Exhibit 99.1
Temecula Valley Bancorp Announces Second Quarter 2008 Results
- Adds $5.3 Million to Reserves, Generating Loss of $2 Million
- Well Capitalized – Total Risk Based Capital 11.80%
- Return to Profitability Anticipated 3rd Quarter 2008
TEMECULA, Calif.--(BUSINESS WIRE)--Temecula Valley Bancorp Inc. (NASDAQ:TMCV) today announced a net loss of $2.0 million, or $0.20 per diluted share, for the second quarter ending June 30, 2008 compared with net income of $5.3 million, or $0.47 per diluted share, reported for the second quarter of 2007. Results reflect the combined impact of a lower net interest margin, a substantial increase in the loan loss provision, and lower noninterest income, partially offset by lower noninterest expense.
For the first six months of 2008, Temecula had a loss of $553 thousand, or $0.06 per diluted share, compared with net income of $9.4 million for the first six months of 2007, or $0.85 per diluted share.
Chairman, President, and CEO, Stephen H. Wacknitz stated, “Clearly, we are continuing to work our way through one of the most challenging economic environments we’ve experienced in a long time. We remain confident that our markets will rebound. We have a strong capital base, solid credit and underwriting infrastructure, and a solid business strategy being implemented by a seasoned team of managers and lenders. We are prepared to address the difficult market and anticipate returning to profitability next quarter.”
Highlights of the 2008 second quarter are as follows:
- Loan loss provision $5.3 million versus $0 in the second quarter of 2007.
- Temecula’s strategy to reduce overall portfolio risk is succeeding at a rapid pace. Construction & development loans reduced from 50.4 percent of total loans a year earlier to 46.2 percent at the end of the current quarter, while SBA loans grew $68.3 million, or 26.2 percent year over year, and now constitute 24.8 percent of the portfolio, up from 22.6 percent last year.
- Year over year assets increased 12 percent to $1.5 billion. In January 2008, David H. Bartram, a 26-year veteran in banking and SBA was hired to diversify the bank’s loan portfolio, following his previous success in SBA lending at Bank of Commerce and U.S. Bank. SBA production was $107.9 million in the second quarter of 2008 compared to $85.2 million in 2007, and $172.8 million year to date 2008 compared to $156.7 million year to date 2007.
- Net interest income decreased by $5.0 million year over year, or 29.5 percent, primarily from a 185 basis point decline in the net interest margin, partially offset by 6.15 percent growth in average earning assets.
- Noninterest income declined by $3.3 million, due mainly from the $3.9 million decrease in gains on sales of loans and a $1.0 million decrease in loan broker income, offset by $1.4 million higher SBA servicing income.
- The ratio of gross nonperforming assets declined 11 basis points from the first quarter 2008, with a $3.0 million increase. Gross nonperforming assets were $74.4 million, or 5.08% of total assets. Government guarantees of $10.5 million reduced the exposure to $63.9 million or 4.37 percent of total assets.
- Net charge-offs were $3.0 million, or 0.67 percent of annualized average loans, higher than historical levels and reflecting the impact of the distressed housing market.
Mr. Wacknitz commented, “During the second quarter, we took steps to respond to the depressed state of the construction industry by shifting our focus to expanding our SBA lending throughout the country as well as establishing more conservative exposures and limits on certain higher-risk construction loans such as non-owner-occupied projects. While we are optimistic about the long-term health and vitality of our markets, the timing of a turnaround is difficult to predict. While we are seeing some bright spots pointing to stabilization in the real estate market, we are still proceeding cautiously.
“As we indicated in the first quarter, we are de-emphasizing conventional construction lending and lowering our exposure in light of market conditions and risk levels. Our business strategy is to expand our SBA lending activities, mainly in the western United States and for owner-user multi-purpose projects, building upon our expertise and infrastructure already in place. We have targeted experienced SBA business development officers in key markets that have referral contacts specific to multi-purpose properties. Through the first six months of 2008, 13 new seasoned SBA business development officers have been hired. In addition, we have positioned our branch network to capture a greater share of commercial business, giving us the opportunity to cross-sell many of our new deposit and cash management products.”
RESULTS FROM OPERATIONS
Total revenue, which consists of net interest income and noninterest income, was $14.8 million for the second quarter of 2008 compared with $23.2 million for the second quarter of 2007, a decrease of 36.1 percent. Net interest income was $12.0 million, down $5.0 million or 29.5 percent from the $17.1 million reported for the prior-year second quarter, due to the unprecedented Federal Reserve Bank rapid rate decreases in late 2007 and early 2008. The net interest margin declined by 185 basis points in the second quarter of 2007 to 3.66 percent in the second quarter of 2008, with 50 basis points of the decline occurring in the linked quarter. The 33.6 percent decline in the net interest margin year over year was only partially offset by an increase in average earning assets of 6.15 percent. The loan yield declined 277 basis points versus a 104 basis point decline in average cost of interest-bearing deposits. “The downward repricing of our time deposits has finally started to catch up with the repricing of our variable rate loans, and we experienced a modest expansion of our net interest margin as we exited the second quarter,” said Mr. Wacknitz. While the net interest margin averaged 3.66 percent for the second quarter, the net interest margin was 3.83 percent for the month of June.
Noninterest income was $2.8 million for the second quarter of 2008, down $3.3 million or 54.4 percent from the $6.1 million reported for the year-ago second quarter. Income from core banking operations such as loan income and service fees on deposit accounts rose modestly from year-ago levels. Combined, they generated $0.8 million of income, up 7.2 percent, from $0.7 million. Gains derived from the sale of loans and other assets declined sharply, from $4.45 million in the 2007 second quarter to $0.55 million for the current quarter. Asset sale gains in the second quarter of 2007 included first trust deed loan sales gain of $1.3 million and $0.5 million of SBA 7a unguaranteed sales gain compared to $0 for both in the same period in 2008. Other asset sale gains have declined as a result of lower volume of loans sales (including SBA 7(a), 504, and USDA B&I loans) this year. In addition, premiums on these loan sales are somewhat depressed due to disruptions in the credit markets that basically started in the third quarter of 2007.
SBA servicing income, the third source of Temecula’s noninterest income, is affected by prepayment speeds and discount rates. These factors reflect market conditions over which Temecula has less control. These factors became more volatile in 2007, reflecting greater uncertainties in the financial markets at that time. More recently, financial market conditions have stabilized, and the mark-to-market adjustment and cash servicing income have become less volatile.
Beginning in the fourth quarter of 2004, less of the SBA loan servicing rights was retained and more SBA 7(a) loans were sold with cash premiums to reduce the volatility associated with early prepayments and volatile discount rates. The SBA requires that the originating lender retain a minimum of one percent in servicing fees, so the current weighted average servicing rate should remain level or reduce to slightly above one percent as remaining loans originated prior to the fourth quarter of 2004 payoff or pay down. For the first quarter of 2008 the net servicing loss was $29,000, due to more than expected prepayments, and the cash servicing income of $1.5 million was offset by the $1.5 million non-cash decline in the valuation of the servicing assets. In the second quarter of 2008, net servicing income improved due to lower prepayment speeds and slightly lower discount rate. The table below provides a breakout of the SBA servicing portfolio calculations for the first and second quarter of 2008 and 2007.
SBA Servicing Assets | ||||||||||||||||
SBA Servicing Assets ($000) | 2Q'08 | 1Q'08 | 2Q'07 | 1Q'07 | ||||||||||||
SBA Loans Serviced - EOP | $ | 353,797 | $ | 362,331 | $ | 384,500 | $ | 383,100 | ||||||||
Value of the Servicing Assets - EOP | $ | 11,354 | $ | 11,185 | $ | 16,886 | $ | 19,020 | ||||||||
Net Servicing Income (Loss) | $ | 552 | $ | (29 | ) | $ | (855 | ) | $ | (855 | ) | |||||
Fair Value Adjustment to SBA Servicing Assets | $ | (877 | ) | $ | (1,475 | ) | $ | (2,578 | ) | $ | (2,771 | ) | ||||
Cash Servicing Income | $ | 1,499 | $ | 1,539 | $ | 1,785 | $ | 1,999 | ||||||||
Weighted Avg. Servicing Rate - EOP | 1.70 | % | 1.67 | % | 1.82 | % | 1.95 | % |
The fourth source of noninterest income is loan broker income on SBA and mortgage loans, which decreased from $1.3 million the second quarter of 2007 to $0.3 million the second quarter of 2008 due to a lower number of mortgage and SBA transactions. Year to date broker income was $2.7 million in 2007 and $1.0 million in 2008.
Noninterest expense for the second quarter of 2008 was $13.2 million, down $1.2 million or 8.1 percent from the $14.3 million reported for the second quarter of 2007. Salary and benefits expenses primarily accounted for the decrease, reflecting lower bonus and commission expense due to lower earnings and broker income for the quarter. In addition, staffing levels have been reduced, with the number of full-time equivalent employees declining by 19 to 299 in the second quarter of this year and declining 17 since year-end 2007. The extent of the staff decreases was offset by increases in the retail SBA division. The full effect of the staff decreases will be recognized in the upcoming quarters. Compared to the linked quarter, noninterest expenses grew $1.5 million, or 13.0 percent, due to an increase in the expenses associated with the administration of problem loans and the management and disposition of foreclosed real estate.
BALANCE SHEET
Total assets were $1.46 billion at June 30, 2008, up $155.8 million or 11.9 percent from the $1.31 billion reported at June 30, 2007. Since year-end 2007, assets increased $146.2 million. Loans grew by $175.1 million, or 15.2 percent, over the last twelve months to $1.33 billion at June 30, 2008, driven by non-construction real estate and SBA lending. Construction and development (C&D) loans constitute 46.2 percent of the portfolio, down from 47.4 percent and year end, while commercial loans, at 6.0 percent, are growing as a percent of the total loan portfolio.
Year-over-year loan growth was funded through a reduction of fed funds sold, growth in deposits, borrowings from the Federal Home Loan Bank Board, and a higher level of junior subordinated debt.
The bank has historically been a real estate lender, with approximately 92.4 percent of its loans collateralized by real property. Construction and Development (C&D) loans at the end of the current quarter were $613.1 million, an increase of $32.1 million, or 5.5 percent, from the $581.0 million reported at the end of the second quarter of 2007, but a decrease of $15.2 million from the linked quarter. While current loan application levels have fallen off sharply, advances on current projects have resulted in higher loan outstanding balances compared with a year ago. Some of the void created by the decline in construction lending will be filled by SBA lending.
SBA loans were $328.5 million at second quarter-end, up $68.3 million or 26.3 percent from second quarter 2007 levels. From the linked quarter, SBA loans increased $60.4 million due to expansion in the number of SBA business development officers.
While other real estate, including CRE loans, increased to $299.6 million, or $49.4 million from year-ago levels, loans in this category were virtually unchanged from March 31, 2008 levels.
Commercial loans increased $23.0 million, or 40.3 percent from a year ago, and total $80.0 million at the end of second quarter 2008.
The loan portfolio is diversified geographically and by loan type. Over 24 percent of the Bank’s loans are located outside of California, underwritten through various SBA programs. These loans are all commercial in nature, divided between CRE ($38.0 million) and commercial construction ($76.0 million), SBA 7(a), 504, and USDA B&I ($109.3 million), and unguaranteed purchase program ($103.4 million).
Deposits at June 30, 2008 were $1.23 billion, an increase of $79.1 million or 6.9 percent from $1.15 billion at June 30, 2007 and an increase of $31.5 million from the linked quarter. Declining rates accounted for the 57 basis point improvement in the cost of interest-bearing deposits since first quarter 2008.
ASSET QUALITY
Gross nonperforming assets were $74.4 million or 5.08 percent of total assets at June 30, 2008, up from $71.4 million or 5.19 percent of total assets at March 31, 2008, and $27.4 million or 2.09 percent of total assets at June 30, 2007. Nonperforming assets were supported by government guarantees of $10.5 million, $11.3 million and $15.2 million, respectively, for the current quarter, the linked quarter and the year-ago quarter. Net charge-offs were an annualized 0.67 percent of average loans for second quarter 2008, compared with 0.40 percent and 0.06 percent, respectively, of average loans for first quarter 2008 and second quarter 2007. The majority of nonperforming loans are construction loans, which represent $35.8 million of the net exposure and $37.2 million of the gross exposure. This is down $9.3 million and $9.3 million respectively from March 31, 2008. Real estate secured nonperforming loan gross balances increased $1.7 million and net balances increased $3.1 million from March 31, 2008. Other real estate owned increased from $3.1 million at March 31, 2008, to $13.7 million at June 30, 2008, due to three SBA loans totaling $1.4 million and three construction loans totaling $9.2 million being transferred from non-accrual status to other real estate owned.
SHAREHOLDERS’ EQUITY
Shareholders’ equity at the end of second quarter 2008 was $105.3 million compared with $107.8 million at March 31, 2008 and $112.2 million a year ago. The decline reflects the impact of the loss in second quarter 2008 and the impact of repurchases of 577,200 shares for $9.974 million in the third quarter of 2007 and 149,500 shares for $1.680 million in the first quarter of 2008 and 50,000 shares for $0.363 million in the second quarter of 2008. At June 30, 2008, the Company had 10,033,267 shares outstanding. Capital ratios remain strong at June 30, 2008, with the Tier 1 leverage ratio at 9.96 percent, the Tier 1 risk-based capital ratio at 9.22 percent, and the total risk-based capital ratio at 11.80 percent, all above the minimum to qualify as "well capitalized."
ABOUT THE COMPANY
Temecula Valley Bank, established in 1996, operates eleven full-service offices in Temecula, Murrieta, Corona, Fallbrook, Escondido, Rancho Bernardo, El Cajon, Carlsbad, Solana Beach, Ontario, and San Marcos. The Bank also operates a number of regional real estate loan production centers in California. As a leading SBA Preferred Lender, the Bank has a network of SBA loan production offices across the United States. Temecula Valley Bancorp was established in June 2002 and operates as a bank holding company for the Bank. For further information, please go to the Bank's website at www.temvalbank.com.
Temecula Valley Bancorp stock is traded on the NASDAQ Global Select Market under the symbol TMCV.
Forward-Looking Statements
Statements concerning future performance, developments, or events concerning expectations for growth and market forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, the effect of interest rate changes, the ability to control costs and expenses, the impact of consolidation in the banking industry, financial policies of the U.S. government, and general economic conditions. Additional information on these and other factors that could affect financial results are included in the filings made with the Securities and Exchange Commission by Temecula Valley Bancorp Inc. The Corporation undertakes no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise.
TEMECULA VALLEY BANCORP INC. | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||
(in thousands except share and per share information) | ||||||||||||||||||
June 30, 2008 | June 30, 2007 | % Change | December 31, 2007 | % Change | ||||||||||||||
ASSETS | ||||||||||||||||||
Cash and due from banks | $ | 13,464 | $ | 13,644 | (1 | %) | $ | 13,210 | 2 | % | ||||||||
Interest-bearing deposits in financial institutions | 1,000 | 1,000 | 0 | % | 1,000 | 0 | % | |||||||||||
Federal funds sold | 0 | 76,750 | (100 | %) | 4,220 | (100 | %) | |||||||||||
Investment securities available-for-sale | 39,685 | 0 | 0 | % | 0 | 0 | % | |||||||||||
Investment securities held-to-maturity | 2,964 | 1,012 | 193 | % | 2,981 | (1 | %) | |||||||||||
Loans | ||||||||||||||||||
Commercial | 80,000 | 57,019 | 40 | % | 68,661 | 17 | % | |||||||||||
Real Estate-Construction | 613,074 | 580,987 | 6 | % | 586,906 | 4 | % | |||||||||||
Real Estate-Other | 299,648 | 250,198 | 20 | % | 292,153 | 3 | % | |||||||||||
SBA | 328,492 | 260,177 | 26 | % | 286,367 | 15 | % | |||||||||||
Consumer and other | 5,360 | 3,134 | 71 | % | 3,630 | 48 | % | |||||||||||
Total Gross Loans | 1,326,574 | 1,151,515 | 15 | % | 1,237,717 | 7 | % | |||||||||||
Less allowance for loan losses | (19,226 | ) | (12,268 | ) | 57 | % | (16,022 | ) | 20 | % | ||||||||
Total Loans, net | 1,307,348 | 1,139,247 | 15 | % | 1,221,695 | 7 | % | |||||||||||
Federal Reserve & Home Loan Bank stock, at cost | 4,650 | 2,833 | 64 | % | 2,905 | 60 | % | |||||||||||
Bank premises and equipment, net | 5,622 | 5,400 | 4 | % | 5,271 | 7 | % | |||||||||||
Other real estate owned, net | 13,724 | 722 | 1801 | % | 0 | 0 | % | |||||||||||
Cash surrender value life insurance | 30,426 | 27,505 | 11 | % | 28,034 | 9 | % | |||||||||||
SBA-loan servicing asset | 4,993 | 7,111 | (30 | %) | 5,350 | (7 | %) | |||||||||||
SBA-loan I/O strip receivable | 6,361 | 9,775 | (35 | %) | 6,599 | (4 | %) | |||||||||||
Accrued interest | 6,042 | 6,466 | (7 | %) | 6,827 | (11 | %) | |||||||||||
Other Assets | 28,446 | 17,500 | 63 | % | 20,433 | 39 | % | |||||||||||
Total Assets | $ | 1,464,725 | $ | 1,308,965 | 12 | % | $ | 1,318,525 | 11 | % | ||||||||
LIABILITIES AND STOCKHOLDER EQUITY | ||||||||||||||||||
Deposits | ||||||||||||||||||
Non-interest Bearing Deposits | 145,193 | 144,683 | 0 | % | 133,867 | 8 | % | |||||||||||
Money Market & NOW | 134,945 | 151,893 | (11 | %) | 146,270 | (8 | %) | |||||||||||
Savings | 26,903 | 29,487 | (9 | %) | 28,059 | (4 | %) | |||||||||||
Time Deposits | 921,882 | 823,772 | 12 | % | 852,875 | 8 | % | |||||||||||
Total deposits | 1,228,923 | 1,149,835 | 7 | % | 1,161,071 | 6 | % | |||||||||||
Junior subordinated debt securities | 56,924 | 34,023 | 67 | % | 34,023 | 67 | % | |||||||||||
Borrowings from Federal Home Loan Bank | 60,530 | 0 | 0 | % | 0 | 0 | % | |||||||||||
Accrued interest | 1,808 | 2,027 | (11 | %) | 2,329 | (22 | %) | |||||||||||
Other liabilities | 11,244 | 10,892 | 3 | % | 13,143 | (14 | %) | |||||||||||
Total liabilities | 1,359,429 | 1,196,777 | 14 | % | 1,210,566 | 12 | % | |||||||||||
Stockholder's equity | 105,296 | 112,188 | (6 | %) | 107,959 | (2 | %) | |||||||||||
Total liabilities and Stockholder's equity | $ | 1,464,725 | $ | 1,308,965 | 12 | % | $ | 1,318,525 | 11 | % | ||||||||
SELECTED BALANCE SHEET DATA | ||||||||||||||||||
Book value per share, end of period | 10.49 | 10.52 | 10.64 | |||||||||||||||
Tier 1 leverage capital ratio | 9.96 | % | 10.93 | % | 10.63 | % | ||||||||||||
Tier 1 risk-based capital ratio | 9.22 | % | 10.58 | % | 9.65 | % | ||||||||||||
Total risk-based capital ratio | 11.80 | % | 11.51 | % | 10.80 | % | ||||||||||||
Allowance for loan losses as a % of total loans | 1.45 | % | 1.07 | % | 1.29 | % | ||||||||||||
Gross nonperforming assets as a % of total assets | 5.08 | % | 2.09 | % | 2.35 | % | ||||||||||||
Net nonperforming assets as a % of total assets | 4.37 | % | 0.93 | % | 1.56 | % | ||||||||||||
Net chargeoffs (annualized) as a % of total loans | 0.65 | % | 0.06 | % | 0.09 | % | ||||||||||||
PAST DUE AND NON-ACCRUAL LOANS | ||||||||
June 30, 2008 | Gross Balance | Government Guaranty | Net Balance | |||||
30 - 89 days past due | 32,063 | (1,426 | ) | 30,637 | ||||
90+ days past due and accruing | 0 | 0 | 0 | |||||
Non-accrual | 60,669 | (8,567 | ) | 52,102 | ||||
Other real estate owned (REO) | 13,724 | (1,888 | ) | 11,836 | ||||
Total non-performing assets | 74,393 | (10,455 | ) | 63,938 | ||||
March 31, 2008 | ||||||||
30 - 89 days past due | 19,844 | (2,160 | ) | 17,684 | ||||
90+ days past due and accruing | 0 | 0 | 0 | |||||
Non-accrual | 68,350 | (10,436 | ) | 57,914 | ||||
Other real estate owned (REO) | 3,091 | (816 | ) | 2,275 | ||||
Total non-performing assets | 71,441 | (11,252 | ) | 60,189 | ||||
December 31, 2007 | ||||||||
30 - 89 days past due | 11,547 | (2,732 | ) | 8,815 | ||||
90+ days past due and accruing | 0 | 0 | 0 | |||||
Non-accrual | 30,936 | (10,379 | ) | 20,557 | ||||
Other real estate owned (REO) | 0 | 0 | 0 | |||||
Total non-performing assets | 30,936 | (10,379 | ) | 20,557 | ||||
June 30, 2007 | ||||||||
30 - 89 days past due | 11,471 | (405 | ) | 11,066 | ||||
90+ days past due and accruing | 0 | 0 | 0 | |||||
Non-accrual | 26,630 | (14,611 | ) | 12,019 | ||||
Other real estate owned (REO) | 722 | (542 | ) | 180 | ||||
Total non-performing assets | 27,352 | (15,153 | ) | 12,199 | ||||
TEMECULA VALLEY BANCORP INC. | |||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
(UNAUDITED) | |||||||||||||||||
(in thousands except share and per share data) | |||||||||||||||||
3 Mos. Ended June 30, | 6 Mos. Ended June 30, | ||||||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||||||
INTEREST INCOME | |||||||||||||||||
Interest income and fees on loans | $ | 22,655 | $ | 29,487 | $ | 48,301 | $ | 57,565 | |||||||||
Other Interest income | 194 | 417 | 477 | 698 | |||||||||||||
Total Interest income | 22,849 | 29,904 | 48,778 | 58,263 | |||||||||||||
INTEREST EXPENSE | |||||||||||||||||
Interest on deposits | 9,631 | 12,071 | 21,026 | 23,347 | |||||||||||||
Interest on junior subordinated debt and other borrowings | 1,201 | 779 | 2,239 | 1,614 | |||||||||||||
Total Interest expense | 10,832 | 12,850 | 23,265 | 24,961 | |||||||||||||
Net interest income | 12,017 | 17,054 | 25,513 | 33,302 | |||||||||||||
Provision for loan losses | 5,300 | 0 | 7,500 | 415 | |||||||||||||
Net interest income after provision for loan losses | 6,717 | 17,054 | 18,013 | 32,887 | |||||||||||||
NON INTEREST INCOME | |||||||||||||||||
Service charges and fees | 147 | 151 | 299 | 300 | |||||||||||||
Gain on sale of loans, fixed assets and OREO | 553 | 4,454 | 1,435 | 6,737 | |||||||||||||
SBA Net Servicing income | 552 | (855 | ) | 523 | (1,710 | ) | |||||||||||
Loan related income | 614 | 559 | 1,027 | 1,017 | |||||||||||||
Other income | 926 | 1,808 | 2,259 | 3,711 | |||||||||||||
Total Non Interest income | 2,792 | 6,117 | 5,543 | 10,055 | |||||||||||||
NON INTEREST EXPENSE | |||||||||||||||||
Salaries and employee benefits | 8,214 | 9,646 | 15,826 | 18,283 | |||||||||||||
Occupancy and equipment | 1,313 | 1,273 | 2,649 | 2,537 | |||||||||||||
Marketing and business promotion | 154 | 257 | 417 | 601 | |||||||||||||
Office expense | 592 | 705 | 1,174 | 1,363 | |||||||||||||
Loan related expense | 600 | 493 | 1,069 | 1,115 | |||||||||||||
Other expense | 2,290 | 1,943 | 3,673 | 3,081 | |||||||||||||
Total Non Interest expense | 13,163 | 14,317 | 24,808 | 26,980 | |||||||||||||
Earnings (Loss) before income taxes | (3,654 | ) | 8,854 | (1,252 | ) | 15,962 | |||||||||||
Income tax expense (benefit) | (1,643 | ) | 3,603 | (699 | ) | 6,532 | |||||||||||
Net earnings (loss) | $ | (2,011 | ) | $ | 5,251 | $ | (553 | ) | $ | 9,430 | |||||||
OTHER SELECTED FINANCIAL DATA | |||||||||||||||||
Actual common shares outstanding at end of period | 10,033,267 | 10,662,772 | 10,033,267 | 10,662,772 | |||||||||||||
Average common shares outstanding | 10,038,322 | 10,661,179 | 10,069,440 | 10,631,627 | |||||||||||||
Average common shares & equivalents outstanding | 10,041,183 | 11,072,471 | 10,125,895 | 11,063,223 | |||||||||||||
Basic earnings (loss) per share | (0.20 | ) | 0.49 | (0.06 | ) | 0.89 | |||||||||||
Diluted earnings (loss) per share | (0.20 | ) | 0.47 | (0.06 | ) | 0.85 | |||||||||||
Return on average assets (annualized) | (0.58 | )% | 1.59 | % | (0.08 | )% | 1.47 | % | |||||||||
Return on average equity (annualized) | (7.59 | )% | 19.07 | % | (1.05 | )% | 17.56 | % | |||||||||
Investment Yield | 3.67 | % | 5.24 | % | 3.37 | % | 5.23 | % | |||||||||
Loan Yield | 7.02 | % | 9.79 | % | 7.59 | % | 9.77 | % | |||||||||
Cost of Interest-bearing Deposits | 3.74 | % | 4.78 | % | 4.04 | % | 4.77 | % | |||||||||
Cost of Borrowings | 4.80 | % | 7.66 | % | 5.74 | % | 7.91 | % | |||||||||
Loan to deposit ratio, end of period | 107.95 | % | 100.15 | % | 107.95 | % | 100.15 | % | |||||||||
Net interest margin | 3.66 | % | 5.51 | % | 3.92 | % | 5.53 | % | |||||||||
Efficiency ratio | 88.89 | % | 61.79 | % | 79.88 | % | 62.23 | % | |||||||||
NET LOAN CHARGEOFFS | |||||||||||||||||
Chargeoffs | 3,067 | 198 | 4,486 | 678 | |||||||||||||
Recoveries | (24 | ) | (9 | ) | (190 | ) | (9 | ) | |||||||||
Net Chargeoffs (Recoveries) | 3,043 | 189 | 4,296 | 669 | |||||||||||||
TEMECULA VALLEY BANCORP, INC. | ||||||||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
(dollars in thousands except per share information) | ||||||||||||||||||||||||
Quarterly | ||||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | |||||||||||||||||||
EARNINGS | ||||||||||||||||||||||||
Net interest income (fully tax-equivalent) | $ | 12,017 | $ | 13,496 | $ | 15,813 | $ | 16,517 | $ | 17,054 | $ | 16,250 | ||||||||||||
Provision for loan and lease losses | $ | 5,300 | $ | 2,200 | $ | 3,130 | $ | 1,055 | $ | 0 | $ | 415 | ||||||||||||
Non Interest income | $ | 2,792 | $ | 2,751 | $ | 4,813 | $ | 1,521 | $ | 6,117 | $ | 3,938 | ||||||||||||
Non Interest expense | $ | 13,163 | $ | 11,645 | $ | 12,284 | $ | 12,642 | $ | 14,317 | $ | 12,664 | ||||||||||||
Net income (loss) | $ | (2,011 | ) | $ | 1,458 | $ | 3,113 | $ | 2,595 | $ | 5,251 | $ | 4,179 | |||||||||||
Basic earnings (loss) per share | $ | (0.20 | ) | $ | 0.14 | $ | 0.31 | $ | 0.25 | $ | 0.49 | $ | 0.39 | |||||||||||
Diluted earnings (loss) per share | $ | (0.20 | ) | $ | 0.14 | $ | 0.30 | $ | 0.25 | $ | 0.47 | $ | 0.38 | |||||||||||
Average shares outstanding | 10,038,322 | 10,100,558 | 10,141,606 | 10,247,356 | 10,661,179 | 10,601,748 | ||||||||||||||||||
Average diluted shares outstanding | 10,041,183 | 10,217,048 | 10,339,950 | 10,559,464 | 11,072,471 | 11,124,945 | ||||||||||||||||||
PERFORMANCE RATIOS | ||||||||||||||||||||||||
Return on average assets | (0.58 | )% | 0.43 | % | 0.93 | % | 0.79 | % | 1.59 | % | 1.34 | % | ||||||||||||
Return on average common equity | (7.59 | )% | 5.44 | % | 11.60 | % | 9.66 | % | 19.07 | % | 16.04 | % | ||||||||||||
Net interest margin (fully tax-equivalent) | 3.66 | % | 4.16 | % | 5.03 | % | 5.38 | % | 5.51 | % | 5.54 | % | ||||||||||||
Investment Yield | 3.67 | % | 3.37 | % | 5.02 | % | 5.16 | % | 5.24 | % | 5.23 | % | ||||||||||||
Loan Yield | 7.02 | % | 8.12 | % | 9.04 | % | 9.62 | % | 9.79 | % | 9.75 | % | ||||||||||||
Cost of Interest-bearing Deposits | 3.74 | % | 4.31 | % | 4.61 | % | 4.73 | % | 4.78 | % | 4.75 | % | ||||||||||||
Cost of Borrowings | 4.80 | % | 7.87 | % | 7.08 | % | 7.51 | % | 7.66 | % | 8.14 | % | ||||||||||||
Noninterest income/Operating revenue | 18.85 | % | 16.93 | % | 23.33 | % | 8.43 | % | 26.40 | % | 19.51 | % | ||||||||||||
Efficiency ratio | 88.89 | % | 71.67 | % | 59.56 | % | 70.09 | % | 61.79 | % | 62.73 | % | ||||||||||||
Full-time equivalent employees | 299 | 317 | 316 | 324 | 318 | 313 | ||||||||||||||||||
CAPITAL | ||||||||||||||||||||||||
Loans/ Deposits | 107.95 | % | 106.08 | % | 106.60 | % | 104.60 | % | 100.15 | % | 102.43 | % | ||||||||||||
Securities/ Assets | 2.91 | % | 0.21 | % | 0.23 | % | 0.23 | % | 0.08 | % | 0.08 | % | ||||||||||||
Equity to assets | 7.19 | % | 7.83 | % | 8.19 | % | 8.04 | % | 8.57 | % | 8.21 | % | ||||||||||||
Regulatory leverage ratio | 9.96 | % | 10.41 | % | 10.63 | % | 10.60 | % | 10.93 | % | 11.27 | % | ||||||||||||
Tier 1 risk-based capital ratio | 9.22 | % | 9.82 | % | 9.65 | % | 9.59 | % | 10.58 | % | 10.42 | % | ||||||||||||
Total risk-based capital ratio | 11.80 | % | 12.35 | % | 10.80 | % | 10.57 | % | 11.51 | % | 11.65 | % | ||||||||||||
Book value per share | $ | 10.49 | $ | 10.71 | $ | 10.64 | $ | 10.35 | $ | 10.52 | $ | 10.15 | ||||||||||||
Common dividends per share | $ | 0.04 | $ | 0.04 | $ | 0.04 | $ | 0.04 | $ | 0.04 | $ | N/A | ||||||||||||
ASSET QUALITY | ||||||||||||||||||||||||
Gross loan charge-offs | $ | 3,067 | $ | 1419 | $ | 510 | $ | 149 | $ | 198 | $ | 479 | ||||||||||||
Net loan charge-offs (recoveries) | $ | 3,043 | $ | 1,253 | $ | 408 | $ | 24 | $ | 190 | $ | 479 | ||||||||||||
Net loan charge-offs annualized to average loans | 0.67 | % | 0.40 | % | 0.13 | % | 0.01 | % | 0.06 | % | 0.16 | % | ||||||||||||
Allowance for loan losses | $ | 19,226 | $ | 16,969 | $ | 16,022 | $ | 13,299 | $ | 12,268 | $ | 12,458 | ||||||||||||
Allowance for losses to total loans | 1.45 | % | 1.34 | % | 1.29 | % | 1.10 | % | 1.07 | % | 1.06 | % | ||||||||||||
Nonaccrual loans - gross | $ | 60,669 | $ | 68,350 | $ | 30,936 | $ | 32,034 | $ | 26,629 | $ | 23,813 | ||||||||||||
90-Day Delinquencies still accruing - gross | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Other real estate owned - gross | $ | 13,724 | $ | 3091 | $ | 0 | $ | 152 | $ | 722 | $ | 722 | ||||||||||||
Nonperforming assets (including OREO) | 74,393 | 71,441 | 30,936 | 32,186 | 27,352 | 24,535 | ||||||||||||||||||
Nonperforming assets to total assets | 5.08 | % | 5.19 | % | 2.35 | % | 2.47 | % | 2.09 | % | 1.87 | % | ||||||||||||
Nonperforming Assets, Net of Guarantees (NOG) | 63,938 | 60,189 | 20,558 | 18,522 | 12,199 | 10,420 | ||||||||||||||||||
Nonperforming assets NOG to Total Assets | 4.37 | % | 4.37 | % | 1.56 | % | 1.42 | % | 0.93 | % | 0.79 | % | ||||||||||||
END OF PERIOD BALANCES | ||||||||||||||||||||||||
Loans (before allowance) | $ | 1,326,574 | $ | 1,270,210 | $ | 1,237,717 | $ | 1,204,474 | $ | 1,151,515 | $ | 1,179,789 | ||||||||||||
Total earning assets (before allowance) | $ | 1,370,223 | $ | 1,301,454 | $ | 1,245,917 | $ | 1,231,510 | $ | 1,230,277 | $ | 1,236,224 | ||||||||||||
Total assets | $ | 1,464,725 | $ | 1,376,209 | $ | 1,318,525 | $ | 1,304,878 | $ | 1,308,965 | $ | 1,312,448 | ||||||||||||
Deposits | ||||||||||||||||||||||||
Non Interest-Bearing Demand | $ | 145,193 | $ | 144,213 | $ | 133,867 | $ | 144,938 | $ | 144,683 | $ | 151,293 | ||||||||||||
Money Market and NOW | $ | 134,945 | $ | 155,811 | $ | 146,270 | $ | 173,851 | $ | 151,893 | $ | 141,028 | ||||||||||||
Savings | $ | 26,903 | $ | 28,386 | $ | 28,059 | $ | 27,214 | $ | 29,487 | $ | 32,012 | ||||||||||||
Timed Deposits Under $100,000 | $ | 537,087 | $ | 470,817 | $ | 453,272 | $ | 391,365 | $ | 403,827 | $ | 420,301 | ||||||||||||
Timed Deposits $100,000 and Over | $ | 384,795 | $ | 398,165 | $ | 399,603 | $ | 414,184 | $ | 419,945 | $ | 407,219 | ||||||||||||
Deposits | $ | 1,228,923 | $ | 1,197,392 | $ | 1,161,071 | $ | 1,151,552 | $ | 1,149,835 | $ | 1,151,853 | ||||||||||||
Shareholders' equity | $ | 105,296 | $ | 107,796 | $ | 107,959 | $ | 104,944 | $ | 112,188 | $ | 107,744 | ||||||||||||
Period end common shares outstanding | 10,033,267 | 10,063,267 | 10,147,910 | 10,137,910 | 10,662,772 | 10,613,659 | ||||||||||||||||||
QUARTERLY AVERAGE BALANCES | ||||||||||||||||||||||||
Loans (before allowance) | $ | 1,294,078 | $ | 1,266,788 | $ | 1,234,795 | $ | 1,175,764 | $ | 1,208,928 | $ | 1,167,399 | ||||||||||||
Total earning assets (before allowance) | $ | 1,317,206 | $ | 1,300,521 | $ | 1,247,838 | $ | 1,218,899 | $ | 1,240,905 | $ | 1,189,218 | ||||||||||||
Total assets | $ | 1,404,359 | $ | 1,374,297 | $ | 1,321,112 | $ | 1,296,334 | $ | 1,323,088 | $ | 1,266,657 | ||||||||||||
Deposits | $ | 1,177,204 | $ | 1,195,820 | $ | 1,155,301 | $ | 1,140,412 | $ | 1,158,276 | $ | 1,106,127 | ||||||||||||
Shareholders' equity | $ | 106,544 | $ | 107,809 | $ | 106,432 | $ | 106,571 | $ | 110,424 | $ | 105,661 | ||||||||||||
LOAN PORTFOLIO (INCLUDING HELD-FOR-SALE) | ||||||||||||||||||
Residential Construction Loans | 6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | ||||||||||||
10 Owner Occupied Res Const | 0.77 | % | 0.74 | % | 0.58 | % | 0.53 | % | 0.41 | % | 0.72 | % | ||||||
11 High-End Owner Occupied | 2.10 | % | 2.81 | % | 2.48 | % | 2.50 | % | 2.57 | % | 2.09 | % | ||||||
20 Spec Residential Construction (1-4 units) | 2.90 | % | 3.18 | % | 3.66 | % | 3.69 | % | 3.89 | % | 3.56 | % | ||||||
21 High-End Spec Residential Const (1-4 units) | 3.84 | % | 3.84 | % | 5.10 | % | 6.10 | % | 6.38 | % | 5.97 | % | ||||||
23 High-End Residential Tract Construction (over 4 units) | 2.57 | % | 3.67 | % | 3.15 | % | 3.50 | % | 3.73 | % | 3.48 | % | ||||||
24 Tract Construction (over 4 Units) | 2.93 | % | 3.32 | % | 2.18 | % | 1.97 | % | 1.83 | % | 1.84 | % | ||||||
25 Multi-Family Construction | 0.78 | % | 1.51 | % | 1.45 | % | 1.25 | % | 1.43 | % | 1.15 | % | ||||||
26 Condominium Construction | 5.09 | % | 4.56 | % | 3.79 | % | 3.03 | % | 2.37 | % | 2.15 | % | ||||||
27 High-End Condominium Construction | 6.58 | % | 7.06 | % | 6.43 | % | 7.21 | % | 6.62 | % | 6.39 | % | ||||||
28 Condominium Conversion | 0.94 | % | 0.96 | % | 0.96 | % | 0.96 | % | 1.49 | % | 1.76 | % | ||||||
Sub-Total Residential Construction Loans | 28.48 | % | 31.66 | % | 29.80 | % | 30.75 | % | 30.72 | % | 29.10 | % | ||||||
Commercial Construction Loans | ||||||||||||||||||
30 Owner-Occupied Comm Const | 2.34 | % | 3.05 | % | 3.58 | % | 4.05 | % | 4.40 | % | 4.32 | % | ||||||
31 Restaurant/Bar Construction | 0.56 | % | 0.50 | % | 0.25 | % | 0.10 | % | 0.08 | % | 0.31 | % | ||||||
32 Hotel/Motel Construction | 6.02 | % | 4.87 | % | 4.13 | % | 5.03 | % | 5.45 | % | 5.58 | % | ||||||
33 Car Wash Construction | 0.42 | % | 0.53 | % | 0.46 | % | 0.45 | % | 0.55 | % | 0.69 | % | ||||||
34 Gas Station/C Store Construction | 0.61 | % | 0.74 | % | 0.67 | % | 0.66 | % | 0.63 | % | 0.48 | % | ||||||
36 Retail Spec Construction | 0.67 | % | 0.61 | % | 0.50 | % | 0.26 | % | 0.20 | % | 0.76 | % | ||||||
38 Office Spec Construction | 1.13 | % | 1.02 | % | 1.15 | % | 1.73 | % | 1.78 | % | 2.24 | % | ||||||
40 Industrial/Warehouse Spec Const | 1.29 | % | 1.44 | % | 1.35 | % | 1.13 | % | 1.04 | % | 1.51 | % | ||||||
42 Healthcare Construction | 1.11 | % | 1.46 | % | 1.68 | % | 1.61 | % | 1.32 | % | 1.26 | % | ||||||
44 Miscellaneous Comm Const | 0.30 | % | 0.30 | % | 0.38 | % | 0.33 | % | 0.27 | % | 0.15 | % | ||||||
45 Mini-Storage Construction | 0.24 | % | 0.24 | % | 0.21 | % | 0.14 | % | 0.38 | % | 0.39 | % | ||||||
50 Residential Land Development | 2.32 | % | 2.33 | % | 2.68 | % | 2.56 | % | 2.98 | % | 3.22 | % | ||||||
51 Commercial Land Development | 0.76 | % | 0.75 | % | 0.75 | % | 0.76 | % | 0.85 | % | 0.43 | % | ||||||
Sub-Total Commercial Construction Loans | 17.76 | % | 17.84 | % | 17.80 | % | 18.80 | % | 19.93 | % | 21.33 | % | ||||||
Non-Construction Real Estate Loans | ||||||||||||||||||
55 Unimproved Land | 6.93 | % | 6.78 | % | 7.67 | % | 7.73 | % | 6.99 | % | 5.68 | % | ||||||
59 Multi-Family | 0.78 | % | 0.29 | % | 0.32 | % | 0.39 | % | 0.43 | % | 0.65 | % | ||||||
60 Owner-Occupied Commercial | 15.37 | % | 13.05 | % | 13.32 | % | 13.24 | % | 13.21 | % | 14.40 | % | ||||||
61 Restaurant/Bar | 1.44 | % | 1.73 | % | 2.07 | % | 1.72 | % | 1.81 | % | 1.60 | % | ||||||
62 Hotel/Motel | 8.04 | % | 7.81 | % | 7.82 | % | 6.47 | % | 5.84 | % | 5.28 | % | ||||||
63 Car Wash | 1.07 | % | 0.99 | % | 1.06 | % | 1.11 | % | 1.11 | % | 1.25 | % | ||||||
64 Gas Station/C Store | 3.55 | % | 3.86 | % | 4.16 | % | 4.39 | % | 4.56 | % | 4.34 | % | ||||||
66 Retail Investment | 0.81 | % | 0.65 | % | 0.57 | % | 0.63 | % | 0.76 | % | 0.83 | % | ||||||
68 Office Investment | 1.61 | % | 1.02 | % | 1.05 | % | 0.67 | % | 0.55 | % | 0.98 | % | ||||||
70 Industrial/Warehouse Investment | 2.17 | % | 2.40 | % | 2.47 | % | 2.74 | % | 2.65 | % | 3.49 | % | ||||||
72 Healthcare | 1.06 | % | 0.70 | % | 0.47 | % | 0.95 | % | 0.86 | % | 0.68 | % | ||||||
74 Miscellaneous Commercial | 0.21 | % | 0.34 | % | 0.48 | % | 0.59 | % | 0.62 | % | 1.26 | % | ||||||
75 Mini-Storage | 0.34 | % | 0.36 | % | 0.37 | % | 0.39 | % | 0.41 | % | 0.56 | % | ||||||
80 1st TD 1-4 Residential | 1.00 | % | 1.40 | % | 1.47 | % | 1.34 | % | 1.45 | % | 1.62 | % | ||||||
82 Junior TD 1-4 Residential | 1.78 | % | 1.98 | % | 2.04 | % | 2.17 | % | 2.04 | % | 1.80 | % | ||||||
Sub-Total Non-Construction Real Estate Loans | 46.17 | % | 43.37 | % | 45.33 | % | 44.52 | % | 43.28 | % | 44.40 | % | ||||||
Total Real Estate Secured Loans | 92.42 | % | 92.88 | % | 92.93 | % | 94.08 | % | 93.93 | % | 94.84 | % | ||||||
Commercial, Consumer, Other | 7.58 | % | 7.12 | % | 7.07 | % | 5.92 | % | 6.07 | % | 5.16 | % | ||||||
Total Loan Portfolio | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||
CONTACT:
Temecula Valley Bank
Stephen H. Wacknitz, 951-694-9940