EX-99.1 2 a5258571ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Nara Bancorp Reports Earnings Per Share of $0.33 For Third Quarter 2006 LOS ANGELES--(BUSINESS WIRE)--Oct. 25, 2006--Nara Bancorp, Inc. (the "Company") (NASDAQ:NARA), the holding company of Nara Bank (the "Bank"), reported net income of $8.7 million for third quarter 2006, an increase of 9% over $7.9 million for third quarter 2005. The Company also reported earnings of $0.33 per diluted share for third quarter 2006, a 3% increase compared to $0.32 per diluted share for third quarter 2005. "We were pleased with our execution during the third quarter, which allowed us to record our highest level of quarterly earnings per share this year." said Min Kim, Chief Operating Officer and Acting President of Nara Bancorp. "We were able to continue generating strong loan growth, while maintaining tight expense control and improving our operating efficiency ratio. Importantly, our effective balance sheet management enabled us to expand our net interest margin by 14 basis points from the prior quarter." Third Quarter Financial Highlights (2006 vs. 2005): -- Net income increased 9% to $8.7 million -- Diluted EPS increased 3% to $0.33 per share -- Net interest income increased 15% to $23.8 million -- Net interest margin (annualized) increased 16 basis points to 5.11% -- Net loans receivable increased 16% to $1.64 billion -- Deposits increased 7% to $1.65 billion Operating Results for Third Quarter 2006 Net Interest Income and Net Interest Margin. Third quarter net interest income before provision for loan losses increased 15% to $23.8 million from $20.8 million for third quarter 2005. The improvement was primarily attributable to a 16% increase in net average interest-earning assets (average interest-earning asset minus average interest-bearing liabilities). The resulting annualized net interest margin (net interest income divided by average interest-earning assets) increased 16 basis points to 5.11% for third quarter 2006 from 4.95% for third quarter 2005. The weighted average annualized yield on the loan portfolio for third quarter 2006 increased 102 basis points to 9.13% from 8.11% for the same period last year. The increase was primarily the result of the Company's substantially prime rate-based loan portfolio repricing upwards, and higher yields achieved on fixed rate loans originated during the quarter. The weighted average annualized cost of deposits for third quarter 2006 increased 107 basis points to 3.55% from 2.48% for the third quarter 2005. The most significant increase was seen in time deposit costs, which increased 148 basis points to 5.06% from 3.58% last year, primarily due to maturing time deposits repricing higher to remain competitive with rates offered within the Company's markets. Sequentially, third quarter 2006 net interest income before provision for loan losses increased $781 thousand, or 3%, over second quarter 2006. The annualized net interest margin of 5.11% for third quarter 2006 increased 14 basis points from 4.97% for second quarter 2006. This margin expansion was a result of growth in average gross loans of $79 million on a linked quarter basis, a 36 basis point increase in yield on average interest-earning assets and a slower rate of increase in the cost of funds as higher cost time deposits were replaced with alternative wholesale funds. Non-interest Income. Third quarter non-interest income decreased $826 thousand, or 14%, to $5.0 million from $5.8 million for the same period last year. The decrease was primarily due to a decrease in net gains on sales of SBA loans. Due to the turnover in SBA management towards the end of the prior quarter of 2006, SBA loan production declined in July, but increased to normal levels in August and September. However sales were lower due to the one month lag in sales of such loans, resulting in lower net gains during the third quarter 2006. Originations of SBA loans during third quarter 2006 were $23.3 million compared to $43.9 million during the same period in 2005, and $21.5 million and $35.4 million during second and first quarter 2006, respectively. Other income and fees increased $180 thousand or 8% to $2.6 million for third quarter 2006, compared to $2.4 million for third quarter 2005. Sequentially, other income and fees also increased $373 thousand, or 17% from second quarter 2006. The increases were primarily due to increases in fees for early loan pay-offs. Non-interest Expense. Third quarter non-interest expense increased $959 thousand, or 8%, to $13.0 million from $12.1 million for the same period last year. The increase was driven by higher compensation costs due to staff and management additions and the new accounting for stock option expense; higher occupancy costs due to lease renewals at higher rates and opening or commencement of leasing of new branches; higher data processing fees due to the increased number of accounts; and higher D&O and FDIC insurance premiums. Sequentially, non-interest expense in third quarter 2006 decreased $1.1 million or 8% to $13.0 million from $14.1 million for second quarter 2006. This decrease was primarily due to lower compensation bonus accruals and lower advertising and marketing expenses. During second quarter 2006, advertising and marketing expenses were higher due to new deposit campaigns, including promotions tied to the World Cup soccer tournament. Income Taxes. The effective tax rate was 40.5% for third quarter 2006 compared to 41.4% for third quarter 2005. During third quarter 2006, certain tax contingencies were resolved resulting in a reduction in deferred tax liabilities and tax expense of approximately $180,000. Balance Sheet Summary At September 30, 2006 total assets were $1.98 billion compared to $1.99 billion at June 30, 2006, a nominal decrease, and $1.79 billion at September 30, 2005, an increase of 11%. Gross loans receivable were $1.66 billion at September 30, 2006, an increase of 16% from the $1.43 billion at September 30, 2005, and an increase of 19% (annualized) from the $1.58 billion at June 30, 2006. The growth in the loan portfolio was primarily driven by the real estate loan portfolio, which increased 24% year-over-year, and 22% (annualized) since June 30, 2006. Total deposits were $1.65 billion at September 30, 2006, an increase of 7% from $1.54 billion at September 30, 2005, and a decrease 16% (annualized) from June 30, 2006. To manage liability costs, particularly higher cost time deposits, management shifted to alternative funding sources by increasing borrowings from the Federal Home Loan Bank and increasing State Treasurer time deposits during the third quarter of 2006. Asset Quality Non-performing assets at September 30, 2006 were $4.6 million, or 0.23% of total assets, compared to $4.1 million, or 0.21% of total assets, at June 30, 2006 and $6.2 million or 0.35% of total assets at December 31, 2005. Non-performing loans at September 30, 2006 were $4.0 million, or 0.24% of total loans, compared to $3.3 million, or 0.21% of total loans, at June 30, 2006 and $5.5 million or 0.38% of total loans at December 31, 2005. The sequential quarter increase in non-performing loans at September 30, 2006 was primarily due to two large commercial loans. Net loan charge-offs were $429 thousand for third quarter 2006, or 0.11% of average loans on an annualized basis, compared to $372 thousand, or 0.10% for second quarter 2006 and $671 thousand or 0.19% for the third quarter 2005. The provision for loan losses was $1.2 million for third quarter 2006, compared to $142 thousand for second quarter 2006 and $970 thousand for third quarter 2005. The higher provision for loan losses was primarily due to an increase in loan volume, and net charge offs. The allowance for loan losses at September 30, 2006 was $18.9 million, or 1.14% of gross loans receivables, compared to $18.2 million, or 1.15% of gross loans receivable at June 30, 2006 and $17.6 million or 1.22% of gross loans receivable at December 31, 2005. Since December 31, 2005 loans classified as special mention or substandard have decreased substantially, resulting in a reduction in the overall allowance for loan losses as a percentage of gross loans receivable. Performance Ratios The annualized return on average equity (ROE) for third quarter 2006 was 20.36%, compared to 19.75% for second quarter 2006, and 25.92% for third quarter 2005. The decline in ROE for third quarter 2006 compared to the same period in 2005 is primarily due to lower average equity before the $20 million of capital injection during the third quarter 2005. The annualized return on average assets (ROA) for third quarter 2006 was 1.77%, compared to 1.62% for the second quarter 2006 and 1.79% for the third quarter 2005. The efficiency ratio for third quarter 2006 improved to 45.26%, from 50.57% for second quarter 2006 and 45.41% for third quarter 2005. The improved efficiency ratio on a linked quarter basis was attributable to increased net interest income and lower non-interest expense. Capital At September 30, 2006, we continued to exceed the regulatory capital requirements to be classified as a "well-capitalized institution." The Leverage Ratio was 10.91% compared to 10.22% at December 31, 2005 and 9.92% at September 30, 2005. The Tier 1 Risk-based Ratio was 12.09% compared to 11.77% at December 31, 2005 and 11.45% at September 30, 2005. The Total Risk-based Ratio was 13.17% compared to 12.90% at December 31, 2005 and 12.57% at September 30, 2005. Outlook For the full year 2006, Nara Bancorp continues to expect fully diluted earnings per share to range between $1.25 and $1.27. Commenting on the outlook, Ms. Kim said, "We expect a continuation of most trends in the fourth quarter, including higher deposit costs due to maturing CDs and certain adjustable rate CDs repricing higher. We do anticipate increased SBA loan production and gains on sales as our new management in this business line gains traction. We will continue our focus on core deposits to manage margin pressures, and have recently launched a deposit campaign to target those accounts." Conference Call and Webcast A conference call with simultaneous webcast to discuss the Company's third quarter 2006 financial results will be held tomorrow, October 26, 2006 at 9:30 a.m. Pacific / 12:30 p.m. Eastern. Interested participants and investors may access the conference call by dialing 866-831-6270 (domestic) or 617-213-8858 (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 web cast, 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 November 2, 2006; and the passcode is 81714884. 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. 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 website 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 9/30/2006 6/30/2006 % change 12/31/2005 % change -------------------------------- --------------------- Cash and due from banks $33,799 $37,001 -9% $32,924 3% Federal funds sold 2,500 96,200 -97% 33,100 -92% Term federal funds sold - - 0% 7,000 -100% Securities available for sale, at fair value 200,461 184,750 9% 174,709 15% Securities held to maturity, at amortized cost (fair value: September 30, 2006 - $1,005; June 30, 2006 - $1,008; December 31, 2005 - $1,023; September 30, 2005 - $2,035) 1,000 1,000 0% 1,001 0% Federal Home Loan Bank and Federal Reserve Bank stock 9,655 9,562 1% 8,266 17% Loans held for sale, at the lower of cost or market 9,103 13,037 -30% 17,083 -47% Loans receivable 1,660,321 1,584,913 5% 1,445,740 15% Allowance for loan losses (18,909) (18,168) 4% (17,618) 7% ------------------------------------------------------ Net loans 1,641,412 1,566,745 5% 1,428,122 15% ------------------------------------------------------ Accrued interest receivable 8,425 7,786 8% 7,620 11% Premises and equipment, net 11,575 9,082 27% 8,148 42% Cash surrender value of life insurance 15,000 14,885 1% 14,640 2% Goodwill 2,347 2,347 0% 2,347 0% Other intangible assets, net 3,071 3,244 -5% 3,589 -14% Other assets 40,457 41,841 -3% 37,273 9% ------------------------------------------------------ Total assets $1,978,805 $1,987,480 0% $1,775,822 11% ====================================================== Liabilities Deposits $1,649,317 $1,719,576 -4% $1,526,486 8% Borrowings from Federal Home Loan Bank 81,000 31,000 161% 31,000 161% Subordinated debentures 39,268 39,268 0% 39,268 0% Accrued interest payable 9,933 9,414 6% 8,755 13% Other liabilities 22,665 25,713 -12% 23,559 -4% ------------------------------------------------------ Total liabilities 1,802,183 1,824,971 -1% 1,629,068 11% ------------------------------------------------------ Stockholders' Equity Common stock, $0.001 par value; authorized, 40,000,000 shares; issued and outstanding, 26,100,672, 25,751,704, 25,444,442 and 25,358,142 shares at September 30, 2006, June 30, 2006, December 31, 2005 and September 30, 2005, respectively $26 $26 0% $25 4% Capital surplus 77,320 73,239 6% 69,451 11% Retained earnings 103,338 95,387 8% 81,016 28% Accumulated other comprehensive income (loss), net (4,062) (6,143) -34% (3,738) 9% -------------------------------- --------------------- Total stockholders' equity 176,622 162,509 9% 146,754 20% -------------------------------- --------------------- Total liabilities and stockholders' equity $1,978,805 $1,987,480 0% $1,775,822 11% ================================ ===================== Assets 9/30/2005 % change --------------------- Cash and due from banks $32,898 3% Federal funds sold 68,000 -96% Term federal funds sold 12,000 -100% Securities available for sale, at fair value 171,671 17% Securities held to maturity, at amortized cost (fair value: September 30, 2006 - $1,005; June 30, 2006 - $1,008; December 31, 2005 - $1,023; September 30, 2005 - $2,035) 2,001 -50% Federal Home Loan Bank and Federal Reserve Bank stock 8,193 18% Loans held for sale, at the lower of cost or market 8,173 11% Loans receivable 1,427,094 16% Allowance for loan losses (17,068) 11% --------------------- Net loans 1,410,026 16% --------------------- Accrued interest receivable 6,862 23% Premises and equipment, net 8,020 44% Cash surrender value of life insurance 14,536 3% Goodwill 2,347 0% Other intangible assets, net 3,768 -18% Other assets 40,606 0% --------------------- Total assets $1,789,101 11% ===================== Liabilities Deposits $1,544,109 7% Borrowings from Federal Home Loan Bank 31,000 161% Subordinated debentures 39,268 0% Accrued interest payable 7,227 37% Other liabilities 27,623 -18% --------------------- Total liabilities 1,649,227 9% --------------------- Stockholders' Equity Common stock, $0.001 par value; authorized, 40,000,000 shares; issued and outstanding, 26,100,672, 25,751,704, 25,444,442 and 25,358,142 shares at September 30, 2006, June 30, 2006, December 31, 2005 and September 30, 2005, respectively $25 4% Capital surplus 68,633 13% Retained earnings 73,805 40% Accumulated other comprehensive income (loss), net (2,589) 57% --------------------- Total stockholders' equity 139,874 26% --------------------- Total liabilities and stockholders' equity $1,789,101 11% ===================== Nara Bancorp, Inc. Consolidated Statements of Income Unaudited (Dollars in Thousands, Except for Per Share Data) Three Months Ended, --------------------------------------------------- % % 9/30/2006 6/30/2006 change 9/30/2005 change ----------- ----------- ------- ----------- ------- Interest income: Interest and fees on loans $37,200 $34,601 8% $29,090 28% Interest on securities 2,340 2,060 14% 1,557 50% Interest on federal funds sold and other investments 470 1,461 -68% 857 -45% ----------- ----------- ------- ----------- ------- Total interest income 40,010 38,122 5% 31,504 27% ----------- ----------- ------- ----------- ------- Interest expense: Interest on deposits 14,799 13,924 6% 9,628 54% Interest on other borrowings 1,403 1,171 20% 1,103 27% ----------- ----------- ------- ----------- ------- Total interest expense 16,202 15,095 7% 10,731 51% ----------- ----------- ------- ----------- ------- Net interest income before provision for loan losses 23,808 23,027 3% 20,773 15% Provision for loan losses 1,170 142 724% 970 21% ----------- ----------- ------- ----------- ------- Net interest income after provision for loan losses 22,638 22,885 -1% 19,803 14% ----------- ----------- ------- ----------- ------- Non-interest income: Service fees on deposit accounts 1,471 1,520 -3% 1,552 -5% Net gains on sales of SBA loans 922 1,096 -16% 1,847 -50% Net gains on sales of securities available-for- sale - - 0% - 0% Other income and fees 2,570 2,197 17% 2,390 8% ----------- ----------- ------- ----------- ------- Total non- interest income 4,963 4,813 3% 5,789 -14% ----------- ----------- ------- ----------- ------- Non-interest expense: Salaries and employee benefits 6,346 7,083 -10% 6,149 3% Occupancy 1,993 1,918 4% 1,767 13% Furniture and equipment 562 548 3% 504 12% Advertising and marketing 421 725 -42% 506 -17% Data processing and communications 1,029 1,018 1% 840 23% Professional fees 815 782 4% 613 33% Other 1,856 2,004 -7% 1,684 10% ----------- ----------- ------- ----------- ------- Total non- interest expense 13,022 14,078 -8% 12,063 8% ----------- ----------- ------- ----------- ------- Income before income taxes 14,579 13,620 7% 13,529 8% Income taxes 5,910 5,719 3% 5,600 6% ----------- ----------- ------- ----------- ------- Net Income $8,669 $7,901 10% $7,929 9% =========== =========== ======= =========== ======= Earnings Per Share: Basic $0.33 $0.31 $0.33 Diluted $0.33 $0.30 $0.32 Average Shares Outstanding Basic 25,949,931 25,612,359 24,041,269 Diluted 26,407,297 26,221,043 24,780,612 Nine Months Ended September 30, ------------------------------- % 2006 2005 change ----------- ----------- ------- Interest income: Interest and fees on loans $104,201 $77,307 35% Interest on securities 6,284 4,346 45% Interest on federal funds sold and other investments 2,723 1,441 89% ----------- ----------- ------- Total interest income 113,208 83,094 36% ----------- ----------- ------- Interest expense: Interest on deposits 40,312 22,161 82% Interest on other borrowings 3,696 3,832 -4% ----------- ----------- ------- Total interest expense 44,008 25,993 69% ----------- ----------- ------- Net interest income before provision for loan losses 69,200 57,101 21% Provision for loan losses 2,392 4,570 -48% ----------- ----------- ------- Net interest income after provision for loan losses 66,808 52,531 27% ----------- ----------- ------- Non-interest income: Service fees on deposit accounts 4,528 4,712 -4% Net gains on sales of SBA loans 3,735 3,690 1% Net gains on sales of securities available-for-sale - 143 -100% Other income and fees 6,786 6,452 5% ----------- ----------- ------- Total non-interest income 15,049 14,997 0% ----------- ----------- ------- Non-interest expense: Salaries and employee benefits 20,240 17,564 15% Occupancy 5,727 5,055 13% Furniture and equipment 1,630 1,511 8% Advertising and marketing 1,697 1,360 25% Data processing and communications 3,000 2,496 20% Professional fees 2,275 2,555 -11% Other 5,740 4,675 23% ----------- ----------- ------- Total non-interest expense 40,309 35,216 14% ----------- ----------- ------- Income before income taxes 41,548 32,312 29% Income taxes 17,099 13,365 28% ----------- ----------- ------- Net Income $24,449 $18,947 29% =========== =========== ======= Earnings Per Share: Basic $0.95 $0.80 Diluted $0.93 $0.77 Average Shares Outstanding Basic 25,679,893 23,685,330 Diluted 26,247,283 24,684,504 Nara Bancorp, Inc. Supplemental Data Unaudited (Dollars in Thousands, Except for Per Share Data) (Annualized) (Annualized) At or for the At or for the Nine Three Months Ended, Months Ended, ----------------------------------------------------- Profitability measures: 9/30/2006 6/30/2006 9/30/2005 9/30/2006 9/30/2005 -------------------------------- -------------------- ROA 1.77% 1.62% 1.79% 1.70% 1.53% ROE 20.36% 19.75% 25.92% 20.26% 22.51% Net interest margin 5.11% 4.97% 4.95% 5.07% 4.89% Efficiency ratio 45.26% 50.57% 45.41% 47.85% 48.84% Yield on loan portfolio 9.13% 8.93% 8.11% 8.90% 7.58% Yield on interest- earning assets 8.59% 8.23% 7.51% 8.29% 7.12% Cost of interest- bearing deposits 4.61% 4.26% 3.26% 4.23% 2.82% Cost of total deposits 3.55% 3.32% 2.48% 3.27% 2.11% Cost of interest- bearing liabilities 4.74% 4.39% 3.43% 4.37% 3.00% Cost of time deposits 5.06% 4.66% 3.58% 4.65% 3.13% Cost of funds 3.70% 3.45% 2.65% 3.42% 2.30% Net interest spread (yield on average interest- earning assets - average cost of funds) 4.89% 4.77% 4.86% 4.87% 4.82% For the Three Months Ended -------------------------------------------------------- 9/30/2006 6/30/2006 % change 9/30/2005 % change -------------------------------------------------------- AVERAGE BALANCES Gross loans, includes loans held for sale $1,629,345 $1,550,453 5% $1,434,369 14% Interest- earning assets 1,862,304 1,853,200 0% 1,678,882 11% Total assets 1,959,562 1,946,639 1% 1,776,045 10% Interest- bearing deposits 1,284,143 1,307,485 -2% 1,180,867 9% Interest- bearing liabilities 1,366,506 1,375,668 -1% 1,252,419 9% Non-interest- bearing demand deposits 383,587 372,093 3% 369,314 4% Stockholders' Equity 170,273 160,055 6% 122,363 39% For the Nine Months Ended ------------------------------- 9/30/2006 9/30/2005 % change ------------------------------- AVERAGE BALANCES Gross loans, includes loans held for sale 1,560,465 1,359,773 15% Interest-earning assets 1,820,573 1,556,325 17% Total assets 1,914,598 1,647,490 16% Interest-bearing deposits 1,270,224 1,047,226 21% Interest-bearing liabilities 1,343,223 1,153,959 16% Non-interest-bearing demand deposits 372,133 354,194 5% Stockholders' Equity 160,878 112,226 43% LOAN PORTFOLIO COMPOSITION: 9/30/2006 6/30/2006 % change 12/31/2005 % change -------------------------------------------------------- Commercial loans $520,253 $499,450 4% $483,231 8% Real estate loans 1,089,705 1,033,277 5% 900,699 21% Consumer and other loans 53,132 55,022 -3% 64,633 -18% -------------------------------------------------------- Loans outstanding 1,663,090 1,587,749 5% 1,448,563 15% Unamortized deferred loan fees - net of costs (2,769) (2,836) -2% (2,823) -2% -------------------------------------------------------- Loans, net of deferred loan fees and costs 1,660,321 1,584,913 5% 1,445,740 15% Allowance for loan losses (18,909) (18,168) 4% (17,618) 7% -------------------------------------------------------- Loan receivable, net $1,641,412 $1,566,745 5% $1,428,122 15% ======================================================== LOAN PORTFOLIO COMPOSITION: 9/30/2005 % change --------------------- Commercial loans $485,924 7% Real estate loans 877,796 24% Consumer and other loans 66,524 -20% --------------------- Loans outstanding 1,430,244 16% Unamortized deferred loan fees - net of costs (3,150) -12% --------------------- Loans, net of deferred loan fees and costs 1,427,094 16% Allowance for loan losses (17,068) 11% --------------------- Loan receivable, net $1,410,026 16% ===================== For the Three Months Ended ---------------------------------------------------- ALLOWANCE FOR LOAN LOSSES: 9/30/2006 6/30/2006 % Change 9/30/2005 % Change ---------------------------------------------------- Balance at Beginning of Period $18,168 $18,398 -1% $16,769 8% Provision for Loan Losses 1,170 142 724% 970 21% Recoveries 218 724 -70% 87 151% Charge Offs (647) (1,096) -41% (758) -15% ---------------------------------------------------- Balance at End of Period $18,909 $18,168 4% $17,068 11% ==================================================== Net charge- off/Average gross loans (annualized) 0.11% 0.10% 0.19% For the Nine Months Ended ------------------------------ ALLOWANCE FOR LOAN LOSSES: 9/30/2006 9/30/2005 % Change ---------- ------------------- Balance at Beginning of Period $17,618 $14,627 20% Provision for Loan Losses 2,392 4,570 -48% Recoveries 1,293 470 175% Charge Offs (2,394) (2,599) -8% ---------- ------------------- Balance at End of Period $18,909 $17,068 11% ========== =================== Net charge-off/Average gross loans (annualized) 0.09% 0.21% NON-PERFORMING ASSETS 9/30/2006 6/30/2006 12/31/2005 9/30/2005 ----------------------------------------- Delinquent Loans 90 days or more on Non-Accrual Status $3,983 $3,329 $5,489 $3,262 Delinquent Loans 90 days or more on Accrual Status - - - 574 ----------------------------------------- Total Non-Performing Loans 3,983 3,329 5,489 3,836 Other real estate owned - - - - Restructured Loans 606 757 741 902 ----------------------------------------- Total Non-Performing Assets $4,589 $4,086 $6,230 $4,738 ========================================= Non-Performing Assets/ Total Assets 0.23% 0.21% 0.35% 0.26% Non-Performing Loans/Gross Loans 0.24% 0.21% 0.38% 0.27% Allowance for loan losses/ Gross Loans 1.14% 1.15% 1.22% 1.20% Allowance for loan losses/ Non-Performing Loans 475% 546% 321% 445% DEPOSIT COMPOSITION 9/30/2006 6/30/2006 % Change 12/31/2005 % Change --------------------------------------------------- Non-interest- bearing demand deposits $386,263 $405,271 -5% $371,943 4% Money market and other 202,157 228,435 -12% 185,550 9% Saving deposits 138,567 139,854 -1% 120,948 15% Time deposits of $100,000 or more 726,900 740,431 -2% 714,636 2% Other time deposits 195,430 205,585 -5% 133,409 46% --------------------------------------------------- Total deposit balances $1,649,317 $1,719,576 -4% $1,526,486 8% =================================================== DEPOSIT COMPOSITION 9/30/2005 % Change ----------- --------- Non-interest-bearing demand deposits $364,471 6% Money market and other 234,973 -14% Saving deposits 102,096 36% Time deposits of $100,000 or more 733,674 -1% Other time deposits 108,895 79% ----------- --------- Total deposit balances $1,544,109 7% =========== ========= DEPOSIT COMPOSITION (%) 9/30/2006 6/30/2006 12/31/2005 9/30/2005 ----------------------------------------- Non-interest-bearing demand deposits 23.4% 23.6% 24.4% 23.6% Money market and other 12.3% 13.3% 12.2% 15.2% Saving deposits 8.4% 8.1% 7.9% 6.6% Time deposits of $100,000 or more 44.1% 43.1% 46.8% 47.5% Other time deposits 11.8% 11.9% 8.7% 7.1% ----------------------------------------- Total deposit balances 100.0% 100.0% 100.0% 100.0% ========================================= CAPITAL RATIOS 9/30/2006 6/30/2006 12/31/2005 9/30/2005 ----------------------------------------- Total stockholders' equity $176,622 162,509 $146,754 $139,874 Tier 1 risk-based capital ratio 12.09% 11.80% 11.77% 11.45% Total risk-based capital ratio 13.17% 12.86% 12.90% 12.57% Tier 1 leverage ratio 10.91% 10.35% 10.22% 9.92% Book value per share $6.77 $6.31 $5.77 $5.52 Tangible book value per share $6.56 $6.09 $5.53 $5.27 Tangible equity to tangible assets 8.68% 7.92% 7.96% 7.50% CONTACT: Financial Relations Board Tony Rossi, 310-854-8317 (Investors and Financial Media)