PRESS RELEASE
July 23, 2003
Contact
Cathy Reines
Chief Financial Officer
(360) 459 -1100
(360) 459 - 0137 (fax)
Venture Financial Group Reports
Record Earnings And Subsequent Earnings Event
Second Quarter Highlights
- Quarterly income and
earnings per share increase 19%
- Quarterly non interest
income up 34%
- Non-performing assets as a
percentage of loans decline from first quarter
Olympia, Wash., July 23, 2003 –
Venture Financial Group, Inc. (“Venture” or “the
Company”), parent company of Venture Bank (www.venture-bank.com)
today announced record second quarter net income of $1.95
million, an increase of 19% compared to $1.64 million for the
second quarter 2002. Diluted earnings per share were $.43 for
the quarter ended June 30, 2003 up 16% from $.37 for the same
quarter in 2002. The increase in net income and earnings per
share includes expenditures related to the Company’s
branding efforts that were incurred throughout the first six
months of 2003. Net income for the second quarter was up 10%
compared to first quarter 2003 earnings of $1.78 million.
Net income for the six months ended June
30, 2003 was $3.73 million, an increase of $.74 million or 25%
compared to $2.99 million for the same period in 2002. On a
diluted earnings per share basis, net income was $.82 per
share for the six months ended June 30, 2003 compared with
$.68 for the same period in 2002, an increase of 21%.
Ken F. Parson Sr., CEO and Chairman,
stated, “We are obviously happy with these results given the
current economic environment and the fact that we have gone
through a major re-branding effort.”
During the first six months the
Company’s net interest margin decreased to 6.55% as compared
to 6.86% for the same period in 2002. The 31 basis point (a
basis point equals 1/100 of 1%) drop is a reflection of loans
re-pricing faster than deposits, in an environment where the
prime rate has dropped 75 basis points in the past 12 months.
For the quarter ended June 30, 2003,
assets totaled $476 million, an increase of 28% over the $371
million in total assets at June 30, 2002. Total loans, which
includes loans held for sale, increased 24% to $367 million
from $297 million at June 30, 2002, while deposits increased
19% to $376 million from $316 million. The balance sheet
growth is primarily due to Venture’s acquisition of Harbor
Bank in Gig Harbor in October 2002.
“We continue to experience solid
operating results across the organization. Record months in
our Mortgage and Construction departments, along with
additional revenue attributed to our Harbor Bank acquisition
have contributed significantly to our success”, said Jon M.
Jones, President, Venture Bank.
Mr. Jones continued, “We at Venture
Bank are extremely excited about the future. Our re-branding
efforts have helped increase activity in both our deposit and
loan products. We continue to improve our products and
services along with the way we deliver them”.
Operating Results
Quarter Ended June 30, 2003
Net Interest Income
As a result of the decreasing rate environment the Company’s
loan yields dropped from 9.17% at June 30, 2002 to 8.56% at
June 30, 2003. To counter the reduction in the prime rate,
Management changed deposit product mix and pricing to reduce
cost of funds from 1.76% at June 30, 2002 to 1.35% at June 30,
2003. Net interest margin, a byproduct of the above factors
decreased from 7.12% at June 30, 2002 to 6.75% at June 30,
2003.
Net interest income for the second
quarter of 2003 increased 20% to $6.6 million, from $5.5
million for the quarter ended June 30, 2002. This increase was
driven by a lower cost of funds and the increase in interest
income generated by the loans acquired with the purchase of
Harbor Bank in the fourth quarter 2002.
Net interest income for the six months
ended June 30, 2003 increased 23% to $13.2 million from $10.7
million for the same period last year.
Non-Interest Income
Non-interest income increased $.6 million or 34% in the second
quarter of 2003 compared to the second quarter 2002, and $1.4
million or 38% for the first six months of 2003 compared with
the same period in 2002. Increase during the second quarter
and first six months of 2003 can be primarily attributed to
origination fees associated with mortgage loans sold.
Non-Interest Expense
Total non-interest expense increased $1.1 million or 24% for
the second quarter of 2003 and increased $2.6 million or 29%
for the first six months of 2003 compared with the same period
in 2002. The increase in non-interest expense can be primarily
attributed to the $100 million dollar growth in assets due
almost entirely to the acquisition of Harbor Bank. The Company
also in the first six months incurred additional marketing and
rollout costs related to the branding efforts that have
occurred in 2003.
Non-performing Assets
Non-performing assets (which includes non-performing loans and
other non-performing assets) as a percentage of total assets
was 2.81%, 3.12% and 2.00% as of June 30, 2003, March 31, 2003
and June 30, 2002 respectively. The increase over June 30,
2002 is attributed to the loans acquired during the
acquisition of Harbor Bank.
“We are pleased with the decreasing
level of non-performing assets since March 31, 2003. We have a
team of specialists devoted to the ongoing oversight of these
special credits and will continue to focus on improving the
quality of our portfolio”, said Mr. Jones.
Subsequent Event
On July 15, the Company sold property that had been acquired
as a result of a failed loan identified in 1999. The sale
resulted in a $2.1 million “Gain on Sale of Asset” and is
expected to increase earnings per share by $.33. The gain will
be reflected in the Company’s third quarter results as
“Other non-interest income”.
The sale of this property reduces the
Company’s non-performing assets from $13.4 million reported
at June 30, 2003 to $10.1 million. Mr. Ken F. Parsons Sr., CEO
and Chairman commented, “Our Team has worked diligently for
four years to recover these monies for the shareholders. We
are very pleased with the results.”
Quarterly Dividend
On July 16, 2003, the Board of Directors declared a cash
dividend of $.07 per share payable August 8, 2003 to all
shareholders of record as of July 31, 2003. The declared
dividend is a 40% increase over the previous quarter and marks
the eighteenth (18) consecutive quarterly dividends paid.
Venture Financial Group, through its
wholly owned subsidiary, Venture Bank has 21 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 the Bank may be
found on the Internet at www.venture-bank.com.
Condensed
Statements of Condition
Condensed
Statements of Operation
Note Regarding
Forward-Looking Information
This news release may contain statements that are not
historical in nature, including the discussions of the
adequacy of the Company's capital resources and allowance for
credit losses, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995 (“PLSRA”). Forward-looking statements are
subject to the risks and uncertainties that may cause actual
future results to differ materially. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this news
release. The Company does not undertake any obligation
to publicly release any revisions to forward-looking
statements contained in this release, with respect to events
or circumstances after the date of this release, or to reflect
the occurrence of unanticipated events. Such risks and
uncertainties with respect to the Company include those
related to the economic environment, particularly in the
region in which the Company operates, competitive products and
pricing, fiscal and monetary policies of the federal
government, changes in government regulations affecting
financial institutions, including regulatory fees and capital
requirements, changes in prevailing interest rates,
acquisitions and the integration of acquired businesses,
credit risk management and asset/liability management, the
financial and securities markets, and the availability of and
costs associated with sources of liquidity.
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