Exhibit 99.1
Press Release
For Immediate Release
Contact: Claire S. Bean, Executive Vice President and Chief Financial Officer
1-508-528-7000 x363
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 2006; Declares Quarterly Dividend;
Announces Stock Purchase in Connection with Stock Incentive Plan
Announces Stock Purchase in Connection with Stock Incentive Plan
FRANKLIN, MASSACHUSETTS (July 27, 2006): Benjamin Franklin Bancorp, Inc. (the “Company” or “Benjamin Franklin”) (Nasdaq: BFBC), the bank holding company for Benjamin Franklin Bank (the “Bank”), today reported net income of $1.3 million, or $.16 per share (basic and diluted), for the quarter ended June 30, 2006. For the six months ended June 30, 2006, the Company reported earnings of $2.5 million or $.32 per share. Comparable 2005 results were affected by two non-recurring charges, resulting in a $2.5 million loss for the second quarter of 2005 and a $2.2 million loss for the 6 months ended June 30, 2005.
The Company also today announced that its Board of Directors declared a quarterly cash dividend of $.03 per common share, payable on August 25, 2006 to stockholders of record as of August 11, 2006.
Further, the Company announced today that its Board of Directors has authorized the purchase of up to 239,096 shares of the Company’s common stock in connection with anticipated awards of restricted stock under the Company’s 2006 Stock Incentive Plan, approved by stockholders at their Annual Meeting on May 11, 2006. The purchases will be effected through open market transactions or negotiated block transactions, at the discretion of management. The exact timing of the purchases will depend on market conditions and other factors, such as Company-imposed blackout periods.
Thomas R. Venables, President and CEO, noted: “As we reflect on our first full year as a public company, we are encouraged by the progress we’ve made, and in particular by the steady growth in our commercial business lines. Although the current environment continues to challenge all of us, we remain focused on expanding our retail and commercial presence in our market area.”
In the first six months of 2006, the Company’s balance sheet increased by $29.8 million, or 3.4%, to $896.8 million. Asset growth was focused primarily in loans, which increased by $19.0 million or 3.1% during the six month period. Smaller increases occurred in short-term investments, which rose by $4.2 million or 35.1%, and in securities , which rose by $2.4 million or 1.8%. Asset growth was funded by increases in deposit balances aggregating $17.8 million or 2.9%, and in borrowed funds, which increased by $9.6 million or 6.9% in the first six months of 2006.
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Growth in time deposit accounts, which increased by $15.9 million or 6.0% in the six month period ended June 30, 2006, caused most of the increase in total deposits. Also increasing during this six month period were NOW accounts (up $2.7 million), money market accounts (up $2.2 million), demand deposits (up $1.5 million), offset by a $4.4 million, or 4.5% decrease in savings accounts. With increases in short-term market interest rates, customers have increasingly shown a preference for short-term time deposits and other higher-yielding core accounts, rather than savings deposits.
The increase in loans during the first six months of 2006 was principally the result of growth in the Bank’s commercial loan portfolio, as commercial real estate loans increased by $14.9 million or 7.1% and commercial business loans increased by $1.3 million or 6.6%, offset by a decline in construction loans outstanding of $5.1 million or 8.5%. While the Company continues to emphasize commercial lending generally, its construction lending for residential development projects has declined over the past six months, as demand has slackened due to an increase in inventory of unsold residential units in the Bank’s market area. Residential mortgage and consumer loans also increased during the period, rising by $4.2 million (1.5%) and $3.7 million (10.6%), respectively.
Non-performing assets as a percentage of total assets remained low, at 0.01% as of June 30, 2006. The allowance for loan losses as a percent of total loans was essentially unchanged at .92% as of June 30, 2006, compared to 0.91% of total loans at June 30, 2005.
The Company’s net interest margin (“NIM”) was 3.06% for the three months ended June 30, 2006, a decrease of 20 basis points compared to the second quarter of 2005. The FHLBB deferred the declaration of its quarterly stock dividend, due to a one-time change in its dividend schedule, causing approximately 5 basis points of the decline in the Company’s NIM for the quarter. The remainder of the reduction in the NIM is due to increases in funding costs, which have outpaced increases in yields earned on loans and securities over the past year. In particular, increases in rates paid on interest-bearing deposits have risen by 101 basis points compared to the second quarter of 2005, as customers have indicated a clear preference for high-yield money market accounts and short-term time deposits. The increase in short-term market interest rates and intense competitive pressure in the Bank’s market area has driven up interest rates on these products significantly over the past twelve months.
Adjusted for the negative effect of the omission of the FHLBB stock dividend (estimated at $97,000, the amount earned in the first quarter of 2006), net interest income in the second quarter of 2006 was little changed from the amount earned in the comparable 2005 quarter. The unfavorable effect of the decrease in the NIM was offset nearly entirely by growth in earning assets, which rose by $31.2 million to $776.2 million on average, compared to an average of $745.0 million in the second quarter of 2005.
The loan loss provision for the second quarter of 2006 was $122,000, a significant reduction from the $328,000 provided in the comparable 2005 quarter. The provision
5
recorded in each quarter is primarily reflective of the net growth in new loans during the quarter, offset by the effect of any recoveries.
Non-interest income for the quarter totaled $1.5 million, an increase of $317,000 or 25.1% compared to the second quarter of 2005, after adjusting both periods for the effect of non-recurring write-downs of bank-owned assets. Most of this growth is attributable to a $213,000 or 41.8% increase in fee revenue generated by CSSI, the Bank’s ATM servicing subsidiary.
The Company’s adjusted efficiency ratio for the quarter (excluding amortization of the core deposit intangible and gains/losses on sales of bank assets) stood at 68.4% compared to 62.7% in the year earlier period, as operating expenses have increased in order to support the Company’s lending growth and public company status. Without those non-GAAP adjustments, the efficiency ratio based on GAAP numbers for the quarter was 71.7% versus 145.1% for the comparable quarter in 2005. For a reconciliation, see the table at the end of this release.
The scheduled opening of a new branch in Wellesley, MA in the third quarter of 2006 and the projected opening of a branch in Watertown, MA in early 2007 (subject to receipt of all required local approvals), will serve to increase operating expenses in the near-term. Also, the granting of restricted stock and stock options under the stock-based incentive plan will increase the Company’s compensation costs in the periods in which such awards and options vest. The Company anticipates that those costs will begin to be realized in the third quarter of 2006.
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)
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, | December 31, | |||||||
2006 | 2005 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash and due from banks | $ | 15,571 | $ | 16,499 | ||||
Cash supplied to ATM customers | 40,121 | 37,200 | ||||||
Short-term investments | 16,278 | 12,051 | ||||||
Total cash and cash equivalents | 71,970 | 65,750 | ||||||
Securities available for sale, at fair value | 124,331 | 122,379 | ||||||
Securities held to maturity, at amortized cost | 60 | 109 | ||||||
Restricted equity securities, at cost | 10,480 | 10,012 | ||||||
Total securities | 134,871 | 132,500 | ||||||
Loans Residential real estate | 290,452 | 286,204 | ||||||
Commercial real estate | 223,944 | 209,009 | ||||||
Construction | 55,263 | 60,399 | ||||||
Commercial business | 20,426 | 19,162 | ||||||
Consumer | 38,514 | 34,814 | ||||||
Net deferred loans costs | 1,157 | 1,214 | ||||||
Total loans, gross | 629,756 | 610,802 | ||||||
Allowance for loan losses | (5,797 | ) | (5,670 | ) | ||||
Loans, net | 623,959 | 605,132 | ||||||
Premises and equipment, net | 11,147 | 11,167 | ||||||
Accrued interest receivable | 3,178 | 3,045 | ||||||
Bank-owned life insurance | 10,238 | 7,451 | ||||||
Goodwill | 33,763 | 33,763 | ||||||
Identifiable intangible asset | 3,555 | 4,133 | ||||||
Other assets | 4,154 | 4,116 | ||||||
$ | 896,835 | $ | 867,057 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Deposits: | ||||||||
Regular savings | $ | 93,547 | $ | 97,960 | ||||
Money market accounts | 96,523 | 94,347 | ||||||
Now accounts | 34,830 | 32,147 | ||||||
Demand deposit accounts | 125,887 | 124,396 | ||||||
Time deposit accounts | 278,711 | 262,823 | ||||||
Total deposits | 629,498 | 611,673 | ||||||
Short-term borrowings | 15,000 | — | ||||||
Long-term debt | 134,954 | 140,339 | ||||||
Other liabilities | 8,118 | 6,933 | ||||||
Total liabilities | 787,570 | 758,945 | ||||||
Common stock, no par value; 75,000,000 shares authorized; | ||||||||
8,488,898 shares issued and outstanding | — | — | ||||||
Additional paid-in capital | 82,866 | 82,849 | ||||||
Retained earnings | 34,962 | 32,942 | ||||||
Unearned compensation | (5,261 | ) | (5,353 | ) | ||||
Accumulated other comprehensive loss | (3,302 | ) | (2,326 | ) | ||||
Total stockholders’ equity | 109,265 | 108,112 | ||||||
$ | 896,835 | $ | 867,057 | |||||
7
BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share and share data)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share and share data)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
(Unaudited) | ||||||||||||||||
Interest and dividend income: | ||||||||||||||||
Loans, including fees | $ | 9,236 | $ | 8,048 | $ | 18,078 | $ | 12,940 | ||||||||
Debt securities | 1,377 | 893 | 2,639 | 1,554 | ||||||||||||
Dividends | 23 | 94 | 143 | 162 | ||||||||||||
Short-term investments | 186 | 151 | 402 | 244 | ||||||||||||
Total interest and dividend income | 10,822 | 9,186 | 21,262 | 14,900 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest on deposits | 3,535 | 2,193 | 6,637 | 3,424 | ||||||||||||
Interest on borrowings | 1,373 | 935 | 2,799 | 1,789 | ||||||||||||
Total interest expense | 4,908 | 3,128 | 9,436 | 5,213 | ||||||||||||
Net interest income | 5,914 | 6,058 | 11,826 | 9,687 | ||||||||||||
Provision for loan losses | 122 | 328 | 128 | 496 | ||||||||||||
Net interest income, after provision for loan losses | 5,792 | 5,730 | 11,698 | 9,191 | ||||||||||||
Other income: | ||||||||||||||||
ATM servicing fees | 722 | 509 | 1,334 | 509 | ||||||||||||
Deposit service fees | 341 | 298 | 670 | 504 | ||||||||||||
Loan servicing fees | 155 | 132 | 276 | 204 | ||||||||||||
Investment sales commissions | 30 | 89 | 97 | 146 | ||||||||||||
Gain on sale of loans, net | 73 | 4 | 138 | 20 | ||||||||||||
Security impairment writedown | (35 | ) | — | (35 | ) | — | ||||||||||
Loss on sale/write-down of bank-owned land, net | — | (1,020 | ) | — | (1,020 | ) | ||||||||||
Income from bank-owned life insurance | 85 | 59 | 150 | 118 | ||||||||||||
Miscellaneous | 176 | 174 | 315 | 256 | ||||||||||||
Total other income | 1,547 | 245 | 2,945 | 737 | ||||||||||||
Operating expenses: | ||||||||||||||||
Salaries and employee benefits | 2,725 | 2,466 | 5,446 | 4,480 | ||||||||||||
Occupancy and equipment | 642 | 658 | 1,308 | 1,099 | ||||||||||||
Data processing | 452 | 535 | 900 | 872 | ||||||||||||
Professional fees | 355 | 238 | 733 | 367 | ||||||||||||
Marketing and advertising | 148 | 117 | 311 | 273 | ||||||||||||
Contribution to Benjamin Franklin Bank Charitable Foundation | — | 4,000 | — | 4,000 | ||||||||||||
Amortization of core deposit intangible | 277 | 554 | 578 | 599 | ||||||||||||
Other general and administrative | 756 | 574 | 1,398 | 916 | ||||||||||||
Total operating expenses | 5,355 | 9,142 | 10,674 | 12,606 | ||||||||||||
Income (loss) before income taxes | 1,984 | (3,167 | ) | 3,969 | (2,678 | ) | ||||||||||
Provision (benefit) for income taxes | 724 | (625 | ) | 1,441 | (466 | ) | ||||||||||
Net income (loss) | $ | 1,260 | $ | (2,542 | ) | $ | 2,528 | $ | (2,212 | ) | ||||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic | 8,030,629 | N/A | 8,028,636 | N/A | ||||||||||||
Diluted | 8,030,629 | N/A | 8,028,636 | N/A | ||||||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.16 | N/A | $ | 0.32 | N/A | ||||||||||
Diluted | $ | 0.16 | N/A | $ | 0.32 | N/A |
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BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA
(In thousands, except per share data) (Unaudited)
SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA
(In thousands, except per share data) (Unaudited)
At or For the Three Months | At or For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Financial Highlights: | ||||||||||||||||
Net interest income | $ | 5,914 | $ | 6,058 | $ | 11,826 | $ | 9,687 | ||||||||
Net income (loss) | $ | 1,260 | $ | (2,542 | ) | $ | 2,528 | $ | (2,212 | ) | ||||||
Shares outstanding — end of period | 8,034,614 | n/a | 8,034,614 | n/a | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 8,030,629 | n/a | 8,028,636 | n/a | ||||||||||||
Diluted | 8,030,629 | n/a | 8,028,636 | n/a | ||||||||||||
Shareholders’ equity | $ | 109,265 | $ | 109,229 | ||||||||||||
Book value per share | $ | 13.60 | $ | 13.33 | ||||||||||||
Tangible book value per share | $ | 8.96 | $ | 8.61 | ||||||||||||
Ratios and Other Information: | ||||||||||||||||
Return on average assets | 0.57 | % | -1.20 | % | 0.58 | % | -0.64 | % | ||||||||
Return on average equity | 4.64 | % | -9.67 | % | 4.69 | % | -6.50 | % | ||||||||
Average interest rate spread(1) | 2.49 | % | 2.89 | % | 2.54 | % | 2.75 | % | ||||||||
Net interest margin (2) | 3.06 | % | 3.26 | % | 3.10 | % | 3.15 | % | ||||||||
Efficiency ratio(3) | 68.41 | % | 62.69 | % | 68.83 | % | 70.08 | % | ||||||||
Non-interest expense to average total assets(4) | 2.42 | % | 4.31 | % | 2.43 | % | 3.68 | % | ||||||||
Average interest-earning assets to average interest-bearing liabilities | 120.66 | % | 122.56 | % | 120.44 | % | 123.40 | % | ||||||||
At period end: | ||||||||||||||||
Non-performing assets to total assets | 0.01 | % | 0.04 | % | ||||||||||||
Non-performing loans to total loans | 0.02 | % | 0.06 | % | ||||||||||||
Allowance for loan losses to non-performing loans | 4354.94 | % | 1592.13 | % | ||||||||||||
Allowance for loan losses to total loans | 0.92 | % | 0.91 | % | ||||||||||||
Equity to total assets | 12.18 | % | 12.62 | % | ||||||||||||
Tier 1 leverage capital ratio | 9.89 | % | 9.96 | % | ||||||||||||
Total risk-based capital ratio | 15.05 | % | 15.34 | % | ||||||||||||
Number of full service offices | 9 | 9 |
(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 (in 2005) 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). Without those non-GAAP adjustments the efficiency ratio based on GAAP numbers for the periods shown were 71.77%, 145.05%, 72.26% and 120.93%, respectively. For a reconciliation, see the table at the end of this release. | |
(4) | For the three and six-month 2005 periods, if the Charitable Foundation contribution were excluded, the ratio of non-interest expense to average total assets would have been 2.42% and 2.51%, respectively. |
9
BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARIES
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (Unaudited)
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (Unaudited)
Three Months Ended June 30, | ||||||||||||||||||||||||
2006 | 2005 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Outstanding | Outstanding | |||||||||||||||||||||||
Balance | Interest | Yield/Rate(1) | Balance | Interest | Yield/Rate(1) | |||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans | $ | 620,986 | $ | 9,236 | 5.91 | % | $ | 589,869 | $ | 8,048 | 5.47 | % | ||||||||||||
Securities | 139,739 | 1,400 | 3.94 | % | 128,698 | 987 | 3.08 | % | ||||||||||||||||
Short-term investments | $ | 15,504 | 186 | 4.75 | % | 26,429 | 151 | 2.29 | % | |||||||||||||||
Total interest-earning assets | 776,229 | 10,822 | 5.54 | % | 744,996 | 9,186 | 4.95 | % | ||||||||||||||||
Non-interest-earning assets | 113,054 | 106,428 | ||||||||||||||||||||||
Total assets | $ | 889,283 | $ | 851,424 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Savings deposits | $ | 94,810 | 121 | 0.51 | % | $ | 109,318 | 142 | 0.52 | % | ||||||||||||||
Money market | 116,061 | 716 | 2.47 | % | 117,969 | 458 | 1.56 | % | ||||||||||||||||
NOW accounts | 28,250 | 10 | 0.15 | % | 36,240 | 32 | 0.35 | % | ||||||||||||||||
Certificates of deposits | 277,996 | 2,688 | 3.88 | % | 244,490 | 1,561 | 2.56 | % | ||||||||||||||||
Total deposits | 517,117 | 3,535 | 2.74 | % | 508,017 | 2,193 | 1.73 | % | ||||||||||||||||
Borrowings | 126,214 | 1,373 | 4.30 | % | 99,857 | 935 | 3.76 | % | ||||||||||||||||
Total interest-bearing liabilities | 643,331 | 4,908 | 3.05 | % | 607,874 | 3,128 | 2.06 | % | ||||||||||||||||
Non-interest bearing liabilities | 136,999 | 138,073 | ||||||||||||||||||||||
Total liabilities | 780,330 | 745,947 | ||||||||||||||||||||||
Equity | 108,953 | 105,477 | ||||||||||||||||||||||
Total liabilities and equity | $ | 889,283 | $ | 851,424 | ||||||||||||||||||||
Net interest income | $ | 5,914 | $ | 6,058 | ||||||||||||||||||||
Net interest rate spread(2) | 2.49 | % | 2.89 | % | ||||||||||||||||||||
Net interest-earning assets(3) | $ | 132,898 | $ | 137,122 | ||||||||||||||||||||
Net interest margin(4) | 3.06 | % | 3.26 | % | ||||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities | 120.66 | % | 122.56 | % |
(1) | Yields and rates for the three months ended June 30, 2006 and 2005 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)
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands)
Six Months Ended June 30, | ||||||||||||||||||||||||
2006 | 2005 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Outstanding | Outstanding | |||||||||||||||||||||||
Balance | Interest | Yield/Rate(1) | Balance | Interest | Yield/Rate(1) | |||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans | $ | 613,788 | $ | 18,078 | 5.88 | % | $ | 489,108 | $ | 12,940 | 5.34 | % | ||||||||||||
Investment securities | 138,280 | 2,782 | 4.03 | % | 110,167 | 1,716 | 3.14 | % | ||||||||||||||||
Short-term investments | $ | 17,589 | 402 | 4.55 | % | 21,272 | 244 | 2.31 | % | |||||||||||||||
Total interest-earning assets | 769,657 | 21,262 | 5.51 | % | 620,547 | 14,900 | 4.84 | % | ||||||||||||||||
Non-interest-earning assets | 114,487 | 71,073 | ||||||||||||||||||||||
Total assets | $ | 884,144 | $ | 691,620 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Savings deposits | $ | 95,712 | 239 | 0.50 | % | $ | 102,177 | 258 | 0.51 | % | ||||||||||||||
Money market | 107,372 | 1,226 | 2.30 | % | 87,618 | 668 | 1.54 | % | ||||||||||||||||
NOW accounts | 27,706 | 20 | 0.15 | % | 29,161 | 40 | 0.28 | % | ||||||||||||||||
Certificates of deposits | 276,957 | 5,152 | 3.75 | % | 193,450 | 2,458 | 2.56 | % | ||||||||||||||||
Total deposits | 507,747 | 6,637 | 2.64 | % | 412,406 | 3,424 | 1.67 | % | ||||||||||||||||
Borrowings | 131,314 | 2,799 | 4.24 | % | 90,485 | 1,789 | 3.99 | % | ||||||||||||||||
Total interest-bearing liabilities | 639,061 | 9,436 | 2.97 | % | 502,891 | 5,213 | 2.09 | % | ||||||||||||||||
Non-interest bearing liabilities | 136,372 | 120,171 | ||||||||||||||||||||||
Total liabilities | 775,433 | 623,062 | ||||||||||||||||||||||
Equity | 108,711 | 68,558 | ||||||||||||||||||||||
Total liabilities and equity | $ | 884,144 | $ | 691,620 | ||||||||||||||||||||
Net interest income | $ | 11,826 | $ | 9,687 | ||||||||||||||||||||
Net interest rate spread(2) | 2.54 | % | 2.75 | % | ||||||||||||||||||||
Net interest-earning assets(3) | $ | 130,596 | $ | 117,656 | ||||||||||||||||||||
Net interest margin(4) | 3.10 | % | 3.15 | % | ||||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities | 120.44 | % | 123.40 | % |
(1) | Yields and rates for the six months ended June 30, 2006 and 2005 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. |
11
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, | June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Efficiency ratio based on GAAP numbers | 71.77 | % | 145.05 | % | 72.26 | % | 120.93 | % | ||||||||
Effects of amortization of intangible assets | (3.73 | ) | (7.57 | ) | (3.94 | ) | (5.24 | ) | ||||||||
Franklin Bank Charitable Foundation Effects of contribution to the Benjamin | — | (54.66 | ) | — | (35.01 | ) | ||||||||||
Effects of net gain/(loss/write-down) on sale of bank assets | .37 | (20.13 | ) | .51 | (10.59 | ) | ||||||||||
Efficiency ratio — Reported | 68.41 | % | 62.69 | % | 68.83 | % | 70.09 | % | ||||||||
12