Cascade Financial Second Quarter Profits Increase to $3.3 Million; Continued Solid Loan Growth Marked by Excellent Credit Quality.EVERETT Everett. 1 City (1990 pop. 35,701), Middlesex co., E Mass., an industrial suburb of Boston, on the Mystic River; settled c.1643, set off from Malden 1870, inc. as a city 1892. , Wash. -- Cascade A connected series of devices or images. It often implies that the second and subsequent device takes over after the previous one is used up. For example, cascading tapes in a dual-tape backup system means the second tape is written after the first one is full. Financial Corporation (Nasdaq:CASB CASB Cost Accounting Standards Board CASB Colorado Association of School Boards CASB Canadian Aviation Safety Board CASB Catalogs and Surveys Branch CASB Chinese Association at Stony Brook CASB Council for the Advancement of Small Business ), parent company of Cascade Bank, today reported record profits for the first half and second quarter of 2006. In the quarter ended June June: see month. 30, 2006, net income was $3.3 million, or $0.27 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to $3.2 million, or $0.26 per diluted share in the second quarter of last year. For the first six months of the year, net income was $6.5 million, or $0.53 per diluted share, compared to $6.3 million, or $0.51 per diluted share in the first half of 2005. All per share data has been adjusted to reflect the 5-for-4 stock split issued in May of 2006. Cascade's core banking business generated a 17% year-over-year increase in quarterly net income, reflecting continued strong loan growth as well as record checking and service fee generation. For comparative purposes, in the second quarter of 2006, profit growth was reduced by $76,000 in stock option expense and $80,000 in core processor conversion costs. In the second quarter of 2005, Cascade booked a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. gain of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $400,000 ($268,000 after tax) on the sale of multifamily loans Multifamily loans Loans usually represented by conventional mortgages on multi-family rental apartments. . Second Quarter Financial Highlights: (Compared to the same quarter one year ago) --Checking and service fees rose 25% to $1.2 million. --Core commercial loan portfolio increased by 21% to $786 million. --Net income and earnings per diluted share reached record levels. --Total loans increased 11% to $958 million. --Total assets increased 12% to $1.3 billion. --Credit quality remained very strong, with 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. dropping to 0.03% of total assets at quarter-end. "We continue to benefit from a growing and diversifying economy in our market area," stated Carol K. Nelson, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "The ongoing success of the aerospace, biotech bi·o·tech n. Informal Biotechnology. biotech Noun short for biotechnology Noun 1. , and biomed industries have strengthened the local economy. Additionally, strong population growth has raised demand for new construction and resulted in meaningful real estate price appreciation." Operating Results In the second quarter of 2006, net interest income before the provision for loan losses was $9.7 million, compared to $9.2 million a year earlier, with a larger asset base and improved yields in the loan portfolio partially offset by rising deposit costs. Other income was $1.6 million in the quarter, compared to $1.7 million a year ago. Other operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. increased 5% to $6.0 million, from $5.8 million in the second quarter of 2005. "Driven by continued growth in our High Performance Checking accounts, checking and service fees grew 25% to $1.2 million, from $974,000 in the second quarter of 2005," Nelson said. "Despite that improvement noninterest income declined slightly, reflecting a more normalized level of residential loan sales. The gain on sale of loans was $42,000 in the second quarter of this year, compared to $434,000 in the second quarter of 2005 when we had a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. multifamily loan sale.
We view the current level service fee income as fairly sustainable,
while the sale of multifamily loans was an unusual event that was
opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik)1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. in nature." "The increases in our operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. have been fairly moderate, although we did have an option expense and costs related to our core processor conversion that we did not have last year," stated Lars Johnson, Chief Financial Officer. "We expect that before year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. , we will have another $250,000-$300,000 in conversion costs, the bulk of which should come in the third quarter. The conversion will allow us to better serve our customers while increasing our efficiencies." Revenues increased 4% over a year ago for both the second quarter and first half of 2006. Revenues (net interest income before the provision for loan losses plus other income) totaled $11.3 million in the second quarter of 2006, and $22.1 million in the six-month period. In the six-month period ended June 30, 2006, net interest income was $19.2 million, up 7% from $17.9 million a year earlier. Total other income was $2.9 million, compared to $3.3 million in the first half of 2005, with a 14% increase in service and checking fees partially offsetting the decrease in gain on sale of loans. Additionally, the first half of 2005 results benefited from a $275,000 gain on the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. . Other operating expense increased 5% to $11.9 million, including $139,000 in stock option expenses, from $11.3 million the first half of 2005. Balance Sheet Management "Loan growth has remained solid, particularly in our most profitable segments," Nelson said. "While we continue to see aggressive pricing in our market, we are still able to generate acceptable yields in commercial lending, where customers tend to value the personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. service that only a community bank can provide."
LOANS ($ in 000s) June 30, 2006 March 31, 2006 June 30, 2005
Business $ 433,679 45% $ 423,954 46% $ 341,352 40%
R/E Construction 213,614 22% 177,158 19% 137,945 16%
Commercial R/E 139,178 15% 147,549 16% 173,362 20%
Multifamily 40,007 4% 41,949 5% 70,865 8%
Retail 131,040 14% 133,330 14% 137,171 16%
--------- ---- --------- ---- --------- ----
Total Loans $ 957,518 100% $ 923,940 100% $ 860,695 100%
Core commercial loans increased by 21% to $786 million at the end of the second quarter, from $653 million a year ago. These construction, business, and commercial real estate loans now account for 82% of total loans, compared to 76% of loans at the end of June 2005. Over the past year, construction loans grew by 55% to $214 million. Business loans increased by 27% to $434 million while commercial real estate loans decreased by 20% to $139 million, due to a reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of $35 million from owner-occupied adj. 1. lived in by the owner; - of dwellings. Adj. 1. owner-occupied - lived in by the owner; "one owner-occupied and three rental apartments" inhabited - having inhabitants; lived in; "the inhabited regions of the earth" commercial real estate to business loans at the final integration of the Issaquah Division in the third quarter last year, as well as an $11 million payoff in late June 2006. "The composition of our loan portfolio has evolved to reflect our focus on business and real estate lending," Nelson said. "Cascade's strength and value proposition continues to be delivering competitive products to these customers with highly personalized service." Multifamily loans dropped 44% to $40 million, reflecting a shift in strategy and loan sales totaling $35 million in the last year. Retail loans, which include residential, home equity and other consumer loans, decreased by 4% to $131 million. Total loans have increased 11% over the last year to $958 million, compared to $861 million at June 30, 2005, including 16% 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. growth in the second quarter. "In order to help fund our loan growth with lower-cost funds, we instituted the High Performance Checking (HPC (Handheld PC) A palmtop computer that weighs less than one pound and runs specialized versions of popular applications. Microsoft coined the term for its Windows CE operating system, which is an abbreviated version of Windows. See Pocket PC. ) program last year," Nelson said. "As a result of HPC, we have opened 1,589 net new personal checking accounts since the first of the year, nearly double what we opened in the first half of 2005. Core deposit balances associated with the HPC program have grown as well, to $29 million at the end of June 2006, compared to $17 million at year-end 2005."
DEPOSITS ($ in 000s) June 30, 2006 March 31, 2006 June 30, 2005
Personal checking
accounts $ 51,330 6% $ 52,145 7% $ 45,610 6%
Business checking
accounts 72,350 9% 69,214 9% 88,464 11%
Savings and MMDA 268,321 32% 199,872 25% 191,022 24%
CDs 453,710 53% 458,762 59% 465,521 59%
-------- ---- -------- ---- -------- ----
Total Deposits $845,711 100% $779,993 100% $790,617 100%
Total deposits increased 7% to $846 million, compared to $791 million at the end of June 2005. Personal checking balances were up 13% from a year ago, although down slightly on a sequential-quarter basis, to $51 million at the end of June 2006. Business checking balances decreased by 18% over the past year to $72.4 million, but grew by 20% on an annualized basis during the second quarter. Savings and money market accounts have grown 40% since the end of June last year, including a 34% increase in the second quarter of 2006 alone, and were $268 million at quarter-end. Time deposits, at $454 million at the end of June 2006, were down 3% from a year earlier and 1% from the end of the previous quarter. "We have developed a municipal banking niche niche: see ecology. niche Smallest unit of a habitat that is occupied by an organism. A habitat niche is the physical space occupied by the organism; an ecological niche is the role the organism plays in the community of organisms found in the that has contributed to our strong deposit growth," Johnson said. "We have also been offering fairly attractive rates on our money market accounts. This has allowed us to be less aggressive on CD rates than some institutions, as the pricing in our market remains very competitive." Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. increased by 7% to $109 million, compared to $101 million at the end of the second quarter last year. Book value per share grew to $8.99 at June 30, 2006, from $8.45 a year ago. 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 was $6.83 at the end of the quarter, up 9% from $6.26 a year prior. Cascade remains 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. with a Tier 1 Capital Tier 1 Capital A term used to describe the capital adequacy of a bank. Tier I capital is core capital, this includes equity capital and disclosed reserves. Notes: Equity capital includes instruments that can't be redeemed at the option of the holder. ratio of 8.78%. Asset Quality "Our credit quality remains very strong," Nelson said. "Nonperforming loans are down from the already low levels posted three months ago and this time last year, and net charge-offs remain minimal." At quarter-end, nonperforming loans (NPLs) were $392,000, down from $660,000 at the end of the preceding quarter and $1.3 million at June 30, 2005. NPLs represented 0.04% of total loans, versus 0.07% at the end of March 2006, and 0.16% of loans at the end of the second quarter last year. Cascade had no Real Estate Owned Real Estate Owned Property owned by a lender - usually a bank - after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most and Other Repossessed Assets at the end of June or March of 2006, but had $381,000 at midyear mid·year n. 1. The middle of the calendar or academic year. 2. a. An examination given in the middle of a school year. b. midyears A series of such examinations. 2005. Net charge-offs were $71,000 in the quarter, compared to a net recovery of $5,000 in the first quarter of 2006 and charge-offs of $40,000 in the second quarter of last year. The provision for loan losses was $300,000 in the second quarter and totaled $550,000 in the first half of 2006, up by $50,000 from the second quarter and $55,000 from the six-month period last year, reflecting the continued growth in the loan portfolio. At June 30, the allowance for loan losses had grown to $10.7 million, representing 1.12% of total loans and more than 27 times the level of NPLs. Net Interest Margin & Interest Rate Risk "Similar to other community banks in our market, our net interest margin has remained under pressure, with fierce competition for both deposits and loans eroding spreads," Nelson said. "The continued rise in short term interest rates has also had a negative impact, as the increase in deposit rates has exceeded the increase in loan yields. While our yield on assets has improved since the second quarter last year, our liability costs increased to a greater extent." The net interest margin was 3.24% in the second quarter of 2006, versus 3.31% in the preceding quarter and 3.38% a year ago.
2Q06 1Q06 4Q05 3Q05 2Q05 1Q05 4Q04 3Q04 2Q04
----- ----- ----- ----- ----- ----- ----- ----- -----
Asset yield 6.76% 6.53% 6.41% 6.33% 6.17% 5.97% 5.90% 5.89% 5.78%
Liability cost 3.94% 3.60% 3.50% 3.28% 3.11% 2.94% 2.80% 2.70% 2.59%
Spread 2.82% 2.93% 2.91% 3.05% 3.06% 3.03% 3.10% 3.19% 3.19%
Margin 3.24% 3.31% 3.29% 3.41% 3.38% 3.34% 3.41% 3.48% 3.46%
Performance Measures Cascade's return on tangible equity (ROTE rote 1 n. 1. A memorizing process using routine or repetition, often without full attention or comprehension: learn by rote. 2. Mechanical routine. ) was 16.41% for the second quarter, compared to 15.99% in the first quarter of 2005 and 18.16% a year ago. Management uses ROTE, a non-GAAP performance measure, to exclude the goodwill created by the 2004 acquisition of Issaquah Bancshares, and believes that it provides a more consistent comparison with pre-merger performance. Return on GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). 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. ) was 12.42% in the second quarter, compared to 12.03% in the preceding quarter and 13.27% in the same quarter last year. The efficiency ratio was 53.6% in the quarter ended June 30, 2006, versus 54.2% in the first quarter of 2006 and 53.4% a year earlier. Conference Call Carol Nelson and Lars Johnson will host a conference call on Wednesday Wednesday: see week. , July July: see month. 26, at 11:00 am PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT (2:00 pm EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ). Interested investors may listen to the call live or via replay at www.cascadebank.com. Investment professionals are invited to dial 303-262-2137 to participate in the live call. A telephone replay of the call will be available for a month at 303-590-3000, using passcode 11064106#. About Cascade Financial Established in 1916, Cascade Bank, the only operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. of Cascade Financial Corporation, is a state chartered commercial bank headquartered in Snohomish County, Washington Snohomish County is a county located in the U.S. state of Washington. It is named after the Snohomish tribe. Since 2000, the county's population has grown from 606,024 to 686,300 residents (2007 figures), making it one of the fastest-growing in the state, ranking third in overall . Cascade Bank operates 19 full service offices, located in Everett, Lynnwood Lynnwood, city (1990 pop. 28,695), Snohomish co., W central Wash., a residential and industrial suburb of Seattle; inc. 1959. Aerospace parts, communications and electrical equipment, electronic components, precious metal jewelry, and scales and balances are among , Marysville Marysville is the name of several places. Locations Australia
John Stevens, 1749–1838, b. New York City, was graduated from King's College (now Columbia Univ.) in 1768. , Bellevue Bellevue (bĕl`vy  ).1 City (1990 pop. 30,982), Sarpy co., E Nebr., a suburb of Omaha, on the Missouri River; inc. 1855. , Snohomish Snohomish can refer to:
In August 2005, US Banker BANKER, com. law. A banker is one engaged in the business of receiving other persons money in deposit, to be returned on demand discounting other persons' notes, and issuing his own for circulation. One who performs the business usually transacted by a bank. magazine ranked Cascade #67 out of the Top Publicly Traded Mid-Tier Banks, those with less than $10 billion in assets, based on three-year average return on equity. The same publication has named President and CEO Carol Nelson one of the 25 Most Powerful Women in Banking. In January January: see month. 2006, Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. CEO magazine named Nelson a CEO of Influence. This press release contains supplemental financial information determined by methods other than in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Accounting Principles Generally Accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, ("GAAP"). These measures include return on tangible equity, tangible book value per share and tangible capital to asset ratio. Cascade's management uses these non-GAAP measures in its analysis of the company's performance. These measures exclude the average and ending balances of acquisition-related goodwill and intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. in determining average tangible shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. . Banking and financial institution regulators also exclude goodwill and intangibles from shareholders' equity when assessing the capital adequacy of a financial institution. Management believes the presentation of the financial measure excluding the impact of these items provides useful supplemental information that is essential for a proper understanding of the financial results of Cascade Financial Corporation, as they provide a method to assess management's success in utilizing the company's tangible capital. This disclosure should not be viewed as a substitute for results determined to be in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. 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. Statement This document contains 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. as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. All such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Those factors include, but are not limited to: continued strong demand for Cascade's products and services, the ability to attract low-cost deposits and commercial loans, expectations for the net interest margin, maintaining asset quality, management's ability to minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. interest rate exposure and the impact of interest rate movements, the ability to attract and retain qualified people, and other factors. For a discussion of factors that could cause actual results to differ, please see the Company's publicly available Securities and Exchange Commission filings, including its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December December: see month. 31, 2005.
CONSOLIDATED FINANCIAL HIGHLIGHTS
---------------------------------
INCOME STATEMENT
(Dollars in Quarter Quarter Quarter
thousands Ended Ended Three Ended One
except per June 30, March 31, Month June 30, Year
share amounts) 2006 2006 Change 2005 Change
------------ -------------------- ------------ -------
(Unaudited)
Interest income $ 20,249 $ 18,787 8% $ 16,666 21%
Interest
expense 10,561 9,267 14% 7,515 41%
----------- ----------- -----------
Net interest
income 9,688 9,520 2% 9,151 6%
Provision for
loan losses 300 250 20% 250 20%
----------- ----------- -----------
Net interest
income after
provision for
loan losses 9,388 9,270 1% 8,901 5%
Other income
Gain on sale
of loans 42 39 8% 434 -90%
Gain on sale of
securities - - NA - NA
Checking fees 862 756 14% 767 12%
Service fees 360 256 41% 207 74%
Gain/(loss)on
sale of real
estate - (27) -100% - NA
BOLI 191 187 2% 190 1%
Other 118 114 4% 69 71%
----------- ----------- -----------
Total other
income 1,573 1,325 19% 1,667 -6%
----------- ----------- -----------
Total income 10,961 10,595 3% 10,568 4%
----------- ----------- -----------
Compensation
expense 3,092 3,159 -2% 3,012 3%
Other operating
expenses 2,868 2,654 8% 2,691 7%
FHLB prepayment
fees - - NA 73 -100%
Option expense 76 62 23% - NA
----------- ----------- -----------
Total other
expense 6,036 5,875 3% 5,776 5%
----------- ----------- -----------
Net income
before tax 4,925 4,720 4% 4,792 3%
Income tax
expense 1,598 1,548 3% 1,577 1%
----------- ----------- -----------
Net income $ 3,327 $ 3,172 5% $ 3,215 3%
=========== =========== ===========
Net income
excluding
option expense $ 3,403 $ 3,234 5% $ 3,215 6%
=========== =========== ===========
EARNINGS PER
SHARE INFORMATION
Earnings per
share, basic $ 0.28 $ 0.26 5% $ 0.27 3%
Earnings per
share, diluted $ 0.27 $ 0.26 5% $ 0.26 3%
Earnings per
share, diluted
excl. options $ 0.28 $ 0.26 5% $ 0.26 5%
Weighted average
number of shares
outstanding
Basic 12,058,708 12,021,223 11,966,470
Diluted 12,370,324 12,343,698 12,288,856
INCOME STATEMENT Six Months Ended
(Dollars in thousands except per June 30, June 30,
share amounts) 2006 2005 Change
---------------------------------
(Unaudited)
Interest income $ 39,036 $ 32,266 21%
Interest expense 19,827 14,341 38%
----------- -----------
Net interest income 19,209 17,925 7%
Provision for loan losses 550 495 11%
----------- -----------
Net interest income after
provision for loan losses 18,659 17,430 7%
Other income
Gain on sale of loans 81 464 -83%
Gain on sale of securities - 13 -100%
Checking fees 1,618 1,543 5%
Service fees 616 420 47%
Gain/(loss) on sale of real
estate (27) 33 NA
BOLI 377 378 0%
Other 232 416 -44%
----------- -----------
Total other income 2,897 3,267 -11%
----------- -----------
Total income 21,556 20,697 4%
----------- -----------
Compensation expense 6,250 6,180 1%
Other operating expenses 5,522 5,076 9%
FHLB prepayment fees - 73 -100%
Option expense 139 - NA
----------- -----------
Total other expense 11,911 11,329 5%
----------- -----------
Net income before tax 9,645 9,368 3%
Income tax expense 3,145 3,082 2%
----------- -----------
Net income $ 6,500 $ 6,286 3%
=========== ===========
Net income excluding option
expense $ 6,639 $ 6,286 6%
=========== ===========
EARNINGS PER SHARE INFORMATION
Earnings per share, basic $ 0.54 $ 0.53 3%
Earnings per share, diluted $ 0.53 $ 0.51 3%
Earnings per share, diluted excl.
options $ 0.54 $ 0.51 5%
Weighted average number of shares
outstanding
Basic 12,038,318 11,968,400
Diluted 12,355,573 12,317,831
Quarter Ended Six Months Ended
PERFORMANCE MEASURES June 30, March 31, June 30, June 30, June 30,
AND RATIOS 2006 2006 2005 2006 2005
-------- --------- -------- -------- --------
Return on equity 12.42% 12.03% 13.27% 12.23% 13.04%
Return on tangible
equity 16.41% 15.99% 18.16% 16.21% 17.87%
Return on average assets 1.05% 1.04% 1.12% 1.05% 1.11%
Efficiency ratio 53.60% 54.17% 53.39% 53.89% 53.46%
Net interest margin 3.24% 3.31% 3.38% 3.27% 3.36%
Net interest margin -
fully tax equivalent 3.26% 3.33% 3.42% 3.30% 3.40%
BALANCE SHEET
(Dollars in thousands Three One
except per share June 30, March 31, Month June 30, Year
amounts) 2006 2006 Change 2005 Change
----------- ------------------------------------
(Unaudited)
Cash and due from
banks $ 25,699 $ 15,762 63% $ 19,041 35%
Interest bearing
deposits 11,057 1,976 460% 1,523 626%
Securities held-to-
maturity 97,858 98,221 0% 93,734 4%
Federal Home Loan
Bank stock 11,920 11,920 0% 11,920 0%
Securities available-
for-sale 136,380 142,030 -4% 119,795 14%
---------- ---------- ----------
Total securities 246,158 252,171 -2% 225,449 9%
---------- ---------- ----------
Loans
Business 433,679 423,954 2% 341,352 27%
R/E construction 213,614 177,158 21% 137,945 55%
Commercial real
estate 139,178 147,549 -6% 173,362 -20%
Multifamily 40,007 41,949 -5% 70,865 -44%
Home equity/consumer 29,977 30,531 -2% 32,423 -8%
Residential 101,063 102,799 -2% 104,748 -4%
---------- ---------- ----------
Total loans 957,518 923,940 4% 860,695 11%
Deferred loan fees (3,442) (3,379) 2% (3,107) 11%
Allowance for loan
losses (10,738) (10,509) 2% (9,891) 9%
---------- ---------- ----------
Loans, net 943,338 910,052 4% 847,697 11%
---------- ---------- ----------
Premises and
equipment 12,023 12,169 -1% 12,907 -7%
Real
estate/repossessed
assets owned - - NA 381 -100%
BOLI 17,637 17,473 1% 16,979 4%
Other assets 12,413 10,823 15% 8,638 44%
Goodwill and
intangible assets 26,044 26,083 0% 26,204 -1%
---------- ---------- ----------
Total assets $1,294,369 $1,246,509 4% $1,158,819 12%
========== ========== ==========
Deposits
Personal checking
accounts $ 51,330 $ 52,145 -2% $ 45,610 13%
Business checking
accounts 72,350 69,214 5% 88,464 -18%
Savings and money
market accounts 268,321 199,872 34% 191,022 40%
Certificates of
deposit 453,710 458,762 -1% 465,521 -3%
---------- ---------- ----------
Total deposits 845,711 779,993 8% 790,617 7%
FHLB advances 233,000 251,000 -7% 223,000 4%
Securities sold under
agreement to
repurchase 70,995 72,047 -1% 21,046 237%
Other liabilities 11,171 11,342 -2% 7,249 54%
Jr. Sub. Deb. (Trust
Preferred
Securities) 24,970 25,206 -1% 15,693 59%
---------- ---------- ----------
Total liabilities 1,185,847 1,139,588 4% 1,057,605 12%
---------- ---------- ----------
Stockholders' equity
Common stock and
paid in capital 38,894 38,695 1% 37,994 2%
Retained earnings 73,529 71,154 3% 63,942 15%
Accumulated
comprehensive
gain/(loss) (3,901) (2,928) 33% (722) 440%
---------- ---------- ----------
Total stockholders'
equity 108,522 106,921 1% 101,214 7%
---------- ---------- ----------
Total liabilities and
stockholders' equity $1,294,369 $1,246,509 4% $1,158,819 12%
========== ========== ==========
ASSET QUALITY
(Dollars in Thousands) June 30, March 31, June 30,
2006 2006 2005
-----------------------------
Nonperforming loans (NPLs) $ 392 $ 660 $ 1,342
Nonperforming loans/total loans 0.04% 0.07% 0.16%
Net loan charge-offs (recoveries) in the
quarter $ 71 $ (5) $ 40
Net charge-offs/total loans 0.01% 0.00% 0.00%
Allowance for loan losses/total loans 1.12% 1.14% 1.15%
Allowance for loan losses/nonperforming
loans 2739% 1592% 737%
Real estate/repossessed assets owned $ - $ - $ 381
Nonperforming assets $ 392 $ 660 $ 1,723
Nonperforming assets/total assets 0.03% 0.05% 0.14%
AVERAGE BALANCES
(Unaudited) Quarter Quarter Quarter
(Dollars in Ended Ended Three Ended One
Thousands) June 30, March 31, Month June 30, Year
2006 2006 Change 2005 Change
------------ -------------------- ------------ -------
Average assets $ 1,266,941 $ 1,218,637 4% $ 1,148,387 10%
Average earning
assets 1,197,887 1,151,619 4% 1,081,868 11%
Average total
loans 941,275 898,228 5% 852,260 10%
Average
deposits 811,506 782,460 4% 775,171 5%
Average equity 107,161 105,449 2% 97,047 10%
Average
tangible
equity 81,098 79,347 2% 70,829 14%
EQUITY ANALYSIS June 30, March 31, June 30,
2006 2006 2005
------------ ------------ ------------
Total equity $ 108,522 $ 106,921 1% $ 101,214 7%
Less: goodwill
and
intangibles 26,044 26,083 0% 26,204 -1%
----------- ----------- -----------
Tangible
equity $ 82,478 $ 80,838 2% $ 75,010 10%
Common stock
outstanding 12,068,200 12,051,494 0% 11,975,043 1%
Book value per
common share $ 8.99 $ 8.87 1% $ 8.45 6%
Tangible book
value per
share $ 6.83 $ 6.71 2% $ 6.26 9%
Capital/asset
ratio (Tier 1,
inc. jr. sub
deb) 8.78% 8.93% 8.07%
Tangible
cap/asset
ratio (ex. sub
deb) 6.50% 6.62% 6.62%
INTEREST SPREAD ANALYSIS June 30, March 31, June 30,
2006 2006 2005
-----------------------------
Yield on loans 7.34% 7.09% 6.65%
Yield on investments 4.62% 4.52% 4.38%
Yield on earning assets 6.76% 6.53% 6.17%
Cost of deposits 3.38% 3.03% 2.23%
Cost of FHLB advances 4.60% 4.44% 4.74%
Cost of other borrowings 2.28% 1.91% 3.01%
Cost of jr. sub. debentures 8.09% 8.48% 7.64%
Cost of interest bearing liabilities 3.94% 3.60% 3.11%
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