Exhibit 99.2
[LOGO] First Ipswich Bancorp
SECOND QUARTER
REPORT
2004
[LOGO]
Investing in Relationships
www.fnbi.com
August 17, 2004
Dear Shareholders, Customers and Friends:
It has been a very exciting quarter for our institution. We began with our
successful conversion and acquisition of our new Cambridge, Massachusetts
location on April 3rd. We opened our next branch in Beverly, Massachusetts on
May 15th. We had sensational results from our grand opening Certificate of
Deposit specials. New deposits taken in exceeded $30 million from these one-day
specials.
Additionally, we completed our stock offering in June, when all 300,000
shares of stock offered were sold. The proceeds of the stock offering are
intended to be used for the acquisition of an investment advisory firm and
growth in our branch network, as was previously mentioned. This new capital will
facilitate our strategic growth plans. We intend to provide quotations of our
common stock on the OTC Bulletin Board. In the future it is our intent to list
on the NASDAQ(R) SmallCap Market.
The second quarter financials reflect the activities previously mentioned.
As a result of our continued investment in new retail branches and the
consequent increase in legal, marketing and other expenses, as well as staffing
infrastructure costs, the company recorded a net loss for the quarter. It is the
intent of this investment in new infrastructure to enhance earnings in the
future.
Assets increased 24.8% from the same period last year to $387.7 million.
Loans increased 7.6% to nearly $164 million, while deposits have increased 20.3%
to $244.8 million when compared to the same period last year.
The Board of Directors, Management and Staff are delighted with the
accomplishments of the first two quarters of 2004. We look forward to deriving
substantial benefits from these achievements during the remainder of the year.
Very truly yours,
Neil St. John Raymond Donald P. Gill
Chairman of the Board President & CEO
FIRST IPSWICH BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited)
(In thousands, except share data)
June 30, June 30,
2004 2003
--------- ---------
ASSETS
Cash and due from banks $ 12,881 $ 11,693
Federal funds sold 410 634
--------- ---------
Total cash and cash equivalents 13,291 12,327
--------- ---------
Certificate of deposit 2,279 --
Securities available for sale, at fair value 155,984 105,227
Securities held to maturity, at amortized cost 34,417 25,396
Federal Home Loan Bank stock, at cost 5,590 5,248
Federal Reserve Bank stock, at cost 489 489
Loans, net of allowance for loan losses of $1,318 and $1,371 163,968 152,424
Banking premises and equipment, net 5,887 5,591
Other assets 5,808 3,910
--------- ---------
Total assets $ 387,713 $ 310,612
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 244,750 $ 203,458
Short-term borrowings 54,281 24,319
Long-term borrowings 42,944 56,994
Subordinated debentures 9,000 9,000
Due to broker 17,475 --
Other liabilities 1,440 2,406
--------- ---------
Total liabilities 369,890 296,177
--------- ---------
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, 2,078,120 and 1,778,120 issued,
respectively 2,078 1,778
Additional paid-in capital 9,148 5,882
Retained earnings 8,092 6,860
Accumulated other comprehensive income (loss) (1,384) 49
Treasury stock, at cost - 20,490 and 24,680 shares,
respectively (111) (134)
--------- ---------
Total stockholders' equity 17,823 14,435
--------- ---------
Total liabilities and stockholders' equity $ 387,713 $ 310,612
========= =========
Non-accrual loans $ -- $ --
Non-performing assets $ -- $ --
Net charged-off loans (recoveries) $ 13 $ 13
Non-performing assets to total assets 0.00% 0.00%
Non-performing assets to ALLL 0.00% 0.00%
Leverage ratio 7.17% 6.10%
Total risk based capital ratio 13.74% 13.42%
2
FIRST IPSWICH BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(In thousands, except share data)
Six Months Ended
Quarter Ended June 30, June 30,
---------------------- --------------------
2004 2003 2004 2003
------- ------ ------ ------
Interest and dividend income:
Interest and fees on loans $ 2,575 $2,537 $5,098 $4,919
Interest on debt securities:
Taxable 1,203 1,030 2,498 2,319
Tax-exempt 191 140 383 238
Dividends on equity securities 57 101 110 194
Other interest 35 2 70 3
------- ------ ------ ------
Total interest and dividend income 4,061 3,810 8,159 7,673
------- ------ ------ ------
Interest expense:
Interest on deposits 705 660 1,223 1,325
Interest on borrowed funds 623 618 1,286 1,227
Interest on subordinated debentures 144 146 288 293
------- ------ ------ ------
Total interest expense 1,472 1,424 2,797 2,845
------- ------ ------ ------
Net interest income 2,589 2,386 5,362 4,828
Provision for loan losses -- -- -- --
------- ------ ------ ------
Net interest income, after provision for loan losses 2,589 2,386 5,362 4,828
Other income:
Gain (loss) on sales and calls of securities, net (11) 294 375 934
Service charges on deposit accounts 364 285 650 531
Credit card fees 176 173 311 334
Trust fees 112 84 203 168
Non-deposit investment fees 70 45 163 113
Miscellaneous 77 30 99 115
------- ------ ------ ------
Total other income 788 911 1,801 2,195
------- ------ ------ ------
Operating expenses:
Salaries and employee benefits 1,821 1,536 3,696 2,937
Occupancy and equipment 513 450 959 877
Professional fees 208 140 495 316
Credit card interchange 146 132 240 233
Advertising and marketing 193 124 263 216
Data processing 156 110 300 233
ATM processing 101 77 191 145
Other general and administrative 381 295 684 568
------- ------ ------ ------
Total operating expenses 3,519 2,864 6,828 5,525
------- ------ ------ ------
Income (loss) before income taxes (142) 433 335 1,498
Provision (credit) for income taxes (100) 128 25 464
------- ------ ------ ------
Net income (loss) $ (42) $ 305 $ 310 $1,034
======= ====== ====== ======
Weighted average common shares outstanding:
Basic 1,758 1,753 1,758 1,753
------- ------ ------ ------
Diluted 1,851 1,806 1,851 1,806
------- ------ ------ ------
Earnings (loss) per share:
Basic $ (0.02) $ 0.17 $ 0.18 $ 0.59
======= ====== ====== ======
Diluted $ (0.02) $ 0.17 $ 0.17 $ 0.57
======= ====== ====== ======
Return on average assets (0.05%) 0.39% 0.18% 0.67%
Return on average equity (1.12%) 8.35% 4.05% 14.39%
Net interest margin 3.19% 3.27% 3.35% 3.34%
3
IPSWICH#
31 Market Street
BEVERLY*
588 Cabot 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*
Wal#Mart
300 Keller Street
NEWINGTON, NH*
Wal#Mart
2200 Woodbury Avenue
SALEM, NH*
Wal#Mart
300-344 North Broadway
800-834-0046
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 EQUAL
OPPORTUNITY
LENDER