Back to GetFilings.com



Table of Contents

FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(XBOX)    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2002

OR

(BOX)    TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-16947

BANKNORTH GROUP, INC.

(Exact name of Registrant as specified in its charter)
     
Maine   01-0437984
 
(State or other jurisdiction of
incorporation or organization)		   (I.R.S. Employer
Identification No.)
     
Two Portland Square, Portland, Maine 04112
(Address of principal executive offices) (Zip Code)

(207) 761-8500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.

Yes (XBOX)   No (BOX)   

The number of shares outstanding of the Registrant’s common stock and related stock purchase rights as of July 31, 2002 is:

     
Common stock, par value $.01 per share   148,282,259
 
(Class)   (Outstanding)

Available on the Web @ www.banknorth.com

 

TABLE OF CONTENTS

CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF INCOME
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Notes to Consolidated Financial Statements
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Part II — Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds — not applicable.
Item 3. Defaults Upon Senior Securities — not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information — not applicable.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
EXHIBIT INDEX
Ex-99.1 Certification of CEO
Ex-99.2 Certification of CFO

Table of Contents

INDEX

BANKNORTH GROUP, INC. AND SUBSIDIARIES

             
PART I.   FINANCIAL INFORMATION   PAGE
       
    Item 1.   Financial Statements    
        Consolidated Balance Sheets
June 30, 2002 and December 31, 2001 		  3
        Consolidated Statements of Income –
Three and six months ended
June 30, 2002 and 2001 		  4
        Consolidated Statements of Changes in Shareholders’ Equity -
Six months ended June 30, 2002 and 2001 		  5
        Consolidated Statements of Cash Flows –
Six months ended June 30, 2002 and 2001 		  6
        Notes to Consolidated Financial Statements   7
    Item 2.   Management’s Discussion and Analysis of Financial
      Condition and Results of Operations 		  12
    Item 3.   Quantitative and Qualitative Disclosures about Market Risk   39
PART II.   OTHER INFORMATION    
         
    Item 1.   Legal proceedings   39
    Item 2.   Changes in securities and use of proceeds   39
    Item 3.   Defaults upon senior securities   39
    Item 4.   Submission of matters to a vote of security holders   39
    Item 5.   Other information   40
    Item 6.   Exhibits and reports on Form 8-K   40
Signatures           41

2

Table of Contents

BANKNORTH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

                         
            June 30, 2002   December 31, 2001
           
 
Assets   (Unaudited)        
Cash and due from banks
   $ 512,703     $ 650,588  
Federal funds sold and other short term investments
     133,853       270,623  
Securities available for sale, at market value
     6,031,881       5,817,238  
Securities held to maturity (fair value of $286,750 and $340,737 at June 30, 2002 and December 31, 2001, respectively)
     281,668       339,623  
Loans held for sale
     52,061       117,674  
Loans and leases:
                
 
Residential real estate mortgages
     2,510,233       2,627,125  
 
Commercial real estate mortgages
     4,316,080       4,094,039  
 
Commercial business loans and leases
     2,677,760       2,462,653  
 
Consumer loans and leases
     3,549,053       3,531,513  
 
    
     
 
   
Total loans and leases
     13,053,126       12,715,330  
 
Less: Allowance for loan and lease losses
     193,444       189,837  
 
    
     
 
       
Net loans and leases
     12,859,682       12,525,493  
 
    
     
 
Premises and equipment, net
     238,006       237,440  
Goodwill
     409,051       409,340  
Identifiable intangible assets
     48,849       57,293  
Mortgage servicing rights
     7,578       8,484  
Bank-owned life insurance
     369,774       321,113  
Other assets
     315,532       321,677  
 
    
     
 
 
Total assets
   $ 21,260,638     $ 21,076,586  
 
    
     
 
Liabilities and Shareholders’ Equity
               
Deposits:
                
 
Savings accounts
   $ 1,724,735     $ 1,604,556  
 
Money market access and NOW accounts
     5,386,871       5,129,626  
 
Certificates of deposit
     4,579,648       4,811,357  
 
Brokered deposits
     41,585       72,171  
 
Demand deposits
     2,670,739       2,603,339  
 
    
     
 
     
Total deposits
     14,403,578       14,221,049  
Federal funds purchased and securities sold under repurchase agreements
     1,842,195       1,620,555  
Borrowings from the Federal Home Loan Bank
     2,467,378       2,644,105  
Other borrowings
     71,558       43,972  
Subordinated long-term debt
     200,000       200,000  
Company obligated, mandatorily redeemable securities of subsidiary trusts holding solely parent junior subordinated debentures
     293,756       93,756  
Other liabilities
     166,735       464,034  
 
    
     
 
 
Total liabilities
     19,445,200       19,287,471  
 
    
     
 
Shareholders’ Equity:
                
Preferred stock (par value $0.01 per share, 5,000,000 shares authorized, none issued)
     —       —  
Common stock (par value $0.01 per share, 400,000,000 shares authorized, 165,120,567 shares issued in 2002 and 165,123,674 shares issued in 2001)
     1,651       1,651  
Paid-in capital
     955,215       958,764  
Retained earnings
     1,157,457       1,056,678  
Unearned compensation
     (371 )     (1,017 )
Treasury stock, at cost (18,025,230 shares in 2002 and 13,903,074 shares in 2001)
     (374,417 )     (267,529 )
Accumulated other comprehensive income
     75,903       40,568  
 
    
     
 
 
Total shareholders’ equity
     1,815,438       1,789,115  
 
    
     
 
   
Total liabilities and shareholders’ equity
   $ 21,260,638     $ 21,076,586  
 
    
     
 

See accompanying Notes to Consolidated Financial Statements.

3

Table of Contents

BANKNORTH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) (Unaudited)

                                     
        Three Months Ended   Six Months Ended
        June 30,   June 30,
       
 
        2002   2001   2002   2001
       
 
 
 
Interest and dividend income:
                                
 
Interest and fees on loans and leases
   $ 218,981     $ 221,507     $ 440,764     $ 450,330  
 
Interest and dividends on securities
     90,406       95,128       174,629       192,849  
 
 
    
     
     
     
 
   
Total interest and dividend income
     309,387       316,635       615,393       643,179  
 
 
    
     
     
     
 
Interest expense:
                                
 
Interest on deposits
     61,466       95,989       126,307       200,227  
 
Interest on borrowed funds
     48,448       54,946       93,127       121,304  
 
 
    
     
     
     
 
   
Total interest expense
     109,914       150,935       219,434       321,531  
 
 
    
     
     
     
 
   
Net interest income
     199,473       165,700       395,959       321,648  
Provision for loan and lease losses
     10,829       9,311       22,657       16,450  
 
 
    
     
     
     
 
   
Net interest income after provision for loan and lease losses
     188,644       156,389       373,302       305,198  
 
 
    
     
     
     
 
Noninterest income:
                                
 
Deposit services
     19,936       18,401       38,896       35,947  
 
Mortgage banking services
     489       1,776       2,165       5,010  
 
Trust and investment management services
     8,519       8,703       16,796       17,490  
 
Investment planning services
     2,964       1,760       5,681       3,458  
 
Insurance brokerage commissions
     10,060       9,241       20,215       19,209  
 
Bank-owned life insurance
     4,994       4,891       9,371       9,198  
 
Merchant and electronic banking income, net
     9,661       7,971       17,410       14,462  
 
Loan fee income
     5,086       2,981       10,519       5,685  
 
Net securities gains
     350       45       369       803  
 
Other noninterest income
     927       1,828       3,140       5,092  
 
 
    
     
     
     
 
 
     62,986       57,597       124,562       116,354  
 
 
    
     
     
     
 
Noninterest expenses:
                                
 
Salaries and employee benefits
     75,747       62,856       151,044       124,550  
 
Data processing
     9,843       8,917       20,425       17,878  
 
Occupancy
     12,785       11,070       25,284       22,882  
 
Equipment
     9,908       8,746       19,638       16,907  
 
Amortization of goodwill
     —       2,761       —       5,554  
 
Amortization of identifiable intangible assets
     2,894       2,631       6,230       5,262  
 
Special charges
     1,061       —       9,265       5,608  
 
Other noninterest expenses
     26,304       24,846       51,305       48,026  
 
 
    
     
     
     
 
 
     138,542       121,827       283,191       246,667  
 
 
    
     
     
     
 
Income before income tax expense
     113,088       92,159       214,673       174,885  
Applicable income tax expense
     38,077       32,266       72,333       59,608  
 
 
    
     
     
     
 
   
Net income before cumulative effect of change in accounting principle
     75,011       59,893       142,340       115,277  
Cumulative effect of change in accounting principle, net of tax
     —       —       —       (290 )
 
 
    
     
     
     
 
   
Net income
   $ 75,011     $ 59,893     $ 142,340     $ 114,987  
 
 
    
     
     
     
 
Basic earnings per share:
                                
 
Net income before cumulative effect of accounting change
   $ 0.51     $ 0.44     $ 0.96     $ 0.83  
 
Cumulative effect of change in accounting principle, net of tax
     —       —       —       —  
 
 
    
     
     
     
 
 
Net income
   $ 0.51     $ 0.44     $ 0.96     $ 0.83  
 
 
    
     
     
     
 
Diluted earnings per share:
                                
 
Net income before cumulative effect of accounting change
   $ 0.50     $ 0.43     $ 0.95     $ 0.82  
 
Cumulative effect of change in accounting principle, net of tax
     —       —       —       —  
 
 
    
     
     
     
 
 
Net income
   $ 0.50     $ 0.43     $ 0.95     $ 0.82  
 
 
    
     
     
     
 
Weighted average shares outstanding:
                                
   
Basic
     147,233       137,659       148,258       139,236  
   
Diluted
     149,064       138,901       150,068       140,461  

See accompanying Notes to Consolidated Financial Statements.

4

Table of Contents

BANKNORTH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands) (Unaudited)

                                                           
                                              Accumulated        
                              Unearned           Other        
      Common   Paid-in   Retained   Compen-   Treasury   Comprehensive        
      Stock   Capital