PRESS RELEASE
May 1, 2007

 

Contact
James F. Arneson, President
(253) 441-4000

 

Venture Financial Group, Inc. Announces Total Assets Exceed $1 Billion

 

FIRST QUARTER 2007 HIGHLIGHTS

Record 1st Quarter Net Income of $3.2 million

Record 1st Quarter Asset Growth of $83.9 million

Excellent Loan Portfolio Credit Quality

New Administrative Offices in DuPont, WA Completed

New Hawks Prairie Financial Center Opens

 

Olympia, Wash. - May 1, 2007 - Venture Financial Group, Inc. (“Venture” or “the Company”), parent company of Venture Bank, (www.venture-bank.com) today announced for the first quarter ended March 31, 2007, net income of $3.2 million, an increase of 39.1% or $0.9 million compared to $2.3 million for the first quarter of 2006. This $3.2 million in net income represents the highest first quarter earnings in Company history.

At March 31, 2007, total assets were at an all time high of $1.062 billion which was an increase of 8.6% or $83.9 million for the first quarter as compared to $978.1 million in total assets at December 31, 2006. $83.9 million represents the highest first quarter asset growth in Company history. Total assets at March 31, 2007 were 28.8% or $237.7 million higher than at March 31, 2006 when total assets were $824.3 million.

“The first quarter 2007 is a milestone for Venture Financial Group, not only did we have record first quarter earnings, but we also hit the one billion mark in total assets,” noted Ken F. Parsons, Sr., Venture Financial Group Chairman and CEO.

Total loans at March 31, 2007 were $730.4 million which was a quarterly increase of 2.0% or $14.3 million as compared to $716.1 million in total loans at December 31, 2006. Total loans at March 31, 2007 increased $103.7 million or 16.5% from $626.7 million at March 31, 2006.

Nonperforming loans as a percentage of total loans was reduced to 0.11% as of March 31, 2007 as compared to 0.49% as of March 31, 2006. The ratio of allowance for credit losses to total loans was reduced to 1.28% at March 31, 2007 from 1.40% at March 31, 2006.

At March 31, 2007, total available for sale securities were $227.9 million which was a quarterly increase of 40.3% or $65.5 million for the first quarter as compared to $162.4 million at December 31, 2006. Total securities available for sale increased $136.7 million or 150.0% to $227.9 from $91.2 million for the time frame March 31, 2007 to March 31, 2006.

The quality of the Company’s assets remains strong. Nonperforming assets as a percentage of total assets declined to 0.09% at March 31, 2007 from 0.43% at March 31, 2006. Nonperforming assets as a percentage of total assets increased slightly in the first quarter from the December 31, 2006 level of 0.07%.

Total deposits at March 31, 2007 were $787.4 million which was a quarterly increase of 2.1% or $16.1 million as compared to $771.3 million in total deposits at December 31, 2006. Total deposits at March 31, 2007 increased $202.9 million or 34.7% from $584.5 million at March 31, 2006.

“Our loan and deposit growth rate moderated somewhat, which is not unusual for us to see in the first quarter. Our loan pipeline remains strong, and we expect that the first quarter opening of our new Hawks Prairie financial center and the DuPont financial center opening in the second quarter will have positive effects on our growth,” said Jim Arneson, President and CEO of Venture Bank.

Operating Results

 

Net Interest Income
Net interest income for the first quarter of 2007 increased 21.8% to $9.5 million, from $7.8 million for the first quarter of 2006. This increase is due to internal growth of loans, securities deposits and borrowings. The net interest margin at March 31, 2007 was 4.22% and at March 31, 2006 was 4.58%. The narrowing of the net interest margin resulted from an increase in funding from borrowings, which are generally more expensive than deposits.

Non Interest Income
Non-interest income for the first quarter of 2007 was $2.6 million which is an increase of 30.0% or $600,000 compared to $2.0 million in the first quarter of 2006. The major components of non-interest income include salable mortgage loan fee income, service charge income, and other miscellaneous income. In spite of a general downturn in home sales in the marketplace, residential mortgage volume remained relatively stable providing fee income of $402,000 for the first quarter of 2007 as compared to $442,000 for the first quarter of 2006. Service charge income of $946,000 for the first quarter of 2007 compares to $940,000 for the first quarter 2006. Other non-interest income for the first quarter of 2007 was $1.2 million, compared to $585,000 for the first quarter of 2006. This $615,000 increase is partly due to a net realized gain on sale of securities available for sale of $278,000, an increase in the cash surrender value of life insurance of $211,000 and income of $91,000 associated with the change in fair value of trust preferred debt.

Non Interest Expense
Total non-interest expense increased by $1 million or 16.4% to $7.1 million for the three months ended March 31, 2007 compared to $6.1 million for the three months ended March 31, 2006. Salaries and benefits expense increased comparing the three months ended March 31, 2007 to the same period ending March 31, 2006 by $675,000. This was largely due to adding employees to accommodate the growth of the Company.

Recent Accounting Changes
Effective January 1, 2007, VFG elected early adoption of Statements of Financial Accounting Standards (“SFAS”) No.159 and 157. SFAS No. 159, which was issued in February 2007, generally permits the measurement of selected eligible financial instruments at fair value at specified election dates. Upon adoption of SFAS No. 159, VFG elected the fair value measurement option for its pre-existing junior subordinated debentures issued to capital trusts (commonly known as “trust preferred debt”) of $22.9 million. The initial fair value measurement of these items resulted in, approximately, a $428,000 cumulative-effect adjustment, net of tax, recorded as a reduction in retained earnings as of January 1, 2007. Under SFAS No. 159, this one-time charge will not be recognized in current earnings. As a result of VFG’s fair value measurement election for the above financial instruments, VFG recorded income of $91,000 in its first quarter earnings for the change in fair value of such instruments from the election date of January 1, 2007 to March 31, 2007.

 

About Venture Financial Group
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. In this press release we make forward-looking statements regarding deposit growth. Specific risks related to forward-looking statements in this press release include the possibility that new financial centers may not be able to attract customers and anticipated deposits.

 

VFG CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
VFG CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

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