SVBF Svb Financial Svcs (MM)

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