CTY BK LYNNWOOD 
By City Bank (NASDAQ:CTBK) today announced strong earnings of $20.93 million for the six months ended June 30, 2007, reflecting an increase of 20.15% from $17.42 million for the same period in 2006. All prior period results have been restated for the 3-for-2 stock split on December 22, 2006, with no effect on net income or shareholders' equity. Net income for the quarter ended June 30, 2007 was $10.56 million, an increase of $1.35 million or 14.64% compared to $9.21 million for the second quarter of 2006. The Bank's diluted net income of $.67 per share reflects an increase of 15.52% from $.58 per share for the second quarter of 2006. Net interest income after provision for credit losses was $20.71 million for the second quarter of 2007 compared to $17.88 million for the same period in 2006, reflecting an increase of 15.83%. The increased net interest income was primarily due to continued growth in average loan balances from $845.31 million to $1.06 billion. Loan growth was the major factor that resulted in the Bank's strong earnings for the three months ended June 30, 2007.
Three Months Highlights (In thousands, except ratios) | ||||||
| June 30, 2007 | June 30, 2006 | |||||
| Total Assets | $ | 1,142,300 | $ | 944,028 | ||
| Total Loans | $ | 1,059,129 | $ | 861,628 | ||
| Net Income | $ | 10,555 | $ | 9,207 | ||
| Non-Performing Assets | $ | 2,019 | $ | 2,351 | ||
| Net Interest Margin | 7.49% | 7.99% | ||||
| Return on Average Assets (ROA) | 3.75% | 4.04% | ||||
| Return on Average Equity (ROE) | 20.50% | 19.56% | ||||
| Average Equity to Average Assets | 18.30% | 20.64% | ||||
Net income for the six months ended June 30, 2007 was $20.93 million compared to $17.42 million in the prior year, reflecting an increase of $3.51 million. On a diluted per share basis, net income was up 20.00% to $1.32 from $1.10 in the comparable period in 2006. Net interest income after provision for credit losses was $40.65 million for the six months ended June 30, 2007 compared to $34.07 million for the same period in 2006, reflecting an increase of 19.33%. The reason for the increase in net interest income was due to continued growth in average loan volume which increased from $826.31 million in 2006 to $1.04 billion in 2007.
Six Months Highlights (In thousands, except ratios) | |||||
| June 30, 2007 | June 30, 2006 | ||||
| Total Assets | $ | 1,142,300 | $ | 944,028 | |
| Total Loans | $ | 1,059,129 | $ | 861,628 | |
| Net Income | $ | 20,931 | $ | 17,421 | |
| Non-Performing Assets | $ | 2,019 | $ | 2,351 | |
| Net Interest Margin | 7.50% | 7.81% | |||
| Return on Average Assets (ROA) | 3.81% | 3.92% | |||
| Return on Average Equity (ROE) | 20.76% | 18.87% | |||
| Average Equity to Average Assets | 18.34% | 20.76% | |||
| Efficiency Ratio | 22.83% | 25.94% | |||
| Total Shareholders' Equity | $ | 209,258 | $ | 191,319 | |
Result of Operations
Interest income for the three and six months ended June 30, 2007 was up 26.69% and 29.83%, respectively, from the comparable periods in 2006 due to increased loan volume. Average outstanding loans was up $219.53 million or 25.97% for the three months ended June 30, 2007 and $208.82 million or 25.27% for the six months ended June 30, 2007 over the same periods in 2006. The average yield on loans for the three and six months ended June 30, 2007 were 11.31% and 11.28%, respectively, up from 11.22% and 10.90% during the same periods in 2006. For the six months ended June 30, 2007, net interest margin reflects a decrease of .40% to 7.50% from 7.81% in the prior year due to the higher cost of funding loan growth. Nonperforming assets at June 30, 2007 have been reduced from $2.35 million to $2.02 million, a reduction of 14.12% over June 30, 2006. The ratio of nonperforming assets to total assets at June 30, 2007 decreased to .18% from .25% at June 30, 2006. A loan loss provision of $150 thousand was added for the quarter ended June 30, 2007 compared to no allowance in the prior year. For the six months ended June 30, 2007, net loan charge-offs were $157 thousand compared to $41 thousand in the prior year.
Interest expense for the second quarter of 2007 was up 54.92% over the comparable period in 2006. Average cost of deposits for the second quarter of 2007 increased to 4.51%, up from 3.75% for the second quarter of 2006, reflecting a higher interest rate environment. Average time deposits and borrowed funds for the second quarter of 2007 were $873.44 million, resulting in a 28.80% increase over the comparable quarter in 2006 of $678.14 million.
Non-interest income of $741 thousand reflects a net decrease of $412 thousand or 35.73% for the second quarter of 2007 from the prior quarter of 2006. The majority of this decrease was due to a decrease of $220 thousand in net gains from sale of loans compared to the same quarter in 2006. SBA loan servicing income also decreased by $18 thousand compared to the same quarter in 2006.
Non-interest expense of $5.05 million in the second quarter of 2007 reflects a net increase of 3.80% or $185 thousand compared to the same quarter of 2006. The majority of the increase relates to an additional $297 thousand reserve for state and local tax expense during the second quarter 2007. Salaries and benefits expense reflects a net decrease of $52 thousand for the quarter compared to the same period in 2006 due to a slight decrease in staffing.
At June 30, 2007, total assets were $1.14 billion, up 21.00% over June 30, 2006. Asset growth since December 31, 2006 was $64.61 million or 6.00%. Loans grew 22.92% to $1.06 billion compared to $861.63 million at June 30, 2006. Loan growth since December 31, 2006 was $93.46 million or 9.68%. Deposits increased 19.48% to $809.98 million at June 30, 2007 compared to $652.20 million at June 30, 2006 and 6.09% compared to $763.49 million at December 31, 2006.
City Bank's return on average assets for the six months ended June 30, 2007 was 3.81% compared to 3.92% for the same period in 2006. Return on average equity was 20.76% for the six month period, compared to 18.87% for the same period in 2006. The ratio of average equity to average assets (Tier 1 Capital) for the six months ended June 30, 2007 was 18.34% compared to 20.76% for the same period in 2006. The Tier 1 Capital Ratio decreased slightly due to the significant increase in the Bank's total assets for the period ended June 30, 2007.
Forward-Looking Statements
The previous discussion contains a review of City Bank's operating results and financial condition for the three and six months ended June 30, 2007 and 2006. The discussion may contain certain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those stated, including, but not limited to, the Bank's inability to generate increased earning assets, sustain credit losses, maintain adequate net interest margin, control fluctuations in operating results, maintain liquidity to fund assets, retain key personnel, and other risks detailed from time to time in the Bank's filings with the Federal Deposit Insurance Corporation, including our Annual Report on Form 10-K for the period ended December 31, 2006. Readers are cautioned not to place undue reliance on these forward-looking statements.
City Bank is a state-chartered commercial bank founded in 1974 and headquartered in Lynnwood, Washington. The bank is publicly traded (NASDAQ:CTBK) and many of the stockholders are local individuals. Eight banking offices serve both Snohomish and North King counties. Two mortgage loan offices serve Snohomish, King and Pierce counties. City Bank provides a wide range of banking services for business and individuals, including loans for residential construction, land development, mortgage, commercial, Small Business Administration, consumer, and all types of deposits as well as other general banking services. City Bank has been consistently recognized as one of the top performing banks in Washington State as well as nationally.
City Bank | |||||||||||||||||||||||||||||||||||
| Selected Financial Highlights (unaudited) | |||||||||||||||||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||||||||||||||
| Three months ended June | Six months ended June | ||||||||||||||||||||||||||||||||||
| Income Statement Data | 2007 | 2006 | % Change | 2007 | 2006 | % Change | |||||||||||||||||||||||||||||
| Interest income | $ 30,702 | $ 24,234 | 26.69% | $ 59,665 | $ 45,957 | 29.83% | |||||||||||||||||||||||||||||
| Interest expense | 9,839 | 6,351 | 54.92% | 18,864 | 11,890 | 58.65% | |||||||||||||||||||||||||||||
| Net interest income | 20,863 | 17,883 | 16.66% | 40,801 | 34,067 | 19.77% | |||||||||||||||||||||||||||||
| Provision for credit losses | 150 | - | 100.00% | 150 | - | 100.00% | |||||||||||||||||||||||||||||
| Net interest income after provision for credit losses | 20,713 | 17,883 | 15.83% | 40,651 | 34,067 | 19.33% | |||||||||||||||||||||||||||||
| Other noninterest income | 741 | 1,153 | -35.73% | 1,559 | 2,154 | -27.62% | |||||||||||||||||||||||||||||
| Other noninterest expense | 5,048 | 4,863 | 3.80% | 9,671 | 9,398 | 2.90% | |||||||||||||||||||||||||||||
| Income before income taxes | 16,406 | 14,173 | 15.76% | 32,539 | 26,823 | 21.31% | |||||||||||||||||||||||||||||
| Provision for income taxes | 5,851 | 4,966 | 17.82% | 11,608 | 9,402 | 23.46% | |||||||||||||||||||||||||||||
| Net Income | $ 10,555 | $ 9,207 | 14.64% | $ 20,931 | $ 17,421 | 20.15% | |||||||||||||||||||||||||||||
| Share Data | |||||||||||||||||||||||||||||||||||
| Actual shares outstanding | 15,721 | 15,614 | 0.69% | ||||||||||||||||||||||||||||||||
| Earnings Per Share: | |||||||||||||||||||||||||||||||||||
| Basic earnings per common share | $0.67 | $0.59 | 13.56% | $1.33 | $1.12 | 18.75% | |||||||||||||||||||||||||||||
| Diluted earnings per common share | $0.67 | $0.58 | 15.52% | $1.32 | $1.10 | 20.00% | |||||||||||||||||||||||||||||
| Book value per common share | $13.31 | $12.25 | 8.62% | ||||||||||||||||||||||||||||||||
| Basic average shares outstanding | 15,715 | 15,609 | 0.68% | 15,699 | 15,596 | 0.66% | |||||||||||||||||||||||||||||
| Fully diluted average shares outstanding | 15,864 | 15,780 | 0.53% | 15,855 | 15,755 | 0.64% | |||||||||||||||||||||||||||||
| Dividends paid per share | $0.15 | $0.14 | 4.65% | $0.30 | $0.27 | 12.50% | |||||||||||||||||||||||||||||
| Balance Sheet Data (at period end) | |||||||||||||||||||||||||||||||||||
| Investment securities | $ 15,377 | $ 14,233 | 8.04% | ||||||||||||||||||||||||||||||||
| Loans held for sale | 4,296 | 5,971 | -28.05% | ||||||||||||||||||||||||||||||||
| Loans, net of unearned income | 1,059,129 | 861,628 | 22.92% | ||||||||||||||||||||||||||||||||
| Assets related to discontinued operations | -- | 2 | -100.00% | ||||||||||||||||||||||||||||||||
| Allowance for credit losses | 10,279 | 10,374 | -0.92% | ||||||||||||||||||||||||||||||||
| Total assets | 1,142,300 | 944,028 | 21.00% | ||||||||||||||||||||||||||||||||
| Total deposits | 809,984 | 652,197 | 24.19% | ||||||||||||||||||||||||||||||||
| Liabilities related to discontinued operations | 1,333 | 1,177 | 13.25% | ||||||||||||||||||||||||||||||||
| Total Shareholders' Equity | 209,258 | 191,319 | 9.38% | ||||||||||||||||||||||||||||||||
| Selected Ratios | |||||||||||||||||||||||||||||||||||
| Return on average shareholders' equity | 20.50% | 19.56% | 4.81% | 20.76% | 18.87% | 10.00% | |||||||||||||||||||||||||||||
| Average shareholders' equity to average assets | 18.30% | 20.64% | -11.37% | 18.34% | 20.76% | -11.63% | |||||||||||||||||||||||||||||
| Return on average total assets | 3.75% | 4.04% | -7.10% | 3.81% | 3.92% | -2.80% | |||||||||||||||||||||||||||||
| Net interest spread | Share
© Business Wire - 2007
City Bank (the Bank) is engaged in general commercial and retail banking, with an emphasis on small and medium-sized businesses, construction lending for single family residences and home mortgage lending. The Bankâs principle business activities are conducted thorough its office located in Lynnwood, Washington, and eight branches throughout Snohomish and King Counties. The Bankâs loan portfolio includes residential construction and development loans secured by real estate amounting to approximately 63% of the total loan portfolio. At December 31, 2008, 55.53% of the Bankâs deposits were in brokered deposits. The Bankâs primary focus has been lending to small and medium-sized businesses, construction lending for single family residences and home mortgage lending. At December 31, 2008, the Bank operated three full service mortgage banking officers in Snohomish, Pierce and Clark Counties whose purpose is to originate loans for sale into the secondary market.
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