[LOGO OF CARVER BANCORP, INC.]
Contact: David Lilly / Ruth Pachman William Gray
Kekst and Company Carver Bancorp, Inc.
(212) 521-4800 (212) 360-8840
CARVER BANCORP, INC. REPORTS SECOND QUARTER RESULTS
CONTINUES QUARTERLY DIVIDEND OF $0.07
NEW YORK, NEW YORK, OCTOBER 28, 2004 - Carver Bancorp, Inc. (the "Company" or
"Carver") (AMEX: CNY), the holding company for Carver Federal Savings Bank (the
"Bank"), today announced its results of operations for the three-month period
ended September 30, 2004, the second quarter of the fiscal year ended March 31,
2005 ("fiscal 2005").
The Company reported diluted earnings per share of $0.19 for the quarter ended
September 30, 2004 compared to $0.55 diluted earnings per share for the same
period last year. Net income available to common stockholders decreased
$943,000, or 68.5%, to $434,000 compared to $1.4 million for the same period
last year.
Net income was affected by two significant events in the quarter. Results were
impacted by charges related to the end of Carver's merger agreement with
Washington D.C.-based Independence Federal Savings Bank ("Independence"), offset
in part by an award to the Bank from the Community Development Financial
Institutions ("CDFI") Fund of the Department of the Treasury.
Following denial by the Office of Thrift Supervision ("OTS") of Carver's
application to acquire Independence, Carver, the Bank and Independence mutually
agreed to terminate their merger agreement. Therefore, Carver has included as
non-interest expense certain previously capitalized expenses related to the
merger of $525,000 after tax. Also reflected in non-interest income is an after
tax impairment charge deemed other than temporary of $685,000, recorded as a
result of the decline in the market price of 150,000 shares of common stock of
Independence that the Company holds. These two charges resulted in a reduction
of diluted earnings per share of $0.46 for the quarter.
During the quarter, the CDFI Fund of the Department of the Treasury awarded the
Bank a $1.5 million grant as part of its Bank Enterprise Award Program, which
seeks to expand financing activities in economically distressed areas throughout
the nation. The Bank shared $360,000 of these funds with its non-profit lending
partners; the remaining $1.1 million was recorded in other non-interest income
and after tax resulted in additional $0.27 of diluted earnings per share for the
quarter.
Deborah Wright, President and CEO of Carver, said: "As announced on October 26,
Carver and Independence have ended our merger agreement. Our goal with the
Independence merger was to create an African-American led institution with
unprecedented scale, able to accelerate growth and therefore value creation for
our stockholders. However, the OTS raised a number of issues related to the
proposed transaction that we had recognized and sought to address to protect our
stockholders and other constituents. Following the OTS decision, and after
careful consideration of every reasonable option, we made the difficult decision
to agree to end our merger agreement
with the interests of our stockholders foremost in our minds. As our approach to
growth has always been a balanced one, we will continue our strategy to
aggressively pursue organic growth in our home market of metropolitan New York
City, while taking an opportunistic stance toward other growth opportunities
which expand our physical presence or product offerings."
Ms. Wright continued: "Carver posted a number of specific accomplishments in the
second quarter of fiscal 2005. First, we are very pleased that the CDFI Fund of
the Department of the Treasury recognized Carver's expansion of financing in the
economically distressed areas that we serve. Carver was one of only five
institutions to receive the maximum grant. Second, we successfully opened our
seventh full-service, state-of-the-art branch in Fort Greene, Brooklyn in the
new Atlantic Terminal Mall, a 373,000 square foot retail complex built above
Brooklyn's busiest transportation hub traveled by more than 15 million riders
annually. Third, Carver successfully launched wealth management product
offerings, including life insurance, mutual funds, and fixed and variable
annuities, through our new alliances with Essex Corporation and SBLI USA Mutual
Life Insurance Company, Inc. Fourth, on September 21, 2004 Carver held its
annual meeting of stockholders at The Studio Museum in Harlem where we discussed
with many of our stockholders our recent accomplishments and growth strategies
including the opening of our new Bradhurst Court branch in northern Harlem and
an additional 24/7 ATM center this winter. Finally, based on their confidence in
Carver's future prospects, the Board of Directors declared a $0.07 per share
dividend on October 26, 2004 for the second quarter payable on November 23, 2004
to holders of record at the close of business on November 9, 2004."
SUBSEQUENT EVENTS TO CLOSE OF SECOND QUARTER
On October 15, 2004 Carver was advised by the OTS of its denial of Carver's
application to consummate the merger agreement between Carver, the Bank and
Independence. The merger agreement was subject to, among other things, approval
by the OTS. As a result, on October 26, 2004, the Company, the Bank and
Independence announced their mutual agreement to terminate the merger agreement
and to release each party from all related liabilities.
On October 20, 2004, the Company announced that the holders of all 40,000
outstanding shares of its Series A Convertible Preferred Stock and all 60,000
outstanding shares of its Series B Convertible Preferred Stock elected to
convert their preferred shares into shares of the Company's common stock. Upon
conversion of their preferred shares, the holders were issued an aggregate of
208,333 shares of common stock.
INCOME STATEMENT HIGHLIGHTS
Quarterly Results
- -----------------
Net income available to common stockholders decreased $943,000, or 68.5%, to
$434,000 compared to $1.4 million for the same period last year. These results
were achieved primarily from a 3.4% increase in net interest income offset by a
30.3% increase in non-interest expense and a decline in non-interest income of
23.9%, as further described below.
Net interest income before the provision for loan losses increased $152,000, or
3.4%, to $4.6 million compared to $4.5 million for the same period last year.
This improvement is a result of an increase in interest income of $411,000, or
6.2%, partially offset by an increase in interest expense of $259,000, or 12.3%,
compared to the same period last year. Interest income rose primarily as a
result of increased real estate mortgage loan balances and interest expense rose
2
primarily due to increased deposits. The Company did not provide for additional
loan loss reserves as the Company considers the current overall allowance for
loan losses to be adequate.
Non-interest income decreased $376,000, or 23.9%, to $1.2 million compared to
$1.6 million for the same period last year. The decrease was primarily
attributable to an impairment charge deemed other than temporary of $1.1
million, resulting from the decline in the market price of 150,000 shares of
common stock of Independence that the Company holds. Additionally, other
non-interest income declined compared to the same period last year when a
recovery of $558,000 was established for the recognition of previously
unrecognized mortgage loan income. Partially offsetting these decreases were the
receipt of a net $1.1 million grant from the Department of the Treasury, a gain
in loan fees and service charges of $65,000, attributable to a rise in mortgage
prepayment penalty income, additional deposit fees and charges of $45,000 and a
gain on the sale of fixed rate loans of $44,000.
Non-interest expense increased $1.2 million, or 30.3%, to $5.1 million compared
to $3.9 million for the same period last year. The increase was primarily due to
an $847,000 charge resulting from expensing previously capitalized costs related
to the unsuccessful merger with Independence and additional employee
compensation and net occupancy expenses as a result of opening the new Jamaica
Center and Atlantic Terminal branches.
Income before taxes decreased $1.4 million, or 64.4%, to $774,000 compared to
$2.2 million for the same period last year. Income taxes decreased $460,000, or
61.3%, to $291,000 compared to $751,000 for the same period last year primarily
due to the decline in income before taxes.
Six-Month Results
- -----------------
Net income available to common stockholders decreased $949,000, or 39.3%, to
$1.5 million compared to $2.4 million for the same period last year. The decline
is primarily due to increased non-interest expense of $1.3 million and decreased
non-interest income of $377,000, partially offset by an increase in net interest
income of $409,000 and a decrease in income taxes of $356,000, as detailed
below.
Net interest income before the provision for loan losses increased by $409,000,
or 4.7%, to $9.2 million compared to $8.8 million for the same period last year.
Interest income increased $606,000, or 4.6%, compared to the same period last
year primarily as a result of increased real estate mortgage loan balances.
Partially offsetting the rise in interest income was additional interest expense
of $197,000 primarily due to increased deposits.
The Company did not provide for additional loan loss reserves as the Company
considers the current overall allowance for loan losses to be adequate.
Non-interest income decreased $377,000, or 13.9%, to $2.3 million compared to
$2.7 million for the same period last year. The decrease was primarily
attributable to an impairment charge deemed other than temporary of $1.1 million
resulting from the decline in the market price of 150,000 shares of common stock
of Independence that the Company holds. Additionally, other non-interest income
declined compared to the same period last year when a recovery of $558,000 was
established for the recognition of previously unrecognized mortgage loan income
and loan fees and service charges decreased as a result of a reduction in
mortgage prepayment penalties compared to the same period last year. Partially
offsetting these decreases were the receipt of a net $1.1 million grant from the
Department of the Treasury and increases in depository fees and
3
charges that were primarily due to higher ATM usage and growth in debit card
income over the same period last year.
Non-interest expense increased $1.3 million, or 17.4%, to $9.0 million compared
to $7.7 million for the same period last year. The increase in other
non-interest expense was primarily due to a charge of $847,000 resulting from
expensing previously capitalized costs related to the merger with Independence.
In addition, employee compensation and net occupancy expenses increased
primarily due to opening the new Jamaica Center and Atlantic Terminal branches.
Income before taxes decreased $1.3 million, or 34.1%, to $2.5 million compared
to $3.8 million for the same period last year. Income taxes decreased $356,000,
or 27.2%, to $1.0 million compared to $1.3 million for the same period last year
primarily due to the decline in income before taxes.
FINANCIAL CONDITION HIGHLIGHTS
At September 30, 2004, total assets increased by $42.0 million, or 7.8%, to
$580.8 million compared to $538.8 million at March 31, 2004. The asset growth
primarily reflects increases in total loans receivable, net, and total
securities of $25.4 million and $17.5 million, respectively. The increase in
total loans receivable is attributable to new mortgage loan originations and
purchases exceeding mortgage loan repayments. The increase in total securities
is attributable to the purchase of additional mortgage-backed securities to meet
collateral requirements of New York State deposits in the new Jamaica Center
branch. Other assets and office properties and equipment, net, increased by $7.0
million and $1.5 million, respectively. The increase in other assets is
primarily related to the Bank's $8.0 million investment in a bank owned life
insurance program. The $1.5 million increase in office properties and equipment
is primarily attributable to the new Atlantic Terminal branch in Brooklyn. The
increase in total assets was partially offset by a decline in total cash and
cash equivalents of $9.7 million as liquid funds were used to fund loan and
securities growth.
At September 30, 2004, total liabilities increased by $40.9 million, or 8.3%, to
$535.1 million from $494.2 million at March 31, 2004. The increase in
liabilities is a result of deposit growth of $53.1 million, of which $50.0
million was deposited by the State and City of New York under the Banking
Development District program. The increase in deposits was partially offset by
repayments of matured borrowings of $3.7 million and a decrease of $8.6 million
in other liabilities resulting primarily from the payment of bank checks and
income taxes.
At September 30, 2004, total stockholders' equity increased $1.1 million, or
2.4%, to $45.7 million compared to $44.6 million at March 31, 2004. The increase
in total stockholders' equity was primarily attributable to an increase in
retained earnings of $1.2 million from net income derived during fiscal 2005,
partially offset by a decrease of $244,000 in accumulated other comprehensive
income related to the mark-to-market of the Bank's available-for-sale
securities.
During the quarter ended September 30, 2004, the Company purchased 4,700
additional shares of its common stock in open market transactions as part of its
stock repurchase program announced on August 6, 2002. To date, the Company has
purchased 35,150 shares of its common stock in open market transactions at an
average price of $14.71 per share. The Company intends to use the repurchased
shares to fund its stock-based benefit and compensation plans and for any other
purpose the Board of Directors of the Company deems advisable in compliance with
applicable law.
4
ASSET QUALITY
At September 30, 2004, non-performing assets totaled $1.8 million, or 0.47% of
total loans receivable, compared to $2.1 million, or 0.60% of total loans
receivable, at March 31, 2004. At September 30, 2004, the allowance for loan
losses of $4.1 million remained substantially unchanged from March 31, 2004. At
September 30, 2004, the ratio of the allowance for loan losses to non-performing
loans was 229.0% compared to 194.3% at March 31, 2004. At September 30, 2004,
the ratio of the allowance for loan losses to total loans receivable was 1.08%
compared to 1.16% at March 31, 2004.
Carver Bancorp, Inc. is the holding company for Carver Federal Savings Bank, a
federally chartered stock savings bank. Carver Federal Savings Bank, the largest
publicly-traded African- and Caribbean-American run bank in the United States,
operates seven full-service branches in the New York City boroughs of Brooklyn,
Queens and Manhattan. For further information, please visit the Company's
website at www.carverbank.com.
STATEMENTS CONTAINED IN THIS NEWS RELEASE, WHICH ARE NOT HISTORICAL FACTS ARE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT"), AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). THESE
FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF SUCH WORDS AS
"BELIEVE," "EXPECT," "ANTICIPATE," "INTEND," "SHOULD," "WILL," "WOULD," "COULD,"
"MAY," "PLANNED," "ESTIMATED," "POTENTIAL," "OUTLOOK," "PREDICT," "PROJECT" AND
SIMILAR TERMS AND PHRASES, INCLUDING REFERENCES TO ASSUMPTIONS. FORWARD-LOOKING
STATEMENTS ARE BASED ON VARIOUS ASSUMPTIONS AND ANALYSES MADE BY THE COMPANY IN
LIGHT OF MANAGEMENT'S EXPERIENCE AND ITS PERCEPTION OF HISTORICAL TRENDS,
CURRENT CONDITIONS AND EXPECTED FUTURE DEVELOPMENTS, AS WELL AS OTHER FACTORS
BELIEVED TO BE APPROPRIATE UNDER THE CIRCUMSTANCES. THESE STATEMENTS ARE NOT
GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO RISKS, UNCERTAINTIES AND
OTHER FACTORS, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL, THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM FUTURE RESULTS EXPRESSED OR IMPLIED BY
SUCH FORWARD-LOOKING STATEMENTS. FACTORS WHICH COULD RESULT IN MATERIAL
VARIATIONS INCLUDE, WITHOUT LIMITATION, THE COMPANY'S SUCCESS IN IMPLEMENTING
ITS INITIATIVES, INCLUDING EXPANDING ITS PRODUCT LINE, ADDING NEW BRANCHES AND
ATM CENTERS, SUCCESSFULLY RE-BRANDING ITS IMAGE AND ACHIEVING GREATER OPERATING
EFFICIENCIES; INCREASES IN COMPETITIVE PRESSURE AMONG FINANCIAL INSTITUTIONS OR
NON-FINANCIAL INSTITUTIONS; LEGISLATIVE OR REGULATORY CHANGES WHICH MAY
ADVERSELY AFFECT THE COMPANY'S BUSINESS OR INCREASE THE COST OF DOING BUSINESS;
TECHNOLOGICAL CHANGES WHICH MAY BE MORE DIFFICULT OR EXPENSIVE THAN WE
ANTICIPATE; CHANGES IN INTEREST RATES WHICH MAY REDUCE NET INTEREST MARGINS AND
NET INTEREST INCOME; CHANGES IN DEPOSIT FLOWS, LOAN DEMAND OR REAL ESTATE VALUES
WHICH MAY ADVERSELY AFFECT THE COMPANY'S BUSINESS; CHANGES IN ACCOUNTING
PRINCIPLES, POLICIES OR GUIDELINES WHICH MAY CAUSE THE COMPANY'S CONDITION TO BE
PERCEIVED DIFFERENTLY; LITIGATION OR OTHER MATTERS BEFORE REGULATORY AGENCIES,
WHETHER CURRENTLY EXISTING OR COMMENCING IN THE FUTURE, WHICH MAY DELAY THE
OCCURRENCE OR NON-OCCURRENCE OF EVENTS LONGER THAN ANTICIPATED; THE ABILITY OF
THE COMPANY TO ORIGINATE AND PURCHASE LOANS WITH ATTRACTIVE TERMS AND ACCEPTABLE
CREDIT QUALITY; AND GENERAL ECONOMIC CONDITIONS, EITHER NATIONALLY OR LOCALLY IN
SOME OR ALL AREAS IN WHICH THE COMPANY DOES BUSINESS, OR CONDITIONS IN THE
SECURITIES MARKETS OR THE BANKING INDUSTRY WHICH COULD AFFECT LIQUIDITY IN THE
CAPITAL MARKETS, THE VOLUME OF LOAN ORIGINATION, DEPOSIT FLOWS, REAL ESTATE
VALUES, THE LEVELS OF NON-INTEREST INCOME AND THE AMOUNT OF LOAN LOSSES. THE
FORWARD-LOOKING STATEMENTS CONTAINED WITHIN HEREIN ARE MADE AS OF THE DATE OF
THIS REPORT, AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE THESE
FORWARD-LOOKING STATEMENTS TO REFLECT ACTUAL RESULTS, CHANGES IN ASSUMPTIONS OR
CHANGES IN OTHER FACTORS AFFECTING SUCH FORWARD-LOOKING STATEMENTS OR TO UPDATE
THE REASONS WHY ACTUAL RESULTS COULD DIFFER FROM THOSE PROJECTED IN THE
FORWARD-LOOKING STATEMENTS. YOU SHOULD CONSIDER THESE RISKS AND UNCERTAINTIES IN
EVALUATING FORWARD-LOOKING STATEMENTS AND YOU SHOULD NOT PLACE UNDUE RELIANCE ON
THESE STATEMENTS.
# # #
5
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, MARCH 31,
2004 2004
--------------- ---------------
(UNAUDITED)
ASSETS
Cash and cash equivalents:
$ 10,933 $ 11,574
Cash and due from banks
Federal funds sold 1,500 8,200
Interest Earning Deposits 600 3,000
--------------- ---------------
Total cash and cash equivalents 13,033 22,774
--------------- ---------------
Securities:
Available-for-sale, at fair value (including pledged as collateral of
$118,058 at September 30, 2004, $82,325 at March 31, 2004) 124,646 96,403
Held-to-maturity, at amortized cost (including pledged as collateral of
$31,943 at September 30, 2004, $42,189 at March 31, 2004) 32,744 43,474
--------------- ---------------
Total securities 157,390 139,877
--------------- ---------------
Loans receivable:
Real estate mortgage loans 375,706 350,015
Consumer and commercial business loans 5,721 6,010
Allowance for loan losses (4,116) (4,125)
--------------- ---------------
Total loans receivable, net 377,311 351,900
--------------- ---------------
Office properties and equipment, net 13,227 11,682
Federal Home Loan Bank of New York stock, at cost 4,625 4,576
Accrued interest receivable 2,656 2,489
Other assets 12,548 5,532
--------------- ---------------
Total assets $ 580,790 $ 538,830
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
$ 426,808 $ 373,665
Deposits
Advances from the Federal Home Loan Bank of New York and other borrowed money 100,582 104,282
Other liabilities 7,669 16,238
--------------- ---------------
Total liabilities 535,059 494,185
--------------- ---------------
Stockholders' equity:
Preferred stock (par value $0.01 per share; 1,000,000
shares authorized; 100,000 issued and outstanding) 1 1
Common stock (par value $0.01 per share: 5,000,000 shares authorized; 2,316,358 shares
issued; 2,295,366 and 2,285,267 outstanding at September 30, 2004 and March 31, 2004,
respectively) 23 23
Additional paid-in capital 23,916 23,882
Retained earnings 22,083 20,892
Unamortized awards of common stock under management recognition plan (11) (21)
Treasury stock, at cost (20,992 shares at September 30, 2004 and 31,091 shares at March
31, 2004) (295) (390)
Accumulated other comprehensive income 14 258
--------------- ---------------
Total stockholders' equity 45,731 44,645
--------------- ---------------
Total liabilities and stockholders' equity $ 580,790 $ 538,830
=============== ===============
6
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------------- --------------------------------------
(UNAUDITED) (UNAUDITED)
2004 2003 2004 2003
--------------- ------------------ ---------------- -----------------
Interest Income:
Loans $ 5,700 $ 5,061 $ 11,116 $ 9,927
Total securities 1,291 1,515 2,551 3,111
Federal funds sold 22 26 58 81
-------- -------- -------- --------
Total interest income 7,013 6,602 13,725 13,119
-------- -------- -------- --------
Interest expense:
Deposits 1,313 1,143 2,438 2,419
Advances and other borrowed money 1,055 966 2,098 1,920
-------- -------- -------- --------
Total interest expense 2,368 2,109 4,536 4,339
-------- -------- -------- --------
Net interest income 4,645 4,493 9,189 8,780
Provision for loan losses -- -- -- --
-------- -------- -------- --------
Net interest income after provision for loan
losses 4,645 4,493 9,189 8,780
-------- -------- -------- --------
Non-interest income:
Depository fees and charges 535 490 1,055 974
Loan fees and service charges 557 492 1,080 1,137
Gain (loss) on sale of securities -- 31 94 31
Impairment of securities (1,104) -- (1,104) --
Gain on sale of loans 44 -- 45 --
Grant income 1,140 -- 1,140 --
Other 26 561 27 572
-------- -------- -------- --------
Total non-interest income 1,198 1,574 2,337 2,714
-------- -------- -------- --------
Non-interest expense:
Employee compensation and benefits 2,068 1,798 4,069 3,603
Net occupancy expense 473 343 876 667
Equipment 395 399 764 782
Merger related expenses 847 -- 847 --
Other 1,286 1,350 2,452 2,619
-------- -------- -------- --------
Total non-interest expense 5,069 3,890 9,008 7,671
-------- -------- -------- --------
Income before income taxes 774 2,177 2,518 3,823
Income taxes 291 751 954 1,310
-------- -------- -------- --------
Net income $ 483 $ 1,426 $ 1,564 $ 2,513
======== ======== ======== ========
Dividends applicable to preferred stock $ 49 $ 49 $ 98 $ 98
Net income available to common stockholders $ 434 $ 1,377 $ 1,466 $ 2,415
======== ======== ======== ========
Earnings per common share:
Basic $ 0.19 $ 0.60 $ 0.64 $ 1.05
======== ======== ======== ========
Diluted $ 0.19 $ 0.55 $ 0.60 $ 0.98
======== ======== ======== ========
7
CARVER BANCORP, INC. AND SUBSIDIARIES
SELECTED KEY RATIOS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
KEY OPERATING RATIOS: SEPTEMBER 30, SEPTEMBER 30,
-------------------- -------------------
2004 2003 2004 2003
------- ------- ------- -------
Return on average assets (1) 0.34 % 1.10 % 0.56 % 0.97
Return on average equity (2) 4.22 13.51 6.90 12.07
Interest rate spread (3) 3.32 3.53 3.39 3.46
Net interest margin (4) 3.41 3.66 3.38 3.61
Operating expenses to average assets (5) 3.54 3.01 3.21 2.98
Equity-to-assets (6) 7.87 8.12 7.87 8.12
Efficiency ratio (7) 86.75 64.25 78.15 66.81
Average interest-earning assets to
interest-bearing liabilities 1.05 1.08 1.05 1.09
ASSET QUALITY RATIOS: SEPTEMBER 30, MARCH 31,
-------------------- -------------------
2004 2003 2004 2003
------- ------- ------- -------
Non performing assets to total assets (8) 0.31 0.56 0.39 0.36
Non performing assets to total loans receivable (8) 0.47 0.91 0.60 0.61
Allowance for loan losses to total loans receivable 1.08 1.29 1.16 1.40
Allowance for loan losses to non-performing loans (8) 229.0 141.8 194.3 230.7
(1) Net income divided by average total assets, annualized
(2) Net income divided by average total equity, annualized
(3) Combined weighted average interest rate earned less combined weighted
average interest rate cost
(4) Net interest income divided by average interest-earning assets annualized
(5) Non-interest expenses less loss on foreclosed real estate divided by average
total assets, annualized. Excluding merger related expenses the ratio would
be 2.95% and 2.91% for the quarter and year-to-date, respectively
(6) Total equity divided by assets at period end
(7) Operating expenses divided by sum of net interest income plus non-interest
income. Excluding the Independence stock impairment charge, grant income and
merger related expenses, the ratio would be 72.71% and 71.03% for the
quarter and year-to-date, respectively
(8) Non performing assets consist of non-accrual loans, loans accruing 90 days
or more past due and property acquired in settlement of loans
8