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REDWOOD EMPIRE BANCORP REPORTS 16 PERCENT INCREASE IN SECOND QUARTER; QUARTERLY RESULTS SET COMPANY RECORD

REDWOOD EMPIRE BANCORP REPORTS 16 PERCENT INCREASE IN SECOND QUARTER;
 QUARTERLY RESULTS SET COMPANY RECORD
 SANTA ROSA, Calif., July 28 /PRNewswire/ -- Redwood Empire Bancorp (AMEX: REB) today reported a 16 percent increase in net income for the second quarter ended June 30, 1992, setting a corporate record for quarterly earnings.
 Net income for the second quarter was $788,000, a 16 percent increase when compared with $677,000 for the same quarter of 1991. Earnings per share for the second quarter were $0.36 compared to $0.37 reported for the second quarter of 1991, reflecting an increase in the average weighted shares to 2,217,687 for the 1992 period compared with 1,851,625 average weighted shares in 1991.
 For the six months of 1992, net income totalled $1,245,000, a 13 percent increase over net income for the same period of 1991 of $1,101,000. Earnings per share were $0.61 for the six-month period versus $0.59 for 1991.
 "The results for the second quarter illustrate the strength of our diversified subsidiaries," said John H. Downey, Jr., chairman of Redwood Empire Bancorp. "It confirms the success of our strategy in having the operating companies focus on different segments of the interest rate cycle."
 Redwood Empire Bancorp is the holding company for two principal subsidiaries: National Bank of the Redwoods, a commercial bank, and Allied Savings Bank, F.S.B., a savings bank.
 Continuing to take advantage of low interest rates, the company has expanded its production facilities in both Sacramento and San Jose. Residential mortgage originations during the quarter reached a record $196 million, an increase of 59 percent over originations in the previous year's second quarter of $123 million. Also, the company was awarded the Preferred Lender status by the Small Business Administration (SBA), thus providing it with approval authority on SBA loans.
 Net interest income in the second quarter rose 14 percent from the 1991 quarter, reflecting a higher level of mortgages and commercial loans. In addition, the net interest margin increased to 4.66 percent in the recent quarter from 4.63 percent in 1991.
 The loan loss provision in the recent quarter was $465,000 compared with $196,000 for the same period last year. Net charge-offs totalled $398,000, or an annualized 0.42 percent of average loans. The ratio of loan loss reserves to total loans at June 30, 1992, was 1.29 percent compared to 1.33 percent at March 31, 1992. Total loans included $67 million in mortgage loans held for sale. Nonperforming assets were $5.5 million, a 4 percent decline from the level at March 31, 1992, representing 2.16 percent of total assets.
 Noninterest income was $3.5 million for the second quarter, an increase of 72 percent from the 1991 second quarter, primarily due to gains on the sales of mortgages and SBA loans.
 Noninterest expense grew 44 percent for the quarter compared to 1991. The increase reflects the expense of the additional staffing necessary to accommodate the increased mortgage volume. Also included were expenses associated with the new home loan center in Sacramento, which opened in January 1992.
 "Our earnings continue to grow despite the continuation of a sluggish economy in our markets in Northern California," said Downey. "Furthermore, the completion of our secondary stock offering of 575,000 shares in May provided nearly $4 million in new capital and will enable the company to pursue its expansion plans." The company has entered into a definitive merger agreement with Lake Savings and Loan, a $43 million institution based in Lake County. The transaction is expected to close in the second half of 1992.
 "The strategy of diversification is confirmed by these quarterly results. Our savings bank is benefiting from the current low interest rate environment, just as the commercial bank will benefit when rates rise," concluded Downey.
 Headquartered in Santa Rosa, Redwood Empire Bancorp is the holding company for two operating subsidiaries: National Bank of the Redwoods, a commercial bank, and Allied Savings Bank, F.S.B., a savings bank. With $255 million in assets, the company operates in Northern California, principally in Sonoma and Mendocino counties.
 REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
 Consolidated Balance Sheets
 (Dollars in thousands)
 (Unaudited)
 June 30, Dec. 31,
 1992 1991
 Cash and due from banks $ 17,453 $ 17,469
 Investment securities 15,184 5,541
 Federal funds sold 1,000 17,350
 Time deposits due from banks 1,197 1,298
 Loans:
 Commercial loans 48,085 53,288
 Real estate-construction 21,592 25,803
 Real estate-mortgage 62,268 54,878
 Installment and other 13,704 12,223
 Less allowance for loan losses 2,731 2,441
 Less deferred loan fees 1,130 1,296
 Net portfolio loans 141,798 142,455
 Loans held for sale (lower of
 cost or market) 67,317 41,511
 Premises and equipment, net 3,120 2,718
 Other real estate owned 1,491 1,397
 Purchased loan servicing rights 987 1,276
 Interest receivable and other
 assets 5,261 4,146
 TOTAL ASSETS $ 254,808 $ 235,161
 Deposits:
 Noninterest bearing $ 28,908 $ 27,013
 Interest bearing 188,917 180,116
 Total deposits 217,825 207,129
 Other borrowings 12,975 9,138
 Interest payable and other
 liabilities 2,785 2,881
 TOTAL LIABILITIES 233,585 219,148
 Shareholders' equity:
 Common stock, no par value;
 authorized 10,000,000 shares;
 issued and outstanding
 2,398,283 and 1,823,283 16,256 12,291
 Retained earnings 4,967 3,722
 TOTAL SHAREHOLDERS' EQUITY 21,223 16,013
 TOTAL LIABILITIES AND
 SHAREHOLDERS' EQUITY $ 254,808 $ 235,161
 REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
 Consolidated Statement Of Operations
 (Dollars in thousands except for income per share and share data)
 (Unaudited)
 Six Months Ended Three Months Ended
 June 30, June 30, June 30, June 30,
 1992 1991 1992 1991
 Interest Income:
 Interest and fees
 on loans $ 9,581 $ 9,842 $ 4,951 $ 5,050
 Interest on
 investment
 securities 160 279 97 140
 Other interest
 income 333 438 153 246
 TOTAL INTEREST INCOME 10,074 10,559 5,201 5,436
 Interest Expense:
 Interest on deposits 4,944 5,727 2,429 2,977
 Interest on other
 borrowings 139 276 95 113
 TOTAL INTEREST EXPENSE 5,083 6,003 2,524 3,090
 NET INTEREST INCOME 4,991 4,556 2,677 2,346
 Provision for loan
 losses 683 301 465 196
 NET INTEREST INCOME
 AFTER LOAN LOSS
 PROVISION 4,308 4,255 2,212 2,150
 Other Income:
 Customer service fees 377 325 214 176
 Gain on sale of loans 4,474 1,872 2,767 1,251
 Investment securities
 gains (losses) 0 96 0 96
 Other 942 988 470 483
 TOTAL OTHER INCOME 5,793 3,281 3,451 2,006
 Other Expense:
 Salaries and benefits 4,169 2,882 2,357 1,561
 Net occupancy expense 1,081 917 561 471
 Other expenses 2,656 1,836 1,361 930
 TOTAL OTHER EXPENSES 7,906 5,635 4,279 2,962
 Income before income
 taxes 2,195 1,901 1,384 1,194
 Income taxes 950 800 596 517
 NET INCOME $ 1,245 $ 1,101 $ 788 $ 677
 Earnings per share:
 Net income $ 0.61 $ 0.59 $ 0.36 $ 0.37
 Weighted average
 shares 2,041,643 1,871,215 2,217,687 1,851,625
 -0- 7/28/92
 /CONTACT: Doug Sherk or Jenifer Kirtland, 415-296-7383; or Michelle Katz or Miriam Adler, 212-986-5900, all of Morgen-Walke for Redwood Empire Bancorp/
 (REB) CO: Redwood Empire Bancorp ST: California IN: FIN SU: ERN


MM-DG -- SF002 -- 3901 07/28/92 09:23 EDT
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Date:Jul 28, 1992
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