Exhibit 99.1
Temecula Valley Bancorp Announces
Third Quarter 2007 Earnings
TEMECULA, Calif.--(BUSINESS WIRE)--Oct. 30, 2007--Temecula Valley
Bancorp Inc. (NASDAQ:TMCV) today announced third quarter 2007 net
income of $2.60 million, a 35.4 percent decline from the $4.02 million
reported for the third quarter of 2006. Diluted earnings per share
were $0.25 compared with $0.41 reported in the prior-year quarter. For
the first nine months of 2007, net income was $12.0 million, down 4.0
percent from the $12.5 million reported for the 2006 nine-month
period; diluted earnings per share were $1.10 compared with $1.30 for
the prior-year nine months, a decline of 15.4 percent. Compared with
the year-earlier quarter, third quarter 2007 results reflect strong
loan growth, a narrowing of the net interest margin, and a decline in
the value of the SBA servicing assets. Further, per share 2007
earnings were diluted by the private placement of 1.4 million common
shares in November 2006; the impact was partially offset by the
repurchase of 684,100 shares during the second and third quarters of
2007. The average number of shares and equivalents outstanding
increased 8.9 percent from the third quarter of 2006, and by 13.3
percent for the nine-month period.
Chairman, President and CEO Stephen H. Wacknitz commented, "The
decline in earnings was primarily the result of the volatility due to
the adoption of fair value accounting of the servicing assets per FAS
156 in 2007 and not the result of any significant increase in loan
losses."
Highlights of the quarter include:
-- A $4.7 million charge to earnings to adjust the SBA servicing
assets to fair market value. Approximately $3.6 million of the
charge was due to a significant increase in the discount rate
used to value the assets, which was the result of the
disruption in the credit markets. If the discount rate
declines from the third quarter 2007 assumed rate of 13.11
percent in future periods, earnings will be impacted
positively.
-- Total revenue declined 9.4 percent year-over-year from a
combination of declining gain on sale of SBA loans and the
mark-down in value of the SBA servicing assets.
-- Loan growth since December 31, 2006 of $61.8 million, or 5.4
percent, with a growing emphasis on CRE and SBA lending.
-- An improving deposit mix, with lower-cost Money Market and NOW
accounts up 33 percent year-to-date.
-- Net non performing assets increased to 1.42 percent of total
assets as a result of current economic conditions. However,
losses have been historically low due to the conservative
valuation of the underlying real estate collateral.
-- During the second and third quarters of 2007, Temecula's board
of directors authorized a stock buyback program to purchase up
to $15.5 million of TMCV common stock; for the second and
third quarters, 684,100 shares were repurchased at a cost of
$12.1 million.
Chairman, President and CEO Stephen H. Wacknitz commented, "While
not the best quarter we ever had, we performed well in light of
extremely challenging conditions in both the credit and housing
markets. Excluding the non-cash write-down of our SBA servicing assets
that was caused by market factors, we would have reported
approximately $4.7 million of pro forma net income, $2.1 million
higher than our GAAP net income. Loan originations are strong and
growing, while our loan losses remain at historically low levels. We
have confidence in the geographical diversity of our markets, our
ability to identify market opportunities, and the quality of our
people to manage our portfolio risk, even in these tough times."
Returns on average assets and average equity were 0.79 percent and
9.66 percent, respectively, for the quarter ending September 30, 2007,
compared to 1.48 percent and 22.72 percent, respectively, for the
year-ago third quarter. Nine-month returns on average assets and
equity were 1.24 percent and 15.03 percent, respectively, for the 2007
period compared with 1.72 percent and 25.85 percent for the prior year
nine months.
Income Statement
Total interest income for the third quarter of 2007 was $29.1
million, compared with $25.2 million for the third quarter of 2006, an
increase of 15.3 percent. Net interest income was $16.5 million, up
5.9 percent over the $15.6 million reported for the year-ago quarter,
reflecting a 23.8 percent increase in average earning assets,
partially offset by a 91 basis point, or 14.5 percent, decline in net
interest margin, from 6.29 percent for the 2006 third quarter, to 5.38
percent for the current quarter. Compared with the second quarter of
2007, net interest income declined 3.2 percent from a combination of
margin decline (13 basis points) and a 1.8 percent decline in average
earning assets. The Company sold $70 million of low yielding
commercial real estate loans at second quarter-end, reducing average
loan balances in the third quarter. The decline in net interest margin
was due to a decline in loan yield of 0.17%, which was partially
offset by a decline in the cost of interest-bearing deposits of 0.05%.
Non interest income for the third quarter of 2007 was $1.5
million, a decrease of $2.8 million from the year-ago quarter and a
$4.6 million decline from the linked quarter. Credit market
disruptions this past quarter that were unprecedented in scope caused
a sharp increase in the discount rates used to value SBA loan
servicing assets. The servicing assets were written down by $4.7
million. This write-down consists of two parts: first, a $3.6 million
write-down for the net impact of third quarter 2007 changes in the
assumptions for the discount rate, primarily; and secondly, and to a
much lesser extent this quarter than for the year-ago quarter, a $1.1
million write-down representing the decline in the underlying loans
serviced and the servicing rate. A table of SBA valuations and their
impact of Temecula's quarterly results is as follows:
(dollars in thousands) 3rd Qtr, 2nd Qtr, 1st Qtr, 4th Qtr, 3rd Qtr,
2007 2007 2007 2006 2006
- ------------------------- -------- -------- -------- -------- --------
SBA Loans Serviced $373,900 $384,500 $383,100 $399,900 $404,900
- ------------------------- -------- -------- -------- -------- --------
Reported Value of the SBA
Servicing Assets $12,418 $16,886 $19,020 $21,503 $23,286
- ------------------------- -------- -------- -------- -------- --------
P&L Servicing Loss ($3,109) ($855) ($855) ($1,095) ($2,143)
- ------------------------- -------- -------- -------- -------- --------
Adjustment to Fair Value
of SBA Servicing Asset ($4,745) ($2,578) ($2,771) ($3,108) ($4,257)
- ------------------------- -------- -------- -------- -------- --------
Cash Servicing Received,
per P&L $1,692 $1,785 $1,999 $2,051 $2,199
- ------------------------- -------- -------- -------- -------- --------
Weighted Average
Servicing Rate 1.72% 1.82% 1.95% 2.01% 2.11%
- ------------------------- -------- -------- -------- -------- --------
Beginning in the fourth quarter of 2004, Temecula began to sell
SBA loans for a cash premium, retaining less of the loan servicing to
reduce the prepayment risk associated with the servicing assets. The
SBA requires that the originating lender retain a minimum of one
percent in fees, so the decline in the weighted average servicing rate
was anticipated, and will continue to decline until loans originated
prior to the fourth quarter of 2004 pay down.
Non interest income for the current quarter included $1.6 million
in gains from the sale of loans, a $2.9 million decline from the $4.5
million reported in the previous quarter, and $2.3 million lower than
the year-ago quarter. The decrease was due to a decline in the number
of loans sold and the decline in premiums for SBA 7(a) loans. Mr.
Wacknitz noted, "We still had good production of SBA loans, and in
fact, our total production is higher than last year. Our SBA
departments originated $374 million for the nine months ended
September 30, 2007 compared to $276 million for the nine months ended
September 30, 2006; this excludes loans purchased through our
unguaranteed purchase program. However, our SBA production mix is
changing gradually due to the impact of the inverted yield curve and
increasing competition. As a result, we have been transitioning from
being primarily a SBA 7(a) lender toward a higher concentration of SBA
504 and other commercial real estate loans that can be sold in the
secondary market. SBA 504 loans have more of a construction component,
so we hold these loans on our balance sheet longer until completion,
resulting in greater interest income and higher concentrations of
owner occupied construction loans."
The provision for loan losses was $1.1 million for the current
quarter, compared with $1.4 million reported for the year-ago quarter;
no provision was taken in the previous quarter. Net charge-offs remain
minimal; virtually all of Temecula's non-performing loans are
collateralized by real estate, and 42 percent guaranteed under various
SBA programs.
Third quarter non interest expense was $12.6 million, an increase
of $1.0 million, or 9.0 percent, over the $11.6 million reported for
the year-ago quarter, and a $1.7 million decline from second quarter
2007. Salary and benefits expenses accounted for $1.9 million of the
linked quarter decrease, primarily from lower bonus accruals due to
lower earnings for the quarter. Offsetting the decline in salary and
benefits expenses was a $483,000 increase in loan-related expenses,
nearly twice the expense incurred during the previous quarter due to
strong loan origination volume. Second quarter 2007 expenses also
included a charge of $485,000 to the reserve for undisbursed loans and
third quarter 2007 included a further charge of $175,000. For the
quarter ending September 30, 2007, the efficiency ratio increased to
70.09 percent from 58.24 percent in the third quarter of 2006,
primarily due to the decrease in non-interest income.
Balance Sheet
Total assets were $1.30 billion at September 30, 2007, up $66.7
million, or 5.4 percent from the $1.24 billion reported at December
31, 2006. Compared with the linked quarter, assets declined $4.1
million, or 0.3 percent; loan growth was funded through the conversion
of fed funds. Year-to-date, loan growth was $61.8 million, or 5.4
percent, reaching $1.20 billion. While end-of-period third quarter
loans increased by $53.0 million compared to second quarter balances
at period-end, average loan balances declined by $33.2 million, or 2.7
percent, reflecting the sale in June 2007 of approximately $70 million
in lower-yielding CRE loans.
Temecula remains solidly entrenched in real estate lending, with
approximately 94.1 percent of loans collateralized by real property.
Construction lending is the bank's major focus, accounting for 49.2
percent of its loan portfolio; however, construction loans grew only
$18.7 million or 4.0 percent since year-end, substantially slower than
in 2006. SBA 7(a) loans took up much of the slack, increasing by $40.2
million, or 20 percent, during the 2007 nine-month period. SBA 7(a)
loans now account for 20 percent of total loans, up from 17.6 percent
at December 31, 2006.
The loans held in Temecula's portfolio are diversified
geographically and by type of loan. Approximately 22.0 percent of
loans are located outside the State of California through various SBA
programs; these are all commercial in nature, and virtually all are
owner-occupied, divided between non-construction CRE ($26.1 million)
and commercial construction ($64.8 million), SBA 7(a) ($69.3 million),
and unguaranteed purchase program ($106.2 million).
Deposits at September 30, 2007 were $1.15 billion, an increase of
$70.0 million, or 6.5 percent, from $1.08 billion at December 31,
2006. The majority of this growth occurred in lower-cost Money Market
and NOW accounts, up $43.5 million, or 33.3 percent since year-end
2006, followed by $24.3 million, or 6.6 percent, growth in retail time
deposits. Virtually all deposit growth occurred in the first quarter
of 2007; the following two quarters were essentially flat over the
six-month period.
Asset Quality
Total nonperforming assets were $32.2 million, supported by
government guarantees of approximately $13.7 million, thereby reducing
Temecula's exposure to $18.5 million, or 1.42 percent of total assets.
In the worse case, after reducing the current appraised collateral
value by 25% for commercial real estate and 20% for residential real
estate, Temecula's loss exposure is estimated at $1.3 million for
nonperforming assets. Both gross and net nonperforming assets have
been increasing quarterly over the past twelve months; compared with
current levels, the gross level of non-performing assets for the
year-ago quarter was $13.8 million (1.21 percent of assets),
increasing to $27.4 million (2.09 percent) for the linked quarter.
After guarantees, exposures for the year-ago quarter were reduced to
$3.8 million (0.33 percent of assets), and $12.2 million (0.93 percent
of assets) for the linked quarter. Despite a growing level of net
nonperforming loans, net loan charge-offs remain low, totaling 0.06
percent of average loans for the current quarter. Mr. Wacknitz
commented, "The majority of nonperforming assets are SBA loans, which
represent $13.8 million of the net exposure. The remaining $4.7
million of conventional non-accrual loans consist of five loans. Of
the $4.7 million, one loan is a construction loan for $2 million
expected to settle in the fourth quarter of 2007. The other is a land
development loan for $2.2 million located in Folsom, CA where we do
not anticipate a loss." At September 30, 2007, the allowance for loan
losses was 1.10 percent of total loans and 1.33 percent excluding
held-for-sale loans.
Shareholder Equity
Shareholder equity increased 43.8 percent from $73.0 million at
September 30, 2006 to $104.9 million at September 30, 2007; the
majority of the growth was attributable to the $25.1 million private
placement completed in November 2006, and the remainder to the
exercise of stock options and contribution from net income, which was
offset due to the repurchase of $10.0 million of common stock.
Compared to the linked quarter, shareholder equity declined by $7.3
million as Temecula reduced its capital base to reflect slower growth
in its markets. At September 30, 2007, the Company had 10,137,910
shares outstanding, net of the 684,100 shares repurchased in second
and third quarter under the stock repurchase program. Capital ratios
remain strong at September 30, 2007, with the Tier 1 leverage ratio at
10.60 percent, the Tier 1 risk-based capital ratio at 9.59 percent,
and the total risk-based capital ratio at 10.57 percent, all above the
minimum to qualify as "well capitalized."
"In summary, I anticipate modest loan growth and stabilization of
the servicing assets, in the fourth quarter of 2007, resulting in
improved earnings," concluded Mr. Wacknitz.
About the Company
Temecula Valley Bank, established in 1996, operates ten
full-service offices in Temecula, Murrieta, Corona, Fallbrook,
Escondido, Rancho Bernardo, El Cajon, Carlsbad, Solana Beach, Ontario
and will soon open an eleventh full service banking office in San
Marcos. The Bank also operates a number of regional real estate loan
production centers in California. As a leading SBA Preferred Lender,
the Bank has a network of SBA loan production offices across the
United States and has funded over $1.3 billion in SBA loans in 36
states in the last five years. Temecula Valley Bancorp was established
in June 2002 and operates as a bank holding company for the Bank. For
further information, please go to the Bank's website at
www.temvalbank.com.
Temecula Valley Bancorp stock is traded on the NASDAQ Global
Select Market under the symbol TMCV.
Forward-looking Statements
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 the Securities and Exchange
Commission by Temecula Valley Bancorp Inc. The Corporation undertakes
no obligation to update forward-looking statements, whether as a
result of new information, future events or otherwise.
TEMECULA VALLEY BANCORP INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
(in thousands except share and per share data)
September 30, September 30,
2007 2006 % Change
------------- ------------- --------
ASSETS
Cash and due from banks $ 12,843 $ 16,453 (22%)
Interest-bearing deposits in
financial institutions 1,000 99 910%
Federal funds sold 22,990 4,350 429%
Securities 3,046 0 0%
Loans (Including HFS)
Commercial 53,885 53,465 1%
Real Estate-Construction 594,912 520,058 14%
Real Estate 286,217 279,985 2%
SBA 266,248 204,489 30%
Consumer and other 3,212 3,518 (9%)
------------- -------------
Total Gross Loans 1,204,474 1,061,515 13%
Less allowance for loan losses (13,299) (11,631) 14%
------------- -------------
Total Loans, net 1,191,175 1,049,884 13%
Federal Reserve & Home Loan
Bank stock, at cost 2,867 1,969 46%
Bank premises and equipment,
net 5,233 5,172 1%
Other real estate owned, net 152 2,131 (93%)
Cash surrender value life
insurance 27,773 22,316 24%
SBA-loan servicing asset 5,572 8,402 (34%)
SBA-loan I/O strip receivable 6,846 14,884 (54%)
Accrued interest 7,014 5,298 32%
Other Assets 18,367 13,013 41%
------------- -------------
Total Assets $ 1,304,878 $ 1,143,971 14%
============= =============
LIABILITIES AND STOCKHOLDER
EQUITY
Deposits
Non-interest Bearing Deposits 144,938 155,445 (7%)
Money Market & NOW 173,851 123,443 41%
Savings 27,214 30,112 (10%)
Time Deposits 805,549 708,455 14%
------------ ------------
Total deposits 1,151,552 1,017,455 13%
Junior subordinated debt
securities 34,023 41,240 (18%)
Accrued interest 2,245 1,642 37%
Dividend Payable 406 0 0%
Other liabilities 11,708 10,674 10%
------------ ------------
Total liabilities 1,199,934 1,071,011 12%
Stockholder's equity 104,944 72,960 44%
------------- -------------
Total Liabilities and
Stockholder's equity $ 1,304,878 $ 1,143,971 14%
============= =============
SELECTED BALANCE SHEET DATA
Book value per share, end of
period $ 10.35 $ 7.96
Tier 1 leverage capital ratio 10.60% 8.94%
Tier 1 risk-based capital ratio 9.59% 7.92%
Total risk-based capital ratio 10.57% 10.19%
Loan to deposit ratio, end of
period 104.60% 104.33%
Allowance for loan losses as a
% of total loans 1.10% 1.10%
Gross nonperforming assets as a
% of total assets 2.47% 1.21%
Net nonperforming assets as a %
of total assets 1.39% 0.33%
Net chargeoffs (annualized) as
a % of total loans 0.07% 0.02%
December 31,
2006 % Change
------------ --------
ASSETS
Cash and due from banks $ 15,190 (15%)
Interest-bearing deposits in
financial institutions 99 910%
Federal funds sold 18,180 26%
Securities 1,019 199%
Loans (Including HFS)
Commercial 59,550 (10%)
Real Estate-Construction 568,227 5%
Real Estate 292,827 (2%)
SBA 218,408 22%
Consumer and other 3,681 (13%)
-------------
Total Gross Loans 1,142,693 5%
Less allowance for loan losses (12,522) 6%
-------------
Total Loans, net 1,130,171 5%
Federal Reserve & Home Loan
Bank stock, at cost 1,996 44%
Bank premises and equipment,
net 5,492 (5%)
Other real estate owned, net 1,255 (88%)
Cash surrender value life
insurance 24,036 16%
SBA-loan servicing asset 8,288 (33%)
SBA-loan I/O strip receivable 13,215 (48%)
Accrued interest 6,155 14%
Other Assets 13,093 40%
-------------
Total Assets $ 1,238,189 5%
=============
LIABILITIES AND STOCKHOLDER
EQUITY
Deposits
Non-interest Bearing Deposits 144,525 0%
Money Market & NOW 130,357 33%
Savings 29,781 (9%)
Time Deposits 776,838 4%
-------------
Total deposits 1,081,501 6%
Junior subordinated debt
securities 41,240 (18%)
Accrued interest 2,094 7%
Dividend Payable 0 0%
Other liabilities 10,091 16%
-------------
Total liabilities 1,134,926 6%
Stockholder's equity 103,263 2%
-------------
Total Liabilities and
Stockholder's equity $ 1,238,189 5%
=============
SELECTED BALANCE SHEET DATA
Book value per share, end of
period $ 9.75
Tier 1 leverage capital ratio 11.42%
Tier 1 risk-based capital
ratio 10.49%
Total risk-based capital ratio 11.90%
Loan to deposit ratio, end of
period 105.66%
Allowance for loan losses as a
% of total loans 1.10%
Gross nonperforming assets as
a % of total assets 1.66%
Net nonperforming assets as a
% of total assets 0.77%
Net chargeoffs (annualized) as
a % of total loans 0.01%
PAST DUE AND NON-ACCRUAL LOANS
---------------------------------------------------------------------
September 30, 2007 Gross Government Net
Balance Guaranty Balance
---------------------------------------- ----------------------------
30 - 89 days past due 6,009 (448) 5,561
======== ========== ========
90+ days past due and accruing 0 0 0
Non-accrual 32,034 (13,550) 18,484
Other real estate owned (REO) 152 (114) 38
-------- ---------- --------
Total non-performing assets 32,186 (13,664) 18,522
======== ========== ========
December 31, 2006
----------------------------------------
30 - 89 days past due 3,284 (1,737) 1,547
======== ========== ========
90+ days past due and accruing 140 0 140
Non-accrual 19,124 (10,335) 8,789
Other real estate owned (REO) 1,255 (638) 617
-------- ---------- --------
Total non-performing assets 20,519 (10,973) 9,546
======== ========== ========
September 30, 2006
----------------------------------------
30 - 89 days past due 380 (161) 219
======== ========== ========
90+ days past due and accruing 0 0 0
Non-accrual 11,670 (8,858) 2,812
Other real estate owned (REO) 2,131 (1,158) 973
-------- ---------- --------
Total non-performing assets 13,801 (10,016) 3,785
======== ========== ========
TEMECULA VALLEY BANCORP INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands except share and per share data)
3 Mos. Ended 9 Mos. Ended
September 30, September 30,
----------------------- ----------------------
2007 2006 2007 2006
------------ ---------- ----------- ----------
INTEREST INCOME
Interest income and
fees on loans $ 28,496 $ 24,845 $ 86,061 $ 65,906
Other Interest income 561 356 1,260 627
----------------------------------------------
Total Interest income 29,057 25,201 87,321 66,533
INTEREST EXPENSE
Interest on deposits 11,892 9,001 35,239 21,120
Interest on junior
subordinated debt
and other borrowings 648 607 2,263 1,915
----------------------------------------------
Total Interest
expense 12,540 9,608 37,502 23,035
----------------------------------------------
Net interest income 16,517 15,593 49,819 43,498
Provision for loan
losses 1,055 1,350 1,470 2,760
----------------------------------------------
Net interest income
after provision for
loan losses 15,462 14,243 48,349 40,738
NON INTEREST INCOME
Service charges and
fees 154 149 454 463
Gain on sale of
loans, fixed assets
and OREO 1,633 3,969 8,369 10,905
SBA Net Servicing
income (3,109) (2,143) (4,818) (1,520)
Loan related income 2,260 1,834 5,938 4,691
Other income 583 524 1,632 1,210
----------------------------------------------
Total Non Interest
income 1,521 4,333 11,575 15,749
NON INTEREST EXPENSE
Salaries and employee
benefits 7,790 7,978 26,074 23,840
Occupancy and
equipment 1,331 1,181 3,868 3,472
Marketing and
business promotion 292 197 893 681
Office expense 648 693 2,011 1,877
Loan related expense 976 564 2,090 1,792
Other expense 1,605 991 4,685 3,073
------------ ---------- ----------- ----------
Total Non Interest
expense 12,642 11,604 39,621 34,735
----------------------------------------------
Earnings before
income taxes 4,341 6,972 20,303 21,752
Income taxes 1,746 2,954 8,278 9,224
----------------------------------------------
Net earnings $ 2,595 $ 4,018 $ 12,025 $ 12,528
==============================================
OTHER SELECTED
FINANCIAL DATA
Actual common shares
outstanding at end
of period 10,137,910 9,169,088 10,137,910 9,169,088
Average common shares
outstanding 10,247,356 9,149,922 10,502,129 9,044,249
Average common shares
& equivalents
outstanding 10,559,464 9,696,764 10,892,611 9,611,518
Basic earnings per
share 0.25 0.44 1.15 1.39
Diluted earnings per
share 0.25 0.41 1.10 1.30
Return on average
assets (annualized) 0.79% 1.48% 1.24% 1.72%
Return on average
equity (annualized) 9.66% 22.72% 15.03% 25.85%
Investment Yield 5.16% 5.22% 5.20% 4.96%
Loan Yield 9.62% 10.30% 9.72% 10.22%
Cost of Interest-
bearing Deposits 4.73% 4.42% 4.76% 3.99%
Cost of Borrowings 7.51% 8.05% 7.79% 7.24%
Net interest margin 5.38% 6.29% 5.48% 6.61%
Efficiency ratio 70.08% 58.24% 64.53% 58.63%
NET LOAN CHARGEOFFS
---------------------
Chargeoffs 149 61 826 357
Recoveries (125) (172) (134) (189)
----------- ---------- ----------- ----------
Net Chargeoffs
(Recoveries) 24 (111) 692 168
=========== ========== =========== ==========
TEMECULA VALLEY BANCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
(dollars in thousands except per share data)
Quarterly
---------------------------------------
2007
---------------------------------------
3rd Qtr 2nd Qtr 1st Qtr
----------- ----------- ------------
EARNINGS
Net interest income (fully
tax-equivalent) $ 16,517 $ 17,054 $ 16,250
Provision for loan and
lease losses $ 1,055 $ 0 $ 415
Non Interest income $ 1,521 $ 6,117 $ 3,938
Non Interest expense $ 12,642 $ 14,317 $ 12,664
Net income $ 2,595 $ 5,251 $ 4,179
Basic earnings per share $ 0.25 $ 0.49 $ 0.39
Diluted earnings per share $ 0.25 $ 0.47 $ 0.38
Average shares outstanding 10,247,356 10,661,179 10,601,748
Average diluted shares
outstanding 10,559,464 11,072,471 11,124,945
PERFORMANCE RATIOS
Return on average assets 0.79% 1.59% 1.34%
Return on average common
equity 9.66% 19.07% 16.04%
Net interest margin (fully
tax-equivalent) 5.38% 5.51% 5.54%
Investment Yield 5.16% 5.24% 5.23%
Loan Yield 9.62% 9.79% 9.75%
Cost of Interest-bearing
Deposits 4.73% 4.78% 4.75%
Cost of Borrowings 7.51% 7.66% 8.14%
Noninterest
income/Operating revenue 8.43% 26.40% 19.51%
Efficiency ratio 70.09% 61.79% 62.73%
Full-time equivalent
employees 324 318 313
CAPITAL
Loans/ Deposits 104.60% 100.15% 102.43%
Securities/ Assets 0.23% 0.08% 0.08%
Equity to assets 8.04% 8.57% 8.21%
Regulatory leverage ratio 10.60% 10.93% 11.27%
Tier 1 capital ratio 9.59% 10.58% 10.42%
Total risk-based capital
ratio 10.57% 11.51% 11.65%
Book value per share $ 10.35 $ 10.52 $ 10.15
Common dividends per share $ 0.04 $ 0.04 $ N/A
ASSET QUALITY
Gross loan charge-offs $ 149 $ 198 $ 479
Net loan charge-offs
(recoveries) $ 24 $ 190 $ 479
Net loan charge-offs to
average loans 0.06% 0.06% 0.16%
Allowance for loan losses $ 13,299 $ 12,268 $ 12,458
Allowance for losses to
total loans 1.10% 1.07% 1.06%
Nonperforming loans $ 32,034 $ 26,629 $ 23,813
90-Day Delinquencies 0 0 0
Other real estate owned $ 152 $ 722 $ 722
Nonperforming assets
(including OREO) 32,186 27,352 24,535
Nonperforming assets to
total assets 2.47% 2.09% 1.87%
Nonperforming Assets, Net
of Guarantees (NOG) 18,522 12,199 10,420
Nonperforming assets NOG to
Total Assets 1.42% 0.93% 0.79%
END OF PERIOD BALANCES
Loans (before allowance) $ 1,204,474 $ 1,151,515 $ 1,179,789
Total earning assets
(before allowance) $ 1,231,510 $ 1,230,277 $ 1,236,224
Total assets $ 1,304,878 $ 1,308,965 $ 1,312,448
Deposits
Non Interest-Bearing
Demand $ 144,938 $ 144,683 $ 151,293
Money Market and NOW $ 173,851 $ 151,893 $ 141,028
Savings $ 27,214 $ 29,487 $ 32,012
Timed Deposits Under
$100,000 $ 391,365 $ 403,827 $ 420,301
Timed Deposits $100,000
and Over $ 414,184 $ 419,945 $ 407,219
Deposits $ 1,151,552 $ 1,149,835 $ 1,151,853
Shareholders' equity $ 104,944 $ 112,188 $ 107,744
Period end common shares
outstanding 10,137,910 10,662,772 10,613,659
QUARTERLY AVERAGE BALANCES
Loans (before allowance) $ 1,175,764 $ 1,208,928 $ 1,167,399
Total earning assets
(before allowance) $ 1,218,899 $ 1,240,905 $ 1,189,218
Total assets $ 1,296,334 $ 1,323,088 $ 1,266,657
Deposits $ 1,140,412 $ 1,158,276 $ 1,106,127
Shareholders' equity $ 106,571 $ 110,424 $ 105,661
Quarterly
-----------------------------------------
2006
--------------------------
4th Qtr 3rd Qtr
----------- -----------
EARNINGS
Net interest income (fully
tax-equivalent) $ 16,282 $ 15,593
Provision for loan and
lease losses $ 890 $ 1,350
Non Interest income $ 3,695 $ 4,333
Non Interest expense $ 12,256 $ 11,604
Net income $ 4,392 $ 4,018
Basic earnings per share $ 0.45 $ 0.44
Diluted earnings per share $ 0.43 $ 0.41
Average shares outstanding 9,800,612 9,149,922
Average diluted shares
outstanding 10,322,256 9,696,764
PERFORMANCE RATIOS
Return on average assets 1.46% 1.48%
Return on average common
equity 20.11% 22.72%
Net interest margin (fully
tax-equivalent) 5.79% 6.29%
Investment Yield 5.22% 5.22%
Loan Yield 9.92% 10.30%
Cost of Interest-bearing
Deposits 4.68% 4.42%
Cost of Borrowings 7.84% 8.04%
Noninterest
income/Operating revenue 18.50% 21.75%
Efficiency ratio 61.35% 58.24%
Full-time equivalent
employees 312 304
CAPITAL
Loans/ Deposits 105.66% 104.33%
Securities/ Assets 0.08% 0.09%
Equity to assets 8.34% 6.38%
Regulatory leverage ratio 11.42% 8.94%
Tier 1 capital ratio 10.49% 7.92%
Total risk-based capital
ratio 11.90% 10.19%
Book value per share $ 9.75 $ 7.96
Common dividends per share $ N/A $ N/A
ASSET QUALITY
Gross loan charge-offs $ 25 $ 61
Net loan charge-offs
(recoveries) $ (1) $ (111)
Net loan charge-offs to
average loans 0.00% (0.05%)
Allowance for loan losses $ 12,522 $ 11,631
Allowance for losses to
total loans 1.10% 1.10%
Nonperforming loans $ 19,124 $ 11,700
90-Day Delinquencies 140 0
Other real estate owned $ 1,255 $ 2,131
Nonperforming assets
(including OREO) 20,519 13,800
Nonperforming assets to
total assets 1.66% 1.21%
Nonperforming Assets, Net
of Guarantees (NOG) 9,547 3,784
Nonperforming assets NOG
to Total Assets 0.77% 0.33%
END OF PERIOD BALANCES
Loans (before allowance) $ 1,142,693 $1,061,515
Total earning assets
(before allowance) $ 1,161,991 $1,065,964
Total assets $ 1,238,189 $1,143,971
Deposits
Non Interest-Bearing
Demand $ 144,525 $ 155,445
Money Market and NOW $ 130,357 $ 123,443
Savings $ 29,781 $ 30,112
Timed Deposits Under
$100,000 $ 367,029 $ 331,432
Timed Deposits $100,000
and Over $ 409,809 $ 377,023
Deposits $ 1,081,501 $1,017,455
Shareholders' equity $ 103,263 $ 72,960
Period end common shares
outstanding 10,586,659 9,169,088
QUARTERLY AVERAGE BALANCES
Loans (before allowance) $ 1,099,465 $ 957,182
Total earning assets
(before allowance) $ 1,116,363 $ 984,203
Total assets $ 1,197,032 $1,076,472
Deposits $ 1,053,338 $ 963,949
Shareholders' equity $ 86,650 $ 70,170
LOAN PORTFOLIO (INCLUDING HELD-FOR-SALE)
- ----------------------------------------------------------------------
Residential
Construction Loans 9/30/2007 6/30/2007 3/31/2007 12/31/2006 9/30/2006
- ------------------- --------- --------- --------- ---------- ---------
10 Owner Occupied
Res Const 0.53% 0.41% 0.72% 0.96% 1.43%
11 High-End Owner
Occupied 2.50% 2.57% 2.09% 2.30% 2.18%
20 Spec Residential
Construction (1-4
units) 3.69% 3.89% 3.56% 3.60% 3.79%
21 High-End Spec
Residentail Const
(1-4 units) 6.10% 6.38% 5.97% 5.51% 5.63%
23 High-End
Residential Tract
Construction (over
4 units) 3.50% 3.73% 3.48% 3.30% 3.40%
24 Tract
Construction (over
4 Units) 1.97% 1.83% 1.84% 2.24% 3.10%
25 Muli-Family
Construction 1.25% 1.43% 1.15% 0.67% 0.61%
26 Condominium
Construction 3.03% 2.37% 2.15% 2.39% 2.27%
27 High-End
Condominium
Construction 7.21% 6.62% 6.39% 6.16% 5.90%
28 Condominium
Conversion 0.96% 1.49% 1.76% 1.92% 1.96%
--------- --------- --------- ---------- ---------
Sub-Total
Residential
Construction Loans 30.75% 30.72% 29.10% 29.03% 30.29%
========= ========= ========= ========== =========
Commercial
Construction Loans
- -------------------
30 Owner-Occupied
Comm Const 4.05% 4.40% 4.32% 3.32% 3.08%
31 Restaurant/Bar
Construction 0.10% 0.08% 0.31% 0.31% 0.28%
32 Hotel/Motel
Construction 5.03% 5.45% 5.58% 5.12% 4.22%
33 Car Wash
Construction 0.45% 0.55% 0.69% 0.94% 0.95%
34 Gas Station/C
Store Construction 0.66% 0.63% 0.48% 0.75% 1.17%
36 Retail Spec
Construction 0.26% 0.20% 0.76% 1.59% 1.16%
38 Office Spec
Construction 1.73% 1.78% 2.24% 1.64% 1.21%
40 Industrial/
Warehouse Spec
Const 1.13% 1.04% 1.51% 1.95% 1.38%
42 Healthcare
Construction 1.61% 1.32% 1.26% 0.81% 0.67%
44 Miscellaneous
Comm Const 0.33% 0.27% 0.15% 0.41% 0.46%
45 Mini-Storage
Construction 0.14% 0.38% 0.39% 0.36% 0.38%
50 Residential Land
Development 2.56% 2.98% 3.22% 3.24% 3.48%
51 Commercial Land
Development 0.76% 0.85% 0.43% 0.44% 0.50%
--------- --------- --------- ---------- ---------
Sub-Total
Commercial
Construction Loans 18.80% 19.93% 21.33% 20.87% 18.94%
========= ========= ========= ========== =========
Non-Construction
Real Estate Loans
- -------------------
55 Unimproved Land 7.73% 6.99% 5.68% 6.89% 6.58%
59 Multi-Family 0.39% 0.43% 0.65% 0.59% 0.59%
60 Owner-Occupied
Commercial 13.24% 13.21% 14.40% 13.28% 12.54%
61 Restaurant/Bar 1.72% 1.81% 1.60% 1.31% 1.27%
62 Hotel/Motel 6.47% 5.84% 5.28% 5.75% 6.91%
63 Car Wash 1.11% 1.11% 1.25% 1.09% 0.96%
64 Gas Station/C
Store 4.39% 4.56% 4.34% 3.82% 4.33%
66 Retail
Investment 0.63% 0.76% 0.83% 0.86% 0.93%
68 Office
Investment 0.67% 0.55% 0.98% 0.96% 1.00%
70 Industrial/
Warehouse
Investment 2.74% 2.65% 3.49% 3.38% 3.10%
72 Healthcare 0.95% 0.86% 0.68% 0.45% 0.64%
74 Miscellaneous
Commercial 0.59% 0.62% 1.26% 1.40% 1.38%
75 Mini-Storage 0.39% 0.41% 0.56% 0.58% 0.63%
80 1st TD 1-4
Residential 1.34% 1.45% 1.62% 1.59% 1.96%
82 Junior TD 1-4
Residential 2.17% 2.04% 1.80% 1.95% 2.08%
--------- --------- --------- ---------- ---------
Sub-Total Non-
Construction Real
Estate Loans 44.52% 43.28% 44.40% 43.89% 44.89%
--------- --------- --------- ---------- ---------
Total Real Estate
Secured Loans 94.08% 93.93% 94.84% 93.79% 94.12%
========= ========= ========= ========== =========
Commercial,
Consumer, Other 5.92% 6.07% 5.16% 6.21% 5.88%
--------- --------- --------- ---------- ---------
Total Loan
Portfolio 100.00% 100.00% 100.00% 100.00% 100.00%
========= ========= ========= ========== =========
CONTACT: Temecula Valley Bank
Stephen H. Wacknitz, 951-694-9940