HEOP 2007 results
January 23, 2008
| Contacts: | Lawrence P. Ward, CEO Margaret Torres, CFO 805-369-5200 |
Heritage Oaks Bancorp Reports Record 2007 Profits,
Stable Asset Quality and Strong Loan and Deposit Growth
Paso Robles, CA - January 23, 2008 - Heritage Oaks Bancorp (NASDAQ: HEOP), the parent company of Heritage Oaks Bank, today reported preliminary financial results for 2007. Substantial loan and deposit growth, both organic and through its acquisition of Business First National Bank of Santa Barbara, contributed to record profits for the year ended December 31, 2007. In 2007, the company earned $6.9 million, or $1.00 per diluted share, compared to $6.6 million, or $1.01 per diluted share, in 2006. For the fourth quarter of 2007 net income increased 20% to $2.0 million, or $0.26 per diluted share, compared to $1.6 million, or $0.25 per diluted share, in the fourth quarter of 2006.
On October 12, 2007 Heritage Oaks Bancorp closed its acquisition of Business First National Bank of Santa Barbara in a stock and cash transaction valued at approximately $20 million. The company issued 850,213 new shares in conjunction with this acquisition, adding two full-service branches, $133 million in deposits and $124 million in loans. In connection with the transaction, Business First National Bank was merged with and into Heritage Oaks Bank and now operates as a division of Heritage Oaks Bank. The merger is expected to be accretive to earnings in 2008.
“Completing our acquisition of Business First National Bank of Santa Barbara in the fourth quarter enabled us to expand our branch network into a larger and more affluent market and added a complementary mix of loans and deposits to our balance sheet” stated Lawrence P. Ward, President and CEO. “With excellent asset quality and a well diversified portfolio of commercial loans, we are continuing to build a strong platform for growth in the attractive Central Coast markets.”
2007 Highlights:
| | · | Net income increased 4% to $6.9 million, or $1.00 per diluted share. |
| | · | Asset quality remained strong, with non-performing assets equaling just 0.05% of total assets. |
| | · | Core deposits increased by 46% over a year ago, and represent 88% of total deposits. |
| | · | Gross loans increased 38% to $613 million. |
| | · | Return on average equity was 12.4% and return on average assets was 1.14%. |
| | · | Net interest margin was 5.47%. |
HEOP 2007 results
January 23, 2008
Balance Sheet
Loans
The following table illustrates Loan Growth excluding the Business First Division:
Excludes Business First Bank | | 12/31/07 | | 12/31/06 | | $Variance vs. | | % Variance vs. | |
Account Type | | Heritage | | Heritage | | 2006 | | 2006 | |
| Commercial, financial and agricultural | | $ | 94,968 | | $ | 84,976 | | $ | 9,992 | | | 11.76 | % |
| Real estate - construction | | | 110,073 | | | 105,712 | | $ | 4,361 | | | 4.13 | % |
| Real estate - commercial | | | 242,193 | | | 237,401 | | $ | 4,792 | | | 2.02 | % |
| Home equity lines of credit | | | 9,167 | | | 10,792 | | $ | (1,625 | ) | | -15.06 | % |
| Installment loans to individuals | | | 5,040 | | | 5,598 | | $ | (558 | ) | | -9.96 | % |
| All other loans (including overdrafts) | | | 455 | | | 504 | | $ | (49 | ) | | -9.73 | % |
Total Gross Loans | | $ | 461,896 | | $ | 444,983 | | $ | 16,913 | | | 3.80 | % |
The following Table illustrates Loan Growth including the Business First Division: |
Includes Business First Bank | | 12/31/07 | | 12/31/06 | | $Variance vs. | | % Variance vs. | |
Account Type | | Total | | Total | | 2006 | | 2006 | |
| Commercial, financial and agricultural | | $ | 146,080 | | $ | 84,976 | | $ | 61,104 | | | 71.91 | % |
| Real estate - construction | | | 118,200 | | | 105,712 | | $ | 12,488 | | | 11.81 | % |
| Real estate - commercial | | | 322,928 | | | 237,401 | | $ | 85,527 | | | 36.03 | % |
| Home equity lines of credit | | | 17,470 | | | 10,792 | | $ | 6,678 | | | 61.88 | % |
| Installment loans to individuals | | | 7,977 | | | 5,598 | | $ | 2,379 | | | 42.50 | % |
| All other loans (including overdrafts) | | | 562 | | | 504 | | $ | 58 | | | 11.55 | % |
Total Gross Loans | | $ | 613,217 | | $ | 444,983 | | $ | 168,234 | | | 37.81 | % |
“The loans added from Business First are primarily Real Estate loans, all of which have undergone a thorough underwriting by our lenders to make sure they conform to our standards,” said Ward. “These loans, along with our internally generated loans, combined to increase the Real Estate (other) loans in our portfolio by 36%.” Net loans grew 38% to $605 million at December 31, 2007, from $439 million a year earlier. Of the total growth in loans 34% came from the Business First acquisition and 4% came from organic growth.
The following tables provide a break-down of the Bank’s Construction / Land and Commercial Real Estate loan portfolios as of December 31, 2007:
Construction / Land:
| Single Family Residences | Single Family Residences - Spec. | Tract | Land | Other | Ow ner Occupied | Hospitality |
10% | 11% | 1% | 26% | 26% | 12 | 14% |
Commercial Real Estate:
| Commercial/Industrial | Retail | Professional | Hospitality | Multi-Family | Farm Land | Other |
21% | 17% | 21% | 18% | 4% | 4% | 15% |
Deposits
“Building core deposits to fund our loan growth will continue to be a focal point for us in 2008,” said Ward. “Last year we implemented a strategy of funding our increased loan demand through a new variable interest rate money market account. We also used this new account to help replace higher cost borrowings. Consequently, savings, NOW and money market balances more than doubled and total deposits increased 53% since the end of December 2006. Of that deposit growth, 29% came from the Business First acquisition and 24% came from internal growth. Additionally, these deposits vary with market rate changes, and are thus, much more complementary funding source for our primarily floating rate loan portfolio.” Total deposits grew 53% to $645 million at the end of 2007, compared to $421 million at the end of 2006 and total assets increased 38% to a record $746 million at year-end, compared to $542 million a year earlier.
HEOP 2007 results
January 23, 2008
The following table illustrates Deposit Growth excluding the Business First Division:
Excludes Business First Bank | | 12/31/07 | | 12/31/06 | | $Variance vs. | | % Variance vs. | |
Account Type | | Heritage | | Heritage | | 2006 | | 2006 | |
| Demand Deposits | | $ | 123,392 | | $ | 153,005 | | $ | (29,613 | ) | | -19.35 | % |
| Interest Checking | | | 57,369 | | | 45,164 | | $ | 12,205 | | | 27.02 | % |
| Savings | | | 18,830 | | | 23,406 | | $ | (4,576 | ) | | -19.55 | % |
| Money Market | | | 180,077 | | | 77,540 | | $ | 102,537 | | | 132.24 | % |
| Time Deposits | | | 141,515 | | | 121,406 | | $ | 20,109 | | | 16.56 | % |
Total Deposits | | $ | 521,184 | | $ | 420,521 | | | 100,663 | | | 23.94 | % |
The following Table illustrates Deposit Growth including the Business First Division:
Includes Business First Bank | | 12/31/07 | | 12/31/06 | | $Variance vs. | | % Variance vs. | |
Account Type | | Total | | Total | | 2006 | | 2006 | |
| Demand Deposits | | $ | 153,684 | | $ | 153,005 | | $ | 679 | | | 0.44 | % |
| Interest Checking | | | 69,558 | | | 45,164 | | $ | 24,394 | | | 54.01 | % |
| Savings | | | 41,599 | | | 23,406 | | $ | 18,193 | | | 77.73 | % |
| Money Market | | | 206,754 | | | 77,540 | | $ | 129,214 | | | 166.64 | % |
| Time Deposits | | | 173,214 | | | 121,406 | | $ | 51,808 | | | 42.67 | % |
Total Deposits | | $ | 644,808 | | $ | 420,521 | | | 224,287 | | | 53.34 | % |
Due to the significant deposit growth, Heritage Oaks reduced its Federal Home Loan Bank (FHLB) borrowings by $42 million in 2007. “We believe that we saved approximately 20-30 basis points by replacing FHLB borrowings with relationship core deposits,” Ward noted. On September 20, 2007, the company issued $5.0 million in trust preferred securities. The Company is using the funds for general corporate purposes, including the acquisition of Business First.
Asset Quality
Asset quality remains strong with non-performing assets totaling only $338,000, or 0.05% of total assets at year-end. Three months earlier, Heritage Oaks’ non-performing assets totaled $641,000, or 0.11% of total assets. Despite the strong asset quality, Heritage Oaks has increased its allowance for loan losses to $6.1 million, or 1.00% of total loans at year-end compared to $4.1 million or 0.92% of total loans at December 31, 2006. “Our non-performing loans consist of four loans, of which, one for approximately $260 thousand that is real estate secured has a Loan To Value (LTV) of approximately <65% and is current, two loans that are less than $20 thousand each and are paying as agreed, and one less than $50 thousand that is in the process of collection. We are closely monitoring all delinquent loans, reviewing them weekly and do not anticipate at this time any significant increase in non-performing loans. As a business bank, we do not hold any residential mortgages in our portfolio and have no direct exposure to the subprime mortgage situation. We are keeping a close eye on all our lending relationships, and frequently review our loan portfolio to maintain strong asset quality,” added Ward.
Operating Results
“Although our net interest margin contracted as a result of our acquisition of Business First, the decline was not as significant as we thought it would be,” Ward said. “Core deposit growth, generated by the success of our program to increase money market account balances contributed to keeping our margin above peer levels.” In 2007, the net interest margin was 5.47% compared to 5.94% in 2006. For the fourth quarter, the net interest margin was 5.33% compared to 5.44% in the previous quarter and 5.72% in the fourth quarter a year ago.
Total revenues, consisting of net interest income before the provision for loan losses and non-interest income, increased 12% to $35.8 million in 2007 compared to $32.0 million a year ago. For the year, approximately 4% of the revenue increase was the result of the acquisition of Business First. Fourth quarter revenues grew 24% to $10.2 million from $8.3 million in the same quarter of 2006. For the quarter, approximately 15% of the revenue increase was the result of the acquisition of Business First. Net interest income increased 12% to $30.4 million in 2007 compared to $27.1 million in 2006. In the fourth quarter, net interest income increased 26% to $8.8 million, from $7.0 million a year ago. Interest and fees on loans increased 31% for the fourth quarter and 25% for the year compared to last year while interest expense increased by 47% and 58% for that same 3 month and 12 month time frame.
HEOP 2007 results
January 23, 2008
Non-interest income was $5.3 million in 2007, compared to $5.0 million in 2006. A recovery of approximately $200,000 from a 2001 operational loss is included in other non-interest income during the fourth quarter of 2006. For the fourth quarter of 2007, non-interest income increased 11% to $1.4 million, compared to $1.3 million in the fourth quarter of 2006.
Total non-interest expense increased 14% to $23.9 million in 2007, from $21.0 million in 2006. In the fourth quarter, non-interest expenses were $6.9 million compared to $5.5 million in the fourth quarter a year ago. “Our increase in salary and employee benefits and the increased occupancy costs are directly a result of our larger organization due to both the acquisition of Business First and our organic growth in 2007,” said Ward. “Additionally, our occupancy expense increased in the second half of 2007 due to a sale leaseback transaction that was finalized in June 2007. The offset to this additional expense is an increase in interest income resulting from the investment of the funds we received by selling the properties.”
The provision for income tax was approximately 200 basis points higher at 38.26 % in 2007 compared to 36.27 % in 2006. The amount of the tax provision is determined by applying the Company’s statutory income tax rates to pre-tax book income, adjusted for permanent differences between pre-tax book income and actual taxable income. Such permanent differences include but are not limited to tax-exempt interest income, and increases in the cash surrender value of bank-owned life insurance.
Performance Measures
Return on average assets was 1.11% in the fourth quarter and 1.14% for the year, compared to 1.23% and 1.32% for the respective periods in 2006. Return on average equity was 11.7% for the fourth quarter of 2007 and 12.4% for the year, compared to 13.5% and 14.1% in their respective periods in 2006.
The efficiency ratio was 67.3% in the fourth quarter of 2007 compared to 66.9% in the previous quarter and 67.1% in the fourth quarter a year ago. For all of 2007, the efficiency ratio was 66.8% compared to 65.5% in 2006. The efficiency ratio measures operating expenses as a percent of revenues.
Shareholders’ equity increased 40% to $69.5 million compared to $49.5 million a year ago. Book value per share was $9.49 at December 31, 2007, compared to $7.80 per share a year earlier. Tangible book value per share was $7.32 at December 31, 2007, compared to $6.84 a year earlier.
Heritage Oaks Bancorp is the holding company for Heritage Oaks Bank which operates as Heritage Oaks Bank and Business First, a division of Heritage Oaks Bank. Heritage Oaks Bank has its headquarters plus two branch offices in Paso Robles, two branch offices in San Luis Obispo, single branch offices in Cambria, Arroyo Grande, Atascadero, Templeton and Morro Bay and three branch offices in Santa Maria. Heritage conducts commercial banking business in San Luis Obispo County and Northern Santa Barbara County. The Business First division has two branch offices in Santa Barbara. Visit Heritage Oaks Bancorp on the Web at www.heritageoaksbancorp.com.
Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to the ability to successfully integrate the operations of Business First National Bank, increased profitability, continued growth, the Bank’s beliefs as to the adequacy of its existing and anticipated allowances for loan losses, beliefs and expectations regarding actions that may be taken by regulatory authorities having oversight of the Bank’s operations, interest rates and financial policies of the United States government, general economic conditions and California’s energy crisis. Additional information on these and other factors that could affect financial results are included in Heritage Oaks Bancorp’s Securities and Exchange Commission filings. If any of these risks or uncertainties materialize or if any of the assumptions underlying such forward-looking statements proves to be incorrect, Heritage Oaks Bancorp’s results could differ materially from those expressed in, implied or projected by such forward-looking statements. Heritage Oaks Bancorp assumes no obligation to update such forward-looking statements.
HEOP 2007 results
January 23, 2008
Heritage Oaks Bancorp |
Consolidated Balance Sheets |
(dollars in thousands except share data) |
| | | | | | | | | | | | |
| | | (unaudited | | (unaudited) | | (audited) | | Percentage Change vs. | |
| | | 12/31/2007 | | 9/30/2007 | | 12/31/2006 | | 9/30/2007 | | 12/31/2006 | |
Assets | | | | | | | | | | | |
Cash and due from banks | | $ | 23,254 | | $ | 20,316 | | $ | 19,164 | | | 14.5 | % | | 21.3 | % |
Federal funds sold | | | 23,165 | | | 14,260 | | | 3,870 | | | 62.4 | % | | 498.6 | % |
Total cash and cash equivalents | | | 46,419 | | | 34,576 | | | 23,034 | | | 34.3 | % | | 101.5 | % |
| | | | | | | | | | | | | | | | | |
Interest bearing deposits with other banks | | | 330 | | | 1,718 | | | 318 | | | -80.8 | % | | 3.8 | % |
Securities available for sale | | | 47,556 | | | 34,854 | | | 38,445 | | | 36.4 | % | | 23.7 | % |
Federal Home Loan Bank Stock, at cost | | | 3,045 | | | 2,171 | | | 2,350 | | | 40.3 | % | | 29.6 | % |
Loans held for sale | | | 902 | | | 902 | | | 1,764 | | | 0.0 | % | | -48.9 | % |
Loans, net (1) | | | 605,342 | | | 468,966 | | | 439,277 | | | 29.1 | % | | 37.8 | % |
Property, premises and equipment | | | 6,390 | | | 5,017 | | | 14,581 | | | 27.4 | % | | -56.2 | % |
Cash surrender value of life insurance | | | 9,923 | | | 9,716 | | | 9,435 | | | 2.1 | % | | 5.2 | % |
Deferred tax assets | | | 5,084 | | | 4,964 | | | 2,414 | | | 2.4 | % | | 110.6 | % |
Goodwill | | | 11,117 | | | 4,865 | | | 4,865 | | | 128.5 | % | | 128.5 | % |
Core deposit intangible | | | 4,551 | | | 883 | | | 1,148 | | | 415.4 | % | | 296.4 | % |
Other assets | | | 4,895 | | | 4,058 | | | 4,143 | | | 20.6 | % | | 18.2 | % |
Total assets | | $ | 745,554 | | $ | 572,690 | | $ | 541,774 | | | 30.2 | % | | 37.6 | % |
| | | | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | |
Non-interest bearing demand | | $ | 153,684 | | $ | 130,221 | | $ | 153,005 | | | 18.0 | % | | 0.4 | % |
Savings, NOW, and money market | | | 317,911 | | | 215,576 | | | 146,110 | | | 47.5 | % | | 117.6 | % |
Time deposits of $100K or more | | | 75,966 | | | 50,666 | | | 30,630 | | | 49.9 | % | | 148.0 | % |
Time deposits under $100K | | | 97,247 | | | 99,847 | | | 90,776 | | | -2.6 | % | | 7.1 | % |
Total deposits | | | 644,808 | | | 496,310 | | | 420,521 | | | 29.9 | % | | 53.3 | % |
FHLB advances and other borrowings | | | 8,000 | | | - | | | 50,000 | | | - | | | -84.0 | % |
Securities sold under agreements to repurchase | | | 1,936 | | | 1,464 | | | 1,364 | | | 32.2 | % | | 41.9 | % |
Junior subordinated debentures | | | 13,403 | | | 13,403 | | | 16,496 | | | 0.0 | % | | -18.8 | % |
Other liabilities | | | 7,957 | | | 7,663 | | | 3,921 | | | 3.8 | % | | 102.9 | % |
Total liabilities | | | 676,104 | | | 518,840 | | | 492,302 | | | 30.3 | % | | 37.3 | % |
Stockholders' equity | | | | | | | | | | | | | | | | |
Common stock, no par value; 20,000,000 shares | | | | | | | | | | | | | | | | |
authorized; issued and outstanding 7,317,932; 6,469,653; | | | | | | | | | | | | | | | | |
and 6,345,639 for December 31, 2007; September 30, 2007 | | | | | | | | | | | | | | | | |
and December 31, 2006 respectively | | | 43,996 | | | 29,976 | | | 29,247 | | | 46.8 | % | | 50.4 | % |
Additional paid in capital | | | 672 | | | 600 | | | 336 | | | 12.0 | % | | 100.0 | % |
Retained earnings | | | 24,598 | | | 23,205 | | | 19,809 | | | 6.0 | % | | 24.2 | % |
Accumulated other comprehensive income | | | 184 | | | 69 | | | 80 | | | 166.7 | % | | 130.0 | % |
Total stockholders' equity | | | 69,450 | | | 53,850 | | | 49,472 | | | 29.0 | % | | 40.4 | % |
Total liabilities and stockholders' equity | | $ | 745,554 | | $ | 572,690 | | $ | 541,774 | | | 30.2 | % | | 37.6 | % |
| (1) | | Loans are net of deferred loan fees of $1,732; $1,941; $1,625 and allowance for loan losses of $6,143; $4,720; $4,081. | | | |
| | | for December 31, 2007, September 30, 2007, and December 31, 2006 respectively. | | | | | |
| | | | | | | | | | | | |
HEOP 2007 results
January 23, 2008
Heritage Oaks Bancorp |
Consolidated Statements of Income |
(dollars in thousands except share data) |
| | | | | | | | | | | | | |
| | | (unaudited) | | (unaudited) | | (unaudited) | | | |
| | | For the Three Months Ended | | Percentage Change Vs. | |
| | | 12/31/2007 | | 9/30/2007 | | 12/31/2006 | | 9/30/2007 | | 12/31/2006 | |
Interest Income: | | | | | | | | | | | |
Interest and fees on loans | | $ | 12,337 | | $ | 10,058 | | $ | 9,423 | | | 22.7 | % | | 30.9 | % |
Investment securities | | | 609 | | | 426 | | | 426 | | | 43.0 | % | | 43.0 | % |
Federal funds sold and commercial paper | | | 208 | | | 385 | | | 35 | | | -46.0 | % | | 494.3 | % |
Time certificates of deposit | | | 1 | | | 1 | | | 48 | | | 0.0 | % | | -97.9 | % |
Total interest income | | | 13,155 | | | 10,870 | | | 9,932 | | | 21.0 | % | | 32.5 | % |
Interest Expense: | | | | | | | | | | | | | | | | |
NOW accounts | | | 135 | | | 55 | | | 20 | | | 145.5 | % | | 575.0 | % |
MMDA accounts | | | 1,582 | | | 1,216 | | | 622 | | | 30.1 | % | | 154.3 | % |
Savings accounts | | | 169 | | | 21 | | | 24 | | | 704.8 | % | | 604.2 | % |
Time deposits of $100K or more | | | 926 | | | 610 | | | 199 | | | 51.8 | % | | 365.3 | % |
Other time deposits | | | 1,198 | | | 1,229 | | | 1,174 | | | -2.5 | % | | 2.0 | % |
Other borrowed funds | | | 364 | | | 411 | | | 942 | | | -11.4 | % | | -61.4 | % |
Total interest expense | | | 4,374 | | | 3,542 | | | 2,981 | | | 23.5 | % | | 46.7 | % |
Net interest income before provision for loan losses | | | 8,781 | | | 7,328 | | | 6,951 | | | 19.8 | % | | 26.3 | % |
Provision for loan losses | | | 140 | | | 210 | | | 120 | | | -33.3 | % | | 16.7 | % |
Net interest income after provision for loan losses | | | 8,641 | | | 7,118 | | | 6,831 | | | 21.4 | % | | 26.5 | % |
Non Interest Income: | | | | | | | | | | | | | | | | |
Service charges on deposit accounts | | | 829 | | | 645 | | | 581 | | | 28.5 | % | | 42.7 | % |
Other income | | | 610 | | | 664 | | | 720 | | | -8.1 | % | | -15.3 | % |
Total non-interest income | | | 1,439 | | | 1,309 | | | 1,301 | | | 9.9 | % | | 10.6 | % |
Non-Interest Expense: | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | | 3,819 | | | 3,238 | | | 3,039 | | | 17.9 | % | | 25.7 | % |
Occupancy and equipment | | | 1,130 | | | 830 | | | 706 | | | 36.1 | % | | 60.1 | % |
Other expenses | | | 1,925 | | | 1,709 | | | 1,794 | | | 12.6 | % | | 7.3 | % |
Total non-interest expenses | | | 6,874 | | | 5,777 | | | 5,539 | | | 19.0 | % | | 24.1 | % |
Income before provision for income taxes | | | 3,206 | | | 2,650 | | | 2,593 | | | 21.0 | % | | 23.6 | % |
Provision for income taxes | | | 1,228 | | | 1,022 | | | 944 | | | 20.2 | % | | 30.1 | % |
Net Income | | $ | 1,978 | | $ | 1,628 | | $ | 1,649 | | | 21.5 | % | | 20.0 | % |
| | | | | | | | | | | | | | | | | |
Average basic shares outstanding | | | 7,316,866 | | | 6,472,653 | | | 6,355,466 | | | | | | | |
Average diluted shares outstanding | | | 7,511,625 | | | 6,679,114 | | | 6,598,355 | | | | | | | |
Basic earnings per share | | $ | 0.27 | | $ | 0.25 | | $ | 0.26 | | | | | | | |
Fully diluted earnings per share | | $ | 0.26 | | $ | 0.24 | | $ | 0.25 | | | | | | | |
| | | | | | | | | | | | | | | | | |
HEOP 2007 results
January 23, 2008
Heritage Oaks Bancorp |
Consolidated Statements of Income |
(dollars in thousands except share data) |
| | | | | | | | | | | | | |
| | | (unaudited) | | (unaudited) | | (unaudited) | | Percent Change | | Percent Change | |
| | | For the Years Ended | | 12/31/2007 vs. | | 12/31/2006 vs. | |
| | | 12/31/2007 | | 12/31/2006 | | 12/31/2005 | | 12/31/2006 | | 12/31/2005 | |
Interest Income: | | | | | | | | | | | |
Interest and fees on loans | | $ | 42,425 | | $ | 33,897 | | $ | 27,399 | | | 25.2 | % | | 23.7 | % |
Investment securities | | | 1,956 | | | 1,927 | | | 2,100 | | | 1.5 | % | | -8.2 | % |
Federal funds sold and commercial paper | | | 785 | | | 539 | | | 667 | | | 45.6 | % | | -19.2 | % |
Time certificates of deposit | | | 8 | | | 9 | | | 9 | | | -11.1 | % | | 0.0 | % |
Total interest income | | | 45,174 | | | 36,372 | | | 30,175 | | | 24.2 | % | | 20.5 | % |
Interest Expense: | | | | | | | | | | | | | | | | |
NOW accounts | | | 262 | | | 86 | | | 89 | | | 204.7 | % | | -3.4 | % |
MMDA accounts | | | 4,411 | | | 2,309 | | | 1,504 | | | 91.0 | % | | 53.5 | % |
Savings accounts | | | 238 | | | 102 | | | 102 | | | 133.3 | % | | 0.0 | % |
Time deposits of $100K or more | | | 2,046 | | | 626 | | | 413 | | | 226.8 | % | | 51.6 | % |
Other time deposits | | | 4,914 | | | 3,845 | | | 1,371 | | | 27.8 | % | | 180.5 | % |
Other borrowed funds | | | 2,880 | | | 2,348 | | | 1,537 | | | 22.7 | % | | 52.8 | % |
Total interest expense | | | 14,751 | | | 9,316 | | | 5,016 | | | 58.3 | % | | 85.7 | % |
Net interest income before provision for loan losses | | | 30,423 | | | 27,056 | | | 25,159 | | | 12.4 | % | | 7.5 | % |
Provision for loan losses | | | 660 | | | 600 | | | 710 | | | 10.0 | % | | -15.5 | % |
Net interest income after provision for loan losses | | | 29,763 | | | 26,456 | | | 24,449 | | | 12.5 | % | | 8.2 | % |
Non Interest Income: | | | | | | | | | | | | | | | | |
Service charges on deposit accounts | | | 2,774 | | | 2,427 | | | 2,430 | | | 14.3 | % | | -0.1 | % |
Other income | | | 2,575 | | | 2,525 | | | 2,579 | | | 2.0 | % | | -2.1 | % |
Total non-interest income | | | 5,349 | | | 4,952 | | | 5,009 | | | 8.0 | % | | -1.1 | % |
Non-Interest Expense: | | | | | | | �� | | | | | | | | | |
Salaries and employee benefits | | | 13,501 | | | 11,573 | | | 9,746 | | | 16.7 | % | | 18.7 | % |
Occupancy and equipment | | | 3,381 | | | 2,607 | | | 2,491 | | | 29.7 | % | | 4.7 | % |
Other expenses | | | 7,026 | | | 6,775 | | | 6,481 | | | 3.7 | % | | 4.5 | % |
Total non-interest expenses | | | 23,908 | | | 20,955 | | | 18,718 | | | 14.1 | % | | 12.0 | % |
Income before provision for income taxes | | | 11,204 | | | 10,453 | | | 10,740 | | | 7.2 | % | | -2.7 | % |
Provision for income taxes | | | 4,287 | | | 3,791 | | | 4,103 | | | 13.1 | % | | -7.6 | % |
Net Income | | $ | 6,917 | | $ | 6,662 | | $ | 6,637 | | | 3.8 | % | | 0.4 | % |
| | | | | | | | | | | | | | | | | |
Average basic shares outstanding | | | 6,651,594 | | | 6,333,924 | | | 6,167,937 | | | | | | | |
Average diluted shares outstanding | | | 6,884,575 | | | 6,595,793 | | | 6,551,389 | | | | | | | |
Basic earnings per share | | $ | 1.04 | | $ | 1.05 | | $ | 1.08 | | | | | | | |
Fully diluted earnings per share | | $ | 1.00 | | $ | 1.01 | | $ | 1.01 | | | | | | | |
HEOP 2007 results
January 23, 2008
Additional Financial Information | | For the Quarters Ended | | Percentage Change vs. | |
(dollars in thousands) | | 12/31/2007 | | 9/30/2007 | | 12/31/2006 | | 9/30/2007 | | 12/31/2006 | |
| | | | | | | | | | | | |
LOANS | | | | | | | | | | | |
| Commercial, financial and agricultural | | $ | 146,080 | | $ | 101,748 | | $ | 84,976 | | | 43.6 | % | | 71.9 | % |
| Real estate - construction/land | | | 118,200 | | | 105,054 | | | 105,712 | | | 12.5 | % | | 11.8 | % |
| Real estate - other | | | 322,928 | | | 253,860 | | | 237,401 | | | 27.2 | % | | 36.0 | % |
| Home equity lines of credit | | | 17,470 | | | 8,897 | | | 10,792 | | | 96.4 | % | | 61.9 | % |
| Installment loans to individuals | | | 7,977 | | | 5,580 | | | 5,598 | | | 43.0 | % | | 42.5 | % |
| All other loans (including overdrafts) | | | 562 | | | 488 | | | 504 | | | 15.2 | % | | 11.5 | % |
| Total gross loans | | $ | 613,217 | | $ | 475,627 | | $ | 444,983 | | | 28.9 | % | | 37.8 | % |
| Loans held for sale | | $ | 902 | | $ | 902 | | $ | 1,764 | | | 0.0 | % | | -48.9 | % |
| | | | | | | | | | | | | | | | | |
ALLOWANCE FOR LOAN LOSSES | | | | | | | | | | | | | | | | |
| Balance, beginning of period | | $ | 4,720 | | $ | 4,520 | | $ | 3,863 | | | 4.4 | % | | 22.2 | % |
| Provision expense | | | 140 | | | 210 | | | 120 | | | -33.3 | % | | 16.7 | % |
| Credit losses charged against allowance | | | (213 | ) | | (16 | ) | | (42 | ) | | 1231.3 | % | | 407.1 | % |
| Recoveries of loans previously charged off | | | 115 | | | 6 | | | 140 | | | 1816.7 | % | | -17.9 | % |
| Credit from purchase of Business First Bank | | | 1,381 | | | - | | | - | | | - | | | - | |
| Balance, end of period | | $ | 6,143 | | $ | 4,720 | | $ | 4,081 | | | 30.1 | % | | 50.5 | % |
| | | | | | | | | | | | | | | | | |
| Net ( charge-offs ) / recoveries | | $ | (98 | ) | $ | (10 | ) | $ | 98 | | | 880.0 | % | | -200.0 | % |
| Net charge-offs / average loans outstanding | | | 0.02 | % | | 0.00 | % | | -0.02 | % | | 681.3 | % | | - | |
| Allowance for loan losses / total loans outstanding | | | 1.00 | % | | 0.99 | % | | 0.92 | % | | 0.9 | % | | 9.2 | % |
| | | | | | | | | | | | | | | | | |
NON-PERFORMING ASSETS | | | | | | | | | | | | | | | | |
| Loans on non-accrual status | | $ | 338 | | $ | 641 | | $ | 55 | | | -47.3 | % | | 514.5 | % |
| Loans more than 90 days delinquent, still accruing | | | - | | | - | | | - | | | - | | | - | |
| Total non-performing loans | | | 338 | | | 641 | | | 55 | | | -47.3 | % | | 514.5 | % |
| Other real estate owned (OREO) / repossessed assets | | | - | | | - | | | - | | | - | | | - | |
| Total non-performing assets | | $ | 338 | | $ | 641 | | $ | 55 | | | -47.3 | % | | 514.5 | % |
| | | | | | | | | | | | | | | | | |
| Total non-performing assets to total assets | | | 0.05 | % | | 0.11 | % | | 0.01 | % | | -59.5 | % | | 346.6 | % |
| | | | | | | | | | | | | | | | | |
DEPOSITS | | | | | | | | | | | | | | | | |
| Non-interest bearing demand | | $ | 153,684 | | $ | 130,221 | | $ | 153,005 | | | 18.0 | % | | 0.4 | % |
| | | | | | | | | | | | | | | | | |
| Interest-bearing demand | | | 69,558 | | | 56,931 | | | 45,164 | | | 22.2 | % | | 54.0 | % |
| Regular savings accounts | | | 41,599 | | | 21,606 | | | 23,406 | | | 92.5 | % | | 77.7 | % |
| Money market accounts | | | 206,754 | | | 137,039 | | | 77,540 | | | 50.9 | % | | 166.6 | % |
| Total interest-bearing transaction and savings accounts | | | 317,911 | | | 215,576 | | | 146,110 | | | 47.5 | % | | 117.6 | % |
| | | | | | | | | | | | | | | | | |
| Time deposits under $100 thousand | | | 97,247 | | | 99,847 | | | 90,776 | | | -2.6 | % | | 7.1 | % |
| Time deposits of $100 thousand or more | | | 75,966 | | | 50,666 | | | 30,630 | | | 49.9 | % | | 148.0 | % |
| Total time deposits | | | 173,213 | | | 150,513 | | | 121,406 | | | 15.1 | % | | 42.7 | % |
| | | | | | | | | | | | | | | | | |
| Total deposits | | $ | 644,808 | | $ | 496,310 | | $ | 420,521 | | | 29.9 | % | | 53.3 | % |
| | | | | | | | | | | | | | | | | |
HEOP 2007 results
January 23, 2008
| | | | | | | | | | | | |
PROFITABILITY / PERFORMANCE RATIOS | | For the Three Months Ended | | For the Twelve Months Ended | |
| | | 12/31/2007 | | 9/30/2007 | | 12/31/2006 | | 12/31/2007 | | 12/31/2006 | |
| Operating efficiency | | | 67.26 | % | | 66.89 | % | | 67.12 | % | | 66.83 | % | | 65.47 | % |
| Return on average equity | | | 11.65 | % | | 12.09 | % | | 13.53 | % | | 12.37 | % | | 14.10 | % |
| Return on average tangible equity | | | 14.51 | % | | 13.54 | % | | 15.46 | % | | 14.36 | % | | 16.22 | % |
| Return on average assets | | | 1.11 | % | | 1.12 | % | | 1.23 | % | | 1.14 | % | | 1.32 | % |
| Other operating income to average assets | | | 0.80 | % | | 0.90 | % | | 0.97 | % | | 0.88 | % | | 0.98 | % |
| Other operating expense to average assets | | | 3.84 | % | | 3.97 | % | | 4.14 | % | | 3.95 | % | | 4.16 | % |
| Net interest income to average assets | | | 4.91 | % | | 5.04 | % | | 5.20 | % | | 5.02 | % | | 5.37 | % |
| Non-interest income to total net revenue | | | 14.08 | % | | 15.16 | % | | 15.77 | % | | 14.95 | % | | 15.47 | % |
| | | | | | | | | | | | | | | | | |
ASSET QUALITY AND CAPITAL RATIOS | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Non-performing loans to total gross loans | | | 0.06 | % | | 0.13 | % | | 0.01 | % | | | | | | |
| Non-performing loans as a % of ALLL | | | 5.50 | % | | 13.58 | % | | 1.35 | % | | | | | | |
| Non-performing loans to primary capital | | | 0.49 | % | | 1.19 | % | | 0.11 | % | | | | | | |
| Leverage ratio | | | 9.60 | % | | 10.69 | % | | 11.00 | % | | | | | | |
| Tier I Risk-Based Capital Ratio | | | 10.08 | % | | 11.65 | % | | 11.51 | % | | | | | | |
| Total Risk-Based Capital Ratio | | | 11.03 | % | | 12.58 | % | | 12.36 | % | | | | | | |
| | | | | | | | | | | | | | | | | |
AVERAGE BALANCES AND RATES | | For the Three Months Ended | | For the Twelve Months Ended | |
(dollars in thousands) | | 12/31/2007 | | 9/30/2007 | | 12/31/2006 | | 12/31/2007 | | 12/31/2006 | |
| | | | | | | | | | | | |
| Average Investments | | $ | 50,525 | | $ | 38,166 | | $ | 41,981 | | $ | 42,619 | | $ | 44,089 | |
| Average federal funds sold | | | 18,137 | | | 29,447 | | | 2,534 | | | 15,878 | | | 11,179 | |
| Average loans | | | 585,484 | | | 466,749 | | | 437,623 | | | 497,374 | | | 400,229 | |
| Average earning assets | | | 654,146 | | | 534,362 | | | 482,138 | | | 555,871 | | | 455,497 | |
| Average non-earning assets | | | 61,090 | | | 46,858 | | | 52,629 | | | 54,649 | | | 52,311 | |
| Allowance for loan losses | | | (5,932 | ) | | (4,600 | ) | | (3,938 | ) | | (4,784 | ) | | (3,931 | ) |
| Average assets | | | 709,304 | | | 576,620 | | | 530,829 | | | 605,736 | | | 503,877 | |
| Average non-interest bearing demand deposits | | | 151,483 | | | 133,432 | | | 142,582 | | | 141,123 | | | 146,458 | |
| Average interest bearing deposits | | | 458,143 | | | 353,845 | | | 274,081 | | | 353,249 | | | 267,183 | |
| Average borrowings | | | 23,634 | | | 26,804 | | | 60,638 | | | 48,363 | | | 38,568 | |
| Average non-interest bearing liabilities | | | 8,701 | | | 9,098 | | | 5,186 | | | 7,074 | | | 4,432 | |
| Average liabilities | | | 641,961 | | | 523,179 | | | 482,487 | | | 549,809 | | | 456,641 | |
| Average equity | | | 67,343 | | | 53,441 | | | 48,342 | | | 55,927 | | | 47,236 | |
| Average liabilities and equity | | $ | 709,304 | | $ | 576,620 | | $ | 530,829 | | $ | 605,736 | | $ | 503,877 | |
| Interest rate yield on loans | | | 8.36 | % | | 8.55 | % | | 8.54 | % | | 8.53 | % | | 8.47 | % |
| Interest rate yield on investments | | | 4.79 | % | | 4.44 | % | | 4.48 | % | | 4.61 | % | | 4.39 | % |
| Interest rate yield on federal funds sold | | | 4.55 | % | | 5.19 | % | | 5.48 | % | | 4.94 | % | | 4.82 | % |
| Interest rate yield on interest-earning assets | | | 7.98 | % | | 8.07 | % | | 8.17 | % | | 8.13 | % | | 7.99 | % |
| Interest rate expense on deposits | | | 2.61 | % | | 2.55 | % | | 1.94 | % | | 2.40 | % | | 1.68 | % |
| Interest rate expense on other borrowings | | | 6.11 | % | | 6.08 | % | | 6.16 | % | | 5.95 | % | | 6.09 | % |
| Interest rate expense on interest-bearing liabilities | | | 3.60 | % | | 3.69 | % | | 3.53 | % | | 3.67 | % | | 3.05 | % |
| Average equity to average assets | | | 9.49 | % | | 9.27 | % | | 9.11 | % | | 9.23 | % | | 9.37 | % |
| Net interest margin | | | 5.33 | % | | 5.44 | % | | 5.72 | % | | 5.47 | % | | 5.94 | % |
| | | | | | | | | | | | | | | | | |
NOTE: Transmitted on Prime Newswire on January 23, 2008 at 3:00 p.m. PST
