Exhibit 99.1
Contact: | Scott Montgomery, President & | 1809 7TH Avenue, Suite 1414 |
| smontgomery@mnbla.com |
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NEWS RELEASE
National Mercantile Reports It’s Second Consecutive Year of Record Earnings
Earnings Grow 27% to $5.6 Million, or $0.94 Per Share in 2006
Los Angeles, California – March 6, 2007 – National Mercantile Bancorp (Nasdaq: MBLA), the holding company for Mercantile National Bank and South Bay Bank, N.A., today reported record earnings for 2006 with strong asset growth. For 2006, net income grew 27% to $5.6 million, or $0.94 per share, compared to $4.5 million, or $0.75 per share, in 2005. Fourth quarter net income was $1.7 million or $0.28 per diluted share, compared to $1.2 million or $0.21 per share in the fourth quarter a year ago.
“The joint proxy statement for the proposed merger of equals with FCB Bancorp of Camarillo became effective in mid-February, and we have scheduled a special meeting of shareholders for March 12, 2007 at 10:00 am at the company’s headquarters in Century City. We encourage all shareholders to review the materials being sent to them and to vote their proxies promptly. Should shareholders approve the transaction as anticipated, the merger is expected to close following the shareholders meeting,” Montgomery added. “We are pleased to report two consecutive years of record earnings and continue to see expansion in the local economy.” The combined banks are expected to have total assets of over $1 billion in 12 full service offices and 3 loan production offices in Los Angeles, Ventura and Orange Counties.
REVIEW OF OPERATIONS
With strong loan growth and higher securities balances, revenue in 2006 (net interest income before provision for credit losses plus non-interest income) increased 15% to $25.1 million in 2006 from $21.9 million in 2005. Net interest income before provision for credit losses increased 12% to $23.3 million in 2006, from $20.8 million in 2005. In the fourth quarter of 2006, net interest income grew 2% to $5.8 million from $5.7 million a year ago. In 2006, the net interest margin was 5.14% compared to 5.58% in 2005. Fourth quarter net interest margin was 4.86% compared to 5.09% in the third quarter of 2006, and 5.51% in the fourth quarter of 2005.
The provision for credit losses was $248,000 during 2006, due to the growth in the loan portfolio, compared to a benefit of $84,000 in 2005, due to recoveries from previously charged off assets. The fourth quarter 2006 provision for credit losses was $104,000 compared to $40,000 a year ago. Noninterest income jumped 60.3%, to $1.8 million and $1.1 million, respectively, reflecting a $705,000 insurance settlement received by the Company in the fourth quarter of 2006 from a claim relating to collateral for a loan.
Operating (non-interest) expense increased 5% to $15.0 million from $14.4 million a year ago. “Revenue growth continues to outpace operating expenses, generating positive operating leverage
(more)
and contributing to strong profitability improvements,” said David Brown, Chief Financial Officer. Operating expenses included an after-tax charge for stock options of $105,000 in 4Q06 and $395,000 year-to-date related to the adoption of SFAS 123R. In 2005, this cost was not included in GAAP earnings but was disclosed in footnotes to the financial statements, and totaled $267,000 for the year.
Profitability continued to improve with strong gains in productivity reflected in an efficiency ratio of 59.8% in 2006 compared to 65.6% in 2005. The company generated a return on average assets (ROAA) of 1.16% and a return on average equity of 13.84% during 2006, versus 1.10% and 12.15%, respectively, a year ago.
In the first quarter of 2007, the company refinanced its trust preferred securities (TPS). The debt extinguishment in the first quarter 2007 resulted in a pre-tax charge of $1.6 million for the payment of the redemption premium and the write-off of the unamortized debt issuance cost. (It was previously reported in our December 26, 2006 press release that we expected this charge would be a fourth quarter 2006 event.) “The replacement of our 10.25% trust preferred securities with a 6.80% issue that will save us over $500,000 pre-tax per year,” said Scott A. Montgomery, President and CEO.
BALANCE SHEET PERFORMANCE
Total assets increased 12% to $501.6 million at December 31, 2006, from $448.5 million a year ago. The loan portfolio grew 8% to $366.6 million at December 31, 2006, compared to $339.6 million at December 31, 2005.
Loan Portfolio Composition
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| December 31, |
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| 2006 |
| 2005 |
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(Dollars in thousands) |
| Amount |
| % |
| Amount |
| % |
| ||
Commercial loans - secured and unsecured |
| $ | 102,662 |
| 28 | % | $ | 89,474 |
| 26 | % |
Real estate loans: |
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Secured by commercial real properties |
| 141,741 |
| 39 | % | 121,641 |
| 36 | % | ||
Secured by multifamily residential properties |
| 17,602 |
| 5 | % | 18,663 |
| 5 | % | ||
Secured by one to four family residential properties |
| 8,790 |
| 2 | % | 10,498 |
| 3 | % | ||
Total real estate loans |
| 270,795 |
| 74 | % | 150,802 |
| 44 | % | ||
Construction and land development loans |
| 83,188 |
| 23 | % | 92,077 |
| 27 | % | ||
Consumer: installment, home equity and unsecured |
| 12,663 |
| 3 | % | 7,239 |
| 2 | % | ||
Total loans outstanding |
| $ | 366,646 |
| 100 | % | $ | 339,592 |
| 100 | % |
Total deposits increased 5% to $380.6 million at December 31, 2006, compared to $363.2 million a year earlier, fueled by strong growth in money market accounts, which grew 56% year-over-year and now represent 31% of total deposits, up from 21% a year earlier. Core deposits, of which money market accounts are the largest component and exclude time certificates $100,000 and over, accounted for 79% of total deposits at December 31, 2006, up from 76% a year ago.
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Shareholders’ equity increased 18% to $45.1 million, equating to a book value per share of $7.73, at December 31, 2006, compared to $38.2 million, or $6.77 per share, at December 31, 2005. Tangible book value increased 19% to $7.03 per share at December 31, 2006, from $6.04 per share at December 31, 2005.
“Credit quality remains excellent this year following the sale of our only piece of other real estate owned,” said Robert Bartlett, Chief Credit Officer. At quarter-end, non-performing assets totaled $303,000 or 0.06% of total assets, down from $1.4 million, or 0.32% of total assets at December 31, 2005. Net charge-offs were just $38,000 year-to-date. There were no loan delinquencies at December 31, 2006. National Mercantile’s allowance for credit losses was 1.30% of gross loans at December 31, 2006, compared to 1.32% a year ago.
ABOUT NATIONAL MERCANTILE BANCORP
National Mercantile Bancorp is the holding company for Mercantile National Bank and South Bay Bank, with offices located in Century City, Encino, Torrance, El Segundo, Costa Mesa and Beverly Hills, all among California’s highest value markets. The banks’ focus is on business banking with specialty lending expertise in the entertainment, healthcare, professional services, real estate escrow, business and residential construction, property management industries and community-based non-profit organizations. The company is building a premier business banking franchise with experienced loan officers providing highly personalized service.
This press release contains forward-looking statements about the Company. Forward-looking statements consist of descriptions of plans or objectives for future operations, products or services, forecasts of revenues, earnings or other measures of economic performance and assumptions underlying or relating to any of the foregoing. Because forward-looking statements discuss future events or conditions and not historical facts, they often include words such as “believe,” “potential,” “confident,” “encourage or encouraging,” “will be,” “anticipate,” “estimate” or similar expressions. Do not rely unduly on forward-looking statements. They give the Company’s expectations about the future and are not guarantees or predictions of future events, conditions or results. Forward-looking statements speak only as of the date they are made, and the Company does not undertake to update them to reflect changes that occur after that date. Many factors, most beyond the company’s control, could cause actual results to differ significantly from the Company’s expectations. These factors include, among other things, changes in interest rates, which affect margins, impact funding sources or alter loan demand; increased competitive pressures; changes in national and local economic conditions; fluctuations in the California real estate markets; changes in fiscal policy, monetary policy, legislative or regulatory environments; changes in the credit quality of the Company’s loan portfolio, the Company’s abilities to realize further efficiencies and achieve growth targets, and finalization of year-end audit results. These and other factors are discussed in greater detail in the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2005.
Additional Information
The proposed merger will be submitted to the shareholders of each of National Mercantile Bancorp and FCB Bancorp for their consideration. First California Financial Group, Inc. filed a registration statement with the SEC, which includes a joint proxy statement/prospectus that has been mailed to the shareholders of each of National Mercantile Bancorp and FCB Bancorp, and each of First California Financial Group, National Mercantile Bancorp and FCB Bancorp may file other relevant documents concerning the proposed merger with the SEC. Shareholders are urged to read the registration statement and the joint proxy statement/prospectus regarding the proposed merger and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they contain important information. You are able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about First California Financial Group, National Mercantile Bancorp and FCB Bancorp, at the SEC’s website ( http://www.sec.gov). You may also obtain these documents, free of charge, by accessing National Mercantile Bancorp’s website
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( http://www.mnbla.com) under the tab “Investor Relations”, or by accessing FCB Bancorp’s website ( http://www.fcbank.com) under the tab “About Us”.
National Mercantile Bancorp and FCB Bancorp and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of National Mercantile Bancorp and FCB Bancorp in connection with the proposed merger. Information about the directors and executive officers of National Mercantile Bancorp is set forth in the proxy statement for its 2006 annual meeting of shareholders, as filed with the SEC on April 20, 2006. Information about the directors and executive officers of FCB Bancorp is set forth in its Annual Report on Form 10-K, as filed with the SEC on March 31, 2006. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the registration statement and the joint proxy statement/prospectus filed with the SEC regarding the proposed merger. You may obtain free copies of these documents as described above.
National Mercantile Bancorp and Subsidiaries
Selected Statement of Operations Data and Ratios:
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| For the Three Months Ended |
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(Unaudited) |
| Dec. 31, |
| Sept. 30, |
| June 30, |
| March 31, |
| Dec. 31, |
| Annual % |
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(In thousands, except share data) |
| 2006 |
| 2006 |
| 2006 |
| 2006(1) |
| 2005(1) |
| Change |
| |||||
Interest income |
| $ | 9,288 |
| $ | 9,248 |
| $ | 8,913 |
| $ | 8,051 |
| $ | 7,585 |
| 22.5 | % |
Interest expense |
| 3,483 |
| 3,387 |
| 2,947 |
| 2,335 |
| 1,907 |
| 82.6 | % | |||||
Net interest income before provision for credit losses |
| 5,805 |
| 5,861 |
| 5,966 |
| 5,716 |
| 5,678 |
| 2.2 | % | |||||
Provision for credit losses |
| 104 |
| 72 |
| 40 |
| 32 |
| 40 |
| n/a |
| |||||
Net interest income after provision for credit losses |
| 5,701 |
| 5,789 |
| 5,926 |
| 5,684 |
| 5,638 |
| 1.1 | % | |||||
Other operating income: |
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Deposit-related and other customer services |
| 258 |
| 255 |
| 234 |
| 232 |
| 242 |
| 6.6 | % | |||||
Other operating income |
| 865 |
| 573 |
| (310 | ) | (315 | ) | (194 | ) | -545.9 | % | |||||
Other operating expenses |
| 3,944 |
| 3,533 |
| 3,819 |
| 3,732 |
| 3,561 |
| 10.8 | % | |||||
Income before provision for income taxes |
| 2,880 |
| 3,084 |
| 2,031 |
| 1,869 |
| 2,125 |
| 35.5 | % | |||||
Provision for income taxes |
| 1,196 |
| 1,328 |
| 885 |
| 813 |
| 883 |
| 35.4 | % | |||||
Net income |
| $ | 1,684 |
| $ | 1,756 |
| $ | 1,146 |
| $ | 1,056 |
| $ | 1,242 |
| 35.6 | % |
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Earnings per share: |
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Basic |
| $ | 0.30 |
| $ | 0.32 |
| $ | 0.21 |
| $ | 0.19 |
| $ | 0.23 |
| 30.7 | % |
Diluted |
| $ | 0.28 |
| $ | 0.29 |
| $ | 0.19 |
| $ | 0.18 |
| $ | 0.21 |
| 33.6 | % |
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Weighted average shares outstanding: |
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Basic |
| 5,597,733 |
| 5,545,903 |
| 5,542,441 |
| 5,518,383 |
| 5,408,969 |
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Diluted |
| 6,004,100 |
| 5,985,837 |
| 6,035,527 |
| 6,002,461 |
| 5,925,829 |
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RATIOS |
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Return on quarterly average assets |
| 1.34 | % | 1.43 | % | 0.94 | % | 0.93 | % | 1.12 | % |
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Return on quarterly average equity |
| 15.29 | % | 17.05 | % | 11.66 | % | 10.82 | % | 12.95 | % |
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Net interest margin - average earning assets |
| 4.86 | % | 5.09 | % | 5.26 | % | 5.49 | % | 5.51 | % |
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Operating expense ratio |
| 3.13 | % | 2.88 | % | 3.14 | % | 3.30 | % | 3.22 | % |
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Efficiency ratio (2) |
| 56.93 | % | 52.82 | % | 64.84 | % | 66.25 | % | 62.19 | % |
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(1) As restated
(2) Other operating expense divided by net interest income and other operating income.
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National Mercantile Bancorp and Subsidiaries
Selected Statement of Operations Data and Ratios:
|
| For the Year Ended |
|
|
| ||||
(Unaudited) |
| December 31, |
| December 31, |
| Annual % |
| ||
(In thousands, except share data) |
| 2006 |
| 2005 |
| Change |
| ||
|
| $ | 35,500 |
| $ | 26,265 |
| 35.2 | % |
Interest expense |
| 12,152 |
| 5,483 |
| 121.6 | % | ||
Net interest income before provision for credit losses |
| 23,348 |
| 20,782 |
| 12.3 | % | ||
Provision for credit losses |
| 248 |
| (84 | ) | -395.2 | % | ||
Net interest income after provision for credit losses |
| 23,100 |
| 20,866 |
| 10.7 | % | ||
Other operating income: |
|
|
|
|
|
|
| ||
Deposit-related and other customer services |
| 979 |
| 1,060 |
| -7.6 | % | ||
Other operating income |
| 813 |
| 58 |
| -92.9 | % | ||
Other operating expenses |
| 15,028 |
| 14,376 |
| 4.5 | % | ||
Income before provision for income taxes |
| 9,864 |
| 7,608 |
| 29.7 | % | ||
Provision for income taxes |
| 4,222 |
| 3,159 |
| 33.6 | % | ||
Net income |
| $ | 5,642 |
| 4,449 |
| 26.8 | % | |
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Earnings per share: |
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Basic |
| $ | 1.02 |
| 0.96 |
| 6.3 | % | |
Diluted |
| $ | 0.94 |
| 0.75 |
| 25.3 | % | |
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Weighted average shares outstanding: |
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Basic |
| 5,551,570 |
| 4,630,186 |
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Diluted |
| 6,007,186 |
| 5,897,758 |
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Total shares outstanding (a) |
| 5,650,147 |
| 5,503,780 |
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RATIOS |
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Return on average assets |
| 1.16 | % | 1.10 | % |
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Return on average equity |
| 13.84 | % | 12.15 | % |
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Net interest margin - average earning assets |
| 5.14 | % | 5.67 | % |
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Operating expense ratio |
| 2.96 | % | 3.55 | % |
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Efficiency ratio (1) |
| 59.78 | % | 65.64 | % |
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(1) Other operating expense divided by net interest income and other operating income.
(a) includes assumed conversion of currently convertible Series A preferred stock into common stock
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National Mercantile Bancorp and Subsidiaries
Selected Financial Condition Ratios:
(Unaudited) |
| Dec. 31, |
| Sept. 30, |
| June 30, |
| March 31, |
| Dec. 31, |
| |||||
(In thousands, except ratios and shares) |
| 2006 |
| 2006 |
| 2006 |
| 2006 |
| 2005 |
| |||||
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Average quarterly assets |
| $ | 499,378 |
| $ | 486,336 |
| $ | 487,372 |
| $ | 458,881 |
| $ | 438,715 |
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Nonperforming assets |
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Nonaccrual loans |
| — |
| 338 |
| 343 |
| 300 |
| 319 |
| |||||
Loans 90 days past due and still accruing |
| — |
| — |
| — |
| — |
| — |
| |||||
Other real estate owned |
| — |
| — |
| — |
| — |
| — |
| |||||
Other property owned |
| 303 |
| — |
| — |
| — |
| 1,056 |
| |||||
Total nonperforming assets |
| 303 |
| 338 |
| 343 |
| 300 |
| 1,375 |
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Loan to deposit ratio |
| 96.33 | % | 94.58 | % | 94.55 | % | 87.45 | % | 93.50 | % | |||||
Allowance for credit losses to total loans |
| 1.30 | % | 1.30 | % | 1.32 | % | 1.29 | % | 1.32 | % | |||||
Allowance for credit losses to nonperforming assets |
| 1564.36 | % | 1379.03 | % | 1355.10 | % | 1520.67 | % | 324.95 | % | |||||
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National Mercantile Bancorp and Subsidiaries
Selected Financial Condition Data:
(Unaudited) |
| Dec. 31, |
| Sept. 30, |
| June 30, |
| March 31, |
| Dec. 31, |
| |||||
(In thousands, except share data) |
| 2006 |
| 2006 |
| 2006 |
| 2006 |
| 2005 |
| |||||
ASSETS |
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Cash and due from banks-demand |
| $ | 11,438 |
| $ | 10,709 |
| $ | 15,002 |
| $ | 15,211 |
| $ | 13,507 |
|
Due from banks-interest bearing |
| 2,000 |
| 2,000 |
| 2,263 |
| 2,000 |
| 2,000 |
| |||||
Federal funds sold and securities purchased under agreements to resell |
| — |
| — |
| 600 |
| 2,790 |
| 685 |
| |||||
Investment securities |
| 104,414 |
| 105,478 |
| 103,970 |
| 88,263 |
| 74,370 |
| |||||
Loans |
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| |||||
Commercial |
| 102,662 |
| 100,757 |
| 91,485 |
| 93,517 |
| 89,474 |
| |||||
Real estate |
| 168,133 |
| 162,237 |
| 164,394 |
| 159,724 |
| 150,802 |
| |||||
Construction and land development |
| 83,188 |
| 88,407 |
| 88,717 |
| 96,121 |
| 92,077 |
| |||||
Consumer and other loans |
| 12,663 |
| 7,434 |
| 7,686 |
| 5,133 |
| 7,239 |
| |||||
Total loans outstanding |
| 366,646 |
| 358,835 |
| 352,282 |
| 354,495 |
| 339,592 |
| |||||
Deferred net loan fees |
| (928 | ) | (615 | ) | (1,053 | ) | (995 | ) | (1,034 | ) | |||||
Loans receivable, net |
| 365,718 |
| 358,220 |
| 351,229 |
| 353,500 |
| 338,558 |
| |||||
Allowance for loan and lease losses |
| (4,740 | ) | (4,661 | ) | (4,648 | ) | (4,562 | ) | (4,468 | ) | |||||
Net loans receivable |
| 360,978 |
| 353,559 |
| 346,581 |
| 348,938 |
| 334,090 |
| |||||
Goodwill and intangible assets |
| 4,410 |
| 4,464 |
| 4,520 |
| 4,576 |
| 4,632 |
| |||||
Accrued interest receivable and other assets |
| 18,323 |
| 17,987 |
| 18,466 |
| 17,554 |
| 19,175 |
| |||||
Total assets |
| $ | 501,563 |
| $ | 494,197 |
| $ | 491,402 |
| $ | 479,332 |
| $ | 448,459 |
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LIABILITIES & CAPITAL |
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Deposits: |
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| |||||
Noninterest-bearing demand |
| $ | 115,745 |
| $ | 115,740 |
| $ | 115,650 |
| $ | 122,638 |
| $ | 115,924 |
|
Interest-bearing demand deposits |
| 26,372 |
| 27,768 |
| 30,973 |
| 31,716 |
| 36,018 |
| |||||
Money market accounts |
| 118,704 |
| 109,210 |
| 97,578 |
| 91,885 |
| 76,334 |
| |||||
Savings |
| 22,463 |
| 24,435 |
| 24,102 |
| 26,336 |
| 28,208 |
| |||||
Time certificates of deposit: |
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|
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| |||||
$100,000 or more |
| 80,080 |
| 84,094 |
| 86,756 |
| 114,296 |
| 87,468 |
| |||||
Under $100,000 |
| 17,250 |
| 18,171 |
| 17,516 |
| 18,481 |
| 19,256 |
| |||||
Total deposits |
| 380,614 |
| 379,418 |
| 372,575 |
| 405,352 |
| 363,208 |
| |||||
Other borrowings |
| 55,300 |
| 52,600 |
| 57,250 |
| 16,400 |
| 28,337 |
| |||||
Junior subordinated deferrable interest debentures |
| 15,464 |
| 15,464 |
| 15,464 |
| 15,464 |
| 15,464 |
| |||||
Accrued interest and other liabilities |
| 5,116 |
| 3,938 |
| 7,077 |
| 3,414 |
| 3,288 |
| |||||
Total liabilities |
| 456,494 |
| 451,420 |
| 452,366 |
| 440,630 |
| 410,297 |
| |||||
Total shareholders’ equity |
| 45,069 |
| 42,777 |
| 39,036 |
| 38,702 |
| 38,162 |
| |||||
Total liabilities & shareholders’ equity |
| $ | 501,563 |
| $ | 494,197 |
| $ | 491,402 |
| $ | 479,332 |
| $ | 448,459 |
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Book value per common share |
| $ | 7.73 |
| $ | 7.45 |
| $ | 6.89 |
| $ | 6.69 |
| $ | 6.72 |
|
Tangible book value per common share (1) |
| $ | 7.03 |
| $ | 6.75 |
| $ | 6.18 |
| $ | 5.96 |
| $ | 5.99 |
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(1) Total common equity, less goodwill and other intangible assets; divided by fully-diluted shares outstanding.
Note: Transmitted on Prime Zone on November 8, 2006.
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