Robert P. Corcoran, President and CEO of SVB Financial Services,
Inc. (NASDAQ: SVBF), the parent holding company of Somerset Valley
Bank, announced the Company's first quarter earnings. Net income
for the first quarter of 2005 was $777,000, a decrease of $53,000
or 6% under the first quarter of last year. This net income
represents basic and diluted earnings per share of $0.19 compared
to basic and diluted earnings per share of $0.21 and $0.20 per
share, respectively in 2004. Corcoran cited a number of factors
contributing to the decrease. The Company's net interest margin was
3.61% in the first quarter of 2005 representing a decline of one
basis point from the previous quarter and 22 basis points from the
first quarter of 2004. Loans, which had accounted for 69% of
average earning assets during the first quarter of last year
declined to 68% in 2005. While the Federal Reserve has raised
interest rates 175 basis points since June 2004, the yield on
average loans increased only three basis points from 6.31% in the
first quarter of last year to 6.34% in the current quarter.
Competitive pricing for three and five year fixed rates loans,
which comprise most of the Company's commercial mortgages, have
kept these rates at approximately the same level during this period
of rising rates. The cost of funding the Bank's earning assets
increased by 29 basis points in comparison to last year. The rate
paid on NOW accounts, which make up 25% of average deposits,
increased by 70 basis points over the first quarter of last year.
This was the result of rate indexed pricing of municipal accounts
and newly court mandated pricing on certain attorney trust accounts
known as IOLTA accounts. Although the net interest margin declined,
net interest income increased $161,000 or 4% in comparison with
last year. Net interest income declined from the previous quarter
by $124,000. Non interest income declined $134,000 or 23% from the
first quarter of 2004. Income from the sale of investment and
insurance products declined by $47,000. Gains on the sales of loans
and securities declined $23,000 and $26,000, respectively, while
service charges on deposit accounts declined $19,000. Non interest
expenses increased $182,000 or 6% as a result of normal salary
increases and an overall 10.5% increase in employee benefit costs.
Occupancy expense increased $20,000 or 5%, mostly as a result of
the opening of the Company's Metuchen office. Increases in outside
services and data processing costs of $109,000 also contributed to
the increase in expense. The provision for loan losses declined
$55,000 from last year and $114,000 from the previous quarter. The
allowance for loan losses grew to 1.03% of total loans from 0.99%
at both December 31, 2004 and March 31, 2004. Non-accrual loans and
loans past due 90 days or more represented 0.49% of total loans,
unchanged from year end but up from 0.27% at March 31, 2004. Loans
increased $19.6 million or 7% from last year but declined $3.9
million or 1% since December 31, 2004. Deposits increased $30.6
million or 8% since March of last year and $1.5 million or less
than 1% since December 31, 2004. "It was a difficult quarter for
loan growth and revenue, but our pipeline of approved loans
continues to expand," said Corcoran. "We will press forward with
our branch expansion and our business development efforts in what
we consider to be a very strong market area in a reasonably good
economy. We will continue to run our Bank with the goal of
long-term performance in mind and maintain our underwriting
standards to preserve the strength of our asset base and limit rate
risk exposure. As the economy settles, we expect our new and
existing markets to provide us with the kind of growth and
profitability our shareholders have come to expect." The Bank
opened its Metuchen office on 700 Middlesex Avenue in December
2004. Somerset Valley Bank also has locations in Somerville,
Hillsborough, Bridgewater, Manville, the Arbor Glen retirement
facility, Bernards, Warren, Raritan Township and Edison. The Bank
is currently constructing its twelfth location in Flemington in
Hunterdon County. A thirteenth location has been approved for South
Plainfield in Middlesex County. SVB Financial Services, Inc. is
traded on the NASDAQ National Market under the trading symbol SVBF
and can be accessed via the internet at www.somersetvalleybank.com.
On January 11, 2005, SVB Financial Services, Inc., signed a
definitive agreement to merge with Fulton Financial Corporation
(NASDAQ: FULT), based in Lancaster, Pennsylvania, with assets of
$11.4 billion. Fulton Financial Corporation is the second largest
commercial bank holding company based in the Third Federal Reserve
District. The merger is also subject to the approval of the Board
of Governors of the Federal Reserve System, the State of New Jersey
Department of Banking and Insurance, and by SVB Financial Services
Inc.'s shareholders. Upon completion of its acquisition of SVB
Financial Services, Inc., Fulton Financial Corporation intends to
retain Somerset Valley Bank as a separate subsidiary. Additional
information on Fulton Financial Corporation is available on the
internet at www.fult.com. The foregoing contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements are not historical facts and
include expressions about management's confidence and strategies
and management's expectations about new and existing programs and
products, relationships, opportunities, technology and market
conditions. These statements may be identified by an "asterisk" (*)
or may use such forward-looking terminology as "expect", " look", "
believe", " anticipate", " may", " will", or similar statements or
variations of such terms or otherwise express views concerning
trends and the future. Such forward-looking statements involve
certain risks and uncertainties. These include, but are not limited
to, the direction of interest rates, continued levels of loan
quality and origination volume, continued relationships with major
customers including sources for loans, as well as the effects of
economic conditions and legal and regulatory barriers and
structure, including those relating to the deregulation of the
financial services industry. Actual results may differ materially
from such forward-looking statements. SVB Financial Services, Inc.
assumes no obligation for updating any such forward-looking
statement at any time. -0- *T SVB FINANCIAL SERVICES, INC. Selected
Consolidated Financial Data Three Months Ended Years Ended (in
thousands except per March 31, December 31, share data) 2005 2004
2004 2003 2002
----------------------------------------------------------------------
INCOME STATEMENT DATA: Interest Income 5,821 5,186 21,651 20,700
20,848 Interest Expense 1,888 1,414 6,152 6,262 7,471 Net Interest
Income 3,933 3,772 15,499 14,438 13,377 Provision for Loan Losses
70 125 444 502 455 Net Interest Income After Provision for Loan
Losses 3,863 3,647 15,055 13,936 12,922 Non-Interest Income 443 577
2,466 2,018 1,732 Non-Interest Expense 3,168 2,986 12,238 11,641
10,764 Income Before Income Taxes 1,138 1,238 5,283 4,313 3,890
Income Tax Expense 361 408 1,742 1,429 1,435 Net Income 777 830
3,541 2,884 2,455 BALANCE SHEET DATA: Total Assets 476,745 440,075
482,958 431,074 404,984 Federal Funds Sold and Other Short Term
Investments 4,695 16,553 3,915 6,768 28,071 Interest Bearing Time
Deposits 11,541 13,337 13,531 13,142 13,839 Securities Available
for Sale 47,203 38,002 48,543 42,855 46,569 Securities Held to
Maturity 75,728 61,980 74,696 58,290 56,209 Loans 298,758 279,210
302,671 271,543 238,185 Deposits 415,102 384,458 413,616 379,013
364,422 Other Borrowings 22,123 20,167 31,184 18,176 9,214
Guaranteed Preferred Beneficial Interest in the Corporation
Subordinated Debentures 6,702 6,702 6,702 6,500 6,500 Shareholders'
Equity 30,470 26,782 29,363 25,689 23,178 PERFORMANCE RATIOS:
Return on Average Assets 0.65% 0.76% 0.76% 0.69% 0.65% Return on
Average Equity 10.60% 12.86% 12.96% 11.92% 11.46% Net Interest
Margin 3.61% 3.83% 3.67% 3.77% 3.81% ASSET QUALITY: Loans Past Due
Over 90 Days 1 -- -- -- -- Non-Accrual Loans 1,468 763 1,484 1,012
658 Net (Recoveries)/Charge Offs (2) 33 123 229 159 Allowance for
Loan Losses to Total Loans 1.03% 0.99% 0.99% 0.99% 1.01% PER SHARE
DATA (1): Earnings Per Share - Basic 0.19 0.21 0.87 0.71 0.62
Earnings Per Share - Diluted 0.19 0.20 0.85 0.70 0.61 Book Value
7.41 6.61 7.23 6.36 5.76 (1) All data has been retroactively
restated for stock dividends. *T
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