PRESS RELEASE
January 30, 2007

 

Contact
James F. Arneson, President
(360) 459-1100

 

Venture Financial Group Announces 2006 Record Earnings And Asset Growth

 

FOURTH QUARTER & ANNUAL HIGHLIGHTS

Quarterly Return on Average Equity 14.66%

Assets, Loans, & Deposits at record levels due to significant growth

2006 Earnings Per Share up 17.8% over 2005

Record quarterly and annual earnings

Loan portfolio quality remains solid

 

Olympia, Wash. - January 30, 2007 - Venture Financial Group, Inc. (“Venture” or “the Company”), parent company of Venture Bank, (www.venture-bank.com) today announced for the fourth quarter ended December 31, 2006, net income of $3.1 million, an increase of 14.8% or $400,000 as compared to $2.7 million for the fourth quarter of 2005. For the twelve months ending December 31, 2006 net income was $11.1 million, which was an increase of 23.3% over the net income for the twelve months ended December 31, 2005 of $9.0 million. Excluding one time gains in previous years, this represents the highest quarterly and annual net income figures in company history. Diluted earnings per share grew 17.8% for the twelve months ended December 31, 2006 as compared to the prior year. The fourth quarter return on average equity improved to 14.66% in 2006 from 13.77% in 2005. The year-to-date return on average equity at December 31, 2006 was 14.05% compared to 14.87% at December 31, 2005.

At December 31, 2006, total assets were $978.1 million which was an increase of 29.9% or $225.3 million over the December 31, 2005 total assets of $752.8 million.

“It has been a record breaking year for Venture Financial Group, Inc. and highlights the strength of our business,” said Ken F. Parsons, Sr., Venture Financial Group Chairman and CEO.

Total loans at December 31, 2006 were $716.1 million which was an increase of 18.9% or $113.8 million from the $602.3 million at December 31, 2005. “Much of this increase has been real estate construction related,” said Jim Arneson, President and CEO of Venture Bank. “We are continually monitoring real estate activity in the Northwest and have not yet seen the weakness exhibited in other parts of the country.”

Total deposits were $771.3 million at December 31, 2006 which was an increase of $257.3 million or 50.1% from the $514.0 million in total deposits at December 31, 2005. “We saw significant success in raising deposits this year as the Venture Bank brand is becoming more widely known in western Washington,” said Arneson.

The quality of the Company’s assets remains strong. Nonperforming assets as a percentage of total assets were successfully decreased to 0.07% at December 31, 2006 from 0.36% at December 31, 2005.

Operating Results

 

Net Interest Income
Net interest income for the fourth quarter of 2006 increased 16.9% to $9.7 million, from $8.3 million for the fourth quarter of 2005. The net interest margin at December 31, 2006 was 4.41% and at December 31, 2005 was 4.93%. The narrowing of the net interest margin is due primarily to a change in the mix of assets and liabilities on the balance sheet. The tactical change in the asset and liability mix provides more liquidity and adds assets that require less overhead cost. A portion of the liabilities were shifted to deposits from borrowings. The interest rate environment that includes a relatively flat to inverted treasury yield curve creates a challenging environment for stabilizing the margin.

Net interest income for the twelve months ending December 31, 2006, increased by 26.1% or $7.4 million from $28.4 to $35.8 million compared to the same period in 2005.

Non Interest Income
Non-interest income for the fourth quarter of 2006 was $2.2 million which is an increase of $200,000 compared to the fourth quarter of 2005. The major components of non-interest income include saleable mortgage loan fee income, service charge income, and other income. Residential mortgage volume remained strong, providing fee income of $426,000 for the fourth quarter of 2006 as compared to $404,000 for the fourth quarter of 2005. Service charge income of $984,000 for the fourth quarter of 2006 compares to $1,006,000 for the fourth quarter 2005. Other non-interest income for the fourth quarter of 2006 was $769,000 compared to $567,000 for the fourth quarter of 2005.

Non-interest income for the twelve months ending December 31, 2006 was $8.7 million, an increase of 6.1% or $500,000 compared to the same period in 2005.

Non Interest Expense
Total non-interest expense increased 9.7% or $600,000 for the three months ended December 31, 2006 compared to the three months ended December 31, 2005. Salaries and benefits increased during the period while occupancy and equipment and other expense both decreased.

Non-interest expense for the twelve months ended December 31, 2006 was $26.7 million, an increase of 17.1% or $3.9 million compared to $22.8 million for the same period in 2005. The increases are primarily attributed to the costs associated with the purchase of Redmond National Bank and the opening of our Lakewood financial center, both in late 2005.

Nonperforming Loans
Nonperforming loans as a percentage of total loans decreased 27 basis points from December 31, 2005 to December 31, 2006. The Company’s portfolio quality finished at an all time high with non-accruals at just $690,000, or 0.10% of the portfolio, compared to $2.2 million, or 0.37% of the portfolio on December 31, 2005. Foreclosed properties at December 31, 2006 totaled just $34,000, compared to $474,000 one year ago.

 

Venture Financial Group, through its wholly owned subsidiary Venture Bank, has 17 offices in four western Washington counties and offers a full spectrum of financial services including commercial, construction, residential and consumer lending, deposit products and other banking services. Further information about Venture Bank may be found at www.venture-bank.com.

 

Note Regarding Forward-Looking Information
This press release includes forward-looking statements within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to certain risk factors, including those set forth from time to time in the Company’s filings with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. Specific risks related to forward-looking statements in this press release include the Company’s ability to maintain growth and asset quality in the current interest rate environment.

 

VFG CONSOLIDATED BALANCE SHEET
VFG CONSOLIDATED STATEMENT OF INCOME

 

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