CENTRAL VALLEY COMMUNITY BANCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
------------- -------------
(In thousands, except share amounts) 2009 2008
------------- -------------
ASSETS
Cash and due from banks $ 18,601 $ 18,061
Federal funds sold 33,922 1,457
------------- -------------
Total cash and cash equivalents 52,523 19,518
Available-for-sale investment securities
(Amortized cost of $164,654 at September 30,
2009 and $185,405 at December 31, 2008) 166,395 185,718
Held-to-maturity, at amortized cost 3,430 7,040
Loans, less allowance for credit losses of
$10,027 at September 30, 2009 and $7,223 at
December 31, 2008 470,821 477,015
Bank premises and equipment, net 6,518 6,900
Other real estate owned 3,102 -
Bank owned life insurance 10,900 10,808
Federal Home Loan Bank stock 3,140 3,140
Goodwill 23,773 23,773
Core deposit intangibles 1,716 2,026
Accrued interest receivable and other assets 16,426 16,775
------------- -------------
Total assets $ 758,744 $ 752,713
============= =============
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing $ 152,255 $ 162,106
Interest bearing 485,808 472,952
------------- -------------
Total deposits 638,063 635,058
Short-term borrowings 5,000 6,368
Long-term debt 14,000 19,000
Junior subordinated deferrable interest
debentures 5,155 5,155
Accrued interest payable and other liabilities 11,104 11,757
------------- -------------
Total liabilities 673,322 677,338
------------- -------------
Commitments and contingencies
Shareholders’ equity:
Preferred stock, no par value, $1,000 per
share liquidation preference; authorized -
10,000,000 shares; issued and outstanding
- 7,000 shares and none at September 30,
2009 and December 31, 2008 6,601 -
Common stock, no par value; 80,000,000
authorized; issued and outstanding -
7,664,802 at September 30, 2009 and
7,642,280 at December 31, 2008 31,260 30,479
Retained earnings 46,516 44,708
Accumulated other comprehensive income, net
of tax 1,045 188
------------- -------------
Total shareholders’ equity 85,422 75,375
------------- -------------
Total liabilities and
shareholders’ equity $ 758,744 $ 752,713
============= =============
CENTRAL VALLEY COMMUNITY BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Nine Months
(In thousands, except share and per share amounts) Ended September 30,
---------------------
2009 2008
--------- ----------
INTEREST INCOME:
Interest and fees on loans $ 22,715 $ 18,851
Interest on Federal funds sold 29 206
Interest and dividends on investment securities:
Taxable 6,087 3,126
Exempt from Federal income taxes 2,292 681
--------- ----------
Total interest income 31,123 22,864
--------- ----------
INTEREST EXPENSE:
Interest on deposits 4,650 4,580
Interest on junior subordinated deferrable
interest debentures 105 -
Other 481 686
--------- ----------
Total interest expense 5,236 5,266
--------- ----------
Net interest income before provision for
credit losses 25,887 17,598
PROVISION FOR CREDIT LOSSES 7,650 905
--------- ----------
Net interest income after provision for
credit losses 18,237 16,693
--------- ----------
NON-INTEREST INCOME:
Service charges 2,578 2,473
Appreciation in cash surrender value of bank
owned life insurance 291 188
Loan placement fees 164 74
Net realized gains on sales and calls of
investment securities 748 156
Federal Home Loan Bank stock dividends 7 88
Other income 959 915
--------- ----------
Total non-interest income 4,747 3,894
--------- ----------
NON-INTEREST EXPENSES:
Salaries and employee benefits 10,781 8,491
Occupancy and equipment 2,866 2,023
Loss on sale of assets 67 -
Other expenses 7,201 4,408
--------- ----------
Total non-interest expenses 20,915 14,922
--------- ----------
Income before provision for income
taxes 2,069 5,665
PROVISION FOR INCOME TAXES (33) 1,831
--------- ----------
Net income 2,102 3,834
--------- ----------
Preferred stock dividends and accretion (295) -
--------- ----------
Net income available to common
shareholders $ 1,807 $ 3,834
========= ==========
Basic earnings per common share $ 0.24 $ 0.64
========= ==========
Weighted average common shares used in basic
computation 7,653,084 5,992,647
========= ==========
Diluted earnings per common share $ 0.23 $ 0.61
========= ==========
Weighted average common shares used in diluted
computation 7,771,048 6,270,591
========= ==========
Cash dividends per share $ - $ 0.10
========= ==========
CENTRAL VALLEY COMMUNITY BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the three months Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30,
ended 2009 2009 2009 2008 2008
--------- ---------- ---------- ---------- ----------
(In thousands,
except share and
per share amounts)
Net interest income $ 8,654 $ 8,748 $ 8,485 $ 6,969 $ 6,023
Provision for credit
losses 3,233 2,500 1,917 385 635
--------- ---------- ---------- ---------- ----------
Net interest
income after
provision for
credit losses 5,421 6,248 6,568 6,584 5,388
Total non-interest
income 1,608 1,401 1,738 1,296 1,382
Total non-interest
expense 6,946 7,129 6,840 6,054 4,984
Provision for income
taxes (296) 56 207 521 572
--------- ---------- ---------- ---------- ----------
Net income $ 379 $ 464 $ 1,259 $ 1,305 $ 1,214
========= ========== ========== ========== ==========
Net income available
to common
shareholders $ 268 $ 329 $ 1,210 $ 1,305 $ 1,214
========= ========== ========== ========== ==========
Basic earnings per
share $ 0.04 $ 0.04 $ 0.16 $ 0.19 $ 0.20
========= ========== ========== ========== ==========
Weighted average
shares used in
basic
computation 7,664,802 7,651,918 7,642,280 6,866,081 6,009,706
========= ========== ========== ========== ==========
Diluted earnings per
share $ 0.03 $ 0.04 $ 0.16 $ 0.19 $ 0.19
========= ========== ========== ========== ==========
Weighted average
shares used in
diluted
computation 7,781,789 7,760,014 7,770,449 7,046,583 6,255,652
========= ========== ========== ========== ==========
CENTRAL VALLEY COMMUNITY BANCORP
SELECTED RATIOS
(Unaudited)
As of and for the three Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30,
months ended 2009 2009 2009 2008 2008
-------- -------- -------- -------- --------
(Dollars in thousands)
Allowance for credit
losses to total loans 2.09% 1.75% 1.57% 1.49% 1.28%
Nonperforming loans to
total loans 2.46% 2.95% 2.89% 3.25% 0.40%
Total nonperforming
assets $ 15,002 $ 17,171 $ 16,636 $ 15,750 $ 1,419
Net interest margin
(calculated on a fully
tax equivalent basis)(1) 5.43% 5.51% 5.23% 4.95% 5.19%
Return on average assets(2) 0.20% 0.25% 0.66% 0.80% 0.93%
Return on average equity(2) 1.86% 2.28% 6.13% 7.48% 8.82%
(1) Net Interest Margin is computed by dividing annualized quarterly net
interest income by quarterly average interest-bearing assets.
(2) Computed by annualizing quarterly net income.
CENTRAL VALLEY COMMUNITY BANCORP
AVERAGE BALANCES AND RATES
(Unaudited)
For the Three Months For the Nine Months
AVERAGE AMOUNTS Ended September 30, Ended September 30,
-------------------- --------------------
(Dollars in thousands) 2009 2008 2009 2008
--------- --------- --------- ---------
Federal funds sold $ 19,496 $ 16,017 $ 13,290 $ 12,099
Interest bearing deposits in
other banks 5 4,674 795 1,661
Investments 170,189 101,665 178,025 97,702
Loans (1) 474,354 351,239 474,414 348,318
Federal Home Loan Bank stock 3,140 2,095 3,140 2,061
--------- --------- --------- ---------
Earning assets 667,184 475,690 669,664 461,841
Allowance for credit losses (8,749) (4,142) (8,030) (4,038)
Non-accrual loans 11,907 1,382 13,267 554
Other non-earning assets 75,324 46,579 76,262 45,490
--------- --------- --------- ---------
Total assets $ 745,666 $ 519,509 $ 751,163 $ 503,847
========= ========= ========= =========
Interest bearing deposits $ 480,802 $ 292,879 $ 477,213 $ 284,174
Other borrowings 24,916 38,900 31,952 32,562
--------- --------- --------- ---------
Total interest-bearing
liabilities 505,718 331,779 509,165 316,736
Non-interest bearing demand
deposits 150,141 127,217 152,702 127,033
Non-interest bearing
liabilities 6,637 5,453 7,026 5,458
--------- --------- --------- ---------
Total liabilities 662,496 464,449 668,893 449,227
--------- --------- --------- ---------
Total equity 83,170 55,060 82,270 54,620
--------- --------- --------- ---------
Total liabilities and equity $ 745,666 $ 519,509 $ 751,163 $ 503,847
========= ========= ========= =========
AVERAGE RATES
Federal funds sold 0.31% 1.91% 0.29% 2.27%
Investments 6.88% 5.95% 7.16% 5.62%
Loans 6.41% 6.96% 6.40% 7.22%
Earning assets 6.36% 6.58% 6.43% 6.73%
Interest bearing deposits 1.13% 1.88% 1.30% 2.15%
Other borrowings 2.85% 2.70% 2.45% 2.81%
Total interest-bearing
liabilities 1.21% 1.98% 1.37% 2.22%
Net interest margin (calculated
on a fully tax equivalent
basis) 5.43% 5.19% 5.39% 5.21%
--------- --------- --------- ---------
(1) Average loans do not include non-accrual loans.
Central Valley Community Bancorp Reports Earnings Results for the Nine Months and Third Quarter Ended September 30, 2009
| Source: Central Valley Community Bancorp
FRESNO, CA--(Marketwire - October 20, 2009) - 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 $2,102,000, and diluted earnings per common share of $0.23 for
the nine months ended September 30, 2009, compared to $3,834,000 and $0.61
per diluted common share for the nine months ended September 30, 2008.
Earnings for the first three quarters of 2009 were negatively impacted by
the overall weak economy, the provision for credit losses, and a
significant increase in FDIC insurance assessments for all banks, partially
offset by gains from sales and calls of investment securities.
As a result of the merger with Service 1st Bancorp (Service 1st) in
November 2008, comparisons of performance for the periods September 30,
2008 and September 30, 2009 reported in this press release will reflect
both operating performance changes for the Company and changes resulting
from the merger. On November 12, 2008, the Company completed its
acquisition of Service 1st with total assets of $224 million. In
conjunction with this acquisition, the Company added full-service branches
in Stockton, Lodi and Tracy, $192 million in deposits and $123 million in
loans. In connection with the transaction, Service 1st Bank was merged
with and into Central Valley Community Bank. Our results of operations
include the operating results of the former Service 1st for the three month
and nine month periods ended September 30, 2009.
Annualized return on average equity (ROE) for the nine months ended
September 30, 2009 was 3.41%, compared to 9.36% for the same period in
2008. The decrease in this ratio reflects both a decrease in net income
and an increase in capital from the Service 1st merger, the issuance of
preferred stock, and an increase in retained earnings. Annualized return
on average assets (ROA) was 0.37% for the first three quarters of 2009,
compared to 1.01% for the same period in 2008. The ROA decrease is due to
the reduction in net income and the increase in average assets.
During the nine months ended September 30, 2009, the Company recorded a
provision for credit losses of $7,650,000, compared to $905,000 for the
same period in 2008. The increase in 2009 is primarily a result of
maintaining an adequate allowance for credit losses during the current
economic downturn affecting borrowers in our market area as well as an
increase in the level of outstanding loans. At September 30, 2009, the
allowance for credit losses stood at $10,027,000, compared to $7,223,000 at
September 30, 2008. The allowance for credit losses as a percentage of
total loans was 2.09% at September 30, 2009, 1.49% at December 31, 2008,
and 1.28% at September 30, 2008. During the nine months ended September
30, 2009, the Company recorded $4,846,000 in net loan charge offs, compared
to $259,000 for the same period in 2008. The increase in 2009 loan charge
offs was primarily due to ongoing challenges in the loan portfolio due to
the economic environment in California's Central Valley.
Total non-performing assets were $15,002,000 as of September 30, 2009
consisting of $11,835,000 in non-accrual loans, $3,102,000 in OREO, and
other assets of $65,000. Non-accrual loans were 2.46% of total loans at
September 30, 2009. This compares to non-accrual loans of $15,750,000 or
3.25% of total loans at December 31, 2008, and $1,419,000 or 0.40% of total
loans at September 30, 2008. The Company did not have any OREO at December
31, or September 30, 2008. The Company believes the allowance for credit
losses is adequate to provide for probable losses inherent within the loan
portfolio when considered with the government guarantees, strong collateral
positions, and the fair market value adjustments for the Service 1st loans
recorded in connection with the merger.
The Company's annualized net interest margin (fully tax equivalent basis)
was 5.39% for the nine months ended September 30, 2009, compared to 5.21%
for the same period in 2008. Despite a 500 basis point reduction in
interest rates by the Federal Reserve Bank since September 2007, our net
interest margin increased due to our ability to lower our cost of interest
bearing liabilities more than the decrease in the yield on our
interest-earning assets. For the nine months ended September 30, 2009, the
effective yield on total earning assets decreased 30 basis points to 6.43%
compared to 6.73% for the same period in 2008, while the cost of total
interest-bearing liabilities decreased 85 basis points to 1.37% compared to
2.22% for the same period in 2008. The effective yield on average
investment securities improved to 6.66% for the nine months ended September
30, 2009 compared to 5.22% for the same period in 2008, while the effective
yield on average loans decreased to 6.40% from 7.22% over the same periods.
The cost of total deposits decreased 50 basis points to 0.99% for the nine
months ended September 30, 2009 compared to 1.49% for the same period in
2008. Net interest income for the nine months ended September 30, 2009 was
$25,887,000, compared to $17,598,000 for the same period in 2008, an
increase of $8,289,000 or 47.1%. Net interest income increased as a result
of these yield changes combined with increased levels of earning assets
offset by the increased levels of interest bearing liabilities. The
increases in average assets and liabilities were primarily from the Service
1st acquisition.
Total average assets for the nine months ended September 30, 2009 were
$751,163,000, compared to $503,847,000 for the same period in 2008, an
increase of $247,316,000 or 49.1%. Total average loans were $487,681,000
for the first three quarters of 2009, compared to $348,872,000 for the same
period in 2008, representing an increase of $138,809,000 or 39.8%. Total
average investments increased to $192,110,000 for the nine months ended
September 30, 2009 from $111,462,000 for the same period in 2008,
representing an increase of $80,648,000 or 72.4%. Total average deposits
increased $218,708,000 or 53.2% to $629,915,000 for the nine months ended
September 30, 2009, compared to $411,207,000 for the same period in 2008.
Average interest-bearing deposits increased $193,039,000, or 67.9% and
average non-interest bearing demand deposits increased $25,669,000 or 20.2%
for the nine months ended September 30, 2009 compared to the same period in
2008. The Company's ratio of average non-interest bearing deposits to
total deposits continued to be above industry averages at 24.2% for the
nine months ended September 30, 2009. The increases in balance sheet
averages during 2009 were driven primarily by the acquisition of Service
1st in November 2008.
Non-interest income for the nine months ended September 30, 2009 increased
$853,000, or 21.9% to $4,747,000, compared to $3,894,000 for the same
period in 2008, mainly due to a $592,000 increase in net realized gains on
sales and calls of investment securities, a $105,000 increase in income
from customer service charges, a $103,000 increase in appreciation of cash
surrender value of bank owned life insurance, and a $90,000 increase in
loan placement fees, partially offset by a decrease in Federal Home Loan
Bank stock dividends of $81,000. The net realized gain on investment
securities related to certain investment securities acquired from Service
1st, the value of which had been marked to market at the time of the
Service 1st acquisition. Certain of those securities were subsequently
called at par value or sold during the first half of 2009 which contributed
to the gains.
Non-interest expense for the nine months ended September 30, 2009 increased
$5,993,000, or 40.2% to $20,915,000 compared to $14,922,000 for the same
period in 2008, primarily due to a $2,290,000 increase in salary and
benefit expenses, a $843,000 increase in occupancy and equipment expenses,
and a $2,793,000 increase in other expenses. The increases in non-interest
expense in the nine months ended September 30, 2009 reflect the addition of
employees and properties in connection with the acquisition of Service 1st
, relocation of an office from an in-store branch to a stand alone
facility, opening new office in Merced, and expected increases in salaries
and benefits. In addition, the Company's FDIC insurance assessments
increased significantly to $1,251,000 for the nine months ended September
30, 2009 compared to $168,000 for the same period in 2008. Included in the
2009 FDIC insurance assessment is a special assessment of $343,000 which
was incurred in the second quarter of 2009.
On January 30, 2009, the Company entered into a Letter Agreement with the
United States Department of the Treasury (U.S. Treasury) under the Capital
Purchase Program, and issued and sold 7,000 shares of the Company's
Series A Fixed Rate Cumulative Perpetual Preferred Stock (Preferred Stock)
and a warrant to purchase 158,133 shares of the Company's common stock, no
par value, for an aggregate purchase price of $7,000,000 in cash. The
Company accrued preferred stock dividends to the U.S. Treasury and
accretion of the warrants in the amount of $295,000 during the nine months
ended September 30, 2009.
Quarter Ended September 30, 2009
For the quarter ended September 30, 2009, the Company reported unaudited
consolidated net income of $379,000 and diluted earnings per common share
of $0.03, compared to $1,214,000 and $0.19 per diluted share, for the same
period in 2008, and $464,000 and $0.04 per diluted share, for the quarter
ended June 30, 2009. The decrease in net income during the third quarter
of 2009 is primarily due to an increase in the provision for credit losses
and a significant increase in our FDIC insurance assessments.
Annualized return on average equity for the third quarter of 2009 was
1.86%, compared to 8.82% for the same period of 2008. This decrease is
reflective of a decrease in net income and an increase in capital from the
Service 1st acquisition, the issuance of the Preferred Stock, and retained
earnings. Annualized return on average assets was 0.20% for the third
quarter of 2009 compared to 0.93% for the same period in 2008. This
decrease is due to the reduction in net income and the increase in average
assets.
In comparing third quarter 2009 to third quarter 2008, average total loans
increased $133,640,000, or 37.9%. During the third quarter of 2009, the
Company recorded a $3,233,000 provision for credit losses, compared to
$635,000 for the same period in 2008. The increase in 2009 is principally
due to further deterioration in the asset quality of the loan portfolio and
our assessment of the overall adequacy of the allowance for credit losses.
During the third quarter of 2009, the Company recorded $1,798,000 in net
loan charge offs compared to $178,000 for the same period in 2008. The net
charge-off ratio, which reflects net charge-offs to average loans, was
0.37% for the quarter ended September 30, 2009 compared to 0.05% for the
quarter ended September 30, 2008.
Average total deposits for the third quarter of 2009 increased $210,847,000
or 50.2% to $630,943,000 compared to $420,096,000 for the same period of
2008.
The Company's net interest margin (fully tax equivalent basis) increased 24
basis points to 5.43% for the three months ended September 30, 2009, from
5.19% for the three months ended September 30, 2008. Net interest income,
before provision for credit losses, increased $2,631,000 or 43.7% to
$8,654,000 for the third quarter of 2009, compared to $6,023,000 for the
same period in 2008. The increases in net interest margin and in net
interest income are primarily due to an 77 basis point reduction in the
cost of interest bearing liabilities to 1.21% for the quarter ended
September 30, 2009 compared to 1.98% for the same period in 2008, while the
yield on interest earning assets decreased 22 basis point to 6.36% compared
to 6.58% for the quarters ended September 30, 2009 and 2008, respectively.
Over the same periods, the cost of total deposits decreased 45 basis points
to 0.86% compared to 1.31% in 2008.
Non-interest income increased $226,000 or 16.4% to $1,608,000 for the third
quarter of 2009 compared to $1,382,000 for the same period in 2008, driven
primarily by an increase in gains on sales and calls of investment
securities, service charge income, appreciation in cash surrender value of
bank owned life insurance, and loan placement fees. Non-interest expense
increased $1,962,000, or 39.4% for the same periods mainly due to increases
in salary and occupancy expenses related to the Service 1st acquisition,
FDIC insurance assessments and other expenses.
"During the third quarter we felt it was prudent to significantly increase
our provision for credit losses to accommodate write downs of some loans
during the quarter, as well as building the reserve for future unforeseen
credit losses in light of the current economy and the impact it may have on
our borrowing customers during this economic cycle. While we remained
profitable, these additions to the provision for credit losses and the
higher FDIC premiums compared to the previous year due to assessment rate
changes that affect all banks, and the significant increase in deposits,
had significant impact on current quarter earnings," stated Daniel J.
Doyle, President and CEO of Central Valley Community Bancorp and Central
Valley Community Bank. "The company continues to increase its capital
ratios and remains well capitalized, has seen an improvement by lower
nonperforming loans, and continues to show a very strong net interest
margin. The Company continues to focus on aggressively working to reduce
the problem assets through various loss mitigation and loan work out
efforts, while supporting our credit worthy customers and communities as we
all work through this difficult economic cycle," 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
16 offices in Clovis, Fresno, Kerman, Lodi, Madera, Merced, Oakhurst,
Prather, Sacramento, Stockton, Tracy, and a loan production office in
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 www.cvcb.com.
Forward-looking Statements -- 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, 2008.
Therefore, the information set forth in such forward-looking statements
should be carefully considered when evaluating the business prospects of
the Company.