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Nevada | 6022 | 88-0365922 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Stuart G. Stein, Esq. R. Daniel Keating, Esq. Hogan & Hartson L.L.P. 555 13th Street, N.W. Washington, DC 20004 Telephone: (202) 637-8575 Facsimile: (202) 637-5910 | Kenneth J. Baronsky, Esq. Milbank Tweed Hadley & McCloy LLP 601 S. Figueroa Street, 30th Floor Los Angeles, CA 90017 Telephone: (213) 892-4333 Facsimile: (213) 892-4733 |
Proposed Maximum | Proposed Maximum | |||||||||||
Title of Each Class of Securities | Amount to be | Offering | Aggregate | Amount of | ||||||||
To Be Registered | Registered(1) | Price per Unit | Offering Price(2) | Registration Fee(3) | ||||||||
Common Stock, par value $0.0001 per share | 3,764,120 | Not applicable | $31,664,000 | $3,389 | ||||||||
(1) | The maximum number of shares of common stock of Western Alliance Bancorporation, issuable to shareholders of Intermountain, upon consummation of the merger of Intermountain with and into Western Alliance. |
(2) | Estimated pursuant to Rule 457(f)(2) under the Securities Act of 1933, as amended, based on the book value of Intermountain common stock expected to be exchanged in connection with the merger as of the latest practicable date prior to the date of filing this registration statement. Estimated solely for the purpose of calculating the registration fee. |
(3) | Calculated by multiplying (a) the proposed maximum aggregate offering price for all securities to be registered less the estimated amount of cash to be paid by Western Alliance in connection with the merger by (b) .000107. |
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The information in this proxy statement/ prospectus is not complete and may be changed. Western Alliance may not issue the shares of its common stock to be issued in connection with the merger described in this proxy statement/ prospectus until the registration statement filed with the SEC is effective. This proxy statement/ prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Any representation to the contrary is a criminal offense. |
Western Alliance Bancorporation 2700 West Sahara Avenue Las Vegas, Nevada 89102 Telephone: (702) 248-4200 | Intermountain First Bancorp 777 N. Rainbow Boulevard Las Vegas, Nevada 89107 Telephone: (702) 310-4000 | |
PROSPECTUS | PROXY STATEMENT |
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1. To adopt and approve an agreement and plan of merger, pursuant to which Intermountain will merge with and into Western Alliance Bancorporation (“Western Alliance”) with Western Alliance surviving (referred to herein as the “merger”). | |
2. To transact any other business that properly comes before the special meeting, or any adjournments or postponements of the meeting, including, without limitation, a motion to adjourn the special meeting to another time and/or place for the purpose of soliciting additional proxies in order to approve the merger agreement and the merger or otherwise. |
By order of the Board of Directors | |
William Bullard | |
Vice President |
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Appendix A Agreement and Plan of Merger | A-1 | |||||||
Appendix B Sections 92.A-300 through 92.A-500 of the Nevada Revised Statutes — Dissenters’ Rights | B-1 | |||||||
EX-10.11 | ||||||||
EX-10.12: SUPPORT AGREEMENT | ||||||||
EX-10.13: AGREEMENT AND PLAN OF MERGER | ||||||||
EX-23.1: CONSENT OF MCGLADREY & PULLEN LLP |
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Q: | Why are Western Alliance and Intermountain proposing the transaction? | |
A: | Western Alliance and Intermountain have a shared commitment to play integral roles in the growth and expansion of Nevada’s banking industry. The proposed merger provides an opportunity for Western Alliance to substantially expand its presence in the Las Vegas and Henderson markets, and extend its operations into Reno. Intermountain believes that the proposed merger will enable Intermountain to align with a partner who will enhance the banking services available to its customers without sacrificing the personal attention and dedication that Intermountain has always offered. | |
Q: | What will I receive in the merger? | |
A: | If the merger agreement is approved and the merger is subsequently completed, you may elect to receive either 2.44 shares of Western Alliance common stock or $71.30 in cash, or some combination thereof, for each share of Intermountain common stock you own, unless you exercise your dissenter’s rights. You will have the opportunity to elect the form of consideration to be received for your shares, subject to allocation procedures set forth in the merger agreement which are intended to ensure that at least 60% of the outstanding shares of Intermountain common stock will be converted into shares of Western Alliance common stock. Therefore, your ability to receive all cash will depend on the elections of other Intermountain shareholders. Western Alliance will pay cash instead of issuing fractional shares. | |
Q: | How do I make an election? | |
A: | Each Intermountain shareholder will receive an election form, which you should complete and return, along with your Intermountain stock certificate(s), according to the instructions printed on the form. The election deadline will be 5:00 p.m., New York City time, on , 2006, the date prior to the date of the special meeting (the “election deadline”). A copy of the election form is being mailed under separate cover on or about the date of this proxy statement/ prospectus. If you do not send in the election form with your stock certificates by the deadline, you will be deemed not to have made an election and you may be paid in cash, Western Alliance common stock or a combination of cash and stock depending on, and after giving effect to, the number of valid cash elections and stock elections that have been made by other Intermountain shareholders. See “The Merger — Election Procedures; Surrender of Stock Certificates”. | |
Q: | Can I change my election? | |
A: | You may change your election at any time prior to the election deadline by submitting to American Stock Transfer & Trust Company written notice accompanied by a properly completed and signed, revised election form. You may revoke your election by submitting written notice to American Stock Transfer & Trust Company prior to the election deadline or by withdrawing your stock certificates prior to the election deadline. Shareholders will not be entitled to change or revoke their elections following the election deadline. | |
Q: | Will I receive any dividends? | |
A: | Before the merger takes place, Intermountain has agreed not to pay any dividends to its shareholders. After the merger, any dividends will be based on what Western Alliance pays. Western Alliance has not paid dividends in the past and does not presently intend to pay dividends. | |
Q: | How many votes are needed to approve the merger? | |
A: | A majority of the outstanding shares of Intermountain’s common stock entitled to vote must vote in favor of the merger agreement in order for it to be adopted and for the merger to be approved. Accordingly, the failure of any holder of Intermountain voting common stock to vote on this proposal will have the same effect as a vote against the proposal. Each of the executive officers and directors as well as certain other shareholders of Intermountain individually have entered into an agreement with Western Alliance to vote their shares of Intermountain voting common stock in favor of the merger agreement and against any competing proposal. These shareholders held approximately 67.8% of Intermountain’s outstanding voting common stock as of December 31, 2005. |
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Q: | What do I need to do now? | |
A: | You should first carefully read this proxy statement/ prospectus. |
If you hold shares of Intermountain voting common stock: | ||
• After you have decided how to vote your shares, please indicate on the enclosed proxy card how you want to vote, and sign, date and return it as soon as possible in the enclosed envelope. If you sign and send in your proxy card and do not indicate how you want to vote, your proxy card will be voted FOR approval of the merger agreement and the merger. Not returning a proxy card, or not voting in person at the special meeting or abstaining from voting, will have the same effect as voting AGAINST the merger agreement and the merger. | ||
• You can choose to attend the special meeting and vote your shares in person instead of completing and returning a proxy card. If you do complete and return a proxy card, you may change your vote at any time up to and including the time of the vote on the day of the special meeting by following the directions in the section “Revocability of Proxies”. | ||
Whether you hold shares of Intermountain voting or nonvoting common stock: | ||
• You should complete and return the election form, together with your stock certificate(s), to American Stock Transfer & Trust Company according to the instructions printed on the form. Do not send your Intermountain stock certificates and/or your election form with your proxy card. |
Q: | Who can vote? | |
A: | Intermountain has four series of common stock, two of which are non-voting. Therefore, if you hold non-voting common stock or Series A non-voting common stock, you are not entitled to vote at the Intermountain special meeting. If you hold voting common stock or Series A voting common stock (together, “Intermountain voting common stock”), you are entitled to vote at the Intermountain special meeting if you owned such stock at the close of business on , 2006. You will have one vote for each share of Intermountain voting common stock that you owned at that time. | |
Q: | Can I change my vote after I have mailed my signed proxy card? | |
A: | Yes. There are three ways for you to revoke your proxy and change your vote. First, you may send a written notice to the Secretary of Intermountain at 777 N. Rainbow Boulevard in Las Vegas, Nevada 89107, stating that you would like to revoke your proxy. Second, you may complete and submit a new proxy card. Third, you may vote in person at the special meeting. | |
Q: | When will the merger close? | |
A: | The merger is expected to close as soon as possible after the receipt of Intermountain shareholder and regulatory approvals, which is expected in the second quarter of 2006. However, we cannot assure you when or if the merger will occur. | |
Q: | What do I do with my stock certificates? | |
A: | You should send your Intermountain common stock certificates to the exchange agent, American Stock Transfer & Trust Company, with your completed, signed election form prior to the election deadline. If you do not send in the election form with your stock certificates by the election deadline, you will be deemed not to have made an election and you may receive cash, Western Alliance common stock or a mixture of cash and stock, for each share of your Intermountain common stock in the merger. Please DO NOT send your stock certificates with your proxy card. | |
Q: | What needs to be done to complete the merger? | |
A: | Completion of the merger depends on a number of conditions being met. In addition to compliance with the merger agreement, these include: |
1. Approval of the merger agreement and merger by Intermountain shareholders. | ||
2. Approval of the merger by federal and state regulatory authorities. |
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3. Approval by the New York Stock Exchange of listing of Western Alliance’s common stock to be issued in the merger. | ||
4. The absence of any injunction or legal restraint blocking the merger or government proceedings trying to block the merger. | ||
5. Receipt by Intermountain of a satisfactory legal opinion regarding certain tax matters. | ||
When the law permits, Western Alliance or Intermountain could decide to complete the merger even though one or more of these conditions has not been met. We cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed. |
Q: | Who can I call with questions or to obtain copies of this proxy statement/ prospectus and other documents? | |
A: | William Bullard, Vice President of Intermountain, at (702) 310-4000. |
A copy of the merger agreement including each of its exhibits and the other documents described in this proxy statement/ prospectus will be provided to you promptly without charge if you call or write to Dale Gibbons, Chief Financial Officer, Western Alliance Bancorporation, 2700 West Sahara Avenue, Las Vegas, Nevada 89102, Telephone: 702-248-4200. Such documents were also filed as exhibits to the registration statement filed with the SEC to register the shares of Western Alliance’s common stock to be issued in the merger. See “Where You Can Find More Information.” |
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• | are a tax-exempt organization; | |
• | are a mutual fund; | |
• | are a dealer in securities or foreign currencies; | |
• | are a bank or other financial institution; | |
• | are an insurance company; | |
• | are a non-United States person; | |
• | are subject to the alternative minimum tax; | |
• | are a trader in securities who elects to apply amark-to-market method of accounting; | |
• | acquired your shares of Intermountain’s common stock from the exercise of options or otherwise as compensation or through a qualified retirement plan; | |
• | hold shares of Intermountain’s common stock as part of a straddle, hedge, constructive sale or conversion transaction; or | |
• | do not hold shares of Intermountain’s common stock as capital assets. |
Tax matters are very complicated. You should consult your tax advisor for a full explanation of the tax consequences of the merger to you. |
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• | to vote on the merger agreement, the merger and the other transactions contemplated by the merger agreement; and | |
• | to address any other matters that properly come before the special meeting, or any adjournments or postponements of the meeting, including a motion to adjourn the special meeting to another time and/or place to solicit additional proxies in favor of the merger agreement and the merger or otherwise. |
Last Reported Sale Price of | ||||||||
Western Alliance’s | Implied Value | |||||||
Date | Common Stock | per Share | ||||||
December 29, 2005 | $ | 29.40 | $ | 71.74 | ||||
February 13, 2006 | $ | 32.85 | $ | 80.15 |
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• | changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; | |
• | inflation, interest rate, market and monetary fluctuations; | |
• | the inability to obtain the regulatory approvals for the merger on acceptable terms, on the anticipated schedule or at all; | |
• | lower revenues following the merger than we expect; | |
• | changes in gaming or tourism in our primary market area; | |
• | risks associated with our growth and expansion strategy and related costs; | |
• | increased lending risks associated with our high concentration of commercial real estate, construction and land development and commercial, industrial loans; | |
• | increases in competitive pressures among financial institutions and businesses offering similar products and services; | |
• | higher defaults on our loan portfolio than we expect; | |
• | changes in management’s estimate of the adequacy of the allowance for loan losses; | |
• | legislative or regulatory changes or changes in accounting principles, policies or guidelines; | |
• | management’s estimates and projections of interest rates and interest rate policy; | |
• | the execution of our business plan; and | |
• | other factors affecting the financial services industry generally or the banking industry in particular. |
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• | difficulty of integrating the operations and personnel; | |
• | potential disruption of our ongoing business; and | |
• | inability of our management to maximize our financial and strategic position by the successful implementation of uniform product offerings and the incorporation of uniform technology into our product offerings and control systems. |
• | the inability to obtain all required regulatory approvals; | |
• | significant costs and anticipated operating losses during the application and organizational phases, and the first years of operation of the new bank; | |
• | the inability to secure the services of qualified senior management; | |
• | the local market may not accept the services of a new bank owned and managed by a bank holding company headquartered outside of the market area of the new bank; | |
• | the inability to obtain attractive locations within a new market at a reasonable cost; and | |
• | the additional strain on management resources and internal systems and controls. |
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• | commercial real estate loans of $655.0 million, or 40.4% of total loans, | |
• | construction and land development loans of $397.0 million, or 24.5% of total loans, | |
• | commercial and industrial loans of 307.0 million, or 19.0% of total loans, | |
• | residential real estate loans of $239.5 million, or 14.8% of total loans, and | |
• | consumer loans of $21.0 million, or 1.3% of total loans. |
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• | Loan delinquencies, non-performing assets and foreclosures may increase, which could result in higher operating costs, as well as increases in our loan loss provisions; | |
• | Demand for our products and services may decline, including the demand for loans, which would adversely affect our revenues; and | |
• | Collateral for loans made by us may decline in value, reducing a customer’s borrowing power, and reducing the value of assets and collateral associated with our loans which would cause decreases in net interest income and increasing loan loss provisions. |
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• | further claims of infringement, including costly litigation; | |
• | an injunction prohibiting our proposed use of the mark; and | |
• | the need to enter into licensing agreements, which may not be available on terms acceptable to us, if at all. |
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1. To adopt and approve an agreement and plan of merger, pursuant to which Intermountain will merge with and into Western Alliance Bancorporation (“Western Alliance”) with Western Alliance surviving (referred to herein as the “merger”). | |
2. To transact any other business that properly comes before the special meeting, or any adjournments or postponements of the meeting, including, without limitation, a motion to adjourn the special meeting to another time and/or place for the purpose of soliciting additional proxies in order to approve the merger agreement and the merger or otherwise. |
• | voting common stock; | |
• | non-voting common stock;. | |
• | Series A voting common stock; and | |
• | Series A non-voting common stock. |
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• | delivering to the Secretary of Intermountain First Bancorp, 777 N. Rainbow Boulevard in Las Vegas, Nevada 89107, a written notice of revocation before the special meeting, | |
• | delivering to Intermountain a duly executed proxy bearing a later date before the special meeting, or | |
• | attending the special meeting and voting in person. |
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For the Year Ended | ||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
($ in millions) | ||||||||
Selected Balance Sheet Data: | ||||||||
Total assets | $ | 2,857.3 | $ | 2,176.8 | ||||
Gross loans, including net deferred fees | 1,793.4 | 1,188.5 | ||||||
Securities | 680.5 | 788.6 | ||||||
Federal funds sold | 131.1 | 23.1 | ||||||
Deposits | 2,393.9 | 1,756.0 | ||||||
Borrowings | 80.5 | 223.6 | ||||||
Junior subordinated debt | 30.9 | 30.9 | ||||||
Stockholders’ equity | 244.2 | 133.6 |
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At or for the | For the | |||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
($ in thousands) | ||||||||||||||||
Selected Income Statement Data: | ||||||||||||||||
Interest income | $ | 38,975 | $ | 27,075 | $ | 134,910 | $ | 90,855 | ||||||||
Interest expense | 10,360 | 5,936 | 32,568 | 19,720 | ||||||||||||
Net interest income | 28,615 | 21,139 | 102,342 | 71,135 | ||||||||||||
Provision for loan losses | 1,962 | 751 | 6,179 | 3,914 | ||||||||||||
Net interest income after provision for loan losses | 26,653 | 20,388 | 96,163 | 67,221 | ||||||||||||
Non-interest income | 3,403 | 2,552 | 12,138 | 8,726 | ||||||||||||
Non-interest expense | 17,050 | 12,873 | 64,864 | 44,929 | ||||||||||||
Income before income taxes | 13,006 | 10,067 | 43,437 | 31,018 | ||||||||||||
Income tax expense | 4,564 | 3,638 | 15,372 | 10,961 | ||||||||||||
Net Income | $ | 8,442 | $ | 6,429 | $ | 28,065 | $ | 20,057 | ||||||||
Common Share Data: | ||||||||||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.37 | $ | 0.35 | $ | 1.36 | $ | 1.17 | ||||||||
Diluted | 0.34 | 0.33 | 1.24 | 1.09 | ||||||||||||
Book value per share | 10.71 | 7.32 | ||||||||||||||
Tangible book value per share | 10.48 | 7.02 |
At or for the | ||||||||||||||||
Three Months | For the | |||||||||||||||
Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Selected Performance Ratios: | ||||||||||||||||
Return on average assets(1) | 1.22 | % | 1.20 | % | 1.13 | % | 1.05 | % | ||||||||
Return on average stockholders’ equity(1) | 13.42 | 19.00 | 14.37 | 17.48 | ||||||||||||
Net interest margin(1) | 4.43 | 4.20 | 4.40 | 4.00 | ||||||||||||
Net interest spread | 3.43 | 3.57 | 3.54 | 3.44 | ||||||||||||
Efficiency ratio | 53.25 | 54.34 | 56.66 | 56.26 | ||||||||||||
Loan to deposit ratio | 74.92 | 67.68 |
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At or for the | ||||||||
Three Months | ||||||||
Ended | ||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
Capital Ratios: | ||||||||
Tangible Common Equity | 8.4 | % | 5.9 | % | ||||
Leverage ratio | 10.2 | 7.7 | ||||||
Tier 1 Risk Based Capital | 12.8 | 10.9 | ||||||
Total Risk Based Capital | 13.8 | 12.0 | ||||||
Asset Quality Ratios: | ||||||||
Net charge-offs to average loans outstanding(1) | 0.01 | % | 0.00 | % | ||||
Non-accrual loans to gross loans | 0.01 | 0.13 | ||||||
Non-accrual loans to total assets | 0.00 | 0.07 | ||||||
Loans past due 90 days and still accruing to total loans | 0.00 | 0.00 | ||||||
Allowance for loan losses to gross loans | 1.18 | 1.28 |
(1) | Annualized for the three-month periods ended December 31, 2005 and 2004. |
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For the Year Ended | ||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
($ in millions) | ||||||||
Selected Balance Sheet Data: | ||||||||
Total assets | $ | 459.4 | $ | 350.4 | ||||
Gross loans, including net deferred fees | 374.2 | 287.2 | ||||||
Securities | 19.1 | 19.0 | ||||||
Federal funds sold | 29.1 | 25.9 | ||||||
Deposits | 395.5 | 305.0 | ||||||
Borrowings | 19.0 | 9.0 | ||||||
Junior subordinated debt | 10.3 | 10.3 | ||||||
Stockholders’ equity | 31.7 | 24.6 |
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For the Year Ended | ||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
($ in thousands) | ||||||||
Selected Income Statement Data: | ||||||||
Interest income | $ | 27,866 | $ | 18,647 | ||||
Interest expense | 8,294 | 3,952 | ||||||
Net interest income | 19,572 | 14,695 | ||||||
Provision for loan losses | 456 | 1,239 | ||||||
Net interest income after provision for loan losses | 19,116 | 13,456 | ||||||
Non-interest income | 1,474 | 1,001 | ||||||
Non-interest expense(1) | 12,695 | 8,818 | ||||||
Income before income taxes | 7,895 | 5,639 | ||||||
Income tax expense | 2,991 | 1,934 | ||||||
Net Income | $ | 4,904 | $ | 3,705 | ||||
Common Share Data: | ||||||||
Net income per share: | ||||||||
Basic | $ | 3.30 | $ | 2.68 | ||||
Diluted | 3.18 | 2.54 | ||||||
Book value per share | 21.32 | 17.77 | ||||||
Tangible book value per share | 21.32 | 17.77 |
For the Year Ended | ||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
Selected Performance Ratios: | ||||||||
Return on average assets | 1.21% | 1.05% | ||||||
Return on average stockholders’ equity | 17.42 | 17.48 | ||||||
Net interest margin | 5.18 | 5.16 | ||||||
Net interest spread | 4.18 | 4.47 | ||||||
Efficiency ratio | 43.08 | 44.74 | ||||||
Loan to deposit ratio | 94.60 | 94.16 |
For the Year Ended | ||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
Capital Ratios: | ||||||||
Tangible Common Equity | 6.89% | 7.02% | ||||||
Leverage ratio | 9.07 | 9.53 | ||||||
Tier 1 Risk Based Capital | 9.39 | 9.38 | ||||||
Total Risk Based Capital | 10.42 | 11.18 | ||||||
Asset Quality Ratios: | ||||||||
Net charge-offs to average loans outstanding | (0.03 | )% | 0.04% | |||||
Non-accrual loans to gross loans | 0.00 | 0.10 | ||||||
Non-accrual loans to total assets | 0.00 | 0.08 | ||||||
Loans past due 90 days and still accruing to total loans | 0.00 | 0.70 | ||||||
Allowance for loan losses to gross loans | 1.11 | 1.25 |
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(1) | Intermountain has agreed to pay a “bonus” to all individuals who exercised options in 2005 that were originally issued as incentive stock options (“ISOs”) but were subsequently disqualified. This bonus of approximately $167,000 is intended to compensate these individuals for certain tax-related costs of exercising non-incentive stock options. |
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At or for the | |||||||||||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||||
September 30, | At or for the Years Ended December 31, | ||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||
(Unaudited) | ($ in thousands, except per share data) | ||||||||||||||||||||||||||||
Selected Balance Sheet Data: | |||||||||||||||||||||||||||||
Total assets | $ | 2,745,014 | $ | 2,126,252 | $ | 2,176,849 | $ | 1,576,773 | $ | 872,074 | $ | 602,703 | $ | 443,665 | |||||||||||||||
Loans receivable (net) | 1,598,253 | 1,070,914 | 1,173,264 | 721,700 | 457,906 | 400,647 | 319,604 | ||||||||||||||||||||||
Securities available for sale | 595,959 | 727,772 | 659,073 | 583,684 | 227,238 | 73,399 | — | ||||||||||||||||||||||
Securities held to maturity | 117,116 | 125,606 | 129,549 | 132,294 | 5,610 | 6,055 | 7,604 | ||||||||||||||||||||||
Federal funds sold | 203,999 | 22,800 | 23,115 | 4,015 | 113,789 | 73,099 | 62,100 | ||||||||||||||||||||||
Deposits | 2,347,498 | 1,689,940 | 1,756,036 | 1,094,646 | 720,304 | 549,354 | 410,177 | ||||||||||||||||||||||
Short-term borrowings and long-term debt | 119,510 | 263,300 | 249,194 | 338,661 | 50,000 | — | — | ||||||||||||||||||||||
Junior subordinated debt | 30,928 | 30,928 | 30,928 | 30,928 | 30,928 | 15,464 | — | ||||||||||||||||||||||
Stockholders’ equity | 238,253 | 128,022 | 133,571 | 97,451 | 67,442 | 35,862 | 32,297 | ||||||||||||||||||||||
Selected Income Statement Data: | |||||||||||||||||||||||||||||
Interest income | 95,935 | 63,780 | $ | 90,855 | $ | 53,823 | $ | 39,117 | $ | 35,713 | $ | 34,032 | |||||||||||||||||
Interest expense | 22,208 | 13,784 | 19,720 | 12,798 | 9,771 | 9,140 | 8,633 | ||||||||||||||||||||||
Net interest income | 73,727 | 49,996 | 71,135 | 41,025 | 29,346 | 26,573 | 25,399 | ||||||||||||||||||||||
Provision for loan losses | 4,217 | 3,163 | 3,914 | 5,145 | 1,587 | 2,800 | 4,299 | ||||||||||||||||||||||
Net interest income after provision for loan losses | 69,510 | 46,833 | 67,221 | 35,880 | 27,759 | 23,773 | 21,100 | ||||||||||||||||||||||
Noninterest income | 8,735 | 6,175 | 8,726 | 4,270 | 3,935 | 3,437 | 2,948 | ||||||||||||||||||||||
Noninterest operating expenses | 47,814 | 32,056 | 44,929 | 27,290 | 19,050 | 18,256 | 16,323 | ||||||||||||||||||||||
Income before income taxes | 30,431 | 20,952 | 31,018 | 12,860 | 12,644 | 8,954 | 7,725 | ||||||||||||||||||||||
Income taxes | 10,808 | 7,324 | 10,961 | 4,171 | 4,235 | 3,001 | 2,664 | ||||||||||||||||||||||
Net income | $ | 19,623 | $ | 13,628 | $ | 20,057 | $ | 8,689 | $ | 8,409 | $ | 5,953 | $ | 5,061 | |||||||||||||||
Common Share Data: | |||||||||||||||||||||||||||||
Net income per share: | |||||||||||||||||||||||||||||
Basic | $ | 0.99 | $ | 0.81 | $ | 1.17 | $ | 0.61 | $ | 0.79 | $ | 0.55 | $ | 0.47 | |||||||||||||||
Diluted | 0.90 | 0.76 | 1.09 | 0.59 | 0.78 | 0.54 | 0.46 | ||||||||||||||||||||||
Book value per share | 10.45 | 7.02 | 7.32 | 5.84 | 4.98 | 3.42 | 3.00 | ||||||||||||||||||||||
Average shares outstanding: | |||||||||||||||||||||||||||||
Basic | 19,841,670 | 16,838,882 | 17,189,687 | 14,313,611 | 10,677,736 | 10,730,738 | 10,765,985 | ||||||||||||||||||||||
Diluted | 21,856,613 | 18,034,097 | 18,405,120 | 14,613,173 | 10,715,448 | 11,038,275 | 11,023,491 | ||||||||||||||||||||||
Common shares outstanding | 22,793,241 | 18,236,454 | 18,249,554 | 16,681,273 | 13,908,279 | 10,850,787 | 10,779,381 |
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At or for the | |||||||||||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||||
September 30, | At or for the Years Ended December 31, | ||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||
(Unaudited) | ($ in thousands, except per share data) | ||||||||||||||||||||||||||||
Selected Performance Ratios: | |||||||||||||||||||||||||||||
Return on average assets(1) | 1.09 | % | 1.00 | % | 1.05 | % | 0.76 | % | 1.22 | % | 1.11 | % | 1.21 | % | |||||||||||||||
Return on average stockholders’ equity(1) | 14.82 | 16.84 | 17.48 | 12.19 | 19.39 | 15.04 | 16.95 | ||||||||||||||||||||||
Net interest margin(1) | 4.39 | 3.93 | 4.00 | 3.83 | 4.57 | 5.50 | 7.93 | ||||||||||||||||||||||
Net interest spread(1) | 3.58 | 3.38 | 3.43 | 3.27 | 3.72 | 4.39 | 5.53 | ||||||||||||||||||||||
Efficiency ratio | 57.98 | 57.07 | 56.26 | 60.25 | 57.24 | 60.83 | 57.58 | ||||||||||||||||||||||
Selected Liquidity and Capital Ratios: | |||||||||||||||||||||||||||||
Loan to deposit ratio | 68.90 | % | 64.23 | % | 67.68 | % | 66.97 | % | 64.47 | % | 74.13 | % | 79.08 | % | |||||||||||||||
Average earning assets to interest-bearing liabilities | 161.50 | 150.41 | 151.29 | 147.37 | 155.98 | 163.14 | 156.73 | ||||||||||||||||||||||
Risk based capital: | |||||||||||||||||||||||||||||
Leverage capital | 10.3 | 7.8 | 7.7 | 8.9 | 11.2 | 8.5 | 7.2 | ||||||||||||||||||||||
Tier 1 | 13.6 | 11.3 | 10.9 | 13.3 | 15.4 | 10.4 | 9.1 | ||||||||||||||||||||||
Total | 14.6 | 12.4 | 12.0 | 14.4 | 18.1 | 12.3 | 10.4 | ||||||||||||||||||||||
Asset Quality Ratios: | |||||||||||||||||||||||||||||
Net charge-offs (recoveries) to average loans outstanding | 0.02 | % | 0.00 | % | 0.00 | % | 0.17 | % | 0.19 | % | 0.27 | % | 1.24 | % | |||||||||||||||
Non-performing loans to gross loans | 0.01 | 0.02 | 0.13 | 0.04 | 0.76 | 0.23 | 1.37 | ||||||||||||||||||||||
Non-performing assets to total assets | 0.01 | 0.01 | 0.07 | 0.02 | 0.41 | 0.17 | 1.00 | ||||||||||||||||||||||
Allowance for loan losses to gross loans | 1.19 | 1.34 | 1.28 | 1.55 | 1.39 | 1.61 | 1.46 | ||||||||||||||||||||||
Allowance for loan losses to non-performing loans | 720.24 | 4,247.08 | 958.63 | 4,137.45 | 181.71 | 711.82 | 106.96 | ||||||||||||||||||||||
Growth Ratios and Other Data:(2) | |||||||||||||||||||||||||||||
Percentage change in net income | 44.0 | % | 115.6 | % | 130.8 | % | 3.3 | % | 41.3 | % | 17.6 | % | 15.5 | % | |||||||||||||||
Percentage change in diluted net income per share | 18.4 | 72.7 | 84.7 | (24.4 | ) | 44.4 | 17.4 | 4.5 | |||||||||||||||||||||
Percentage change in assets | 29.1 | 52.0 | 38.1 | 81.0 | 44.7 | 35.7 | 20.4 | ||||||||||||||||||||||
Percentage change in gross loans, including deferred fees | 49.1 | 75.4 | 62.1 | 57.9 | 14.0 | 25.5 | 22.1 | ||||||||||||||||||||||
Percentage change in deposits | 38.9 | 61.0 | 60.4 | 52.0 | 31.1 | 33.9 | 20.7 | ||||||||||||||||||||||
Percentage change in equity | 86.2 | 44.4 | 37.1 | 44.5 | 88.1 | 11.0 | 18.8 | ||||||||||||||||||||||
Number of branches | 15 | 13 | 13 | 10 | 5 | 5 | 4 |
(1) | Annualized for the nine-month periods ended September 30, 2005 and 2004. |
(2) | Ratios of changes in income are computed based upon the growth over the comparable prior period. Ratios of changes in balance sheet data compare period-end data against the same data from the comparable period-end for the prior year. |
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26
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Key Financial Measures | ||||||||||||||||||||
At or for the Nine Months | ||||||||||||||||||||
Ended September 30, | At or for the Years Ended December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
($ in thousands, except per share data) | ||||||||||||||||||||
Net Income | $ | 19,623 | $ | 13,628 | $ | 20,057 | $ | 8,689 | $ | 8,409 | ||||||||||
Basic earnings per share | 0.99 | 0.81 | 1.17 | 0.61 | 0.79 | |||||||||||||||
Diluted earnings per share | 0.90 | 0.76 | 1.09 | 0.59 | 0.78 | |||||||||||||||
Total Assets | 2,745,014 | 2,126,252 | 2,176,849 | 1,576,773 | 872,074 | |||||||||||||||
Gross Loans | 1,617,541 | 1,085,439 | 1,188,535 | 733,078 | 464,355 | |||||||||||||||
Total Deposits | 2,347,498 | 1,689,940 | 1,756,036 | 1,094,646 | 720,304 | |||||||||||||||
Net interest margin(1) | 4.39 | % | 3.93 | % | 4.00 | % | 3.83 | % | 4.57 | % | ||||||||||
Efficiency Ratio | 57.98 | 57.07 | 56.26 | 60.25 | 57.24 | |||||||||||||||
Return on average assets(1) | 1.09 | 1.00 | 1.05 | 0.76 | 1.22 | |||||||||||||||
Return on average equity(1) | 14.82 | 16.84 | 17.48 | 12.19 | 19.39 |
(1) | Annualized for the nine-month periods ended September 30, 2005 and 2004. |
• | Return on Average Equity, or ROE; | |
• | Return on Average Assets, or ROA; | |
• | Asset Quality; | |
• | Asset and Deposit Growth; and | |
• | Operating Efficiency. |
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29
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Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004 |
Nine Months Ended | ||||||||||||
September 30, | ||||||||||||
2005 | 2004 | Increase | ||||||||||
($ in thousands, except per share | ||||||||||||
data) | ||||||||||||
Consolidated Statement of Earnings Data: | ||||||||||||
Interest income | $ | 95,935 | $ | 63,780 | $ | 32,155 | ||||||
Interest expense | 22,208 | 13,784 | 8,424 | |||||||||
Net interest income | 73,727 | 49,996 | 23,731 | |||||||||
Provision for loan losses | 4,217 | 3,163 | 1,054 | |||||||||
Net interest income after provision for loan losses | 69,510 | 46,833 | 22,677 | |||||||||
Other income | 8,735 | 6,175 | 2,560 | |||||||||
Other expense | 47,814 | 32,056 | 15,758 | |||||||||
Net income before income taxes | 30,431 | 20,952 | 9,479 | |||||||||
Income tax expense | 10,808 | 7,324 | 3,484 | |||||||||
Net income | $ | 19,623 | $ | 13,628 | $ | 5,995 | ||||||
Earnings per share — basic | $ | 0.99 | $ | 0.81 | $ | 0.18 | ||||||
Earnings per share — diluted | $ | 0.90 | $ | 0.76 | $ | 0.14 | ||||||
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Nine Months Ended September 30, | |||||||||||||||||||||||||
2005 | 2004 | ||||||||||||||||||||||||
Average | Average | Average | Average | ||||||||||||||||||||||
Balance | Interest | Yield/Cost(6) | Balance | Interest | Yield/Cost(6) | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||
Earning Assets | |||||||||||||||||||||||||
Securities: | |||||||||||||||||||||||||
Taxable | $ | 739,072 | $ | 22,053 | 3.99 | % | $ | 765,629 | $ | 22,097 | 3.86 | % | |||||||||||||
Tax-exempt(1) | 7,064 | 256 | 4.85 | 7,241 | 256 | 4.72 | |||||||||||||||||||
Total securities | 746,136 | 22,309 | 4.00 | 772,870 | 22,353 | 3.86 | |||||||||||||||||||
Federal funds sold | 82,124 | 1,919 | 3.12 | 29,190 | 224 | 1.03 | |||||||||||||||||||
Loans(1)(2)(3) | 1,403,124 | 71,266 | 6.79 | 884,730 | 40,819 | 6.16 | |||||||||||||||||||
Federal Home Loan Bank stock | 13,242 | 441 | 4.45 | 14,046 | 384 | 3.65 | |||||||||||||||||||
Total earnings assets | 2,244,626 | 95,935 | 5.71 | 1,700,836 | 63,780 | 5.01 | |||||||||||||||||||
Non-earning Assets | |||||||||||||||||||||||||
Cash and due from banks | 76,331 | 66,513 | |||||||||||||||||||||||
Allowance for loan losses | (17,255 | ) | (12,859 | ) | |||||||||||||||||||||
Bank-owned life insurance | 31,064 | 25,395 | |||||||||||||||||||||||
Other assets | 66,436 | 44,434 | |||||||||||||||||||||||
Total assets | $ | 2,401,202 | $ | 1,824,319 | |||||||||||||||||||||
Interest Bearing Liabilities | |||||||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||||
Interest checking | $ | 107,359 | $ | 407 | 0.51 | % | $ | 67,778 | $ | 76 | 0.15 | % | |||||||||||||
Savings and money market | 791,664 | 11,279 | 1.90 | 527,711 | 5,143 | 1.30 | |||||||||||||||||||
Time deposits | 276,385 | 5,438 | 2.63 | 207,254 | 3,125 | 2.01 | |||||||||||||||||||
Total interest-bearing deposits | 1,175,408 | 17,124 | 1.95 | 802,743 | 8,344 | 1.39 | |||||||||||||||||||
Short-term borrowings | 72,219 | 1,305 | 2.42 | 186,620 | 1,961 | 1.40 | |||||||||||||||||||
Long-term debt | 111,314 | 2,259 | 2.71 | 110,487 | 2,376 | 2.87 | |||||||||||||||||||
Junior subordinated debt | 30,928 | 1,520 | 6.57 | 30,928 | 1,103 | 4.76 | |||||||||||||||||||
Total interest-bearing liabilities | 1,389,869 | 22,208 | 2.14 | 1,130,778 | 13,784 | 1.63 | |||||||||||||||||||
Non-interest Bearing Liabilities | |||||||||||||||||||||||||
Noninterest-bearing deposits | 823,867 | 571,745 | |||||||||||||||||||||||
Other liabilities | 10,482 | 13,679 | |||||||||||||||||||||||
Stockholders’ equity | 176,984 | 108,117 | |||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,401,202 | $ | 1,824,319 | |||||||||||||||||||||
Net interest income and margin(4) | $ | 73,727 | 4.39 | % | $ | 49,996 | 3.93 | % | |||||||||||||||||
Net interest spread(5) | 3.57 | % | 3.38 | % |
(1) | Yields on loans and securities have not been adjusted to a tax equivalent basis. |
(2) | Net loan fees of $915,000 and $635,000 are included in the yield computation for September 30, 2005 and 2004, respectively. |
(3) | Includes average non-accrual loans of $454,000 in 2005 and $347,000 in 2004. |
(4) | Net interest margin is computed by dividing net interest income by total average earning assets. |
(5) | Net interest spread represents average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. |
(6) | Annualized. |
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Nine Months Ended September 30, | |||||||||||||
2005 v. 2004 | |||||||||||||
Increase (Decrease) | |||||||||||||
Due to Changes in(1) | |||||||||||||
Volume | Rate | Total | |||||||||||
(In thousands) | |||||||||||||
Interest on securities: | |||||||||||||
Taxable | $ | (792 | ) | $ | 748 | $ | (44 | ) | |||||
Tax-exempt | (6 | ) | 6 | — | |||||||||
Federal funds sold | 1,237 | 458 | 1,695 | ||||||||||
Loans | 26,330 | 4,117 | 30,447 | ||||||||||
Other investment | (27 | ) | 84 | 57 | |||||||||
Total interest income | 26,742 | 5,413 | 32,155 | ||||||||||
Interest expense: | |||||||||||||
Interest checking | 150 | 181 | 331 | ||||||||||
Savings and Money market | 3,761 | 2,375 | 6,136 | ||||||||||
Time deposits | 1,360 | 953 | 2,313 | ||||||||||
Short-term borrowings | (2,067 | ) | 1,411 | (656 | ) | ||||||||
Long-term debt | 17 | (134 | ) | (117 | ) | ||||||||
Junior subordinated debt | — | 417 | 417 | ||||||||||
Total interest expense | 3,221 | 5,203 | 8,424 | ||||||||||
Net increase | $ | 23,521 | $ | 210 | $ | 23,731 | |||||||
(1) | Changes due to both volume and rate have been allocated to volume changes. |
• | Trust and investment advisory services, | |
• | Services provided to deposit customers, and | |
• | Services provided to current and potential loan customers. |
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Table of Contents
Nine Months Ended | |||||||||||||
September 30, | |||||||||||||
Increase | |||||||||||||
2005 | 2004 | (Decrease) | |||||||||||
(In thousands) | |||||||||||||
Trust and investment advisory services | $ | 4,108 | $ | 1,801 | $ | 2,307 | |||||||
Service charges | 1,858 | 1,884 | (26 | ) | |||||||||
Income from bank owned life insurance | 1,045 | 908 | 137 | ||||||||||
Investment securities gains, net | 69 | 14 | 55 | ||||||||||
Other | 1,655 | 1,568 | 87 | ||||||||||
Total non-interest income | $ | 8,735 | $ | 6,175 | $ | 2,560 | |||||||
Nine Months Ended | |||||||||||||
September 30, | |||||||||||||
Increase | |||||||||||||
2005 | 2004 | (Decrease) | |||||||||||
(In thousands) | |||||||||||||
Salaries and employee benefits | $ | 27,049 | $ | 17,934 | $ | 9,115 | |||||||
Occupancy | 7,314 | 5,271 | 2,043 | ||||||||||
Customer service | 2,930 | 1,473 | 1,457 | ||||||||||
Advertising, public relations and business development | 2,023 | 1,234 | 789 | ||||||||||
Legal, professional and director fees | 1,523 | 1,057 | 466 | ||||||||||
Correspondent banking service charges and wire transfer costs | 1,220 | 888 | 332 | ||||||||||
Audits and exams | 1,128 | 822 | 306 | ||||||||||
Data processing | 715 | 467 | 248 | ||||||||||
Supplies | 804 | 616 | 188 | ||||||||||
Travel and automobile | 487 | 307 | 180 | ||||||||||
Insurance | 540 | 383 | 157 | ||||||||||
Telephone | 558 | 419 | 139 | ||||||||||
Other | 1,523 | 1,185 | 338 | ||||||||||
Total non-interest expense | $ | 47,814 | $ | 32,056 | $ | 15,758 | |||||||
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Year Ended December 31, 2004 Compared to Year Ended December 31, 2003 |
Years Ended | ||||||||||||
December 31, | ||||||||||||
Increase | ||||||||||||
2004 | 2003 | (Decrease) | ||||||||||
($ in thousands, except per share | ||||||||||||
data) | ||||||||||||
Consolidated Statement of Earnings Data: | ||||||||||||
Interest income | $ | 90,855 | $ | 53,823 | $ | 37,032 | ||||||
Interest expense | 19,720 | 12,798 | 6,922 | |||||||||
Net interest income | 71,135 | 41,025 | 30,110 | |||||||||
Provision for loan losses | 3,914 | 5,145 | (1,231 | ) | ||||||||
Net interest income after provision for loan losses | 67,221 | 35,880 | 31,341 | |||||||||
Other income | 8,726 | 4,270 | 4,456 | |||||||||
Other expense | 44,929 | 27,290 | 17,639 | |||||||||
Net income before income taxes | 31,018 | 12,860 | 18,158 | |||||||||
Income tax expense | 10,961 | 4,171 | 6,790 | |||||||||
Net income | $ | 20,057 | $ | 8,689 | $ | 11,368 | ||||||
Earnings per share — basic | $ | 1.17 | $ | 0.61 | $ | 0.56 | ||||||
Earnings per share — diluted | $ | 1.09 | $ | 0.59 | $ | 0.50 | ||||||
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Table of Contents
Years Ended December 31, | |||||||||||||||||||||||||
2004 | 2003 | ||||||||||||||||||||||||
Average | Average | Average | Average | ||||||||||||||||||||||
Balance | Interest | Yield/Cost | Balance | Interest | Yield/Cost | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||
Earning Assets | |||||||||||||||||||||||||
Securities: | |||||||||||||||||||||||||
Taxable | $ | 781,407 | $ | 30,373 | 3.89 | % | $ | 432,425 | $ | 15,938 | 3.69 | % | |||||||||||||
Tax-exempt(1) | 7,198 | 341 | 4.74 | 7,266 | 346 | 4.76 | |||||||||||||||||||
Total securities | 788,605 | 30,714 | 3.89 | 439,691 | 16,284 | 3.70 | |||||||||||||||||||
Federal funds sold | 25,589 | 293 | 1.15 | 52,735 | 578 | 1.10 | |||||||||||||||||||
Loans(1)(2)(3) | 947,848 | 59,311 | 6.26 | 571,501 | 36,792 | 6.44 | |||||||||||||||||||
Federal Home Loan Bank stock | 14,320 | 537 | 3.75 | 6,063 | 169 | 2.79 | |||||||||||||||||||
Total earnings assets | 1,776,362 | 90,855 | 5.11 | 1,069,990 | 53,823 | 5.03 | |||||||||||||||||||
Non-earning Assets | |||||||||||||||||||||||||
Cash and due from banks | 67,334 | 41,415 | |||||||||||||||||||||||
Allowance for loan losses | (13,370 | ) | (8,783 | ) | |||||||||||||||||||||
Bank-owned life insurance | 25,544 | 17,934 | |||||||||||||||||||||||
Other assets | 47,077 | 28,264 | |||||||||||||||||||||||
Total assets | $ | 1,902,947 | $ | 1,148,820 | |||||||||||||||||||||
Interest Bearing Liabilities | |||||||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||||
Interest checking | $ | 73,029 | $ | 142 | 0.19 | % | $ | 51,723 | $ | 93 | 0.18 | % | |||||||||||||
Savings and money market | 561,744 | 7,585 | 1.35 | 336,012 | 4,358 | 1.30 | |||||||||||||||||||
Time deposits | 214,515 | 4,396 | 2.05 | 158,418 | 3,707 | 2.34 | |||||||||||||||||||
Total interest-bearing deposits | 849,288 | 12,123 | 1.43 | 546,153 | 8,158 | 1.49 | |||||||||||||||||||
Short-term borrowings | 239,175 | 4,472 | 1.87 | 111,258 | 1,671 | 1.50 | |||||||||||||||||||
Long-term debt | 54,733 | 1,586 | 2.90 | 37,701 | 1,475 | 3.91 | |||||||||||||||||||
Junior subordinated debt | 30,928 | 1,539 | 4.98 | 30,928 | 1,494 | 4.83 | |||||||||||||||||||
Total interest-bearing liabilities | 1,174,124 | 19,720 | 1.68 | 726,040 | 12,798 | 1.76 | |||||||||||||||||||
Non-interest Bearing Liabilities | |||||||||||||||||||||||||
Noninterest-bearing deposits | 600,790 | 345,274 | |||||||||||||||||||||||
Other liabilities | 13,268 | 6,230 | |||||||||||||||||||||||
Stockholders’ equity | 114,765 | 71,276 | |||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,902,947 | $ | 1,148,820 | |||||||||||||||||||||
Net interest income and margin(4) | $ | 71,135 | 4.00 | % | $ | 41,025 | 3.83 | % | |||||||||||||||||
Net interest spread(5) | 3.43 | % | 3.27 | % | |||||||||||||||||||||
(1) | Yields on loans and securities have not been adjusted to a tax equivalent basis. |
(2) | Net loan fees of $872,000 and $810,000 are included in the yield computation for 2004 and 2003, respectively. |
(3) | Includes average non-accrual loans of $426,000 in 2004 and $393,000 in 2003. |
(4) | Net interest margin is computed by dividing net interest income by total average earning assets. |
(5) | Net interest spread represents average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. |
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Table of Contents
Years Ended December 31, | |||||||||||||
2004 v. 2003 | |||||||||||||
Increase (Decrease) | |||||||||||||
Due to Changes in(1) | |||||||||||||
Volume | Rate | Total | |||||||||||
(In thousands) | |||||||||||||
Interest on securities: | |||||||||||||
Taxable | $ | 13,565 | $ | 870 | $ | 14,435 | |||||||
Tax-exempt | (3 | ) | (2 | ) | (5 | ) | |||||||
Federal funds sold | (311 | ) | 26 | (285 | ) | ||||||||
Loans | 23,550 | (1,031 | ) | 22,519 | |||||||||
Other investment | 310 | 58 | 368 | ||||||||||
Total interest income | 37,111 | (79 | ) | 37,032 | |||||||||
Interest expense: | |||||||||||||
Interest checking | 41 | 8 | 49 | ||||||||||
Savings and Money market | 3,048 | 179 | 3,227 | ||||||||||
Time deposits | 1,150 | (461 | ) | 689 | |||||||||
Short-term borrowings | 2,392 | 409 | 2,801 | ||||||||||
Long-term debt | 494 | (383 | ) | 111 | |||||||||
Junior subordinated debt | — | 45 | 45 | ||||||||||
Total interest expense | 7,125 | (203 | ) | 6,922 | |||||||||
Net increase (decrease) | $ | 29,986 | $ | 124 | $ | 30,110 | |||||||
(1) | Changes due to both volume and rate have been allocated to volume changes. |
• | Trust and investment advisory services, | |
• | Services provided to deposit customers, and | |
• | Services provided to current and potential loan customers. |
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Table of Contents
Years Ended | |||||||||||||
December 31, | |||||||||||||
Increase | |||||||||||||
2004 | 2003 | (Decrease) | |||||||||||
(In thousands) | |||||||||||||
Trust and investment advisory services | $ | 2,896 | $ | — | $ | 2,896 | |||||||
Service charges | 2,333 | 1,998 | 335 | ||||||||||
Income from bank owned life insurance | 1,203 | 967 | 236 | ||||||||||
Mortgage loan pre-underwriting fees | 435 | 792 | (357 | ) | |||||||||
Investment securities gains (losses), net | 19 | (265 | ) | 284 | |||||||||
Other | 1,840 | 778 | 1,062 | ||||||||||
Total non-interest income | $ | 8,726 | $ | 4,270 | $ | 4,456 | |||||||
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Table of Contents
Years Ended | |||||||||||||
December 31, | |||||||||||||
Increase | |||||||||||||
2004 | 2003 | (Decrease) | |||||||||||
(In thousands) | |||||||||||||
Salaries and employee benefits | $ | 25,590 | $ | 15,615 | $ | 9,975 | |||||||
Occupancy | 7,309 | 4,820 | 2,489 | ||||||||||
Customer service | 1,998 | 752 | 1,246 | ||||||||||
Advertising, public relations and business development | 1,672 | 989 | 683 | ||||||||||
Legal, professional and director fees | 1,405 | 1,111 | 294 | ||||||||||
Correspondent banking service charges and wire transfer costs | 1,260 | 512 | 748 | ||||||||||
Audits and exams | 935 | 435 | 500 | ||||||||||
Supplies | 838 | 619 | 219 | ||||||||||
Data Processing | 641 | 466 | 175 | ||||||||||
Telephone | 578 | 424 | 154 | ||||||||||
Insurance | 540 | 305 | 235 | ||||||||||
Travel and automobile | 467 | 261 | 206 | ||||||||||
Organizational costs | — | 604 | (604 | ) | |||||||||
Other | 1,696 | 377 | 1,319 | ||||||||||
Total non-interest expense | $ | 44,929 | $ | 27,290 | $ | 17,639 | |||||||
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Table of Contents
Year Ended December 31, 2003 Compared to Year Ended December 31, 2002 |
Years Ended | ||||||||||||
December 31, | ||||||||||||
Increase | ||||||||||||
2003 | 2002 | (Decrease) | ||||||||||
($ in thousands, except | ||||||||||||
per share data) | ||||||||||||
Consolidated Statement of Earnings Data: | ||||||||||||
Interest income | $ | 53,823 | $ | 39,117 | $ | 14,706 | ||||||
Interest expense | 12,798 | 9,771 | 3,027 | |||||||||
Net interest income | 41,025 | 29,346 | 11,679 | |||||||||
Provision for loan losses | 5,145 | 1,587 | 3,558 | |||||||||
Net interest income after provision for loan losses | 35,880 | 27,759 | 8,121 | |||||||||
Other income | 4,270 | 3,935 | 335 | |||||||||
Other expense | 27,290 | 19,050 | 8,240 | |||||||||
Net income before income taxes | 12,860 | 12,644 | 216 | |||||||||
Income tax expense | 4,171 | 4,235 | (64 | ) | ||||||||
Net income | $ | 8,689 | $ | 8,409 | $ | 280 | ||||||
Earnings per share — basic | $ | 0.61 | $ | 0.79 | $ | (0.18 | ) | |||||
Earnings per share — diluted | $ | 0.59 | $ | 0.78 | $ | (0.19 | ) | |||||
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Table of Contents
Years Ended December 31, | |||||||||||||||||||||||||
2003 | 2002 | ||||||||||||||||||||||||
Average | Average | Average | Average | ||||||||||||||||||||||
Balance | Interest | Yield/Cost | Balance | Interest | Yield/Cost | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||
Earning Assets | |||||||||||||||||||||||||
Securities: | |||||||||||||||||||||||||
Taxable | $ | 432,425 | $ | 15,938 | 3.69 | % | $ | 143,202 | $ | 6,616 | 4.62 | % | |||||||||||||
Tax-exempt(1) | 7,266 | 346 | 4.76 | 7,419 | 354 | 4.77 | |||||||||||||||||||
Total securities | 439,691 | 16,284 | 3.70 | 150,621 | 6,970 | 4.63 | |||||||||||||||||||
Federal funds sold | 52,735 | 578 | 1.10 | 51,358 | 794 | 1.55 | |||||||||||||||||||
Loans(1)(2)(3) | 571,501 | 36,792 | 6.44 | 439,391 | 31,290 | 7.12 | |||||||||||||||||||
Federal Home Loan Bank stock | 6,063 | 169 | 2.79 | 1,364 | 63 | 4.62 | |||||||||||||||||||
Total earnings assets | 1,069,990 | 53,823 | 5.03 | 642,734 | 39,117 | 6.09 | |||||||||||||||||||
Non-earning Assets | |||||||||||||||||||||||||
Cash and due from banks | 41,415 | 33,324 | |||||||||||||||||||||||
Allowance for loan losses | (8,783 | ) | (7,110 | ) | |||||||||||||||||||||
Bank-owned life insurance | 17,934 | — | |||||||||||||||||||||||
Other assets | 28,264 | 18,979 | |||||||||||||||||||||||
Total assets | $ | 1,148,820 | $ | 687,927 | |||||||||||||||||||||
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Years Ended December 31, | |||||||||||||||||||||||||
2003 | 2002 | ||||||||||||||||||||||||
Average | Average | Average | Average | ||||||||||||||||||||||
Balance | Interest | Yield/Cost | Balance | Interest | Yield/Cost | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||
Interest Bearing Liabilities | |||||||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||||
Interest checking | $ | 51,723 | $ | 93 | 0.18 | % | $ | 43,139 | $ | 102 | 0.24 | % | |||||||||||||
Savings and money market | 336,012 | 4,358 | 1.30 | 198,613 | 3,823 | 1.92 | |||||||||||||||||||
Time deposits | 158,418 | 3,707 | 2.34 | 112,782 | 3,469 | 3.08 | |||||||||||||||||||
Total interest-bearing deposits | 546,153 | 8,158 | 1.49 | 354,534 | 7,394 | 2.09 | |||||||||||||||||||
Short-term borrowings | 111,258 | 1,671 | 1.50 | 14,332 | 354 | 2.47 | |||||||||||||||||||
Long-term debt | 37,701 | 1,475 | 3.91 | 27,098 | 1,085 | 4.00 | |||||||||||||||||||
Junior subordinated debt | 30,928 | 1,494 | 4.83 | 16,108 | 938 | 5.82 | |||||||||||||||||||
Total interest-bearing liabilities | 726,040 | 12,798 | 1.76 | 412,072 | 9,771 | 2.37 | |||||||||||||||||||
Non-interest Bearing Liabilities | |||||||||||||||||||||||||
Noninterest-bearing demand deposits | 345,274 | 229,843 | |||||||||||||||||||||||
Other liabilities | 6,230 | 2,642 | |||||||||||||||||||||||
Stockholders’ equity | 71,276 | 43,370 | |||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,148,820 | $ | 687,927 | |||||||||||||||||||||
Net interest income and margin(4) | $ | 41,025 | 3.83 | % | $ | 29,346 | 4.57 | % | |||||||||||||||||
Net interest spread(5) | 3.27 | % | 3.72 | % | |||||||||||||||||||||
(1) | Yields on loans and securities have not been adjusted to a tax equivalent basis. |
(2) | Net loan fees of $810,000 and $674,000 are included in the yield computation for 2003 and 2002, respectively. |
(3) | Includes average non-accrual loans of $393,000 in 2003 and $1.3 million in 2002. |
(4) | Net interest margin is computed by dividing net interest income by total average earning assets. |
(5) | Net interest spread represents average yield earned on interest earning assets less the average rate paid on interest bearing liabilities. |
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Table of Contents
Years Ended December 31, | |||||||||||||
2003 v. 2002 | |||||||||||||
Increase (Decrease) | |||||||||||||
Due to Changes in(1) | |||||||||||||
Volume | Rate | Total | |||||||||||
(In thousands) | |||||||||||||
Interest on securities: | |||||||||||||
Taxable | $ | 10,660 | $ | (1,338 | ) | $ | 9,322 | ||||||
Tax-exempt | (7 | ) | (1 | ) | (8 | ) | |||||||
Federal funds sold | 15 | (231 | ) | (216 | ) | ||||||||
Loans | 8,505 | (3,003 | ) | 5,502 | |||||||||
Other investment | 131 | (25 | ) | 106 | |||||||||
Total interest income | 19,304 | (4,598 | ) | 14,706 | |||||||||
Interest expense: | |||||||||||||
Interest checking | 15 | (24 | ) | (9 | ) | ||||||||
Savings and Money market | 1,782 | (1,247 | ) | 535 | |||||||||
Time deposits | 1,068 | (830 | ) | 238 | |||||||||
Short-term borrowings | 1,532 | (215 | ) | 1,317 | |||||||||
Long-term debt | 217 | 173 | 390 | ||||||||||
Junior subordinated debt | 716 | (160 | ) | 556 | |||||||||
Total interest expense | 5,330 | (2,303 | ) | 3,027 | |||||||||
Net increase (decrease) | $ | 13,974 | $ | (2,295 | ) | $ | 11,679 | ||||||
(1) | Changes due to both volume and rate have been allocated to volume changes. |
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Table of Contents
Nine Months | |||||||||||||
Ended | |||||||||||||
December 31, | |||||||||||||
Increase | |||||||||||||
2003 | 2002 | (Decrease) | |||||||||||
(In thousands) | |||||||||||||
Service charges | $ | 1,998 | $ | 1,644 | $ | 354 | |||||||
Income from bank owned life insurance | 967 | — | 967 | ||||||||||
Mortgage loan pre-underwriting fees | 792 | 719 | 73 | ||||||||||
Investment securities gains (losses), net | (265 | ) | 609 | (874 | ) | ||||||||
Other | 778 | 963 | (185 | ) | |||||||||
Total non-interest income | $ | 4,270 | $ | 3,935 | $ | 335 | |||||||
Nine Months | |||||||||||||
Ended | |||||||||||||
December 31, | |||||||||||||
Increase | |||||||||||||
2003 | 2002 | (Decrease) | |||||||||||
(In thousands) | |||||||||||||
Salaries and employee benefits | $ | 15,615 | $ | 9,921 | $ | 5,694 | |||||||
Occupancy | 4,820 | 3,794 | 1,026 | ||||||||||
Legal, professional and director fees | 1,111 | 775 | 336 | ||||||||||
Advertising, public relations and business development | 989 | 687 | 302 | ||||||||||
Customer service | 752 | 831 | (79 | ) | |||||||||
Supplies | 619 | 350 | 269 | ||||||||||
Organizational costs | 604 | 461 | 143 | ||||||||||
Correspondent banking service charges and wire transfer costs | 512 | 291 | 221 | ||||||||||
Data processing | 466 | 324 | 142 | ||||||||||
Audit and exams | 435 | 330 | 105 | ||||||||||
Telephone | 424 | 191 | 233 | ||||||||||
Insurance | 305 | 209 | 96 | ||||||||||
Travel and automobile | 261 | 131 | 130 | ||||||||||
Other | 377 | 755 | (378 | ) | |||||||||
Total non-interest expense | $ | 27,290 | $ | 19,050 | $ | 8,240 | |||||||
44
Table of Contents
Total Assets |
Loans |
45
Table of Contents
December 31, | |||||||||||||||||||||||||
September 30, | |||||||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Construction and land development | $ | 396,970 | $ | 323,176 | $ | 195,182 | $ | 127,974 | $ | 82,604 | $ | 37,283 | |||||||||||||
Commercial real estate | 655,004 | 491,949 | 324,702 | 209,834 | 208,683 | 168,314 | |||||||||||||||||||
Residential real estate | 239,538 | 116,360 | 42,773 | 21,893 | 18,067 | 20,043 | |||||||||||||||||||
Commercial and industrial | 307,045 | 241,292 | 159,889 | 94,411 | 85,050 | 84,200 | |||||||||||||||||||
Consumer | 21,046 | 17,682 | 11,802 | 10,281 | 13,156 | 14,561 | |||||||||||||||||||
Net deferred loan fees | (2,062 | ) | (1,924 | ) | (1,270 | ) | (38 | ) | (350 | ) | (51 | ) | |||||||||||||
Gross loans, net of deferred fees | 1,617,541 | 1,188,535 | 733,078 | 464,355 | 407,210 | 324,350 | |||||||||||||||||||
Less: Allowance for loan losses | (19,288 | ) | (15,271 | ) | (11,378 | ) | (6,449 | ) | (6,563 | ) | (4,746 | ) | |||||||||||||
$ | 1,598,253 | $ | 1,173,264 | $ | 721,700 | $ | 457,906 | $ | 400,647 | $ | 319,604 | ||||||||||||||
December 31, 2004 | ||||||||||||||||||
Due Within | Due 1-5 | Due Over | ||||||||||||||||
One Year | Years | Five Years | Total | |||||||||||||||
(In thousands) | ||||||||||||||||||
Construction and land development | $ | 249,878 | $ | 63,175 | $ | 10,123 | $ | 323,176 | ||||||||||
Commercial real estate | 54,357 | 153,067 | 284,525 | 491,949 | ||||||||||||||
Residential real estate | 16,101 | 15,834 | 84,425 | 116,360 | ||||||||||||||
Commercial and industrial | 138,993 | 90,290 | 12,009 | 241,292 | ||||||||||||||
Consumer | 13,256 | 4,283 | 143 | 17,682 | ||||||||||||||
Net deferred loan fees | — | — | — | (1,924 | ) | |||||||||||||
Gross loans, net of deferred fees | 472,585 | 326,649 | 391,225 | 1,188,535 | ||||||||||||||
Less: Allowance for loan losses | — | — | — | (15,271 | ) | |||||||||||||
$ | 472,585 | $ | 326,649 | $ | 391,225 | $ | 1,173,264 | |||||||||||
Interest rates: | ||||||||||||||||||
Fixed | $ | 44,341 | $ | 163,644 | $ | 291,742 | $ | 499,727 | ||||||||||
Variable | 428,244 | 163,005 | 99,483 | 690,732 | ||||||||||||||
Net deferred loan fees | — | — | — | (1,924 | ) | |||||||||||||
Gross loans, net of deferred fees | $ | 472,585 | $ | 326,649 | $ | 391,225 | $ | 1,188,535 | ||||||||||
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At or for the | At or for the Years Ended December 31, | ||||||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||
September 30, 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||
Total nonaccrual loans | $ | 175 | $ | 1,591 | $ | 210 | $ | 1,039 | $ | 686 | $ | 3,251 | |||||||||||||
Loans past due 90 days or more and still accruing | 2,503 | 2 | 65 | 317 | 236 | 1,186 | |||||||||||||||||||
Restructured loans | — | — | — | 2,193 | — | — | |||||||||||||||||||
Total non-performing loans | 2,678 | 1,593 | 275 | 3,549 | 922 | 4,437 | |||||||||||||||||||
Other real estate owned (OREO) | — | — | — | — | 79 | — | |||||||||||||||||||
Total non-performing assets | 2,678 | 1,593 | 275 | 3,549 | 1,001 | 4,437 | |||||||||||||||||||
Non-performing loans to gross loans | 0.17 | % | 0.13 | % | 0.04 | % | 0.76 | % | 0.23 | % | 1.37 | % | |||||||||||||
Non-performing assets to gross loans and OREO | 0.17 | 0.13 | 0.04 | 0.76 | 0.25 | 1.37 | |||||||||||||||||||
Non-performing assets to total assets | 0.09 | 0.07 | 0.02 | 0.41 | 0.17 | 1.00 | |||||||||||||||||||
Interest income received on nonaccrual loans | $ | 3 | $ | 61 | $ | 6 | $ | 158 | $ | 49 | $ | 430 | |||||||||||||
Interest income that would have been recorded under the original terms of the loans | 18 | 96 | 29 | 242 | 108 | 669 |
47
Table of Contents
Allowance for Loan Losses |
48
Table of Contents
At or for the | ||||||||||||||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||||||||||||
September 30, | At or for the Years Ended December 31, | |||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||
Balance at beginning of period | $ | 15,271 | $ | 11,378 | $ | 11,378 | $ | 6,449 | $ | 6,563 | $ | 4,746 | $ | 4,166 | ||||||||||||||||
Provisions charged to operating expenses | 4,217 | 3,163 | 3,914 | 5,145 | 1,587 | 2,800 | 4,299 | |||||||||||||||||||||||
Adjustments(1) | — | — | — | 737 | (850 | ) | — | — | ||||||||||||||||||||||
Recoveries of loans previously charged-off: | ||||||||||||||||||||||||||||||
Construction and land development | — | — | — | — | — | — | — | |||||||||||||||||||||||
Commercial real estate | — | — | — | 140 | — | — | — | |||||||||||||||||||||||
Residential real estate | 3 | 9 | 15 | 1 | — | — | — | |||||||||||||||||||||||
Commercial and industrial | 156 | 111 | 132 | 272 | 464 | 921 | 87 | |||||||||||||||||||||||
Consumer | 12 | 10 | 10 | 7 | 7 | 32 | — | |||||||||||||||||||||||
Total recoveries | 171 | 130 | 157 | 420 | 471 | 953 | 87 | |||||||||||||||||||||||
Loans charged-off: | ||||||||||||||||||||||||||||||
Construction and land development | — | — | — | — | — | — | — | |||||||||||||||||||||||
Commercial real estate | — | — | — | 140 | — | 132 | — | |||||||||||||||||||||||
Residential real estate | — | 9 | 9 | 20 | 60 | — | — | |||||||||||||||||||||||
Commercial and industrial | 125 | 104 | 115 | 1,090 | 1,201 | 1,601 | 3,516 | |||||||||||||||||||||||
Consumer | 246 | 33 | 54 | 123 | 61 | 203 | 290 | |||||||||||||||||||||||
Total charged-off | 371 | 146 | 178 | 1,373 | 1,322 | 1,936 | 3,806 | |||||||||||||||||||||||
Net charge-offs | 200 | 16 | 21 | 953 | 851 | 983 | 3,719 | |||||||||||||||||||||||
Balance at end of period | $ | 19,288 | $ | 14,525 | $ | 15,271 | $ | 11,378 | $ | 6,449 | $ | 6,563 | $ | 4,746 | ||||||||||||||||
Net charge-offs to average loans outstanding | 0.02 | % | 0.00 | % | 0.00 | % | 0.17 | % | 0.19 | % | 0.27 | % | 1.24 | % | ||||||||||||||||
Allowance for loan losses to gross loans | 1.19 | 1.34 | 1.28 | 1.55 | 1.39 | 1.61 | 1.46 |
(1) | In accordance with regulatory reporting requirements and American Institute of Certified Public Accountants’ Statement of Position 01-06, Accounting by Certain Entities that Lend to or Finance the Activities of Others, the Company has reclassified the portion of its allowance for loan losses that relates to undisbursed commitments during the year ended December 31, 2002. During the year ended December 31, 2003, management reevaluated its methodology for calculating this amount and reclassified an amount from other liabilities to the allowance for loan losses. The liability amount was approximately $507,000, $307,000 and $68,000 as of September 30, 2005 and December 31, 2004 and 2003, respectively. |
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December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||||||||||||||||||||||
% of | % of | % of | % of | % of | % of | |||||||||||||||||||||||||||||||||||||||||||
Loans in | Loans in | Loans in | Loans in | Loans in | Loans in | |||||||||||||||||||||||||||||||||||||||||||
Each | Each | Each | Each | Each | Each | |||||||||||||||||||||||||||||||||||||||||||
Category | Category | Category | Category | Category | Category | |||||||||||||||||||||||||||||||||||||||||||
to Gross | to Gross | to Gross | to Gross | to Gross | to Gross | |||||||||||||||||||||||||||||||||||||||||||
Amount | Loans | Amount | Loans | Amount | Loans | Amount | Loans | Amount | Loans | Amount | Loans | |||||||||||||||||||||||||||||||||||||
Construction and land development | $ | 5,905 | 24.5 | % | $ | 4,920 | 27.1 | % | $ | 3,252 | 26.6 | % | $ | 1,050 | 27.6 | % | $ | 1,462 | 20.3 | % | $ | 493 | 11.4 | % | ||||||||||||||||||||||||
Commercial real estate | 2,432 | 40.4 | 2,095 | 41.3 | 1,446 | 44.2 | 2,531 | 45.2 | 1,566 | 51.2 | 1,645 | 51.9 | ||||||||||||||||||||||||||||||||||||
Residential real estate | 530 | 14.8 | 327 | 9.8 | 179 | 5.8 | 282 | 4.7 | 100 | 4.4 | 89 | 6.2 | ||||||||||||||||||||||||||||||||||||
Commercial and industrial | 9,942 | 19.0 | 7,502 | 20.3 | 6,192 | 21.8 | 2,340 | 20.3 | 3,110 | 20.9 | 2,228 | 26.0 | ||||||||||||||||||||||||||||||||||||
Consumer | 479 | 1.3 | 427 | 1.5 | 309 | 1.6 | 246 | 2.2 | 325 | 3.2 | 291 | 4.5 | ||||||||||||||||||||||||||||||||||||
Total | $ | 19,288 | 100.0 | % | $ | 15,271 | 100.0 | % | $ | 11,378 | 100.0 | % | $ | 6,449 | 100.0 | % | $ | 6,563 | 100.0 | % | $ | 4,746 | 100.0 | % | ||||||||||||||||||||||||
Investments |
50
Table of Contents
Carrying Value | |||||||||||||||||
December 31, | |||||||||||||||||
September 30, | |||||||||||||||||
2005 | 2004 | 2003 | 2002 | ||||||||||||||
(In thousands) | |||||||||||||||||
U.S. Treasury securities | $ | 3,496 | $ | 3,501 | $ | 3,014 | $ | 3,040 | |||||||||
U.S. Government-sponsored agencies | 137,464 | 118,348 | 112,537 | 59,651 | |||||||||||||
Mortgage-backed obligations | 552,456 | 648,100 | 581,446 | 156,982 | |||||||||||||
SBA Loan Pools | 507 | 625 | 1,142 | 1,779 | |||||||||||||
State and Municipal obligations | 7,153 | 7,290 | 7,563 | 8,109 | |||||||||||||
Other | 11,999 | 10,758 | 10,276 | 3,287 | |||||||||||||
Total investment securities | $ | 713,075 | $ | 788,622 | $ | 715,978 | $ | 232,848 | |||||||||
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September 30, 2005 | |||||||||||||||||||||||||||||||||||||||||
Due Under | |||||||||||||||||||||||||||||||||||||||||
1 Year | Due 1-5 Years | Due 5-10 Years | Due Over 10 Years | Total | |||||||||||||||||||||||||||||||||||||
Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | ||||||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||||||||||
Available for Sale: | |||||||||||||||||||||||||||||||||||||||||
U.S. Government-sponsored Agency obligations | $ | 61,537 | 3.43 | % | $ | 39,800 | 3.31 | % | $ | 28,937 | 3.81 | % | $ | 8,059 | 4.47 | % | $ | 138,333 | 3.54 | % | |||||||||||||||||||||
Mortgage-backed obligations | — | — | 6,703 | 3.35 | — | — | 449,973 | 4.11 | 456,676 | 4.10 | |||||||||||||||||||||||||||||||
State and Municipal obligations | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other | 12,144 | 4.03 | — | — | — | — | — | — | 12,144 | 4.03 | |||||||||||||||||||||||||||||||
Total available for sale | $ | 73,681 | 3.53 | % | $ | 46,503 | 3.32 | % | $ | 28,937 | 3.81 | % | $ | 458,032 | 4.11 | % | $ | 607,153 | 3.97 | % | |||||||||||||||||||||
Held to Maturity: | |||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | 2,996 | 2.71 | % | $ | 500 | 2.56 | % | $ | — | — | % | $ | — | — | % | $ | 3,496 | 2.69 | % | |||||||||||||||||||||
State and Municipal obligations | — | — | — | — | 1,687 | 4.67 | 5,466 | 4.94 | 7,153 | 4.88 | |||||||||||||||||||||||||||||||
Mortgage-backed obligations | — | — | — | — | — | — | 105,960 | 4.38 | 105,960 | 4.38 | |||||||||||||||||||||||||||||||
SBA Loan Pools | — | — | — | — | 226 | 3.36 | 281 | 3.97 | 507 | 3.71 | |||||||||||||||||||||||||||||||
Other | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Total held to maturity | $ | 2,996 | 2.71 | % | $ | 500 | 2.56 | % | $ | 1,913 | 4.52 | % | $ | 111,707 | 4.41 | % | $ | 117,116 | 4.36 | % | |||||||||||||||||||||
December 31, 2004 | |||||||||||||||||||||||||||||||||||||||||
Due Under | |||||||||||||||||||||||||||||||||||||||||
1 Year | Due 1-5 Years | Due 5-10 Years | Due Over 10 Years | Total | |||||||||||||||||||||||||||||||||||||
Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | ||||||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||||||||||
Available for Sale: | |||||||||||||||||||||||||||||||||||||||||
U.S. Government- sponsored Agency obligations | $ | — | — | $ | 66,800 | 2.40 | % | $ | 24,289 | 3.51 | % | $ | 27,709 | 3.59 | % | $ | 118,798 | 2.91 | % | ||||||||||||||||||||||
Mortgage-backed obligations | — | — | — | — | 7,981 | 3.41 | 529,401 | 4.23 | 537,382 | 4.21 | |||||||||||||||||||||||||||||||
Other | 10,781 | 3.71 | — | — | — | — | — | — | 10,781 | 3.71 | |||||||||||||||||||||||||||||||
Total available for sale | $ | 10,781 | 3.71 | % | $ | 66,800 | 2.40 | % | $ | 32,270 | 3.49 | % | $ | 557,110 | 4.19 | % | $ | 666,961 | 3.97 | % | |||||||||||||||||||||
Held to Maturity: | |||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | 1,000 | 1.37 | % | $ | 2,501 | 2.47 | % | $ | — | — | % | $ | — | — | % | $ | 3,501 | 2.16 | % | |||||||||||||||||||||
State and Municipal obligations | — | — | 100 | 5.04 | 680 | 4.66 | 6,510 | 4.86 | 7,290 | 4.85 | |||||||||||||||||||||||||||||||
Mortgage-backed obligations | — | — | — | — | — | — | 118,133 | 4.36 | 118,133 | 4.36 | |||||||||||||||||||||||||||||||
SBA Loan Pools | — | — | — | — | — | — | 625 | 2.43 | 625 | 2.43 | |||||||||||||||||||||||||||||||
Total held to maturity | $ | 1,000 | 1.37 | % | $ | 2,601 | 2.57 | % | $ | 680 | 4.66 | % | $ | 125,268 | 4.38 | % | $ | 129,549 | 4.32 | % | |||||||||||||||||||||
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December 31, | ||||||||||||||||
September 30, | ||||||||||||||||
2005 | 2004 | 2003 | 2002 | |||||||||||||
(In thousands) | ||||||||||||||||
Aggregate carrying value | $ | 689,920 | $ | 766,448 | $ | 693,983 | $ | 216,633 | ||||||||
Aggregate fair value | $ | 688,191 | $ | 765,453 | $ | 693,044 | $ | 216,633 | ||||||||
Other Assets |
Deposits |
Years Ended December 31, | |||||||||||||||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||||||||
September 30, 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||||||||||||
Balance | Rate | Balance | Rate | Balance | Rate | Balance | Rate | ||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||
Interest checking (NOW) | $ | 107,359 | 0.51 | % | $ | 73,029 | 0.19 | % | $ | 51,723 | 0.18 | % | $ | 43,139 | 0.24 | % | |||||||||||||||||
Savings and money market | 791,664 | 1.90 | 561,744 | 1.35 | 336,012 | 1.30 | 198,613 | 1.92 | |||||||||||||||||||||||||
Time | 276,385 | 2.63 | 214,515 | 2.05 | 158,418 | 2.34 | 112,782 | 3.08 | |||||||||||||||||||||||||
Total interest-bearing deposits | 1,175,408 | 1.95 | 849,288 | 1.43 | 546,153 | 1.49 | 354,534 | 2.09 | |||||||||||||||||||||||||
Non-interest bearing demand deposits | 823,867 | — | 600,790 | — | 345,274 | — | 229,843 | — | |||||||||||||||||||||||||
Total deposits | $ | 1,999,275 | 1.15 | % | $ | 1,450,078 | 0.84 | % | $ | 891,427 | 0.92 | % | $ | 584,377 | 1.27 | % | |||||||||||||||||
September 30, 2005 | ||||
(In thousands) | ||||
3 months or less | $ | 146,334 | ||
3 to 6 months | 63,493 | |||
6 to 12 months | 54,963 | |||
Over 12 months | 10,535 | |||
Total | $ | 275,325 | ||
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Capital Resources |
September 30, 2005 | |||||||||||||||||||||||||
Adequately | |||||||||||||||||||||||||
Actual | Capitalized(1) | Well-Capitalized | |||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||
Leverage ratio (to Average Assets) | |||||||||||||||||||||||||
BankWest of Nevada | $ | 128,451 | 7.2 | % | $ | 71,796 | 4.0 | % | $ | 89,745 | 5.0 | % | |||||||||||||
Alliance Bank of Arizona(1) | 43,910 | 9.5 | 18,571 | 4.0 | 23,214 | 5.0 | |||||||||||||||||||
Torrey Pines Bank(1) | 33,171 | 9.7 | 13,684 | 4.0 | 17,105 | 5.0 | |||||||||||||||||||
Company | 270,020 | 10.3 | 104,659 | 4.0 | 130,824 | 5.0 | |||||||||||||||||||
Tier I Capital (to Risk Weighted Assets) | |||||||||||||||||||||||||
BankWest of Nevada | $ | 128,451 | 10.5 | % | $ | 48,934 | 4.0 | % | $ | 73,401 | 6.0 | % | |||||||||||||
Alliance Bank of Arizona | 43,910 | 10.1 | 17,373 | 4.0 | 26,059 | 6.0 | |||||||||||||||||||
Torrey Pines Bank | 33,171 | 10.8 | 12,291 | 4.0 | 18,436 | 6.0 | |||||||||||||||||||
Company | 270,020 | 13.6 | 79,342 | 4.0 | 119,013 | 6.0 | |||||||||||||||||||
Total Capital (to Risk Weighted Assets) | |||||||||||||||||||||||||
BankWest of Nevada | $ | 140,207 | 11.5 | % | $ | 97,868 | 8.0 | % | $ | 122,335 | 10.0 | % | |||||||||||||
Alliance Bank of Arizona | 48,894 | 11.3 | 13,745 | 8.0 | 43,431 | 10.0 | |||||||||||||||||||
Torrey Pines Bank | 36,228 | 11.8 | 24,581 | 8.0 | 30,727 | 10.0 | |||||||||||||||||||
Company | 289,817 | 14.6 | 158,684 | 8.0 | 198,355 | 10.0 |
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December 31, 2004 | |||||||||||||||||||||||||
Adequately | |||||||||||||||||||||||||
Actual | Capitalized(1) | Well-Capitalized | |||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||
Leverage ratio (to Average Assets) | |||||||||||||||||||||||||
BankWest of Nevada | $ | 95,449 | 6.1 | % | $ | 62,970 | 4.0 | % | $ | 78,713 | 5.0 | % | |||||||||||||
Alliance Bank of Arizona | 31,810 | 10.3 | 12,394 | 4.0 | 15,492 | 5.0 | |||||||||||||||||||
Torrey Pines Bank | 26,774 | 10.9 | 9,830 | 4.0 | 12,288 | 5.0 | |||||||||||||||||||
Company | 163,205 | 7.7 | 85,321 | 4.0 | 106,651 | 5.0 | |||||||||||||||||||
Tier I Capital (to Risk Weighted Assets) | |||||||||||||||||||||||||
BankWest of Nevada | $ | 95,449 | 9.4 | % | $ | 40,484 | 4.0 | % | $ | 60,726 | 6.0 | % | |||||||||||||
Alliance Bank of Arizona(1) | 31,810 | 11.3 | 11,214 | 4.0 | 16,821 | 6.0 | |||||||||||||||||||
Torrey Pines Bank(1) | 26,774 | 13.4 | 8,006 | 4.0 | 12,010 | 6.0 | |||||||||||||||||||
Company | 163,205 | 10.9 | 59,816 | 4.0 | 89,724 | 6.0 | |||||||||||||||||||
Total Capital (to Risk Weighted Assets) | |||||||||||||||||||||||||
BankWest of Nevada | $ | 105,544 | 10.4 | % | $ | 80,968 | 8.0 | % | $ | 101,210 | 10.0 | % | |||||||||||||
Alliance Bank of Arizona | 35,258 | 12.6 | 22,428 | 8.0 | 28,035 | 10.0 | |||||||||||||||||||
Torrey Pines Bank | 28,809 | 14.4 | 16,013 | 8.0 | 20,016 | 10.0 | |||||||||||||||||||
Company | 178,784 | 12.0 | 119,632 | 8.0 | 149,540 | 10.0 |
(1) | Alliance Bank of Arizona and Torrey Pines Bank have agreed to maintain a Tier 1 capital ratio of at least 8% for the first three years of their existence. |
Subordinated Debt |
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Year Beginning | Percentage | |||
July 25, 2006 | 107.6875 | % | ||
July 25, 2007 | 106.1500 | % | ||
July 25, 2008 | 104.6125 | % | ||
July 25, 2009 | 103.0750 | % | ||
July 25, 2010 | 101.5375 | % | ||
July 25, 2011 and after | 100.0000 | % |
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December 31, 2004 | ||||||||||||||||||||
Less Than | 1-3 | 3-5 | After | |||||||||||||||||
Total | 1 Year | Years | Years | 5 Years | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Long term borrowed funds | $ | 63,700 | $ | 34,400 | $ | 63,700 | $ | — | $ | — | ||||||||||
Junior subordinated deferrable interest debentures | 30,928 | — | — | — | 30,928 | |||||||||||||||
Operating lease obligations | 18,492 | 3,545 | 7,080 | 2,527 | 5,340 | |||||||||||||||
Total | $ | 113,120 | $ | 37,945 | $ | 70,780 | $ | 2,527 | $ | 36,268 | ||||||||||
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December 31, 2004 | ||||||||||||||||||||||||
Amount of Commitment Expiration Per Period | ||||||||||||||||||||||||
At or for the | Total | |||||||||||||||||||||||
Nine Months Ended | Amounts | Less Than | 1-3 | 3-5 | After | |||||||||||||||||||
September 30, 2005 | Committed | 1 Year | Years | Years | 5 Years | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Commitments to extend credit | $ | 674,341 | $ | 423,767 | $ | 292,013 | $ | 78,792 | $ | 8,100 | $ | 44,862 | ||||||||||||
Credit card guarantees | 7,404 | 5,421 | 5,421 | — | — | — | ||||||||||||||||||
Standby letters of credit | 29,506 | 5,978 | 3,984 | 1,994 | — | — | ||||||||||||||||||
Total | $ | 711,251 | $ | 435,166 | $ | 301,418 | $ | 80,786 | $ | 8,100 | $ | 44,862 | ||||||||||||
At or for the Years Ended | |||||||||||||||||
At or for the | December 31, | ||||||||||||||||
Nine Months Ended | |||||||||||||||||
September 30, 2005 | 2004 | 2003 | 2002 | ||||||||||||||
($ in thousands) | |||||||||||||||||
FHLB Advances: | |||||||||||||||||
Maximum month-end balance | $ | 96,000 | $ | 174,200 | $ | 163,211 | $ | 11,300 | |||||||||
Balance at end of period | — | 151,900 | 163,211 | 11,300 | |||||||||||||
Average balance | 31,931 | 186,662 | 69,319 | 9,285 | |||||||||||||
Other: | |||||||||||||||||
Maximum month-end balance | $ | 55,810 | $ | 78,050 | $ | 78,050 | $ | 6,000 | |||||||||
Balance at end of period | 55,810 | 33,594 | 78,050 | 6,000 | |||||||||||||
Average balance | 40,288 | 52,513 | 41,939 | 5,047 | |||||||||||||
Total Short-Term Borrowed Funds | $ | 55,810 | $ | 185,494 | $ | 241,261 | $ | 17,300 | |||||||||
Weighted average interest rate at end of period | 2.60 | % | 2.23 | % | 1.31 | % | 2.37 | % | |||||||||
Weighted average interest rate during period/year | 2.42 | % | 1.87 | % | 1.50 | % | 2.47 | % |
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Percentage | Percentage | Percentage | ||||||||||||||
Economic | Change | of Total | of Equity | |||||||||||||
Interest Rate Scenario | Value | from Base | Assets | Book Value | ||||||||||||
($ in millions) | ||||||||||||||||
Up 300 basis points | $ | 440.4 | 4.2 | % | 16.0 | % | 184.8 | % | ||||||||
Up 200 basis points | �� | 435.8 | 3.1 | 15.9 | 182.9 | |||||||||||
Up 100 basis points | 429.7 | 1.7 | 15.7 | 180.3 | ||||||||||||
BASE | 422.7 | — | 15.4 | 177.4 | ||||||||||||
Down 100 basis points | 412.1 | (2.5 | ) | 15.0 | 172.9 | |||||||||||
Down 200 basis points | 393.0 | (7.0 | ) | 14.3 | 164.9 | |||||||||||
Down 300 basis points | 365.6 | (13.5 | ) | 13.3 | 153.4 |
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Percentage | ||||||||
Adjusted Net | Change | |||||||
Interest Rate Scenario | Interest Income | from Base | ||||||
(In millions) | ||||||||
Up 300 basis points | $ | 121.4 | 6.2 | % | ||||
Up 200 basis points | 120.6 | 5.5 | ||||||
Up 100 basis points | 118.3 | 3.5 | ||||||
BASE | 114.3 | — | ||||||
Down 100 basis points | 110.2 | (3.6 | ) | |||||
Down 200 basis points | 107.8 | (5.7 | ) | |||||
Down 300 basis points | 107.0 | (6.4 | ) |
FAS No. 123(R), Shared-Based Payment, Revised December 2004 |
FASB Interpretation (FIN) 46, Consolidation of Variable Interest Entities |
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• | total assets from $443.7 million to $2.7 billion; | |
• | total net loans from $319.6 million to $1.6 billion; | |
• | total deposits from $410.2 million to $2.3 billion; and | |
• | core deposits (all deposits other than certificates of deposit greater than $100,000) from $355.8 million to $2.1 billion. |
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• | Leveraging our knowledge and expertise. Over the past decade we have assembled an experienced management team and built a culture committed to credit quality and operational efficiency. We have also successfully centralized at our holding company level a significant portion of our operations, processing, compliance, Community Reinvestment Act administration and specialty functions. We intend to grow our franchise and improve our operating efficiencies by continuing to leverage our managerial expertise and the functions we have centralized at Western Alliance. | |
• | Maintaining a strong credit culture. We adhere to a specific set of credit standards across our bank subsidiaries that ensure the proper management of credit risk. Western Alliance’s management team plays an active role in monitoring compliance with our Banks’ credit standards. Western Alliance also continually monitors each of our subsidiary banks’ loan portfolios, which enables us to identify and take prompt corrective action on potentially problematic loans. As of September 30, 2005, non-performing assets represented approximately 0.01% of total assets. The average for similarly sized publicly traded banks in the United States was 0.40% as of September 30, 2005. | |
• | Attracting seasoned relationship bankers and leveraging our local market knowledge. We believe our success has been the result, in part, of our ability to attract and retain experienced relationship bankers that have strong relationships in their communities. These professionals bring with them valuable customer relationships, and have been an integral part of our ability to expand rapidly in our market areas. These professionals allow us to be responsive to the needs of our customers and provide a high level of service to local businesses. We intend to continue to hire experienced relationship bankers as we expand our franchise. | |
• | Focusing on markets with attractive growth prospects. We operate in what we believe to be highly attractive markets with superior growth prospects. Our metropolitan areas have a high per capita income and are expected to experience some of the fastest population growth in the country. We continuously evaluate new markets in the Western United States with similar growth characteristics as targets for expansion. Our long term strategy is to have four to six subsidiary banks each with assets between $500.0 million and $3.0 billion. We intend to implement this strategy through the formation of additionalde novobanks or acquiring other commercial banks in new market areas with attractive growth prospects. As of September 30, 2005, we maintained 15 bank branch offices located throughout our market areas. To accommodate our growth and enhance efficiency, we intend to expand over the next 12 months to an aggregate of 24 offices, and to open a service center facility that will provide centralized back-office services and call center support for all our banking subsidiaries. | |
• | Attracting low cost deposits. We believe we have been able to attract a stable base of low-cost deposits from customers who are attracted to our personalized level of service and local knowledge. As of September 30, 2005, our deposit base was comprised of 44.7% non-interest bearing deposits, of which 40.7% consisted of title company deposits, 54.5% consisted of other business deposits and 4.8% consisted of consumer deposits. Given our relatively currentloan-to-deposit ratio of 68.9%, we expect to obtain additional value in the future by leveraging our low-cost deposit base to increase quality credit relationships. |
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• | BankWest of Nevada. BankWest of Nevada is a Nevada-chartered commercial bank headquartered in Las Vegas, Nevada. BankWest of Nevada opened for business in 1994. As of September 30, 2005, the bank had $1.8 billion in assets, $991.3 million in net loans and $1.6 billion in deposits. BankWest of Nevada has three full- service offices in Las Vegas and two in Henderson. | |
• | Alliance Bank of Arizona. Alliance Bank of Arizona is an Arizona-chartered commercial bank headquartered in Phoenix, Arizona. As of September 30, 2005, the bank had $514.1 million in assets, $353.7 million in net loans and $460.1 million in deposits. Alliance Bank has two full-service offices in Phoenix, two in Tucson and one in Scottsdale. |
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• | Torrey Pines Bank. Torrey Pines Bank is a California-chartered commercial bank headquartered in San Diego, California. As of September 30, 2005, the bank had $357.3 million in assets, $253.3 million in net loans and $315.1 million in deposits. Torrey Pines has two full-service offices in San Diego and one in La Mesa. | |
• | Miller/ Russell & Associates, Inc. Miller/ Russell offers investment advisory services to businesses, individuals and non-profit entities. As of September 30, 2005, Miller/ Russell had $1.1 billion in assets under management. Miller/ Russell has offices in Phoenix, Tucson, San Diego and Las Vegas. | |
• | Premier Trust, Inc. Premier Trust offers clients wealth management services, including trust administration of personal and retirement accounts, estate and financial planning, custody services and investments. As of September 30, 2005, Premier Trust had $247.7 million in trust assets and $131.9 million in assets under management. Premier Trust has offices in Las Vegas and Phoenix. |
• | home equity loans and lines of credit; | |
• | home improvement loans; | |
• | new and used automobile loans; and | |
• | personal lines of credit. |
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September 30, 2005 | |||||||||
Loan Type | Amount | Percent | |||||||
($ in millions) | |||||||||
Commercial Real Estate | $ | 655.0 | 40.4 | % | |||||
Construction and Land Development | 397.0 | 24.5 | |||||||
Commercial and Industrial | 307.0 | 19.0 | |||||||
Residential Real Estate | 239.5 | 14.8 | |||||||
Consumer | 21.0 | 1.3 | |||||||
Total Gross Loans | $ | 1,619.5 | 100.0 | % | |||||
Net Deferred Loan Fees | (2.0 | ) | |||||||
Gross Loans, net of deferred loan fees | $ | 1,617.5 | |||||||
General |
Loan Approval Procedures and Authority |
• | Individual Authorities. The board of directors of each subsidiary bank sets the authorization levels for individual loan officers on a case-by-case basis. Generally, the more experienced a loan officer, the higher the authorization level. The average approval authority for individual loan officers is approximately $475,000 for secured loans and approximately $199,000 for unsecured loans. The maximum approval authority for a loan officer is $1.5 million for secured loans and $750,000 for unsecured loans. | |
• | Management Loan Committees. Credits in excess of individual loan limits are submitted to the appropriate bank’s Management Loan Committee. The Management Loan Committees consist of members of the senior management team of that bank and are chaired by that bank’s chief credit |
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officer. The Management Loan Committees have approval authority up to $3.0 million at BankWest of Nevada, $5.0 million at Alliance Bank of Arizona and $2.5 million at Torrey Pines Bank. | ||
• | Credit Administration. Credits in excess of the Management Loan Committee authority are submitted by the bank subsidiary to Western Alliance’s Credit Administration. Credit Administration consists of the chief credit officers of Western Alliance and BankWest of Nevada. Credit Administration has approval authority up to $18.0 million. | |
• | Board of Director Oversight. The Chairman of the Board of Directors of Western Alliance acting with the Chairman of the Credit Committee has approval authority up to each respective bank’s legal lending limit (approximately $35.1 million for BankWest of Nevada, $7.3 million for Alliance Bank of Arizona, and $9.1 million for Torrey Pines Bank, each as of September 30, 2005). |
• | BankWest of Nevada: $14.5 million, consisting of a letter of credit in favor of FNMA on behalf of a single asset entity which develops age restricted apartments; | |
• | Alliance Bank of Arizona: $12.6 million, consisting of an $11.4 million real estate loan to a60-physician medical clinic, secured by the underlying property, and the remainder for multiple equipment loans, secured by the underlying equipment; and | |
• | Torrey Pines Bank: $10.4 million, consisting of lines of credit to a construction contractor for the development of single family and other residential properties. |
Percent of Total Capital | Percent of Total Loans | |||||||||||||||
Policy Limit | Actual | Policy Limit | Actual | |||||||||||||
Commercial Real Estate — Term | 400 | % | 247 | % | 65 | % | 41 | % | ||||||||
Construction | 250 | 147 | 30 | 25 | ||||||||||||
Commercial and Industrial | 200 | 113 | 30 | 19 | ||||||||||||
Residential Real Estate | 150 | 83 | 65 | 14 | ||||||||||||
Consumer | 50 | 8 | 15 | 1 |
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General |
Collection Procedure |
Non-performing Loans |
Criticized Assets |
• | “Watch List/ Special Mention.”Generally these are assets that require more than normal management attention. These loans may involve borrowers with adverse financial trends, higher debt/equity ratios, or weaker liquidity positions, but not to the degree of being considered a “problem loan” where risk of loss may be apparent. Loans in this category are usually performing as agreed, although there may be some minor non-compliance with financial covenants. | |
• | “Substandard.”These assets contain well-defined credit weaknesses and are characterized by the distinct possibility that the bank will sustain some loss if such weakness or deficiency is not corrected. These loans generally are adequately secured and in the event of a foreclosure action or liquidation, the |
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bank should be protected from loss. All loans 90 days or more past due and all loans on non-accrual are considered at least “substandard,” unless extraordinary circumstances would suggest otherwise. | ||
• | “Doubtful.”These assets have an extremely high probability of loss, but because of certain known factors which may work to the advantage and strengthening of the asset (for example, capital injection, perfecting liens on additional collateral and refinancing plans), classification as an estimated loss is deferred until a more precise status may be determined. | |
• | “Loss.”These assets are considered uncollectible, and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practicable or desirable to defer writing off the asset, even though partial recovery may be achieved in the future. |
• | results of the quarterly credit quality review; | |
• | historical loss experience in each segment of the loan portfolio; | |
• | general economic and business conditions affecting our key lending areas; | |
• | credit quality trends (including trends in non-performing loans expected to result from existing conditions); | |
• | collateral values; | |
• | loan volumes and concentrations; | |
• | age of the loan portfolio; | |
• | specific industry conditions within portfolio segments; | |
• | duration of the current business cycle; | |
• | bank regulatory examination results; and | |
• | external loan review results. |
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September 30, 2005 | ||||||||
Amount | Percent | |||||||
($ in millions) | ||||||||
Mortgage-backed Securities | $ | 552.5 | 77.5 | |||||
U.S. Government Sponsored Agencies | 137.5 | 19.3 | ||||||
Municipal Bonds, U.S. Treasuries & Other | 23.1 | 3.2 | ||||||
Total Investment Securities | $ | 713.1 | 100.0 | % | ||||
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• | Information on current and projected national and local economic conditions and the outlook for interest rates; | |
• | The competitive environment in the markets it operates in; | |
• | Loan and deposit positions and forecasts, including any concentrations in either; and | |
• | FHLB advance rates and rates charged on other sources of funds. |
September 30, 2005 | ||||||||
Amount | Percent | |||||||
($ in millions) | ||||||||
Non-interest Bearing Demand | $ | 1,048.2 | 44.7 | |||||
Savings & Money Market | 893.7 | 38.1 | ||||||
Time, $100k and over | 275.3 | 11.7 | ||||||
Interest Bearing Demand | 107.7 | 4.6 | ||||||
Other Time | 22.6 | 0.9 | ||||||
Total Deposits | $ | 2,347.5 | 100.0 | % | ||||
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• | Internet banking; | |
• | Wire transfers; | |
• | Electronic bill payment; | |
• | Lock box services; | |
• | Courier services; | |
• | Cash vault; and | |
• | Cash management services (including account reconciliation, collections and sweep accounts). |
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Owned or | Original Year | ||||||||
Leased | Acquired/Term of Lease | ||||||||
BankWest of Nevada | |||||||||
Southwest Regional Office | Owned | 2001 | |||||||
3985 S. Durango Drive | |||||||||
Las Vegas, NV 89147 - 4131 | |||||||||
Henderson Regional Office | Owned | 1997 | |||||||
2890 North Green Valley Parkway | |||||||||
Henderson, NV 89014 - 0400 | |||||||||
Eastern/ Siena Heights Office | Owned | 2001 | |||||||
10199 South Eastern Avenue | |||||||||
Henderson, NV 89052 | |||||||||
Central Regional Office | Owned | 2005 | |||||||
2700 West Sahara Avenue | |||||||||
Las Vegas, NV 89102 - 1700 | |||||||||
Northwest Regional Office | Leased | 6/1/98 - 5/31/2013 | |||||||
7251 West Lake Mead, Suite 100 | |||||||||
Las Vegas, NV 89128 - 8351 | |||||||||
Alliance Bank of Arizona | |||||||||
Phoenix Regional Office | Leased | 2/1/03 - 8/1/2013 | |||||||
4646 E. Van Buren, #100 | |||||||||
Phoenix, AZ 85008 | |||||||||
Scottsdale Office | Leased | 10/1/03 - 9/30/08 | |||||||
7373 N. Scottsdale Road, A-195 | |||||||||
Scottsdale, AZ 85253 | |||||||||
Phoenix Plaza | Leased | 7/26/04 - 7/31/09 | |||||||
2901 N. Central Avenue, Suite 100 | |||||||||
Phoenix, AZ 85012 | |||||||||
Tucson Regional Office | Leased | 11/1/03 - 10/31/2013 | |||||||
4703 E. Camp Lowell Office | |||||||||
Tucson, AZ 85712 | |||||||||
Tucson Downtown Office | Leased | 7/19/04 - 9/30/09 | |||||||
1 South Church Avenue, #950 | |||||||||
Tucson, AZ 85701 |
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Owned or | Original Year | ||||||||
Leased | Acquired/Term of Lease | ||||||||
Phoenix Biltmore Park Office | Owned | 2005 | |||||||
2701 E. Camelback Road, ste.100 | |||||||||
Phoenix, Arizona 85016 | |||||||||
Tucson Williams Center Office | Owned | 2005 | |||||||
200 S. Craycroft Road | |||||||||
Tucson, AZ 85711 | |||||||||
Torrey Pines Bank | |||||||||
La Mesa Office | Owned | 2004 | |||||||
8379 Center Drive | |||||||||
La Mesa, CA 91942 | |||||||||
Carmel Valley Office | Leased | 10/13/03 - 10/12/2013 | |||||||
12220 El Camino Real, Suite 100 | |||||||||
San Diego, CA 92130 | |||||||||
Downtown San Diego | Leased | 5/1/03 - 4/30/08 | |||||||
550 West C Street, Suite 100 | |||||||||
San Diego, CA 92101 | |||||||||
Miller/ Russell & Associates, Inc. | |||||||||
Phoenix Office | Leased | 09/01/05 - 08/31/10 | |||||||
2701 E. Camelback Road, Suite 120 | |||||||||
Phoenix, AZ 85016 | |||||||||
Golden Triangle | Leased | 08/01/05 - 07/31/2015 | |||||||
4350 Executive Drive, Suite 130 | |||||||||
San Diego, CA 92121 |
• | Las Vegas, NV (3 branches and a service center facility) | |
• | Henderson, NV (1 branch) | |
• | North Las Vegas, NV (1 branch) | |
• | Mesa, AZ (1 branch) | |
• | San Diego, CA (2 branches) |
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• | Under sections 661.235 and 661.240 of the Nevada Revised Statutes, BankWest of Nevada may not pay dividends unless the bank’s surplus fund, not including any initial surplus fund, equals the bank’s initial stockholders’ equity, including 10% of the previous year’s net profits, and the dividend would not reduce the bank’s stockholders’ equity below the initial stockholders’ equity of the bank or 6% of the total deposit liability of the bank. | |
• | Under section 6-187 of the Arizona Revised Statutes, Alliance may pay dividends on the same basis as any other Arizona corporation. Under section 10-640 of the Arizona Revised Statutes, a corporation may not make a distribution to shareholders if to do so would render the corporation insolvent or unable to pay its debts as they become due. However, an Arizona bank may not declare a non-stock dividend out of capital surplus without the approval of the Arizona Superintendent. |
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• | Under section 642 of the California Financial Code, Torrey Pines Bank may not, without the prior approval of the California Commissioner, make a distribution to its shareholders in an amount exceeding the bank’s retained earnings or its net income, whichever is less, during its last three fiscal years, less any previous distributions made during that period by the bank or by any majority-owned subsidiary of the bank. Under section 643 of the California Financial Code, the California Commissioner may approve a larger distribution, but in no event to exceed the bank’s net income during the year, net income during the prior fiscal year or retained earnings, whichever is greatest. |
• | Broadens the activities that may be conducted by bank holding companies and their subsidiaries and by national banks through financial subsidiaries. Under parity provisions of the FDI Act and FDIC |
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regulations, as well as state banking laws and regulations, insured state banks may engage in activities that are permissible for national banks, thereby extending the effect of the GLB Act to state banks as well; | ||
• | Provides a framework for protecting the privacy of consumer information; | |
• | Modifies the laws governing the implementation of the Community Reinvestment Act (“CRA”); and | |
• | Addresses a variety of other legal and regulatory issues affecting bothday-to-day operations and long-term activities of financial institutions. |
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• | making unaffordable loans based on the borrower’s assets rather than the borrower’s ability to repay an obligation; | |
• | inducing a borrower to refinance a loan repeatedly in order to charge high points and fees each time the loan is refinanced, or loan flipping; and | |
• | engaging in fraud or deception to conceal the true nature of the loan obligation from an unsuspecting or unsophisticated borrower. |
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• | interest rates for first lien mortgage loans more than 8 percentage points above the yield on U.S. Treasury securities having a comparable maturity; | |
• | interest rates for subordinate lien mortgage loans more than 10 percentage points above the yield on U.S. Treasury securities having a comparable maturity; or | |
• | fees, such as optional insurance and similar debt protection costs paid in connection with the credit transaction that, when combined with points and fees, are deemed to be excessive. |
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Name | Age | Position with Western Alliance Bancorporation | ||||
Robert Sarver | 44 | Chairman of the Board, President and Chief Executive Officer | ||||
Gary Cady | 51 | Executive Vice President, California Administration | ||||
Duane Froeschle | 53 | Executive Vice President and Chief Credit Officer | ||||
Dale Gibbons | 45 | Executive Vice President and Chief Financial Officer | ||||
James Lundy | 56 | Executive Vice President, Arizona Administration | ||||
Linda Mahan | 48 | Executive Vice President, Operations | ||||
Merrill Wall | 58 | Executive Vice President and Chief Administrative Officer | ||||
Larry L. Woodrum | 67 | Executive Vice President, Nevada Administration and Director | ||||
Paul Baker | 64 | Director | ||||
Bruce Beach | 56 | Director | ||||
William S. Boyd | 74 | Director | ||||
Steven J. Hilton | 44 | Director | ||||
Marianne Boyd Johnson | 47 | Director | ||||
Cary Mack | 46 | Director | ||||
Arthur Marshall | 76 | Director | ||||
Todd Marshall | 49 | Director | ||||
M. Nafees Nagy, M.D. | 62 | Director | ||||
James E. Nave, D.V.M. | 61 | Director | ||||
Edward Nigro | 63 | Director | ||||
Donald D. Snyder | 58 | Director | ||||
(1) | Director |
(1) | Mr. , a director of Intermountain, will be invited to join the board of directors of Western Alliance following consummation of the merger. |
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• | at any time in the last three years, the director is, or has been employed by us, or has an immediate family member that serves or has served as one of our executive officers; | |
• | the director or an immediate family member has received more than $100,000 in direct compensation from us over a twelve-month period during the last three years, other than for director or committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); | |
• | the director is a partner or employee of a firm that is our current internal or external auditor, or the director has an immediate family member who is currently a partner of such firm or who is currently employed by the firm in its audit, assurance, or tax compliance practice, or within the last three years, the director or an immediate family member was a partner or employee in such firm and personally worked on our audit in that time; | |
• | in the last three years, the director or an immediate family member is or was employed as an executive officer by another company where, at the same time, any of our present executive officers serve or served on that company’s compensation committee; or | |
• | the director is currently employed by, or, in the case of an immediate family member, is employed as an executive officer by, another company that has made payments to us, or received payments from us for property or services that, in any of the last three fiscal years, account for more than 2% of such company’s consolidated gross revenue or $1,000,000, whichever is greater. |
• | Class I, whose term will expire at the annual meeting of shareholders to be held in 2006; | |
• | Class II, whose term will expire at the annual meeting of shareholders to be held in 2007; and | |
• | Class III whose term will expire at the annual meeting of shareholders to be held in 2008. |
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• | the Audit Committee; | |
• | the Compensation Committee; | |
• | the Nominating and Corporate Governance Committee; and | |
• | the Credit Committee. |
Audit Committee. |
• | serving as an independent and objective body to monitor and assess our compliance with legal and regulatory requirements, our financial reporting processes and related internal control systems and the general creation and performance of our internal audit function; | |
• | overseeing the compliance of our internal audit function with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002; | |
• | overseeing the audit and other services of our outside auditors and being directly responsible for the appointment, independence, qualifications, compensation and oversight of the outside auditors, who will report directly to the audit committee; | |
• | providing an open means of communication among our outside auditors, accountants, financial and senior management, our internal auditors, our corporate compliance department and our board; | |
• | resolving any disagreements between our management and the outside auditors regarding our financial reporting; and | |
• | preparing the audit committee report for inclusion in our proxy statement for our annual meeting. |
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Compensation Committee. |
• | determining the compensation of our executive officers; | |
• | reviewing our executive compensation policies and plans; | |
• | administering and implementing our equity compensation plans; | |
• | determining the number of shares underlying stock options and restricted common stock awards to be granted to our directors, executive officers and other employees pursuant to these plans; and | |
• | preparing a report on executive compensation for inclusion in our proxy statement for our annual meeting. |
Nominating and Corporate Governance Committee. |
• | identifying individuals qualified to become members of our board of directors and recommending director candidates for election or re-election to our board; | |
• | considering and making recommendations to our board regarding board size and composition, committee composition and structure and procedures affecting directors; and | |
• | monitoring our corporate governance principles and practices. |
Credit Committee. |
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Annual Retainer | Per In-person Meeting | Per Telephonic Meeting | ||||||||||
BankWest of Nevada | $ | 5,000 | $ | 2,000 | $ | 2,000 | ||||||
Alliance Bank | — | 1,500 | 1,500 | |||||||||
Torrey Pines Bank | — | 1,500 | 1,500 |
Annual Compensation | |||||||||||||||||||||
Awards | |||||||||||||||||||||
Securities | |||||||||||||||||||||
Underlying | All Other | ||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus | Options/SARs | Compensation | ||||||||||||||||
Robert Sarver | 2005 | $ | 500,000 | $ | 500,000 | — | $ | 6,300 | (2) | ||||||||||||
Chairman, President and Chief | 2004 | — | — | 65,000 | 60,000 | (1) | |||||||||||||||
Executive Officer(1) | 2003 | — | — | — | 60,000 | (1) | |||||||||||||||
Larry Woodrum | 2005 | 310,000 | 90,000 | 19,000 | 8,430 | (2) | |||||||||||||||
President and Chief Executive Officer, | 2004 | 294,840 | 94,666 | — | 8,000 | (2) | |||||||||||||||
BankWest of Nevada | 2003 | 284,048 | 67,775 | — | 7,000 | (2) | |||||||||||||||
Dale Gibbons | 2005 | 231,000 | 81,000 | 19,000 | 6,500 | (2) | |||||||||||||||
Executive Vice President and | 2004 | 206,000 | 72,100 | — | 6,500 | (2) | |||||||||||||||
Chief Financial Officer(3) | 2003 | 145,654 | (4) | 58,333 | 50,000 | — | |||||||||||||||
James Lundy | 2005 | 212,000 | 33,000 | 7,500 | 6,013 | (2) | |||||||||||||||
President and Chief Executive Officer, | 2004 | 206,000 | — | — | 4,915 | (2) | |||||||||||||||
Alliance Bank of Arizona | 2003 | 198,454 | — | — | 3,000 | (2) | |||||||||||||||
Linda Mahan | 2005 | 175,000 | 40,000 | 7,500 | 5,285 | (2) | |||||||||||||||
Executive Vice President and | 2004 | 160,365 | 41,943 | — | 4,939 | (2) | |||||||||||||||
Chief Operations Officer | 2003 | 148,846 | 28,757 | (5) | — | 4,567 | (2) |
(1) | Mr. Sarver did not receive a salary for years 2002 through 2004. Beginning in 2003, and pursuant to a Consulting Agreement dated as of January 1, 2003, by and between Western Alliance and SWVP Management Co., Inc., an entity owned and operated by Mr. Sarver, Western Alliance made payments of $60,000 per year to SWVP. The Consulting Agreement was terminated in 2005. |
(2) | Represents amounts contributed to the Western Alliance Bancorporation 401(k) Plan on behalf of the executive officer. |
(3) | Mr. Gibbons joined Western Alliance in May 2003. |
(4) | Includes $29,500 of consulting payments paid to Mr. Gibbons prior to joining Western Alliance. |
(5) | Includes $1,109 incentive payment for successful completion of outside banking education program. |
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% of Total | ||||||||||||||||||||
Options/SARs | ||||||||||||||||||||
Number of Securities | Granted to | |||||||||||||||||||
Underlying | Employees in | Exercise or Base | Expiration | Grant Date | ||||||||||||||||
Name | Option/SARs Granted | Fiscal Year | Price ($/Share) | Date | Present Value(2) | |||||||||||||||
Robert Sarver | — | — | — | — | $ | — | ||||||||||||||
Larry Woodrum | 19,000 | 4.67 | % | 16.50 | 1/25/15 | 76,760 | ||||||||||||||
Dale Gibbons | 19,000 | 4.67 | % | 16.50 | 1/25/15 | 76,760 | ||||||||||||||
James Lundy | 7,500 | 1.85 | % | 16.50 | 1/25/15 | 30,300 | ||||||||||||||
Linda Mahan | 7,500 | 1.85 | % | 16.50 | 1/25/15 | 30,300 |
(1) | Options were granted on January 25, 2005 and vest annually beginning on January 25, 2006 in five equal installments. |
(2) | We used the minimum value method to estimate the grant date present value of the options. We are not endorsing the accuracy of this model. All stock option valuation models, including the minimum value method, require a prediction about future stock prices. The assumptions used in calculating the values shown above were a risk-free rate of return of 4.09%, weighted average life of seven years and no cash dividends. The real value of the options will depend upon the actual performance of our common stock during the applicable period. |
Number of Securities | Value of Unexercised | |||||||||||||||||||||||
Underlying Unexercised | In-the-Money Options/ | |||||||||||||||||||||||
Shares | Options/SARs at Year End | SAR’s at Year End(2) | ||||||||||||||||||||||
Acquired on | Value | |||||||||||||||||||||||
Name | Exercise | Realized(1) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Robert Sarver | — | $ | — | 15,000 | 50,000 | $ | 268,050 | $ | 893,500 | |||||||||||||||
Larry Woodrum | — | — | 51,000 | 49,000 | 1,169,020 | 939,230 | ||||||||||||||||||
Dale Gibbons | — | — | 20,000 | 49,000 | 456,800 | 1,396,030 | ||||||||||||||||||
James Lundy | — | — | 45,000 | 37,500 | 1,027,800 | 785,475 | ||||||||||||||||||
Linda Mahan | 12,000 | 281,040 | 27,750 | 22,500 | 637,468 | 442,875 |
(1) | Represents the difference between the fair market value of our common stock on the date of exercise less the exercise price. |
(2) | The dollar values were calculated by determining the difference between the fair market value of our common stock on December 31, 2005 of $29.87 and the exercise price of the option. |
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Number of Securities | |||||||||||||
Remaining Available for | |||||||||||||
Number of Securities | Future Issuance Under | ||||||||||||
to Be Issued Upon | Equity Compensation | ||||||||||||
Exercise of | Weighted-Average Exercise | Plans (Excluding | |||||||||||
Outstanding Options, | Price of Outstanding Options, | Securities Reflected in | |||||||||||
Warrants and Rights | Warrants and Rights | Column (a)) | |||||||||||
Plan Category | (a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders | 2,124,794 | $ | 10.10 | 915,700 | |||||||||
Equity compensation plans not approved by security holders | — | — | — | ||||||||||
Total | 2,124,794 | $ | 10.10 | 915,700 |
2005 Stock Incentive Plan |
• | an increase in the number of reserved shares by 1,000,000; | |
• | the inclusion of individual limits on the awards that an individual may receive in a given year under the 2005 Stock Incentive Plan; and | |
• | the inclusion of new types of awards consisting of unrestricted stock, stock units, dividend equivalent rights, and performance and annual incentive awards that are in addition to the stock options (incentive and non-qualified), stock appreciation rights and restricted stock which may have been awarded under one or more of the prior plans. |
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• | the first shareholders meeting at which directors are to be elected held after the close of the third calendar year following the calendar year in which this offering occurs; or | |
• | the time at which the equity incentive plan is materially amended. |
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• | restricted shares of common stock, which are shares of common stock subject to restrictions; | |
• | stock units, which are common stock units subject to restrictions; | |
• | unrestricted shares of common stock, which are shares of common stock issued at no cost or for a purchase price determined by the compensation committee which are free from any restrictions under the equity incentive plan; | |
• | dividend equivalent rights, which are rights entitling the recipient to receive credits for dividends that would be paid if the recipient had held a specified number of shares of common stock; | |
• | stock appreciation rights, which are a right to receive a number of shares or, in the discretion of the committee, an amount in cash or a combination of shares and cash, based on the increase in the fair market value of the shares underlying the right during a stated period specified by the compensation committee; | |
• | performance and annual incentive awards, ultimately payable in common stock or cash, as determined by the compensation committee. The compensation committee may grant multi-year and annual incentive awards subject to achievement of specified goals tied to business criteria (described below). The committee may specify the amount of the incentive award as a percentage of these business criteria, a percentage in excess of a threshold amount or as another amount which need not bear a strictly mathematical relationship to these business criteria. The compensation committee may modify, amend or adjust the terms of each award and performance goal. |
• | total shareholder return; | |
• | total shareholder return as compared to total return of a known index; | |
• | net income; | |
• | pretax earnings; | |
• | earnings before interest expense, taxes, depreciation and amortization; | |
• | pretax operating earnings after interest expense and before bonuses, service fees and extraordinary or special items; | |
• | operating margin; | |
• | earnings per share; | |
• | return on equity; |
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• | return on capital; | |
• | return on investment; | |
• | operating earnings; | |
• | working capital; | |
• | ratio of debt to shareholders’ equity; and | |
• | revenue. |
401(k) Plan |
401(k) Restoration Plan |
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Noncompetition Agreement |
Indemnification Agreement |
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Number of Securities | ||||||||||||
Remaining Available | ||||||||||||
for Future Issuance | ||||||||||||
Number of Securities | Under Equity | |||||||||||
to Be Issued Upon | Weighted-Average | Compensation plans | ||||||||||
Exercise of | Exercise Price of | (Excluding | ||||||||||
Outstanding Options, | Outstanding Options, | Securities Reflected | ||||||||||
Warrants and Rights | Warrants and Rights | in Column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders | 57,150 | $ | 14.41 | 24,960 | ||||||||
Equity compensation plans not approved by security holders | None | N/A | N/A |
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1. Intermountain’s board compared the purchase price offered for the common stock to the purchase prices obtained by comparable companies in recent transactions. | |
2. Intermountain’s board of directors considered the current operating environment, including but not limited to the continued consolidation and increasing competition in the banking and financial services industries, the prospects for further changes in these industries, and the importance of being able to capitalize on developing opportunities in these industries. Intermountain’s board of directors also considered the current and prospective economic and competitive conditions facing Intermountain in its market areas. Intermountain’s board also considered the challenges facing Intermountain in remaining an independent banking institution, the lack of opportunities to grow through potential acquisitions or “merger of equals,” and the difficulties of further enhancing shareholder value. | |
3. Intermountain’s board of directors reviewed the terms and conditions of the merger agreement, including the parties’ respective representations, warranties and covenants, the conditions to closing, and the fact that the merger agreement permits Intermountain’s board of directors, in the exercise of its fiduciary duties, under certain conditions, to furnish information to, or engage in negotiations with, a third party which has submitted an unsolicited superior proposal to acquire Intermountain, and provisions providing for Intermountain’s payment of a termination fee to Western Alliance in certain circumstances. | |
4. Intermountain’s board of directors considered the ability of Western Alliance to pay the merger consideration, and accordingly, reviewed Western Alliance’s financial condition, results of operations, liquidity and capital position. | |
5. Intermountain’s board of directors considered the ability of Western Alliance to consummate the transaction in an efficient and timely manner based on its history of consummating other acquisitions. | |
6. Intermountain’s board of directors considered the likelihood of the merger being approved by the appropriate regulatory authorities. See “The Merger — Regulatory Approvals” beginning on page of this proxy statement/ prospectus for more information. | |
7. Intermountain’s board of directors examined current financial market conditions with respect to shares of Intermountain common stock. In particular, the board noted that shares of Western Alliance common stock are publicly traded on the New York Stock Exchange while Intermountain’s common stock is relatively illiquid. | |
8. Intermountain’s board of directors considered the potential impact of the merger on Intermountain’s customers. The board viewed the potential impact on customers as positive in view of Western Alliance’s history of providing exceptional service to customers, and the fact that the merger will enhance |
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the services available to Intermountain’s customers without sacrificing the personal attention and dedication that Intermountain has offered. | |
9. Intermountain’s board of directors considered the merger’s impact on Intermountain’s employees. Although the board recognized that Western Alliance did not make any commitment to retain any or all of Intermountain’s offices, the board viewed the impact on employees as generally positive, in that they would become part of a more geographically diversified institution with greater resources and opportunities than Intermountain. The board also noted that Western Alliance agreed to use commercially reasonable efforts to ensure that almost all of Intermountain’s employees remain employed with Western Alliance in positions comparable to their positions with Intermountain and to pay severance to employees to whom such positions cannot be given. | |
10. Intermountain’s board of directors considered community and societal considerations, and Western Alliance’s commitment to local civic groups, charitable organizations, and the towns and cities in which it operates. | |
11. Intermountain’s board of directors considered the fact that the shareholders of Western Alliance would not be required to approve the merger agreement. |
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• | If the number of shares held by Intermountain shareholders who have made no election is sufficient to make up the shortfall in the number of shares of Intermountain common stock to be converted into shares of Western Alliance common stock, then all Intermountain shareholders who made a cash election with respect to some or all of their shares will receive cash for all of the shares with respect to which they made a cash election, and those shareholders who made no election will receive a combination of cash and Western Alliance common stock in whatever proportion is necessary to make up the shortfall. | |
• | If the number of shares held by Intermountain shareholders who have made no election is insufficient to make up the shortfall, then all of those shares will be converted into Western Alliance common stock and those Intermountain shareholders who made a cash election with respect to some or all of their shares will receive a combination of cash and Western Alliance common stock in whatever proportion is necessary to make up the shortfall. |
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• | the number of shares of Western Alliance common stock to be subject to the option immediately after the effective time of the merger will be equal to the product of the number of shares of Intermountain common stock subject to the option immediately before the merger, multiplied by 2.44. Any fractional shares of Western Alliance common stock resulting from this multiplication will be rounded down to the nearest whole share; and | |
• | the exercise price per share of Western Alliance common stock under the converted option immediately after the merger will be equal to the exercise price per share of Intermountain common stock under the option immediately before the merger divided by 2.44, provided that the exercise price will be rounded up to the nearest cent. |
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• | pay to the exchange agent in advance any transfer or other taxes required by reason of the issuance of a certificate or payment to a person other than the registered holder of the certificate surrendered, or | |
• | establish to the satisfaction of the exchange agent that the tax has been paid or is not payable. |
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• | the merger agreement and the merger are approved and adopted by the affirmative vote of the holders of at least a majority of the outstanding shares of Intermountain common stock entitled to vote at the special meeting; | |
• | all required regulatory approvals are obtained and remain in full force and effect, all statutory waiting periods related to these approvals have expired, and none of the regulatory approvals or statutory waiting periods contains a non-customary provision that materially alters the benefits for which Western Alliance bargained in the merger agreement; | |
• | the Registration Statement is declared effective by the SEC, and no stop order suspending the effectiveness of the Registration Statement is issued and no proceedings for that purpose are initiated or threatened by the SEC; and | |
• | no order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the merger or any of the other transactions contemplated by the merger agreement from taking place is in effect, and no statute, rule, regulation, order, injunction or decree is enacted, entered, promulgated or enforced by any governmental entity which prohibits, restricts or makes illegal the consummation of the merger. |
• | the representations and warranties of Intermountain contained in the merger agreement are true and correct in all material respects as of the date of the merger agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the closing date of the merger as though made on and as of the closing date; | |
• | Intermountain performs in all material respects all covenants and agreements contained in the merger agreement to be performed by Intermountain at or prior to the closing date; | |
• | Intermountain obtains the consents, approvals or waivers of each person whose consent or approval is required in order to permit the succession by Western Alliance and BankWest of Nevada pursuant to the merger and the bank merger, respectively, to any obligation, right or interest of Intermountain or Nevada First Bank under any loan or credit agreement, note, mortgage, indenture, lease, license or other agreement or instrument, except where the failure to obtain consents, approvals or waivers will not have a material adverse effect on Intermountain, Western Alliance, Nevada First Bank or BankWest of Nevada; | |
• | no changes, other than changes contemplated by the merger agreement, in the business, operations, condition (financial or otherwise), assets or liabilities of Intermountain (regardless of whether or not such events or changes are inconsistent with the representations and warranties given in the merger agreement) occur that individually or in the aggregate have or would reasonably be expected to have a material adverse effect on Intermountain; | |
• | Intermountain causes to be delivered to Western Alliance on the respective dates thereof “comfort letters” from McGladrey & Pullen, LLP, dated the date on which the proxy materials or last |
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amendment thereto are approved for use, and dated the date of the closing and addressed to Western Alliance and Intermountain, with respect to Intermountain’s financial data presented in the proxy materials; and | ||
• | that certain stockholders’ agreement dated June 15, 2001 by and among certain stockholders of Intermountain is terminated. |
• | the representations and warranties of Western Alliance contained in the merger agreement are true and correct in all material respects as of the date of the merger agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the closing date of the merger as though made on and as of the closing date; | |
• | Western Alliance performs in all material respects all covenants and agreements contained in the merger agreement required to be performed by it at or prior to the closing date; | |
• | the consent, approval or waiver of each person whose consent or approval is required in connection with the transactions contemplated by the merger agreement under any loan or credit agreement, note, mortgage, indenture, lease, license or other agreement or instrument to which Western Alliance is a party or is otherwise bound shall be obtained; | |
• | the shares of Western Alliance common stock to be issued in the merger are approved for listing on the NYSE; | |
• | no changes, other than changes contemplated by the merger agreement, in the business, operations, condition (financial or otherwise), assets or liabilities of Western Alliance (regardless of whether or not such events or changes are inconsistent with the representations and warranties given in the merger agreement) occur that individually or in the aggregate have or would reasonably be expected to have a material adverse effect on Western Alliance; and | |
• | Intermountain receives an opinion of counsel that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. |
• | declaring or paying any dividends or other distributions on its capital stock; | |
• | splitting, combining or reclassifying any of its capital stock; | |
• | repurchasing, redeeming or otherwise acquiring any shares of its capital stock or any securities convertible into or exercisable for any shares of its capital stock; | |
• | issuing or authorizing or proposing the issuance of any securities, other than the issuance of additional shares of its common stock upon the exercise or fulfillment of rights or options issued or existing under Intermountain’s stock option plan in accordance with their present terms; | |
• | amending its articles of incorporation or bylaws; | |
• | making capital expenditures aggregating in excess of $25,000; | |
• | entering into any new line of business; |
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• | acquiring an equity interest in the assets of other business organizations except in connection with foreclosures, settlements or troubled loan restructurings, or in the ordinary course of business consistent with prudent banking practices; | |
• | taking any action that may result in any of its representations and warranties contained in the merger agreement becoming untrue or in any of the applicable conditions contained in the merger agreement not being satisfied; | |
• | changing its methods of accounting in effect at December 31, 2004, except as required by changes in regulatory or generally accepted accounting principles; | |
• | adopting or amending any employment agreements between Intermountain or its subsidiaries and their employees and directors other than merit increases consistent with past business practices, not to exceed 5% of such employee’s base salary; | |
• | entering into, modifying or renewing any agreement or arrangement providing for the payment to any director, officer or employer of compensation or benefits; | |
• | hiring any new employee at an annual rate of compensation in excess of $75,000; | |
• | promoting any employee to a rank of vice president or more senior; | |
• | incurring any indebtedness for borrowed money or assuming the obligations of a third party, except for short-term borrowings with a maturity of six months or less in the ordinary course consistent with past practices; | |
• | selling, opening or closing any banking or other office; | |
• | making any equity investments in real estate, other than in connection with foreclosures or settlements in lieu of foreclosures or troubled loan restructurings, in the ordinary course of business consistent with past banking practices; | |
• | making any new loans or modifying the terms of any existing loans with any affiliated person of Intermountain; | |
• | incurring any deposit liabilities, other than in the ordinary course of business consistent with past practice; | |
• | purchasing any loans or selling, purchasing or leasing any real property other than consistent with past practices; | |
• | originating (a) any loans except in accordance with existing Intermountain lending policies and practices, (b) residential mortgage loans, (c) 30 year residential mortgage loans without interest rate, terms, appraisal, and underwriting do not make them immediately available for sale in the secondary market, (d) unsecured consumer loans in excess of $200,000, (e) commercial business loans in excess of $1,000,000 as to any loan or $1,000,000 in the aggregate as to related loans or loans to related persons, (f) commercial real estate first mortgage loans in excess of $1,000,000 as to any loan or $1,000,000 in the aggregate as to related loans or loans to related borrowers, or (g) modifications and/or extensions of any commercial business or commercial real estate loans in the amounts set forth in the preceding clauses (e) and (f) other than in the ordinary course of business consistent with past practice; | |
• | making any investments other than in overnight federal funds and U.S. Treasuries that have a maturity date that does not exceed three months; | |
• | selling or purchasing any mortgage loan servicing rights; | |
• | taking any actions that would prevent the transactions contemplated by the merger agreement from qualifying as a reorganization under section 368(a) of the Code; or | |
• | agreeing or committing to do any of the actions listed above. |
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• | not take any action that may delay the merger or that may result in any of the conditions under its control not being satisfied; and | |
• | file mutually acceptable proxy materials relating to the matters described in this proxy statement/ prospectus. |
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• | the proper organization and good standing of Intermountain and Nevada First Bank; | |
• | insurance of the Intermountain’s deposit accounts by the FDIC; | |
• | capitalization of Intermountain and Nevada First Bank and ownership of shares of Nevada First Bank; | |
• | existence of corporate power and authority of Intermountain and Nevada First Bank to execute, deliver and perform their various obligations under the transaction documents; | |
• | board approval of the merger agreement; | |
• | a listing of all consents and approvals required to complete the merger; | |
• | accurate disclosure of loan portfolio and timely filing of reports; | |
• | proper presentation of financial statements; | |
• | Intermountain’s filings with the FDIC comply in all material respects with applicable requirements; | |
• | no broker’s fees; | |
• | absence of any material adverse change in Intermountain; | |
• | absence of legal proceedings; | |
• | timely filing of tax returns and absence of tax claims; | |
• | existence of employee benefit plans and material compliance with applicable law; | |
• | existence of material contracts and their effectiveness; | |
• | absence of regulatory agreements with banking regulators; | |
• | material compliance with environmental law; | |
• | adequacy of loss reserves; |
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• | existence of properties and assets, absence of encumbrances, and existence of good title; | |
• | existence of insurance policies; | |
• | operations in material compliance with applicable laws; | |
• | existence of loans, their material compliance with applicable laws, proper organization of loan information, and proper perfection of security interests; | |
• | accuracy of information regarding Intermountain to be included in this document; | |
• | existence of satisfactory internal controls; | |
• | a listing of affiliates of Intermountain; | |
• | labor matters; | |
• | intellectual property matters; and | |
• | anti-takeover provisions inapplicable to the transactions contemplated by the merger agreement. |
• | the proper organization and good standing of Western Alliance and BankWest of Nevada; | |
• | capitalization of Western Alliance and ownership of shares of BankWest of Nevada; | |
• | existence of corporate power and authority of Western Alliance and BankWest of Nevada to execute, deliver and perform their obligations under the transaction documents; | |
• | a listing of all regulatory consents and approvals to complete the merger; | |
• | absence of material regulatory agreements or legal proceedings; | |
• | that the information contained in the various consolidated financial statements of Western Alliance and its subsidiaries delivered to Intermountain is true, correct and complete and fairly presents consolidated operations results and financial condition of Western Alliance and its subsidiaries; | |
• | accuracy of information regarding Western Alliance to be included in this document; | |
• | that except as set forth in Western Alliance’s quarterly report on Form 10-Q for the period ended September 30, 2005 or in any other filing made by Western Alliance with the SEC since December 31, 2004, neither Western Alliance nor any of its subsidiaries has incurred any material liability, except as contemplated by the merger agreement or in the ordinary course of business consistent with past practices, and no event has occurred which has had, or is likely to have, a material adverse effect (as defined in the merger agreement) on Western Alliance; and | |
• | since September 30, 2005, Western Alliance and its subsidiaries have carried on their respective businesses in the ordinary and usual course consistent with past practice. |
• | by mutual written consent of Western Alliance and Intermountain; | |
• | by Western Alliance or Intermountain upon written notice if 30 days pass after any required regulatory approval is denied or regulatory application is withdrawn at a regulator’s request unless action is taken during the 30 day period for a rehearing or to file an amended application; | |
• | by Western Alliance or Intermountain if the merger has not taken place on or before July 31, 2006, unless the failure to complete the merger by that date is due to the terminating party’s failure to perform or observe its covenants and agreements in the merger agreement; |
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• | by Western Alliance or Intermountain if Intermountain’s shareholders do not approve the merger agreement due to failure to obtain the required vote at a duly held meeting of shareholders; | |
• | by either Western Alliance or Intermountain (provided that the terminating party is not then in breach of any representation, warranty, covenant or other agreement contained in the merger agreement that, individually or in the aggregate, would give the other party the right to terminate the merger agreement) if there shall have been a breach of any of the representations or warranties set forth in the merger agreement on the part of the other party, if such breach, individually or in the aggregate, has had or is likely to have a material adverse effect on the breaching party, and such breach is not curable or shall not have been cured within 30 days following receipt by the breaching party of written notice of such breach from the other party thereto or such breach, by its nature, cannot be cured prior to the closing; | |
• | by either Western Alliance or Intermountain (provided that the terminating party is not then in breach of any representation, warranty, covenant or other agreement contained in the merger agreement that, individually or in the aggregate, would give the other party the right to terminate the merger agreement) if there shall have been a material breach of any of the covenants or agreements set forth in the merger agreement on the part of the other party, and such breach is not curable or shall not have been cured within 30 days following receipt by the breaching party of written notice of such breach from the other party thereto or such breach, by its nature, cannot be cured prior to the closing; | |
• | by Western Alliance, if Intermountain fails to call and hold within 60 days of the effective date of this registration statement a special meeting of Intermountain shareholders to approve the merger agreement, fails to recommend that Intermountain shareholders approve the merger and merger agreement, or fails to oppose a competing third party proposal; and | |
• | by Intermountain, if Intermountain has complied with its obligations regarding competing proposals and has given written notice to Western Alliance of its desire to enter into a superior competing transaction (as defined in the merger agreement) and complied with the expense and breakup fee provisions described above. |
• | amend the merger agreement except as provided below; | |
• | extend the time for performance of any of the obligations or other acts of the other party; | |
• | waive any inaccuracies in the representations and warranties contained in the merger agreement or in any document delivered under the merger agreement; or | |
• | waive compliance with any of the agreements or conditions contained in the merger agreement. |
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• | Before the vote on the adoption of the merger agreement occurs at the shareholder meeting, each shareholder who wishes to assert appraisal rights must give written notice to William Bullard, Vice President of Intermountain, before the vote is taken, of the shareholder’s intent to demand payment for his or her shares if the merger takes place and shall not vote or cause or permit to be voted his or her shares in favor of the proposed merger. Neither voting against, abstaining from voting, or failing to vote on the adoption of the merger agreement will constitute notice of intent to demand payment or demand for payment of fair value within the meaning of Section 92A.420. | |
• | A dissenting shareholder may NOT vote for approval of the merger agreement. If an Intermountain shareholder returns a signed proxy but does not specify in the proxy a vote against adoption of the merger agreement or an instruction to abstain, the proxy will be voted FOR adoption of the merger agreement, which will have the effect of waiving the rights of that Intermountain shareholder to have |
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his shares purchased at fair value. Abstaining from voting or voting against the adoption of the merger agreement will NOT constitute a waiver of a shareholder’s rights. |
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• | there are no adverse Federal or state income tax consequences to Intermountain shareholders as a result of the modification; | |
• | the consideration to be paid to the holders of shares of Intermountain common stock under the merger agreement is not changed in kind or value or reduced in amount; and | |
• | the modification will not delay materially or jeopardize receipt of any required regulatory approvals or other consents and approvals relating to the completion of the merger. |
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• | a U.S. citizen or resident, as determined for U.S. federal income tax purposes; | |
• | a corporation created or organized in or under the laws of the United States or any political subdivision thereof; | |
• | an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or | |
• | a trust whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust. |
• | tax-exempt organizations; | |
• | mutual funds; | |
• | dealers in securities or foreign currencies; | |
• | banks or other financial institutions; | |
• | insurance companies; | |
• | non-United States persons; | |
• | shareholders who acquired shares of Intermountain’s common stock through the exercise of options or otherwise as compensation or through a qualified retirement plan; | |
• | shareholders who are subject to the alternative minimum tax; | |
• | shareholders who hold shares of Intermountain’s common stock as part of a straddle, hedge, constructive sale or conversion transaction; | |
• | traders in securities who elect to apply amark-to-market method of accounting; and | |
• | holders that do not hold their Intermountain common stock as capital assets. |
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Percentage of | ||||||||
Number of Shares | Common | |||||||
Beneficial Owner(1) | Beneficially Owned | Stock | ||||||
Paul Baker | 255,055 | 1.12 | % | |||||
Bruce Beach | 81,168 | * | ||||||
William S. Boyd | 6,000 | * | ||||||
Gary Cady | 116,563 | * | ||||||
Duane Froeschle | 209,311 | * | ||||||
Dale Gibbons | 88,700 | * | ||||||
Steve Hilton | 245,055 | 1.07 | % | |||||
Marianne Boyd Johnson | 4,606,331 | 20.19 | % | |||||
James Lundy | 170,295 | * | ||||||
Cary Mack | 105,697 | * | ||||||
Linda Mahan | 61,484 | * | ||||||
Arthur Marshall | 231,996 | 1.02 | % | |||||
Todd Marshall | 613,839 | 2.69 | % | |||||
M. Nafees Nagy | 843,252 | 3.70 | % | |||||
James Nave | 512,244 | 2.25 | % | |||||
Edward Nigro | 263,660 | 1.16 | % | |||||
Robert Sarver | 3,552,021 | 14.90 | % | |||||
Donald Snyder | 209,371 | * | ||||||
Merrill Wall | 67,000 | * | ||||||
Larry Woodrum | 154,800 | * | ||||||
All directors and executive officers as a group (20 persons) | 12,393,842 | 51.14 | % |
* | Less than one percent |
(1) | In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a person is deemed to be the beneficial owner, for purposes of this table, of any shares of common stock if such person has or shares voting power and/or investment power with respect to the shares, or has a right to acquire beneficial ownership at any time within 60 days from December 31, 2005. As used herein, “voting power” includes the power to vote or direct the voting of shares and “investment power” includes the power to dispose or direct the disposition of shares. |
The table includes, with respect to Mr. Sarver, 30,000 shares held by Mr. Sarver’s spouse over which he disclaims all beneficial ownership. The table also includes the following: 263,950 shares subject to outstanding options exercisable within 60 days after December 31, 2005 and 1,160,672 shares subject to outstanding warrants exercisable within 60 days after December 31, 2005. Shares subject to outstanding stock options and warrants, which an individual has the right to acquire within 60 days after December 31, 2005, are deemed to be outstanding for the purpose of computing the percentage of |
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outstanding securities of the class of stock owned by such individual or any group including such individual only. Beneficial ownership may be disclaimed as to certain of the securities. | |
Outstanding options reflected in the table are held as follows: Mr. Baker, 2,800 shares; Mr. Beach, 1,600 shares; Mr. Cady 21,300 shares; Mr. Froeschle 31,500 shares; Mr. Gibbons, 23,800 shares; Mr. Hilton, 2,800 shares; Ms. Johnson, 2,800 shares; Mr. Lundy, 46,500 shares; Mr. Mack, 2,200 shares; Ms. Mahan, 29,250 shares; Mr. A. Marshall, 2,800 shares; Mr. T. Marshall, 2,800 shares; Dr. Nagy, 600 shares; Dr. Nave, 2,800 shares; Mr. Nigro, 2,800 shares; Mr. Sarver, 15,000 shares; Mr. Snyder 2,800 shares; Mr. Woodrum, 54,800 shares; and Mr. Wall 15,000 shares. Outstanding warrants reflected in the table are as follows: Mr. Froeschle 44,381 shares; Mr. Hilton, 68,274 shares; Mr. Lundy, 34,137 shares; and Mr. Sarver, 1,013,880 shares. |
(2) | The business address of each of the executive officers and directors is 2700 West Sahara Avenue, Las Vegas, Nevada 89102, Telephone: (702) 248-4200. |
Percentage of | ||||||||||||
Number of Shares of | Percentage of | Western Alliance | ||||||||||
Intermountain Voting | Intermountain | Common Stock | ||||||||||
Common Stock | Voting Common | Owned after the | ||||||||||
Beneficial Owner(1) | Beneficially Owned | Stock | Merger(2) | |||||||||
William Bullard | 118,519 | (3) | 9.1 | % | 1.2% | |||||||
Dipak K. Desai, M.D. | 122,202 | (4) | 9.4 | % | 1.5% | |||||||
Mark Fine | 46,127 | 3.5 | % | * | ||||||||
Timothy Herbst | 48,798 | (5) | 3.7 | % | * | |||||||
K. James King | 40,314 | (6) | 3.1 | % | * | |||||||
Thomas Land | 114,086 | (7) | 8.7 | % | 1.3% | |||||||
Michael Luce | 52,169 | (8) | 4.0 | % | * | |||||||
Sandra Mallin | 4,426 | * | * | |||||||||
Ned Martin | 1,103 | * | * | |||||||||
Arvind A. Menon | 34,199 | (9) | 2.3 | % | * | |||||||
Hugh G. Merriman, M.D. | 34,859 | 2.7 | % | * | ||||||||
James E. Rogers | 111,422 | (10) | 9.3 | % | 2.1% | |||||||
Perry Rogers | 9,759 | (11) | * | * | ||||||||
Frank Schreck, Jr. | 48,802 | 3.7 | % | * | ||||||||
Harvey Whittemore | 25,000 | 1.9 | % | * | ||||||||
William C. Wortman | 48,802 | 3.7 | % | * | ||||||||
All Current Directors and Executive Officers as a group (16 persons) | 860,587 | (12) | 65.9 | % | 9.8% | |||||||
Other Principal Shareholders: | ||||||||||||
Andre Agassi | 120,961 | (13) | 9.3 | % | 1.4% |
* | Less Than One Percent |
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Number of Shares of | ||||||||
Intermountain | Percentage of | |||||||
Non-Voting Common | Intermountain | |||||||
Stock Beneficially | Non-Voting | |||||||
Beneficial Owner(1) | Owned | Common Stock | ||||||
Andre Agassi | 24,015 | 13.3 | % | |||||
Dipak K. Desai, M.D. | 32,331 | 17.9 | % | |||||
Maloof Companies | 14,910 | 8.3 | % | |||||
James E. Rogers | 109,187 | (10) | 60.5 | % |
(1) | The business address of each of the executive officers and directors is 777 N. Rainbow Boulevard, Las Vegas, Nevada 89107, Telephone: (702) 310-4000. | |
(2) | Includes number of Intermountain voting and non-voting common stock. Assumes 100% stock election by each individual and 60% stock election by all Intermountain stockholders on an aggregate basis. | |
(3) | Includes 118,519 shares held by Fertitta Enterprises, of which Mr. Bullard is Chief Financial Officer. | |
(4) | Includes 22,601 shares held by Dr. Desai directly, 77,401 shares held in the name of the Hari Om Family Partnership, an entity controlled by Dr. Desai, 12,000 shares held in the name of Ravi Patel, Uniform Trust for Minors Act, of which Dr. Desai is a trustee, and 10,200 shares held in the name of Lina Multani. Does not include 18,289 and 14,042 shares of non-voting common stock held by Dr. Desai and the Hari Om Family Partnership, respectively. | |
(5) | Includes 16,268 shares held by Mr. Herbst, 16,265 shares held by Edward Herbst, Mr. Herbst’s brother and 16,265 shares held by Troy Herbst, Mr. Herbst’s brother. | |
(6) | Includes 2,114 shares held by Mr. King directly, and 38,200 shares held by R&R Partners, of which Mr. King is an affiliate. | |
(7) | Includes 63 shares held by Mr. Thomas Land directly and 114,023 shares held by the Maloof companies, of which Mr. Land is the Chief Financial Officer. Does not include 14,910 shares of non-voting common stock held by the Maloof companies. | |
(8) | Includes 3,367 shares held by Mr. Luce directly, and 48,802 shares held by The Walters Group, of which Mr. Luce is President. | |
(9) | Includes 3,600 shares which may be acquired pursuant to the exercise of options under the Intermountain option plan. Options to acquire 3,600 shares at $17 per share expire on December 16, 2013. Percentage calculation assumes all 3,600 shares acquired upon exercise of the options. |
(10) | Includes 4,689 shares of voting common stock held by Mr. James Rogers directly, and 101,848 shares of voting common stock held in the name of Sunbelt Communications Co., a corporation controlled by Mr. Rogers. Includes 4,885 shares held by Cheryl Purdue as custodian for Maren Renee Plant, under the California Transfers to Minors Act. Maren Renee Plant is Mr. Rogers’ granddaughter. Does not include 109,187 shares of non-voting common stock held by Sunbelt Communications Co. Also, the shares beneficially owned by Mr. Perry Rogers are attributable to James E. Rogers for the purposes of the Change in Bank Control Act of 1978, as amended, and are attributable to Sunbelt Communications Co. for the purposes of the Bank Holding Company Act of 1956, as amended. See footnote (11). |
(11) | Includes 4,182 shares held by Mr. Perry Rogers directly, and 5,577 shares held by Mr. Perry Rogers as trustee for his daughter Hanna Rogers. Also, under the Change in Bank Control Act of 1978, as amended, the 4,531 shares directly owned by James E. Rogers, the 98,418 shares owned by Sunbelt Communications Co., a company controlled by Mr. James E. Rogers, and the 4,885 shares held by Cheryl Purdue as custodian for Maren Renee Plant are attributable to Mr. Perry Rogers. See footnote (10). |
(12) | Includes shares (and shares acquirable upon exercise of options) owned by the current members of the regular board and the executive officers, as a group. |
(13) | Includes 102,333 held by Mr. Agassi and 18,628 shares owned by Phil Agassi, Mr. Agassi’s brother, which under the Change in Bank control Act of 1978, as amended, are attributable to Mr. Agassi. Does not include 24,015 shares of non-voting common stock held by Mr. Andre Agassi. |
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• | the effect on employees, suppliers and customers; | |
• | the economy of Nevada and the nation; | |
• | the effect on the communities in which offices of the corporation are located; and | |
• | the long-term as well as short-term interests of the corporation and its stockholders, including the possibility that these interests may be better served by continued independence. |
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Western Alliance | Intermountain | |||
Shareholder Action by Written Consent | Shareholders may not act by written consent in lieu of a meeting. | Shareholders may act without a meeting by written consent of the holders of a majority in interest of the voting power of the company. | ||
Types of Shares | There is currently only one class of capital stock, common stock; the board of directors has the authority, without further action by the shareholders, to issue preferred stock. | There are four series of common stock: Voting Common Stock, Non-Voting Common Stock, Series A Voting Common Stock, and Series A Non-Voting Common Stock. The Series A Voting and Non-Voting Stock include a non-detachable right, exercisable upon notice by the company, to purchase additional shares of common stock. In addition, the company is authorized to issue from time to time additional shares, the class, number of shares, designation, rights, preferences, privileges and restrictions of which will be determined by the board of directors. | ||
Special Shareholder Meetings | A special meeting of shareholders may be called only by the chairman of the board or by the board of directors. | A special meeting of shareholders may be called by the chairman of the board, by the board of directors, or by any one or more shareholders owning in the aggregate not less than 25% of the voting stock of the company. | ||
Undesignated Preferred Stock | No shares of preferred stock are issued and outstanding, and there is no current intent to issue preferred stock in the immediate future. The board of directors has the authority, without further | No shares of preferred stock are issued and outstanding. The company is authorized to issue from time to time additional shares, the class, number of shares, designation, rights, |
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Western Alliance | Intermountain | |||
action by the stockholders, to issue from time to time the undesignated preferred stock in one or more series and to fix the number of shares, designations, preferences, powers, and relative, participating, optional or other special rights and the qualifications or restrictions thereof. | preferences, privileges and restrictions of which will be determined by the board of directors. | |||
Amendment of Articles of Incorporation and Bylaws | Amendment of the articles of incorporation requires the approval by holders of at least two thirds of the outstanding shares of each class entitled to vote as a separate class on such matters. Amendment of the bylaws requires the approval by holders of at least 80% of the voting power of the issued and outstanding shares of capital stock. | The articles of incorporation may be amended to the extent and in the manner prescribed by the laws of the State of Nevada. The bylaws may be amended by the vote or written consent of shareholders entitled to exercise a majority of the voting power of the company. Subject to this right, the bylaws may be amended by the board of directors. | ||
Share Warrants | As of December 31, 2005, there were warrants outstanding to purchase 1,160,672 shares of common stock, at a per share exercise price of $7.62, all of which are exercisable. The warrants expire on June 12, 2010. | There are currently no warrants outstanding. | ||
Anti-Takeover Provisions | • Board of directors has the authority to issue undesignated preferred stock. • Special meetings of shareholders may be called only by the chairman of the board or by the board of directors. • Shareholders may not act by written consent in lieu of a meeting. • The board of directors is divided into three classes, with one class being elected each year by the shareholders. Once elected, directors may be removed only by the affirmative vote of at least 80% of the outstanding common stock. | • Board of directors has the authority to issue undesignated preferred stock. • Directors may be removed only by vote of at least2/3 (two- thirds) of the issued and outstanding voting shares of the company at a meeting of the shareholders or by unanimous written consent. |
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Western Alliance | Intermountain | |||
• Amendment of the articles of incorporation requires the approval by holders of at least two-thirds of the outstanding shares of each class entitled to vote as a separate class on such matters. • Amendment of the bylaws requires the approval by holders of at least 80% of the voting power of the issued and outstanding shares of capital stock. |
Market Price ($) | ||||||||
For the Quarter Ended | High | Low | ||||||
September 30, 2005 | 31.50 | 25.75 | ||||||
December 31, 2005 | 30.01 | 24.39 |
136
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137
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138
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Audited: | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
Unaudited: | ||||
F-35 | ||||
F-36 | ||||
F-37 | ||||
F-38 | ||||
F-39 |
F-1
Table of Contents
/s/McGladrey & Pullen, llp | |
McGLADREY & PULLEN, LLP |
F-2
Table of Contents
2004 | 2003 | ||||||||||
($ in thousands, except per | |||||||||||
share amounts) | |||||||||||
ASSETS | |||||||||||
Cash and due from banks | $ | 92,282 | $ | 61,893 | |||||||
Federal funds sold | 23,115 | 4,015 | |||||||||
Cash and cash equivalents | 115,397 | 65,908 | |||||||||
Securities held to maturity (approximate fair value $128,984 and $131,572, respectively) | 129,549 | 132,294 | |||||||||
Securities available for sale | 659,073 | 583,684 | |||||||||
Gross loans, including net deferred loan fees | 1,188,535 | 733,078 | |||||||||
Less: Allowance for loan losses | (15,271 | ) | (11,378 | ) | |||||||
Loans, net | 1,173,264 | 721,700 | |||||||||
Premises and equipment, net | 29,364 | 18,038 | |||||||||
Bank owned life insurance | 26,170 | 24,967 | |||||||||
Investment in Federal Home Loan Bank stock | 15,097 | 12,628 | |||||||||
Accrued interest receivable | 8,359 | 6,389 | |||||||||
Deferred tax assets, net | 5,949 | 4,778 | |||||||||
Goodwill | 3,946 | — | |||||||||
Other intangible assets, net of accumulated amortization of $183 and $0, respectively | 1,440 | 673 | |||||||||
Other assets | 9,241 | 5,714 | |||||||||
Total assets | $ | 2,176,849 | $ | 1,576,773 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Liabilities | |||||||||||
Non-interest bearing demand deposits | $ | 749,550 | $ | 441,160 | |||||||
Interest bearing deposits: | |||||||||||
Demand | 103,723 | 61,797 | |||||||||
Savings and money market | 665,425 | 415,308 | |||||||||
Time, $100 and over | 219,451 | 160,397 | |||||||||
Other time | 17,887 | 15,984 | |||||||||
1,756,036 | 1,094,646 | ||||||||||
Federal Home Loan Bank advances and other borrowings | |||||||||||
One year or less | 185,494 | 241,261 | |||||||||
Over one year | 63,700 | 97,400 | |||||||||
Junior subordinated debt | 30,928 | 30,928 | |||||||||
Due to broker for pending investment purchases | — | 9,750 | |||||||||
Accrued interest payable and other liabilities | 7,120 | 5,337 | |||||||||
Total liabilities | 2,043,278 | 1,479,322 | |||||||||
Commitments and Contingencies | |||||||||||
Stockholders’ Equity | |||||||||||
Common stock, par value $.0001; shares authorized 50,000,000; shares issued and outstanding 2004: 18,249,554; 2003:16,681,273 | 2 | 2 | |||||||||
Additional paid-in capital | 80,459 | 62,533 | |||||||||
Retained earnings | 58,216 | 38,159 | |||||||||
Accumulated other comprehensive loss — net unrealized loss on available for sale securities | (5,106 | ) | (3,243 | ) | |||||||
Total stockholders’ equity | 133,571 | 97,451 | |||||||||
Total liabilities and stockholders’ equity | $ | 2,176,849 | $ | 1,576,773 | |||||||
F-3
Table of Contents
2004 | 2003 | 2002 | ||||||||||||
($ in thousands, except per | ||||||||||||||
share amounts) | ||||||||||||||
Interest income on: | ||||||||||||||
Loans, including fees | $ | 59,311 | $ | 36,792 | $ | 31,290 | ||||||||
Securities — taxable | 30,373 | 15,938 | 6,616 | |||||||||||
Securities — nontaxable | 341 | 346 | 354 | |||||||||||
Dividends — taxable | 537 | 169 | 63 | |||||||||||
Federal funds sold and other | 293 | 578 | 794 | |||||||||||
Total interest income | 90,855 | 53,823 | 39,117 | |||||||||||
Interest expense on: | ||||||||||||||
Deposits | 12,123 | 8,158 | 7,394 | |||||||||||
Federal Home Loan Bank advances and other borrowings, short-term | 4,472 | 1,671 | 354 | |||||||||||
Federal Home Loan Bank advances and other borrowings, long-term | 1,586 | 1,475 | 1,085 | |||||||||||
Junior subordinated debt | 1,539 | 1,494 | 938 | |||||||||||
Total interest expense | 19,720 | 12,798 | 9,771 | |||||||||||
Net interest income | 71,135 | 41,025 | 29,346 | |||||||||||
Provision for loan losses | 3,914 | 5,145 | 1,587 | |||||||||||
Net interest income after provision for loan losses | 67,221 | 35,880 | 27,759 | |||||||||||
Other income: | ||||||||||||||
Trust and investment advisory services | 2,896 | — | — | |||||||||||
Service charges | 2,333 | 1,998 | 1,644 | |||||||||||
Income from bank owned life insurance | 1,203 | 967 | — | |||||||||||
Mortgage loan pre-underwriting fees | 435 | 792 | 719 | |||||||||||
Investment securities gains (losses), net | 19 | (265 | ) | 609 | ||||||||||
Other | 1,840 | 778 | 963 | |||||||||||
8,726 | 4,270 | 3,935 | ||||||||||||
Other expense: | ||||||||||||||
Salaries and employee benefits | 25,590 | 15,615 | 9,921 | |||||||||||
Occupancy | 7,309 | 4,820 | 3,794 | |||||||||||
Customer service | 1,998 | 752 | 831 | |||||||||||
Advertising, public relations and business development | 1,672 | 989 | 687 | |||||||||||
Legal, professional and director fees | 1,405 | 1,111 | 775 | |||||||||||
Correspondent banking service charges and wire transfer costs | 1,260 | 512 | 291 | |||||||||||
Audits and exams | 935 | 435 | 330 | |||||||||||
Supplies | 838 | 619 | 350 | |||||||||||
Data processing | 641 | 466 | 324 | |||||||||||
Telephone | 578 | 424 | 191 | |||||||||||
Insurance | 540 | 305 | 209 | |||||||||||
Travel and automobile | 467 | 261 | 131 | |||||||||||
Organizational costs | — | 604 | 461 | |||||||||||
Other | 1,696 | 377 | 755 | |||||||||||
44,929 | 27,290 | 19,050 | ||||||||||||
Income before income taxes | 31,018 | 12,860 | 12,644 | |||||||||||
Income tax expense | 10,961 | 4,171 | 4,235 | |||||||||||
Net income | $ | 20,057 | $ | 8,689 | $ | 8,409 | ||||||||
Earnings per share: | ||||||||||||||
Basic | $ | 1.17 | $ | 0.61 | $ | 0.79 | ||||||||
Diluted | $ | 1.09 | $ | 0.59 | $ | 0.78 | ||||||||
F-4
Table of Contents
Accumulated | ||||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||||
Common Stock | Additional | Comprehensive | ||||||||||||||||||||||||||||||||
Comprehensive | Paid-In | Treasury | Retained | Income | ||||||||||||||||||||||||||||||
Description | Income | Shares Issued | Amount | Capital | Stock | Earnings | (Loss) | Total | ||||||||||||||||||||||||||
($ in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2001 | 3,616,929 | $ | 3,617 | $ | 10,621 | $ | (2,372 | ) | $ | 24,111 | $ | (114 | ) | $ | 35,863 | |||||||||||||||||||
Stock options exercised | 17,798 | 18 | 75 | — | — | — | 93 | |||||||||||||||||||||||||||
Effect of three-for-one stock split | 7,269,454 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Effect of change in par value | — | (3,634 | ) | 3,634 | — | — | — | — | ||||||||||||||||||||||||||
Issuance of 3,004,098 shares of common stock at $7.03 per share and 1,502,049 stock warrants at $.59 per warrant, net of offering costs of $636 | 3,004,098 | — | 21,363 | — | — | — | 21,363 | |||||||||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||||||||||
Net income | $ | 8,409 | — | — | — | — | 8,409 | — | 8,409 | |||||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||||||||||||||
Unrealized holding gains on securities available for sale arising during the period, net of taxes of $1,090 | 2,116 | |||||||||||||||||||||||||||||||||
Less: reclassification adjustment for gains included in net income, net of taxes of $207 | (402 | ) | ||||||||||||||||||||||||||||||||
Net unrealized holding gains | 1,714 | — | — | — | — | — | 1,714 | 1,714 | ||||||||||||||||||||||||||
$ | 10,123 | |||||||||||||||||||||||||||||||||
Balance, December 31, 2002 | 13,908,279 | 1 | 35,693 | (2,372 | ) | 32,520 | 1,600 | 67,442 | ||||||||||||||||||||||||||
Stock options exercised, including tax benefit of $256 | 108,042 | — | 434 | — | — | — | 434 | |||||||||||||||||||||||||||
Issuance of 711,310 shares of common stock $7.03 per share, net of offering costs of $116 | 711,310 | — | 4,884 | — | — | — | 4,884 | |||||||||||||||||||||||||||
Issuance of 2,297,560 shares of common stock at $9 per share, net of offering costs of $55 | 2,297,560 | 1 | 20,622 | — | — | — | 20,623 | |||||||||||||||||||||||||||
Issuance of 100,000 shares of common stock at $9 per share in connection with merger | 100,000 | — | 900 | — | — | — | 900 | |||||||||||||||||||||||||||
Treasury stock purchased at $9 per share (75,338 shares) | — | — | — | (678 | ) | — | — | (678 | ) | |||||||||||||||||||||||||
Retirement of treasury stock | (443,918 | ) | — | — | 3,050 | (3,050 | ) | — | — | |||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||
Net income | $ | 8,689 | — | — | — | — | 8,689 | — | 8,689 | |||||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||||||||||||||
Unrealized holding losses on securities available for sale arising during the period, net of taxes of $2,602 | (5,018 | ) | ||||||||||||||||||||||||||||||||
Less reclassification adjustment for losses included in net income, net of taxes of $90 | 175 | |||||||||||||||||||||||||||||||||
Net unrealized holding losses | (4,843 | ) | — | — | — | — | — | (4,843 | ) | (4,843 | ) | |||||||||||||||||||||||
$ | 3,846 | |||||||||||||||||||||||||||||||||
Balance, December 31, 2003 | 16,681,273 | 2 | 62,533 | — | 38,159 | (3,243 | ) | 97,451 | ||||||||||||||||||||||||||
Stock options exercised | 97,800 | — | 415 | — | — | — | 415 | |||||||||||||||||||||||||||
Stock warrants exercised | 20,481 | — | 156 | — | — | — | 156 | |||||||||||||||||||||||||||
Issuance of 1,250,000 shares of common stock at $12 per share, net of offering costs of $45 | 1,250,000 | — | 14,955 | — | — | — | 14,955 | |||||||||||||||||||||||||||
Issuance of 200,000 shares of common stock at $12 per share, in connection with merger | 200,000 | — | 2,400 | — | — | — | 2,400 | |||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||
Net income | $ | 20,057 | — | — | — | — | 20,057 | — | 20,057 | |||||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||||||||||||||
Unrealized holding losses on securities available for sale arising during the period, net of taxes of $1,096 | (1,850 | ) | ||||||||||||||||||||||||||||||||
Less reclassification adjustment for gains included in net income, net of taxes of $6 | (13 | ) | ||||||||||||||||||||||||||||||||
Net unrealized holding losses | (1,863 | ) | — | — | — | — | — | (1,863 | ) | (1,863 | ) | |||||||||||||||||||||||
$ | 18,194 | |||||||||||||||||||||||||||||||||
Balance, December 31, 2004 | 18,249,554 | $ | 2 | $ | 80,459 | $ | — | $ | 58,216 | $ | (5,106 | ) | $ | 133,571 | ||||||||||||||||||||
F-5
Table of Contents
2004 | 2003 | 2002 | |||||||||||||
($ in thousands) | |||||||||||||||
Cash Flows from Operating Activities: | |||||||||||||||
Net income | $ | 20,057 | $ | 8,689 | $ | 8,409 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 2,629 | 1,804 | 1,651 | ||||||||||||
Net amortization of securities premiums | 3,698 | 2,937 | 1,310 | ||||||||||||
Tax benefit from exercise of stock options | — | 256 | — | ||||||||||||
Stock dividends received, FHLB stock | (536 | ) | (167 | ) | (63 | ) | |||||||||
Provision for loan losses | 3,914 | 5,145 | 1,587 | ||||||||||||
Deferred taxes | (69 | ) | (1,470 | ) | (223 | ) | |||||||||
(Increase) in accrued interest receivable | (1,970 | ) | (2,811 | ) | (1,316 | ) | |||||||||
(Increase) in bank-owned life insurance | (1,203 | ) | (967 | ) | — | ||||||||||
(Increase) in other assets | (844 | ) | (2,732 | ) | (1,234 | ) | |||||||||
Increase in accrued interest payable and other liabilities | 1,627 | 1,686 | 528 | ||||||||||||
Other, net | (29 | ) | 326 | (637 | ) | ||||||||||
Net cash provided by operating activities | 27,274 | 12,696 | 10,012 | ||||||||||||
Cash Flows from Investing Activities: | |||||||||||||||
Purchases of securities held to maturity | (32,706 | ) | (121,192 | ) | (4,044 | ) | |||||||||
Proceeds from maturities of securities held to maturity | 35,241 | 11,416 | 4,492 | ||||||||||||
Purchases of securities available for sale | (441,986 | ) | (506,246 | ) | (249,777 | ) | |||||||||
Proceeds from maturities of securities available for sale | 305,908 | 102,051 | 28,714 | ||||||||||||
Proceeds from the sale of securities available for sale | 41,775 | 30,051 | 69,117 | ||||||||||||
Net cash (paid) received in settlement of acquisition | (2,177 | ) | 246 | — | |||||||||||
Purchase of Federal Home Loan Bank stock | (1,933 | ) | (10,908 | ) | (737 | ) | |||||||||
Net increase in loans made to customers | (455,457 | ) | (268,828 | ) | (57,997 | ) | |||||||||
Purchase of premises and equipment | (13,899 | ) | (7,071 | ) | (1,605 | ) | |||||||||
Purchase of bank-owned life insurance | — | (24,000 | ) | — | |||||||||||
Net cash used in investing activities | (565,234 | ) | (794,481 | ) | (211,837 | ) | |||||||||
Cash Flows from Financing Activities: | |||||||||||||||
Net increase in deposits | 661,390 | 374,342 | 170,950 | ||||||||||||
Proceeds from issuance of junior subordinated debt | — | — | 15,000 | ||||||||||||
Net (repayments) proceeds from borrowings | (89,467 | ) | 288,661 | 50,000 | |||||||||||
Proceeds from exercise of stock options and stock warrants | 571 | 178 | 93 | ||||||||||||
Proceeds from stock issuance | 14,955 | 25,507 | 21,364 | ||||||||||||
Repurchase of treasury stock | — | (678 | ) | — | |||||||||||
Net cash provided by financing activities | 587,449 | 688,010 | 257,407 | ||||||||||||
Increase (decrease) in cash and cash equivalents | 49,489 | (93,775 | ) | 55,582 | |||||||||||
Cash and Cash Equivalents, beginning of year | 65,908 | 159,683 | 104,101 | ||||||||||||
Cash and Cash Equivalents, end of year | $ | 115,397 | $ | 65,908 | $ | 159,683 | |||||||||
Supplemental Disclosure of Cash Flow Information | |||||||||||||||
Cash payments for interest | $ | 19,601 | $ | 11,675 | $ | 9,391 | |||||||||
Cash payments for income taxes | $ | 10,129 | $ | 4,855 | $ | 4,416 | |||||||||
Supplemental Disclosure of Noncash Investing and Financing Activities | |||||||||||||||
Stock issued in connection with acquisitions (Note 2) | $ | 2,400 | $ | 900 | $ | — | |||||||||
Securities transferred from available for sale to held to maturity | $ | — | $ | 16,862 | $ | — | |||||||||
Purchase of available for sale securities pending settlement | $ | — | $ | 9,750 | $ | — | |||||||||
Retirement of treasury stock | $ | — | $ | 3,050 | $ | — |
F-6
Table of Contents
Note 1. | Nature of Business and Summary of Significant Accounting Policies |
Nature of business |
Use of estimates in the preparation of financial statements |
Principles of consolidation |
Cash and cash equivalents |
Securities |
F-7
Table of Contents
Loans |
F-8
Table of Contents
Interest and fees on loans |
Transfers of financial assets |
Bank owned life insurance |
Federal Home Loan Bank stock |
F-9
Table of Contents
Premises and equipment |
Years | ||||
Bank premises | 31 | |||
Equipment and furniture | 5-10 | |||
Leasehold improvements | 6-10 |
Organization andstart-up costs |
Other intangible assets |
Goodwill |
Income taxes |
Stock compensation plans |
F-10
Table of Contents
2004 | 2003 | 2002 | |||||||||||
Net income: | |||||||||||||
As reported | $ | 20,057 | $ | 8,689 | $ | 8,409 | |||||||
Deduct total stock-based employee compensation expense determined under fair value based method for all awards | (696 | ) | (440 | ) | (87 | ) | |||||||
Related tax benefit for nonqualified stock options | 33 | 9 | — | ||||||||||
Pro forma | $ | 19,394 | $ | 8,258 | $ | 8,322 | |||||||
Earnings per share: | |||||||||||||
Basic — as reported | $ | 1.17 | $ | 0.61 | $ | 0.79 | |||||||
Basic — pro forma | 1.13 | 0.58 | 0.78 | ||||||||||
Diluted — as reported | 1.09 | 0.59 | 0.78 | ||||||||||
Diluted — pro forma | 1.05 | 0.56 | 0.77 |
2004 | 2003 | 2002 | ||||||||||
Expected life in years | 7 | 7 | 7 | |||||||||
Risk-free interest rate | 3.93 | % | 3.58 | % | 3.78 | % | ||||||
Dividends rate | None | None | None | |||||||||
Fair value per optional share | $ | 2.84 | $ | 1.96 | $ | 1.61 |
Off-balance sheet instruments |
Trust assets and investment advisory assets under management |
Fair values of financial instruments |
F-11
Table of Contents
Cash and cash equivalents |
The carrying amounts reported in the consolidated balance sheets for cash and due from banks and federal funds sold approximate their fair value. |
Securities |
Fair values for securities are based on quoted market prices where available or on quoted markets for similar securities in the absence of quoted prices on the specific security. |
Federal Home Loan Bank stock |
The Company’s subsidiary banks are members of the Federal Home Loan Bank (FHLB) system and maintain an investment in capital stock of the FHLB. No ready market exists for the FHLB stock and it has no quoted market value. |
Loans |
For variable rate loans that reprice frequently and that have experienced no significant change in credit risk, fair values are based on carrying values. Variable rate loans comprised approximately 58% and 54% of the loan portfolio at December 31, 2004 and 2003, respectively. Fair value for all other loans is estimated based on discounted cash flows using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. Prepayments prior to the repricing date are not expected to be significant. Loans are expected to be held to maturity and any unrealized gains or losses are not expected to be realized. |
Accrued interest receivable and payable |
The carrying amounts reported in the consolidated balance sheets for accrued interest receivable and payable approximate their fair value. |
Deposit liabilities |
The fair value disclosed for demand and savings deposits is by definition equal to the amount payable on demand at their reporting date (that is, their carrying amount). The carrying amount for variable-rate deposit accounts approximates their fair value. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on |
F-12
Table of Contents
certificates to a schedule of aggregated expected monthly maturities on these deposits. Substantially all of the Company’s certificates of deposit at December 31, 2004 and 2003 mature in less than one year. Early withdrawals of fixed-rate certificates of deposit are not expected to be significant. |
Federal Home Loan Bank and other borrowings |
The fair values of the Company’s borrowings are estimated using discounted cash flow analyses, based on the Company’s incremental borrowing rates for similar types of borrowing arrangements. |
Junior subordinated debt |
The carrying amounts reported in the consolidated balance sheets for junior subordinated debt instruments approximate their fair value due to the variable nature of these instruments. |
Off-balance sheet instruments |
Fair values for the Company’s off-balance sheet instruments (lending commitments and standby letters of credit) are based on quoted fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. |
Earnings per share |
2004 | 2003 | 2002 | |||||||||||
Basic: | |||||||||||||
Net income applicable to common stock | $ | 20,057 | $ | 8,689 | $ | 8,409 | |||||||
Average common shares outstanding | 17,189,687 | 14,313,611 | 10,677,736 | ||||||||||
Earnings per share | $ | 1.17 | $ | 0.61 | $ | 0.79 | |||||||
Diluted: | |||||||||||||
Net income applicable to common stock | $ | 20,057 | $ | 8,689 | $ | 8,409 | |||||||
Average common shares outstanding | 17,189,687 | 14,313,611 | 10,677,736 | ||||||||||
Stock option adjustment | 694,801 | 254,021 | 37,712 | ||||||||||
Stock warrant adjustment | 520,632 | 45,541 | — | ||||||||||
Average common shares outstanding | 18,405,120 | 14,613,173 | 10,715,448 | ||||||||||
Earnings per share | $ | 1.09 | $ | 0.59 | $ | 0.78 | |||||||
Reclassifications |
F-13
Table of Contents
Recent accounting pronouncements |
Note 2. | Mergers and Acquisition Activity |
F-14
Table of Contents
Miller/Russell | Premier Trust | ||||||||
Cash | $ | 230 | $ | 363 | |||||
Furniture and equipment | 67 | 18 | |||||||
Customer relationship intangible asset | 950 | 673 | |||||||
Goodwill | 3,946 | — | |||||||
Other assets | 463 | 103 | |||||||
Total assets acquired | 5,656 | 1,157 | |||||||
Other liabilities assumed | 849 | 140 | |||||||
Net assets acquired | $ | 4,807 | $ | 1,017 | |||||
Note 3. | Restrictions on Cash and Due from Banks |
Note 4. | Securities |
2004 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | ||||||||||||||
Cost | Gains | (Losses) | Fair Value | |||||||||||||
Securities held to maturity | ||||||||||||||||
U.S. Treasury securities | $ | 3,501 | $ | — | $ | (26 | ) | $ | 3,475 | |||||||
Small Business Administration loan pools | 625 | — | (8 | ) | 617 | |||||||||||
Municipal obligations | 7,290 | 464 | — | 7,754 | ||||||||||||
Mortgage-backed securities | 118,133 | 3 | (998 | ) | 117,138 | |||||||||||
$ | 129,549 | $ | 467 | $ | (1,032 | ) | $ | 128,984 | ||||||||
Securities available for sale | ||||||||||||||||
U.S. Government-sponsored agencies | $ | 118,798 | $ | 7 | $ | (457 | ) | $ | 118,348 | |||||||
Mortgage-backed securities | 537,382 | 631 | (8,046 | ) | 529,967 | |||||||||||
Other | 10,781 | — | (23 | ) | 10,758 | |||||||||||
$ | 666,961 | $ | 638 | $ | (8,526 | ) | $ | 659,073 | ||||||||
F-15
Table of Contents
2003 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | ||||||||||||||
Cost | Gains | (Losses) | Fair Value | |||||||||||||
Securities held to maturity | ||||||||||||||||
U.S. Treasury securities | $ | 3,014 | $ | 5 | $ | — | $ | 3,019 | ||||||||
Small Business Administration loan pools | 1,142 | 4 | (4 | ) | 1,142 | |||||||||||
Municipal obligations | 7,563 | 212 | — | 7,775 | ||||||||||||
Mortgage-backed securities | 120,575 | 300 | (1,239 | ) | 119,636 | |||||||||||
$ | 132,294 | $ | 521 | $ | (1,243 | ) | $ | 131,572 | ||||||||
Securities available for sale | ||||||||||||||||
U.S. Government-sponsored agencies | $ | 112,223 | $ | 314 | $ | — | $ | 112,537 | ||||||||
Mortgage-backed securities | 466,063 | 793 | (5,985 | ) | 460,871 | |||||||||||
Other | 10,329 | — | (53 | ) | 10,276 | |||||||||||
$ | 588,615 | $ | 1,107 | $ | (6,038 | ) | $ | 583,684 | ||||||||
Less Than Twelve | ||||||||||||||||
Months | Over Twelve Months | |||||||||||||||
Gross | Gross | |||||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||
Losses | Value | Losses | Value | |||||||||||||
Securities held to maturity | ||||||||||||||||
U.S. Treasury securities | $ | 26 | $ | 3,475 | $ | — | $ | — | ||||||||
Small Business Administration loan pools | 4 | 305 | 4 | 312 | ||||||||||||
Mortgage-backed securities | 795 | 84,144 | 203 | 26,050 | ||||||||||||
$ | 825 | $ | 87,924 | $ | 207 | $ | 26,362 | |||||||||
Less Than Twelve | ||||||||||||||||
Months | Over Twelve Months | |||||||||||||||
Gross | Gross | |||||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||
Losses | Value | Losses | Value | |||||||||||||
Securities available for sale | ||||||||||||||||
U.S. Government-sponsored agencies | $ | 457 | $ | 105,589 | $ | — | $ | — | ||||||||
Mortgage-backed securities | 4,641 | 359,352 | 3,405 | 99,699 | ||||||||||||
Other | 23 | 10,758 | — | — | ||||||||||||
$ | 5,121 | $ | 475,699 | $ | 3,405 | $ | 99,699 | |||||||||
F-16
Table of Contents
Amortized | Fair | |||||||
Cost | Value | |||||||
Securities held to maturity | ||||||||
Due in one year or less | $ | 1,000 | $ | 999 | ||||
Due after one year through five years | 2,601 | 2,579 | ||||||
Due after five years through ten years | 680 | 727 | ||||||
Due after ten years | 6,510 | 6,924 | ||||||
Small Business Administration loan pools | 625 | 617 | ||||||
Mortgage-backed securities | 118,133 | 117,138 | ||||||
$ | 129,549 | $ | 128,984 | |||||
Securities available for sale | ||||||||
Due in one year or less | $ | — | $ | — | ||||
Due after one year through five years | 66,800 | 66,489 | ||||||
Due after five years through ten years | 24,289 | 24,191 | ||||||
Due after ten years | 27,709 | 27,668 | ||||||
Mortgage-backed securities | 537,382 | 529,967 | ||||||
Other | 10,781 | 10,758 | ||||||
$ | 666,961 | $ | 659,073 | |||||
F-17
Table of Contents
Note 5. | Loans |
2004 | 2003 | |||||||
Construction and land development, including raw commercial land of approximately $77,252 for 2004 and $42,872 for 2003 | $ | 323,176 | $ | 195,182 | ||||
Commercial real estate | 491,949 | 324,702 | ||||||
Residential real estate | 116,360 | 42,773 | ||||||
Commercial and industrial | 241,292 | 159,889 | ||||||
Consumer | 17,682 | 11,802 | ||||||
Less: net deferred loan fees | (1,924 | ) | (1,270 | ) | ||||
1,188,535 | 733,078 | |||||||
Less: | ||||||||
Allowance for loan losses | (15,271 | ) | (11,378 | ) | ||||
$ | 1,173,264 | $ | 721,700 | |||||
2004 | 2003 | |||||||
Total impaired loans, all with an allowance for loan losses | $ | 1,718 | $ | 333 | ||||
Related allowance for loan losses on impaired loans | $ | 498 | $ | 130 | ||||
Total non accrual loans | $ | 1,591 | $ | 210 | ||||
Loans past due 90 days or more and still accruing | $ | 2 | $ | 65 | ||||
2004 | 2003 | 2002 | ||||||||||
Average balance during the year on impaired loans | $ | 1,553 | $ | 434 | $ | 3,289 | ||||||
Interest income recognized on impaired loans | $ | 61 | $ | 6 | $ | 158 | ||||||
2004 | 2003 | 2002 | |||||||||||
Balance, beginning | $ | 11,378 | $ | 6,449 | $ | 6,563 | |||||||
Provision charged to operating expense | 3,914 | 5,145 | 1,587 | ||||||||||
Recoveries of amounts charged off | 157 | 420 | 471 | ||||||||||
Less amounts charged off | (178 | ) | (1,373 | ) | (1,322 | ) | |||||||
Reclassification (to) from other liabilities | — | 737 | (850 | ) | |||||||||
Balance, ending | $ | 15,271 | $ | 11,378 | $ | 6,449 | |||||||
F-18
Table of Contents
Note 6. | Premises and Equipment |
2004 | 2003 | ||||||||
Land | $ | 13,355 | $ | 7,795 | |||||
Bank premises | 6,246 | 4,092 | |||||||
Equipment and furniture | 15,120 | 10,937 | |||||||
Leasehold improvements | 4,306 | 2,305 | |||||||
39,027 | 25,129 | ||||||||
Less accumulated depreciation and amortization | (9,663 | ) | (7,091 | ) | |||||
Net premises and equipment | $ | 29,364 | $ | 18,038 | |||||
Note 7. | Income Tax Matters |
2004 | 2003 | |||||||||
Deferred tax assets: | ||||||||||
Allowance for loan losses | $ | 5,500 | $ | 3,600 | ||||||
Unrealized loss on available for sale securities | 2,800 | 1,700 | ||||||||
Organizational costs | 200 | 300 | ||||||||
Accrual to cash adjustment | 200 | — | ||||||||
Deferred compensation | 100 | 100 | ||||||||
Other | 31 | 536 | ||||||||
Total deferred tax assets | 8,831 | 6,236 | ||||||||
Deferred tax liabilities: | ||||||||||
Deferred loan costs | (800 | ) | (700 | ) | ||||||
Premises and equipment | (1,700 | ) | (700 | ) | ||||||
Federal Home Loan Bank dividend | (300 | ) | — | |||||||
Other | (82 | ) | (58 | ) | ||||||
Total deferred tax liabilities | (2,882 | ) | (1,458 | ) | ||||||
Net deferred tax asset | $ | 5,949 | $ | 4,778 | ||||||
F-19
Table of Contents
2004 | 2003 | 2002 | |||||||||||
Current | $ | 11,030 | $ | 5,641 | $ | 4,458 | |||||||
Deferred | (69 | ) | (1,470 | ) | (223 | ) | |||||||
Total provision for income taxes | $ | 10,961 | $ | 4,171 | $ | 4,235 | |||||||
2004 | 2003 | 2002 | |||||||||||
Computed “expected” tax expense | $ | 10,856 | $ | 4,501 | $ | 4,425 | |||||||
Increase (decrease) resulting from: | |||||||||||||
State income taxes, net of federal benefits | 580 | 145 | — | ||||||||||
Bank-owned life insurance | (420 | ) | (338 | ) | — | ||||||||
Tax-exempt income | (116 | ) | (116 | ) | (124 | ) | |||||||
Nondeductible expenses | 100 | 59 | 39 | ||||||||||
Other | (39 | ) | (80 | ) | (105 | ) | |||||||
$ | 10,961 | $ | 4,171 | $ | 4,235 | ||||||||
Note 8. | Deposits |
2005 | $ | 227,854 | ||
2006 | 8,410 | |||
2007 | 1,048 | |||
2008 | 26 | |||
$ | 237,338 | |||
F-20
Table of Contents
Note 9. | Borrowed Funds |
2004 | 2003 | |||||||
Short Term | ||||||||
FHLB Advances (weighted average rate is 2004: 2.21% 2003: 1.26%) | $ | 151,900 | $ | 163,211 | ||||
Securities sold under agreement to repurchase (weighted average rate is 2004: 2.32% 2003: 1.41%) | 33,594 | 78,050 | ||||||
Due in one year or less | $ | 185,494 | $ | 241,261 | ||||
Long Term | ||||||||
FHLB Advances (weighted average rate is 2004: 2.63% 2003: 2.70%) | $ | 63,700 | $ | 89,400 | ||||
Securities sold under agreement to repurchase (weighted average rate is 2003: 4.17%) | — | 8,000 | ||||||
Due in over one year | $ | 63,700 | $ | 97,400 | ||||
Year ending December 31: | ||||
2005 | $ | 185,494 | ||
2006 | 34,400 | |||
2007 | 29,300 | |||
$ | 249,194 | |||
Note 10. | Junior Subordinated Debt |
F-21
Table of Contents
Note 11. | Commitments and Contingencies |
Contingencies |
Financial instruments with off-balance sheet risk |
2004 | 2003 | |||||||
Commitments to extend credit, including unsecured loan commitments of $81,606 in 2004 and $66,940 in 2003 | $ | 423,767 | $ | 262,595 | ||||
Credit card guarantees | 5,421 | 5,553 | ||||||
Standby letters of credit, including unsecured letters of credit of $1,264 in 2004 and $448 in 2003 | 5,978 | 3,919 | ||||||
$ | 435,166 | $ | 272,067 | |||||
F-22
Table of Contents
Year ending December 31: | |||||
2005 | $ | 3,545 | |||
2006 | 3,560 | ||||
2007 | 3,520 | ||||
2008 | 1,318 | ||||
2009 | 1,209 | ||||
Thereafter | 5,340 | ||||
$ | 18,492 | ||||
F-23
Table of Contents
Stock Options |
2004 | 2003 | 2002 | |||||||||||
Outstanding options, beginning of year | 1,680,308 | 1,359,850 | 534,744 | ||||||||||
Granted | 439,500 | 442,000 | 887,500 | ||||||||||
Exercised | (97,800 | ) | (108,042 | ) | (53,394 | ) | |||||||
Forfeited | (36,000 | ) | (13,500 | ) | (9,000 | ) | |||||||
Outstanding options, end of year | 1,986,008 | 1,680,308 | 1,359,850 | ||||||||||
Options exercisable, end of year | 642,908 | 450,208 | 370,450 | ||||||||||
Available to grant, end of year | 354,600 | 258,100 | 686,600 | ||||||||||
Weighted-average exercise price: | |||||||||||||
Outstanding options, beginning of year | $ | 6.70 | $ | 5.87 | $ | 3.08 | |||||||
Options granted, during the year | $ | 12.17 | $ | 7.85 | $ | 7.03 | |||||||
Options exercised, during the year | $ | 4.24 | $ | 1.64 | $ | 1.74 | |||||||
Options outstanding, end of year | $ | 7.96 | $ | 6.70 | $ | 5.87 | |||||||
Options forfeited, during the year | $ | 3.79 | $ | 7.03 | $ | 1.39 | |||||||
Options exercisable, end of year | $ | 6.04 | $ | 4.90 | $ | 2.90 | |||||||
Weighted-average expiration (in years) | 8.03 | 8.43 | 8.68 |
F-24
Table of Contents
Outstanding Options | ||||||||||||
Weighted Average | Exercisable Options | |||||||||||
Remaining Contractual | ||||||||||||
Exercise Price | Number of Shares | Life (Years) | Number of Shares | |||||||||
$ 1.39 | 97,050 | 2.85 | 97,050 | |||||||||
$ 3.79 | 22,500 | 5.25 | 22,500 | |||||||||
$ 6.33 | 137,458 | 6.74 | 121,158 | |||||||||
$ 7.03 | 1,100,500 | 7.98 | 369,200 | |||||||||
$ 9.00 | 189,000 | 8.81 | 33,000 | |||||||||
$12.00 | 392,000 | 9.48 | — | |||||||||
$13.20 | 37,500 | 9.83 | — | |||||||||
$15.00 | 10,000 | 9.98 | — |
F-25
Table of Contents
2004 | 2003 | 2002 | |||||||||||
Rights outstanding, beginning of year | 216,000 | 72,000 | 72,000 | ||||||||||
Granted | — | — | — | ||||||||||
Forfeited | — | — | — | ||||||||||
Exercised | (216,000 | ) | — | — | |||||||||
Shares granted through amendment of plan | — | 144,000 | — | ||||||||||
Rights outstanding, end of year | — | 216,000 | 72,000 | ||||||||||
Rights exercisable, end of year | — | 216,000 | 54,000 | ||||||||||
Available to grant, end of year | 234,000 | 234,000 | 78,000 |
Note 13. | Regulatory Capital |
F-26
Table of Contents
For Capital | ||||||||||||||||||||||||||
Adequacy | To Be | |||||||||||||||||||||||||
Actual | Purposes | Well Capitalized | ||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||
As of December 31, 2004: | ||||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||||
BankWest of Nevada | $ | 105,544 | 10.4 | % | $ | 80,968 | 8.0 | % | $ | 101,210 | 10.0 | % | ||||||||||||||
Alliance Bank of Arizona | 35,258 | 12.6 | % | 22,428 | 8.0 | % | 28,035 | 10.0 | % | |||||||||||||||||
Torrey Pines Bank | 28,809 | 14.4 | % | 16,013 | 8.0 | % | 20,016 | 10.0 | % | |||||||||||||||||
Company | 178,784 | 12.0 | % | 119,632 | 8.0 | % | 149,540 | 10.0 | % | |||||||||||||||||
Tier I Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||||
BankWest of Nevada | 95,449 | 9.4 | % | 40,484 | 4.0 | % | 60,726 | 6.0 | % | |||||||||||||||||
Alliance Bank of Arizona | 31,810 | 11.3 | % | 11,214 | 4.0 | % | 16,821 | 6.0 | % | |||||||||||||||||
Torrey Pines Bank | 26,774 | 13.4 | % | 8,006 | 4.0 | % | 12,010 | 6.0 | % | |||||||||||||||||
Company | 163,205 | 10.9 | % | 59,816 | �� | 4.0 | % | 89,724 | 6.0 | % | ||||||||||||||||
Tier I Capital (to Average Assets) | ||||||||||||||||||||||||||
BankWest of Nevada | 95,449 | 6.1 | % | 62,970 | 4.0 | % | 78,713 | 5.0 | % | |||||||||||||||||
Alliance Bank of Arizona | 31,810 | 10.3 | % | 12,394 | 4.0 | % | 15,492 | 5.0 | % | |||||||||||||||||
Torrey Pines Bank | 26,774 | 10.9 | % | 9,830 | 4.0 | % | 12,288 | 5.0 | % | |||||||||||||||||
Company | 163,205 | 7.7 | % | 85,321 | 4.0 | % | 106,651 | 5.0 | % | |||||||||||||||||
As of December 31, 2003: | ||||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||||
BankWest of Nevada | $ | 79,604 | 10.7 | % | $ | 59,686 | 8.0 | % | $ | 74,607 | 10.0 | % | ||||||||||||||
Alliance Bank of Arizona | 19,529 | 14.2 | % | 10,987 | 8.0 | % | 13,734 | 10.0 | % | |||||||||||||||||
Torrey Pines Bank | 19,877 | 20.2 | % | 7,859 | 8.0 | % | 9,823 | 10.0 | % | |||||||||||||||||
Company | 141,321 | 14.4 | % | 78,379 | 8.0 | % | 97,974 | 10.0 | % | |||||||||||||||||
Tier I Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||||
BankWest of Nevada | 71,107 | 9.5 | % | 29,843 | 4.0 | % | 44,764 | 6.0 | % | |||||||||||||||||
Alliance Bank of Arizona | 17,814 | 13.0 | % | 5,494 | 4.0 | % | 8,241 | 6.0 | % | |||||||||||||||||
Torrey Pines Bank | 18,755 | 19.1 | % | 3,929 | 4.0 | % | 5,894 | 6.0 | % | |||||||||||||||||
Company | 129,875 | 13.3 | % | 39,190 | 4.0 | % | 58,785 | 6.0 | % | |||||||||||||||||
Tier I Capital (to Average Assets) | ||||||||||||||||||||||||||
BankWest of Nevada | 71,107 | 6.1 | % | 46,510 | 4.0 | % | 58,137 | 5.0 | % | |||||||||||||||||
Alliance Bank of Arizona | 17,814 | 10.6 | % | 6,696 | 4.0 | % | 8,371 | 5.0 | % | |||||||||||||||||
Torrey Pines Bank | 18,755 | 14.3 | % | 5,234 | 4.0 | % | 6,542 | 5.0 | % | |||||||||||||||||
Company | 129,875 | 8.9 | % | 58,457 | 4.0 | % | 73,027 | 5.0 | % |
F-27
Table of Contents
Note 14. | Employee Benefit Plan |
Note 15. | Transactions with Related Parties |
Loan transactions |
2004 | 2003 | ||||||||
Balance, beginning | $ | 18,222 | $ | 8,500 | |||||
New loans | 44,380 | 21,351 | |||||||
Repayments | (35,515 | ) | (11,629 | ) | |||||
Balance, ending | $ | 27,087 | $ | 18,222 | |||||
Other transactions |
F-28
Table of Contents
Note 16. | Fair Value of Financial Instruments |
2004 | 2003 | ||||||||||||||||
Carrying | Carrying | ||||||||||||||||
Amount | Fair Value | Amount | Fair Value | ||||||||||||||
Financial assets: | |||||||||||||||||
Cash and due from banks | $ | 92,282 | $ | 92,282 | $ | 61,893 | $ | 61,893 | |||||||||
Federal funds sold | 23,115 | 23,115 | 4,015 | 4,015 | |||||||||||||
Securities held to maturity | 129,549 | 128,984 | 132,294 | 131,572 | |||||||||||||
Securities available for sale | 659,073 | 659,073 | 583,684 | 583,684 | |||||||||||||
Federal Home Loan Bank stock | 15,097 | 15,097 | 12,628 | 12,628 | |||||||||||||
Loans, net | 1,173,264 | 1,170,202 | 721,700 | 723,572 | |||||||||||||
Accrued interest receivable | 8,359 | 8,359 | 6,389 | 6,389 | |||||||||||||
Financial liabilities: | |||||||||||||||||
Deposits | 1,756,036 | 1,756,297 | 1,094,646 | 1,095,036 | |||||||||||||
Accrued interest payable | 2,439 | 2,439 | 2,320 | 2,320 | |||||||||||||
Other borrowed funds | 249,194 | 248,048 | 338,661 | 339,462 | |||||||||||||
Junior subordinated debt | 30,928 | 30,928 | 30,928 | 30,928 |
Interest rate risk |
Fair value of commitments |
F-29
Table of Contents
Note 17. | Parent Company Financial Information |
2004 | 2003 | |||||||||
ASSETS | ||||||||||
Cash | $ | 7,185 | $ | 21,284 | ||||||
Investment in subsidiaries | 156,826 | 106,570 | ||||||||
Other assets | 1,221 | 1,129 | ||||||||
$ | 165,232 | $ | 128,983 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Accrued interest and other liabilities | $ | 733 | $ | 604 | ||||||
Junior subordinated debt | 30,928 | 30,928 | ||||||||
Total liabilities | 31,661 | 31,532 | ||||||||
Stockholders’ equity: | ||||||||||
Common stock | 2 | 2 | ||||||||
Additional paid-in capital | 80,459 | 62,533 | ||||||||
Retained earnings | 58,216 | 38,159 | ||||||||
Accumulated other comprehensive loss | (5,106 | ) | (3,243 | ) | ||||||
Total stockholders’ equity | 133,571 | 97,451 | ||||||||
$ | 165,232 | $ | 128,983 | |||||||
2004 | 2003 | 2002 | |||||||||||||
Interest income | $ | 97 | $ | — | $ | — | |||||||||
Interest expense on borrowings | 1,539 | 1,494 | 938 | ||||||||||||
Net interest expense | (1,442 | ) | (1,494 | ) | (938 | ) | |||||||||
Other income: | |||||||||||||||
Income from consolidated subsidiaries | 22,096 | 10,102 | 9,366 | ||||||||||||
Expenses: | |||||||||||||||
Salaries and employee benefits | 330 | 212 | — | ||||||||||||
Other | 383 | 218 | 512 | ||||||||||||
713 | 430 | 512 | |||||||||||||
Income before income tax benefit | 19,941 | 8,178 | 7,916 | ||||||||||||
Income tax benefit | 116 | 511 | 493 | ||||||||||||
Net income | $ | 20,057 | $ | 8,689 | $ | 8,409 | |||||||||
F-30
Table of Contents
2004 | 2003 | 2002 | |||||||||||||
Cash Flows from Operating Activities: | |||||||||||||||
Net income | $ | 20,057 | $ | 8,689 | $ | 8,409 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Equity in net undistributed earnings of consolidated subsidiaries | (22,096 | ) | (10,102 | ) | (9,366 | ) | |||||||||
(Increase) decrease in other assets | (92 | ) | 336 | (1,324 | ) | ||||||||||
Increase (decrease) in other liabilities | 129 | 436 | (104 | ) | |||||||||||
Net cash used in operating activities | (2,002 | ) | (641 | ) | (2,385 | ) | |||||||||
Cash Flows from Investing Activities: | |||||||||||||||
Investment in subsidiaries | (27,623 | ) | (39,309 | ) | — | ||||||||||
Net cash used in investing activities | (27,623 | ) | (39,309 | ) | — | ||||||||||
Cash Flows from Financing Activities: | |||||||||||||||
Proceeds from issuance of junior subordinated debt | — | — | 15,000 | ||||||||||||
Proceeds from exercise of stock options and stock warrants | 571 | 178 | 93 | ||||||||||||
Proceeds from stock issuance | 14,955 | 25,507 | 21,364 | ||||||||||||
Repurchase of Treasury stock | — | (678 | ) | — | |||||||||||
Net cash provided by financing activities | 15,526 | 25,007 | 36,457 | ||||||||||||
Increase (decrease) in cash and cash equivalents | (14,099 | ) | (14,943 | ) | 34,072 | ||||||||||
Cash and Cash Equivalents, beginning of year | 21,284 | 36,227 | 2,155 | ||||||||||||
Cash and Cash Equivalents, end of year | $ | 7,185 | $ | 21,284 | $ | 36,227 | |||||||||
Note 18. | Segment Information |
F-31
Table of Contents
BankWest | Alliance Bank | Torrey Pines | Intersegment | Consolidated | ||||||||||||||||||||
of Nevada | of Arizona | Bank | Other | Eliminations | Company | |||||||||||||||||||
2004: | ||||||||||||||||||||||||
Assets | $ | 1,578,332 | $ | 332,805 | $ | 257,516 | $ | 173,748 | $ | (165,552 | ) | $ | 2,176,849 | |||||||||||
Gross loans and deferred fees | 790,312 | 234,141 | 164,082 | — | — | 1,188,535 | ||||||||||||||||||
Less: Allowance for loan losses | (9,857 | ) | (3,416 | ) | (1,998 | ) | — | — | (15,271 | ) | ||||||||||||||
Net loans | 780,455 | 230,725 | 162,084 | — | — | 1,173,264 | ||||||||||||||||||
Deposits | 1,287,615 | 277,231 | 199,382 | — | (8,192 | ) | 1,756,036 | |||||||||||||||||
Stockholders’ equity | 91,361 | 31,189 | 26,405 | 140,634 | (156,018 | ) | 133,571 | |||||||||||||||||
Number of branch locations | 5 | 5 | 3 | — | — | 13 | ||||||||||||||||||
Net interest income | $ | 54,215 | $ | 10,225 | $ | 8,141 | $ | (1,444 | ) | $ | (2 | ) | $ | 71,135 | ||||||||||
Provision for loan losses | 1,417 | 1,657 | 840 | — | — | 3,914 | ||||||||||||||||||
Net interest income after provision for loan losses | 52,798 | 8,568 | 7,301 | (1,444 | ) | (2 | ) | 67,221 | ||||||||||||||||
Noninterest income | 4,851 | 774 | 604 | 25,149 | (22,652 | ) | 8,726 | |||||||||||||||||
Noninterest expense | (27,286 | ) | (8,074 | ) | (6,301 | ) | (3,705 | ) | 437 | (44,929 | ) | |||||||||||||
Income (loss) before income taxes | 30,363 | 1,268 | 1,604 | 20,000 | (22,217 | ) | 31,018 | |||||||||||||||||
Income tax expense (benefit) | 10,033 | 422 | 584 | (78 | ) | — | 10,961 | |||||||||||||||||
Net income (loss) | $ | 20,330 | $ | 846 | $ | 1,020 | $ | 20,078 | $ | (22,217 | ) | $ | 20,057 | |||||||||||
F-32
Table of Contents
BankWest | Alliance Bank | Torrey Pines | Intersegment | Consolidated | ||||||||||||||||||||
of Nevada | of Arizona | Bank | Other | Eliminations | Company | |||||||||||||||||||
2003: | ||||||||||||||||||||||||
Assets | $ | 1,244,549 | $ | 187,314 | $ | 157,156 | $ | 130,953 | $ | (143,199 | ) | $ | 1,576,773 | |||||||||||
Gross loans and deferred fees | 557,868 | 106,239 | 68,971 | — | — | 733,078 | ||||||||||||||||||
Less: Allowance for loan losses | (8,460 | ) | (1,759 | ) | (1,159 | ) | — | — | (11,378 | ) | ||||||||||||||
Net loans | 549,408 | 104,480 | 67,812 | — | — | 721,700 | ||||||||||||||||||
Deposits | 917,983 | 115,726 | 82,265 | — | (21,328 | ) | 1,094,646 | |||||||||||||||||
Stockholders’ equity | 69,114 | 17,117 | 18,394 | 98,353 | (105,527 | ) | 97,451 | |||||||||||||||||
Number of branch locations | 5 | 3 | 2 | — | — | 10 | ||||||||||||||||||
Net interest income | $ | 37,615 | $ | 3,137 | $ | 1,768 | $ | (1,494 | ) | $ | (1 | ) | $ | 41,025 | ||||||||||
Provision for loan losses | 2,227 | 1,759 | 1,159 | — | — | 5,145 | ||||||||||||||||||
Net interest income after provision for loan losses | 35,388 | 1,378 | 609 | (1,494 | ) | (1 | ) | 35,880 | ||||||||||||||||
Noninterest income | 4,043 | 245 | 102 | 10,102 | (10,222 | ) | 4,270 | |||||||||||||||||
Noninterest expense | (20,016 | ) | (4,319 | ) | (2,645 | ) | (430 | ) | 120 | (27,290 | ) | |||||||||||||
Income (loss) before income taxes | 19,415 | (2,696 | ) | (1,934 | ) | 8,178 | (10,103 | ) | 12,860 | |||||||||||||||
Income tax expense (benefit) | 6,352 | (981 | ) | (689 | ) | (511 | ) | — | 4,171 | |||||||||||||||
Net income (loss) | $ | 13,063 | $ | (1,715 | ) | $ | (1,245 | ) | $ | 8,689 | $ | (10,103 | ) | $ | 8,689 | |||||||||
2002: | ||||||||||||||||||||||||
Assets | $ | 869,186 | $ | — | $ | — | $ | 99,723 | $ | (96,835 | ) | $ | 872,074 | |||||||||||
Gross loans and deferred fees | 464,355 | — | — | — | — | 464,355 | ||||||||||||||||||
Less: Allowance for loan losses | (6,449 | ) | — | — | — | — | (6,449 | ) | ||||||||||||||||
Net loans | 457,906 | — | — | — | — | 457,906 | ||||||||||||||||||
Deposits | 756,531 | — | — | — | (36,227 | ) | 720,304 | |||||||||||||||||
Stockholders’ equity | 59,680 | — | — | 67,442 | (59,680 | ) | 67,442 | |||||||||||||||||
Number of branch locations | 5 | — | — | — | — | 5 | ||||||||||||||||||
Net interest income | $ | 30,284 | $ | — | $ | — | $ | (938 | ) | $ | — | $ | 29,346 | |||||||||||
Provision for loan losses | 1,587 | — | — | — | — | 1,587 | ||||||||||||||||||
Net interest income after provision for loan losses | 28,697 | �� | — | — | (938 | ) | — | 27,759 | ||||||||||||||||
Noninterest income | 3,935 | — | — | 9,366 | (9,366 | ) | 3,935 | |||||||||||||||||
Noninterest expense | (18,538 | ) | — | — | (512 | ) | — | (19,050 | ) | |||||||||||||||
Income (loss) before income taxes | 14,094 | — | — | 7,916 | (9,366 | ) | 12,644 | |||||||||||||||||
Income tax expense (benefit) | 4,728 | — | — | (493 | ) | — | 4,235 | |||||||||||||||||
Net income (loss) | $ | 9,366 | $ | — | $ | — | $ | 8,409 | $ | (9,366 | ) | $ | 8,409 | |||||||||||
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Table of Contents
Note 19. | Quarterly Data (Unaudited) |
Years Ended December 31, | ||||||||||||||||||||||||||||||||
2004 | 2003 | |||||||||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | Third | Second | First | |||||||||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||||||||
Interest and dividend income | $ | 27,075 | $ | 24,145 | $ | 20,758 | $ | 18,877 | $ | 16,925 | $ | 14,396 | $ | 11,992 | $ | 10,510 | ||||||||||||||||
Interest expense | 5,936 | 5,148 | 4,458 | 4,178 | 3,937 | 3,329 | 2,893 | 2,639 | ||||||||||||||||||||||||
Net interest income | 21,139 | 18,997 | 16,300 | 14,699 | 12,988 | 11,067 | 9,099 | 7,871 | ||||||||||||||||||||||||
Provision for loan losses | 751 | 1,256 | 415 | 1,492 | 1,281 | 1,813 | 1,184 | 867 | ||||||||||||||||||||||||
Net interest income, after provision for loan losses | 20,388 | 17,741 | 15,885 | 13,207 | 11,707 | 9,254 | 7,915 | 7,004 | ||||||||||||||||||||||||
Noninterest income | 2,552 | 2,619 | 1,991 | 1,564 | 1,097 | 1,210 | 1,062 | 901 | ||||||||||||||||||||||||
Noninterest expenses | (12,873 | ) | (11,740 | ) | (10,624 | ) | (9,692 | ) | (9,169 | ) | (6,425 | ) | (6,277 | ) | (5,419 | ) | ||||||||||||||||
Income before income taxes | 10,067 | 8,620 | 7,252 | 5,079 | 3,635 | 4,039 | 2,700 | 2,486 | ||||||||||||||||||||||||
Income tax expense | 3,638 | 3,071 | 2,602 | 1,650 | 1,268 | 1,252 | 816 | 835 | ||||||||||||||||||||||||
Net income | $ | 6,429 | $ | 5,549 | $ | 4,650 | $ | 3,429 | $ | 2,367 | $ | 2,787 | $ | 1,884 | $ | 1,651 | ||||||||||||||||
Earnings per share: | ||||||||||||||||||||||||||||||||
Basic | $ | 0.35 | $ | 0.33 | $ | 0.28 | $ | 0.21 | $ | 0.16 | $ | 0.20 | $ | 0.13 | $ | 0.12 | ||||||||||||||||
Diluted | $ | 0.33 | $ | 0.31 | $ | 0.26 | $ | 0.19 | $ | 0.15 | $ | 0.19 | $ | 0.13 | $ | 0.12 | ||||||||||||||||
Note 20. | Subsequent Events |
F-34
Table of Contents
September 30, | December 31, | ||||||||||
2005 | 2004 | ||||||||||
(Unaudited) | |||||||||||
($ in thousands, except | |||||||||||
per share amounts) | |||||||||||
ASSETS | |||||||||||
Cash and due from banks | $ | 90,618 | $ | 92,282 | |||||||
Federal funds sold | 203,999 | 23,115 | |||||||||
Cash and cash equivalents | 294,617 | 115,397 | |||||||||
Securities held to maturity (approximate fair value $115,689 and $128,984, respectively) | 117,116 | 129,549 | |||||||||
Securities available for sale | 595,959 | 659,073 | |||||||||
Loans, net of allowance for loan losses of $19,288 and $15,271, respectively | 1,598,253 | 1,173,264 | |||||||||
Premises and equipment, net | 36,859 | 29,364 | |||||||||
Bank owned life insurance | 51,215 | 26,170 | |||||||||
Investment in Federal Home Loan Bank stock | 14,006 | 15,097 | |||||||||
Accrued interest receivable | 9,189 | 8,359 | |||||||||
Deferred tax assets, net | 8,858 | 5,949 | |||||||||
Goodwill | 3,946 | 3,946 | |||||||||
Other intangible assets, net of accumulated amortization of $349 and $183, respectively | 1,274 | 1,440 | |||||||||
Other assets | 13,722 | 9,241 | |||||||||
Total assets | $ | 2,745,014 | $ | 2,176,849 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Liabilities | |||||||||||
Non-interest bearing demand deposits | $ | 1,048,175 | $ | 749,550 | |||||||
Interest bearing deposits: | |||||||||||
Demand | 107,700 | 103,723 | |||||||||
Savings and money market | 893,736 | 665,425 | |||||||||
Time, $100 and over | 275,325 | 219,451 | |||||||||
Other time | 22,562 | 17,887 | |||||||||
2,347,498 | 1,756,036 | ||||||||||
Federal Home Loan Bank advances and other borrowings | |||||||||||
One year or less | 55,810 | 185,494 | |||||||||
Over one year | 63,700 | 63,700 | |||||||||
Junior subordinated debt | 30,928 | 30,928 | |||||||||
Accrued interest payable and other liabilities | 8,825 | 7,120 | |||||||||
Total liabilities | 2,506,761 | 2,043,278 | |||||||||
Commitments and Contingencies | |||||||||||
Stockholders’ Equity | |||||||||||
Preferred stock, par value $.0001; shares authorized 20,000,000; no shares issued and outstanding 2005 and 2004 | — | — | |||||||||
Common stock, par value $.0001; shares authorized 100,000,000; shares issued and outstanding 2005: 22,793,241; 2004:18,249,554 | 2 | 2 | |||||||||
Additional paid-in capital | 167,950 | 80,459 | |||||||||
Retained earnings | 77,839 | 58,216 | |||||||||
Deferred compensation — restricted stock | (386 | ) | — | ||||||||
Accumulated other comprehensive loss — net unrealized loss on available for sale securities | (7,152 | ) | (5,106 | ) | |||||||
Total stockholders’ equity | 238,253 | 133,571 | |||||||||
Total liabilities and stockholders’ equity | $ | 2,745,014 | $ | 2,176,849 | |||||||
F-35
Table of Contents
Three Months Ended | Nine Months Ended | |||||||||||||||||
September 30, | September 30, | |||||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||||
($ in thousands, except per share amounts) | ||||||||||||||||||
Interest income on: | ||||||||||||||||||
Loans, including fees | $ | 27,343 | $ | 15,866 | $ | 71,266 | $ | 40,819 | ||||||||||
Securities — taxable | 7,269 | 7,989 | 22,053 | 22,097 | ||||||||||||||
Securities — nontaxable | 85 | 84 | 256 | 256 | ||||||||||||||
Dividends — taxable | 135 | 149 | 441 | 384 | ||||||||||||||
Federal funds sold and other | 868 | 57 | 1,919 | 224 | ||||||||||||||
Total interest income | 35,700 | 24,145 | 95,935 | 63,780 | ||||||||||||||
Interest expense on: | ||||||||||||||||||
Deposits | 6,767 | 3,228 | 17,124 | 8,344 | ||||||||||||||
Short-term borrowings | 357 | 601 | 1,305 | 1,961 | ||||||||||||||
Long-term borrowings | 699 | 912 | 2,259 | 2,376 | ||||||||||||||
Junior subordinated debt | 546 | 407 | 1,520 | 1,103 | ||||||||||||||
Total interest expense | 8,369 | 5,148 | 22,208 | 13,784 | ||||||||||||||
Net interest income | 27,331 | 18,997 | 73,727 | 49,996 | ||||||||||||||
Provision for loan losses | 1,283 | 1,256 | 4,217 | 3,163 | ||||||||||||||
Net interest income after provision for loan losses | 26,048 | 17,741 | 69,510 | 46,833 | ||||||||||||||
Other income: | ||||||||||||||||||
Trust and investment advisory services | 1,448 | 1,045 | 4,108 | 1,801 | ||||||||||||||
Service charges | 662 | 638 | 1,858 | 1,884 | ||||||||||||||
Income from bank owned life insurance | 463 | 293 | 1,045 | 908 | ||||||||||||||
Investment securities gains (losses), net | — | 58 | 69 | 14 | ||||||||||||||
Other | 660 | 585 | 1,655 | 1,568 | ||||||||||||||
3,233 | 2,619 | 8,735 | 6,175 | |||||||||||||||
Other expense: | ||||||||||||||||||
Salaries and employee benefits | 9,541 | 6,678 | 27,049 | 17,934 | ||||||||||||||
Occupancy | 2,619 | 1,917 | 7,314 | 5,271 | ||||||||||||||
Customer service | 1,257 | 468 | 2,930 | 1,473 | ||||||||||||||
Advertising and other business development | 702 | 316 | 2,023 | 1,234 | ||||||||||||||
Legal, professional and director fees | 527 | 420 | 1,523 | 1,057 | ||||||||||||||
Correspondent and wire transfer costs | 417 | 349 | 1,220 | 888 | ||||||||||||||
Audits and exams | 367 | 311 | 1,128 | 822 | ||||||||||||||
Data processing | 350 | 168 | 715 | 467 | ||||||||||||||
Supplies | 304 | 230 | 804 | 616 | ||||||||||||||
Travel and automobile | 232 | 173 | 487 | 307 | ||||||||||||||
Insurance | 223 | 167 | 540 | 383 | ||||||||||||||
Telephone | 195 | 149 | 558 | 419 | ||||||||||||||
Other | 540 | 394 | 1,523 | 1,185 | ||||||||||||||
17,274 | 11,740 | 47,814 | 32,056 | |||||||||||||||
Income before income taxes | 12,007 | 8,620 | 30,431 | 20,952 | ||||||||||||||
Income tax expense | 4,258 | 3,071 | 10,808 | 7,324 | ||||||||||||||
Net income | $ | 7,749 | $ | 5,549 | $ | 19,623 | $ | 13,628 | ||||||||||
Comprehensive income | $ | 6,071 | $ | 12,631 | $ | 17,577 | $ | 12,713 | ||||||||||
Earnings per share: | ||||||||||||||||||
Basic | $ | 0.34 | $ | 0.33 | $ | 0.99 | $ | 0.81 | ||||||||||
Diluted | $ | 0.31 | $ | 0.31 | $ | 0.90 | $ | 0.76 | ||||||||||
F-36
Table of Contents
Deferred | Accumulated | |||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional | Compensation — | Other | ||||||||||||||||||||||||||||||||||||||
Comprehensive | Paid-In | Retained | Restricted | Comprehensive | ||||||||||||||||||||||||||||||||||||||
Description | Income | Shares Issued | Amount | Shares Issued | Amount | Capital | Earnings | Stock | (Loss) | Total | ||||||||||||||||||||||||||||||||
($ in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2004 | — | $ | — | 18,249,554 | $ | 2 | $ | 80,459 | $ | 58,216 | $ | — | $ | (5,106 | ) | $ | 133,571 | |||||||||||||||||||||||||
Issuance of 4,200,000 shares of common stock, net of offering costs of $7,337 | 4,200,000 | — | 85,063 | — | — | — | 85,063 | |||||||||||||||||||||||||||||||||||
Stock options exercised | 210,864 | — | 1,176 | — | — | — | 1,176 | |||||||||||||||||||||||||||||||||||
Stock warrants exercised | 105,823 | — | 806 | — | — | — | 806 | |||||||||||||||||||||||||||||||||||
Restricted stock granted | 27,000 | — | 446 | — | (446 | ) | — | — | ||||||||||||||||||||||||||||||||||
Compensation cost on restricted stock | — | — | — | — | 60 | — | 60 | |||||||||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 19,623 | — | — | — | 19,623 | — | — | 19,623 | |||||||||||||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||
Unrealized holding losses on securities available for sale arising during the period, net of taxes of $1,239 | (2,001 | ) | ||||||||||||||||||||||||||||||||||||||||
Less reclassification adjustment for gains included in net income, net of taxes of $24 | (45 | ) | ||||||||||||||||||||||||||||||||||||||||
Net unrealized holding losses | (2,046 | ) | — | — | — | — | — | (2,046 | ) | (2,046 | ) | |||||||||||||||||||||||||||||||
$ | 17,577 | |||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2005 | — | $ | — | 22,793,241 | $ | 2 | $ | 167,950 | $ | 77,839 | $ | (386 | ) | $ | (7,152 | ) | $ | 238,253 | ||||||||||||||||||||||||
F-37
Table of Contents
2005 | 2004 | ||||||||||
($ in thousands) | |||||||||||
Cash Flows from Operating Activities: | |||||||||||
Net income | $ | 19,623 | $ | 13,628 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 2,809 | 1,890 | |||||||||
Net amortization of securities premiums | 1,196 | 3,024 | |||||||||
Stock dividends received, FHLB stock | (440 | ) | (384 | ) | |||||||
Provision for loan losses | 4,217 | 3,163 | |||||||||
(Gain) loss on sales of securities available for sale | (69 | ) | 14 | ||||||||
Deferred taxes | (25 | ) | (522 | ) | |||||||
Compensation cost on restricted stock | 60 | — | |||||||||
(Decrease) in accrued interest receivable | (830 | ) | (1,094 | ) | |||||||
(Increase) in bank-owned life insurance | (1,045 | ) | (907 | ) | |||||||
Increase in other assets | (4,260 | ) | (1,535 | ) | |||||||
Increase in accrued interest payable and other liabilities | 84 | 1,029 | |||||||||
Other, net | (30 | ) | 15 | ||||||||
Net cash provided by operating activities | 21,290 | 18,321 | |||||||||
Cash Flows from Investing Activities: | |||||||||||
Purchases of securities held to maturity | (8,233 | ) | (19,964 | ) | |||||||
Proceeds from maturities of securities held to maturity | 20,560 | 26,491 | |||||||||
Purchases of securities available for sale | (85,747 | ) | (409,644 | ) | |||||||
Proceeds from maturities of securities available for sale | 125,697 | 244,469 | |||||||||
Proceeds from the sale of securities available for sale | 18,728 | 13,768 | |||||||||
Net cash paid in settlement of acquisition | — | (2,177 | ) | ||||||||
Proceeds from sale (purchase) of Federal Home Loan Bank stock | 1,531 | (2,483 | ) | ||||||||
Net increase in loans made to customers | (429,206 | ) | (352,361 | ) | |||||||
Purchase of premises and equipment | (10,285 | ) | (7,142 | ) | |||||||
Proceeds from sale of premises and equipment | 62 | — | |||||||||
Purchase of bank owned life insurance | (24,000 | ) | — | ||||||||
Net cash used in investing activities | (390,893 | ) | (509,043 | ) | |||||||
Cash Flows from Financing Activities: | |||||||||||
Net increase in deposits | 591,462 | 595,294 | |||||||||
Net repayments on borrowings | (129,684 | ) | (75,360 | ) | |||||||
Proceeds from stock issuance | 85,063 | 14,955 | |||||||||
Proceeds from exercise of stock options and stock warrants | 1,982 | 502 | |||||||||
Net cash provided by financing activities | 548,823 | 535,391 | |||||||||
Increase in cash and cash equivalents | 179,220 | 44,669 | |||||||||
Cash and Cash Equivalents, beginning of period | 115,397 | 65,908 | |||||||||
Cash and Cash Equivalents, end of period | $ | 294,617 | $ | 110,577 | |||||||
Supplemental Disclosure of Cash Flow Information | |||||||||||
Cash payments for interest | $ | 23,141 | $ | 14,860 | |||||||
Cash payments for income taxes | $ | 12,640 | $ | 6,935 | |||||||
Supplemental Disclosure of Noncash Investing and Financing Activities Stock issued in connection with acquisition | $ | — | $ | 2,400 |
F-38
Table of Contents
Note 1. | Nature of Business and Summary of Significant Accounting Policies |
Nature of business |
Use of estimates in the preparation of financial statements |
Principles of consolidation |
Interim financial information |
Stock compensation plans |
F-39
Table of Contents
Three Months | |||||||||||||||||
Ended | Nine Months | ||||||||||||||||
September 30, | Ended September 30, | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Net income: | |||||||||||||||||
As reported | $ | 7,749 | $ | 5,549 | $ | 19,623 | $ | 13,628 | |||||||||
Deduct total stock-based employee compensation expense determined under fair value based method for all awards | (259 | ) | (172 | ) | (684 | ) | (481 | ) | |||||||||
Related tax benefit for nonqualified stock options | 19 | 10 | 42 | 19 | |||||||||||||
Pro forma | $ | 7,509 | $ | 5,387 | $ | 18,981 | $ | 13,166 | |||||||||
Earnings per share: | |||||||||||||||||
Basic — as reported | $ | 0.34 | $ | 0.33 | $ | 0.99 | $ | 0.81 | |||||||||
Basic — pro forma | 0.33 | 0.32 | 0.96 | 0.78 | |||||||||||||
Diluted — as reported | 0.31 | 0.31 | 0.90 | 0.76 | |||||||||||||
Diluted — pro forma | 0.30 | 0.30 | 0.87 | 0.73 |
Recent Accounting Pronouncements |
F-40
Table of Contents
Capital Stock |
Note 2. | Earnings Per Share |
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Basic: | |||||||||||||||||
Net income applicable to common stock | $ | 7,749 | $ | 5,549 | $ | 19,623 | $ | 13,628 | |||||||||
Average common shares outstanding | 22,732,713 | 16,994,849 | 19,841,670 | 16,838,882 | |||||||||||||
Earnings per share | $ | 0.34 | $ | 0.33 | $ | 0.99 | $ | 0.81 | |||||||||
Diluted: | |||||||||||||||||
Net income applicable to common stock | $ | 7,749 | $ | 5,549 | $ | 19,623 | $ | 13,628 | |||||||||
Average common shares outstanding | 22,732,713 | 16,994,849 | 19,841,670 | 16,838,882 | |||||||||||||
Stock option adjustment | 1,340,705 | 669,478 | 1,128,402 | 694,500 | |||||||||||||
Stock warrant adjustment | 1,008,205 | 540,772 | 886,541 | 500,715 | |||||||||||||
Average common equivalent shares outstanding | 25,081,623 | 18,205,099 | 21,856,613 | 18,034,097 | |||||||||||||
Earnings per share | $ | 0.31 | $ | 0.31 | $ | 0.90 | $ | 0.76 | |||||||||
F-41
Table of Contents
Note 3. | Loans |
September 30, | December 31, | ||||||||
2005 | 2004 | ||||||||
Construction and land development | $ | 396,970 | $ | 323,176 | |||||
Commercial real estate | 655,004 | 491,949 | |||||||
Residential real estate | 239,538 | 116,360 | |||||||
Commercial and industrial | 307,045 | 241,292 | |||||||
Consumer | 21,046 | 17,682 | |||||||
Less: net deferred loan fees | (2,062 | ) | (1,924 | ) | |||||
1,617,541 | 1,188,535 | ||||||||
Less: | |||||||||
Allowance for loan losses | (19,288 | ) | (15,271 | ) | |||||
$ | 1,598,253 | $ | 1,173,264 | ||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Balance, beginning | $ | 18,118 | $ | 13,360 | $ | 15,271 | $ | 11,378 | |||||||||
Provision charged to operating expense | 1,283 | 1,256 | 4,217 | 3,163 | |||||||||||||
Recoveries of amounts charged off | 13 | 24 | 171 | 130 | |||||||||||||
Less amounts charged off | (126 | ) | (115 | ) | (371 | ) | (146 | ) | |||||||||
Balance, ending | $ | 19,288 | $ | 14,525 | $ | 19,288 | $ | 14,525 | |||||||||
Note 4. | Commitments and Contingencies |
Commitments |
Contingencies |
F-42
Table of Contents
Financial instruments with off-balance sheet risk |
September 30, | December 31, | |||||||
2005 | 2004 | |||||||
Commitments to extend credit, including unsecured loan commitments of $125,960 in 2005 and $81,606 in 2004 | $ | 674,341 | $ | 423,767 | ||||
Credit card guarantees | 7,404 | 5,421 | ||||||
Standby letters of credit, including unsecured letters of credit of $4,463 in 2005 and $1,264 in 2004 | 29,506 | 5,978 | ||||||
$ | 711,251 | $ | 435,166 | |||||
F-43
Table of Contents
Concentrations |
Note 5. | Stock Options, Stock Warrants and Restricted Stock |
F-44
Table of Contents
Note 6. | Segment Information |
BankWest | Alliance Bank | Torrey Pines | Intersegment | Consolidated | |||||||||||||||||||||
of Nevada | of Arizona | Bank | Other | Eliminations | Company | ||||||||||||||||||||
At September 30, 2005: | |||||||||||||||||||||||||
Assets | $ | 1,815,708 | $ | 514,073 | $ | 357,272 | $ | 277,999 | $ | (220,038 | ) | $ | 2,745,014 | ||||||||||||
Gross loans and deferred fees | 1,002,762 | 358,490 | 256,289 | — | — | 1,617,541 | |||||||||||||||||||
Less: Allowance for loan losses | (11,474 | ) | (4,833 | ) | (2,981 | ) | — | — | (19,288 | ) | |||||||||||||||
Net loans | 991,288 | 353,657 | 253,308 | — | — | 1,598,253 | |||||||||||||||||||
Deposits | 1,586,490 | 460,078 | 315,093 | — | (14,163 | ) | 2,347,498 | ||||||||||||||||||
Stockholders’ equity | 122,708 | 43,132 | 32,705 | 245,289 | (205,581 | ) | 238,253 | ||||||||||||||||||
Three Months Ended September 30, 2005: | |||||||||||||||||||||||||
Net interest income | $ | 18,414 | $ | 5,128 | $ | 3,929 | $ | (122 | ) | $ | (18 | ) | $ | 27,331 | |||||||||||
Provision for loan losses | 375 | 515 | 393 | — | — | 1,283 | |||||||||||||||||||
Net interest income after provision for loan losses | 18,039 | 4,613 | 3,536 | (122 | ) | (18 | ) | 26,048 | |||||||||||||||||
Noninterest income | 1,375 | 454 | 213 | 9,929 | (8,738 | ) | 3,233 | ||||||||||||||||||
Noninterest expense | (9,345 | ) | (3,707 | ) | (2,465 | ) | (2,035 | ) | 278 | (17,274 | ) | ||||||||||||||
Income before income taxes | 10,069 | 1,360 | 1,284 | 7,772 | (8,478 | ) | 12,007 | ||||||||||||||||||
Income tax expense | 3,227 | 483 | 517 | 31 | — | 4,258 | |||||||||||||||||||
Net income | $ | 6,842 | $ | 877 | $ | 767 | $ | 7,741 | $ | (8,478 | ) | $ | 7,749 | ||||||||||||
Nine Months Ended September 30, 2005: | |||||||||||||||||||||||||
Net interest income | $ | 51,208 | $ | 13,469 | $ | 10,114 | $ | (1,046 | ) | $ | (18 | ) | $ | 73,727 | |||||||||||
Provision for loan losses | 1,817 | 1,417 | 983 | — | — | 4,217 | |||||||||||||||||||
Net interest income after provision for loan losses | 49,391 | 12,052 | 9,131 | (1,046 | ) | (18 | ) | 69,510 | |||||||||||||||||
Noninterest income | 3,830 | 983 | 488 | 25,826 | (22,392 | ) | 8,735 | ||||||||||||||||||
Noninterest expense | (26,098 | ) | (9,603 | ) | (7,282 | ) | (5,563 | ) | 732 | (47,814 | ) | ||||||||||||||
Income before income taxes | 27,123 | 3,432 | 2,337 | 19,217 | (21,678 | ) | 30,431 | ||||||||||||||||||
Income tax expense (benefit) | 8,997 | 1,312 | 940 | (441 | ) | — | 10,808 | ||||||||||||||||||
Net income | $ | 18,126 | $ | 2,120 | $ | 1,397 | $ | 19,658 | $ | (21,678 | ) | $ | 19,623 | ||||||||||||
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BankWest | Alliance Bank | Torrey Pines | Intersegment | Consolidated | |||||||||||||||||||||
of Nevada | of Arizona | Bank | Other | Eliminations | Company | ||||||||||||||||||||
At September 30, 2004: | |||||||||||||||||||||||||
Assets | $ | 1,579,308 | $ | 294,704 | $ | 244,147 | $ | 166,460 | $ | (158,367 | ) | $ | 2,126,252 | ||||||||||||
Gross loans and deferred fees | 752,326 | 203,736 | 129,377 | — | — | 1,085,439 | |||||||||||||||||||
Less: Allowance for loan losses | (9,861 | ) | (2,905 | ) | (1,759 | ) | — | — | (14,525 | ) | |||||||||||||||
Net loans | 742,465 | 200,831 | 127,618 | — | — | 1,070,914 | |||||||||||||||||||
Deposits | 1,253,583 | 232,683 | 217,368 | — | (13,694 | ) | 1,689,940 | ||||||||||||||||||
Stockholders’ equity | 85,959 | 27,651 | 24,245 | 134,557 | (144,390 | ) | 128,022 | ||||||||||||||||||
Three Months Ended September 30, 2004: | |||||||||||||||||||||||||
Net interest income | $ | 14,544 | $ | 2,686 | $ | 2,174 | $ | (404 | ) | $ | (3 | ) | $ | 18,997 | |||||||||||
Provision for loan losses | 679 | 527 | 50 | — | — | 1,256 | |||||||||||||||||||
Net interest income after provision for loan losses | 13,865 | 2,159 | 2,124 | (404 | ) | (3 | ) | 17,741 | |||||||||||||||||
Noninterest income | 1,270 | 240 | 124 | 7,178 | (6,193 | ) | 2,619 | ||||||||||||||||||
Noninterest expense | (6,916 | ) | (2,075 | ) | (1,727 | ) | (1,143 | ) | 121 | (11,740 | ) | ||||||||||||||
Income before income taxes | 8,219 | 324 | 521 | 5,631 | (6,075 | ) | 8,620 | ||||||||||||||||||
Income tax expense | 2,723 | 87 | 194 | 67 | — | 3,071 | |||||||||||||||||||
Net income | $ | 5,496 | $ | 237 | $ | 327 | $ | 5,564 | $ | (6,075 | ) | $ | 5,549 | ||||||||||||
Nine Months Ended September 30, 2004: | |||||||||||||||||||||||||
Net interest income | $ | 38,509 | $ | 6,858 | $ | 5,663 | $ | (1,032 | ) | $ | (2 | ) | $ | 49,996 | |||||||||||
Provision for loan losses | 1,417 | 1,146 | 600 | — | — | 3,163 | |||||||||||||||||||
Net interest income after provision for loan losses | 37,092 | 5,712 | 5,063 | (1,032 | ) | (2 | ) | 46,833 | |||||||||||||||||
Noninterest income | 3,703 | 545 | 480 | 16,882 | (15,435 | ) | 6,175 | ||||||||||||||||||
Noninterest expense | (19,844 | ) | (5,803 | ) | (4,443 | ) | (2,264 | ) | 298 | (32,056 | ) | ||||||||||||||
Income before income taxes | 20,951 | 454 | 1,100 | 13,586 | (15,139 | ) | 20,952 | ||||||||||||||||||
Income tax expense (benefit) | 6,893 | 81 | 387 | (37 | ) | — | 7,324 | ||||||||||||||||||
Net income | $ | 14,058 | $ | 373 | $ | 713 | $ | 13,623 | $ | (15,139 | ) | $ | 13,628 | ||||||||||||
Note 7. | Initial Public Offering |
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ARTICLE I THE MERGER | 1 | |||||||||
1.1 | The Merger | 1 | ||||||||
1.2 | Effective Time | 1 | ||||||||
1.3 | Effects of the Merger | 1 | ||||||||
1.4 | Conversion of Intermountain Common Stock | 2 | ||||||||
1.5 | Options | 2 | ||||||||
1.6 | Articles of Incorporation | 3 | ||||||||
1.7 | Bylaws | 3 | ||||||||
1.8 | Directors and Officers | 3 | ||||||||
1.9 | Tax Consequences | 3 | ||||||||
1.10 | Possible Alternative Structures | 3 | ||||||||
ARTICLE II PRORATION; ELECTION AND EXCHANGE PROCEDURES | 4 | |||||||||
2.1 | Proration | 4 | ||||||||
2.2 | Election and Exchange Procedures | 5 | ||||||||
2.3 | Certain Adjustments | 8 | ||||||||
2.4 | Dissenters’ Rights | 8 | ||||||||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF INTERMOUNTAIN | 9 | |||||||||
3.1 | Corporate Organization | 9 | ||||||||
3.2 | Capitalization | 10 | ||||||||
3.3 | Authority; No Violation | 11 | ||||||||
3.4 | Consents and Approvals | 12 | ||||||||
3.5 | Loan Portfolio; Reports | 12 | ||||||||
3.6 | Financial Statements; Books and Records | 12 | ||||||||
3.7 | Broker’s Fees | 13 | ||||||||
3.8 | Absence of Certain Changes or Events | 13 | ||||||||
3.9 | Legal Proceedings | 13 | ||||||||
3.10 | Taxes and Tax Returns | 13 | ||||||||
3.11 | Employee Plans | 15 | ||||||||
3.12 | Certain Contracts | 16 | ||||||||
3.13 | Agreements with Regulatory Agencies | 17 | ||||||||
3.14 | Environmental Matters | 17 | ||||||||
3.15 | Reserves for Losses | 18 | ||||||||
3.16 | Properties and Assets | 18 | ||||||||
3.17 | Insurance | 19 | ||||||||
3.18 | Compliance with Applicable Laws; Licenses | 19 | ||||||||
3.19 | Loans | 20 | ||||||||
3.20 | Affiliates | 21 | ||||||||
3.21 | Labor and Employment Matters | 21 | ||||||||
3.22 | Intellectual Property | 22 | ||||||||
3.23 | Internal Controls | 22 | ||||||||
3.24 | Antitakeover Provisions Inapplicable | 22 | ||||||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WESTERN | 22 | |||||||||
4.1 | Corporate Organization | 22 | ||||||||
4.2 | Capitalization | 23 | ||||||||
4.3 | Authority; No Violation | 23 |
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4.4 | Regulatory Approvals | 24 | ||||||||
4.5 | Agreements with Governmental Entities | 25 | ||||||||
4.6 | Legal Proceedings | 25 | ||||||||
4.7 | Tax Matters | 25 | ||||||||
4.8 | Financial Statements, SEC Filings, Books and Records | 25 | ||||||||
4.9 | Absence of Certain Changes or Events | 26 | ||||||||
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS | 26 | |||||||||
5.1 | Covenants of Intermountain | 26 | ||||||||
5.2 | Merger Covenants | 29 | ||||||||
5.3 | Covenant of Western | 29 | ||||||||
ARTICLE VI ADDITIONAL AGREEMENTS | 30 | |||||||||
6.1 | Regulatory Matters | 30 | ||||||||
6.2 | Access to Information | 31 | ||||||||
6.3 | Stockholder Meeting | 32 | ||||||||
6.4 | Legal Conditions to Merger | 32 | ||||||||
6.5 | Employees | 33 | ||||||||
6.6 | Indemnification | 34 | ||||||||
6.7 | Subsequent Interim and Annual Financial Statements | 35 | ||||||||
6.8 | Additional Agreements | 35 | ||||||||
6.9 | Advice of Changes | 36 | ||||||||
6.10 | Current Information | 36 | �� | |||||||
6.11 | Execution and Authorization of Bank Merger Agreement | 36 | ||||||||
6.12 | Transaction Expenses of Intermountain | 36 | ||||||||
6.13 | Additions to Boards of Directors | 37 | ||||||||
ARTICLE VII CONDITIONS PRECEDENT | 37 | |||||||||
7.1 | Conditions to Each Party’s Obligation To Effect the Merger | 37 | ||||||||
7.2 | Conditions to Obligations of Western | 38 | ||||||||
7.3 | Conditions to Obligations of Intermountain | 39 | ||||||||
ARTICLE VIII TERMINATION AND AMENDMENT | 40 | |||||||||
8.1 | Termination | 40 | ||||||||
8.2 | Effect of Termination | 41 | ||||||||
8.3 | Amendment | 41 | ||||||||
8.4 | Extension; Waiver | 41 | ||||||||
ARTICLE IX GENERAL PROVISIONS | 42 | |||||||||
9.1 | Closing | 42 | ||||||||
9.2 | Nonsurvival of Representations, Warranties and Agreements | 42 | ||||||||
9.3 | Expenses; Breakup Fee | 42 | ||||||||
9.4 | Notices | 43 | ||||||||
9.5 | Interpretation | 43 | ||||||||
9.6 | Counterparts | 43 | ||||||||
9.7 | Entire Agreement | 44 | ||||||||
9.8 | Governing Law | 44 | ||||||||
9.9 | Enforcement of Agreement | 44 | ||||||||
9.10 | Severability | 44 | ||||||||
9.11 | Publicity | 44 | ||||||||
9.12 | Assignment; Limitation of Benefits | 44 | ||||||||
9.13 | Additional Definitions | 45 |
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THE MERGER
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PRORATION; ELECTION AND EXCHANGE PROCEDURES
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REPRESENTATIONS AND WARRANTIES OF INTERMOUNTAIN
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REPRESENTATIONS AND WARRANTIES OF WESTERN
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COVENANTS RELATING TO CONDUCT OF BUSINESS
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ADDITIONAL AGREEMENTS
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CONDITIONS PRECEDENT
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TERMINATION AND AMENDMENT
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GENERAL PROVISIONS
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(a) | if to Western or BankWest of Nevada, to: | ||
Western Alliance Bancorporation 2700 West Sahara Avenue Las Vegas, NV 89102 Attn.: Robert Sarver | |||
with a copy (which shall not constitute notice) to: | |||
Hogan & Hartson L.L.P. Columbia Square 555 Thirteenth Street, N.W. Washington, DC 20004-1109 Attn.: Stuart G. Stein, Esq. |
(b) | if to Intermountain, to: | ||
Intermountain First Bancorp 777 North Rainbow Blvd. Las Vegas, NV 89107 Attn.: Arvind A. Menon | |||
with a copy (which shall not constitute notice) to: | |||
Milbank, Tweed, Hadley & McCloy LLP 601 South Figueroa Street, 30th Floor Los Angeles, CA 90017 Attn.: Kenneth J. Baronsky, Esq. |
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WESTERN ALLIANCE BANCORPORATION | ||||||||||||
ATTEST: | ||||||||||||
By: | By: | |||||||||||
Name: | Dale Gibbons | Name: | Robert Sarver | |||||||||
Title: | Executive Vice President and | Title: | President and Chief Executive Officer | |||||||||
Chief Financial Officer | ||||||||||||
INTERMOUNTAIN FIRST BANCORP | ||||||||||||
ATTEST: | ||||||||||||
By: | By: | |||||||||||
Name: | Name: | |||||||||||
Title: | Title: |
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(a) Consummation of a conversion or plan of merger to which the domestic corporation is a constituent entity: |
(1) If approval by the stockholders is required for the conversion or merger by NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation, regardless of whether the stockholder is entitled to vote on the conversion or plan of merger; or |
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(2) If the domestic corporation is a subsidiary and is merged with its parent pursuant to NRS 92A.180. |
(b) Consummation of a plan of exchange to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be acquired, if his shares are to be acquired in the plan of exchange. | |
(c) Any corporate action taken pursuant to a vote of the stockholders to the extent that the articles of incorporation, bylaws or a resolution of the board of directors provides that voting or nonvoting stockholders are entitled to dissent and obtain payment for their shares. |
Corporations § 182.4(5). |
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(a) The articles of incorporation of the corporation issuing the shares provide otherwise; or | |
(b) The holders of the class or series are required under the plan of merger or exchange to accept for the shares anything except: |
(1) Cash, owner’s interests or owner’s interests and cash in lieu of fractional owner’s interests of: |
(I) The surviving or acquiring entity; or | |
(II) Any other entity which, at the effective date of the plan of merger or exchange, were either listed on a national securities exchange, included in the national market system by the National Association of Securities Dealers, Inc., or held of record by a least 2,000 holders of owner’s interests of record; or |
(2) A combination of cash and owner’s interests of the kind described in sub-subparagraphs (I) and (H) of subparagraph (1) of paragraph (b). |
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(a) He submits to the subject corporation the written consent of the stockholder of record to the dissent not later than the time the beneficial stockholder asserts dissenter’s rights; and | |
(b) He does so with respect to all shares of which he is the beneficial stockholder or over which he has power to direct the vote. |
(a) Must deliver to the subject corporation, before the vote is taken, written notice of his intent to demand payment for his shares if the proposed action is effectuated; and | |
(b) Must not vote his shares in favor of the proposed action. |
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(a) State where the demand for payment must be sent and where and when certificates, if any, for shares must be deposited; | |
(b) Inform the holders of shares not represented by certificates to what extent the transfer of the shares will be restricted after the demand for payment is received; | |
(c) Supply a form for demanding payment that includes the date of the first announcement to the news media or to the stockholders of the terms of the proposed action and requires that the person asserting dissenter’s rights certify whether or not he acquired beneficial ownership of the shares before that date; | |
(d) Set a date by which the subject corporation must receive the demand for payment, which may not be less than 30 nor more than 60 days after the date the notice is delivered; and | |
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive. |
(a) Demand payment; | |
(b) Certify whether he or the beneficial owner on whose behalf he is dissenting, as the case may be, acquired beneficial ownership of the shares before the date required to be set forth in the dissenter’s notice for this certification; and | |
(c) Deposit his certificates, if any, in accordance with the terms of the notice. |
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(a) Of the county where the corporation’s registered office is located; or | |
(b) At the election of any dissenter residing or having its registered office in this state, of the county where the dissenter resides or has its registered office. The court shall dispose of the complaint promptly. |
(a) The subject corporation’s balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, a statement of income for that year, a statement of changes in the stockholders’ equity for that year and the latest available interim financial statements, if any; | |
(b) A statement of the subject corporation’s estimate of the fair value of the shares; | |
(c) An explanation of how the interest was calculated; | |
(d) A statement of the dissenter’s rights to demand payment under NRS 92A.480; and | |
(e) A copy of NRS 92A.300 to 92A.500, inclusive. |
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(a) For the amount, if any, by which the court finds the fair value of his shares, plus interest, exceeds the amount paid by the subject corporation; or | |
(b) For the fair value, plus accrued interest, of his after-acquired shares for which the subject corporation elected to withhold payment pursuant to NRS 92A.470. | |
(Added to NRS by 1995, 2091) |
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(a) Against the subject corporation and in favor of all dissenters if the court finds the subject corporation did not substantially comply with the requirements of NRS 92A.300 to 92A.500, inclusive; or | |
(b) Against either the subject corporation or a dissenter in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by NRS 92A.300 to 92A.500, inclusive. |
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Item 20. | Indemnification of Directors and Officers |
Item 21. | Exhibits and Financial Statement Schedules |
Item 22. | Undertakings |
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; | |
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; |
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(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change in such information in the registration statement. |
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | |
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(1) The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. | |
(2) The registrant undertakes that every prospectus (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
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WESTERN ALLIANCE BANCORPORATION |
By: | /s/Robert Sarver |
Robert Sarver | |
Chairman of the Board; President and | |
Chief Executive Officer |
Name | Title | Date | ||||
/s/Robert Sarver Robert Sarver | Chairman of the Board; President and Chief Executive Officer (Principal Executive Officer) | February 15, 2006 | ||||
/s/Dale Gibbons Dale Gibbons | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | February 15, 2006 | ||||
/s/Terry A. Shirey Terry A. Shirey | Senior Vice President and Controller (Principal Accounting Officer) | February 15, 2006 | ||||
Paul Baker | Director | |||||
/s/Bruce Beach Bruce Beach | Director | February 15, 2006 | ||||
William S. Boyd | Director |
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Name | Title | Date | ||||
Steve Hilton | Director | |||||
/s/Marianne Boyd Johnson Marianne Boyd Johnson | Director | February 15, 2006 | ||||
/s/Cary Mack Cary Mack | Director | February 15, 2006 | ||||
/s/Arthur Marshall Arthur Marshall | Director | February 15, 2006 | ||||
/s/Todd Marshall Todd Marshall | Director | February 15, 2006 | ||||
/s/M. Nafees Nagy, M.D. M. Nafees Nagy, M.D. | Director | February 15, 2006 | ||||
/s/James Nave, D.V.M James Nave, D.V.M | Director | February 15, 2006 | ||||
/s/Edward Nigro Edward Nigro | Director | February 15, 2006 | ||||
Donald Snyder | Director | |||||
/s/Larry Woodrum Larry Woodrum | Director | February 15, 2006 |
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Exhibit No. | Description of Exhibit | |||
2 | .1 | Agreement and Plan of Merger dated as of December 30, 2005 between Western Alliance Bancorporation and Intermountain First Bancorp (included as Appendix A to this joint proxy statement/ prospectus) | ||
3 | .1 | Amended and Restated Articles of Incorporation (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on June 7, 2005 and incorporated herein by reference). | ||
3 | .2 | Amended and Restated By-Laws (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on June 7, 2005 and incorporated herein by reference). | ||
4 | .1 | Form of common stock certificate (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on June 27, 2005 and incorporated herein by reference). | ||
5 | .1* | Opinion of Hogan & Hartson L.L.P. | ||
8 | .1* | Tax Opinion of Hogan & Hartson L.L.P. | ||
10 | .1 | Western Alliance Bancorporation 2005 Stock Incentive Plan (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on June 7, 2005 and incorporated herein by reference). | ||
10 | .2 | Form of Western Alliance Bancorporation 2005 Stock Incentive Plan Agreement (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on June 7, 2005 and incorporated herein by reference). | ||
10 | .3 | Form of BankWest of Nevada Incentive Stock Option Plan Agreement (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on April 28, 2005 and incorporated herein by reference). | ||
10 | .4 | Form of Western Alliance Incentive Stock Option Plan Agreement (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on April 28, 2005 and incorporated herein by reference). | ||
10 | .5 | Form of Western Alliance 2002 Stock Option Plan Agreement (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on April 28, 2005 and incorporated herein by reference). | ||
10 | .6 | Form of Western Alliance 2002 Stock Option Plan Agreement (with double trigger acceleration clause) (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on April 28, 2005 and incorporated herein by reference). | ||
10 | .7 | Form of Indemnification Agreement by and between Western Alliance Bancorporation and the following directors and officers: Messrs. Boyd, Froeschle, Lundy, A. Marshall, Nagy, Sarver, Snyder and Woodrum, Drs. Nagy and Nave, and Mses. Boyd Johnson and Mahan (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on April 28, 2005 and incorporated herein by reference). | ||
10 | .8 | Form of Non-Competition Agreement by and between Western Alliance Bancorporation and the following directors and officers: Messrs. Froeschle, Sarver, Lundy, Snyder and Woodrum (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on April 28, 2005 and incorporated herein by reference). | ||
10 | .9 | Form of Warrant to purchase shares of Western Alliance Bancorporation common stock, dated December 12, 2002, together with a schedule of warrantholders (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on April 28, 2005 and incorporated herein by reference). | ||
10 | .10 | Directors Fee Schedule (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on April 28, 2005 and incorporated herein by reference). | ||
10 | .11 | Summary of Compensation Arrangements with Named Executive Officers. |
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Exhibit No. | Description of Exhibit | |||
10 | .12 | Support Agreement dated as of December 30, 2005 by and among Western Alliance Bancorporation and certain shareholders of Intermountain First Bancorp named therein. | ||
10 | .13 | Agreement and Plan of Merger dated January 16, 2006 by and between Western Alliance Corporation and Bank of Nevada. | ||
21 | .1 | List of Subsidiaries of Western Alliance Bancorporation (incorporated by reference to Western Alliance’s Registration Statement on Form S-1, File No. 333-124406, filed with the SEC on April 28, 2005 and incorporated herein by reference). | ||
23 | .1 | Consent of McGladrey & Pullen LLP | ||
23 | .2 | Consents of Hogan & Hartson L.L.P. (included in Exhibit 5.1 and 8.1) | ||
24 | .1 | Power of Attorney (included on the signature pages of this registration statement) | ||
99 | .1* | Proxy for Special Meeting of Stockholders of Intermountain First Bancorp |
* | To be filed by amendment |
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