Capital Crossing Bank (NASDAQ:CAPX) (the "Bank") reported
consolidated net income of $4.3 million, or $0.62 per diluted
share, for the second quarter of 2005, compared to consolidated net
income of $4.3 million, or $0.54 per diluted share, for the same
period in 2004. The Bank also reported consolidated net income of
$8.9 million, or $1.26 per diluted share, for the six months ended
June 30, 2005, compared to consolidated net income of $9.5 million,
or $1.20 per diluted share, for the same period in 2004. Nicholas
W. Lazares, the Bank's Chairman and Co-Chief Executive Officer,
stated, "We are pleased to report another strong quarter at Capital
Crossing Bank." Mr. Lazares further stated, "A significant portion
of the Bank's revenue arises from the recognition of
"transactional" income. In the second quarter of 2005, the Bank
recognized $10.1 million of transactional income, including $5.8
million of accelerated interest income associated with loan and
lease payoffs and $4.3 million in net gains on sales of other real
estate owned and property in possession. By contrast, in the second
quarter of 2004, the Bank recognized approximately $8.7 million of
transactional income, including $6.9 million of accelerated
interest income associated with loan and lease payoffs, $960,000 in
gains on sales of loans and $845,000 in net gains on sales of other
real estate owned and property in possession. Total transactional
income for the six months ended June 30, 2005 and 2004 amounted to
$19.8 million and $17.0 million, respectively. Since the level of
transactional income is unpredictable from quarter to quarter, the
Bank's earnings may fluctuate significantly in the future." Richard
Wayne, the Bank's President and Co-Chief Executive Officer,
explained that, "The volume of our loan acquisitions varies from
quarter-to-quarter depending upon market conditions. For example,
in the second quarter of 2005, we purchased loans with outstanding
principal balances of $48.7 million for a purchase price of $41.5
million, compared to the same period in 2004, when we purchased
loans with outstanding principal balances of $164.5 million for a
purchase price of $148.6 million. In the six months ended June 30,
2005, we purchased loans with outstanding principal balances of
$99.6 million for a purchase price of $85.9 million, compared to
the same period in 2004, when we purchased loans with outstanding
principal balances of $183.4 million for a purchase price of $167.6
million." Included in our loan acquisitions for the second quarter
of 2004, were $89.8 million of high quality residential loans that
were acquired for a purchase price of $88.1 million. Although
residential loan portfolios were available for purchase in the
second quarter of 2005, management elected not to bid on or
purchase such loans at the offered pricing levels. Mr. Wayne
continued, "During the course of our review of available loan
portfolios, we will, in some cases, decline to bid on a portfolio
after analyzing the results of our due diligence review, or, in
other instances, be outbid by other purchasers. We simply cannot
predict how often we will successfully bid on a loan portfolio."
Mr. Wayne further stated, "Our total non-performing assets
decreased $10.2 million from $39.7 million at December 31, 2004 to
$29.5 million at June 30, 2005. While a substantial majority of the
loan and leases we have acquired in recent years have been
performing, we have also acquired appropriately priced
non-performing loans and leases. At June 30, 2005, we held loans
and leases with net investment balances of $9.9 million which were
acquired as non-performing. In the past, our pricing strategy and
the level of discount we obtain on such loans and leases has
enabled us to, over time, realize significant levels of
transactional income from these assets." During the second quarter
of 2005, the Bank's leasing subsidiary, Dolphin Capital Corp.,
originated leases with an aggregate investment balance of $15.5
million, compared to the same period in 2004 when it originated or
acquired leases with an aggregate investment balance of $12.3
million. During the six months ended June 30, 2005, Dolphin Capital
originated leases with an aggregate investment balance of $30.1
million compared to the same period in 2004 when it originated or
acquired leases with an aggregate investment balance of $23.5
million. The increase is partially attributable to the initiation
of a more aggressive marketing campaign. Dolphin Capital Corp.'s
net income was $1.3 million for the six months ended June 30, 2005,
compared to $1.2 million for the same period in 2004 and $425,000
for the second quarter in 2005, compared to $484,000 for the same
period in 2004. The Bank continued to repurchase shares of its
common stock under its common stock repurchase program during the
second quarter of 2005. On June 27, 2005, the Bank announced that
it had increased the amount of the repurchase program by $15.0
million. As of June 30, 2005, the Bank had repurchased 6,609,818
shares under its current repurchase program and previous repurchase
programs at an average purchase price of $11.74 per share, and had
an additional $14.4 million to invest under its current repurchase
program. The Bank initiated its first repurchase program in August
2000. On July 22, 2004, the Bank announced that it had declared a
2-for-1 stock split effected in the form of a dividend, which was
subsequently paid on August 9, 2004 to shareholders of record at
the close of business on August 2, 2004. The effect of the stock
split was that shareholders received one additional share of common
stock for every share owned on the record date. The retroactive
effect of this stock split has been applied to the number of shares
and per share information contained in this press release.
Investors and interested parties will have the opportunity to
listen to management's discussion of the Bank's quarterly and six
month results in a conference call to be held on Wednesday, July
20th at 11:00 a.m., Eastern Time. The conference call will be
broadcast over the investor relations 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 on the
website or via telephone at 888-203-1112, access code #7889843. A
replay of the call will be available beginning at approximately
2:00 p.m. on July 20, 2005 through midnight on July 26, 2005. This
press release contains a number of forward-looking statements
concerning the Bank's current expectations as to future growth and
its results of operations. Any statements that are not statements
of historical fact (including statements containing the words
"believes," "plans," "anticipates," "expects," "estimates,"
"intends," "may," "projects," "will," "would," and similar
expressions) should also be considered to be forward-looking
statements. There are a number of important factors that could
cause actual results or events to differ materially from those
indicated by such forward-looking statements, including: 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 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 detailed under the caption "Certain
Factors That May Affect Future Results" in the Bank's Quarterly
Report on Form 10-Q for the period ended March 31, 2005, which
important factors are incorporated herein by this reference. The
Bank disclaims any intention or obligation to update any
forward-looking statements as a result of developments occurring
after the date of this press release. Capital Crossing Bank is a
Massachusetts-chartered, FDIC-insured trust company with $1.0
billion in assets as of June 30, 2005. The Bank operates as a
commercial bank, providing financial products and services to
customers through its executive and main offices in Boston, its
website at www.capitalcrossing.com, and through its leasing
subsidiary Dolphin Capital Corp. located in Moberly, Missouri. The
Bank is a value oriented investor in whole loans and loan
portfolios generally secured by commercial, multi-family and
one-to-four family residential real estate and other business
assets. -0- *T Capital Crossing Bank and Subsidiaries Consolidated
Financial Highlights (Unaudited) June 30, December 31, 2005 2004
------------ ------------ (dollars in thousands, except per share
data) Total assets $1,048,561 $1,082,224 Loans and leases: 997,375
1,005,665 Non-amortizing discount (43,462) (47,042) Amortizing
discount (80,472) (80,399) Allowance for loan and lease losses
(17,416) (21,037) Net deferred loan and lease income (17,500)
(16,326) ----------- ----------- Loans and leases, net 838,525
840,861 ----------- ----------- Short-term investments 63,659
60,353 Securities available for sale 88,071 115,417 Deposits
713,379 727,874 Borrowed funds 171,623 176,079 REIT preferred stock
64,759 64,761 Stockholders' equity 81,742 91,355 Non-performing
assets: Other real estate owned, net 5,723 7,567 Other assets in
possession, net 250 1,163 Non-performing loans and leases: Loans
and leases acquired as non- performing 9,936 21,213 Loans and
leases that became non- performing subsequent to acquisition 13,598
9,761 ----------- ----------- Total non-performing assets, net
29,507 39,704 ----------- ----------- Total non-performing assets,
net as a percent to total assets 2.81 % 3.67 % Allowance for loan
and lease losses as a percent of loans and leases, net of discount
and deferred income 2.03 2.44 Allowance for loan and lease losses
as a percent of net non-performing loans and leases 74.00 67.92
Book value per common share $14.65 $14.96 Tangible book value per
common share 13.86 14.24 Shares outstanding, net 5,581,481
6,108,114 Capital Crossing Bank and Subsidiaries Consolidated
Operating Results and Related Financial Data (Unaudited) Three
Months Six Months Ended Ended June 30, June 30, -----------------
----------------- 2005 2004 2005 2004 -------- -------- --------
-------- (in thousands, except per share data) Interest income -
regularly scheduled $18,418 $15,994 $36,477 $33,172 Interest income
- accelerated 5,796 6,904 12,110 14,292 -------- -------- --------
-------- Total interest income 24,214 22,898 48,587 47,464 Interest
expense (8,910) (7,521) (17,110) (14,687) -------- --------
-------- -------- Net interest income 15,304 15,377 31,477 32,777
Credit (provision) for loan and lease losses 510 732 1,550 2,040
-------- -------- -------- -------- Net interest income, after
credit (provision) for loan and lease losses 15,814 16,109 33,027
34,817 Gain on sales of loans, net - 960 - 1,735 Other income 421
472 823 999 Operating expenses: Other real estate owned and assets
in possession income, net 3,929 533 7,343 380 Other operating
expenses (10,598) (9,280) (21,621) (18,991) -------- --------
-------- -------- Total operating expenses (6,669) (8,747) (14,278)
(18,611) -------- -------- -------- -------- Income before income
taxes, minority interest and dividends on REIT preferred stock
9,566 8,794 19,572 18,940 Provision for income taxes (4,331)
(3,804) (8,722) (8,200) Minority interest, net of taxes (23) (11)
(55) (88) Dividends on REIT preferred stock, net of taxes (927)
(728) (1,854) (1,198) -------- -------- -------- -------- Net
income $4,285 $4,251 $8,941 $9,454 ======== ======== ========
======== Weighted average shares outstanding: Basic 5,803 6,676
5,913 6,666 Diluted 6,964 7,867 7,085 7,882 Earnings per share:
Basic $0.74 $0.64 $1.51 $1.42 Diluted 0.62 0.54 1.26 1.20 Financial
ratios (annualized): Return on average assets 1.68% 1.75% 1.74%
1.94% Return on average stockholders' equity 19.84% 17.83% 20.44%
20.33% Transactional income: Interest and fee income on loan and
lease pay-offs Non-amortizing discount $2,331 $2,834 $5,948 $5,887
Amortizing discount 2,012 2,974 4,216 6,569 Other interest income
1,453 1,096 1,946 1,836 -------- -------- -------- -------- Total
interest and fee income on loan and lease pay-offs 5,796 6,904
12,110 14,292 Gain on sale of loans, net - 960 - 1,735 Gain on sale
of other real estate owned and assets in possession, net 4,260 845
7,733 980 -------- -------- -------- -------- Total transactional
income $10,056 $8,709 $19,843 $17,007 ======== ======== ========
======== Capital Crossing Bank and Subsidiaries Interest Rate and
Loan and Lease Volume Analysis (Unaudited) Three Months Ended Six
Months Ended June 30, June 30,
--------------------------------------- 2005 2004 2005 2004
--------------------------------------- (dollars in thousands)
Weighted average yield/rate (annualized): Short-term investments
2.91 % 1.08 % 2.63 % 1.09 % Securities available for sale 4.75 3.79
4.72 3.46 Loan and lease portfolio, net 11.05 12.11 11.16 12.36
Total interest-earning assets 10.04 % 9.87 % 10.06 % 10.13 %
Interest bearing liabilities 4.19 % 3.73 % 4.02 % 3.58 % Interest
rate spread 5.85 % 6.14 % 6.04 % 6.55 % Net interest margin 6.34 %
6.63 % 6.52 % 7.00 % Loan and lease volume: Loan originations $-
$1,000 $508 $1,000 Loan acquisitions Loan balances 48,717 164,482
99,625 183,378 (Discount) premium, net (7,196) (15,858) (13,681)
(15,781) -------- --------- --------- --------- Loan acquisitions,
net 41,521 148,624 85,944 167,597 -------- --------- ---------
--------- Total loan volume 41,521 149,624 86,452 168,597 --------
--------- --------- --------- Lease originations 15,544 11,229
30,070 22,440 Lease acquisitions, net - 1,023 - 1,023 --------
--------- --------- --------- Total lease volume 15,544 12,252
30,070 23,463 -------- --------- --------- --------- Total loan and
lease volume, net $57,065 $161,876 $116,522 $192,060 ========
========= ========= ========= *T
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