Exhibit 99.1
Press Release
For Immediate Release
Contact: Claire S. Bean, Executive Vice President and Chief Financial Officer
1-508-528-7000 x363
Benjamin Franklin Bancorp Reports Results for Second Quarter of 2005
FRANKLIN, MASSACHUSETTS (July 19, 2005): Benjamin Franklin Bancorp, Inc. (the “Company” or “Benjamin Franklin”) (Nasdaq: BFBC), the bank holding company for Benjamin Franklin Bank (the “Bank”), today reported a net loss of $2.5 million for the quarter ended June 30, 2005. The loss was the result of two non-recurring charges:
1. | A $4.0 million contribution made to the Benjamin Franklin Bank Charitable Foundation (loss of $2.6 million on an after-tax basis); | |||
2. | The recognition of a net loss of $1.0 million on the sale/write-down of bank-owned land (loss of $1.0 million after-tax). |
Excluding the Foundation contribution and the loss on land, Benjamin Franklin earned $1.1 million for the quarter ended June 30, 2005. Because shares had not been issued and outstanding during the entire quarter ending June 30, 2005 or for the other full periods presented, earnings per share have not been reported.
Benjamin Franklin completed its mutual-to-stock conversion and related stock offering on April 4, 2005, with the issuance of 5,977,419 shares (including 400,000 shares issued to the Benjamin Franklin Bank Charitable Foundation). Net proceeds received in connection with the offering aggregated $53.7 million. An additional 2,511,479 shares were issued in connection with the acquisition of Chart Bank, which was consummated immediately following the stock conversion. The cash portion of the consideration paid to Chart Bank shareholders totaled $21.4 million. A total of 8,194,211 shares were outstanding as of June 30, 2005, representing 8,488,898 shares issued in the offering and the acquisition, less 294,687 unallocated shares held by the Company’s Employee Stock Ownership Plan. The weighted average of the shares outstanding during the quarter was 8,212,140 (for the 88 day period from April 4, 2005 to quarter end), as the ESOP shares were purchased on the open market over the course of the quarter.
Thomas R. Venables, President and Chief Executive Officer, noted: “At over $860 million in total assets, Benjamin Franklin is now one of the largest public banks headquartered in the Boston west-suburban market. We have effectively deployed a significant portion of our new capital with the acquisition of Chart Bank, but still have the resources necessary to carry out our growth strategy, which is focused on building core deposits and lending relationships. ”
The acquisition of Chart Bank added $260.4 million to the Company’s total assets. Of that amount, the largest components were loans ($185.0 million, net), securities ($39.9
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million) and cash deployed by CSSI, the Bank’s ATM servicing subsidiary ($28.9 million). Funding liabilities added as a result of the acquisition included deposits totaling $216.9 million and borrowed funds of $25.5 million. The integration of former Chart customers into Benjamin Franklin’s operations, including data processing systems conversions, was accomplished during the second quarter.
In addition to the loans added by the Chart acquisition, the Company’s loan portfolio grew by $29.1 million in the second quarter, $21.5 million of that in commercial real estate loans. As of June 30, 2005, net loans represented 70.4% of total assets, and commercial loans in particular (including commercial real estate, construction and commercial business loans) represented 44.5% of total loans, compared to 30.9% at December 31, 2004. The Company is committed to expanding its commercial lending business, and to that end has increased the size of its commercial lending staff to twelve at present, compared to four at year-end 2004. Commercial credit analysis and processing resources have also been increased to support this effort.
With the addition of Chart Bank, the Company’s deposits have grown to $628.8 million as of June 30, 2005, with 59.7% of that total in core deposit accounts. Borrowed funds have increased by $11.4 million during the quarter, over and above the $25.5 million in borrowed funds assumed in the Chart Bank acquisition.
The Company’s net interest margin (“NIM”), at 3.26% for the three months ended June 30, 2005, has benefited from the increase in higher-yielding commercial loans, as well as from the wider NIM provided by Chart’s balance sheet, which was more heavily invested in commercial assets than that of Benjamin Franklin.
Asset quality remains strong at the close of the second quarter, with non-performing assets as a percentage of total assets at .04% as of June 30, 2005. The allowance for loan losses stood at .91% of total loans at quarter end, representing 1,592.1% of non-performing loans on that date.
Non-interest income for the second quarter was significantly affected by the $1.0 million net loss recognized on bank-owned land. Two parcels of land that had been held as future branch sites were sold during the quarter for an aggregate gain of $380,000. A third parcel that had been held as a future branch site was written down by $1.4 million to estimated fair market value, once the decision was made to market the parcel for sale. Although the Company’s current strategy contemplates the opening of several new branches over the next few years, in all likelihood future branch locations will be leased rather than owned. Non-interest income for the quarter also reflects the addition of deposit and loan fees associated with former Chart Bank accounts, as well as fee revenue generated by CSSI, the Bank’s ATM servicing subsidiary. For the quarter, those ATM fees amounted to approximately $380,000.
The Company’s efficiency ratio for the quarter (excluding the Foundation contribution, amortization of the core deposit intangible, and the net loss recognized on bank-owned land) improved to 62.7% from 83.0% in the year earlier period. Although operating
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expenses have increased in order to support the Company’s lending growth, the leverage to the Company’s existing expense structure provided by the Chart Bank acquisition more than offset these expense increases.
At its regularly scheduled meeting on July 27, 2005, the Board of Directors intends to consider a policy of paying dividends on the Company’s common stock. At this time, no decision has been made with respect to whether or when the payment of dividends may occur.
Certain statements herein constitute “forward-looking statements” and actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, legislative and regulatory changes that adversely affect the businesses in which Benjamin Franklin Bancorp is engaged and changes in the securities market. The Company disclaims any intent or obligation to update any forward-looking statements, whether in response to new information, future events or otherwise.
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BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
June 30, | December 31, | |||||||
2005 | 2004 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash and due from banks | $ | 15,052 | $ | 8,691 | ||||
Cash supplied by CSSI to its ATM customers | 27,192 | — | ||||||
Short-term investments | 18,424 | 5,513 | ||||||
Total cash and cash equivalents | 60,668 | 14,204 | ||||||
Securities available for sale, at fair value | 120,029 | 86,070 | ||||||
Securities held to maturity, at amortized cost | 161 | 217 | ||||||
Restricted equity securities, at cost | 9,115 | 6,975 | ||||||
Total securities | 129,305 | 93,262 | ||||||
Loans: | ||||||||
Residential real estate mortgage loans | 306,118 | 241,090 | ||||||
Commercial real estate | 219,774 | 85,911 | ||||||
Construction | 36,434 | 28,651 | ||||||
Commercial business | 14,487 | 4,375 | ||||||
Consumer | 35,824 | 25,370 | ||||||
Net deferred loan costs | 1,344 | 1,148 | ||||||
Total loans | 613,982 | 386,545 | ||||||
Allowance for loan losses | (5,531 | ) | (3,172 | ) | ||||
Loans, net | 608,451 | 383,373 | ||||||
Premises and equipment, net | 11,338 | 11,147 | ||||||
Accrued interest receivable | 2,818 | 1,490 | ||||||
Goodwill | 33,762 | 4,248 | ||||||
Bank-owned life insurance | 7,303 | 7,182 | ||||||
Other assets | 10,139 | 2,487 | ||||||
$ | 863,784 | $ | 517,393 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Deposits: | ||||||||
Regular savings | $ | 107,557 | $ | 95,875 | ||||
Money market accounts | 105,586 | 53,167 | ||||||
Now accounts | 36,697 | 22,460 | ||||||
Demand deposit accounts | 126,632 | 87,776 | ||||||
Time deposit accounts | 252,373 | 137,221 | ||||||
Total deposits | 628,845 | 396,499 | ||||||
Short-term borrowings | 3,915 | 4,250 | ||||||
Long-term debt | 114,000 | 81,000 | ||||||
Other liabilities | 7,794 | 4,316 | ||||||
Total liabilities | 754,555 | 486,065 | ||||||
Common stock | — | — | ||||||
Additional paid-in capital | 82,836 | — | ||||||
Retained earnings | 30,785 | 32,997 | ||||||
Unallocated common shares held by ESOP | (2,990 | ) | — | |||||
Accumulated other comprehensive loss | (1,403 | ) | (1,669 | ) | ||||
Total shareholders’ equity | 109,229 | 31,328 | ||||||
$ | 863,784 | $ | 517,393 | |||||
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BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share and share data)
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Interest and dividend income | $ | 9,186 | $ | 4,943 | $ | 14,900 | $ | 9,804 | ||||||||
Interest expense | 3,128 | 1,661 | 5,213 | 3,268 | ||||||||||||
Net interest income | 6,058 | 3,282 | 9,687 | 6,536 | ||||||||||||
Provision for loan losses | 328 | 150 | 496 | 320 | ||||||||||||
Net interest income, after provision for loan losses | 5,730 | 3,132 | 9,191 | 6,216 | ||||||||||||
Other income (charges): | ||||||||||||||||
Deposit service fees | 295 | 230 | 502 | 484 | ||||||||||||
Loan servicing fees | 132 | 32 | 204 | 177 | ||||||||||||
ATM servicing fees | 379 | 4 | 382 | 8 | ||||||||||||
Gain on sale of loans, net | 4 | 31 | 20 | 98 | ||||||||||||
Gain (loss) on sales of securities, net | — | (1 | ) | — | 8 | |||||||||||
Loss on sale/write-down of bank-owned land, net | (1,020 | ) | — | (1,020 | ) | — | ||||||||||
Income from bank-owned life insurance | 59 | 49 | 118 | 97 | ||||||||||||
Miscellaneous | 395 | 183 | 532 | 352 | ||||||||||||
Total other income | 245 | 528 | 737 | 1,222 | ||||||||||||
Operating expenses: | ||||||||||||||||
Salaries and employee benefits | 2,466 | 1,866 | 4,480 | 3,717 | ||||||||||||
Occupancy and equipment | 658 | 366 | 1,099 | 745 | ||||||||||||
Data processing | 535 | 366 | 872 | 702 | ||||||||||||
Professional fees | 238 | 52 | 367 | 118 | ||||||||||||
Contribution to Benjamin Franklin Bank Charitable Foundation | 4,000 | — | 4,000 | — | ||||||||||||
Amortization of core deposit intanglible | 554 | 45 | 599 | 91 | ||||||||||||
Other general and administrative | 691 | 489 | 1,189 | 938 | ||||||||||||
Total operating expenses | 9,142 | 3,184 | 12,606 | 6,311 | ||||||||||||
Income (loss) before income taxes | (3,168 | ) | 476 | (2,678 | ) | 1,127 | ||||||||||
Provision (benefit) for income taxes | (625 | ) | 153 | (466 | ) | 349 | ||||||||||
Net income (loss) | $ | (2,543 | ) | $ | 323 | $ | (2,212 | ) | $ | 778 | ||||||
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BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA
(In thousands except per share data)
At or For the Three Months | ||||||||||||
Ended June 30, | ||||||||||||
2005 | 2004 | |||||||||||
(Unaudited) | ||||||||||||
Financial Highlights: | ||||||||||||
Net interest income | $ | 6,058 | $ | 3,282 | ||||||||
Net income (loss) | $ | (2,543 | ) | $ | 323 | |||||||
Shares outstanding — end of period | 8,194,211 | n/a | ||||||||||
Weighted average shares outstanding(4): | ||||||||||||
Basic | 8,212,140 | n/a | ||||||||||
Diluted | 8,212,140 | n/a | ||||||||||
Shareholders’ equity — end of period | $ | 109,230 | $ | 30,800 | ||||||||
Book value per share — end of period | $ | 13.33 | n/a | |||||||||
Tangible book value per share — end of period | $ | 8.61 | n/a | |||||||||
Ratios and Other Information: | ||||||||||||
Return on average assets | -1.20 | % | 0.27 | % | ||||||||
Return on average equity | -9.67 | % | 4.25 | % | ||||||||
Average interest rate spread(1) | 2.88 | % | 2.53 | % | ||||||||
Net interest margin (2) | 3.26 | % | 2.92 | % | ||||||||
Efficiency ratio(3) | 62.69 | % | 83.00 | % | ||||||||
Non-interest expense to average total assets(5) | 4.31 | % | 2.65 | % | ||||||||
Average interest-earning assets to average interest-bearing liabilities | 122.56 | % | 125.99 | % | ||||||||
At period end: | ||||||||||||
Non-performing assets to total assets | 0.04 | % | 0.08 | % | ||||||||
Non-performing loans to total loans | 0.06 | % | 0.12 | % | ||||||||
Allowance for loan losses to non-performing loans | 1592.13 | % | 729.63 | % | ||||||||
Allowance for loan losses to total loans | 0.91 | % | 0.84 | % | ||||||||
Equity to total assets at end of period | 12.62 | % | 5.69 | % | ||||||||
Tier 1 leverage capital ratio | 9.79 | % | 7.53 | % | ||||||||
Total risk-based capital ratio | 15.09 | % | 13.40 | % | ||||||||
Number of full service offices | 9 | 6 |
(1) | The average interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period. | |
(2) | The net interest margin represents net interest income as a percent on average interest-earning assets for the period. | |
(3) | The efficiency ratio represents non-interest expense minus expenses related to the amortization of intangible assets and the contribution to the Benjamin Franklin Bank Charitable Foundation, divided by the sum of net interest income (before the loan loss provision) plus non-interest income (excluding net gains (losses) on sale of bank assets). | |
(4) | Weighted average shares outstanding are calculated for the 88 days from April 4, 2005 through June 30, 2005. |
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BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARIES
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands)
Six Months Ended June 30, | ||||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Outstanding | Outstanding | |||||||||||||||||||||||
Balance | Interest | Yield/Rate(1) | Balance | Interest | Yield/Rate(1) | |||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans | $ | 489,108 | $ | 12,940 | 5.34 | % | $ | 308,729 | $ | 7,989 | 5.20 | % | ||||||||||||
Investment securities | 110,443 | 1,715 | 3.13 | % | 112,887 | 1,729 | 3.08 | % | ||||||||||||||||
Short-term investments | $ | 20,996 | 244 | 2.35 | % | 19,525 | 86 | 0.89 | % | |||||||||||||||
Total interest-earning assets | 620,546 | 14,900 | 4.84 | % | 441,141 | 9,804 | 4.47 | % | ||||||||||||||||
Non-interest-earning assets | 71,073 | 31,361 | ||||||||||||||||||||||
Total assets | $ | 691,619 | $ | 472,502 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Savings deposits | $ | 102,177 | 258 | 0.51 | % | $ | 98,602 | 244 | 0.50 | % | ||||||||||||||
Money market | 87,618 | 668 | 1.54 | % | 51,414 | 207 | 0.81 | % | ||||||||||||||||
NOW accounts | 29,161 | 41 | 0.28 | % | 24,065 | 18 | 0.15 | % | ||||||||||||||||
Certificates of deposits | 193,450 | 2,458 | 2.56 | % | 132,406 | 1,668 | 2.53 | % | ||||||||||||||||
Total deposits | 412,405 | 3,424 | 1.67 | % | 306,487 | 2,136 | 1.40 | % | ||||||||||||||||
Short-term borrowings | 3,102 | 22 | 1.42 | % | 55 | 0 | 0.00 | % | ||||||||||||||||
Long-term debt | 87,383 | 1,767 | 4.08 | % | 45,275 | 1,132 | 5.03 | % | ||||||||||||||||
Total interest-bearing liabilities | 502,890 | 5,213 | 2.09 | % | 351,816 | 3,268 | 1.87 | % | ||||||||||||||||
Non-interest bearing liabilities | 120,171 | 90,815 | ||||||||||||||||||||||
Total liabilities | 623,061 | 442,631 | ||||||||||||||||||||||
Equity | 68,558 | 29,870 | ||||||||||||||||||||||
Total liabilities and equity | $ | 691,619 | $ | 472,502 | ||||||||||||||||||||
Net interest income | $ | 9,687 | $ | 6,536 | ||||||||||||||||||||
Net interest rate spread(2) | 2.75 | % | 2.60 | % | ||||||||||||||||||||
Net interest-earning assets(3) | $ | 117,657 | $ | 89,325 | ||||||||||||||||||||
Net interest margin(4) | 3.15 | % | 2.98 | % | ||||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities | 123.40 | % | 125.39 | % |
(1) | Yields and rates for the six months ended June 30, 2005 and 2004 are annualized. | |
(2) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities | |
(3) | Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. | |
(4) | Net interest margin represents net interest income divided by average total interest-earning assets. |
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BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARIES
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands)
Three Months Ended June 30, | ||||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Outstanding | Outstanding | |||||||||||||||||||||||
Balance | Interest | Yield/Rate(1) | Balance | Interest | Yield/Rate(1) | |||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans | $ | 589,869 | $ | 8,048 | 5.47 | % | $ | 320,864 | $ | 4,073 | 5.11 | % | ||||||||||||
Investment securities | 129,250 | 987 | 3.06 | % | 115,064 | 834 | 2.91 | % | ||||||||||||||||
Short-term investments | $ | 25,876 | 151 | 2.33 | % | 16,565 | 37 | 0.89 | % | |||||||||||||||
Total interest-earning assets | 744,996 | 9,186 | 4.95 | % | 452,493 | 4,943 | 4.39 | % | ||||||||||||||||
Non-interest-earning assets | 106,428 | 30,059 | ||||||||||||||||||||||
Total assets | $ | 851,424 | $ | 482,553 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Savings deposits | $ | 109,318 | 142 | 0.52 | % | $ | 100,505 | 124 | 0.50 | % | ||||||||||||||
Money market | 117,969 | 458 | 1.56 | % | 51,601 | 104 | 0.81 | % | ||||||||||||||||
NOW accounts | 36,240 | 32 | 0.36 | % | 24,804 | 9 | 0.15 | % | ||||||||||||||||
Certificates of deposits | 244,490 | 1,561 | 2.56 | % | 136,581 | 856 | 2.52 | % | ||||||||||||||||
Total deposits | 508,017 | 2,193 | 1.73 | % | 313,492 | 1,094 | 1.40 | % | ||||||||||||||||
Short-term borrowings | 6,092 | 21 | 1.39 | % | 110 | 0 | 0.00 | % | ||||||||||||||||
Long-term debt | 93,765 | 914 | 3.91 | % | 45,549 | 567 | 5.00 | % | ||||||||||||||||
Total interest-bearing liabilities | 607,874 | 3,128 | 2.06 | % | 359,151 | 1,661 | 1.86 | % | ||||||||||||||||
Non-interest bearing liabilities | 138,073 | 93,675 | ||||||||||||||||||||||
Total liabilities | 745,947 | 452,826 | ||||||||||||||||||||||
Equity | 105,477 | 29,727 | ||||||||||||||||||||||
Total liabilities and equity | $ | 851,424 | $ | 482,553 | ||||||||||||||||||||
Net interest income | $ | 6,058 | $ | 3,282 | ||||||||||||||||||||
Net interest rate spread(2) | 2.88 | % | 2.53 | % | ||||||||||||||||||||
Net interest-earning assets(3) | $ | 137,122 | $ | 93,342 | ||||||||||||||||||||
Net interest margin(4) | 3.26 | % | 2.92 | % | ||||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities | 122.56 | % | 125.99 | % |
(1) | Yields and rates for the three months ended June 30, 2005 and 2004 are annualized. | |
(2) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities | |
(3) | Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. | |
(4) | Net interest margin represents net interest income divided by average total interest-earning assets. |
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Reconciliation of Non-GAAP Financial Measures
This press 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 significant gains or losses that are expected to be non-recurring and to exclude the effects of amortization of intangible assets (in the case of the efficiency ratio). 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 that may be presented by other companies.
Three months ended | Six months ended | |||||||
June 30, 2005 | ||||||||
Net Income (GAAP) | $ | (2,543 | ) | $ | (2,212 | ) | ||
Add back contribution to the Benjamin Franklin Bank Charitable Foundation (after tax) | 2,640 | 2,640 | ||||||
Add back net loss on sale of bank assets (after tax) | 1,020 | 1,020 | ||||||
$ | 1,117 | $ | 1,448 | |||||
Efficiency Ratio (GAAP) | 145.1 | % | 120.9 | % | ||||
Effects of amortization of intangible assets | (7.6 | )% | (5.2 | )% | ||||
Effects of contribution to the Benjamin Franklin Bank Charitable Foundation | (54.7 | )% | (35.0 | )% | ||||
Effects of net loss on sale of bank assets | (20.1 | )% | (10.6 | )% | ||||
62.7 | % | 70.1 | % | |||||
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