SOURCE: Desert Community Bank

August 07, 2006 09:00 ET

Desert Community Bank Announces Earnings for The Second Quarter and Year-to-Date for 2006

Second Quarter Earnings Increase 11.7% Over Second Quarter Earnings for 2005; Year-to-Date Earnings Increase 26.6% Over Year-to-Date Earnings for 2005; Results of Operation for the Quarter and Year-to-Date Periods Ended June 30, 2006

VICTORVILLE, CA -- (MARKET WIRE) -- August 7, 2006 -- Desert Community Bank (the "Bank") (NASDAQ: DCBK) today reported earnings for the quarter and year-to-date periods ended June 30, 2006 of $1,747,000 and $3,599,000, respectively for 2006, as compared to $1,564,000 and $2,844,000, respectively for the same periods in 2005. The growth in earnings of $183,000 and $755,000 for the quarter and year-to-date periods in 2006 respectively, represents an increase of 11.7% and 26.6%, respectively, over the same periods in 2005.

Diluted earnings per share for the quarter and year-to-date periods in 2006 were $0.29 and $0.61, respectively, as compared to $0.27 and $0.48, respectively, for the same periods in 2005. The increase in diluted earnings per share of $0.02 and $0.13, respectively, represent increases of 7.4% and 27.1%, respectively.

The increase in net income for the second quarter and year-to-date periods ended June 30, 2006, as compared to the same periods ended in 2005 are attributable to higher net interest income resulting from increases in income from loans and investments, partially offset by higher interest expense on deposits and higher noninterest expense.

Total assets of the Bank increased to $549.4 million at June 30, 2006. This represents a decline in total assets of $5.9 million since March 31, 2006, but an increase of $9.4 million (3.5% annualized) since December 31, 2005 and $42.4 million (8.4%) since June 30, 2005. Average earning assets for the second quarter of 2006 were $495.1 million, as compared to $503.2 million for the first quarter of 2006 and $426.8 million for the second quarter of 2005. This represents a decline of $8.1 million (1.6%) from the first quarter of 2006, but an increase of $68.2 million (16.0%) from the second quarter of 2005. The decline in total average earning assets during the quarter did not adversely impact gross interest income, which increased to $9.1 million for the second quarter, as compared to $8.7 million for first quarter of 2006.

Highlights as of or for the quarter ended June 30, 2006, as compared to information as of or for the quarter ended March 31, 2006 include:

--  Total loans, net of unearned income, increased by $20.9 million (25.2%
    annualized) to $351.9 million.
    
--  Total deposits decreased by $7.4 million (5.9% annualized) to $494.1
    million, with the decline in both interest-bearing deposits ($3.4 million)
    and noninterest-bearing deposits ($4.0 million).
    
--  Shareholders' equity increased by $1.3 million.
    
--  The return on average shareholders' equity was 13.77%, as compared to
    15.17% in the first quarter.
    
--  The return on average assets was 1.27%, as compared to 1.33% for the
    first quarter.
    
--  Net income declined by $105,000 from $1,852,000 in the first quarter
    of 2006 to $1,747,000 for the second quarter of 2006.
    
--  Noninterest expenses increased $836,000 from $4,974,000 for the first
    quarter of 2006 to $5,810,000 for the second quarter of 2006.  However, the
    first quarter number included a $400,000 recovery of a write off of an
    asset from the fourth quarter of 2005.  Excluding that recovery, first
    quarter noninterest expenses would have been $5,374,000 and the quarterly
    increase would have been $436,000.
    
--  The net interest margin increased from 5.61% in the first quarter of
    2006 to 6.08% in the second quarter of 2006, largely as a result of
    increases in the levels of loans and investment securities and lower levels
    of federal funds sold.  The yield on average earning assets increased from
    7.05% to 7.48%, reflecting the changes in the earning asset base, while the
    cost of all interest-bearing liabilities increased from 2.04% in the first
    quarter to 2.11% in the second quarter.
    
--  The closing price of the Bank's shares decreased $1.65 (8.21%) from
    $20.10 at March 31, 2006 to $18.45 at June 30, 2006.
    
Highlights as of or for the three-month and six-month periods ended June 30, 2006, as compared to the same periods in 2005 include:
--  Total loans, net of unearned income, increased by $51.2 million
    (17.0%) from $300.7 million to $351.9 million.
    
--  Total deposits increased by $35.0 million (7.6%) from $459.1 million
    to $494.1 million.
    
--  Shareholders' equity increased by $6.5 million from $44.7 million to
    $51.3 million.
    
--  The return on average shareholders' equity was 13.77% for the quarter,
    as compared to 14.54% in 2005, and 14.45% for the six-month period in 2006,
    as compared to 13.19% in 2005.
    
--  Return on average assets was 1.27% for the second quarter in both 2006
    and 2005, was 1.30% for the six-month period in 2006, as compared to 1.17%
    in 2005.
    
--  Net income increased by $183,000 (11.7%) for the quarter, from
    $1,564,000 to $1,747,000, and $755,000 (26.6%) for the six-month period,
    from $2,844,000 to $3,599,000.
    
--  Net interest margin increased from 5.92% in the second quarter of 2005
    to 6.08% in the second quarter of 2006, and from 5.87% for the six-month
    period in 2005 to 5.89% for the same period in 2006.
    
--  The closing price of the Bank's shares increased $5.42 (41.6%) from
    $13.03 at June 30, 2005 to $18.45 at June 30, 2006.
    
Asset quality continues to improve, as evidenced by the lower provision for loan losses recorded in both the quarter and six-month periods ended June 30, 2006 as compared to the same periods in 2005.

The Bank's net interest income before its provision for loan losses was $7,444,000 for the quarter and $14,431,000 for the six-month period in 2006, as compared to $6,279,000 and $12,342,000 for the same periods in 2005. These increases represent increases of $1,165,000 (18.6%) and $2,089,000 (16.9%) for the same periods in 2005. These increases are the result of growth of the total earning asset base funded by the growth in the deposit base, and the increases in the interest rate environment occurring continually since September 30, 2004.

Other operating income was slightly lower for both the quarter and six-month periods ended June 30, 2006 as compared to the same periods in 2005. Total noninterest income was $1,217,000 and $2,351,000 for the quarter and year-to-date periods ended June 30, 2006, respectively, as compared to $1,347,000 and $2,577,000 for the same periods in 2005. The decline for the quarter is primarily attributable to lower voucher control fee income. The decline for the six-month period is attributable to lower voucher income and a loss on the sale of investments recorded in the first quarter of 2006.

Total noninterest expenses were $5,764,000 for the quarter, as compared to $4,893,000 for the second quarter of 2005. The increase in the quarterly expense of $871,000 related primarily to increases in compensation and employee benefits, totaling $566,000, which change was composed primarily of the stock-based compensation expense of $237,000, pursuant to new accounting guidelines, which were adopted in 2006. No comparable expense was recorded in 2005. The majority of the change in the aggregate expenses for the quarter were related to increased depreciation on facilities and equipment ($63,000), increased property taxes ($30,000), loan brokerage fees ($65,000), legal fees and expenses associated with shareholder matters ($44,000) and repairs and maintenance on facilities and equipment ($34,000).

Total noninterest expense for the six-month period ended June 30, 2006 was $10,738,000, as compared to $9,747,000 for the same period in 2005, for an increase of $991,000. Compensation and employee benefits expenses increased by $1,071,000, with the largest change in this category relating to an increase of $445,000 related to the stock-based compensation expense which was recorded pursuant to new accounting guidelines which were adopted in 2006. No comparable expense was recorded in 2005. The balance of the change in compensation and benefits expense was attributable to other employee related expenses, including expansion of professional staff in June 2005 and to normal pay increases since that date. All other expenses increased in various expense types $320,000, but were offset by a nonrecurring recovery of $400,000 relating to a write off of a funds transfer receivable occurring in the fourth quarter of 2005 which was recovered in the first quarter of 2006.

The Bank's efficiency ratio, which measures the proportion of total noninterest expense to total operating income, was 67.1% and 64.3% for the quarter and six-month periods of 2006, respectively, as compared to 64.2% and 65.3% for the same periods in 2005.

"We are very pleased with the quarter's results," said Ron L. Wilson, Chairman, President and CEO of the Bank, noting that this was a continuation of the very strong quarterly performance that began in the third quarter of 2005 and is continuing. He noted that loan growth for the quarter was especially gratifying and representative of the strong efforts put forth by management in the lending areas of the Bank, and that he looks forward to seeing further solid growth in loans as the year progresses. He added that "these results reflect our continuing efforts to provide excellence in financial services to our customers in this, one of the fastest growing markets in the United States. Our focus on serving our customers will not diminish, but rather will be enhanced over the next year, as we complete our new Phelan branch facility, initiate offering of sweep agreements and super jumbo fully FDIC insured certificates of deposit, and continue to better serve our customers and our communities."

About Desert Community Bank

From its inception in March 1980, Desert Community Bank has been a leader in serving the needs of the communities in which it operates. That leadership is reflected by the involvement of the Bank and its employees in the many civic and non-profit organizations that act as its partner in enhancing the quality of life for all. The success of the Bank's efforts in partnership with many community leaders is reflected in the growth of the Bank to become the largest financial institution headquartered in the High Desert.

Desert Community Bank is based in Victorville, California, and operates eight full-service branches in San Bernardino County in the cities of Victorville, Apple Valley, Hesperia, Wrightwood, Adelanto and Barstow. Shares of the Bank's common stock are traded on the NASDAQ Small Cap Market System under the symbol "DCBK." To obtain a copy of any of the Bank's public filings, or to obtain additional information, please visit our web site at www.dcbk.org or contact Mr. Ronald L. Wilson, President and CEO, or John G. Sullivan, Chief Financial Officer at (760) 243-2140.

This news release may contain forward-looking statements with respect to the financial condition, results of operation and business of Desert Community Bank. These may include, but are not limited to statements that relate to or are dependent upon estimates or assumptions relating to the prospects of loan growth, deposit growth, credit quality, and certain operating efficiencies resulting from the operations of the Bank. These statements are subject to various risks and uncertainties. Such forward-looking statements are made based upon management's belief as well as assumptions made by, and information currently available to, management pursuant to "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The Bank's actual results may differ materially from the results anticipated in forward-looking statements due to a variety of factors. Such factors are described below and include, without limitation, (i) unanticipated deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses, (ii) increased competition with other financial institutions, (iii) lack of sustained growth in the economy in the Victorville, California area, (iv) rapid fluctuations or unanticipated changes in interest rates, (v) the inability of the Bank to satisfy regulatory requirements for its expansion plans, and (vi) changes in the legislative and regulatory environment. Many of such factors are beyond the Bank's ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. The Bank does not intend to update or reissue any forward-looking statements contained in this report as a result of new information or other circumstances that may become known to the Bank.


                        DESERT COMMUNITY BANK
                   STATEMENTS OF FINANCIAL CONDITION
                              (Unaudited)
            (Amounts in thousands, except for per share data)


                                            June 30,   Dec. 31,   June 30,
                                                2006       2005       2005
ASSETS                                     ---------  ---------  ---------
Cash and due from banks                    $  29,744  $  23,122  $  30,723
Federal funds sold                            28,115     86,727     80,368
                                           ---------  ---------  ---------
  Total cash and cash equivalents             57,859    109,849    111,091
Investment securities available-for-sale      89,852     74,465     59,151
Investment securities held-to-maturity        11,778      4,233          -
Securities, restricted equities                2,177      2,027      2,011
Loans held for sale                            3,237      1,523      1,577
Loans, net of allowance of $3,897, $3,705,
 and $3,976                                  348,025    313,801    296,729
Foreclosed real estate                         1,730      1,829      3,345
Premises and equipment, net                   16,135     15,775     16,183
Cash surrender value of life insurance        10,082      8,628      8,465
Accrued interest receivable and other
 assets                                        8,497      7,840      8,419
                                           ---------  ---------  ---------


  TOTAL ASSETS                             $ 549,372  $ 539,970  $ 506,971
                                           =========  =========  =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
  Deposits
    Noninterest-bearing                    $ 173,692  $ 166,153  $ 161,508
    Interest-bearing                         320,453    321,669    297,635
                                           ---------  ---------  ---------
      TOTAL DEPOSITS                         494,145    487,822    459,143
Borrowings                                       307        700        700
Accrued interest payable and other
 liabilities                                   3,638      3,567      2,380
                                           ---------  ---------  ---------
      TOTAL LIABILITIES                      498,090    492,089    462,223


SHAREHOLDERS' EQUITY
Common stock, no par value:  18,750,000
 shares authorized, 5,899,544 shares
 issued and outstanding at June 30, 2006,
 5,885,544 at December 31, 2005 and
 5,882,544 at June 30, 2005                   15,512     14,896     14,810
Retained earnings                             36,994     33,631     30,226
Additional paid in capital                         -          -          -
Accumulated other comprehensive income
 (loss)                                       (1,224)      (646)      (288)
                                           ---------  ---------  ---------
      TOTAL SHAREHOLDERS' EQUTY               51,282     47,881     44,748
                                           ---------  ---------  ---------
  TOTAL LIABILITIES AND SHAREHOLDERS'
   EQUITY                                  $ 549,372  $ 539,970  $ 506,971
                                           =========  =========  =========




Where appropriate, some items in the prior financial statements have been
reclassified to conform to the current presentation.



                         DESERT COMMUNITY BANK
                          STATEMENTS OF INCOME
                              (Unaudited)
         For the Three-Month and Six-Month Periods Ended June 30
            (Amounts in thousands, except for per share data)


                                       Three Months Ended  Six Months Ended
                                            June 30,          June 30,
                                          2006     2005     2006     2005
                                        -------  -------  -------  -------
Interest Income
  Loans and leases, including fees      $ 7,384 $ 6,189 $ 14,219  $ 12,297
  Investment securities                   1,098     496    1,960     1,013
  Federal funds sold and other              670     562    1,654       906
                                        -------  -------  -------  -------
                                          9,152    7,247   17,833   14,216
                                        -------  -------  -------  -------
Interest expense
  Deposits                                1,702      966    3,391    1,871
  Other borrowings                            6        2       11        3
                                        -------  -------  -------  -------
                                          1,708      968    3,402    1,874
                                        -------  -------  -------  -------

Net interest income                       7,444    6,279   14,431   12,342

Provision for loan losses                   104      200      304      500
                                        -------  -------  -------  -------

Net interest income after provision
 for loan losses                          7,340    6,079   14,127   11,842
                                        -------  -------  -------  -------


Noninterest income
   Service charges and fees                 389      404      767      780
  Voucher control fees                      177      251      404      471
  Earnings on cash values in life
   insurance contracts                      112       96      206      187
  Net losses on sales of securities           -        -      (78)       -
  Net gains on sales of repossessed
   and foreclosed assets                      -       75       16       75
  Other                                     539      521    1,036    1,064
                                        -------  -------  -------  -------
                                          1,217    1,347    2,351    2,577
                                        -------  -------  -------  -------
Noninterest expense
  Salaries and employee benefits          3,167    2,601    6,302    5,231
  Occupancy and equipment                   581      468    1,098      968
  Professional fees                         184      149      338      241
  Insurance                                  53       54      104      104
  Office Supplies                            83       71      166      169
  Armored car and security                  220      244      422      441
  Data processing                           474      506      946      931
  Other                                   1,048      800    1,408    1,662
                                        -------  -------  -------  -------
                                          5,810    4,893   10,784    9,747
                                        -------  -------  -------  -------
Income before income taxes                2,747    2,533    5,694    4,672
Income tax expense                        1,000      969    2,095    1,828
                                        -------  -------  -------  -------

Net income                              $ 1,747  $ 1,564  $ 3,599  $ 2,844
                                        =======  =======  =======  =======


Weighted average common shares
 outstanding (shares in thousands):
   Basic                                  5,897    5,882    5,894    5,882
   Diluted                                5,975    5,894    5,917    5,896

Earnings per share of common stock
  Basic                                 $  0.30  $  0.27  $  0.61  $  0.48
  Diluted                               $  0.29  $  0.27  $  0.61  $  0.48




Where appropriate, some items in the prior financial statements have been
reclassified to conform to the current presentation.



                         DESERT COMMUNITY BANK
                         SUPPLEMENTAL ANALYSES
                             (Unaudited)
            (Amounts in thousands, except for per share data)


                                    Three Months Ended   Six Months Ended
                                         June 30,            June 30,
                                       2006      2005      2006      2005
                                    --------  --------  --------  --------

Profitability Ratios:
  Return on average assets              1.27%     1.27%     1.30%     1.17%
  Return on average equity             13.77%    14.54%    14.45%    13.19%
  Net interest margin
   (tax-equivalent)                     6.08%     5.92%     5.89%     5.87%
  Efficiency ratio                      67.1%     64.2%     64.3%     65.3%

Other Information:
  Average total assets              $552,290  $492,796  $554,490  $485,314
  Average interest-earning assets   $495,090  $426,818  $499,137  $423,249
  Average equity                    $ 50,749  $ 43,021  $ 49,803  $ 43,113

Share Information:
  Average basic shares outstanding
   (in thousands)                      5,897     5,882     5,894     5,882
  Average diluted shares outstanding
   (in thousands)                      5,975     5,894     5,917     5,896
  Basic earnings per share          $   0.30  $   0.27  $   0.61  $   0.48
  Diluted earnings per share        $   0.29  $   0.27  $   0.61  $   0.48

Book value per share at end of
 period
  Shares outstanding at end of
   period
  Share prices and quotes:
      Closing price per share at
       end of period                $  18.45  $  13.03  $  18.45  $  13.03
      Average price per share
       during period                $  18.91  $  13.55  $  19.17  $  13.74
      Highest share price during
       the period                   $  20.10  $  14.50  $  20.75  $  15.00
      Lowest share price during the
       period                       $  16.90  $  12.78  $  16.90  $  12.78
      Closing share price as
       multiple of book value
      Closing share price as
       multiple of basic earnings:
         Current period annualized      15.6      12.3
         Trailing twelve months         14.4      13.7

Asset Quality Information at end of
 period:
    Nonperforming loans             $  2,415  $  1,454
    Repossessed and foreclosed
     assets                         $  1,730  $  3,345
    Allowance for loan losses       $  3,897  $  3,976
    Nonperforming loans/total loans     0.69%     0.48%
    Nonperforming assets/total
     assets                             0.75%     0.95%
    Allowance for loan losses/loans
     outstanding                        1.11%     1.32%




Where appropriate, some items in the prior financial statements have been
reclassified to conform to the current presentation.


                    DESERT COMMUNITY BANK
                    SUPPLEMENTAL ANALYSES
                         (Unaudited)
                    (Amounts in thousands)


                                                Three Months Ended
                                                  June 30, 2006
                                          ----------------------------
                                                     Interest   Average
                                          Average    Earned     Yield or
                                          Balances   or Paid 1  Rate Paid
                                          --------   --------   ------
Assets
Interest-earning assets:
  Loans and leases                        $342,322   $  7,384     8.65%
  Investment securities - taxable           85,701        933     4.37%
  Investment securities - nontaxable        16,420        250     6.11%
  Federal funds sold and other              50,647        670     5.31%
                                          --------   --------   ------
  Total interest-earning assets            495,090      9,237     7.48%
                                                     --------   ======
Noninterest-earning assets                  57,200
                                          --------
Total assets                              $552,290
                                          ========

Liabilities
Interest-bearing liabilities:
  Money Market and Desert Gold            $233,385      1,204     2.07%
  Savings                                   40,560         82     0.81%
  Certificates of deposit                   49,015        416     3.40%
  Other borrowed funds                         634          6     3.54%
                                          --------   --------   ------
  Total interest-bearing liabilities       323,594      1,708     2.11%
                                          --------   --------   ======
Noninterest-bearing liabilities:
  Demand deposits                          174,144
  Other liabilities                          3,803
                                          --------
Total liabilities                          501,541
Stockholders' equity                        50,749
                                          --------
Total liabilities and stockholders'
 equity                                   $552,290
                                          ========

Net interest income                                  $  7,529
                                                     ========

Net interest spread                                               5.37%
Net interest margin                                               6.08%

 1 Yields and rates have been annualized.


Interest income presented above is stated on a tax-equivalent basis using
the statutory income tax rate of 34%.  The reconciliation of interest
income as presented in the basic financial statements to the above amounts
is as follows:


    Interest income from investment securities-
    non-taxable as presented in the basic financial
    statements                                       $  9,152

    Adjustment to reported income to convert to
    tax-equivalent amount                                  85
                                                     --------

    Tax-equivalent to income                         $  9,237
                                                     ========




                                                Three Months Ended
                                                  June 30, 2005
                                          ----------------------------
                                                     Interest   Average
                                          Average    Earned     Yield or
                                          Balances   or Paid 1  Rate Paid
                                          --------   --------   ------

Assets
Interest-earning assets:
  Loans and leases                        $300,638   $  6,189     8.23%
  Investment securities - taxable           54,460        416     3.06%
  Investment securities - nontaxable         7,348        122     6.64%
  Federal funds sold and other              64,372        562     3.49%
                                          --------   --------   ------
  Total interest-earning assets            426,818      7,289     6.83%
                                                     --------   ======
Noninterest-earning assets                  65,978
                                          --------
Total assets                              $492,796
                                          ========


Liabilities
Interest-bearing liabilities:
  Money Market and Desert Gold            $212,839        702     1.32%
  Savings                                   39,783         78     0.78%
  Certificates of deposit                   37,881        186     1.96%
  Other borrowed funds                         481          2     1.66%
                                          --------   --------   ------
  Total interest-bearing liabilities       290,984        968     1.33%
                                                     --------   ======
Noninterest-bearing liabilities:
  Demand deposits                          155,522
  Other liabilities                          3,269
                                          --------
Total liabilities                          449,775
Stockholders' equity                        43,021
                                          --------
Total liabilities and stockholders'
 equity                                   $492,796
                                          ========

Net interest income                                  $  6,321
                                                     ========

Net interest spread                                               5.50%
Net interest margin                                               5.92%

 1 Yields and rates have been annualized.

Interest income presented above is stated on a tax-equivalent basis using
the statutory income tax rate of 34%.  The reconciliation of interest
income as presented in the basic financial statements to the above amounts
is as follows:

    Interest income from investment securities-
    non-taxable as presented in the basic financial
    statements                                       $  7,247

    Adjustment to reported income to convert to
    tax-equivalent amount                                  42
                                                     --------

    Tax-equivalent to income                         $  7,289
                                                     ========



                    DESERT COMMUNITY BANK
                    SUPPLEMENTAL ANALYSES
                        (Unaudited)
                   (Amounts in thousands)


                                                Six Months Ended
                                                  June 30, 2006
                                          ----------------------------
                                                     Interest   Average
                                          Average    Earned     Yield or
                                          Balances   or Paid 1  Rate Paid
                                          --------   --------   ------
Assets
Interest-earning assets:
  Loans and leases                        $333,895   $ 14,219     8.59%
  Investment securities - taxable           80,815      1,655     4.13%
  Investment securities - nontaxable        15,034        462     6.20%
  Federal funds sold and other              69,393      1,654     4.81%
                                          --------   --------   ------
  Total interest-earning assets            499,137     17,990     7.27%
                                                     --------   ======
Noninterest-earning assets                  55,353
                                          --------
Total assets                              $554,490
                                          ========

Liabilities
Interest-bearing liabilities:
  Money Market and Desert Gold            $236,555      2,424     2.07%
  Savings                                   41,458        166     0.81%
  Certificates of deposit                   49,252        801     3.28%
  Other borrowed funds                         593         11     3.74%
                                          --------   --------   ------
  Total interest-bearing liabilities       327,859      3,402     2.09%
                                                     --------   ======
Noninterest-bearing liabilities:
  Demand deposits                          172,424
  Other liabilities                          4,404
                                          --------
Total liabilities                          504,687
Stockholders' equity                        49,803
                                          --------
Total liabilities and stockholders'
 equity                                   $554,490
                                          ========

Net interest income                                  $ 14,588
                                                     ========

Net interest spread                                               5.18%
Net interest margin                                               5.89%

  1 Yields and rates have been annualized.

Interest income presented above is stated on a tax-equivalent basis using
the statutory income tax rate of 34%.  The reconciliation of interest
income as presented in the basic financial statements to the above amounts
is as follows:

    Interest income from investment securities-
    non-taxable as presented in the basic financial
    statements                                       $ 17,833

    Adjustment to reported income to convert to
    tax-equivalent amount                                 157
                                                     --------

    Tax-equivalent to income                         $ 17,990
                                                     ========



                                                Six Months Ended
                                                  June 30, 2005
                                          ----------------------------
                                                     Interest   Average
                                          Average    Earned     Yield or
                                          Balances   or Paid 1  Rate Paid
                                          --------   --------   ------
Assets
Interest-earning assets:
  Loans and leases                        $301,721   $ 12,297     8.15%
  Investment securities - taxable           55,023        850     3.09%
  Investment securities - nontaxable         7,375        248     6.72%
  Federal funds sold and other              59,130        906     3.06%
                                          --------   --------   ------
  Total interest-earning assets            423,249     14,301     6.76%
                                                     --------   ======
Noninterest-earning assets                  62,065
                                          --------
Total assets                              $485,314
                                          ========

Liabilities
Interest-bearing liabilities:
  Money Market and Desert Gold            $209,574      1,361     1.30%
  Savings                                   39,730        154     0.78%
  Certificates of deposit                   37,714        356     1.89%
  Other borrowed funds                         516          3     1.16%
                                          --------   --------   ------
  Total interest-bearing liabilities       287,534      1,874     1.30%
                                                     --------   ======
Noninterest-bearing liabilities:
  Demand deposits                          151,373
  Other liabilities                          3,294
                                          --------
Total liabilities                          442,201
Stockholders' equity                        43,113
                                          --------
Total liabilities and stockholders'
 equity                                   $485,314
                                          ========

Net interest income                                  $ 12,427
                                                     ========

Net interest spread                                               5.45%
Net interest margin                                               5.87%

  1 Yields and rates have been annualized.

Interest income presented above is stated on a tax-equivalent basis using
the statutory income tax rate of 34%.  The reconciliation of interest
income as presented in the basic financial statements to the above amounts
is as follows:

    Interest income from investment securities-
    non-taxable as presented in the basic financial
    statements                                       $ 14,216

    Adjustment to reported income to convert to
    tax-equivalent amount                                  85
                                                     --------

    Tax-equivalent to income                         $ 14,301
                                                     ========

Contact Information

  • Contact:

    Ronald L. Wilson
    Chairman/CEO
    (760) 243-2140