[X] |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Oregon |
93-1034484 |
|||||
(State of
Incorporation) |
(IRS Employer Identification #) |
|||||
1100 NW Wall
Street, Bend, Oregon |
97701 |
|||||
(Address of
principal executive offices) |
(Zip Code) |
|||||
(541) 385-6205 |
||||||
(Registrants telephone number) |
PART I |
||||||
|
|
Page | ||||
|
Forward Looking Statements |
3 | ||||
Item
1. |
Business |
4 | ||||
Item
1A. |
Risk Factors |
10 | ||||
Item
1B. |
Unresolved Staff Comments |
12 | ||||
Item
2. |
Properties |
12 | ||||
Item
3. |
Legal proceedings |
13 | ||||
Item
4. |
Submission of Matters to a Vote of Security Holders |
13 | ||||
PART II |
||||||
Item
5. |
Market for Registrants Common Equity and Related Stockholder Matters |
14 | ||||
Item
6. |
Selected Financial Data |
14 | ||||
Item
7. |
Managements Discussion and Analysis of Financial Condition and
Results of Operations |
17 | ||||
Item
7A. |
Quantitative and Qualitative Disclosures about Market Risk |
34 | ||||
Item
8. |
Financial Statements and Supplementary Data |
38 | ||||
Item
9. |
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure |
70 | ||||
Item
9A. |
Controls and Procedures |
70 | ||||
Item
9B. |
Other Information |
70 | ||||
PART III |
||||||
Item
10. |
Directors and Executive Officers of the Registrant |
71 | ||||
Item
11. |
Executive Compensation |
71 | ||||
Item
12. |
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters |
71 | ||||
Item
13. |
Certain Relationships and Related Transactions |
71 | ||||
Item
14. |
Principal Accountant Fees and Services |
71 | ||||
PART IV |
||||||
Item
15. |
Exhibits and Financial Statement Schedules |
71 | ||||
Signatures |
72 |
ITEM
1. |
BUSINESS |
|
all of the depository institution subsidiaries must be well capitalized and well managed; |
|
the holding company must file a declaration with the Federal Reserve Board that it elects to be a financial holding company to engage in activities that would not have been permissible before the Gramm-Leach-Bliley Act; and |
|
all of the depository institution subsidiaries must have a Community Reinvestment Act rating of satisfactory or better. |
|
acting as a principal, agent or broker for insurance; |
|
underwriting, dealing in or making a market in securities; and |
|
providing financial and investment advice. |
ITEM
1A. |
RISK FACTORS |
ITEM
1B. |
Unresolved Staff Comments |
ITEM
2. |
PROPERTIES |
ITEM
3. |
LEGAL PROCEEDINGS |
ITEM
4. |
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
ITEM
5. |
MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS |
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2006
(January 1 through March 10) |
||||||||||||||||||
High |
$ | 26.36 | N/A | N/A | N/A | |||||||||||||
Low |
$ | 23.11 | N/A | N/A | N/A | |||||||||||||
2005 |
||||||||||||||||||
High |
$ | 20.17 | $ | 21.33 | $ | 23.34 | $ | 24.71 | ||||||||||
Low |
$ | 18.35 | $ | 18.58 | $ | 20.18 | $ | 19.95 | ||||||||||
2004 |
||||||||||||||||||
High |
$ | 18.78 | $ | 20.00 | $ | 19.65 | $ | 22.44 | ||||||||||
Low |
$ | 15.42 | $ | 15.48 | $ | 16.96 | $ | 18.53 |
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Per Share |
Per Share |
Per Share |
Per Share |
|||||||||||||||
2006 |
$ | .09 | N/A | N/A | N/A | |||||||||||||
2005 |
$ | .08 | $ | .08 | $ | .08 | $ | .09 | ||||||||||
2004 |
$ | .06 | $ | .06 | $ | .07 | $ | .07 |
ITEM
6. |
SELECTED FINANCIAL DATA |
Years ended December 31, |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
2004 |
2003 |
2002 |
2001 |
|||||||||||||||||||
Balance Sheet
Data (at period end) |
|||||||||||||||||||||||
Investment
securities |
$ | 59,286 | $ | 47,069 | $ | 34,270 | $ | 28,571 | $ | 25,885 | |||||||||||||
Total
loans |
1,049,704 | 859,559 | 587,170 | 499,173 | 421,705 | ||||||||||||||||||
Total
assets |
1,269,671 | 1,007,163 | 734,712 | 578,359 | 488,753 | ||||||||||||||||||
Total
deposits |
1,065,380 | 851,397 | 651,154 | 501,962 | 425,258 | ||||||||||||||||||
Non-interest
bearing deposits |
430,463 | 340,652 | 245,378 | 209,524 | 162,676 | ||||||||||||||||||
Core Deposits
(1) |
1,030,444 | 824,814 | 635,177 | 483,505 | 391,443 | ||||||||||||||||||
Total
shareholders equity (2) |
104,375 | 86,432 | 61,756 | 51,188 | 41,680 | ||||||||||||||||||
Income
Statement Data |
|||||||||||||||||||||||
Interest
income |
$ | 72,837 | $ | 50,911 | $ | 40,835 | $ | 37,897 | $ | 38,298 | |||||||||||||
Interest
expense |
13,285 | 4,903 | 4,003 | 4,657 | 8,771 | ||||||||||||||||||
Net interest
income |
59,552 | 46,008 | 36,832 | 33,240 | 29,527 | ||||||||||||||||||
Loan loss
provision |
3,050 | 3,650 | 2,695 | 2,680 | 3,690 | ||||||||||||||||||
Net interest
income after loan loss provision |
56,502 | 42,358 | 34,137 | 30,560 | 25,837 | ||||||||||||||||||
Non-interest
income |
13,069 | 12,940 | 13,400 | 9,663 | 7,829 | ||||||||||||||||||
Non-interest
expenses |
34,201 | 29,578 | 24,854 | 21,023 | 19,313 | ||||||||||||||||||
Income before
income taxes |
35,370 | 25,720 | 22,683 | 19,200 | 14,353 | ||||||||||||||||||
Provision for
income taxes |
12,934 | 9,712 | 8,728 | 7,485 | 5,671 | ||||||||||||||||||
Net
income |
$ | 22,436 | $ | 16,008 | $ | 13,955 | $ | 11,715 | $ | 8,682 | |||||||||||||
Share Data
(2) |
|||||||||||||||||||||||
Basic
earnings per common share |
$ | 1.33 | $ | 0.96 | $ | 0.89 | $ | 0.75 | $ | 0.56 | |||||||||||||
Diluted
earnings per common share |
$ | 1.29 | $ | 0.93 | $ | 0.86 | $ | 0.73 | $ | 0.55 | |||||||||||||
Book value
per common share |
$ | 6.16 | $ | 5.14 | $ | 3.69 | $ | 3.27 | $ | 2.68 | |||||||||||||
Tangible book
value per common share |
$ | 5.76 | $ | 4.73 | $ | 3.69 | $ | 3.27 | $ | 2.68 | |||||||||||||
Cash
dividends declared per common share |
$ | 0.33 | $ | 0.26 | $ | 0.26 | $ | 0.21 | $ | 0.17 | |||||||||||||
Ratio of
dividends declared to net income |
24.79 | % | 26.66 | % | 28.86 | % | 27.68 | % | 30.48 | % | |||||||||||||
Basic Average
shares outstanding |
16,856 | 16,669 | 15,730 | 15,593 | 15,504 | ||||||||||||||||||
Fully Diluted
average shares outstanding |
17,420 | 17,299 | 16,249 | 16,089 | 15,844 |
Years ended December 31, |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
2004 |
2003 |
2002 |
2001 | |||||||||||||||||||
Key
Ratios |
|||||||||||||||||||||||
Return on
average total shareholders equity (book) |
24.04 | % | 20.39 | % | 25.07 | % | 25.62 | % | 22.92 | % | |||||||||||||
Return on
average total shareholders equity (tangible) (3) |
25.93 | % | 22.40 | % | 25.07 | % | 25.62 | % | 22.92 | % | |||||||||||||
Return on
average total assets |
1.97 | % | 1.83 | % | 2.13 | % | 2.20 | % | 1.88 | % | |||||||||||||
Net interest
spread |
4.85 | % | 5.35 | % | 5.62 | % | 6.17 | % | 5.88 | % | |||||||||||||
Net interest
margin |
5.66 | % | 5.74 | % | 6.03 | % | 6.75 | % | 7.02 | % | |||||||||||||
Total revenue
(net int inc + non int inc) |
$ | 72,621 | $ | 58,948 | $ | 50,232 | $ | 42,903 | $ | 37,356 | |||||||||||||
Efficiency
ratio (4) |
47.10 | % | 50.18 | % | 49.48 | % | 49.00 | % | 51.70 | % | |||||||||||||
Asset Quality
Ratios |
|||||||||||||||||||||||
Loan loss
reserves on loans and loan commitments |
$ | 14,688 | $ | 12,412 | $ | 9,399 | $ | 7,669 | $ | 6,555 | |||||||||||||
Reserve to
endng total loans |
1.40 | % | 1.44 | % | 1.60 | % | 1.54 | % | 1.55 | % | |||||||||||||
Non-performing assets (5) |
$ | 40 | $ | 483 | $ | 56 | $ | 1,505 | $ | 2,486 | |||||||||||||
Non-performing assets to total assets |
0.00 | % | 0.05 | % | 0.01 | % | 0.26 | % | 0.51 | % | |||||||||||||
Delinquent
>30 days to total loans |
0.02 | % | 0.02 | % | 0.04 | % | 0.17 | % | 0.43 | % | |||||||||||||
Net Charge
offs |
$ | 773 | $ | 992 | $ | 965 | $ | 1,566 | $ | 2,155 | |||||||||||||
Net loan
charge-offs (annualized) |
0.08 | % | 0.13 | % | 0.18 | % | 0.34 | % | 0.55 | % | |||||||||||||
Mortgage
Activity |
|||||||||||||||||||||||
Mortgage
Originations |
$ | 158,775 | $ | 141,407 | $ | 304,691 | $ | 224,308 | $ | 164,436 | |||||||||||||
Total
Servicing Portfolio (sold loans) |
$ | 498,668 | $ | 502,390 | $ | 514,223 | $ | 453,536 | $ | 375,051 | |||||||||||||
Capitalized
Mortgage Servicing Rights (MSRs) |
$ | 4,439 | $ | 4,663 | $ | 4,688 | $ | 4,071 | $ | 3,603 | |||||||||||||
Capital
Ratios |
|||||||||||||||||||||||
Average
shareholders equity to average assets |
8.19 | % | 9.00 | % | 8.51 | % | 8.60 | % | 8.20 | % | |||||||||||||
Leverage
ratio (6) |
9.30 | % | 10.11 | % | 8.55 | % | 8.88 | % | 8.58 | % | |||||||||||||
Total
risk-based capital ratio (6) |
10.72 | % | 11.40 | % | 11.21 | % | 11.24 | % | 10.92 | % |
(1) |
Core deposits include all demand, interest bearing demand, savings plus time deposits of amounts less than $100,000. |
(2) |
Adjusted to reflect a 20% (6:5) stock split declared in May 2001, a 50% (3:2) stock split declared in May 2002 and a 25% (5:4) stock split declared in March 2004. |
(3) |
Excludes goodwill, core deposit intangible and other identifiable intangible assets, related to acquisition of Community Bank of Grants Pass. |
(4) |
Efficiency ratio is noninterest expense divided by (net interest income + noninterest income). |
(5) |
Nonperforming assets consist of loans contractually past due 90 days or more, nonaccrual loans and other real estate owned. |
(6) |
Computed in accordance with FRB and FDIC guidelines. |
ITEM
7. |
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Compound Annual Growth |
1 year |
3 year |
5 year |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Per
Share Growth |
39.2 | % | 19.8 | % | 22.4 | % | ||||||||
Net Income
Growth |
40.2 | % | 24.2 | % | 25.1 | % | ||||||||
Loan
Growth |
22.1 | % | 28.2 | % | 24.0 | % | ||||||||
Deposit
Growth |
25.2 | % | 28.5 | % | 24.4 | % |
|
Attract and retain bankers |
|
Retain and grow profitable relationships |
|
Maintain earnings momentum |
|
Complete conversion with minimal customer disruption |
|
Realize synergies in the future |
(1) |
USA banks over $2 billion in assets |
|
Fourth Quarter 2005 Earnings Per Share up 49.0% at $0.39 |
|
Full Year 2005 Earnings Per Share up 39.2% at $1.29 |
|
Loan Growth at 22.1% Year-over-Year |
|
Deposit Growth at 25.2% Year-over-Year |
|
Outstanding Loan Portfolio Credit Quality |
Year
ended December 31, 2005 |
Year
ended December 31, 2004 |
Year
ended December 31, 2003 |
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Average Balance |
Interest Income/ Expense |
Average Yield or Rate |
Average Balance |
Interest Income/ Expense |
Average Yield or Rate |
Average Balance |
Interest Income/ Expense |
Average Yield or Rate |
||||||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||||||||||
Taxable
securities |
$ | 46,115 | $ | 1,719 | 3.73 | % | $ | 34,503 | $ | 1,093 | 3.17 | % | $ | 27,094 | $ | 1,019 | 3.76 | % | ||||||||||||||||||
Non-taxable
securities (1) |
5,593 | 159 | 2.84 | % | 3,606 | 92 | 2.55 | % | 2,369 | 66 | 2.79 | % | ||||||||||||||||||||||||
Interest
bearing balances from Federal Home Loan Bank |
22,357 | 797 | 3.56 | % | 14,555 | 194 | 1.33 | % | 23,098 | 214 | 0.93 | % | ||||||||||||||||||||||||
Federal
funds sold |
12,516 | 463 | 3.70 | % | 8,710 | 111 | 1.27 | % | 11,775 | 116 | 0.99 | % | ||||||||||||||||||||||||
Federal
Home Loan Bank stock |
3,108 | 10 | .32 | % | 2,390 | 63 | 2.64 | % | 2,240 | 121 | 5.40 | % | ||||||||||||||||||||||||
Loans
(2)(3)(4) |
962,514 | 69,689 | 7.24 | % | 737,421 | 49,358 | 6.69 | % | 544,440 | 39,299 | 7.22 | % | ||||||||||||||||||||||||
Total
earning assets |
1,052,203 | 72,837 | 6.92 | % | 801,185 | 50,911 | 6.35 | % | 611,016 | 40,835 | 6.68 | % | ||||||||||||||||||||||||
Reserve
for loan losses |
(13,909 | ) | (10,943 | ) | (8,415 | ) | ||||||||||||||||||||||||||||||
Cash
and due from banks |
63,907 | 47,620 | 23,062 | |||||||||||||||||||||||||||||||||
Premises
and equipment, net |
22,254 | 18,659 | 11,540 | |||||||||||||||||||||||||||||||||
Other
Assets |
15,174 | 15,929 | 16,979 | |||||||||||||||||||||||||||||||||
Total
assets |
$ | 1,139,629 | $ | 872,450 | $ | 654,182 | ||||||||||||||||||||||||||||||
Liabilities & Stockholders Equity |
||||||||||||||||||||||||||||||||||||
Int.
bearing demand deposits |
$ | 458,767 | 8,351 | 1.82 | % | $ | 376,424 | 3,241 | 0.86 | % | $ | 281,438 | 2,449 | 0.87 | % | |||||||||||||||||||||
Savings
deposits |
37,094 | 126 | 0.34 | % | 33,928 | 117 | 0.34 | % | 26,888 | 109 | 0.41 | % | ||||||||||||||||||||||||
Time
deposits |
67,557 | 1,654 | 2.45 | % | 53,001 | 806 | 1.52 | % | 47,973 | 898 | 1.87 | % | ||||||||||||||||||||||||
Other
borrowings |
76,828 | 3,154 | 4.11 | % | 25,686 | 739 | 2.88 | % | 20,424 | 547 | 2.68 | % | ||||||||||||||||||||||||
Total
interest bearing liabilities |
640,246 | 13,285 | 2.07 | % | 489,039 | 4,903 | 1.00 | % | 376,723 | 4,003 | 1.06 | % | ||||||||||||||||||||||||
Demand
deposits |
392,273 | 295,108 | 213,639 | |||||||||||||||||||||||||||||||||
Other
liabilities |
13,791 | 9,790 | 8,164 | |||||||||||||||||||||||||||||||||
Total
liabilities |
1,046,310 | 793,937 | 598,526 | |||||||||||||||||||||||||||||||||
Stockholders equity |
93,319 | 78,513 | 55,656 | |||||||||||||||||||||||||||||||||
Total
liabilities & equity |
$ | 1,139,629 | $ | 872,450 | $ | 654,182 | ||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Net
interest income |
$ | 59,552 | $ | 46,008 | $ | 36,832 | ||||||||||||||||||||||||||||||
Net
interest spread |
4.85 | % | 5.35 | % | 5.62 | % | ||||||||||||||||||||||||||||||
Net
interest income to earning assets |
5.66 | % | 5.74 | % | 6.03 | % |
(1) |
Yields on tax-exempt securities have not been stated on a tax-equivalent basis. |
(2) |
Average non-accrual loans included in the computation of average loans was insignificant for 2005, 2004 and 2003. |
(3) |
Loan related fees included in the above yield calculations: $2,649,000 in 2005, $2,218,000 in 2004, and $1,885,000 in 2003. |
(4) |
Includes mortgage loans held for sale. |
Year ended December 31, |
|||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 over 2004 |
2004 over 2003 |
||||||||||||||||||||||||||
Amount of Change Attributed to |
Amount of Change Attributed to |
||||||||||||||||||||||||||
Total Increase (Decrease) |
Volume |
Rate |
Total Increase (Decrease) |
Volume |
Rate |
||||||||||||||||||||||
Interest
income: |
|||||||||||||||||||||||||||
Interest and
fees on loans |
$ | 20,331 | $ | 15,066 | $ | 5,265 | $ | 10,059 | $ | 13,930 | $ | (3,871 | ) | ||||||||||||||
Taxable
securities |
626 | 368 | 258 | 74 | 279 | (205 | ) | ||||||||||||||||||||
Non-taxable
securities |
67 | 51 | 16 | 26 | 34 | (8 | ) | ||||||||||||||||||||
Interest
bearing balances due from FHLB |
603 | 104 | 499 | (20 | ) | (79 | ) | 59 | |||||||||||||||||||
Federal Home
Loan Bank stock |
(53 | ) | 19 | (72 | ) | (58 | ) | 8 | (66 | ) | |||||||||||||||||
Federal funds
sold |
352 | 49 | 303 | (5 | ) | (30 | ) | 25 | |||||||||||||||||||
Total
interest income |
21,926 | 15,657 | 6,269 | 10,076 | 14,142 | (4,066 | ) | ||||||||||||||||||||
Interest
expense: |
|||||||||||||||||||||||||||
Interest on
deposits: |
|||||||||||||||||||||||||||
Interest
bearing demand |
5,110 | 709 | 4,401 | 792 | 827 | (35 | ) | ||||||||||||||||||||
Savings |
9 | 11 | (2 | ) | (37 | ) | 37 | (74 | ) | ||||||||||||||||||
Time |
848 | 221 | 627 | (92 | ) | 94 | (186 | ) | |||||||||||||||||||
Other
borrowings |
2,415 | 1,471 | 944 | 192 | 141 | 51 | |||||||||||||||||||||
Total
interest expense |
8,382 | 2,412 | 5,970 | 900 | 1,090 | (190 | ) | ||||||||||||||||||||
Net interest
income |
$ | 13,544 | $ | 13,245 | $ | 299 | $ | 9,176 | $ | 13,052 | $ | (3,876 | ) |
December 31, |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
2004 |
2003 |
2002 |
2001 |
|||||||||||||||||||
Commercial |
$ | 320,619 | $ | 252,575 | $ | 142,460 | $ | 106,548 | $ | 74,357 | |||||||||||||
Real
Estate: |
|||||||||||||||||||||||
Construction/lot |
220,230 | 178,716 | 123,157 | 104,972 | 96,876 | ||||||||||||||||||
Mortgage |
56,724 | 52,668 | 46,083 | 42,953 | 43,992 | ||||||||||||||||||
Commercial |
417,580 | 338,392 | 243,011 | 207,654 | 164,496 | ||||||||||||||||||
Consumer |
34,551 | 37,209 | 32,459 | 37,045 | 41,983 | ||||||||||||||||||
Total
loans |
1,049,705 | 859,559 | 587,170 | 499,172 | 421,705 | ||||||||||||||||||
Less: |
|||||||||||||||||||||||
Reserve for
loan losses |
14,688 | 12,412 | 9,399 | 7,669 | 6,555 | ||||||||||||||||||
Total loans,
net |
$ | 1,035,017 | $ | 847,147 | $ | 577,801 | $ | 491,503 | $ | 415,150 |
Loan Category |
Due within one year |
Due after one, but within five years |
Due after five years |
Total |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial |
$ | 141,835 | $ | 134,812 | $ | 43,972 | $ | 320,619 | ||||||||||
Real
Estate: |
||||||||||||||||||
Construction/lot |
112,009 | 108,221 | | 220,230 | ||||||||||||||
Mortgage |
11,931 | 8,009 | 36,784 | 56,724 | ||||||||||||||
Commercial |
19,208 | 73,068 | 325,304 | 417,580 | ||||||||||||||
Consumer |
6,912 | 15,162 | 12,478 | 34,552 | ||||||||||||||
$ | 291,895 | $ | 339,272 | $ | 418,538 | $ | 1,049,705 |
Commercial Real Estate: |
2005 |
% of total CRE |
2004 |
% of total CRE |
2003 |
% of total CRE |
||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Owner
occupied |
$ | 219,909 | 52 | % | $ | 185,688 | 55 | % | $ | 136,389 | 56 | % | ||||||||||||||
Non-owner
occupied |
199,324 | 48 | % | 154,100 | 45 | % | 107,814 | 44 | % | |||||||||||||||||
$ | 419,233 | 100 | % | $ | 339,788 | 100 | % | $ | 244,203 | 100 | % |
Real Estate Construction/lot
loans: |
2005 |
% of total Const. |
2004 |
% of total Const. |
2003 |
% of total Const. |
||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Residential
construction to homeowner |
$ | 41,223 | 19 | % | $ | 48,247 | 27 | % | $ | 56,881 | 46 | % | ||||||||||||||
Commercial
construction |
69,102 | 31 | % | 75,065 | 42 | % | 26,631 | 21 | % | |||||||||||||||||
Residential
speculative construction developer/builder |
110,951 | 50 | % | 56,620 | 31 | % | 40,380 | 33 | % | |||||||||||||||||
$ | 221,276 | 100 | % | $ | 179,932 | 100 | % | $ | 123,892 | 100 | % |
2005 |
2004 |
||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Reserve for loan losses |
Allocated reserve as a % of loan category |
Loan category as a % of total loans |
Reserve for loan losses |
Allocated reserve as a % of loan category |
Loan category as a % of total loans |
||||||||||||||||||||||
Commercial |
$ | 3,526 | 1.10 | % | 30.51 | % | $ | 3,740 | 1.48 | % | 29.33 | % | |||||||||||||||
Real
Estate: |
|||||||||||||||||||||||||||
Construction/lot |
2,445 | 1.11 | % | 21.01 | % | 1,643 | 0.91 | % | 20.86 | % | |||||||||||||||||
Mortgage |
567 | 1.00 | % | 5.39 | % | 572 | 1.08 | % | 6.11 | % | |||||||||||||||||
Commercial |
2,821 | 0.68 | % | 39.81 | % | 2,268 | 0.67 | % | 39.39 | % | |||||||||||||||||
Consumer |
1,281 | 3.71 | % | 3.28 | % | 1,518 | 4.08 | % | 4.31 | % | |||||||||||||||||
Committed/unfunded (1) |
2,753 | | | 2,077 | | | |||||||||||||||||||||
Unallocated |
1,295 | | | 603 | | | |||||||||||||||||||||
Total reserve
for loan losses |
$ | 14,688 | 1.40 | % | 100.00 | % | $ | 12,421 | 1.44 | % | 100.00 | % |
2003 |
2002 |
||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Reserve for loan losses |
Allocated reserve as a % of loan category |
Loan category as a % of total loans |
Reserve for loan losses |
Allocated reserve as a % of loan category |
Loan category as a % of total loans |
||||||||||||||||||||||
Commercial |
$ | 1,977 | 1.38 | % | 24.22 | % | $ | 1,198 | 1.12 | % | 21.31 | % | |||||||||||||||
Real
Estate: |
|||||||||||||||||||||||||||
Construction/lot |
1,183 | 0.95 | % | 21.02 | % | 1,154 | 1.09 | % | 21.08 | % | |||||||||||||||||
Mortgage |
581 | 1.26 | % | 7.83 | % | 250 | 0.58 | % | 8.58 | % | |||||||||||||||||
Commercial |
2,133 | 0.87 | % | 41.43 | % | 1,653 | 0.79 | % | 41.63 | % | |||||||||||||||||
Consumer |
1,144 | 3.52 | % | 5.51 | % | 2,198 | 5.93 | % | 7.40 | % | |||||||||||||||||
Committed/unfunded (1) |
1,372 | | | 639 | | | |||||||||||||||||||||
Unallocated |
1,009 | | | 577 | | | |||||||||||||||||||||
Total reserve
for loan losses |
$ | 9,399 | 1.59 | % | 100.00 | % | $ | 7,669 | 1.53 | % | 100.00 | % |
2001 |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Reserve for loan losses |
Allocated reserve as a % of loan category |
Loan category as a % of total loans |
|||||||||||||
Commercial |
$ | 978 | 1.31 | % | 17.60 | % | |||||||||
Real
Estate: |
|||||||||||||||
Construction/lot |
766 | 0.79 | % | 23.02 | % | ||||||||||
Mortgage |
532 | 1.21 | % | 10.41 | % | ||||||||||
Commercial |
1,238 | 0.75 | % | 39.04 | % | ||||||||||
Consumer |
2,129 | 5.07 | % | 9.92 | % | ||||||||||
Committed/unfunded (1) |
589 | | | ||||||||||||
Unallocated |
323 | | | ||||||||||||
Total reserve
for loan losses |
$ | 6,555 | 1.55 | % | 100.00 | % |
(1) |
The Company currently classifies reserves for commitments in the loan loss reserve in accordance with industry practice of other banks in its peer group. At some point in the future management anticipates that the Company will reclassify such amounts as other liabilities. |
Year ended December 31, |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
2004 |
2003 |
2002 |
2001 |
|||||||||||||||||||
Loans
outstanding at end of period |
$ | 1,049,704 | $ | 859,559 | $ | 587,170 | $ | 499,173 | $ | 421,705 | |||||||||||||
Average loans
outstanding during the period |
$ | 962,514 | $ | 737,421 | $ | 544,440 | $ | 457,906 | $ | 394,432 | |||||||||||||
Reserve
balance, beginning of period |
$ | 12,412 | $ | 9,399 | $ | 7,669 | $ | 6,555 | $ | 5,020 | |||||||||||||
Recoveries: |
|||||||||||||||||||||||
Commercial |
241 | 202 | 173 | 33 | 91 | ||||||||||||||||||
Real
Estate: |
|||||||||||||||||||||||
Construction |
| | | | | ||||||||||||||||||
Mortgage |
25 | 9 | 18 | 41 | 30 | ||||||||||||||||||
Commercial |
| | 138 | 145 | | ||||||||||||||||||
Consumer |
227 | 217 | 179 | 285 | 212 | ||||||||||||||||||
493 | 428 | 508 | 504 | 333 | |||||||||||||||||||
Loans charged
off: |
|||||||||||||||||||||||
Commercial |
(405 | ) | (363 | ) | (371 | ) | (215 | ) | (518 | ) | |||||||||||||
Real
Estate: |
|||||||||||||||||||||||
Construction |
| (151 | ) | | | | |||||||||||||||||
Mortgage |
| | (106 | ) | (253 | ) | (72 | ) | |||||||||||||||
Commercial |
| (17 | ) | | (166 | ) | (145 | ) | |||||||||||||||
Consumer |
(861 | ) | (887 | ) | (996 | ) | (1,436 | ) | (1,753 | ) | |||||||||||||
(1,266 | ) | (1,420 | ) | (1,473 | ) | (2,070 | ) | (2,488 | ) | ||||||||||||||
Net loans
charged-off |
(773 | ) | (992 | ) | (965 | ) | (1,566 | ) | (2,155 | ) | |||||||||||||
Provision
charged to operations |
3,050 | 3,650 | 2,695 | 2,680 | 3,690 | ||||||||||||||||||
Reserves
acquired from CBGP |
| | | | | ||||||||||||||||||
Reserve
balance, end of period |
$ | 14,688 | $ | 12,412 | $ | 9,399 | $ | 7,669 | $ | 6,555 | |||||||||||||
Ratio of net
loans charged-off to average loans outstanding |
.08 | % | .13 | % | .18 | % | .34 | % | .55 | % | |||||||||||||
Ratio of
reserve for loan losses to loans at end of period |
1.40 | % | 1.44 | % | 1.60 | % | 1.54 | % | 1.55 | % |
December 31, |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
2004 |
2003 |
2002 |
2001 |
|||||||||||||||||||
Loans on
non-accrual status |
$ | 40 | $ | 483 | $ | 56 | $ | 971 | $ | 2,430 | |||||||||||||
Loans past
due 90 days or more but not on non-accrual status |
| | | 203 | 56 | ||||||||||||||||||
Other real
estate owned |
| | | 331 | | ||||||||||||||||||
Total
non-performing assets |
$ | 40 | $ | 483 | $ | 56 | $ | 1,505 | $ | 2,486 | |||||||||||||
Percentage of
non-performing assets To total assets |
.00 | % | .05 | % | .01 | % | .26 | % | .51 | % |
December 31, |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
2004 |
2003 |
|||||||||||||
U.S. Agency
mortgage-backed securities |
$ | 38,408 | $ | 29,525 | $ | 25,193 | |||||||||
U.S.
Government and agency securities |
11,925 | 10,584 | 3,135 | ||||||||||||
Obligations
of state and political subdivisions |
6,464 | 4,686 | 3,458 | ||||||||||||
Total debt
securities |
56,797 | 44,795 | 31,786 | ||||||||||||
Mutual
fund |
377 | 369 | 352 | ||||||||||||
Equity
securities |
2,112 | 1,905 | 2,133 | ||||||||||||
Total
investment securities |
$ | 59,286 | $ | 47,069 | $ | 34,271 |
Type and maturity |
Carrying Value |
Weighted Average Yield (1) |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
U.S. Agency
mortgage-backed securities |
||||||||||
Due after 1
but within 5 years |
$ | 1,513 | 3.56 | % | ||||||
Due after 10
years |
36,895 | 4.97 | % | |||||||
Total U.S.
Agency mortgage-backed securities |
38,408 | 4.91 | % | |||||||
U.S.
Government and Agency Securities |
||||||||||
Due within 1
year |
3,010 | 5.10 | % | |||||||
Due after 1
but within 5 years |
7,424 | 3.67 | % | |||||||
Due after 10
years |
1,491 | 4.06 | % | |||||||
Total U.S.
Government and Agency Securities |
11,925 | 4.08 | % | |||||||
State and
Political Subdivisions (1) |
||||||||||
Due within 1
year |
989 | 3.16 | % | |||||||
Due after 1
but within 5 years |
3,472 | 4.18 | % | |||||||
Due after 5
but within 10 years |
2,003 | 6.25 | % | |||||||
Total State
and Political Subdivisions |
6,464 | 4.67 | % | |||||||
Total debt
securities |
56,797 | 4.71 | % | |||||||
Mutual
fund |
377 | 3.92 | % | |||||||
Equity
securities |
2,112 | 1.34 | % | |||||||
Total
Securities |
$ | 59,286 | 4.59 | % |
(1) |
Yields on tax-exempt securities have not been stated on a tax equivalent basis. |
Years ended December 31, |
|||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 Average |
2004 Average |
2003 Average |
|||||||||||||||||||||||||
Deposit Liabilities |
Amount |
Rate Paid |
Amount |
Rate Paid |
Amount |
Rate Paid |
|||||||||||||||||||||
Demand |
$ | 392,273 | N/A | $ | 295,108 | N/A | $ | 213,639 | N/A | ||||||||||||||||||
Interest-bearing demand |
458,767 | 1.82 | % | 376,424 | 0.86 | % | 281,438 | 0.87 | % | ||||||||||||||||||
Savings |
37,094 | 0.34 | % | 33,928 | 0.34 | % | 26,888 | 0.41 | % | ||||||||||||||||||
Time |
67,557 | 2.45 | % | 53,001 | 1.52 | % | 47,973 | 1.87 | % | ||||||||||||||||||
Total
Deposits |
$ | 955,691 | $ | 758,461 | $ | 569,938 |
Time deposits of $100,000 or more (1) |
All other Time deposits (2) |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Remaining time to maturity |
Amount |
Percent |
Amount |
Percent |
|||||||||||||||
3 months or
less |
$ | 6,601 | 18.89 | % | $ | 7,779 | 24.86 | % | |||||||||||
Over 3 months
through 6 months |
1,868 | 5.35 | % | 11,463 | 42.61 | % | |||||||||||||
Over 6 months
through 12 months |
12,944 | 37.05 | % | 3,044 | 9.73 | % | |||||||||||||
Over 12
months |
13,523 | 38.71 | % | 9,005 | 22.80 | % | |||||||||||||
Total |
$ | 34,936 | 100.00 | % | $ | 31,291 | 100.00 | % |
(1) |
Time deposits of $100,000 or more represent 3.28% of total deposits as of December 31, 2005. |
(2) |
All other time deposits represent 2.94% of total deposits as of December 31, 2005. |
Payments Due by Period |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total |
Less Than 1 Year |
1 to 3 Years |
3 to 5 Years |
More Than 5 Years |
|||||||||||||||||||
Time deposits
of $100,000 and over |
$ | 34,936 | $ | 21,413 | $ | 11,966 | $ | 1,557 | $ | | |||||||||||||
Federal Home
Loan Bank advances |
61,109 | | 24,000 | 5,000 | 32,109 | ||||||||||||||||||
Junior
subordinated debentures |
20,619 | | | | 20,619 | ||||||||||||||||||
Operating
leases |
10,115 | 1,319 | 2,494 | 1,877 | 4,425 | ||||||||||||||||||
Total
contractual obligations |
$ | 126,779 | $ | 22,732 | $ | 38,460 | $ | 8,434 | $ | 57,153 |
Commitments
to extend credit |
$ | 410,709 | ||||
Commitments
under credit card lines of credit |
20,686 | |||||
Standby
letters of credit |
15,228 |
ITEM
7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Actual
Market Rates at December 2005 |
Estimated Rates at December 2007 |
Declining Rates at December 2007 |
Rising Rates at December 2007 |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Federal
Funds Rate |
4.25% |
4.75% |
0.50% |
10.25% |
||||||||||||
Prime
Rate |
7.25% |
7.75% |
3.50% |
12.75% |
||||||||||||
Yield
Curve Spread 10-year to Fed Funds |
.14% Nearly Flat Yield Curve |
Modest Inversion from .14% to .06% |
Steepening to 1.90% |
Modestly Steepening to .25% |
Stable Rate Scenario compared to: |
First Twelve Month Average % Change in Pro-forma Earnings |
Second Twelve Month Average % Change in Pro-forma Earnings |
24th Month % Change in Pro-forma Earnings |
|||
---|---|---|---|---|---|---|
Estimated Rate Scenario |
1.30 | % | 2.51 | % | 2.80 | % |
Rising Rate Scenario |
5.10 | % | 14.72 | % | 21.39 | % |
Declining Rate Scenario |
(4.50 | %) | (16.00 | %) | (20.24 | %) |
Within 90 days |
After 90 days within one year |
After one year within five years |
After five years |
Total |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
INTEREST
EARNING ASSETS: |
||||||||||||||||||||||
Investments
& fed funds sold |
$ | 64,934 | $ | 3,999 | $ | 12,409 | $ | 42,878 | $ | 124,220 | ||||||||||||
Interest
bearing balances with FHLB |
7,242 | | | | 7,242 | |||||||||||||||||
Loans |
478,283 | 99,035 | 424,789 | 47,598 | 1,049,705 | |||||||||||||||||
Total
interest earning assets |
$ | 550,459 | $ | 103,034 | $ | 437,198 | $ | 90,476 | $ | 1,181,167 | ||||||||||||
INTEREST
BEARING LIABILITIES: |
||||||||||||||||||||||
Interest-bearing demand deposits |
$ | 426,808 | $ | 106,702 | $ | | $ | | $ | 533,510 | ||||||||||||
Savings
deposits |
17,590 | 17,590 | | | 35,179 | |||||||||||||||||
Time
deposits |
14,380 | 31,189 | 20,658 | | 66,227 | |||||||||||||||||
Total
interest bearing deposits |
458,778 | 155,481 | 20,658 | | 634,916 | |||||||||||||||||
Junior
subordinated debentures |
20,619 | | | | 20,619 | |||||||||||||||||
Other
borrowings |
3,242 | | 29,000 | 32,108 | 64,350 | |||||||||||||||||
Total
interest bearing liabilities |
$ | 482,639 | $ | 155,481 | $ | 49,658 | $ | 32,108 | $ | 719,885 | ||||||||||||
Interest rate
sensitivity gap |
$ | 67,821 | $ | (52,447 | ) | $ | 387,540 | $ | 58,368 | $ | 461,282 | |||||||||||
Cumulative
interest rate sensitivity gap |
$ | 67,821 | $ | 15,374 | $ | 402,914 | $ | 461,282 | $ | 461,282 | ||||||||||||
Interest rate
gap as a percentage of total interest earning assets |
5.74 | % | (4.44 | )% | 32.81 | % | 4.94 | % | 39.05 | % | ||||||||||||
Cumulative
interest rate gap as a percentage of total earning assets |
5.74 | % | 1.30 | % | 34.11 | % | 39.05 | % | 39.05 | % |
ITEM
8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Page |
||||||
---|---|---|---|---|---|---|
Report of
Independent Registered Public Accounting Firm |
39 | |||||
Consolidated
Balance Sheets at December 31, 2005 and 2004 |
40 | |||||
For the Years
Ended December 31, 2005, 2004 and 2003: |
||||||
Consolidated
Statements of Income |
41 | |||||
Consolidated
Statements of Changes in Stockholders Equity |
42 | |||||
Consolidated
Statements of Cash Flows |
44 | |||||
Notes to
Consolidated Financial Statements |
45 |
2005 |
2004 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
ASSETS |
||||||||||
Cash and cash
equivalents: |
||||||||||
Cash and due
from banks |
$ | 35,532,104 | $ | 34,915,710 | ||||||
Interest
bearing deposits with Federal Home Loan Bank |
7,242,440 | 3,040,978 | ||||||||
Federal funds
sold |
64,934,548 | 13,935,467 | ||||||||
Total cash
and cash equivalents |
107,709,092 | 51,892,155 | ||||||||
Investment
securities available-for-sale |
55,448,640 | 45,110,418 | ||||||||
Investment
securities held-to-maturity, estimated fair value of $3,828,856 ($1,999,026 in 2004) |
3,837,310 | 1,958,736 | ||||||||
Federal Home
Loan Bank stock |
3,240,700 | 2,571,600 | ||||||||
Loans,
net |
1,035,016,697 | 847,147,231 | ||||||||
Premises and
equipment, net |
22,688,198 | 21,755,058 | ||||||||
Bank-owned
life insurance |
16,047,099 | 14,065,927 | ||||||||
Accrued
interest and other assets |
25,683,214 | 22,290,671 | ||||||||
Total
assets |
$ | 1,269,670,950 | $ | 1,006,791,796 | ||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||
Liabilities: |
||||||||||
Deposits: |
||||||||||
Demand |
$ | 430,463,105 | $ | 340,652,463 | ||||||
Interest
bearing demand |
533,510,409 | 415,556,155 | ||||||||
Savings |
35,179,285 | 36,715,012 | ||||||||
Time |
66,227,372 | 58,472,916 | ||||||||
Total
deposits |
1,065,380,171 | 851,396,546 | ||||||||
Junior
subordinated debentures |
20,619,000 | 20,619,000 | ||||||||
Other
borrowings |
64,350,302 | 36,533,475 | ||||||||
Accrued
interest and other liabilities |
14,945,972 | 11,810,330 | ||||||||
Total
liabilities |
1,165,295,445 | 920,359,351 | ||||||||
Stockholders equity: |
||||||||||
Common stock,
no par value; 35,000,000 shares authorized (20,000,000 in 2004); 16,953,515 shares issued and outstanding (16,738,627 in 2004) |
33,705,919 | 32,078,798 | ||||||||
Retained
earnings |
70,570,994 | 53,706,929 | ||||||||
Unearned
compensation on restricted stock |
(442,773 | ) | (155,925 | ) | ||||||
Accumulated
other comprehensive income |
541,365 | 802,643 | ||||||||
Total
stockholders equity |
104,375,505 | 86,432,445 | ||||||||
Total
liabilities and stockholders equity |
$ | 1,269,670,950 | $ | 1,006,791,796 |
2005 |
2004 |
2003 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest and
dividend income: |
||||||||||||||
Interest and
fees on loans |
$ | 69,688,931 | $ | 49,357,692 | $ | 39,299,069 | ||||||||
Taxable
interest on investment securities |
1,719,020 | 1,092,709 | 1,018,475 | |||||||||||
Nontaxable
interest on investment securities |
159,201 | 92,330 | 65,815 | |||||||||||
Interest on
interest bearing deposits with Federal Home Loan Bank |
796,695 | 194,116 | 214,027 | |||||||||||
Interest on
federal funds sold |
463,693 | 111,509 | 116,405 | |||||||||||
Dividends on
Federal Home Loan Bank stock |
10,000 | 62,600 | 121,392 | |||||||||||
Total
interest and dividend income |
72,837,540 | 50,910,956 | 40,835,183 | |||||||||||
Interest
expense: |
||||||||||||||
Deposits: |
||||||||||||||
Interest
bearing demand |
8,350,665 | 3,240,683 | 2,448,717 | |||||||||||
Savings |
126,054 | 117,188 | 109,453 | |||||||||||
Time |
1,654,311 | 806,101 | 898,014 | |||||||||||
Junior
subordinated debentures and other borrowings |
3,154,073 | 738,651 | 546,935 | |||||||||||
Total
interest expense |
13,285,103 | 4,902,623 | 4,003,119 | |||||||||||
Net interest
income |
59,552,437 | 46,008,333 | 36,832,064 | |||||||||||
Loan loss
provision |
3,050,000 | 3,650,000 | 2,695,000 | |||||||||||
Net interest
income after loan loss provision |
56,502,437 | 42,358,333 | 34,137,064 | |||||||||||
Noninterest
income: |
||||||||||||||
Service
charges on deposit accounts, net |
6,218,510 | 6,747,052 | 6,035,350 | |||||||||||
Mortgage
banking income, net |
2,256,159 | 2,361,815 | 4,114,738 | |||||||||||
Card issuer
and merchant service fees, net |
2,386,319 | 2,004,018 | 1,692,456 | |||||||||||
Earnings on
bank-owned life insurance |
708,824 | 655,755 | 412,817 | |||||||||||
Gain on sale
of other real estate owned |
195,714 | | | |||||||||||
Gains on
sales of investment securities available-for-sale |
| 181,720 | 236,435 | |||||||||||
Other |
1,303,365 | 989,316 | 908,604 | |||||||||||
Total
noninterest income |
13,068,891 | 12,939,676 | 13,400,400 | |||||||||||
Noninterest
expenses: |
||||||||||||||
Salaries and
employee benefits |
20,668,913 | 17,907,486 | 15,730,367 | |||||||||||
Equipment |
1,454,965 | 1,241,961 | 1,017,960 | |||||||||||
Occupancy |
2,349,304 | 2,182,666 | 1,901,901 | |||||||||||
Communications |
952,346 | 862,614 | 681,661 | |||||||||||
Advertising |
693,512 | 738,032 | 408,424 | |||||||||||
Other |
8,082,239 | 6,644,600 | 5,114,263 | |||||||||||
Total
noninterest expenses |
34,201,279 | 29,577,359 | 24,854,576 | |||||||||||
Income before
income taxes |
35,370,049 | 25,720,650 | 22,682,888 | |||||||||||
Provision for
income taxes |
12,934,000 | 9,713,000 | 8,728,000 | |||||||||||
Net
income |
$ | 22,436,049 | $ | 16,007,650 | $ | 13,954,888 | ||||||||
Basic
earnings per common share |
$ | 1.33 | $ | 0.96 | $ | 0.89 | ||||||||
Diluted
earnings per common share |
$ | 1.29 | $ | 0.93 | $ | 0.86 |
Number of shares |
Comprehensive income |
Common stock |
Retained earnings |
Unearned compensation on restricted stock |
Accumulated other comprehensive income |
Total stockholders equity |
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balances at
December 31, 2002 |
15,642,048 | $ | 18,253,082 | $ | 32,172,221 | $ | | $ | 762,412 | $ | 51,187,715 | |||||||||||||||||||
Comprehensive
income: |
||||||||||||||||||||||||||||||
Net
income |
| $ | 13,954,888 | | 13,954,888 | | | 13,954,888 | ||||||||||||||||||||||
Other
comprehensive income unrealized gains on investment securities available-for-sale of approximately $172,000 (net of income taxes of
approximately $107,000), net of reclassification adjustment for net gains on sales of investment securities available-for-sale included in net income
of approximately $146,000 (net of income taxes of approximately $91,000) |
| 25,954 | | | | 25,954 | 25,954 | |||||||||||||||||||||||
Total
comprehensive income |
| $ | 13,980,842 | | | | | | ||||||||||||||||||||||
Fair value of
restricted stock grants |
| 311,850 | | (311,850 | ) | | | |||||||||||||||||||||||
Amortization of
unearned compensation on restricted stock |
| | | 31,185 | | 31,185 | ||||||||||||||||||||||||
Cash dividends
paid (aggregating $.26 per share) |
| | (4,026,401 | ) | | | (4,026,401 | ) | ||||||||||||||||||||||
Stock options
exercised |
134,546 | 576,609 | | | | 576,609 | ||||||||||||||||||||||||
Tax benefit
from non-qualified stock options exercised |
| 5,744 | | | | 5,744 | ||||||||||||||||||||||||
Balances at
December 31, 2003 |
15,776,594 | 19,147,285 | 42,100,708 | (280,665 | ) | 788,366 | 61,755,694 | |||||||||||||||||||||||
Comprehensive
income: |
||||||||||||||||||||||||||||||
Net
income |
| $ | 16,007,650 | | 16,007,650 | | | 16,007,650 | ||||||||||||||||||||||
Other
comprehensive incomeunrealized gains on investment securities available-for-sale of approximately $127,000 (net of income taxes of approximately
$78,000), net of reclassification adjustment for net gains on sales of investment securities available-for-sale included in net income of approximately
$113,000 (net of income taxes of approximately $69,000) |
| 14,277 | | | | 14,277 | 14,277 | |||||||||||||||||||||||
Total
comprehensive income |
| $ | 16,021,927 | | | | | | ||||||||||||||||||||||
Common stock
issued in conjunction with acquisition |
772,752 | 11,699,399 | | | | 11,699,399 | ||||||||||||||||||||||||
Amortization of
unearned compensation on restricted stock |
| | | 124,740 | | 124,740 | ||||||||||||||||||||||||
Cash dividends
paid (aggregating $.26 per share) |
| | (4,401,429 | ) | | | (4,401,429 | ) | ||||||||||||||||||||||
Stock options
exercised |
189,281 | 812,375 | | | | 812,375 | ||||||||||||||||||||||||
Tax benefit
from non-qualified stock options exercised |
| 419,739 | | | | 419,739 | ||||||||||||||||||||||||
Balances at
December 31, 2004 |
16,738,627 | 32,078,798 | 53,706,929 | (155,925 | ) | 802,643 | 86,432,445 |
Number of shares |
Comprehensive income |
Common stock |
Retained earnings |
Unearned compensation on restricted stock |
Accumulated other comprehensive income (loss) |
Total stockholders equity |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balances
at December 31, 2004 |
16,738,627 | $ | 32,078,798 | $ | 53,706,929 | $ | (155,925 | ) | $ | 802,643 | $ | 86,432,445 | |||||||||||||
Comprehensive
income: |
|||||||||||||||||||||||||
Net
income |
| $ | 22,436,049 | | 22,436,049 | | | 22,436,049 | |||||||||||||||||
Other
comprehensive loss unrealized losses on investment securities available-for-sale
of approximately $261,000 (net of income taxes of approximately $160,000) |
| (261,278 | ) | | | | (261,278 | ) | (261,278 | ) | |||||||||||||||
Total
comprehensive income |
| $ | 22,174,771 | | | | | | |||||||||||||||||
Fair
value of restricted stock grants |
49,986 | 590,410 | | (590,410 | ) | | | ||||||||||||||||||
Amortization
of unearned compensation on restricted stock |
| | | 303,562 | | 303,562 | |||||||||||||||||||
Cash
dividends paid (aggregating $.33 per share) |
| | (5,571,984 | ) | | | (5,571,984 | ) | |||||||||||||||||
Stock
options exercised |
164,902 | 796,849 | | | | 796,849 | |||||||||||||||||||
Tax
benefit from non-qualified stock options exercised |
| 239,862 | | | | 239,862 | |||||||||||||||||||
Balances
at December 31, 2005 |
16,953,515 | $ | 33,705,919 | $ | 70,570,994 | $ | (442,773 | ) | $ | 541,365 | $ | 104,375,505 |
2005 |
2004 |
2003 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash flows
from operating activities: |
||||||||||||||
Net
income |
$ | 22,436,049 | $ | 16,007,650 | $ | 13,954,888 | ||||||||
Adjustments
to reconcile net income to net cash provided by operating activities: |
||||||||||||||
Depreciation
and amortization |
3,407,588 | 3,296,552 | 3,426,792 | |||||||||||
Loan loss
provision |
3,050,000 | 3,650,000 | 2,695,000 | |||||||||||
Credit for
deferred income taxes |
(1,751,000 | ) | (905,000 | ) | (1,028,000 | ) | ||||||||
Discounts on
sales of mortgage loans, net |
525,867 | 368,213 | 694,125 | |||||||||||
Gains on
sales of investment securities available-for-sale |
| (181,720 | ) | (236,435 | ) | |||||||||
Dividends on
Federal Home Loan Bank stock |
(10,000 | ) | (62,600 | ) | (121,392 | ) | ||||||||
Deferred
benefit plan expenses |
1,785,216 | 1,087,000 | 681,000 | |||||||||||
Amortization
of unearned compensation on restricted stock |
303,562 | 124,740 | 31,185 | |||||||||||
Increase in
accrued interest and other assets |
(4,035,206 | ) | (7,456,190 | ) | (3,041,233 | ) | ||||||||
Increase in
accrued interest and other liabilities |
1,510,560 | 1,729,821 | 46,285 | |||||||||||
Originations
of mortgage loans |
(158,774,816 | ) | (141,406,975 | ) | (304,691,027 | ) | ||||||||
Proceeds from
sales of mortgage loans |
158,822,424 | 140,296,007 | 305,699,939 | |||||||||||
Net cash
provided by operating activities |
27,270,244 | 16,547,498 | 18,111,127 | |||||||||||
Cash flows
from investing activities: |
||||||||||||||
Purchases of
investment securities available-for-sale |
(23,511,564 | ) | (20,477,804 | ) | (16,963,356 | ) | ||||||||
Purchases of
investment securities held-to-maturity |
(1,886,292 | ) | (1,300,000 | ) | | |||||||||
Proceeds from
maturities, calls and prepayments of investment securities available-for-sale |
12,632,772 | 8,625,150 | 10,989,640 | |||||||||||
Proceeds from
sales of investment securities available-for-sale |
| 404,573 | 427,835 | |||||||||||
Proceeds from
maturities and calls of investment securities held-to-maturity |
| | 124,479 | |||||||||||
Purchase of
Federal Home Loan Bank stock |
(659,100 | ) | (162,200 | ) | | |||||||||
Loan
originations, net |
(191,492,941 | ) | (235,911,282 | ) | (90,695,692 | ) | ||||||||
Cash acquired
in acquisition of Community Bank of Grants Pass |
| 10,192,199 | | |||||||||||
Purchases of
premises and equipment, net |
(2,444,361 | ) | (7,856,186 | ) | (4,750,406 | ) | ||||||||
Purchases of
bank-owned life insurance |
(1,357,000 | ) | (4,925,000 | ) | (320,000 | ) | ||||||||
Net cash used
in investing activities |
(208,718,486 | ) | (251,410,550 | ) | (101,187,500 | ) | ||||||||
Cash flows
from financing activities: |
||||||||||||||
Net increase
in deposits |
213,983,625 | 158,116,554 | 149,192,734 | |||||||||||
Proceeds from
issuance of junior subordinated debentures |
| 20,619,000 | | |||||||||||
Net increase
(decrease) in other borrowings |
27,816,827 | 22,668,870 | (4,135,395 | ) | ||||||||||
Cash
dividends paid |
(5,571,984 | ) | (4,401,429 | ) | (4,026,401 | ) | ||||||||
Stock options
exercised |
796,849 | 812,375 | 576,609 | |||||||||||
Tax benefit
from non-qualified stock options exercised |
239,862 | 419,739 | 5,744 | |||||||||||
Net cash
provided by financing activities |
237,265,179 | 198,235,109 | 141,613,291 | |||||||||||
Net increase
(decrease) in cash and cash equivalents |
55,816,937 | (36,627,943 | ) | 58,536,918 | ||||||||||
Cash and cash
equivalents at beginning of year |
51,892,155 | 88,520,098 | 29,983,180 | |||||||||||
Cash and cash
equivalents at end of year |
$ | 107,709,092 | $ | 51,892,155 | $ | 88,520,098 |
1. |
Basis of presentation and summary of significant accounting policies |
2005 |
2004 |
2003 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net income,
as reported |
$ | 22,436,049 | $ | 16,007,650 | $ | 13,954,888 | ||||||||
Deduct: Total
stock-based compensation expense determined under fair value based method for all awards, net of related income tax effects |
(593,726 | ) | (604,578 | ) | (541,294 | ) | ||||||||
Pro forma net
income |
$ | 21,842,323 | $ | 15,403,072 | $ | 13,413,594 | ||||||||
Earnings per
common share: |
||||||||||||||
Basic
as reported |
$ | 1.33 | $ | .96 | $ | .89 | ||||||||
Basic
pro forma |
1.30 | .92 | .85 | |||||||||||
Diluted
as reported |
1.29 | .93 | .86 | |||||||||||
Diluted
pro forma |
1.25 | .89 | .83 |
2005 |
2004 |
2003 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dividend
yield |
1.7 | % | 1.6 | % | 2.3 | % | ||||||||
Estimated
volatility |
38.5 | % | 43.6 | % | 47.8 | % | ||||||||
Risk-free
interest rate |
3.7 | % | 3.1 | % | 3.0 | % | ||||||||
Estimated
option lives |
6
years |
6
years |
5
years |
2. |
Cash and due from banks |
3. |
Investment securities |
Amortized cost |
Gross unrealized gains |
Gross unrealized losses |
Estimated fair value |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
||||||||||||||||||
Available-for-sale |
||||||||||||||||||
U.S. Agency
mortgage-backed secrities |
$ | 38,584,298 | $ | 75,534 | $ | 251,707 | $ | 38,408,125 | ||||||||||
U.S.
Government and agency securities |
11,994,794 | 9,819 | 79,864 | 11,924,749 | ||||||||||||||
Obligations
of state and political subdivisions |
2,667,811 | | 40,801 | 2,627,010 | ||||||||||||||
Equity
securities |
957,478 | 1,154,511 | | 2,111,989 | ||||||||||||||
Mutual
fund |
371,088 | 5,679 | | 376,767 | ||||||||||||||
$ | 54,575,469 | $ | 1,245,543 | $ | 372,372 | $ | 55,448,640 | |||||||||||
Held-to-maturity |
||||||||||||||||||
Obligations
of state and political subdivisions |
$ | 3,837,310 | $ | 29,855 | $ | 38,309 | $ | 3,828,856 | ||||||||||
2004 |
||||||||||||||||||
Available-for-sale |
||||||||||||||||||
U.S. Agency
mortgage-backed secrities |
$ | 29,255,143 | $ | 308,044 | $ | 38,129 | $ | 29,525,058 | ||||||||||
U.S.
Government and agency securities |
10,498,229 | 101,633 | 15,774 | 10,584,088 | ||||||||||||||
Obligations
of state and political subdivisions |
2,741,738 | 6,069 | 20,505 | 2,727,302 | ||||||||||||||
Equity
securities |
957,478 | 947,627 | | 1,905,105 | ||||||||||||||
Mutual
fund |
356,838 | 12,027 | | 368,865 | ||||||||||||||
$ | 43,809,426 | $ | 1,375,400 | $ | 74,408 | $ | 45,110,418 | |||||||||||
Held-to-maturity |
||||||||||||||||||
Obligations
of state and political subdivisions |
$ | 1,958,736 | $ | 43,393 | $ | 3,103 | $ | 1,999,026 |
Less than 12 months |
12 months or more |
Total |
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fair value |
Unrealized losses |
Fair value |
Unrealized losses |
Fair value |
Unrealized losses |
||||||||||||||||||||||
U.S. Agency
mortgage-backed securities |
$ | 23,922,377 | $ | (144,005 | ) | $ | 6,868,519 | $ | (107,702 | ) | $ | 30,790,896 | $ | (251,707 | ) | ||||||||||||
U.S
Government and agency securities |
6,469,788 | (25,006 | ) | 2,445,142 | (54,858 | ) | 8,914,930 | (79,864 | ) | ||||||||||||||||||
Obligations
of state and political subdivisions |
1,443,714 | (18,555 | ) | 3,196,697 | (60,555 | ) | 4,640,411 | (79,110 | ) | ||||||||||||||||||
$ | 31,835,879 | $ | (187,566 | ) | $ | 12,510,358 | $ | (223,115 | ) | $ | 44,346,237 | $ | (410,681 | ) |
Amortized cost |
Estimated fair value |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Available-for-sale |
||||||||||
Due three
months to one year |
$ | 3,869,095 | $ | 3,869,347 | ||||||
Due after one
year through five years |
10,639,858 | 10,520,135 | ||||||||
Due after
five years through ten years |
185,000 | 184,547 | ||||||||
Due after ten
years |
38,552,950 | 38,385,855 | ||||||||
Equity
securities |
957,478 | 2,111,989 | ||||||||
Mutual
fund |
371,088 | 376,767 | ||||||||
$ | 54,575,469 | $ | 55,448,640 | |||||||
Held-to-maturity |
||||||||||
Due three
months to one year |
$ | 130,330 | $ | 130,879 | ||||||
Due after one
year through five years |
1,889,201 | 1,864,220 | ||||||||
Due after
five years through ten years |
1,817,779 | 1,833,757 | ||||||||
$ | 3,837,310 | $ | 3,828,856 |
4. |
Loans |
2005 |
2004 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Commercial |
$ | 320,618,805 | $ | 252,575,123 | ||||||
Real
estate: |
||||||||||
Construction/lot |
220,229,831 | 178,715,858 | ||||||||
Mortgage |
56,724,240 | 52,667,778 | ||||||||
Commercial |
417,579,762 | 338,391,526 | ||||||||
Consumer |
34,551,748 | 37,208,514 | ||||||||
Total
loans |
1,049,704,386 | 859,558,799 | ||||||||
Less reserve
for loan losses |
14,687,689 | 12,411,568 | ||||||||
Total loans,
net |
$ | 1,035,016,697 | $ | 847,147,231 |
5. |
Reserve for loan losses |
2005 |
2004 |
2003 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at
beginning of year |
$ | 12,411,568 | $ | 9,398,584 | $ | 7,669,145 | ||||||||
Loan loss
provision |
3,050,000 | 3,650,000 | 2,695,000 | |||||||||||
Loans
charged-off |
(1,266,435 | ) | (1,419,726 | ) | (1,473,867 | ) | ||||||||
Recoveries of
loans previously charged-off |
492,556 | 428,291 | 508,306 | |||||||||||
Reserve
acquired from CBGP |
| 354,419 | | |||||||||||
Balance at
end of year |
$ | 14,687,689 | $ | 12,411,568 | $ | 9,398,584 |
6. |
Mortgage banking activities |
2005 |
2004 |
2003 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at
beginning of year |
$ | 4,663,358 | $ | 4,688,445 | $ | 4,071,370 | ||||||||
Additions |
1,318,150 | 1,269,752 | 3,096,576 | |||||||||||
Amortization |
(1,542,089 | ) | (1,619,839 | ) | (2,504,501 | ) | ||||||||
Impairment
adjustments |
| 325,000 | 25,000 | |||||||||||
Balance at
end of year |
$ | 4,439,419 | $ | 4,663,358 | $ | 4,688,445 |
2005 |
2004 |
2003 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at
beginning of year |
$ | | $ | 325,000 | $ | 350,000 | ||||||||
Impairment
adjustments |
| (325,000 | ) | (25,000 | ) | |||||||||
Balance at
end of year |
$ | | $ | | $ | 325,000 |
2005 |
2004 |
2003 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Origination
and processing fees |
$ | 1,824,224 | $ | 1,593,520 | $ | 3,389,614 | ||||||||
Gains on
sales of mortgage loans, net |
688,165 | 766,078 | 1,976,242 | |||||||||||
Servicing
fees |
1,285,859 | 1,297,057 | 1,228,383 | |||||||||||
Amortization
and impairment adjustments |
(1,542,089 | ) | (1,294,840 | ) | (2,479,501 | ) | ||||||||
Mortgage
banking income, net |
$ | 2,256,159 | $ | 2,361,815 | $ | 4,114,738 |
7. |
Premises and equipment |
2005 |
2004 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Land |
$ | 3,408,465 | $ | 3,299,900 | ||||||
Buildings and
leasehold improvements |
19,344,389 | 17,479,550 | ||||||||
Furniture and
equipment |
9,311,638 | 8,732,684 | ||||||||
32,064,492 | 29,512,134 | |||||||||
Less
accumulated depreciation and amortization |
9,387,102 | 8,134,068 | ||||||||
22,677,390 | 21,378,066 | |||||||||
Construction
in progress |
10,808 | 376,992 | ||||||||
Premises and
equipment, net |
$ | 22,688,198 | $ | 21,755,058 |
8. |
Time deposits |
2006 |
$ | 43,699,000 | ||||
2007 |
11,310,000 | |||||
2008 |
4,943,000 | |||||
2009 |
5,001,000 | |||||
2010 |
1,274,000 | |||||
$ | 66,227,000 |
9. |
Junior subordinated debentures |
10. |
Other borrowings |
2006 |
$ | | ||||
2007 |
7,000,000 | |||||
2008 |
13,000,000 | |||||
2009 |
4,000,000 | |||||
2010 |
5,000,000 | |||||
Thereafter |
32,109,000 | |||||
$ | 61,109,000 |
11. |
Mergers and acquisitions |
12. |
Commitments, guarantees and contingencies |
2005 |
2004 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Commitments
to extend credit |
$ | 410,709,000 | $ | 296,914,000 | ||||||
Commitments
under credit card lines of credit |
20,686,000 | 18,893,000 | ||||||||
Standby
letters of credit |
15,228,000 | 9,010,000 | ||||||||
Total
off-balance sheet financial instruments |
$ | 446,623,000 | $ | 324,817,000 |
2006 |
$ | 1,319,000 | ||||
2007 |
1,285,000 | |||||
2008 |
1,209,000 | |||||
2009 |
992,000 | |||||
2010 |
885,000 | |||||
Thereafter |
4,425,000 | |||||
Total minimum
payments |
$ | 10,115,000 |
13. |
Income taxes |
2005 |
2004 |
2003 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Current: |
||||||||||||||
Federal |
$ | 13,015,000 | $ | 8,954,000 | $ | 8,282,000 | ||||||||
State |
1,670,000 | 1,664,000 | 1,474,000 | |||||||||||
14,685,000 | 10,618,000 | 9,756,000 | ||||||||||||
Deferred |
(1,751,000 | ) | (905,000 | ) | (1,028,000 | ) | ||||||||
Provision for
income taxes |
$ | 12,934,000 | $ | 9,713,000 | $ | 8,728,000 |
2005 |
2004 |
2003 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Expected
federal income tax provision at statutory rates |
$ | 12,380,000 | $ | 9,002,000 | $ | 7,939,000 | ||||||||
State income
taxes, net of federal effect |
981,000 | 1,082,000 | 958,000 | |||||||||||
Effect of
nontaxable interest income, net |
(443,000 | ) | (321,000 | ) | (228,000 | ) | ||||||||
Other,
net |
16,000 | (50,000 | ) | 59,000 | ||||||||||
Provision for
income taxes |
$ | 12,934,000 | $ | 9,713,000 | $ | 8,728,000 |
2005 |
2004 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deferred tax
assets: |
||||||||||
Reserve for
loan losses |
$ | 5,774,000 | $ | 4,597,000 | ||||||
Deferred
benefit plan expenses, net |
2,030,000 | 1,261,000 | ||||||||
Other |
253,000 | 334,000 | ||||||||
Total
deferred tax assets |
8,057,000 | 6,192,000 | ||||||||
Deferred tax
liabilities: |
||||||||||
Accumulated
depreciation |
679,000 | 838,000 | ||||||||
Deferred loan
income |
1,068,000 | 554,000 | ||||||||
Mortgage
servicing rights |
1,754,000 | 1,839,000 | ||||||||
Purchased
intangibles related to CBGP |
409,000 | 556,000 | ||||||||
FHLB stock
dividends |
510,000 | 505,000 | ||||||||
Net
unrealized gains on investment securities |
332,000 | 492,000 | ||||||||
Other |
31,000 | 45,000 | ||||||||
Total
deferred tax liabilities |
4,783,000 | 4,829,000 | ||||||||
Net deferred
tax assets |
$ | 3,274,000 | $ | 1,363,000 |
14. |
Basic and diluted earnings per common share |
Net income (numerator) |
Weighted-average shares (denominator) |
Per-share amount |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
||||||||||||||
Basic
earnings per common share Income available to common stockholders |
$ | 22,436,049 | 16,855,946 | $ | 1.33 | |||||||||
Effect of
stock options and restricted stock |
| 563,853 | ||||||||||||
Diluted
earnings per common share |
$ | 22,436,049 | 17,419,799 | $ | 1.29 | |||||||||
2004 |
||||||||||||||
Basic
earnings per common share Income available to common stockholders |
$ | 16,007,650 | 16,668,787 | $ | .96 | |||||||||
Effect of
stock options and restricted stock |
| 630,203 | ||||||||||||
Diluted
earnings per common share |
$ | 16,007,650 | 17,298,990 | $ | .93 | |||||||||
2003 |
||||||||||||||
Basic
earnings per common share Income available to common stockholders |
$ | 13,954,888 | 15,729,808 | $ | .89 | |||||||||
Effect of
stock options and restricted stock |
| 518,734 | ||||||||||||
Diluted
earnings per common share |
$ | 13,954,888 | 16,248,542 | $ | .86 |
15. |
Transactions with related parties |
2005 |
2004 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Balance at
beginning of year |
$ | 1,170,000 | $ | 1,631,000 | ||||||
Additions |
981,000 | 1,176,000 | ||||||||
Repayments |
(1,245,000 | ) | (777,000 | ) | ||||||
Retirement of
Board member |
| (860,000 | ) | |||||||
Balance at
end of year |
$ | 906,000 | $ | 1,170,000 |
16. |
Benefit plans |
17. |
Stock-based compensation plans |
2005 |
2004 |
2003 |
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Options outstanding |
Weighted- average exercise price |
Options outstanding |
Weighted- average exercise price |
Options outstanding |
Weighted- average exercise price |
||||||||||||||||||||||
Balance at
beginning of year |
1,030,751 | $ | 8.33 | 1,017,801 | $ | 6.90 | 967,552 | $ | 5.61 | ||||||||||||||||||
Granted |
76,108 | 19.02 | 218,140 | 12.25 | 203,832 | 11.38 | |||||||||||||||||||||
Forfeited |
| | (15,909 | ) | 12.58 | (19,037 | ) | 8.00 | |||||||||||||||||||
Exercised |
(164,902 | ) | 4.76 | (189,281 | ) | 4.36 | (134,546 | ) | 4.29 | ||||||||||||||||||
Balance at
end of year |
941,957 | $ | 9.82 | 1,030,751 | $ | 8.33 | 1,017,801 | $ | 6.90 |
Options outstanding |
Exercisable options |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Exercise price range |
Number of options |
Weighted- average exercise price |
Weighted- average remaining contractual life (years) |
Number of options |
Weighted- average exercise price |
||||||||||||||||||
Under
$5.00 |
103,945 | $ | 3.40 | 1.3 | 103,945 | $ | 3.40 | ||||||||||||||||
$5.01
$8.00 |
315,028 | 6.59 | 3.5 | 315,028 | 6.59 | ||||||||||||||||||
$8.01
$12.00 |
313,620 | 10.28 | 6.7 | 178,788 | 9.50 | ||||||||||||||||||
$12.01
$16.00 |
1,562 | 12.72 | 7.4 | | | ||||||||||||||||||
$16.01
$20.00 |
203,802 | 17.16 | 8.4 | 24,399 | 16.20 | ||||||||||||||||||
$20.01
$22.59 |
4,000 | 21.02 | 9.8 | | | ||||||||||||||||||
941,957 | $ | 9.82 | 5.4 | 662,160 | $ | 7.27 |
18. |
Estimated fair value of financial instruments |
Cash and cash equivalents: The carrying amount approximates the estimated fair value of these instruments. |
Investment securities: The market value of investment securities, which is based on quoted market values or the market values for comparable securities, represents estimated fair value. |
FHLB stock: The carrying amount approximates the estimated fair value. |
Loans: The estimated fair value of loans is calculated by discounting the contractual cash flows of the loans using December 31, 2005 and 2004 origination rates. The resulting amounts are adjusted to estimate the effect of changes in the credit quality of borrowers since the loans were originated. |
Deposits: The estimated fair value of demand deposits, consisting of checking, interest bearing demand and savings deposit accounts, is represented by the amounts payable on demand. At the reporting date, the estimated fair value of time deposits is calculated by discounting the scheduled cash flows using the December 31, 2005 and 2004 rates offered on those instruments. |
Junior subordinated debentures and other borrowings: The fair value of the Banks junior subordinated debentures and other borrowings are estimated using discounted cash flow analyses based on the Banks December 31, 2005 and 2004 incremental borrowing rates for similar types of borrowing arrangements. |
Loan commitments and standby letters of credit: The majority of the Banks commitments to extend credit have variable interest rates and escape clauses if the customers credit quality deteriorates. Therefore, the fair values of these items are not significant and are not included in the following table. |
2005 |
2004 |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Carrying value |
Estimated fair value |
Carrying value |
Estimated fair value |
||||||||||||||||
Financial
assets: |
|||||||||||||||||||
Cash and cash
equivalents |
$ | 107,709,092 | $ | 107,709,000 | $ | 51,892,155 | $ | 51,892,000 | |||||||||||
Investment
securities: |
|||||||||||||||||||
Available-for-sale |
55,448,640 | 55,449,000 | 45,110,418 | 45,110,000 | |||||||||||||||
Held-to-maturity |
3,837,310 | 3,829,000 | 1,958,736 | 1,999,000 | |||||||||||||||
FHLB
stock |
3,240,700 | 3,241,000 | 2,571,600 | 2,572,000 | |||||||||||||||
Loans,
net |
1,035,016,697 | 1,033,047,000 | 847,147,231 | 854,559,000 | |||||||||||||||
Bank-owned
life insurance |
16,047,099 | 16,047,000 | 14,065,927 | 14,066,000 | |||||||||||||||
Financial
liabilities: |
|||||||||||||||||||
Deposits |
1,065,380,171 | 1,064,971,000 | 851,396,546 | 851,547,000 | |||||||||||||||
Junior
subordinated debentures and other borrowings |
84,969,302 | 82,968,000 | 57,152,475 | 57,158,000 |
19. |
Regulatory matters |
Actual |
Regulatory minimum to be adequately capitalized |
Regulatory minimum to be well capitalized under prompt corrective action provisions |
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
||||||||||||||||||||||
December
31, 2005: |
|||||||||||||||||||||||||||
Tier 1
capital (to average assets) |
$ | 116,667 | 9.3 | % | $ | 50,179 | 4.0 | % | $ | 62,725 | 5.0 | % | |||||||||||||||
Tier 1
capital (to risk-weighted assets) |
116,667 | 9.8 | 47,451 | 4.0 | 71,177 | 6.0 | |||||||||||||||||||||
Total
capital (to risk-weighted assets) |
131,877 | 11.1 | 94,903 | 8.0 | 118,628 | 10.0 | |||||||||||||||||||||
December
31, 2004: |
|||||||||||||||||||||||||||
Tier 1
capital (to average assets) |
98,274 | 10.1 | 38,867 | 4.0 | 48,584 | 5.0 | |||||||||||||||||||||
Tier 1
capital (to risk-weighted assets) |
98,274 | 10.1 | 38,866 | 4.0 | 58,299 | 6.0 | |||||||||||||||||||||
Total
capital (to risk-weighted assets) |
110,855 | 11.4 | 77,731 | 8.0 | 97,164 | 10.0 |
Actual |
Regulatory minimum to be adequately capitalized |
Regulatory minimum to be well capitalized under prompt corrective action provisions |
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
||||||||||||||||||||||
December
31, 2005: |
|||||||||||||||||||||||||||
Tier 1
capital (to average assets) |
$ | 114,746 | 9.2 | % | $ | 50,043 | 4.0 | % | $ | 62,554 | 5.0 | % | |||||||||||||||
Tier 1
capital (to risk-weighted assets) |
114,746 | 9.7 | 47,362 | 4.0 | 71,042 | 6.0 | |||||||||||||||||||||
Total
capital (to risk-weighted assets) |
129,437 | 10.9 | 94,723 | 8.0 | 118,404 | 10.0 | |||||||||||||||||||||
December
31, 2004: |
|||||||||||||||||||||||||||
Tier 1
capital (to average assets) |
96,484 | 10.0 | 38,788 | 4.0 | 48,485 | 5.0 | |||||||||||||||||||||
Tier 1
capital (to risk-weighted assets) |
96,484 | 9.9 | 38,815 | 4.0 | 58,222 | 6.0 | |||||||||||||||||||||
Total
capital (to risk-weighted assets) |
108,622 | 11.2 | 77,629 | 8.0 | 97,037 | 10.0 |
20. |
Parent company financial information |
December 31, |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
2004 |
||||||||||
Assets: |
|||||||||||
Cash and cash
equivalents |
$ | 882,010 | $ | 732,615 | |||||||
Investment
securities available-for-sale |
2,111,989 | 1,905,105 | |||||||||
Investment in
subsidiary |
121,738,640 | 104,054,991 | |||||||||
Other
assets |
763,316 | 758,831 | |||||||||
Total
assets |
$ | 125,495,955 | $ | 107,451,542 | |||||||
Liabilities
and stockholders equity: |
|||||||||||
Junior
subordinated debentures |
$ | 20,619,000 | $ | 20,619,000 | |||||||
Other
liabilities |
501,450 | 400,097 | |||||||||
Stockholders equity |
104,375,505 | 86,432,445 | |||||||||
Total
liabilities and stockholders equity |
$ | 125,495,955 | $ | 107,451,542 |
Years ended December 31, |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
2004 |
2003 |
|||||||||||||
Income: |
|||||||||||||||
Interest and
other dividend income |
$ | 19,307 | $ | 22,438 | $ | 24,838 | |||||||||
Gains on
sales of investment securities available-for-sale |
| 181,720 | 236,435 | ||||||||||||
Total
income |
19,307 | 204,158 | 261,273 | ||||||||||||
Expenses: |
|||||||||||||||
Administrative |
516,742 | 220,170 | 171,150 | ||||||||||||
Interest |
1,025,710 | 40,000 | | ||||||||||||
Other |
261,442 | 274,368 | 76,738 | ||||||||||||
Total
expenses |
1,803,894 | 534,538 | 247,888 | ||||||||||||
Net income
(loss) before credit (provision) for income taxes, dividends from the Bank and equity in undistributed net earnings of subsidiary |
(1,784,587 | ) | (330,380 | ) | 13,385 | ||||||||||
Credit
(provision) for income taxes |
672,443 | 125,545 | (5,000 | ) | |||||||||||
Net income
(loss) before dividends from the Bank and equity in undistributed net earnings of subsidiary |
(1,112,144 | ) | (204,835 | ) | 8,385 | ||||||||||
Dividends
from the Bank |
5,475,000 | 3,350,000 | 3,225,000 | ||||||||||||
Equity in
undistributed net earnings of subsidiary |
18,073,193 | 12,862,485 | 10,721,503 | ||||||||||||
Net
income |
$ | 22,436,049 | $ | 16,007,650 | $ | 13,954,888 |
Years ended December 31, |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
2004 |
2003 |
|||||||||||||
Cash flows
from operating activities: |
|||||||||||||||
Net
income |
$ | 22,436,049 | $ | 16,007,650 | $ | 13,954,888 | |||||||||
Adjustments
to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
Dividends
from the Bank |
5,475,000 | 3,350,000 | 3,225,000 | ||||||||||||
Equity in
undistributed net earnings of subsidiary |
(23,548,193 | ) | (16,212,485 | ) | (13,946,503 | ) | |||||||||
Gains on
sales of investment securities available-for-sale |
| (181,720 | ) | (236,435 | ) | ||||||||||
Increase in
other assets |
(4,485 | ) | (623,406 | ) | (5,041 | ) | |||||||||
Increase in
other liabilities |
22,735 | 659,000 | | ||||||||||||
Net cash
provided by operating activities |
4,381,106 | 2,999,039 | 2,991,909 | ||||||||||||
Cash flows
from investing activities: |
|||||||||||||||
Investment in
subsidiary |
| (20,000,000 | ) | | |||||||||||
Proceeds from
sales of investment securities available-for-sale |
| 404,573 | 427,835 | ||||||||||||
Purchase of
investment securities available-for-sale |
| (69,839 | ) | (66,785 | ) | ||||||||||
Net cash
provided (used) by investing activities |
4,381,106 | (19,665,266 | ) | 361,050 | |||||||||||
Cash flows
from financing activities: |
|||||||||||||||
Cash
dividends paid |
(5,571,984 | ) | (4,401,429 | ) | (4,026,401 | ) | |||||||||
Net proceeds
from issuance of junior subordinated debentures |
| 20,000,000 | | ||||||||||||
Amortization
of unearned compensation on restricted stock |
303,562 | 124,740 | 31,185 | ||||||||||||
Stock options
exercised and related tax benefits |
1,036,711 | 1,232,114 | 582,353 | ||||||||||||
Net cash
provided (used) by financing activities |
(4,231,711 | ) | 16,955,425 | (3,412,863 | ) | ||||||||||
Net increase
(decrease) in cash and cash equivalents |
149,395 | 289,198 | (59,904 | ) | |||||||||||
Cash and cash
equivalents at beginning of year |
732,615 | 443,417 | 503,321 | ||||||||||||
Cash and cash
equivalents at end of year |
$ | 882,010 | $ | 732,615 | $ | 443,417 |
21. |
Selected quarterly financial data (unaudited) |
2005 |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
||||||||||||||||
Interest and
dividend income |
$ | 20,991 | $ | 19,317 | $ | 17,049 | $ | 15,480 | |||||||||||
Interest
expense |
4,300 | 3,727 | 2,922 | 2,336 | |||||||||||||||
Net interest
income |
16,691 | 15,590 | 14,127 | 13,144 | |||||||||||||||
Loan loss
provision |
| 1,150 | 1,000 | 900 | |||||||||||||||
Net interest
income after loan loss provision |
16,691 | 14,440 | 13,127 | 12,244 | |||||||||||||||
Noninterest
income |
3,332 | 3,493 | 3,272 | 2,972 | |||||||||||||||
Noninterest
expenses |
9,232 | 8,603 | 8,416 | 7,950 | |||||||||||||||
Income before
income taxes |
10,791 | 9,330 | 7,983 | 7,266 | |||||||||||||||
Provision for
income taxes |
3,964 | 3,158 | 3,063 | 2,749 | |||||||||||||||
Net
income |
$ | 6,827 | $ | 6,172 | $ | 4,920 | $ | 4,517 | |||||||||||
Basic
earnings per common share |
$ | 0.40 | $ | 0.37 | $ | 0.29 | $ | 0.27 | |||||||||||
Fully diluted
earnings per common share |
$ | 0.39 | $ | 0.35 | $ | 0.28 | $ | 0.26 |
2004 |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
||||||||||||||||
Interest and
dividend income |
$ | 14,513 | $ | 13,221 | $ | 11,981 | $ | 11,196 | |||||||||||
Interest
expense |
1,596 | 1,190 | 1,057 | 1,060 | |||||||||||||||
Net interest
income |
12,917 | 12,031 | 10,924 | 10,136 | |||||||||||||||
Loan loss
provision |
900 | 1,200 | 900 | 650 | |||||||||||||||
Net interest
income after loan loss provision |
12,017 | 10,831 | 10,024 | 9,486 | |||||||||||||||
Noninterest
income |
3,184 | 3,145 | 3,481 | 3,130 | |||||||||||||||
Noninterest
expenses |
7,884 | 7,457 | 7,254 | 6,982 | |||||||||||||||
Income before
income taxes |
7,317 | 6,519 | 6,251 | 5,634 | |||||||||||||||
Provision for
income taxes |
2,763 | 2,396 | 2,323 | 2,231 | |||||||||||||||
Net
income |
$ | 4,554 | $ | 4,123 | $ | 3,928 | $ | 3,403 | |||||||||||
Basic
earnings per common share |
$ | 0.27 | $ | 0.25 | $ | 0.24 | $ | 0.21 | |||||||||||
Fully diluted
earnings per common share |
$ | 0.26 | $ | 0.24 | $ | 0.23 | $ | 0.20 |
ITEM
9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM
9A. |
CONTROLS AND PROCEDURES |
ITEM
9B. |
OTHER INFORMATION |
ITEM
15. |
EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K |
(a) (1) |
The financial statements required in this Annual Report are listed in the accompanying Index to Consolidated Financial Statements on page 38. |
(2)Financial Statement Schedules. |
(b) |
Reports on Form 8-K. |
(c) |
Exhibits. |
CASCADE
BANCORP |
CASCADE BANCORP |
|||||
/s/ Patricia L.
Moss Patricia L. Moss President/Chief Executive Officer |
/s/
Gregory D. Newton Gregory D. Newton Executive Vice President/Chief Financial Officer |
|||||
Date: March 3, 2006 |
Date: March 3, 2006 |
/s/ Jerol E.
Andres Jerol E. Andres, Director/Vice Chairman |
March 9, 2006 Date |
|||||
Gary L.
Capps Gary L. Capps, Director |
March 9, 2006 Date |
|||||
/s/ Gary L.
Hoffman Gary L. Hoffman, Director/Chairman |
March 9, 2006 Date |
|||||
/s/ Henry H.
Hewitt Henry H. Hewitt, Director |
March 9, 2006 Date |
|||||
/s/ Judi
Johansen Judi Johansen, Director |
March 9, 2006 Date |
|||||
/s/ Patricia
L. Moss Patricia L. Moss, Director/President/CEO |
March 3, 2006 Date |
|||||
/s/ Ryan R.
Patrick Ryan R. Patrick, Director |
March 9, 2006 Date |
EXHIBITS INDEX
3.1 |
Articles of Incorporation. As amended, filed as exhibit 3.1 to registrants Form 10-Q report for the quarter ended June 30, 1997, and incorporated herein by reference. |
3.2 |
Bylaws. As amended and restated, filed as exhibit 3.2 to registrants Form 10-K Annual Report for the fiscal year ended December 31, 2000, and is incorporated herein by reference. |
10.1 |
Registrant's 1994 Incentive Stock Option Plan. Filed as an exhibit to registrant's Registration Statement on Form 10-SB, filed in January 1994, and incorporated herein by reference. |
10.2 |
Incentive Stock Option Plan Letter Agreement. Entered into between registrant and certain employees pursuant to registrant's 1994 Incentive Stock Option Plan. Filed as an exhibit to registrant's Registration Statement on Form 10-SB, filed in January, 1994, and incorporated herein by reference. |
10.3 |
Deferred Compensation Plans. Established for the Board, certain key executives and managers during the fourth quarter ended December 31, 1995. Filed as exhibit 10.5 to registrants Form 10-KSB filed December 31, 1995, and incorporated herein by reference. |
10.4 |
2002 Equity Incentive Plan. Filed as an exhibit to the registrants filing on Form S-8/A, as filed with the Securities and Exchange Commission on April 23, 2003, and incorporated herein by reference. |
11.1 |
Earnings per Share Computation. The information called for by this item is located on page 67 of this Form 10-K Annual Report, and is incorporated herein by reference. |
21.1 |
Subsidiaries of registrant. |
23.1 |
Consent of Symonds, Evans & Company, P.C., Independent Accountants. |
31.1 |
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 |
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.0 |
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of | ||
|
the Sarbanes-Oxley Act of 2002 |
| |