EX-99.1 3 d09782exv99w1.txt NEWS RELEASE EXHIBIT 99.1 (FIRST STATE BANCORPORATION LOGO) NEWS RELEASE H. PATRICK DEE CHRISTOPHER C. SPENCER CHIEF OPERATING OFFICER CHIEF FINANCIAL OFFICER (505) 241-7102 (505) 241-7154 FIRST STATE REPORTS RECORD QUARTERLY EARNINGS AS TOTAL ASSETS SURPASS $1.5 BILLION Albuquerque, NM--October 20, 2003--First State Bancorporation ("First State") (NASDAQ:FSNM) today announced third quarter 2003 earnings of $4.0 million, compared to $2.3 million for the third quarter of 2002, an increase of 74%. For the nine months ended September 30, 2003, net income was $11.2 million compared to $6.6 million for the nine months ended September 30, 2002, an increase of 70%. Earnings per share were $0.53 per diluted share for the third quarter of 2003 compared to $0.36 per diluted share for the third quarter of 2002. For the nine months ended September 30, 2003, earnings per share were $1.48 per diluted share compared to $1.21 per diluted share for the nine months ended September 30, 2002. "Our loan growth continues at a brisk pace in both New Mexico and Colorado, as we continue to pry business away from the large banks in those markets," stated Michael R. Stanford, President and Chief Executive Officer. "As a result, our net interest income reflects a substantial increase, in spite of the current low rate environment," continued Stanford. "We remain committed to repositioning some of our facilities in Colorado and Utah, to improve our future growth potential," commented Stanford. "We have hired many talented bankers for these markets and we want to make sure that we have facilities that will allow them to provide the convenience and quality of service that our customers deserve," continued Stanford. At September 30, 2003, total assets increased $519 million, loans increased $521 million, investment securities increased $15 million, and deposits increased $372 million over September 30, 2002. First State's total assets increased 52% from $999 million at September 30, 2002, to $1.518 billion at September 30, 2003. Loans increased 83% from $629 million at September 30, 2002, to $1.150 billion at September 30, 2003. Investment securities increased 8% from $189 million at September 30, 2002, to $204 million at September 30, 2003. Total deposits grew 47% from $784 million at September 30, 2002, to $1.156 billion at September 30, 2003. Non-interest bearing deposits grew to $249 million at September 30, 2003, from $177 million at September 30, 2002, while interest bearing deposits grew to $907 million at September 30, 2003 from $607 million at September 30, 2002. The year-to-year comparisons are significantly impacted by First State's completion of the acquisition of First Community Industrial Bank ("First Community") on October 1, 2002 for approximately $67 million. First State financed this acquisition through a public offering of its common stock in August 2002, which netted approximately $51.0 million and through the issuance of approximately $25.0 million in trust preferred securities in June of 2002. The acquisition was accounted for using the purchase method of accounting, and accordingly, the assets and liabilities of First Community were recorded at their respective fair values on October 1, 2002. First State acquired approximately $343 million in loans and approximately $242 million in deposits and recognized goodwill of approximately $43 million related to the transaction. The First Community account balances acquired on October 1, 2002 and the results of operations since October 1, 2002 are included in the results of First State. FSNM - THIRD QUARTER RESULTS OCTOBER 20, 2003 PAGE TWO Net interest income before provision for loan losses was $16.6 million for the third quarter of 2003 compared to $9.8 million for the same quarter of 2002. For the nine months ended September 30, 2003 and 2002, net interest income before provision for loan losses was $47.4 million and $29.1 million, respectively. First State's net interest margin was 4.89% and 4.41% for the third quarters of 2003 and 2002, respectively. The net interest margin was 4.87% and 4.79% for the nine months ended September 30, 2003 and 2002, respectively. First State's provision for loan losses was $1.65 million for the third quarter of 2003 compared to $469,000 for the same quarter of 2002. First State's allowance for loan losses was 1.16% and 1.26% of total loans at September 30, 2003, and September 30, 2002, respectively. The ratio of allowance for loan losses to non-performing loans was 128% at September 30, 2003 compared to 226% at September 30, 2002. Non-performing assets equaled 0.78% of total assets at September 30, 2003 compared to 0.44% at September 30, 2002. "Our provision for loan losses was higher in the third quarter due to the strong loan growth and an elevated level of net charge-offs," stated H. Patrick Dee, Executive Vice President and Chief Operating Officer. "Total non-performing assets are just slightly lower than at the end of 2002, with a resulting improvement in our ratio of the allowance for loan losses to non-performing loans over that time frame," continued Dee. Non-interest income for the third quarter of 2003 was $3.7 million compared to $3.3 million for the third quarter of 2002, an increase of 12%. Non-interest income for the nine months ended September 30, 2003 was $11.3 million compared to $9.1 million for the nine months ended September 30, 2002. The gains on sales of mortgage loans increased approximately $243,000 over the third quarter of 2002 and approximately $1.2 million over the first nine months of 2002; however, gains in the third quarter of 2003 decreased by $237,000 from the second quarter of 2003 reflecting a lower level of refinancing activity. Service charges on deposit accounts increased approximately $207,000 over the third quarter of 2002 and approximately $639,000 over the first nine months of 2002. Non-interest expenses were $13.0 million and $9.1 million for the quarters ended September 30, 2003 and 2002, respectively and represent an increase of $3.9 million or 43%. Salaries and employee benefits increased $2.0 million, occupancy increased $569,000, equipment-related expenses increased $232,000, and other non-interest expenses increased $634,000 over the third quarter of 2002. Non-interest expenses for the nine months ended September 30, 2003 were $37.5 million compared to $26.1 million for the nine months ended September 30, 2002. Salaries and employee benefits increased $6.4 million, occupancy increased $1.3 million, equipment related expenses increased $663,000, and other non-interest expenses increased $1.8 million over the first nine months of 2002. The increases in non-interest expenses for the quarter and the nine months ended September 30, 2003, are due primarily to the First Community operations. Income tax expense for the third quarter of 2003 was $1.6 million compared to $1.2 million for the third quarter of 2002, representing effective tax rates of approximately 28.9% and 33.7%, respectively. Income tax expense for the nine months ended September 30, 2003 was $6.0 million compared to $3.8 million for the nine months ended September 30, 2002, representing effective tax rates of approximately 34.9% and 36.6%, respectively. The decrease in the effective tax rate in the third quarter of 2003 and consequently a lower effective rate for the nine months ended September 30, 2003 compared to 2002 is due primarily to an increase in the estimated tax rate at which net deferred tax assets will be realized, resulting in a tax benefit of approximately $216,000 and a benefit of approximately $170,000 related to finalizing the 2002 tax return in September. FSNM - THIRD QUARTER RESULTS OCTOBER 20, 2003 PAGE THREE In conjunction with its third quarter earnings release, First State will host a conference call to discuss these results, which will be simulcast over the Internet on Monday, October 20, 2003 at 5:00 p.m. Eastern Time. To listen to the call and view the slide presentation, visit www.fsbnm.com, Investor Relations. The conference call will be available for replay beginning October 20, 2003 through November 1, 2003 at www.fsbnm.com, Investor Relations. On Friday, October 17, 2003, First State's Board of Directors declared its regular quarterly dividend of $0.11 per share. The dividend will be paid to shareholders of record on November 12, 2003, payable December 10, 2003. First State Bancorporation is a New Mexico based commercial bank holding company (NASDAQ:FSNM). First State provides services to customers from a total of 32 branches located in New Mexico, Colorado, and Utah. On Friday, October 17, 2003, First State's stock closed at $31.19 per share. SELECTED FINANCIAL INFORMATION (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
INCOME STATEMENT HIGHLIGHTS Third Quarter Ended Nine Months Ended --------------------------- September 30, September 30, 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Interest income $ 22,076 $ 13,960 $ 64,436 $ 40,970 Interest expense 5,498 4,202 17,056 11,906 ------------ ------------ ------------ ------------ Net interest income before provision for loan losses 16,578 9,758 47,380 29,064 Provision for loan losses 1,645 469 3,963 1,657 ------------ ------------ ------------ ------------ Net interest income after provision for loan losses 14,933 9,289 43,417 27,407 Non-interest income 3,736 3,265 11,301 9,134 Non-interest expense 12,999 9,108 37,457 26,097 Income tax expense 1,637 1,160 6,031 3,827 ------------ ------------ ------------ ------------ Net income $ 4,033 $ 2,286 $ 11,230 $ 6,617 ============ ============ ============ ============ Basic earnings per share $ 0.54 $ 0.38 $ 1.51 $ 1.25 Diluted earnings per share $ 0.53 $ 0.36 $ 1.48 $ 1.21 Average basic shares outstanding 7,511,874 6,080,409 7,439,057 5,288,664 Average diluted shares outstanding 7,619,755 6,277,164 7,573,864 5,485,968
BALANCE SHEET HIGHLIGHTS September 30, 2003 December 31, 2002 September 30, 2002 ------------------ ----------------- ------------------ Total assets $ 1,517,674 $ 1,386,870 $ 998,547 Loans receivable, net 1,150,230 1,005,187 629,252 Investment securities 204,003 194,094 189,017 Deposits 1,156,278 1,079,684 784,401 Borrowings 155,296 113,174 33,501 Shareholders' equity 129,670 117,468 115,253 Book value per share 17.15 16.03 15.74 Tangible book value per share 11.32 9.98 15.69
FINANCIAL RATIOS: Third Quarter Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Return on average assets 1.08% 0.96% 1.05% 1.01% Return on average equity 12.50% 10.13% 12.07% 12.62% Efficiency ratio 63.99% 69.94% 63.83% 68.32% Operating expenses to average assets 3.47% 3.82% 3.49% 4.00% Net interest margin 4.89% 4.41% 4.87% 4.79% Average equity to average assets 8.62% 9.47% 8.68% 8.03% Leverage ratio (end of period) 7.99% 14.69% 7.99% 14.69% Total risk based capital ratio (end of period) 11.02% 21.40% 11.02% 21.40%
FSNM - THIRD QUARTER RESULTS OCTOBER 20, 2003 PAGE FOUR
NON-INTEREST INCOME: Third Quarter Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Service charges on deposit accounts $ 1,080 $ 873 $ 3,165 $ 2,526 Other banking service fees 312 282 896 805 Credit and debit card transaction fees 1,020 1,129 2,976 3,104 Gain on sale of mortgage loans 919 676 2,994 1,800 Other 405 305 1,270 899 ------------ ------------ ------------ ------------ $ 3,736 $ 3,265 $ 11,301 $ 9,134 ============ ============ ============ ============
NON-INTEREST EXPENSE: Third Quarter Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Salaries and employee benefits $ 6,145 $ 4,157 $ 18,246 $ 11,867 Occupancy 1,633 1,064 4,395 3,081 Data processing 592 495 1,707 1,386 Credit and debit card interchange 418 524 1,228 1,522 Equipment 908 676 2,638 1,975 Telephone 375 201 1,070 619 Supplies 171 138 571 421 Legal, accounting, and consulting 273 185 872 543 Other real estate owned 82 3 237 87 Marketing 646 543 1,575 1,472 Other 1,756 1,122 4,918 3,124 ------------ ------------ ------------ ------------ $ 12,999 $ 9,108 $ 37,457 $ 26,097 ============ ============ ============ ============
AVERAGE BALANCES: Third Quarter Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Assets $ 1,485,118 $ 944,859 $ 1,433,997 $ 872,945 Earning assets 1,346,048 878,668 1,300,173 811,022 Loans 1,140,750 621,714 1,082,445 587,507 Investment securities 199,399 189,929 199,165 185,819 Deposits 1,144,425 755,746 1,121,036 718,673 Equity 128,024 89,509 124,425 70,125
LOANS: September 30, 2003 December 31, 2002 September 30, 2002 ------------------------ ------------------------ ------------------------ Commercial $ 125,052 10.7% $ 100,813 9.9% $ 95,401 15.0% Real estate - mortgage 883,040 75.9% 759,884 74.7% 409,582 64.3% Real estate - construction 111,875 9.6% 100,458 9.9% 96,868 15.2% Consumer and other 31,397 2.7% 35,555 3.5% 27,756 4.4% Mortgage loans available for sale 12,337 1.1% 20,315 2.0% 7,693 1.1% ---------- ---------- ---------- ---------- ---------- ---------- Total $1,163,701 100.0% $1,017,025 100.0% $ 637,300 100.0% ========== ========== ========== ========== ========== ==========
DEPOSITS: September 30, 2003 December 31, 2002 September 30, 2002 ------------------------ ------------------------ ------------------------ Non-interest bearing $ 248,569 21.5% $ 189,063 17.5% $ 176,522 22.5% Interest bearing demand 194,931 16.8% 192,067 17.8% 170,515 21.7% Money market savings accounts 154,424 13.4% 125,616 11.6% 77,883 9.9% Regular savings 60,732 5.3% 52,636 4.9% 50,746 6.5% Certificates of deposit less than $100,000 250,759 21.7% 298,900 27.7% 127,098 16.2% Certificates of deposit greater than $100,000 246,863 21.3% 221,402 20.5% 181,637 23.2% ---------- ---------- ---------- ---------- ---------- ---------- Total $1,156,278 100.0% $1,079,684 100.0% $ 784,401 100.0% ========== ========== ========== ========== ========== ==========
FSNM - THIRD QUARTER RESULTS OCTOBER 20, 2003 PAGE FIVE
ALLOWANCE FOR LOAN LOSSES: September 30, 2003 December 31, 2002 September 30, 2002 ------------------ ------------------ ------------------ Balance beginning of period $ 11,838 $ 7,207 $ 7,207 Provision for loan losses 3,963 2,589 1,657 Net charge-offs (2,330) (1,123) (816) Allowance related to acquired loans -- 3,165 -- ------------------ ------------------ ------------------ Balance end of period $ 13,471 $ 11,838 $ 8,048 ================== ================== ================== Allowance for loan losses to total loans 1.16% 1.16% 1.26% Allowance for loan losses to non-performing loans 128% 108% 226%
NON-PERFORMING ASSETS: September 30, 2003 December 31, 2002 September 30, 2002 ------------------ ------------------ ------------------ Accruing loans - 90 days past due $ 15 $ 721 $ 416 Non-accrual loans 10,516 10,241 3,144 ------------------ ------------------ ------------------ Total non-performing loans 10,531 10,962 3,560 Other real estate owned 1,334 908 800 ------------------ ------------------ ------------------ Total non-performing assets $ 11,865 $ 11,870 $ 4,360 ================== ================== ================== Total non-performing assets to total assets 0.78% 0.86% 0.44%
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of forward-looking words such as "believe," "expect," "may," "will," "should," "seek," "approximately," "intend," "plan," "estimate," or "anticipate" or the negative of those words or other comparable terminology. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statement. Some factors include fluctuations in interest rates, inflation, government regulations, loss of key personnel, faster or slower than anticipated growth, economic conditions, competition's responses to the Company's marketing strategy, and competition in the geographic and business areas in which we conduct our operations. Other factors are described in First State's filings with the Securities and Exchange Commission. First State is under no obligation to update any forward-looking statements. First State's news releases and filings with the Securities and Exchange Commission are available through the Investor Relations section of First State's website at www.fsbnm.com.