EXHIBIT 99.1
Contact: Wil Goodrich, Vice President-Director of Marketing (209) 438-2600
Regency Bancorp Announces Increase in First Quarter Earnings
Fresno, April 16 -- Fresno-based Regency Bancorp, parent company of
Regency Bank and Regency Investment Advisors, Inc., today announced that it
earned $519,000 or $0.20 per share in the first quarter of 1998. This was a
121% increase over the same period last year when its net income was $235,000
or $0.13 per share. Compared to the last quarter of 1997, the company's net
income was up almost 56% and that was a 10.6% increase from the third quarter
of 1997.
Steve Hertel, chairman, president and chief executive officer of Regency
Bancorp, stated that "the company is continuing to make significant progress
in the divestiture of its real estate develop-ment subsidiary's properties.
Regency Service Corporation's (RSC) inventory of lots and homes a year ago
included 291 properties. It closed 1997 with 66 lots or homes on the books
with 48 of those in escrow. By the end of the just concluded quarter, the
company's inventory included only 19 units with 12 of those in escrow.
Remaining properties consist of five model homes and two unsold lots."
In addition to its success in selling its inventory of homes and lots,
the company also reduced its cash investment in real estate from $14.95
million at the end of last year's first quarter to $1.53 million on March 31,
1998, a decrease of 89.8% or $13.4 million. During the first quarter of
1998, the total non interest expense related to the divestiture of real
estate activities was $46,000 compared to $487,000 during the same period
last year. Additionally, as cash from the sale of properties became
available, the bank was able to use those resources to fund additional loans
and other earning assets with only a minimal increase in interest expense.
By the end of the first quarter, the company's loan portfolio had
reached a record $136.0 million, up $34.9 million or 34.4% since the end of
the 1997 first quarter. While loan growth has been substantial, credit
quality has continued to be strong. With the reduction in inventory related
to RSC activities, non performing loans as a percentage of total loans
declined 55.4% from 3.41% at March 31, 1997, to 1.52% at the end of the just
concluded quarter. Excluding the remaining loans RSC has made to facilitate
the sale of real estate, the bank's non performing loans were just .65% of
which .39% were guaranteed by the U.S. Small Business Administration.
"Over the last three years, we've known internally that once we got RSC
behind us, we could unlock the potential of the company," Hertel stated,
"Now, we're beginning to see the tangible results of shedding the RSC assets
that have been a drain on this company for too long. In the last three
quarters, without the day to day impact of dealing with the real estate
divestiture issue, we've been able to concentrate on developing our core
business potential."
"The substantial improvement in earnings for the first quarter," Hertel
said "was a direct result of growth in the lending area, an improved interest
margin, and lower non interest expense. During the quarter, interest income
increased by $676,000 while interest expense was up by only $4,000 when
compared to the first quarter of 1997. We were also able to reduce non
interest expense by $241,000 or 9.5%. The improved net interest margin
combined with the reduction in non interest expense improved Regency's
efficiency ratio to 64.2% from 81.6% at the end of last year's first
quarter."
Regency Investment Advisors, Inc. (RIA), the holding company's
SEC-registered investment management firm, continued its steady growth in
assets under management and income. Since the end of March, 1997, assets
under management were up 21.9% to $96.2 million with net income growing 19.6%.
The holding company also reported higher levels of assets and deposits
for the first quarter. At March 31, 1998, assets were $192.1 million, up
5.8% from $181.6 million a year earlier and total deposits grew 5.1% from
$161.5 million a year ago to $169.9 million at March 31, 1998.
Shareholders equity was up 38.7% to $19.3 million as compared to the end
of last year's first quarter when it was $13.9 million. Equally important,
the company's return on average assets was 1.11% for the first three months
of 1998 compared to 0.54% for the 1997 first quarter. Return on average
common equity grew to 11.1% from 6.8% in the same period last year.
"The company's improved financial performance has been anticipated by
the market," according to Hertel. "During the first quarter, the bid price
of our holding company's stock increased 36%, from a quote of $10.25 at
December 31, 1997, to a quote of $14.00 at March 31, 1998."
Regency Bancorp and its subsidiaries have served Fresno and the Central
Valley since December of 1980. The company currently provides banking to the
greater Fresno market and Madera County through its three branches and has a
government-guaranteed loan production office in Modesto. Its stock trades
over the counter under the symbol: REFN, with market makers such as: Van
Kasper & Co., Hoefer & Arnett, and Sutro & Co., as well as other financial
firms such as Banc Stock Financial Services.
# # #
Certain matters discussed in this news release may be forward-looking
statements that are subject to risks and uncertainties that could cause
actual results to differ materially from those projected. Such risks and
uncertainties, which could impact future financial performance, include,
among others, (1) competitive pressures in the banking industry; (2) changes
in the interest rate environment; (3) general economic conditions, either
nationally or regionally; (4) changes in the regulatory environment; (5)
changes in business conditions and inflation; and (6) changes in securities
markets. Therefore, the information set forth herein should be carefully
considered when evaluating the business prospects of the company and the bank.
Regency Bancorp -- Summary Financial Data
For the Three Months Ended Mar. 31,
1998 1997
Results of Operations: $(000)
Interest income 4,124 3,448
Interest expense 1,283 1,279
Net interest income 2,841 2,169
Provision for credit losses 125 0
Net interest income after provision 2,716 2,169
Non interest income 487 782
Non interest expense 2,304 2,545
Income/(loss) before income taxes 899 406
Income tax expense 379 170
Net income/(loss) 519 235
Balance Sheet: (end of period) $(000)
Total Assets 192,127 181,552
Total Loans 136,043 100,982
Investments 34,387 35,829
Earning assets 169,875 148,205
Investments in real estate 1,798 15,165
Total deposits 169,761 161,476
Notes payable and capital leases 518 4,497
Shareholders' equity 19,273 13,897
Financial Ratios: (period Annualized %)
Return on average assets 1.11 .54
Return on average equity 11.07 6.97
Ending equity to average assets 10.11 7.86
Average earning assets to average assets 88.71 81.60
Efficiency ratio 64.15 81.59
Net interest margin 6.81 6.10
Non interest income to avg. assets 1.04 1.79
Non interest expense to avg. assets 4.90 5.84
Loan loss reserve to total loans 1.72 1.68
Per Share:
Earnings per share ($) .20 .13
Dividends ($) .00 .00
Book value (end of period) ($) 7.34 7.50
Market value (end of period) ($) 14.19 9.63
Market to book value (%) 1.93 1.28
Price earnings (PE) ratio (%) 17.68 18.69
Shares outstanding 2,623,124 1,853,738
April 16, 1998