Exhibit 99.1
January 29, 2003
FOR IMMEDIATE RELEASE
MONTEREY BAY BANCORP, INC. ANNOUNCES:
RECORD FOURTH QUARTER AND FISCAL YEAR 2002 RESULTS;
INFORMATION REGARDING THE 2003 ANNUAL MEETING OF STOCKHOLDERS
Common Stock Symbol: MBBC
NASDAQ National Market
Watsonville, CA. January 29, 2003. Monterey Bay Bancorp, Inc. ("Company"),
the holding company for Monterey Bay Bank ("Bank"), today reported net income of
$1.62 million, equivalent to $0.46 diluted earnings per share, for the quarter
ended December 31, 2002, compared to net income of $1.14 million, or $0.33
diluted earnings per share, for the same period in 2001. Net income during the
quarter ended September 30, 2002 (the immediately preceding quarter) was $1.47
million, equivalent to $0.42 diluted earnings per share. The earnings for the
fourth quarter of 2002 were the highest of any quarter in the Company's history.
For the year ended December 31, 2002, net income was a record $5.64
million, equivalent to $1.61 diluted earnings per share. This compares to net
income of $3.75 million, or $1.12 diluted earnings per share, for the year 2001.
The $1.89 million (50.3%) increase in net income for the year 2002 compared to
2001 primarily resulted from two key factors:
o the continued implementation of the Company's strategic plan to transform
the Bank into a community commercial bank with a focus on relationship
banking and strong commitment to community involvement
o during the year 2001, the Company incurred pre-tax operating costs of $447
thousand for the conversion of the core data processing system and $284
thousand for legal and other expenses associated with the arbitration of
claims by a former executive
Return on average stockholders' equity improved from 7.94% in 2001 to
10.50% in 2002, and was 11.64% for the fourth quarter of 2002. At December 31,
2002, the Company had record levels of loans, assets, and stockholders' equity.
Tangible book value per share increased from $14.08 at December 31, 2001 to
$16.00 at December 31, 2002. The closing price of the Company's common stock
increased from $15.50 per share on December 31, 2001 to $19.95 per share on
December 31, 2002.
Monterey Bay Bancorp, Inc. Page 2
Press Release
January 29, 2003
During 2002, the Company continued the implementation of its strategic
plan of transforming the Bank into a community focused commercial bank serving
the financial needs of individuals, families, local organizations, and
businesses. Key accomplishments during the fourth quarter included:
o strong growth in net loans held for investment
o significant progress in shifting the composition of the loan portfolio
o increased local commercial banking business
o continued improvement in the Company's efficiency ratio
o expanded customer use of new services
o record mortgage banking activity and income
o maintenance of strong credit quality
Net interest income increased from $5.2 million and $19.7 million during
the fourth quarter and the year 2001 to $5.9 million and $22.6 million during
the same periods in 2002. These increases resulted from both expanded spreads
and growth in the average balances of interest earning assets and liabilities.
The Company's ratio of net interest income to average total assets was 4.01% for
2002, up from 3.83% for 2001. The increased spread in part stemmed from the
Bank's continued implementation of its strategic plan, which incorporates a
higher ratio of loans to total assets, a smaller percentage of total loans being
comprised of residential mortgages, and transaction accounts constituting a
greater portion of total deposits.
The Company recorded a $400 thousand provision for loan losses during the
fourth quarter of 2002, up from $325 thousand during the same period in the
prior year. This greater provision primarily resulted from the growth and change
in mix of the loan portfolio. For the full year of 2002, the Company recorded
$1.5 million in provisions for loan losses, compared to $1.4 million during the
year 2001. The Company's ratio of loan loss reserves to total loans increased
from 1.41% at December 31, 2001 to 1.54% at December 31, 2002. The primary
factors contributing to the rise in this ratio included:
o the continued shift in the Company's loan mix away from its historic
concentration in residential mortgages
o the establishment of a specific reserve for a loan secured by a hotel /
resort within the Company's primary market area, as subsequently discussed
o the Company's updating its formula general reserve factors to reflect
current information regarding real estate valuations, business conditions,
rental and vacancy rates for various types of income property, and other
factors in estimating the amount of loss inherent in the loan portfolio at
December 31, 2002
Monterey Bay Bancorp, Inc. Page 3
Press Release
January 29, 2003
Net charge-offs during 2002 totaled $13 thousand, comparing favorably to
$99 thousand during 2001. Non-accrual loans increased from $2.3 million at
December 31, 2001 to $2.6 million at December 31, 2002 primarily due to the
placement of a $2.3 million commercial real estate mortgage on non-accrual
status during the first quarter of 2002. This credit is a participation loan
where the Bank is not the lead financial institution. The loan is secured by a
first deed of trust on a hotel / resort located within the Company's primary
market area and by a first deed of trust on a residential lot located in
California. The borrowers are directly personally indebted. The hotel / resort
is a relatively new development that has experienced limited cash flow. The
hotel / resort was also adversely impacted by the decline in tourism and travel
during late 2001 and all of 2002.
At December 31, 2002, the Company maintained a $462 thousand specific
reserve for this hotel / resort loan, based upon estimated net proceeds
following foreclosure and sale. Although the loan was current in its payments at
December 31, 2002, the Company maintained the loan on non-accrual status at
December 31, 2002 due to concern about the future net cash flow of the hotel /
resort during the seasonally slow winter months, particularly in light of the
status of the economy, the tourism industry, and the outlook for business travel
activity. These factors also create particular volatility in the market value of
the hotel / resort.
Non-accrual loans at December 31, 2002 also included:
o a residential mortgage with a principal balance of $201 thousand
o a $129 thousand loan secured by a first deed of trust on residential land
o a $49 thousand home equity line of credit
The Company does not anticipate recording a loss on any of the above three
non-accrual loans due to the estimated value of the underlying real estate
collateral.
At December 31, 2002, the Company had one foreclosed property with a book
value of $846 thousand. This property is a custom single family home located in
an upscale neighborhood in the East Bay of the Greater San Francisco Bay Area.
The Company has ordered a current appraisal for the property, and intends to
list the property for sale following the completion of certain maintenance work.
The original appraisal and current real estate broker price opinions indicate a
market value in excess of the Bank's investment in the property.
Non-interest income totaled $622 thousand and $2.1 million during the
fourth quarter and the year ended December 31, 2002, compared to $538 thousand
and $2.6 million during the same periods in 2001.
Monterey Bay Bancorp, Inc. Page 4
Press Release
January 29, 2003
Customer service charge income was $411 thousand and $1.5 million during
the fourth quarter and the year ended December 31, 2002. This compares to $405
thousand and $1.7 million during the same periods in 2001. In conjunction with
the conversion to the new core data processing system in March 2001, the Company
implemented a restructured consumer checking product line and an associated
revised fee and service charge schedule. These changes contributed to the
closing of certain lower balance, recurring overdraft, and / or higher
transaction volume consumer checking accounts beginning in the second quarter of
2001, as such accounts began incurring increased service charges. The closure of
these accounts contributed to the reduced levels of customer service charge
income for the full year, but also decreased certain operating costs for the
Company. Customer service charge income during the fourth quarter of 2002
benefited from a 24.8% increase in debit card income versus the same period the
prior year. The Company conducted a debit card education and sales campaign
during 2002 to foster increased customer utilization of this convenient and
flexible service.
Gains on the sale of loans were $89 thousand during the fourth quarter of
2002, up from $41 thousand during the fourth quarter of 2001. For the full year
of 2002, gains on the sale of loans totaled $170 thousand, a 93.2% increase from
the $88 thousand recorded during 2001. Mortgage banking income during 2002
benefited from the historically low interest rate environment and record
national refinance volume. At the beginning of 2003, the Company commenced
offering a greater variety of residential mortgages under an expanded
relationship with a secondary market conduit. This expansion was pursued in
light of the Company's desire to continue reducing the percentage of total loans
held for investment comprised of residential mortgages while at the same time
continuing to meet the home financing needs of its local communities. The
Company anticipates continued favorable results from its mortgage banking
operations during the first quarter of 2003 based upon its pipeline at the end
of 2002 and the continued availability of thirty year fixed rate loans at rates
near 6.00%.
Commissions from the sale of non-FDIC insured investment products were $25
thousand and $125 thousand during the three and twelve months ended December 31,
2002, compared to $22 thousand and $244 thousand during the same periods in
2001. This decrease for the full year of 2002 was primarily due to vacancies in
positions for licensed investment sales representatives and the general state of
the capital markets during 2002. The Company expects revenue from these
operations to remain constrained during the first quarter of 2003.
Loan servicing income totaled $16 thousand and $63 thousand during the
three and twelve months ended December 31, 2002, down from $24 thousand and $101
thousand during the same periods in 2001. The Company continues to sell the vast
majority of its long term, fixed rate residential loan production into the
secondary market on a servicing released basis, and purchases more interest rate
sensitive loans as part of its interest rate risk management program. Additions
to loans serviced for others during 2002 have been limited to loan
participations sold to correspondent banks. As a result, the portfolio of loans
serviced for others continues to decline as loans pay off. At December 31, 2002,
the Company serviced $35.3 million in various types of loans for other
investors, compared to $42.6 million at December 31, 2001. The Company
maintained loan servicing assets of $35 thousand at December 31, 2002, and is
thus limited in its exposure of loan servicing income to the accelerated loan
prepayment speeds now occurring as a result of the low interest rate environment
and high volume of residential mortgage refinance activity.
Monterey Bay Bancorp, Inc. Page 5
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January 29, 2003
The Company did not sell any securities during the fourth quarters of 2002
or 2001. Gains on sale of mortgage backed securities during 2002 totaled $35
thousand, down from $190 thousand during 2001. The Company's security sales
during 2002 were limited to the sale of two collateralized mortgage obligations.
These securities were sold in conjunction with the Company's interest rate risk
management program. Although the market value of many of the Company's mortgage
backed securities exceeded historic carrying cost during 2002 due to the decline
in most capital markets interest rates, the Company retained the securities as a
means of generating net interest income.
Non-interest expense totaled $3.5 million and $13.8 million during the
fourth quarter and year ended December 31, 2002, compared to $3.4 million and
$14.4 million during the same periods in 2001. Factors contributing to lower
expenses in 2002 included the 2001 nonrecurring expenses associated with its
data processing conversion and the arbitration of claims by a former executive.
Compensation and employee benefits costs were higher in the fourth quarter
and year ended December 31, 2002 than during the same periods the prior year due
to:
o compensation costs associated with the Los Angeles loan production office
which opened during the first quarter of 2002
o other staff additions and changes in support of the Company's strategic
plan, particularly in the Company's commercial banking, income property
lending, and information technology functions
o higher costs for the Bank's Employee Stock Ownership Plan due to the
greater average market price of the Company's common stock
o higher costs for payroll taxes on a greater compensation base
o increased expenses for worker's compensation insurance, which is a general
problem faced by businesses in the State of California
Deposit insurance premiums decreased from $50 thousand and $198 thousand
for the fourth quarter and year ended December 31, 2001 to $19 thousand and $140
thousand during the same periods in 2002, despite the expansion in the Company's
deposit portfolio. The decline resulted from an adjustment in the Company's
insurance premium rate effective July 1, 2002. The lower insurance premium rate
will also favorably impact deposit insurance expenses during the first half of
2003.
Legal and accounting expenses decreased from $138 thousand and $863
thousand for the fourth quarter and year ended December 31, 2001 to $114
thousand and $442 thousand during the same periods in 2002. These reductions
were primarily due to the aforementioned arbitration in 2001, and due to the
Company's utilizing more cost effective providers for certain professional
services in 2002. In addition, the Company during 2002 commenced performing
certain regulatory filing functions internally at lower cost.
Monterey Bay Bancorp, Inc. Page 6
Press Release
January 29, 2003
Advertising and promotion costs totaled $86 thousand during the fourth
quarter of 2002, down from $108 thousand during the same period in the prior
year. Advertising expenses during the fourth quarter of 2002 were concentrated
in print advertising for consumer deposits and radio advertising targeted at
local businesses. Advertising and promotion costs totaled $300 thousand during
2002, up from $251 thousand during the same period the prior year. These costs
were unusually low in the first half of 2001, as the Company postponed certain
advertising and promotional activities due to the implementation of the new
computer systems environment.
Other non-interest expense decreased from $436 thousand and $2.3 million
during the fourth quarter and year ended December 31, 2001 to $407 thousand and
$1.6 million during the same periods in 2002. The Company spent $236 thousand
less for consulting in 2002 than during 2001, when significant professional
costs were incurred in support of a data processing systems conversion. In
addition, the Company has implemented a number of expense control and efficiency
initiatives over the past year that moderated various operating costs.
In conjunction with the Company's strategic plan, the Company's employees
and Directors enhanced the Bank's visibility during 2002 by their extensive
participation in a significant number of community events and organizations. As
just one example, during the months of November and December, the Company
focused its efforts on helping the less fortunate by providing food and
donations to local food banks through a Holiday Food Drive Campaign. Each of the
Bank's eight branches as well as the Administrative Headquarters served as
public collection sites promoting donations of non-perishable food items.
Through the combined efforts of employees, Directors, customers, and the general
public, the Company collected the equivalent of over 7,000 pounds of food.
The Company's effective book tax rate during the fourth quarter of 2002
was 38.3%, compared to 42.7% in the same quarter the prior year. The reduction
in effective book tax rate resulted from the Company's increased utilization of
tax benefits under the State of California Enterprise Zone Program and the
purchase of Bank owned life insurance during the fourth quarter of 2002. The
Company's Administrative Headquarters building and Watsonville branch are
located within a State of California Enterprise Zone, and the Bank has increased
its lending to local businesses also domiciled within Enterprise Zones. The
dividends the Company earns on the Bank owned life insurance are not subject to
regular Federal and State income tax.
The Company's efficiency ratio improved from 59.59% during the fourth
quarter of 2001 and 54.77% during the third quarter of 2002 to 53.41% during the
fourth quarter of 2002. While the Company continues to pursue a range of
alternatives to improve its efficiency and augment revenue, further progress in
this ratio will likely be tempered in coming quarters by the need to invest in
support of the continued implementation of the strategic plan. These investments
are projected to include product development, new branch sites, additional
relationship officers, and enhanced technology-facilitated services.
Total assets increased from $537.4 million at December 31, 2001 to a
record $609.7 million at December 31, 2002.
Cash and cash equivalents decreased from $13.1 million at December 31,
2001 to $11.4 million at December 31, 2002 due to the use of cash equivalents to
fund expansions in the security and loan portfolios, and to purchase Bank owned
life insurance.
Monterey Bay Bancorp, Inc. Page 7
Press Release
January 29,2003
Investment and mortgage backed securities increased from $37.9 million at
December 31, 2001 to $44.5 million at December 31, 2002. The Company purchased
relatively short duration, AAA rated collateralized mortgage obligations
("CMO's") and Agency balloon mortgage backed securities during 2002 to serve as
collateral for certain deposits, invest available liquidity, and provide a
recurring stream of cash flow to support the expansion in lending. Throughout
2002, the Company did not own any corporate bonds issued by companies primarily
in the telecommunications, technology, or energy industries. The Company owned
two corporate bonds at December 31, 2002, both of which were variable rate,
trust preferred securities issued by large financial institutions. These bonds
reprice quarterly based upon LIBOR and were rated "A" and "A-" by Standard &
Poors at December 31, 2002.
Loans held for investment, net, increased from $465.9 million at December
31, 2001 to a record $521.9 million at December 31, 2002. The increase resulted
from a combination of strong internal loan originations, including activity from
the Los Angeles loan production office, and from purchases of, or participations
in, individual income property and construction loans from correspondent banks.
In addition, during the fourth quarter of 2002, the Company purchased a $16.9
million pool of high credit quality, seasoned hybrid residential mortgages
secured by first deeds of trust on California homes in order to better utilize
the Company's capital, support the Bank's Qualified Thrift Lender ("QTL") ratio,
and offset historically high loan payoff volumes stemming from the low interest
rate environment.
Total net loans as a percentage of total assets were 85.9% at December
31,2002, down slightly from 86.8% at December 31, 2001 and 86.2% at September
30, 2002. The Company has targeted increasing this ratio to 90.0% as part of its
strategy of supporting its interest margin, fostering economic activity in its
local communities, and effectively utilizing the Bank's capital. The decline in
this ratio during the fourth quarter of 2002 primarily resulted from the
Company's acquisition of $9.0 million in Bank owned life insurance, as
subsequently discussed.
The loan portfolio product mix shifted during 2002 in conformity with the
Company's strategic plan. Residential one to four unit loans declined from 42.3%
of gross loans at December 31, 2001 to 33.2% of gross loans at December 31,
2002. In contrast, commercial and industrial real estate loans rose from 22.6%
to 24.6%, construction loans increased from 7.9% to 12.2%, land loans increased
from 2.5% to 4.4%, commercial loans rose from 1.8% to 3.2%, and consumer loans
(primarily home equity lines of credit) increased from 1.4% to 1.6%. This change
in loan mix was facilitated by the commercial business relationship officers the
Company hired over the past year and by the new Los Angeles loan production
office, which concentrates on income property and construction lending. During
2003, the Company plans to continue decreasing the percentage of its loan
portfolio allocated to residential mortgages in favor of other generally higher
yielding and more interest rate sensitive types of loans.
Monterey Bay Bancorp, Inc. Page 8
Press Release
January 29, 2002
The Company concluded 2002 with a significant loan pipeline, including
several new commercial banking relationships. Management anticipates for the
first quarter of 2003:
o a further rise in loans outstanding and total assets
o an increase in the ratio of loans to assets
o residential mortgages comprising a smaller percentage of total gross loans
o a significant percentage rise in commercial business loans outstanding
The Company's investment in the capital stock of the Federal Home Loan
Bank ("FHLB") increased from $3.0 million at December 31, 2001 to $4.7 million
at December 31, 2002. This increase was due to a combination of required stock
purchases stemming from the Bank's increased utilization of FHLB advances and
the receipt of FHLB stock dividends.
The Bank purchased $9.0 million in Bank owned life insurance during the
fourth quarter of 2002. The associated policies are universal life modified
endowment contracts spread among five insurance companies with favorable credit
profiles and histories of competitive policy dividend yields. The insurance was
purchased to fund:
o non-qualified supplemental executive retirement benefits for the Chief
Executive Officer and Chief Financial Officer that were implemented by the
Company in early 2003
o the increasing expense of the tax qualified Employee Stock Ownership Plan,
with associated costs rising due to the higher market price of the
Company's common stock
In addition, the Bank owned life insurance policies provide significant key man
insurance to the Company.
Deposits increased from $432.3 million at December 31, 2001 to $458.3
million at December 31, 2002. This increase was primarily due to:
o The Bank's issuance of its first brokered certificate of deposit ("CD"),
for $20.0 million, during the second quarter of 2002. The brokered CD was
issued in order to provide funding for loan production in 2002.
o A $9.0 million increase in deposits from the State of California time
deposit program during 2002. The State places funds with California banks
as a vehicle for encouraging employment and economic growth.
Total deposits decreased by $3.3 million during the fourth quarter of
2002. Contributing factors included the Company's declining to match
significantly above market rates offered on selected transaction accounts by two
large thrifts and seasonal deposit balance reductions by certain commercial
banking customers. The Company was, however, successful in increasing the number
of deposit accounts maintained by customers with commercial banking and real
estate lending relationships during the fourth quarter of 2002.
Monterey Bay Bancorp, Inc. Page 9
Press Release
January 29, 2002
The Company continues to pursue increases in transaction account balances
as a fundamental component of its strategic plan. Excluding the impact of the
aggregate $29.0 million increase in brokered and State certificates of deposit,
transaction accounts increased from 43.6% of total deposits at December 31, 2001
to 49.3% of total deposits at December 31, 2002. This shift in mix contributed
to the Company's reducing its weighted average cost of deposits from 2.26%
during the third quarter of 2002 to 2.05% during the fourth quarter of 2002.
This 21 basis point reduction in deposit cost was attained despite the
historically low level of interest rates and therefore the Company's limited
ability to decrease interest rates on many deposit products that are currently
priced between zero and one percent.
Management is, however, not satisfied with the volume of deposit
acquisition achieved by its eight full service retail branches in 2002,
particularly in light of general deposit inflows into the banking system from
investors leaving the equity markets. Management responded to this performance
by:
o hiring a Director of Branch Sales during the second quarter of 2002, whose
primary responsibility is to implement and manage an improved sales
culture throughout the branch network
o altering branch staff compensation to provide for an increased incentive
opportunity based upon deposit growth and quality customer service
o hiring a new Director of Retail Banking effective in February 2003 with
extensive local financial industry experience
The prior Director of Retail Banking will continue to assist the Company
in its implementation of the strategic plan by serving as Chief Administrative
Officer.
Checking account balances increased from $63.6 million at December 31,
2001 to $67.2 million at December 31, 2002. The Company plans to introduce
several new consumer checking products during 2003, with a particular focus on
relationship pricing and providing increased choice and options to customers. In
addition, the Company's commercial lending officers have increasing business
demand deposit balances as a key component of their sales objectives.
During the latter part of 2002, the Company introduced "remote deposit"
services to its business and high net worth individual accounts. Via this new
service, the Bank's customers can make deposits to their Monterey Bay Bank
checking account at any branch of a correspondent bank with over 4,900 banking
locations in 23 states. Remote deposit services were implemented to offer
improved convenience and assist the Bank in competing with larger financial
institutions with more extensive branch networks.
Monterey Bay Bancorp, Inc. Page 10
Press Release
January 29, 2003
Money market deposits increased from $105.8 million at December 31, 2001
to $126.1 million at December 31, 2002. Factors supporting the rise in money
market balances in 2002 included the Company's active cross-selling of this
product in its branches and the desire by certain customers to avoid committing
funds to term certificates of deposit in the current historically low interest
rate environment. The Company introduced two new money market accounts at the
beginning of 2003: Investors Money Market and Business Money Market. Investors
Money Market is a highly tiered product targeted to attract funds from money
market mutual funds and brokerage firms. Business Money Market is a product
designed specifically for the Bank's local commercial customers seeking an
attractive return on liquid funds while also enjoying the many attractive
attributes provided by the Bank, including Internet banking, global ATM access,
24 hour bilingual telephone banking, and superior customer service provided by
local bankers familiar with their business.
The Company's ratio of net loans to deposits was 114.21% at December 31,
2002. In addition to the planned deposit related actions described above, the
Company intends to actively manage this ratio by:
o pursuing opportunities for additional branch locations, either de novo or
acquisition of existing branches from other financial institutions
o directing a higher percentage of the advertising and promotion budget to
deposit generation
o taking advantage of opportunities to cost effectively issue a limited
volume of brokered certificates of deposit during the first quarter of
2003
o selling a greater percentage of total residential loan production into the
secondary market
In early 2003, the Bank was actively negotiating for the lease of a 3,000
square foot building to serve as a de novo branch in its primary market area. In
addition, effective in January 2003, the Bank received approval from the Office
of Thrift Supervision to operate a branch at the Company's existing
Administrative Headquarters building in Watsonville. This branch will primarily
serve the Bank's growing base of commercial business, construction, and income
property real estate customers who are served by relationship officers operating
from the Headquarters building.
Borrowings increased from $53.8 million at December 31, 2001 to $93.8
million at December 31, 2002. The increase was associated with funding the rise
in the loan and security portfolios. All of the Company's FHLB advances at
December 31, 2002 were fixed rate, fixed term or overnight borrowings without
call or put option features.
Monterey Bay Bank continues to be in the highest regulatory capital
classification of "Well Capitalized", with capital levels significantly in
excess of regulatory requirements. All of the Bank's regulatory capital ratios
increased from December 31, 2001 to December 31, 2002, despite a significant
rise in Bank assets, due to the increased net income generated by the Bank and
because of a $1.0 million capital contribution from the holding company during
the fourth quarter of 2002.
Monterey Bay Bancorp, Inc. Page 11
Press Release
January 29, 2003
Consolidated stockholders' equity increased from $50.2 million at December
31, 2001 to a record $56.1 million at December 31, 2002 due to a combination of:
o net income
o continued amortization of deferred stock compensation
o additional paid-in capital generated from the Employee Stock Ownership
Plan and the Performance Equity Plan
o Directors continuing to receive their retainer fees in Company common
stock
o the exercise of 48,463 vested stock options
The above factors more than offset the impact of the depreciation in the
aggregate fair value of securities classified as available for sale and
acquisitions of common stock under the Company's repurchase program. The
depreciation in the portfolio of securities classified as available for sale was
concentrated in reduced market prices for the Company's two corporate trust
preferred securities. The Company's stock repurchases during 2002 were comprised
of the following:
Number Of Price
2002 Shares Of Shares
Quarter Repurchased Repurchased
- ----------------- ----------------- -----------------
First 5,000 $16.25
Second None --
Third 5,000 $17.10
5,000 $17.20
5,000 $17.24
5,000 $17.25
5,000 $17.36
Fourth 31,000 $18.15
Full Year 2002 61,000 $17.62 average
At December 31, 2002, there were 53,035 remaining shares authorized for
repurchase under the Company's current repurchase program.
Monterey Bay Bancorp, Inc. Page 12
Press Release
January 29, 2003
The 2003 annual meeting of stockholders will take place on Thursday, May
22, 2003 at 9:00 AM Pacific Time in Watsonville, California. All stockholders
are cordially invited to attend. The Board of Directors has established
Wednesday, March 26, 2003 as the Record Date for voting at the 2003 annual
meeting of stockholders.
In reviewing the most recent quarter, C. Edward Holden, the Company's
Chief Executive Officer and President, commented: "We are pleased to report the
seventh consecutive quarter of increased earnings per share, and the achievement
of record levels of loans, assets, and tangible book value per share. These
results reinforce the benefits deriving from our continued focus on relationship
banking and ongoing involvement in our local communities. It has been gratifying
during 2002 to be able to meet a broader range of customer needs while at the
same time generating record levels of net income for our stockholders. Our
introduction of new financial products and services, including commercial
letters of credit and enhanced money market accounts, has assisted in attracting
new customers and better helping existing customers attain their financial
objectives."
Mr. Holden continued: "Three other accomplishments of which we are
particularly proud are the maintenance of strong credit quality in a challenging
economic environment, the 28.7% rise in the price of MBBC common stock during
2002, and the record levels of community involvement and contributions
associated with our employees and Directors. Upon hearing of particular
difficulties experienced by local food banks in feeding the hungry this winter,
we conducted an extensive campaign to raise awareness and increase donations of
food and money. At the same time, we extended credit to help local businesses
expand and create new jobs. Looking forward to 2003, we start the year with
positive momentum in a number of areas, a strong and larger balance sheet,
improved capital utilization, and an ongoing commitment to creating additional
stockholder value. However, we expect our financial results for 2003 to be
tempered by the current economic environment, possibly including impacts from
international events, and by the Company's continued need to invest in employee
recruitment and training, technology, product development, and augmented
distribution and service channels."
McKenzie Moss, Chairman of the Board of Directors, remarked: "While our
progress from just one year ago is substantial, we recognize the need to further
improve earnings and profitability to the levels generated by our better
performing peers. The Board maintains strong commitments to quality corporate
governance and enhancing stockholder value. With regard to stockholder value,
the Directors adopted a new Board compensation program during the fourth quarter
of 2002 that better links Directors fees to a Director's individual
contribution. In addition, all Director fees are paid in Company common stock.
Management's alignment with stockholder value was exhibited during the fourth
quarter of 2002, when the Chief Executive Officer and Chief Financial Officer
again volunteered to accept a portion of their annual incentive compensation in
Company common stock. The Board of Directors recognizes and appreciates the
continued support of our stockholders throughout 2002."
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,
one stand-alone loan production office in Los Angeles, and eight full service
branches located in the Greater Monterey Bay Area of Central California. The
Bank operates 11 ATM's including two at remote (non-branch) sites. The Bank also
offers customer access via bilingual telephone banking, Internet banking, and
worldwide ATM networks. The Bank's deposits are insured by the Federal Deposit
Insurance Corporation ("FDIC") to the maximum extent allowed by law.
Monterey Bay Bancorp, Inc. Page 13
Press Release
January 29, 2003
Certain of the statements contained herein that are not historical facts
are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act. Forward-looking statements are typically identified by
words or phrases such as "believe", "expect", "anticipate", "intend",
"estimate", "target", "plans", "may increase", "may fluctuate", "may result in",
"are projected", and similar expressions. The Company's actual results may
differ materially from those included in the forward-looking statements. These
forward-looking statements involve risks and uncertainties including, but not
limited to, the economic, business, and real estate market conditions in the
Company's market areas, competition, regulatory and legislative actions, the
possibility that the Company will not be successful in achieving its strategic
objectives, the performance and contributions of employees and Directors, the
Company's ability to recruit high caliber bankers, expected loan payments, loan
originations, and future collateral values, the successful future utilization
and efficacy of new technology, and other factors discussed in documents filed
by the Company with the Securities and Exchange Commission from time to time,
including the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 and the quarterly Form 10-Q's filed by the Company . 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.
This news release is available at the www.montereybaybank.com Internet
site for no charge and is included as an Exhibit to a Form 8-K filed with the
Securities & Exchange Commission that is available at the www.sec.gov Internet
site.
For further information contact:
C. Edward Holden Mark R. Andino
Chief Executive Officer or Chief Financial Officer
President Treasurer
(831) 768 - 4840 (831) 768 - 4806
ed.holden@montereybaybank.com mark.andino@montereybaybank.com
General communication:
INFO@MONTEREYBAYBANK.COM
www.montereybaybank.com
Phone: (831) 768 - 4800
Fax: (831) 722 - 6794
--- financial data follows ---
MONTEREY BAY BANCORP, INC.
(NASDAQ: MBBC)
Consolidated Financial Highlights
Unaudited
(Dollars In Thousands)
December 31, December 31,
Financial Condition Data 2002 2001
- ------------------------------------------------------------- ----------- ---------
Cash and cash equivalents $ 11,447 $ 13,079
Investment securities available for sale 7,030 7,300
Mortgage backed securities available for sale 37,466 30,644
Loans held for sale 1,545 713
Loans receivable held for investment:
Residential one to four unit real estate loans 187,471 204,829
Multifamily five or more units real estate loans 118,004 103,854
Commercial and industrial real estate loans 140,027 109,988
Construction loans 69,526 38,522
Land loans 24,801 11,924
Commercial loans 18,008 8,843
Other loans 9,216 6,980
--------- ---------
Sub-total gross loans held for investment 567,053 484,940
(Less) / Plus:
Undisbursed construction loan funds (36,683) (12,621)
Unamortized purchase premiums, net of purchase discounts 848 435
Deferred loan fees and costs, net (1,127) (202)
Allowance for loan losses (8,162) (6,665)
--------- ---------
Loans receivable held for investment, net 521,929 465,887
Investment in capital stock of the Federal Home Loan Bank 4,679 2,998
Accrued interest receivable 2,867 2,915
Premises and equipment, net 7,161 7,618
Core deposit intangibles, net 833 1,514
Bank owned life insurance 9,036 --
Real estate acquired via foreclosure, net 846 --
Other assets 4,857 4,723
--------- ---------
Total assets $ 609,696 $ 537,391
========= =========
Non-interest bearing demand deposits $ 23,549 $ 21,062
Interest bearing NOW checking accounts 43,629 42,557
Savings accounts 18,474 19,127
Money market accounts 126,061 105,828
Certificates of deposit 246,621 243,765
--------- ---------
Total deposits 458,334 432,339
FHLB advances and other borrowings 93,805 53,800
Other liabilities 1,454 1,090
--------- ---------
Total liabilities 553,593 487,229
--------- ---------
Stockholders' equity 56,103 50,162
--------- ---------
Total liabilities and stockholders' equity $ 609,696 $ 537,391
========= =========
14
MONTEREY BAY BANCORP, INC.
(NASDAQ: MBBC)
Consolidated Financial Highlights, Continued
Unaudited
(Dollars In Thousands Except Per Share Amounts)
Three Months Ended Year Ended
December 31, December 31,
---------------------------- ----------------------------
Operating Data 2002 2001 2002 2001
- ---------------------------------------------------- ---------- ---------- ---------- ----------
Interest income $ 8,861 $ 9,267 $ 35,486 $ 38,731
Interest expense 2,990 4,066 12,907 18,990
---------- ---------- ---------- ----------
Net interest income before provision for loan losses 5,871 5,201 22,579 19,741
Provision for loan losses 400 325 1,510 1,400
---------- ---------- ---------- ----------
Net interest income after provision for loan losses 5,471 4,876 21,069 18,341
---------- ---------- ---------- ----------
Non-interest income:
Customer service charges 411 405 1,541 1,688
Gain on sale of loans held for sale 89 41 170 88
Commissions from sales of non-insured products 25 22 125 244
Income from loan servicing 16 24 63 101
Gain on sale of mortgage backed securities -- -- 35 190
Other income 81 46 193 255
---------- ---------- ---------- ----------
Total non-interest income 622 538 2,127 2,566
---------- ---------- ---------- ----------
Non-interest expense:
Compensation and employee benefits 1,929 1,805 7,626 6,857
Occupancy and equipment 428 430 1,705 1,652
Amortization of intangible assets 170 170 681 681
Supplies, postage, and telecommunications 170 152 675 663
Data and item processing 145 131 567 876
Legal and accounting 114 138 442 863
Advertising and promotion 86 108 300 251
Deposit insurance premiums 19 50 140 198
Other 407 436 1,644 2,328
---------- ---------- ---------- ----------
Total non-interest expense 3,468 3,420 13,780 14,369
---------- ---------- ---------- ----------
Income before provision for income taxes 2,625 1,994 9,416 6,538
Provision for income taxes 1,005 851 3,778 2,787
---------- ---------- ---------- ----------
Net income $ 1,620 $ 1,143 $ 5,638 $ 3,751
========== ========== ========== ==========
Shares applicable to basic earnings per share 3,369,803 3,318,113 3,369,600 3,275,303
Basic earnings per share $ 0.48 $ 0.34 $ 1.67 $ 1.15
========== ========== ========== ==========
Shares applicable to diluted earnings per share 3,505,016 3,412,222 3,497,150 3,343,233
Diluted earnings per share $ 0.46 $ 0.33 $ 1.61 $ 1.12
========== ========== ========== ==========
15
MONTEREY BAY BANCORP, INC.
(NASDAQ: MBBC)
Selected Ratios And Other Data
Unaudited
(Dollars In Thousands Except Per Share Amounts)
Three Months Ended December 31, Year Ended December 31,
------------------------------ ------------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Profitability Ratios [1]
- ------------------------------------------
Return on average assets 1.11% 0.86% 1.00% 0.73%
Return on average equity 11.64% 9.17% 10.50% 7.94%
Interest rate spread during the period 4.01% 3.79% 3.96% 3.67%
Net interest income / average total assets 4.02% 3.92% 4.01% 3.83%
Net interest margin 4.24% 4.12% 4.22% 4.04%
Efficiency ratio 53.41% 59.59% 55.78% 64.41%
Other Information
- ------------------------------------------
Average total assets $ 583,791 $ 531,389 $ 562,500 $ 515,351
Average interest earning assets $ 553,899 $ 505,110 $ 534,986 $ 488,796
December 31, December 31,
2002 2001
------------ ------------
Asset Quality Information
- ------------------------------------------
Non-accrual loans $ 2,643 $ 2,252
Non-performing loans $ 2,643 $ 2,252
Real estate acquired via foreclosure, net $ 846 --
Allowance for loan losses $ 8,162 $ 6,665
Non-performing loans /
total assets 0.43% 0.42%
Allowance for loan losses /
loans outstanding 1.54% 1.41%
Allowance for loan losses /
non-accrual loans 308.82% 295.96%
Bank Regulatory Capital Ratios
- ------------------------------------------
Tangible capital ratio 8.57% 8.24%
Core capital ratio 8.57% 8.24%
Tier one risk based capital ratio 11.63% 11.38%
Total risk based capital ratio 12.88% 12.64%
Other Information
- ------------------------------------------
Full-service customer facilities 8 8
Stand alone loan production offices 1 --
Number of ATM's 11 11
Loan to deposit ratio 114.21% 107.92%
Tangible book value per share $ 16.00 $ 14.08
Shares outstanding 3,454,315 3,456,097
Stock price at end of period $ 19.95 $ 15.50
- ------------------------------------------
[1] All applicable ratios reflect annualized figures.
16