Exhibit 99.1
[Logo of Foothill Independent Bancorp appears here] | Contact: G. Langley | |
(626) 963-8551 |
PRESS RELEASE - October 16, 2003
FOOTHILL INDEPENDENT BANCORP POSTS RECORD THIRD QUARTER PROFITS
NONPERFORMING ASSETS IMPROVE TO ONLY 0.14% OF TOTAL ASSETS
GLENDORA, CA – Foothill Independent Bancorp (Nasdaq: FOOT) today reported that continued focus on liability management, which led to increases in no-and low-cost core deposits, coupled with increases in interest income and continued improvement in loan quality, contributed to record profits in the third quarter and nine months ended September 30, 2003. Net income increased 13% in the third quarter of 2003 to $2.2 million, or $0.34 per diluted share, compared to $1.9 million, or $0.31 per share in the third quarter last year. For the nine-month period ended September 30, 2003, net income grew 6% to $6.0 million, or $0.96 per diluted share, from $5.8 million, or $0.90 per diluted share in the first nine months of 2002.
Annualized return on average equity (ROE) improved to 14.9% in the third quarter of 2003, from 14.0% in the third quarter last year. For the nine months ended September 30, 2003, ROE was off slightly to 14.2%, compared to 14.4% in the same period of 2002. Annualized return on average assets was 1.31% for the third quarter, and 1.29% for the first nine months of 2003, compared to 1.33% and 1.37%, respectively, in the corresponding period of 2002.
“We have always focused on building no- and low-cost deposits to fund our loans, and this strategy enabled us to attain record profits despite a difficult interest rate environment,” stated George Langley, President and CEO. “Our ability to consistently attract and retain lower-cost funds should help us quickly ramp up our margin once rates start to rise.” Net interest margin was 5.40% in the third quarter of 2003, down from 5.66% for the same quarter of 2002, and was 5.29% in the nine months ended September 30, 2003, compared to 5.77% for the first nine months of last year.
Total deposits were $610 million at the end of the third quarter of 2003, up 14% from $534 million a year ago. Core deposits, defined as low- and no-cost deposits, increased 19% to $532 million, representing 87% of total deposits at September 30, 2003 compared to $447 million, or 84% of deposits at September 30, 2002. Time deposits decreased by 10% to $78 million, from $86 million a year ago.
Credit quality has improved from already strong levels. Non-performing assets (NPAs) decreased to $1.0 million, or 0.14% of total assets, at September 30, 2003, compared to $2.7 million, or 0.46% of assets at September 30, 2002. At year-end 2002, NPAs were $2.9 million, or 0.49% of total assets. The reserve for loan losses increased to $4.8 million at the end of the third quarter, representing 1.07% of gross loans and far exceeding NPAs. Net charge-offs totaled $48,000 and $41,000, respectively, for the quarter and nine months ended September 30, 2003 compared to $33,000 and $53,000, respectively, for the same respective periods ended September 30, 2002.
“In August, Foothill Independent Bank was named a ‘Preferred Lender’ by the Small Business Administration,” Langley said. “This program recognizes our ability to meet the financing needs of Southern California’s small business owners, and should help us continue to conservatively grow our loan portfolio.” Total assets increased 15% to $683 million at September 30, 2003, from $594 million at September 30, 2002, with total loans growing 3% to $452 million, from $438 million at September 30, 2002.
“While the loan portfolio growth seems less robust than we are accustomed to, our lending activity has remained strong with the local economy,” Langley said. “The low interest rates have triggered some loan prepayments, slowing growth in the portfolio but boosting interest income in the form of prepayment fees.”
In the third quarter 2003, interest income rose 7% to $9.3 million, compared to $8.7 million for the same quarter a year ago. Core deposit growth and declining interest rates helped drive down interest expense, which decreased 16% to $1.0 million in the third quarter of 2003, from $1.2 in the third quarter last year. As a result, net interest income grew 10% to $8.3 million in the third quarter of the current year, compared to $7.4 million in the same quarter a year ago. Other operating income showed slight increases in each of its components, growing 13% to $1.4 million in the third quarter of 2003 from $1.3 million in the same quarter last year. Other operating expense grew 9% to $6.1 million in the quarter ended September 30, 2003 from $5.6 million in the third quarter of 2002.
In the nine months ended September 30, 2003, net interest income grew 4% to $23.2 million, compared to $22.4 million in the first nine months of 2002. Other operating income declined slightly to $4.2 million in the period,
compared to $4.3 million last year, due to a decrease in fees on deposits. Other operating expenses increased by 2% to $17.4 million in the nine months ended September 30, 2003, from $17.1 million in the same period the previous year.
“Our efficiency ratio showed real progress on a quarter-over-quarter basis, improving by 239 basis points to 62.1% in the third quarter,” Langley said. “In the first nine months of the current year the efficiency ratio remained relatively flat at 64.3%. We will continue to monitor our operating expenses carefully and will strive to drive that number down even further.”
Shareholders’ equity was $60 million at September 30, 2003, compared to $56 million a year earlier and book value increased to $9.84 per share at September 30, 2003, from $9.33 per share at September 30, 2002. Capital ratios continue to be above the “Well-Capitalized” guidelines established by U.S. Bank Regulatory Agencies. The Tier 1 Leverage Ratio was 10.02% and the Total Risk-based Capital Ratio was 14.19% at September 30 2003.
About Foothill Independent Bancorp
Foothill Independent Bancorp is a one-bank holding company that owns and operates Foothill Independent Bank. This wholly owned bank subsidiary currently operates 12 commercial banking offices in Los Angeles, San Bernardino and Riverside Counties. Foothill Independent Bank has consistently earned the highest ratings for safety and soundness from such bank rating firms as Findley Reports, Bauer Financial Services, and Veribanc.
Forward Looking Information
This Release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and often include the words “believe,” “expect,” “anticipate,” “project,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements are estimates of, or expectations or beliefs regarding, our future financial condition or financial performance that are based on current information. Our business is subject to a number of risks and uncertainties that could adversely affect our ability to grow earnings per share, expand net interest margin and maintain asset quality and, therefore, could cause our future financial condition or operating results to differ significantly from our current expectations and beliefs. Certain of those risks and uncertainties are described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2002, as filed with the Securities and Exchange Commission. Readers of this Release are urged to read the cautionary statements, which are set forth under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Forward Looking Information and Uncertainties Regarding Future Financial Performance” in Part II of that Report. Due to these uncertainties and risks, readers are cautioned not to place undue reliance on forward-looking statements contained in this Release, which speak only as of this date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Dollars in thousands, except per share data
Three Months ended September 30, | Percent Change | Nine Months ended September 30, | Percent Change | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||||
Interest Income | ||||||||||||||||||
Interest on loans & leases | $ | 8,233 | $ | 7,922 | 3.9 | % | $ | 23,797 | $ | 23,471 | ||||||||
Interest on securities | 970 | 615 | 57.7 | % | 2,318 | 2,244 | ||||||||||||
Interest on federal funds sold | 81 | 148 | 272 | 306 | ||||||||||||||
Interest other | 33 | 47 | 95 | 147 | ||||||||||||||
Total Interest Income | 9,317 | 8,732 | 6.70 | % | 26,482 | 26,168 | 1.20 | % | ||||||||||
Interest Expense | ||||||||||||||||||
Deposits | 949 | 1,244 | 3,005 | 3,857 | ||||||||||||||
FHLB advances and other | 94 | — | 280 | 25 | ||||||||||||||
Total Interest Expense | 1,043 | 1,244 | (16.16 | )% | 3,285 | 3,882 | (15.38 | )% | ||||||||||
Net interest income | 8,274 | 7,488 | 10.50 | % | 23,197 | 22,286 | 4.09 | % | ||||||||||
Provision of loan losses | 200 | 110 | 81.82 | % | 300 | 360 | (16.67 | )% | ||||||||||
Net interest income after provision of loan losses | 8,074 | 7,378 | 9.43 | % | 22,897 | 21,926 | 4.4 | % | ||||||||||
Other Operating Income | ||||||||||||||||||
Fees on deposits | 1,218 | 1,178 | 3,732 | 3,868 | ||||||||||||||
Gain on sales of SBA loans | 2 | 1 | 3 | 2 | ||||||||||||||
Other | 196 | 76 | 464 | 389 | ||||||||||||||
Total Other Operating Income | 1,416 | 1,255 | 12.83 | % | 4,199 | 4,259 | (1.41 | )% | ||||||||||
Other Operating Expense | ||||||||||||||||||
Salaries and employee benefits | 3,090 | 2,899 | 8,819 | 8,551 | ||||||||||||||
Occupancy and equipment | 1,044 | 1,019 | 3,045 | 3,065 | ||||||||||||||
Other | 1,943 | 1,675 | 5,549 | 5,452 | ||||||||||||||
Total Other Operating Expenses | 6,077 | 5,593 | 8.65 | % | 17,413 | 17,068 | 2.02 | % | ||||||||||
Income before taxes | 3,413 | 3,040 | 9,683 | 9,117 | ||||||||||||||
Income taxes | 1,215 | 1,100 | 3,482 | 3,302 | ||||||||||||||
NET INCOME | $ | 2,198 | $ | 1,940 | 13.30 | % | $ | 6,201 | $ | 5,815 | 6.64 | % | ||||||
Earnings per common share – Basic | $ | 0.36 | $ | 0.33 | 8.45 | % | $ | 1.03 | $ | 0.97 | 6.26 | % | ||||||
Earnings per common share – Diluted | $ | 0.34 | $ | 0.31 | 8.35 | % | $ | 0.96 | $ | 0.90 | 6.43 | % | ||||||
Weighted Average Shares Outstanding | ||||||||||||||||||
Basic | 6,104,743 | 6,024,916 | 6,042,059 | 6,020,364 | ||||||||||||||
Diluted | 6,530,185 | 6,452,829 | 6,461,213 | 6,448,801 | ||||||||||||||
* | Per share date for the quarter and nine months ended September 30, 2002 has been retroactively adjusted for a stock dividend declared subsequent to September 30, 2002. |
FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
BALANCE SHEETS
(unaudited)
(Dollars in thousands, except share data)
September 30, | Percentage Change | ||||||||||
2003 | 2002 | ||||||||||
ASSETS: | |||||||||||
Noninterest earning demand deposits and cash on hand | $ | 37,314 | $ | 31,239 | |||||||
Federal funds sold and overnight repurchase agreements | 17,500 | 39,500 | |||||||||
Interest-earning deposits | 9,108 | 9,009 | |||||||||
Total Cash and Cash Equivalents | 63,922 | 79,748 | (20 | )% | |||||||
Securities available for sale | 139,011 | 52,406 | |||||||||
Securities held to maturity | 9,480 | 9,455 | |||||||||
Total Securities | 148,491 | 61,861 | 140 | % | |||||||
Loans and leases receivable | 452,212 | 438,031 | 3 | % | |||||||
Reserve For loan losses | (4,817 | ) | (4,513 | ) | |||||||
Loans & Leases Receivable, Net | 447,395 | 433,518 | 3 | % | |||||||
Accrued interest receivable | 2,574 | 2,373 | |||||||||
Other real estate owned | — | 387 | |||||||||
Premises and equipment | 5,019 | 5,679 | |||||||||
Federal Home Loan Bank (FHLB) stock, at cost | 370 | 353 | |||||||||
Federal Reserve Bank (FRB) stock, at cost | 229 | 229 | |||||||||
Other assets | 15,164 | 9,785 | |||||||||
TOTAL ASSETS | $ | 683,164 | $ | 593,933 | 15 | % | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY: | |||||||||||
LIABILITIES: | |||||||||||
Non-interest bearing demand deposits | $ | 223,655 | $ | 198,755 | |||||||
Savings & NOW deposits | 151,367 | 133,699 | |||||||||
Money market deposits | 156,984 | 114,651 | |||||||||
Time deposits | 77,987 | 86,447 | |||||||||
Total Deposits | 609,993 | 533,552 | 14 | % | |||||||
Accrued employee benefits | 2,957 | 2,676 | |||||||||
Accrued interest and other liabilities | 1,912 | 1,509 | |||||||||
Other debt | 8,000 | — | |||||||||
Total Liabilities | 622,862 | 537,737 | 16 | % | |||||||
STOCKHOLDERS’ EQUITY: | |||||||||||
Common stock $0.001 par value-authorized: 25,000,000 shares; | 6 | 6 | |||||||||
Additional paid-in capital | 54,317 | 43,050 | |||||||||
Retained earnings | 5,499 | 12,924 | |||||||||
Accumulated other comprehensive income net of taxes | 480 | 216 | |||||||||
Total Stockholders’ Equity | 60,302 | 56,196 | 7 | % | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 683,164 | $ | 593,933 | 15 | % | |||||
FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
CONSOLIDATED FINANCIAL RATIOS
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||
Return on Average Assets* | 1.31 | % | 1.33 | %* | 1.29 | % | 1.37 | % | ||||
Return on Average Equity* | 14.86 | % | 13.96 | %* | 14.17 | % | 14.36 | % | ||||
Efficiency Ratio* | 62.09 | % | 64.48 | % | 64.33 | % | 64.28 | % | ||||
Annualized Operating Expense/Average Assets* | 3.62 | % | 3.85 | %* | 3.63 | % | 4.02 | % | ||||
Net Interest Margin | 5.40 | % | 5.66 | %* | 5.29 | % | 5.77 | % | ||||
Tier 1 Capital Ratio* | 10.02 | % | 9.57 | % | 10.02 | % | 9.57 | % | ||||
Risk Adjusted Capital Ratio* | 14.19 | % | 12.60 | % | 14.19 | % | 12.60 | % |
* | These ratios have been annualized. |
OTHER CONSOLIDATED FINANCIAL DATA
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||
Net Loans and Leases | $ | 447,395 | $ | 433,518 | $ | 447,395 | $ | 433,518 | ||||||||
Non-Performing/Non-Accrual Loans* | ||||||||||||||||
Amounts | $ | 980 | $ | 2,350 | $ | 980 | $ | 2,350 | ||||||||
As a Percentage of Gross Loans | 0.22 | % | 0.54 | % | 0.22 | % | 0.54 | % | ||||||||
Real Estate Owned—Loans | $ | — | $ | 387 | $ | — | $ | 387 | ||||||||
Total Non-Performing Assets | ||||||||||||||||
Amounts | $ | 980 | $ | 2,737 | $ | 980 | $ | 2,737 | ||||||||
Percentage of Total Assets | 0.14 | % | 0.46 | % | 0.14 | % | 0.46 | % | ||||||||
Loan Loss Reserves | ||||||||||||||||
Amounts | $ | 4,817 | $ | 4,513 | $ | 4,817 | $ | 4,513 | ||||||||
As a Percentage of Gross Loans | 1.07 | % | 1.03 | % | 1.07 | % | 1.03 | % | ||||||||
Loan Loss Provision | $ | 200 | $ | 110 | $ | 300 | $ | 360 | ||||||||
Net Charge-Offs (Recoveries) | $ | 48 | $ | 33 | $ | 41 | $ | 53 |
* | Non-Accrual loans are loans as to which there have been no payments of principal or interest for more than 90 days. |
At September 30, | |||||||
2003 | 2002 | ||||||
Book Value Per Share | $ | 9.84 | $ | 9.33 | ** |
** | Adjusted for a stock dividend declared subsequent to September 30, 2002. |
FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEET
(unaudited)
(Dollars in thousands)
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
ASSETS | ||||||||||||||||
Earning assets: | ||||||||||||||||
Interest-earning deposits | $ | 8,937 | $ | 7,849 | $ | 7,818 | $ | 7,237 | ||||||||
Federal funds sold and overnight repurchase agreements | 34,128 | 50,684 | 33,564 | 37,813 | ||||||||||||
Investment securities | 121,960 | 46,609 | 98,025 | 57,129 | ||||||||||||
Loans and leasses (net of unearned income) | 453,851 | 431,522 | 451,523 | 418,608 | ||||||||||||
Total earning assets | 618,876 | 536,664 | 590,930 | 520,787 | ||||||||||||
Loan loss reserve | (4,711 | ) | (4,448 | ) | (4,652 | ) | (4,331 | ) | ||||||||
Non-earning assets | 57,776 | 49,389 | 53,724 | 49,392 | ||||||||||||
TOTAL ASSETS | $ | 671,941 | $ | 581,605 | $ | 640,002 | $ | 565,848 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||
Deposits: | ||||||||||||||||
Savings and interst bearing transaction accounts | $ | 302,223 | $ | 246,540 | $ | 280,767 | $ | 238,351 | ||||||||
Certificates of deposit, $100,000 or more | 30,637 | 33,881 | 31,972 | 34,680 | ||||||||||||
Other time deposits | 48,422 | 52,764 | 49,415 | 55,003 | ||||||||||||
Total interest-bearing deposits | 381,282 | 333,185 | 362,154 | 328,034 | ||||||||||||
Other interest-bearing liabilities | 8,000 | 0 | 8,000 | 0 | ||||||||||||
Total interest bearing liabilities | 389,282 | 333,185 | 370,154 | 328,034 | ||||||||||||
Non-interest liabilities: | ||||||||||||||||
Demand deposits | 218,930 | 188,070 | 207,040 | 177,727 | ||||||||||||
Other non-interest liabilities | 4,551 | 4,787 | 4,458 | 6,087 | ||||||||||||
Total liabilities | 612,763 | 526,042 | 581,652 | 511,848 | ||||||||||||
Stockholders’ equity | 59,178 | 55,563 | 58,350 | 54,000 | ||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 671,941 | $ | 581,605 | $ | 640,002 | $ | 565,848 | ||||||||