First Ipswich Bancorp News

First Ipswich Bancorp Announces Profitable Second Quarter 2008

IPSWICH, Mass., July 28 PRNewswire-FirstCall — First Ipswich Bancorp (OTC Bulletin Board: FIWC) (the "Company"), the bank holding company for the First National Bank of Ipswich (the "Bank"), announced net income of $39,000 for the quarter ended June 30, 2008. "These modest earnings actually represent solid progress in the implementation of the Company's three-year strategic restructuring plan and an improvement from the previous quarter ended March 31, 2008. Our primary objective has been to restore profitability, while increasing the Company's capital levels and continuing high quality lending. While the profit number is modest, the more notable achievement is the Bank's solid position as a strong and active community lender, at a time when so many other financial institutions are struggling with eroding earnings and troubled loan portfolios," stated Russ Cole, President and CEO.

Unlike many other financial institutions, the Company has not experienced any losses related to sub-prime loans which have plagued the financial markets over the course of the recent months. With a continued focus on a disciplined growth strategy, the Bank expects to continue to improve its core profitability over the coming quarters. For the six months ended June 30, 2008, net loans increased by $10.7 million and deposits increased by $4.5 million. During the same six month period over $35 million in loans were originated, demonstrating the strong commitment the Bank has to its local businesses and communities.

The Bank's success in implementing its strategic plan is also evidenced in the improvements in the quality of its balance sheet. The low level of non-accrual loans at June 30, 2008 reflects the Bank's efforts to maintain a strong loan portfolio. The Bank had no loans on non-accrual status at June 30, 2008 as compared to $439,000 and $1,747,000 at December 31, 2007 and June 30, 2007, respectively. "Our efforts to manage the quality of our loan portfolio have resulted in remarkably low levels of loan delinquencies during this time of turmoil in the economy," stated Russ Cole, President and CEO.

The Bank's efforts to restructure and reduce non-interest expenses have resulted in improved core earnings. Non-interest expenses for the quarter ended June 30, 2008 totaled $3.2 million, down $0.4 million from the same quarter of 2007. Non-interest expenses for the six months ended June 30, 2008 totaled $6.4 million, down from $7.0 million during the same six month period of 2007.

The positive impact of the Bank's efforts to reduce expenses were offset by a decrease in the value of two financial instruments affected by recent declines in the stock market, a trend that began in the third quarter of 2007. The Bank recognized an $84,000 decrease in value of two financial instruments during the quarter ended June 30, 2008 as compared to a $205,000 increase in value during the same quarter of 2007. The decrease in value recognized for the six months ended June 30, 2008 was $454,000 as compared to an increase of $167,000 in the same six month period of 2007.

"As we continue to experience challenging economic conditions, locally and nationally, the Company remains focused on implementing the key elements of its strategic plan including steady improvement in core earnings. The continued prudent growth of loans and deposits while maintaining a vigilant oversight of the risk in the existing strong loan portfolio remain top priorities," said Russ Cole, President and CEO.

The First National Bank of Ipswich is a commercial community bank with branch offices in Beverly, Boston, Essex, Gloucester, Ipswich, Newburyport, and Rowley, Massachusetts and Portsmouth, NH. The Bank can be found on the web at www.FNBI.com. Press releases can be viewed on the internet at our website http://www.fnbi.com/sp.cfm?pageid=619.

First Ipswich Bancorp Condensed Consolidated Balance Sheets (Dollars in thousands) 06/30/2008 12/31/2007 Assets: Loans, net $210,092 $199,365 Investments and other earning assets 47,899 50,781 Foreclosed and in-substance foreclosed real estate 1,925 1,489 Other assets 29,377 31,470 Total assets $289,293 $283,105 Liabilities and stockholders' equity Deposits $216,128 $211,595 Borrowed funds 52,101 49,573 Other liabilities 1,634 2,357 Stockholders' equity 19,430 19,580 Total liabilities and stockholders' equity $289,293 $283,105 First Ipswich Bancorp Condensed Consolidated Income Statements (Dollars in thousands, except per share data) Quarter Ended Six Months Ended 06/30/2008 06/30/2007 06/30/2008 06/30/2007 Interest and fees on loans $3,483 $3,639 $6,981 $7,815 Investment and other interest income 505 769 1,044 1,507 Total interest income 3,988 4,408 8,025 9,322 Deposit interest expense 1,073 1,512 2,256 3,257 Other interest expense 540 593 1,151 1,170 Total interest expense 1,613 2,105 3,407 4,427 Net interest income 2,375 2,303 4,618 4,895 Provision for loan losses 66 (85) 106 (260) Non-interest income 951 1,338 1,619 2,726 Non-interest expense 3,177 3,634 6,445 7,002 Pre-tax income 83 92 (314) 879 Income tax expense 44 39 (186) 360 Net income $39 $53 $(128) $519 Basic earnings per share $0.02 $0.02 $(0.05) $0.22 Diluted earnings per share $0.02 $0.02 $(0.05) $0.22 End of period common shares outstanding 2,332,879 2,344,630 2,332,879 2,344,630 End of period preferred shares outstanding 11,751 - 11,751 - Average common shares outstanding: Basic 2,332,879 2,344,630 2,344,630 2,327,068 Diluted 2,332,879 2,347,891 2,344,630 2,329,434 Select Financial Data Book value per share $8.29 $8.28 First National Bancorp Bank of Ipswich 06/30/2008 12/31/2007 06/30/2008 12/31/2007 Leverage Ratio 7.71% 7.88% 9.70% 9.81% Tier 1 risk-based capital 9.86% 10.31% 12.42% 12.84% Total risk-based capital 13.47% 14.02% 13.16% 13.59%

SOURCE First Ipswich Bancorp

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