EX-99.1 2 w99179exv99w1.htm EXHIBIT 99.1 exv99w1
 

For Immediate Release
For Further Information, Contact:
Jeff Nathanson, SVP, Investor Relations
207 761-8517

Banknorth reports record earnings. Net Income Up 10%.

(Second Quarter Earnings Conference Call at 1:30 p.m. Eastern Time today, July 19, 2004. Dial-in number for USA and Canada is 800 901-5241. International dial-in number is 617-786-2963. Passcode for both numbers is 10986982. Replay number for USA and Canada is 888-286-8010. International replay dial-in number is 617-801-6888. Replay passcode for both is 67555612. Live webcast and webcast replay available at www.banknorth.com, Investor Relations.)

Portland, Maine, July 19, 2004 – Banknorth Group, Inc. (NYSE: BNK) today announced net income of $95.8 million for the second quarter ended June 30, 2004, a 10% increase over net income of $87.5 million for the second quarter of 2003. On a per diluted share basis, net income was 55 cents for the second quarter, up 4% over the same quarter a year ago.

Exclusive of merger and consolidation costs, net income was $98.5 million for the quarter ended June 30, 2004, up 11% from $88.5 million for the second quarter of 2003. On a per share basis, net income exclusive of merger and consolidation costs was 57 cents per diluted share for the quarter ended June 30, 2004 up 6% from 54 cents per diluted share for the quarter ended June 30, 2003.

Banknorth’s net income for the six months ended June 30, 2004 amounted to $186.2 million, a 10% increase over net income of $168.9 million for the six months ended June 30, 2003. On a per diluted share basis, net income for the first half of 2004 was $1.10, which represented a 6% increase over the $1.04 net income per diluted share for the first half of 2003.

“It was a solid quarter all the way around marked by strong loan and deposit growth, successful acquisition integration and tight expense control.” said William J. Ryan, Banknorth Chairman, President and Chief Executive Officer.

Net interest income was $230.1 million in the second quarter of 2004, a 9% increase as compared to $211.6 million of net interest income in the second quarter of 2003.

Noninterest income, excluding gains on sales of securities, increased 5% in the second quarter of 2004 as compared to the second quarter of 2003. Investment planning services income increased 32%, trust and investment management services income increased 24%, merchant and electronic banking income increased 18%, deposit services fees rose 15%, and insurance brokerage commissions were up 12%. These increases were partially offset by a decrease in mortgage banking revenue of $2.7 million during the quarter ended June 30, 2004 as compared to the quarter ended June 30, 2003, and by a decrease in option income of $4.9 million for the same period.

Noninterest expense, excluding prepayment penalties on borrowings in the second quarter of 2003 and merger and consolidation expenses, increased by 5% in the second quarter of 2004 as compared to the second quarter of 2003. Salaries and employee benefits and advertising and marketing expenses both increased by 6% for the quarter ended June 30, 2004 as compared to the quarter ended June 30, 2003. When compared to the first quarter of 2004, noninterest expense, excluding merger and consolidation expenses, increased by just $1.6 million or 1.0%.

Total assets increased by 14% to $29.3 billion at June 30, 2004 up from $25.8 billion at June 30, 2003. Total assets increased by $2.4 billion at June 30, 2004 compared to March 31, 2004, of which $1.8 billion was due to the acquisitions of CCBT Financial Companies, Inc. and Foxborough Savings Bank on April 30, 2004.

Total loans and leases increased by 15% to $18.1 billion at June 30, 2004 from $15.7 billion at June 30, 2003, with commercial real estate loans and commercial business loans and leases both up 18% and consumer loans up 13%. Total loans and leases at June 30, 2004 were 9% higher than the $16.6 billion of total loans and leases at March 31, 2004.

Total deposits at June 30, 2004 were $19.3 billion, 9% higher than at June 30, 2003. Noninterest bearing deposits, principally checking accounts, increased by 24% and money market and NOW accounts increased by 16% while regular savings accounts increased by 6%. Retail certificates of deposit declined by 8%, reflecting the Company’s strategy to allow these higher rate CDs to run off. Total deposits at June 30, 2004 were 8% higher than the $18.0 billion of total deposits at March 31, 2004.

The Company’s net interest margin for the quarter ended June 30, 2004 was 3.66% as compared to 3.71% for the quarter ended June 30, 2003 and 3.68% for the quarter ended March 31, 2004.

 

 

Asset quality remained strong and continued positive trends. Non-performing loans decreased by $2.7 million or 4% in the second quarter of 2004 as compared to the first quarter of 2004. As a percentage of total loans, non-performing loans declined to .36% at June 30, 2004, down from .39% at June 30, 2003 and down from .41% at March 31, 2004. As a percentage of total assets, non-performing assets declined to .23% at June 30, 2004 as compared to .25% at June 30, 2003 and .26% at March 31, 2004.

At June 30, 2004, the Company’s Tier 1 leverage capital was 6.75% as compared to 6.36% at June 30, 2003 and 6.84% at March 31, 2004. The Company’s total risk based capital ratio was 10.98% at June 30, 2004 as compared to 10.99% at June 30, 2003 and 11.47% at March 31, 2004.

At June 30, 2004, the Company’s book value per share was $16.61 while tangible book value per share was $8.39. Shareholders’ equity was $2.87 billion at June 30, 2004.

Banknorth also announced today that it has completed the previously-announced acquisition of Drake, Swan & Crocker Insurance Agency of Orleans, Massachusetts.

At June 30, 2004, Banknorth Group, headquartered in Portland, Maine and one of the 30 largest commercial banks in the country, had $29.3 billion in assets. 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. Banknorth’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 offer investment products in association with PrimeVest Financial Services, Inc. The Company’s website is at www.banknorth.com.

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 Company’s management uses these non-GAAP measures in its analysis of the Company’s 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 Company’s 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 Company’s 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 Banknorth’s 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 Banknorth’s periodic reports filed with the Securities and Exchange Commission for financial and business information regarding Banknorth, including information which could affect Banknorth’s forward-looking statements.

 

 

Banknorth Group, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS (Unaudited)

                                         
    June 30,   June 30,   %   March 31,   %
(In thousands)
   2004
   2003
   Change
   2004
   Change
Cash and due from banks
   $ 613,675     $ 661,103       -7 %   $ 516,772       19 %
Federal funds sold and other short-term investments
     10,917       2,968       268 %     8,356       31 %
Securities available for sale
     7,888,172       6,992,917       13 %     7,389,833       7 %
Securities held to maturity
     103,792       166,239       -38 %     115,442       -10 %
Loans and leases held for sale
     67,207       92,795       -28 %     46,970       43 %
Loans and leases:
                                        
Residential real estate mortgages
     3,092,269       2,852,991       8 %     2,647,540       17 %
Commercial real estate mortgages
     6,086,800       5,140,130       18 %     5,549,406       10 %
Commercial business loans and leases
     3,825,003       3,229,718       18 %     3,482,093       10 %
Consumer loans and leases
     5,106,240       4,510,473       13 %     4,944,573       3 %
 
    
 		      
 		              
 		          
Total loans and leases
     18,110,312       15,733,312       15 %     16,623,612       9 %
Less: Allowance for loan and lease losses
     247,620       227,240       9 %     233,297       6 %
 
    
 		      
 		              
 		          
Loans and leases, net
     17,862,692       15,506,072       15 %     16,390,315       9 %
Premises and equipment
     288,362       271,124       6 %     260,302       11 %
Goodwill
     1,364,716       1,092,345       25 %     1,127,799       21 %
Identifiable intangible assets
     53,972       38,986       38 %     34,491       56 %
Bank owned life insurance
     500,132       476,470       5 %     493,729       1 %
Other assets
     522,153       449,091       16 %     495,583       5 %
 
    
 		      
 		              
 		          
 
   $ 29,275,790     $ 25,750,110       14 %   $ 26,879,592       9 %
 
    
 		      
 		              
 		          
Liabilities & Shareholders’ Equity
                                        
Deposits:
                                        
Regular savings
   $ 2,624,256     $ 2,472,816       6 %   $ 2,517,632       4 %
Retail money market and NOW accounts
     7,872,310       6,759,000       16 %     7,268,948       8 %
Retail certificates of deposit
     4,701,046       5,122,392       -8 %     4,592,577       2 %
Noninterest bearing deposits
     4,139,017       3,340,408       24 %     3,578,609       16 %
 
    
 		      
 		              
 		          
Total deposits
     19,336,629       17,694,616       9 %     17,957,766       8 %
Borrowings from the Federal Home Loan Bank
     1,476,626       1,634,507       -10 %     1,485,014       -1 %
Federal funds purchased and securities sold under repurchase agreements
     4,625,277       2,610,493       77 %     3,823,452       21 %
Subordinated debt and senior notes
     340,002       362,942       -6 %     362,961       -6 %
Other borrowings
     158,774       8,758       1713 %     61,360       159 %
Junior subordinated debentures
     310,746       —       100 %     305,591       2 %
Company obligated, mandatorily redeemable securities of subsidiary trusts holding solely parent junior subordinated debentures
     —       295,056       -100 %     —       0 %
Other liabilities
     161,044       679,987       -76 %     231,537       -30 %
 
    
 		      
 		              
 		          
Total liabilities
     26,409,098       23,286,359       13 %     24,227,681       9 %
 
    
 		      
 		              
 		          
Shareholders’ equity
     2,866,692       2,463,751       16 %     2,651,911       8 %
 
    
 		      
 		              
 		          
 
   $ 29,275,790     $ 25,750,110       14 %   $ 26,879,592       9 %
 
    
 		      
 		              
 		          

3

 

Banknorth Group, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

                                                 
    Six Months Ended June 30,
   %   Three Months Ended June 30,
   %
(In thousands, except per share data)
  2004
   2003
   Change
   2004
   2003
   Change
Interest and dividend income
   $ 601,798     $ 611,805       -2 %   $ 309,146     $ 302,478       2 %
Interest expense
     154,139       194,095       -21 %     79,096       90,904       -13 %
 
    
 		      
 		              
 		      
 		          
Net interest income
     447,659       417,710       7 %     230,050       211,574       9 %
Provision for loan and lease losses
     19,000       21,401       -11 %     9,500       10,500       -10 %
 
    
 		      
 		              
 		      
 		          
Net interest income after provision for loan and lease losses
     428,659       396,309       8 %     220,550       201,074       10 %
 
    
 		      
 		              
 		      
 		          
Noninterest income:
                                                
Deposit services
     53,412       46,273       15 %     27,260       23,747       15 %
Insurance brokerage commissions
     26,014       23,305       12 %     12,278       10,948       12 %
Merchant and electronic banking income, net
     23,474       20,118       17 %     13,069       11,098       18 %
Trust and investment management services
     19,019       15,309       24 %     9,870       7,957       24 %
Bank owned life insurance
     11,771       11,168       5 %     6,275       5,826       8 %
Investment planning services
     9,985       7,167       39 %     5,146       3,911       32 %
Net gains on sales of securities
     6,936       36,206       -81 %     3,355       33,423       -90 %
Other noninterest income
     27,083       34,521       -22 %     12,223       18,918       -35 %
 
    
 		      
 		              
 		      
 		          
 
     177,694       194,067       -8 %     89,476       115,828       -23 %
 
    
 		      
 		              
 		      
 		          
Noninterest expense:
                                                
Salaries and employee benefits
     174,538       162,941       7 %     87,005       82,248       6 %
Occupancy and equipment expense
     55,111       53,739       3 %     27,512       27,579       0 %
Data processing
     20,455       20,593       -1 %     10,018       10,415       -4 %
Advertising and marketing
     13,827       11,017       26 %     6,303       5,957       6 %
Amortization of identifiable intangible assets
     3,988       4,302       -7 %     2,084       2,306       -10 %
Merger and consolidation costs (1)
     5,748       5,981       -4 %     4,135       1,530       170 %
Prepayment penalties on borrowings
     —       30,490     NM     —       30,490     NM
Other noninterest expense
     49,877       44,884       11 %     26,769       23,514       14 %
 
    
 		      
 		              
 		      
 		          
 
     323,544       333,947       -3 %     163,826       184,039       -11 %
 
    
 		      
 		              
 		      
 		          
Income before income tax expense
     282,809       256,429       10 %     146,200       132,863       10 %
Income tax expense
     96,636       87,510       10 %     50,353       45,338       11 %
 
    
 		      
 		              
 		      
 		          
Net Income
   $ 186,173     $ 168,919       10 %   $ 95,847     $ 87,525       10 %
 
    
 		      
 		              
 		      
 		          
Weighted average shares outstanding:
                                                
Basic
     166,318       159,980       4 %     169,637       162,312       5 %
Diluted
     169,903       161,898       5 %     173,109       164,559       5 %
Earnings per share:
                                                
Basic
   $ 1.12     $ 1.06       6 %   $ 0.57     $ 0.54       6 %
Diluted
     1.10       1.04       6 %     0.55       0.53       4 %

(1)   Merger and consolidation costs consist of merger charges, certain asset write-downs and branch closing costs.

NM - calculated % change is not meaningful

4

 

Banknorth Group, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (Unaudited)

                                                 
    Six Months Ended June 30,
   %   Three Months Ended June 30,
   %
(In thousands, except per share data)
   2004
   2003
   Change
   2004
   2003
   Change
Net interest income
   $ 447,659     $ 417,710       7 %   $ 230,050     $ 211,574       9 %
Net income
   $ 186,173     $ 168,919       10 %   $ 95,847     $ 87,525       10 %
Shares outstanding (end of period)
     172,546       160,843       7 %     172,546       160,843       7 %
Weighted average shares outstanding:
                                                
Basic
     166,318       159,980       4 %     169,637       162,312       5 %
Diluted
     169,903       161,898       5 %     173,109       164,559       5 %
Earnings per share:
                                                
Basic
   $ 1.12     $ 1.06       6 %   $ 0.57     $ 0.54       6 %
Diluted
   $ 1.10     $ 1.04       6 %   $ 0.55     $ 0.53       4 %
Shareholders’ equity (end of period)
   $ 2,866,692     $ 2,463,751       16 %   $ 2,866,692     $ 2,463,751       16 %
Book value per share (end of period)
   $ 16.61     $ 15.32       8 %   $ 16.61     $ 15.32       8 %
Tangible book value per share (end of period)
   $ 8.39     $ 8.28       1 %   $ 8.39     $ 8.28       1 %
 
                                        
 
                   Nominal                   Nominal
 
                   Inc/(Dec)
                   Inc/(Dec)
RATIOS & OTHER INFORMATION:
                                                
Net interest margin (net interest income as a % of average earning assets) (1)
     3.67 %     3.69 %     -0.02 %     3.66 %     3.71 %     -0.05 %
Net interest spread (yield on earning assets minus yield on interest-bearing liabilities) (1)
     3.44 %     3.41 %     0.03 %     3.43 %     3.45 %     -0.02 %
Return on average assets
     1.36 %     1.35 %     0.01 %     1.36 %     1.38 %     -0.02 %
Return on average equity
     13.82 %     14.25 %     -0.43 %     13.54 %     14.24 %     -0.70 %
At period end:
                                                
Tier 1 leverage capital ratio
     6.75 %     6.36 %     0.39 %     6.75 %     6.36 %     0.39 %
Tangible equity/tangible assets
     5.20 %     5.41 %     -0.21 %     5.20 %     5.41 %     -0.21 %
Total risk based capital ratio
     10.98 %     10.99 %     -0.01 %     10.98 %     10.99 %     -0.01 %
Non-performing loans
   $ 65,143     $ 60,735       7 %   $ 65,143     $ 60,735       7 %
Total non-performing assets
   $ 67,167     $ 64,460       4 %   $ 67,167     $ 64,460       4 %
Non-performing loans as a % of total loans
     0.36 %     0.39 %     -0.03 %     0.36 %     0.39 %     -0.03 %
Non-performing assets as a % of total assets
     0.23 %     0.25 %     -0.02 %     0.23 %     0.25 %     -0.02 %
Full service banking offices
     389       357               389       357          
FINANCIAL INFORMATION AND RATIOS EXCLUDING CERTAIN ITEMS (Non-GAAP Financial Information):
Noninterest income as a percent of total income (2)
     27.61 %     27.43 %     0.18 %     27.24 %     28.03 %     -0.79 %
Merger and consolidation costs on a net of tax basis (3)
   $ 3,737     $ 3,895       -4 %   $ 2,687     $ 997       170 %
Per diluted share:
     0.02       0.03       -33 %     0.02       0.01       100 %
Noninterest expense (4)
   $ 317,796     $ 297,476       7 %   $ 159,691     $ 152,018       5 %
Return on average assets (5)
     1.39 %     1.38 %     0.01 %     1.40 %     1.39 %     0.01 %
Cash return on average tangible assets (5) (6)
     1.48 %     1.46 %     0.02 %     1.49 %     1.48 %     0.01 %
Return on average equity (5)
     14.09 %     14.58 %     -0.49 %     13.92 %     14.40 %     -0.48 %
Cash return on average tangible equity (5) (6)
     26.54 %     25.92 %     0.62 %     26.67 %     27.15 %     -0.48 %
Efficiency ratio (7)
     51.39 %     51.68 %     -0.29 %     50.51 %     51.71 %     -1.20 %
Cash efficiency ratio (8)
     50.74 %     50.94 %     -0.20 %     49.85 %     50.93 %     -1.08 %

(1)   Adjusted to fully taxable equivalent basis.
 
(2)   Excludes securities gains/(losses).
 
(3)   Merger and consolidation costs consist of merger charges, certain asset write-downs and branch closing costs.
 
(4)   Excludes pre-tax merger and consolidation costs.
 
(5)   Excludes merger and consolidation costs, net of related tax benefits.
 
(6)   Cash ratios reflect an adjustment to add back the amortization of intangible assets, net of related tax benefits.
 
(7)   Excludes securities gains/(losses) and merger and consolidation costs.
 
(8)   Excludes securities gains/(losses), merger and consolidation costs and amortization of intangible assets.
 
     

5

 

Banknorth Group, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)

                                 
    Three Months Ended June 30,
    2004
   2003
    Average   Yield/   Average   Yield/
(Dollars in thousands)
  Balance
   Rate
   Balance
   Rate
Assets
                                
Loans and leases (1)
                                
Residential real estate mortgages
   $ 2,987,625       5.00 %   $ 2,996,485       5.76 %
Commercial real estate mortgages
     5,883,659       5.74 %     5,074,540       6.19 %
Commercial loans and leases
     3,675,217       4.71 %     3,154,085       5.23 %
Consumer loans and leases
     4,981,924       5.02 %     4,463,057       5.76 %
 
    
 		              
 		          
 
     17,528,425       5.19 %     15,688,167       5.79 %
Securities
     7,875,274       4.27 %     7,280,880       4.24 %
Federal funds sold and other short-term investments
     3,683       1.74 %     18,077       1.20 %
 
    
 		              
 		          
Total earning assets
     25,407,382       4.91 %     22,987,124       5.30 %
Bank owned life insurance
     497,250               472,853          
Noninterest-earning assets
     2,478,117               2,040,703          
 
    
 		              
 		          
Total assets
   $ 28,382,749             $ 25,500,680          
 
    
 		              
 		          
Liabilities & Shareholders’ Equity
                                
Interest-bearing deposits:
                                
Regular savings
   $ 2,614,679       0.30 %   $ 2,468,244       0.50 %
Retail money market and NOW accounts
     7,646,403       0.79 %     6,582,004       0.97 %
Retail certificates of deposit
     4,719,524       1.93 %     5,243,908       2.43 %
 
    
 		              
 		          
Total interest-bearing deposits
     14,980,606       1.06 %     14,294,156       1.42 %
Borrowed funds
     6,467,964       2.46 %     5,459,725       2.95 %
 
    
 		              
 		          
Total interest-bearing liabilities
     21,448,570       1.48 %     19,753,881       1.85 %
Noninterest bearing deposits
     3,898,967               3,099,420          
Other liabilities
     188,596               181,765          
Shareholders’ equity
     2,846,616               2,465,614          
 
    
 		              
 		          
Total liabilities and shareholders’ equity
   $ 28,382,749             $ 25,500,680          
 
    
 		              
 		          
Net earning assets
   $ 3,958,812             $ 3,233,243          
 
    
 		              
 		          
Net interest income (fully taxable equivalent)
   $ 231,594             $ 213,066          
Less: fully taxable equivalent adjustments
     (1,544 )             (1,492 )        
 
    
 		              
 		          
Net interest income
   $ 230,050             $ 211,574          
 
    
 		              
 		          
Net interest rate spread (fully taxable equivalent)
             3.43 %             3.45 %
Net interest margin (fully taxable equivalent)
             3.66 %             3.71 %

(1)   Loans and leases include portfolio loans and leases, loans held for sale and nonperforming loans.
 
     

6

 

Banknorth Group, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)

                                 
    Six Months Ended June 30,
    2004
   2003
    Average   Yield/   Average   Yield/
(Dollars in thousands)
  Balance
   Rate
   Balance
   Rate
Assets
                                
Loans and leases (1)
                                
Residential real estate mortgages
   $ 2,856,423       5.09 %   $ 2,895,113       5.86 %
Commercial real estate mortgages
     5,712,075       5.72 %     4,994,310       6.31 %
Commercial loans and leases
     3,531,263       4.76 %     3,080,635       5.27 %
Consumer loans and leases
     4,932,477       5.07 %     4,325,750       5.89 %
 
    
 		              
 		          
 
     17,032,238       5.23 %     15,295,808       5.89 %
Securities
     7,607,260       4.25 %     7,578,748       4.40 %
Federal funds sold and other short-term investments
     5,605       1.12 %     11,346       1.40 %
 
    
 		              
 		          
Total earning assets
     24,645,103       4.92 %     22,885,902       5.40 %
Bank owned life insurance
     493,839               449,126          
Noninterest-earning assets
     2,315,929               1,949,017          
 
    
 		              
 		          
Total assets
   $ 27,454,871             $ 25,284,045          
 
    
 		              
 		          
Liabilities & Shareholders’ Equity
                                
Interest-bearing deposits:
                                
Regular savings
   $ 2,541,547       0.30 %   $ 2,321,821       0.54 %
Retail money market and NOW accounts
     7,382,671       0.79 %     6,400,948       1.00 %
Retail certificates of deposit
     4,689,767       1.95 %     5,128,769       2.53 %
 
    
 		              
 		          
Total interest-bearing deposits
     14,613,985       1.08 %     13,851,538       1.49 %
Borrowed funds
     6,257,627       2.43 %     5,863,321       3.16 %
 
    
 		              
 		          
Total interest-bearing liabilities
     20,871,612       1.48 %     19,714,859       1.99 %
Noninterest bearing deposits
     3,693,342               3,003,113          
Other liabilities
     179,954               175,298          
Shareholders’ equity
     2,709,963               2,390,775          
 
    
 		              
 		          
Total liabilities and shareholders’ equity
   $ 27,454,871             $ 25,284,045          
 
    
 		              
 		          
Net earning assets
   $ 3,773,491             $ 3,171,043          
 
    
 		              
 		          
Net interest income (fully taxable equivalent)
   $ 450,694             $ 420,464          
Less: fully taxable equivalent adjustments
     (3,035 )             (2,754 )        
 
    
 		              
 		          
Net interest income
   $ 447,659             $ 417,710          
 
    
 		              
 		          
Net interest rate spread (fully taxable equivalent)
             3.44 %             3.41 %
Net interest margin (fully taxable equivalent)
             3.67 %             3.69 %

(1)   Loans and leases include portfolio loans and leases, loans held for sale and nonperforming loans.

7

 

Banknorth Group, Inc. and Subsidiaries
Asset Quality (unaudited)
(Dollars in thousands)

                                         
    6/30/2004
   3/31/2004
   12/31/2003
   9/30/2003
   6/30/2003
Non-performing assets:
                                        
Residential real estate mortgages
   $ 7,870     $ 7,990     $ 7,157     $ 9,135     $ 9,827  
Commercial real estate mortgages
     27,951       24,620       19,700       27,069       19,139  
Commercial business loans and leases
     23,637       28,977       24,412       22,857       24,577  
Consumer loans and leases
     5,685       6,267       8,493       7,664       7,192  
 
    
 		      
 		      
 		      
 		      
 		  
Total non-performing loans and leases
     65,143       67,854       59,762       66,725       60,735  
Other non-performing assets, net
     2,024       2,700       3,341       3,632       3,725  
 
    
 		      
 		      
 		      
 		      
 		  
Total non-performing assets
   $ 67,167     $ 70,554     $ 63,103     $ 70,357     $ 64,460  
 
    
 		      
 		      
 		      
 		      
 		  
Allowance for loan and lease losses
   $ 247,620     $ 233,297     $ 232,287     $ 229,581     $ 227,240  
 
    
 		      
 		      
 		      
 		      
 		  
Net loan charge-offs (recoveries):
                                        
Residential real estate mortgages
     ($41 )     ($72 )   $ 10     $ 58     $ 31  
Commercial real estate mortgages
     (665 )     (446 )     (168 )     (269 )     (474 )
 
    
 		      
 		      
 		      
 		      
 		  
Total real estate mortgages
     (706 )     (518 )     (158 )     (211 )     (443 )
Commercial business loans and leases
     3,387       1,785       2,404       519       4,468  
Consumer loans and leases
     6,160       7,223       8,111       7,853       5,913  
 
    
 		      
 		      
 		      
 		      
 		  
Total net charge-offs
   $ 8,841     $ 8,490     $ 10,357     $ 8,161     $ 9,938  
 
    
 		      
 		      
 		      
 		      
 		  
Ratios:
                                        
Allowance for loan and lease losses to total loans and leases
     1.37 %     1.40 %     1.42 %     1.44 %     1.44 %
Allowance for loan and lease losses to non-performing loans
     380.12 %     343.82 %     388.69 %     344.07 %     374.15 %
Non-performing loans to total loans and leases
     0.36 %     0.41 %     0.37 %     0.42 %     0.39 %
Non-performing assets to total assets
     0.23 %     0.26 %     0.24 %     0.27 %     0.25 %
Net charge-offs to average loans - QTD (1)
     0.20 %     0.21 %     0.26 %     0.20 %     0.25 %

(1)   Annualized.

8

 

Banknorth Group, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

                                         
    Three Months Ended
(In thousands, except per share data)
   6/30/2004
   3/31/2004
   12/31/2003
   9/30/2003
   6/30/2003
Interest and dividend income
   $ 309,146     $ 292,652     $ 290,414     $ 290,750     $ 302,478  
Interest expense
     79,096       75,043       77,126       80,918       90,904  
 
    
 		      
 		      
 		      
 		      
 		  
Net interest income
     230,050       217,609       213,288       209,832       211,574  
Provision for loan and lease losses
     9,500       9,500       10,400       10,500       10,500  
 
    
 		      
 		      
 		      
 		      
 		  
Net interest income after provision for loan and lease losses
     220,550       208,109       202,888       199,332       201,074  
 
    
 		      
 		      
 		      
 		      
 		  
Noninterest income:
                                        
Deposit services
     27,260       26,153       25,881       25,167       23,747  
Insurance brokerage commissions
     12,278       13,736       11,480       10,930       10,948  
Merchant and electronic banking income, net
     13,069       10,404       10,542       11,115       11,098  
Trust and investment management services
     9,870       9,149       8,470       8,178       7,957  
Bank owned life insurance
     6,275       5,496       5,978       5,785       5,826  
Investment planning services
     5,146       4,839       4,765       3,761       3,911  
Net gains on sales of securities
     3,355       3,581       2,682       3,573       33,423  
Other noninterest income
     12,223       14,859       14,637       20,147       18,918  
 
    
 		      
 		      
 		      
 		      
 		  
 
     89,476       88,217       84,435       88,656       115,828  
 
    
 		      
 		      
 		      
 		      
 		  
Noninterest expense:
                                        
Salaries and employee benefits
     87,005       87,534       81,451       82,230       82,248  
Occupancy and equipment expense
     27,512       27,599       26,731       26,188       27,579  
Data processing
     10,018       10,436       9,881       10,466       10,415  
Advertising and marketing
     6,303       7,523       5,430       5,553       5,957  
Amortization of identifiable intangible assets
     2,084       1,904       2,324       2,320       2,306  
Merger and consolidation costs (1)
     4,135       1,614       1,316       808       1,530  
Prepayment penalties on borrowings
     —       —       —       —       30,490  
Other noninterest expense
     26,769       23,109       28,543       24,082       23,514  
 
    
 		      
 		      
 		      
 		      
 		  
 
     163,826       159,719       155,676       151,647       184,039  
 
    
 		      
 		      
 		      
 		      
 		  
Income before income tax expense
     146,200       136,607       131,647       136,341       132,863  
Income tax expense
     50,353       46,280       40,085       46,063       45,338  
 
    
 		      
 		      
 		      
 		      
 		  
Net Income
   $ 95,847     $ 90,327     $ 91,562     $ 90,278     $ 87,525  
 
    
 		      
 		      
 		      
 		      
 		  
Weighted average shares outstanding:
                                        
Basic
     169,637       162,965       162,149       161,517       162,312  
Diluted
     173,109       166,657       165,685       164,446       164,559  
Earnings per share:
                                        
Basic
   $ 0.57     $ 0.55     $ 0.56     $ 0.56     $ 0.54  
Diluted
     0.55       0.54       0.55       0.55       0.53  

(1)   Merger and consolidation costs consist of merger charges, certain asset write-downs and branch closing costs.

9

 

Banknorth Group, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (Unaudited)

                                         
    Three Months Ended
(In thousands, except per share data)
   6/30/2004
   3/31/2004
   12/31/2003
   9/30/2003
   6/30/2003
Net interest income
   $ 230,050     $ 217,609     $ 213,288     $ 209,832     $ 211,574  
Net income
   $ 95,847     $ 90,327     $ 91,562     $ 90,278     $ 87,525  
Shares outstanding (end of period)
     172,546       163,046       162,188       161,543       160,843  
Weighted average shares outstanding:
                                        
Basic
     169,637       162,965       162,149       161,517       162,312  
Diluted
     173,109       166,657       165,685       164,446       164,559  
Earnings per share:
                                        
Basic
   $ 0.57     $ 0.55     $ 0.56     $ 0.56     $ 0.54  
Diluted
   $ 0.55     $ 0.54     $ 0.55     $ 0.55     $ 0.53  
Shareholders’ equity (end of period)
   $ 2,866,692     $ 2,651,911     $ 2,520,519     $ 2,475,580     $ 2,463,751  
Book value per share (end of period)
   $ 16.61     $ 16.26     $ 15.54     $ 15.32     $ 15.32  
Tangible book value per share (end of period)
   $ 8.39     $ 9.14     $ 8.37     $ 8.32     $ 8.28  
RATIOS & OTHER INFORMATION:
                                        
Net interest margin (net interest income as a % of average earning assets) (1)
     3.66 %     3.68 %     3.65 %     3.63 %     3.71 %
Net interest spread (yield on earning assets minus yield on interest-bearing liabilities) (1)
     3.43 %     3.46 %     3.42 %     3.39 %     3.45 %
Return on average assets
     1.36 %     1.37 %     1.39 %     1.39 %     1.38 %
Return on average equity
     13.54 %     14.13 %     14.72 %     14.85 %     14.24 %
At period end:
                                        
Tier 1 leverage capital ratio
     6.75 %     6.84 %     6.65 %     6.56 %     6.36 %
Tangible equity/tangible assets
     5.20 %     5.79 %     5.37 %     5.46 %     5.41 %
Total risk based capital ratio
     10.98 %     11.47 %     11.29 %     11.29 %     10.99 %
Non-performing loans
   $ 65,143     $ 67,854     $ 59,762     $ 66,725     $ 60,735  
Total non-performing assets
   $ 67,167     $ 70,554     $ 63,103     $ 70,357     $ 64,460  
Non-performing loans as a % of total loans
     0.36 %     0.41 %     0.37 %     0.42 %     0.39 %
Non-performing assets as a % of total assets
     0.23 %     0.26 %     0.24 %     0.27 %     0.25 %
Full service banking offices
     389       358       359       357       357  
FINANCIAL INFORMATION AND RATIOS EXCLUDING CERTAIN ITEMS (Non-GAAP Financial Information):
Noninterest income as a percent of total income (2)
     27.24 %     28.00 %     27.71 %     28.85 %     28.03 %
Merger and consolidation costs on a net of tax basis (3)
   $ 2,687     $ 1,049     $ 855     $ 525     $ 997  
Per diluted share:
     0.02       0.01       0.01       —       0.01  
Noninterest expense (4)
   $ 159,691     $ 158,105     $ 154,360     $ 150,839     $ 152,018  
Return on average assets (5)
     1.40 %     1.39 %     1.41 %     1.40 %     1.39 %
Cash return on average tangible assets (5)(6)
     1.49 %     1.47 %     1.49 %     1.48 %     1.48 %
Return on average equity (5)
     13.92 %     14.29 %     14.86 %     14.93 %     14.40 %
Cash return on average tangible equity (5)(6)
     26.67 %     26.44 %     27.86 %     28.63 %     27.15 %
Efficiency ratio (7)
     50.51 %     52.31 %     52.32 %     51.15 %     51.71 %
Cash efficiency ratio (8)
     49.85 %     51.68 %     51.53 %     50.36 %     50.93 %

(1)   Adjusted to fully taxable equivalent basis.
 
(2)   Excludes securities gains/(losses).
 
(3)   Merger and consolidation costs consist of merger charges, certain asset write-downs and branch closing costs.
 
(4)   Excludes pre-tax merger and consolidation costs and prepayment penalties on borrowings.
 
(5)   Excludes merger and consolidation costs, net of related tax benefits.
 
(6)   Cash ratios reflect an adjustment to add back the amortization of intangible assets, net of related tax benefits.
 
(7)   Excludes securities gains/(losses), prepayment penalties on borrowings, and merger and consolidation costs.
 
(8)   Excludes securities gains/(losses), prepayment penalties on borrowings, merger and consolidation costs, and amortization of intangible assets.

Ratios are annualized where appropriate.

10

 

Banknorth Group, Inc. and Subsidiaries
Reconciliation Table – Non-GAAP Financial Information (Unaudited)

                                         
    Three Months Ended
(In thousands, except per share data)
   6/30/2004
   3/31/2004
   12/31/2003
   9/30/2003
   6/30/2003
Net income (including merger and consolidation costs)
   $ 95,847     $ 90,327     $ 91,562     $ 90,278     $ 87,525  
Add back merger and consolidation costs, net of tax
                                        
Merger related
     2,687       1,355       862       525       1,397  
Branch closings
     —       (306 )     (7 )     —       —  
Revised auto lease residual charge
     —       —       —       —       (400 )
 
    
 		      
 		      
 		      
 		      
 		  
Excluding merger and consolidation costs
     98,534       91,376       92,417       90,803       88,522  
Add back amortization of intangibles, net of tax
     1,354       1,238       1,511       1,508       1,499  
 
    
 		      
 		      
 		      
 		      
 		  
Cash basis, excluding merger and consolidation costs
   $ 99,888     $ 92,614     $ 93,928     $ 92,311     $ 90,021  
 
    
 		      
 		      
 		      
 		      
 		  
Basic earnings per share
   $ 0.57     $ 0.55     $ 0.56     $ 0.56     $ 0.54  
Effects of merger and consolidation costs, net of tax
     0.01       0.01       0.01       —       0.01  
 
    
 		      
 		      
 		      
 		      
 		  
Excluding merger and consolidation costs
     0.58       0.56       0.57       0.56       0.55  
Effects of amortization of intangibles, net of tax
     0.01       0.01       0.01       0.01       —  
 
    
 		      
 		      
 		      
 		      
 		  
Cash basis, excluding merger and consolidation costs
   $ 0.59     $ 0.57     $ 0.58     $ 0.57     $ 0.55  
 
    
 		      
 		      
 		      
 		      
 		  
Diluted earnings per share
   $ 0.55     $ 0.54     $ 0.55     $ 0.55     $ 0.53  
Effects of merger and consolidation costs, net of tax
     0.02       0.01       0.01       —       0.01  
 
    
 		      
 		      
 		      
 		      
 		  
Excluding merger and consolidation costs
     0.57       0.55       0.56       0.55       0.54  
Effects of amortization of intangibles, net of tax
     0.01       0.01       0.01       0.01       0.01  
 
    
 		      
 		      
 		      
 		      
 		  
Cash basis, excluding merger and consolidation costs
   $ 0.58     $ 0.56     $ 0.57     $ 0.56     $ 0.55  
 
    
 		      
 		      
 		      
 		      
 		  
Return on average assets
     1.36 %     1.37 %     1.39 %     1.39 %     1.38 %
Effects of merger and consolidation costs, net of tax
     0.04 %     0.02 %     0.02 %     0.01 %     0.01 %
 
    
 		      
 		      
 		      
 		      
 		  
Excluding merger and consolidation costs
     1.40 %     1.39 %     1.41 %     1.40 %     1.39 %
Effects of amortization of intangibles, net of tax
     0.09 %     0.08 %     0.08 %     0.08 %     0.09 %
 
    
 		      
 		      
 		      
 		      
 		  
Cash basis, excluding merger and consolidation costs
     1.49 %     1.47 %     1.49 %     1.48 %     1.48 %
 
    
 		      
 		      
 		      
 		      
 		  
Return on average equity
     13.54 %     14.13 %     14.72 %     14.85 %     14.24 %
Effects of merger and consolidation costs, net of tax
     0.38 %     0.16 %     0.14 %     0.08 %     0.16 %
 
    
 		      
 		      
 		      
 		      
 		  
Excluding merger and consolidation costs
     13.92 %     14.29 %     14.86 %     14.93 %     14.40 %
Effects of amortization of intangibles, net of tax
     12.75 %     12.15 %     13.00 %     13.70 %     12.75 %
 
    
 		      
 		      
 		      
 		      
 		  
Cash basis, excluding merger and consolidation costs
     26.67 %     26.44 %     27.86 %     28.63 %     27.15 %
 
    
 		      
 		      
 		      
 		      
 		  
Efficiency ratio
     51.27 %     52.23 %     52.29 %     50.80 %     56.21 %
Effects of securities gains and prepayment penalties on borrowings
     0.55 %     0.61 %     0.48 %     0.62 %     -3.98 %
Effects of merger and consolidation costs
     -1.31 %     -0.53 %     -0.45 %     -0.27 %     -0.52 %
 
    
 		      
 		      
 		      
 		      
 		  
Excluding securities gains, prepayment penalties on borrowings, and merger and consolidation costs
     50.51 %     52.31 %     52.32 %     51.15 %     51.71 %
Effects of amortization of intangibles
     -0.66 %     -0.63 %     -0.79 %     -0.79 %     -0.78 %
 
    
 		      
 		      
 		      
 		      
 		  
Cash basis, excluding securities gains, prepayment penalties on borrowings and merger and consolidation costs
     49.85 %     51.68 %     51.53 %     50.36 %     50.93 %
 
    
 		      
 		      
 		      
 		      
 		  
Non Interest Income
   $ 89,476     $ 88,217     $ 84,435     $ 88,656     $ 115,828  
Net gains on sales of securities
     3,355       3,581       2,682       3,573       33,423  
 
    
 		      
 		      
 		      
 		      
 		  
Excluding securities gains
   $ 86,121     $ 84,636     $ 81,753     $ 85,083     $ 82,405  
 
    
 		      
 		      
 		      
 		      
 		  
Non Interest Expense
   $ 163,826     $ 159,719     $ 155,676     $ 151,647     $ 184,039  
Merger and consolidation costs
     4,135       1,614       1,316       808       1,530  
Prepayment penalties on borrowings
     —       —       —       —       30,490  
 
    
 		      
 		      
 		      
 		      
 		  
Excluding merger and consolidation costs and prepayment penalties on borrowings
   $ 159,691     $ 158,105     $ 154,360     $ 150,839     $ 152,019  
 
    
 		      
 		      
 		      
 		      
 		  

11

 

Banknorth Group, Inc. and Subsidiaries
Reconciliation Table – Non-GAAP Financial Information (Unaudited)

                 
    Six Month Ended
(In thousands, except per share data)
   6/30/2004
   6/30/2003
Net income (including merger and consolidation costs)
   $ 186,173     $ 168,919  
Add back merger and consolidation costs, net of tax
                
Merger related
     4,043       4,324  
Branch closings
     (306 )     (29 )
Revised auto lease residual charge
     —       (400 )
 
    
 		      
 		  
Excluding merger and consolidation costs
     189,910       172,814  
Add back amortization of intangibles, net of tax
     2,592       2,797  
 
    
 		      
 		  
Cash basis, excluding merger and consolidation costs
   $ 192,502     $ 175,611  
 
    
 		      
 		  
Basic earnings per share
   $ 1.12     $ 1.06  
Effects of merger and consolidation costs, net of tax
     0.02       0.02  
 
    
 		      
 		  
Excluding merger and consolidation costs
     1.14       1.08  
Effects of amortization of intangibles, net of tax
     0.02       0.02  
 
    
 		      
 		  
Cash basis, excluding merger and consolidation costs
   $ 1.16     $ 1.10  
 
    
 		      
 		  
Diluted earnings per share
   $ 1.10     $ 1.04  
Effects of merger and consolidation costs, net of tax
     0.02       0.03  
 
    
 		      
 		  
Excluding merger and consolidation costs
     1.12       1.07  
Effects of amortization of intangibles, net of tax
     0.01       0.01  
 
    
 		      
 		  
Cash basis, excluding merger and consolidation costs
   $ 1.13     $ 1.08  
 
    
 		      
 		  
Return on average assets
     1.36 %     1.35 %
Effects of merger and consolidation costs, net of tax
     0.03 %     0.03 %
 
    
 		      
 		  
Excluding merger and consolidation costs
     1.39 %     1.38 %
Effects of amortization of intangibles, net of tax
     0.09 %     0.08 %
 
    
 		      
 		  
Cash basis, excluding merger and consolidation costs
     1.48 %     1.46 %
 
    
 		      
 		  
Return on average equity
     13.82 %     14.25 %
Effects of merger and consolidation costs, net of tax
     0.27 %     0.33 %
 
    
 		      
 		  
Excluding merger and consolidation costs
     14.09 %     14.58 %
Effects of amortization of intangibles, net of tax
     12.45 %     11.34 %
 
    
 		      
 		  
Cash basis, excluding merger and consolidation costs
     26.54 %     25.92 %
 
    
 		      
 		  
Efficiency ratio
     51.74 %     54.59 %
Effects of securities gains and prepayment penalties on borrowings
     0.58 %     -1.87 %
Effects of merger and consolidation costs
     -0.93 %     -1.04 %
 
    
 		      
 		  
Excluding securities gains, prepayment penalties on borrowings, and merger and consolidation costs
     51.39 %     51.68 %
Effects of amortization of intangibles
     -0.65 %     -0.74 %
 
    
 		      
 		  
Cash basis, excluding securities gains, prepayment penalties on borrowings, and merger and consolidation costs
     50.74 %     50.94 %
 
    
 		      
 		  
Non Interest Income
   $ 177,694     $ 194,067  
Net gains on sales of securities
     6,936       36,206  
 
    
 		      
 		  
Excluding securities gains
   $ 170,758     $ 157,861  
 
    
 		      
 		  
Non Interest Expense
   $ 323,544     $ 333,947  
Merger and consolidation costs
     5,748       5,981  
Prepayment penalties on borrowings
     —       30,490  
 
    
 		      
 		  
Excluding merger and consolidation costs, write-off of branch automation project and prepayment penalties on borrowings.
   $ 317,796     $ 297,476  
 
    
 		      
 		  

12