ICBC Independence Community Bank (MM)

BROOKLYN, N.Y., Oct. 17 /PRNewswire-FirstCall/ -- Independence Community Bank Corp. (NASDAQ:ICBC) reported today that net income for the three months ended September 30, 2005 was $54.4 million and diluted earnings per share was $0.67, a decline of 14% and 12%, respectively, compared to the same period in 2004. On a linked quarter basis, diluted earnings per share increased from $0.66 for the second quarter of 2005 to $0.67 for the third quarter. For the nine months ended September 30, 2005, net income increased by 5.0% to $168.3 million as compared to the same period in 2004 although diluted earnings per share decreased by 8% to $2.05, as compared to the same period in 2004. The Company's results of operations for the 2005 periods reflect the inclusion of the operations of Staten Island Bancorp, Inc. ("SIB"), which merged with the Company on April 12, 2004 and the related issuance of 28.2 million shares of the Company's common stock in connection with the merger. Alan H. Fishman, President and Chief Executive Officer, commented, "In this current interest rate environment, the Company remains disciplined and diligent in its approach to both balance sheet and capital management. The earnings for the quarter reflect the Company's approach. However, margin compression as well as heightened competition in the multi-family residential loan market continue to exert pressure on both the quality of earnings and the economic level of returns. The Company remains committed to returning current earnings to shareholders through its stock repurchase and dividend programs rather than weaken the quality of its balance sheet." Highlights -- Net interest margin was 3.12% for the quarter ended September 30, 2005 as compared to 3.22% for the quarter ended June 30, 2005. The decline in net interest margin during the third quarter was primarily attributable to the rise in the cost of funds which outpaced the upward repricing of interest-earning assets as general market rates of interest continued their upward trend. -- The Company believes the pressure on net interest margin will continue in the short-term based upon the flattening of the yield curve combined with the anticipated reduction in the margin associated with the purchase accounting amortization related to the SIB transaction. -- The Company originated loans totaling $1.52 billion, excluding mortgage warehouse lines of credit, during the quarter ended September 30, 2005, of which $1.15 billion were retained for portfolio with the remainder being originated for sale in the secondary market. -- Core deposits increased by $160.5 million to $7.19 billion at September 30, 2005 compared to December 31, 2004 through the combination of five de novo branch openings, new business development and the introduction of the Independence RewardsPlus Checking(TM) product during 2005. -- As part of its long-term asset/liability management strategy, the Company selectively chose to utilize certain certificate of deposit promotions as a source of lower cost funding for its asset generation, reducing dependence on wholesale borrowings. Borrowings as a percentage of assets declined to 29.2% at September 30, 2005 compared to 33.3% at December 31, 2004. -- During the third quarter, the Company issued $250.0 million aggregate principal amount of 4.90% Fixed-Rate Senior Notes due in 2010. The Company used $150.0 million of the proceeds to make a capital contribution to Independence Community Bank to strengthen the Bank's capital position. The remainder of the proceeds will be used for general corporate purposes, including funding the Company's ongoing stock repurchase program. -- Non-interest income increased in the third quarter compared to the second quarter of 2005 as a result of increased income from mortgage- banking activities and fees associated with loan prepayment penalties. -- The increase in non-interest expense from the prior quarter in 2005 was partly due to increased compensation costs associated with business development efforts and severance costs reflecting certain management and staff repositioning. -- Asset quality continues to improve; the Company recorded a $0.4 million net charge-off for the quarter ended September 30, 2005 and a $0.2 million net recovery for the nine months ended September 30, 2005. -- Non-performing assets as a percentage of total assets were 0.23% at September 30, 2005 compared to 0.29% at December 31, 2004. The allowance for loan losses as a percentage of total loans was 0.82% at September 30, 2005 compared to 0.90% at December 31, 2004. The allowance for loan losses as a percentage of non-performing loans was 244.13% at September 30, 2005 compared to 205.84% at December 31, 2004. No provision for loan losses was required for the third quarter of 2005. -- As a result of the current economic environment, the Company expects to return current year earnings to shareholders through a combination of stock repurchases and dividends. During the nine months ended September 30, 2005, the Company repurchased 4.3 million shares of common stock at an aggregate cost of $154.4 million, of which 1.6 million shares were purchased in the third quarter at an aggregate cost of $56.6 million. Post Earnings Announcement Conference Call The Company will conduct a conference call on October 18, 2005 at 9:00 a.m., Eastern Time, to discuss highlights of its third quarter 2005 earnings. The call will be simultaneously webcast on the Company's investor relations web page at http://investor.myindependence.com/. The conference call will also be available via dial-in at 800-289-0730 for domestic callers and at 913-981-5509 for international callers. There will be a replay of this conference call beginning October 18, 2005 at 2:00 p.m., Eastern Time. The replay will remain available through October 28, 2005. The replay can be accessed by dialing 888-203-1112 for domestic callers and 719-457-0820 for international callers. The replay passcode is 6642162. The archive of the webcast is expected to be available for replay at the Company's website through October 28, 2005. Independence Community Bank Corp. is the holding company for Independence Community Bank. The Bank, originally chartered in 1850, currently operates 123 branches located in the greater New York City metropolitan area, which includes the five boroughs of New York City, Nassau and Suffolk Counties and New Jersey. At its banking offices located on Staten Island, the Bank conducts business as SI Bank & Trust, a division of Independence Community Bank. The Bank has three key business divisions, Commercial Real Estate Lending, Consumer Banking and Business Banking, and actively targets small and mid-size businesses. The Bank maintains its community orientation by offering its diverse communities a wide range of financial products and by emphasizing customer service, superior value and convenience. The Bank's Internet address is http://www.myindependence.com/. Note: This news release contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's management uses these non-GAAP measures in its analysis of the Company's performance. These measures typically adjust GAAP performance measures to exclude the effects of significant gains or losses that are unusual in nature or non-recurring. Because these items and their impact on the Company's performance are difficult to predict, management believes that presentations of financial measures excluding the impact of these items provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Statements contained in this release which are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. Words such as "expect," "feel," "believe," "will," "may," "anticipate," "plan," "estimate," "intend," "should," and similar expressions are intended to identify forward- looking statements. These statements include, but are not limited to, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of the Company, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) growth opportunities may not be fully realized or may take longer to realize than expected; (2) operating costs may be greater than expected; (3) competitive factors which could affect net interest income and non-interest income and general economic conditions which could affect the volume of loan originations, deposit flows and real estate values; (4) the levels of non-interest income and the amount of provisions for loan losses as well as other factors discussed in the documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made. INDEPENDENCE COMMUNITY BANK CORP. Consolidated Statements of Financial Condition (Dollars in thousands) September December September 30, 2005 31, 2004 30, 2004 (Unaudited) (Audited) (Unaudited) ASSETS: Cash and due from banks $456,071 $360,877 $378,140 Securities available-for-sale: Investment securities 390,250 454,305 574,857 Mortgage-related securities 3,161,043 3,479,482 3,333,820 Total securities available-for-sale 3,551,293 3,933,787 3,908,677 Loans available-for-sale 105,429 96,671 83,855 Mortgage loans 10,278,333 9,315,090 9,222,918 Other loans 2,053,556 1,933,502 1,904,723 Total loans 12,331,889 11,248,592 11,127,641 Less: allowance for possible loan losses (101,671) (101,435) (104,910) Total loans, net 12,230,218 11,147,157 11,022,731 Premises, furniture and equipment, net 163,297 162,687 157,407 Accrued interest receivable 71,638 64,437 66,051 Goodwill 1,191,718 1,155,572 1,144,345 Intangible assets, net 70,438 79,056 82,039 Bank owned life insurance ("BOLI") 332,465 321,040 317,646 Other assets 327,793 432,146 470,797 Total assets $18,500,360 $17,753,430 $17,631,688 LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits $10,503,254 $9,305,064 $9,301,672 Borrowings 4,756,893 5,511,972 5,443,021 Subordinated notes 397,017 396,332 396,097 Senior notes 248,098 -- -- Escrow and other deposits 179,930 104,304 139,283 Accrued expenses and other liabilities 160,127 131,715 107,745 Total liabilities 16,245,319 15,449,387 15,387,818 Stockholders' equity: Common stock ($.01 par value, 250,000,000 shares authorized at September 30, 2005, December 31, 2004 and September 30, 2004, respectively; 104,243,820 shares issued at September 30, 2005, December 31, 2004 and September 30, 2004; 81,859,731, 84,928,719 and 84,544,163 shares outstanding at September 30, 2005, December 31, 2004 and September 30, 2004, respectively) 1,042 1,042 1,042 Additional paid-in-capital 1,907,063 1,900,252 1,877,188 Treasury stock at cost; 22,384,089, 19,315,101 and 19,699,657 shares at September 30, 2005, December 31, 2004 and September 30, 2004, respectively (473,707) (341,226) (347,972) Unallocated common stock held by ESOP (60,559) (64,267) (65,503) Unvested restricted stock awards under stock benefit plans (10,614) (9,701) (10,818) Retained earnings, partially restricted 925,642 821,702 789,602 Accumulated other comprehensive loss: Net unrealized loss on securities available-for-sale, net of tax (33,826) (3,759) 331 Total stockholders' equity 2,255,041 2,304,043 2,243,870 Total liabilities and stockholders' equity $18,500,360 $17,753,430 $17,631,688 INDEPENDENCE COMMUNITY BANK CORP. Consolidated Statements of Income (In thousands, except per share data) (Unaudited) For the Three For the Nine Months Ended Months Ended September June September September September 30, 2005 30, 2005 30, 2004 30, 2005 30, 2004(1) Interest income: Mortgage loans $136,486 $128,563 $121,669 $389,881 $304,792 Other loans 33,542 29,344 25,101 90,126 68,431 Loans available-for-sale 1,266 1,248 1,509 3,971 5,113 Investment securities 4,708 4,386 6,337 13,603 16,046 Mortgage-related securities 34,871 37,662 37,269 112,359 95,817 Other 2,892 2,665 1,500 7,873 3,362 Total interest income 213,765 203,868 193,385 617,813 493,561 Interest expense: Deposits 44,736 37,046 19,239 108,713 49,299 Borrowings 39,288 36,070 38,918 112,138 90,972 Subordinated notes 3,903 3,904 3,838 11,710 9,548 Senior notes 281 -- -- 281 -- Total interest expense 88,208 77,020 61,995 232,842 149,819 Net interest income 125,557 126,848 131,390 384,971 343,742 Provision for loan losses -- -- -- -- 2,000 Net interest income after provision for loan losses 125,557 126,848 131,390 384,971 341,742 Non-interest income: Net gain on securities 1,428 1,980 883 6,518 1,532 Net gain (loss) on loans 128 (161) 80 172 175 Mortgage-banking activities 6,597 4,703 6,295 15,259 24,053 Service fees 17,253 16,399 18,508 49,261 50,746 BOLI 3,959 4,018 3,912 11,751 10,214 Other 3,680 3,014 6,219 9,596 12,135 Total non-interest income 33,045 29,953 35,897 92,557 98,855 Non-interest expense: Compensation and employee benefits 38,096 35,941 36,748 110,264 98,313 Occupancy costs 13,126 12,833 11,702 38,299 30,821 Data processing fees 3,929 3,992 2,938 11,788 11,381 Advertising 2,389 2,238 2,385 6,802 6,676 Other 15,254 16,285 17,775 44,888 43,861 Total general and administrative expenses 72,794 71,289 71,548 212,041 191,052 Amortization of identifiable intangible assets 2,816 2,873 2,540 8,617 5,285 Total non-interest expense 75,610 74,162 74,088 220,658 196,337 Income before provision for income taxes 82,992 82,639 93,199 256,870 244,260 Provision for income taxes 28,632 28,510 29,785 88,620 84,455 Net income $54,360 $54,129 $63,414 $168,250 $159,805 Basic earnings per share $0.69 $0.68 $0.79 $2.11 $2.33 Diluted earnings per share $0.67 $0.66 $0.76 $2.05 $2.23 INDEPENDENCE COMMUNITY BANK CORP. Selected Financial Ratios and Other Data (In thousands, except ratios and per share amounts) (Unaudited) At or For the Three At or For the Nine Months Ended Months Ended September June September September September 30, 30, 30, 30, 30, 2005 2005 2004 2005 2004(1) Performance Ratios: Return on average assets (2) 1.19% 1.21% 1.42% 1.25% 1.45% Return on average equity (2) 9.49% 9.41% 11.57% 9.75% 12.22% Return on average tangible assets (2) 1.28% 1.31% 1.53% 1.34% 1.53% Return on average tangible equity (2) 21.16% 20.98% 25.62% 21.46% 22.41% Non-interest expense to average assets 1.66% 1.66% 1.66% 1.64% 1.78% Efficiency ratio (3) 46.35% 46.00% 43.02% 45.03% 43.33% Average Balances: Average shares outstanding - basic 78,727,182 79,672,843 79,924,041 79,610,614 68,553,635 Average shares outstanding - diluted 80,812,827 82,128,428 83,375,631 82,049,174 71,664,331 September June December September 30, 2005 30, 2005 31, 2004 30, 2004 Capital and Other Ratios: Book value per share $27.55 $27.52 $27.13 $26.54 Tangible book value per share $12.13 $12.35 $12.59 $12.03 Average equity to average assets 12.57% 12.89% 12.77% 12.32% Tangible equity to tangible assets 5.76% 6.10% 6.47% 6.20% Leverage ratio (Bank only) 6.68% 5.60% 5.51% 5.24% Tier 1 risk-based (Bank only) 8.44% 7.03% 7.36% 6.90% Total risk-based capital (Bank only) 12.22% 10.88% 11.47% 10.97% Deposits: Core deposits: Savings $2,280,861 $2,391,073 $2,630,416 $2,695,661 Money market 986,166 1,193,798 1,701,287 1,698,384 Interest-bearing demand 2,365,618 2,035,058 1,214,190 1,169,990 Non-interest-bearing demand 1,561,529 1,550,181 1,487,756 1,530,061 Total core deposits 7,194,174 7,170,110 7,033,649 7,094,096 Certificates of deposit 3,309,080 2,837,337 2,271,415 2,207,576 Total deposits $10,503,254 $10,007,447 $9,305,064 $9,301,672 INDEPENDENCE COMMUNITY BANK CORP. Selected Financial Ratios and Other Data (In thousands, except ratios and per share amounts) (Unaudited) September June December September 30, 2005 30, 2005 31, 2004 30, 2004 Loan Portfolio Composition: Mortgage loans on real estate: Single-family residential and cooperative apartment loans $2,131,544 $2,282,820 $2,490,062 $2,649,319 Multi-family residential 4,634,533 4,212,316 3,800,649 3,670,141 Commercial real estate 3,522,846 3,397,846 3,034,254 2,912,057 Total principal balance - mortgage loans 10,288,923 9,892,982 9,324,965 9,231,517 Less net deferred fees 10,590 10,555 9,875 8,599 Total mortgage loans on real estate 10,278,333 9,882,427 9,315,090 9,222,918 Commercial business loans, net of deferred fees 914,479 838,486 809,392 823,925 Other loans: Mortgage warehouse lines of credit 624,081 676,551 659,942 630,625 Home equity loans and lines of credit 477,725 461,782 416,351 398,620 Consumer and other loans 37,271 36,268 47,817 51,736 Total principal balance - other loans 1,139,077 1,174,601 1,124,110 1,080,981 Less net deferred fees -- -- -- 183 Total principal balance - other loans 1,139,077 1,174,601 1,124,110 1,080,798 Total loans receivable 12,331,889 11,895,514 11,248,592 11,127,641 Less allowance for loan losses 101,671 102,101 101,435 104,910 Loans receivable, net $12,230,218 $11,793,413 $11,147,157 $11,022,731 Loans Available-for-Sale Composition: Single-family residential $4,723 $3,675 $74,121 $69,445 Multi-family residential 100,706 182,009 22,550 14,410 Total loans available-for-sale $105,429 $185,684 $96,671 $83,855 September June December September 30, 2005 30, 2005 31, 2004 30, 2004 Asset Quality: Non-performing loans: Non-accrual loans $33,821 $37,253 $43,644 $64,318 Loans past due 90 days or more as to: Interest and accruing 18 11 117 90 Principal and accruing(4) 7,808 739 5,517 4,901 Total non-performing loans 41,647 38,003 49,278 69,309 Other real estate owned 1,591 1,747 2,512 2,682 Total non-performing assets $43,238 $39,750 $51,790 $71,991 Non-performing assets to total assets 0.23% 0.22% 0.29% 0.41% Allowance for loan losses to non-performing loans 244.13% 268.67% 205.84% 151.37% Allowance for loan losses to total loans 0.82% 0.86% 0.90% 0.94% Net charge offs to average loans - quarter ended 0.004% 0.004% 0.031% 0.002% Net charge offs to average loans - year-to-date N/A N/A 0.043% 0.007% INDEPENDENCE COMMUNITY BANK CORP. Selected Financial Ratios and Other Data (In thousands, except ratios and per share amounts) (Unaudited) For the Three Months Ended September 30, June 30, September 30, 2005 2005 2004 Average Average Average Net Interest Margin: Balance Rate Balance Rate Balance Rate (2) (2) (2) Interest-earning assets: Loans receivable: Mortgage loans $10,153,025 5.43% $9,751,220 5.32% $9,378,361 5.25% Commercial business loans 854,375 6.87 831,729 6.79 816,777 5.95 Mortgage warehouse lines of credit 696,917 6.40 558,031 5.97 612,018 4.48 Consumer and other loans 508,322 5.74 485,660 5.64 441,095 5.29 Total loans 12,212,639 5.60 11,626,640 5.48 11,248,251 5.26 Mortgage-related securities 3,220,819 4.33 3,444,278 4.37 3,429,954 4.35 Investment securities 402,649 4.68 380,351 4.61 625,010 4.06 Other interest-earning assets 287,118 4.00 265,842 4.02 309,373 1.93 Total interest-earning assets 16,123,225 5.29 15,717,111 5.19 15,612,588 4.95 Non-interest-earning assets 2,109,640 2,133,825 2,194,073 Total assets $18,232,865 $17,850,936 $17,806,661 Interest-bearing liabilities: Deposits: Savings deposits 2,327,875 0.34 2,466,423 0.34 2,749,247 0.34 Interest-bearing demand and money market deposits 3,465,224 2.09 3,485,534 1.79 2,972,082 1.25 Certificates of deposit 3,030,820 3.21 2,746,039 2.83 2,213,933 1.37 Total interest-bearing deposits 8,823,919 2.01 8,697,996 1.71 7,935,262 0.96 Non-interest-bearing demand deposits 1,537,621 -- 1,465,842 -- 1,495,617 -- Total deposits 10,361,540 1.71 10,163,838 1.46 9,430,879 0.81 Senior notes 21,573 5.21 -- -- -- -- Subordinated notes 396,912 3.90 396,675 3.95 396,004 3.86 Borrowings 5,038,947 3.09 4,809,352 3.01 5,672,352 2.73 Total interest-bearing liabilities 15,818,972 2.21 15,369,865 2.01 15,499,235 1.59 Non-interest-bearing liabilities 122,783 179,258 114,136 Total liabilities 15,941,755 15,549,123 15,613,371 Total stockholders' equity 2,291,110 2,301,813 2,193,290 Total liabilities and stockholders' equity $18,232,865 $17,850,936 $17,806,661 Net interest-earning assets $304,253 $347,246 $113,353 Interest rate spread (2) 3.08% 3.18% 3.36% Net interest margin (2) 3.12% 3.22% 3.37% Average interest-earning assets to average interest-bearing liabilities 101.92% 102.26% 100.73% INDEPENDENCE COMMUNITY BANK CORP. Selected Financial Ratios and Other Data (In thousands, except ratios and per share amounts) (Unaudited) For the Nine Months Ended September 30, 2005 September 30, 2004 Average Average Net Interest Margin: Balance Rate(2) Balance Rate(2) Interest-earning assets: Loans receivable: Mortgage loans $9,803,001 5.36% $7,540,625 5.48% Commercial business loans 833,257 6.78 752,412 6.09 Mortgage warehouse lines of credit 596,430 5.99 565,422 4.33 Consumer and other loans 489,454 5.67 389,770 5.32 Total loans 11,722,142 5.50 9,248,229 5.45 Mortgage-related securities 3,423,762 4.38 3,035,276 4.21 Investment securities 398,700 4.55 525,608 4.07 Other interest-earning assets 282,762 3.72 285,297 1.57 Total interest-earning assets 15,827,366 5.20 13,094,410 5.02 Non-interest-earning assets 2,139,930 1,619,338 Total assets $17,967,296 $14,713,748 Interest-bearing liabilities: Deposits: Savings deposits 2,458,091 0.36 2,345,590 0.34 Interest-bearing demand and money market deposits 3,392,558 1.82 2,492,654 1.12 Certificates of deposit 2,756,647 2.72 1,920,319 1.56 Total interest-bearing deposits 8,607,296 1.69 6,758,563 0.97 Non-interest-bearing demand deposits 1,480,559 -- 1,204,901 -- Total deposits 10,087,855 1.44 7,963,464 0.83 Senior notes 7,270 5.15 -- -- Subordinated notes 396,681 3.95 322,759 3.95 Borrowings 5,012,078 2.99 4,508,332 2.70 Total interest-bearing liabilities 15,503,884 2.01 12,794,555 1.56 Non-interest-bearing liabilities 161,934 174,854 Total liabilities 15,665,818 12,969,409 Total stockholders' equity 2,301,478 1,744,339 Total liabilities and stockholders' equity $17,967,296 $14,713,748 Net interest-earning assets $323,482 $299,855 Interest rate spread (2) 3.19% 3.46% Net interest margin (2) 3.24% 3.50% Average interest-earning assets to average interest-bearing liabilities 102.09% 102.34% (1) The merger with Staten Island Bancorp, Inc. ("SIB") was completed on April 12, 2004. As a result, SIB's assets and liabilities and results of operations were included in the Consolidated Statement of Financial Condition and Consolidated Statement of Income effective as of such date. (2) Presented on an annualized basis. (3) Reflects in each period presented adjusted operating expense (net of amortization of identifiable intangible assets) as a percentage of the aggregate of net interest income and adjusted non-interest income (excluding gains and losses on loans and securities). Amortization of identifiable intangible assets is excluded from the calculation since it is a non-cash expense. Gains and losses on loans and securities are also excluded since they are generally considered by the Company's management to be non-recurring in nature. The operating efficiency ratio is not a financial measurement required by generally accepted accounting principles in the United States of America. However, the Company believes such information is useful to investors in evaluating the Company's operations. (4) Reflects loans that are 90 days or more past maturity which continue to make payments on a basis consistent with the original repayment schedule. DATASOURCE: Independence Community Bank Corp. CONTACT: Kathleen A. Hanrahan, First Vice President, Investor Relations, +1-718-722-5400, or Frank W. Baier, Executive Vice President, Chief Financial Officer, +1-718-923-3506, both of Independence Community Bank Corp. Web site: http://www.myindependence.com/

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