Exhibit 99
Seacoast Financial Services Corporation Announces:
NEW BEDFORD, Mass.--(BUSINESS WIRE)--July 24, 2003--
-- SECOND QUARTER 2003 RESULTS
-- DECLARES INCREASE IN QUARTERLY DIVIDEND
-- RECORDS SETTLEMENT OF REIT DISPUTE WITH MASSACHUSETTS DOR
Seacoast Financial Services Corporation (Nasdaq: SCFS) holding
company for CompassBank and Nantucket Bank, today announced net income
of $13,316,000 or $.56 per diluted share, for the quarter ended June
30, 2003, a 43.4% increase in earnings when compared to net income of
$9,284,000, or $.39 per diluted share for the quarter ended June 30,
2002. Included in the second quarter 2003 results is a credit of
$5,309,000 resulting from the Company's recently announced settlement
with the Massachusetts Department of Revenue (DOR) of the dispute
involving tax treatment of dividends received by CompassBank and
Nantucket Bank from their Real Estate Investment Trust (REIT)
subsidiaries. This credit represents the difference between the
$11,192,000 liability accrued by the Company in the first quarter of
2003 as a result of the REIT issue and the amount of the settlement
paid, net of related tax benefits. The DOR settlement was announced by
the Company in a press release on June 24, 2003.
Including the first quarter charge and the second quarter credit
relating to the REIT tax issue, consolidated net income for the six
months ended June 30, 2003 was $10,287,000, or $.45 per diluted share,
compared to $18,158,000, or $.77 per diluted share for the same six
month period last year. The net income represents a return on average
assets of 0.53% and a return on equity of 6.32% compared to 1.05% and
11.70% respectively, for the same period last year.
Commenting on these results, President and Chief Executive Officer
Kevin G. Champagne stated, "We along with approximately sixty other
Massachusetts banks concluded that it was in the best interests of our
Company and our shareholders to reach a timely settlement agreement
with the DOR on the outstanding issue of bank REITs. Accordingly, we
arrived at a settlement for CompassBank and Nantucket Bank that would
enable us to refocus our energies and resources toward further
franchise growth and increases in shareholder value. The cost of that
settlement for the years 1999 through 2002 should be confined to the
first two calendar quarters of 2003."
Net interest income totaled $33,593,000 for the quarter ended June
30, 2003 compared to $30,241,000 in the same period in 2002, an
increase of $3,352,000 or 11.1%. This increase was attributable to the
increase in average interest-earning assets during the most recent
quarter as well as the continued growth in lower cost deposit
accounts. Seacoast's net interest margin in the quarter ended June 30,
2003 was 3.56% compared to 3.66% in the same period in 2002 and 3.63%
in the first quarter of 2003. The continuation of the current low
interest rate environment has attributed to an acceleration in the
repricing of earning assets that far exceeds the corresponding decline
in rates paid on deposits and borrowings comparing second quarter 2003
to the second quarter of 2002. Yields on earning assets declined to
5.86% verses 6.54% while costs associated with all deposits and
borrowings declined to 2.30% verses 2.88%.
Noninterest income increased $845,000, or 23.3%, during the
quarter ended June 30, 2003 compared to the same period in 2002. Fees
and other income were $4,278,000 for June 30, 2003 verses $3,755,000,
an improvement of $523,000 or 13.9%. Deposit service charges increased
by $519,000 or 20.5% reflecting the continued growth in core deposits
and noninterest checking accounts. Other loan fees increased $198,000
or 59.3%, as the current low interest rate environment continued to
fuel strong refinancing. Conversely loan servicing fees, merchant card
fees (net of expenses) and other income declined by $194,000 or 21.9%.
Noninterest expenses increased $3,259,000, or 19.1%, during the
second quarter of 2003 compared to the same period in 2002. Offsetting
other operating expenses in the second quarter of 2003 is a credit of
$623,000 for recovery of an interest charge recorded in the first
quarter of 2003 in connection with the REIT tax issue. The settlement
with the DOR referred to above resulted in the recovery of this
interest charge. Exclusive of this recovery, noninterest expenses
increased $3,882,000 or 22.7%. For the quarter, salaries and employee
benefits increased by $1,677,000, professional services increased by
$586,000, occupancy and equipment increased by $563,000, data
processing increased by $348,000, and the amortization of intangibles
increased by $69,000. Such increases are generally attributable to
franchise expansion, including a new branch and increased staffing
levels to support growth in the number of loan and deposit customers.
Dividends paid to the holders of the 8.50% and 6.65% Trust
Preferred Securities (minority interest expense) amounted to
$1,471,000 for the second quarter of 2003 and $2,704,000 for the six
months ended June 30, 2003 compared to $407,000 paid in the second
quarter of 2002 and through the first six months of 2002.
Income tax provisions decreased by $4,245,000 in the second
quarter of 2003 compared to the second quarter of 2002, primarily due
to the income tax credit taken in 2003 as a result of the settlement
of the REIT issue with the DOR. Exclusive of this settlement of
$4,686,000, income tax provisions increased by $441,000 or 8.7%.
Seacoast Financial completed its acquisition of Bay State Bancorp,
Inc., Brookline, MA, and the holding company for Bay State Federal
Savings Bank, effective May 31, 2003. This transaction has been
accounted for under the purchase method of accounting and,
accordingly, the results of operations of Bay State Federal Savings
Bank are only included subsequent to the date of acquisition. At May
31, 2003, Bay State Federal Savings Bank had total assets of $603
million, including loans of $512 million, total deposits of $389
million and borrowed funds of $138 million. The goodwill associated
with this transaction totaled $81.6 million.
Kevin G. Champagne, President and CEO stated, "In this past
quarter we welcomed the customers and staff of Bay State Federal
Savings Bank into our CompassBank family. Our continuing plans call
for a full conversion and consolidation of that franchise by year-end
2003. In the meantime we are focused on additional strategic
opportunities that would geographically connect this exciting new
market territory to the balance of our franchise. We remain confident
that these new markets offer Seacoast shareholders opportunities for
increased future franchise value."
Total assets increased by $775.8 million, or 21% from December 31,
2002 to a total of $4.5 billion at June 30, 2003. Total loans
increased by $635 million, or 21.3%, during the six months ended June
30, 2003. The acquisition of Bay State Bancorp, Inc. accounted for
$517 million of this increase. By loan categories, increases were
mainly in real estate loans ($587.6 million or 29.7%), indirect
automobile loans ($15.4 million or 2.0%), commercial loans ($15.3
million or 12.0%), home equity loans ($15.2 million or 22.4%), and
consumer loans ($2.2 million or 5.0%). Even though an economic
resurgence has failed to materialize within our region, the current
low interest rate environment continues to fuel the housing and
automobile sector and has helped to sustain strong earning asset
growth for the quarter.
The allowance for loan losses was $41.8 million, or 1.15% of
loans, at June 30, 2003, compared with $34.3 million, or 1.15% of
loans, at December 31, 2002. Non-performing loans were $15.7 million
or 0.43% of total loans at June 30, 2003, compared to $14.1 million,
or 0.47% of total loans, at December 31, 2002. Non-performing assets
were $16.1 million or 0.36% of total assets at June 30, 2003, compared
to $15.4 million, or 0.42% of total assets, at December 31, 2002.
Total deposits of $2.9 billion at June 30, 2003 were up by $493
million or 20.5% from the December 31, 2002 balances. Deposits in Bay
State Bancorp Inc. represent $434 million of this increase. Savings
accounts, Money Market accounts, NOW accounts, Retirement accounts,
and Term Certificate balances increased $76.5 million, or 23.8%,
$204.9 million, or 35.4%, $47.8 million, or 16.2%, $6.4 million, or
3.5%, and $95.6 million, or 11.5%, respectively. Commercial Checking
accounts also exhibited balance increases totaling $258.6 million in
outstandings and increasing $61.8 million, or 31.4% since the
beginning of the year. There still remains a strong inclination from
depositors to preserve their funds and remain liquid. Wholesale
borrowing also increased for the first six months by $182.5 million,
or 21.3% as the Company took advantage of the favorable rate
environment to draw down some longer term structured funding
opportunities.
Total stockholders' equity at June 30, 2003 was $392.4 million or
8.77% of total assets verses $319.5 million or 8.63% at December 31,
2002. This represents a book value per share of $14.82 at June 30,
2003 verses $13.67 at December 31, 2002. The Company repurchased $6.7
million, or 348,725 shares of its common stock during the first six
months of 2003. There remain 326,459 shares available for repurchase
under the Company's fourth repurchase program announced in September
2002.
Today, the Board of Directors announced a quarterly cash dividend
of $.13 per share, representing an 8% increase from the prior
quarterly dividend. The dividend is payable on August 22, 2003 to
stockholders of record on August 8, 2003.
The measurement of Seacoast Financial's noninterest expense and
income tax provisions, exclusive of the credits attributable to the
settlement of the REIT dispute with the DOR, was determined by a
method other than in accordance with accounting principles generally
accepted in the United States of America ("GAAP"). The Company
believes that this supplemental information is helpful to a proper
understanding of its operating results. However, such disclosure
should not be viewed as a substitute for operating results determined
in accordance with GAAP, nor is it necessarily comparable to non-GAAP
performance measures which may be presented by other companies.
Seacoast Financial Services Corporation is the holding company for
CompassBank and Nantucket Bank and is headquartered in New Bedford,
Massachusetts. CompassBank is a $4.0 billion state chartered savings
bank serving Southeastern Massachusetts and the greater Boston market
through a network of 47 full service branch offices and 53 branch and
remote ATMs, a customer call center and on-line banking at
www.compassbank.com. Nantucket Bank is a $479 million state chartered
savings bank serving Nantucket Island with 3 full service branch
offices. CompassBank ranks as the second largest savings bank
headquartered in Massachusetts. The banks provide a wide array of
financial services including consumer banking, mortgage lending,
commercial lending, consumer finance, private banking and alternative
investments to retail and business customers.
The foregoing contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are not historical facts and include expressions about
management's confidence and strategies and management's expectations
about new and existing programs and products, relationships,
opportunities, technology and market conditions. Such forward-looking
statements involve certain risks and uncertainties. These include, but
are not limited to, the direction of movements in interest rates, the
possibility of disruption in credit markets, successful implementation
and integration of acquisitions, the effects of economic conditions
and the impact of legal and regulatory barriers and structures. Actual
results may differ materially from such forward-looking statements.
Seacoast Financial assumes no obligation for updating any such
forward-looking statements at any time.
Seacoast Financial Services Corporation and Subsidiaries
(Nasdaq: SCFS)
Selected Consolidated Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
------------------------ ------------------------
2003 2002 2003 2002
----------- -------- -------- --------
Interest income
Loans $50,535 $47,180 $98,783 $94,103
Investments 4,809 6,856 10,095 13,133
-------- -------- -------- --------
Total
interest
income 55,344 54,036 108,878 107,236
Interest expense 21,751 23,795 43,031 48,200
-------- -------- -------- --------
Net interest income 33,593 30,241 65,847 59,036
Provision for loan
losses 2,087 2,000 4,174 3,535
-------- -------- -------- --------
Net interest income
after provision 31,506 28,241 61,673 55,501
-------- -------- -------- --------
Noninterest income
Net gain (loss) on
sale of loans and
securities 188 (134) 493 90
Fees and other
income 4,278 3,755 7,558 6,736
-------- -------- -------- --------
Total
noninterest
income 4,466 3,621 8,051 6,826
-------- -------- -------- --------
Noninterest expense
Salaries and
employee benefits 10,960 9,283 20,934 18,696
Amortization of
intangibles 275 206 439 414
Other noninterest
expense 9,112 7,599 19,335 14,867
-------- -------- -------- --------
Total
noninterest
expense 20,347 17,088 40,708 33,977
-------- -------- -------- --------
Minority interest 1,471 407 2,704 407
-------- -------- -------- --------
Income before taxes 14,154 14,367 26,312 27,943
Income taxes 838 5,083 16,025 9,785
-------- -------- -------- --------
Net income $13,316 $9,284 $10,287 $18,158
======== ======== ======== ========
Net income per share-
diluted $0.56 $0.39 $0.45 $0.77
======== ======== ======== ========
Net income per share-
basic $0.57 $0.40 $0.46 $0.79
======== ======== ======== ========
Weighted average
common and common
stock equivalent
shares outstanding-
diluted 23,660,292 23,545,425 22,964,294 23,577,139
=========== =========== =========== ===========
Weighted average
common shares
outstanding-basic 23,162,908 22,913,994 22,467,978 23,996,819
=========== =========== =========== ===========
Seacoast Financial Services Corporation and Subsidiaries
Selected Consolidated Financial and Statistical Information
(Dollars in thousands, except per share amounts)
(Unaudited)
June 30, December June 30,
2003 31, 2002
2002
----------- ----------- -----------
Total assets $4,476,815 $3,701,045 $3,602,972
Investment securities 437,690 489,755 514,293
Loans, net of unearned discount
(1) 3,626,988 2,991,171 2,746,056
Allowance for loan losses 41,797 34,354 31,631
Deposits 2,896,842 2,403,875 2,329,392
Borrowings 1,082,041 896,704 874,203
Stockholders' equity 392,410 319,488 315,066
Number of common shares
outstanding 26,483,630 23,372,574 23,993,226
Book value per share 14.82 13.67 13.13
Tangible book value per share 10.15 12.15 11.64
Equity-to-assets ratio 8.77% 8.63% 8.74%
Non-performing assets 16,095 15,454 14,105
Non-performing assets to total
assets 0.36% 0.42% 0.39%
Non-performing loans 15,729 14,073 12,884
Non-performing loans to total
loans 0.43% 0.47% 0.47%
Three Months Six Months
Ended June 30, Ended June 30,
----------------- -----------------
Average Yields: 2003 2002 2003 2002
------ ------ ------ -------
Loans 6.18 % 6.97 % 6.26 % 7.05 %
Investments 3.78 4.57 3.98 4.45
Yield on earning assets 5.86 6.54 5.94 6.58
Non-time deposits 1.05 1.44 1.03 1.51
Time deposits 2.98 3.69 3.07 3.79
Borrowed funds 4.24 4.97 4.33 5.02
Cost of funds 2.59 3.24 2.65 3.32
Net interest spread 3.27 3.30 3.29 3.26
Net interest margin 3.56 3.66 3.59 3.62
Return on average assets
(annualized) 1.33 1.06 0.53 1.05
Return on average equity
(annualized) 16.47 11.86 6.32 11.70
Efficiency ratio (2) 54.38 % 49.86 % 53.14 % 50.96 %
(1) Excludes loans held for sale.
(2) Excludes interest on tax deficiency in 2003 associated with
the loss of the REIT and amortization of intangibles.
CONTACT: Seacoast Financial Services Corporation
James R. Rice, 508-984-6102