EXHIBIT 99.1
CONTACTS: Mary K. Talbot
(401) 245-8819
SLADE'S FERRY BANCORP REPORTS INCREASED EARNINGS AND RESTATEMENT OF PRIOR
YEARS' RESULTS
SOMERSET, Mass. (July 19, 2005) -- Slade's Ferry Bancorp (the "Company"),
(NASDAQ Small Cap: SFBC) parent company of Slade's Ferry Trust Company (the
"Bank"), announced that its net income for the quarter ended June 30, 2005
was $848,000, or $0.21 per share (diluted), an increase of 35.7% over net
income for the quarter ended June 30, 2004, which totaled $625,000 or $0.15
per share (diluted). For the six months ended June 30, 2005, net income was
$1.9 million or $0.47 per share (diluted), an increase of 61.0% over net
income for the six months ended June 30, 2004, which totaled $1.2 million
or $0.30 per share (diluted).
The primary reason for the increase in earnings is the Bank's successful
deployment of the deposit growth realized in 2004 and early 2005 into loans
and investments. The Bank initiated its deposit growth measures in early
2004. The deposit growth, as well as an increase in the level of Federal
Home Loan Bank advances, has generated an increase in average earning
assets, from $458.7 million for the six months ended June 30, 2004 to
$523.3 million for the six months ended June 30, 2005. Because of this
growth, net interest and dividend income increased from $3.8 million for
the quarter ended June 30, 2004, to $4.4 million for the quarter ended June
30, 2005, an increase of 17.9%. For the six months ended June 30, 2005, net
interest income was $8.9 million, compared to $7.5 million for the six
months ended June 30, 2004, an increase of 18.3%. The net interest margin
increased from 3.31% for the six months ended June 30, 2004 to 3.42% for
the six months ended June 30, 2005. For the three months ended June 30,
2005 the net interest margin was 3.33%, which was an increase from the
three months ended June 30, 2004, which was 3.17%.
Also contributing to the increase in earnings was a reduced provision for
loan losses totaling $15,000 in the second quarter of 2005, compared to
$130,000 in the second quarter of 2004. For the six months ended June 30,
2005, the provision for loan losses totaled $65,000, compared to $376,000
for the six months ended June 30, 2004. Due to changes in the composition
of the loan portfolio, stronger underwriting guidelines, and the sale of
loans previously deemed non-performing, the overall credit risk profile of
the loan portfolio has improved, allowing a lesser provision for loan
losses in 2005.
Non-interest income decreased from $600,000 for the quarter ended June 30,
2004 to $539,000 for the quarter ended June 30, 2005. Non-interest income
decreased from $1.2 million for the six months ended June 30 2004, to $1.1
million for the six months ended June 30, 2005. The decrease is primarily
the result of shifting customer preferences toward "free" checking products
and associated services.
Total operating expenses increased from $3.2 million for the quarter ended
June 30, 2004 to $3.6 million for the quarter ended June 30, 2005, an
increase of 12.5%. For the six months ended June 30, 2005, operating
expenses totaled $6.9 million, compared to $6.4 million for the six months
ended June 30, 2004, an increase of 7.8%. The increase is attributable to
increased marketing costs, costs related to the automation of branches,
and increased professional fees related to both the restatement discussed
below, and the Company's implementation of the provisions of the
Sarbanes-Oxley Act of 2002.
"We're pleased that our employees' collective efforts are paying off for
Slade's Ferry Bank shareholders'," said President and CEO Mary Lynn D.
Lenz. "We laid out ambitious earnings goals in our strategic plan and have
met each milestone. Moving forward, Slade's Ferry Bank will continue to
seek operational efficiencies, create products that anticipate customer
needs, and motivate our sales force while helping to improve the community
in which we live and work."
Total assets increased from $549.4 million at December 31, 2004 to $577.8
million at June 30, 2005. Total net loans increased from $362.3 million to
$391.3 million, while total deposits increased from $399.9 million to
$406.6 million during the same period. Total stockholders' equity at June
30, 2005 was $47.9 million versus $46.6 million at December 31, 2004, an
increase of 2.9%. Both the Company and the Bank maintain capital levels
sufficient to be considered "well-capitalized" under applicable regulatory
capital guidelines and requirements.
The Company also announced that certain of the Company's financial
statements would be restated due to the discovery of financial reporting
errors relating to its defined benefit pension plan that affects its
previously filed financial statements.
The reporting errors involve the overstatement of the Company's prepaid
benefit cost and the understatement of the Company's defined benefit
pension plan expense since the fiscal year ended December 31, 1996 due to
(1) the failure to use settlement accounting for significant lump sum
distributions, as required by FASB Statement No. 88, Employers' Accounting
for Settlements and Curtailments of Defined Benefit Plans and for
Termination Benefits, and (2) the understatement of the Company's projected
benefit obligation prior to 2003.
The cumulative effect of the error on the Company's retained earnings at
March 31, 2005 was determined to be a reduction of $399,000, or 2.3%, as
reported on Form 8-K filed today with the Securities and Exchange Commission.
The Company expects to file an amended Form 10-K for the year ended December
31, 2004, and amended Form 10-Q for the quarter and nine months ended
September 30, 2004 and for the quarter ended March 31, 2005, along with its
Form 10-Q for the quarter ended June 30, 2005, on or about August 14, 2005.
Included in the 2005 expenses are legal, accounting, actuarial and
consulting expenses totaling $66,000 associated with the upcoming
restatement of earnings.
"Our board and management team are wholly committed to ensuring that this
error is corrected so that present (and future) shareholders can have an
accurate picture of the robust financial health of this institution,"
added Lenz.
Slade's Ferry Bancorp was founded to serve community-banking needs with
both personal and commercial products and services. With more than $575
million in assets and nine retail branches in Southeastern Massachusetts,
Slade's Ferry is a trusted community partner. Traded on the NASDAQ Small
Cap Market as SFBC, Slade's Ferry Bancorp can also be found on the web at
www.sladesferry.com and in seven Massachusetts communities - Assonet,
Fairhaven, Fall River, New Bedford, Seekonk, Somerset and Swansea.
# # #
This news release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including statements
regarding the strength of the company's capital and asset quality. Other
such statements may be identified by words such as "believes," "will,"
"expects," "project," "may," "developments," "strategic," "launching,"
"opportunities," "anticipates," "estimates," "intends," "plans," "targets"
and similar expressions. These statements are based upon the current
beliefs and expectations of Slade's Ferry Bancorp's management and are
subject to significant risks and uncertainties. Actual results may differ
materially from those set forth in the forward-looking statements as a
result of numerous factors.
The following factors, among others, could cause actual results to differ
materially from the anticipated results or other expectation expressed in
our forward-looking statements: (1) enactment of adverse government
regulations (2) competitive pressures among depository and other financial
institutions may increase significantly and have an effect on pricing,
spending, third-party relationships and revenues; (3) the strength of the
United States economy in general and specifically the strength of the New
England economics may be different than expected, resulting in, among other
things, a deterioration in overall credit quality and borrowers' ability to
service and repay loans, or a reduced demand for credit, including the
resultant effect on the Bank's loan portfolio, levels of charge-offs and
non-performing loans and allowance for loan losses; (4) changes in the
interest rate environment may reduce interest margins and adversely impact
net interest income and (5) changes in assumptions used in making such
forward-looking statements. Should one or more of these risks materialize
or should underlying beliefs or assumptions prove incorrect, Slade's Ferry
Bancorp's actual results could differ materially from those discussed. All
subsequent written and oral forward-looking statements attributable to
Slade's Ferry Bancorp or any person acting on its behalf are expressly
qualified in their entirety by the cautionary statements set forth above.
Slade's Ferry Bancorp does not intend or undertake any obligation to update
any forward-looking statement to reflect circumstances or events that occur
after the date of the forward-looking statements are made.
SLADE'S FERRY BANCORP
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
AS OF
JUNE 30, DECEMBER 31,
ASSETS: 2005 2004
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<s> <c> <c>
Cash and deposits with other banks $ 20,585,021 $ 16,394,024
Federal funds sold 5,100,000 13,800,000
Federal Home Loan Bank overnight deposit - 5,000,000
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Cash and Cash Equivalents 25,685,021 35,194,024
Interest bearing time deposits with other banks 100,000 100,000
Securities held to maturity 33,403,677 37,773,227
Securities available for sale 95,333,527 83,882,432
Federal Home Loan Bank stock 5,904,900 4,649,700
Loans, net 391,302,619 362,264,873
Premises & equipment 6,163,959 5,527,362
Accrued interest receivable 2,182,698 1,969,151
Goodwill 2,173,368 2,173,368
Cash surrender value of life insurance 11,673,810 11,548,320
Other assets 3,872,221 4,315,881
- --------------------------------------------------------------------------------
TOTAL ASSETS $577,795,800 $549,398,338
================================================================================
LIABILITIES & STOCKHOLDERS' EQUITY:
Deposits $406,637,901 $399,904,731
Advances from Federal Home Loan Bank 110,077,618 90,286,416
Subordinated debentures 10,310,000 10,310,000
Other liabilities 2,808,116 2,296,213
- --------------------------------------------------------------------------------
Total Liabilities 529,833,635 502,797,360
Stockholders' equity:
Common stock 41,153 40,684
Paid in capital 30,703,397 29,976,062
Retained earnings 17,668,501 16,459,244
Accum. other comprehensive loss (income) (450,886) 124,988
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Total Stockholders' Equity 47,962,165 46,600,978
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $577,795,800 $549,398,338
================================================================================
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
6 MONTHS ENDED JUNE 30,
2005 2004
--------------------------
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INTEREST AND DIVIDEND INCOME:
Interest and fees on loans $10,993,433 $ 9,867,034
Interest and dividends on investments 2,604,476 1,207,525
Other interest 167,871 162,535
--------------------------
Total interest and dividend income 13,765,779 11,237,094
--------------------------
INTEREST EXPENSE:
Interest on deposits 2,616,404 2,447,061
Interest on other borrowed funds 1,984,781 1,173,137
Interest on subordinated debentures 290,731 117,923
--------------------------
Total interest expense 4,891,916 3,738,121
--------------------------
Net interest and dividend income 8,873,863 7,498,973
Provision for loan losses 65,000 376,215
--------------------------
Net interest and dividend income after
provision for loan losses 8,808,863 7,122,758
--------------------------
OTHER INCOME:
Service charges on deposit accounts 190,648 271,834
Overdraft service charges 229,164 254,787
Gain of sale of assets 51,134 -
Security gains, net 17,223 39,304
Other income 620,605 597,491
--------------------------
Total other income 1,108,775 1,163,416
--------------------------
OTHER EXPENSE:
Salaries and employee benefits 4,095,038 4,082,131
Occupancy expense 450,759 420,192
Equipment expense 357,680 279,697
Other expenses 2,033,073 1,650,735
--------------------------
Total other expense 6,936,549 6,432,755
--------------------------
Income before income taxes 2,981,089 1,853,419
Income taxes 1,033,334 643,071
--------------------------
Net income $ 1,947,755 $ 1,210,348
==========================
Basic earnings per share $ 0.48 $ 0.30
==========================
Diluted earnings per share $ 0.47 $ 0.30
==========================
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
3 MONTHS ENDING JUNE 30,
2005 2004
------------------------
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INTEREST AND DIVIDEND INCOME:
Interest and fees on loans $5,727,494 $4,974,859
Interest and dividends on investments 1,283,249 678,029
Other interest 98,148 103,821
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Total interest and dividend income 7,108,891 5,756,709
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INTEREST EXPENSE:
Interest on deposits 1,457,645 1,324,772
Interest on other borrowed funds 1,073,839 578,266
Interest on subordinated debentures 154,494 101,673
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Total interest expense 2,685,977 2,004,711
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Net interest and dividend income 4,422,914 3,751,998
Provision for loan losses 15,000 130,000
------------------------
Net interest and dividend income after
provision for loan losses 4,407,914 3,621,998
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OTHER INCOME:
Service charges on deposit accounts 92,751 126,337
Overdraft fees 119,287 131,447
Gain on sale of assets 10,749 -
Security gains, net 15,429 4,422
Other income 301,200 337,552
------------------------
Total other income 539,416 599,758
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OTHER EXPENSE:
Salaries and employee benefits 2,119,871 2,011,514
Occupancy expense 211,380 188,827
Equipment expense 187,296 132,619
Other expenses 1,102,531 886,563
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Total other expense 3,621,079 3,219,523
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Income before income taxes 1,326,251 1,002,233
Income taxes 478,125 377,184
------------------------
Net income 848,126 625,049
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Basic earnings per share $ 0.21 $ 0.15
========================
Diluted earnings per share $ 0.21 $ 0.15
========================