Capital Corp of the West Announces a 32% Annual Earnings Increase.Business Editors MERCED Merced (mərsĕd`), city (1990 pop. 56,216), seat of Merced co., central Calif.; inc. 1889. It is a growing city and a center for tourism and farm trade in a cotton, fruit, and dairy region. , Calif.--(BUSINESS WIRE)--Jan. 28, 2003 Capital Corp of the West (Nasdaq:CCOW CCOW Clinical Context Object Workgroup CCOW Channel Control Order Wire CCOW Control Channel Order Wire CCOW Contributing to Coalition Operations Worldwide CCOW Computer Care on Wheels (Brantford, Ontario, Canada) ) today announced a 32% increase in net income for the year ended December December: see month. 31, 2002. "Although this was a year of historically low interest rates, we were able to build additional strength in the foundation of our Company by increasing our total assets and strengthening our balance sheet," stated Chief Executive Officer, Tom Hawker. "Along with achieving a return on equity to our shareholders approaching 15%, we significantly improved our credit quality statistics while growing total assets another 16% from a year ago. With over $1 Billion in total assets and having just celebrated our 25th anniversary year, all of us at Capital Corp of the West look forward to the upcoming 2003 year with great enthusiasm knowing we have built a solid organization that can meet the myriad Myriad is a classical Greek name for the number 104 = 10 000. In modern English the word refers to an unspecified large quantity. The term myriad is a progression in the commonly used system of describing numbers using tens and hundreds. needs of our various constituencies well into the future," continued Mr. Hawker. "Historically low interest rates for all of 2002 has negatively impacted the business environment for our company as well as the entire financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industry. In this less than favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. earnings environment, we were able to grow earnings by 32%, loans by 19%, deposits by 14%, and increase book and tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. book values by 17% and 18%." "Additionally during the year, we consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: the results of the rapid expansion of recent prior years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time spreading of our geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. , and the enhancement of product offerings to our customers. We are also pleased with the over 60% increase in our stock price during the year and view this as a confirmation of a job well done by all members of our Capital Corp of the West family," continued Mr. Hawker. Earnings Discussion Net earnings were $10,428,000 or $1.92 per share for the year. This compares to earnings of $7,911,000 or $1.51 per share for 2001. Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. return on average assets and return on average equity were 1.09% and 14.94% for the 2002 year compared with 1.03% and 13.40% for 2001. Net earnings results for the three month period ended December 31, 2002 were $2,834,000 or $.52 per share. This compares to earnings of $2,109,000 or $.40 per share for the three month period ended December 31, 2001. Annualized return on average assets and return on average equity were 1.13% and 15.18% for the three month period ended December 31, 2002 compared with 1.00% and 13.28% for the three month period ended December 31, 2001. The full year 2002 earnings of $10,428,000 showed a $2,517,000 increase over the comparable 2001 earnings due primarily to a $5,120,000 improvement in net interest income. The increase in net interest income was driven by a $181,497,000 or 26% increase in average interest earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin . The net interest margin for the full year 2002 was 4.64%, a decrease of 45 basis points from the 5.09% achieved during the year 2001. Other expenses increased by $4,901,000 due primarily to increases in salaries and benefits of $3,059,000 that were the result of bonus accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. , additional branch offices, management and support staff increases necessary to accommodate branch expansion and normal salary progression progression, in mathematics, sequence of quantities, called terms, in which the relationship between consecutive terms is the same. An arithmetic progression is a sequence in which each term is derived from the preceding one by adding a given number, d, . Earnings for the fourth quarter of 2002 showed an increase of $725,000 to $2,834,000, which compares favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. with the $2,109,000 achieved during 2001. The increase in year over year results was primarily due to an increase of $1,624,000 in net interest income that was primarily achieved by an increase of $151,069,000 or 19% in average interest earning assets. The net interest margin for the fourth quarter of 2002 was 4.64%, a decrease of 7 basis points from the 4.71% achieved during the fourth quarter of 2001. Other expenses in 2002 increased $1,235,000 over 2001 levels due primarily to increases in salaries and benefits of $1,111,000 that were the result of production bonus accruals, management and support staff increases necessary to accommodate branch expansion and normal salary progression. Income tax expense increased $243,000 to $708,000 during the fourth quarter of 2002 when compared to the $465,000 recorded during the same period in 2001. Credit Quality The Company's allowance for loan losses was $12,134,000 or 1.91% of total loans at December 31, 2002. Nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. totaled $2,443,000 or 0.24% of total assets and nonperforming loans stood at $2,383,000 or 0.38% of total loans. At December 31, 2002 the allowance for loan loss totaled 509% of nonperforming loans. This compares to an allowance for loan loss of $9,743,000 or 1.83% of total loans at December 31, 2001. At December 31, 2001, nonperforming assets totaled $5,328,000 or 1.00% of total assets, nonperforming loans totaled $4,856,000 or 0.91% of total loans and the allowance for loan loss totaled 201% of nonperforming loans. The decline in nonperforming assets during 2002 occurred primarily in the fourth quarter and was concentrated in a single $3,140,000 well secured credit that was returned to performing status. Book Values -- Capital The Company's capital at December 31, 2002 stood at $77,169,000 compared with $64,120,000 as of December 31, 2001. Book value and tangible book value per share totaled $14.49 and $13.87 as of December 31, 2002 as compared to $12.39 and $11.72 as of December 31, 2001. The Company's tangible leverage capital ratio stood at 7.68% at December 31, 2002, compared with 7.72% as of December 31, 2001. The Company's risk based capital ratio stood at 10.74% at December 31, 2002, compared with 10.74% as of December 31, 2001. Forecasted Information Looking forward to 2003, R. Dale Dale , Sir Henry Hallett 1875-1968. British physiologist. He shared a 1936 Nobel Prize for work on the chemical transmission of nerve impulses, particularly for the isolation and study of acetylcholine (1914). McKinney McKinney, city (1990 pop. 21,283), seat of Collin co., N Tex.; inc. 1849. It is a shipping point for cotton, cattle, and grains. Manufacturing includes electronic equipment, leather and food products, marble items, and copper wire. , CFO See Chief Financial Officer. of the Corporation, comments, "Interest rates for 2002 have been at a historical low and are anticipated to continue at these levels for most of 2003. Margins averaged 4.64% for both the 2002-year and 2002-fourth quarter. If the current rate environment continues through all of 2003, additional margin compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. is anticipated with an average forecasted margin for 2003 in the 4.35% to 4.40% range. The goal of the company is to manage interest rate risk to near neutral, but if rates rise during 2003, margins should improve from these projections." "In this environment, earnings increases in the 12% to 15% range are anticipated for 2003 or fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of in the $2.12 to $2.18 range for the full year. In the current rate environment, loans are anticipated to grow in the $100 to $110 million range and deposits to grow in the $130 to $140 million range. The Corporation ended the year with a 10.74% risk based and 7.68% leverage capital ratio. Both ratios are well within the "well capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. " regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. definitions. The ability to internally generate capital to support corporate growth is projected to continue with resulting risk based capital ratios anticipated in the 10.50% to 10.75% range and leverage capital ratios anticipated in the 7.75% to 8.25% range for 2003." Conference Call Recording Capital Corp of the West's year end 2002 earnings conference call is scheduled for January January: see month. 29, 2003 at 7:00 am PST PST Paroxysmal supraventricular tachycardia, see there . Investors have the opportunity to listen to a recording of the conference call by going the web site of the company www.ccow.com just after the call and following the instructions to play back the recorded conference call. The recording will be available on the web site for 30 days following the conference call. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. In addition to historical information, this release includes certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding events and trends which may affect the Company's future results. Such statements are subject to risks and uncertainties that could cause the Company's actual results to differ materially. These factors include general risks inherent to commercial lending; risks related to asset quality; risks related to the Company's dependence on key personnel and its ability to manage existing and future growth; risks related to competition; risks posed pose 1 v. posed, pos·ing, pos·es v.intr. 1. To assume or hold a particular position or posture, as in sitting for a portrait. 2. To affect a particular mental attitude. by present and future government regulation and legislation; and risks resulting from federal monetary policy. Reference Information Capital Corp. of the West, a bank holding company established November November: see month. 1, 1995, is the parent company of County Bank, with more than 24 years of service as "Central California's Community Bank." Currently County Bank has eighteen branch offices serving the communities of Fresno Fresno (frĕz`nō), city (1990 pop. 354,202), seat of Fresno co., S central Calif.; inc. 1885. Settled in 1872 as a station on the Central Pacific RR, Fresno profited from irrigated farming as early as the 1880s. , Madera, Mariposa, Merced, Stanislaus, San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , Stockton Stockton, city (1990 pop. 210,943), seat of San Joaquin co., central Calif., on the San Joaquin River; inc. 1850. One of the fastest-growing U.S. cities during the late 20th cent., Stockton is an inland seaport located at the head of the San Joaquin delta. , Tulare Tulare (təlâr`, t  lâr`ē), city (1990 pop. 33,249), Tulare co., S central Calif., in the San Joaquin valley; inc. 1888. and Tuolumne Tu·ol·um·ne A river, about 249 km (155 mi) long, of central California flowing generally westward to the San Joaquin River. counties. As of the latest FDIC FDIC See: Federal Deposit Insurance Corporation FDIC See Federal Deposit Insurance Corporation (FDIC). data, County Bank has 5.1% market share of the six counties in which it has retail branches. This ranks County Bank sixth out of forty-one financial intuitions in these counties. For further information about the Company's financial performance, contact Tom Hawker, President & Chief Executive Officer at (209) 725-2276, or R. Dale McKinney Chief Financial Officer, at (209) 725-7435.
Capital Corp of the West
Consolidated Statements of Income
For the For the
Three Months Twelve Months
Ended Ended
December 31, December 31,
2002 2001 2002 2001
-------- -------- -------- --------
Interest income $15,052 $14,520 $58,811 $58,167
Interest expense 4,299 5,391 18,223 22,699
-------- -------- -------- --------
Net interest income 10,753 9,129 40,588 35,468
Provision for loan losses 730 1,036 4,151 4,115
Other income:
Service charges on accounts 1,344 1,048 5,076 3,981
All other income
Other expenses: 705 728 3,168 2,293
Salaries and related benefits 4,659 3,548 16,674 13,615
Premises and occupancy 710 571 2,526 2,133
Equipment 789 732 2,954 2,739
Professional fees 285 158 1,177 467
Marketing 223 217 900 949
Intangible amortization 170 198 680 792
Supplies 222 229 780 885
Other expenses 1,319 1,489 5,495 4,795
Dividends on Capital Securities 153 153 612 522
-------- -------- -------- --------
Total Other Expenses 8,530 7,295 31,798 26,897
-------- -------- -------- --------
Income before income taxes 3,542 2,574 12,883 10,730
Provision for income taxes 708 465 2,455 2,819
NET INCOME $ 2,834 $ 2,109 $10,428 $ 7,911
======== ======== ======== ========
Capital Corp of the West
Consolidated Balance Sheets
2002
(Dollars in thousands) At December 31, Averages
2002 2001 YTD
----------- --------- ---------
Assets
Cash and noninterest-bearing deposits
in other banks $ 46,628 $ 38,003 $ 30,372
Federal funds sold 26,555 11,285 21,244
Time deposits at other financial
institutions 500 500 500
Investment securities available for
sale, at fair value 231,392 229,852 227,525
Investment securities held to maturity
at cost, fair value of $57,904 and
$42,185 at December 31, 2002 and 2001 55,628 41,559 59,460
Loans, net of allowance for loan losses
of $12,134 and $9,743 at December 31,
2002 and 2001 621,639 522,677 564,925
Interest receivable 5,532 5,757 5,216
Premises and equipment, net 13,942 13,143 13,551
Intangible assets 3,325 3,493 3,401
Other assets 29,069 28,058 30,048
----------- --------- ---------
Total assets $1,034,210 $894,327 $956,242
=========== ========= =========
Liabilities and Shareholders' Equity
Deposits
Noninterest-bearing demand $ 164,852 $132,496 $131,367
Negotiable orders of withdrawal 120,449 102,055 103,209
Savings 223,404 203,721 218,788
Time, under $100 164,959 163,195 161,810
Time, $100 and over 160,715 131,174 149,773
----------- --------- ---------
Total deposits 834,379 732,641 764,947
Other Borrowings 110,204 80,685 109,742
Accrued interest, taxes and other
liabilities 6,427 10,881 5,767
----------- --------- ---------
Total liabilities 951,010 824,207 880,456
----------- --------- ---------
Trust Preferred Securities and other
minority equity interests 6,031 6,000 6,031
----------- --------- ---------
Preferred Stock, no par value;
10,000,000 shares authorized; None
outstanding -- -- --
Common stock, no par value; 20,000,000
shares authorized; 5,325,082 and
5,173,838 issued & outstanding at
December 31, 2002 and 2001 46,436 40,089 43,292
Retained earnings 27,824 22,372 24,497
Accumulated other comprehensive income 2,909 1,659 1,966
----------- --------- ---------
Total shareholders' equity 77,169 64,120 69,755
----------- --------- ---------
Total liabilities and shareholders'
equity $1,034,210 $894,327 $956,242
=========== ========= =========
Loan Portfolio Composition
December 31, December 31,
(Dollars in thousands) 2002 2001
----------------- -----------------
Percent Percent
Loan Categories: Dollar of Dollar of
Amount loans Amount loans
--------- ------- --------- -------
Commercial $145,364 23% $118,626 22%
Agricultural 96,793 15 96,489 18
Real estate construction 78,064 12 57,989 11
Real estate mortgage 244,468 39 187,586 35
Consumer 69,084 11 71,730 14
--------- ------- --------- -------
Total 633,773 100% 532,420 100%
--------- ======= --------- =======
Less allowance for loan losses (12,134) (9,743)
--------- ---------
Net loans $621,639 $522,677
--------- ---------
Allowance for Loan Loss Activity
Twelve Months Ended
December 31,
2002 2001 2000
---------- --------- ----------
(In thousands)
Allowance for Loan Losses:
Balance at beginning of period $ 9,743 $ 8,207 $ 6,542
---------- --------- ---------
Provision for loan losses 4,151 4,115 3,286
---------- --------- ---------
Charge-offs (2,589) (3,152) (2,394)
Recoveries 829 573 773
---------- --------- ---------
Net charge-offs (1,760) (2,579) (1,621)
---------- --------- ---------
Balance at end of period $ 12,134 $ 9,743 $ 8,207
========== ========= =========
Loans outstanding at period-end $633,773 $532,420 $412,664
========== ========= =========
Average loans outstanding $576,156 $453,503 $369,367
========== ========= =========
Annualized net charge-offs to average
loans 0.31% 0.57% 0.44%
Allowance for loan losses
To total loans 1.91% 1.83% 1.99%
To nonperforming assets 496.56% 182.85% 317.12%
Selected Financial Data
Three Three Twelve Twelve
Capital Corp of the West Months Months Months Months
Selected Financial Data Ended Ended Ended Ended
12/31/02 12/31/01 12/31/02 12/31/01
--------------------------------------
Basic Earnings Per Share $ .53 $ .41 $ 1.98 $ 1.55
Diluted earning per share $ .52 $ .40 $ 1.92 $ 1.51
Annualized Return on:
Average Assets 1.13% 1.00% 1.09% 1.03%
Average Equity 15.18% 13.28% 14.94% 13.40%
Net Interest Margin 4.64% 4.71% 4.64% 5.09%
Efficiency Ratio 64% 64% 63% 61%
---------------------------------------------------------------------
Annualized Net Charge-offs to
Average Loans 0.35% 0.26% 0.31% 0.57%
Capital / Shareholder information
Dec. 31, Dec. 31,
2002 2001
-------- ---------
Book Value Per Share $ 14.49 $ 12.39
Tangible Book Value Per Share $ 13.87 $ 11.72
Leverage Capital Ratio 7.68% 7.72%
Risk Based Capital Ratio 10.74% 10.74%
Nonperforming Assets
December 31 December 31
2002 2001
------------ --------------
(In thousands)
Nonaccrual loans $ 2,381 $ 4,247
Accruing loans past due 90 days or more 2 609
------------ --------------
Total nonperforming loans 2,383 4,856
Other real estate owned 60 472
------------ --------------
Total nonperforming assets $ 2,443 $ 5,328
============ ==============
Nonperforming loans to total loans 0.38% 0.91%
Nonperforming assets to total assets 0.24% 0.60%
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