Central Valley Community Bancorp Reports Earnings Results for the Nine Months and Quarter Ended September 30, 2011
(firmenpresse) - FRESNO, CA -- (Marketwire) -- 10/19/11 -- The Board of Directors of Central Valley Community Bancorp (Company) (NASDAQ: CVCY), the parent company of Central Valley Community Bank (Bank), reported today unaudited consolidated net income of $4,769,000, and diluted earnings per common share of $0.46 for the nine months ended September 30, 2011, compared to $2,660,000 and $0.26 per diluted common share for the nine months ended September 30, 2010. While net interest income before provision for credit losses for the period decreased compared to the corresponding period in 2010, net income increased primarily as a result of lower provision for credit losses and an increase in non-interest income.
During the first three quarters of 2011, the Company's total assets increased 7.37%, total liabilities increased 7.11% and shareholders' equity increased 9.20% compared to December 31, 2010. Annualized return on average equity (ROE) for the nine months ended September 30, 2011 was 6.21%, compared to 3.71% for the same period in 2010. The increase in ROE reflects an increase in net income, notwithstanding an increase in capital from an increase in other comprehensive income and an increase in retained earnings. Annualized return on average assets (ROA) was 0.81% for the first nine months of 2011, compared to 0.47% for the same period in 2010. The ROA increase is due to an increase in net income, notwithstanding an increase in average assets.
During the nine months ended September 30, 2011, the Company recorded a provision for credit losses of $750,000, compared to $2,900,000 for the same period in 2010. During nine months ended September 30, 2011, the Company recorded $733,000 in net loan charge-offs, compared to $1,994,000 for the same period in 2010. The annualized net charge-off ratio, which reflects net charge-offs to average loans, was 0.23% for the nine months ended September 30, 2011, and 0.58% for the same period in 2010. The Company also recorded OREO related expenses of $11,000 during the first three quarters of 2011 compared to $759,000 for the same period in 2010.
At September 30, 2011, the allowance for credit losses was $11,031,000, compared to $11,014,000 at December 31, 2010, a net increase of $17,000. The allowance for credit losses as a percentage of total loans was 2.59% at September 30, 2011, and 2.55% at December 31, 2010. The Company believes the allowance for credit losses is adequate to provide for probable losses inherent within the loan portfolio at September 30, 2011.
Total non-performing assets were $17,064,000, or 2.04% of total assets, as of September 30, 2011 compared to $19,984,000 or 2.57% of total assets as of December 31, 2010. Total non-performing assets as of June 30, 2011 were of $14,959,000 or 1.89% of total assets.
The following provides a reconciliation of the change in non-accrual loans for the first three quarters of 2011.
The following provides a summary of the change in the OREO balance for the nine months ended September 30, 2011:
The Company's annualized net interest margin (fully tax equivalent basis) was 4.68% for the nine months ended September 30, 2011, compared to 5.05% for the same period in 2010. The 2011 net interest margin decrease in the period-to-period comparison resulted primarily from a decrease in the yield on the Company's investment portfolio partially offset by a decrease in the Company's cost of funds. For the nine months ended September 30, 2011, the effective yield on total earning assets decreased 61 basis points to 5.11% compared to 5.72% for the same period in 2010, while the cost of total interest-bearing liabilities decreased 28 basis points to 0.61% compared to 0.89% for the same period in 2010. The amount of the Company's average investment securities, including interest-earning deposits in other banks and Federal funds sold, increased while the effective yield on average investment securities decreased to 3.42% for the nine months ended September 30, 2011 compared to 4.66% for the same period in 2010. The amount of the Company's average loans decreased, while the effective yield on average loans increased to 6.32% from 6.30% over the same periods. The decrease in yield in the Company's investment securities during the first nine months of 2011 resulted primarily from the purchase of lower yielding investment securities along with an increase in average balances in interest bearing deposits in other banks. The cost of total deposits decreased 20 basis points to 0.42% for the nine months ended September 30, 2011 compared to 0.62% for the same period in 2010. Net interest income before the provision for credit losses for the nine months ended September 30, 2011 was $23,341,000, compared to $24,089,000 for the same period in 2010, a decrease of $748,000 or 3.11%. Net interest income decreased as a result of these yield changes offset by an increase in average earning assets and interest-bearing liabilities.
Total average assets for the nine months ended September 30, 2011 were $786,394,000, compared to $752,883,000 for the same period in 2010, an increase of $33,511,000 or 4.45%. Total average loans were $431,506,000 for the first three quarters of 2011, compared to $458,361,000 for the same period in 2010, representing a decrease of $26,855,000 or 5.86%. Total average investments, including deposits in other banks and Federal funds sold, increased to $283,567,000 for the nine months ended September 30, 2011 from $222,965,000 for the same period in 2010, representing an increase of $60,602,000 or 27.18%. Total average deposits increased $34,360,000 or 5.45% to $665,193,000 for the nine months ended September 30, 2011, compared to $630,833,000 for the same period in 2010. Average interest-bearing deposits increased $6,595,000, or 1.37% and average non-interest bearing demand deposits increased $27,765,000 or 18.73% for the nine months ended September 30, 2011 compared to the same period in 2010. The Company's ratio of average non-interest bearing deposits to total deposits was 26.46% for the nine months ended September 30, 2011 compared to 23.50% for the same period in 2010.
Non-interest income for the nine months ended September 30, 2011 increased $1,565,000, or 46.37% to $4,940,000, compared to $3,375,000 for the same period in 2010, mainly due to an increase in gain on sale of other real estate owned of $608,000, an increase in net realized gains on sales and calls of investment securities of $217,000, a $142,000 gain related to the final distribution of the Service 1st escrow account, an $85,000 gain related to the collection of life insurance proceeds, and a decrease in other than temporary impairment charges of $669,000.
Non-interest expense for the nine months ended September 30, 2011 decreased $313,000, or 1.44% to $21,442,000 compared to $21,755,000 for the same period in 2010, primarily due to decreases in OREO expenses of $748,000, legal fees of $101,000, and regulatory assessments of $223,000, partially offset by increases in salaries and employees benefits of $590,000.
The Company recorded a provision for income taxes of $1,320,000 for the nine months ended September 30, 2011, compared to $149,000 for the same period in 2010. The effective tax rate for the first nine months of 2011 was 21.68% compared to 5.30% for the same period in 2010. The increase in the effective tax rate is primarily due to an increase in taxable income and a decrease in permanent tax differences as a percentage of taxable income.
Quarter Ended September 30, 2011
For the quarter ended September 30, 2011, the Company reported unaudited consolidated net income of $1,408,000 and diluted earnings per common share of $0.13, compared to $864,000 and $0.08 per diluted share, for the same period in 2010, and $1,773,000 and $0.18 per diluted share, for the quarter ended June 30, 2011. The increase in net income during the third quarter of 2011 compared to the same period in 2010 is primarily due to decreases in the provision for credit losses and increases in non-interest income partially offset by decreases in net interest income before the provision for credit losses.
Annualized return on average equity for the third quarter of 2011 was 5.34%, compared to 3.53% for the same period of 2010. This increase is reflective of an increase in net income partially offset by an increase in capital. Annualized return on average assets was 0.70% for the third quarter of 2011 compared to 0.46% for the same period in 2010. This increase is due to an increase in net income partially offset by an increase in average assets.
In comparing the third quarter of 2011 to the third quarter of 2010, average total loans decreased $30,125,000, or 6.48%. During the third quarter of 2011, the Company recorded a $400,000 provision for credit losses, compared to $1,300,000 for the same period in 2010. During the third quarter of 2011, the Company recorded $404,000 in net loan charge-offs compared to $1,662,000 for the same period in 2010. The net charge-off ratio, which reflects annualized net charge-offs to average loans, was 0.37% for the quarter ended September 30, 2011 compared to 1.43% for the quarter ended September 30, 2010.
The following provides a reconciliation of the change in non-accrual loans for the quarter ended September 30, 2011.
The following provides a summary of the change in the OREO balance for the quarter ended September 30, 2011:
Average total deposits for the third quarter of 2011 increased $49,840,000 or 7.85% to $684,721,000 compared to $634,881,000 for the same period of 2010.
The Company's net interest margin (fully tax equivalent basis) decreased 44 basis points to 4.66% for the three months ended September 30, 2011, from 5.10% for the three months ended September 30, 2010. Net interest income, before provision for credit losses, decreased $224,000 or 2.74% to $7,949,000 for the third quarter of 2011, compared to $8,173,000 for the same period in 2010. The decreases in net interest margin and in net interest income are primarily due to a decrease in the yield of interest-earning assets and a decrease in average loan balances. Over the same periods, the cost of total deposits decreased 18 basis points to 0.37% compared to 0.55% in 2010.
Non-interest income increased $302,000 or 23.36% to $1,595,000 for the third quarter of 2011 compared to $1,293,000 for the same period in 2010, primarily due to an increase in net gains on sales and calls of investment securities of $242,000. The third quarter of 2011 non-interest income also included a $75,000 gain from the sale of other real estate owned. Non-interest expense decreased $187,000 or 2.52% for the same periods mainly due to decreases in regulatory assessments and other real estate owned expenses, partially offset by increases in salary and employee benefits.
During the third quarter of 2011, the Company entered into a Securities Purchase Agreement with the Small Business Lending Fund of the U.S. Treasury (the "Treasury"), under which the Company issued 7,000 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series C, to the Treasury for an aggregate purchase price of $7,000,000. Simultaneously, the Company agreed with Treasury to redeem 7,000 shares of the Company's Series A Fixed Rate Cumulative Perpetual Preferred Stock originally issued pursuant to the Treasury's Capital Purchase Program in 2009 for an aggregate price of $7,000,000. The redemption of the Series A Stock resulted in an acceleration of the remaining discount and caused an increase in the preferred stock dividends and accretion of $103,000 during the third quarter of 2011. Also in connection with the repurchase of the Series A Stock, the Company repurchased the common stock warrant originally issued to Treasury in connection with the CPP transaction for total consideration of $185,000.
The Company recorded a provision for income taxes of $514,000 for the quarter ended September 30, 2011, compared to a tax benefit of $107,000 for the same period in 2010. The effective tax rate for the third quarter of 2011 was 26.74% compared to (14.13%) for the same period in 2010. The increase in the effective tax rate is due to the establishment of an $118,000 deferred tax asset valuation allowance related to a California capital loss carryforward, an increase in taxable income and a decrease in permanent tax differences as a percentage of taxable income.
"The quarter proved to be eventful with some expense-related activity including the relocation of the Modesto office, the pay-off of TARP funding, redemption of warrants, completion of funding for the Small Business Lending Fund and conversion to a new Online Banking and Bill Pay service. Following this busy quarter, the Bank ultimately remains well-positioned for growth and stability," stated Daniel J. Doyle, president and CEO for Central Valley Community Bancorp and Central Valley Community Bank.
"The Bank continues to show very strong deposit growth from new customers as a result of offices and personnel added in the past year as well as growth from existing relationships. However, profits continue to be impacted by the decline in loan growth with the deleveraging by both business and consumer customers, cyclical pay down of some agricultural loans and reductions in problem loans. While there was a slight increase in non-performing loans due to one secured borrower and a small OREO asset that has been subsequently sold, classified loans are continuing to show a declining trend," concluded Doyle.
Central Valley Community Bancorp trades on the NASDAQ stock exchange under the symbol CVCY. Central Valley Community Bank, headquartered in Fresno, California, was founded in 1979 and is the sole subsidiary of Central Valley Community Bancorp. Central Valley Community Bank currently operates 17 full service offices in Clovis, Fresno, Kerman, Lodi, Madera, Oakhurst, Prather, Merced, Sacramento, Stockton, Tracy, and Modesto, California. Additionally, the Bank operates Commercial Real Estate Lending, SBA Lending and Agribusiness Lending Departments. Investment services are provided by Investment Centers of America and insurance services are offered through Central Valley Community Insurance Services LLC. Members of Central Valley Community Bancorp's and the Bank's Board of Directors are: Daniel N. Cunningham (Chairman), Sidney B. Cox, Edwin S. Darden, Jr., Daniel J. Doyle, Steven D. McDonald, Louis McMurray, Wanda L. Rogers (Director Emeritus), William S. Smittcamp, and Joseph B. Weirick.
More information about Central Valley Community Bancorp and Central Valley Community Bank can be found at .
- Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained herein that are not historical facts, such as statements regarding the Company's current business strategy and the Company's plans for future development and operations, are based upon current expectations. These statements are forward-looking in nature and involve a number of risks and uncertainties. Such risks and uncertainties include, but are not limited to (1) significant increases in competitive pressure in the banking industry; (2) the impact of changes in interest rates, a decline in economic conditions at the international, national or local level on the Company's results of operations, the Company's ability to continue its internal growth at historical rates, the Company's ability to maintain its net interest margin, and the quality of the Company's earning assets; (3) changes in the regulatory environment; (4) fluctuations in the real estate market; (5) changes in business conditions and inflation; (6) changes in securities markets; and (7) the other risks set forth in the Company's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2010. Therefore, the information set forth in such forward-looking statements should be carefully considered when evaluating the business prospects of the Company.
(1) Average loans do not include non-accrual loans.
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Datum: 19.10.2011 - 14:54 Uhr
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