EX-99.1 2 a5323256ex991.txt NARA BANCORP, INC. EXHIBIT 99.1 Exhibit 99.1 Nara Bancorp Reports $0.35 Earnings Per Diluted Share for Fourth Quarter 2006 LOS ANGELES--(BUSINESS WIRE)--Jan. 31, 2007--Nara Bancorp, Inc. (the "Company") (NASDAQ:NARA), the holding company of Nara Bank (the "Bank") reported net income of $9.4 million, or $0.35 per diluted share, for fourth quarter 2006, an 18% increase compared to net income of $7.9 million, or $0.30 per diluted share, for fourth quarter 2005. The increase was primarily due to higher net interest income and a credit to income tax expense of $772 thousand during fourth quarter 2006 for resolution of certain tax contingencies. For the full year 2006, net income increased 26% to $33.8 million from $26.9 million in 2005. Diluted earnings per share increased 20% to $1.28 from $1.07 in 2005. Min Kim, President and Chief Executive Officer, said, "Our fourth quarter performance capped a memorable year for Nara Bancorp, in which we produced record earnings while also strengthening our management team, board leadership, and internal controls. In the fourth quarter, we were able to offset compression in our net interest margin with our strongest loan production of the year, driven by our increased focus on C&I lending. We also continue to experience positive momentum in our SBA business, as our SBA loan originations increased by 68% and sales increased by 26% over the prior quarter. We are pleased with our continued ability to win new business from customers, which helps us to achieve our financial goals despite a highly competitive market for deposits. "We are also pleased to announce that we received a formal notice, dated January 29, 2007, from the Federal Reserve Bank of San Francisco that they no longer consider Nara Bank or Nara Bancorp, Inc. to be in 'troubled condition.' Our regulators, both Federal and State, have been tremendously helpful as we reshaped our governance, internal controls and leadership. We appreciate their confidence in our progress, and we will continue to work towards full relief from the MOU," said Ms. Kim. Fourth Quarter Financial Highlights (2006 vs. 2005): -- Net income increased 18% to $9.4 million -- Diluted EPS increased 17% to $0.35 per share -- Net interest income increased 9% to $24.2 million -- Net interest margin decreased 13 basis points to 5.10% -- Efficiency ratio improved to 46.01% from 48.63% -- Net loans receivable increased 19% over prior year to $1.70 billion -- Deposits increased 12% over prior year to $1.71 billion -- Non-performing assets ratio decreased to 0.17% from 0.35% Operating Results for Fourth Quarter 2006 Net Interest Income and Net Interest Margin. Fourth quarter net interest income before provision for loan losses increased 9% to $24.2 million from $22.2 million for fourth quarter 2005. The improvement was attributable to an increase in the net average interest-earning assets which more than offset the decline in the net interest spread. The resulting fourth quarter net interest margin (net interest income divided by average interest-earning assets) decreased 13 basis points to 5.10% from 5.23%. The weighted average yield on the loan portfolio for fourth quarter 2006 increased 60 basis points to 9.21% from 8.61% for the same period last year. The increase was the result of the prime rate-based portion of the loan portfolio repricing upward as interest rates increased during the first half of the year. The weighted average cost of deposits for fourth quarter 2006 increased 94 basis points to 3.68% from 2.74% for the same period last year. The cost of time deposits increased 127 basis points to 5.22% from 3.95%, accounting for a substantial portion of the increase. Sequentially, 2006 fourth quarter net interest income before provision for loan losses decreased $209 thousand, or 1% from the third quarter. Average interest-earning assets increased nominally and the net interest spread decreased by 17 basis points, resulting in a decline in the net interest margin to 5.10% from 5.25%. During the fourth quarter of 2006, the Bank had $244 million of time deposits tied to prime that re-priced upward by approximately 34 basis points, as well as a large amount of other time deposits that were renewed at significantly higher interest rates. As anticipated, this put downward pressure on the net interest margin for the quarter. The net interest margin however, benefited from the current recognition of delinquent interest, totaling $238 thousand relating to the recovery of delinquent interest from a non-accrual loan placed back on accrual status. Excluding this item, the fourth quarter 2006 net interest margin was 5.05%. Non-interest Income. Fourth quarter non-interest income was relatively the same compared to fourth quarter 2005. However, during the fourth quarter of 2006, the Company recognized a gain of $1.3 million on the sale of commercial real estate loans to reduce certain industry concentrations within the commercial real estate portfolio. Additionally, the Company recognized net gains of $1.1 million from the sale of $19.4 million of SBA loans during the quarter, representing an 18% increase over the net gains recognized during the third quarter of 2006. Sequentially, non-interest income increased 25%, primarily due to the increased gains on sales of commercial real estate and SBA loans discussed above. The increase was partially offset by the decrease in other income and fees, which decreased 26%, due primarily to write-offs of $230 thousand from disposals of premises and equipment related to the corporate headquarters relocation and a branch relocation. Non-interest Expense. Fourth quarter non-interest expense increased 1% to $13.6 million from $13.5 million for the same period last year. Compensation expense increased 8% over the same quarter of the prior year, due to an increase in the full-time equivalent employee count from 376 to 408 and the recognition of $496 thousand in stock option expense. These increases were partially offset by a decrease of $827 thousand in accrued bonus expense. Occupancy expense increased 9%, primarily due to lease renewals at higher lease rates for four branches and a new lease related to the relocation of our corporate headquarters. Reductions in expense were achieved in professional fees, marketing, and data processing. Professional fees decreased by $496 thousand primarily due to the completion of consulting work related to MOU compliance. The decrease in marketing expense was due to higher expenses related to a deposit promotion in fourth quarter 2005. Data processing costs decreased as the Company brought certain services in-house. Sequentially, non-interest expense in fourth quarter 2006 increased 5% to $13.6 million from $13.0 million in third quarter 2006. This increase was primarily due to increases in compensation and marketing, partially offset by decreases in data processing and professional fees. Compensation expense increased due to growth in the full time equivalent employee count from 396 to 408 and higher salary and stock option expense. Advertising and marketing expenses increased due to a deposit campaign, holiday and new branding promotions during the fourth quarter. Data processing costs declined due to the reason mentioned earlier, while professional fees declined as legal fees normalized and consulting fees decreased. Income Taxes. The effective tax rate was 36.2% for fourth quarter 2006 compared to 40.8% for fourth quarter 2005. The decrease in the effective tax rate was due primarily to the resolution of certain tax contingencies during fourth quarter 2006, resulting in a reduction of deferred tax liabilities and a credit to income tax expense of $772 thousand. Balance Sheet Summary At December 31, 2006 total assets were $2.05 billion compared to $1.78 billion at December 31, 2005, an increase of 15%. Gross loans receivable were $1.71 billion at December 31, 2006, an increase of 19% from the $1.45 billion at December 31, 2005. On a sequential quarter basis, gross loans receivable increased 13% (annualized) as loan production was $30 million higher during fourth quarter 2006, and loan pay-offs were lower than the third quarter by $25 million. Including the $31.9 million of commercial real estate loans sold during the quarter, gross loans receivable increased at an annualized rate of 21% in the fourth quarter of 2006. SBA loan originations were $39.2 million during the quarter compared to $23.3 million during third quarter 2006 and $46.9 million during fourth quarter 2005. Sales of SBA loans during fourth quarter 2006 were $19.4 million, compared to $15.4 million during third quarter 2006 and $38.4 million during fourth quarter 2005. Total deposits were $1.71 billion at December 31, 2006, an increase of 12% from $1.53 billion at December 31, 2005. On a sequential quarter basis, deposits increased 15% (annualized). The largest increases came in non-interest bearing deposits ("DDAs") and certificates of deposit. DDAs increased $31 million during the latter half of December 2006. By January 4, 2007 DDAs decreased by $31 million, reflecting the management of cash balances by customers at year end. FHLB advances were $76.0 million at December 31, 2006 compared to $31.0 million at December 31, 2005. During 2006, FHLB advances were used to augment deposits as a source of match-funding $50 million of fixed-rate loan originations. Asset Quality The Company recorded a provision for loan losses of $1.4 million in the fourth quarter 2006, compared to $857 thousand in the same period of the prior year. The increase in the provision was due primarily to the higher loan growth in 2006 compared to 2005. Non-performing assets at December 31, 2006 were $3.6 million, or 0.17% of total assets, compared to $6.2 million, or 0.35% of total assets, at December 31, 2005 and $4.6 million, or 0.23% of total assets, at September 30, 2006. Non-performing loans at December 31, 2006 were $3.3 million, or 0.19% of total loans, compared to $5.5 million, or 0.38% of total loans, at December 31, 2005 and $4.0 million, or 0.24% of total loans, at September 30, 2006. Net loan charge-offs were $1.2 million during the quarter, or 0.27% of average loans on annualized basis, compared to $307 thousand, or 0.08% of average loans on an annualized basis, for fourth quarter 2005, and $429 thousand, or 0.11% of average loan on an annualized basis, for third quarter 2006. Fourth quarter charge-offs included four commercial loans totaling $820 thousand. These businesses were primarily retail businesses. The allowance for loan losses at December 31, 2006 was $19.1 million, or 1.11% of gross loans receivable, compared to $17.6 million, or 1.22% of gross loans receivable at December 31, 2005, and $18.9 million, or 1.14% of gross loans receivable, at September 30, 2006. The reduction in the allowance for loan losses ratio reflects a 50% decline in the level of special mention and classified loans during 2006. Performance Ratios The annualized return on average equity (ROE) for fourth quarter 2006 was 20.56%, compared to 21.83% for fourth quarter 2005, and 20.36% for third quarter 2006. The 2006 fourth quarter ROE declined from fourth quarter 2005 due to the increase in equity resulting from the $20 million of capital raised in September 2005. For the full year, the ROE was 20.34% in 2006 compared to 22.23% in 2005. The annualized return on average assets (ROA) for fourth quarter 2006 was 1.88%, compared to 1.77% for fourth quarter 2005, and 1.77% for third quarter 2006. For the full year, the ROA was 1.75% in 2006 compared to 1.59% in 2005. The efficiency ratio for fourth quarter 2006 was 46.01%, compared to 48.63% for fourth quarter 2005. The improvement in the efficiency ratio was primarily due to improved operating leverage as revenues increased 7.2% and expenses increased 1.4%. The increase in the efficiency ratio comparing fourth quarter 2006 to 45.26% for third quarter 2006 was due primarily to the effect of margin compression on revenue growth. Capital At December 31, 2006, we continued to exceed the regulatory capital requirements to be classified as a "well-capitalized institution." The Leverage Ratio was 11.18% compared to 10.22% at December 31, 2005. The Tier 1 Risk-based Ratio was 12.16% compared to 11.77% at December 31, 2005. The Total Risk-based Ratio was 13.21% compared to 12.90% at December 31, 2005. During September 2005, approximately $20 million of capital was raised from the sale of common stock to the Company's chairman of the board of directors which closed on September 12, 2005. Earnings Outlook For the full year of 2007, the Company expects fully diluted earnings per share to range between $1.29 and $1.33. Commenting on the outlook, Ms. Kim said, "We expect to continue generating loan growth in the 15-20% range in 2007, while also seeing further increases in our SBA loan production as we continue to build our presence in newer markets. However, we expect that our earnings growth will continue to be impacted by a decline in our net interest margin due to the yield curve environment and higher expenses related to FDIC insurance and professional fees. As we are able to expand our footprint in the future, we believe we can increase our ability to gather core deposits, lower our cost of funds, and drive higher levels of earnings growth." Conference Call and Webcast A conference call with simultaneous webcast to discuss the Company's fourth quarter 2006 financial results will be held tomorrow, February 1, 2007 at 9:30 a.m. Pacific / 12:30 p.m. Eastern. Interested participants and investors may access the conference call by dialing 800-901-5217 (domestic) or 617-786-2964 (international), passcode 62140641. There will also be a live webcast 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 February 8, 2007; the pass code is 86246930. 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 7 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, , 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, Except for Share Data) Assets % % 12/31/2006 9/30/2006 change 12/31/2005 change ----------- ----------- ------- ----------- ------- Cash and due from banks $36,300 $33,799 7% $32,924 10% Federal funds sold 44,500 2,500 1680% 33,100 34% Term federal funds sold - - 0% 7,000 -100% Securities available for sale, at fair value 162,851 200,461 -19% 174,709 -7% Securities held to maturity, at amortized cost (fair value: December 31, 2006 - $1,002; September 30, 2006 - $1,005; December 31, 2005 - $1,023) 1,000 1,000 0% 1,001 0% Federal Home Loan Bank and Federal Reserve Bank stock 9,758 9,655 1% 8,266 18% Loans held for sale, at the lower of cost or market 15,162 9,103 67% 17,083 -11% Loans receivable 1,714,865 1,660,321 3% 1,445,740 19% Allowance for loan losses (19,112) (18,909) 1% (17,618) 8% ----------- ----------- ------- ----------- ------- Net loans 1,695,753 1,641,412 3% 1,428,122 19% ----------- ----------- ------- ----------- ------- Accrued interest receivable 8,974 8,425 7% 7,620 18% Premises and equipment, net 11,941 11,575 3% 8,148 47% Cash surrender value of life insurance 15,113 15,000 1% 14,640 3% Goodwill 2,347 2,347 0% 2,347 0% Other intangible assets, net 2,899 3,071 -6% 3,589 -19% Other assets 41,878 40,457 4% 37,273 12% ----------- ----------- ------- ----------- ------- Total assets $2,048,476 $1,978,805 4% $1,775,822 15% =========== =========== ======= =========== ======= Liabilities Deposits $1,712,235 $1,649,317 4% $1,526,486 12% Borrowings from Federal Home Loan Bank 76,000 81,000 -6% 31,000 145% Subordinated debentures 39,268 39,268 0% 39,268 0% Accrued interest payable 8,258 9,933 -17% 8,755 -6% Other liabilities 26,123 22,665 15% 23,559 11% ----------- ----------- ------- ----------- ------- Total liabilities 1,861,884 1,802,183 3% 1,629,068 14% ----------- ----------- ------- ----------- ------- Stockholders' Equity Common stock, $0.001 par value; authorized, 40,000,000 shares; issued and outstanding, 26,107,672, 26,100,672 and 25,444,442 shares at December 31, 2006, September 30, 2006 and December 31, 2005, respectively $26 $26 0% $25 4% Capital surplus 77,904 77,320 1% 69,451 12% Retained earnings 111,978 103,338 8% 81,016 38% Accumulated other comprehensive loss, net (3,316) (4,062) -18% (3,738) -11% ----------- ----------- ------- ----------- ------- Total stockholders' equity 186,592 176,622 6% 146,754 27% ----------- ----------- ------- ----------- ------- Total liabilities and stockholders' equity $2,048,476 $1,978,805 4% $1,775,822 15% =========== =========== ======= =========== ======= Nara Bancorp, Inc. Consolidated Statements of Income Unaudited (Dollars in Thousands, Except for Share and Per Share Data) Three Months Ended, --------------------------------------------------- % % 12/31/2006 9/30/2006 change 12/31/2005 change --------------------------------------------------- Interest income: Interest and fees on loans $38,950 $37,818 3% $31,332 24% Interest on securities 2,151 2,340 -8% 1,871 15% Interest on federal funds sold and other investments 324 470 -31% 651 -50% --------------------------------------------------- Total interest income 41,425 40,628 2% 33,854 22% --------------------------------------------------- Interest expense: Interest on deposits 15,245 14,799 3% 10,537 45% Interest on other borrowings 1,963 1,403 40% 1,121 75% --------------------------------------------------- Total interest expense 17,208 16,202 6% 11,658 48% --------------------------------------------------- Net interest income before provision for loan losses 24,217 24,426 -1% 22,196 9% Provision for loan losses 1,362 1,170 16% 857 59% --------------------------------------------------- Net interest income after provision for loan losses 22,855 23,256 -2% 21,339 7% --------------------------------------------------- Non-interest income: Service fees on deposit accounts 1,553 1,471 6% 1,569 -1% Net gains on sales of SBA loans 1,091 922 18% 2,297 -53% Net gains on sales of other loans 1,272 - - - - Net gains on sales of securities available-for- sale 92 - - - - Other income and fees 1,440 1,952 -26% 1,606 -10% --------------------------------------------------- Total non- interest income 5,448 4,345 25% 5,472 0% --------------------------------------------------- Non-interest expense: Salaries and employee benefits 6,857 6,346 8% 6,361 8% Occupancy 2,087 1,993 5% 1,907 9% Furniture and equipment 639 562 14% 589 8% Advertising and marketing 655 421 56% 789 -17% Data processing and communications 781 1,029 -24% 920 -15% Professional fees 663 815 -19% 1,159 -43% Other 1,966 1,856 6% 1,729 14% --------------------------------------------------- Total non- interest expense 13,648 13,022 5% 13,454 1% --------------------------------------------------- Income before income taxes 14,655 14,579 1% 13,357 10% Income taxes 5,298 5,910 -10% 5,446 -3% --------------------------------------------------- Net Income $9,357 $8,669 8% $7,911 18% =================================================== Earnings Per Share: Basic $0.36 $0.33 $0.31 Diluted $0.35 $0.33 $0.30 Average Shares Outstanding Basic 26,103,639 25,949,931 25,406,294 Diluted 26,533,757 26,407,185 26,180,117 Twelve Months Ended December 31, --------------------------------- 2006 2005 % change --------------------------------- Interest income: Interest and fees on loans $144,349 $108,915 33% Interest on securities 8,435 6,217 36% Interest on federal funds sold and other investments 3,047 2,092 46% --------------------------------- Total interest income 155,831 117,224 33% --------------------------------- Interest expense: Interest on deposits 55,557 32,698 70% Interest on other borrowings 5,659 4,953 14% --------------------------------- Total interest expense 61,216 37,651 63% --------------------------------- Net interest income before provision for loan losses 94,615 79,573 19% Provision for loan losses 3,754 5,427 -31% --------------------------------- Net interest income after provision for loan losses 90,861 74,146 23% --------------------------------- Non-interest income: Service fees on deposit accounts 6,081 6,281 -3% Net gains on sales of SBA loans 4,826 5,987 -19% Net gains on sales of other loans 1,272 - - Net gains on sales of securities available-for-sale 92 143 -36% Other income and fees 7,028 7,781 -10% --------------------------------- Total non-interest income 19,299 20,192 -4% --------------------------------- Non-interest expense: Salaries and employee benefits 27,097 23,925 13% Occupancy 7,814 6,963 12% Furniture and equipment 2,269 2,100 8% Advertising and marketing 2,352 2,149 9% Data processing and communications 3,781 3,416 11% Professional fees 2,938 3,714 -21% Other 7,706 6,403 20% --------------------------------- Total non-interest expense 53,957 48,670 11% --------------------------------- Income before income taxes 56,203 45,668 23% Income taxes 22,397 18,811 19% --------------------------------- Net Income $33,806 $26,857 26% ================================= Earnings Per Share: Basic $1.31 $1.11 Diluted $1.28 $1.07 Average Shares Outstanding Basic 25,786,700 24,119,107 Diluted 26,317,408 25,062,921 Nara Bancorp, Inc. Supplemental Data Unaudited (Dollars in Thousands) (Annualized) At or for the Three Months At or for the Twelve Ended, Months Ended, ------------------------------------------------------ Profitability measures: 12/31/2006 9/30/2006 12/31/2005 12/31/2006 12/31/2005 ------------------------------------------------------ ROA 1.88% 1.77% 1.77% 1.75% 1.59% ROE 20.56% 20.36% 21.83% 20.34% 22.23% Net interest margin, including loan prepayment fee income 5.10% 5.25% 5.23% 5.14% 5.00% Net interest margin, excluding loan prepayment fee income 4.99% 5.11% 5.13% 5.05% 4.95% Efficiency ratio 46.01% 45.26% 48.63% 47.37% 48.78% Yield on loan portfolio 9.21% 9.28% 8.61% 9.06% 7.87% Yield on interest- earning assets 8.73% 8.73% 7.98% 8.47% 7.36% Cost of interest- bearing deposits 4.78% 4.61% 3.57% 4.37% 3.03% Cost of total deposits 3.68% 3.55% 2.74% 3.38% 2.28% Cost of interest- bearing liabilities 4.91% 4.74% 3.74% 4.51% 3.20% Cost of time deposits 5.22% 5.06% 3.95% 4.80% 3.37% Cost of funds 3.87% 3.70% 2.90% 3.54% 2.46% Net interest spread (yield on average interest- earning assets - average cost of funds) 4.86% 5.02% 5.08% 4.93% 4.91% For the Three Months Ended, -------------------------------------------------------- 12/31/2006 9/30/2006 % change 12/31/2005 % change -------------------------------------------------------- AVERAGE BALANCES Gross loans, includes loans held for sale $1,691,340 $1,629,345 4% $1,454,930 16% Interest- earning assets 1,898,348 1,862,304 2% 1,696,845 12% Total assets 1,995,242 1,959,562 2% 1,790,975 11% Interest- bearing deposits 1,276,231 1,284,143 -1% 1,179,585 8% Interest- bearing liabilities 1,401,350 1,366,506 3% 1,247,753 12% Non-interest- bearing demand deposits 378,703 383,587 -1% 359,103 5% Stockholders' Equity 182,017 170,273 7% 144,963 26% For the Twelve Months Ended, --------------------------------- 12/31/2006 12/31/2005 % change --------------------------------- AVERAGE BALANCES Gross loans, includes loans held for sale 1,593,453 1,383,758 15% Interest-earning assets 1,840,176 1,591,744 16% Total assets 1,934,925 1,684,577 15% Interest-bearing deposits 1,271,738 1,080,588 18% Interest-bearing liabilities 1,357,874 1,177,600 15% Non-interest-bearing demand deposits 373,789 355,431 5% Stockholders' Equity 166,206 120,793 38% LOAN PORTFOLIO COMPOSITION: 12/31/2006 9/30/2006 % change 12/31/2005 % change ------------------------------------------------------- Commercial loans $565,759 $520,253 9% $483,231 17% Real estate loans 1,102,072 1,089,705 1% 900,699 22% Consumer and other loans 49,201 53,132 -7% 64,633 -24% ------------------------------------------------------- Loans outstanding 1,717,032 1,663,090 3% 1,448,563 19% Unamortized deferred loan fees - net of costs (2,167) (2,769) -22% (2,823) -23% ------------------------------------------------------- Loans, net of deferred loan fees and costs 1,714,865 1,660,321 3% 1,445,740 19% Allowance for loan losses (19,112) (18,909) 1% (17,618) 8% ------------------------------------------------------- Loan receivable, net $1,695,753 $1,641,412 3% $1,428,122 19% ======================================================= For the Three Months Ended, ------------------------------------------------------ ALLOWANCE FOR LOAN LOSSES: 12/31/2006 9/30/2006 % Change 12/31/2005 % Change ------------------------------------------------------ Balance at Beginning of Period $18,909 $18,168 4% $17,068 11% Provision for Loan Losses 1,362 1,170 16% 857 59% Recoveries 108 218 -50% 160 -33% Charge Offs (1,267) (647) 96% (467) 171% ------------------------------------------------------ Balance at End of Period $19,112 $18,909 1% $17,618 8% ====================================================== Net charge- off/Average gross loans (annualized) 0.27% 0.11% 0.08% For the Twelve Months Ended, --------------------------------- ALLOWANCE FOR LOAN LOSSES: 12/31/2006 12/31/2005 % Change ----------------------- --------- Balance at Beginning of Period $17,618 $14,627 20% Provision for Loan Losses 3,754 5,427 -31% Recoveries 1,401 630 122% Charge Offs (3,661) (3,066) 19% --------------------------------- Balance at End of Period $19,112 $17,618 8% ================================= Net charge-off/Average gross loans (annualized) 0.14% 0.18% NON-PERFORMING ASSETS 12/31/2006 9/30/2006 12/31/2005 ---------------------------------- Delinquent Loans 90 days or more on Non-Accrual Status $3,271 $3,983 $5,489 Delinquent Loans 90 days or more on Accrual Status - - - ---------------------------------- Total Non-Performing Loans 3,271 3,983 5,489 Other real estate owned - - - Restructured Loans 298 606 741 ---------------------------------- Total Non-Performing Assets $3,569 $4,589 $6,230 ================================== Non-Performing Assets/ Total Assets 0.17% 0.23% 0.35% Non-Performing Loans/Gross Loans 0.19% 0.24% 0.38% Allowance for loan losses/ Gross Loans 1.11% 1.14% 1.22% Allowance for loan losses/ Non- Performing Loans 584% 475% 321% DEPOSIT COMPOSITION 12/31/2006 9/30/2006 % Change 12/31/2005 % Change ------------------------------------------------------- Non-interest- bearing demand deposits $407,519 $386,263 6% $371,943 10% Money market and other 184,199 202,157 -9% 185,550 -1% Saving deposits 141,611 138,567 2% 120,948 17% Time deposits of $100,000 or more 768,727 726,900 6% 714,636 8% Other time deposits 210,179 195,430 8% 133,409 58% ----------------------- ------------------------------- Total deposit balances $1,712,235 $1,649,317 4% $1,526,486 12% ======================= =============================== DEPOSIT COMPOSITION (%) 12/31/2006 9/30/2006 12/31/2005 ---------------------------------- Non-interest-bearing demand deposits 23.8% 23.4% 24.4% Money market and other 10.7% 12.3% 12.2% Saving deposits 8.3% 8.4% 7.9% Time deposits of $100,000 or more 44.9% 44.1% 46.8% Other time deposits 12.3% 11.8% 8.7% ---------------------------------- Total deposit balances 100.0% 100.0% 100.0% ================================== CAPITAL RATIOS 12/31/2006 9/30/2006 12/31/2005 ---------------------------------- Total stockholders' equity $186,592 176,622 $146,754 Tier 1 risk-based capital ratio 12.16% 12.09% 11.77% Total risk-based capital ratio 13.21% 13.17% 12.90% Tier 1 leverage ratio 11.18% 10.91% 10.22% Book value per share $7.15 $6.77 $5.77 Tangible book value per share $6.95 $6.56 $5.53 Tangible equity to tangible assets 8.88% 8.68% 7.96% CONTACT: Financial Relations Board Investors and Financial Media: Tony Rossi, 310-854-8317