VLLY Valley Bancorp

Valley Bancorp (NASDAQ: VLLY) Highlights -- Third quarter earnings of $1,453,000, up 65% from $879,000 in third quarter 2004. -- Third quarter earnings per diluted share of $0.49 up 4% from $0.47 in third quarter 2004. -- ROE and ROA of 14.51% and 1.63% respectively in third quarter 2005. -- Total net loans increased $96 million, up 51% from third quarter 2004. Valley Bancorp, the holding company for Valley Bank, today announced net income of $1,453,000 or $0.49 per diluted share for the quarter ended Sept. 30, 2005, a 65% increase from net income of $879,000 for the third quarter of 2004. Valley also announced earnings for the nine months ended Sept. 30, 2005 of $3,950,000 or $1.34 per diluted share, an 80% increase over the $2,192,000 earned during the same period in 2004. Return on average assets and return on average equity for the quarter ended Sept. 30, 2005 were 1.63% and 14.51% as compared to 1.51% and 19.47% for the same period in 2004, respectively. For the nine months ended Sept. 30, 2005, return on average assets and return on average equity were 1.63% and 13.74%, respectively. The return on average equity for the third quarter 2005 was lower than the third quarter 2004 due to a higher average equity balance during the quarter resulting from the successful completion of the Initial Public Offering that closed on Sept. 28, 2004. Valley's total assets grew $122 million or 49%, to $373 million at Sept. 30, 2005 as compared to $251 million at Sept. 30, 2004. At Sept. 30, 2005, Valley's total net loans were $282 million, total deposits were $316 million, and stockholders' equity was $40 million. Barry L. Hulin, president and chief executive officer, stated, "I am extremely proud of the efforts of all the company's employees during what was a challenging quarter. This strong performance was achieved notwithstanding increased funding costs and the occupancy of our new headquarters and branch. With continued strength in the local economy, we remain optimistic for the balance of the year." -0- *T Financial Performance Indicators for the Three and Nine Months Ended Sept. 30, 2005 and 2004 (Dollars in thousands, except per share data) (Unaudited) At Sept. 30, Change --------------------- ------------------- 2005 2004 $ or # % ---------- ---------- ---------- -------- Balance Sheet: Loans net of Unearned Fees $285,321 $188,614 $96,707 51.27% Allowance for Loan Losses $(2,841) $(2,026) $(815) 40.23% ---------- ---------- ---------- Loans, net $282,480 $186,588 $95,892 51.39% Total Assets $373,183 $251,244 $121,939 48.53% Total Earning Assets $358,104 $236,334 $121,770 51.52% Total Investments $75,624 $49,746 $25,878 52.02% Total Deposits $315,625 $214,417 $101,208 47.20% Total Borrowed Funds $15,436 $477 $14,959 3136.06% Total Liabilities $332,874 $216,003 $116,871 54.11% Total Stockholders' Equity $40,309 $35,241 $5,068 14.38% Common Shares Outstanding 2,824,901 2,789,228 35,673 1.28% Book Value per Share $14.27 $12.63 $1.64 12.96% Allowance for Loan Losses to Total Loans 1.00% 1.07% -0.07% Total Stockholders' Equity to Total Assets 10.80% 14.03% -3.23% Total Loans to Total Deposits & Borrowed Funds 85.33% 86.83% -1.50% Three Months Ended Sept. 30, Change --------------------- ------------------- 2005 2004 $ or # % ---------- ---------- ---------- -------- Income Statement: Interest Income $6,199 $3,474 $2,725 78.44% Interest Expense $1,844 $670 $1,174 175.22% ---------- ---------- ---------- Net Interest Income $4,355 $2,804 $1,551 55.31% Provision for Loan Losses $324 $120 $204 170.00% Non-interest Income $66 $63 $3 4.76% Non-interest Expense $1,892 $1,414 $478 33.80% ---------- ---------- ---------- Income before Income Taxes $2,205 $1,333 $872 65.42% Income Tax Expense $752 $454 $298 65.64% ---------- ---------- ---------- Net Income $1,453 $879 $574 65.30% ========== ========== ========== Basic Earnings Per Share $0.51 $0.48 $0.03 6.25% Diluted Earnings Per Share $0.49 $0.47 $0.02 4.26% Weighted Average Shares - Basic 2,822,814 1,817,978 1,004,836 55.27% Weighted Average Shares - Diluted 2,963,453 1,888,336 1,075,117 56.93% Average Total Assets $357,129 $232,629 $124,500 53.52% Average Earning Assets $342,827 $221,029 $121,798 55.10% Average Stockholders' Equity $40,055 $18,059 $21,996 121.80% Net Interest Margin (1) 5.04% 5.05% -0.01% Return on Assets (1) 1.63% 1.51% 0.12% Return on Equity (1) 14.51% 19.47% -4.96% Non-interest Expense to Average Earning Assets (1) 2.21% 2.56% -0.35% Efficiency Ratio 42.80% 49.17% -6.38% Full Time Equivalent Employees 57 47 10 21.28% Nine Months Ended Sept. 30, Change --------------------- ------------------- 2005 2004 $ or # % ---------- ---------- ---------- -------- Income Statement: Interest Income $15,943 $9,536 $6,407 67.19% Interest Expense $4,363 $1,982 $2,381 120.13% ---------- ---------- ---------- Net Interest Income $11,580 $7,554 $4,026 53.30% Provision for Loan Losses $604 $506 $98 19.37% Non-interest Income $203 $224 $(21) -9.38% Non-interest Expense $5,187 $3,946 $1,241 31.45% ---------- ---------- ---------- Income before Income Taxes $5,992 $3,326 $2,666 80.16% Income Tax Expense $2,042 $1,134 $908 80.07% ---------- ---------- ---------- Net Income $3,950 $2,192 $1,758 80.20% ========== ========== ========== Basic Earnings Per Share $1.41 $1.25 $0.16 12.80% Diluted Earnings Per Share $1.34 $1.20 $0.14 11.67% Weighted Average Shares - Basic 2,804,054 1,756,650 1,047,404 59.63% Weighted Average Shares - Diluted 2,955,666 1,819,770 1,135,896 62.42% Average Total Assets $322,197 $220,629 $101,568 46.04% Average Earning Assets $308,547 $209,420 $99,127 47.33% Average Stockholders' Equity $38,315 $17,371 $20,944 120.57% Net Interest Margin (1) 5.02% 4.82% 0.20% Return on Assets (1) 1.63% 1.32% 0.31% Return on Equity (1) 13.74% 16.82% -3.08% Non-interest Expense to Average Earning Assets (1) 2.24% 2.51% -0.27% Efficiency Ratio 44.02% 50.69% -6.67% ----------------------------- (1) Annualized *T Net Interest Income and Net Interest Margin Net interest income for the third quarter of 2005 was $4.4 million. This represents an increase of $1.6 million or 55% as compared to $2.8 million for the third quarter of 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 $122 million or 55% to $343 million for the quarter ended Sept. 30, 2005 as compared to $221 million for the third quarter of 2004. The net interest margin for the quarter ended Sept. 30, 2005 was 5.04% as compared to 5.05% for the same period in 2004. For the nine months ended Sept. 30, 2005, net interest income increased by $4.0 million or 53% to $11.6 million as compared to $7.6 million for the same period in 2004. Average earning assets for the nine-month period in 2005 totaled $309 million as compared to $209 million for the same period in 2004, an increase of $100 million or 48%. The net interest margin for the nine months ended Sept. 30, 2005 was 5.02% as compared to 4.82% for the same period in 2004. Rising interest rates and increasing loans and investment securities outstanding contributed to the improved net interest margin. -0- *T Distribution of Assets, Liabilities and Stockholders' Equity; Interest Rates and Interest Differential Three Months Ended Sept. 30, ----------------------------------------------------- 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) $269,573 $5,541 8.15% $181,289 $3,279 7.20% Federal funds sold (6) 26,825 234 3.46% 17,274 60 1.38% Interest bearing deposits (6) 7,566 66 3.46% 9,705 53 2.17% Investment securities (6) 38,863 358 3.65% 12,761 82 2.56% --------- -------- --------- -------- Total earning assets and interest income 342,827 6,199 7.17% 221,029 3,474 6.25% Non-interest earning assets: Cash and due from banks 7,455 8,218 Premises and equipment 6,713 4,358 Other assets 2,800 1,039 Allowance for credit losses (2,666) (2,015) --------- --------- Total assets $357,129 $232,629 ========= ========= Liabilities and Stockholders' Equity Interest bearing liabilities: Interest bearing demand deposits $86,387 $341 1.57% $73,386 $182 0.99% Savings deposits 11,341 41 1.43% 12,156 15 0.49% Time deposits $100,000 or more 67,520 554 3.26% 31,405 172 2.18% Other time deposits 86,456 743 3.41% 49,835 294 2.34% Short-term borrowings - - - - - - Long-term borrowings 15,443 165 4.24% 483 7 6.59% --------- -------- --------- -------- Total interest bearing liabilities 267,147 1,844 2.74% 167,265 670 1.59% Noninterest- bearing liabilities: Demand deposits 48,204 46,489 Other liabilities 1,723 816 Stockholders' equity 40,055 18,059 --------- --------- Total liabilities and stockholders' equity $357,129 $232,629 ========= ========= Net Interest Spread (7) 4.43% 4.66% -------- -------- Net interest income/margin (8) $4,355 5.04% $2,804 5.05% ======== ======= ======== ======= -------------------------- (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 $24,000 and $82,000 for the three months ended September 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. ----------------------------------------------------- Nine Months Ended Sept. 30, ----------------------------------------------------- 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) $239,703 $14,194 7.92% $166,350 $8,947 7.18% Federal funds sold (6) 20,934 474 3.03% 16,460 138 1.12% Interest bearing deposits (6) 9,096 206 3.03% 12,444 193 2.07% Investment securities (6) 38,814 1,069 3.68% 14,166 258 2.43% --------- -------- --------- -------- Total earning assets and interest income 308,547 15,943 6.91% 209,420 9,536 6.08% Non-interest earning assets: Cash and due from banks 7,404 7,684 Premises and equipment 6,268 4,392 Other assets 2,408 1,058 Allowance for credit losses (2,430) (1,925) --------- --------- Total assets $322,197 $220,629 ========= ========= Liabilities and Stockholders' Equity Interest bearing liabilities: Interest bearing demand deposits $78,373 $816 1.39% $69,417 $457 0.88% Savings deposits 11,905 81 0.91% 11,159 41 0.49% Time deposits $100,000 or more 59,948 1,335 2.98% 31,960 536 2.24% Other time deposits 80,256 1,933 3.22% 50,590 921 2.43% Short-term borrowings - - - 102 1 1.31% Long-term borrowings 6,057 198 4.37% 492 26 7.06% --------- -------- --------- -------- Total interest bearing liabilities 236,539 4,363 2.47% 163,720 1,982 1.62% Noninterest- bearing liabilities: Demand deposits 45,907 38,716 Other liabilities 1,436 822 Stockholders' equity 38,315 17,371 --------- --------- Total liabilities and stockholders' equity $322,197 $220,629 ========= ========= Net Interest Spread (7) 4.44% 4.46% -------- -------- Net interest income/margin (8) $11,580 5.02% $7,554 4.82% ======== ======= ======== ======= -------------------------- (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 $106,000 and $319,000 for the nine months ended September 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 $324,000 for the three months ended Sept. 30, 2005 as compared to $120,000 for the same period in 2004. For the nine months ended Sept. 30, 2005, the provision for loan losses was $604,000 as compared to $506,000 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 nine months of 2005. The allowance for loan losses of $2.8 million at Sept. 30, 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 $145,000 and one loan of $11,000 that was past due 90 days or more as of Sept. 30, 2005. Non-interest Income and Non-interest Expense Non-interest income was $66,000 for the three months ended Sept. 30, 2005 as compared to $63,000 for the same period in 2004. For the nine months ended Sept. 30, 2005, non-interest income was $203,000 as compared to $224,000 for the same period in 2004. The decrease of $21,000 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 $1.9 million for the three months ended Sept. 30, 2005, an increase of $478,000 over the same period in 2004. For the nine months ended Sept. 30, 2005, non-interest expense was $5.2 million, an increase of $1.2 million over the same period in 2004. The increase was primarily a result of increased compensation and employee benefits costs 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, and higher occupancy costs associated with the move to the new headquarters and the opening of the fourth branch during the quarter ended Sept. 30, 2005. Balance Sheet Valley's total assets were $373 million at Sept. 30, 2005, an increase of $122 million or 49% from $251 million at Sept. 30, 2004. The increase was due primarily to a $96 million net increase in the loan portfolio, and a $25 million increase in available for sale securities. Total deposits increased by $102 million or 48% to $316 million at Sept. 30, 2005, as compared to $214 million at Sept. 30, 2004. Valley stockholders' equity increased by $5 million or 14% to $40 million at Sept. 30, 2005 from $35 million at Sept. 30, 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, Nev. -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.