EXHIBIT 99.1
Temecula Valley Bancorp Announces Record 2006 Earnings
TEMECULA, Calif.--(BUSINESS WIRE)--Jan. 23, 2007--Temecula Valley
Bancorp Inc. (NASDAQ:TMCV) announces record earnings of $16.9 million,
a 21% increase in earnings for the year ending December 31, 2006,
compared to the $14.0 million earned in the same period in 2005.
Fourth quarter net income was $4.4 million, an 18% increase from the
$3.7 million earned in the same period last year.
"We are very pleased with our continued strong financial
performance," stated Stephen H. Wacknitz, Chairman of the Board, CEO
and President. "Our experienced team was able to produce these results
while managing unprecedented prepayments in our SBA loan servicing
portfolio, resulting in accelerated amortization of the related
servicing asset; the increased costs associated with stock options;
the negative effect of the inverted yield curve on our net interest
margin; and the decreasing demand for certain loans as a result of the
slowing residential real estate market."
Net SBA servicing income and related items for 2006 decreased $4.6
million from 2005. For the fourth quarter of 2006, the decrease was
$1.8 million over the same period in 2005.
2006 was the first year during which we were required to recognize
expenses in connection with stock options. This was $1.1 million
before tax and $1.0 million after tax. For the fourth quarter of 2006
the expense was $0.2 million before and after tax.
Net interest income for 2006 was $59.8 million, a 37% increase
over the $43.5 million in 2005. For the quarter ending December 31,
2006, net interest income was $16.3 million, a 26% increase from the
$12.9 million earned in the same period last year. The increase was
primarily due to the increase in loans outstanding.
Return on average assets was 1.64% and return on average equity
was 23.89% for the year ending December 31, 2006, compared to 1.91%
and 27.71%, respectively, for 2005. For the quarter ending December
31, 2006, the return on average assets was 1.46% and the return on
average equity was 20.11%, compared to 1.79% and 26.44%, respectively,
in 2005. "Based on our industry's historical performance, these
returns continue to place us among the top performers in the country,"
stated Mr. Wacknitz.
Total assets were $1.24 billion at December 31, 2006, a 42%
increase from $869.0 million at December 31, 2005. For the same
period, loans increased 52%. "The increase in loans was due to
continued strong lending activity in the markets we serve as well as
the addition of new profit centers, including the SBA un-guaranteed
purchase program, whose outstanding loans have surpassed $125 million
within the first nine months of operation," added Mr. Wacknitz.
The allowance for loan loss increased 39%, from $9.0 million at
December 31, 2005, to $12.5 million at December 31, 2006. Net
chargeoffs were $220 thousand for 2005 and $167 thousand for 2006.
Non-accrual loans (net of SBA guarantees) were $1.4 million at
December 31, 2005, and $8.8 million at December 31, 2006. Much of the
increase in net non-accrual loans is due to a $5.9 million real estate
project located in the North San Diego county coast area. Mr. Wacknitz
stated that "we do not anticipate incurring any loss on this project."
There was $0.6 million of other real estate owned (net of SBA
guarantees) at December 31, 2006, compared to $1.5 million at December
31, 2005.
Deposits increased 46% from $742.4 million at December 31, 2005,
to $1.08 billion at December 31, 2006. The deposit growth has been
fueled by existing branch growth, through various CD promotions; money
desk operations; brokered deposits; and from our new Carlsbad, Solana
Beach, and Ontario full service branches.
Shareholder equity increased 77% from $58.2 million at December
31, 2005, to $103.3 million at December 31, 2006, due to a private
placement stock offering in November, net income, and the exercise of
stock options. The stock offering raised a net amount of $25.1
million, of which $18.0 million was transferred to the Temecula Valley
Bancorp's principal subsidiary, Temecula Valley Bank ("Bank"), as tier
one capital. Capital ratios remain strong at December 31, 2006, with
the tier one leverage ratio at 11.42%, the tier one risk-based ratio
at 10.93%, and the total risk-based capital ratio at 12.40%, all above
the minimum to qualify as "well capitalized." During the third quarter
of 2006, $12 million of junior subordinated debt securities were
issued, of which $11.5 million was transferred to the Bank as tier one
capital.
"Although we have seen somewhat of a recent softening in the
California residential real estate market, the Bank remains strong
with 94% of its loans secured by real estate with an overall loan to
value of 65%. Additionally, we believe that other major economic
indicators in California remain strong," stated Mr. Wacknitz.
Temecula Valley Bank was established in 1996 and operates full
service offices in Temecula, Murrieta, Corona, Fallbrook, Escondido,
Rancho Bernardo, El Cajon, Carlsbad, Solana Beach, and Ontario. The
Bank also operates a number of regional real estate loan production
centers in California. As a nationally authorized SBA Preferred
Lender, the Bank has multiple SBA loan production offices across the
Mid and Western United States and has funded over $1.3 billion in SBA
loans in 36 states during the last five years. The Bank's website is
at www.temvalbank.com. Temecula Valley Bancorp was established in June
2002 and operates as a bank holding company for the Bank.
Temecula Valley Bancorp stock is traded on the NASDAQ Global
Select Market under the symbol TMCV.
Statements concerning future performance, developments, or events
concerning expectations for growth and market forecasts, and any other
guidance on future periods, constitute forward-looking statements that
are subject to a number of risks and uncertainties. Actual results may
differ materially from stated expectations. Specific factors include,
but are not limited to, the effect of interest rate changes, the
ability to control costs and expenses, the impact of consolidation in
the banking industry, financial policies of the United States
government, and general economic conditions. Additional information on
these and other factors that could affect financial results are
included in the filings made with Securities and Exchange Commission
by Temecula Valley Bancorp Inc.
TEMECULA VALLEY BANCORP INC.
FINANCIAL DATA
DECEMBER 2006
(UNAUDITED)
(all amounts in whole dollars except share and per share information)
Dec 31, Dec 31, Increase Increase
2006 2005 (Decrease) (Decrease)
-------------- ------------ ------------ -----------
ASSETS
Cash and due
from banks 15,190,212 18,311,714 (3,121,502) (17%)
Due from
Banks-Time 99,000 0 99,000 0%
Securities 1,018,683 0 1,018,683 0%
Federal funds
sold 18,180,000 33,200,000 (15,020,000) (45%)
Loans 1,142,692,822 753,246,789 389,446,033 52%
Less allowance
for loan
losses (12,521,717) (9,039,155) (3,482,562) 39%
-------------- ------------ ------------
Loans, net 1,130,171,105 744,207,634 385,963,471 52%
Federal
Reserve &
Home Loan
Bank stock,
at cost 1,996,300 3,098,600 (1,102,300) (36%)
Other real
estate owned,
net 1,255,000 2,111,250 (856,250) (41%)
Bank premises
and
equipment,
net 5,491,968 4,885,015 606,953 12%
SBA-loan
servicing
asset 8,287,703 8,169,273 118,430 1%
SBA-loan
servicing I/O
strip
receivable 13,215,760 22,067,900 (8,852,140) (40%)
Cash surrender
value life
insurance 24,036,291 17,590,733 6,445,558 37%
Other Assets 19,246,503 15,345,927 3,900,576 25%
-------------- ------------ ------------
1,238,188,525 868,988,046 369,200,479 42%
============== ============ ============
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Demand
deposits 144,525,203 155,992,027 (11,466,824) (7%)
Interest
bearing
deposits 936,975,447 586,439,912 350,535,535 60%
-------------- ------------ ------------
Total
deposits 1,081,500,650 742,431,939 339,068,711 46%
FHLB Advances 0 30,000,000 (30,000,000) (100%)
Junior
subordinated
debt
securities 41,240,000 28,868,000 12,372,000 43%
Other
liabilities 12,184,866 9,507,797 2,677,069 28%
-------------- ------------ ------------
Total
liabilities 1,134,925,516 810,807,736 324,117,780 40%
Stockholders'
equity 103,263,009 58,180,310 45,082,699 77%
-------------- ------------ ------------
1,238,188,525 868,988,046 369,200,479 42%
============== ============ ============
3 Mos. 3 Mos. 12 Mos. 12 Mos.
Ended Ended Ended Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Interest income 27,696,399 17,908,753 94,229,455 58,125,260
Interest expense 11,414,283 4,975,226 34,449,350 14,583,784
----------- ----------- ----------- -----------
Net interest income 16,282,116 12,933,527 59,780,105 43,541,476
Provision for loan
losses 890,000 908,100 3,650,000 2,897,000
Other income 3,695,227 4,974,688 19,443,803 23,822,163
Other expense 12,255,953 10,660,150 46,990,796 40,627,302
----------- ----------- ----------- -----------
Earnings before income
taxes 6,831,390 6,339,965 28,583,112 23,839,337
Income taxes 2,439,072 2,616,583 11,662,790 9,886,072
----------- ----------- ----------- -----------
Net earnings 4,392,318 3,723,382 16,920,322 13,953,265
=========== =========== =========== ===========
Actual common shares
outstanding at end of
period 10,586,659 8,879,697 10,586,659 8,879,697
Average common shares
outstanding 10,322,256 8,894,814 9,797,912 8,845,736
Average common shares
& equivalents
outstanding 9,800,612 9,650,105 9,234,894 9,587,559
Basic earnings per
share 0.45 0.42 1.83 1.58
Diluted earnings per
share 0.43 0.39 1.73 1.46
Return on average
assets (annualized) 1.46% 1.79% 1.64% 1.91%
Return on average
equity (annualized) 20.11% 26.44% 23.89% 27.71%
Efficiency ratio 61.35% 59.53% 59.31% 60.31%
12/31/2006 12/31/2005
---------------- --------------
Tier 1 leverage capital ratio 11.42% 9.28%
Tier 1 risk-based capital ratio 10.93% 8.93%
Total risk-based capital ratio 12.40% 11.02%
Allowance for loan losses as a % of
total loans 1.29% 1.35%
Gross nonperforming assets as a % of
total assets 1.66% 1.16%
Net nonperforming assets as a % of
total assets 0.82% 0.34%
Net chargeoffs (annualized) as a % of
total loans 0.01% 0.03%
Loan to deposit ratio 105.66% 101.46%
Book value per share 9.75 6.54
PAST DUE AND NON-ACCRUAL LOANS
- --------------------------------- ------------------------------------
Gross Government
December 31, 2006 Balance Guaranty Net Balance
- --------------------------------- ------------------------------------
30-89 days past due 3,284,267 (1,737,093) 1,547,174
=========== ============ ===========
90+ days past due and accruing 140,167 0 140,167
Non-accrual 19,123,973 (10,334,511) 8,789,462
Other real estate owned (REO) 1,255,000 0 1,255,000
----------- ------------ -----------
Total nonperforming assets 20,519,140 (10,334,511) 10,184,629
=========== ============ ===========
December 31, 2005
- ---------------------------------
30-89 days past due 933,294 (732,923) 200,371
=========== ============ ===========
90+ days past due and accruing 0 0 0
Non-accrual 7,950,601 (6,513,752) 1,436,849
Other real estate owned (REO) 2,111,250 (604,004) 1,507,246
----------- ------------ -----------
Total nonperforming assets 10,061,851 (7,117,756) 2,944,095
=========== ============ ===========
NET LOAN CHARGEOFFS
- --------------------------------
3 Mos. 3 Mos. 12 Mos. 12 Mos.
Ended Ended Ended Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2006 2005 2006 2005
-------- -------- --------- ---------
Chargeoffs 24,556 109,618 381,150 540,152
Recoveries (25,101) (475) (213,712) (319,773)
-------- -------- --------- ---------
Net Chargeoffs (Recoveries) (545) 109,143 167,438 220,379
======== ======== ========= =========
CONTACT: Temecula Valley Bancorp
Stephen H. Wacknitz, 951-694-9940