Exhibit 99.1
PRESS RELEASE
Available for Immediate Publication: December 27, 2004
Contacts: Thomas T. Hawker, President / Chief Executive Officer (209) 725-2276
R. Dale McKinney, EVP / Chief Financial Office (209) 725-7435
Web Site www.ccow.com
Capital Corp of the West announces two earnings adjustments.
Merced, California, December 27, 2004-Capital Corp of the West (NASDAQ:NMS:CCOW)
today announced that fourth quarter 2004 earnings will be impacted by two
separate adjustments to earnings. The first relates to other-than-temporarily
impaired securities, the second relates to a California state income tax
receivable generated by consent dividends declared by a Real Estate Investment
Trust (REIT) available to California banks for the tax years of 2001 and 2002.
"Both of these items should have no negative impact on the future earnings of
CCOW" stated R. Dale McKinney CFO of CCOW. "Without these two adjustments, our
earnings for the full year 2004 should fall within the 13% to 15% improvement
over full year 2003, consistent with guidance already provided in our Third
Quarter 2004 press release. We will provide guidance for the full year 2005 in
our scheduled January 25th, 2005 earnings release and anticipate the guidance
will be within the recent annual historical CCOW trend lines".
Tom Hawker, Chief Executive Officer, commented, "The performance of Capital Corp
of the West, particularly over the past three years, has been, by any measure,
outstanding. We look forward to continuing to deliver equally strong results to
our shareholders and to the communities we serve in the years ahead. We believe
taking both of these adjustments at this time eliminates uncertainty about the
potential future effects of either of these issues. Also, it is important to
remember that, as we go forward, there is also the potential of recapturing a
portion of these adjustments as the business environment changes and as we
pursue legal remedies with the State of California."
County Bank (the "Bank"), the primary subsidiary of CCOW, holds two Freddie Mac
preferred stocks with par values of $3,000,000 and $6,710,000 and one Fannie Mae
preferred stock with a $5,000,000 par value in its investment portfolio. Bank
management has been closely following the market valuations of these stocks and
recent financial news on these agencies, and has now concluded that all three
are other-than-temporarily impaired under guidance provided by Financial
Accounting Standards Board (FASB) 115. As a result a pre tax earnings adjustment
on the $3,000,000 and $6,710,000 Freddie Mac and the $5,000,000 Fannie Mae
stocks of $690,660, $1,617,110, and $1,401,400 respectively has been recorded.
The after tax impact of these three write-downs total $2,151,319 with a $.36
fully diluted earnings per share impact. Under Generally Accepted Accounting
Principles (GAAP) the market devaluations of these stocks have already been
recorded as a reduction in comprehensive income and there are no additional
charges to capital.
The second adjustment relates to the Bank REIT consent dividend and the state of
California Voluntary Compliance Initiative (VCI) program announced in early
2004. For the years 2001 and 2002 the Bank recorded certain state tax savings
related to the consent dividends declared by the REIT. Under the state VCI
program the bank paid, in early 2004, taxes and interest relating to the years
2001 and 2002 and established a $1,563,000 receivable along with an offsetting
$334,000 Financial Accounting Standard (FAS) 5 reserve, both net of federal tax,
for the pending refund claims that have yet to be filed. Management intends to
actively pursue our rights for a state tax refund relating to this receivable
under the legal and statutory process available. However, at this time
Management has elected to write off into current period earnings the $1,563,000
state tax receivable less the $334,000 FAS 5 reserve or an after tax impact of
$1,229,000. The writing off of these amounts does not impact the ultimate
outcome of the legal and statutory process, but is a conservative measure in
that the final outcome of the process is uncertain as to amount of ultimate
recovery and time frames required. This adjustment negatively impacts earnings
by $.21 per share.
Conference Call Recording
Capital Corp of the West has scheduled an investor conference call for 7:00 am
PST, December 28th. Investors may listen to a recording of the conference call
by going to the web site of the company www.ccow.com just after the call and
following the instructions to play back the recorded conference call. The web
site recording will be available for 30 days following the conference call.
Safe Harbor
In addition to historical information, this release includes certain
forward-looking statements regarding events and trends that may affect the
Company's future results. Such statements are subject to risks and uncertainties
that could cause the Company's actual results to differ materially. These
factors include general risks inherent to commercial lending; risks related to
asset quality; risks related to the Company's dependence on key personnel and
its ability to manage existing and future growth; risks related to competition;
risks posed by present and future government regulation and legislation; and
risks resulting from federal monetary policy.
Reference Information
Capital Corp. of the West, a bank holding company established November 1, 1995,
is the parent company of County Bank, which has more than 27 years of service as
"Central California's Community Bank." Currently County Bank has twenty branch
offices serving the counties of Fresno, Madera, Mariposa, Merced, Stanislaus,
San Joaquin, San Francisco and Tuolumne. As of the latest FDIC data, County Bank
has 6.2% market share in the six Central California counties in which it has
retail branches. This ranks County Bank fifth out of thirty-nine banking
institutions in this market area. For further information about the Company's
financial performance, contact Tom Hawker, President & Chief Executive Officer
at (209) 725-2276, or R. Dale McKinney Chief Financial Officer, at
(209) 725-7435.
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