Exhibit 99.1
[LETTERHEAD OF THE FIRST NATIONAL BANK OF IPSWICH]
[LOGO] First Ipswich Bancorp
THIRD QUARTER
REPORT
September 30, 2004
[LOGO]
Investing in Relationships
www.fnbi.com
November 17, 2004
Dear Shareholders, Customers and Friends,
During the third quarter, management put into operation the infrastructure to
efficiently implement the initiatives started in the previous quarter. As you
know, branches were successfully opened in Cambridge and Beverly, Massachusetts.
We completed our stock offering on the last day of June. We are in various
stages of potential new branch locations and continue to pursue a potential
acquisition of an investment advisory firm. We believe these initiatives will
have a long lasting impact on the future of your financial institution.
Assets have grown nearly 18% over the same period last year. Loans have
increased over 7% while deposits have risen nearly 28%. Earnings have declined
32% on a quarter to quarter comparison ending September 30, 2004 versus
September 30, 2003 while on a year to year comparison earnings have declined
58%.
As noted in the second quarter, earnings were anticipated to return to a
positive position as many of the costs associated with the aforementioned
initiatives were behind us. This, in fact, has occurred. Although earnings from
the quarter, as well as year to date, are below last year's performance, this is
a reflection of those initiatives previously mentioned.
From a shareholder perspective, our stock is currently trading on the OTC
Bulletin board under the symbol of FIWC.
Very truly yours,
/s/ Neil St. John Raymond /s/ Donald P. Gill
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)
September 30, September 30,
2004 2003
------------- -------------
ASSETS
Cash and due from banks $ 13,297 $ 9,537
Federal funds sold 1,678 4
---------- ----------
Total cash and cash equivalents 14,975 9,541
---------- ----------
Certificate of deposit 3,190 --
Securities available for sale, at fair value 153,019 110,158
Securities held to maturity, at amortized cost 32,971 39,749
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 $1,333 165,604 153,717
Banking premises and equipment, net 5,811 5,490
Other assets 5,220 3,682
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Total assets $ 386,869 $ 328,074
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 257,691 $ 201,553
Short-term borrowings 59,811 44,792
Long-term borrowings 38,667 55,741
Subordinated debentures 9,000 9,000
Due to broker 1,385 --
Other liabilities 1,272 1,808
---------- ----------
Total liabilities 367,826 312,894
---------- ----------
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 9,198 5,890
Retained earnings 8,390 7,316
Accumulated other comprehensive income (loss) (512) 314
Treasury stock, at cost - 20,490 and 21,640 shares, respectively (111) (118)
---------- ----------
Total stockholders' equity 19,043 15,180
---------- ----------
Total liabilities and stockholders' equity $ 386,869 $ 328,074
========== ==========
Non-accrual loans $ -- $ --
Non-performing assets $ -- $ --
Net charged-off loans (recoveries) $ 40 $ 26
Non-performing assets to total assets 0.00% 0.00%
Non-performing loans to ALLL 0.00% 0.00%
Leverage ratio 6.69% 6.19%
Total risk based capital ratio 14.03% 13.60%
FIRST IPSWICH BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(In thousands, except per share data)
Quarter Ended Nine Months Ended
September 30, September 30,
--------------------- --------------------
2004 2003 2004 2003
-------- -------- -------- --------
Interest and dividend income:
Interest and fees on loans $ 2,647 $ 2,561 $ 7,745 $ 7,480
Interest on debt securities:
Taxable 1,462 1,102 3,961 3,421
Tax-exempt 187 185 570 423
Dividends on equity securities 64 64 174 258
Other interest 37 1 106 4
-------- -------- -------- --------
Total interest and dividend income 4,397 3,913 12,556 11,586
-------- -------- -------- --------
Interest expense:
Interest on deposits 856 573 2,079 1,897
Interest on borrowed funds 672 622 1,958 1,850
Interest on subordinated debentures 152 143 440 435
-------- -------- -------- --------
Total interest expense 1,680 1,338 4,477 4,182
-------- -------- -------- --------
Net interest income 2,717 2,575 8,079 7,404
Provision (credit) for loan losses -- (25) -- (25)
-------- -------- -------- --------
Net interest income, after provision for loan losses 2,717 2,600 8,079 7,429
Other income:
Gain on sales and calls of securities, net 403 60 778 994
Service charges on deposit accounts 363 304 1,013 835
Credit card fees 196 185 508 518
Trust fees 104 100 307 267
Non-deposit investment fees 105 119 267 232
Miscellaneous (38) 275 60 392
-------- -------- -------- --------
Total other income 1,133 1,043 2,933 3,238
-------- -------- -------- --------
Operating expenses:
Salaries and employee benefits 1,745 1,614 5,440 4,551
Occupancy and equipment 542 443 1,501 1,320
Professional fees 250 151 744 467
Credit card interchange 139 124 380 357
Advertising and marketing 113 132 376 348
Data processing 161 124 459 357
ATM processing 103 74 294 219
Other general and administrative 362 297 1,049 866
-------- -------- -------- --------
Total operating expenses 3,415 2,959 10,243 8,485
-------- -------- -------- --------
Income before income taxes 435 684 769 2,182
Provision for income taxes 110 206 134 670
-------- -------- -------- --------
Net income $ 325 $ 478 $ 635 $ 1,512
======== ======== ======== ========
Weighted average common shares outstanding:
Basic 2,058 1,756 1,859 1,754
-------- -------- -------- --------
Diluted 2,161 1,814 1,962 1,812
-------- -------- -------- --------
Earnings per share:
Basic $ 0.16 $ 0.27 $ 0.34 $ 0.86
======== ======== ======== ========
Diluted $ 0.15 $ 0.26 $ 0.32 $ 0.83
======== ======== ======== ========
Return on average assets 0.34% 0.60% 0.24% 0.64%
Return on average equity 7.05% 13.51% 5.18% 14.24%
Net interest margin 3.07% 3.45% 3.25% 3.38%
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*
WalMart
300 Keller Street
NEWINGTON, NH*
WalMart
2200 Woodbury Avenue
SALEM, NH*
WalMart
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