Press Release: Central Valley Community Bancorp Reports Earnings Results for the Nine Months and Quarter Ended September 30, 2013
17 hours 8 minutes ago - DJNF
Central Valley Community Bancorp Reports Earnings Results for the Nine Months and Quarter Ended September 30, 2013
FRESNO, CA--(Marketwired - Oct 16, 2013) - 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 $6,039,000, and diluted earnings per common share of $0.57 for the nine months ended September 30, 2013, compared to $5,878,000 and $0.58 per diluted common share for the nine months ended September 30, 2012. Net income increased 2.74%, primarily driven by an increase in net interest income in 2013 compared to 2012, increases in non-interest income, and lower provision for credit losses offset by increases in non-interest expense. Non-performing assets decreased $1,549,000 or 15.98% to $8,146,000 at September 30, 2013, compared to $9,695,000 at December 31, 2012. The Company had $124,000 in OREO as of September 30, 2013 compared to none at December 31, 2012. During the nine months ended September 30, 2013, the Company's shareholders' equity increased $9,208,000, or 7.83%. The increase in shareholders' equity was driven by the issuance of stock as part of the Visalia Community Bank acquisition and a net increase in retained earnings, partially offset by a decrease in accumulated other comprehensive income (AOCI). The decrease in AOCI was primarily due to an increase in longer term interest rates, which resulted in a decrease in the market value of the Company's available-for-sale investment securities. The Company also declared and paid $1,502,000 in cash dividends to holders of common stock during the first nine months of 2013 ($0.15 per share).
Net interest income for the first nine months of 2013 was positively impacted by the collection in full of a non-accrual loan of $4,731,000 which resulted in a recovery of foregone interest of $1,484,000 and legal expenses of $51,000.
On July 1, 2013, the Company completed the acquisition of Visalia Community Bank (VCB). With the VCB acquisition, the Company added four new branches in Tulare County. The Company's results of operations for the nine months ended September 30, 2013 include the VCB operations from July 1, 2013. Assets and liabilities acquired included loans of $113,467,000, net of a fair value mark of $4,094,000; investment securities of $14,817,000; bank premises and equipment of $4,263,000; and deposits of $174,206,000. A core deposit intangible of $1,365,000 and goodwill of $6,199,000 were also recorded as part of the transaction. In connection with the acquisition, each share of VCB common stock was converted into the right to receive 2.971 shares of Central Valley Community Bancorp common stock and $26.00 in cash. The Company issued an aggregate of approximately 1.263 million shares of its common stock and aggregate cash of $11.050 million to VCB shareholders. Based on the closing price of the Company's common stock on June 28, 2013 of $10.08 per share, the aggregate consideration paid to VCB common shareholders was approximately $23.78 million.
During the first three quarters of 2013, the Company's total assets increased 22.64%, total liabilities increased 24.90%, and shareholders' equity increased 7.83% compared to December 31, 2012 primarily as a result of the VCB acquisition. Annualized return on average equity (ROE) for the nine months ended September 30, 2013 was 6.83%, compared to 6.91% for the nine months ended September 30, 2012. ROE decreased primarily due to an increase in average equity. Despite the decrease in AOCI at September 30, 2013 noted above, average equity for the nine months of 2013 increased to $117,812,000 compared to $113,358,000 for the same period in 2012. Annualized return on average assets (ROA) was 0.86% and 0.93% for the nine months ended September 30, 2013 and 2012, respectively. The decrease in ROA is primarily due to an increase in average assets as a result of the VCB acquisition.
During the nine months ended September 30, 2013, the Company did not record a provision for credit losses, compared to $500,000 for the nine months ended September 30, 2012. During the nine months ended September 30, 2013, the Company recorded $401,000 in net loan charge-offs, compared to $1,682,000 for the nine months ended September 30, 2012. The net charge-off ratio, which reflects net charge-offs to average loans, was 0.12% for the nine months ended September 30, 2013, compared to 0.55% for the same period in 2012. The loans charged off during the first three quarters of 2013 were previously classified and sufficient funds were held in the allowance for credit losses as of December 31, 2012.
At September 30, 2013, the allowance for credit losses (ALLL) stood at $9,732,000, compared to $10,133,000 at December 31, 2012, a net decrease of $401,000 reflecting the net charge offs. The allowance for credit losses as a percentage of total loans was 1.89% at September 30, 2013, and 2.56% at December 31, 2012. The decrease in the ALLL as a percentage of total loans is primarily due to the inclusion of $108,219,000 former VCB loans that were recorded at fair value in connection with the acquisition and therefore have no related allowance. The Company believes the allowance for credit losses is adequate to provide for probable incurred losses inherent within the loan portfolio at September 30, 2013.
Total non-performing assets were $8,146,000, or 0.75% of total assets as of September 30, 2013 compared to $9,695,000 or 1.09% of total assets as of December 31, 2012. Total non-performing assets as of September 30, 2012 were $10,190,000 or 1.15% of total assets.
The following provides a reconciliation of the change in non-accrual loans for 2013.
Transfer to Returns
Balances Additions to Foreclosed to Balances
December Non-accrual Net Pay Collateral - Accrual Charge September
(Dollars in thousands) 31, 2012 Loans Downs OREO Status Offs 30, 2013
---------- ------------- -------- ------------ --------- ------ -----------
Non-accrual loans:
Commercial and
industrial $ - $ 389 $ (12) $ - $ - $ - $ 377
Real estate 213 1,847 (89) - - - 1,971
Equity loans and lines
of credit 237 672 (15) - - - 894
Consumer - 9 (1) - - - 8
Restructured loans
(non-accruing):
Commercial and
industrial - 2,100 (131) - - (697) 1,272
Real estate 1,362 7 (55) - (920) - 394
Real estate construction
and land development 6,288 285 (5,074) - - - 1,499
Equity loans and lines
of credit 1,595 111 (103) - - - 1,603
Consumer - 5 (1) - - - 4
------ --- -------- ------ ----- ----- ---- ---- -------
Total non-accrual $ 9,695 $ 5,425 $(5,481) $ - $ (920) $(697) $ 8,022
====== === ======== ====== ===== ===== ==== ==== =======
The Company's net interest margin (fully tax equivalent basis) was 4.16% for the nine months ended September 30, 2013, compared to 4.30% for the nine months ended September 30, 2012. The decrease in net interest margin in the period-to-period comparison resulted primarily from a decrease in the yield on the Company's investment portfolio and loan portfolio, partially offset by a decrease in the Company's cost of funds. For the nine months ended September 30, 2013, the effective yield on total earning assets decreased 25 basis points to 4.32% compared to 4.57% for the nine months ended September 30, 2012, while the cost of total interest-bearing liabilities decreased 14 basis points to 0.25% compared to 0.39% for the nine months ended September 30, 2012. The cost of total deposits decreased 9 basis points to 0.16% for the nine months ended September 30, 2013, compared to 0.25% for the nine months ended September 30, 2012. For the nine months ended September 30, 2013, the amount of the Company's average investment securities, including interest-earning deposits in other banks and Federal funds sold, increased $68,278,000 or 19.25% compared to the nine months ended September 30, 2012. The effective yield on average investment securities decreased to 2.52% for the nine months ended September 30, 2013, compared to 2.88% for the nine months ended September 30, 2012. The decrease in yield in the Company's investment securities during 2013 resulted primarily from the purchase of lower yielding investment securities. Total average loans, which generally yield higher rates than investment securities, increased $26,783,000, from $409,090,000 for the nine months ended September 30, 2012 to $435,873,000 for the nine months ended September 30, 2013. The effective yield on average loans was 6.12% for the nine months ended September 30, 2013 and September 30, 2012. Net interest income before the provision for credit losses for the nine months ended September 30, 2013 was $24,259,000, compared to $22,748,000 for the nine months ended September 30, 2012, an increase of $1,511,000 or 6.64%. Net interest income increased as a result of these yield changes, recovery of $1,484,000 of foregone interest, asset mix changes explained above, and increase in average earning assets, partially offset by an increase in interest-bearing liabilities.
(MORE TO FOLLOW) Dow Jones Newswires
October 16, 2013 18:30 ET (22:30 GMT)
AI
