CCBT Financial Companies, Inc. Report 2003 Third Quarter and Year-to-Date Earnings

Business Wire, Oct 16, 2003

Business Editors

SOUTH YARMOUTH, Mass.--(BUSINESS WIRE)--Oct. 16, 2003

CCBT Financial Companies, Inc. (NASDAQ: CCBT) Chief Executive Officer and President Stephen B. Lawson announced third quarter 2003 earnings of $2.3 million, or $.27 per share, as compared to $3.9 million, or $.45 per share, earned in the same prior year period. For the nine months ended September 30, 2003, the Company reported earnings of $5.2 million, or $.61 per share, as compared to $13.5 million, or $1.56 per share in the same prior year period.

Mr. Lawson commented, "The three and nine month earnings in 2003 have been negatively affected by economic factors and several significant events thus far this year. The historic lows in interest rates and mortgage rates, in particular, have substantially accelerated pre-payments on both residential mortgage loans and investment securities backed by housing collateral, resulting in reinvestment of principal proceeds at much lower rates. This has also accelerated the write-off of deferred costs and mortgage servicing rights on residential mortgage loans and hastened the amortization of premiums paid on mortgage related investment securities. During the third quarter, we extended the hours of operations in our full service financial offices, opened a financial center in Mashpee Commons, worked toward completing our Pine Hills office and closed nine transaction locations in Stop & Shop supermarkets. The write-down of leasehold improvements and expenses incurred, in these efforts, are reflected in non-interest income-Other Loss and in the non-interest expense categories. Our nine-month earnings results also reflect the impact of these factors and events, as well as the previously disclosed settlement of the REIT tax issue with the Massachusetts Department of Revenue and losses from the impairment and sale of investment securities. Net interest income reported for both the quarter and year-to-date have decreased from the combination of earning asset yields having declined faster than our ability to lower funding costs, the accelerated write-down of residential mortgage deferred costs and the accelerated amortization of premiums on investment securities. The third quarter returns on average equity and assets, respectively, were 8.09% and 0.69% for 2003 as compared to 12.87% and 1.05% for the same period in 2002. For the nine months ended September 30, 2003, returns on average equity and assets, respectively, were 6.13% and 0.52%, as compared to 15.25% and 1.26%, in the 2002 comparable period.

"In 2003, our focus has been on upgrading, expanding and realigning our full service office locations, growing our sales associate staff and intensifying their training and education to increase non-interest income through growing fee-based revenue. All of CCBT's offices are now capable of providing our customers with the full range of financial offerings including banking, investment, brokerage, insurance, tax, estate and trust services and the number of staff attaining financial designations, including CPA, CFA, CFP, and brokerage and insurance licensing, is increasing steadily. These efforts have been successful as measured by the increase in income from financial service products (financial advisory, brokerage and insurance sales) from $2.7 to $3.1 million or 15.2% for the comparative quarters and from $7.9 to $9.3 million or 18.3% for the comparative nine months, after excluding the $398,000 adjustment in the second quarter of 2002 for the one-time recognition of deferred insurance commissions. Our strategy of providing a wide range of financial services to meet all the needs of our clients from under one roof will continue to be our foremost goal.

"Recent economic data points to an improvement in the U.S. economy, and recent increases in mortgage rates should contribute to stabilizing net interest spreads and margins at current levels. This has been a difficult year due to the results of historically low interest rates and our continued realignment as we refocus our business to include financial services. However, we believe that the worst is behind us and look forward to improving earnings in the next quarter and beyond."

Total assets have decreased to $1.35 billion at September 30, 2003 from $1.62 billion at September 30, 2002 driven by reductions in residential mortgage loans and housing-related investment securities. In this low rate environment, residential mortgage borrowers have refinanced from adjustable-rate to fixed-rate mortgages, which are sold to mitigate future interest rate risk. While residential mortgage loans have decreased $144 million, commercial and home equity loans were up $31 million and $15 million, or 7.4% and 23.6%, respectively, from a year ago. The quality of the loan portfolio remains strong as total non-performing assets declined from $3.5 million to $3.3 million at September 30, 2002 and 2003, respectively. The allowance for loan losses was $12.8 million on September 30, 2003, up modestly from $12.4 million a year ago. As loans and investments have declined, borrowings have decreased $250 million. This funding decline has been partially offset by deposit increases of $56 million or 5.7% from the September 30, 2002 levels. The deposit growth reflects organic growth in core deposits as the year-round Cape Cod region population continues to increase. The capital to assets ratio stands at 8.4% and 7.4%, respectively, at September 30, 2003 and 2002. We recorded positive results in the growth of our commercial loans and core deposits while maintaining asset quality and a strong capital position. CCBT Financial Companies, Inc. recently declared a $0.19 quarterly dividend to be paid October 31, 2003 to stockholders of record on October 20, 2003.