 11,996,433 8.1 9,956,409 30.3 Return on average assets 1.34 % 1.40 % 1.51 % Return on average equity 12.93 14.03 18.22 Net interest margin 4.29 4.38 4.71
Nine Months Ended _____________________________________ September September 12 30, 30, month 2003 2002 Change ----------- ----------- -------- (unaudited) (unaudited) Net interest income (taxable equivalent) $34,427 $29,031 18.6 % Provision for loan and lease losses 1,280 885 44.6 Net gain on sale of securities 520 495 5.1 Non-interest income, excluding net gain on sale of securities 7,303 4,318 69.1 Non-interest expenses 22,981 18,750 22.6 Net income $12,054 $9,462 27.4 Basic earnings per common share $1.05 $0.96 9.4 % Diluted earnings per common share & share equivalents 1.04 0.95 9.5 Dividends declared per common share 0.33 0.30 10.0 Book value per common share - end of period $11.02 $8.04 37.1 Shares outstanding - end of period 12,793,445 9,824,958 30.2 Weighted average shares outstanding Basic 11,483,443 9,823,841 16.9 Diluted 11,634,932 9,956,409 16.9 Return on average assets 1.38 % 1.43 % Return on average equity 14.12 17.49 Net interest margin 4.38 4.65
Contacts: Interchange Financial Services Charles T. Field, 201-703-2265 OR KeatingPR Vicki Banner, 973-400-5405 OR Lauren Mackiel, 973-400-5417