EX-99.1 2 a4746744ex991.txt FOOTHILL INDEPENDENT BANCORP Exhibit 99.1 Foothill Independent Bancorp Record Profits Up 9% in the Third Quarter; Management Expects Margin to Benefit from Continued Rising Interest Rates GLENDORA, Calif.--(BUSINESS WIRE)--Oct. 21, 2004--Foothill Independent Bancorp (NASDAQ:FOOT), the parent holding company of Foothill Independent Bank, today reported that continued core deposit and adjustable-rate loan growth fueled record profits in both the third quarter and first nine months of 2004. In the quarter ended September 30, 2004, net income increased 9% to $2.39 million, or $0.33 per diluted share, compared to $2.20 million, or $0.31 per diluted share in the like quarter a year ago. In the nine months ended September 30, 2004, net income grew 10% to $6.80 million, or $0.95 per diluted share, from $6.20 million, or $0.87 per diluted share in the same period of 2003. "We are committed to utilizing low-cost deposits to fund high-quality, prime-based and adjustable-rate loans," stated George Langley, President and CEO. "As a result, our net interest margin shows sequential-quarter improvement this year and credit quality remains outstanding. Looking ahead, our balance sheet is positioned to benefit further should interest rates continue to rise at a measured pace." Core deposits, consisting of no-cost demand deposits and low-cost savings and money market deposits, increased 14% to $603.9 million at September 30, 2004, compared to $532.0 million at September 30, 2003. In the same period, time deposits decreased by 15% to $66.2 million at quarter-end, from $78.0 million a year ago. Core deposits now represent 90% of total deposits, compared to 87% of deposits at September 30, 2003. Total deposits were up 10% to $670.1 million at September 30, 2004, from $610.0 million a year earlier. Total assets increased 9% to $747.4 million at the end of the third quarter, compared to $683.4 million at September 30, 2003. Net loans were up 6%, growing to $473.9 million from $447.4 million a year ago, while the securities portfolio increased 15% to $171.0 million, versus $148.5 million at the end of September last year. "The rise in short-term interest rates and the shift in our balance sheet had a positive effect on our net interest margin," Langley said. "We expect to continue to see sequential-quarter improvement, assuming continued loan demand." Net interest margin improved 23 basis points to 4.88% in the third quarter, compared to 4.65% in the second quarter of 2004. A year ago, the net interest margin was 5.40% in the third quarter. "In the last year, deposit growth has outpaced loan generation, so we have continued to build up our securities portfolio. The greater concentration of securities, which typically earn lower yields than loans, has resulted in a drop in net interest margin on a year-over-year basis. With a goal of building long-term shareholder value, we will not sacrifice asset quality to better our near-term results." For the first nine months of this year, the net interest margin was 4.82%, compared to 5.29% for the same period in 2003. Credit quality remains exceptionally strong: -- Non-performing assets (NPAs) declined to $141,000, or 0.02% of total assets at the end of the third quarter, compared to $980,000, or 0.14% of assets a year ago. -- The reserve for loan losses grew to $5.0 million at the end of the third quarter of 2004, representing 1.04% of gross loans and far exceeding NPAs. -- Foothill recorded a net recovery of $34,000 for the first nine months of 2004. Annualized return on average equity (ROE) improved to 15.2% in the third quarter of 2004, from 14.9% in the third quarter last year. For the nine months ended September 30, 2004, ROE improved to 14.7%, from 14.2% in the same period of 2003. Annualized return on average assets (ROA) was 1.28% for the third quarter and 1.24% for the first nine months of 2004, compared to 1.31% and 1.29%, respectively, in 2003. Net interest income was up moderately to $8.35 million in the third quarter of 2004, compared to $8.27 million in the third quarter last year, driven by an increase in average earning assets and a decrease in time deposits. In the first nine months of the year, net interest income was $23.9 million in 2004, compared to $23.2 million for the same period in 2003. Other operating income also increased slightly, to $1.44 million in the third quarter of 2004, from $1.42 million in the previous year, and to $4.3 million in the nine months ended September 30, 2004 from $4.2 million for the first nine months of 2003. The rise in other operating income was a result of increased fee income generated in deposit accounts. Other operating expenses declined to $6.00 million in the quarter ended September 30, 2004, from $6.1 million for the same quarter of 2003. For the first nine months of 2004, other operating expenses rose slightly to $17.5, million from $17.4 in the first nine months of last year. The efficiency ratio was 63.1% in the third quarter of 2004 from 62.1% for the same period of 2003. However, for the nine-month period, the efficiency ratio improved to 63.8% from 64.3% for the same period in 2003, due to the increase in other operating income. At September 30, 2004, shareholders' equity was $64.2 million, compared to $60.3 million a year earlier, and book value increased to $9.55 per share from $9.02 per share at September 30, 2003. Capital ratios continue to be above the "Well-Capitalized" guidelines established by U.S. Bank Regulatory Agencies. The Tier 1 Leverage Ratio was 9.66% and the Total Risk-based Capital Ratio was 14.08% at September 30 2004. About Foothill Independent Bancorp Foothill Independent Bancorp is a one-bank holding company that owns and operates Foothill Independent Bank. The Bank currently operates 12 commercial banking offices in Los Angeles, San Bernardino and Riverside Counties. Foothill Independent Bank has consistently earned the highest ratings for safety and soundness from such bank rating firms as Findley Reports, Bauer Financial Services, and Veribanc. Forward Looking Information This Release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and often include the words "believe," "expect," "anticipate," "project," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are estimates of, or expectations or beliefs regarding, our future financial condition or future financial performance that are based on current information. Our future financial condition or operating results could differ significantly from our current expectations and beliefs, as set forth in this Release, due to a number of risks and uncertainties, which include risks such as; increased competition from other financial and depository institutions and possible adverse changes in national economic conditions, either of which could adversely affect our ability to improve net interest margin and to grow earnings per share, adverse changes in local economic conditions and declines in real estate values that could result in a decline in the quality of interest earning assets, principally loans; and changes in regulatory requirements and the costs of growing our business through the addition of new branches or possible acquisitions of other banks, either of which could cause our operating expenses to increase. Certain of those risks and uncertainties are described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2003, as filed with the Securities and Exchange Commission. Readers of this Release are urged to read the cautionary statements, which are set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Factors That Could Affect Our Future Financial Performance" in Part II of that Report. Due to these uncertainties and risks, readers are cautioned not to place undue reliance on forward-looking statements contained in this Release, which speak only as of this date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. FOOTHILL INDEPENDENT BANCORP CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------ Percent ---------------- Percent 2004 2003 Change 2004 2003 Change ---------- ------- ------- -------- -------- ------- Interest Income Interest on loans & leases $7,893 $8,233 $22,985 $23,797 Interest on securities 1,414 970 3,764 2,318 Interest on federal funds sold 141 81 307 272 Interest other 36 33 90 95 ---------- ------- -------- -------- Total Interest Income 9,484 9,317 2% 27,146 26,482 3% Interest Expense Deposits 1,033 949 2,949 3,005 Interest on borrowings 102 94 286 280 ---------- ------- -------- -------- Total Interest Expense 1,135 1,043 9% 3,235 3,285 (2)% Net interest income 8,349 8,274 1% 23,911 23,197 3% Provision for loan losses 78 200 (61)% 78 300 (74)% ---------- ------- -------- -------- Net interest income after loan loss provision 8,271 8,074 2% 23,833 22,897 4% Other Operating Income Fees on deposits 1,264 1,217 3,821 3,732 Gain on sales of SBA loans -- 2 5 3 Other 180 196 452 464 ---------- ------- -------- -------- Total Other Operating Income 1,444 1,415 2% 4,278 4,199 2% Other Operating Expense Salaries and employee benefits 3,298 3,090 8,654 8,819 Occupancy and equipment 1,069 1,044 3,194 3,045 Other 1,629 1,943 5,657 5,549 ---------- ------- -------- -------- Total Other Operating Expenses 5,996 6,077 (1)% 17,505 17,413 1% ---------- ------- -------- -------- Income before taxes 3,719 3,412 10,606 9,683 Income tax 1,325 1,215 3,801 3,482 ---------- ------- -------- -------- NET INCOME $2,394 $2,197 9% $6,805 $6,201 10% ========== ======= ======== ======== Per Share Data(a) Earnings per share - Basic $0.35 $0.33 6% $1.01 $0.94 7% ========== ============= ========== ========== Wtd. Avg. shares outstanding - Basic 6,720,338 6,653,505 6,719,961 6,585,182 ========== ============= ========== ========== Earnings per share - Diluted $0.33 $0.31 6% $0.95 $0.87 9% ========== ============= ========== ========== Wtd. Avg. shares outstanding - Diluted 7,136,607 7,088,900 7,140,913 7,112,243 ========== ============= ========== ========== (a) Per share data for the quarter ended September 30, 2003 has been retroactively adjusted for stock dividends paid subsequent to December 31, 2003. FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, ------------------- Percentage 2004 2003 Change --------- --------- ---------- (Dollars in thousands, except per share data) ------------------- ASSETS: Noninterest earning demand deposits and cash on hand $32,561 $37,314 Federal funds sold and overnight repurchase agreements 32,900 17,500 Interest-earning deposits 8,021 9,108 --------- --------- Total Cash and Cash Equivalents 73,482 63,922 15% Securities available for sale 164,720 139,011 Securities held to maturity 6,316 9,480 --------- --------- Total Securities 171,036 148,491 15% Loans and leases receivable 478,903 452,212 6% Reserve for loan losses (4,981) (4,812) --------- --------- Loans & Leases Receivable, Net 473,922 447,400 6% Accrued interest receivable 2,900 2,574 Other real estate owned -- -- Premises and equipment 4,806 5,019 Federal Home Loan Bank (FHLB) stock, at cost 3,428 370 Federal Reserve Bank (FRB) stock, at cost 351 229 Other assets 17,478 15,423 --------- --------- TOTAL ASSETS $747,403 $683,428 9% ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY: Liabilities: Non-interest bearing demand deposits $250,050 $223,671 Savings & NOW deposits 162,000 151,367 Money market deposits 191,865 156,984 Time deposits 66,231 77,987 --------- --------- Total Deposits 670,146 610,009 10% Accrued employee benefits 3,326 2,957 Accrued interest and other liabilities 1,502 1,912 Other debt 8,248 8,248 --------- --------- Total Liabilities 683,222 623,126 10% Stockholders' Equity: Common stock $0.001 par value: Authorized: 25,000,000 shares; Issued and outstanding: 6,719,165 and 6,516,214 shares, respectively 7 6 Additional paid-in capital 67,474 54,317 Retained earnings (2,938) 5,499 Accumulated other comprehensive income net of taxes (362) 480 --------- --------- Total Stockholders' Equity 64,181 60,302 6% --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $747,403 $683,428 9% ========= ========= FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES CONSOLIDATED FINANCIAL RATIOS (Unaudited) Three Months Nine Months Ended(1) Ended(1) September 30, September 30, ------------- ------------- 2004 2003 2004 2003 ------ ------ ------ ------ Return on average assets 1.28% 1.31% 1.24% 1.29% Return on average equity 15.20% 14.86% 14.69% 14.17% Efficiency ratio 63.10% 62.09% 63.85% 64.33% Operating expense/average assets 3.20% 3.62% 3.20% 3.63% Net interest margin 4.88% 5.40% 4.82% 5.29% Tier 1 capital ratio 9.66% 10.02% 9.66% 10.02% Risk adjusted capital ratio 14.08% 14.19% 14.08% 14.19% (1) All ratios have been annualized OTHER CONSOLIDATED FINANCIAL DATA (Unaudited) Three Months Ended Nine Month Ended September 30, September 30, ------------------- ------------------- 2004 2003 2004 2003 --------- --------- --------- --------- (Dollars in thousands) --------------------------------------- Net loans and leases $473,922 $447,395 $473,922 $447,395 Non-performing/non-accrual loans (1) Amounts $141 $980 $141 $980 As a percentage of gross loans 0.03% 0.22% 0.03% 0.22% Real estate owned - loans $-- $-- $-- $-- Total non-performing assets Amounts $141 $980 $141 $980 As a percentage of total assets 0.02% 0.14% 0.02% 0.14% Loan loss reserves Amounts $4,981 $4,817 $4,981 $4,817 As a percentage of gross loans 1.04% 1.07% 1.04% 1.07% Loan loss provision $78 $200 $78 $300 Net charge-offs (recoveries) $8 $48 $(34) $41 (1) Non-Accrual loans are loans that have made no payments of principal or interest for more than 90 days. At September 30, 2004 2003 ------ ------ Book Value Per Share(1) $9.55 $9.02 (1) Adjusted for stock dividends issued subsequent to December 31, 2003 and 2002. FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES CONSOLIDATED AVERAGE BALANCES (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------- 2004 2003 2004 2003 --------- --------- --------- --------- (In thousands) --------------------------------------- ASSETS Earning assets: Interest-earning deposits $8,196 $8,937 $7,537 $7,818 Federal funds sold and overnight repurchase agreements 41,111 34,128 37,142 33,564 Investment securities 168,401 122,208 155,206 98,273 Loans and leases (net of unearned income) 475,594 453,851 469,960 451,523 --------- --------- --------- --------- Total earning assets 693,302 619,124 669,845 591,178 Loan loss reserve (4,992) (4,711) (4,971) (4,652) Non-earning assets 61,089 57,776 64,374 53,724 --------- --------- --------- --------- Total Assets $749,399 $672,189 $729,248 $640,250 ========= ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing liabilities: Deposits: Savings and interest bearing transaction accounts $353,739 $302,223 $340,936 $280,767 Certificates of deposit, $100,000 or more 27,893 30,637 29,448 31,972 Other time deposits 39,990 48,422 41,469 49,415 --------- --------- --------- --------- Total interest-bearing deposits 421,622 381,282 411,853 362,154 Other interest-bearing liabilities 8,248 8,248 8,248 8,248 --------- --------- --------- --------- Total interest bearing liabilities 429,870 389,530 420,101 370,402 Non-interest bearing liabilities: Demand deposits 251,701 218,930 242,146 207,040 Other non-interest bearing liabilities 4,845 4,551 5,243 4,458 --------- --------- --------- --------- Total liabilities 686,416 613,011 667,490 581,900 Stockholders' equity 62,983 59,178 61,758 58,350 --------- --------- --------- --------- Total Liabilities and Stockholders' Equity $749,399 $672,189 $729,248 $640,250 ========= ========= ========= ========= CONTACT: Foothill Independent Bancorp G. Langley, 626-963-8551