Exhibit 99.1
[LOGO] First Ipswich Bancorp
FIRST QUARTER
REPORT
March 31, 2004
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Investing in Relationships
www.fnbi.com
April 23, 2004
Dear Shareholders, Customers and Friends,
The Board of Directors, management and staff look with great anticipation to the
continued implementation of our strategic plan for 2004. Included in this plan
are three major initiatives: opening several new branches in both Massachusetts
and New Hampshire, commencing activity in our newest subsidiary Ipswich Capital
Investment Corp., and expanding our shareholder base. Most of the work required
to lay the foundation for these important initiatives was started in 2003.
The successful conversion of the Atlantic Bank of N.Y. Cambridge branch was
finalized over the first weekend in April. We are delighted to welcome those
customers into our First National family. Several branches are at various stages
of completion including Beverly, Massachusetts and Portsmouth, New Hampshire.
From a shareholder development perspective, we have completed the shareholder 10
for 1 stock split as well as the increase in our authorized capital stock from
two million shares to four million shares and we are moving forward with our
efforts to expand our shareholder base.
In the financial arena, earnings have been impacted by the costs associated with
all these initiatives. During the past year a significant number of staff were
added to support these initiatives. This growth was needed so that staff would
be in place and trained when we launch these programs. In addition, the current
interest rate environment and competitive pressures have also had an impact upon
earnings. Despite these factors, the bank continues to grow as it has for the
past six years. Assets have increased nearly six percent over the same period
last year. Loans have increased almost eleven percent in a very competitive
market since last year.
We believe that the short term impact due to our aggressive undertakings planned
for this year will have an immense long term benefit. This is an exciting year
for the Board, management and staff. We look forward with great anticipation to
see the results of these initiatives.
Very truly yours,
Neil St. John Raymond Donald P. Gill
Chairman of the Board President & CEO
FIRST IPSWICH BANCORP
Consolidated Balance Sheets
UNAUDITED UNAUDITED
(In thousands, except share data) 03/31/04 03/31/03
ASSETS
Cash and cash equivalents $ 9,505 $ 10,066
Certificate of deposit 2,266 --
Securities available for sale, at fair value 105,760 128,861
Securities held to maturity, at amortized cost 37,969 14,285
Federal Home Loan Bank stock, at cost 5,590 5,248
Federal Reserve Bank stock, at cost 489 489
Loans, net 159,294 143,903
Premises and equipment, net 5,559 5,320
Other assets 3,789 3,917
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Total assets $330,221 $312,089
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LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $194,542 $188,897
Federal Home Loan Bank advances 100,418 89,619
Other borrowed funds 9,421 8,352
Subordinated debentures 9,000 9,000
Other liabilities 1,142 1,811
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Total liabilities $314,523 $297,679
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Stockholders' equity:
Preferred stock, $1.00 par value; 1,000,000 shares
authorized, none issued -- --
Common stock, $1.00 par value; 4,000,000 shares
authorized, 1,778,120 shares issued 1,778 1,778
Additional paid-in capital 5,894 5,881
Retained earnings 8,155 6,577
Accumulated other comprehensive income (loss) (18) 309
Treasury stock, at cost (20,490 shares in 2004 and
24,930 shares in 2003) (111) (135)
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Total stockholders' equity 15,698 14,410
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Total liabilities and stockholders' equity $330,221 $312,089
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Book value per share $ 8.93 $ 8.22
Allowance for loan losses (ALLL) $ 1,333 $ 1,372
Non-accrual loans $ 0 $ 0
Non-performing assets $ 0 $ 0
Net charged-off loans (recoveries) $ 26 $
12
Non-performing assets to total assets 0.00% 0.00%
Non-performing assets to ALLL 0.00% 0.00%
Leverage ratio 6.22% 6.15%
Risk based capital ratio 14.12% 14.10%
This statement has not been reviewed or confirmed for accuracy or relevance by
the Office of the Comptroller of the Currency.
FIRST IPSWICH BANCORP
Consolidated Statements of Income
UNAUDITED
Three Months Ended
(In thousands, except share data) March 31,
2004 2003
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Interest and dividend income:
Interest and fees on loans $2,523 $2,382
Interest and dividends on securities 1,541 1,480
Other interest 34 1
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Total interest and dividend income 4,098 3,863
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Interest expense:
Interest on deposits 518 665
Interest on borrowed funds 663 609
Interest on subordinated debentures 144 147
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Total interest expense 1,325 1,421
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Net interest income 2,773 2,442
Provision for loan losses -- --
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Net interest income, after provision for loan losses 2,773 2,442
Other income:
Gain on sales and calls of securities, net 386 639
Service charges on deposit accounts 286 246
Trust fees 91 84
Non-deposit investment fees 93 68
Miscellaneous 157 247
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Total other income 1,013 1,284
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Operating expenses:
Salaries and employee benefits 1,875 1,401
Occupancy and equipment 446 453
Professional fees 287 175
Other 701 632
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Total operating expenses 3,309 2,661
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Income before income taxes 477 1,065
Provision for income taxes 124 336
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Net income $ 353 $ 729
====== ======
Weighted average common shares outstanding:
Basic 1,758 1,753
Diluted 1,819 1,806
Earnings per share:
Basic $ 0.20 $ 0.42
Diluted 0.19 0.40
Return on average assets 0.42% 0.95%
Return on average equity 9.10% 21.50%
Net interest margin 3.81% 3.67%
This statement has not been reviewed or confirmed for accuracy or relevance by
the Office of the Comptroller of the Currency.
IPSWICH*
31 Market Street
CAMBRIDGE#
2067 Massachusetts Avenue
ESSEX*
8-10 Martin Street
GLOUCESTER#
207 Main street
NEWBURYPORT*
155 State Street
ROWLEY#
167 Main Street
ROWLEY#
144 Newburyport Turnpike (Route 1)
LONDONDERRY, NH*
23 Orchard View Drive
MANCHESTER, NH
WalMart
300 Keller Street
NEWINGTON, NH
WalMart
2200 Woodbury Avenue
SALEM, NH#
WalMart
300-344 North Broadway
866-356-FNBI (3624)
Connects All Offices
Remote ATM Locations-Massachusetts
Bruni's Market, 36 Essex Rd, Ipswich#
Salt Box Restaurant, 141 High St, Ipswich#
108 Eastern Ave, Gloucester*
Topsfield Fairgrounds, 207 Boston Rd, Topsfield#
Dunkin Donuts, 148 Newburyport Trnpk, Rowley*
ATMs available at all branch locations
# 24-Hour ATMs * Drive-Up ATMs
www.fnbi.com
Member FDIC [EOL LOGO]