PRESS RELEASE
February 1, 2005
Contact
Cathy Reines, Chief Financial Officer
(360) 459 -1100
(360) 459 - 0137 (fax)
Venture Financial Group Reports Record Earnings
FOURTH QUARTER
HIGHLIGHTS
Quarterly and year-end earnings highest in Company history
Return on assets 2.23%; Return on equity 23.00%
Loan growth continues – 18% increase for the twelve months ending December 31, 2004
Olympia, Wash. - February 1, 2005 -
Ken F. Parsons, Sr., CEO of Venture Financial Group, Inc.
("Venture" or the "Company"), parent company of Venture Bank,
(www.venture-bank.com) today announced fourth quarter net
income of $5.8 million, a 186% increase over the same period
in 2003. Included in the $5.8 million is one-time income of
$3.5 million net of tax related to the sale of seven branches
("the divestiture"). Excluding this income, quarterly net
income of $2.3 million represents a 13% increase over the same
period in 2003 and also represents the largest quarterly earnings
in Company history. Diluted earnings per share were $0.86 for
the quarter ended December 31, 2004 compared to $0.30 for the
quarter ended December 31, 2003. Excluding the divestiture
income, December 31, 2004 quarterly diluted earnings per share
increased $0.04 or 13% over the December 31, 2003 quarterly
diluted earnings per share of $0.30.
Net income for the twelve months ended
December 31, 2004 was $11.8 million, an increase of $2.7 million
or 30% compared to $9.1 million for the same period in 2003.
On a diluted earnings per share basis, net income was $1.77 per
share for the twelve months ended December 31, 2004 compared
with $1.32 for the same period in 2003, an increase of 34%.
Excluding the divestiture income recorded in 2004 and a $1.4
million gain on the sale of real estate recorded in 2003,
adjusted net income for the twelve months ended December 31,
2004 was $8.3 million, an increase of $600,000 or 8% compared
to adjusted net income for the same period in 2003. Diluted
earnings per share for the twelve months ended December 31,
2004 and 2003, adjusted for the 2004 divestiture income and
2003 gain on sale of real estate income, was $1.27 and $1.17
respectively, also an increase of 9%.
For the period ending December 31, 2004,
total loans increased $66 million or 18% to $429 million from
$363 million at December 31, 2003. Securities available for
sale decreased $11 million or 13% to $74 million from $85
million at December 31, 2003. This decrease is due largely
to principal paydowns on mortgage backed securities.
Demand deposits, interest-bearing demand
deposits and certificates of deposit decreased 11%, 17% and 13%
respectively for the period ending December 31, 2004. This
decrease is directly attributable to the branch divestiture.
Excluding the sale of these deposits, demand deposits,
interest-bearing demand deposits, and certificates of deposit
increased 7%, 10%, and 20% respectively or $4.8 million, $13.8
million and $17.6 million respectively during the year.
The $88.0 million in deposits sold was
replaced with short-term borrowings which increased $80.6 million
due to the branch divestiture.
"As evidenced by our record quarterly and
annual financial results, we believe our strong brand continues
to have a positive impact on our ability to grow the Company,"
said Jon M. Jones, President. "Our team looks forward to 2005
and the continued expansion of the Venture Bank brand."
Operating Results
Quarter Ended December 31, 2004
Net Interest Income
Net interest income for the fourth quarter of 2004 increased 10.2%
to $6.5 million, from $5.9 million for the same period in 2003.
This increase is due to larger loan volumes partially offset by
growth in interest expense due to the increase in short term borrowings.
Net interest income for the twelve months ending December 31, 2004
and 2003 was $25 million. The Bank discontinued Alabama small
loan originations in 2003 and accordingly, loan interest income
for the twelve months ending December 31, 2003 included $1.5 million
in small loan income not included in 2004. Excluding Alabama small
loan income from the 2003 numbers, net interest income year-over-year
increased $1.5 million or 6.1%. This increase can be attributed to
the following factors. Investment income increased $1 million due
to $50 million in investments purchased during the last four months
of 2003. Loan interest income increased $1 million due to increased
loan volumes. Finally, the increase in interest income was offset
by a $500,000 increase in interest expense due primarily to increased borrowings.
Non-interest Income
Non-interest income increased by $5.3 million or 221% to a total of
$7.7 million for the quarter ending December 31, 2004 compared
to $2.4 million for the same quarter in 2003. Non-interest income
in 2004 includes one time income of $5.4 million from the branch
divestiture. Excluding the one time income from the 2004 numbers,
non-interest income quarter-over-quarter was consistent.
The twelve months ending December 31, 2004 reflects an increase in
non-interest income of $1 million or 8% compared to the previous
year. As previously mentioned, 2004 numbers include one time income
related to the branch divestiture of $5.4 million, and 2003 includes
one time income on the sale of real estate of $2.1 million. Excluding
one-time income numbers from both 2004 and 2003 non-interest income
decreased $2.3 million. This decrease is due to $1.3 million of fees
related to discontinued small loan originations in Alabama recorded
in 2003 compared to none in 2004 and a $2.0 million decrease in fees
on mortgage loans sold year-over-year. This decrease was offset by
an increase in service charges, additional gross revenue generated by
Venture Wealth Management, a subsidiary of Venture Bank, and income
on the sale of premises and equipment.
"Given the reduction in these sources of non-interest income from the
previous year, Management is pleased with the income growth generated
from our core banking operations and we are excited about how this
positions us for the future," said Jones.
Non-interest Expense
Non-interest expense increased by $773,000 or 15.7% for the three
months ended December 31, 2004 compared to the three months ended
December 31, 2003. The fourth quarter increase is attributed to
several uncommon events including a $328,000 write down of other
real estate owned and an increase in salary continuation benefit
expense due to the death of one of the Company’s senior officers.
The increased salary continuation benefit expense was offset entirely
by non-interest income recorded related to a life insurance policy.
Increased other expenses were offset by a $558,000 decrease in salary
and benefit expense resulting from the reduction in mortgage
commissions and a reduction in salary expense associated with the
branch divestiture.
Non-interest expense for the twelve months ending December 31, 2004
decreased $1.1 million or 5.0% compared to the same period in 2003.
This reduction is due to a decrease in salary and benefit expense of
$1.3 million resulting from the reduction in mortgage commissions and
a reduction in salary expense associated with the branch divestiture.
Nonperforming Assets
Nonperforming assets as a percentage of total assets were 1.05% and 0.82%
as of December 31, 2004 and 2003 respectively. Nonperforming loans as
a percentage of total loans was 1.18% and 0.60% as of December 31, 2004
and 2003 respectively. The increase in 2004 is primarily due to one
commercial property loan that became non-performing at the end of 2004;
Management continues to monitor this loan closely. Credit quality
continues to be a focus of the Company.
Sale of Seven Branches
The Company sold seven of its branches on October 8, 2004. Of the
seven branches, one was in Thurston County, two were in Lewis County
and four were in Grays Harbor County. Deposits transferred totaled
$88 million. The Company retained all loans originated through the
seven branches. The Company realized a $3.5 million gain net of tax
and previously recorded goodwill with respect to such branches.
"The sale of these branches was a strategic move and allows the Company
to reallocate its resources to more populated and growing areas. We
have moved forward with this strategy with the opening of our Kent
Financial Center in December 2004 and our anticipated opening of our
Lakewood Financial Center in July 2005," said Parsons. "We continue
to seek other opportunities that compliment our strategic focus," Parsons continued.
Venture Financial Group, through its wholly owned subsidiary, Venture
Bank has 14 financial centers in three western Washington Counties
and offers a full spectrum of financial services including commercial,
construction, residential and consumer lending, deposit products and
wealth management services through its wholly-owned subsidiary Venture
Wealth Management. Further information about the Bank may be found on
the Internet 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 each company's filings with the Securities and Exchange Commission
(the "SEC"). You should not place undue reliance on forward-looking
statements and we undertake no obligation to update any such statements.
Specific risks in this press release include whether the Company will
open its Lakewood Financial Center in July 2005.
Condensed Statements of Condition
Condensed Statements of Income
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