Bank group’s earnings ‘solid’ Banknorth income increases 10 percent

PORTLAND – Banknorth Group on Monday reported a second quarter net income of $95.8 million, a 10 percent increase over a year ago.

Banknorth, the parent company of Peoples Heritage Bank in Maine and other banks in the Northeast, said total loans and leases increased by 15 percent during the quarter that ended June 30. The company also furthered its strategy of acquiring community banks in suburban Massachusetts.

“It was a solid quarter all the way around marked by strong loan and deposit growth, successful acquisition integration and tight expense control,” said William Ryan, president and chief executive officer.

Jim Ackor, director of equity research at RBC Capital Markets in Portland, said Banknorth continues to turn in strong numbers.

“Good old blocking and tackling, producing yet another solid quarter,” Ackor said.

For the quarter, Banknorth had income of 55 cents per share, up from 53 cents for the same period last year. Its earnings were in line with analysts’ expectations.

It reported that interest income rose 9 percent, noninterest income increased 5 percent and assets grew 14 percent to $29.3 billion. Commercial real estate and business loans increased 18 percent, while consumer loans went up 13 percent.

Net interest margin fell to 3.66 percent from 3.71 percent a year ago. But with the Federal Reserve beginning to boost interest rates gradually, the interest margin is expected to creep up at Banknorth and other banks, Ackor said.

“Which is something we haven’t been able to talk about for a very long time,” he said.

Banknorth this year has continued buying smaller community banks in suburban Massachusetts. Last month it announced it would acquire the parent of Boston Federal Savings Bank, which has $1.7 billion in deposits and 16 branches throughout the Boston area.

Banknorth also completed acquisitions of CCBT Companies Inc., Foxborough Savings Bank and First & Ocean Bancorp Inc., helping it increase its presence in Massachusetts to 145 bank locations.

Banknorth is the largest bank with headquarters in New England following Bank of America’s acquisition of FleetBoston Financial Corp., which was completed April 1.

Banknorth Group’s banking subsidiaries include Peoples Heritage in Maine, Bank of New Hampshire, Banknorth Massachusetts, Banknorth Vermont, Banknorth Connecticut and Evergreen Bank in upstate New York.