Olympia, Wash., October 21, 2004 - 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
third quarter net income of $2.19 million, a 16% increase over the same period in 2003, excluding
a third quarter 2003 one-time net gain of $1.4 million on the sale of real estate. Excluding the
gain in 2003, the $2.19 million represents the largest quarterly net income ever recorded by
Venture Financial Group. Diluted earnings per share were $0.33 for the quarter ended
September 30, 2004 compared to $0.48 for the quarter ended September 30, 2003. Excluding the
2003 gain, September 30, 2004 diluted earnings per share increased $0.05 or 18% over the adjusted
September 30, 2003 diluted earnings per share of $0.28.
For the period ended September 30, 2004, total loans increased $42 million
or 12% to $405 million from $363 million at December 31, 2003. Securities available for sale
decreased $12 million or 14% to $73 million from $85 million at December 31, 2003. This decrease
is due largely to principal paydowns on mortgage backed securities.
Demand deposits and interest bearing demand deposits increased 14% and 12% respectively during
the year. Time deposits decreased 15% during the year. Management continues to focus on shifting
its deposit base toward demand and interest bearing demand deposits.
“We continue to experience strong loan growth which has helped us to have another outstanding
quarter,” said Jon M. Jones, President. “Our team is doing a great job of capitalizing on opportunities
in our market,” continued Jones.
Operating Results
Net Interest Income
Net interest income for the third quarter of 2004 increased 8% to $6.5 million, from $6 million for
the same period in 2003. This increase is due largely to the increase in loan volume.
Net interest income for the nine months ended September 30, 2004 increased $666,000 or
4% to $18.1 million from $17.4 million for the same period last year. Net interest income
for the nine months ending September 30, 2003, excluding the discontinued small loan originations
in Alabama, would have been $15.8 million. Excluding small loan income from the 2003 numbers, net
interest income year-over-year increased $2.3 million or 15%.
Non-interest Income
Non-interest income decreased by $3 million or 59% to a total of $2 million for the quarter
ended September 30, 2004 compared to $5 million for the same quarter in 2003. The income in
2003 included a one time gain on sale of repossessed property of $2.1 million. In addition,
2003 numbers include $600,000 in non-interest income related to the discontinued small loan
operations in Alabama not included in 2004 non-interest income numbers. Finally, origination
fees on mortgage loans sold decreased $635,000 quarter-over-quarter. This decrease is largely
attributed to a reduction in the 1-4 family refinance market.
The nine months ending September 30, 2004 showed a decrease in non-interest income of $4 million
or 42% compared to the previous year. As previously mentioned, 2003 income includes a one time gain
on sale of repossessed property of $2.1 million. In addition, 2003 non-interest income includes $2.3
million of fees related to discontinued small loan originations in Alabama. Finally, origination fees
on mortgage loans sold decreased $1.8 million for the nine months ending September 30, 2004 to 2003.
Non-interest Expense
Total non-interest expense decreased by $305,000 or 5% for the three months ended September 30, 2004
compared to the three months ended September 30, 2003. This cost savings is due to a decrease in
salary and benefit expense of $171,000 related to reduced mortgage commission and a decrease of
$206,000 in other expense which is attributed to the Company’s continued focus on cost control in 2004.
Non-interest expense for the nine months ending September 30, 2004 decreased $1.9 million or 11%
compared to the same period in 2003. This reduction is due to a decrease in salary and benefit
expense of $785,000 resulting primarily from a reduction in mortgage commissions. In addition, the
Company incurred $722,000 in marketing and branding costs earlier in 2003 not incurred in 2004.
Non-performing Assets
Nonperforming assets as a percentage of total assets was .51%, .82% and 0.99% as of September 30, 2004,
December 31, 2003 and September 30, 2003 respectively. Nonperforming loans as a percentage of total
loans was .41%, .60% and 0.76% as of September 30, 2004, December 31, 2003 and September 30, 2003 respectively.
Credit quality continues to be a focus of the Company.
Agreement to Sell Seven Branches
On June 24, 2004 the Company entered into agreement to sell seven of its branches. This
transaction closed 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
will benefit from an estimated $4 million net gain on the sale with an anticipated accretion
to annual earnings per share of $0.10 going forward
“This most recent transaction exemplifies our continued focus on shareholder value and the
ongoing implementation of the Company’s strategic plan,” said Parsons.
Venture Financial Group, through its wholly owned subsidiary,
Venture Bank has 13 financial centers in three western Washington Counties and one
loan production/Venture Wealth Management office in Elma, Washington 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 can realize anticipated accretion to earnings from the sale of
its seven branches.
Condensed Statements of Condition
Condensed Statements of Income
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Excluding one-time gain in September 2003, Venture achieves largest quarterly net income in the Company’s history