Exhibit 99.1
PRESS RELEASE
Available for Immediate Publication: April 18, 2005
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 First Quarter 2005 Earnings
Increased 37% over First Quarter 2004
Merced, California, April 18, 2005-Capital Corp of the West NASDAQ:NMS:
CCOW) today announced $4,988,000 in net income for the first quarter ended March
31, 2005. This represents a 37% increase in net income from the first quarter
2004 or fully diluted earnings per share of $.46 and an 18.85% Return on Equity
(ROE) to our shareholders. These amounts reflect a $539,000 after tax earnings
increase related to receipt of Bank Owned Life Insurance (BOLI) proceeds and our
9 for 5 stock split previously announced on March 29, 2005. Prior to the 9 for 5
stock split, comparable fully diluted EPS would have been $.83 for the first
quarter end March 31, 2005.
"We are pleased to start the new 2005 year with this strong earning base
and look to a continuation of this performance going forward", stated Chief
Executive Officer, Tom Hawker. "On April 26th we will be discussing these
results at our scheduled annual shareholder meeting along with the success of
our franchise with great enthusiasm. Relative to first quarter 2004, we have
increased our gross loans by $134 million or 17% and our deposits by $162
million or 16% after consideration of a $15 million reduction in brokered
certificate of deposits year over year. These excellent returns and the growth
of our franchise allows for the continuation of the high quality of service
enjoyed by our customers while at the same time generating above industry
average returns for our shareholders and a challenging work environment for our
team members," continued Mr. Hawker.
"These results are primarily due to our improved net interest margin of
4.59% during the quarter of 2005 while at the same time benefiting from
increased gross loan volumes of $37 million over the fourth quarter loan totals
of 2004", stated Chief Financial Officer, R. Dale McKinney. "Prior to the BOLI
payment, earnings for the first quarter 2005 were $4,449,000 or a 22% increase
over the $3,644,000 earnings reported for the first quarter 2004. The $4,449,000
in earnings provides a solid 16.8% ROE to our shareholders and at the same time
funds the growth of our franchise and expansion of high quality services to our
valued customer base," continued Mr. McKinney.
Earnings Discussion
-------------------
Net earnings were $4,988,000 or $0.46 per share for the three months ended
March 31, 2005. This compares to earnings of $3,644,000 or $0.34 per share for
the same period in 2004. Annualized return on average assets and return on
average equity were 1.37% and 18.85% for the first quarter of 2005 compared with
1.17% and 15.83% for 2004.
The 2005 first quarter earnings of $4,988,000 reflect a year over year
increase in earnings of $1,344,000 due primarily to increasing net interest
margins and a $539,000 gain derived from BOLI. The increase in net interest
income was driven by a $195,692,000 or a 17% increase in average interest
earning assets. The taxable equivalent net interest margin for the first quarter
of 2005 was 4.59%, an increase of 6 basis points from the 4.53% achieved during
the same period during 2004. In comparing the 2005 to 2004 first quarter, other
expenses increased by $982,000 due primarily to increases in salaries and
benefits of $497,000 that were the result of management and support staff
increases necessary to accommodate branch expansion and normal salary
progression and a $206,000 increase in premises and occupancy expenses due
primarily to branch expansion and remodel expenses. Our effective tax rate was
30% for the first quarter of 2005 compared with 31% for the first quarter of
2004. Income tax expense increased $456,000 to $2,093,000 when compared to the
$1,637,000 recorded during the same quarter in 2004. The decrease in the 2005
tax rate is primarily attributable to the receipt of nontaxable life insurance
proceeds of approximately $539,000. Without this item, the 2005 first quarter
effective tax rate would have been 32%, an increase of 1% from the level
achieved in the first quarter of 2004. The primary reason for this increase is a
higher level of fully taxable income year over year.
Credit Quality
--------------
The Company's allowance for loan losses was $13,358,000 or 1.45% of total
loans at March 31, 2005. Nonperforming assets totaled $3,145,000 or 0.21% of
total assets and nonperforming loans stood at $3,085,000 or 0.34% of total
loans. At March 31, 2005 the allowance for loan losses totaled 433% of
nonperforming loans. This compares to an allowance for loan losses of
$12,841,000 or 1.63% of total loans at March 31, 2004. At March 31, 2004,
nonperforming assets totaled $3,302,000 or 0.26% of total assets, nonperforming
loans totaled $3,242,000 or 0.41% of total loans and the allowance for loan
losses totaled 396% of nonperforming loans. The decrease in the provision for
loan losses in the quarter ended March 31, 2005 when compared to the same
quarter in 2004 was due to a decrease in criticized loans on a year over year
comparison. Included in non-performing loans at the end of the first quarter of
2005 was one commercial real estate loans totaling $1.0 million, which was
secured by a first deed of trust with adequate margin between appraised value
and the loan balance.
Net charge-offs for the first quarter of 2005 were $467,000, which
compares to $308,000 for the same period in 2004. The increased charge-off
activity in the first quarter of 2005 when compared to the same period in 2004
was primarily in the agricultural segment of the loan portfolio.
Book Values - Capital
---------------------
Prior to the stock split, the Company's capital at March 31, 2005 stood at
$106,871,000 compared with $94,394,000 as of March 31, 2004. Book value and
tangible book value per share totaled $18.37 and $18.12 as of March 31, 2005 as
compared to $16.59 and $16.15 as of March 31, 2004. The Company's tangible
leverage capital ratio stood at 8.44% at March 31, 2005, compared with 8.50% as
of March 31, 2004. The Company's risk based capital ratio stood at 11.49% at
March 31, 2005, compared with 11.77% as of March 31, 2004.
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Forecasted Information
----------------------
Chief Financial Officer R. Dale McKinney comments on the remaining three
quarters of 2005, "Although interest rates are anticipated to continue to rise
during the year, the forecast is based on existing interest rates since future
interest rates cannot be predicted with certainty. Our ALCO model indicates
slight asset sensitivity; therefore if rates continue to rise as predicted,
forecasted margins should slightly improve to this forecast. Tax equivalent
margins averaged 4.59% for first quarter 2005 and are expected to decline during
the year 2005 to an average tax equivalent margin in the 4.47% to 4.52% range.
Loan loss accruals and net charge offs are well below normal run rates for the
first quarter, but for the total year 2005 are anticipated to remain at the same
relative levels as during the year 2004. Our effective tax rate for 2005
continues to be forecasted in the 33% to 34% range. For 2005, ROE is forecast to
be 15% plus and growth in total assets of about 12%. We continue with our
expense growth forecast in the 10% to 12% range for 2005 to reflect the
infrastructure added during the 2004 year in order to comply with provisions of
both Sarbanes Oxley (SOX) and the Bank Secrecy Act (BSA), and in support of our
continued branch and franchise expansion. After adding back the two previously
announced fourth quarter 2004 earnings charges, a 12% to 14% earnings
improvement over our 2004 year is forecasted, plus added to this would be the
$539,000 after tax BOLI income. Fully diluted earnings per share, after our
previously announced 9 for 5 stock split should be in the $1.67 to $1.70 range.
Risk based capital ratios are anticipated at 11.00% to 11.50% and leverage
capital ratios are anticipated at 8.25% to 8.50% during the full 2005 year.
These ratios are considered well capitalized by regulatory definitions."
Conference Call Recording
-------------------------
Capital Corp of the West's first quarter 2005 earnings conference call is
scheduled for April 19, 2005 at 7:00 am PDT. Investors have the opportunity to
listen to a recording of the conference call by going 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 recording will be available on the web
site 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.
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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 6.5% market share in the six Central California counties in which it has
significant 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.
-Financial Tables Follow-
-------------------------
4
Capital Corp of the West
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands)
For the Three For the Year
Months Ended Ended
March 31, December 31,
2005 2004 2004 2003
-------- -------- -------- --------
Interest income $ 20,013 $ 16,906 $ 70,571 $ 62,413
Interest expense 5,073 4,119 17,097 16,253
-------- -------- -------- --------
Net interest income 14,940 12,787 53,474 46,160
Provision for loan losses 220 615 2,671 2,455
Other income:
Service charges on accounts 1,367 1,434 6,134 5,480
Loss on sale or impairment of securities -- -- (3,665) --
All other income 1,302 1,006 3,936 4,697
Other expenses:
Salaries and related benefits 5,553 5,056 20,697 19,071
Premises and occupancy 985 779 3,446 2,946
Equipment 858 826 3,186 3,335
Professional fees 562 370 1,671 1,662
Marketing 295 348 1,062 963
Intangible amortization 11 167 655 676
Supplies 264 222 873 794
Other expenses 1,780 1,543 6,145 5,938
-------- -------- -------- --------
Total other expenses 10,308 9,321 37,735 35,385
-------- -------- -------- --------
Income before income taxes 7,081 5,281 19,473 18,497
Provision for income taxes 2,093 1,637 7,150 4,857
-------- -------- -------- --------
NET INCOME $ 4,988 $ 3,644 $ 12,323 $ 13,640
======== ======== ======== ========
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Capital Corp of the West
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands) 2005 2004
At March 31, Averages Averages
2005 2004 QTD YTD
----------- ----------- ----------- -----------
Assets
Cash and noninterest-bearing deposits in other banks $ 38,627 $ 40,951 $ 40,285 $ 40,475
Federal funds sold 4,295 2,025 5,747 16,604
Time deposits at other financial institutions 350 350 1,883 670
Investment securities available for sale, at fair value 290,374 281,716 274,058 272,221
Investment securities held to maturity at cost, fair
value of $177,122 and $103,921 at March 31, 2005 and 2004 179,714 102,191 173,050 109,769
Loans, net of allowance for loan losses of $13,358 and
$12,831 at March 31, 2005 and 2004 909,019 775,550 877,544 799,049
Interest receivable 6,398 5,921 5,479 5,447
Premises and equipment, net 23,933 17,331 23,097 18,881
Intangible assets 1,463 2,482 1,466 2,227
Cash value of life insurance 28,012 24,355 28,360 26,341
Investment in housing tax credit limited partnerships 8,447 8,621 8,547 8,664
Other assets 14,750 6,808 12,666 9,175
----------- ----------- ----------- -----------
Total assets $ 1,505,382 $ 1,268,301 $ 1,452,182 $ 1,309,523
=========== =========== =========== ===========
Liabilities and Shareholders' Equity
Deposits
Noninterest-bearing demand $ 261,943 $ 197,705 $ 253,277 $ 213,864
Negotiable orders of withdrawal 185,647 137,505 166,451 148,951
Savings 362,166 343,297 361,335 350,270
Time, under $100 198,497 184,669 198,432 188,907
Time, $100 and over 177,069 175,580 175,497 167,277
----------- ----------- ----------- -----------
Total deposits 1,185,322 1,038,756 1,154,992 1,069,269
Other borrowings and subordinated debentures 201,866 129,844 180,935 138,081
Accrued interest, taxes and other liabilities 11,323 5,307 10,401 5,081
----------- ----------- ----------- -----------
Total liabilities 1,398,511 1,173,907 1,346,328 1,212,431
----------- ----------- ----------- -----------
Preferred stock, no par value; 10,000,000 shares
authorized; none outstanding -- -- -- --
Common stock, no par value; 20,000,000 shares authorized;
5,816,327 and 5,690,602 issued & outstanding at March
31, 2005 and 2004 57,502 54,734 57,332 55,554
Retained earnings 50,677 38,174 48,337 41,933
Accumulated other comprehensive (loss) income (1,308) 1,486 185 (395)
----------- ----------- ----------- -----------
Total shareholders' equity 106,871 94,394 105,854 97,092
----------- ----------- ----------- -----------
Total liabilities and shareholders' equity $ 1,505,382 $ 1,268,301 $ 1,452,182 $ 1,309,523
=========== =========== =========== ===========
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Loan Portfolio Composition
March 31 March 31
(Dollars in thousands) 2005 2004
---- ----
Percent Percent
Loan Categories: Dollar Amount of loans Dollar Amount Of loans
------------- -------- ------------- --------
Commercial $229,421 25% $198,053 25%
-------- -- -------- --
Agricultural 69,004 7 89,521 11
Real estate construction 107,458 12 93,826 12
Real estate mortgage 444,862 48 337,627 43
Consumer 71,632 8 69,354 9
-------- --- -------- ---
Total 922,377 100% 788,381 100%
-------- === -------- ===
Less allowance for
loan losses (13,358) (12,831)
-------- --------
Net loans $909,019 $775,550
-------- --------
Allowance for Loan Loss Activity
Three Months Ended March 31,
2005 2004 2003
---- ---- ----
(In thousands)
Allowance for Loan Losses:
Balance at beginning of period $ 13,605 $ 12,524 $ 11,680
--------- --------- ---------
Provision for loan losses 220 655 615
--------- --------- ---------
Charge-offs (676) (450) (312)
Recoveries 209 197 142
--------- --------- ---------
Net charge-offs (467) (308) (115)
--------- --------- ---------
Balance at end of period $ 13,358 $ 12,831 $ 12,220
========= ========= =========
Loans outstanding at period-end $ 922,377 $ 788,381 $ 655,328
========= ========= =========
Average loans outstanding $ 891,063 $ 770,998 $ 635,089
========= ========= =========
Annualized net charge-offs
to average loans 0.21% 0.16% 0.07%
Allowance for loan losses
To total loans 1.45% 1.63% 1.87%
To nonperforming loans 433% 396% 559%
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Selected Financial Data
Three Three Twelve Twelve
Capital Corp of the West Months Ended Months Ended Months Ended Months Ended
Selected Financial Data 03/31/05 03/31/04 12/31/04 12/31/03
----------------------------------------------------
Basic Earnings Per Share $ .48 $ .36 $ 1.19 $ 1.35
Diluted Earnings Per Share $ .46 $ .34 $ 1.15 $ 1.30
Annualized Return on:
Average Assets 1.37% 1.17% 0.94% 1.23%
Average Equity 18.85% 15.83% 12.69% 16.43%
Net Interest Margin 4.59% 4.53% 4.49% 4.53%
Efficiency Ratio 58% 60% 62% 62%
- --------------------------------------------------------------------------------
Annualized Net Charge-offs to
Average Loans .21% 0.16% 0.25% 0.19%
Capital / Shareholder information
March 31, March 31,
2005 2004
---- ----
Book Value Per Share (prior to stock split) $18.37 $16.59
Tangible Book Value Per Share (prior to stock split) $18.12 $16.15
Leverage Capital Ratio 8.44% 8.50%
Risk Based Capital Ratio 11.49% 11.77%
Nonperforming Assets
March 31 March 31
2005 2004
------ ------
(In thousands)
Nonaccrual loans $2,948 $2,779
Accruing loans past due 90 days or more 137 463
------ ------
Total nonperforming loans 3,085 3,242
Other real estate owned 60 60
------ ------
Total nonperforming assets $3,145 $3,302
====== ======
Nonperforming loans to total loans 0.34% 0.41%
Nonperforming assets to total assets 0.21% 0.26%
8