Exhibit 99.1
Heritage Commerce Corp Earns $4 Million in Second Quarter 2007 As Diablo Valley Bank Acquistion Closes
San Jose, CA – August 7, 2007 — Heritage Commerce Corp (Nasdaq: HTBK), parent company of Heritage Bank of Commerce, today reported that second quarter net income totaled $4.0 million, or $0.33 per diluted share, compared with $4.2 million, or $0.35 per diluted share, for the same quarter a year ago. For the first half of 2007, net income was $8.0 million, or $0.68 per diluted share, compared to $8.6 million, or $0.71 per diluted share, in the first half of 2006.
The merger with Diablo Valley Bank (“DVB”) was completed on June 20, 2007. The consolidated financial statements of Heritage Commerce Corp for the three and six months ended June 30, 2007 reflect the completion of the merger including the preliminary purchase accounting adjustments to reflect the DVB assets and liabilities at their estimated fair values. The completion of the acquisition of Diablo Valley Bank contributed to a 29% increase in loans and a 30% rise in deposits year-over-year. Revenue and expenses from the operations of DVB have only been included for the 10 day period from the closing of the merger, and they were not significant for the three and six months reported.
“Our focus during the second quarter has been on completing the merger with Diablo Valley Bank and preparing for a smooth integration and conversion of their operations with ours,” said Walter Kaczmarek, President and Chief Executive Officer. “We have also brought on board a number of seasoned bankers in other financial institutions with strong reputations in our markets. The combination of the talent from Diablo and the other new people hired by Heritage this quarter should help us gain market share during the remainder of this year and into next year. In addition, we are preparing to open our first office in Walnut Creek, further expanding our presence in the affluent East Bay market.”
Second Quarter 2007 Financial Highlights:
| ¨ | Produced an annualized return on average assets of 1.50%. |
| ¨ | Completed the acquisition of Daiblo Valley Bank, adding $257 million in deposits and $214 million in loans. |
| ¨ | Net interest margin expanded to 5.11% from 5.06% in the first quarter of 2007 and 4.98% in the second quarter a year ago. |
| ¨ | Commercial loans increased 22% in the quarter and 31% year-over-year, and now account for 38% of total loans. |
| ¨ | Received approval to open a new office in Walnut Creek, further expanding presence in Contra Costa County. |
Operating Results
“Several factors contributed to a small decline in revenue for the quarter and year-to-date periods,” said Mr. Kaczmarek. “Our SBA lending team was understaffed during most of the quarter and, consequently, SBA loan originations and gains on the sale of SBA loans were both down. As we rebuild the SBA lending team, we anticipate activity will improve. In addition, the Company has also decided to change its strategy regarding its SBA loan business. Beginning in the third quarter of 2007, we will retain most of our SBA production in lieu of selling it. Thus, quarterly gains on sale will most likely be significantly lower. However, as the SBA loan portfolio increases over time, our net interest income should also increase.”
Net interest income decreased 2% to $12.4 million for the second quarter of 2007, compared to $12.6 million for the second quarter of 2006. For the first half of 2007, net interest income decreased 3% to $24.1 million from $24.8 million for the same period of 2006.
The net interest margin was 5.11% for the three months ended June 30, 2007, compared to 5.06% for the first quarter of 2007 and 4.98% for the three months ended June 30, 2006. For the first six months of 2007, net interest margin improved to 5.09% from 4.94% for the first six months of 2006.
No provision for loan losses was recognized in the second quarter of 2007, compared to a reverse provision for loan losses of $236,000 recognized in the first quarter of 2007. Reverse provisions for loan losses were $114,000 and $603,000 for the three and six months ended June 30, 2006.
Noninterest income was $2.3 million for the second quarter of 2007, compared to $2.3 million for second quarter of 2006 and $2.5 million for the first quarter of 2007. Noninterest income was primarily comprised of the gain on sale of Small Business Administration (“SBA”) and other guaranteed loans, loan servicing income, the increase in cash surrender value of life insurance, and service charges on deposit accounts. In the first six months of 2007, noninterest income was $4.8 million, compared to $5.2 million in the first six months a year ago.
Heritage’s second quarter noninterest expense was approximately the same as the second quarter a year ago at $8.5 million and up slightly from $8.3 million in the first quarter of 2007. In the first six months of 2007, noninterest expense decreased 3% to $16.8 million from $17.3 million in the first six months a year ago. Compensation expense decreased 4% from the first quarter to the second quarter but increased 1% from the second quarter a year ago.
The efficiency ratio was 58.00% in the second quarter of 2007, compared to 58.26% in the first quarter of 2007, and 57.06% in the second quarter of 2006. The efficiency ratio for the first six months of 2007 increased to 58.13% from 57.57% a year ago. The annualized returns on average assets and average equity for the second quarter of 2007 were 1.50% and 12.15%, compared to 1.50% and 14.35% for the second quarter ended June 30, 2006, respectively. Returns on average assets and average equity for the first six months of 2007 were 1.53% and 12.63%, compared to 1.55% and 14.93% for the first six months of 2006, respectively.
Balance Sheet, Capital Management and Credit Quality
Heritage’s assets totaled $1.35 billion at June 30, 2007, compared to $1.09 billion a year ago, and $1.07 billion at March 31, 2007. Deposits totaled $1.12 billion at June 30, 2007, compared to $0.91 billion at June 30, 2006, and $0.88 billion at March 31, 2007. The Company added a net $23 million of brokered deposits in the second quarter of 2007, compared to the first quarter of 2007. Total loans, excluding loans held for sale, were $0.94 billion at June 30, 2007, compared to $0.71 billion at June 30, 2006, and $0.70 billion at March 31, 2007.
Nonperforming assets increased to $6.3 million, or 0.47% of total assets, at the end of June, compared to $1.6 million, or 0.15% of total assets, a year ago, and $3.3 million, or 0.31% of total assets, at March 31, 2007. Approximately $3.7 million of the nonperforming assets at June 30, 2007, were acquired in the Diablo Valley Bank merger. Of the total nonperforming assets at June 30, 2007, so far $900,000 were paid off during the third quarter of 2007. Net charge-offs in the second quarter of 2007 were $35,000, or 0.02% of average loans, compared to net charge-offs of $29,000, or 0.02% of average loans, in the preceding quarter. Net charge-offs in the second quarter a year ago were $536,000, or 0.31% of average loans. The allowance for loan losses at June 30, 2007 was $11.1 million, or 1.18% of total loans, and represented 192% of nonperforming loans. The allowance for loan losses at June 30, 2006 was $9.1 million, or 1.27% of total loans, and represented 564% of nonperforming loans. The allowance for loan losses at December 31, 2006 was $9.3 million, or 1.28% of total loans, and represented 215% of nonperforming loans.
Shareholders’ equity increased 44% to $170 million at June 30, 2007, compared to $118 million a year ago, and $126 million at March 31, 2007. Capital ratios continue to be above the well-capitalized guidelines established by regulatory agencies. The Company’s leverage ratio at June 30, 2007, was 14.29%, compared to 12.70% at June 30, 2006, and 14.43% at March 31, 2007. Since the Diablo Valley Bank acquisition occurred on June 20, 2007, the transaction did not have much effect on the quarterly average assets used in the leverage ratio calculation. If period end total assets were the denominator instead of average assets, the leverage ratio would have been 11.31% at June 30, 2007.
During the second quarter of 2007, the Company repurchased 25,200 shares of its common stock with an average price of $24.00 a share under the Company’s $10 million common stock repurchase program, which was approved by the Company’s Board of Directors in February, 2006. Shares were purchased on the open market financed by available cash. The authorization for this repurchase program expired as of June 30, 2007.
Heritage Commerce Corp, a bank holding company established in February 1998, is the parent company of Heritage Bank of Commerce, established in 1994 and headquartered in San Jose with full-service branches in Los Gatos, Fremont, Danville, Pleasanton, Morgan Hill, Gilroy, Mountain View, and Los Altos. Heritage Bank of Commerce is also a SBA Preferred Lender ranked the fourth largest SBA lender in Northern California and fourteenth in the State of California, with Loan Production Offices in San Jose, Chico, Fremont, Fresno, and Sacramento, California. For more information, please visit www.heritagecommercecorp.com.
Forward Looking Statement Disclaimer
This release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include, but are not necessarily limited to, the Company’s ability to sustain dividend payments, fluctuations in interest rates and monetary policy established by the Federal Reserve, inflation, government regulations, general economic conditions, competition within the business areas in which the Company is conducting its operations, including the real estate market in California, the ability to recognize identified cost savings, and other factors beyond the Company's control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. For a discussion of factors which could cause results to differ, please see the Company's reports on Forms 10-K and 10-Q as filed with the Securities and Exchange Commission and the Company's press releases. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.
Member FDIC
| | | For the Three Months Ended: | | Percent Change From: | | | For the Six Months Ended: | |
CONSOLIDATED INCOME STATEMENTS | | June 30, | | March 31, | | June 30, | | March 31, | | June 30, | | | June 30, | | June 30, | | Percent | |
(in $000's, unaudited) | | | 2007 | | | 2007 | | | 2006 | | | 2007 | | | 2006 | | | | 2007 | | | 2006 | | | Change | |
| Interest Income | | $ | 18,317 | | $ | 17,234 | | $ | 18,392 | | | 6 | % | | 0 | % | | $ | 35,551 | | $ | 35,652 | | | 0 | % |
| Interest Expense | | | 5,924 | | | 5,503 | | | 5,766 | | | 8 | % | | 3 | % | | | 11,427 | | | 10,835 | | | 5 | % |
| Net Interest Income | | | 12,393 | | | 11,731 | | | 12,626 | | | 6 | % | | -2 | % | | | 24,124 | | | 24,817 | | | -3 | % |
| Provision for Loan Losses | | | 0 | | | (236) | | | (114) | | | 100 | % | | -100 | % | | | (236) | | | (603) | | | -61 | % |
| Net Interest income after Provision for Loan Losses | | | 12,393 | | | 11,967 | | | 12,740 | | | 4 | % | | -3 | % | | | 24,360 | | | 25,420 | | | -4 | % |
| Noninterest Income: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gain on Sale of Loans | | | 695 | | | 1,011 | | | 842 | | | -31 | % | | -17 | % | | | 1,706 | | | 2,339 | | | -27 | % |
| Servicing Income | | | 534 | | | 517 | | | 441 | | | 3 | % | | 21 | % | | | 1,050 | | | 909 | | | 16 | % |
| Increase in Cash Surrender Value of Life Insurance | | | 353 | | | 344 | | | 360 | | | 3 | % | | -2 | % | | | 697 | | | 707 | | | -1 | % |
| Service Charges and Other Fees on Deposit Accounts | | | 336 | | | 274 | | | 327 | | | 23 | % | | 3 | % | | | 610 | | | 654 | | | -7 | % |
| Other | | | 344 | | | 369 | | | 287 | | | -7 | % | | 20 | % | | | 713 | | | 542 | | | 32 | % |
| Total Noninterest Income | | | 2,262 | | | 2,515 | | | 2,257 | | | -10 | % | | 0 | % | | | 4,776 | | | 5,151 | | | -7 | % |
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| Noninterest Expense: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Salaries & Employee Benefits | | | 4,685 | | | 4,888 | | | 4,653 | | | -4 | % | | 1 | % | | | 9,573 | | | 9,762 | | | -2 | % |
| Occupancy & Equipment | | | 889 | | | 875 | | | 922 | | | 2 | % | | -4 | % | | | 1,764 | | | 1,808 | | | -2 | % |
| Other | | | 2,926 | | | 2,537 | | | 2,917 | | | 15 | % | | 0 | % | | | 5,463 | | | 5,683 | | | -4 | % |
| Total Noninterest Expense | | | 8,500 | | | 8,300 | | | 8,492 | | | 2 | % | | 0 | % | | | 16,800 | | | 17,253 | | | -3 | % |
| Income Before Income Taxes | | | 6,155 | | | 6,182 | | | 6,505 | | | 0 | % | | -5 | % | | | 12,336 | | | 13,318 | | | -7 | % |
| Provision for Income Taxes | | | 2,140 | | | 2,149 | | | 2,316 | | | 0 | % | | -8 | % | | | 4,288 | | | 4,753 | | | -10 | % |
Net Income | | $ | 4,015 | | $ | 4,033 | | $ | 4,189 | | | 0 | % | | -4 | % | | $ | 8,048 | | $ | 8,565 | | | -6 | % |
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PER SHARE DATA | | | | | | | | | | | | | | | | | | | | | | | | | | |
(unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic Earnings Per Share | | $ | 0.34 | | $ | 0.35 | | $ | 0.35 | | | -3 | % | | -3 | % | | $ | 0.69 | | $ | 0.72 | | | -4 | % |
| Diluted Earnings Per Share | | $ | 0.33 | | $ | 0.34 | | $ | 0.35 | | | -3 | % | | -6 | % | | $ | 0.68 | | $ | 0.71 | | | -4 | % |
| Common Shares Outstanding | | | 13,375,163 | | | 11,636,828 | | | 11,820,563 | | | 15 | % | | 13 | % | | | 13,375,163 | | | 11,820,563 | | | 13 | % |
| Book Value Per Share | | $ | 12.72 | | $ | 10.83 | | $ | 9.98 | | | 17 | % | | 27 | % | | $ | 12.72 | | $ | 9.98 | | | 27 | % |
| Tangible Book Value Per Share | | $ | 9.12 | | $ | 10.83 | | $ | 9.98 | | | -16 | % | | -9 | % | | $ | 9.12 | | $ | 9.98 | | | -9 | % |
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KEY FINANCIAL RATIOS | | | | | | | | | | | | | | | | | | | | | | | | | | |
(unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Annualized Return on Average Equity | | | 12.17 | % | | 13.12 | % | | 14.35 | % | | -7 | % | | -15 | % | | | 12.63 | % | | 14.93 | % | | -15 | % |
| Annualized Return on Average Assets | | | 1.50 | % | | 1.57 | % | | 1.50 | % | | -4 | % | | 0 | % | | | 1.53 | % | | 1.55 | % | | -1 | % |
| Net Interest Margin | | | 5.11 | % | | 5.06 | % | | 4.98 | % | | 1 | % | | 3 | % | | | 5.09 | % | | 4.94 | % | | 3 | % |
| Efficiency Ratio | | | 58.00 | % | | 58.26 | % | | 57.06 | % | | 0 | % | | 2 | % | | | 58.13 | % | | 57.57 | % | | 1 | % |
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AVERAGE BALANCES | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in $000's, unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Average Assets | | $ | 1,075,271 | | $ | 1,039,975 | | $ | 1,120,108 | | | 3 | % | | -4 | % | | $ | 1,057,683 | | $ | 1,117,193 | | | -5 | % |
| Tangilble Average Assets | | $ | 1,075,251 | | $ | 1,039,975 | | $ | 1,120,108 | | | 3 | % | | -4 | % | | $ | 1,055,059 | | $ | 1,117,193 | | | -6 | % |
| Average Earning Asset | | $ | 972,016 | | $ | 939,604 | | $ | 1,017,290 | | | 3 | % | | -4 | % | | $ | 955,874 | | $ | 1,013,600 | | | -6 | % |
| Average Total Loans | | $ | 730,337 | | $ | 700,647 | | $ | 702,817 | | | 4 | % | | 4 | % | | $ | 715,562 | | $ | 702,376 | | | 2 | % |
| Average Loans Held For Sale | | $ | 12,823 | | $ | 18,596 | | $ | 32,494 | | | -31 | % | | -61 | % | | $ | 15,693 | | $ | 35,464 | | | -56 | % |
| Average Deposits | | $ | 880,079 | | $ | 846,736 | | $ | 929,00 | | | 4 | % | | -5 | % | | $ | 863,422 | | $ | 924,496 | | | -7 | % |
| Average Demand Deposits - Noninterest Bearing | | $ | 223,415 | | $ | 218,039 | | $ | 228,891 | | | 2 | % | | -2 | % | | $ | 220,727 | | $ | 232,072 | | | -5 | % |
| Average Interest Bearing Deposits | | $ | 656,664 | | $ | 628,697 | | $ | 700,109 | | | 4 | % | | -6 | % | | $ | 642,695 | | $ | 692,424 | | | -7 | % |
| Average Interest Bearing Liabilities | | $ | 696,773 | | $ | 674,050 | | $ | 749,533 | | | 3 | % | | -7 | % | | $ | 685,412 | | $ | 745,245 | | | -8 | % |
| Average Equity | | $ | 132,347 | | $ | 124,642 | | $ | 117,126 | | | 6 | % | | 13 | % | | $ | 128,509 | | $ | 115,705 | | | 11 | % |
| Tangible Average Equity | | $ | 127,196 | | $ | 124,642 | | $ | 117,126 | | | 2 | % | | 9 | % | | $ | 125,919 | | $ | 115,705 | | | 9 | % |
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| | | End of Period: | | | Percent Change From: | |
CONSOLIDATED BALANCE SHEETS | | June 30, | | | March 31, | | | June 30, | | | March 31, | | | June 30, | |
(in $000's, unaudited) | | 2007 | | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
ASSETS | | | | | | | | | | | | | | | |
| Cash and Due from Banks | | $ | 45,881 | | | $ | 33,718 | | | $ | 39,390 | | | | 36 | % | | | 16 | % |
| Federal Funds Sold | | | 57,810 | | | | 90,400 | | | | 47,000 | | | | -36 | % | | | 23 | % |
| Securities Available-for-Sale, at Fair Value | | | 169,498 | | | | 164,800 | | | | 191,471 | | | | 3 | % | | | -11 | % |
| Loans Held For Sale | | | 6,095 | | | | 11,351 | | | | 30,325 | | | | -46 | % | | | -80 | % |
| Loans: | | | | | | | | | | | | | | | | | | | | |
| Commercial Loans | | | 358,095 | | | | 294,010 | | | | 273,208 | | | | 22 | % | | | 31 | % |
| Real Estate-Mortgage | | | 330,422 | | | | 239,082 | | | | 242,125 | | | | 38 | % | | | 36 | % |
| Real Estate-Land and Construction | | | 203,457 | | | | 128,663 | | | | 149,168 | | | | 58 | % | | | 36 | % |
| Home Equity | | | 42,474 | | | | 36,067 | | | | 46,690 | | | | 18 | % | | | -9 | % |
| Consumer Loans | | | 4,715 | | | | 2,620 | | | | 1,389 | | | | 80 | % | | | 239 | % |
| Total Loans | | | 939,163 | | | | 700,442 | | | | 712,580 | | | | 34 | % | | | 32 | % |
| Deferred Loan Costs, net | | | 504 | | | | 624 | | | | 1,184 | | | | -19 | % | | | -57 | % |
| Loans, Net of Deferred Costs | | | 939,667 | | | | 701,066 | | | | 713,764 | | | | 34 | % | | | 32 | % |
| Allowance for Loan Losses | | | (11,104 | ) | | | (9,014 | ) | | | (9,098 | ) | | | 23 | % | | | 22 | % |
| Net Loans | | | 928,563 | | | | 692,052 | | | | 704,666 | | | | 34 | % | | | 32 | % |
| Company Owned Life Insurance | | | 37,900 | | | | 36,519 | | | | 35,442 | | | | 4 | % | | | 7 | % |
| Premises & Equipment, Net | | | 9,186 | | | | 2,446 | | | | 2,406 | | | | 276 | % | | | 282 | % |
| Goodwill | | | 43,172 | | | | - | | | | - | | | N/ | A | | N/ | A |
| Intangible Assets | | | 5,049 | | | | - | | | | - | | | N/ | A | | N/ | A |
| Accrued Interest Receivable and Other Assets | | | 43,777 | | | | 39,778 | | | | 43,964 | | | | 10 | % | | | 0 | % |
Total Assets | | $ | 1,346,931 | | | $ | 1,071,064 | | | $ | 1,094,664 | | | | 26 | % | | | 23 | % |
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LIABILITIES & SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | |
| Deposits | | | | | | | | | | | | | | | | | | | | |
| Demand Deposits-Noninterest Bearing | | $ | 266,404 | | | $ | 221,206 | | | $ | 221,438 | | | | 20 | % | | | 20 | % |
| Demand Deposits-Interest Bearing | | | 162,003 | | | | 141,395 | | | | 144,120 | | | | 15 | % | | | 12 | % |
| Savings and Money Market | | | 448,528 | | | | 351,005 | | | | 366,892 | | | | 28 | % | | | 22 | % |
| Time Deposits, Under $100 | | | 33,735 | | | | 30,730 | | | | 31,476 | | | | 10 | % | | | 7 | % |
| Time Deposits, $100 and Over | | | 143,544 | | | | 96,813 | | | | 110,513 | | | | 48 | % | | | 30 | % |
| Brokered Deposits, $100 and Over | | | 65,439 | | | | 42,748 | | | | 34,048 | | | | 53 | % | | | 92 | % |
| Total Deposits | | | 1,119,653 | | | | 883,897 | | | | 908,487 | | | | 27 | % | | | 23 | % |
| Securities Sold under Agreement to Repurchase | | | 10,900 | | | | 15,100 | | | | 21,800 | | | | -28 | % | | | -50 | % |
| Notes Payable To Subsidiary Grantor Trusts | | | 23,702 | | | | 23,702 | | | | 23,702 | | | | 0 | % | | | 0 | % |
| Accrued Interest Payable and Other Liabilities | | | 22,522 | | | | 22,333 | | | | 22,708 | | | | 1 | % | | | -1 | % |
| Total Liabilities | | | 1,176,777 | | | | 945,032 | | | | 976,697 | | | | 25 | % | | | 20 | % |
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| Shareholders' Equity: | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | | 103,498 | | | | 61,958 | | | | 66,726 | | | | 67 | % | | | 55 | % |
| Accumulated Other Comprehensive Loss | | | (2,446 | ) | | | (1,712 | ) | | | (3,681 | ) | | | 43 | % | | | -34 | % |
| Retained Earnings | | | 69,102 | | | | 65,786 | | | | 54,922 | | | | 5 | % | | | 26 | % |
| Total Shareholders' Equity | | | 170,154 | | | | 126,032 | | | | 117,967 | | | | 35 | % | | | 44 | % |
Total Liabilities & Shareholders' Equity | | $ | 1,346,931 | | | $ | 1,071,064 | | | $ | 1,094,664 | | | | 26 | % | | | 23 | % |
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CREDIT QUALITY DATA | | | | | | | | | | | | | | | | | | | | |
(in $000's, unaudited) | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual Loans | | $ | 3,192 | | | $ | 3,315 | | | $ | 1,612 | | | | -4 | % | | | 98 | % |
| Loans Over 90 Days Past Due and Still Accruing | | | 2,604 | | | | 0 | | | | 0 | | | N/ | A | | N/ | A |
| Total Nonperforming Loans | | | 5,796 | | | | 3,315 | | | | 1,612 | | | | 75 | % | | | 260 | % |
| Other Real Estate Owned | | | 487 | | | | 0 | | | | 0 | | | N/ | A | | N/ | A |
Total Nonperforming Assets | | $ | 6,283 | | | $ | 3,315 | | | $ | 1,612 | | | | 90 | % | | | 290 | % |
| Net Charge-offs | | $ | 35 | | | $ | 29 | | | $ | 536 | | | | -21 | % | | | -93 | % |
| Net Charge-offs as Percent of Average Loans | | | 0.02 | % | | | 0.02 | % | | | 0.31 | % | | | 0 | % | | | -94 | % |
| Allowance for Loan Losses to Total Loans | | | 1.18 | % | | | 1.29 | % | | | 1.27 | % | | | -9 | % | | | -7 | % |
| Allowance for Loan Losses to Nonperforming Loans | | | 191.58 | % | | | 271.92 | % | | | 564.39 | % | | | -30 | % | | | -66 | % |
| Nonperforming Assets to Total Assets | | | 0.47 | % | | | 0.31 | % | | | 0.15 | % | | | 52 | % | | | 213 | % |
| Nonperforming Loans to Total Loans | | | 0.62 | % | | | 0.47 | % | | | 0.23 | % | | | 32 | % | | | 170 | % |
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OTHER PERIOD-END STATISTICS | | | | | | | | | | | | | | | | | | | | |
(unaudited) | | | | | | | | | | | | | | | | | | | | |
| Shareholders' Equity / Total Assets | | | 12.63 | % | | | 11.77 | % | | | 10.78 | % | | | 7 | % | | | 17 | % |
| Loan to Deposit Ratio | | | 83.92 | % | | | 79.32 | % | | | 78.57 | % | | | 6 | % | | | 7 | % |
| Noninterest Bearing Deposits / Total Deposits | | | 23.79 | % | | | 25.03 | % | | | 24.37 | % | | | -5 | % | | | -2 | % |
| Leverage Ratio | | | 14.29 | % | | | 14.43 | % | | | 12.70 | % | | | -1 | % | | | 13 | % |
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| | For the Three Months Ended | | | For the Three Months Ended | |
| | | June 30, 2007 | | | June 30, 2006 | |
| | | | | Interest | | Average | | | | | Interest | | Average | |
| NET INTEREST INCOME AND NET INTEREST MARGIN | | Average | | Income/ | | Yield/ | | | Average | | Income/ | | Yield/ | |
(in $000's unaudited) | | Balance | | Expense | | Rate | | | Balance | | Expense | | Rate | |
| Assets: | | | | | | | | | | | | | | | | | | | | |
| Loans, gross | | $ | 743,160 | | $ | 15,589 | | | 8.41 | % | | $ | 735,311 | | $ | 15,344 | | | 8.37 | % |
| Securities | | | 171,896 | | | 1,982 | | | 4.62 | % | | | 195,743 | | | 1,977 | | | 4.05 | % |
| Interest bearing deposits in other financial institutions | | | 3,243 | | | 40 | | | 4.95 | % | | | 2,728 | | | 42 | | | 6.18 | % |
| Federal funds sold | | | 53,717 | | | 706 | | | 5.27 | % | | | 83,508 | | | 1,029 | | | 4.94 | % |
| Total interest earning assets | | | 972,016 | | $ | 18,317 | | | 7.56 | % | | $ | 1,017,290 | | $ | 18,392 | | | 7.25 | % |
| Cash and due from banks | | | 33,305 | | | | | | | | | | 36,224 | | | | | | | |
| Premises and equipment, net | | | 3,111 | | | | | | | | | | 2,393 | | | | | | | |
| Other assets | | | 66,839 | | | | | | | | | | 64,201 | | | | | | | |
| Total assets | | $ | 1,075,271 | | | | | | | | | $ | 1,120,108 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Liabilities and shareholders' equity: | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | |
| Demand, interest bearing | | $ | 141,230 | | $ | 780 | | | 2.22 | % | | $ | 148,635 | | $ | 830 | | | 2.24 | % |
| Savings and money market | | | 328,580 | | | 2,456 | | | 3.00 | % | | | 373,697 | | | 2,698 | | | 2.90 | % |
| Time deposits, under $100 | | | 30,872 | | | 301 | | | 3.91 | % | | | 32,264 | | | 251 | | | 3.12 | % |
| Time deposits, $100 and over | | | 102,284 | | | 1,067 | | | 4.18 | % | | | 11,024 | | | 929 | | | 3.36 | % |
| Brokered time deposits, $100 and over | | | 53,698 | | | 617 | | | 4.61 | % | | | 34,489 | | | 325 | | | 3.78 | % |
| Notes payable to subsidiary grantor trusts | | | 23,702 | | | 583 | | | 9.87 | % | | | 23,702 | | | 575 | | | 9.73 | % |
| Securities sold under agreement to repurchase | | | 16,407 | | | 120 | | | 2.93 | % | | | 25,722 | | | 158 | | | 2.46 | % |
| Total interest bearing liabilities | | | 696,773 | | $ | 5,924 | | | 3.41 | % | | | 749,533 | | $ | 5,766 | | | 3.09 | % |
| Demand, noninterest bearing | | | 223,415 | | | | | | | | | | 228,891 | | | | | | | |
| Other liabilities | | | 22,736 | | | | | | | | | | 24,558 | | | | | | | |
| Total liabilities | | | 942,924 | | | | | | | | | | 1,002,982 | | | | | | | |
| Shareholders' equity: | | | 132,347 | | | | | | | | | | 117,126 | | | | | | | |
| Total liabilities and shareholders' equity | | $ | 1,075,271 | | | | | | | | | $ | 1,120,108 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income / margin | | | | | $ | 12,393 | | | 5.11 | % | | | | | $ | 12,626 | | | 4.98 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | For the Six Months Ended | | | For the Six Months Ended | |
| | | June 30, 2007 | | | June 30, 2006 | |
| | | | | Interest | | Average | | | | | Interest | | Average | |
| NET INTEREST INCOME AND NET INTEREST MARGIN | | Average | | Income/ | | Yield/ | | | Average | | Income/ | | Yield/ | |
(in $000's unaudited) | | Balance | | Expense | | Rate | | | Balance | | Expense | | Rate | |
| Assets: | | | | | | | | | | | | | | |
| Loans, gross | | $ | 731,255 | | $ | 30,259 | | | 8.34 | % | | $ | 737,840 | | $ | 30,065 | | | 8.22 | % |
| Securities | | | 172,603 | | | 3,934 | | | 4.60 | % | | | 198,394 | | | 3,769 | | | 3.83 | % |
| Interest bearing deposits in other financial institutions | | | 2,936 | | | 73 | | | 5.01 | % | | | 2,783 | | | 60 | | | 4.35 | % |
| Federal funds sold | | | 49,080 | | | 1,285 | | | 5.28 | % | | | 74,583 | | | 1,758 | | | 4.75 | % |
| Total interest earning assets | | | 955,874 | | $ | 35,551 | | | 7.50 | % | | $ | 1,013,600 | | $ | 35,652 | | | 7.09 | % |
| Cash and due from banks | | | 34,311 | | | | | | | | | | 36,588 | | | | | | | |
| Premises and equipment, net | | | 2,807 | | | | | | | | | | 2,435 | | | | | | | |
| Other assets | | | 64,691 | | | | | | | | | | 64,570 | | | | | | | |
| Total assets | | $ | 1,057,683 | | | | | | | | | $ | 1,117,193 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Liabilities and shareholders' equity: | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | |
| Demand, interest bearing | | $ | 138,876 | | $ | 1,545 | | | 2.24 | % | | $ | 153,288 | | $ | 1,668 | | | 2.19 | % |
| Savings and money market | | | 323,549 | | | 4,740 | | | 2.95 | % | | | 360,983 | | | 4,779 | | | 2.67 | % |
| Time deposits, under $100 | | | 30,929 | | | 590 | | | 3.85 | % | | | 33,232 | | | 497 | | | 3.02 | % |
| Time deposits, $100 and over | | | 101,741 | | | 2,079 | | | 4.12 | % | | | 109,656 | | | 1,750 | | | 3.22 | % |
| Brokered time deposits, $100 and over | | | 47,600 | | | 1,052 | | | 4.46 | % | | | 35,265 | | | 658 | | | 3.76 | % |
| Notes payable to subsidiary grantor trusts | | | 23,702 | | | 1,164 | | | 9.90 | % | | | 23,702 | | | 1,137 | | | 9.67 | % |
| Securities sold under agreement to repurchase | | | 19,015 | | | 257 | | | 2.73 | % | | | 29,119 | | | 346 | | | 2.40 | % |
| Total interest bearing liabilities | | | 685,412 | | $ | 11,427 | | | 3.36 | % | | | 745,245 | | $ | 10,835 | | | 2.93 | % |
| Demand, noninterest bearing | | | 220,727 | | | | | | | | | | 232,072 | | | | | | | |
| Other liabilities | | | 23,035 | | | | | | | | | | 24,171 | | | | | | | |
| Total liabilities | | | 929,174 | | | | | | | | | | 1,001,488 | | | | | | | |
| Shareholders' equity: | | | 128,509 | | | | | | | | | | 115,705 | | | | | | | |
| Total liabilities and shareholders' equity | | $ | 1,057,683 | | | | | | | | | $ | 1,117,193 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income / margin | | | | | $ | 24,124 | | | 5.09 | % | | | | | $ | 24,817 | | | 4.94 | % |
| | | | | | | | | | | | | | | | | | | | | |
