THE BANK HOLDINGS 
By The Bank Holdings (NASDAQ:TBHS), parent holding company of Nevada Security Bank, today announced its results of operations and continued growth for the quarter ended September 30, 2006. Net income of $534,000 was reported for the third quarter, as compared to $381,000 for the same period of 2005 and $669,000 for the second quarter of 2006. The increase in reported earnings, as compared to the third quarter of 2005 is attributed to a 44.9% increase in net interest income before provision for loan losses, combined with a 42.3% increase in non-interest income and reduced by an increase of 36.4% in non-interest expense. Year-to-date net income for September 30, 2006 amounted to $1.179 million, as compared to $833,000 for the same period ending September 30, 2005.
Total assets were $461.3 million at September 30, 2006, as compared to $318.9 million at September 30, 2005 and $384.4 million at December 31, 2005. This represents an increase of $142.4 million, or approximately 44.7% over a year earlier and $76.9 million or 20% over the year end. Since September 30, 2005 deposits have risen $81 million, or 29.9%, and since December 31, 2005, deposits have increased $14 million or 4%. Since September 30, 2005 gross loans have increased $80 million or 35% and since December 31, 2005 have increased $65.5 million, or 27%.
Hal Giomi, Chief Executive Officer stated, ?We have been busy with the acquisition of Northern Nevada Bank, which will close next week. Their loans, deposits, and locations are a complementary fit to our existing portfolio and our home marketplace. At the current time, our loan portfolio continues to reflect very good loan quality. We continue to have no loan charge-offs, however, we believe an adequate loan loss reserve is especially important in this uncertain economic climate. Our net interest margin, while four basis points lower than that reported last year for the same period, also slipped slightly since the June quarter, not unlike the margins reported by our peers. We continue to see intense competition and pressure for growth of core and other deposits.?
ACTIVITIES
During the third quarter, the Company completed a private placement for $11.5 million to partially fund the announced merger of the Company and NNB Holdings wherein Northern Nevada Holdings and Northern Nevada Bank would be merged with and into The Bank Holdings and Nevada Security Bank, respectively. In addition, preparations were made for the consolidation of the two entities' data processing, lending, and deposit operations systems as well as the integration of the branch networks held by each institution.
FINANCIAL PERFORMANCE
Quarterly Analysis
On a quarterly basis, the unaudited consolidated net earnings for the three months ended September 30, 2006 were $534,000, as compared to the unaudited net earnings for the quarter ended September 30, 2005 of $381,000. In the third quarter of 2006, net interest income before the provision for loan losses was $3.9 million, which represents an approximate 44% increase from the $2.7 million reported for the same period in 2005. This demonstrates the continued expansion of the loan portfolio and the higher rates earned on the loan and investment portfolios. The ratio of average gross loans to average total assets for the quarters ended September 30, 2006 and 2005 was 67%, and 71%, respectively.
Non-interest income for the quarter ended September 30, 2006 was $535,000, as compared to $376,000 for the same period in 2005. At September 30, 2006, third quarter non-interest expense was approximately $3.3 million, as compared to $2.4 million for the same period in 2005. At September 30, 2006 the Bank operated five branches, with 67 Full Time Equivalents (FTE) while on the same date in 2005, the Bank had four branches with 56 FTE. In addition, the 1031 companies currently operate in four markets with ten FTE that were not in operation at September 30, 2005.
The provision for probable loan losses was $247,000 for the three months ended September 30, 2006 and $292,000 for the same period in 2005, while the provision for undisbursed loan commitments showed a recovery of $37,000 in the third quarter of 2006, as compared to a provision of $32,000 for the third quarter of 2005. The recovery was due to a substantial drawdown of committed lines, which increased the volume of loans outstanding at September 30, 2006.
Basic earnings per share for the quarter ended September 30, 2006 were $0.14, as compared to $0.13 for the same period of the prior year. Quarterly return on average equity was 2.29% and return on average assets was 0.18% for 2006, as compared to 1.32% and 0.13% for the third quarter of 2005.
Year-To-Date Analysis
The unaudited consolidated net earnings reported for the nine months ended September 30, 2006 are $1.179 million, as compared to reported earnings of $833,000 for the same period in 2005. In the nine months of 2006, net interest income before the provision for loan losses was $10.6 million, which represents an increase of about 47% from the nearly $7.2 million reported for the same period of 2005.
Non-interest income was $1.0 million for the nine months ended September 30, 2005, as compared to $619,000 for the same period in 2005, an increase of 62%. For the nine months ended September 30, 2006 non-interest expense was $9.5 million, as compared to $6.3 million for the same period in 2005, an increase of 51 %. These increases have to do with the new branch in process in northern California, as well as certain activities related to the acquisition currently in process.
The provision for probable loan losses was $596,000 for the nine months ended September 30, 2005, as compared to $692,000 for the same period of 2005, while the provision for undisbursed loan commitments was $62,000 for the nine months of 2006, and $68,000 for the same period of 2005.
Basic earnings per share for the year to date period ended September 30, 2006, were $0.34, as compared to the basic earnings per share of $0.28 for the same period of the prior year and as compared to the basic earnings per share of $0.48 for the year ended December 31, 2005. Return on average equity was 4.71% and return on average assets was 0.38% for the nine months of 2006, as compared to 3.98% and 0.40%, respectively, for the same period of 2005, and 5.03% and 0.48% for the full year ended December 31, 2005. During the period under discussion, the company's average capital accounts grew by $12 million, or 41%.
The company has eliminated its former tax loss carry-forward and has become a taxable entity. This is reflected in the increased tax expense of $372,000 for the quarter ended September 30, 2006 as compared to no reported tax expense for the same period of 2005. On a taxable basis, the company's year-to-date tax provisions were $422,000 for the first nine months of 2006, as compared to no tax provision for the comparable period of 2005.
CREDIT QUALITY
At September 30, 2006 the Bank had two non-accrual loans totaling $528,000 and no past due loans on September 30, 2005. There were no non-performing assets for prior periods being reported or compared. In addition, 5% of the Bank's loan portfolio is government guaranteed, which has a very low likelihood of loss.
EARNINGS GUIDANCE
Jack Buchold, Chief Financial Officer stated, ?We have experienced a declining net interest margin as a result of continued upward movement on deposit and borrowed funds rates. The tax effect on earnings has reduced the Company's year-to-date results, when compared to the same period of last year. While we have had substantial increases in deposit and loan growth during 2006 and increasing core earnings, the results for the year will be negatively impacted by expenses related to the acquisition of Northern Nevada Bank, including the data processing, legal, and accounting costs assumed in the transaction, although the transaction is expected to be accretive to earnings during the full fiscal year ending December 31, 2007. The related activities have also slowed the assimilation and release of financial results, due to data table re-definitions, and by the restructure of the Bank's general ledger system. Such events are not expected to affect financial reporting for the end of the year 2006.?
About The Bank Holdings
The Bank Holdings is the holding company for Nevada Security Bank. The Bank was incorporated in February 2001 and opened for business on December 27, 2001 with initial capitalization of over $14 million. The Bank currently has contributed capital of approximately $32 million and operates four branches in northern Nevada and one in northern California, which is separately branded as Silverado Bank. An FDIC approved branch office in the vicinity of Rancho Cordova, California is scheduled to open during the fourth quarter of 2006. After the merger, the Bank will operate six branches in northern Nevada. The President of the Bank, David A. Funk, is a long-time banker and resident of the Reno area. For additional information, please visit www.nevadasecuritybank.com. The President of The Bank Holdings is Joseph Bourdeau, and Hal Giomi is the Chairman and Chief Executive Officer.
The Company also operates two subsidiary qualified exchange intermediary companies, Rocky Mountain Property Exchange, of Bozeman, Montana, and Granite Exchange, of Roseville, California. These companies were acquired during March, 2006 and perform tax-deferred property exchanges under Internal Revenue Code Section 1031.
The statements contained in this release that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Readers are cautioned not to unduly rely on forward-looking statements. Actual results may differ from those projected. These forward looking statements involve risks and uncertainties concerning the health of the national, Nevada and California economies, the Company's abilities to attract and retain skilled employees, customers' service expectations, the Company's ability to successfully deploy new technology and therefore gain efficiencies, success of branch expansion, changes in interest rates, loan portfolio performance, and other factors detailed in the Company's Securities and Exchange Commission filings. The Company undertakes no obligation to publicly revise these forward looking statements to reflect subsequent events or circumstances.
FOR ADDITIONAL INFORMATION,
Please review the Company's Form 10-KSB as filed with the SEC and/or CONTACT:
Hal Giomi, Chairman and Chief Executive Officer, or Jack Buchold, Chief Financial Officer The Bank Holdings, or www.thebankholdings.com Nevada Security Bank or www.nevadasecuritybank.com Mailing Address: P. O. Box 19579 (89511) Physical Address: 9990 Double R. Blvd. (89521) Reno, Nevada Phone: 775-853-8600 FAX: 775-853-2056
| Summary Selected Consolidated Financial Data | |||||||||
| Quarter Ended September 30, 2006 | Quarter Ended September 30, 2005 | Year Ended December 31, 2005 | |||||||
| (Dollars in thousands, except per share data) | |||||||||
| Condensed Income Statement | |||||||||
| Interest income | $ | 7,736 | $ | 4,643 | $ | 17,166 | |||
| Interest expense | 3,855 | 1,964 | 7,344 | ||||||
| Net interest income | 3,881 | 2,679 | 9,822 | ||||||
| Provision for loan losses | 247 | 292 | 1,069 | ||||||
| Non - interest income | 535 | 376 | 772 | ||||||
| Non - interest expenses | 3,250 | 2,382 | 8,823 | ||||||
| Losses attributable to Minority Shareholders | 3 | - | - | ||||||
| Provision for income taxes (1) | 382 | - | (710) | ||||||
| Net income | $ | 534 | $ | 381 | $ | 1,412 | |||
| Period End Data | |||||||||
| Assets | 461,335 | 318,922 | 384,632 | ||||||
| Loans, gross | 310,716 | 230,863 | 245,185 | ||||||
| Securities | 96,167 | 69,186 | 83,821 | ||||||
| Deposits | 352,002 | 270,932 | 338,198 | ||||||
| Other borrowed funds | 53,494 | 18,250 | 15,464 | ||||||
| Shareholders' equity | 45,448 | 28,223 | 28,499 | ||||||
| Non-performing assets (3) | 528 | - | - | ||||||
| Average Balance Sheet | |||||||||
| Assets | 441,582 | 299,087 | 293,580 | ||||||
| Loans, gross | 295,691 | 213,510 | 201,267 | ||||||
| Deposits | 355,500 | 255,332 | 245,322 | ||||||
| Shareholders' equity | 40,959 | 28,967 | 28,061 | ||||||
| Asset Quality | |||||||||
| Non-performing assets (3) | - | - | - | ||||||
| Allowance for loan losses | 3,251 | 2,278 | 2,655 | ||||||
| Net charge-offs | - | - | - | ||||||
| Non-performing assets to total assets | 0.1 % | - | - | ||||||
| Allowance for loan losses to loans | 1.05% | 0.99% | 1.08% | ||||||
| Net Charge-offs to average loans | - | - | - | ||||||
| Per Common Share | |||||||||
| Basic income per share | 0.14 | 0.13 | 0.47 | ||||||
| Diluted income per share | 0.13 | 0.12 | 0.43 | ||||||
| Book value per share | 11.01 | 9.49 | 9.19 | ||||||
| Period end common shares outstanding | 4,126,744 | 2,974,330 | 3,124,266 | ||||||
| Weighted average shares outstanding -basic | 3,921,034 | 2,973,960 | 2,974,104 | ||||||
| Financial Ratios | |||||||||
| Return on average assets | 0.18% | 0.13% | 0.48% | ||||||
| Return on average equity | 2.29% | 1.32% | 5.03% | ||||||
| Net interest margin (2) | 3.70% | 3.74% | 3.49% | ||||||
| Tier 1 leverage capital ratio | 12.00% | 9.42% | 10.06% | ||||||
(1) The Company removed the valuation allowance against the
deferred | |||||||||
(2) Net interest income calculated on a fully-taxable equivalent | |||||||||
(3) Non-performing assets consists of loans 90 days or more | |||||||||
| Summary Selected Consolidated Financial Data | |||||||||||||||||||||||||||||||||||||
| Quarter Ended June 30, 2006 | Quarter Ended June 30, 2005 | Year Ended December 31, 2005 | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||||||||||
| Condensed Income Statement | |||||||||||||||||||||||||||||||||||||
| Interest income | $ | 6,916 | $ | 3,864 | $ | 17,166 | |||||||||||||||||||||||||||||||
| Interest expense | 3,274 | 1,533 | 7,344 | ||||||||||||||||||||||||||||||||||
| Net interest income | 3,642 | 2,331 | 9,822 | ||||||||||||||||||||||||||||||||||
| Provision for loan losses | (124) | 186 | 1,069 | ||||||||||||||||||||||||||||||||||
| Non - interest income | 251 | 97 | 772 | ||||||||||||||||||||||||||||||||||
| Non - interest expenses | 3,348 | 1,967 | 8,823 | ||||||||||||||||||||||||||||||||||
| Losses attributable to minority shareholders | (35) | - | - | ||||||||||||||||||||||||||||||||||
| Provision for income taxes (1) | 33 | - | (710) | ||||||||||||||||||||||||||||||||||
| Net income | $ | 669 | $ | 275 | $ | 1,412 | |||||||||||||||||||||||||||||||
| Period End Data | |||||||||||||||||||||||||||||||||||||
| Assets | 418,548 | 284,544 | 384,632 | ||||||||||||||||||||||||||||||||||
| Loans, gross | 280,390 | 201,850 | 245,185 | ||||||||||||||||||||||||||||||||||
| Securities | 89,827 | 62,623 | 83,821 | ||||||||||||||||||||||||||||||||||
| Deposits | 342,235 | 227,767 | 338,198 | ||||||||||||||||||||||||||||||||||
| Other borrowed funds | 37,994 | 28,000 | 15,464 | ||||||||||||||||||||||||||||||||||
| Shareholders' equity | 33,146 | 27,907 | 28,499 | ||||||||||||||||||||||||||||||||||
| Non-performing assets (2) | - | - | - | ||||||||||||||||||||||||||||||||||
| Average Balance Sheet | |||||||||||||||||||||||||||||||||||||
| Assets | 403,382 | 273,991 | 293,580 | ||||||||||||||||||||||||||||||||||
| Loans, gross | 274,080 | 187,683 | 201,267 | ||||||||||||||||||||||||||||||||||
| Deposits | 333,724 | 224,987 | 245,322 | ||||||||||||||||||||||||||||||||||
| Shareholders' equity | 31,190 | 27,564 | 28,061 | ||||||||||||||||||||||||||||||||||
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© Business Wire - 2006
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