EX-99.1 2 a5196855ex991.txt NARA BANCORP, INC. EXHIBIT 99.1 Exhibit 99.1 Nara Bancorp Reports 30% Increase in Earnings Per Share for Second Quarter 2006 LOS ANGELES--(BUSINESS WIRE)--July 26, 2006--Nara Bancorp, Inc. (the "Company") (NASDAQ:NARA), the holding company of Nara Bank (the "Bank"), reported net income of $7.9 million for the second quarter of 2006, an increase of 41% over $5.6 million for the second quarter of 2005. The Company also reported earnings of $0.30 per diluted share for second quarter 2006, a 30% increase compared to $0.23 per diluted share for the second quarter of 2005. "Despite a challenging operating environment, we are pleased with the Bank's steady performance in the second quarter," said Min Kim, Chief Operating Officer and Acting President of Nara Bancorp. "Our financial results were driven by solid loan production, successful campaigns to attract core deposits, and meaningful improvement in credit quality. Our success in these areas helped to offset higher levels of loan payoffs than we expected, a reduction in our net interest margin from our first quarter 2006 results, and a temporary shortfall in SBA originations due to a change in the management of this business line. Overall, we continue to execute well on our strategic initiatives to generate disciplined growth through effective balance sheet management, focusing on core deposits and strong credit quality." Second Quarter Financial Highlights (2006 vs. 2005): -- Net income increased 41% to $7.9 million -- Diluted EPS increased 30% to $0.30 per share -- Net interest income increased 21% to $23.0 million -- Annualized net interest margin increased 3 basis points to 4.97% -- Net loans receivable increased 14% over prior year to $1.57 billion -- Deposits increased 15% over prior year to $1.72 billion Operating Results for Second Quarter 2006 Net Interest Income and Net Interest Margin. Second quarter net interest income before provision for loan losses increased 21% to $23.0 million from $19.0 million for second quarter 2005. The improvement was attributable to an 18% increase in net average interest-earning assets. The resulting annualized net interest margin (net interest income divided by average interest-earning assets) increased 3 basis points to 4.97% in the second quarter of 2006 from 4.94% in the same period of the prior year. The weighted average annualized yield on the loan portfolio for second quarter 2006 increased 138 basis points to 8.93% from 7.55% for the same period last year. The increase was the result of the Company's substantially prime rate-based loan portfolio repricing upward with each federal funds increase by the Federal Reserve. The weighted average annualized cost of deposits for second quarter 2006 increased 126 basis points to 3.32% from 2.06% for the same period last year. The most significant increase was seen in annualized time deposit costs, which increased 158 basis points to 4.66% from 3.08% last year. Sequentially, second quarter 2006 net interest income before provision for loan losses increased $662 thousand, or 3%, over first quarter 2006. The annualized net interest margin for second quarter 2006 was 4.97%, a decrease of 16 basis points from the net interest margin of 5.13% for first quarter 2006. This margin compression was primarily due to money market and time deposit repricing, average interest-bearing deposit growth exceeding loan growth, and the increase in fixed rate loans. Non-interest Income. Second quarter non-interest income decreased $216 thousand, or 4%, to $4.8 million from $5.0 million for the same period last year. The decrease was primarily due to non-recurring gains of $128 thousand on sales of securities during the second quarter of 2005. Sequentially, non-interest income in second quarter 2006 decreased $460 thousand, or 9%, from $5.3 million in first quarter 2006. This decrease was primarily due to a decrease in gains on sales of SBA loans. The volume of SBA loans sold during the second quarter was $17.2 million compared to $24.5 million in first quarter 2006. Total originations of SBA loans during the second quarter 2006 were $21.5 million compared to $35.4 million in first quarter 2006. The slowdown in SBA loan production was primarily due to the transition to new management of this business line towards the end of the second quarter. Non-interest Expense. Second quarter non-interest expense increased $1.6 million, or 13%, to $14.1 million from $12.5 million for the same period last year. The increase was driven by higher compensation costs due to staff and management additions and the new requirement to recognize stock option expense; higher occupancy costs due to opening or commencement of leasing of new branches; marketing costs, mostly advertising, relating to deposit campaigns and new Fullerton office; higher data processing fees from increased accounts; and higher D&O and FDIC insurance premiums. Sequentially, non-interest expense in second quarter 2006 increased $869 thousand, or 7%, to $14.1 million from $13.2 million in first quarter 2006. This increase was primarily due to increases in salaries and employee benefits, occupancy costs, advertising and marketing expenses, and professional fees. Salaries and employee benefit expenses were higher due to an increase in the amount of bonus accrued and stock option expense. Occupancy costs were higher due to the Oakland branch lease payment which commenced in March of 2006 and new leasehold improvement costs for the new Fullerton office. Advertising and marketing expenses were higher during second quarter 2006 due to new deposit campaigns, including promotions tied to the World Cup soccer tournament. Professional fees were higher during second quarter 2006 due to increased outsourced internal audit fees and costs related to the CEO and other senior officer searches. Income Taxes. The effective tax rate was 42% for the second quarters of 2006 and 2005. Balance Sheet Summary At June 30, 2006 total assets were $1.99 billion compared to $1.91 billion at March 31, 2006 and $1.72 billion at June 30, 2005, increases of 16% (annualized) and 16%, respectively. Gross loans receivable, excluding loans held for sale of $13.0 million, were $1.58 billion at June 30, 2006, an increase of 14% from the $1.39 billion at June 30, 2005, and an increase of 16% (annualized) from the $1.52 billion at March 31, 2006. The growth in the loan portfolio was primarily driven by the real estate loan portfolio, which increased 23% year-over-year, and 24% (annualized) since March 31, 2006. Higher than expected loan payoffs, driven by an increasing trend of refinancing variable loans for fixed rate loans as well as higher levels of property and business sales by borrowers, mitigated the overall portfolio growth during the second quarter of 2006. Total deposits were $1.72 billion at June 30, 2006, an increase of 15% from $1.50 billion at June 30, 2005, and an increase of 17% (annualized) from March 31, 2006. Deposit growth was largely driven by annualized increases in money market, non-interest bearing, and non-jumbo time deposit accounts of 19%, 32%, and 49%, respectively, resulting from a bank-wide core deposit campaign during the second quarter of 2006. Asset Quality Non-performing assets at June 30, 2006 declined to $4.1 million, or 0.21% of total assets, from $5.4 million, or 0.28% of total assets, at March 31, 2006. Non-performing loans at June 30, 2006 declined to $3.3 million, or 0.21% of total loans, from $4.6 million, or 0.30% of total loans, at March 31, 2006. The sequential quarter decrease in non-performing loans at June 30, 2006 was primarily due to one large credit being placed back on accrual status during the quarter and charge-offs. Net loan charge-offs were $372 thousand for second quarter 2006, or 0.10% of average loans on an annualized basis, compared to $300 thousand, or 0.08% of average loans on annualized basis for first quarter 2006. The provision for loan losses was $142 thousand for the second quarter of 2006, compared to $1.1 million for the first quarter of 2006. The lower provision for loan losses was primarily due to a $8.9 million improvement in classified and special mention loans during the second quarter of 2006. The allowance for loan losses at June 30, 2006 was $18.2 million, or 1.15% of gross loans receivable, compared to $18.4 million, or 1.21% of gross loans receivable at March 31, 2006 Performance Ratios The annualized return on average equity (ROE) for second quarter 2006 was 19.75%, compared to 20.72% for first quarter 2006, and 20.58% for second quarter 2005. The 2006 second quarter ROE declined from the 2005 second quarter primarily due to the increase in equity resulting from the $20.0 million of capital raised in September 2005. The annualized return on average assets (ROA) for second quarter 2006 was 1.62%, compared to 1.72% for the first quarter 2006, and 1.38% for the second quarter 2005. The efficiency ratio for second quarter 2006 was 50.57%, compared to 47.79% for first quarter 2006, and 51.83% for second quarter 2005. The higher efficiency ratio in the second quarter was attributable to slower growth in net interest income, a decrease in non-interest income and increased non-interest expenses, such as salaries and employee benefits, occupancy costs, and marketing-related expenses and professional fees. Capital At June 30, 2006, we continued to exceed the regulatory capital requirements to be classified as a "well-capitalized institution." The Leverage Ratio was 10.35% compared to 10.22% at December 31, 2005 and 8.84% at June 30, 2005. The Tier 1 Risk-based Ratio was 11.80% compared to 11.77% at December 31, 2005 and 9.69% at June 30, 2005. The Total Risk-based Ratio was 12.86% compared to 12.90% at December 31, 2005 and 11.05% at June 30, 2005. Outlook For the full year 2006, Nara Bancorp continues to expect fully diluted earnings per share to range between $1.20 and $1.25. Commenting on the outlook, Ms. Kim said, "Over the second half of 2006, we believe that continued strength in our loan production and declining professional fees as we complete our regulatory compliance efforts should help us offset the impact of further compression in our net interest margin and elevated levels of loan payoffs. In addition, we have recently added a highly productive SBA loan manager that we believe can quickly improve our SBA loan production and help this business line become a catalyst for earnings growth in future quarters." Conference Call and Webcast A conference call with simultaneous webcast to discuss the Company's second quarter 2006 financial results will be held tomorrow, July 27, 2006 at 9:30 a.m. Pacific/12:30 p.m. Eastern. Interested participants and investors may access the conference call by dialing 866-713-8567 (domestic) or 617-597-5326 (international). There will also be a live web cast of the call available at the Investor Relations section of Nara Bank's web site at www.narabank.com. Web participants are encouraged to go to the web site at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software. After the live webcast, a replay will remain available in the Investor Relations section of Nara Bancorp's web site. A replay of the call will be available at 888-286-8010 (domestic) or 617-801-6888 (international) through August 3, 2006; the passcode is 21402479. About Nara Bancorp, Inc. Nara Bancorp, Inc. is the parent company of Nara Bank, which was founded in 1989. Nara Bank is a full-service community bank headquartered in Los Angeles, with 18 branches and 8 loan production offices in the United States and one liaison office in Seoul, Korea. Nara Bank operates full-service branches in California and New York, with loan production offices in California, Washington, Colorado, Texas, Georgia, Illinois, New Jersey, and Virginia. Nara Bank was founded specifically to serve the needs of Korean-Americans, one of the fastest-growing Asian ethnic communities over the past decade. Presently, Nara Bank serves a diverse group of customers mirroring its communities. Nara Bank specializes in core business banking products for small and medium-sized companies, with emphasis in commercial real estate and business lending, SBA lending, and international trade financing. Nara Bank is a member of the FDIC and is an Equal Opportunity Lender. For more information on Nara Bank, visit our web site at www.narabank.com. Nara Bancorp, Inc. stock is listed on NASDAQ under the symbol "NARA." Forward-Looking Statements This press release contains forward-looking statements, including statements about future operations and projected full-year financial results that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental, and technological factors affecting the Company's operations, markets, products, services, and pricing. Readers should carefully review the risk factors and the information that could materially affect the Company's financial results and business, described in documents the Company files from time to time with the Securities and Exchange Commission, including its quarterly reports on Form 10-Q and Annual Reports on Form 10-K, and particularly the discussion of business considerations and certain factors that may affect results of operations and stock price set forth therein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements. Nara Bancorp, Inc. Consolidated Statements of Financial Condition Unaudited (Dollars in Thousands) Assets 6/30/2006 3/31/2006 % change --------------------------------- Cash and due from banks $37,001 $38,306 -3% Federal funds sold 96,200 75,500 27% Term federal funds sold - 7,000 -100% Securities available for sale, at fair value 184,750 185,653 0% Securities held to maturity, at amortized cost (fair value: June 30, 2006 - $1,008; March 31, 2006 - $1,015; December 31, 2005 - $1,023; June 30, 2005 - $2,052) 1,000 1,000 0% Federal Home Loan Bank and Federal Reserve Bank stock 9,562 8,341 15% Loans held for sale, at the lower of cost or market 13,037 15,422 -15% Loans receivable 1,584,913 1,524,377 4% Allowance for loan losses (18,168) (18,398) -1% --------------------------------- Net loans 1,566,745 1,505,979 4% --------------------------------- Accrued interest receivable 7,786 7,694 1% Premises and equipment, net 9,082 8,575 6% Cash surrender value of life insurance 14,885 14,775 1% Goodwill 2,347 2,347 0% Other intangible assets, net 3,244 3,416 -5% Other assets 41,841 37,302 12% --------------------------------- Total assets $1,987,480 $1,911,310 4% ================================= Liabilities Deposits $1,719,576 $1,650,623 4% Borrowings from Federal Home Loan Bank 31,000 31,000 0% Subordinated debentures 39,268 39,268 0% Accrued interest payable 9,414 11,655 -19% Other liabilities 25,713 24,307 6% --------------------------------- Total liabilities 1,824,971 1,756,853 4% --------------------------------- Stockholders' Equity Common stock, $0.001 par value; authorized, 40,000,000 shares; issued and outstanding, 25,751,704, 25,557,948, 25,444,442 and 23,694,596 shares at June 30, 2006, March 31, December 31, 2005 and June 30, 2005, respectively $26 $25 4% Capital surplus 73,239 70,900 3% Retained earnings 95,387 88,192 8% Accumulated other comprehensive income (loss), net (6,143) (4,660) 32% --------------------------------- Total stockholders' equity 162,509 154,457 5% --------------------------------- Total liabilities and stockholders' equity $1,987,480 $1,911,310 4% ================================= Assets 12/31/2005 % change 6/30/2005 % change --------------------- --------------------- Cash and due from banks $32,924 12% $32,672 13% Federal funds sold 33,100 191% 77,400 24% Term federal funds sold 7,000 -100% 12,000 -100% Securities available for sale, at fair value 174,709 6% 131,246 41% Securities held to maturity, at amortized cost (fair value: June 30, 2006 - $1,008; March 31, 2006 - $1,015; December 31, 2005 - $1,023; June 30, 2005 - $2,052) 1,001 0% 2,001 -50% Federal Home Loan Bank and Federal Reserve Bank stock 8,266 16% 8,129 18% Loans held for sale, at the lower of cost or market 17,083 -24% 11,631 12% Loans receivable 1,445,740 10% 1,387,280 14% Allowance for loan losses (17,618) 3% (16,769) 8% ------------------------------------------- Net loans 1,428,122 10% 1,370,511 14% ------------------------------------------- Accrued interest receivable 7,620 2% 6,164 26% Premises and equipment, net 8,148 11% 6,837 33% Cash surrender value of life insurance 14,640 2% 14,433 3% Goodwill 2,347 0% 2,347 0% Other intangible assets, net 3,589 -10% 3,947 -18% Other assets 37,273 12% 38,063 10% ------------------------------------------- Total assets $1,775,822 12% $1,717,381 16% =========================================== Liabilities Deposits $1,526,486 13% $1,496,523 15% Borrowings from Federal Home Loan Bank 31,000 0% 43,000 -28% Subordinated debentures 39,268 0% 39,268 0% Accrued interest payable 8,755 8% 4,518 108% Other liabilities 23,559 9% 21,105 22% ------------------------------------------- Total liabilities 1,629,068 12% 1,604,414 14% ------------------------------------------- Stockholders' Equity Common stock, $0.001 par value; authorized, 40,000,000 shares; issued and outstanding, 25,751,704, 25,557,948, 25,444,442 and 23,694,596 shares at June 30, 2006, March 31, December 31, 2005 and June 30, 2005, respectively $25 4% $23 13% Capital surplus 69,451 5% 47,465 54% Retained earnings 81,016 18% 66,573 43% Accumulated other comprehensive income (loss), net (3,738) 64% (1,094) 462% ------------------------------------------- Total stockholders' equity 146,754 11% 112,967 44% ------------------------------------------- Total liabilities and stockholders' equity $1,775,822 12% $1,717,381 16% =========================================== Nara Bancorp, Inc. Consolidated Statements of Income Unaudited (Dollars in Thousands, Except for Per Share Data) Three Months Ended, ---------------------------------------------------- % % 6/30/2006 3/31/2006 change 6/30/2005 change ---------------------------------------------------- Interest income: Interest and fees on loans $34,601 $32,400 7% $25,762 34% Interest on securities 2,060 1,884 9% 1,389 48% Interest on federal funds sold and other investments 1,461 792 84% 345 323% ---------------------------------------------------- Total interest income 38,122 35,076 9% 27,496 39% ---------------------------------------------------- Interest expense: Interest on deposits 13,924 11,589 20% 7,074 97% Interest on other borrowings 1,171 1,122 4% 1,426 -18% ---------------------------------------------------- Total interest expense 15,095 12,711 19% 8,500 78% ---------------------------------------------------- Net interest income before provision for loan losses 23,027 22,365 3% 18,996 21% Provision for loan losses 142 1,080 -87% 1,950 -93% ---------------------------------------------------- Net interest income after provision for loan losses 22,885 21,285 8% 17,046 34% ---------------------------------------------------- Non-interest income: Service fees on deposit accounts 1,520 1,537 -1% 1,582 -4% Net gains on sales of SBA loans 1,096 1,717 -36% 1,094 0% Net gains on sales of securities available-for- sale - - 0% 128 -100% Other income and fees 2,197 2,019 9% 2,225 -1% ---------------------------------------------------- Total non- interest income 4,813 5,273 -9% 5,029 -4% ---------------------------------------------------- Non-interest expense: Salaries and employee benefits 7,083 6,811 4% 6,152 15% Occupancy 1,918 1,816 6% 1,692 13% Furniture and equipment 548 520 5% 497 10% Advertising and marketing 725 551 32% 464 56% Data processing and communications 1,018 953 7% 860 18% Professional fees 782 678 15% 1,186 -34% Other 2,004 1,880 7% 1,602 25% ---------------------------------------------------- Total non- interest expense 14,078 13,209 7% 12,453 13% ---------------------------------------------------- Income before income taxes 13,620 13,349 2% 9,622 42% Income taxes 5,719 5,470 5% 4,009 43% ---------------------------------------------------- Net Income $7,901 $7,879 0% $5,613 41% ==================================================== Earnings Per Share: Basic $0.31 $0.31 $0.24 Diluted $0.30 $0.30 $0.23 Average Shares Outstanding Basic 25,612,359 25,473,400 23,653,365 Diluted 26,221,043 26,140,846 24,538,181 Six Months Ended June 30, --------------------------------- 2006 2005 % change --------------------------------- Interest income: Interest and fees on loans $67,001 $48,217 39% Interest on securities 3,944 2,789 41% Interest on federal funds sold and other investments 2,253 584 286% --------------------------------- Total interest income 73,198 51,590 42% --------------------------------- Interest expense: Interest on deposits 25,513 12,532 104% Interest on other borrowings 2,293 2,730 -16% --------------------------------- Total interest expense 27,806 15,262 82% --------------------------------- Net interest income before provision for loan losses 45,392 36,328 25% Provision for loan losses 1,222 3,600 -66% --------------------------------- Net interest income after provision for loan losses 44,170 32,728 35% --------------------------------- Non-interest income: Service fees on deposit accounts 3,057 3,160 -3% Net gains on sales of SBA loans 2,813 1,843 53% Net gains on sales of securities available-for-sale - 143 -100% Other income and fees 4,216 4,062 4% --------------------------------- Total non-interest income 10,086 9,208 10% --------------------------------- Non-interest expense: Salaries and employee benefits 13,894 11,415 22% Occupancy 3,734 3,288 14% Furniture and equipment 1,068 1,007 6% Advertising and marketing 1,276 854 49% Data processing and communications 1,971 1,656 19% Professional fees 1,460 1,942 -25% Other 3,884 2,991 30% --------------------------------- Total non-interest expense 27,287 23,153 18% --------------------------------- Income before income taxes 26,969 18,783 44% Income taxes 11,189 7,765 44% --------------------------------- Net Income $15,780 $11,018 43% ================================= Earnings Per Share: Basic $0.62 $0.47 Diluted $0.60 $0.45 Average Shares Outstanding Basic 25,542,636 23,504,411 Diluted 26,168,550 24,634,849 Nara Bancorp, Inc. Supplemental Data Unaudited (Dollars in Thousands, Except for Per Share Data) (Annualized) (Annualized) At or for the Three Months At or for the Six Ended, Months Ended, ------------------------------------------------------ Profitability measures: 6/30/2006 3/31/2006 6/30/2005 6/30/2006 6/30/2005 -------------------------------- --------------------- ROA 1.62% 1.72% 1.38% 1.67% 1.39% ROE 19.75% 20.72% 20.58% 20.22% 20.58% Net interest margin 4.97% 5.13% 4.94% 5.05% 4.86% Efficiency ratio 50.57% 47.79% 51.83% 49.19% 50.85% Yield on loan portfolio 8.93% 8.64% 7.55% 8.78% 7.30% Yield on interest- earning assets 8.23% 8.04% 7.15% 8.14% 6.91% Cost of interest- bearing deposits 4.26% 3.80% 2.78% 4.04% 2.56% Cost of total deposits 3.32% 2.94% 2.06% 3.13% 1.89% Cost of interest- bearing liabilities 4.39% 3.95% 2.99% 4.18% 2.77% Cost of time deposits 4.66% 4.22% 3.08% 4.45% 2.83% Cost of funds 3.45% 3.09% 2.27% 3.28% 2.10% Net interest spread (yield on average interest- earning assets - average cost of funds) 4.77% 4.95% 4.87% 4.86% 4.80% For the Three Months Ended ------------------------------------------------------- 6/30/2006 3/31/2006 % change 6/30/2005 % change ------------------------------------------------------- AVERAGE BALANCES Gross loans, includes loans held for sale $1,550,453 $1,500,177 3% $1,365,423 14% Interest- earning assets 1,853,200 1,744,924 6% 1,538,850 20% Total assets 1,946,639 1,836,238 6% 1,630,918 19% Interest- bearing deposits 1,307,485 1,218,324 7% 1,016,345 29% Interest- bearing liabilities 1,375,668 1,286,621 7% 1,138,082 21% Non-interest- bearing demand deposits 372,093 360,460 3% 357,148 4% Stockholders' Equity 160,055 152,105 5% 109,120 47% For the Six Months Ended -------------------------------- 6/30/2006 6/30/2005 % change -------------------------------- AVERAGE BALANCES Gross loans, includes loans held for sale 1,525,454 1,321,858 15% Interest-earning assets 1,799,362 1,494,030 20% Total assets 1,891,743 1,582,032 20% Interest-bearing deposits 1,263,151 979,298 29% Interest-bearing liabilities 1,331,391 1,103,914 21% Non-interest-bearing demand deposits 366,308 346,509 6% Stockholders' Equity 156,102 107,051 46% LOAN PORTFOLIO COMPOSITION: 6/30/2006 3/31/2006 % change --------------------------------- Commercial loans $499,450 $495,080 1% Real estate loans 1,033,277 973,903 6% Consumer and other loans 55,022 58,214 -5% --------------------------------- Loans outstanding 1,587,749 1,527,197 4% Unamortized deferred loan fees - net of costs (2,836) (2,820) 1% --------------------------------- Loans, net of deferred loan fees and costs 1,584,913 1,524,377 4% Allowance for loan losses (18,168) (18,398) -1% --------------------------------- Loan receivable, net $1,566,745 $1,505,979 4% ================================= LOAN PORTFOLIO COMPOSITION: 12/31/2005 % change 6/30/2005 % change ------------------------------------------- Commercial loans $483,231 3% $481,226 4% Real estate loans 900,699 15% 842,131 23% Consumer and other loans 64,633 -15% 67,010 -18% ------------------------------------------- Loans outstanding 1,448,563 10% 1,390,367 14% Unamortized deferred loan fees - net of costs (2,823) 0% (3,087) -8% ------------------------------------------- Loans, net of deferred loan fees and costs 1,445,740 10% 1,387,280 14% Allowance for loan losses (17,618) 3% (16,769) 8% ------------------------------------------- Loan receivable, net $1,428,122 10% $1,370,511 14% =========================================== For the Three Months Ended ---------------------------------------------------- ALLOWANCE FOR LOAN LOSSES: 6/30/2006 3/31/2006 % Change 6/30/2005 % Change ---------------------------------------------------- Balance at Beginning of Period $18,398 $17,618 4% $15,715 17% Provision for Loan Losses 142 1,080 -87% 1,950 -93% Recoveries 724 351 106% 89 713% Charge Offs (1,096) (651) 68% (985) 11% ---------------------------------------------------- Balance at End of Period $18,168 $18,398 -1% $16,769 8% ==================================================== Net charge- off/Average gross loans (annualized) 0.10% 0.08% 0.26% For the Six Months Ended ------------------------------- ALLOWANCE FOR LOAN LOSSES: 6/30/2006 6/30/2005 % Change ------------------------------- Balance at Beginning of Period $17,618 $14,627 20% Provision for Loan Losses 1,222 3,600 -66% Recoveries 1,075 383 181% Charge Offs (1,747) (1,841) -5% ------------------------------- Balance at End of Period $18,168 $16,769 8% =============================== Net charge-off/Average gross loans (annualized) 0.09% 0.22% NON-PERFORMING ASSETS 6/30/2006 3/31/2006 12/31/2005 6/30/2005 -------------------------------------------- Delinquent Loans 90 days or more on Non-Accrual Status $3,329 $4,589 $5,489 $2,772 Delinquent Loans 90 days or more on Accrual Status - - - 86 -------------------------------------------- Total Non-Performing Loans 3,329 4,589 5,489 2,858 Other real estate owned - - - - Restructured Loans 757 807 741 1,067 -------------------------------------------- Total Non-Performing Assets $4,086 $5,396 $6,230 $3,925 ============================================ Non-Performing Assets/ Total Assets 0.21% 0.28% 0.35% 0.23% Non-Performing Loans/Gross Loans 0.21% 0.30% 0.38% 0.21% Allowance for loan losses/ Gross Loans 1.15% 1.21% 1.22% 1.21% Allowance for loan losses/ Non-Performing Loans 546% 401% 321% 587% DEPOSIT COMPOSITION 6/30/2006 3/31/2006 % Change --------------------------------- Non-interest-bearing demand deposits $405,271 $375,672 8% Money market and other 228,435 218,235 5% Saving deposits 139,854 141,327 -1% Time deposits of $100,000 or more 740,431 732,348 1% Other time deposits 205,585 183,041 12% ----------------------- --------- Total deposit balances $1,719,576 $1,650,623 4% ======================= ========= DEPOSIT COMPOSITION 12/31/2005 % Change 6/30/2005 % Change ------------------------------------------- Non-interest-bearing demand deposits $371,943 9% $367,516 10% Money market and other 185,550 23% 266,829 -14% Saving deposits 120,948 16% 99,623 40% Time deposits of $100,000 or more 714,636 4% 662,394 12% Other time deposits 133,409 54% 100,161 105% ------------------------------------------- Total deposit balances $1,526,486 13% $1,496,523 15% =========================================== DEPOSIT COMPOSITION (%) 6/30/2006 3/31/2006 12/31/2005 6/30/2005 -------------------------------------------- Non-interest-bearing demand deposits 23.6% 22.7% 24.4% 24.5% Money market and other 13.3% 13.2% 12.2% 17.8% Saving deposits 8.1% 8.6% 7.9% 6.7% Time deposits of $100,000 or more 43.1% 44.4% 46.8% 44.3% Other time deposits 11.9% 11.1% 8.7% 6.7% -------------------------------------------- Total deposit balances 100.0% 100.0% 100.0% 100.0% ============================================ CAPITAL RATIOS 6/30/2006 3/31/2006 12/31/2005 6/30/2005 -------------------------------------------- Total stockholders' equity $162,509 154,457 $146,754 $112,967 Tier 1 risk-based capital ratio 11.80% 11.67% 11.77% 9.69% Total risk-based capital ratio 12.86% 12.79% 12.90% 11.05% Tier 1 leverage ratio 10.35% 10.45% 10.22% 8.84% Book value per share $6.31 $6.04 $5.77 $4.77 Tangible book value per share $6.09 $5.82 $5.53 $4.50 Tangible equity to tangible assets 7.92% 7.80% 7.96% 6.23% CONTACT: Investors and Financial Media: Financial Relations Board Tony Rossi, 310-854-8317