EX-99.1 2 a5252787ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 San Joaquin Bancorp Continues Growth in the Third Quarter BAKERSFIELD, Calif.--(BUSINESS WIRE)--Oct. 18, 2006--San Joaquin Bancorp (OTCBB:SJQU), a bank holding company with $711 million in assets, today announced financial results for the third quarter ended September 30, 2006. Net income after tax for the third quarter was $1.9 million, a 14% increase from $1.7 million in net income reported for the third quarter of 2005. Earnings per share for the third quarter of 2006 were $0.52 per diluted share compared to $0.46 per diluted share reported in the third quarter of 2005, which is an increase of 13%. For the nine months ended September 30, 2006, net income after tax was $6.7 million, an increase of 40% compared to $4.8 million in net income reported for the same period in 2005. Earnings per share for the period were $1.81 per diluted share compared to $1.31 per diluted share reported through the third quarter of 2005, which is an increase of 38%. Bart Hill, President and CEO said, "San Joaquin Bank is having another excellent year of earnings and asset growth. The bank also continues to be a leader in market share gains for Kern County commercial bank deposits. San Joaquin Bank has a market share of 10.5% and is the fourth largest of 22 FDIC insured institutions in the county." Highlights for the Quarter Compared to Third Quarter 2005: -- Net income - up 14% to $1.9 million -- Loans, net of unearned fees - up 44% to $506 million -- Deposits - up 6% to $575 million -- Assets - up 20% to $711 million Income Statement Total interest income for the third quarter of 2006 was $12.2 million compared to $8.5 million reported in the same quarter 2005, an increase of $3.7 million, or 44%. Strong loan demand and rising interest rates were the primary driving factors while loan and investment yields continue to improve. Average earning assets increased from $525 million in the third quarter of 2005 to $636 million at the end of the third quarter of 2006 led by continued strength in loan demand. Interest expense for the third quarter of 2006 was $4.9 million compared to $2.6 million for the third quarter of 2005. Interest rate increases accounted for approximately 52% of the change; however, growth in money market and non-core funding comprised the remainder. Net interest margin increased in the comparative third quarters from 4.48% in 2005 to 4.53% in 2006. The rise is the result of growth in earning assets, primarily loans, which carry more favorable yields. Improvement in investment yields also contributed. Non-interest income was $725,000 for the third quarter of 2006 compared to $680,000 for the same period in 2005. The improvement was due to an increase in other customer service fees. Fees from deposit accounts were down $24,000 compared to the third quarter in 2005. Non-interest expense was $3.8 million for the third quarter of 2006 compared to $3.3 million in the same period of 2005. Increases in salaries and employee benefits, including normal adjustments and staff additions, account for most of the change. The Company's efficiency ratio improved on a year over year basis from 50.26% in the third quarter 2005 to 48.08% in 2006, demonstrating increases in overall operating efficiency as compared to the prior year. In the third quarter of 2006, the provision for loan losses was increased to $600,000 compared to $300,000 in 2005. The additional provision was prompted by significant growth in the loan portfolio. Allowance for loan loss adequacy is determined by the application of various factors such as historical loss and industry default rates, peer group comparisons, and loan quality classifications. Annualized return on average assets decreased from 1.18% in the third quarter 2005 compared to 1.11% for the same period in 2006. Return on average equity decreased from 18.46% in 2005 to 17.01% in 2006 on an annualized basis. The decline is due primarily to additional provision for loan losses. Balance Sheet Total loans, net of unearned fees, increased $155 million to $506 million, or 44%, compared to $351 million at the end of the third quarter of 2005. The increase was primarily attributable to growth in loans on existing commercial real estate and construction and land development. As of September 30, 2006, total deposits were $575 million as compared to $543 million at September 30, 2005. The increase of $32 million, or 6%, was primarily due to growth in money market accounts. Interest-bearing deposits increased by $36 million while noninterest-bearing deposits declined by $4 million. For the Bank, non-core funding consisting of time deposits of $100,000 or more, Federal Home Loan Bank (FHLB) advances and other borrowings, increased as strong loan demand outpaced deposit growth. FHLB advances made up the majority of the increase. At September 30, 2006, non-core funds were $99 million compared to $26 million at September 30, 2005. Non-core funding accounted for approximately 15% of total funding at September 30, 2006. Asset Quality The Company had net recoveries of previously charged off loans of $66,000 in the first nine months of 2006 compared to $277,000 net charge-offs for the same period in 2005. The allowance for loan losses was $8.2 million and $6.1 million or 1.62% and 1.74% of loans at September 30, 2006 and 2005, respectively. Nonperforming and restructured loans were $330,000 at September 30, 2006, compared to $3.4 million at September 30, 2005. The percentage of nonperforming and restructured loans to total loans, net of unearned income, was .07% at the end of the third quarter of 2006 compared to .97% at the end of the third quarter in 2005. Total nonperforming and restructured assets were $1.0 million at September 30, 2006, compared to $4 million at September 30, 2005. Nonperforming and restructured assets as a percentage of total assets were 0.14% and 0.67% at the third quarter of 2006 and 2005, respectively. San Joaquin Bancorp, (the "Company"), assesses and manages credit risk on an ongoing basis through a formal credit review program and approval policies, internal monitoring and formal lending policies of its bank subsidiary, San Joaquin Bank. The Company believes that the Bank's ability to identify and assess risk and return characteristics of the loan portfolio is critical for profitability and growth of the consolidated group. The Company, through the Bank, emphasizes credit quality in the loan approval process, active credit administration and regular monitoring. The Bank has designed and implemented a comprehensive loan review and grading system that functions to monitor and assess the credit risk inherent in the loan portfolio. Capital Total shareholders' equity at September 30, 2006 was $46 million compared to $37 million at September 30, 2005. Capital ratios for the Company continue to remain above the well-capitalized guidelines established by bank regulatory agencies. Additional Information On September 1, 2006, the Company issued $10 million in trust preferred securities. The Company made a capital injection into San Joaquin Bank on September 12, 2006 in the amount of $9.7 million. The injection was recorded as capital surplus by the Bank. The trust preferred securities, in the form of a junior subordinated note, qualify as Tier I Capital under regulatory guidelines. San Joaquin Bancorp is a bank holding company subject to the regulatory oversight of the Federal Reserve System. San Joaquin Bank is a state-chartered bank wholly-owned by San Joaquin Bancorp. It was established in 1980 and is headquartered in Bakersfield, California. San Joaquin Bank is a full-service, community bank with three banking offices in Bakersfield and one in Delano. San Joaquin Bank emphasizes professional, personal banking service directed primarily to small and medium-sized businesses and professionals. The Bank also provides a full range of banking services that are available to individuals, public entities, and non-profit organizations. On October 12, 2006, San Joaquin Bank became a member of the Federal Reserve System. As a member bank, the Federal Reserve Bank of San Francisco will assume federal regulatory oversight of the Bank. FORWARD-LOOKING INFORMATION: The following appears in accordance with the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about San Joaquin Bancorp for which it claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995, including statements with regard to descriptions of our plans or objectives for future operations, products or services, and forecasts of our revenues, earnings or other measures of economic performance. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors -- many of which are beyond our control -- could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements and reported results should not be considered an indication of our future performance. Some of these risk factors include, among others, certain credit, market, operational and liquidity risks associated with our business and operations, changes in business and economic conditions in California and nationally, rising interest rates, potential acts of terrorism (which are beyond our control), volatility of rate sensitive deposits and assets, value of real estate collateral securing many of our loans, accounting estimates and judgments, compliance costs associated with the company's internal control structure and procedures for financial reporting. These risk factors are not exhaustive and additional factors that could have an adverse effect on our business and financial performance are set forth under "Risk Factors" and elsewhere in this quarterly report and in our annual report on Form 10-K for the year ended December 31, 2005. Forward-looking statements speak only as of the date they are made. We do not undertake to update forward-looking statements to reflect circumstances or events that occur after the date forward-looking statements are made. San Joaquin Bancorp and Subsidiaries Consolidated Balance Sheet (unaudited) As of September 30 2006 2005 ---------------------------------------------------------------------- ASSETS Cash and due from banks $30,416,000 $31,948,000 Interest-bearing deposits in banks 2,037,000 1,594,000 Federal funds sold - 6,700,000 ------------- ------------- Total cash and cash equivalents 32,453,000 40,242,000 Investment securities: Held to maturity 141,914,000 177,398,000 Available for sale 7,001,000 2,479,000 ------------- ------------- Total Investment Securities 148,915,000 179,877,000 Loans, net of unearned income 505,546,000 350,777,000 Less: allowance for loan losses (8,199,000) (6,110,000) ------------- ------------- Net Loans 497,347,000 344,667,000 Premises and equipment 7,707,000 7,617,000 Investment in real estate 659,000 584,000 Interest receivable and other assets 23,785,000 19,836,000 ------------- ------------- TOTAL ASSETS $710,866,000 $592,823,000 ============= ============= ---------------------------------------------------------------------- LIABILITIES Deposits: Noninterest-bearing $172,117,000 $175,894,000 Interest-bearing deposits 403,325,000 366,962,000 ------------- ------------- Total Deposits 575,442,000 542,856,000 Short-term borrowings 65,600,000 - Accrued interest payable and other liabilities 7,108,000 5,770,000 Long-term debt 17,100,000 6,800,000 ------------- ------------- Total Liabilities 665,250,000 555,426,000 ------------- ------------- SHAREHOLDERS' EQUITY Common stock, no par value - 10,000,000 shares authorized; 3,479,722 and 3,435,896 issued and outstanding at September 30, 2006 and 2005, respectively 10,308,000 9,970,000 Additional paid-in capital 104,000 - Retained earnings 35,321,000 27,560,000 Accumulated other comprehensive income (loss) (117,000) (133,000) ------------- ------------- Total Shareholders' Equity 45,616,000 37,397,000 ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $710,866,000 $592,823,000 ============= ============= San Joaquin Bancorp and Subsidiaries Consolidated Statement of Income (unaudited) Three Months ended Sept 30 Nine Months ended Sept 30 -------------------------- ------------------------- 2006 2005 2006 2005 -------------- ----------- ------------ ------------ INTEREST INCOME Loans (including fees) $10,558,000 $6,859,000 $28,742,000 $18,696,000 Investment securities 1,610,000 1,427,000 4,859,000 3,649,000 Fed funds & other interest-bearing balances 22,000 202,000 365,000 493,000 -------------- ----------- ------------ ------------ Total Interest Income 12,190,000 8,488,000 33,966,000 22,838,000 -------------- ----------- ------------ ------------ INTEREST EXPENSE Deposits 4,212,000 2,456,000 11,165,000 5,716,000 Short-term borrowings 526,000 - 805,000 35,000 Long-term borrowings 189,000 99,000 421,000 272,000 -------------- ----------- ------------ ------------ Total Interest Expense 4,927,000 2,555,000 12,391,000 6,023,000 -------------- ----------- ------------ ------------ Net Interest Income 7,263,000 5,933,000 21,575,000 16,815,000 Provision for loan losses 600,000 300,000 1,130,000 900,000 -------------- ----------- ------------ ------------ Net Interest Income After Loan Loss Provision 6,663,000 5,633,000 20,445,000 15,915,000 -------------- ----------- ------------ ------------ NONINTEREST INCOME Service charges & fees on deposits 200,000 224,000 591,000 682,000 Other customer service fees 317,000 214,000 949,000 846,000 Other 208,000 242,000 694,000 519,000 -------------- ----------- ------------ ------------ Total Noninterest Income 725,000 680,000 2,234,000 2,047,000 -------------- ----------- ------------ ------------ NONINTEREST EXPENSE Salaries and employee benefits 2,445,000 1,981,000 7,008,000 5,711,000 Occupancy 245,000 283,000 681,000 655,000 Furniture & equipment 257,000 171,000 780,000 799,000 Promotional 131,000 126,000 433,000 428,000 Professional 305,000 145,000 885,000 725,000 Other 458,000 618,000 1,405,000 1,453,000 -------------- ----------- ------------ ------------ Total Noninterest Expense 3,841,000 3,324,000 11,192,000 9,771,000 -------------- ----------- ------------ ------------ Income Before Taxes 3,547,000 2,989,000 11,487,000 8,191,000 Income Taxes 1,625,000 1,298,000 4,777,000 3,403,000 -------------- ----------- ------------ ------------ NET INCOME $1,922,000 $1,691,000 $6,710,000 $4,788,000 ============== =========== ============ ============ Basic Earnings per Share $0.55 $0.49 $1.93 $1.40 ============== =========== ============ ============ Diluted Earnings per Share $0.52 $0.46 $1.81 $1.31 ============== =========== ============ ============ Financial Highlights - September 30, 2006 ---------------------------------------------------------------------- (data in thousands except per share data) ---First 9 Months--- % Variance -------------------- (unaudited) 2006 2005 2006 vs. 2005 ---------- --------- ------------- Net Interest Income $21,575 $16,815 28.3% Non Interest Income $2,234 $2,047 9.1% Addition to Provision for Loan Losses $1,130 $900 25.6% Net Income $6,710 $4,788 40.1% Total Assets $710,866 $592,823 19.9% Total Net Loans $497,347 $344,667 44.3% Total Deposits $575,442 $542,856 6.0% Total Shareholders' Equity $45,616 $37,397 22.0% Basic Earnings per Share $1.93 $1.40 37.9% Diluted Earnings per Share $1.81 $1.31 38.2% Book Value per Share $13.11 $10.88 20.5% Key Ratios: Annualized Return on Average Equity 21.11% 18.16% 16.2% Annualized Return on Average Assets 1.35% 1.17% 15.0% Annualized Net Interest Margin 4.68% 4.53% 3.3% Efficiency Ratio 47.01% 51.80% -9.3% CONTACT: San Joaquin Bancorp Bart Hill, President 661-281-0300 Stephen M. Annis, Executive Vice President & CFO 661-281-0360 www.sjbank.com