Exhibit 99.1
Foothill Independent Bancorp's
Net Income Increases 18% in Third Quarter and
20% for the First Nine Months of 2005
GLENDORA, Calif.--(BUSINESS WIRE)--Oct. 25, 2005--Foothill
Independent Bancorp (NASDAQ:FOOT), the holding company for Foothill
Independent Bank, today reported that a continued focus on building
core deposits while keeping operating expenses in check resulted in
record profits for both the third quarter and first nine months of
2005. Net income increased 18% to $2.82 million, or $0.31 per diluted
share, in the quarter ended September 30, 2005, compared to $2.39
million, or $0.27 per share, in the third quarter a year ago. For the
first nine months of 2005, net income grew 20% to $8.19 million, or
$0.91 per diluted share, compared to $6.81 million, or $0.76 per
diluted share, in the first nine months of last year. All per share
data has been adjusted to reflect the 5-for-4 stock split issued in
May 2005.
Annualized return on average equity (ROE) improved to 16.0% in the
third quarter of 2005, up from 15.2% in the same quarter last year,
and to 16.4% in the first nine months of this year, compared to 14.7%
for the first nine months of 2004. Annualized return on average assets
(ROA) grew to 1.41% for the third quarter, up from 1.28% in the same
period of 2004, and to 1.36% for the first nine months of 2005,
compared to 1.24% in the nine-month period ended September 30, 2004.
"A number of factors contributed to our record profits in both the
third quarter and first nine months of 2005, but they can be summed up
as the successful execution of banking fundamentals," stated George
Langley, President and CEO. "We are gathering low-cost deposits and
using those funds to underwrite high-quality loans and to build our
securities portfolio. As a result, we have maintained excellent credit
quality and our net interest margin has shown meaningful improvement
for both the quarter and nine months ended September 30, 2005."
Foothill's net interest margin increased to 5.15% in the third
quarter, compared to 4.88% in the third quarter a year ago. For the
first nine months of 2005, the net interest margin expanded to 5.07%,
up from 4.82% for the first nine months of 2004.
"In order to keep our cost of funds down, we allowed some time
deposits to run off and replaced them with lower-cost retail
deposits," Langley said. "As a result, our deposit mix has improved
over the past year, and at the end of September 2005, core deposits
had grown to 91% of total deposits." Core deposits, which consist of
no-cost demand and low-cost savings and money market deposits,
increased by $46.4 million during the 12 months ended September 30,
2005, to $650 million, while time deposits have decreased by $4.67
million in the same period to $61.6 million. Total deposits increased
6% to $712 million at September 30, 2005, compared to $670 million a
year earlier.
"Our success in growing our deposit base, principally through the
addition of no-cost and low-cost core deposits, enabled us to increase
our loan volume and build our securities portfolio, as well as to
increase our net interest margin," Langley said. Gross loans increased
6% to $510 million at the end of the third quarter of 2005, up from
$479 million at the end of the same quarter last year; total
securities grew 12% to $192 million at September 30, 2005, compared to
$171 million a year earlier; and total assets grew 6% to $794 million,
compared to $747 million at the end of September last year.
Asset quality has remained outstanding, as well. Non-performing
loans (NPLs) declined to $117,000 at September 30, 2005, from $141,000
at September 30, 2004. At the end of the third quarter of 2005, NPLs
represented just 0.02% of total loans compared to 0.03% of total loans
at the end of September last year. With no repossessed assets on the
books, non-performing assets (NPAs) have remained equal to NPLs, and
were 0.01% of total assets at the end of September 2005, compared to
0.02% of assets at the end of the third quarter of 2004. For the first
nine months of 2005, Foothill recorded a net recovery of $31,000,
versus a net recovery of $34,000 during the first nine months of last
year. At September 30, 2005, the reserve for loan losses was $5.05
million, representing 0.99% of gross loans and far exceeding NPAs.
"Foothill has a long history of excellent credit quality," Langley
said. "As a result, we have been able to grow our reserves without
having to make any additional loan loss provisions. In addition to our
remarkably low credit costs, we have been able to limit the increases
in operating expenses. As a result, our efficiency ratio has improved,
indicating our ability to generate increased revenues without a
corresponding increase in operating expenses, and more importantly,
the majority of our incremental revenue growth has flowed directly to
the bottom line."
Relative to the same periods last year, revenues grew by 8% in the
third quarter and 13% for the nine months ended September 30, 2005.
For the quarter ended September 30, 2005, revenues were $10.6 million,
compared to $9.8 million a year ago. For the first nine months of
2005, revenues were $31.9 million, versus $28.2 million in the same
period last year.
"Our revenue growth is attributable to the substantial increase in
net interest income," Langley said. "Our balance sheet management,
low-cost deposit base, and the rising interest rate environment
enabled us to increase interest income by $1.29 million in the third
quarter this year over the third quarter of last year. By comparison,
interest expense increased by only $219,000 in the third quarter this
year over the third quarter last year. In the nine months ended
September 30, 2005, interest income increased by $4.82 million, while
interest expense increased by $703,000, compared to the same nine
months of 2004."
As a result, net interest income increased by 13% to $9.42 million
in the third quarter of 2005, compared to $8.35 million in the same
quarter of 2004. For the nine-month period ended September 30, 2005,
net interest income grew 17% to $28.0 million, from $23.9 million a
year ago. Other operating income was $1.23 million in the third
quarter this year, compared to $1.44 million in the third quarter of
2004. In the nine months ended September 30, 2005, other operating
income was $3.85 million, compared to $4.28 million in the same period
last year. Non-interest expense (also referred to as operating
expense) increased by 4% to $6.22 million in the third quarter this
year, compared to $6.0 million in the third quarter of last year, and
grew 10% to $19.2 million for the nine months ended September 30,
2005, from $17.5 million in the same period last year. Despite those
increases, our efficiency ratios improved to 59.0% in the quarter and
61.0% for the nine months ended September 30, 2005, from 63.1% and
63.9%, respectively, in the same corresponding periods of 2004.
"The increase in operating expenses, particularly in the third
quarter, was primarily due to additional accounting and legal expenses
and Sarbanes-Oxley costs; however, they were somewhat offset by a
decline in salary and benefit costs," Langley said. "In the fourth
quarter, I expect to see a somewhat greater year-over-year increase in
operating expenses as we have recently bolstered our sales force and I
anticipate greater commission expenses going forward. However, the
benefits of these new hires, in terms of achieving increases in
interest income, are expected to outweigh these costs."
Shareholders' equity grew to $68.3 million at September 30, 2005,
compared to $64.1 million a year earlier. Book value increased to
$8.03 per share at the end of the third quarter, from $7.64 per share
at September 30, 2004. Capital ratios continue to be above the
"Well-Capitalized" guidelines established by the regulatory agencies.
The Tier 1 Leverage Ratio was 9.78% and the Total Risk-based Capital
Ratio was 14.17% at September 30, 2005.
About Foothill Independent Bancorp
Foothill Independent Bancorp is a one-bank holding company that
owns and operates Foothill Independent Bank. The Bank currently
operates 12 commercial banking offices in Los Angeles, San Bernardino,
and Riverside Counties. Foothill Independent Bank has consistently
earned the highest ratings for safety and soundness from such bank
rating firms as Findley Reports, Bauer Financial Services, and
Veribanc.
Forward-Looking Information
This Release contains forward-looking statements within the
meaning of the Securities Acts of 1933 and 1934, as amended.
Forward-looking statements can be identified by the fact that they do
not relate strictly to historical or current facts and often include
the words "believe," "expect," "anticipate," or words of similar
meaning, or future or conditional verbs such as "will," "would,"
"should," "could," or "may." Forward-looking statements set forth our
expectations or beliefs regarding our future financial condition or
future financial performance, which are based on current information.
Our actual results in future periods could differ significantly from
our current estimates, expectations, and beliefs, as set forth in this
Release, due to a number of risks and uncertainties that could affect
our business or operating results. Those risks and uncertainties
include, but are not limited to:
-- The risk of increased competition from other financial
institutions, which could require us to reduce the interest
rates we are able to charge on loans or to increase the
interest we must pay to attract or maintain deposits, either
or both of which could lead to reductions in our net interest
margin or net earnings.
-- The risk of adverse changes in national economic conditions or
changes in Federal Reserve Board monetary policies, which
could lead to reductions in interest rates and in our net
interest margins and to declines in loan demand or a weakening
in the financial ability of borrowers to meet their loan
obligations to us.
-- The risk of a significant decline in real property values in
Southern California which, because approximately 90% of our
loans are secured by real property, could result in a
deterioration in the performance of our loan portfolio and, as
a result, could require us to increase the provisions we must
make for potential loan losses and could lead to an increase
in loan write-offs, which would reduce our earnings and could
adversely affect our financial condition.
-- The risk that we may have to reduce or eliminate cash
dividends due to the occurrence of any of the foregoing
events.
Certain of those risks and uncertainties, as well as others, are
described more fully in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2004, as filed with the Securities and
Exchange Commission. Readers of this Release are urged to read the
cautionary statements, which are set forth under the caption
"Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Factors That Could Affect Our Future
Financial Performance" in Part II of that Report. Due to these
uncertainties and risks, readers are cautioned not to place undue
reliance on forward-looking statements contained in this Release,
which speak only as of this date. We undertake no obligation to update
or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amount)
Three Months Ended
September 30, Percent
--------------------- Change
2005 2004
---------- ---------- -------
Interest Income
Interest on loans & leases $8,815 $7,893
Interest on securities 1,668 1,414
Interest on federal funds sold 280 141
Interest other 10 36
---------- ----------
Total Interest Income 10,773 9,484 14%
Interest Expense
Deposits 1,213 1,033
Interest on borrowings 141 102
---------- ----------
Total Interest Expense 1,354 1,135 19%
---------- ----------
Net interest Income 9,419 8,349 13%
Provision for loan losses -- 78
---------- ----------
Net interest income after loan loss
provision 9,419 8,271 14%
Other Operating Income
Fees on deposits 995 1,264
Gain on sales of SBA loans -- --
Other 234 180
---------- ----------
Total Other Operating Income 1,229 1,444 -15%
Operating Expenses
Salaries and employee benefits 2,858 3,298
Occupancy and equipment 1,231 1,069
Other 2,133 1,629
---------- ----------
Total Other Operating Expenses 6,222 5,996 4%
---------- ----------
Income before taxes 4,426 3,719 19%
Income taxes 1,611 1,325
---------- ----------
NET INCOME $2,815 $2,394 18%
========== ==========
Per Share Data(1)
Earnings per common share - Basic $0.33 $0.29 14%
========== ==========
Weighted average shares outstanding -
Basic 8,504,769 8,399,951
========== ==========
Earnings per common share - Diluted $0.31 $0.27 15%
========== ==========
Weighted average shares outstanding -
Diluted 9,025,686 8,919,805
========== ==========
Nine Months Ended
September 30, Percent
--------------------- Change
2005 2004
---------- ---------- -------
Interest Income
Interest on loans & leases $26,097 $22,985
Interest on securities 5,110 3,764
Interest on federal funds sold 680 307
Interest other 83 90
---------- ----------
Total Interest Income 31,970 27,146 18%
Interest Expense
Deposits 3,368 2,949
Interest on borrowings 570 286
---------- ----------
Total Interest Expense 3,938 3,235 22%
---------- ----------
Net interest Income 28,032 23,911 17%
Provision for loan losses -- 78
---------- ----------
Net interest income after loan loss
provision 28,032 23,833 18%
Other Operating Income
Fees on deposits 3,139 3,821
Gain on sales of SBA loans 13 5
Other 698 452
---------- ----------
Total Other Operating Income 3,850 4,278 -10%
Operating Expenses
Salaries and employee benefits 8,922 8,654
Occupancy and equipment 3,337 3,194
Other 6,931 5,657
---------- ----------
Total Other Operating Expenses 19,190 17,505 10%
---------- ----------
Income before taxes 12,692 10,606 20%
Income taxes 4,501 3,801
---------- ----------
NET INCOME $8,191 $6,805 20%
========== ==========
Per Share Data(1)
Earnings per common share - Basic $0.97 $0.81 20%
========== ==========
Weighted average shares outstanding -
Basic 8,466,865 8,399,479
========== ==========
Earnings per common share - Diluted $0.91 $0.76 20%
========== ==========
Weighted average shares outstanding -
Diluted 9,016,978 8,925,191
========== ==========
(1) Per share data for the three- and nine-month periods ended
September 30, 2004, have been retroactively adjusted to reflect a
5-for-4 stock split that was effectuated on May 25, 2005.
FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in Thousands, Except Per Share Amount)
September 30, Percentage
------------------- Change
2005 2004
--------- --------- ----------
ASSETS:
Noninterest-earning demand deposits and
cash on hand $33,998 $32,561
Federal funds sold and overnight
repurchase agreements 29,900 32,900
Interest-earning deposits 1,485 8,021
--------- ---------
Total Cash and Cash Equivalents 65,383 73,482 -11%
Securities available for sale 184,686 164,720
Securities held to maturity 7,450 6,316
--------- ---------
Total Securities 192,136 171,036 12%
Loans and leases receivable 509,861 478,903 6%
Reserve For loan losses (5,047) (4,981)
--------- ---------
Loans & Leases Receivable, Net 504,814 473,922 7%
Accrued interest receivable 3,391 2,900
Other real estate owned -- --
Premises and equipment 4,553 4,806
Federal Home Loan Bank (FHLB) stock, at
cost 4,256 3,428
Federal Reserve Bank (FRB) stock, at
cost 348 351
Other assets 19,189 17,478
--------- ---------
TOTAL ASSETS $794,070 $747,403 6%
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
Noninterest-bearing demand deposits $288,813 $250,050
Savings & NOW deposits 174,818 162,000
Money market deposits 186,733 191,865
Time deposits 61,560 66,231
--------- ---------
Total Deposits 711,924 670,146 6%
Accrued employee benefits 3,641 3,326
Accrued interest and other liabilities 1,946 1,502
Other debt 8,248 8,248
--------- ---------
Total Liabilities 725,759 683,222 6%
STOCKHOLDERS' EQUITY:
Common stock $0.001 par value-
authorized: 25,000,000 shares; issued
and outstanding: 8,510,297 and
8,402,234 shares, respectively 7 7
Additional paid-in capital 68,361 67,474
Retained earnings 2,117 (2,938)
Accumulated other comprehensive income
net of taxes (2,174) (362)
--------- ---------
Total Stockholders' Equity 68,311 64,181 6%
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $794,070 $747,403 6%
========= =========
FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
CONSOLIDATED FINANCIAL RATIOS AND OTHER CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------
2005 2004 2005 2004
--------- --------- -------- --------
Financial Ratios:
Return on average assets(1) 1.41% 1.28% 1.36% 1.24%
Return on average equity(1) 16.04% 15.20% 16.44% 14.69%
Efficiency ratio(1) 59.01% 63.10% 61.01% 63.85%
Annualized operating
expense/average assets(1) 3.13% 3.20% 3.19% 3.20%
Net interest margin(1) 5.15% 4.88% 5.07% 4.82%
Tier 1 capital ratio 9.78% 9.66% 9.78% 9.66%
Risk adjusted capital ratio 14.17% 14.08% 14.17% 14.08%
Other Consolidated Financial Data
Provision for loan losses $-- $78 $-- $78
Net charge-offs (recoveries) $(20) $8 $(31) $(34)
(1) These ratios have been annualized.
At September 30,
-------------------------------
2005 2004
-------------- ----------------
(Dollars in thousands,
Other Consolidated Financial Data except per share amounts)
(continued)
-------------------------------
Net loans and leases $508,814 $473,922
Non-performing/non-accrual loans(1)
Amounts $117 $141
As a percentage of gross loans 0.02% 0.03%
Real estate owned - loans $-- $--
Total non-performing assets
Amounts $117 $141
As a percentage of total assets 0.01% 0.02%
Loan loss reserves
Amounts $5,047 $4,981
As a percentage of gross loans 0.99% 1.04%
Book value per share $8.03 $7.64(2)
(1) Non-Accrual loans are loans that have made no payments of
principal or interest for more than 90 days.
(2) Retroactively adjusted for a 5-for-4 stock split effectuated
on May 25, 2005.
FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
AVERAGE BALANCES
(Unaudited)
(Dollars in Thousands, Except Per Share Amount)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2005 2004 2005 2004
--------- ------------------- ---------
ASSETS
Earning assets:
Interest-earning deposits $1,316 $8,196 $4,639 $7,537
Federal funds sold and
overnight repurchase
agreements 32,190 41,111 30,612 37,142
Investment securities 196,914 168,401 198,435 155,206
Loans and leases (net of
unearned income) 510,330 475,594 511,517 469,960
--------- --------- --------- ---------
Total earning assets 740,750 693,302 745,203 669,845
Loan loss reserve (5,026) (4,992) (5,022) (4,971)
Non-earning assets 60,135 61,089 62,397 64,374
--------- --------- --------- ---------
Total Assets $795,859 $749,399 $802,578 $729,248
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing liabilities:
Deposits:
Savings and interest
bearing transaction
accounts $358,295 $353,739 $364,668 $340,936
Certificates of deposit,
$100,000 or more 35,278 27,893 37,575 29,448
Other time deposits 32,568 39,990 34,309 41,469
--------- --------- --------- ---------
Total interest-bearing
deposits 426,141 421,622 436,552 411,853
Other interest-bearing
liabilities 8,248 8,248 8,248 8,248
--------- --------- --------- ---------
Total interest-bearing
liabilities 434,389 429,870 444,800 420,101
Non-interest liabilities:
Demand deposits 284,977 251,701 277,787 242,146
Other non-interest
liabilities 6,318 4,845 13,541 5,243
--------- --------- --------- ---------
Total liabilities 725,684 686,416 736,128 667,490
Stockholders' equity 70,175 62,983 66,450 61,758
--------- --------- --------- ---------
Total Liabilities and
Stockholders' Equity $795,859 $749,399 $802,578 $729,248
========= ========= ========= =========
CONTACT: Foothill Independent Bancorp
G. Langley, 626-963-8551