Capital Crossing Bank Announces Record Third Quarter Results.Business Editors BOSTON--(BUSINESS WIRE)--Oct. 20, 2003 Capital Crossing Bank (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CAPX CAPX Capital Expenditure(s) cAPX cytosolic ascorbate peroxidase CAPX Capital Expense(s) CAPX Customer Accessible Parts eXpress (Grove Cranes) ) (together with its subsidiaries, the "Bank") reported consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net income of $10.5 million, or $2.72 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the third quarter of 2003, compared to consolidated net income of $3.1 million, or $0.72 per diluted share, for the same period in 2002. On a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. basis, the Bank's consolidated net income was $16.6 million, or $4.14 per diluted share, a 78% increase on an earnings per share basis from $10.1 million, or $2.32 per diluted share, for the same period in 2002. "We are pleased to report our strongest quarter in the history of the Bank," noted Nicholas Nicholas, Russian grand duke Nicholas (Nikolai Nikolayevich) (nyĭkəlī` nyĭkəlī`əvĭch), 1856–1929, Russian grand duke and army officer; first cousin of Czar Alexander III and grandson of Czar W. Lazares, the Bank's Chairman and Co-chief Executive Officer, "as we have surpassed previous record-highs in per share earnings, consolidated net income, book value per share and returns on both stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. and assets. During the third quarter of 2003, management was able to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. unique opportunities in the marketplace due in part to the low interest rate environment, and made strategic decisions to conduct loan sales at a gain of $17.0 million. As we have previously disclosed, a significant portion of the Bank's earnings arises from the recognition of 'transactional' income, of which the most volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. component is gains on sales of loans. Management regularly evaluates our loan portfolio, considering the interest rate environment, geographic and industry concentrations and non-performing loan A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. ratios. Based on this analysis, management may elect to sell loans when it is deemed more advantageous than retaining such loans. The secondary loan market is highly competitive and opportunities to realize gains on sales of loans at the level achieved this quarter are influenced by several factors, many of which are beyond our control, and consequently, there can be no assurance that similar gains will be realized in the future." Mr. Lazares continued that, "In addition to our loan sales, we recognized $4.0 million of accelerated interest income associated with loan and lease payoffs and $271,000 in gains on sales of other real estate owned Real Estate Owned Property owned by a lender - usually a bank - after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most , resulting in total transaction income recognized in the third quarter of 2003 of $21.3 million." Total transactional income for the nine months ended September September: see month. 30, 2003 amounted to $34.7 million, including $19.1 million of gains on sales of loans, $14.9 million in accelerated interest income associated with loan pay-offs and $667,000 in gains on sales of other real estate owned. For the three and nine months ended September 30, 2002, total transactional income was $6.7 million and $19.4 million, respectively. In addition to the transactional income recognized on loan pay-offs, a $536,000 net credit provision for loan and lease losses was reported in the third quarter of 2003. Since the loans acquired in recent years have performed above initial expectations and loan pay-offs continue, the total net credit provision for loan and leases losses for the nine months ended September 30, 2003 amounted to $1.3 million. "During the third quarter of 2003, we purchased loans with outstanding principal balances of $79.7 million for a purchase price of $64.5 million, compared to the same period in 2002 when we purchased loans with outstanding principal balances of $82.3 million for a purchase price of $53.5 million," explained Richard Wayne Dr. Richard Wayne (April 4, 1804 – June 27, 1858) served as mayor of Savannah, Georgia for four terms: 1844 - 1845, 1848 - 1851, 1852 - 1853 and 1857 - 1858. He died while in office.[1] Wayne was the first mayor of Savannah elected by its citizens. , the Bank's President and Co-Chief Executive Officer. Mr. Wayne Wayne, city (1990 pop. 19,899), Wayne co., SE Mich., a suburb of Detroit, on the Lower Rouge River; inc. as a village 1869, and with surrounding areas as a city 1960. It has automobile and aircraft industries and other varied manufactures. continued that, "On a year-to-date basis, we have purchased loans with outstanding principal balances of $259.3 million for a purchase price of $167.6 million, compared to the same period in 2002, when we purchased loans with outstanding principal balances of $164.3 million for a purchase price of $123.6 million. Variations from quarter to quarter in the volume of loans we acquire is a reflection of the type and pricing of assets that are available and our ability to acquire loans at prices we deem appropriate. Since our loan acquisitions can be unpredictable and the level of loan and lease payoffs is, to a certain extent, beyond the Bank's control, our earnings may fluctuate significantly in the future." Mr. Wayne added that, "In the third quarter of 2003, the Bank continued to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. shares of its common stock under its common stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program. As of September 30, 2003, the Bank had repurchased 2,650,001 shares under its current repurchase program and a previous repurchase program which was completed in 2001, and had an additional $2.1 million to spend under its current repurchase program." The Bank's consolidated net income for the nine months ended September 30, 2003 includes income of $0.45 per diluted share from the sale of the Bank's Chestnut Hill branch Chestnut Hill Branch refers to the following rail lines:
A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a state taxes as a result of new legislation enacted in Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. on March 5, 2003 disallowing the deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. for dividends
received from a real estate investment trust subsidiary. The Bank's
effective tax rate for the nine months ended September 30, 2003 was
43.1%, excluding the $3.2 million provision for retroactive state taxes,
compared to 37.5% for the same period in 2002. The increase in the tax
rate is due primarily to the elimination of the benefit associated with
the dividend received deduction from a REIT REITSee: Real Estate Investment Trust REIT See real estate investment trust (REIT). . Since December December: see month. 31, 2002, the Bank's book value per share has increased 19%, from $21.72 to $25.85 at September 30, 2003. Additionally, return on stockholders' equity increased to 53.47% for the quarter ended September 30, 2003 from 15.91% for the same period in 2002, and to 28.84% for the nine months ended September 30, 2003 from 17.90% for the same period in 2002. Investors and interested parties will have the opportunity to listen to management's discussion of the Bank's quarterly results in a conference call to be held on Tuesday Tuesday: see week. , October October: see month. 21st at 11:00 a.m., Eastern Time. The conference call will be broadcast over the investor relations Investor relations The process by which the corporation communicates with its investors. page of the Bank's website at www.capitalcrossing.com. For those who cannot listen to the live broadcast, an audio replay of the call will be available for seven days on the website or via telephone at (800) 428-6051 or (973) 709-2089, reservation code #310176. Statements in this news release that are not historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are only predictions of future events or financial performance that involve risks and uncertainties and actual events or results may differ materially. Factors which could cause such differences include the Bank's ability to successfully acquire loans at the same volume and the same yields as it has historically, changes in interest rates that adversely affect its business, the level of transactional income realized by the Bank as a result of loan and lease payoffs and the sale of real estate and loans, the Bank's ability to successfully diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. its asset base, the level of the Bank's non-performing assets, the Bank's ability to successfully conduct its leasing business, general economic conditions in the Bank's markets, as well as those other factors described in the Bank's periodic filings with the FDIC FDIC See: Federal Deposit Insurance Corporation FDIC See Federal Deposit Insurance Corporation (FDIC). , specifically the cautionary statement identifying certain factors that could affect future results included in the Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial section of its most recent Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . The Bank undertakes no obligation to publicly update any forward-looking statement. Capital Crossing Bank is a Massachusetts-chartered, FDIC-insured trust company with approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $901 million in assets as of September 30, 2003. The Bank operates as a commercial bank, providing financial products and services to customers through its executive and main offices in Boston Boston, town, England Boston, town (1991 pop. 26,495), E central England, on the Witham River. Boston's fame as a port dates from the 13th cent., when it was a Hanseatic port trading wool and wine. Having recovered from a decline in the 18th and 19th cent. , its website at www.capitalcrossing.com, and through its leasing subsidiary Dolphin dolphin, fish dolphin, large, swift game fish, Coryphaena hipparus, also called dorado. It is of nearly worldwide distribution in warm waters. Capital Corp. located in Moberly, Missouri Moberly is a city in Randolph County, Missouri, United States. The population was 11,945 at the 2000 census. The city was incorporated 1868. The Moberly Micropolitan Statistical Area consists of Randolph County. . The Bank specializes in purchasing loans, primarily secured by commercial and multi-family and one-to-four family residential real estate and other business assets.
Capital Crossing Bank and Subsidiaries
Consolidated Financial Highlights
(Unaudited)
September 30, December 31,
2003 2002
(dollars in thousands,
except per share data)
Total assets $900,726 $933,127
Loans and leases: 890,680 886,254
Non-amortizing discount (63,220) (56,375)
Amortizing discount (82,747) (71,935)
Allowance for loan and lease losses (21,062) (24,799)
Net deferred loan and lease income (14,397) (15,545)
Loans and leases, net 709,254 717,600
Short-term investments 114,832 151,213
Securities available for sale 36,411 6,104
Deposits 639,514 677,993
Borrowed funds 129,000 130,922
REIT preferred stock 29,503 29,503
Stockholders' equity 85,044 80,040
Non-performing assets:
Other real estate owned, net 2,116 4,114
Non-performing loans and leases, net 11,243 7,317
Total non-performing assets, net 13,359 11,431
Total non-performing assets, net as a
percent to total assets 1.48 % 1.23 %
Allowance for loan and lease losses as a
percent of loans and leases, net of
discount and deferred income 2.88 3.34
Allowance for loan and lease losses as a
percent of net non-performing loans
and leases 187.33 338.92
Book value per common share $25.85 $21.72
Tangible book value per common share 24.52 20.53
Shares outstanding, net 3,289,412 3,685,501
Capital Crossing Bank and Subsidiaries
Consolidated Operating Results and Related Financial Data
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(in thousands, except per share data)
Interest income - regularly
scheduled $15,264 $14,849 $48,068 $46,928
Interest income - accelerated 4,026 3,667 14,901 15,751
Total interest income 19,290 18,516 62,969 62,679
Interest expense (6,953) (7,672) (22,371) (24,424)
Net interest income 12,337 10,844 40,598 38,255
Credit (provision) for loan and
lease losses 536 (295) 1,296 (828)
Net interest income, after credit
(provision) for loan and lease
losses 12,873 10,549 41,894 37,427
Gain on sale of deposits and
branch, net - - 3,160 -
Gains on sales of loans and
leases 16,955 3,027 19,117 3,544
Other income 348 87 1,068 664
Operating expenses:
Other real estate owned
income, net 151 11 405 99
Other operating expenses (11,038) (7,800) (28,126) (22,942)
Total operating expenses (10,887) (7,789) (27,721) (22,843)
Income before income taxes, minority
interest, dividends on REIT
preferred stock and change
in accounting principle 19,289 5,874 37,518 18,792
Provision for income taxes (8,313) (2,205) (19,342) (7,054)
Minority interest, net of taxes (26) (52) (153) (397)
Dividends on REIT preferred
stock, net of taxes (470) (532) (1,409) (1,595)
Net income before cumulative
change in accounting principle 10,480 3,085 16,614 9,746
Cumulative change in accounting
principle - - - 306
Net income $10,480 $3,085 $16,614 $10,052
Weighted average shares outstanding:
Basic 3,295 3,780 3,463 3,841
Diluted 3,856 4,266 4,012 4,332
Basic earnings per common share:
Income before cumulative change
in accounting principle $3.18 $0.82 $4.80 $2.54
Cumulative effect of change
in accounting principle - - - 0.08
Net income $3.18 $0.82 $4.80 $2.62
Diluted earnings per common share:
Income before cumulative change
in accounting principle $2.72 $0.72 $4.14 $2.25
Cumulative effect of change
in accounting principle - - - 0.07
Net income $2.72 $0.72 $4.14 $2.32
Financial ratios (annualized):
Return on average assets 4.68% 1.45% 2.34% 1.53%
Return on average stockholders'
equity 53.47% 15.91% 28.84% 17.90%
Capital Crossing Bank and Subsidiaries
Interest Rate and Loan and Lease Volume Analysis
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(dollars in thousands)
Weighted average yield/rate (annualized):
Short-term investments 1.07 % 1.81 % 1.25 % 1.84 %
Securities available for
sale 1.74 4.93 1.98 5.42
Loan and lease portfolio,
net 10.44 10.19 10.94 11.25
Total interest-earning
assets 8.84 % 8.90 % 9.08 % 9.71 %
Interest bearing liabilities 3.62 % 4.27 % 3.63 % 4.36 %
Interest rate spread 5.22 % 4.63 % 5.45 % 5.35 %
Net interest margin 5.65 % 5.21 % 5.85 % 5.93 %
Loan and lease volume:
Loan originations $1,085 $100 $3,040 $2,465
Loan acquisitions
Loan balances (a) 79,748 82,345 259,328 164,302
Discount (a) (15,219) (28,855) (91,695) (40,656)
Loan acquisitions, net 64,529 53,490 167,633 123,646
Total loan volume 65,614 53,590 170,673 126,111
Lease originations 9,507 11,754 30,345 33,296
Lease acquisitions, net 2,136 2,839 2,257 7,537
Total lease volume 11,643 14,593 32,602 40,833
Total loan and lease
volume, net $77,257 $68,183 $203,275 $166,944
(a) - In the first quarter of 2003, loans acquired include loans for
which $16.6 million was immediately charged-off against the
discount.
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