Capital Corp of the West Announces a 42% 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)--July 16, 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 42% increase in net income for second quarter ended June June: see month. 30, 2003 relative to the second quarter 2002. "In this less than favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. interest rate environment, we substantially increased our earnings relative to a year ago due to significant improvements in our credit quality statistics and strong growth in market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" ", stated Chief Executive Officer, Tom Hawker. "In the last year we passed through the $1 billion mark by growing our assets more than 15% and reduced our 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. to less than one fourth of year ago totals. We have also continued to expand our franchise with the opening of our third branch in 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. during the second quarter. These results have not gone without notice in that we are now included in the recently released Russell 3000 Index The Russell 3000 Index is a stock market index of US stocks. The ticker is "RUA" or similar. See Russell Indexes page for main discussion. See also the iShares Russell 3000. based on market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. and for the second year in a row are included on the FSB (FrontSide Bus) See system bus. FSB - front side bus : Fortune Small Business magazine 100 list, which highlights Americas A·mer·i·cas , the See America. fastest growing small public companies," continued Hawker. "With a record 16.6% second quarter Return On Equity (ROE A fictitious surname used for an unknown or anonymous person or for a hypothetical person in an illustration. A lawsuit is generally named for the persons who are parties to it. ), we have achieved four consecutive quarters of a 15% plus ROE and remain on goal of providing solid shareholder return while expanding our franchise and customer service levels," stated Chief Financial Officer 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. . "The significant improvements in credit quality statistics have resulted in a $1.1 million reduction in our loan loss provision for the first half of 2003 relative to the first half of 2002. Our loan loss reserve to total loans stands at a well reserved 1.82% and is reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of this improved credit quality as well as 19% growth in total loans relative to a year ago." Earnings Discussion Net earnings were $3,395,000 or $0.59 per share for the three months ended June 30, 2003. This compares to earnings of $2,384,000 or $0.42 per share for the same period in 2002. 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 1.24% and 16.61% for the second quarter of 2003 compared with 1.01% and 14.10% for 2002. The 2003 second quarter earnings of $3,395,000 reflect a year over year increase in earnings of $1,011,000 due primarily to a $1,553,000 improvement in net interest income. The increase in net interest income was driven by a $141,025,000 or 16% 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 second quarter of 2003 was 4.53%, a decrease of 13 basis points from the 4.66% achieved during the same period during 2002. Other expenses increased by $1,478,000 due primarily to increases in salaries and benefits of $1,095,000 that were the result of 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, . Our effective tax rate remains flat at 23% while income tax expense increased $299,000 to $1,014,000 during the second quarter of 2003 when compared to the $715,000 recorded during the same period in 2002 due to an increase in net income. Credit Quality The Company's allowance for loan losses was $12,626,000 or 1.82% of total loans at June 30, 2003. Nonperforming assets totaled $1,466,000 or 0.13% of total assets and nonperforming loans stood at $1,406,000 or 0.20% of total loans. At June 30, 2003 the allowance for loan loss totaled 899% of nonperforming loans. This compares to an allowance for loan loss of $11,261,000 or 1.93% of total loans at June 30, 2002. At June 30, 2002, nonperforming assets totaled $6,785,000 or 0.69% of total assets, nonperforming loans totaled $6,725,000 or 1.15% of total loans and the allowance for loan loss totaled 167% of nonperforming loans. The decline in nonperforming assets between June 30, 2002 and June 30, 2003 was due to aggressive collection of nonperforming agricultural loans and the return of a large, well secured, agricultural credit to performing status. Book Values -- Capital The Company's capital at June 30, 2003 stood at $83,136,000 compared with $69,792,000 as of June 30, 2002. Book value 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 value per share totaled $14.83 and $14.30 as of June 30, 2003 as compared to $12.55 and $11.89 as of June 30, 2002. The Company's tangible leverage capital ratio stood at 7.53% at June 30, 2003, compared with 7.46% as of June 30, 2002. The Company's risk based capital ratio stood at 10.52% at June 30, 2003, compared with 10.76% as of June 30, 2002. Forecasted Information Looking to the second half of 2003, R. Dale McKinney, CFO See Chief Financial Officer. of the Corporation, comments, "Interest rates were further reduced near quarter end and are anticipated to continue at these even lower historical levels for the remainder of 2003. Tax equivalent margins averaged 4.53% for second quarter 2003, a reduction from the 4.74% first quarter 2003 margin. While we are pleased with these margins in the current rate environment, 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. with average margins in the 4.45% to 4.50% range is anticipated for the second half of 2003. If rates rise during the remainder of 2003, margins should improve slightly. As a result of significant improvement in credit quality statistics during the first half of 2003, second half 2003 loan loss 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. are anticipated to be less than the second half of 2002. "In this environment, we are increasing our previous earnings estimate to a range of 25% to 30% improvement over our 2002 year, 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 $2.25 to $2.34 range for the full 2003 year. For the first half of 2003 loans grew $60 million and key to achieving this earnings forecast is a projected equivalent level of loan growth for the second half of 2003. Remaining 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. by 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 is projected to continue through internal generation of capital in support of corporate growth. Resulting risk based capital ratios are anticipated in the 10.25% to 10.75% range and leverage capital ratios are anticipated in the 7.25% to 7.75% range for 2003." Conference Call Recording Capital Corp of the West's second quarter 2003 earnings conference call is scheduled for July July: see month. 17, 2003 at 7:00 am PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT . 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 Regency Regency, in British history, the period of the last nine years (1811–20) of the reign of George III, when the king's insanity had rendered him unfit to rule and the government was vested in the prince of Wales (later George IV) as regent. Investment Advisors Investment Advisor 1. A person making investment recommendations in return for a flat fee or percentage of assets managed, known as a commission. 2. For mutual fund companies, it is the individual who has the day-to-day responsibility of investing and monitoring the cash and (RIA (Rich Internet Application) A Web-based application that approaches the speed and elegance of a local application. An RIA may refer to a browser-based application that uses AJAX or another enhanced coding technique. ) and County Bank, with more than 25 years of service as "Central California's Community Bank." Currently County Bank has nineteen branch offices serving the communities of Fresno, 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. 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 institutions 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.
-- Financial Tables Follow --
Capital Corp of the West
Consolidated Statements of Income
(In thousands) For the For the
Three Months Six Months
Ended Ended
June 30, June 30,
----------------- -----------------
2003 2002 2003 2002
-------- -------- -------- --------
Interest income $15,501 $14,590 $30,144 $28,467
Interest expense 4,015 4,657 7,869 9,208
-------- -------- -------- --------
Net interest income 11,486 9,933 22,275 19,259
Provision for loan losses 482 1,451 1,153 2,231
Other income:
Service charges on accounts 1,357 1,279 2,634 2,406
All other income 1,039 851 2,088 1,503
Other expenses:
Salaries and related benefits 4,934 3,839 9,437 7,783
Premises and occupancy 712 704 1,382 1,140
Equipment 702 571 1,461 1,420
Professional fees 484 317 758 570
Marketing 248 219 508 407
Intangible amortization 170 170 340 340
Supplies 197 171 432 357
Other expenses 1,391 1,370 2,880 2,615
Dividends on Capital Securities 153 152 306 306
-------- -------- -------- --------
Total other expenses 8,991 7,513 17,504 14,938
-------- -------- -------- --------
Income before income taxes 4,409 3,099 8,340 5,999
Provision for income taxes 1,014 715 1,918 1,391
-------- -------- -------- --------
NET INCOME $3,395 $2,384 $6,422 $4,608
======== ======== ======== ========
Capital Corp of the West
Consolidated Balance Sheets
2003 2003
(Dollars in thousands) At June 30, Averages Averages
2003 2002 QTD YTD
---------- ---------- ---------- ----------
Assets
Cash and noninterest-
bearing deposits in other
banks $41,856 $40,340 $34,589 $33,588
Federal funds sold 21,910 15,340 16,945 15,157
Time deposits at other
financial institutions 600 500 600 580
Investment securities
available for sale, at
fair value 240,899 230,831 264,780 248,705
Investment securities held
to maturity at cost, fair
value of $86,598 and
$65,410 at June 30, 2003
and 2002 84,539 64,399 58,979 56,186
Loans, net of allowance
for loan losses of
$12,626 and $11,261 at
June 30, 2003 and 2002 681,209 572,393 663,203 643,063
Interest receivable 5,789 5,771 5,353 5,065
Premises and equipment,
net 15,153 13,956 15,261 14,805
Intangible assets 2,985 3,665 3,070 3,154
Other assets 36,063 28,637 33,744 32,343
---------- ---------- ---------- ----------
Total assets $1,131,003 $975,832 $1,096,524 $1,052,646
========== ========== ========== ==========
Liabilities and
Shareholders' Equity
Deposits
Noninterest-bearing
demand $171,634 $138,851 $152,415 $150,432
Negotiable orders of
withdrawal 116,190 100,019 117,697 117,606
Savings 280,493 221,840 247,854 236,040
Time, under $100 173,558 158,793 166,097 163,580
Time, $100 and over 200,228 154,380 184,864 169,675
---------- ---------- ---------- ----------
Total deposits 942,103 773,883 868,927 837,333
Other borrowings 92,356 120,607 134,075 123,277
Accrued interest, taxes
and other liabilities 7,377 5,519 5,761 5,732
---------- ---------- ---------- ----------
Total liabilities 1,041,836 900,009 1,008,763 966,342
---------- ---------- ---------- ----------
Trust Preferred Securities
and other minority equity
interests 6,031 6,031 6,031 6,031
---------- ---------- ---------- ----------
Preferred stock, no par
value; 10,000,000 shares
authorized;
None outstanding - - - -
Common stock, no par
value; 20,000,000 shares
authorized; 5,604,309 and
5,561,244 issued &
outstanding at June 30,
2003 and 2002 53,219 45,898 52,689 49,630
Retained earnings 27,600 22,004 26,349 27,827
Accumulated other
comprehensive income 2,317 1,890 2,692 2,816
---------- ---------- ---------- ----------
Total shareholders'
equity 83,136 69,792 81,730 80,273
---------- ---------- ---------- ----------
Total liabilities and
shareholders' equity $1,131,003 $975,832 $1,096,524 $1,052,646
========== ========== ========== ==========
Loan Portfolio Composition
June 30, June 30,
(Dollars in thousands) 2003 2002
------------------ ------------------
Dollar Percent Dollar Percent
Loan Categories: Amount of loans Amount of loans
--------- -------- --------- --------
Commercial $157,221 23% $128,199 22%
Agricultural 99,832 14 92,773 16
Real estate construction 74,557 11 72,507 12
Real estate mortgage 293,884 42 220,786 38
Consumer 68,341 10 69,389 12
--------- ------- --------- -------
Total 693,835 100% 583,654 100%
--------- ======= --------- =======
Less allowance for loan losses (12,626) (11,261)
--------- ---------
Net loans $681,209 $572,393
--------- ---------
Allowance for Loan Loss Activity
Six Months Ended June 30,
2003 2002 2001
--------- --------- ---------
(In thousands)
Allowance for Loan Losses:
Balance at beginning of period $12,134 $9,743 $8,207
--------- --------- ---------
Provision for loan losses 1,153 2,231 1,539
--------- --------- ---------
Charge-offs (969) (1,132) (1,276)
Recoveries 308 419 332
--------- --------- ---------
Net charge-offs (661) (713) (944)
--------- --------- ---------
Balance at end of period $12,626 $11,261 $8,802
========= ========= =========
Loans outstanding at period-end $693,835 $583,654 $448,612
========= ========= =========
Average loans outstanding $655,682 $546,324 $417,685
========= ========= =========
Annualized net charge-offs to average
loans 0.20% 0.26% 0.45%
Allowance for loan losses
To total loans 1.82% 1.93% 1.96%
To nonperforming assets 861.48% 165.97% 289.99%
Selected Financial Data
Three Three Six Six
Capital Corp of the West Months Months Months Months
Selected Financial Data Ended Ended Ended Ended
06/30/03 06/30/02 06/30/03 06/30/02
-------- -------- -------- --------
Basic Earnings Per Share $.61 $.43 $1.15 $.84
Diluted Earning Per Share $.59 $.42 $1.11 $.81
Annualized Return on:
Average Assets 1.24% 1.01% 1.22% 1.01%
Average Equity 16.61% 14.10% 16.00% 13.87%
Net Interest Margin 4.53% 4.66% 4.60% 4.67%
Efficiency Ratio 62% 60% 62% 62%
----------------------------------------------------------------------
Annualized Net Charge-offs to
Average Loans 0.32% 0.30% 0.20% 0.26%
Capital/Shareholder information
June 30, June 30,
2003 2002
--------- ---------
Book Value Per Share $14.83 $12.55
Tangible Book Value Per Share $14.30 $11.89
Leverage Capital Ratio 7.53% 7.46%
Risk Based Capital Ratio 10.52% 10.76%
Nonperforming Assets
June 30, June 30,
2003 2002
--------- ---------
(In thousands)
Nonaccrual loans $1,370 $6,060
Accruing loans past due 90 days or more 36 665
--------- ---------
Total nonperforming loans 1,406 6,725
Other real estate owned 60 60
--------- ---------
Total nonperforming assets $1,466 $6,785
========= =========
Nonperforming loans to total loans 0.20% 1.15%
Nonperforming assets to total assets 0.13% 0.69%
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