Exhibit 99.1
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February 8, 2001
FOR IMMEDIATE RELEASE
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MONTEREY BAY BANCORP, INC. ANNOUNCES:
FOURTH QUARTER AND FISCAL YEAR 2000 RESULTS;
APPOINTMENT OF NEW SENIOR OFFICER FOR MONTEREY BAY BANK;
APPOINTMENT OF NEW DIRECTOR;
DATE FOR 2001 ANNUAL MEETING OF STOCKHOLDERS;
RECORD DATE FOR VOTING AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS
Common Stock Symbol: MBBC
NASDAQ National Market
Watsonville, CA. February 8, 2001. Monterey Bay Bancorp, Inc.
("Company"), the holding company for Monterey Bay Bank ("Bank"), today reported
net income of $709 thousand, equivalent to $0.22 diluted earnings per share, for
the fourth quarter ended December 31, 2000, compared to net income of $645
thousand, or $0.20 diluted earnings per share, for the fourth quarter of 1999.
For the fiscal year 2000, the Company reported net income of $2.5 million,
equivalent to $0.81 diluted earnings per share. This compares to net income of
$3.3 million for fiscal year 1999, equivalent to $0.99 diluted earnings per
share.
Net interest income increased from $4.0 million during the fourth
quarter of 1999 to $4.5 million during the fourth quarter of 2000 due to both a
larger average balance sheet and greater spreads. The Company's ratio of net
interest income to average total assets increased from 3.44% during the fourth
quarter of 1999 to 3.76% during the fourth quarter of 2000. For fiscal 2000, net
interest income totaled $18.0 million, up from $16.0 million the prior year. The
ratio of net interest income to average total assets rose from 3.53% during 1999
to 3.79% during 2000. The greater spreads in part stemmed from the Bank's
continued implementation of its strategic plan to transform a 75 year old
savings & loan into a community focused commercial bank.
Loans secured by multifamily real estate increased from 10.9% of gross
loans at December 31, 1999 to 18.1% of gross loans at December 31, 2000. During
the same period, commercial real estate loans increased from 18.6% to 24.1% of
gross loans. In contrast, residential mortgages declined from 43.4% of gross
loans at December 31, 1999 to 37.8% of gross loans at December 31, 2000. Loans
secured by income property typically provide higher yields than residential
mortgages. In addition, net loans as a percentage of total assets rose from
77.9% at December 31, 1999 to 80.6% at December 31, 2000.
Checking account balances, which generally present a lower interest
expense than alternative funding, increased from 13.3% of total deposits at
December 31, 1999 to 14.4% of total deposits at December 31, 2000. Borrowings
declined from 11.2% of total assets at December 31, 1999 to 6.7% of total assets
at December 31, 2000. This decline was offset by deposits increasing from 79.4%
of total assets at December 31, 1999 to 83.9% of total assets at December 31,
2000.
As previously announced, Monterey Bay Bancorp was paid in full in
December 2000 on a $4.8 million business term loan that had been on non-accrual
status and classified as a substandard asset. In conjunction with the payoff,
the Company received all interest due and $16 thousand in reimbursed legal fees.
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Monterey Bay Bancorp, Inc. Page 2
Press Release
February 8, 2001
During the fourth quarter of 2000, the Company recorded a $500 thousand
provision for loan losses, up from $150 thousand during the same period the
prior year. This higher provision was due to:
1. the growth in the loan portfolio
2. the continued shift in loan mix away from residential mortgages and
toward income property loans, which typically present more credit risk
than residential mortgages
3. the establishment of a $600 thousand specific allowance for impairment
related to a $2.85 million, non-accrual, construction loan secured by a
substantially completed commercial property in the Bank's primary
market area. This allowance was established in light of difficulty
obtaining an occupancy permit from local government agencies and due to
a lack of continued financial support from the borrowers. The Bank is
presently in the process of foreclosing on the subject property.
4. the increasing credit concentrations in the Company's loan portfolio
associated with a smaller number of larger income property loans,
versus a larger number of comparatively smaller residential mortgages
5. management's concerns about several key factors which management
believes have negatively impacted the inherent loss in the Company's
credit portfolio, including:
o the California energy crisis, with impacts upon the availability
and price of electricity, business costs, consumer spending and
disposable income, and the pace of economic activity in the State
o the financial difficulties experienced by many technology related
companies in the Silicon Valley area adjacent to the Bank's
primary market areas
o the impact of lower technology stock prices on consumer spending,
liquidity, and investment, with a particular concern regarding
effects on the demand and pricing for real estate in the Bank's
primary market areas
o the general reduction in national economic growth and the
increased volume of layoffs being announced by major corporations
The Company's ratio of loan loss reserves to gross loans outstanding
increased from 0.96% at December 31, 1999 to 1.35% at December 31, 2000. The
Company increased this ratio throughout 2000 in conjunction with the
aforementioned change in loan mix.
The Company's ratio of loan loss reserves to non-accrual loans rose
from 50.84% at December 31, 1999 to 114.96% at December 31, 2000. Non-accrual
loans declined from $6.9 million at December 31, 1999 to $4.7 million at
December 31, 2000, primarily as a result of the repayment of the significant
non-accrual loan originated by Monterey Bay Bancorp, as discussed above. The
Company had no foreclosed real estate at December 31, 2000.
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Monterey Bay Bancorp, Inc. Page 3
Press Release
February 8, 2001
The special residential loan pool which the Company purchased in 1998
has paid down significantly in recent months. This pool is comprised of loans
that present a borrower credit profile and / or a loan to value ratio outside of
(less favorable than) the Company's normal underwriting criteria. To mitigate
the credit risk for this portfolio, the Company obtained, at purchase, a
scheduled principal / scheduled interest loan servicing agreement from the
seller. This agreement also contains a guaranty by the seller to absorb any
principal losses on the portfolio in exchange for the seller's retention of a
portion of the loans' yield through loan servicing fees. While the seller has
met all its contractual obligations through January, 2001, the Company has
allocated certain reserves due to concerns regarding the potential losses by the
seller in honoring the guaranty, the present delinquency profile of the special
residential mortgage pool, and the differential between loan principal balances
and current appraisals for foreclosed loans and loans in the process of
foreclosure. The original balance of the special residential loan pool in 1998
was $40.0 million, which has been paid down to $13.3 million by January 20,
2001.
Non-interest income increased from $479 thousand during the fourth
quarter of 1999 to $626 thousand during the fourth quarter of 2000. Higher
customer service charges significantly contributed to this rise, as the Company
increased its number of transaction accounts and implemented a new fee and
service charge schedule during 2000. Non-interest income for the year 2000
totaled $2.3 million, down from $2.5 million in 1999 primarily due to sales of
mortgage backed and investment securities generating a loss of $55 thousand in
2000 versus a gain of $496 thousand in 1999.
General & administrative expenses increased from $3.2 million and $11.9
million during the three and twelve months ended December 31, 1999,
respectively, to $3.4 million and $13.7 million during the same periods in 2000.
The Company incurred $108 thousand in operating expenses associated with its
pending data processing conversion during the fourth quarter of 2000. These
expenses included costs for consultants assisting with the technology
implementation, employee training, travel, and deconversion related payments to
the existing data processor. The Company expects operating costs in support of
the data processing conversion to increase during the first quarter of 2001.
The Company also experienced higher legal, accounting, and consulting
costs during the fourth quarter of 2000 than during the fourth quarter of 1999.
During the third quarter of 2000, the Company established a $250 thousand
accrual for a separation package associated with the former President & Chief
Operating Officer. The Company is still in the process of settling this matter,
which resulted in costs for related legal and consulting services during the
fourth quarter of 2000. In addition, the Company expanded the scope of its
largely outsourced internal audit function during the fourth quarter of 2000,
leading to an increase in associated expense.
General & administrative expenses for fiscal year 2000 rose $1.8
million from 1999 as a result of the greater number of customers and accounts
serviced by the Company, higher associated data processing costs, increases in
Bank staff, changes in the senior management team, the settlement of certain
non-qualified benefits obligations, the adoption of a Directors Emeritus
program, the implementation of an expanded performance based incentive
compensation program, the accrual for the aforementioned separation package,
higher outside professional costs, and expenses associated with the data
processing conversion.
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Monterey Bay Bancorp, Inc. page 4
Press Release
February 8, 2001
Total assets rose from $462.8 million at December 31, 1999 to $486.2
million at December 31, 2000. The increase in assets was concentrated in net
loans, which increased from $360.7 million at December 31, 1999 to $391.8
million at December 31, 2000. Total deposits increased from $367.4 million at
December 31, 1999 to $407.8 million at December 31, 2000. The rise in deposits
stemmed from:
o an increase in lower cost transaction accounts, particularly NOW
checking accounts and money market accounts - areas where the
Company introduced new products during 2000
o the Company's participation ($14.0 million) in the State of
California time deposit program during 2000; whereby the State
places time deposits with banks as a means of encouraging the
lending of funds back into California's communities
The percentage of the deposit portfolio comprised of historically higher cost
certificates of deposit declined from 60.5% at December 31, 1999 to 60.0% at
December 31, 2000 despite the Company's participation in the State of California
program.
The rise in deposits experienced during 2000 permitted the Company to
repay certain wholesale borrowings. Total borrowings decreased from $52.0
million at December 31, 1999 to $32.6 million at December 31, 2000.
Monterey Bay Bank continues to be in the highest regulatory capital
classification of "well capitalized", with its regulatory capital ratios
increasing during 2000. The Bank also remains well in excess of the institution
specific regulatory capital requirements imposed by the Office of Thrift
Supervision during the first quarter of 2000 in conjunction with the special
residential mortgage pool.
Consolidated stockholders' equity increased from $40.8 million at
December 31, 1999 to $43.8 million at December 31, 2000, as the effects of net
income, continued amortization of deferred stock compensation, and directors
receiving their fees in Company stock more than offset the impacts of the
repurchase of 120,000 shares of the Company's common stock during the first
quarter of 2000 and an eight cents per share cash dividend payment during the
first quarter of 2000. As previously announced, the Company's Board of Directors
has indefinitely suspended the declaration and payment of cash dividends. The
Company's tangible book value per share increased from $11.07 at December 31,
1999 to $12.54 at December 31, 2000.
On February 12, 2001, Susan F. Grill will join Monterey Bay Bank as its
Senior Vice President and Director of Retail Banking. Ms. Grill will also serve
as the President of Portola Investment Corporation, the Bank's subsidiary that
sells non federally insured investment products such as mutual funds and
annuities. Ms. Grill has been in banking for over 25 years, including a number
of years in the Greater Monterey Bay Area, with significant experience in
consumer financial services, sales management, and marketing. Ms. Grill is a
graduate of California State University / Fresno with a Bachelor of Science in
Marketing Management, and has a Master of Business Administration degree from
St. Mary's College in Moraga.
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Monterey Bay Bancorp, Inc. page 5
Press Release
February 8, 2001
In reviewing the most recent quarter, C Edward Holden, Chief Executive
Officer & President, commented "The Company continues to make progress in its
transition from a 75 year old savings & loan to a community based financial
services firm. During the most recent quarter, we increased loans and deposits
to record levels, improved our credit profile, further restructured the balance
sheet, expanded customer utilization of our new Internet banking product, and
invested significant human and financial resources into our upcoming conversion
to a new core processing platform built upon a leading relational database and
client / server technology. Collecting the full amount on the large non-accrual
loan held by Monterey Bay Bancorp provided the Company with additional
flexibility and liquidity, and supported our investing $2.1 million into the
Bank to facilitate its future growth and the continued execution of our business
strategy. With the addition of Susan F. Grill, the Bank will have in place a
strong and highly experienced management team to implement the tactical and
strategic steps necessary for the Bank to become a successful community focused
commercial bank."
Mr. Holden continued "Despite these achievements, we are disappointed
with the level of earnings generated by the Company. The Board of Directors
strongly appreciates the importance of building shareholder value and producing
a competitive return on shareholders' equity. However, many of the initiatives
integral to the strategic transformation of the Company require up front
operating costs and initial capital investments before associated revenues may
be realized. In particular, we anticipate continued additional operating costs
during 2001 associated with the upcoming conversion to a new and much improved
data processing system. This system is integral to our strategic plan, as it
supports a broader array of products and financial services in a more efficient
environment than our present technology. We appreciate the support of our
stockholders, customers, directors, and employees as we continue to reposition
the Company while endeavoring to leverage 75 years of superior customer service,
community involvement, and local decision-making."
Effective February 1, 2001, Larry Daniels was appointed a Director of
the Company and the Bank, with a term expiring at the 2001 annual meeting of
stockholders. Mr. Daniels has also been nominated for a one year term as
Director, subject to stockholder approval at the 2001 annual meeting. Mr.
Daniels is President of long-established Daniels & House Construction Company,
headquartered in Monterey, California. In announcing Mr. Daniels' appointment,
McKenzie Moss, Chairman of the Board, stated "We are pleased to have Mr. Daniels
join the Board. His years of business experience in the Greater Monterey Bay
Area and knowledge of the local real estate markets will allow him to contribute
to the Company's success in many ways."
The Company has previously announced that Eugene R. Friend and P. W.
Bachan are retiring from the Company's Board of Directors at the 2001 annual
meeting of stockholders, following many decades of service to the Company and
Bank.
The 2001 annual meeting of stockholders will take place on Thursday,
May 24, 2001 at 9:00 AM Pacific Standard Time at the Watsonville Women's Club in
Watsonville, California. The Board of Directors has established Monday, April 2,
2001 as the Record Date for voting at the annual meeting. All stockholders are
cordially invited to attend.
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Monterey Bay Bancorp, Inc. page 6
Press Release
February 8, 2001
The Company's common stock is listed on the NASDAQ National Market
under the symbol "MBBC". The Company and the Bank are headquartered in
Watsonville, California. The Bank operates through its administrative offices in
Watsonville and eight full service branches located in the Greater Monterey Bay
Area of Central California. The Bank's deposits are insured by the Federal
Deposit Insurance Corporation up to the maximum allowed by law.
This news release contains certain forward-looking statements that are
subject to various factors that could cause actual results to differ materially
from such statements. Such factors include, but are not limited to, the
economic, business, and real estate market conditions in the Company's market
areas, competition, regulatory actions, the possibility that the Company will
not be successful in achieving its strategic objectives, the performance and
contributions of new employees, borrowers' willingness to work out troubled
credits, and other factors discussed in documents filed by the Company with the
Securities and Exchange Commission from time to time. The Company does not
undertake, and specifically disclaims any obligation, to update any
forward-looking statements to reflect occurrences or unanticipated events or
circumstances after the date of such statements.
For further information contact:
--------------------------------
C. Edward Holden Mark R. Andino
Chief Executive Officer or Chief Financial Officer
(831) 768 - 4840 (831) 768 - 4806
ed.holden@montereybaybank.com mark.andino@montereybaybank.com
General communication:
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INFO@MONTEREYBAYBANK.COM
www.montereybaybank.com
Phone: (831) 768 - 4800
Fax: (831) 722 - 6794
--- financial data follows ---
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MONTEREY BAY BANCORP, INC.
Consolidated Financial Highlights
Unaudited
(Dollars In Thousands Except Per Share Amounts)
December 31, December 31,
Financial Condition Data 2000 1999
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Cash and cash equivalents $ 25,159 $ 12,833
Investment and mortgage backed securities available for sale 50,310 69,179
Investment and mortgage backed securities held to maturity -- 60
Loans receivable held for investment, net:
Residential one to four unit real estate loans 160,155 168,465
Multifamily five or more units real estate loans 76,727 42,173
Commercial and industrial real estate loans 102,322 72,344
Construction loans 59,052 79,034
Land loans 16,310 13,930
Other loans 9,379 12,252
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Sub-total gross loans held for investment 423,945 388,198
(Less) / Plus:
Undisbursed construction loan funds (26,580) (23,863)
Unamortized purchase premiums, net of purchase discounts 21 134
Deferred loan fees and costs, net (202) (281)
Allowance for loan losses (5,364) (3,502)
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Loans receivable held for investment, net 391,820 360,686
Investment in capital stock of the Federal Home Loan Bank 2,884 3,213
Accrued interest receivable 2,901 2,688
Premises and equipment, net 7,375 7,042
Core deposit premiums and other intangible assets, net 2,195 2,918
Real estate acquired via foreclosure, net -- 96
Other assets 3,546 4,112
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Total assets $ 486,190 $ 462,827
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Non-interest bearing demand deposits $ 17,065 $ 17,316
Interest bearing NOW checking accounts 41,859 31,385
Savings accounts 16,503 15,312
Money market accounts 87,651 81,245
Certificates of deposit 244,710 222,144
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Total deposits 407,788 367,402
Borrowings 32,582 51,992
Other liabilities 1,983 2,630
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Total liabilities 442,353 422,024
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Stockholders' equity 43,837 40,803
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Total liabilities and stockholders' equity $ 486,190 $ 462,827
========= =========
Three Months Ended December 31, Fiscal Year Ended December 31,
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Operating Data 2000 1999 2000 1999
- ------------------------------ ---- ---- ---- ----
Interest income $ 9,781 $ 8,442 $ 37,757 $ 33,417
Interest expense 5,246 4,453 19,777 17,388
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Net interest income before provision for loan losses 4,535 3,989 17,980 16,029
Provision for loan losses 500 150 2,175 835
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Net interest income after provision for loan losses 4,035 3,839 15,805 15,194
Non-interest income 626 479 2,340 2,505
General & administrative expense 3,417 3,203 13,676 11,887
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Income before income tax expense 1,244 1,115 4,469 5,812
Income tax expense 535 470 1,946 2,511
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Net income $ 709 $ 645 $ 2,523 $ 3,301
========= ========= ========= =========
Shares applicable to basic earnings per share 3,129,897 3,219,098 3,110,910 3,231,162
Basic earnings per share $ 0.23 $ 0.20 $ 0.81 $ 1.02
========= ========= ========= =========
Shares applicable to diluted earnings per share 3,163,182 3,289,561 3,123,552 3,320,178
Diluted earnings per share $ 0.22 $ 0.20 $ 0.81 $ 0.99
========= ========= ========= =========
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MONTEREY BAY BANCORP, INC.
Selected Ratios And Other Data
Unaudited
(Dollars In Thousands)
Three Months Ended December 31, Fiscal Year Ended December 31,
------------------------------- ------------------------------
2000 1999 2000 1999
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Profitability Ratios
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Return on average assets 0.58% 0.55% 0.53% 0.73%
Return on average equity 6.77% 6.18% 6.24% 8.05%
Interest rate spread during the period 3.50% 3.23% 3.54% 3.27%
Net interest income / average total assets 3.76% 3.44% 3.79% 3.53%
Efficiency ratio 66.21% 71.69% 67.30% 64.14%
At At
December 31, December 31,
2000 1999
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Asset Quality Information
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Non-accrual loans $ 4,666 $ 6,888
Non-performing loans 4,741 8,182
Real estate acquired via foreclosure -- 96
Allowance for loan losses 5,364 3,502
Allowance for loan losses / loans outstanding 1.35% 0.96%
Allowance for loan losses / non-accrual loans 114.96% 50.84%
Bank Regulatory Capital Ratios
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Tangible capital ratio 8.03% 7.11%
Core capital ratio 8.03% 7.11%
Tier one risk based capital ratio 11.03% 9.58%
Total risk based capital ratio 12.28% 10.56%
Other Information
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Number of deposit accounts 29,129 27,831
Full-service customer facilities 8 8
Number of ATM's 11 10
Loan to deposit ratio 96.08% 98.17%
Tangible book value per share $12.54 $11.07
Shares outstanding 3,321,210 3,422,637
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