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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: July 18, 2001
REDWOOD EMPIRE BANCORP
(Exact number of Registrant as specified in its charter)
California File No. 0-19231 68-0166366
(State or other jurisdiction of (Commission File Number) (IRS Employer)
Incorporated or organization) Identification No.)
111 Santa Rosa Avenue, Santa Rosa, California 95404-4905
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (707) 573-4800
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Item 5. Other Events
Press release for the following (article attached):
Redwood Empire Bancorp announces second quarter 2001 results.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
07-18-01
Date: ___________________ REDWOOD EMPIRE BANCORP
(Registrant)
/s/ James E. Beckwith
By:
James E. Beckwith
Executive Vice President and
Chief Operating Officer
FOR: REDWOOD EMPIRE BANCORP
APPROVED BY: James Beckwith
EVP/Chief Operating Officer
(707) 522-5215
For Immediate Release
REDWOOD EMPIRE BANCORP REPORTS AN INCREASE OF
39% IN EARNINGS PER SHARE FOR SECOND QUARTER 2001
SANTA ROSA, Calif. (July 18, 2001) -- Redwood Empire Bancorp (NASDAQ: REBC)
today reported record income of $1,768,000, or $0.71 per diluted share, for the
quarter ended June 30, 2001 as compared to $1,629,000, or $0.51 per diluted
share, one year ago. Return on equity was 28.05% in the second quarter as
compared to 17.32% in the same quarter a year ago. Return on assets was 1.60% in
the second quarter as compared to 1.48% one year ago. For the six months ended
June 30, 2001, net income was $3,555,000 or $1.34 per diluted share. This
compares with net income of $3,049,000 or $0.94 per diluted share for the first
six months of 2000. "We are extremely pleased with bottom line results," noted
James Beckwith, Chief Operating Officer. "Growing earning assets, reducing
overhead costs, managing capital and maintaining asset quality continue to be
our key objectives," said Beckwith.
Total average loans amounted to $318,724,000 as of June 30, 2001, an
increase of 11%, after consideration of an asset repositioning strategy. In the
fourth quarter of 2000 the Company sold $21,205,000 and securitized another
$17,949,000 in single family residential loans. Average loans amounted to
$322,096,000 one year ago. Total deposits averaged $395,183,000 for the quarter
as compared to $381,471,000 one year ago which amounts to a $13,712,000 or a 4%
increase.
Net interest income amounted to $4,826,000 in the second quarter,
compared to $5,275,000 in the same period in 2000. The decrease in net interest
income is attributable to a decline in net interest margin from 5.12% in second
quarter of 2000 to 4.66% in the second quarter of 2001. Two stock repurchase
plans that were funded with pooled trust preferred debt financing had a negative
impact of 24 basis points on the net interest margin, when compared with the
second quarter of 2000, and a negative impact of 17 on a year to date basis. Net
interest income amounted to $10,127,000 for the six months ended June 30, 2001
as compared to $10,214,000 when compared to the same period one year ago.
Interest expense on the pooled trust preferred debt totaled $251,000 and
$357,000 for the quarter and six months ended June 30, 2001.
There was no loan loss provision for the quarter ended June 30, 2001 as
compared to $50,000 one year ago. Net recoveries were $8,000 or .01% of average
portfolio loans for the quarter as compared to net recoveries of $69,000 or .08%
one year ago. Non-performing assets at June 30, 2001 were $1,846 ,000 or .4% of
total assets, as compared to non-performing assets of $1,960,000 or .4% of total
assets as of December 31, 2000. Non-performing assets have declined $114,000 or
6% during the six months of 2001. The ratio of the allowance for loan losses to
nonperforming assets was 417% as of June 30, 2001 as compared to 392% as of
December 31, 2000. "Maintaining excellent asset quality continues to be a high
priority for management and staff," said Beckwith.
Noninterest income amounted to $1,552,000 for the quarter ended June
30, 2001 as compared to $1,526,000 in the same period in 2000 or a 2% increase.
Noninterest income amounted to $2,917,000 for the first six months of 2001 as
compared to $2,937,000 one year ago. Merchant card processing revenues declined
from $1,075,000 in the second quarter of 2000 to $1,019,000 in the second
quarter of 2001. For the six month period ended June 30, 2001 merchant card
processing revenues declined $140,000 from $1,972,000 at June 30, 2000 to
$1,832,000 at June 30, 2000. In the fourth quarter of 2000, a large merchant
card processing contract with an independent sales organization (ISO) expired.
To help offset the decline in merchant bankcard processing revenue brought about
by the expiration of the contract referenced above, the Company has been
building its overall merchant card processing business through direct marketing
efforts and new ISO business. Excluding net revenue from merchant bankcard
processing, noninterest income grew $82,000 or 18% in the second quarter of 2001
when compared to the same quarter one year ago and $120,000 or 12% for the six
month period.
Noninterest expense amounted to $3,432,000 for the quarter ended June
30, 2001 as compared to $4,005,000 in the same period one year ago, which
represents a decrease of $573,000 or 14%. The decline in noninterest expense is
directly attributable to the Company's focus on improving efficiency. The
Company's efficiency ratio for the second quarter of 2001 amounted to 53.81% as
compared to 58.89% one year ago. Noninterest expense amounted to $7,082,000 for
the six months ended June 30, 2001 as compared to $7,863,000 in the same period
one year ago. This represents a decrease of $781,000 or 10%. The efficiency
ratio for the Company's subsidiary, National Bank of the Redwoods was 50.02% for
the quarter ended June 30, 2001 as compared to 56.05% one year ago. For the six
months ended June 30, 2001, National Bank of the Redwood's efficiency ratio was
50.90% as compared to 57.02% at June 30, 2001.
For the three and six months ended June 30, 2001 the net income of the
Company's community banking segment was $1,322,000 and $2,769,000 on revenues of
$5,098,000 and $10,643,000. This compares to net income of $1,106,000 and
$2,085,000 and revenues of $5,439,000 and $10,597,000 for the same period one
year ago. The segment's 20% improvement in earnings is attributable to earning
asset growth, margin improvement and expense control, after excluding the impact
of interest expense on the pooled trust preferred debt. The net income of the
Company's bankcard segment was $446,000 and $786,000 in the quarter and six
months ended June 30, 2001 versus $523,000 and $964,000 in 2000. The decline in
the unit's net income is due to a decline in processing revenue and an increase
in salary and benefits expenses. The decline in the segment's revenue is
directly attributable to the expiration of a large merchant bankcard processing
contract as mentioned above. The merchant bankcard segment net income comprised
25% and 22% of the Company's consolidated net income for the three and six
months ended June 30, 2001.
In January and February 2001 the Board of Directors authorized the
repurchase of up to 10% of the Company's total shares outstanding or 285,000
shares in January 2001 and 257,000 shares in February 2001, of which all shares
have been repurchased. Under the repurchase program, the Company plans to
purchase shares from time to time on the open market and/or in privately
negotiated transactions. The repurchase was funded in part with proceeds
received from a $10,000,000 pooled trust preferred securities offering concluded
on February 22, 2001. The financing, which qualifies for tier 1 capital
treatment, bears an interest rate of 10.2% and is due in 30 years. Debt issuance
costs amounted to approximately $300,000 and will be amortized over the life of
the offering.
Total assets were $446,390,000 at quarter end. Common book value per
share was $10.23. The Company's Tier 1 capital to average assets ratio was 7.00%
as of June 30, 2001.
Redwood Empire Bancorp is the holding company for National Bank of the
Redwoods, a commercial bank. The Company operates through branches in Sonoma,
Mendocino and Lake Counties.
The statements contained in this release, which are not historical
facts, are forward-looking statements that are subject to risks and
uncertainties. Actual results may differ materially from those set forth in or
implied by forward-looking statements. These risks are described in the
Company's Securities and Exchange Commission filings.
(Tables to follow)
REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except for earnings per share and share data)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Interest income $8,442 $8,802 17,495 $16,961
Interest expense 3,616 3,527 7,368 6,747
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Net interest income 4,826 5,275 10,127 10,214
Provision for loan losses - 50 - 150
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Net interest income after provision for loan losses 4,826 5,225 10,127 10,064
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Service charge on deposit accounts 266 251 535 528
Merchant draft processing, net 1,019 1,075 1,832 1,972
Loan servicing income 80 80 157 120
Net realized (losses)/gains on sale of investment
securities available for sale - (37) - (38)
Other income 187 157 393 355
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Total noninterest income 1,552 1,526 2,917 2,937
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Salaries and employee benefits 1,989 2,092 4,221 4,242
Occupancy and equipment expense 503 509 992 1,010
Other 940 1,404 1,869 2,611
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Total noninterest expense 3,432 4,005 7,082 7,863
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Income before tax 2,946 2,746 5,962 5,138
Income tax expense 1,178 1,117 2,407 2,089
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Net income $1,768 $1,629 $3,555 $3,049
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Basic earnings per share:
Net income available for common stock shareholders $0.73 $0.52 $1.39 $0.95
Weighted average shares 2,414,000 3,157,000 2,567,000 3,205,000
Diluted earnings per share:
Net income available for common stock shareholders $0.71 $0.51 $1.34 $0.94
Weighted average shares 2,489,000 3,213,000 2,645,000 3,239,000
Selected Ratios
Annualized Return on Average Total Equity 28.05 % 17.32% 24.61 % 16.04%
Annualized Return on Average Assets 1.60 % 1.48% 1.61 % 1.40%
Selected Balance Sheet Data
(In Thousands)
June 30, June 30,
2001 2000
Total Loans, excluding mortgage loans held for sale $325,782 $335,229
Allowance for Loan Losses 7,704 8,099
Total Assets 446,390 442,697
Total Deposits 396,800 392,034
Equity Capital 24,232 35,556
Nonperforming Assets 1,846 2,730
REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
BUSINESS SEGMENTS
Three Months Ended
June 30, 2001
(in thousands)
Community
Banking Bankcard
Total interest income $8,442 $ ---
Total interest expense 3,614 2
Interest income (expense) allocation (263) 263
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Net interest income 4,565 261
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Provision for loan losses --- ---
Service charge on deposit accounts 266 ---
Merchant draft processing, net --- 1,019
Loan servicing income 80 ---
Other income 187 ---
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Total noninterest income 533 1,019
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Salaries and employee benefits 1,629 360
Occupancy and equipment expense 461 42
Other 806 134
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Total noninterest expense 2,896 536
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Income before income taxes 2,202 744
Provision for income taxes 880 298
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Net Income $1,322 $446
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Three Months Ended
June 30, 2000
(in thousands)
Community
Banking Bankcard
Total interest income $8,802 $ ---
Total interest expense 3,527 ---
Interest income (expense) allocation (287) 287
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Net interest income 4,988 287
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Provision for loan losses 50 ---
Service charge on deposit accounts 251 ---
Merchant draft processing, net --- 1,075
Loan servicing income 80 ---
Net realized (losses)/gains on sale of investment
securities available for sale (37) ---
Other income 157 ---
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Total noninterest income 451 1,075
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Salaries and employee benefits 1,820 272
Occupancy and equipment expense 465 44
Other 1,241 163
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Total noninterest expense 3,526 479
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Income before income taxes 1,863 883
Provision for income taxes 757 360
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Net Income $1,106 $523
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REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
BUSINESS SEGMENTS
Six Months Ended
June 30, 2001
(in thousands)
Community
Banking Bankcard
Total interest income $17,495 $ ---
Total interest expense 7,363 5
Interest income (expense) allocation (574) 574
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Net interest income 9,558 569
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Provision for loan losses --- ---
Service charge on deposit accounts 535 ---
Merchant draft processing, net --- 1,832
Loan servicing income 157 ---
Other income 393 ---
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Total noninterest income 1,085 1,832
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Salaries and employee benefits 3,478 743
Occupancy and equipment expense 914 78
Other 1,607 262
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Total noninterest expense 5,999 1,083
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Income before income taxes 4,644 1,318
Provision for income taxes 1,875 532
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Net Income $2,769 $786
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Six Months Ended
June 30, 2000
(in thousands)
Community
Banking Bankcard
Total interest income $16,961 $ ---
Total interest expense 6,747 ---
Interest income (expense) allocation (582) 582
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Net interest income 9,632 582
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Provision for loan losses 150 ---
Service charge on deposit accounts 528 ---
Merchant draft processing, net --- 1,972
Loan servicing income 120 ---
Net realized (losses)/gains on sale of investment
securities available for sale (38) ---
Other income 355 ---
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Total noninterest income 965 1,972
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Salaries and employee benefits 3,689 553
Occupancy and equipment expense 926 84
Other 2,320 291
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Total noninterest expense 6,935 928
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Income before income taxes 3,512 1,626
Provision for income taxes 1,427 662
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Net Income $2,085 $964
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