Banknorth Group Inc. (NASDAQ: BKNG)announced record quarterly net income of $76.9 million, or 51 centsper diluted share, for the three months ended September 30, 2002, anincrease of 24% from net income of $62.2 million, or 45 cents per dilutedshare, for the same quarter a year ago. Exclusive of special charges,third quarter earnings were $78.3 million, or 52 cents per diluted share,up 26 % from $62.2 million, or 45 cents per diluted per share, for thesame quarter a year ago.For the first nine months of 2002, net income was $221.5 million, or $1.48per diluted share, an increase of 25% from $177.2 million, or $1.27 perdiluted share, for the first nine months of 2001. Exclusive of specialcharges, income for the first nine months of the year was $228.9 million,or $1.53 per diluted share, up 26% from $181.1 million, or $1.30 perdiluted share, for the first three quarters of 2001.The Company also announced today that it will move to the New York StockExchange on November 4, 2002, where its common stock will trade under thesymbol BNK.“Our growth in assets to $22.5 billion as of September 30, our continuedstrong earnings, and our geographic expansion to a strong presence inevery New England state except Rhode Island convinces us that the time isright to move to the NYSE,” said William J. Ryan, Chairman, President andChief Executive Officer.The Company’s acquisitions over the past year and a half were a majorfactor in double-digit growth in loans and deposits.Total loans at September 30, 2002 were 26% higher than total loans atSeptember 30, 2001. Exclusive of acquisitions, nonresidential loan growthwas still strong at 11%, with the strongest growth coming in commercialbusiness and commercial real estate loans.Total deposits at September 30, 2002 were 24% higher than total depositsat September 30, 2001, with the greatest growth in checking, retail moneymarket and NOW accounts. Exclusive of acquisitions, core deposit growthwas 13%.Acquisitions and the loan and deposit growth helped achieve net interestincome for the quarter ended September 30, 2002 that was 18% higher thanfor the same period in the prior year, despite margin pressure largely dueto more loan prepayments primarily as a result of declining interestrates.The net interest margin for the quarter ended September 30, 2002 was4.03%, down from 4.08% for the same quarter a year ago and down from 4.18%from the previous quarter. The net interest margin for the nine monthsended September 30, 2002 was 4.14%, as compared to a net interest marginof 3.94% for the first three quarters of 2001.Asset quality improved over both the same quarter a year ago and theprevious quarter.At September 30, 2002, nonperforming assets as a percentage of totalassets were 0.31% as compared to 0.39% at September 30, 2001 and to 0.34%at June 30, 2002. Nonperforming loans as a percentage of total loans atSeptember 30, 2002 were 0.47% as compared to 0.59% at September 30, 2001and to 0.51% at June 30, 2002. Net charge offs to average loans of 0.31%for the quarter ended September 30, 2002 and 0.30% for the first ninemonths of the year were essentially consistent with the same periods ayear ago.The Company’s efficiency ratio for the quarter ended September 30, 2002was 52.35% as compared to 54.22% for the same quarter a year ago.Noninterest income for the quarter ended September 30, 2002, principallyfee income from deposit and nonbanking services, increased 8% over thesame quarter a year ago, from $60.6 million to $65.5 million. Noninterestincome increases were primarily in deposit services, investment planningservices, insurance brokerage commissions and merchant and electronicbanking. These increases more than offset a decrease in mortgage bankingincome, which experienced $2.6 million of impairment and amortizationcharges to the value of mortgage servicing rights, and a decrease in trustand investment management services income, which reflected the weak stockmarket. The mortgage banking impairment and amortization left a remainingbalance of capitalized mortgage servicing rights at September 30, 2002totaling $5.2 million, or approximately 70 basis points of the unpaidbalance of loans serviced for others.Shareholders’ equity at September 30, 2002 was $1.92 billion, up 32% from$1.46 billion at September 30, 2001. Book value per share at September 30,2002 was $13.01.The Company completed the acquisitions of Ipswich Bancshares, Inc, basedin Ipswich Massachusetts, and Bancorp Connecticut, Inc, parent company ofSouthington Savings Bank, during the quarter ended September 30, 2002.The acquisitions of Warren Bancorp (NASDAQ: WRNB), headquartered inPeabody, Massachusetts, and American Financial Holdings, Inc. (NASDAQ:AMFH), parent company of American Savings Bank in Connecticut, are pendingregulatory approvals and votes by the shareholders of both companies. Itis anticipated that these acquisitions will increase the Company’s totalassets to over $26 billion.The Company’s results for the nine months ended September 30, 2002 reflectits adoption of Statement of Financial Accounting Standards (“SFAS”) No.147, “Acquisitions of Certain Financial Institutions.” Under SFAS No.147, the Company can reclassify certain unidentifiable intangible assetsto goodwill and cease amortization beginning January 1, 2002. As a result,earnings for the first nine months have been increased by two cents pershare. Exclusive of the adoption of SFAS No.147, earnings for the quarterended September 30, 2002 exclusive of special charges still were 52 centsper share.
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