SOURCE: Desert Community Bank

January 31, 2007 15:44 ET

Desert Community Bank Announces Earnings for 2006 and Dividend Declaration

2006 Net Income Equals 2005 Results; Cash Dividend of $0.04 Per Share Declared; Results of Operation for the Year Ended December 31, 2006

VICTORVILLE, CA -- (MARKET WIRE) -- January 31, 2007 -- Desert Community Bank (the "Bank") (NASDAQ: DCBK) today reported earnings for the quarter and year ended December 31, 2006 of $1,447,000 and $6,815,000 as compared to $1,967,000 and $6,808,000, respectively for the same periods in 2005.

Diluted earnings per share for the quarter and year ended December 31, 2006 were $0.24 and $1.14, respectively, as compared to $0.33 and $1.15, respectively, for the same periods in 2005. Diluted earnings per share declined $.09 for the fourth quarter of 2006, as compared to the fourth quarter of 2005, and declined $0.01 on a full year basis.

The decline in net income for the fourth quarter of 2006, as compared to the fourth quarter of 2005 is primarily attributable to recognition of $353,000 in stock options expense, pursuant to a new accounting rule adopted as of January 1, 2006. Excluding this change in accounting method, net income would have been approximately $1,800,000, as compared to $1,967,000 in the fourth quarter of 2005.

Net income for 2006 included the recognition of $1,132,000 in stock options expense, pursuant to a new accounting rule adopted as of January 1, 2006. Excluding this change in accounting method, net income would have been approximately $7,947,000, as compared to $6,808,000 reported for 2005.

During 2006, total assets of the Bank declined by $8.0 million, from $540.0 million at year-end 2005 to $532.0 million at year-end 2006. Federal funds sold declined by $73.0 million and loans increased by $66.0 million during this period. The balances of all other assets remained essentially unchanged.

During 2006, total deposits of the Bank decreased by $26.1 million, attributable primarily to interest-bearing transaction accounts, which declined by $35.0 million and non-interest bearing balances, which declined by $9.7 million. Time deposits increased by $18.5 million.

Total average assets for 2006 were $553.5 million, as compared to $504.8 million for 2005. The largest growth in average assets in 2006 occurred in loans (increase of approximately $49 million) and investment securities (increase of approximately $33.5 million), while the average balance of federal funds sold declined from $73.4 million to $44.9 million.

Asset quality improved significantly, as loan recoveries exceeded loan charge-offs by $8,000. The provision for loan losses increased from $410,000 in 2005 to $630,000 in 2006, which increased the reserve for loan losses to $4.2 million as compared to $3.7 million at year-end 2005. The increase in reserves is reflective of the significantly higher loan balances.

Mr. Wilson stated that, "while we were not able to report a significant increase in net income as we did for 2005, we are nevertheless satisfied with the results for 2006, after taking into consideration the $1.1 million non-cash accounting charge related to the stock options. In 2006, we were able to accomplish a number of significant achievements, including the development of a new branch facility in Phelan and most notably, the 20%+ increase in loans. At the same time, however, our bank, like most other community banks, is faced with challenges in maintaining profit margins caused by the interest rate environment." Mr. Wilson 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 several months as we complete our new Phelan branch facility, and expand our financial products and services throughout our market."

Full year results including financial statements are expected to be released about February 28, 2007, at which time the Bank intends to supplement this announcement.

Declaration of Cash Dividend

Mr. Wilson also announced the Board of Directors declaration to pay a $0.04 per share dividend to shareholders of record as of February 15, 2007. This cash dividend will be payable on February 28, 2007.

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 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.

Contact Information

  • Contact:
    Ronald L. Wilson
    (760) 243-2140