PRESS RELEASE
November 1, 2005

Contact
Ken Parsons, CEO
(360) 459 -1100

Venture Financial Group Reports 3rd Quarter Earnings

 THIRD QUARTER HIGHLIGHTS

Merger with Redmond National Bank finalized

Quarterly income increases 5.2%

Loans grow $155 million from same period in 2004

Interest income increases $2.3 million or 28% from same period in 2004

Olympia, Wash. - November 1, 2005 - Venture Financial Group, Inc. ("Venture" or the "Company"), parent company of Venture Bank, (www.venture-bank.com) today announced third quarter net income of $2,300,000, an increase of 5.2% or $113,000 compared to $2,187,000 for the third quarter 2004. Excluding one time gains in the fourth quarter 2004 and the third quarter 2003, the $2,300,000 represents the highest quarterly earnings in the Company’s history. Diluted earnings per share were $0.33 for the quarter ended September 30, 2005 which is unchanged from that reported in the third quarter 2004.

As of September 30, 2005, assets totaled $738 million, an increase of 37.3% over the $537 million in total assets at September 30, 2004. Total loans, net of reserves, increased $155 million or 38.9% to $553 million from $398 million at September 30, 2004. Securities available for sale decreased $8 million or 11.0% to $65 million from $73 million. The cash received from this decrease has been used to fund loan growth over the last twelve months.

Total deposits increased by $131 million or 32.9% to $529 million as of September 30, 2005 from September 30, 2004. Excluding the sale of $88 million of deposits from the divesture of seven branches in the fourth quarter 2004, total deposits increased by $219 million from September 30, 2004 to September 30, 2005.

On September 2, 2005, the Company completed the acquisition of Redmond National Bank and its parent company, Washington Commercial Bancorp. "Our merger with Redmond National Bank will have a major impact on our company," said Ken F. Parsons Sr., Venture Financial Group Chairman and CEO. "The addition of two branches, $129 million in assets, $107 million in loans and $87 million in deposits in King County fits right into Venture Bank’s strategy for growth focused along the interstate corridors of western Washington."

"Our growth over the past year is testament to the effectiveness of our team in delivering service to our customers", said Jim Arneson, President and CEO of Venture Bank. "With our new market footprint in King County we are in a strong position to capitalize on the growth opportunities in the Puget Sound region."

Operating Results

Net Interest Income
Net interest income for the third quarter of 2005 increased 7% to $7.0 million, from $6.5 million for the quarter ended September 30, 2004. This increase is due to a $2.3 million increase in interest income related to a $104 million increase in loan volume from the merger with Redmond National Bank and another $52 million increase from internal loan growth, offset by a $1.8 million increase in interest expense primarily due to a $131 million increase in deposits related to the merger and a $34 million increase in borrowings following the sale of seven branches in the fourth quarter 2004.

Net interest income for the nine months ended September 30, 2005 increased by $1.5 million, or 8%, compared to the same time period in 2004 to a total of $20 million. This increase is due to a $5.4 million increase in interest income offset by a $3.9 million increase in interest expense.

Non Interest Income
Non interest income increased by $74,000 or 3.5% to a total of $2,180,000 for the quarter ended September 30, 2005 compared to $2,106,000 for the same quarter in 2004. This increase was due to an increase in fee income from the sale of first residential mortgages of $99,000, an increase in other fee income of $59,000 offset by a decrease in service charge income of $84,000. The decrease in service charge income was primarily due to the sale of seven branches in the fourth quarter 2004 that had earned $251,000 in service charge income in the first nine months of 2004.

Non interest income for the nine months ended September 30, 2005 increased by $343,000 or 5.8% over the same period in 2004 to a total of $6,233,000. This increase is due largely to a one time gain on the sale of foreclosed property of $300,000.

Non Interest Expense
Total non interest expense increased by $489,000 or 9.2% for the three months ended September 30, 2005 compared to the three months ended September 30, 2004. This increase was the result of an increase in audit and consulting fees of $60,000 due to expenses associated with Sarbanes-Oxley Act of 2002, an increase in salary expense of $172,000 attributable to the increase in mortgage loan production and $295,000 in operating expenses associated with the two new financial centers in Redmond.

For the nine months ending September 30, 2005, total non interest expense increased by $1,161,000 or 7.5% compared to the same time period in 2004. This increase is due to a $112,000 increase in legal expenses, an increase in audit and consulting fees of $195,000 due to expenses associated with Sarbanes-Oxley, an increase of $255,000 in expenses associated with new marketing campaigns, an increase in salary expense of $296,000 attributable to the increase in mortgage loan production year over year, and $295,000 in operating expenses associated with the merger with Redmond National Bank.

Nonperforming Assets
Nonperforming assets (which includes nonperforming loans and other nonperforming assets) as a percentage of total assets was 0.76%, 1.05% and 0.51% as of September 30, 2005, December 31, 2004 and September 30, 2004 respectively. Nonperforming loans as a percentage of total loans was 0.90%, 1.18% and 0.41% as of September 30, 2005, December 31, 2004 and September 30, 2004 respectively.

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 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 the 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 related to forward-looking statements in this press release include the Company’s ability to effectively integrate Redmond National Bank into Venture Bank, the Company’s ability to realize significant positive impact from the Redmond National Bank acquisition, the continued strength of the local economy, continued demand for the Company’s products and services, the Company’s ability to maintain growth in the current interest rate environment, and the Company’s ability to maintain asset quality.

Condensed Statements of Condition
Condensed Statements of Income

Back to News Releases