VLLY Valley Bancorp

Valley Bancorp (NASDAQ: VLLY) Highlights -- Year 2005 earnings of $5,608,000, up 75% from $3,211,000 in year 2004 -- Year 2005 earnings per diluted share of $1.90, up 24% from year 2004 -- ROE and ROA of 14.35% and 1.66%, respectively, in year 2005. -- Total net loans increased $103 million, up 53% from year-end 2004. -- Fourth quarter earnings of $1,659,000, up 63% from $1,019,000 in fourth quarter 2004. -- Fourth quarter earnings per diluted share of $0.56, up 60% from $0.35 in fourth quarter 2004. -- ROE and ROA of 15.92% and 1.71%, respectively, in fourth quarter 2005. -- Total net loans increased $17 million in fourth quarter 2005. Valley Bancorp (NASDAQ: VLLY), the holding company for Valley Bank, today announced net income of $5,608,000 or $1.90 per diluted share for the year 2005, a 75% increase from net income of $3,211,000 for the year 2004. Valley also announced earnings for the three months ended Dec. 31, 2005, of $1,659,000 or $0.56 per diluted share, a 63% increase over the $1,019,000 earned during the same period in 2004. Return on average assets and return on average equity for the year 2005 were 1.66% and 14.35% as compared to 1.40% and 14.61% for the same period in 2004, respectively. For the three months ended Dec. 31, 2005, return on average assets and return on average equity were 1.71% and 15.92%, respectively. Valley's total assets grew $117 million or 43%, to $391 million at Dec. 31, 2005, as compared to $274 million at Dec. 31, 2004. At Dec. 31, 2005, Valley's total net loans were $299 million, total deposits were $332 million, and stockholders' equity was $42 million. Barry L. Hulin, president and chief executive officer, stated, "These results represent a solid performance by the company for 2005. We remain optimistic about the southern Nevada economy for 2006 and look forward to continuing to capitalize on that strength." -0- *T Financial Performance Indicators for the Twelve and Three Months Ended Dec. 31, 2005 and 2004 (Dollars in thousands, except per share data) (Unaudited) At Dec. 31, Change --------------------- ------------------ 2005 2004 $ or # % ---------- ---------- --------- -------- Balance Sheet: Loans net of Unearned Fees $302,286 $198,270 $104,016 52.46% Allowance for Loan Losses $(3,022) $(2,113) $(909) 43.02% ---------- ---------- --------- Loans, net $299,264 $196,157 $103,107 52.56% Total Assets $391,163 $273,705 $117,458 42.91% Total Earning Assets $375,682 $259,664 $116,018 44.68% Total Investments $76,418 $63,507 $12,911 20.33% Total Deposits $332,436 $236,211 $96,225 40.74% Total Borrowed Funds $15,425 $467 $14,958 3203.00% Total Liabilities $349,198 $237,451 $111,747 47.06% Total Stockholders' Equity $41,965 $36,254 $5,711 15.75% Common Shares Outstanding 2,827,681 2,790,748 36,933 1.32% Book Value per Share $14.84 $12.99 $1.85 14.24% Allowance for Loan Losses to Total Loans 1.00% 1.07% -0.07% Total Stockholders' Equity to Total Assets 10.73% 13.25% -2.52% Total Loans to Total Deposits & Borrowed Funds 86.03% 82.88% 3.15% Twelve Months Ended Dec. 31, Change --------------------- ------------------ 2005 2004 $ or # % ---------- ---------- --------- -------- Income Statement: Interest Income $22,922 $13,458 $9,464 70.32% Interest Expense $6,609 $2,708 $3,901 144.05% ---------- ---------- --------- Net Interest Income $16,313 $10,750 $5,563 51.75% Provision for Loan Losses $777 $632 $145 22.94% Non-interest Income $262 $295 $(33) -11.19% Non-interest Expense $7,290 $5,543 $1,747 31.52% ---------- ---------- --------- Income before Income Taxes $8,508 $4,870 $3,638 74.70% Income Tax Expense $2,900 $1,659 $1,241 74.80% ---------- ---------- --------- Net Income $5,608 $3,211 $2,397 74.65% ========== ========== ========= Basic Earnings Per Share $2.00 $1.59 $0.41 25.79% Diluted Earnings Per Share $1.90 $1.53 $0.37 24.18% Weighted Average Shares - Basic 2,809,608 2,017,094 792,514 39.29% Weighted Average Shares - Diluted 2,956,188 2,103,963 852,225 40.51% Average Total Assets $337,801 $229,582 $108,219 47.14% Average Earning Assets $323,531 $218,088 $105,443 48.35% Average Stockholders' Equity $39,076 $21,984 $17,092 77.75% Net Interest Margin 5.04% 4.93% 0.11% Return on Assets 1.66% 1.40% 0.26% Return on Equity 14.35% 14.61% -0.25% Non-interest Expense to Average Earning Assets 2.25% 2.54% -0.29% Efficiency Ratio 43.98% 50.16% -6.18% Three Months Ended Dec. 31, Change --------------------- ------------------ 2005 2004 $ or # % ---------- ---------- --------- -------- Income Statement: Interest Income $6,979 $3,922 $3,057 77.94% Interest Expense $2,246 $726 $1,520 209.37% ---------- ---------- --------- Net Interest Income $4,733 $3,196 $1,537 48.09% Provision for Loan Losses $173 $126 $47 37.30% Non-interest Income $59 $71 $(12) -16.90% Non-interest Expense $2,102 $1,597 $505 31.62% ---------- ---------- --------- Income before Income Taxes $2,517 $1,544 $973 63.02% Income Tax Expense $858 $525 $333 63.43% ---------- ---------- --------- Net Income $1,659 $1,019 $640 62.81% ========== ========== ========= Basic Earnings Per Share $0.59 $0.37 $0.22 59.46% Diluted Earnings Per Share $0.56 $0.35 $0.21 60.00% Weighted Average Shares - Basic 2,826,090 2,789,936 36,154 1.30% Weighted Average Shares - Diluted 2,962,273 2,948,051 14,222 0.48% Average Total Assets $384,115 $256,402 $127,713 49.81% Average Earning Assets $367,999 $244,015 $123,984 50.81% Average Stockholders' Equity $41,335 $35,859 $5,476 15.27% Net Interest Margin (1) 5.10% 5.21% -0.11% Return on Assets (1) 1.71% 1.58% 0.13% Return on Equity (1) 15.92% 11.30% 4.62% Non-interest Expense to Average Earning Assets (1) 2.28% 2.62% -0.33% Efficiency Ratio 43.86% 48.88% -5.02% Full Time Equivalent Employees 62 46 16 34.78% ----------------------------- (1) Annualized *T Net Interest Income and Net Interest Margin Net interest income for the year 2005 was $16.3 million. This represents an increase of $5.6 million or 52% as compared to $10.7 million for the year 2004. The increase was primarily a result of higher interest income from loans and other earning assets due to increased balances outstanding. Average earning assets increased by $106 million or 49% to $324 million for the year 2005 as compared to $218 million for the year 2004. The net interest margin for the year 2005 was 5.04% as compared to 4.93% for the same period in 2004. Rising interest rates and increasing loans and investment securities outstanding contributed to the improved net interest margin. For the three months ended Dec. 31, 2005, net interest income increased by $1.5 million or 48% to $4.7 million as compared to $3.2 million for the same period in 2004. Average earning assets for the three-month period in 2005 totaled $368 million as compared to $244 million for the same period in 2004, an increase of $124 million or 51%. The net interest margin for the three months ended Dec. 31, 2005, was 5.10% as compared to 5.21% for the same period in 2004. -0- *T Distribution of Assets, Liabilities and Stockholders' Equity; Interest Rates and Interest Differential Twelve Months Ended Dec. 31, ----------------------------------------------------- 2005 2004 -------------------------- -------------------------- Average Interest Average Average Interest Average Balance Income/ Yield/ Balance Income/ Yield/ (1) Expense Cost (1) Expense Cost --------- -------- ------- --------- -------- ------- Assets (Dollars in thousands) Earning assets: Loans (2) (3) (4) $254,423 $20,496 8.06% $172,967 $12,563 7.26% Federal funds sold (5) 21,704 716 3.30% 18,447 257 1.39% Interest bearing deposits (5) 8,957 290 3.24% 11,576 244 2.11% Investment securities (5) 37,905 1,405 3.71% 15,098 394 2.61% Federal Home Loan Bank Stock (5) 542 15 2.77% - - - --------- -------- --------- -------- Total earning assets and interest income 323,531 22,922 7.08% 218,088 13,458 6.17% Non-interest earning assets: Cash and due from banks 8,434 7,386 Premises and equipment 6,500 4,382 Other assets 1,900 1,702 Allowance for credit losses (2,564) (1,976) --------- --------- Total assets $337,801 $229,582 ========= ========= Liabilities and Stockholders' Equity Interest bearing liabilities: Interest bearing demand deposits $80,855 $1,200 1.48% $69,771 $628 0.90% Savings deposits 12,027 142 1.18% 11,629 57 0.49% Time deposits $100,000 or more 65,247 2,079 3.19% 32,502 728 2.24% Other time deposits 83,757 2,826 3.37% 51,439 1,259 2.45% Short-term borrowings - - - 76 1 1.32% Long-term borrowings 8,420 362 4.30% 487 35 7.19% --------- -------- --------- -------- Total interest bearing liabilities 250,306 6,609 2.64% 165,904 2,708 1.63% Noninterest- bearing liabilities: Demand deposits 46,870 40,877 Other liabilities 1,549 817 Stockholders' equity 39,076 21,984 --------- --------- Total liabilities and stockholders' equity $337,801 $229,582 ========= ========= Net Interest Spread (6) 4.44% 4.54% -------- -------- Net interest income/margin (7) $16,313 5.04% $10,750 4.93% ======== ======= ======== ======= ----------------------------- (1) Average balances are obtained from the best available daily data. (2) Loans are gross of allowance for credit losses but after unearned fees. (3) Non-accruing loans are included in the average balances. (4) Interest income includes loan fees of $125,000 and $398,000 for the twelve months ended December 2005 and 2004, respectively. (5) All investments are taxable. (6) Represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. (7) Net interest margin represents net interest income as a percentage of average interest-earning assets. Three Months Ended Dec. 31, ----------------------------------------------------- 2005 2004 -------------------------- -------------------------- Average Average Average Interest Yield/ Average Interest Yield/ Balance Income/ Cost Balance Income/ Cost (1) Expense (2) (1) Expense (2) --------- -------- ------- --------- -------- ------- Assets (Dollars in thousands) Earning assets: Loans (3) (4) (5) $298,101 $6,302 8.39% $192,677 $3,616 7.47% Federal funds sold (6) 23,990 242 4.00% 24,365 119 1.94% Interest bearing deposits (6) 8,442 84 3.95% 9,101 51 2.23% Investment securities (6) 36,662 342 3.70% 17,872 136 3.03% Federal Home Loan Bank Stock (6) 804 9 4.44% - - - --------- -------- --------- -------- Total earning assets and interest income 367,999 6,979 7.52% 244,015 3,922 6.39% Non-interest earning assets: Cash and due from banks 9,488 8,572 Premises and equipment 7,191 4,350 Other assets 2,400 1,591 Allowance for credit losses (2,963) (2,126) --------- --------- Total assets $384,115 $256,402 ========= ========= Liabilities and Stockholders' Equity Interest bearing liabilities: Interest bearing demand deposits $88,219 $384 1.73% $70,828 $171 0.96% Savings deposits 12,388 61 1.95% 13,027 16 0.49% Time deposits $100,000 or more 80,973 744 3.65% 34,054 192 2.24% Other time deposits 94,144 893 3.76% 54,029 338 2.49% Long-term borrowings 15,432 164 4.22% 473 9 7.57% --------- -------- --------- -------- Total interest bearing liabilities 291,156 2,246 3.06% 172,411 726 1.68% Noninterest- bearing liabilities: Demand deposits 49,736 47,357 Other liabilities 1,888 775 Stockholders' equity 41,335 35,859 --------- --------- Total liabilities and stockholders' equity $384,115 $256,402 ========= ========= Net Interest Spread (7) 4.46% 4.71% -------- -------- Net interest income/margin (8) $4,733 5.10% $3,196 5.21% ======== ======= ======== ======= ----------------------------- (1) Average balances are obtained from the best available daily data. (2) Annualized. (3) Loans are gross of allowance for credit losses but after unearned fees. (4) Non-accruing loans are included in the average balances. (5) Interest income includes loan fees of $19,000 and $79,000 for the three months ended December 2005 and 2004, respectively. (6) All investments are taxable. (7) Represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. (8) Net interest margin represents net interest income as a percentage of average interest-earning assets. *T Provision for Loan Losses and Related Allowance for Loan Losses The provision for loan losses was $777,000 for the year 2005 as compared to $632,000 for the same period in 2004. For the three months ended Dec. 31, 2005, the provision for loan losses was $173,000 as compared to $126,000 for the same period in 2004. The increase in the provision was primarily to reflect the growth in the loan portfolio for the quarter and the year of 2005. The allowance for loan losses of $3.0 million at Dec. 31, 2005, reflected management's assessment of the current risk in the loan portfolio and represented 1% of total loans. Valley had two non-accrual loans totaling $129,000 and one loan of $36,000 that was past due 90 days or more as of Dec. 31, 2005. Non-interest Income and Non-interest Expense Non-interest income was $262,000 for the year 2005 as compared to $295,000 for the same period in 2004. For the three months ended Dec. 31, 2005, non-interest income was $59,000 as compared to $71,000 for the same period in 2004. The decrease in non-interest income for both the year and the quarter was due primarily to lower aggregate service charges on deposit accounts. Higher average balances on deposit accounts maintained by the customers continued to hold down service charge income. Non-interest expense was $7.3 million for the year 2005, an increase of $1.7 million over the same period in 2004. For the three months ended Dec. 31, 2005, non-interest expense was $2.1 million, an increase of $505,000 over the same period in 2004. The increase primarily resulted from a combination of the following: increased compensation and employee benefits cost due to increasing staff levels; higher professional fees associated with being a publicly traded company; higher data processing expenses due to increased number of accounts and transactions being processed; higher marketing and advertising costs; higher occupancy and related costs associated with the move to the new headquarters and the opening of the fourth branch during the third quarter of 2005, as well as the forthcoming opening of the fifth branch anticipated in the first quarter of 2006. Balance Sheet Valley's total assets were $391 million at Dec. 31, 2005, an increase of $117 million or 43% from $274 million at Dec. 31, 2004. The increase was due primarily to a $103 million net increase in the loan portfolio, and a $13 million increase in the overnight Federal Funds Sold. Total deposits increased by $96 million or 41% to $332 million at Dec. 31, 2005, as compared to $236 million at Dec. 31, 2004. Valley stockholders' equity increased by $6 million or 16% to $42 million at Dec. 31, 2005, from $36 million at Dec. 31, 2004, due primarily to increased retained earnings. About Valley Bancorp Headquartered in Las Vegas, Valley Bancorp is the holding company for Valley Bank, a Nevada state-chartered commercial bank with branches in Las Vegas, Henderson and Pahrump. -0- *T Web site: Valley Bancorp's Web site -- www.valleybancorp.com Valley Bank's Web site -- www.vbnv.com *T This news release contains forward-looking statements. These statements are subject to a number of uncertainties and risks including, but not limited to, the company'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 Valley Bancorp's filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the period ended Dec. 31, 2004. Actual results may differ.