WSBA Western Sierra Bancorp (MM)

Western Sierra Bancorp Reports Record First Quarter; Fully Diluted Earnings Per Share increases 16% to $.51 for the 1st Quarter CAMERON PARK, Calif., April 13 /PRNewswire-FirstCall/ -- Western Sierra Bancorp (NASDAQ:WSBA), a multi-bank holding company, headquartered in Cameron Park, Calif., announced results for the first quarter ended March 31, 2005. Financial Highlights from the first quarter of 2005 vs. 2004: -- An increase in GAAP net income of $558,000 or 16% to $4.02 million -- An increase in Fully Diluted GAAP EPS to $0.51 from $0.44 or 16% -- GAAP ROA and ROE of 1.36% and 14.66%, as compared to 1.32% and 14.74% -- Return on Tangible Equity of 21.05% as compared to 23.15% -- Total assets increased $123 million or 11% to $1.22 billion -- Total loans increased $111 million or 13% to $969 million -- Net interest margin decreased 4 basis points to 5.28% versus 5.32% (increase of 14 bps from Q4 2004) -- Efficiency Ratio increased to 56.8% from 56.0% -- Continued superior asset quality with nonperforming assets at just 0.09% of ending assets Management Comments Gary D. Gall, President and CEO of Western Sierra Bancorp, stated, "Despite opening three new branches in the fourth quarter, loan growth and a strong net interest margin resulted in another record quarter for Western Sierra Bancorp. The fundamental economic drivers remain prevalent in the markets we serve." Record Earnings and Returns The Company reported record GAAP Earnings of $4,023,000 for the quarter or $0.51 per diluted share, an increase of $558,000 or 16% over the quarter ended March 31, 2004 in which earnings were $3,465,000 or $0.44 per diluted share. For the twelve month period ended March 31, 2005 (trailing twelve months) GAAP earnings were $15,594,000 or $1.97 per diluted share, an increase of $4,468,000 or 40% over the $11,126,000 or $1.53 per diluted share reported for the trailing twelve months ended March 31, 2004. The Company reported record Cash Earnings (excludes amortization expense of intangibles of $117,000 in the first quarter of 2005 and 2004) of $4,140,000 for the quarter or $0.52 per diluted share, an increase of $558,000 or 16% over the quarter ended March 31, 2004 in which Cash Earnings were $3,582,000, or $0.46 per diluted share. On a GAAP basis, Return on Average Assets was 1.36% for the quarter ended March 31, 2005 as compared to 1.32% for the first quarter ended March 31, 2004. Return on Average Equity was 14.66% for the first quarter ended March 31, 2005 as compared to 14.74% for the first quarter ended March 31, 2004. Return on Tangible Equity (excludes average Goodwill and other intangible assets from average equity) was 21.05% for the first quarter ended March 31, 2005 as compared to 23.15% ended March 31, 2004. Strong Loan and Deposit Growth Total Assets ended the quarter at a record high of $1.22 billion. This represents a $123 million or 11% increase over March 31, 2004. The Company has continued its record of strong loan growth. Total gross loans grew to $969 million, an increase of $111 million or 13% over a year ago. Total Deposits grew to a record $1.03 billion; this represents a $112 million or 12% increase over March 31, 2004. Net Interest Income Reaches Record High Net interest income increased by $1.56 million or 13% over the first quarter of 2004. The Company's reported Net Interest Margin (on a fully tax equivalent basis) of 5.28% was down 4 basis points from the first quarter 2004. Recent increases in interest rates have reduced the number of loans at rate floors as evidenced by the percentage of the loan portfolio at rate floors which has dropped to approximately 20% at March 31, 2005 from a high of 46% at December 31, 2003. As a result, the yield on loans rose 17 bps as compared to the first quarter of 2004 to 6.91%. During this period the Company's cost of funds rose 18 bps to 1.27%. The loan to deposit ratio fell from 95.3% in the first quarter of 2004 to 92.9% in the first quarter of 2005. The margin expanded in the first quarter of 2005 as compared to the fourth quarter of 2004 by 14 bps as a result of a higher loan to deposit ratio and increase in the prevailing market rates. Superior Asset Quality Credit quality remains strong with $238,000 or 0.02% loan delinquencies between 30 and 89 days as of March 31, 2005 compared to $272,000 or 0.03% loan delinquencies as of March 31, 2004. Non-performing assets (delinquent loans 90 days and over and REO) as of March 31, 2005 totaled $1,045,000 or 0.09% of total assets, compared to $1,854,000 or 0.17% of total assets at March 31, 2004. The allowance for loan and lease losses totaled $14.3 million, or 1.47% of loans outstanding at March 31, 2005, compared to $12.2 million, or 1.42%, a year ago. The Company recorded net recoveries of $52,000 in the first quarter of 2005 as compared to net charge-offs of $30,000 in the same period of 2004. Other Income / Expense and the Efficiency Ratio The growth in net interest income of 13% for the quarter was complemented by an increase in non-interest income of 1.6%, which was largely due in part to a $112,000 gain on SBA loan sale and an increase in mortgage premiums of $78,000 which were offset by a decrease in investment service fee income of $161,000. Operating expenses includes approximately $160,000 in after tax costs related to operating losses incurred by the three denovo branches the Company opened in the fourth quarter of 2004 and a reserve for a check fraud loss of $100,000. Total operating expenses, excluding amortization of core deposit intangibles, grew at the same approximate rate as net revenue resulting in a relatively flat efficiency ratio, which increased slightly from 56.0% in the first quarter of 2004 to 56.8% in the first quarter of 2005. Other Information and Disclaimers Western Sierra Bancorp is comprised of Western Sierra National Bank, Lake Community Bank, Central California Bank and Auburn Community Bank. The Company operates twenty-nine branches and four loan production facilities in the counties of El Dorado, Placer, Sacramento, Lake, Stanislaus, San Joaquin, Calaveras, Amador, Contra Costa, Tuolumne and Butte. This press release contains statements which constitute 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 that involve risk and uncertainties. Actual results may differ materially from the results in these forward-looking statements. Factors that might cause such a difference include, among other things, fluctuations in interest rates, changes in economic conditions or governmental regulation, credit quality and other factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2004. Western Sierra Bancorp and Subsidiaries Consolidated Statements of Income (dollars in thousands, except per share data) Three Months Ended (Unaudited) March 31, 2005 2004 Growth % Interest income: Interest and fees on loans $16,113 $14,036 14.8% Interest on investment securities: Taxable 398 369 Exempt from federal taxes 409 387 Interest on Federal funds sold 312 53 Total interest income 17,232 14,844 16.1% Interest expense: Interest on deposits 2,671 2,004 Interest on borrowed funds 716 557 Total interest expense 3,387 2,562 32.2% Net interest income 13,845 12,282 12.7% Provision for loan and lease losses (LLP) 450 710 -38.3% Net interest income after LLP 13,395 11,572 15.9% Non-interest income: Service charges and fees 1,186 1,195 Investment service fee income 130 291 Net gain on sale and packaging of residential mortgage loans 933 855 Gain on sale of government-guaranteed loans 112 -- Gain (loss) on sale of investment securities (3) -- Other income 251 227 Total non-interest income 2,609 2,568 1.6% Other expenses: Salaries and benefits 5,403 4,887 Occupancy and equipment 1,611 1,352 Other expenses 2,621 2,309 Merger expenses -- -- Amortization of core deposit intangibles 180 180 Total other expenses 9,815 8,728 12.6% Income before income tax 6,189 5,412 14.4% Income taxes 2,166 1,947 GAAP net income $4,023 $ 3,465 16.1% Amortization of core deposit intangibles after tax 117 117 Cash net income $4,140 $ 3,582 15.6% GAAP EPS Basic earnings per share $0.53 $0.46 15.2% Fully diluted earnings per share $0.51 $0.44 15.9% Cash EPS (excluding amortization expense) Basic earnings per share $0.54 $0.48 12.7% Fully diluted earnings per share $0.52 $0.46 13.9% Shares used to compute Basic EPS 7,646 7,458 Shares used to compute Fully Diluted EPS 7,956 7,864 Average Loans $945,555 $837,635 12.9% Average Investments $136,044 $106,899 27.3% Average Earning Assets $1,081,599 $944,534 14.5% Average Deposits $1,017,456 $879,217 15.7% Average Non-interest Demand Deposits $267,844 $214,849 24.7% Average Interest-bearing Liabilities $811,794 $731,200 11.0% Average Assets $1,199,465 $1,052,003 14.0% Average Equity $111,315 $94,582 17.7% Return on Average Assets (GAAP) 1.36% 1.32% Return on Average Equity (GAAP) 14.66% 14.74% Return on Tangible Equity 21.05% 23.15% Net Interest Margin (FTE) 5.28% 5.32% Efficiency Ratio (FTE) 56.8% 56.0% Western Sierra Bancorp and Subsidiaries Consolidated Balance Sheet (dollars in thousands) (Unaudited) March 31, March 31, ASSETS: 2005 2004 Growth % Cash and due from banks $40,863 $36,453 Federal funds sold 47,100 43,295 Cash and cash equivalents 87,963 79,748 10.3% Interest-bearing deposits -- 4,000 Loans held for sale 1,484 1,729 Investment securities: Trading 36 31 Available for sale (amortized cost $79,539 in 2005 and $75,650 in 2004) 80,065 77,695 Held to maturity (market value of $3,129 in 2005 and $3,989 in 2004) 3,017 3,811 Total investments 83,118 81,537 1.9% Portfolio loans and leases: Real estate mortgage 639,929 544,422 Real estate construction 193,390 180,633 Commercial 119,099 114,813 Agricultural 11,162 11,509 Installment 3,904 5,178 Lease financing 1,904 1,983 Total gross loans and leases 969,388 858,538 12.9% Deferred loan and lease fees, net (2,953) (2,490) Allowance for loan and lease losses (14,276) (12,165) Net portfolio loans and leases 952,159 843,883 12.8% Premises and equipment, net 21,153 19,543 Other real estate -- -- Goodwill and other intangible assets 33,722 34,551 Other assets 38,807 29,971 Total Assets $1,218,406 $1,094,962 11.3% LIABILITIES AND SHAREHOLDERS' EQUITY: Non-interest bearing deposits $280,062 $238,523 17.4% Interest bearing deposits: NOW, money market and savings 389,389 336,424 Time, over $100,000 205,810 174,583 Other time 154,557 168,769 Total deposits 1,029,818 918,299 12.1% Borrowed funds 30,500 32,750 Subordinated debt 36,496 36,496 Other liabilities 7,085 9,867 Total liabilities 1,103,899 997,412 10.7% Shareholders' equity: Preferred stock - no par value; 15,000,000 shares authorized; none issued -- -- Common stock - no par value; 15,000,000 shares authorized; issued - 7,679,934 shares in 2005 and 7,463,299 shares in 2004 69,037 66,649 Retained earnings 45,132 29,562 Unearned ESOP shares -- -- Accumulated other comprehensive income 338 1,339 Total shareholders' equity 114,507 97,550 17.4% Total Liabilities and Shareholders' Equity $1,218,406 $1,094,962 11.3% Allowance for Loan and Lease Losses to Gross Loans 1.47% 1.42% Ending Delinquent Loans (past due 30 to 89 days) $238 $272 Ending Non Performing Loans (non accrual and 90 days or more) $1,045 $1,854 Total Non Performing Loans and REO - Non Performing Assets $1,045 $1,854 YTD Net (recoveries) Charge-offs $(52) $30 YTD Net (recoveries) Charge-offs as a % of Avg Loans (-.02%) 0.01% Non Performing Assets as a % of Total Assets 0.09% 0.17% Total Risk Based Capital To Risk Weighted Assets 12.74% 12.07% Tier 1 Capital to Risk Weighted Assets 11.49% 10.39% Tier 1 Capital to Average Assets (Leverage Ratio) 9.74% 8.79% DATASOURCE: Western Sierra Bancorp CONTACT: Gary D. Gall and Anthony J. Gould, both of Western Sierra Bancorp, +1-530-677-5600 Web site: http://www.westernsierrabancorp.com/

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