FOOT Foothill Independent Bancorp (MM)

Board of Directors Declares $0.15 Per Share Quarterly Cash Dividend Foothill Independent Bancorp (NASDAQ:FOOT), the holding company for Foothill Independent Bank, today reported that, as a result of continued growth in core deposits and loans, and a rising interest rate environment, it achieved record net profits for the fourth quarter and the fiscal year ended December 31, 2005. In the quarter ended December 31, 2005, net income increased by 21% to $3.10 million, or $0.34 per diluted share, compared to $2.55 million, or $0.28 per diluted share in the fourth quarter a year ago. For the full year ended December 31, 2005, net income grew by nearly $1.9 million, or 21%, to $11.29 million, or $1.25 per diluted share, from $9.36 million, or $1.05 per diluted share, in the fiscal year ended December 31, 2004. All per share data have been adjusted to reflect a 5-for-4 stock split effectuated on May 25, 2005. "We have always been focused on maximizing shareholder value, and 2005 was no exception," stated George Langley, President and CEO. "We increased our quarterly cash dividend to $0.15 per share and issued a 5-for-4 stock split in May 2005, and we achieved increases in our stock price as our earnings rose during 2005. Finally, on December 15, 2005 we announced that Foothill had entered into an Agreement and Plan of Merger with First Community Bancorp (NASDAQ:FCBP). That Agreement provides, subject to the satisfaction of certain conditions, for a merger of Foothill with and into First Community. On consummation of that merger, Foothill's stockholders are to receive approximately 0.4982 shares of First Community common stock for each of their Foothill shares and, as a result, will become stockholders of First Community." To start off 2006, our Board of Directors just declared another quarterly cash dividend of $0.15 per share, payable February 28th, to shareholders of record February 9, 2006. Foothill's performance ratios remained outstanding, and improved in both the fourth quarter and full year ended December 31, 2005. In the fourth quarter of 2005, our annualized return on average equity (ROE) was 18.0%, and our annualized return on average assets (ROA) grew to 1.58%, as compared to an ROE of 16.1% and an ROA of 1.28% in the same quarter of 2004. For the full year ended December 31, 2005, we achieved an ROE of 16.8% and an ROA of 1.42%, as compared to an ROA of 15.1% and an ROE of 1.25% in the fiscal year ended December 31, 2004. Net interest margin increased to 5.33% in the fourth quarter of 2005, compared to 5.15% in the immediately preceding quarter of 2005 and 4.74% in the fourth quarter a year ago. For the year ended December 31, 2005, net interest margin increased to 5.14%, up from 4.80% for fiscal 2004. "While rising interest rates helped our net interest margin, we generated additional net interest income by keeping our funding costs down," Langley said. "While many banks were increasing interest rates to attract time deposits, we have been able to support our growth while letting some of our costlier deposits run off." Gross loans increased 9% to $552 million at December 31, 2005, up from $506 million at the end of 2004. By comparison, total assets grew 1% to $799 million, compared to $787 million at the end of December last year, as we funded loan growth primarily by redeploying lower yielding assets, such as federal funds sold. Although core deposits, which consist of no-cost demand and low-cost savings and money market deposits, decreased by 3% during 2005 to $613 million from $631 million at December 31, 2004, during that same period we were able to reduce time deposits by 23% to $60.0 million, compared to $77.9 million at the end of 2004. As a result, as a percentage of total deposits, core deposits grew to 91% and time deposits declined to 9% at December 31, 2005, compared to 89% and 11% respectively, at December 31, 2004, while total deposits decreased 5% to $673 million during the year ended December 31, 2005 from $709 million at December 31, 2004. Asset quality has remained outstanding. Non-performing loans (NPLs) declined to $113,000 at December 31, 2005, from $137,000 at December 31, 2004. At the end of 2005, NPLs represented just 0.02% of total loans compared to 0.03% of total loans at the end of last year. With no repossessed assets on the books, non-performing assets (NPAs) have remained equal to NPLs, and were 0.01% of total assets at year-end 2005, compared to 0.02% of assets at the end of 2004. Including a $46,000 net recovery in the year, the reserve for loan losses was $5.06 million at the end of 2005, representing 0.92% of gross loans and far exceeding NPAs. By comparison, the reserve for loan losses was $5.02 million, representing 0.99% of gross loans and far exceeding NPAs, at December 31, 2004. "Revenues grew 9% and 12% in the fourth quarter and full year 2005, respectively, relative to the same periods last year," Langley said. "All of that improvement came from net interest income growth, reflecting our commitment to keeping funding costs down despite the rising interest rate environment." For the quarter ended December 31, 2005, revenues were $10.9 million, compared to $10.0 million a year ago. For the fiscal year ended December 31, 2005, revenues were $42.8 million, versus $38.1 million in the same period last year. In the final quarter of 2005, interest income was up by $1.26 million over the same quarter last year, reflecting the increase in loan volume and the rising interest rate environment. However, interest expense increased by only $308,000 over the fourth quarter of 2004, with the rise in rates largely offset by the decrease in time deposits. As a result, net interest income increased by 11% to $9.60 million in the fourth quarter of 2005, compared to $8.65 million in the same quarter of 2004. In the year ended December 31, 2005, interest income increased by $6.1 million, while interest expense increased by $1.0 million over 2004. As a result, net interest income grew 16% in 2005 to $37.6 million, from $32.6 million the previous year. Other operating income was $1.28 million in the quarter ended December 31, 2004, compared to $1.31 million in the fourth quarter of 2004, and was $5.13 million for the full year ended December 31, 2005, compared to $5.58 million for fiscal 2004. Other operating expense increased by 1% to $6.08 million in the fourth quarter of 2005, compared to $6.03 million in the fourth quarter of last year. Other operating expense grew 7% to $25.3 million for the year ended December 31, 2005, from $23.6 million last year. "Our efficiency ratio improved to 54.3% in the quarter ended December 31, 2005, compared to 60.8% in the fourth quarter of 2004," Langley said. "Revenues continued to grow and we were able to trim salary expenses slightly. For the full year ended December 31, 2005, we were able to improve our efficiency ratio to 59.3%, compared to 63.0% for 2004, despite the 7% increase in other operating expenses during 2005." Shareholders' equity grew to $70.27 million at December 31, 2005, compared to $64.60 million a year earlier as a result of the earnings achieved in fiscal 2005. Book value increased to $8.25 per share at the end of the year, from $7.67 per share at December 31, 2004. Capital ratios continue to be above the "Well-Capitalized" guidelines established by the regulatory agencies. The Tier 1 Leverage Ratio was 10.21% and the Total Risk-based Capital Ratio was 13.79% at December 31, 2005. 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. On December 15, 2005 we announced that Foothill had entered into an Agreement and Plan of Merger with First Community Bancorp. That Agreement provides, subject to the satisfaction of certain conditions set forth in that Agreement, for a merger to be consummated by Foothill and First Community pursuant to which Foothill will be merged with and into First Community and Foothill's stockholders will receive shares of First Community Bancorp common stock for their shares of Foothill common stock. The Agreement and Plan of Merger establishes an initial exchange ratio of approximately 0.4982 shares of First Community common stock for each Foothill share. The initial exchange ratio and, therefore, the number of First Community shares that each Foothill stockholder will receive in the merger will be subject to adjustment depending on the average closing price of First Community's common stock over a 15 trading day period ending 2 trading days prior to the closing of the merger. Consummation of the proposed merger requires the satisfaction of certain conditions, including the approval of both Foothill's and First Community's stockholders and bank regulatory authorities, and is expected to close in the second quarter of 2006. Additional Information And Where To Find It Investors and security holders are urged to carefully review and consider each of First Community's and Foothill Independent Bancorp's public filings with the SEC, including but not limited to their Annual Reports on Form 10-K for the year ended December 31, 2004 and Quarterly Reports on Form 10-Q for the reporting periods of 2005. The documents filed by Foothill Independent Bancorp with the SEC may be obtained free of charge at Foothill's website at www.foothillbank.com or at the SEC's website at www.sec.gov. These documents may also be obtained free of charge from Foothill by requesting them in writing to Foothill Independent Bancorp, 510 South Grand Avenue, 2nd Floor, Glendora, CA 91741, Attention: Susan Hickam, Vice President - Investor Relations, or by telephone at Phone: (626) 963-8551. This Release may be deemed to be solicitation material in respect of the proposed acquisition of Foothill Independent Bancorp. First Community and Foothill intend to file a registration statement including a joint proxy statement/prospectus and other documents regarding the proposed acquisition with the SEC. Before making any voting or investment decision, investors and security holders of either Foothill or First Community are urged to carefully read the entire registration statement and proxy statement, when they become available, as well as any amendments or supplements to these documents, because they will contain important information about the proposed acquisition. A definitive proxy statement will be sent to the shareholders of each institution seeking any required shareholder approval of these documents. Investors and security holders will be able to obtain the registration statement and proxy statement free of charge from Foothill by requesting them in writing from Foothill Independent Bancorp, 510 South Grand Avenue, Glendora, CA 91741, Attention: Susan Hickam, Vice President - Investor Relations, or by telephone at Phone: (626) 963-8551. Foothill, its directors, executive officers and certain other persons may be soliciting proxies from Foothill shareholders in favor of the approval of the acquisition. Shareholders may obtain additional information regarding the interests of such participants by reading the registration statement and proxy statement when they become available. Forward Looking Information This Release contains forward-looking statements within the meaning 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," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements set forth our expectations or beliefs regarding our future financial condition or future financial performance, which are based on current information. Our actual results in future periods could differ significantly from our current estimates, expectations and beliefs, as set forth in this Release, due to a number of risks and uncertainties that could affect our business or operating results. Those risks and uncertainties include, but are not limited to: -- The risk of increased competition from other financial institutions, which could require us to reduce the interest rates we are able to charge on loans or to increase the interest we must pay to attract or maintain deposits, either or both of which could lead to reductions in our net interest margin or net earnings. -- The risk of adverse changes in national economic conditions or changes in Federal Reserve Board monetary policies, which could lead to reductions in interest rates and in our net interest margins and to declines in loan demand or a weakening in the financial ability of borrowers to meet their loan obligations to us. -- The risk of a significant decline in real property values in Southern California which, because approximately 90% of our loans are secured by real property, could result in a deterioration in the performance of our loan portfolio and, as a result, could require us to increase the provisions we must make for potential loan losses and could lead to increase in loan write-offs, which would reduce our earnings and could adversely affect our financial condition. -- The risk that natural disasters, such as earthquakes or fires, which are not uncommon in Southern California, or localized economic downturns, could adversely affect our operating results. -- The risk of changes in federal and state bank regulatory policies that might have the effect of reducing yields on earning assets or increasing our operating costs. -- The risk that we may have to reduce or eliminate cash dividends due to the occurrence of any of the foregoing events. Certain of those risks and uncertainties, as well as others, are described more fully in our Annual Report on Form 10-K for the fiscal year ended December 31, 2004, 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. -0- *T FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands, Except Per Share Data) Three Months Ended December 31, Percent ----------------------- ------- 2005 2004 Change ----------- ----------- ------- Interest on loans & leases $9,238 $8,031 Interest on securities 1,695 1,461 Interest on federal funds sold 198 346 Interest other 13 46 ----------- ----------- Total Interest Income 11,144 9,884 13% Deposits 1,315 1,124 Interest on borrowings 225 108 ----------- ----------- Total Interest Expense 1,540 1,232 25% Net Interest Income 9,604 8,652 11% Provision for Loan Losses -- -- ----------- ----------- Net Interest Income after Provision 9,604 8,652 11% Fees on deposits 1,027 1,178 Gain on sales of SBA loans -- -- Other 256 128 ----------- ----------- Total Other Operating Income 1,283 1,306 -2% Salaries & employee benefits 2,783 3,043 Occupancy and equipment 1,080 1,102 Other 2,218 1,881 ----------- ----------- Total Other Operating Exp. 6,081 6,026 1% ----------- ----------- Income before taxes 4,806 3,932 Income tax 1,711 1,382 ----------- ----------- NET INCOME $3,095 $2,550 21% =========== =========== Earnings per common share - Basic $0.36 $0.30 20% =========== =========== Weighted average shares outstanding - Basic 8,515,512 8,408,755 =========== =========== Earnings per common share - Diluted $0.34 $0.28 21% =========== =========== Weighted average shares outstanding - Diluted 9,072,969 8,960,975 =========== =========== Twelve Months Ended December 31, Percent ----------------------- ------- 2005 2004 Change ----------------------- ------- Interest on loans & leases $35,335 $31,016 Interest on securities 6,805 5,225 Interest on federal funds sold 878 653 Interest other 96 136 ----------- ----------- Total Interest Income 43,114 37,030 16% Deposits 4,683 4,073 Interest on borrowings 795 394 ----------- ----------- Total Interest Expense 5,478 4,467 23% Net Interest Income 37,636 32,563 16% Provision for Loan Losses -- -- ----------- ----------- Net Interest Income after Provision 37,636 32,563 16% Fees on deposits 4,166 4,999 Gain on sales of SBA loans 13 5 Other 955 581 ----------- ----------- Total Other Operating Income 5,134 5,585 -8% Salaries & employee benefits 11,705 11,697 Occupancy and equipment 4,417 4,296 Other 9,150 7,617 ----------- ----------- Total Other Operating Exp. 25,272 23,610 7% ----------- ----------- Income before taxes 17,498 14,538 Income tax 6,212 5,183 ----------- ----------- NET INCOME $11,286 $9,355 21% =========== =========== Earnings per common share - Basic $1.33 $1.11 20% =========== =========== Weighted average shares outstanding - Basic 8,479,126 8,401,810 =========== =========== Earnings per common share - Diluted $1.25 $1.05 19% =========== =========== Weighted average shares outstanding - Diluted 9,029,651 8,947,711 =========== =========== (1) Per share data for the three and twelve month periods ended December 31, 2005 and 2004 have been retroactively adjusted to reflect a 5-for-4 stock split that was effectuated on May 25, 2005. FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Unaudited) (Dollars in Thousands, Except Per Share Data) December 31, Percentage ------------------- 2005 2004 Change --------- --------- ---------- ASSETS: Noninterest earning demand deposits and cash on hand $32,163 $23,611 Federal funds sold and overnight repurchase agreements 5,500 28,900 Interest-earning deposits 1,287 9,803 --------- --------- Total Cash and Cash Equivalents 38,950 62,314 -37% Securities available for sale 172,064 186,575 Securities held to maturity 7,364 7,980 --------- --------- Total Securities 179,428 194,555 -8% Loans and leases receivable 552,487 505,623 9% Reserve for loan losses (5,062) (5,016) --------- --------- Loans & Leases Receivable, Net 547,425 500,607 9% Accrued interest receivable 3,400 3,006 Other real estate owned -- -- Premises and equipment 4,470 4,815 Federal Home Loan Bank (FHLB) stock, at cost 4,305 3,460 Federal Reserve Bank (FRB) stock, at cost 348 348 Other assets 20,380 17,850 --------- --------- TOTAL ASSETS $798,706 $786,955 1% ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY: Liabilities: Non-interest bearing demand deposits $267,047 $259,285 Savings & NOW deposits 172,648 164,947 Money market deposits 173,094 206,919 Time deposits 59,975 77,899 --------- --------- Total Deposits 672,764 709,050 -5% Accrued employee benefits 3,774 3,446 Accrued interest and other liabilities 1,650 1,642 Other debt 50,248 8,248 --------- --------- Total Liabilities 728,436 722,386 1% Stockholders' Equity: Common stock $0.001 par value- authorized: 25,000,000 shares; Issued and outstanding: 8,519,892 and 6,731,631 shares, respectively 7 7 Additional paid-in capital 68,701 67,831 Retained earnings 3,934 (2,608) Accumulated other comprehensive income net of taxes (2,372) (661) --------- --------- Total Stockholders' Equity 70,270 64,569 9% --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $798,706 $786,955 1% ========= ========= FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES CONSOLIDATED FINANCIAL RATIOS AND OTHER DATA (Dollars in thousands, except per share amounts) Three Months Twelve Months Ended Ended December 31, December 31, ---------------- ------------- 2005 2004 2005 2004 ------ ------ ------ ------ Financial Ratios: Return on average assets 1.58%(1) 1.28%(1) 1.42% 1.25% Return on average equity 18.00%(1) 16.09%(1) 16.84% 15.05% Efficiency ratio 54.33% 60.83% 59.29% 63.01% Annualized operating expense/average assets 3.11%(1) 3.06%(1) 3.17% 3.16% Net interest margin 5.33%(1) 4.74%(1) 5.14% 4.80% Tier 1 capital ratio 10.21% 9.10% 10.21% 9.10% Risk adjusted capital ratio 13.79% 13.40% 13.79% 13.40% Other Consolidated Financial Data Provision for loan losses $-- $-- $-- $-- Net charge-offs (recoveries) $(16) $(35) $(46) $(69) (1) These ratios have been annualized. At December 31, ------------------- 2005 2004 --------- --------- (Dollars in thousands, Other Consolidated Financial Data (continued) except per share amounts) ------------------- Net loans and leases $547,425 $500,607 Non-performing/non-accrual loans (1) Amounts $113 $137 As a percentage of gross loans 0.02% 0.03% Real estate owned - loans $-- $-- Total non-performing assets Amounts $113 $137 As a percentage of total assets 0.01% 0.02% Loan loss reserves Amounts $5,062 $5,016 As a percentage of gross loans 0.92% 0.99% Book value per share $8.25 $7.67(2) (1) Non-Accrual loans are loans that have made no payments of principal or interest for more than 90 days. (2) Retroactively adjusted for a 5-for-4 stock split effectuated on May 25, 2005. FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES AVERAGE BALANCES (Unaudited) (Dollars in Thousands, Except Per Share Data) Three Months Ended Twelve Months Ended December 31, December 31, 2005 2004 2005 2004 --------- --------- --------- --------- ASSETS Earning assets: Interest-earning deposits $1,388 $9,118 $3,820 $7,934 Federal funds sold and overnight repurchase agreements 20,017 73,082 27,942 46,176 Investment securities 190,536 176,118 196,444 160,463 Loans and leases (net of unearned income) 516,562 480,717 512,789 472,664 --------- --------- --------- --------- Total earning assets 728,503 739,035 740,995 687,237 Loan loss reserve (5,053) (4,985) (5,030) (4,975) Non-earning assets 58,443 62,579 61,341 64,071 --------- --------- --------- --------- Total Assets $781,893 $796,629 $797,306 $746,333 ========= ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing liabilities: Deposits: Savings and interest bearing transaction accounts $351,195 $382,204 $361,271 $351,308 Certificates of deposit, $100,000 or more 34,686 33,236 36,847 30,400 Other time deposits 26,418 37,220 32,320 40,401 --------- --------- --------- --------- Total interest-bearing deposits 412,299 452,660 430,438 422,109 Other interest-bearing liabilities 14,870 8,248 15,675 8,248 --------- --------- --------- --------- Total interest bearing liabilities 427,169 460,908 446,113 430,357 Non-interest bearing liabilities: Demand deposits 279,504 266,165 278,168 248,386 Other non-interest bearing liabilities 6,415 6,153 5,987 5,421 --------- --------- --------- --------- Total liabilities 713,088 733,226 730,268 684,164 Stockholders' equity 68,805 63,403 67,038 62,169 --------- --------- --------- --------- Total Liabilities and Stockholders' Equity $781,893 $796,629 $797,306 $746,333 ========= ========= ========= ========= *T