CAMERON PARK, Calif., Feb. 4 /PRNewswire-FirstCall/ -- Western Sierra Bancorp , a multi-bank holding company, headquartered in Cameron Park, California, announced results for the fourth quarter and year ended December 31, 2005.
Financial Highlights from the year of 2005 vs. 2004:
* An increase in GAAP net income of $2.71 million or 18.0% to
$17.75 million
* An increase in GAAP net income excluding terminated merger expenses of
$232,000, net of tax, to $17.98 million or 19.6%
* An increase in Diluted GAAP EPS to $2.23 from $1.91 or 16.8%
* An increase in Diluted GAAP EPS excluding terminated merger expenses to
$2.26 from $1.91 or 18.3%
* GAAP ROA and ROE of 1.43% and 14.82%, as compared to 1.33% and 14.83%
* ROA and ROE excluding terminated merger expenses of 1.45% and 15.02%, as
compared to 1.33% and 14.83%
* Return on tangible equity of 21.02% as compared to 22.96%
* Total assets increased $94 million or 7.8% to $1.29 billion
* Average loans increased $113 million or 12.8% to $993 million
* Average deposits increased $79 million or 8.3% to $1.04 billion
* Net interest margin (FTE) increased 21 basis points to 5.35% from 5.14%
* Efficiency ratio increased to 55.8% from 55.2%
* Nonperforming assets ended the year at 0.11% as compared to 0.12% at
December 31, 2004
Financial Highlights from the 4th quarter of 2005 vs. 2004:
* An increase in GAAP net income of $881,000 or 21.8% to $4.92 million
* An increase in Diluted GAAP EPS to $0.62 from $0.51 or 21.6%
* GAAP ROA and ROE of 1.53% and 15.39%, as compared to 1.35% and 14.93%
* Return on tangible equity of 21.28% as compared to 22.37%
* Average loans increased $104 million or 11.3% to $1.03 billion
* Average deposits increased $39 million or 3.8% to $1.06 billion
* Net interest margin (FTE) increased 38 basis points to 5.50% versus
5.12%
* Efficiency Ratio increased to 55.0% from 54.9%
Management Comments
Gary D. Gall, President and CEO of Western Sierra Bancorp, stated, "During 2005, we eclipsed $1 billion in loans and our record of strong asset quality and organic loan growth continued. Our net interest margin expanded by twenty-one basis points in 2005 which drove earnings growth. In 2006, we will continue to deliver the relationship banking experience that our clients have come to expect."
Discussion of Non-GAAP Financial Measures
In order to assist investors in comparing what management believes to be the Company's core operating results from one period to another, included herein are financial measures that exclude the affect of "terminated merger expenses." In November 2004, the Company entered into a definitive agreement to acquire Gold Country Financial Services Inc. This agreement was terminated by the mutual consent of both parties in June of 2005. Included in the Company's operating results for the quarter ending June 30, 2005 and the year ending December 31, 2005 are approximately $400,000 ($232,000 after tax) in legal, consulting, data processing, accounting and other merger costs that were incurred and capitalized while the transaction was pending. Management does not expect a similar charge to be incurred in the foreseeable future. In management's view, net income excluding terminated merger expenses assists investors in better understanding the comparative core operating performance of the Company.
Information regarding the Review of Accounting for Income Taxes
On January 31 2006, the Company issued a press release and announced it was conducting a comprehensive review of the historical accounting for income taxes. Based upon this review, it has been concluded that the aggregate potential adjustments are approximately $500,000 and relate to accounting periods prior to 2003. In the opinion of management, these amounts are immaterial to all accounting periods contained herein and to shareholder's equity; thus no adjustment or restatement of the financial statements is required.
Record Earnings and Returns
The Company reported record GAAP earnings of $4.92 million for the quarter or $0.62 per diluted share, an increase of $881,000 or 21.8% over the quarter ended December 31, 2004 in which earnings were $4.04 million or $0.51 per diluted share.
For the year ended December 31, 2005, the Company reported GAAP earnings of $17.75 million or $2.23 per diluted share, an increase of $2.71 million or 18.0% over the same period in 2004 in which earnings were $15.04 million or $1.91 per diluted share. Excluding terminated merger costs of $232,000 after tax, net income for the year ended December 31, 2005 was $17.98 million or $2.26 per diluted share, an increase of $2.94 million or 19.6% over the same period in 2004.
Return on average assets ("ROA") was 1.53% and 1.43% for the quarter and the year ended December 31, 2005 as compared to 1.35% and 1.33% for the fourth quarter and the year ended December 31, 2004, respectively. Excluding terminated merger expenses, ROA was 1.45% for the year ended December 31, 2005, as compared to 1.33% for the same period of 2004.
The Company's return on average equity ("ROE") was 15.39% for the fourth quarter and 14.82% for the year ended December 31, 2005 as compared to 14.93% and 14.83% for the fourth quarter and year ended December 31, 2004. Excluding terminated merger expenses, ROE was 15.02% for the year ended December 31, 2005 as compared to 14.83% for same period of 2004.
Strong Loan and Deposit Growth
Total assets ended the year at a record high of $1.29 billion. This represents a $94 million or 7.8% increase over December 31, 2004. The Company has continued its record of strong loan growth. Total gross loans grew to $1.05 billion, an increase of $111 million or 11.9% over a year ago. Total deposits grew to a record $1.05 billion, which represents a $26 million or 2.5% increase over December 31, 2004.
For the year ended December 31, 2005, average loans increased $113 million or 12.8% to $993 million over the same period of 2004. For the fourth quarter of 2005, average loans increased $17 million or 1.7% to $1.03 billion over the third quarter of 2005 and increased $104 million or 11.3% over the fourth quarter of 2004.
For the year ended December 31, 2005, average deposits increased $79 million or 8.3% to $1.04 billion over 2004. For the fourth quarter of 2005, average deposits increased $4 million or 0.4% to $1.06 billion over the third quarter of 2005 and increased $39 million or 3.8% over the fourth quarter of 2004.
Net Interest Income Reaches Record High
Net interest income increased by $2.17 million or 15.9% over the fourth quarter of 2004. The Company's reported net interest margin (on a fully tax equivalent basis "FTE") of 5.50% which represents an increase of 16 basis points over the third quarter of 2005 and 38 basis points over the fourth quarter 2004. For the year ended December 31, 2005, net interest income increased $7.68 million or 14.8% and the net interest margin (FTE) increased 21 basis points from the full year 2004.
The Company's cost of funds was 1.80% in the fourth quarter of 2005 as compared to 1.64% in the third quarter of 2005 and 1.17% in the fourth quarter of 2004. Yield on earning assets was 7.27% in the fourth quarter of 2005 as compared to 6.97% in the third quarter of 2005 and 6.29% in the fourth quarter of 2004.
For the full year 2005 the Company's cost of funds was 1.55%, yield on earning assets 6.89% and net interest margin 5.35%. In 2004, the Company's cost of funds was 1.11%, yield on earning assets 6.26% and net interest margin 5.14%.
Superior Asset Quality
Non-performing assets ("NPA's") as of December 31, 2005 totaled $1,412,000 or 0.11% of total assets, compared to $1,473,000 or 0.12% of total assets at December 31, 2004. Net of government guarantees of $500,000 and $584,000, NPA's totaled $912,000 (.07% of total assets) and $889,000 (0.07% of total assets) at December 31, 2005 and 2004, respectively.
The allowance for loan losses totaled $15.5 million, or 1.48% of loans outstanding at December 31, 2005, compared to $13.8 million or 1.47% a year ago. Total provision for loan losses were $2.05 million for the year ended December 31, 2005.
The Company recorded net charge-offs of $116,000 in the fourth quarter of 2005 as compared to $96,000 in the same period of 2004. For the year ended December 31, 2005, net charge-offs were $331,000 (0.04% of average loans) as compared to $453,000 (0.05% of average loans) for the same period of 2004.
Other Income / Expense and the Efficiency Ratio
Non-interest income grew $471,000 or 16.1% in the fourth quarter of 2005 as compared to the fourth quarter of 2004. This was primarily attributable to increased deposit service charges and fees of $472,000, an increase in premiums on the sale of mortgage loans of $110,000, a $158,000 gain on the sale of SBA loans, a $196,000 gain on the sale of a real estate property, and a $161,000 gain (net of selling expenses) on the sale of the Company's credit card portfolio. These increases were offset in part by a reduction in bank- owned life insurance income of $479,000 as a result of a $585,000 death benefit recorded in 2004.
For the year ended December 31, 2005, the Company grew non-interest income by $2.44 million or 22.7% primarily due to increased deposit service charges and fees of $901,000, a $555,000 gain on the sale of SBA loans, an increase in premiums on the sale of mortgage loans of $269,000 and a $275,000 contract settlement.
Total operating expenses increased $1.24 million or 12.6% in the fourth quarter of 2005 as compared to the same period in 2004. This increase was driven by an increase in salaries and benefits of $880,000 or 16.7% and an increase in occupancy expense of $264,000 or 17.7%. Total operating expenses grew at a faster rate (12.4%) in the fourth quarter than fully tax equivalent net revenue (12.3%) resulting in a negative impact on the efficiency ratio, which increased from 54.9% in the fourth quarter of 2004 to 55.0% in the fourth quarter of 2005.
Total operating expenses increased $6.38 million or 17.5% for the full year 2005 over 2004. This increase was driven by an increase in salaries and benefits of $3.5 million or 17.6% and an increase in occupancy expense of $1.0 million or 17.4%. Total operating expenses grew at a faster rate (16.3% for the twelve-month period) than fully tax equivalent net revenue (15.2%) resulting in a negative impact on the efficiency ratio, which increased from 55.2% in 2004 to 55.8% in 2005.
Conference Call
The Company will conduct an earnings conference call Monday, February 6, 2006 at 10:00 a.m. pacific standard time. Instructions to participate are as follows:
Dial In #: (877) 381-6419
Conference Name: (Western Sierra Bancorp)
Leader Name: (Gary Gall, President and CEO)
Date of Call: (February 6, 2006)
Time of Call: (10:00 a.m. PST) (1:00 p.m. EST)
Expected duration of the call is forty-five minutes
Other Information and Disclaimers
Western Sierra Bancorp is comprised of Western Sierra National Bank, Lake Community Bank, Central California Bank and Auburn Community Bank. The Company operates thirty-two branches and four loan production facilities in the counties of El Dorado, Placer, Sacramento, Lake, Stanislaus, San Joaquin, Calaveras, Amador, Contra Costa, Tuolumne and Butte.
This press release contains statements which constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risk and uncertainties. Actual results may differ materially from the results in these forward-looking statements. Factors that might cause such a difference include, among other things, fluctuations in interest rates, changes in economic conditions or governmental regulation, credit quality and other factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2004.
This press release contains statements which constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risk and uncertainties. Actual results may differ materially from the results in these forward-looking statements. Factors that might cause such a difference include, among other things, fluctuations in interest rates, changes in economic conditions or governmental regulation, credit quality and other factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2004.
Western Sierra Bancorp and Subsidiaries
Consolidated Statements of Income
(dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
(Unaudited) December 31, December 31,
2005 2004 Growth % 2005 2004 Growth %
Interest income:
Interest and
fees on loans $19,708 $15,680 25.7% $71,761 $59,078 21.5%
Interest on
investment
securities:
Taxable 472 498 1,818 1,736
Exempt from
federal taxes 439 395 1,695 1,562
Interest on
Federal funds
sold 438 310 1,455 707
Total
interest
income 21,057 16,883 24.7% 76,729 63,083 21.6%
Interest
expense:
Interest on
deposits 4,007 2,539 13,375 9,049
Interest on
borrowed funds 1,161 629 3,926 2,287
Total
interest
expense 5,168 3,168 63.1% 17,301 11,336 52.6%
Net interest
income 15,889 13,715 15.9% 59,428 51,747 14.8%
Provision for
loan losses
(LLP) 370 800 -53.8% 2,050 2,710 -24.4%
Net interest
income after
LLP 15,519 12,915 20.2% 57,378 49,037 17.0%
Non-interest
income:
Service charges
and fees 1,560 1,088 5,609 4,708
Investment
service fee
income 160 104 792 621
Net gain on
sale and
packaging of
residential
mortgage loans 870 760 4,062 3,793
Gain on sale
of government-
guaranteed
loans 158 0 713 0
Loss on sale
of investment
securities (2) 3 (4) (9)
Other income 652 972 2,026 1,643
Total non-
interest
income 3,398 2,927 16.1% 13,198 10,756 22.7%
Other expenses:
Salaries and
benefits 6,135 5,255 23,412 19,915
Occupancy and
equipment 1,755 1,491 6,792 5,783
Other expenses 2,994 2,900 11,434 9,961
Merger expenses 0 0 400 0
Amortization of
core deposit
intangibles 180 180 720 720
Total other
expenses 11,064 9,826 12.6% 42,758 36,379 17.5%
Income before
income tax 7,853 6,016 30.5% 27,818 23,414 18.8%
Income taxes 2,931 1,975 10,072 8,378
GAAP net
income $4,922 $4,041 21.8% $17,746 $15,036 18.0%
Merger expense
after tax 0 0 232 0
GAAP net
income
excluding
merger
expenses $4,922 $4,041 21.8% $17,978 $15,036 19.6%
GAAP net income
Basic earnings
per share $0.64 $0.53 20.8% $2.30 $1.99 15.6%
Diluted earnings
per share $0.62 $0.51 21.6% $2.23 $1.91 16.8%
GAAP net income
excluding merger
expenses
Basic earnings
per share $0.64 $0.53 20.8% $2.33 $1.99 17.1%
Diluted earnings
per share $0.62 $0.51 21.6% $2.26 $1.91 18.3%
Shares used to
compute Basic
EPS 7,737 7,621 7,707 7,557
Shares used to
compute Fully
Diluted EPS 7,955 7,948 7,951 7,892
Average
Loans $1,030,384 $925,951 11.3% $993,219 $880,156 12.8%
Average
Investments $126,741 $153,191 -17.3% $128,737 $139,037 -7.4%
Average
Earning
Assets $1,157,125 $1,079,142 7.2% $1,121,956 $1,019,193 10.1%
Average
Deposits $1,058,102 $1,019,141 3.8% $1,036,740 $957,611 8.3%
Average
Non-interest
Demand
Deposits $294,483 $270,456 8.9% $284,455 $246,369 15.5%
Average
Interest-
bearing
Liabilities $846,506 $806,681 4.9% $830,888 $773,328 7.4%
Average
Assets $1,277,990 $1,195,070 6.9% $1,242,509 $1,131,179 9.8%
Average
Equity $126,904 $107,683 17.8% $119,720 $101,405 18.1%
Return on
Average Assets
(GAAP) 1.53% 1.35% 1.43% 1.33%
Return on
Average Equity
(GAAP) 15.39% 14.93% 14.82% 14.83%
Return on
Tangible
Equity 21.28% 22.37% 21.02% 22.96%
Return on
Tangible
Equity
excluding
merger expense 21.28% 22.37% 21.26% 22.96%
Net Interest
Margin (FTE) 5.50% 5.12% 5.35% 5.14%
Efficiency
Ratio (FTE) 55.0% 54.9% 55.8% 55.2%
Western Sierra Bancorp and Subsidiaries
Consolidated Balance Sheet
(dollars in thousands)
(Unaudited)
ASSETS: Dec. 31, Dec. 31, Growth %
2005 2004
Cash and due from banks $41,972 $29,975
Federal funds sold 39,535 74,630
Cash and cash equivalents 81,507 104,605 -22.1%
Interest-bearing deposits 1,200
Loans held for sale 3,190 2,685
Investment securities:
Trading 41 42
Available for sale (amortized
cost $78,940 in 2005 and
$81,106 in 2004) 79,519 82,521
Held to maturity (market value
of $2,960 in 2005 and $3,202
in 2004) 2,888 3,067
Total investments 82,448 85,630 -3.7%
Portfolio loans:
Real estate mortgage 681,717 600,108
Real estate construction 244,872 199,140
Commercial 98,152 119,823
Agricultural 15,828 11,514
Other Loans 7,066 5,928
Total gross loans 1,047,635 936,513 11.9%
Deferred loan fees, net (3,663) (3,008)
Allowance for loan losses (15,505) (13,786)
Net portfolio loans 1,028,467 919,719 11.8%
Premises and equipment, net 19,466 20,808
Other real estate
Goodwill and other intangible assets 33,177 33,913
Other assets 44,318 30,150
Total Assets $1,292,573 $1,198,710 7.8%
LIABILITIES AND SHAREHOLDERS' EQUITY:
Non-interest bearing deposits $276,667 $ 272,250 1.6%
Interest bearing deposits:
NOW, money market and savings 395,257 405,967
Time, over $100,000 222,496 185,935
Other time 154,275 158,814
Total deposits 1,048,695 1,022,966 2.5%
Borrowed funds 66,000 21,500
Subordinated debt 37,116 37,116
Other liabilities 10,530 6,977
Total liabilities 1,162,341 1,088,559 6.7%
Shareholders' equity:
Preferred stock- no par value;
15,000,000 shares authorized;
none issued -- --
Common stock- no par value;
15,000,000 shares authorized;
issued - 7,782,223 shares in
2005 and 7,629,762 shares in 2004 71,042 68,125
Retained earnings 58,855 41,109
Accumulated other comprehensive
income 335 917
Total shareholders' equity 130,232 110,151 18.2%
Total Liabilities and
Shareholders' Equity $1,292,573 $1,198,710 7.8%
Allowance for loan losses to
Gross Loans 1.48% 1.47%
Ending Delinquent Loans $5 $344
Gross Non Performing Loans
(non accrual and > 90 days) $1,412 $1,473
Government Guaranteed portion of
Non Performing Loans $500 $584
Non Performing Loans net of
Government Guarantees $912 $889
OREO $-- $--
YTD Net Charge-offs $331 $453
YTD Net Charge-offs as a % of Avg Loans 0.04% 0.05%
Gross Non Performing Assets as a
% of Total Assets 0.11% 0.12%
Non Performing Assets net of
Government Guarantees as a % of
Total Assets 0.07% 0.07%
Book Value Per Share $16.73 $14.44
Tangible Book Value Per Share $12.47 $9.99
Total Risk Based Capital
To Risk Weighted Assets 13.23% 12.58%
Tier 1 Capital to Risk Weighted Assets 11.98% 11.33%
Tier 1 Capital to Average Assets
(Leverage Ratio) 10.44% 9.48%
