Vail Banks (NASDAQ:VAIL)
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AVON, Colo., Oct. 18 /PRNewswire-FirstCall/ -- Vail Banks, Inc. (NASDAQ:VAIL) today reported diluted net income per share of $0.25 for the third quarter 2005 compared to $0.18 for the second quarter 2005 and $0.10 for third quarter 2004. Net income for the quarter was $1,343,000 versus $971,000 in the second quarter 2005 and $559,000 in the third quarter 2004.
"This quarter's success was driven by continued high credit quality, new loan originations, and an increase in core deposits," stated Gary Judd, CEO of Vail Banks, Inc. "We have been able to maintain excellent credit quality with no non-accrual loans for the second straight quarter. Average loans have increased $10.2 million, or 10 percent annualized, from the second quarter 2005, and $59.1 million since the third quarter 2004, or 16 percent. We continue to take advantage of the strong real-estate markets in which we have branches, as evidenced by our $36.2 million increase in real estate construction lending year to date. The allowance for loan losses as a percentage of loans was 0.95 percent at September 30, 2005, which is unchanged from the second quarter."
"Average core deposit balances improved $24.8 million, or 6 percent, since the last quarter. Specifically, non-interest bearing checking has increased $8.0 million, or 7 percent, since the last quarter. Overnight sweep deposits (repurchase agreements or "repos") have increased $12.8 million year to date and average money market balances have increased $48.2 million, or 48 percent annualized. These two trends are the result of our continued focus on building long-term customer relationships. This core growth has significantly contributed to keeping our cost of funds to a reasonable 1.90 percent during the third quarter 2005. In addition, this contributed to the improved net interest margin of 5.07 percent for the quarter compared to 5.00 percent in the second quarter 2005 and 4.68 percent in the third quarter 2004," commented Mr. Judd.
"We continue to show balance sheet growth with average earning assets increasing $18.4 million, or 13 percent annualized, since the second quarter 2005 and $69.0 million, or 13 percent, since the third quarter 2004. Concurrent with our earning asset growth, we have paid down higher rate Federal Home Loan Bank advances by $15.4 million or 36 percent this year," stated Mr. Judd.
"Interest income and fees on loans are up $673,000 since the second quarter 2005 and $2.2 million, or 33 percent, since the third quarter 2004. This increase, combined with the continued core deposit growth, increased net interest income $375,000 from the second quarter 2005 and 24 percent, or $1.4 million, from the third quarter 2004. This reflects our ability to continue to take advantage of the short-term rate increases by the Federal Reserve Bank while maintaining our lower rate core deposits," commented Mr. Judd.
The increase in deposits during the quarter contributed to improved liquidity. Fed funds sold balances have increased by $9.9 million from the second quarter, or $31.5 million year to date. The yield on investment securities increased to 3.87 percent (tax equivalent yield) during the quarter compared to 3.75 percent in the second quarter, due to an increase in the ratio of tax-exempt municipal bonds to total securities.
Total non-interest income increased $582,000, or 35 percent, during the third quarter compared to the second quarter. This increase was driven primarily by a one-time brokerage fee of $435,000 received for placing a significant loan with third parties. In addition, $129,000 of the increase in non-interest income represents an increase in mortgage fees from increased origination volumes in the quarter as a result of a fully staffed and trained mortgage department.
Non-interest expenses increased $299,000 during the past quarter. Salaries and employee benefits increased $487,000 from the previous quarter due to an increase of $168,000 in health insurance accruals, an increase in incentive expenses of $140,000, an increase in salaries of $84,000 as a result of filling open positions, and an increase of $68,000 in mortgage incentive compensation as a result of higher mortgage originations.
At its meeting on October 17, the Board of Directors of Vail Banks declared a regular quarterly dividend of $0.07 per share payable November 11 to shareholders of record on October 28.
Vail Banks, Inc., through its subsidiary WestStar Bank, has 24 banking offices in 19 communities in Colorado, including Aspen, Avon, Breckenridge, Cedaredge, Delta, Denver, Dillon, Edwards, Estes Park, Frisco, Fruita, 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" in 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
Sept. 30, June 30, Mar. 31, Dec 31, Sept. 30,
2005 2005 2005 2004 2004
Earnings and
Performance
Net income $1,343 $971 $885 $643 $559
Diluted net
income per
share 0.25 0.18 0.16 0.12 0.10
Return on
assets 0.79% 0.60% 0.55% 0.41% 0.37%
Return on
equity 8.59 6.39 5.95 4.30 3.79
Net interest
margin (FTE) 5.07 5.00 5.11 4.95 4.68
Efficiency
ratio 79 84 84 89 87
Return on
tangible
equity 20.57 15.69 14.86 10.96 9.89
Asset Quality
Ratios
Net charge-offs
(recoveries) to
average loans 0.00% (0.05)% (0.03)% 0.03% (0.05)%
Allowance for
loan losses to
loans 0.95 0.95 0.99 0.96 0.97
Allowance for
loan losses to
non-performing
loans (1) NA NA 287 1,657 460
Non-performing
assets to
loan-related
assets 0.14 0.14 0.54 0.25 0.37
Risk assets to
loan-related
assets (2) 0.47 0.18 0.80 0.25 0.37
Capital Ratios
Equity to assets
at period end 9.33% 9.44% 8.81% 9.44% 9.50%
Tangible equity
to assets at
period end 3.96 3.93 3.55 3.75 3.72
Leverage ratio 8.13 8.12 8.01 8.06 8.28
Tier 1 capital
ratio 10.61 10.70 10.14 10.52 10.88
Total capital
ratio 11.84 12.05 11.62 12.02 12.47
Other Information
at Period End
Book value per
share $11.19 $11.05 $10.84 $11.25 $11.19
Tangible book
value per
share 4.75 4.61 4.37 4.46 4.38
Closing market
price 14.00 14.64 13.13 13.18 13.08
Shares
outstanding 5,604,235 5,604,235 5,578,824 5,326,504 5,310,754
Full time
equivalent
associates 256 254 243 249 252
Banking
offices 24 23 23 23 23
(1) Calculation is not applicable (NA) when non-performing loans equal
zero.
(2) 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)
September 30, December 31, Percent
Assets 2005 2004 Change
(unaudited)
Cash and due from banks $21,228 $18,360 16%
Federal funds sold 48,810 17,295 182
Investment securities
Available for sale 91,761 103,779 (12)
Held to maturity 180 246 (27)
Investments in Trust I and Trust II 743 743 0
Loans held for sale 1,006 7,110 (86)
Gross loans 428,426 407,629 5
Allowance for loan losses (4,050) (3,895) 4
Net deferred loan fee income (1,034) (1,276) (19)
Investment in bank stocks 4,532 4,457 2
Premises and equipment, net 38,889 38,721 0
Goodwill, net 35,970 35,970 0
Other intangible assets, net 129 159 (19)
Other assets 5,320 5,297 0
$671,910 $634,595 6%
Liabilities and Shareholders' Equity
Liabilities
Deposits $537,831 $500,444 7%
Securities sold under agreements
to repurchase 13,738 894 1,437
Federal Home Loan Bank advances 27,084 42,444 (36)
Subordinated notes to Trust I and
Trust II 24,743 24,743 0
Other liabilities 3,342 3,605 (7)
Total liabilities 606,738 572,130 6
Minority interest 2,468 2,563 (4)
Shareholders' equity
Common equity 63,690 60,520 5
Accumulated other comprehensive
loss (986) (618) 60
Total shareholders' equity 62,704 59,902 5
$671,910 $634,595 6%
Loan Mix at Period End
Commercial, industrial, and land $220,246 $239,946 (8)%
Real estate -- construction 128,909 92,705 39
Real estate -- mortgage 72,885 69,164 5
Consumer 6,386 5,814 10
Total gross loans $428,426 $407,629 5%
Deposit Mix at Period End
Interest bearing checking $89,350 $92,279 (3)%
Savings 32,901 31,261 5
Money market 189,064 132,388 43
CDs under $100,000 44,165 51,541 (14)
CDs $100,000 and over 50,920 72,848 (30)
Interest bearing deposits 406,400 380,317 7
Non-interest bearing checking 131,431 120,127 9
Total deposits $537,831 $500,444 7%
Shares Outstanding at Period End 5,604,235 5,326,504 5%
Vail Banks, Inc.
Statement of Income by Quarter
(in thousands, except share data)
(unaudited)
Three Months Ended
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2005 2005 2005 2004 2004
Interest income
Interest on loans $8,042 $7,410 $6,705 $6,623 $5,829
Fees on loans 874 833 909 1,028 875
Interest on
investment
securities 852 1,028 1,371 1,056 1,134
Interest on federal
funds sold and
short-term
investments 499 219 192 21 25
Investments in
Trust I and
Trust II 19 19 19 19 19
Total interest
income 10,286 9,509 9,196 8,747 7,882
Interest expense
Deposits 1,962 1,623 1,329 1,200 1,028
Borrowings 279 241 364 379 340
Federal funds
purchased and
securities sold
under agreements
to repurchase 122 98 25 19 3
Subordinated notes
to Trust I and
Trust II 631 630 631 631 631
Total interest
expense 2,994 2,592 2,349 2,229 2,002
Net interest income 7,292 6,917 6,847 6,518 5,880
Provision for loan
losses 50 (36) 65 180 323
Net interest income
after provision 7,242 6,953 6,782 6,338 5,557
Non-interest income
Deposit related 648 645 620 689 717
Mortgage broker fees 588 459 394 812 756
Gain (loss) on sale
of fixed assets -- 11 (8) (1) (11)
Other 1,022 561 564 524 781
Total non-interest
income 2,258 1,676 1,570 2,024 2,243
Non-interest expense
Salaries and
employee benefits 4,596 4,109 4,195 4,375 4,096
Occupancy 972 1,044 999 1,050 1,000
Furniture and
equipment 646 650 683 658 608
Amortization of
intangible assets 10 10 10 10 10
Other 1,285 1,397 1,214 1,521 1,338
Total non-interest
expense 7,509 7,210 7,101 7,614 7,052
Income before taxes 1,991 1,419 1,251 748 748
Income tax expense 648 448 366 105 189
Net Income $1,343 $971 $885 $643 $559
Diluted net income
per share $0.25 $0.18 $0.16 $0.12 $0.10
Vail Banks, Inc.
Statement of Income
(in thousands, except share data)
Three months Nine Months
ended ended
September 30, Percent September 30, Percent
2005 2004 Change 2005 2004 Change
Interest income
Interest on
loans $8,042 $5,829 38% $22,157 $16,342 36%
Fees on loans 874 875 0 2,616 2,592 1
Interest on
investment
securities 852 1,134 (25) 3,251 2,952 10
Interest on
federal funds
sold and
short-term
investments 499 25 1,896 910 314 190
Investments in
Trust I and
Trust II 19 19 0 57 57 0
Total interest
income 10,286 7,882 30 28,991 22,257 30
Interest expense
Deposits 1,962 1,028 91 4,914 3,052 61
Borrowings 279 340 (18) 884 1,057 (16)
Federal funds
purchased and
securities sold
under agreements
to repurchase 122 3 3,967 245 5 4,800
Subordinated notes
to Trust I and
Trust II 631 631 0 1,892 1,892 0
Total interest
expense 2,994 2,002 50 7,935 6,006 32
Net interest
income 7,292 5,880 24 21,056 16,251 30
Provision for
loan losses 50 323 (85) 79 524 (85)
Net interest
income after
provision 7,242 5,557 30 20,977 15,727 33
Non-interest
income 2,258 2,243 1 5,504 8,179 (33)
Non-interest
expense 7,509 7,052 6 21,820 20,187 8
Income before
taxes 1,991 748 166 4,661 3,719 25
Income taxes 648 189 243 1,462 1,406 4
Net Income $1,343 $559 140% $3,199 $2,313 38%
Diluted net
income per
share $0.25 $0.10 150% $0.59 $0.43 37%
Weighted average
shares
outstanding --
diluted 5,380,120 5,426,283 (1) 5,395,579 5,415,405 0
Profitability
Ratios
Return on
assets 0.79% 0.37% 0.65% 0.52%
Return on
equity 8.59 3.79 7.00 5.28
Net interest
margin (FTE) 5.07 4.68 5.05 4.41
Net chargeoffs/
(recoveries) 0.00 (0.05) (0.03) 0.11
Efficiency ratio 79 87 82 83
Average Balances
Assets $673,080 $604,689 11% $659,633 $596,429 11%
Earning
assets 580,370 511,363 13 565,597 504,023 12
Loans 421,678 362,585 16 411,909 335,685 23
Deposits 536,756 480,902 12 525,851 471,912 11
Shareholders'
equity 62,001 58,621 6 61,080 58,487 4
Vail Banks, Inc.
Supplemental Information
(in thousands)
(unaudited)
Three Months Ended
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2005 2005 2005 2004 2004
Average Balances
Assets $673,080 $654,444 $651,133 $630,212 $604,689
Earning assets 580,370 561,978 554,155 534,933 511,363
Loans 421,678 411,495 402,340 394,763 362,585
Deposits 536,756 523,298 517,286 498,080 480,902
Interest bearing
liabilities 477,432 468,261 465,834 455,340 436,601
Shareholders'
equity 62,001 60,937 60,282 59,477 58,621
Average Deposit
Mix
Interest bearing
checking 91,277 93,380 93,637 97,081 99,279
Savings 31,778 31,787 31,560 33,013 31,893
Money market 181,233 162,355 147,308 133,006 124,130
CDs under
$100,000 45,736 48,993 50,663 52,144 51,943
CDs $100,000
and over 59,049 67,114 74,850 74,070 69,965
Interest bearing
deposits 409,073 403,629 398,018 389,314 377,210
Non-interest
bearing
checking 127,683 119,669 119,268 108,766 103,692
Total
deposits $536,756 $523,298 $517,286 $498,080 $480,902
Net Interest
Margin Analysis
Net interest
income $7,292 $6,917 $6,847 $6,518 $5,880
Fully taxable
equivalent
adjustment 111 76 140 133 132
Net interest
income (FTE) 7,403 6,993 6,987 6,651 6,012
Yields (FTE)
Loans 8.39% 8.04% 7.67% 7.71% 7.36%
Investment
securities 3.87 3.75 5.15 3.63 3.59
Other earning
assets 3.59 3.09 2.77 3.26 2.39
Total earning
assets 7.11 6.84 6.83 6.60 6.23
Cost of funds
Interest
bearing
deposits 1.90 1.61 1.35 1.23 1.08
Other interest
bearing
liabilities 5.99 6.01 6.10 6.20 6.52
Total interest
bearing
liabilities 2.49 2.22 2.05 1.95 1.82
Total interest
expense to
earning assets 2.04 1.84 1.72 1.65 1.55
Net interest
margin (FTE) 5.07% 5.00% 5.11% 4.95% 4.68%
Vail Banks, Inc.
Asset Quality
(in thousands)
(unaudited)
Three Months Ended
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2005 2005 2005 2004 2004
Asset Quality
Nonaccrual loans $0 $0 $1,391 $235 $814
Restructured loans 0 0 0 0 0
Total non-performing
loans 0 0 1,391 235 814
Foreclosed properties 617 589 802 785 606
Total non-performing
assets 617 589 2,193 1,020 1,420
90+ days past due and
accruing 1,399 181 1,053 17 3
Total risk assets $2,016 $770 $3,246 $1,037 $1,423
Allowance for Loan
Losses
Beginning Balance $4,003 $3,989 $3,895 $3,742 $3,369
Provision (credit)
for loan losses 50 (36) 65 180 323
Loan charge-offs 7 1 24 63 149
Loan recoveries 4 51 53 36 199
Net charge-offs
(recoveries) 3 (50) (29) 27 (50)
Ending Balance $4,050 $4,003 $3,989 $3,895 $3,742
Net Charge-Offs
(Recoveries) to
Average Loans 0.00% (0.05)% (0.03)% 0.03% (0.05)%
Loans Past Due 30
Days or More and
Accruing 0.43 0.07 0.31 0.32 0.15
DATASOURCE: Vail Banks, Inc.
CONTACT: Raymond E. Verlinde, Sr. EVP/Chief Administrative Officer,
+1-970-328-9710, , or Brady T. Burt, EVP/Chief
Financial Officer, +1-970-328-9711, , both of Vail
Banks, Inc.