CTY BK LYNNWOOD 
By City Bank (NASDAQ:CTBK) today announced net income from continuing operations was $37.00 million for the year ended December 31, 2006, up 59.34% from the $23.22 million for the same period in 2005. All prior period results have been reclassified to show the operating results of Diligenz and Merchant Cards as discontinued operations with no effect on net income or shareholders' equity. They have also been restated for the 3-for-2 stock split in December 2006. Consolidated net income for the quarter ended December 31, 2006 was $9.68 million, an increase of $2.12 million or 28.00% compared to $7.56 million for the fourth quarter of 2005. The Bank's diluted net income per share from continuing operations reflects an increase of 24.49% from $.49 to $.61 compared to prior year fourth quarter.
Consolidated net income for the twelve months ended December 31, 2006 was $37.00 million compared to $51.48 million in the prior year, which included the gain of $28.29 million from the sale of Diligenz Inc. and an after-tax gain of $390 thousand from the sale of Merchant Cards. Income from continuing operations increased from $23.22 million to $37.00 million, an increase of 59.34% or $13.78 million for the twelve months ended December 2006 over the prior year. On a diluted per share basis, net income from continuing operations was up 57.05% to $2.34 from $1.49 in the comparable period in 2005. Net interest income after provision for credit losses was $72.64 million for the twelve months ended 2006 compared to $47.93 million for the prior period in 2005, reflecting an increase of 51.54%. The increased net interest income was due to continued growth in average loan volume which increased from $674.79 million in 2005 to $876.17 million in 2006, as well as the effect of higher interest rates.
Twelve Months Highlights (In thousands, except per share data) | |||
| Dec. 31 2006 | Dec. 31 2005 | ||
| Total Assets | $ 1,077,689 | $ 832,039 | |
| Total Loans | $ 970,237 | $ 749,486 | |
| Income from Continuing Operations | $ 37,000 | $ 23,221 | |
| Income (Loss) from Discontinued Operations | $ -0- | $ (424) | |
| Net Gain on Sale of Discontinued Operations | $ -0- | $ 28,681 | |
| Net Income | $ 37,000 | $ 51,478 | |
| Nonperforming Assets | $ 8,006 | $ 2,478 | |
| Net Interest Margin | 7.80% | 6.60% | |
| Return on Average Assets ? Continuing Operations (ROA) | 3.91% | 3.09% | |
| Return on Average Equity ? Continuing Operations (ROE) | 19.47% | 13.52% | |
| Average Equity to Average Assets | 20.08% | 22.89% | |
Income from continuing operations increased from $7.56 million to $9.68 million, an increase of 28.00% for the three months ended December 2006 compared to the fourth quarter 2005. The Bank's diluted net income per share from continuing operations reflects an increase of 24.49% from $.49 to $.61 compared to fourth quarter in the prior year. Net interest income after provision for credit losses was $19.50 million for the fourth quarter of 2006 compared to $14.77 million for the prior period in 2005, reflecting an increase of 32.06%. The increase in net interest income was due in part to the growth in average loan volume from $721.81 million to $958.25 million as well as prime rate increases that occurred during the first six months of 2006.
Fourth Quarter Highlights (In thousands, except per share data) | |||
| Dec. 31 2006 | Dec. 31 2005 | ||
| Income from Continuing Operations | $ 9,677 | $ 7,560 | |
| Income (Loss) from Discontinued Operations | $ -0- | $ (902) | |
| Net Gain on Sale of Discontinued Operations | $ -0- | $ 1,156 | |
| Net Income | $ 9,677 | $ 7,814 | |
| Net Interest Margin | 7.63% | 7.35% | |
| Return on Average Assets ?Continuing Operations (ROA) | 3.74% | 3.77% | |
| Return on Average Equity ?Continuing Operations (ROE) | 19.84% | 17.10% | |
| Average Equity to Average Assets | 18.84% | 22.05% | |
Result of Operations
Interest income for the three months ended December 2006 was up 46.94% over the comparable period in 2005 due to strong loan volume and a higher interest rate environment. Major factors contributing to this growth were the increase of average outstanding loans by $236.44 million or 32.76% over last year and the twelve prime rate changes since the beginning of 2005, which increased interest rates a total of 300 basis points. These rate increases benefit the Bank as they cause the Bank's variable rate loans to reprice, increasing the average yield on loans quicker than the average cost of funds. The average yield on loans for fourth quarter 2006 was 11.20%, up from 9.01% during fourth quarter 2005 and net interest margin increased to 7.63% from 7.35%. Nonperforming assets at December 31, 2006 increased $5.53 million over December 31, 2005. This increase was primarily due to the transfer of two loans to nonaccrual status totaling $6.30 million in December 2006. The Bank believes that these loans are adequately collateralized and will not result in any losses. As a result of putting these loans on nonaccrual status, interest of $166 thousand was reversed from income and the ratio of nonperforming assets to total assets at December 31, 2006 increased to .74% from .30% at December 31, 2005.
Interest expense for the fourth quarter of 2006 was up 98.43% from the comparable period in 2005. Average cost of deposits for the fourth quarter of 2006 increased 46.87% to 4.45%, up from 3.03% for the fourth quarter of 2005, reflecting rising interest rates. Average deposits for the fourth quarter of 2006 were $728.15 million reflecting an increase 50.50% or $244.33 million over the comparable quarter in 2005 of $483.82 million. Management expects to see increased interest expense during the coming year due to increasing deposits to fund loan growth.
Non-interest income of $859 thousand reflects a net decrease of $125 thousand or 12.70% during the fourth quarter 2006 from the fourth quarter 2005. Net gains from sale of loans decreased $225 thousand due to a 15% decrease in residential mortgage loans sold compared to the fourth quarter of 2005. Loan servicing fees increased $77 thousand year over year.
Non-interest expense of $4.82 million reflects a net increase of 21.24% or $845 thousand compared to the fourth quarter of 2005. Salary and benefit expenses, net of amounts deferred, during fourth quarter ended December 31, 2006 reflect a net increase of $762 thousand compared to the same period in 2005. The increase was due in part to higher benefit accruals for bonus and profit sharing of $575 thousand because of the Bank's increased level of gross profit year to date. As of December 31, 2006 foreclosed real estate expense increased $133 thousand over December 31, 2005.
At December 31, 2006, total assets were $1.08 billion, up $245.90 million or 29.55% over December 31, 2005. Loans grew 29.40% to $970.24 million compared to $749.49 million at December 31, 2005. Loan growth since September 30, 2006 was $44.89 million or 4.80%. Residential construction loan activity has accounted for the majority of the increased loan volume. At December 31, 2006, deposits increased 49.45% to $763.49 million compared to $510.86 million at December 31, 2005 and 6.70% or $48.02 million since September 30, 2006.
City Bank's return on average assets (continuing operations) for the three and twelve months ending December 31, 2006 were 3.74% and 3.91% compared to 3.77% and 3.09% for the same periods in 2005. Return on average equity (continuing operations) was 19.84% and 19.47% for the three and twelve month period, compared to 17.10% and 13.52% for the same periods in 2005. The ratio of average equity to average assets (Tier 1 Capital) for the three and twelve months ending December 31, 2006 were 18.84% and 20.08% compared to 22.05% and 22.89% for the same periods in 2005. The Tier 1 Capital Ratio has decreased slightly due to the significant increase in the Bank's total assets for the period ended December 31, 2006.
Forward-Looking Statements
The previous discussion contains a review of City Bank's operating results and financial condition for the three and twelve months ended December 31, 2006 and 2005. 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, 2005. 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 Consolidated Financial Highlights (unaudited) | |||||||||||||||||||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||||||||||||||||
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Three Months Ended December | Twelve Months Ended December | ||||||||||||||||||||||||||||||||||||
| 2006 | 2005 | % Change | 2006 | 2005 | % Change | |||||||||||||||||||||||||||||||
Income Statement Data -- Continuing Operations | |||||||||||||||||||||||||||||||||||||
| Interest income | $ 27,973 | $ 19,037 | 46.94% | $ 100,500 | $ 62,435 | 60.97% | |||||||||||||||||||||||||||||||
| Interest expense | 8,471 | 4,269 | 98.43% | 27,862 | 14,202 | 96.18% | |||||||||||||||||||||||||||||||
| Net interest income | 19,502 | 14,768 | 32.06% | 72,638 | 48,233 | 50.60% | |||||||||||||||||||||||||||||||
| Provision for credit losses | - | - | - | 300 | -100.00% | ||||||||||||||||||||||||||||||||
| Net interest income after provision for credit losses | 19,502 | 14,768 | 32.06% | 72,638 | 47,933 | 51.54% | |||||||||||||||||||||||||||||||
| Other noninterest income | 859 | 984 | -12.70% | 4,027 | 4,821 | -16.47% | |||||||||||||||||||||||||||||||
| Other noninterest expense | 4,824 | 3,979 | 21.24% | 19,063 | 16,951 | 12.46% | |||||||||||||||||||||||||||||||
| Income from continuing operations before income taxes | 15,537 | 11,773 | 31.97% | 57,602 | 35,803 | 60.89% | |||||||||||||||||||||||||||||||
| Provision for income taxes | 5,860 | 4,213 | 39.09% | 20,602 | 12,582 | 63.74% | |||||||||||||||||||||||||||||||
| Income from continuing operations | $ 9,677 | $ 7,560 | 28.00% | $ 37,000 | $ 23,221 | 59.34% | |||||||||||||||||||||||||||||||
| Income (loss) from discontinued operations | - | (902) | -100.00% | - | (424) | -100.00% | |||||||||||||||||||||||||||||||
| Net Gain on Sale of Discontinued Operations | - | 1,156 | - | 28,681 | |||||||||||||||||||||||||||||||||
| Net Income | $ 9,677 | $ 7,814 | 23.84% | $ 37,000 | $ 51,478 | -28.12% | |||||||||||||||||||||||||||||||
| Share Data | |||||||||||||||||||||||||||||||||||||
| Actual shares outstanding | 15,670 | 15,518 | 0.98% | ||||||||||||||||||||||||||||||||||
| Earnings Per Share: | |||||||||||||||||||||||||||||||||||||
| Basic earnings per common share | $0.62 | $0.52 | 19.23% | $2.37 | $3.39 | -30.09% | |||||||||||||||||||||||||||||||
| Diluted earnings per common share | $0.61 | $0.51 | 19.61% | $2.34 | $3.34 | -29.94% | |||||||||||||||||||||||||||||||
| Earnings Per Share From Continuing Operations: | |||||||||||||||||||||||||||||||||||||
| Basic earnings per common share | $0.62 | $0.50 | 24.00% | $2.37 | $1.53 | 54.90% | |||||||||||||||||||||||||||||||
| Diluted earnings per common share | $0.61 | $0.49 | 24.49% | $2.34 | $1.49 | 57.05% | |||||||||||||||||||||||||||||||
| Book value per common share | $12.26 | $11.36 | 7.89% | ||||||||||||||||||||||||||||||||||
| Basic average shares outstanding | 15,639 | 15,446 | 1.25% | 15,612 | 15,213 | 2.62% | |||||||||||||||||||||||||||||||
| Fully diluted average shares outstanding | 15,822 | 15,575 | 1.59% | 15,780 | 15,386 | 2.56% | |||||||||||||||||||||||||||||||
| Dividends paid per share | $1.15 | $2.13 | -46.09% | $1.55 | $2.53 | -38.82% | |||||||||||||||||||||||||||||||
| Balance Sheet Data (at period end) | |||||||||||||||||||||||||||||||||||||
| Investment securities | $ 14,392 | $ 10,174 | 41.46% | ||||||||||||||||||||||||||||||||||
| Loans held for sale | 4,568 | 2,815 | 62.27% | ||||||||||||||||||||||||||||||||||
| Loans, net of unearned income | 965,669 | 746,671 | 29.33% | ||||||||||||||||||||||||||||||||||
| Assets related to discontinued operations | - | 251 | -100.00% | ||||||||||||||||||||||||||||||||||
| Allowance for credit losses | 10,286 | 10,415 | -1.24% | ||||||||||||||||||||||||||||||||||
| Total assets | 1,077,689 | 832,039 | 29.52% | ||||||||||||||||||||||||||||||||||
| Total deposits | 763,486 | 510,863 | 49.45% | ||||||||||||||||||||||||||||||||||
| Liabilities related to discontinued operations | 1,168 | 1,224 | -4.58% | ||||||||||||||||||||||||||||||||||
| Total Shareholders' Equity | 192,071 | 176,300 | 8.95% | ||||||||||||||||||||||||||||||||||
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Selected Consolidated Financial Highlights (unaudited) | |||||||||||||||||||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||||||||||||||||
| Three Months Ended December | Twelve Months Ended December | |||||||||||||||||||||||||||||||||||
| 2006 | 2005 | % Change | 2006 | 2005 | % Change | ||||||||||||||||||||||||||||||||
| Selected Ratios | |||||||||||||||||||||||||||||||||||||
| Return on average shareholders' equity | 19.84% | 17.67% | 12.24% | 19.47% | 29.97% | -35.03% | |||||||||||||||||||||||||||||||
| Return on average shareholders' equity - continuing operations | 19.84% | 17.10% | 16.00% | 19.47% | 13.52% | 44.02% | |||||||||||||||||||||||||||||||
| Average shareholders' equity to average assets | 18.84% | 22.05% | -14.56% | 20.08% | 22.89% | -12.26% | |||||||||||||||||||||||||||||||
| Return on average total assets | 3.74% | 3.90% | -4.10% | 3.91% | 6.86% | -43.00% | |||||||||||||||||||||||||||||||
| Return on average total assets - continuing operations | 3.74% | 3.77% | -0.89% | 3.91% | 3.09% | 26.36% | |||||||||||||||||||||||||||||||
| Net interest spread | 6.39% | 6.26% | 2.08% | 6.62% | 5.65% | 17.17% | |||||||||||||||||||||||||||||||
| Net interest margin | 7.63% | 7.35% | 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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