Redwood Financial, Inc. Second Quarter Earnings

Redwood Financial, Inc. Second Quarter Earnings REDWOOD FALLS, Minn., Feb. 9 /PRNewswire-FirstCall/ -- Redwood Financial, Inc. (Pink Sheets: REDW) (the "Company"), the parent holding company of HomeTown Bank has announced net earnings for the second fiscal quarter ended December 31, 2004. For the six months ended December 31, 2004, the Company recorded net earnings of $113,650. Basic and diluted earnings per share were $0.23 per share, and $0.21 per share, respectively. Comparatively, for the six months ended December 31, 2003, the Company recorded net earnings of $16,988. Basic and diluted earnings per share were $0.03 per share, and $0.03 per share, respectively. At December 31, 2004, the Company reported total consolidated assets and consolidated stockholders' equity of $73.3 million and $9.1 million, respectively. HomeTown Bank is headquartered in Redwood Falls, Minnesota and operates through its main office in Redwood Falls and its branch offices located in Redwood Falls and Olivia, Minnesota. The Bank's deposits are insured up to maximum legal limits by the Federal Deposit Insurance Corporation (FDIC). REDWOOD FINANCIAL, INC. AND SUBSIDIARY Consolidated Balance Sheets (Unaudited) Assets December 31, June 30, 2004 2004 Cash $363,121 502,934 Interest-bearing deposits with banks 3,495,509 2,825,050 Cash and cash equivalents 3,858,630 3,327,984 Securities available for sale: Mortgage-backed and related securities 5,544,106 7,391,313 Investment securities 10,253,594 11,888,220 Total securities available for sale 15,797,700 19,279,533 Loans receivable, net 48,860,144 50,211,030 Federal Home Loan Bank stock, at cost 1,044,700 943,900 Accrued interest receivable 469,035 511,433 Premises and equipment, net 2,768,123 2,835,515 Deferred tax asset 173,936 229,000 Real estate owned, net 271,775 371,026 Other assets 76,583 111,571 Total Assets $73,320,626 77,820,992 Liabilities and Stockholders' Equity Deposits 53,135,062 56,515,619 Federal Home Loan Bank advances 10,061,607 10,676,040 Accrued interest payable 367,034 447,575 Advance payments by borrowers for taxes and insurance 126,641 113,747 Accrued expenses and other liabilities 486,231 474,329 Total Liabilities 64,176,575 68,227,310 Common stock ($.10 par value): Authorized and issued 1,125,000 shares; outstanding 500,634 shares at December 31, 2004 and 533,749 shares at June 30, 2004 112,500 112,500 Additional paid-in capital 8,640,337 8,612,143 Retained earnings, subject to certain restrictions 8,510,973 8,397,322 Accumulated other comprehensive income (loss) (71,045) (116,593) Unearned Employee Stock Ownership Plan shares (32,704) (65,824) Treasury stock, at cost, 624,366 shares at December 31, 2004 and 591,251 June 30, 2004 (8,016,010) (7,345,866) Total Stockholders' Equity 9,144,052 9,593,682 Total Liabilities and Stockholders' Equity $73,320,626 77,820,992 REDWOOD FINANCIAL, INC. AND SUBSIDIARY Consolidated Statements of Earnings (Unaudited) Three months Six months Ended December 31, Ended December 31, 2004 2003 2004 2003 Interest Income: Loans receivable $846,221 940,204 1,704,280 1,940,159 Securities available for sale: Mortgage-backed and related securities 51,808 80,484 110,381 185,650 Investment securities 109,956 96,045 228,403 135,188 Cash equivalents and other 6,792 341 6,647 3,060 Total interest income 1,014,777 1,117,074 2,049,711 2,264,057 Interest Expense: Deposits 228,542 262,592 455,091 555,314 Federal Home Loan Bank advances 142,099 162,763 289,231 337,068 Total interest expense 370,641 425,355 744,322 892,382 Net interest income 644,136 691,719 1,305,389 1,371,675 Provision for losses on loans 30,000 496,851 60,000 547,975 Net interest income after provision for losses on loans 614,136 194,868 1,245,389 823,700 Noninterest income: Gains on sale of securities available for sale 10,000 0 10,000 0 Fees and service charges 76,208 114,504 177,457 291,467 Other 2,475 5,660 7,099 10,614 Total noninterest income 88,683 120,164 194,556 302,081 Noninterest expense: Compensation and employee benefits 381,754 373,776 748,327 745,179 Occupancy 85,516 82,871 163,536 158,214 Professional fees 20,648 17,897 36,916 35,745 Advertising 13,905 14,210 28,032 25,737 Data processing expense 6,982 7,135 16,539 15,575 Federal deposit insurance premiums 2,077 2,222 4,238 4,560 Other 120,336 67,381 264,296 128,187 Total noninterest expense 631,218 565,492 1,261,884 1,113,197 Earnings before income taxes 71,601 (250,460) 178,061 12,584 Income tax expense (benefit) 26,470 (106,025) 64,411 (4,404) Net earnings (loss) $ 45,131 (144,435) 113,650 16,988 Net earnings per common share - Basic $0.09 (0.28) 0.23 0.03 Net earnings per common share - Diluted 0.08 (0.25) 0.21 0.03 REDWOOD FINANCIAL, INC. AND SUBSIDIARIES Selected Consolidated Financial Information (Unaudited) Three months ended Six months ended December 31, December 31, December 31, December 31, 2004 2003 2004 2003 Profitability Measures: Net earnings (loss) 45,131 (144,435) 113,650 16,988 Basic earnings per share 0.09 (0.28) 0.23 0.03 Diluted earnings per share 0.08 (0.25) 0.21 0.03 Return on average assets 0.06% (.72%) 0.15% 0.04% Return on average equity 0.49% (6.00%) 1.20% 0.36% Net interest spread 3.39% 3.39% 3.41% 3.35% Net yield on interest earning assets 3.59% 3.59% 3.61% 3.56% Ratio of operating expense to average total assets (annualized) 0.85% 0.70% 1.69% 1.38% Period Ended Year Ended Year Ended December 31, June 30, June 30, Financial Position: 2004 2004 2003 Total assets 73,320,626 77,820,992 81,567,799 Total stockholders' equity 9,144,052 9,593,682 9,408,959 Average total assets 74,855,245 88,726,471 88,726,471 Average total equity 9,438,080 8,953,013 9,270,686 Loans receivable, net 48,860,144 50,211,030 58,753,945 Securities available for sale net of mark to market 15,797,700 19,279,533 14,255,767 Net unrealized gain/(loss) on securities available for sale (117,795) (193,316) 44,814 Non-performing assets 37,929 4,714 640,000 Non-performing assets to total assets 0.05% 0.01% 0.78% Allowance for loan losses 364,073 346,553 425,717 Allowance for loan losses to total assets 0.50% 0.45% 0.52% Allowance for loan losses to total loans receivable 0.74% 0.69% 0.72% Net charge-offs (recoveries) 42,480 777,139 18,889 Stockholders' equity to total assets, at end of period 12.47% 12.33% 11.54% Total shares outstanding 500,634 533,749 522,716 Book value per share (including mark to market) 18.26 17.97 18.00 Ratio of average interest-earning assets to average interest-bearing liabilities 109.19% 109.61% 108.34% DATASOURCE: Redwood Financial, Inc. CONTACT: Dean Toft of Redwood Financial, Inc., +1-507-644-4663, Fax: +1-507-644-4664 Web site: http://www.redwoodfinancial.com/