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) � � � 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% � � � 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% 3.81% 7.80% 6.60% 18.18% Efficiency ratio -
continuing operations 23.69% 25.26% -6.20% 24.86% 31.94% -22.17% �
Asset Quality Ratios � Allowance for credit losses $ 10,286� $
10,415� -1.24% Allowance to ending total loans 1.07% 1.39% -5.44%
Non-performing assets Non-accrual $ 7,648� $ 1,813� 321.84% 90 days
past due and still accruing $ 69� $ -� -� Foreclosed real estate $
289� $ 665� -56.54% Non-performing assets to total assets 0.74%
0.30% 149.44% Net (charge-offs) recoveries $ (129) $ (232) -44.40%
Net loan charge-offs (annualized) to average loans 0.01% 0.03%
-57.18%
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