WSBA Western Sierra Bancorp (MM)

Western Sierra Bancorp Reports 26% Increase in EPS; Fully Diluted Earnings Per Share $0.66 for the 1st Quarter; Asset Quality Remains Strong CAMERON PARK, Calif., April 20 /PRNewswire-FirstCall/ -- Western Sierra Bancorp , a multi-bank holding company, headquartered in Cameron Park, Calif., announced results for the first quarter ended March 31, 2004. Financial and Operational Highlights from the first quarter of 2004 vs. 2003: -- An increase in Fully Diluted EPS to $0.66 from $0.52 or 26% -- Record Net Income of $3.47 million, an increase of $1.18 million or 52% -- GAAP ROA and ROE of 1.32% and 14.74%, as compared to 1.34% and 16.84% -- Total assets increased $372 million or 51% to $1.09 billion -- Total loans increased $289 million or 51% to $859 million -- Interest margin remained stable at 5.32% versus 5.36% -- Efficiency Ratio fell to 56.0% from 57.8% -- Continued superior asset quality with nonperforming assets at just 0.17% of ending assets. Management Comments Gary D. Gall, President and CEO of Western Sierra Bancorp, stated, "We are off to an excellent start in 2004 and we expect the full year to be another record year for Western Sierra Bancorp. This is the first full quarter of operations including Auburn Community Bank and we are very pleased with the results thus far. Our credit team continues to deliver good loan volume and maintain asset quality at the top of our peer group." Record Earnings and Returns The Company reported record GAAP Earnings of $3,465,000 for the quarter or $0.66 per diluted share, an increase of $1,178,000 or 52% over the quarter ended March 31, 2003 in which earnings were $2,287,000 or $0.52 per diluted share. For the twelve month period ended March 31, 2004 (trailing twelve months) GAAP earnings were $11,125,000 or $2.30 per diluted share *, an increase of $2,650,000 or 31% over the $8,475,000 or $1.96 per diluted share reported for the trailing twelve months ended March 31, 2003. (* includes a $.19 per diluted share one-time charge for elimination of the tax benefits associated with the Company's Real Estate Investment Trust "REIT"). The Company reported record Cash Net Income (excludes amortization expense of intangibles of $117,000 and $40,000, respectively, on a tax-adjusted basis) of $3,582,000 or $0.68 per diluted share, an increase of $1,255,000 or 54% over the quarter ended March 31, 2003 in which Cash Net Income was $2,327,000, or $0.53 per diluted share. On a GAAP basis, Return on Average Assets was 1.32% for the quarter as compared to 1.34% for the first quarter ended March 31, 2003. Return on Average Equity was 14.74% for the quarter as compared to 16.84% for the first quarter ended March 31, 2003. Return on Tangible Equity increased from 18.28% in the first quarter of 2003 to 23.15% in the first quarter of 2004. Strong Loan and Deposit Growth Total Assets ended the quarter at a record high of $1.09 billion. This represents a $372 million or 51% increase over March 31, 2003. The Company has continued its record of strong loan growth. Total gross loans grew to $859 million, an increase of $289 million or 51% over a year ago and $37 million or 4.5% over 2003 year end. Total Deposits grew to a record $918 million; this represents a $282 million or 44% increase over March 31, 2003. The March 31, 2004 balance sheet totals include $159 million in loans, $237 million in total assets and $211 million in deposits acquired though the acquisitions of Central Sierra Bank on July 11, 2003 and Auburn Community Bank on December 12, 2003. Net Interest Income Reaches Record High Net interest income increased by $4.0 million or 48% over the first quarter of 2003. The Company's reported Net Interest Margin (on a fully tax equivalent basis) of 5.32% was up 21 basis points from the previous quarter (Q4 2003) and down 4 basis points from the first quarter of 2003. Federal Funds Sold averaged $22 million or 2.3% of average earning assets in the quarter as compared to $56.7 million or 6.5% of average earning assets in fourth quarter of 2003 and $13.6 million or 2.1% of average earning assets for the first quarter of 2003. The loan-to-deposit ratio increased to 95% from 89% in the fourth quarter of 2003 and 93% in the first quarter of 2003. Yield on loans were 6.74% for the first quarter of 2004 as compared to 7.07% in the same period of 2003. Costs of funds were 1.09% for the first quarter of 2004 as compared to 1.45% in the same period of 2003. Superior Asset Quality Credit quality remains strong with $272,000 or 0.03% loan delinquencies between 30 and 90 days compared to loan delinquencies of $104,000 or 0.02% of total loans as of March 31, 2003. Non-performing assets (delinquent loans over 90 days and REO) totaled $1,854,000 or 0.17% of total assets, compared to $1,315,000 or 0.18% of total assets at March 31, 2003. Loan loss reserves totaled $12.2 million, or 1.42% of loans outstanding at March 31, 2004, compared to $7.7 million, or 1.35% a year ago. The Company recorded net charge-offs of $30,000 in the first quarter of 2004 as compared to net recoveries of $23,000 in the same period of 2003. Other Income / Expense and the Efficiency Ratio In addition to growth in net interest income of 48% for the quarter, the Company grew non-interest income by 25% through increased service charges and fees of $376,000 and increased investment service fee income of $275,000, which was offset in part by a decline in mortgage premiums of $249,000. Total operating expenses excluding amortization of core deposit intangibles grew at a slower rate (40% for the quarter) resulting in an improved efficiency ratio, which fell from 57.8% in the first quarter of 2003 to 56.0% in the first quarter of 2004. Other Information and Disclaimers Western Sierra Bancorp is comprised of Western Sierra Bank, Lake Community Bank, Central California Bank and Auburn Community Bank. The Company operates 32 Branches and 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, 2003. CONTACT: Gary D. Gall or Anthony J. Gould, both of Western Sierra Bancorp, +1-530-677-5600 Western Sierra Bancorp and Subsidiaries Consolidated Statements of Income (dollars in thousands, except per share data) Three Months Ended (Unaudited) March 31, 2004 2003 Growth % Interest income: Interest and fees on loans $14,036 $9,752 43.9% Interest on investment securities: Taxable 369 401 Exempt from federal taxes 387 359 Interest on Fed Funds Sold 53 42 Total interest income 14,844 10,555 40.6% Interest expense: Interest on deposits 2,004 1,999 Interest on borrowed funds 557 272 Total interest expense 2,562 2,271 12.8% Net interest income 12,282 8,284 48.3% Provision for loan and lease losses (LLP) 710 525 35.2% Net interest income after LLP 11,572 7,759 49.2% Non-interest income: Service charges and fees 1,195 819 Investment service fee income 291 16 Net gain on sale and packaging of residential mortgage and government-guaranteed commercial loans 855 1,104 Other income 227 117 Total non-interest income 2,568 2,055 25.0% Other expenses: Salaries and benefits 4,887 3,416 Occupancy and equipment 1,352 1,052 Other expenses 2,309 1,645 Amortization of core deposit intangibles 180 62 Total other expenses 8,728 6,175 41.3% Income before income tax 5,412 3,639 48.7% Income taxes 1,947 1,352 GAAP net income $3,465 $2,287 51.5% Amortization of core deposits after tax 117 40 Cash net income $3,582 $2,327 53.9% GAAP EPS (including amortization expense) Basic earnings per share $0.70 $0.55 27.7% Fully diluted earnings per share $0.66 $0.52 26.4% Cash EPS (excluding amortization expense) Basic earnings per share $0.72 $0.56 29.8% Fully diluted earnings per share $0.68 $0.53 28.5% Shares used to Compute Basic EPS 4,972 4,192 Shares used to Compute Fully Diluted EPS 5,243 4,375 Average Loans $837,635 $559,085 49.8% Average Investments $106,899 $82,827 29.1% Average Earning Assets $944,534 $641,911 47.1% Average Deposits $879,217 $604,103 45.5% Average Non Interest Demand Deposits $214,849 $140,825 52.6% Average Interest Bearing Liabilities $731,200 $492,497 48.5% Average Assets $1,052,003 $694,306 51.5% Average Equity $94,582 $55,076 71.7% Return on Average Assets (GAAP) 1.32% 1.34% Return on Average Equity (GAAP) 14.74% 16.84% Return on Tangible Equity (GAAP) 23.15% 18.28% Net Interest Margin (FTE) 5.32% 5.36% Efficiency Ratio (FTE) 56.0% 57.8% Western Sierra Bancorp and Subsidiaries Consolidated Balance Sheet (dollars in thousands) (Unaudited) March 31, March 31, Growth ASSETS: 2004 2003 % Cash and due from banks $36,453 $23,668 Federal funds sold 43,295 32,920 Cash and cash equivalents 79,748 56,588 40.9% Interest-bearing deposits 4,000 1,388 Loans held for sale 1,729 4,345 Investment securities: Trading 31 18 Available for sale (amortized cost $75,651 in 2004 and $57,667 in 2003) 77,695 59,096 Held to maturity (market value of $3,989 in 2004 and $7,021 in 2003) 3,811 6,794 Total investments 81,537 65,908 23.7% Portfolio loans and leases: Real estate mortgage 544,422 335,923 Real estate construction 180,633 131,890 Commercial 114,813 84,981 Agricultural 11,509 9,161 Installment 5,178 4,136 Lease financing 1,983 3,296 Total gross loans and leases 858,538 569,387 50.8% Deferred loan and lease fees, net (2,490) (1,435) Allowance for loan and lease losses (12,165) (7,661) Net portfolio loans and leases 843,883 560,291 50.6% Premises and equipment, net 19,543 15,788 Other real estate -- 485 Goodwill and other intangible assets 34,551 5,089 Other assets 29,971 13,291 Total Assets $1,094,962 $723,173 51.4% LIABILITIES AND SHAREHOLDERS' EQUITY: Non-interest bearing deposits $238,523 $150,393 58.6% Interest bearing deposits: NOW, money market and savings 336,424 187,162 Time, over $100,000 174,583 165,307 Other time 168,769 134,266 Total deposits 918,299 637,128 44.1% Borrowed funds 32,750 7,500 Subordinated debt 36,496 16,000 Other liabilities 9,867 5,526 Total liabilities 997,412 666,154 49.7% Shareholders' equity: Preferred stock- no par value; 10,000,000 shares authorized; none issued -- -- Common stock- no par value; 10,000,000 shares authorized; 4,975,533 shares issued in 2004 and 4,197,339 shares in 2003 66,649 31,085 Retained earnings 29,562 25,000 Accumulated other comprehensive income 1,339 935 Total shareholders' equity 97,550 57,020 71.1% Total Liabilities and Shareholders' Equity $1,094,962 $723,173 51.4% Allowance for Loan and Lease Losses to Gross Loans 1.42% 1.35% Ending Delinquent Loans $272 $104 Ending Non Performing Loans (non accrual and > 90 days) $1,854 $830 Total Non Performing Loans and REO - Non Performing Assets $1,854 $1,315 YTD Charge-offs (recoveries) $30 $(23) YTD Charge-offs (recoveries) as a % of Average Loans 0.01% (0.02)% Non Performing Assets as a % of Total Assets 0.17% 0.18% Total Risk Based Capital to Risk Weighted Assets 12.07% 12.39% Tier 1 Capital to Risk Weighted Assets 10.39% 11.14% Tier 1 Capital to Average Assets (Leverage Ratio) 8.79% 9.37% DATASOURCE: Western Sierra Bancorp CONTACT: Gary D. Gall or Anthony J. Gould, both of Western Sierra Bancorp, +1-530-677-5600 Web site: http://www.westernsierrabancorp.com/

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