IFCJ Interchange Financial Services

Interchange Financial Services Corporation (Nasdaq:IFCJ): 3rd Quarter Highlights: -- Commercial loans grew $122 million for the nine months at an annualized rate of 26% -- Franklin Bank shareholders approve our acquisition, transaction closed October 13, 2005 Interchange Financial Services Corporation (the "Company") (Nasdaq:IFCJ), holding company of Interchange Bank (the "Bank"), today reported diluted earnings per share ("EPS") of $0.24, on net income of $4.7 million for the quarters ending September 30, 2005 and 2004. For the nine months ended September 30, 2005 and 2004, net income was approximately $13.6 million and $13.0 million, respectively. Diluted EPS for the nine months ended September 30, 2005 was $0.69 versus $0.67, as compared to the same period in 2004. "Our prudent approach to balance sheet management in a challenging interest rate environment generated returns on average assets and tangible equity of over 1.2% and 19%, respectively, for the quarter and nine months which are excellent under the circumstances," Anthony Abbate, President and CEO stated, "Our returns and balance sheet growth have been achieved without sacrificing our credit standards or stretching for yields on our securities portfolio. We are constantly seeking ways to enhance shareholder value through managed growth and being disciplined in controlling our operating expenses." Commenting further on the Company's activities Mr. Abbate stated "We have extended our presence into Essex County with the completion of our acquisition of Franklin Bank. In addition, we have already identified three additional branch locations outside of Bergen County - one in each of Essex, Hudson and Passaic Counties in our effort to enhance our franchise. I am also delighted by our continued success in growing our commercial loans which continue to grow 26% on an annualized basis for the first nine months." The Company declared a quarterly cash dividend of $0.09 per common share for the fourth quarter payable November 18, 2005. This dividend represents $0.36 per share on an annualized basis; an increase of 8.0% over the prior year. Return on Average Assets and Equity For the third quarter 2005 return on average stockholders' equity and return on average assets was 11.98% and 1.22% versus 12.90% and 1.31% respectively, for the third quarter in 2004. The change in return on equity and assets for the quarter was primarily a result of a decline in the net interest margin. The Company's return on average stockholders' equity was 11.84% as compared to 12.04% for the nine months ended September 30, 2005 and 2004, respectively. Return on average assets for the nine month period ended September 30, 2005 was 1.21% as compared to 1.24% for the same period in 2004. Net Interest Income For the third quarter of 2005 net interest income, on a taxable equivalent basis, increased $354 thousand, or 2.6%, from the same period in 2004. The net interest margin of 4.02% decreased 22 basis points as the average rate on deposits increased 82 basis points and as both the rate paid on and volume of borrowings increased. The increase in the borrowing costs were affected by $20 million of trust preferred securities issued by the Company's subsidiaries at an average rate of 6.10%. The trust preferred securities were issued as part of our overall liquidity and capital management plans and in support of our continued loan growth. For the nine months ended September 30, 2005 net interest income, on a taxable equivalent basis, increased $2.0 million, or 5.1%, from the same period in 2004. The growth for nine months in 2005 as compared to 2004 was primarily attributed to an increase in the average balances of outstanding commercial loans and leases of $125.0 million, or 22.1%. The benefit in net interest income obtained from the increase in average loans outstanding was partially offset by a 11 basis point decline in the net interest margin to 4.07% for the nine months ended September 30, 2005. The margin was primarily affected by a 62 basis point increase in the cost of interest bearing deposits and as both the rate paid on and volume of borrowings increased. Non-Interest Income For the three and nine month periods ended September 30, 2005, non-interest income was $2.7 million and $7.3 million, as compared to $2.9 million and $8.1 million for the same periods in 2004, respectively. Service charges on deposits were $910 thousand and $2.7 million for the three and nine months ended September 30, 2005, respectively. Service charges on deposits declined for the third quarter, as compared to the same period in the prior year, primarily as result of less service charge opportunities. The decline in service charge opportunities was a result of fewer overdraft presentations and the increase in debit card usage, which reduced the opportunity for a customer to overdraw the account. Also affecting the three and nine month periods ended September 30, 2005, as compared to the same periods in the prior year, were a decrease in gains on sales of securities of $86 thousand and $588 thousand, respectively. Gains on sales of loans and leases were $498 thousand and $877 thousand for the three and nine month periods, respectively, increases of 82% and 116%. The increase in gains on sale or loans and leases was primarily a result of our SBA department, an area of strategic focus, which originated over 40 loans for the first nine months of 2005. Non-Interest Expense Non-interest expense for the third quarter in 2005 amounted to $9.2 million, a decline of $20 thousand, as compared to same quarter in 2004. The decline in non-interest expense for the three month period ended September 30, 2005 as compared to the same period in 2004 was primarily a result of a decline in "other" non-interest expense and advertising and promotion costs. For the nine-month period ended September 30, 2005, non-interest expense amounted to $27.6 million, an increase of $599 thousand, or 2.2%, as compared to the same period last year. The increases in salary and benefit and occupancy expenses for each reporting period was primarily a result an increase in personnel associated with the expansion of our commercial lending unit and the establishment of a credit administration function along with normal increases related to salaries and benefits. The expansion of the commercial lending and credit departments was part of our redesign of our overall commercial loan platform which streamlined processes and assisted in double digit commercial loan growth. Total Loans At September 30, 2005, total loans were approximately $1.0 billion, an increase of $115.2 million, or 16.4% annualized, as compared to December 31, 2004. The increase in loans was principally a result of growth in commercial loans. Growth occurred in each segment of our commercial loan portfolio as commercial mortgages, construction and commercial and financial loans expanded $55.4 million, $39.4 million and $27.1 million, respectively. Non-performing assets decreased 34.6% to $6.1 million at September 30, 2005 as compared to $9.3 million at December 31, 2004. Non-performing assets represented 0.58% versus 0.99%, of the total loans and foreclosed and repossessed assets outstanding at the end of the respective periods. Net charge-offs to average loans and leases for the three and nine months ended September 30, 2005 on an annualized basis declined to 0.03% and 0.05% versus 0.13% for each of the same periods in the prior year, respectively. The Allowance for Loan and Lease Losses totaled $10.2 million at September 30, 2005, and represented 171.7% of non-performing loans and leases and 0.97% of total loans and leases. Post-Earnings Conference Call The Bank will hold a conference call on Thursday, October 27, 2005, at 10 a.m. (Eastern Time) to discuss the financial results for its third fiscal quarter ending September 30, 2005. This Web-cast can be accessed through the Bank's Web site, www.interchangebank.com or on the investor relations page, as well as the Web address www.companyboardroom.com. The replay will begin shortly after the completion of the live call and will be available for approximately two weeks. About Interchange Financial Services Corporation Headquartered in Saddle Brook, NJ, Interchange Financial Services Corporation (NASDAQ: IFCJ) wholly-owns Interchange Bank, one of Bergen County's largest independent commercial banks. A thought leader in the industry, the Bank was among the first to implement a broad range of innovative services, including 24-hour, 7-day-a-week online banking and bill paying services, online stock trading, and the ability to apply for a loan online with an instant credit decision. Mutual funds and annuities are offered through the Bank's investment services. With $1.6 billion in assets and 30 branches, the Bank focuses its efforts on the local communities from which it derives deposits and generates loans. Through Interchange Bank's subsidiary, Interchange Capital Company, L.L.C., cost effective equipment leasing solutions are available to small- and middle-market companies. For additional information, please visit the company's Web site at www.interchangebank.com. In addition to discussing historical information, certain statements included in or incorporated into this report relate to the financial condition, results of operations and business of the Company which are not historical facts, but which are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used herein, the words "anticipate," "believe," "estimate," "expect," "will" and other similar expressions are generally intended to identify such forward-looking statements. Such statements are intended to be covered by the safe harbor provisions for forward-looking statements contained in such Act, and we are including this statement for purposes of invoking these safe harbor provisions. These forward-looking statements include, but are not limited to, statements about the operations of the Company, the adequacy of the Company's allowance for losses associated with the loan portfolio, the prospects of continued loan and deposit growth, and improved credit quality and other risks as discussed in reports we have filed with the SEC. The forward-looking statements in this report involve certain estimates or assumptions, known and unknown risks and uncertainties, many of which are beyond the control of the Company, and reflect what we currently anticipate will happen in each case. What actually happens could differ materially. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake - and specifically disclaims any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. -0- *T INTERCHANGE FINANCIAL SERVICES CORPORATION CONSOLIDATED FINANCIAL HIGHLIGHTS CONSOLIDATED BALANCE SHEETS (dollars in thousands) September December 30, 31, 2005 2004 Change ----------- ----------- ------ (unaudited) (unaudited) Assets Cash and due from banks $34,643 $33,108 4.6 % Interest earning deposits 4 2 100.0 Federal funds sold - - - Securities 357,559 388,729 (8.0) Loans and leases Commercial 735,428 613,533 19.9 Commercial Lease Financing 22,853 23,535 (2.9) Consumer 291,051 297,113 (2.0) ----------- ----------- ------ 1,049,332 934,181 12.3 Allowance for loan and lease losses (10,159) (9,797) 3.7 ----------- ----------- ------ Net loans 1,039,173 924,384 12.4 Premises and equipment, net 16,301 17,713 (8.0) Foreclosed real estate and other repossessed assets 156 156 - Bank Owned Life Insurance 26,666 25,847 3.2 Goodwill and other intangible assets 59,234 59,612 (0.6) Accrued interest receivable and other assets 18,204 14,590 24.8 ----------- ----------- ------ Total assets $1,551,940 $1,464,141 6.0 =========== =========== ====== Liabilities Deposits $1,266,128 $1,246,138 1.6 Borrowings 97,455 59,001 65.2 Subordinated debentures 20,620 - - Accrued interest payable and other liabilities 10,260 8,847 16.0 ----------- ----------- ------ Total liabilities 1,394,463 1,313,986 6.1 ----------- ----------- ------ Total stockholders' equity 157,477 150,155 4.9 ----------- ----------- ------ Total liabilities and stockholders' equity $1,551,940 $1,464,141 6.0 =========== =========== ====== CONSOLIDATED INCOME STATEMENTS (dollars in thousands) Three Months Ended September 30, ------------------------------ 2005 2004 Change ----------- ----------- ------ (unaudited) (unaudited) Interest income: Interest and fees on loans $17,097 $13,877 23.2 % Interest on federal funds sold 17 33 (48.5) Interest on interest earning deposits - - - Interest and dividends on securities: Taxable interest income 2,342 2,630 (11.0) Interest income exempt from federal income taxes 545 303 79.9 Dividends 59 33 78.8 ----------- ----------- ------ Total interest income 20,060 16,876 18.9 ----------- ----------- ------ Interest expense: Interest on deposits 5,265 3,085 70.7 Interest on borrowings 1,091 331 229.6 ----------- ----------- ------ Total interest expense 6,356 3,416 86.1 ----------- ----------- ------ Net interest income 13,704 13,460 1.8 Provision for loan and lease losses 300 300 - ----------- ----------- ------ Net interest income after provision for loan & lease losses 13,404 13,160 1.9 ----------- ----------- ------ Non-interest income: Service fees on deposit accounts 910 1,001 (9.1) Net gain on sale of securities 77 163 (52.8) Other 1,690 1,713 (1.3) ----------- ----------- ------ Total non-interest income 2,677 2,877 (7.0) ----------- ----------- ------ Non-interest expense: Salaries and benefits 5,236 5,029 4.1 Net occupancy 1,382 1,325 4.3 Furniture and equipment 309 327 (5.5) Advertising and promotion 242 346 (30.1) Other 2,078 2,240 (7.2) ----------- ----------- ------ Total non-interest expense 9,247 9,267 (0.2) ----------- ----------- ------ Income before income taxes 6,834 6,770 0.9 Income taxes 2,158 2,109 2.3 ----------- ----------- ------ Net income $4,676 $4,661 0.3 =========== =========== ====== Basic earnings per common share $0.24 $0.24 - Diluted earnings per common share $0.24 $0.24 - CONSOLIDATED INCOME STATEMENTS (dollars in thousands) Nine Months Ended September 30, ------------------------------ 2005 2004 Change ----------- ----------- ------ (unaudited) (unaudited) Interest income: Interest and fees on loans $47,907 $39,709 20.6 % Interest on federal funds sold 18 70 (74.3) Interest on interest earning deposits - - - Interest and dividends on securities: Taxable interest income 7,464 7,841 (4.8) Interest income exempt from federal income taxes 1,332 851 56.5 Dividends 196 74 164.9 ----------- ----------- ------ Total interest income 56,917 48,545 17.2 ----------- ----------- ------ Interest expense: Interest on deposits 13,782 8,672 58.9 Interest on borrowings 2,382 943 152.6 ----------- ----------- ------ Total interest expense 16,164 9,615 68.1 ----------- ----------- ------ Net interest income 40,753 38,930 4.7 Provision for loan and lease losses 700 975 (28.2) ----------- ----------- ------ Net interest income after provision for loan & lease losses 40,053 37,955 5.5 ----------- ----------- ------ Non-interest income: Service fees on deposit accounts 2,682 2,778 (3.5) Net gain on sale of securities 394 982 (59.9) Other 4,271 4,324 (1.2) ----------- ----------- ------ Total non-interest income 7,347 8,084 (9.1) ----------- ----------- ------ Non-interest expense: Salaries and benefits 15,145 14,541 4.2 Net occupancy 4,188 3,977 5.3 Furniture and equipment 940 987 (4.8) Advertising and promotion 1,060 1,209 (12.3) Other 6,248 6,268 (0.3) ----------- ----------- ------ Total non-interest expense 27,581 26,982 2.2 ----------- ----------- ------ Income before income taxes 19,819 19,057 4.0 Income taxes 6,208 6,055 2.5 ----------- ----------- ------ Net income $13,611 $13,002 4.7 =========== =========== ====== Basic earnings per common share $0.71 $0.68 4.4 Diluted earnings per common share $0.69 $0.67 3.0 Analysis of Net Interest Income for the quarter ended September 30, (dollars in thousands) 2005 (unaudited) ----------------------------- Average Average Balance Interest Rate ------------- -------- ------- Assets Interest earning assets: Loans(1) $1,026,631 $17,120 6.67 % Taxable securities(4) 299,663 2,401 3.20 Tax-exempt securities(2)(4) 64,078 809 5.05 Interest earning deposits 4 - - Federal funds sold 1,964 17 3.46 ------------- -------- ------- Total interest-earning assets 1,392,340 20,347 5.85 -------- Non-interest earning assets: Cash and due from banks 36,446 Allowance for loan and lease losses (10,113) Other assets 116,003 ------------- Total assets $1,534,676 ============= Liabilities and stockholders' equity Interest-bearing liabilities Interest bearing deposits $1,009,488 5,265 2.09 Borrowings and subordinated debentures 111,292 1,091 3.92 ------------- -------- ------- Total interest-bearing liabilities 1,120,780 6,356 2.27 -------- Non-interest bearing liabilities Demand deposits 246,923 Other liabilities 10,867 ------------- Total liabilities(3) 1,378,570 Stockholders' equity 156,106 ------------- Total liabilities and stockholders' equity $1,534,676 ============= Net interest income (tax-equivalent basis) 13,991 3.58 Tax-equivalent basis adjustment (287) -------- Net interest income $13,704 ======== Net interest income as a percent of interest-earning assets (tax-equivalent basis) 4.02 % Analysis of Net Interest Income for the quarter ended September 30, (dollars in thousands) 2004 (unaudited) ----------------------------- Average Average Balance Interest Rate ----------- ---------- ------- Assets Interest earning assets: Loans(1) $903,113 $13,913 6.16 % Taxable securities(4) 346,836 2,663 3.07 Tax-exempt securities(2)(4) 26,930 444 6.59 Interest earning deposits 12 - - Federal funds sold 8,899 33 1.48 ----------- ---------- ------- Total interest-earning assets 1,285,790 17,053 5.31 ---------- Non-interest earning assets: Cash and due from banks 36,837 Allowance for loan and lease losses (9,981) Other assets 114,422 ----------- Total assets $1,427,068 =========== Liabilities and stockholders' equity Interest-bearing liabilities Interest bearing deposits $969,217 3,085 1.27 Borrowings and subordinated debentures 61,043 331 2.17 ----------- ---------- ------- Total interest-bearing liabilities 1,030,260 3,416 1.33 ---------- Non-interest bearing liabilities Demand deposits 235,869 Other liabilities 16,427 ----------- Total liabilities(3) 1,282,556 Stockholders' equity 144,512 ----------- Total liabilities and stockholders' equity $1,427,068 =========== Net interest income (tax-equivalent basis) 13,637 3.98 Tax-equivalent basis adjustment (177) ---------- Net interest income $13,460 ========== Net interest income as a percent of interest-earning assets (tax-equivalent basis) 4.24 % (1) Nonaccrual loans and any related interest recorded have been included in computing the average rate earned on the loan portfolio. When applicable, tax exempt loans are computed on a fully taxable equivalent basis using the corporate federal tax rate of 34%. (2) Computed on a fully taxable equivalent basis using the corporate federal tax rate of 34%. (3) All deposits are in domestic bank offices. (4) The average balances are based on historical cost and do not reflect unrealized gains or losses. Analysis of Net Interest Income for the nine months ended September 30, (dollars in thousands) 2005 (unaudited) ------------------------------- Average Average Balance Interest Rate ----------- ---------- ------- Assets Interest earning assets Loans(1) $988,490 $47,982 6.47 % Taxable securities(4) 319,940 7,660 3.19 Tax-exempt securities(2)(4) 50,413 1,963 5.19 Interest earning deposits 3 - - Federal funds sold 714 18 3.36 ----------- ---------- ------- Total interest-earning assets 1,359,560 57,623 5.65 ---------- Non-interest earning assets Cash and due from banks 36,145 Allowance for loan and lease losses (9,994) Other assets 115,561 ----------- Total assets $1,501,272 =========== Liabilities and stockholders' equity Interest-bearing liabilities Interest bearing deposits $1,001,073 13,782 1.84 Borrowings and subordinated debentures 93,071 2,382 3.41 ----------- ---------- ------- Total interest-bearing liabilities 1,094,144 16,164 1.97 ---------- Non-interest bearing liabilities Demand deposits 243,574 Other liabilities 10,253 ----------- Total liabilities(3) 1,347,971 Stockholders' equity 153,301 ----------- Total liabilities and stockholders' equity $1,501,272 =========== Net interest income (tax-equivalent basis) 41,459 3.68 Tax-equivalent basis adjustment (706) ---------- Net interest income $40,753 ========== Net interest income as a percent of interest-earning assets (tax-equivalent basis) 4.07 % Analysis of Net Interest Income for the nine months ended September 30, (dollars in thousands) 2004 (unaudited) ----------- ---------- -------- Average Average Balance Interest Rate ----------- ---------- -------- Assets Interest earning assets Loans(1) $851,936 $39,821 6.23 % Taxable securities(4) 371,774 7,915 2.84 Tax-exempt securities(2)(4) 24,964 1,238 6.61 Interest earning deposits 10 - - Federal funds sold 8,088 70 1.15 ----------- ---------- ------- Total interest-earning assets 1,256,772 49,044 5.20 ---------- Non-interest earning assets Cash and due from banks 36,239 Allowance for loan and lease losses (9,812) Other assets 117,245 ----------- Total assets $1,400,444 =========== Liabilities and stockholders' equity Interest-bearing liabilities Interest bearing deposits $949,929 8,672 1.22 Borrowings and subordinated debentures 60,426 943 2.08 ----------- ---------- ------- Total interest-bearing liabilities $1,010,355 9,615 1.27 ---------- Non-interest bearing liabilities Demand deposits 230,919 Other liabilities 15,194 ----------- Total liabilities(3) 1,256,468 Stockholders' equity 143,976 ----------- Total liabilities and stockholders' equity $1,400,444 =========== Net interest income (tax-equivalent basis) 39,429 3.93 Tax-equivalent basis adjustment (499) ---------- Net interest income 38,930 ========== Net interest income as a percent of interest-earning assets (tax-equivalent basis) 4.18 % (1) Nonaccrual loans and any related interest recorded have been included in computing the average rate earned on the loan portfolio. When applicable, tax exempt loans are computed on a fully taxable equivalent basis using the corporate federal tax rate of 34%. (2) Computed on a fully taxable equivalent basis using the corporate federal tax rate of 34%. (3) All deposits are in domestic bank offices. (4) The average balances are based on historical cost and do not reflect unrealized gains or losses. STATEMENT OF CONDITION - SELECTED DATA (Period Ending) September 30, June 30, 3 month 2005 2005 Change ----------- ----------- ------ (unaudited) (unaudited) Loans $1,049,332 $1,019,987 2.9 % Securities 357,559 361,217 (1.0) Earning assets 1,406,895 1,381,206 1.9 Total Assets 1,551,940 1,527,772 1.6 Deposits 1,266,128 1,258,154 0.6 Borrowings 97,455 83,133 17.2 Subordinated debentures 20,620 20,620 - Shareholders' equity 157,477 155,190 1.5 Leverage ratio 8.21 % 8.21 % Risk weighted ratios: Tier 1 11.01 11.10 Total 11.93 12.03 Quarter Ended September 30, 12 month 2004 Change ----------- ------ (unaudited) Loans $927,154 13.2 % Securities 372,757 (4.1) Earning assets 1,317,213 6.8 Total Assets 1,461,234 6.2 Deposits 1,245,314 1.7 Borrowings 53,756 81.3 Subordinated debentures - n/a Shareholders' equity 147,777 6.6 Leverage ratio 6.43 % Risk weighted ratios: Tier 1 9.07 Total 10.09 Asset quality Quarter ended ------------------------------- September 30, June 30, 3 month 2005 2005 Change ----------- ----------- ------ (unaudited) (unaudited) Net charge offs $87 $156 (44.2)% Loan loss allowance (10,159) (9,945) 2.2 Nonperforming loans $5,917 $6,276 (5.7) Foreclosed real estate & other repossessed assets 156 154 1.3 ----------- ----------- ------ Total Nonperforming assets ("NPA") $6,073 $6,430 (5.6) =========== =========== ====== Ratio's ------- Net charge offs as % of average loans (annualized) 0.03 % 0.06 % Loan loss allowance as % of period-end loans 0.97 0.98 Loan loss allowance as % of nonperforming loans 171.7 158.5 NPA's as a percent of loans + foreclosed assets 0.58 0.63 September 30, 12 month 2004 Change ----------- ------ (unaudited) Asset quality Net charge offs $291 (70.1)% Loan loss allowance (9,797) 3.7 Nonperforming loans $9,373 (36.9) Foreclosed real estate & other repossessed assets 246 (36.6) ----------- ------ Total Nonperforming assets ("NPA") $9,619 (36.9) =========== ====== Ratio's ------- Net charge offs as % of average loans (annualized) 0.13 % Loan loss allowance as % of period-end loans 1.06 Loan loss allowance as % of nonperforming loans 104.5 NPA's as a percent of loans + foreclosed assets 1.04 Nine Months Ended ------------------------------- September September 30, 30, 12 month 2005 2004 Change ----------- ----------- ------ Net charge offs $338 $819 -$481 Net charge offs as % of average loans (annualized) 0.05 % 0.13 % (0.08)% PROFITABILITY (dollars in thousands, except per share data) Quarter ended ------------------------------- September 30, June 30, 3 month 2005 2005 Change ----------- ----------- ------- (unaudited) (unaudited) Net interest income (taxable equivalent) $13,991 $13,742 1.8 % Provision for loan and lease losses 300 225 33.3 Net gain on sale of securities 77 250 (69.2) Non-interest income, excluding net gain on sale of securities 2,600 2,226 16.8 Non-interest expense 9,247 9,180 0.7 Net income $4,676 $4,515 3.6 Return on average assets 1.22 % 1.20 % Return on average equity 11.98 11.83 Return on average tangible equity 19.32 19.36 Net interest margin 4.02 4.05 Basic earnings per common share(1) $0.24 $0.24 - % Diluted earnings per common share(1) 0.24 0.23 4.3 Dividends declared per common share(1) 0.090 0.090 - Book value per common share - end of period(1) $8.22 $8.12 1.2 Shares outstanding - end of period(1) 19,162 19,158 0.0 Weighted average shares outstanding(1) Basic(1) 19,160 19,153 0.0 Diluted(1) 19,607 19,597 0.1 (1) Adjusted for 3 for 2 stock split declared on January 18, 2005 payable on February 18, 2005 PROFITABILITY (dollars in thousands, except per share data) Quarter ended -------------------------- September 30, 12 month 2004 Change ----------- ---------- (unaudited) Net interest income (taxable equivalent) $13,637 2.6 % Provision for loan and lease losses 300 - Net gain on sale of securities 163 (52.8) Non-interest income, excluding net gain on sale of securities 2,714 (4.2) Non-interest expense 9,267 (0.2) Net income $4,661 0.3 Return on average assets 1.31 % Return on average equity 12.90 Return on average tangible equity 22.01 Net interest margin 4.24 Basic earnings per common share(1) $0.24 - % Diluted earnings per common share(1) 0.24 - Dividends declared per common share(1) 0.083 8.4 Book value per common share - end of period(1) $7.73 6.3 Shares outstanding - end of period(1) 19,118 0.2 Weighted average shares outstanding(1) Basic(1) 19,116 0.2 Diluted(1) 19,464 0.7 (1) Adjusted for 3 for 2 stock split declared on January 18, 2005 payable on February 18, 2005 Nine Months Ended ------------------------------- September 30, September 30, 12 month 2005 2004 Change ----------- ----------- ------ (unaudited) (unaudited) Net interest income (taxable equivalent) $41,459 $39,429 5.1 % Provision for loan and lease losses 700 975 (28.2) Net gain on sale of securities 394 982 (59.9) Non-interest income, excluding net gain on sale of securities 6,953 7,102 (2.1) Non-interest expenses 27,581 26,982 2.2 Net income $13,611 $13,002 4.7 Return on average assets 1.21 % 1.24 % Return on average equity 11.84 12.04 Return on average tangible equity 19.33 20.53 Net interest margin 4.07 4.18 Basic earnings per common share(1) $0.71 $0.68 4.4 % Diluted earnings per common share(1) 0.69 0.67 3.0 Dividends declared per common share(1) 0.27 0.25 8.0 Book value per common share - end of period(1) $8.22 $7.73 6.3 Shares outstanding - end of period(1) 19,162 19,118 0.2 Weighted average shares outstanding(1) Basic(1) 19,149 19,126 0.1 Diluted(1) 19,585 19,473 0.6 (1) Adjusted for 3 for 2 stock split declared on January 18, 2005 payable on February 18, 2005 *T