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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: October 18, 2001
REDWOOD EMPIRE BANCORP
(Exact number of Registrant as specified in its charter)
California File No. 0-19231 68-0166366
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(State or other jurisdiction of (Commission File Number) (IRS Employer)
Incorporated or organization) Identification No.)
111 Santa Rosa Avenue, Santa Rosa, California 95404-4905
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(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 releases for the following (articles attached):
Redwood Empire Bancorp comments on third quater 2001 expectations.
Redwood Empire Bancorp announces third 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.
Date: 10-18-01 REDWOOD EMPIRE BANCORP
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(Registrant)
By: /s/ James E. Beckwith
-----------------------------------
James E. Beckwith
Executive Vice President and
Chief Operating Officer
FOR: REDWOOD EMPIRE BANCORP
APPROVED BY: James E. Beckwith
Chief Operating Officer
(707) 522-5215
For Immediate Release
REDWOOD EMPIRE BANCORP COMMENTS
ON THIRD QUARTER 2001 EXPECTATIONS
Santa Rosa, California (October 2, 2001) -- Redwood Empire Bancorp (NASDAQ:
REBC) today announced that it expects third quarter 2001 earnings to be
consistent with market expectations.
Redwood Empire Bancorp, through its principal operating subsidiary,
National Bank of the Redwoods, provides diverse financial products and services.
The Company offers commercial banking services primarily to businesses and
professionals in the North Coast counties of California. The Company's business
strategy includes the development of fee-based products and services which will
provide insulation to the Company's results from changes in interest rates.
Except for historical information contained herein, the statements
contained in this press release, including statements concerning future
increases in the value of Redwood Empire Bancorp stock, are forward-looking
statements within the meaning of the "safe harbor" provisions of Section 27A of
the Securities Act of 1933, as amended, and section 21E of the Securities
Exchange Act or 1934, as amended. These forward-looking statements 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
from time to time in Redwood Empire Bancorp's Securities and Exchange Commission
filings, including its Annual Report on Form 10-K for the year ended December
31, 2000, and Form 10-Q for the periods ended March 31, 2001 and June 30, 2001.
Redwood Empire Bancorp disclaims any intent or obligation to update these
forward-looking statements.
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
32% IN EARNINGS PER SHARE FOR THIRD QUARTER 2001
SANTA ROSA, Calif. (October 17, 2001) -- Redwood Empire Bancorp (NASDAQ: REBC)
today reported record income of $1,832,000, or $0.50 per diluted share, for the
quarter ended September 30, 2001 as compared to $1,698,000, or $0.38 per diluted
share, one year ago. Return on equity was 28.86% in the third quarter as
compared to 19.50% in the same quarter a year ago. Return on assets was 1.61% in
the third quarter as compared to 1.54% one year ago. For the nine months ended
September 30, 2001, net income was $5,387,000 or $1.39 per diluted share. This
compares with net income of $4,747,000 or $1.00 per diluted share for the first
nine months of 2000. On September 20, 2001, the Company announced a
three-for-two stock split of its outstanding shares of common stock. Earnings
per share information for all periods presented give effect to the stock split.
"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 $327,113,000 for the quarter ended
September 30, 2001, an increase of 11%, when compared to September 30, 2000, and
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. Total deposits averaged $399,545,000 for the
quarter as compared to $386,519,000 one year ago which amounts to a $13,026,000
or a 3% increase.
Net interest income amounted to $4,991,000 in the third quarter,
compared to $5,277,000 in the same period in 2000. The decrease in net interest
income is primarily attributable to a decline in net interest margin from 5.13%
in third quarter of 2000 to 4.69% in the third quarter of 2001. The Company's
net interest margin has been negatively impacted by the decline in the general
interest rate environment. In addition, the pooled trust preferred debt
financing which funded two stock repurchase plans had a negative impact of 26
basis points on the net interest margin, when compared with the third quarter of
2000, and a negative impact of 20 basis points on a year-to-date basis. Net
interest income amounted to $15,118,000 for the nine months ended September 30,
2001 as compared to $15,491,000 when compared to the same period one year ago.
Interest expense on the pooled trust preferred debt totaled $279,000 and
$621,000 for the quarter and nine months ended September 30, 2001.
There was no loan loss provision for the quarters ended September 30,
2001 and September 30, 2000. Net charge-offs were $95,000 or .12% of average
portfolio loans for the quarter, on an annualized basis, and $65,000 or .03% of
average portfolio loans for the first nine months of 2001, on an annualized
basis. This compares to net charge-offs of $35,000 or .04% of average portfolio
loans for the quarter ended September 30, 2000, on an annualized basis, and
$17,000 or .01% of average portfolio loans for the first nine months of 2000, on
an annualized basis. Non-performing assets at September 30, 2001 were $3,475,000
or .77% of total assets, as compared to non-performing assets of $1,960,000 or
.43% of total assets as of December 31, 2000.This increase is primarily due to a
$1,000,000 commercial loan that was paid down substantially subsequent to
September 30, 2001 and returned to full accrual status in October 2001. After
consideration of this, nonperforming assets would have been $2,475,000 or .55%
of total assets. The ratio of the allowance for loan losses to non-performing
assets was 219% as of September 30, 2001 as compared to 392% as of December 31,
2000. Adjusted for the October 2001 events referred to above, the allowance for
loan losses to non-performing assets was 307% as of September 30, 2001.
Non-interest income amounted to $1,694,000 for the quarter ended
September 30, 2001 as compared to $1,498,000 in the same period in 2000 or a 13%
increase. Non-interest income amounted to $4,611,000 for the first nine months
of 2001 as compared to $4,435,000 one year ago. Merchant card processing
revenues declined from $1,116,000 in the third quarter of 2000 to $1,098,000 in
the third quarter of 2001. For the nine month period ended September 30, 2001
merchant card processing revenues declined $158,000 from $3,088,000 at September
30, 2000 to $2,930,000 at September 30, 2001. 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, non-interest income grew $214,000 or 56% in the
third quarter of 2001 when compared to the same quarter one year ago and
$334,000 or 25% for the nine month period.
Non-interest expense amounted to $3,629,000 for the quarter ended
September 30, 2001 as compared to $3,928,000 in the same period one year ago,
which represents a decrease of $299,000 or 8%. The decline in non-interest
expense is directly attributable to the Company's focus on improving efficiency.
The Company's efficiency ratio for the third quarter of 2001 amounted to 54.29%
as compared to 57.98% one year ago. Non-interest expense amounted to $10,711,000
for the nine months ended September 30, 2001 as compared to $11,791,000 in the
same period one year ago. This represents a decrease of $1,080,000 or 9%. The
efficiency ratio for the Company's subsidiary, National Bank of the Redwoods was
49.69% for the quarter ended September 30, 2001 as compared to 54.47% one year
ago. For the nine months ended September 30, 2001, National Bank of the
Redwood's efficiency ratio was 50.49% as compared to 56.15% for the same period
one year ago.
For the three and nine months ended September 30, 2001 the net income
of the Company's community banking segment was $1,356,000 and $4,125,000 on
revenues of $5,324,000 and $15,967,000. This compares to net income of
$1,218,000 and $3,302,000 and revenues of $5,439,000 and $16,036,000 for the
same period one year ago. The segment's 11% quarterly improvement in net income,
as compared to the third quarter of 2000, is attributable to earning asset
growth and expense control. The net income of the Company's bankcard segment was
$476,000 and $1,262,000 in the quarter and nine months ended September 30, 2001
versus $480,000 and $1,445,000 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's net income comprised 26% and 23% of the
Company's consolidated net income for the three and nine months ended September
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 427,500
shares in January 2001 and 385,500 shares in February 2001, as adjusted for the
three-for-two stock split announced September 20, 2001, of which all shares
have been repurchased. In August 2001, the Company announced a third
authorization to repurchase an additional 355,500 shares, as adjusted for the
three-for-two stock split announced
September 20, 2001. To date, 34,259 shares have been repurchased, as adjusted
for the three-for-two stock split announced September 20, 2001. 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 first two
repurchase authorizations were 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, for up to 25%
of total tier 1 capital, bears an interest rate of 10.20% and is due in 30
years. Debt issuance costs amounted to approximately $300,000 and is being
amortized over the life of the offering.
Total assets were $449,263,000 at September 30, 2001 and pre-split
common book value per share was $10.89. After the effect of the stock split,
common book value per share was $7.26. The Company's Tier 1 capital to average
assets ratio was 7.18% as of September 30, 2001.
Redwood Empire Bancorp, through its principal operating subsidiary,
National Bank of the Redwoods, provides diverse financial products and services.
The Company offers commercial banking services primarily to businesses and
professionals in the North Coast counties of California. The Company's business
strategy includes the development of fee-based products and services which will
provide insulation to the Company's results from changes in interest rates.
Except for historical information contained herein, the statements
contained in this press release, including statements concerning future
increases in the value of Redwood Empire Bancorp stock, are forward-looking
statements within the meaning of the "safe harbor" provisions of Section 27A of
the Securities Act of 1933, as amended, and section 21E of the Securities
Exchange Act or 1934, as amended. These forward-looking statements 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
from time to time in Redwood Empire Bancorp's Securities and Exchange Commission
filings, including its Annual Report on Form 10-K for the year ended December
31, 2000, and Form 10-Q for the periods ended March 31, 2001 and June 30, 2001.
Redwood Empire Bancorp disclaims any intent or obligation to update these
forward-looking statements.
(Tables to follow)
REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands except for earnings per share and share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
---- ---- ---- ----
Interest income $8,317 $9,027 $25,812 $25,988
Interest expense 3,326 3,750 10,694 10,497
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Net interest income 4,991 5,277 15,118 15,491
Provision for loan losses - - - 150
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Net interest income after provision for loan losses 4,991 5,277 15,118 15,341
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Service charge on deposit accounts 284 264 819 792
Merchant draft processing, net 1,098 1,116 2,930 3,088
Loan servicing income 69 67 226 187
Other income 243 51 636 368
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Total noninterest income 1,694 1,498 4,611 4,435
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Salaries and employee benefits 2,066 2,133 6,287 6,375
Occupancy and equipment expense 511 498 1,503 1,508
Other 1,052 1,297 2,921 3,908
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Total noninterest expense 3,629 3,928 10,711 11,791
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Income before tax 3,056 2,847 9,018 7,985
Income tax expense 1,224 1,149 3,631 3,238
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Net income $1,832 $1,698 $5,387 $4,747
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Basic earnings per share:
Net income available for common stock shareholders $0.51 $0.39 $1.43 $1.02
Weighted average shares (1) 3,564,000 4,410,000 3,754,739 4,675,500
Diluted earnings per share:
Net income available for common stock shareholders $0.50 $0.38 $1.39 $1.00
Weighted average shares (1) 3,697,000 4,513,500 3,877,000 4,759,500
Selected Ratios
Annualized Return on Average Total Equity 28.86 % 19.50% 25.67 % 17.15%
Annualized Return on Average Assets 1.61 % 1.54% 1.61 % 1.45%
(1) Adjusted for three-for-two stock split announced September 20, 2001.
Selected Balance Sheet Data
(In Thousands)
(Unaudited)
September 30, September 30,
2001 2000
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Total Loans, excluding mortgage loans held for sale $342,911 $337,436
Allowance for Loan Losses 7,609 8,064
Total Assets 449,263 436,768
Total Deposits 400,208 390,579
Trust Preferred Debt 10,000 ---
Common Equity 25,846 33,712
Nonperforming Assets 3,475 2,361
REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended
September 30, 2001
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(in thousands)
Community
Banking Bankcard
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Total interest income $8,317 $ ---
Total interest expense 3,323 3
Interest income (expense) allocation (266) 266
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Net interest income 4,728 263
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Provision for loan losses --- ---
Service charge on deposit accounts 284 ---
Merchant draft processing, net --- 1,098
Loan servicing income 69 ---
Other income 243 ---
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Total noninterest income 596 1,098
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Salaries and employee benefits 1,695 371
Occupancy and equipment expense 472 39
Other 895 157
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Total noninterest expense 3,062 567
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Income before income taxes 2,262 794
Provision for income taxes 906 318
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Net Income $1,356 $476
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Three Months Ended
September 30, 2000
------------------
(in thousands)
Community
Banking Bankcard
------- --------
Total interest income $9,027 $ ---
Total interest expense 3,643 107
Interest income (expense) allocation (327) 327
------ ------
Net interest income 5,057 220
------ ------
Provision for loan losses 0 ---
Service charge on deposit accounts 264 ---
Merchant draft processing, net --- 1,116
Loan servicing income 67 ---
Other income 51 ---
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Total noninterest income 382 1,116
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Salaries and employee benefits 1,852 281
Occupancy and equipment expense 458 40
Other 1,088 209
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Total noninterest expense 3,398 530
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Income before income taxes 2,041 806
Provision for income taxes 823 326
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Net Income $1,218 $480
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REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Nine Months Ended
September 30, 2001
------------------
(in thousands)
Community
Banking Bankcard
------- --------
Total interest income $25,812 $ ---
Total interest expense 10,686 8
Interest income (expense) allocation (840) 840
------ ------
Net interest income 14,286 832
------ ------
Provision for loan losses --- ---
Service charge on deposit accounts 819 ---
Merchant draft processing, net --- 2,930
Loan servicing income 226 ---
Other income 636 ---
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Total noninterest income 1,681 2,930
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Salaries and employee benefits 5,173 1,114
Occupancy and equipment expense 1,386 117
Other 2,502 419
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Total noninterest expense 9,061 1,650
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Income before income taxes 6,906 2,112
Provision for income taxes 2,781 850
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Net Income $4,125 $1,262
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Nine Months Ended
September 30, 2000
------------------
(in thousands)
Community
Banking Bankcard
------- --------
Total interest income $25,988 $ ---
Total interest expense 10,390 107
Interest income (expense) allocation (909) 909
------ ------
Net interest income 14,689 802
------ ------
Provision for loan losses 150 ---
Service charge on deposit accounts 792 ---
Merchant draft processing, net --- 3,088
Loan servicing income 187 ---
Other income 368 ---
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Total noninterest income 1,347 3,088
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Salaries and employee benefits 5,541 834
Occupancy and equipment expense 1,384 124
Other 3,409 499
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Total noninterest expense 10,334 1,457
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Income before income taxes 5,552 2,433
Provision for income taxes 2,250 988
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Net Income $3,302 $1,445
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