===========================================================================
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 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 reports third quarter 2002 net income.
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: 10-16-02 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
THIRD QUARTER 2002 NET INCOME
SANTA ROSA, Calif. (October 16, 2002) -- Redwood Empire Bancorp (NASDAQ: REBC)
today reported net income of $1,958,000 or $.54 per diluted share for the
quarter ended September 30, 2002. This compares with net income of $1,832,000 or
$.50 per diluted share for the same quarter a year ago. Return on average total
equity was 27.29% in the third quarter of 2002, as compared with 28.86% in the
same quarter a year ago. Return on assets was 1.54% in the third quarter of 2002
as compared to 1.61% one year ago. For the nine months ended September 30, 2002,
net income was $5,930,000 or $1.64 per diluted share. This compares with
$5,387,000 or $1.39 per diluted share for the first nine months of 2001. During
the third quarter of 2002, the Company's financial performance was impacted by a
revenue and an expense item. In an effort to improve the risk profile of the
Company's investment portfolio, management sold $4,000,000 of corporate debt
securities, which resulted in a gain of $259,000. In addition, the Company
incurred $331,000 in legal and consulting fees associated with certain corporate
activities, including exploring strategic options for the Company and its
Merchant Bankcard segment. The effect of these two items lowered net income by
$45,000 or $0.01 per share.
Total loans amounted to $368,528,000 at September 30, 2002 as compared to
$342,911,000 at September 30, 2001, which amounts to an increase of $25,617,000,
or 7%. Total deposits amounted to $452,014,000 as of September 30, 2002 as
compared to $400,208,000 at September 30, 2001, or a 13% increase. Total assets
amounted to $509,863,000 as of September 30, 2002 as compared to $449,263,000
one year ago, representing a 13% increase.
Net interest income amounted to $5,271,000 in the third quarter of 2002,
compared to $4,991,000 in the same period in 2001, which represents a $280,000
increase. The increase in net interest income is primarily attributable to an
increase in average earning assets of $53,961,000 from $422,591,000 for the
quarter ended September 30, 2001 to $476,552,000 for the quarter ended September
30, 2002. Net interest margin for the third quarter of 2002 declined to 4.39%
from 4.69% one year ago primarily due to the lower interest rate environment and
the Company carrying $36,806,000 in lower yielding average overnight investments
for the quarter ended September 30, 2002, as compared to $19,149,000 in such
investments for the quarter ended September 30, 2001. Average overnight
investments have increased due to the success of the Company's deposit gathering
activities. Net interest income amounted to $15,583,000 for the nine months
ended September 30, 2002 as compared to $15,118,000 for the same period one year
ago, representing an increase of $465,000.
There was no loan loss provision for the three and nine months ended
September 30, 2002 and September 30, 2001. Net charge-offs were $8,000 or .01%
of average portfolio loans for the quarter ended September 30, 2002, on an
annualized basis, as compared to $95,000 or .12% of average portfolio loans for
the same quarter in 2001, on an annualized basis. This compares to net
charge-offs of $2,000 of average portfolio loans for the nine months ended
September 30, 2002, on an annualized basis, and $65,000 or .03% of average
portfolio loans for the first nine months of 2001, on an annualized basis.
Non-performing assets at September 30, 2002 were $1,419,000 or .3% of total
assets, as compared to non-performing assets of $3,176,000, or .7% of total
assets, as of December 31, 2001. The allowance for loan losses to nonperforming
assets was 534% as of September 30, 2002 as compared to 239% as of December 31,
2001.
Non-interest income amounted to $2,155,000 for the quarter ended September
30, 2002 as compared to $1,694,000 in the same period in 2001. Non-interest
income amounted to $5,766,000 for the nine months ended September 30, 2002 as
compared to $4,611,000 for the same period one year ago. Merchant draft
processing revenues increased from $1,098,000 in the third quarter of 2001 to
$1,322,000 in the third quarter of 2002 as a result of the unit's marketing
efforts. In the third quarter of 2002, $4,000,000 of corporate debt securities
were sold resulting in a gain of $259,000. Such securities were primarily sold
to improve the risk profile of the Company's investment portfolio. For the nine
month period ended September 30, 2002, merchant draft processing revenues
amounted to $3,698,000, an increase of $768,000 from $2,930,000 for the nine
months ended September 30, 2001.
Non-interest expense amounted to $4,303,000 for the quarter ended September
30, 2002 as compared to $3,629,000 in the same period one year ago, which
represents an increase of $674,000 or 19%. During the quarter of 2002, the
Company incurred $331,000 in legal and consulting fees associated with certain
corporate activities, including exploring strategic options for the Company and
its Merchant Bankcard segment. Without the effect of these expenses, the
increase in non-interest expense amounted to $343,000 or 9% when compared to the
quarter ended September 30, 2001. Salaries and benefit expense increased
$280,000 or 14% in the three months ended September 30, 2002 when compared to
the same period one year ago. The increase in this expense is directly
attributable to the growth of the Company. The Company's efficiency ratio for
the third quarter of 2002 amounted to 57.95% as compared to 54.29% for the same
period one year ago. Non-interest expense amounted to $11,945,000 for the nine
months ended September 30, 2002 as compared to $10,711,000 in the same period
one year ago. This represents an increase of $1,234,000 or 12%. Without the
effect of the expenses referred to above, which were $386,000 for the nine
months ended September 30, 2002, the increase in non-interest expense would have
been $848,000 or 8% when compared to the same period one year ago. The
efficiency ratio for the Company's subsidiary, National Bank of the Redwoods was
50.33% for the quarter ended September 30, 2002 as compared to 49.69% one year
ago. For the nine months ended September 30, 2002, National Bank of the
Redwood's efficiency ratio was 50.38% as compared to 50.49% for the same period
one year ago.
For the three and nine months ended September 30, 2002, the net income of
the Company's community banking segment was $1,490,000 and $4,577,000 on
revenues of $5,963,000 and $17,196,000. This compares to net income of
$1,356,000 and $4,125,000 and revenues of $5,324,000 and $15,967,000 for the
same periods one year ago. The net income of
the Company's bankcard segment was $468,000 and $1,353,000 for the three and
nine months ended September 30, 2002 versus $476,000 and $1,262,000 for the
three and nine months ended September 30, 2001. The merchant bankcard segment's
net income comprised 24% and 23% of the Company's consolidated net income for
the three and nine months ended September 30, 2002, as compared to 26% and 23%
for the three and nine months ended September 30, 2001.
As previously disclosed in the Company's quarterly reports on Form 10-Q for
the quarters ended March 31, 2002 and June 30, 2002, on January 15, 2002
National Bank of the Redwoods formed NBR Real Estate Investment Trust, a
Maryland Real Estate Investment Trust. The entity was formed to hold the Bank's
real estate secured loans and to better organize the Bank's marketing and
origination of real estate secured loans. As a result of the formation and
funding of this entity, the Company's effective tax rate was reduced to 37% for
the quarter ended September 30, 2002 from 40% for the quarter ended September
30, 2001. Costs associated with the implementation of this entity amounted to
$49,000 for the third quarter of 2002 and $101,000 on a year to date basis.
In August 2001, the Company announced a common stock repurchase
authorization to repurchase up to 355,500 shares, as adjusted for the
three-for-two stock split announced September 20, 2001. To date, 138,636 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.
Total assets were $509,863,000 at September 30, 2002. Common book value per
share was $8.34. The Company's Tier 1 capital to average assets ratio was 7.17%
as of September 30, 2002.
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 Reports on Form 10-K and quarterly reports on Form
10-Q. 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,
2002 2001 2002 2001
----------------------------------------------------------------
Total interest income $7,806 $8,317 $22,949 $25,812
Total interest expense 2,535 3,326 7,366 10,694
----------------------------------------------------------------
Net interest income 5,271 4,991 15,583 15,118
Provision for loan losses - - - -
----------------------------------------------------------------
Net interest income after provision for loan losses 5,271 4,991 15,583 15,118
----------------------------------------------------------------
Service charges on deposit accounts 288 284 910 819
Merchant draft processing, net 1,322 1,098 3,698 2,930
Loan servicing income 66 69 201 226
Net realized gains on investment securities available for sale 259 22 294 22
Other income 220 221 663 614
----------------------------------------------------------------
Total noninterest income 2,155 1,694 5,766 4,611
----------------------------------------------------------------
Salaries and employee benefits 2,346 2,066 6,694 6,287
Occupancy and equipment expense 531 511 1,588 1,503
Other 1,426 1,052 3,663 2,921
----------------------------------------------------------------
Total noninterest expense 4,303 3,629 11,945 10,711
----------------------------------------------------------------
Income before income tax expense 3,123 3,056 9,404 9,018
Income tax expense 1,165 1,224 3,474 3,631
----------------------------------------------------------------
Net income $1,958 $1,832 $5,930 $5,387
================================================================
Basic earnings per share:
Net income available for common stock shareholders $0.56 $0.51 $1.70 $1.43
Weighted average shares (1) 3,476,000 3,564,000 3,489,000 3,755,000
Diluted earnings per share:
Net income available for common stock shareholders $0.54 $0.50 $1.64 $1.39
Weighted average shares (1) 3,600,000 3,697,000 3,616,000 3,877,000
Selected Ratios
Annualized Return on Average Total Equity 27.29 % 28.86% 29.16 % 25.67%
Annualized Return on Average Total Assets 1.54 % 1.61% 1.63 % 1.61%
(1) Adjusted for three-for-two stock split announced September 20, 2001.
Selected Balance Sheet Data
(In Thousands)
(Unaudited)
September 30, December 31, September 30,
2002 2001 2001
-------------------------------------------------
Total Loans $368,528 $351,649 $342,911
Allowance for Loan Losses 7,578 7,580 7,609
Total Assets 509,863 448,742 449,263
Total Deposits 452,014 397,412 400,208
Trust Preferred Debt 10,000 10,000 10,000
Total Shareholders' Equity 28,811 26,687 25,846
Nonperforming Assets 1,419 3,176 3,475
REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
BUSINESS SEGMENTS
(Unaudited)
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, 2002 September 30, 2002
--------------------------------------------------------
Community Community
Banking Bankcard Banking Bankcard
--------------------------------------------------------
Total interest income $7,806 $ --- $22,949 $ ---
Total interest expense 2,529 6 7,342 24
Interest income (expense) allocation (147) 147 (479) 479
--------------------------------------------------------
Net interest income 5,130 141 15,128 455
--------------------------------------------------------
Provision for loan losses --- --- --- ---
Service charges on deposit accounts 288 --- 910 ---
Merchant draft processing, net --- 1,322 --- 3,698
Loan servicing income 66 --- 201 ---
Net realized gains on investment securities available for sale 259 --- 294 ---
Other income 220 --- 663 ---
--------------------------------------------------------
Total noninterest income 833 1,322 2,068 3,698
--------------------------------------------------------
Salaries and employee benefits 1,885 461 5,397 1,297
Occupancy and equipment expense 485 46 1,451 137
Other 1,217 209 3,088 575
--------------------------------------------------------
Total noninterest expense 3,587 716 9,936 2,009
--------------------------------------------------------
Income before income tax expense 2,376 747 7,260 2,144
Income tax expense 886 279 2,683 791
--------------------------------------------------------
Net income $1,490 $468 $4,577 $1,353
========================================================
Three Months Ended Nine Months Ended
September 30, 2001 September 30, 2001
--------------------------------------------------------
Community Community
Banking Bankcard Banking Bankcard
--------------------------------------------------------
Total interest income $8,317 $ --- $25,812 $ ---
Total interest expense 3,323 3 10,686 8
Interest income (expense) allocation (266) 266 (840) 840
--------------------------------------------------------
Net interest income 4,728 263 14,286 832
--------------------------------------------------------
Provision for loan losses --- --- --- ---
Service charges on deposit accounts 284 --- 819 ---
Merchant draft processing, net --- 1,098 --- 2,930
Loan servicing income 69 --- 226 ---
Net realized gains on investment securities available for sale 22 --- 22 ---
Other income 221 --- 614 ---
--------------------------------------------------------
Total noninterest income 596 1,098 1,681 2,930
--------------------------------------------------------
Salaries and employee benefits 1,695 371 5,173 1,114
Occupancy and equipment expense 472 39 1,386 117
Other 895 157 2,502 419
--------------------------------------------------------
Total noninterest expense 3,062 567 9,061 1,650
--------------------------------------------------------
Income before income tax expense 2,262 794 6,906 2,112
Income tax expense 906 318 2,781 850
--------------------------------------------------------
Net income $1,356 $476 $4,125 $1,262
========================================================