===========================================================================
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: January 16, 2002
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
===========================================================================
Item 5. Other Events
Press release for the following (article attached):
Redwood Empire Bancorp releases fourth 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.
01-16-02
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 RECORD
FOURTH QUARTER AND FULL YEAR 2001 NET INCOME
SANTA ROSA, Calif. (January 16, 2002) -- Redwood Empire Bancorp (NASDAQ: REBC)
today reported record net income of $1,920,000 or $.52 per diluted share for its
fourth quarter ended December 31, 2001. This compares with net income of
$1,719,000 or $.39 per diluted share for the fourth quarter a year ago. Return
on common equity was 29.02% in the fourth quarter as compared with 19.76% in the
same quarter a year ago. Return on assets was 1.68% in the fourth quarter as
compared to 1.53% one year ago. For the twelve months ended December 31, 2001
net income was $7,307,000 or $1.91 per diluted share. This compares with net
income of $6,466,000 or $1.39 per diluted share, for the twelve months ended
December 31, 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 our loan portfolio, reducing overhead costs and
managing capital continue to be our key objectives," said Beckwith.
Total loans amounted to $351,649,000 as of December 31, 2001 as
compared to $315,101,000 at December 31, 2000, which amounts to a $36,548,000 or
12% increase. Total deposits amounted to $397,412,000 as of December 31, 2001 as
compared to $405,333,000 at December 31, 2000. Total assets amounted to
$448,742,000 as of December 31, 2001 as compared to $453,439,000 one year ago.
Net interest income amounted to $4,986,000 in the fourth quarter of
2001, compared to $5,353,000 in the same period in 2000, which represents a
$367,000 decrease. Net interest income for the year ended December 31, 2001 was
$20,104,000 compared to $20,844,000 in 2000, a decrease of $740,000. The net
interest margin was 4.64% and 4.78% for the quarter and twelve months ended
December 31, 2001 as compared to 5.10% and 5.08% one year ago. 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 purchase plans had a negative impact of 24
basis points on the net interest margin, when compared with the fourth quarter
of 2000, and a negative impact of 21 basis points on a full year basis.
There was no loan loss provision for the quarters ended December 31,
2001 and December 31, 2000. There was no loan loss provision for the year ended
December 31, 2001, versus $150,000 in the prior year. Net charge-offs were
$29,000 or .03% (annualized) of average portfolio loans for the quarter as
compared to $390,000 or .5% (annualized) one year ago. Net charge-offs were
$94,000, or .03% of average portfolio loans for the year ended December 31, 2001
as compared to $407,000 or .12% in 2000. Non-performing assets at December 31,
2001 were $3,176,000 or .7% of total assets, as compared to non-performing
assets of $1,960,000, or .4% of total assets, as of December 31, 2000. The
allowance for loan losses to nonperforming assets was 239% as of December 31,
2001 as compared to 392% as of December 31, 2000.
Non-interest income amounted to $1,988,000 for the quarter ended
December 31, 2001 as compared to $1,671,000 in the same period in 2000 or a 19%
increase. Non-interest income amounted to $6,599,000 for the twelve months ended
December 31, 2001 as compared to $6,106,000 one year ago, an increase of
$493,000 or 8%. Merchant draft processing revenues declined from $1,768,000 in
the fourth quarter of 2000 to $1,310,000 in the fourth quarter of 2001. For the
year ended December 31, 2001 merchant draft processing revenues declined
$616,000 from $4,856,000 for the year ended December 31, 2000 to $4,240,000 for
the year ended December 31, 2001. In the fourth quarter of 2000, a large
merchant draft processing contract with an independent sales organization (ISO)
expired. For the quarter and year ended December 31, 2000 the Company recorded
revenues of $240,000 and $1,400,000 associated with the contract. 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 draft processing business through direct marketing efforts and
new ISO business. Excluding net revenue from merchant bankcard processing,
non-interest income grew $775,000 in the fourth quarter of 2001 when compared to
the same quarter one year ago and $1,109,000 or 89% for the twelve month period.
This increase is primarily attributable to losses recognized in 2000 on loan and
investment security sales totaling $584,000 and $171,000, compared to gains
recognized in 2001 on investment security sales totaling $112,000. For both
years, the majority of the transactions occurred in the fourth quarter.
Non-interest expense amounted to $3,740,000 for the quarter ended
December 31, 2001 as compared to $4,157,000 in the same period one year ago,
which represents a decrease of $417,000 or 10%. The decline in non-interest
expense is directly attributable to the Company's focus on improving efficiency.
The Company's efficiency ratio for the fourth quarter of 2001 amounted to 53.63%
as compared to 59.18% one year ago. Non-interest expense amounted to $14,451,000
for the twelve months ended December 31, 2001 as compared to $15,948,000 in the
same period one year ago. This represents a decrease of $1,497,000 or 9%. The
Company's efficiency ratio was 54.12% for 2001 as compared to 59.18% for 2000.
The efficiency ratio for the Company's subsidiary, National Bank of the Redwoods
was 49.45% for the quarter ended December 31, 2001 as compared to 55.32% one
year ago. For the twelve months ended December 31, 2001, National Bank of the
Redwood's efficiency ratio was 50.45% as compared to 55.94% for the same period
one year ago.
For the three and twelve months ended December 31, 2001 the net income
of the Company's community banking segment was $1,360,000 and $5,485,000 on
revenues of $5,454,000 and $21,421,000. This compares to net income of $792,000
and $4,095,000 and revenues of $4,924,000 and $20,960,000 for the same period
one year ago. The segment's 72% quarterly improvement in net income, as compared
to the fourth quarter of 2000, is attributable to the loss on sale of loans and
investments in the fourth quarter of 2000 discussed above and expense control.
The net income of the Company's bankcard segment was $560,000 and $1,822,000 for
the quarter and twelve months ended December 31, 2001 versus $927,000 and
$2,371,000 in 2000. The decline in the segment's net income is due to a decline
in processing revenue and an increase in salary and benefits expenses. The
revenue drop is primarily due to expiration of the contract mentioned above. The
increase in the unit's salary and benefits expense is due to a build-up in sales
development personnel. The merchant bankcard segment's net income comprised 29%
and 25% of the Company's consolidated net income for the three and twelve months
ended December 31, 2001, compared to 54% and 37% of the Company's consolidated
net income for the three and twelve months ended December 31, 2000.
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, 53,308 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 a cost of 10.20%
and is due in 30 years.
Total assets were $448,742,000 at year-end 2001. Common book value per
share was $7.53. The Company's Tier 1 capital to average assets ratio was 7.46%
as of December 31, 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, June 30, 2001 and
September 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 Twelve Months Ended
December 31, December 31,
2001 2000 2001 2000
--------------------------------------------------------
Total interest income $7,743 $9,175 $33,555 $35,163
Total interest expense 2,757 3,822 13,451 14,319
--------------------------------------------------------
Net interest income 4,986 5,353 20,104 20,844
Provision for loan losses - - - 150
--------------------------------------------------------
Net interest income after provision for loan losses 4,986 5,353 20,104 20,694
--------------------------------------------------------
Service charges on deposit accounts 297 285 1,116 1,077
Merchant draft processing, net 1,310 1,768 4,240 4,856
Loan servicing income 69 85 295 272
Other income 312 (467) 948 (99)
--------------------------------------------------------
Total noninterest income 1,988 1,671 6,599 6,106
--------------------------------------------------------
Salaries and employee benefits 2,049 2,265 8,336 8,640
Occupancy and equipment expense 523 532 2,026 2,040
Other 1,168 1,360 4,089 5,268
--------------------------------------------------------
Total noninterest expense 3,740 4,157 14,451 15,948
--------------------------------------------------------
Income before income tax expense 3,234 2,867 12,252 10,852
Income tax expense 1,314 1,148 4,945 4,386
--------------------------------------------------------
Net income $1,920 $1,719 $7,307 $6,466
========================================================
Basic earnings per share:
Net income available for common stock shareholders $0.54 $0.40 $1.97 $1.41
Weighted average shares (1) 3,548,000 4,282,500 3,703,000 4,576,500
Diluted earnings per share:
Net income available for common stock shareholders $0.52 $0.39 $1.91 $1.39
Weighted average shares (1) 3,671,000 4,375,500 3,825,000 4,663,500
Selected Ratios
Annualized Return on Average Total Equity 29.02% 19.76% 26.41% 17.75%
Annualized Return on Average Total Assets 1.68% 1.53% 1.63% 1.47%
(1) Adjusted for three-for-two stock split announced September 20, 2001.
Selected Balance Sheet
Data
(In Thousands)
(Unaudited)
December 31, December 31,
2001 2000
--------------- ---------------
Total Loans, excluding mortgage loans held for sale $351,649 $315,101
Allowance for Loan Losses 7,580 7,674
Total Assets 448,742 453,439
Total Deposits 397,412 405,333
Trust Preferred 10,000 ---
Common Equity 26,687 35,459
Nonperforming Assets 3,176 1,960
REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Three Months Ended
December 31, 2001
--------------------------------------------------
(in thousands)
Community
Banking Bankcard
------------------ --------------
Total interest income $7,743 $ ---
Total interest expense 2,755 2
Interest income (expense) allocation (212) 212
--------------
------------------
Net interest income 4,776 210
------------------ --------------
Provision for loan losses --- ---
Service charges on deposit accounts 297 ---
Merchant draft processing, net --- 1,310
Loan servicing income 69 ---
Other income 312 ---
------------------ --------------
Total noninterest income 678 1,310
------------------ --------------
Salaries and employee benefits 1,665 384
Occupancy and equipment expense 482 41
Other 1,014 154
------------------ --------------
Total noninterest expense 3,161 579
------------------ --------------
Income before income tax expense 2,293 941
Income tax expense 933 381
------------------ --------------
Net income $1,360 $560
================== ==============
Three Months Ended
December 31, 2000
--------------------------------------------------
(in thousands)
Community
Banking Bankcard
------------------ --------------
Total interest income $9,175 $ ---
Total interest expense 3,908 (86)
Interest income (expense) allocation (246) 246
------------------ --------------
Net interest income 5,021 332
------------------ --------------
Provision for loan losses 0 ---
Service charges on deposit accounts 285 ---
Merchant draft processing, net --- 1,768
Loan servicing income 85 ---
Other income (467) ---
------------------ --------------
Total noninterest income (97) 1,768
------------------ --------------
Salaries and employee benefits 1,930 335
Occupancy and equipment expense 494 38
Other 1,182 178
------------------ --------------
Total noninterest expense 3,606 551
------------------ --------------
Income before income tax expense 1,318 1,549
Income tax expense 526 622
------------------
--------------
Net income $792 $927
================== ==============
REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
Twelve Months Ended
December 31, 2001
--------------------------------------------------
(in thousands)
Community
Banking Bankcard
------------------ --------------
Total interest income $33,555 $ ---
Total interest expense 13,441 10
Interest income (expense) allocation (1,052) 1,052
------------------ --------------
Net interest income 19,062 1,042
------------------ --------------
Provision for loan losses --- ---
Service charges on deposit accounts 1,116 ---
Merchant draft processing, net --- 4,240
Loan servicing income 295 ---
Other income 948 ---
------------------ --------------
Total noninterest income 2,359 4,240
------------------ --------------
Salaries and employee benefits 6,838 1,498
Occupancy and equipment expense 1,868 158
Other 3,516 573
------------------ --------------
Total noninterest expense 12,222 2,229
------------------ --------------
Income before income tax expense 9,199 3,053
Income tax expense 3,714 1,231
------------------ --------------
Net income $5,485 $1,822
================== ==============
Twelve Months Ended
December 31, 2000
--------------------------------------------------
(in thousands)
Community
Banking Bankcard
------------------ --------------
Total interest income $35,163 $ ---
Total interest expense 14,298 21
Interest income (expense) allocation (1,155) 1,155
------------------ --------------
Net interest income 19,710 1,134
------------------ --------------
Provision for loan losses 150 ---
Service charges on deposit accounts 1,077 ---
Merchant draft processing, net --- 4,856
Loan servicing income 272 ---
Other income (99) ---
------------------ --------------
Total noninterest income 1,250 4,856
------------------ --------------
Salaries and employee benefits 7,471 1,169
Occupancy and equipment expense 1,878 162
Other 4,590 678
------------------ --------------
Total noninterest expense 13,939 2,009
------------------ --------------
Income before income tax expense 6,871 3,981
Income tax expense 2,776 1,610
------------------ --------------
Net income $4,095 $2,371
================== ==============