Vail Banks (NASDAQ:VAIL)
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Vail Banks Announces Fourth Quarter and Year End Results
AVON, Colo., Jan. 18 /PRNewswire-FirstCall/ -- Vail Banks, Inc. (NASDAQ:VAIL)
today reported diluted net income per share of $0.12 for the fourth quarter
2004 compared to a loss of ($0.35) for fourth quarter 2003. Net income for the
quarter was $643,000 versus a loss of $1.8 million in fourth quarter 2003. For
2004 the Company reported earnings of $3 million or $0.55 per share compared
with $714,000 or $0.13 per share for 2003.
In looking at core earnings, the Company would have earned $842,000 or $0.16
per share for the fourth quarter 2004 compared with $326,000 or $0.06 per share
for the fourth quarter of 2003. Core earnings for the fourth quarter of 2004
would exclude the $311,000 pretax loss on the sale of securities. For the
fourth quarter of 2003, $1.8 million in fixed asset write-offs, $543,000
write-down on core deposit intangibles, $317,000 in severance and stock
compensation, and $173,000 in lease expenses related to closed branches would
be eliminated.
"Loans have continued to show healthy growth during the fourth quarter
increasing $22 million or 23 percent annualized and over $95 million or 30
percent for the year," commented Gary Judd, CEO of Vail Banks, Inc. "The
growth in loans has been across our real estate construction, real estate
mortgage and commercial loan portfolios. We have good momentum going into
2005. Asset quality, which has been strong throughout the year, improved again
this quarter. The allowance for loan losses to non-performing loans was at
1,657 percent at year end, up 260 percent from the previous quarter. The
non-performing assets to loan-related assets were at 0.25 percent at December
31, 2004, a 32 percent reduction from the third quarter. Our improved credit
processes created over the past 18 months have clearly contributed to these
outstanding ratios," stated Mr. Judd.
Mr. Judd further commented, "Core deposit balances have improved throughout the
year increasing $53 million or 16 percent since last year end. For the fourth
quarter, average core deposits increased $13 million or 14 percent annualized
since the end of the third quarter. This growth has kept our cost of deposits
at a low 1.23 percent as of December 31, 2004, and importantly, indicates a
strengthening of our relationship with our customers. These core balances,
coupled with our slightly asset sensitive balance sheet, have improved our net
interest margin 22 percent since year end 2003 to 4.95 percent in this rising
interest rate environment."
The asset quality of WestStar Bank is at an all-time high. Non-accrual loans
stood at $235,000 at December 31, 2004 compared with $1.7 million at year end
2003, down 87 percent. Loans 90 days or more past due and accruing were only
$17,000 at December 31, 2004 compared to $164,000 on the same date in the prior
year, a 90 percent reduction. Loans past due 30 days or more and accruing have
improved 32 percent to 0.32 percent at year end compared to 0.47 percent at
year end 2003. Finally, total risk assets compared to loan-related assets has
declined 66 percent since the prior year end to 0.25 percent.
Mr. Judd stated, "Given the significant loan growth experienced during the past
three quarters, we have taken the opportunity to increase our funding to
support this growth by selling $19.6 million of investment securities taking a
pretax loss of $311,000. These investment sales not only improve our balance
sheet, but will also enhance our net interest margin in the future."
Throughout this significant loan growth, the Bank has maintained strong loan
loss reserve coverage. The Bank has added $704,000 to the reserve for the year
ended December 31, 2004 compared to $578,000 for the same period last year, a
22 percent increase. The Bank had net charge-offs of 0.09 percent for the year
ended December 31, 2004 compared to 0.25 percent for 2003, a 64 percent
improvement.
Total revenue (net interest income and non-interest income) increased $982,000,
or 13 percent in the fourth quarter 2004 compared to the same quarter for 2003.
Loan interest and fees have increased 23 percent or $1.4 million between the
fourth quarter of 2004 and 2003. This increase was the result of improved loan
volumes, partially offset by a 3 percent reduction in loan yields. Total
interest and fees on loans increased $947,000 or 56 percent on an annualized
basis between the fourth and third quarter 2004 as a result of improved volumes
and yields.
During the quarter, the Bank developed a marketing strategy and plan for each
region that it will implement throughout 2005 to further its growth in market
share in the communities it serves. "We believe that we are positively
positioned moving into 2005 to capitalize on the opportunities that are
presented in our markets," stated Mr. Judd.
The Company has made a conscious effort to reduce its non-interest expenses
throughout the year. Not considering $2.8 million in one-time adjustments made
in the fourth quarter 2003, non-interest expenses have been reduced $452,000 or
2 percent for the year even with the substantial loan and deposit growth and
the opening of a new branch during 2004. Additionally, the Company remodeled
existing facilities and constructed a new, larger branch to replace an older
location. "We are very pleased with the direction non-interest expenses are
heading and we will continue to review opportunities in the coming year to
increase our operating efficiencies," said Mr. Judd.
At its meeting on January 17, the Board of Directors of Vail Banks declared a
regular quarterly dividend of $0.07 per share payable February 11 to
shareholders of record on January 28.
Also at its meeting on January 17, the Company's Board of Directors
reauthorized the Company's stock repurchase program. The total amount of
repurchases under the program, both previously completed and allowable up to
January 2006, aggregate approximately $29 million. During 2004, the Company
did not repurchase any common shares. Since inception of the stock repurchase
program in March 2001, the Company has repurchased 1,535,380 shares at an
average price of $12.10 per share for an aggregate purchase price of
approximately $19 million. Shares outstanding at March 2001 were 6,202,758.
Shares outstanding at December 31, 2004 were 5,326,504. This represents a
decrease of 14 percent in shares outstanding.
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.
Vail Banks warns caution should be taken in relying upon any forward-looking
statements in this release, as they involve a number of risks and uncertainties
that could cause actual results to differ materially from any such statements,
including the risks and uncertainties discussed in the Company's Annual Report
on Form 10-K for the year ended December 31, 2003, under the caption "Certain
Factors Affecting Forward Looking Statements," which discussion is incorporated
herein by reference.
Vail Banks, Inc.
Financial Highlights
(in thousands, except share data)
Three Months Ended
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
2004 (2) 2004 (2) 2004 (2) 2004 (2) 2003
Earnings and
Performance
Net income
(loss) $643 559 574 1,180 (1,761)
Diluted
net income
(loss)
per share 0.12 0.10 0.11 0.22 (0.35)
Return on
assets 0.41% 0.37 0.39 0.80 (1.18)
Return on
equity 4.30 3.79 3.95 8.13 (11.77)
Net interest
margin (FTE) 4.95 4.68 4.38 4.17 4.05
Efficiency
ratio 89 87 89 73 130
Asset Quality
Ratios
Net
charge-offs
(recoveries)
to average
loans 0.03% (0.05) 0.04 0.38 (0.05)
Allowance
for loan
losses to
loans 0.96 0.97 0.97 1.05 1.12
Allowance
for loan
losses to
non-performing
loans 1,657 460 217 205 201
Non-performing
assets to
loan-related
assets 0.25 0.37 0.67 0.72 0.68
Risk assets
to loan-
related
assets (1) 0.25 0.37 0.67 0.73 0.73
Capital Ratios
Equity
to assets
at period
end 9.45% 9.50 9.82 9.77 10.05
Tangible
equity to
assets at
period end 3.75 3.72 3.70 3.81 3.63
Leverage ratio 8.06 8.28 7.93 7.80 7.45
Tier 1
capital
ratio 10.54 10.88 11.58 11.91 11.50
Total
capital
ratio 12.05 12.47 13.49 13.96 13.72
Other
Information
at Period End
Book value
per share $11.25 11.19 10.89 11.20 10.95
Tangible
book value
per share 4.46 4.38 4.10 4.37 3.96
Closing
market price 13.18 13.08 12.44 12.32 11.94
Shares
outstanding 5,326,504 5,310,754 5,326,330 5,298,093 5,283,264
Full time
equivalent
associates 249 252 238 238 244
Banking
offices 23 23 22 22 22
(1) Risk assets are non-performing assets plus loans 90 days or more
past due and accruing.
(2) Reflects the adoption of Financial Interpretation Number 46 on
January 1, 2004. Prior period information has not been restated.
Vail Banks, Inc.
Balance Sheet
(in thousands, except share data)
December 31, December 31, Percent
Assets 2004 2003 Change
Cash and due from banks $18,360 21,628 (15)%
Federal funds sold 17,295 79,280 (78)
Interest-bearing deposits in
banks --- 2,000 (100)
Investment securities
Available for sale 103,779 76,554 36
Held to maturity 246 370 (34)
Bank stocks 4,457 4,371 2
Investments in Trust I and
Trust II (1) 743 0 0
Loans held for sale 7,110 2,515 183
Gross loans 407,629 312,544 30
Allowance for loan losses (3,895) (3,503) 11
Net deferred loan fee income (1,276) (770) 66
Premises and equipment, net 38,721 38,147 2
Goodwill, net 35,970 36,758 (2)
Other intangible assets, net 159 199 (20)
Other assets 4,276 5,517 (22)
$633,574 575,610 10%
Liabilities and Shareholders' Equity
Liabilities
Deposits $500,444 448,515 12%
Federal funds purchased
and securities sold under
agreements to repurchase 894 907 0
Federal Home Loan Bank
advances 42,444 39,461 8
Trust preferred (1) 0 24,000 (100)
Subordinated notes to
Trust I and Trust II (1) 24,743 0 0
Other liabilities 2,584 4,165 (38)
Total liabilities 571,109 517,048 10
Minority interest 2,563 703 265
Shareholders' equity
Common equity 60,520 57,979 4
Accumulated other
comprehensive loss (618) (120) 415
Total shareholders' equity 59,902 57,859 4
$633,574 575,610 10%
Loan Mix at Period End
Commercial, industrial,
and land $239,946 185,158 30%
Real estate--construction 92,705 63,844 45
Real estate--mortgage 69,164 57,602 20
Consumer 5,814 5,940 (2)
Total gross loans $407,629 312,544 30%
Deposit Mix at Period End
Interest bearing checking $92,279 88,191 5%
Savings 31,261 29,873 5
Money market 132,388 103,969 27
CDs under $100,000 51,541 55,978 (8)
CDs $100,000 and over 72,848 69,199 5
Interest bearing deposits 380,317 347,210 10
Non-interest bearing checking 120,127 101,305 19
Total deposits $500,444 448,515 12%
Shares Outstanding at
Period End 5,326,504 5,283,264 1%
(1) Reflects the adoption of Financial Interpretation Number 46 on
January 1, 2004. Prior year information has not been restated.
Vail Banks, Inc.
Statement of Income
(in thousands, except share data)
Three months ended Year ended
December 31, Percent December 31, Percent
2004 2003 Change 2004 2003 Change
Interest income
Interest on
loans $6,623 5,437 22% 22,965 23,495 (2)
Fees on
loans 1,028 801 28 3,620 2,603 39
Interest on
investment
securities 1,056 557 90 4,008 3,404 18
Interest on
federal funds
sold and
short-term
investments 21 210 (90) 335 690 (51)
Investments
in Trust I
and Trust II (1) 19 0 0 76 0 0
Total
interest
income 8,747 7,005 25 31,004 30,192 3
Interest expense
Deposits 1,200 1,068 12 4,252 4,644 (8)
Borrowings 379 430 (12) 1,436 1,602 (10)
Federal
funds
purchased
and
securities
sold under
agreements
to repurchase 19 1 1,800 24 1 2,300
Trust
preferred 0 612 (100) 0 2,447 (100)
Subordinated
notes to
Trust I and
Trust II (1) 631 0 0 2,523 0 0
Total
interest
expense 2,229 2,111 6 8,235 8,694 (5)
Net interest
income 6,518 4,894 33 22,769 21,498 6
Provision for
loan losses 180 164 10 704 578 22
Net interest
income after
provision 6,338 4,730 34 22,065 20,920 5
Non-interest
income 2,024 2,666 (24) 10,203 11,142 (8)
Non-interest
expense 7,614 9,825 (23) 27,801 31,038 (10)
Income
before taxes 748 (2,429) (131) 4,467 1,024 336
Income taxes 105 (668) (116) 1,511 310 387
Net Income $643 (1,761) (137)% 2,956 714 314
Diluted net
income per
share $0.12 (0.35) (134)% 0.55 0.13 323
Weighted
average
shares
outstanding
- diluted 5,423,984 5,405,729 0 5,417,562 5,617,720 (4)
Profitability
Ratios
Return on
assets 0.41% (1.18) 0.49 0.12
Return on
equity 4.30 (11.77) 5.03 1.14
Net interest
margin (FTE) 4.95 4.05 4.55 4.46
Net
(recoveries)
chargeoffs 0.03 (0.05) 0.09 0.25
Efficiency
ratio 89 130 84 95
Average
Balances
Assets $630,212 589,586 7% 604,920 589,664 3
Earning
assets 534,933 492,696 9 511,792 494,134 4
Loans 394,763 311,001 27 350,535 324,086 8
Deposits 498,080 457,108 9 478,490 456,810 5
Shareholders'
equity 59,477 59,340 0 58,736 62,457 (6)
(1) Reflects the adoption of Financial Interpretation Number 46 on
January 1, 2004. Prior period information has not been restated.
Vail Banks, Inc.
Statement of Income by Quarter
(in thousands, except share data)
Three Months Ended
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
2004 2004 2004 2004 2003
Interest income
Interest on loans $6,623 5,829 5,223 5,290 5,437
Fees on loans 1,028 875 943 774 801
Interest on investment
securities 1,056 1,134 1,045 773 557
Interest on federal
funds sold and
short-term investments 21 25 85 204 210
Investments in
Trust I and
Trust II (1) 19 19 19 19 0
Total interest
income 8,747 7,882 7,315 7,060 7,005
Interest expense
Deposits 1,200 1,028 1,005 1,019 1,068
Borrowings 379 340 345 372 430
Federal funds
purchased and
securities sold
under agreements
to repurchase 19 3 1 1 1
Trust preferred (1) 0 0 0 612
Subordinated notes
to Trust I and
Trust II (1) 631 631 630 631 0
Total interest
expense 2,229 2,002 1,981 2,023 2,111
Net interest income 6,518 5,880 5,334 5,037 4,894
Provision for loan
losses 180 323 43 158 164
Net interest income
after provision 6,338 5,557 5,291 4,879 4,730
Non-interest income
Deposit related 689 717 692 685 757
Mortgage broker fees 812 756 775 803 853
Gain (loss) on sale
of fixed assets (1) (11) 103 1,678 0
Other 524 781 522 678 1,056
2,024 2,243 2,092 3,844 2,666
Non-interest expense
Salaries and
employee benefits 4,375 4,096 3,994 4,019 4,578
Occupancy 1,050 1,000 846 845 1,259
Furniture and
equipment 658 608 611 562 673
Amortization of
intangible assets 10 10 10 10 561
Other 1,521 1,338 1,158 1,080 2,754
7,614 7,052 6,619 6,516 9,825
Income (loss) before
taxes 748 748 764 2,207 (2,429)
Income tax expense
(benefit) 105 189 190 1,027 (668)
Net Income (Loss) $643 559 574 1,180 (1,761)
Diluted net income
(loss) per share $0.12 0.10 0.11 0.22 (0.35)
(1) Reflects the adoption of Financial Interpretation Number 46 on
January 1, 2004. Prior period information has not been restated.
Vail Banks, Inc.
Supplemental Information
(in thousands)
Three Months Ended
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
2004 (1) 2004 (1) 2004 (1) 2004 (1) 2003
Average Balances
Assets $630,212 604,689 592,343 592,263 589,586
Earning assets 534,933 511,363 501,982 498,642 492,696
Loans 394,763 362,585 329,508 314,667 311,001
Deposits 498,080 480,902 468,618 466,117 457,108
Interest bearing
liabilities 455,340 436,601 430,525 428,143 427,518
Shareholders' equity 59,477 58,621 58,453 58,385 59,340
Average Deposit Mix
Interest bearing
checking 97,081 99,279 95,259 92,413 89,817
Savings 33,013 31,893 30,300 30,708 30,019
Money market 133,006 124,130 126,845 119,881 108,637
CDs under $100,000 52,144 51,943 53,141 55,109 58,357
CDs $100,000 and over 74,070 69,965 64,829 66,746 71,979
Interest bearing
deposits 389,314 377,210 370,374 364,857 358,809
Non-interest
bearing checking 108,766 103,692 98,244 101,260 98,299
Total deposits 498,080 480,902 468,618 466,117 457,108
Net Interest Margin
Analysis
Net interest income $6,518 5,880 5,334 5,037 4,894
Fully taxable
equivalent adjustment 133 132 134 132 133
Net interest
income (FTE) 6,651 6,012 5,468 5,169 5,027
Yields (FTE)
Loans 7.71 7.36% 7.53 7.75 7.96
Investment
securities 3.63 3.59 3.53 4.05 3.28
Other earning
assets 3.26 2.39 1.16 0.99 0.90
Total earning
assets 6.60 6.23 5.97 5.80 5.75
Cost of funds
Interest bearing
deposits 1.23 1.08 1.09 1.12 1.18
Other interest
bearing liabilities 6.20 6.52 6.53 6.38 6.02
Total interest
bearing
liabilities 1.95 1.82 1.85 1.90 1.96
Total interest
expense to
earning assets 1.65 1.55 1.59 1.63 1.70
Net interest
margin (FTE) 4.95 4.68 4.38 4.17 4.05
(1) Reflects the adoption of Financial Interpretation Number 46 on
January 1, 2004. Prior period information has not been restated.
Vail Banks, Inc.
Asset Quality
(in thousands)
Three Months Ended
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
2004 2004 2004 2004 2003
Asset Quality
Nonaccrual loans $235 814 1,555 1,636 1,747
Restructured loans 0 0 0 0 0
Total non-performing
loans 235 814 1,555 1,636 1,747
Foreclosed properties 785 606 788 674 362
Total non-performing
assets 1,020 1,420 2,343 2,310 2,109
90+ days past due and
accruing 17 3 8 15 164
Total risk assets $1,037 1,423 2,351 2,325 2,273
Allowance for Loan Losses
Beginning Balance $3,742 3,369 3,361 3,503 3,299
Provision for loan
losses 180 323 43 158 164
Loan charge-offs 63 149 120 338 78
Loan recoveries 36 199 85 38 118
Net charge-offs
(recoveries) 27 (50) 35 300 (40)
Ending Balance $3,895 3,742 3,369 3,361 3,503
Net Charge-Offs
(Recoveries) to
Average Loans 0.03 (0.05)% 0.04 0.38 (0.05)
Loans Past Due 30 Days
or More and Accruing 0.32 0.15 0.24 2.46 0.47
DATASOURCE: Vail Banks, Inc.
CONTACT: Lisa M. Dillon, Vice Chairman, +1-970-476-2002,
, or Raymond E. Verlinde, Sr. EVP/Chief
Administrative Officer, +1-970-328-9710, , both
of Vail Banks