Vail Banks (NASDAQ:VAIL)
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Vail Banks Announces First Quarter Results
AVON, Colo., April 18 /PRNewswire-FirstCall/ -- Vail Banks, Inc. (NASDAQ:VAIL)
today reported diluted net income per share of $0.16 for the first quarter 2005
compared to $0.08 for first quarter 2004, excluding the gain on the sale of
fixed assets of $1.7 million. Net income for the quarter was $885,000 versus
$419,000 in the first quarter 2004 excluding the gain. Including the gain on
the sale of fixed assets, the company earned $1.2 million or $0.22 per share in
the first quarter of 2004.
"Highlights of the quarter were strong core deposit growth, continued high
credit quality, and new loan originations," commented Gary Judd, CEO of Vail
Banks, Inc. "Our core deposit balances improved $51.3 million or 12 percent
since the last quarter. This core growth has significantly contributed to
keeping our cost of funds to a low 1.35 percent during the first quarter 2005.
We are pleased with having only a 12 basis point increase in our funding costs
since December 31, 2004 given the 50 basis point increase in short-term rates
by the Federal Reserve in the past 90 days. We believe this core funding is an
important component of our future growth and profitability. As a result of
this, our net interest margin has improved to 5.11 percent during the quarter,
up from 4.95 percent during the fourth quarter 2004."
"Loans have increased $87.7 million since the first quarter of last year or 28
percent. Average earning assets are up 11 percent since the first quarter
2004, or $55.5 million, while total average assets have increased 10 percent or
$58.9 million over the same period. Our asset quality continues to be strong
with a $29,000 net recovery for the quarter compared to net charge-offs of
$300,000 for the same period last year. The allowance for loan losses to loans
stood at .99 percent compared to .96 percent for the previous quarter," stated
Mr. Judd.
"Interest income and fees on loans are up 26 percent or $1.6 million since the
first quarter of 2004. This increase, coupled with the improved margin
resulting from strong core deposit growth, increased net interest income 36
percent or $1.8 million from the first quarter 2005 compared to the first
quarter of 2004. This reflects the hard work of our lending officers and
retail office associates in delivering and executing our plan to provide
customers with the financial solutions they need," commented Mr. Judd.
Deposit growth during the quarter contributed to an improved liquidity position
at March 31, 2005. We have invested a portion of this excess liquidity in
short-term investment securities with maturities of 90 days or less.
Investment securities increased 24 percent or $25.9 million during the quarter
while fed funds sold have increased $33.8 million. The yield on investment
securities increased to 5.13 percent during the quarter as a result of reduced
amortization of premiums on securities that had been accelerated in previous
quarters in expectation of probable prepayments. Earlier this month we
paid-off over $6 million of our higher rate borrowings with the Federal Home
Loan Bank to further improve our net interest margin. We anticipate that
future loan growth will absorb a substantial portion of the remaining excess
liquidity in the coming months.
Total non-interest income decreased $454,000, or 22 percent from the first
quarter 2005 compared to the fourth quarter for 2004. $418,000 of this
decrease represents lower mortgage fees from reduced origination volumes caused
by increasing interest rates. However, given the variable overhead of this
business line, this reduced volume does not have a proportional impact on the
net income of the Company.
Non-interest expenses declined $513,000 during the past quarter. During the
fourth quarter of 2004 the Company had a $311,000 loss on sale of securities.
In addition, $180,000 of this change reflects reduced salary and benefit costs,
largely because of reduced commissions paid to mortgage originators due to
lower origination volumes. In addition, occupancy costs, professional fees,
and supplies and printing costs were down for the quarter. This was offset
slightly by higher costs associated with depreciation on furniture and
equipment. "During 2005, the Company will continue to review closely all of
its operating expenses in an effort to be more efficient in its overall
processing and delivery of value added services to our customers," stated Mr.
Judd.
On April 5, 2005, the Company launched a new customer-driven brand initiative
for each of its 23 banking offices in 18 Colorado communities. Extensive
research with current and prospective customers identified that professional
associates providing personal attention, exceptional service delivery, and
strong, long-term banking relationships separate the Company from other choices
in Colorado. To further align these identified strengths, we modified the
brand of our wholly-owned subsidiary, WestStar Bank, to WestStar Bank. Expect
Action. "We are very excited about our new brand launch and believe that it
will continue to strengthen our relationship with existing customers and
WestStar's awareness with prospective customers in the future. Additionally,
WestStar Bank has upgraded its web site consistent with the new brand identity,
featuring greater interaction and improved, simple navigation. I encourage you
to visit it at weststarbank.com," commented Mr. Judd.
At its meeting on April 18, the Board of Directors of Vail Banks declared a
regular quarterly dividend of $0.07 per share payable May 13 to shareholders of
record on April 29.
Vail Banks, Inc., through its subsidiary WestStar Bank, has 23 banking offices
in 18 communities in Colorado, including Aspen, Avon, Breckenridge, Cedaredge,
Delta, Denver, Dillon, Edwards, Estes Park, Frisco, Glenwood Springs, Granby,
Grand Junction, Gypsum, Montrose, Norwood, Telluride and Vail.
This news release contains forward-looking statements, as defined by federal
securities laws, including statements about financial outlook and business
environment. These statements are provided to assist in the understanding of
future financial performances and such performance involves risks and
uncertainties that may cause actual results to differ materially from those in
such statements. Any such statements are based on current expectations and
involve a number of risks and uncertainties. For a discussion of factors that
may cause such forward-looking statements to differ materially from actual
results, please refer to the section entitled "Certain Factors Affecting
Forward Looking Statements" of Vail Banks, Inc.'s annual report filed on Form
10-K with the Securities and Exchange Commission.
Vail Banks, Inc.
Financial Highlights
(in thousands, except share data)
(unaudited)
Three Months Ended
Mar. 31, Dec 31, Sept. 30, June 30, Mar. 31,
2005 2004 2004 2004 2004
Earnings and
Performance
Net income $885 $643 $559 $574 $1,180
Diluted net income
per share 0.16 0.12 0.10 0.11 0.22
Return on assets 0.55 % 0.41 % 0.37 % 0.39 % 0.80 %
Return on equity 5.95 4.30 3.79 3.95 8.13
Net interest
margin (FTE) 5.11 4.95 4.68 4.38 4.17
Efficiency ratio 84 89 87 89 73
Return on
tangible equity 14.86 10.93 9.87 10.32 21.84
Asset Quality
Ratios
Net charge-offs
(recoveries)
to average
loans (0.03) % 0.03 % (0.05) % 0.04 % 0.38 %
Allowance for
loan losses
to loans 0.99 0.96 0.97 0.97 1.05
Allowance for
loan losses
to non-performing
loans 287 1,657 460 217 205
Non-performing
assets to
loan-related
assets 0.54 0.25 0.37 0.67 0.72
Risk assets
to loan-related
assets (1) 0.80 0.25 0.37 0.67 0.73
Capital Ratios
Equity to
assets at
period end 8.81 % 9.44 % 9.50 % 9.82 % 9.77 %
Tangible equity
to assets at
period end 3.55 3.75 3.72 3.70 3.81
Leverage ratio 8.05 8.06 8.28 7.93 7.80
Tier 1 capital
ratio 10.19 10.52 10.88 11.35 11.91
Total capital
ratio 11.67 12.02 12.47 13.22 13.96
Other Information
at Period End
Book value per
share $10.84 $11.25 $11.19 $10.89 $11.20
Tangible book
value per share 4.37 4.46 4.38 4.10 4.37
Closing market
price 13.13 13.18 13.08 12.44 12.32
Shares
outstanding 5,578,824 5,326,504 5,310,754 5,326,330 5,298,093
Full time
equivalent
associates 243 249 252 238 238
Banking offices 23 23 23 22 22
(1) Risk assets are non-performing assets plus loans 90 days or more
past due and accruing.
Vail Banks, Inc.
Balance Sheet
(in thousands, except share data)
March 31, December 31, Percent
Assets 2005 2004 Change
(unaudited)
Cash and due from banks $20,716 $18,360 13 %
Federal funds sold 51,120 17,295 196
Investment securities
Available for sale 129,620 103,779 25
Held to maturity 238 246 (3)
Bank stocks 4,481 4,457 1
Investments in Trust I and Trust II 743 743 0
Loans held for sale 450 7,110 (94)
Gross loans 403,883 407,629 (1)
Allowance for loan losses (3,989) (3,895) 2
Net deferred loan fee income (1,120) (1,276) (12)
Premises and equipment, net 38,473 38,721 (1)
Goodwill, net 35,970 35,970 --
Other intangible assets, net 149 159 (6)
Other assets 6,054 5,297 14
$686,788 $634,595 8 %
Liabilities and Shareholders' Equity
Liabilities
Deposits $554,652 $500,444 11 %
Securities sold under agreements
to repurchase 11,522 894 1,189
Federal Home Loan Bank advances 29,738 42,444 (30)
Subordinated notes to Trust I and
Trust II 24,743 24,743 0
Other liabilities 3,090 3,605 (14)
Total liabilities 623,745 572,130 9
Minority interest 2,542 2,563 (1)
Shareholders' equity
Common equity 61,590 60,520 2
Accumulated other comprehensive loss (1,089) (618) 76
Total shareholders' equity 60,501 59,902 1
$686,788 $634,595 8 %
Loan Mix at Period End
Commercial, industrial, and land $227,367 $239,946 (5) %
Real estate--construction 100,594 92,705 9
Real estate--mortgage 70,920 69,164 3
Consumer 5,002 5,814 (14)
Total gross loans $403,883 $407,629 (1) %
Deposit Mix at Period End
Interest bearing checking $94,646 $92,279 3 %
Savings 31,942 31,261 2
Money market 182,147 132,388 38
CDs under $100,000 50,230 51,541 (3)
CDs $100,000 and over 75,772 72,848 4
Interest bearing deposits 434,737 380,317 14
Non-interest bearing checking 119,915 120,127 (0)
Total deposits $554,652 $500,444 11 %
Shares Outstanding at Period End 5,578,824 5,326,504 5 %
Vail Banks, Inc.
Statement of Income
(in thousands, except share data)
(unaudited)
Three months ended
March 31, Percent
2005 2004 Change
Interest income
Interest on loans $6,705 $5,290 27 %
Fees on loans 909 774 17
Interest on investment securities 1,371 773 77
Interest on federal funds sold
and short-term investments 192 204 (6)
Investments in Trust I and Trust II 19 19 0
Total interest income 9,196 7,060 30
Interest expense
Deposits 1,329 1,019 30
Borrowings 364 372 (2)
Federal funds purchased and
securities sold under agreements
to repurchase 25 1 2,400
Subordinated notes to Trust I and
Trust II 631 631 0
Total interest expense 2,349 2,023 16
Net interest income 6,847 5,037 36
Provision for loan losses 65 158 (59)
Net interest income after provision 6,782 4,879 39
Non-interest income 1,570 3,844 (59)
Non-interest expense 7,101 6,516 9
Income before taxes 1,251 2,207 (43)
Income taxes 366 1,027 (64)
Net Income $885 $1,180 (25) %
Diluted net income per share $0.16 $0.22 (27) %
Weighted average shares outstanding
- diluted 5,471,918 5,401,988 1
Profitability Ratios
Return on assets 0.55 % 0.80 %
Return on equity 5.95 8.13
Net interest margin (FTE) 5.11 4.17
Net (recoveries) chargeoffs (0.03) 0.38
Efficiency ratio 84 73
Average Balances
Assets $651,133 $592,263 10 %
Earning assets 554,155 498,642 11
Loans 402,340 314,667 28
Deposits 517,286 466,117 11
Shareholders' equity 60,282 58,385 3
Vail Banks, Inc.
Statement of Income by Quarter
(in thousands, except share data)
(unaudited)
Three Months Ended
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
2005 2004 2004 2004 2004
Interest income
Interest on loans $6,705 $6,623 $5,829 $5,223 $5,290
Fees on loans 909 1,028 875 943 774
Interest on
investment
securities 1,371 1,056 1,134 1,045 773
Interest on
federal funds
sold and
short-term
investments 192 21 25 85 204
Investments in
Trust I and
Trust II 19 19 19 19 19
Total interest
income 9,196 8,747 7,882 7,315 7,060
Interest expense
Deposits 1,329 1,200 1,028 1,005 1,019
Borrowings 364 379 340 345 372
Federal funds
purchased and
securities sold
under agreements
to repurchase 25 19 3 1 1
Subordinated notes
to Trust I and
Trust II 631 631 631 630 631
Total interest
expense 2,349 2,229 2,002 1,981 2,023
Net interest income 6,847 6,518 5,880 5,334 5,037
Provision for
loan losses 65 180 323 43 158
Net interest income
after provision 6,782 6,338 5,557 5,291 4,879
Non-interest income
Deposit related 620 689 717 692 685
Mortgage broker fees 394 812 756 775 803
Gain (loss) on
sale of fixed
assets (8) (1) (11) 103 1,678
Other 564 524 781 522 678
1,570 2,024 2,243 2,092 3,844
Non-interest expense
Salaries and
employee benefits 4,195 4,375 4,096 3,994 4,019
Occupancy 999 1,050 1,000 846 845
Furniture
and equipment 683 658 608 611 562
Amortization of
intangible assets 10 10 10 10 10
Other 1,214 1,521 1,338 1,158 1,080
7,101 7,614 7,052 6,619 6,516
Income before taxes 1,251 748 748 764 2,207
Income tax expense 366 105 189 190 1,027
Net Income $885 $643 $559 $574 $1,180
Diluted net income
per share $0.16 $0.12 $0.10 $0.11 $0.22
Vail Banks, Inc.
Supplemental Information
(in thousands)
(unaudited)
Three Months Ended
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
2005 2004 2004 2004 2004
Average Balances
Assets $651,133 $630,212 $604,689 $592,343 $592,263
Earning assets 554,155 534,933 511,363 501,982 498,642
Loans 402,340 394,763 362,585 329,508 314,667
Deposits 517,286 498,080 480,902 468,618 466,117
Interest bearing
liabilities 465,834 455,340 436,601 430,525 428,143
Shareholders'
equity 60,282 59,477 58,621 58,453 58,385
Average Deposit
Mix
Interest
bearing
checking 93,637 97,081 99,279 95,259 92,413
Savings 31,560 33,013 31,893 30,300 30,708
Money market 147,308 133,006 124,130 126,845 119,881
CDs under
$100,000 50,663 52,144 51,943 53,141 55,109
CDs $100,000
and over 74,850 74,070 69,965 64,829 66,746
Interest
bearing
deposits 398,018 389,314 377,210 370,374 364,857
Non-interest
bearing checking 119,268 108,766 103,692 98,244 101,260
Total deposits $517,286 $498,080 $480,902 $468,618 $466,117
Net Interest
Margin Analysis
Net interest
income $6,847 $6,518 $5,880 $5,334 $5,037
Fully taxable
equivalent
adjustment 132 133 132 134 132
Net interest
income (FTE) 6,979 6,651 6,012 5,468 5,169
Yields (FTE)
Loans 7.67 % 7.71 % 7.36 % 7.53 % 7.75 %
Investment
securities 5.13 3.63 3.59 3.53 4.05
Other earning
assets 2.77 3.26 2.39 1.16 0.99
Total earning
assets 6.83 6.60 6.23 5.97 5.80
Cost of funds
Interest bearing
deposits 1.35 1.23 1.08 1.09 1.12
Other interest
bearing
liabilities 6.10 6.20 6.52 6.53 6.38
Total interest
bearing
liabilities 2.05 1.95 1.82 1.85 1.90
Total interest
expense to
earning assets 1.71 1.65 1.55 1.59 1.63
Net interest margin
(FTE) 5.11 % 4.95 % 4.68 % 4.38 % 4.17 %
Vail Banks, Inc.
Asset Quality
(in thousands)
(unaudited)
Three Months Ended
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
2005 2004 2004 2004 2004
Asset Quality
Nonaccrual loans $1,391 $235 $814 $1,555 $1,636
Restructured loans 0 0 0 0 0
Total
non-performing
loans 1,391 235 814 1,555 1,636
Foreclosed
properties 802 785 606 788 674
Total
non-performing
assets 2,193 1,020 1,420 2,343 2,310
90+ days past due
and accruing 1,053 17 3 8 15
Total risk
assets $3,246 $1,037 $1,423 $2,351 $2,325
Allowance for
Loan Losses
Beginning Balance $3,895 $3,742 $3,369 $3,361 $3,503
Provision for
loan losses 65 180 323 43 158
Loan charge-offs 24 63 149 120 338
53
Loan recoveries 53 36 199 85 38
Net charge-offs
(recoveries) (29) 27 (50) 35 300
Ending Balance $3,989 $3,895 $3,742 $3,369 $3,361
Net Charge-Offs
(Recoveries) to
Average Loans (0.03) % 0.03 % (0.05) % 0.04 % 0.38 %
Loans Past Due
30 Days or More
and Accruing 0.31 0.32 0.15 0.24 2.46
DATASOURCE: Vail Banks, Inc.
CONTACT: Raymond E. Verlinde, Sr. EVP/Chief Administrative Officer of
Vail Banks, Inc., +1-970-328-9710,
Web site: http://www.weststarbank.com/