Capital Crossing Bank (NASDAQ:CAPX) (the "Bank") reported
consolidated net income of $3.4 million, or $0.52 per diluted
share, for the third quarter of 2005, compared to consolidated net
income of $4.5 million, or $0.58 per diluted share, for the same
period in 2004. The Bank also reported consolidated net income of
$12.4 million, or $1.78 per diluted share, for the nine months
ended September 30, 2005, compared to consolidated net income of
$13.9 million, or $1.78 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 third quarter of
2005, the Bank recognized $7.7 million of transactional income,
including $6.9 million of accelerated interest income associated
with loan and lease payoffs and $735,000 in net gains on sales of
other real estate owned and assets in possession. By contrast, in
the third quarter of 2004, the Bank recognized $7.3 million of
transactional income. Total transactional income for the nine
months ended September 30, 2005 and 2004 amounted to $27.5 million
and $24.3 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 third quarter of 2005, we purchased loans with outstanding
principal balances of $31.7 million for a purchase price of $25.9
million, compared to the same period in 2004, when we purchased
loans with outstanding principal balances of $20.6 million for a
purchase price of $15.9 million. In the nine months ended September
30, 2005, we purchased loans with outstanding principal balances of
$131.3 million for a purchase price of $111.9 million, compared to
the same period in 2004, when we purchased loans with outstanding
principal balances of $204.0 million for a purchase price of $183.5
million." Included in our loan acquisitions for the nine months
ended September 30, 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 nine months ended September 30, 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 acquire a loan
portfolio." Mr. Wayne further stated, "Our total non-performing
assets decreased $7.7 million from $39.7 million at December 31,
2004 to $32.0 million at September 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 September 30, 2005, we held
loans and leases with net investment balances of $14.0 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 third 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 $18.2
million. During the nine months ended September 30, 2005, Dolphin
Capital originated leases with an aggregate investment balance of
$45.6 million compared to the same period in 2004 when it
originated or acquired leases with an aggregate investment balance
of $41.7 million. Dolphin Capital Corp.'s net income was $1.6
million for the nine months ended September 30, 2005, compared to
$1.8 million for the same period in 2004 and $264,000 for the third
quarter in 2005, compared to $523,000 for the same period in 2004.
The Bank continued to repurchase shares of its common stock under
its common stock repurchase program during the third quarter of
2005. As of September 30, 2005, the Bank had repurchased 6,842,832
shares under its current repurchase program and previous repurchase
programs at an average purchase price of $12.58 per share, and had
an additional $5.9 million to invest under its current repurchase
program. The Bank initiated its first repurchase program in August
2000. Investors and interested parties will have the opportunity to
listen to management's discussion of the Bank's quarterly and nine
month results in a conference call to be held on Tuesday, October
25th at 9:00 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 #8140513. A
replay of the call will be available beginning at approximately
11:00 a.m. on October 25, 2005 through midnight on October 31,
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 June 30, 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 $1.1
billion in assets as of September 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) September 30, December 31, 2005
2004 ------------ ------------ (dollars in thousands, except per
share data) Total assets $1,066,753 $1,082,224 Loans and leases:
955,922 1,005,665 Non-accretable discount (41,847) (47,042)
Accretable discount (77,093) (80,399) Allowance for loan and lease
losses (16,682) (21,037) Net deferred loan and lease income
(17,836) (16,326) ----------- ----------- Loans and leases, net
802,464 840,861 ----------- ----------- Short-term investments
112,187 60,353 Securities available for sale 91,773 115,417
Deposits 686,684 727,874 Borrowed funds 219,927 176,079 REIT
preferred stock 64,758 64,761 Stockholders' equity 76,503 91,355
Non-performing assets: Other real estate owned, net 5,952 7,567
Other assets in possession, net 266 1,163 Non-performing loans and
leases: Loans and leases acquired as non- performing 13,952 21,213
Loans and leases that became non- performing subsequent to
acquisition 11,852 9,761 ----------- ----------- Total
non-performing assets, net 32,022 39,704 ----------- -----------
Total non-performing assets, net as a percent to total assets 3.00
% 3.67 % Allowance for loan and lease losses as a percent of loans
and leases, net of discount and deferred income 2.04 2.44 Allowance
for loan and lease losses as a percent of net non-performing loans
and leases 64.65 67.92 Book value per common share $14.28 $14.96
Tangible book value per common share 13.46 14.24 Shares
outstanding, net 5,358,667 6,108,114 Capital Crossing Bank and
Subsidiaries Consolidated Operating Results and Related Financial
Data (Unaudited) Three Months Nine Months Ended Ended September 30,
September 30, ----------------- ----------------- 2005 2004 2005
2004 -------- -------- -------- -------- (in thousands, except per
share data) Interest income - regularly scheduled $18,648 $18,290
$55,125 $51,462 Interest income - accelerated 6,921 6,520 19,031
20,812 -------- -------- -------- -------- Total interest income
25,569 24,810 74,156 72,274 Interest expense (9,555) (8,002)
(26,665) (22,689) -------- -------- -------- -------- Net interest
income 16,014 16,808 47,491 49,585 Credit (provision) for loan and
lease losses 688 63 2,238 2,103 -------- -------- -------- --------
Net interest income, after credit (provision) for loan and lease
losses 16,702 16,871 49,729 51,688 Gain on sales of loans, net -
437 - 2,172 Other income 394 499 1,217 1,498 Operating expenses:
Other real estate owned and assets in possession income, net 481
357 7,824 737 Other operating expenses (9,631) (9,037) (31,252)
(28,028) -------- -------- -------- -------- Total operating
expenses (9,150) (8,680) (23,428) (27,291) -------- --------
-------- -------- Income before income taxes, minority interest and
dividends on REIT preferred stock 7,946 9,127 27,518 28,067
Provision for income taxes (3,497) (3,708) (12,219) (11,908)
Minority interest, net of taxes (99) (19) (154) (107) Dividends on
REIT preferred stock, net of taxes (927) (928) (2,781) (2,126)
-------- -------- -------- -------- Net income $3,423 $4,472
$12,364 $13,926 ======== ======== ======== ======== Weighted
average shares outstanding: Basic 5,458 6,563 5,760 6,632 Diluted
6,635 7,718 6,933 7,828 Earnings per share: Basic $0.63 $0.68 $2.15
$2.10 Diluted 0.52 0.58 1.78 1.78 Financial ratios (annualized):
Return on average assets 1.32% 1.56% 1.60% 1.80% Return on average
stockholders' equity 17.10% 18.19% 19.39% 19.59% Transactional
income: Interest and fee income on loan and lease pay-offs
Non-accretable discount $1,788 $3,374 $7,736 $9,261 Accretable
discount 3,114 1,792 7,330 8,361 Other interest income 2,019 1,354
3,965 3,190 -------- -------- -------- -------- Total interest and
fee income on loan and lease pay-offs 6,921 6,520 19,031 20,812
Gain on sale of loans, net - 437 - 2,172 Gain on sale of other real
estate owned and assets in possession, net 735 316 8,468 1,296
-------- -------- -------- -------- Total transactional income
$7,656 $7,273 $27,499 $24,280 ======== ======== ======== ========
Capital Crossing Bank and Subsidiaries Interest Rate and Loan and
Lease Volume Analysis (Unaudited) Three Months Ended Nine Months
Ended September 30, September 30, -------------------
--------------------- 2005 2004 2005 2004 --------- ---------
---------- ---------- (dollars in thousands) Weighted average
yield/rate (annualized): Short-term investments 3.45 % 1.49 % 2.97
% 1.21 % Securities available for sale 4.62 3.51 4.68 3.49 Loan and
lease portfolio, net 11.71 11.22 11.35 11.95 Total interest-
earning assets 10.34 % 9.09 % 10.16 % 9.75 % Interest bearing
liabilities 4.40 % 3.35 % 4.14 % 3.49 % Interest rate spread 5.94 %
5.74 % 6.02 % 6.26 % Net interest margin 6.48 % 6.16 % 6.51 % 6.69
% Loan and lease volume: Loan originations $- $- $508 $1,000 Loan
acquisitions Loan balances 31,723 20,644 131,348 204,022 (Discount)
premium, net (5,796) (4,716) (19,477) (20,497) -------- --------
--------- --------- Loan acquisitions, net 25,927 15,928 111,871
183,525 -------- -------- --------- --------- Total loan volume
25,927 15,928 112,379 184,525 -------- -------- --------- ---------
Lease originations 15,530 12,262 45,600 34,702 Lease acquisitions,
net - 5,937 - 6,960 -------- -------- --------- --------- Total
lease volume 15,530 18,199 45,600 41,662 -------- --------
--------- --------- Total loan and lease volume, net $41,457
$34,127 $157,979 $226,187 ======== ======== ========= ========= *T
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