Western Sierra Bancorp (NASDAQ:WSBA)
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Western Sierra Bancorp Reports Record Profitability; Fully
Diluted Earnings Per Share Increases to $1.91 for 2004 and $0.51 for the 4th
Quarter
CAMERON PARK, Calif., Jan. 20 /PRNewswire-FirstCall/ -- Western Sierra Bancorp
(NASDAQ:WSBA), a multi-bank holding company, headquartered in Cameron Park,
California, announced results for the fourth quarter and year ended December
31, 2004.
Financial Highlights from the year of 2004 vs. 2003:
-- An increase in GAAP net income of $5.09 million or 51% to $15.04 million
-- An increase in Fully Diluted GAAP EPS to $1.91 from $1.44 or 33%
-- GAAP ROA and ROE of 1.33% and 14.95%, as compared to 1.21% and 15.42%
-- Return on Tangible Equity of 22.69% as compared to 18.46%
-- Total assets increased $162 million or 16% to $1.2 billion
-- Total loans increased $115 million or 14% to $936 million
-- Average core loans (excluding acquisitions) grew $135 million or 25%
-- Average core deposits (excluding acquisitions) grew $105 million or 18%
-- Net interest margin remained stable at 5.16%, no change over the prior year
-- Efficiency Ratio was reduced to 55.2% from 56.5%
-- Nonperforming assets fell to 0.07% of ending assets from .15%
Financial Highlights from the year of 2004 vs. 2003 excluding merger expenses
and a charge for the REIT tax benefit:
-- Included in GAAP Net Income for 2003 was a charge of $940,000 or $.14 per
diluted share for the Real Estate Investment Trust ("REIT") 2002 tax benefit
and after tax merger expenses of $123,000 or $.02 per diluted share
-- Earnings were $15.04 million, an increase of $4.03 million or 37% from 2003,
excluding after tax merger expenses and the charge for the 2002 REIT tax
benefit
-- EPS was $1.91 vs. $1.59 in 2003, excluding after tax merger expenses and
the 2002 REIT tax benefit, an increase of 20%
-- ROA and ROE, excluding after tax merger expenses and the charge for the 2002
REIT tax benefit, were 1.33% and 14.95%, as compared to 1.34% and 17.07%
Financial Highlights from the 4th quarter of 2004 vs. 2003:
-- An increase in GAAP net income of $1.8 million or 80% to $4.04 million
-- An increase in Fully Diluted GAAP EPS to $0.51 from $0.30 or 70%
-- GAAP ROA and ROE of 1.35% and 15.06%, as compared to 0.92% and 11.71%
-- Return on Tangible Equity of 22.11% as compared to 15.46%
-- Net interest margin increased 3 basis points to 5.14% versus 5.11%
-- Efficiency Ratio increased to 55.3% from 54.9%
Financial Highlights from the 4th quarter of 2004 vs. 2003 excluding merger
expenses and a charge for the REIT tax benefit:
-- Included in GAAP Net Income in the fourth quarter of 2003 was a charge of
$940,000 or $.13 per diluted share for the Real Estate Investment Trust
("REIT") 2002 tax benefit and after tax merger expenses of $66,000 or $.01 per
diluted share
-- Earnings of $4.04 million, excluding after tax merger expenses and the
charge for the 2002 REIT tax benefit, an increase of $793,000 or 24%
-- EPS of $0.51 vs. $0.44 in 2003, excluding after tax merger expenses and the
charge for the 2002 REIT tax benefit, an increase of 16%
-- ROA and ROE, excluding after tax merger expenses and the charge for the 2002
REIT tax benefit, were 1.35% and 15.06%, as compared to 1.33% and 16.97%
Management Comments
Gary D. Gall, President and CEO of Western Sierra Bancorp, stated, "A
twenty-percent increase in core earnings, three denovo branch openings,
continued loan and deposit growth as well as record asset quality has resulted
in another successful year for our Company. We will continue to execute our
three pronged growth strategy in 2005: organic, acquisitive and denovo
growth."
Record Earnings and Returns
The Company reported record GAAP earnings of $4,041,000 for the quarter or
$0.51 per diluted share, an increase of $1,799,000 or 80% over the quarter
ended December 31, 2003 in which earnings were $2,242,000 or $0.30 per diluted
share. For the year ended December 31, 2004, the Company reported GAAP
earnings of $15,036,000 or $1.91 per diluted share, an increase of $5,088,000
or 51% over the same period in 2003 in which earnings were $9,948,000 or $1.44
per diluted share.
Excluding merger expenses and the charge for the 2002 REIT tax benefit, of
$4,041,000 or $0.51 per diluted share, earnings increased $793,000 or 24% over
the quarter ended December 31, 2003 in which earnings were $3,248,000, or $0.44
per diluted share. Management believes that earnings, excluding merger
expenses and the charge for the 2002 REIT tax benefit, assist investors by
providing another measure of results of operations that excludes items that
management believes to be unrelated to core operating activities for the
period.
For the year ended December 31, 2004, the Company reported earnings, excluding
after tax merger expenses and the charge for the REIT tax benefit, of
$15,036,000 or $1.91 per diluted share, an increase of $4,025,000 or 37% over
the same period in 2003 in which earnings were $11,011,000 or $1.59 per diluted
share.
On a GAAP basis, Return on Average Assets was 1.35% and 1.33% for the quarter
and twelve-month period ended December 31, 2004 as compared to 0.92% and 1.21%
for the fourth quarter and twelve-month period ended December 31, 2003. Return
on Average Equity was 15.06% for the fourth quarter and 14.95% for the
twelve-month period ended December 31, 2004 as compared to 11.71% and 15.42%
for the fourth quarter and twelve-month period ended December 31, 2003. Return
on Tangible Equity (excludes average Goodwill and other intangible assets from
average equity) was 22.11% for the fourth quarter and 22.69% for the year ended
December 31, 2004 as compared to 15.46% and 18.46% for the fourth quarter and
year ended December 31, 2003.
Strong Loan and Deposit Growth
Total Assets ended the year at a record high of $1.2 billion. This represents
a $162 million or 16% increase over December 31, 2003. The Company has
continued its record of strong loan growth. Total gross loans grew to $936
million, an increase of $115 million or 14% over a year ago. Total Deposits
grew to a record $1.02 billion; this represents a $150 million or 17% increase
over December 31, 2003.
Net Interest Income Reaches Record High
Net interest income increased by $2.63 million or 24% over the fourth quarter
of 2003. The Company's reported Net Interest Margin (on a fully tax equivalent
basis) of 5.14% was up 3 basis points from the fourth quarter 2003. For the
twelve-month period ended December 31, 2004, net interest income increased
$13.64 million or 37% and the Net Interest Margin (on a fully tax equivalent
basis) of 5.16% was unchanged from the full year 2003. Net interest margin
increased 4 basis points in the fourth quarter over the third quarter as the
Company has benefited from the recent increase in interest rates as evidenced
by the percentage of the loan portfolio at rate floors which has dropped to
approximately 22% at December 31, 2004 from 46% at December 31, 2003. In
addition, loan growth has driven the increase in net interest income with the
average loan-to-deposit ratio increasing from approximately 89% in the fourth
quarter and 89% for the full year 2003 to 91% and 92% in the same periods of
2004.
Superior Asset Quality
Credit quality remains strong with $344,000 or 0.04% loan delinquencies between
30 and 90 days as of December 31, 2004 compared to $398,000 or .05% as of
December 31, 2003. Non-performing assets (delinquent loans over 90 days and
REO) as of December 31, 2004 totaled $889,000 or 0.07% of total assets,
compared to $1,554,000 or 0.15% of total assets at December 31, 2003. The
allowance for loan and lease losses totaled $13.79 million, or 1.47% of loans
outstanding at December 31, 2004, compared to $11.53 million or 1.40% a year
ago. The Company recorded net charge-offs of $96,000 in the fourth quarter of
2004 as compared to $238,000 in the same period of 2003. For the twelve-month
period ended December 31, 2004, net charge-offs were $453,000 as compared to
$494,000 for the same period of 2003.
Other Income / Expense and the Efficiency Ratio
In addition to growth in net interest income of 24% for the quarter, the
Company grew non-interest income by 21% primarily due to a tax free insurance
benefit of approximately $585,000. Operating expenses for the fourth quarter
increased $911,000 or 10.2% over the third quarter of 2004. This increase was
primarily attributable to retirement plan charges of approximately $230,000 as
a result of Board awards in the fourth quarter, additional retirement accruals
of $100,000 as a result of lowering the effective discount rate on all plans to
6.5%, a donation of $100,000 to the Nehemiah Housing Corporation of America,
$75,000 in marketing costs for a special promotion and approximately $80,000 in
other accruals specific to the fourth quarter.
Largely as a result of these charges in the fourth quarter, total operating
expenses excluding amortization of core deposit intangibles grew at a slightly
faster rate (24% for the quarter) than net revenue resulting in an increased
efficiency ratio of 55.3% in the fourth quarter of 2004 as compared to 54.9% in
the fourth quarter of 2003. For the full year 2004, the efficiency ratio was
55.2% as compared to 56.5% throughout 2003.
In addition to growth in net interest income of 36% for the year ended December
31, 2004, the Company grew non-interest income by 11% primarily through
increased service charges and fees of $664,000, other income which included the
nonrecurring tax free insurance benefit described above and increased
investment service fee income of $521,000.
Mortgage premiums fell $937,000 or 24.7% to $3.79 million in 2004 vs. 2003 and
$167,000 to $760,000 or 18% in the fourth quarter of 2004 as compared to the
fourth quarter of 2003. This decline was primarily due to rising interest
rates, which had a negative effect on refinance activity. Management also
opted to portfolio, or hold, approximately $20 million in selected loans during
2004 ($7.9 million in the fourth quarter) that would have contributed
approximately $260,000 in mortgage premiums in 2004 and $98,000 in the fourth
quarter of 2004. Thus Mortgage premiums would have declined $677,000 or 14.3%
for the year and $69,000 or 7.4% for the fourth quarter had the Company sold
these loans, which is its normal practice.
Total operating expenses excluding amortization of core deposit intangibles
grew at a slower rate (28% for the year) than net revenue, which grew at 30.8%
resulting in an improved efficiency ratio, which was reduced from 56.5% in 2003
to 55.2% in 2004.
The Company's tax rate was 35.8% in 2004 vs. 42.2% in 2003. The primary
difference was a charge of $940,000 in 2003 for the Real Estate Investment
Trust ("REIT") and $585,000 in income realized in the fourth quarter of 2004
from a tax free insurance benefit.
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, 2003.
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, 2003.
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,
2004 2003 Growth 2004 2003 Growth
% %
Interest income:
Interest and
fees on loans $15,680 $12,703 23.4% $59,078 $44,344 33.2%
Interest on
investment
securities:
Taxable 498 429 1,736 1,484
Exempt from
federal taxes 395 321 1,562 1,410
Interest on Federal
funds sold 310 138 707 491
Total interest
income 16,883 13,591 24.2% 63,083 47,729 32.2%
Interest expense:
Interest on
deposits 2,539 2,029 9,049 8,253
Interest on
borrowed funds 629 472 2,287 1,373
Total interest
expense 3,168 2,501 26.7% 11,336 9,626 17.8%
Net interest
income 13,715 11,090 23.7% 51,747 38,103 35.8%
Provision for
loan and lease
losses (LLP) 800 615 30.1% 2,710 2,270 19.4%
Net interest
income after
LLP 12,915 10,475 23.3% 49,037 35,833 36.8%
Non-interest
income:
Service charges
and fees 1,088 1,129 4,708 4,044
Investment
service fee
income 104 66 621 100
Net gain on sale
and packaging of
residential mortgage
and government-
guaranteed commercial
loans 760 927 3,793 4,730
Gain (loss) on sale
of investment
securities 3 (2) (9) 18
Other income 972 305 1,643 785
Total non-interest
income 2,927 2,426 20.7% 10,756 9,677 11.2%
Other expenses:
Salaries and
benefits 5,255 4,313 19,915 15,455
Occupancy and
equipment 1,491 1,282 5,783 4,746
Other expenses 2,900 2,055 9,961 7,508
Merger Expenses -- 100 -- 186
Amortization of
core deposit
intangibles 180 134 720 392
Total other
expenses 9,826 7,884 24.6% 36,379 28,287 28.6%
Income before
income tax 6,016 5,016 19.9% 23,414 17,223 35.9%
Income taxes 1,975 2,774 8,378 7,275
GAAP net income $4,041 $2,242 80.2% $15,036 $9,948 51.1%
Net Effect of
Reserve for 2002
REIT Tax benefits -- 940 -- 940
Merger Expenses Net
of Tax -- 66 -- 123
Earnings excluding
the REIT charge
and
merger expenses 4,041 3,248 24.4% 15,036 11,011 36.6%
Amortization of
core deposit
intangibles after
tax 117 87 468 254
Cash earnings
excluding the
REIT charge
and merger
expenses $4,158 $3,335 24.6% $15,504 $11,265 37.6%
EPS - GAAP Net
Income:
Basic earnings
per share $0.53 $0.32 65.6% $1.99 $1.51 31.8%
Fully diluted
earnings per
share $0.51 $0.30 70.0% $1.91 $1.44 32.6%
EPS - Earnings
excluding the
REIT charge
and merger
expenses:
Basic earnings
per share $0.53 $0.46 14.3% $1.99 $1.67 19.3%
Fully diluted
earnings per
share $0.51 $0.44 15.6% $1.91 $1.59 19.8%
EPS - Cash
earnings excluding
the REIT charge
and merger expenses:
Basic earnings per
share $0.55 $0.48 14.5% $2.05 $1.71 20.2%
Fully diluted
earnings
per share $0.52 $0.45 15.8% $1.96 $1.63 20.7%
Shares used to
compute Basic
EPS 7,621 7,004 7,557 6,600
Shares used to
compute
Fully Diluted
EPS 7,948 7,386 7,892 6,924
Average Loans $925,951 $736,299 25.8% $880,156 $633,641 38.9%
Average
Investments $153,191 $139,381 9.9% $139,037 $120,280 15.6%
Average
Earning
Assets $1,079,142 $875,680 23.2% $1,019,193 $753,921 35.2%
Average
Deposits $1,019,141 $826,894 23.2% $957,611 $713,707 34.2%
Average
Non-interest
Demand
Deposits $270,456 $202,128 33.8% $246,369 $169,855 45.0%
Average
Interest-bearing
Liabilities $806,681 $677,955 19.0% $773,328 $581,985 32.9%
Average
Assets $1,195,070 $966,850 23.6% $1,131,179 $823,812 37.3%
Average
Equity $106,718 $75,949 40.5% $100,594 $64,501 56.0%
Return on
Average Assets
(GAAP) 1.35% 0.92% 1.33% 1.21%
Return on
Average Equity
(GAAP) 15.06% 11.71% 14.95% 15.42%
Return on
Average Assets
(Excluding the
REIT charge and
merger expenses) 1.35% 1.33% 1.33% 1.34%
Return on Average
Equity (Excluding
the REIT charge
and merger
expenses) 15.06% 16.97% 14.95% 17.07%
Return on
Tangible
Equity (Excluding
the REIT charge
and merger
expenses) 22.11% 22.40% 22.69% 20.44%
Net Interest
Margin (FTE) 5.14% 5.11% 5.16% 5.16%
Efficiency
Ratio (FTE) 55.3% 54.9% 55.2% 56.5%
Western Sierra Bancorp and Subsidiaries
Consolidated Balance Sheet
(dollars in thousands)
(Unaudited)
December 31, December 31,
ASSETS: 2004 2003 Growth %
Cash and due from banks $29,975 $38,584
Federal funds sold 74,630 17,380
Cash and cash equivalents 104,605 55,964 86.9%
Interest-bearing deposits 1,200 4,198
Loans held for sale 2,685 940
Investment securities:
Trading 42 28
Available for sale (amortized cost
$81,105 in 2004 and $78,156 in 2003) 82,521 79,502
Held to maturity (market value of
$3,202 in 2004 and $4,219 in 2003) 3,067 4,058
Total investments 85,630 83,588 2.4%
Portfolio loans and leases:
Real estate mortgage 600,108 495,948
Real estate construction 199,140 195,889
Commercial 119,823 109,685
Agricultural 11,514 12,185
Installment 4,160 5,795
Lease financing 1,768 2,016
Total gross loans and leases 936,513 821,518 14.0%
Deferred loan and lease fees, net (3,008) (2,729)
Allowance for loan and lease losses (13,786) (11,529)
Net portfolio loans and leases 919,719 807,260 13.9%
Premises and equipment, net 20,808 19,591
Other real estate
Goodwill and other intangible assets 33,913 34,731
Other assets 29,530 29,439
Total Assets $1,198,090 $1,035,711 15.7%
LIABILITIES AND SHAREHOLDERS' EQUITY:
Non-interest bearing deposits $272,250 $221,898 22.7%
Interest bearing deposits:
NOW, money market and savings 405,967 340,922
Time, over $100,000 185,935 145,608
Other time 158,814 164,710
Total deposits 1,022,966 873,138 17.2%
Borrowed funds 21,500 20,650
Subordinated debt 36,496 36,496
Other liabilities 6,953 11,990
Total liabilities 1,087,915 942,274 15.5%
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
- 7,629,762 shares in 2004 and
7,439,030 shares in 2003 68,125 66,459
Retained earnings 41,133 26,097
Accumulated other comprehensive income 917 881
Total shareholders' equity 110,175 93,437 17.9%
Total Liabilities and Shareholders'
Equity $1,198,090 $1,035,711 15.7%
Allowance for loan and lease losses to
Gross Loans 1.47% 1.40%
Ending Delinquent Loans $344 $398
Ending Non Performing Loans (non accrual
and > 90 days) $889 $1,554
Total Non Performing Loans and REO -
Non Performing Assets $889 $1,554
YTD Net Charge-offs $453 $494
YTD Net Charge-offs as a % of Avg Loans 0.05% 0.08%
Non Performing Assets as a % of Total
Assets 0.07% 0.15%
Total Risk Based Capital To Risk Weighted
Assets 12.58% 12.12%
Tier 1 Capital to Risk Weighted Assets 11.33% 10.29%
Tier 1 Capital to Average Assets
(Leverage Ratio) 9.48% 8.83%
DATASOURCE: Western Sierra Bancorp
CONTACT: Gary D. Gall or Anthony J. Gould, both of Western Sierra
Bancorp, +1-530-677-5600
Web site: http://www.westernsierrabancorp.com/