Exhibit 99.1
PFF BANCORP REPORTS 7 PERCENT INCREASE IN
EARNINGS FOR FISCAL 2007
Rancho Cucamonga, Calif. - April 23, 2007 - PFF Bancorp, Inc. (NYSE:PFB), the holding company for PFF Bank & Trust (the "Bank"), Diversified Builder Services, Inc. ("DBS") and Glencrest Investment Advisors, Inc. ("Glencrest"), today reported net earnings of $55.9 million or $2.25 per diluted share for the year ended March 31, 2007 ("fiscal 2007"), up 7 percent from $52.1 million or $2.10 per diluted share for the previous fiscal year ("fiscal 2006").
Net interest income increased $11.6 million or 7 percent between fiscal 2006 and 2007 to $182.1 million. Net interest margin contracted 27 basis points to 4.15% between fiscal 2006 and 2007. On a sequential quarter basis, net interest margin contracted 5 basis points to 4.00%. Average interest-earning assets increased $527.7 million or 14 percent between fiscal 2007 and 2006. On a sequential quarter basis, average interest-earnings assets decreased slightly by $38.4 million.
Construction, commercial business, commercial real estate and consumer loans (the "Four-Cs") increased $338.6 million or 16 percent during fiscal 2007 to $2.51 billion or 61 percent of loans and leases receivable, net, compared to $2.17 billion or 56 percent of loans and leases receivable, net, one year ago. Four-Cs originations were $2.01 billion or 86 percent of total originations for fiscal 2007 compared to $2.38 billion or 85 percent of total originations for fiscal 2006. On a sequential quarter basis, the Four-Cs increased $49.0 million. At March 31, 2007, DBS had outstanding loans receivable, net, of $118.4 million compared to $87.0 million one year ago and $104.0 million at December 31, 2006. The majority of DBS's loans are classified as construction and land.
Total deposits increased $234.3 million or 8 percent during fiscal 2007 with certificates of deposits ("CDs") increasing $216.1 million, and passbook, money market and demand accounts ("core deposits") increasing $18.2 million. On a sequential quarter basis, CDs decreased $10.7 million and core deposits increased $63.5 million. At March 31, 2007, core deposits of $1.71 billion (including $295.1 million of non-interest bearing demand accounts) represented 52 percent of total deposits compared to $1.69 billion or 55 percent of total deposits one year ago.
Kevin McCarthy, President and CEO commented, "Sound execution of our business model is continuing to deliver strong and consistent balance sheet growth in a very competitive banking environment. With the addition of our second Riverside branch in March 2007, our Apple Valley branch earlier this month and our previously announced additional branch expansion, we are positioning ourselves for continued profitable growth in the Inland Empire."
We recorded a non-cash mark-to-market charge of $597,000 during fiscal 2007 compared to a non-cash credit of $1.6 million during fiscal 2006 related to two interest rate swaps, with notional amounts of $30.0 million and $10.0 million, entered into in connection with the issuance of our floating rate junior subordinated debentures during September 2004 and 2005. During the current March quarter, we sold $54.3 million of investment securities and mortgage-backed securities at a net loss of $283,000. Excluding gain and loss on sale of securities, gain on sale of a former administrative facility building and the non-cash mark-to-market associated with our interest rate swaps, non-interest income increased $2.0 million or 9 percent between fiscal 2006 and 2007. Deposit and related fees rose $701,000 or 5 percent, while trust, investment and insurance fees increased $1.2 million or 27 percent, compared to one year ago.
Our efficiency ratio was 48.90 percent for fiscal 2007, relatively unchanged from fiscal 2006. Excluding gain and loss on sales of securities, gain on sale of building and the non-cash mark-to-market associated with our interest rate swaps, our efficiency ratio improved to 48.93 percent for fiscal 2007 from 49.53 for fiscal 2006. General & Administrative ("G&A") expense to average assets improved to 2.22 percent for fiscal 2007 compared to 2.37 percent for the comparable period of 2006. G&A expense increased $5.5 million or 6 percent between the years ended March 31, 2006 and 2007 to $100.5 million. G&A expense for the March quarter includes a $1.9 million credit associated with a reversal of previously company-wide accrued incentive plan payments.
Non-accrual loans were $11.4 million or 0.24 percent of gross loans and leases at March 31, 2007 compared to $1.1 million or 0.03 percent of gross loans and leases at March 31, 2006. The non-accrual loan balance of $11.4 million as of March 31, 2007 primarily consists of our $8.9 million portion of a $43.0 million construction loan located in Scottsdale, Arizona. The construction loan is being marketed by the lead lender and the Bank has established a specific valuation allowance totaling $450,000 based upon the estimated fair value of the property.
At March 31, 2007, our allowance for loan and lease losses ("ALLL") was $46.3 million or 0.98 percent of gross loans and leases compared to $37.1 million or 0.83 percent of gross loans and leases at March 31, 2006. Classified assets increased from $21.5 million at March 31, 2006 to $65.8 million at March 31, 2007, primarily due to two construction loans; a $31.7 million tract construction loan located in Palm Desert, California and the $8.9 million nonaccrual construction loan mentioned above, both of which were classified substandard. The tract construction loan in Palm Desert is not past due, however, slower than anticipated sales and lower property valuations warranted the classification.
Loan charge-offs, net of recoveries for fiscal 2007 totaled $531,000, or 0.01 percent of average loans and leases receivable, net, compared to $2.6 million or 0.07 percent of average loans and leases receivable, net for fiscal 2006.
We recorded a $9.7 million provision for loan and lease losses for fiscal 2007 compared to $6.4 million for the comparable period of 2006. The increase in our provision for loan and lease losses for fiscal 2007 is attributable primarily to the construction loans located in Palm Desert and Scottsdale mentioned above, in addition to the cautious approach we are taking to credit evaluation in light of the slower levels of absorption in some segments of the residential housing market.
Our effective tax rate was 41.6 percent for fiscal 2007 compared to 43.9 percent for fiscal 2006.
We repurchased 476,500 shares of our common stock at a weighted average price of $30.85 per share during fiscal 2007. At March 31, 2007, 477,810 shares remain under a 1.0 million share repurchase authorization adopted by our Board of Directors on October 26, 2005.
Having opened our full-service branch in Apple Valley, California on April 16, 2007, we are presently conducting business through 33 full-service banking branches, three registered investment advisory offices, two trust offices, a Southern California regional loan center, an office providing diversified financial services to home builders and a loan origination office in Northern California. Assets under management or advisory by Glencrest and the Bank's trust department increased to $742.8 million at March 31, 2007, compared to $672.0 million at March 31, 2006. These assets under management or advisory include $606.4 million managed or advised by Glencrest at March 31, 2007, as compared to $525.7 million at March 31, 2006.
We will host a conference call at 8:30 A.M. PDT on Monday, April 23, 2007, to discuss our financial results. The conference call can be accessed by dialing
1-888-459-5609 and referencing "PFF Bancorp, Inc. Fourth Quarter Conference Call". An audio replay of this conference call will be available through Monday, May 7, 2007, by dialing 1-877-519-4471 and referencing replay PIN number 8601284.
Certain matters discussed in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate to, among other things, expectations of the business environment in which the Company operates, projections of future performance, perceived opportunities in the market and statements regarding the Company's strategic objectives. These forward-looking statements are based upon current management expectations, and may therefore involve risks and uncertainties. The Company's actual results or performance, may differ materially from those suggested, expressed, or implied by forward-looking statements due to a wide range of factors including, but not limited to, the general business environment, the California real estate market, competitive conditions in the business and geographic areas in which the Company conducts its business, regulatory actions or changes and other risks detailed in the Company's reports filed with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended March 31, 2006. The Company disclaims any obligation to subsequently revise or update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Contact Kevin McCarthy, President and CEO or
Gregory C. Talbott, Senior Executive Vice President, COO/CFO,
PFF Bancorp, Inc.
9337 Milliken Avenue, Rancho Cucamonga, CA 91730
(909) 941-5400
PFF BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
March 31, (Unaudited) |
March 31, | |||
ASSETS | ||||
| Cash and cash equivalents | $ 59,587 | $ 58,831 | ||
Investment securities held-to-maturity (estimated fair value of $6,646 at March 31, 2007, and $6,567 March 31, 2006) | 6,712 | 6,724 | ||
| Investment securities available-for-sale, at fair value | 28,067 | 60,092 | ||
| Mortgage-backed securities available-for-sale, at fair value | 186,607 | 229,470 | ||
| Loans held-for-sale | - | 795 | ||
Loans and leases receivable, net (net of allowances for loan and lease losses of $46,315 and $37,126 at March 31, 2007 and 2006) | 4,116,232 | 3,839,779 | ||
| Federal Home Loan Bank (FHLB) stock, at cost | 46,158 | 39,307 | ||
| Accrued interest receivable | 25,704 | 21,278 | ||
| Assets acquired through foreclosure, net | - | 8,728 | ||
| Property and equipment, net | 56,564 | 44,303 | ||
| Prepaid expenses and other assets | 27,896 | 31,483 | ||
| Total assets | $ 4,553,527 | $ 4,340,790 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY |
| |||
| Liabilities: |
| |||
| Deposits | $ 3,291,645 | $ 3,057,309 | ||
| FHLB advances and other borrowings | 775,300 | 822,000 | ||
| Junior subordinated debentures | 56,702 | 56,702 | ||
| Accrued expenses and other liabilities | 32,767 | 41,048 | ||
| Total liabilities | 4,156,414 | 3,977,059 | ||
| Commitments and contingencies | - | - | ||
| Stockholders' equity: |
| |||
| Preferred stock, $.01 par value. Authorized 2,000,000 shares; none issued | - | - | ||
Common stock, $.01 par value. Authorized 59,000,000 shares; issued 24,156,834 and 24,493,472; outstanding 24,108,834 and 24,493,472 at March 31, 2007 and 2006, respectively | 240 | 244 | ||
| Additional paid-in capital | 180,285 | 175,581 | ||
| Retained earnings | 221,892 | 195,591 | ||
| Accumulated other comprehensive losses | (5,304 | ) | (7,685 | ) |
| Total stockholders' equity | 397,113 | 363,731 | ||
| Total liabilities and stockholders' equity | $ 4,553,527 | $ 4,340,790 | ||
PFF BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share data)
(Unaudited)
| For the Three Months Ended | For the Twelve Months Ended | ||||||
| 2007 |
| 2006 |
| 2007 |
| 2006 |
|
Interest income: | ||||||||
Loans and leases receivable | $ 81,770 | $ 68,104 | $ 321,309 | $ 245,435 | ||||
| Mortgage-backed securities | 2,345 | 2,510 | 10,370 | 9,479 | ||||
| Investment securities and deposits | 1,254 | 1,316 | 6,004 | 4,632 | ||||
| Total interest income | 85,369 | 71,930 | 337,683 | 259,546 | ||||
| Interest expense: | ||||||||
| Deposits | 29,412 | 17,848 | 106,378 | 61,605 | ||||
| Borrowings | 11,746 | 9,249 | 49,206 | 27,438 | ||||
| Total interest expense | 41,158 | 27,097 | 155,584 | 89,043 | ||||
| Net interest income | 44,211 | 44,833 | 182,099 | 170,503 | ||||
| Provision for loan and lease losses | 4,800 | 3,300 | 9,720 | 6,395 | ||||
Net interest income after provision for loan and lease losses | 39,411 | 41,533 | 172,379 | 164,108 | ||||
| Non-interest income: | ||||||||
| Deposit and related fees | 3,281 | 3,088 | 13,473 | 12,772 | ||||
| Loan and servicing fees | 523 | 586 | 2,260 | 2,347 | ||||
| Trust, investment and insurance fees | 1,439 | 1,214 | 5,792 | 4,575 | ||||
| Gain on sale of loans, net | 74 | 46 | 238 | 180 | ||||
| Gain (loss) on sale of securities, net | (283 | ) | - | (12 | ) | 923 | ||
| Mark-to-market on interest rate swaps | (240) | 1,568 | (597 | ) | 1,568 | |||
| Other non-interest income | 421 | 592 | 2,175 | 1,364 | ||||
| Total non-interest income | 5,215 | 7,094 | 23,329 | 23,729 | ||||
| Non-interest expense: | ||||||||
| General and administrative: | ||||||||
| Compensation and benefits | 11,604 | 15,224 | 55,530 | 55,104 | ||||
| Occupancy and equipment | 4,426 | 3,969 | 16,641 | 14,897 | ||||
| Marketing and professional services | 3,598 | 2,782 | 13,003 | 11,175 | ||||
| Other general and administrative | 3,880 | 3,431 | 15,290 | 13,784 | ||||
| Total general and administrative | 23,508 | 25,406 | 100,464 | 94,960 | ||||
| Foreclosed asset operations, net | - | (20 | ) | (470 | ) | (6 | ) | |
| Total non-interest expense | 23,508 | 25,386 | 99,994 | 94,954 | ||||
| Earnings before income taxes | 21,118 | 23,241 | 95,714 | 92,883 | ||||
| Income taxes | 8,320 | 10,048 | 39,805 | 40,803 | ||||
| Net earnings | $ 12,798 | 13,193 | $ 55,909 | 52,080 | ||||
| Basic earnings per share | $ 0.52 | $ 0.54 | $ 2.28 | $ 2.13 | ||||
| Weighted average shares outstanding for basic earnings per share calculation | 24,484,344 | 24,299,315 | 24,496,258 | 24,441,424 | ||||
| Diluted earnings per share | $ 0.52 | $ 0.53 | $ 2.25 | $ 2.10 | ||||
| Weighted average shares outstanding for diluted earnings per share calculation | 24,836,009 | 24,703,102 | 24,841,109 | 24,854,837 | ||||
PFF BANCORP, INC. AND SUBSIDIARIES
Selected Ratios and Other Data
(Dollars in thousands)
(Unaudited)
For the Three Months Ended March 31, | For the Twelve Months Ended March 31, | ||||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||||
| Performance Ratios | |||||||||||||||||
| Return on average assets (1) | 1.12 | % | 1.26% |
| 1.23 | % | 1.30 | % | |||||||||
| Return on average stockholders' equity (1) | 12.70 | % | 14.76% |
| 14.41 | % | 14.96 | % | |||||||||
| General and administrative expense to average assets (1) | 2.06 | % | 2.43% |
| 2.22 | % | 2.37 | % | |||||||||
| Efficiency ratio (2) | 47.56 | % | 48.93% |
| 48.90 | % | 48.89 | % | |||||||||
| Average interest-earning assets to average interest- |
|
| |||||||||||||||
| bearing liabilities | 107.05 | % | 106.98% |
| 106.69 | % | 107.21 | % | |||||||||
|
| ||||||||||||||||
| Yields and Costs (1) |
|
| |||||||||||||||
| Net interest spread | 3.74 | % | 4.28% | 3.91 | % | 4.25 | % | ||||||||||
| Net interest margin (3) | 4.00 | % | 4.46% | 4.15 | % | 4.42 | % | ||||||||||
| Average yield on interest-earning assets | 7.79 | % | 7.21% | 7.70 | % | 6.73 | % | ||||||||||
| Average cost of interest-bearing liabilities | 4.05 | % | 2.93% | 3.79 | % | 2.48 | % | ||||||||||
| Average yield on loans and leases receivable, net | 8.02 | % | 7.47% | 7.96 | % | 7.00 | % | ||||||||||
| Average yield on securities | 4.61 | % | 4.25% | 4.61 | % | 3.90 | % | ||||||||||
| Average cost of core deposits | 2.40 | % | 1.46% | 2.06 | % | 1.37 | % | ||||||||||
| Average cost of C.D.s | 5.01 | % | 3.94% | 4.76 | % | 3.53 | % | ||||||||||
| Average cost of total deposits | 3.67 | % | 2.50% | 3.37 | % | 2.18 | % | ||||||||||
| Average cost of FHLB advances and other borrowings | 5.36 | % | 4.26% | 5.12 | % | 3.41 | % | ||||||||||
| Average cost of junior subordinated debentures | 6.24 | % | 6.01% | 6.23 | % | 6.01 | % | ||||||||||
| Asset Quality |
|
| |||||||||||||||
| Net charge-offs | $ | 591 | 13 | 531 | 2,571 | ||||||||||||
| Net charge-offs to average loans and leases receivable, net (1) | 0.06 | % | 0.00% |
| 0.01 | % | 0.07 | % | |||||||||
|
| ||||||||||||||||
| Average Balances |
|
| |||||||||||||||
| Average total assets | $ | 4,565,575 | $ | 4,175,898 | $ | 4,535,590 | $ | 4,013,975 | |||||||||
| Average interest-earning assets | $ | 4,416,415 | $ | 4,016,902 | $ | 4,384,168 | $ | 3,856,508 | |||||||||
| Average interest-bearing liabilities | $ | 4,125,606 | $ | 3,754,818 | $ | 4,109,369 | $ | 3,597,198 | |||||||||
| Average loans and leases receivable, net | $ | 4,109,767 | $ | 3,669,892 | $ | 4,036,831 | $ | 3,503,984 | |||||||||
| Average securities | $ | 249,213 | $ | 304,403 | $ | 292,483 | $ | 303,862 | |||||||||
| Average core deposits | $ | 1,662,714 | $ | 1,687,045 | $ | 1,631,152 | $ | 1,767,262 | |||||||||
| Average C.D.s | $ | 1,584,784 | $ | 1,210,812 | $ | 1,528,978 | $ | 1,059,621 | |||||||||
| Average total deposits | $ | 3,247,498 | $ | 2,897,857 | $ | 3,160,130 | $ | 2,826,883 | |||||||||
| Average FHLB advances and other borrowings | $ | 821,406 | $ | 800,259 | $ | 892,537 | $ | 725,476 | |||||||||
| Average junior subordinated debentures | $ | 56,702 | $ | 56,702 | $ | 56,702 | $ | 44,839 | |||||||||
| Average stockholders' equity | $ | 403,077 | $ | 357,488 | $ | 388,061 | $ | 348,087 | |||||||||
| Loan and Lease Activity | |||||||||||||||||
| Total originations | $ | 433,892 | $ | 806,313 | $ | 2,330,616 | $ | 2,818,101 | |||||||||
| One-to-four-family | $ | 47,214 | $ | 103,033 | $ | 244,925 | $ | 387,282 | |||||||||
| Multi-family | $ | 1,655 | $ | 19,450 | $ | 72,896 | $ | 47,329 | |||||||||
| Commercial real estate | $ | 14,708 | $ | 119,937 | $ | 200,508 | $ | 265,950 | |||||||||
| Construction - residential, including land | $ | 137,302 | $ | 284,436 | $ | 865,492 | $ | 1,210,321 | |||||||||
| Construction - commercial | $ | 60,436 | $ | 44,514 | $ | 193,811 | $ | 171,441 | |||||||||
| Commercial loans and leases | $ | 126,179 | $ | 162,459 | $ | 524,606 | $ | 481,341 | |||||||||
| Consumer | $ | 46,398 | $ | 72,484 | $ | 228,378 | $ | 254,437 | |||||||||
| Purchases | $ | - | $ | 2,579 | $ | 8,497 | $ | 47,209 | |||||||||
| Principal repayments | $ | 457,242 | $ | 532,364 | $ | 2,095,271 | $ | 2,383,292 | |||||||||
| Sales | $ | 14,271 | $ | 3,487 | $ | 26,175 | $ | 16,227 | |||||||||
| (1) Computed on an annualized basis. | |||||||||||||||||
| (2) Total general and administrative expense divided by net interest income plus non-interest income. | |||||||||||||||||
| (3) Net interest income divided by average interest-earning assets. | |||||||||||||||||
PFF BANCORP, INC. AND SUBSIDIARIES
Selected Ratios and Other Data
(Dollars in thousands, except per share data)
(Unaudited)
As of March 31, |
| As of March 31, | ||||
| ||||||
Asset Quality | ||||||
| Non-accrual loans | $ | 11,421 | $ | 1,130 | ||
| Non-accrual loans to gross loans and leases | 0.24 | % | 0.03 | % | ||
| Non-performing assets to total assets (1) | 0.25 | % | 0.23 | % | ||
| Allowance for loan and lease losses | $ | 46,315 | $ | 37,126 | ||
| Allowance for loan and lease losses to non-accrual loans | 406 | % | 3,285 | % | ||
| Allowance for loan and lease losses to gross loans and leases | 0.98 | % | 0.83 | % | ||
|
| |||||
| Capital |
|
| ||||
| Stockholders' equity to assets ratio | 8.72 | % | 8.38 | % | ||
| Core capital ratio* | 8.72 | % | 8.24 | % | ||
| Risk-based capital ratio* | 11.21 | % | 10.90 | % | ||
| Shares outstanding at end of period | 24,108,834 | 24,493,472 | ||||
| Book value per share outstanding | $ | 16.47 | $ | 14.85 | ||
| Tangible book value per share outstanding (2) | $ | 16.42 | $ | 14.80 | ||
|
| |||||
| Loan, Lease and Deposit Balances | ||||||
| One-to-four family loans | $ | 1,421,310 | $ | 1,522,572 | ||
| Multi-family loans | $ | 235,424 | $ | 188,257 | ||
| Commercial real estate loans | $ | 679,526 | $ | 611,247 | ||
| Construction - residential, including land (3) | $ | 1,088,395 | $ | 887,771 | ||
| Construction - commercial (3) | $ | 139,678 | $ | 124,196 | ||
| Commercial business loans and leases | $ | 286,678 | $ | 264,168 | ||
| Consumer loans | $ | 313,203 | $ | 281,488 | ||
| Core deposits | $ | 1,707,988 | $ | 1,689,790 | ||
| C.D.s | $ | 1,583,657 | $ | 1,367,519 | ||
| (1) Non-performing assets consist of non-accrual loans and assets acquired through foreclosure, net. | ||||||
| (2) Stated book value minus goodwill. | ||||||
| (3) Net of undisbursed balances of $547,516 and $596,198 at March 31, 2007 and 2006, respectively. | ||||||
*PFF Bank & Trust
