Cavalry Bancorp (CAVB) 8-K Results of Operations and Financial Condition

Contact:

William S. Jones

Executive Vice President

and Chief Administrative Officer

615/849-2272

CAVALRY BANCORP, INC. REPORTS

FOURTH QUARTER AND

YEAR END EARNINGS

Murfreesboro, Tennessee—January 28, 2005—Cavalry Bancorp, Inc. (the “Company”) (Nasdaq NMS:CAVB) announced today fourth quarter and year-to-date consolidated earnings for its wholly-owned subsidiary Cavalry Banking (“Bank”) and the Company.

Net income decreased from $768,000 or $0.11 per share diluted for the quarter ended December 31, 2003 to a net loss of $3.2 million or $(0.48) per share diluted for the quarter ended December 31, 2004. As previously disclosed, the loss for the quarter was a result of a one-time, non cash, pre-tax charge of $5.3 million resulting from the acceleration of vesting of employee accounts in the Employee Stock Ownership Program (ESOP) and the acceleration of vesting of all director and officer stock options granted under the 1999 Stock Option Plan (SOP). Annualized return on average assets decreased from 0.62% for the quarter ended December 31, 2003 to

(2.28)% for the quarter ended December 31, 2004. Annualized return on average equity decreased from 5.64% for the quarter ended December 31, 2003 to (23.19)% for the quarter ended December 31, 2004.

Net income was $4.5 million or $0.67 per share diluted for the year ended December 31, 2003 and $429,000 or $0.06 per share diluted for the year ended December 31, 2004. Annualized return on average assets decreased from 0.96% for the year ended December 31, 2003 to 0.08% for the year ended December 31, 2004. Annualized return on average equity decreased from 8.60% for the year ended December 31, 2003 to 0.77% for the year ended December 31, 2004.

Total assets of the Company increased from $515.2 million at December 31, 2003 to $578.7 million at December 31, 2004. Net loans receivable increased from $350.4 million at December 31, 2003 to $430.5 million at December 31, 2004. Loans held-for-sale decreased from $2.6 million at December 31, 2003 to $2.5 million at December 31, 2004. Deposits increased from $454.3 million at December 31, 2003 to $506.5 million at December 31, 2004.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Certain of these statements contained in this release which are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including the uncertainties inherent in the process of auditing and making end-of-year adjustments to a corporation’s financial statements by changes in: interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flow s, competition, demand for financial services in the Company’s market area, implementation of new technologies, the Company’s ability to develop and maintain secure and reliable electronic systems and accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

[Selected financial data follows]

Cavalry Bancorp, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share data)
	December 31,			December 31,
Assets	2004			2003
Cash and cash equivalents	$	63,135		$	70,913
Investment securities available-for-sale, at fair value		42,183			55,123
Loans held for sale, at estimated fair value		2,501			2,648
Loans receivable, net of allowances for loan losses of $4,863 at December 31, 2004 and $4,525 at December 31, 2003		430,526			350,412
Accrued interest receivable		1,985			1,668
Office properties and equipment, net		17,607			18,431
Required investments in stock of the Federal Home Loan Bank and
Required investments in stock of the Federal Home Loan Bank and Federal Reserve Bank stock, at cost		3,125			2,992
Foreclosed assets		16			-
Bank owned life insurance		11,604			8,308
Goodwill		1,772			1,772
Other assets		4,216			2,905
Total assets		578,670			515,172
Liabilities
Liabilities:
Deposits:
Non-interest-bearing	$	81,719		$	72,443
Interest-bearing		424,815			381,814
		506,534			454,257
Advances from Federal Home Loan Bank of Cincinnati		2,835			2,889
Dividends payable		11,332			410
Accrued expenses and other liabilities		4,136			3,189
Total liabilities		524,837			460,745
Shareholders' Equity
Preferred stock, no par value Authorized - 250,000 shares; none issued or outstanding at December 31, 2004 and 2003		-			-
Common stock, no par value Authorized- 49,750,000 shares; issued and outstanding 7,217,565 and 6,834,873 at December 31, 2004 and 2003		19,354			10,175
Retained earnings		34,598			46,633
Unallocated ESOP shares		-			(2,373	)
Accumulated other comprehensive loss, net of tax		(119	)		(8	)
Total shareholders' equity		53,833			54,427
Total liabilities and shareholders' equity		578,670			515,172

Cavalry Bancorp,Inc
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
	Three Months Ended				Year ended
	December 31,				December 31,
		2004		2003		2004	2003
Interest income:
Loans	$	6,344		5,143	$	23,183	20,267
Investment securities:
Taxable		337		390		1,315	1,286
Non-taxable		27		-		101	-
Other		207		74		469	383
Total interest income		6,915		5,607		25,068	21,936
Interest expense:
Deposits		1,577		1,297		5,458	5,518
Borrowings		25		24		97	98
Total interest expense		1,602		1,321		5,555	5,616
Net interest income		5,313		4,286		19,513	16,320
Provision for loan losses		523		-		875	101
Net interest income after provision for loan losses		4,790		4,286		18,638	16,219
Non-interest income:
Servicing income		47		36		186	212
Gain on sale of loans, net		492		762		2,773	5,473
Gain on sale of investment securities, net		-		-		-	11
Deposit servicing fees and charges		1,371		1,141		5,362	4,596
Trust service fees		265		248		1,097	988
Commissions and other non-banking fees		579		457		2,477	2,452
Other operating income		267		275		1,003	879
Total non-interest income		3,021		2,919		12,898	14,611
Non-interest expenses:
Salaries and employee benefits		8,370		3,716		19,205	15,214
Occupancy expense		417		325		1,395	1,304
Supplies, communications, and other office expenses		239		251		946	1,042
Advertising expense		175		171		578	501
Professional fees		378		141		1,033	506
Equipment and service bureau expense		956		778		3,507	2,989
Loss on sale of investment securities, net		19		-		22	-
Other operating expense		431		463		1,887	1,815
Total non-interest expense		10,985		5,845		28,573	23,371
Income (loss) before income tax expense		(3,174	)	1,360		2,963	7,459
Income tax expense		59		592		2,534	2,965
Net income (loss)	$	(3,233	)	768	$	429	4,494
Basic Earnings (Loss) Per Share	$	(0.48	)	0.12	$	0.07	0.70
Diluted Earnings (Loss) Per Share	$	(0.48	)	0.11	$	0.06	0.67
Weighted average shares outstanding - Basic		6,754,189		6,450,933		6,536,801	6,407,030
Weighted average shares outstanding - Diluted		6,754,189		6,729,532		6,779,184	6,661,840

Cavalry Bancorp, Inc.
Consolidated Financial
Highlights
(unaudited)
(dollars in thousands)
	December 31, 2004		December 31,2003		% Change
FINANCIAL CONDITION DATA:
Total assets	$	578,670		515,172		12.33	%
Loans receivable, net		430,526		350,412		22.86	%
Loans held-for-sale		2,501		2,648		-5.55	%
Investment securities available-for-sale		42,183		55,123		-23.47	%
Cash and cash equivalents		63,135		70,913		-10.97	%
Deposits		506,534		454,257		11.51	%
Borrowings		2,835		2,889		-1.87	%
Shareholders' Equity		53,833		54,427		-1.09	%

	For the quarters ending								For the years ending
	December 31,								December 31,
	2004			2003		%Change			2004		2003		%Change
OPERATING DATA:
Interest income	$	6,915			5,607		23.33	%	$	25,068		21,936		14.28	%
Interest expense		1,602			1,321		21.27	%		5,555		5,616		-1.09	%
Net interest income		5,313			4,286		23.96	%		19,513		16,320		19.56	%
Provision for loan losses		523			-		100.00	%		875		101		766.34	%
Net interest income after provision for loan losses		4,790			4,286		11.76	%		18,638		16,219		14.91	%
Gains from sale of loans		492			762		-35.43	%		2,773		5,473		-49.33	%
Other income		2,529			2,157		17.25	%		10,125		9,138		10.80	%
Other expenses		10,985			5,845		87.94	%		28,573		23,371		22.26	%
Income (loss) before income taxes		(3,174	)		1,360		-333.38	%		2,963		7,459		-60.28	%
Income tax expense		59			592		-90.03	%		2,534		2,965		-14.54	%
Net income (loss)	$	(3,233	)		768		-520.96	%	$	429		4,494		-90.45	%

	For the quarters ending						For the years ending
	December 31,						December 31,
	2004			2003			2004			2003
KEY FINANCIAL RATIOS
Performance Ratios:
Return on average assets		-2.28	%		0.62	%		0.08	%		0.96	%
Return on average shareholders' equity		-23.19	%		5.64	%		0.77	%		8.60	%
Interest rate spread (tax equivalent)		3.82	%		3.66	%		3.84	%		3.68	%
Net interest margin (tax equivalent)		4.14	%		3.89	%		4.10	%		3.93	%
Average interest-earning assets to average interest-bearing liabilities		125.17	%		118.94	%		122.41	%		118.10	%
Non-interest expense as a percent of average total assets		7.76	%		4.72	%		5.40	%		5.00	%
Efficiency ratio		131.81	%		81.12	%		88.16	%		75.56	%
Asset Quality Ratios:
Nonaccrual and 90 days or more past due loans as a percent of total loans, net		0.17	%		0.24	%		0.17	%		0.24	%
Nonperforming assets as a percent of total assets		0.13	%		0.17	%		0.13	%		0.17	%
Allowance for loan losses as a percent of total loans receivable		1.12	%		1.28	%		1.12	%		1.28	%
Net charge-offs to average outstanding loans		0.09	%		0.01	%		0.14	%		0.07	%