CENTRAL VALLEY COMMUNITY BANCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
(In thousands, except share amounts) 2009 2008
----------- ------------
ASSETS
Cash and due from banks $ 16,879 $ 18,061
Federal funds sold 10,047 1,457
----------- ------------
Total cash and cash equivalents 26,926 19,518
Interest bearing deposits in other banks 100 -
Investment securities:
Available-for-sale investment securities
(Amortized cost of $169,084 and $185,405
at June 30, 2009 and December 31, 2008) 163,642 185,718
Held-to-maturity, at amortized cost 5,701 7,040
Loans, less allowance for credit losses of
$8,592 and $7,223 at June 30, 2009 and
December 31, 2008 483,506 477,015
Bank premises and equipment, net 6,566 6,900
Other real estate owned 2,550 -
Bank owned life insurance 10,808 10,808
Federal Home Loan Bank stock 3,140 3,140
Goodwill 23,773 23,773
Core deposit intangibles 1,819 2,026
Accrued interest receivable and other assets 19,092 16,775
----------- ------------
Total assets $ 747,623 $ 752,713
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 143,416 $ 162,106
Interest bearing 478,303 472,952
----------- ------------
Total deposits 621,719 635,058
Short-term borrowings 15,000 6,368
Long-term debt 14,000 19,000
Junior subordinated deferrable interest
debentures 5,155 5,155
Accrued interest payable and other liabilities 10,996 11,757
----------- ------------
Total liabilities 668,870 677,338
----------- ------------
Shareholders' equity:
Preferred stock, $1,000 per share liquidation
preference: 10,000,000 shares authorized,
7,000 shares outstanding at June 30, 2009 6,578 -
Common stock, no par value; 80,000,000 shares
authorized; 7,664,802 and 7,642,280 shares
outstanding at June 30, 2009 and December 31,
2008 31,193 30,479
Retained earnings 46,247 44,708
Accumulated other comprehensive (loss) income,
net of tax (3,265) 188
----------- ------------
Total shareholders' equity 80,753 75,375
----------- ------------
Total liabilities and shareholders' equity $ 747,623 $ 752,713
=========== ============
CENTRAL VALLEY COMMUNITY BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Six Months
(In thousands, except share and per share amounts) Ended June 30,
--------------------
2009 2008
--------- ----------
INTEREST INCOME:
Interest and fees on loans $ 15,055 $ 12,686
Interest on Federal funds sold 14 128
Interest and dividends on investment securities:
Taxable 4,339 1,917
Exempt from Federal income taxes 1,513 457
--------- ----------
Total interest income 20,921 15,188
--------- ----------
INTEREST EXPENSE:
Interest on deposits 3,281 3,192
Interest on junior subordinated deferrable interest
debentures 77 -
Other 330 421
--------- ----------
Total interest expense 3,688 3,613
--------- ----------
Net interest income before provision for credit
losses 17,233 11,575
PROVISION FOR CREDIT LOSSES 4,417 270
--------- ----------
Net interest income after provision for credit
losses 12,816 11,305
--------- ----------
NON-INTEREST INCOME:
Service charges 1,678 1,646
Appreciation in cash surrender value of bank owned
life insurance 195 124
Loan placement fees 121 55
Net realized gains on sales and calls of investment
securities 511 -
Federal Home Loan Bank stock dividends - 56
Other income 634 631
--------- ----------
Total non-interest income 3,139 2,512
--------- ----------
NON-INTEREST EXPENSES:
Salaries and employee benefits 7,330 5,716
Occupancy and equipment 1,889 1,310
Other expenses 4,750 2,912
--------- ----------
Total non-interest expenses 13,969 9,938
--------- ----------
Income before provision for income taxes 1,986 3,879
PROVISION FOR INCOME TAXES 263 1,259
--------- ----------
Net income $ 1,723 $ 2,620
========= ==========
Preferred stock dividends and accretion (184) -
--------- ----------
Net income available to common shareholders $ 1,539 $ 2,620
========= ==========
Basic earnings per common share $ 0.20 $ 0.44
========= ==========
Weighted average common shares used in basic
computation 7,647,128 5,984,025
========= ==========
Diluted earnings per common share $ 0.20 $ 0.42
========= ==========
Weighted average common shares used in diluted
computation 7,765,519 6,277,015
========= ==========
Cash dividends per share $ - $ .10
========= ==========
CENTRAL VALLEY COMMUNITY BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the three months Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
ended 2009 2009 2008 2008 2008
--------- --------- --------- --------- ---------
(In thousands, except
share and per share
amounts)
Net interest income $ 8,748 $ 8,485 $ 6,969 $ 6,023 $ 5,726
Provision for credit
losses 2,500 1,917 385 635 135
--------- --------- --------- --------- ---------
Net interest income
after provision for
credit losses 6,248 6,568 6,584 5,388 5,591
Total non-interest income 1,401 1,738 1,296 1,382 1,274
Total non-interest
expense 7,129 6,840 6,054 4,984 4,966
Provision for income
taxes 56 207 521 572 584
--------- --------- --------- --------- ---------
Net income $ 464 $ 1,259 $ 1,305 $ 1,214 $ 1,315
========= ========= ========= ========= =========
Net income available to
common shareholders $ 329 $ 1,210 $ 1,305 $ 1,214 $ 1,315
========= ========= ========= ========= =========
Basic earnings per common
share $ 0.04 $ 0.16 $ 0.19 $ 0.20 $ 0.22
========= ========= ========= ========= =========
Weighted average shares
used in basic
computation 7,651,918 7,642,280 6,866,081 6,009,706 5,991,101
========= ========= ========= ========= =========
Diluted earnings per
common share $ 0.04 $ 0.16 $ 0.19 $ 0.19 $ 0.21
========= ========= ========= ========= =========
Weighted average shares
used in diluted
computation 7,760,014 7,770,449 7,046,583 6,255,652 6,277,690
========= ========= ========= ========= =========
CENTRAL VALLEY COMMUNITY BANCORP
SELECTED RATIOS
(Unaudited)
For the three months Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
ended 2009 2009 2008 2008 2008
-------- -------- -------- -------- --------
(Dollars in thousands)
Allowance for credit
losses to total
loans 1.75% 1.57% 1.49% 1.28% 1.16%
Non-performing loans to
total loans 2.95% 2.89% 3.25% 0.40% 0.10%
Total non-performing
assets $ 17,171 $ 16,636 $ 15,750 $ 1,419 $ 366
Net interest margin
(calculated on a
fully tax equivalent
basis) (1) 5.51% 5.23% 4.95% 5.19% 5.04%
Return on average assets
(2) 0.25% 0.66% 0.80% 0.93% 1.04%
Return on average equity
(2) 2.28% 6.13% 7.48% 8.82% 9.71%
(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 Six Months
AVERAGE AMOUNTS Ended June 30, Ended June 30,
-------------------- --------------------
(Dollars in thousands) 2009 2008 2009 2008
--------- --------- --------- ---------
Federal funds sold $ 4,831 $ 11,726 $ 10,136 $ 10,118
Interest bearing deposits in
other banks 2,341 275 1,196 137
Investments 177,901 98,595 181,923 95,699
Loans (1) 476,924 353,402 474,456 346,831
Federal Home Loan Bank stock 3,140 2,065 3,140 2,044
--------- --------- --------- ---------
Earning assets 665,137 466,063 670,851 454,829
Allowance for credit losses (8,005) (4,038) (7,665) (3,986)
Non-accrual loans 13,341 175 13,947 139
Other non-earning assets 73,892 44,883 76,805 44,962
--------- --------- --------- ---------
Total assets $ 744,365 $ 507,083 $ 753,938 $ 495,944
========= ========= ========= =========
Interest bearing deposits $ 469,334 $ 283,638 $ 475,413 $ 279,837
Other borrowings 37,201 38,188 35,528 29,358
--------- --------- --------- ---------
Total interest-bearing
liabilities 506,535 321,826 510,941 309,195
Non-interest bearing demand
deposits 147,788 125,516 153,995 126,897
Non-interest bearing
liabilities 8,505 5,605 7,183 5,452
--------- --------- --------- ---------
Total liabilities 662,828 452,947 672,119 441,544
--------- --------- --------- ---------
Total equity 81,537 54,136 81,819 54,400
--------- --------- --------- ---------
Total liabilities and equity $ 744,365 $ 507,083 $ 753,938 $ 495,944
========= ========= ========= =========
AVERAGE RATES
--------- --------- --------- ---------
Federal funds sold 0.25% 1.94% 0.28% 2.54%
Investments 7.52% 5.50% 7.28% 5.45%
Loans 6.30% 7.02% 6.40% 7.34%
Earning assets 6.54% 6.56% 6.47% 6.81%
Interest bearing deposits 1.28% 2.14% 1.39% 2.29%
Other borrowings 2.20% 2.69% 2.31% 2.88%
Total interest-bearing
liabilities 1.35% 2.20% 1.46% 2.34%
Net interest margin (calculated
on a fully tax equivalent
basis) 5.51% 5.04% 5.37% 5.22%
--------- --------- --------- ---------
(1) Average loans do not include non-accrual loans.
Central Valley Community Bancorp Reports Earnings Results for the Six Months and Second Quarter Ended June 30, 2009
| Source: Central Valley Community Bancorp
FRESNO, CA--(Marketwire - July 14, 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 $1,723,000, and diluted earnings per common share of $0.20 for
the six months ended June 30, 2009, compared to $2,620,000 and $0.42 per
diluted common share for the six months ended June 30, 2008. Earnings for
the first half 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.
Annualized return on average equity (ROE) for the six months ended June 30,
2009 was 4.21%, compared to 9.63% for the same period in 2008. This
decrease is reflective of a decrease in net income and an increase in
capital from retained earnings and the issuance of preferred stock.
Annualized return on average assets (ROA) was 0.46% for the first half of
2009, compared to 1.06% for the same period in 2008. The ROA decrease is
due to the reduction in net income and the increase in average assets.
On November 12, 2008, the Company completed its acquisition of Service 1st
Bancorp (Service 1st) with total assets of $224 million. The Company paid
cash of $5,972,000, inclusive of a $3,500,000 escrow amount related to
litigation on one Service 1st loan, and issued 1,628,397 new shares of
common stock. 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 first half of 2009.
During the first half of 2009, the Company recorded $3,048,000 in net loan
charge offs, compared to $81,000 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. During the first half of 2009, the Company recorded a provision
for credit losses of $4,417,000, compared to $270,000 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. The allowance for credit losses as a percentage of
total loans was 1.75% at June 30, 2009, 1.49% at December 31, 2008, and
1.16% at June 30, 2008.
Total non-performing assets were $17,171,000 as of June 30, 2009 consisting
of $2,550,000 in OREO, $14,524,000 in non-accrual loans, and other assets
of $97,000. Non-accrual loans were 2.95% of total loans at June 30, 2009.
This compares to non-accrual loans of $15,750,000 or 3.25% of total loans
at December 31, 2008, and $366,000 or 0.10% of total loans at June 30,
2008. The Company did not have any OREO at December 31, or June 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 5.37% for the six months ended June 30, 2009, compared to 5.22% 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 six months ended June 30, 2009, the effective yield on
total earning assets decreased 34 basis points to 6.47% compared to 6.81%
for the same period in 2008, while the cost of total interest-bearing
liabilities decreased 88 basis points to 1.46% compared to 2.34% for the
same period in 2008. The effective yield on average investment securities
improved to 6.88% for the first half of 2009 compared to 5.17% for the same
period in 2008, while the effective yield on average loans decreased to
6.47% from 6.81% over the same periods. The cost of total deposits
decreased 53 basis points to 1.05% for the first half of 2009 compared to
1.58% for the same period in 2008. Net interest income for the six months
ended June 30, 2009 was $17,233,000, compared to $11,575,000 for the same
period in 2008, an increase of $5,658,000 or 48.9%. Net interest income
increased as a result of the increased levels of earning assets offset by
the increased levels of interest bearing liabilities. The increases were
primarily from the Service 1st acquisition and also from our organic
growth.
Total average assets for the six months ended June 30, 2009 were
$753,938,000, compared to $495,944,000 for the same period in 2008, an
increase of $257,944,000 or 52.0%. Total average loans were $488,403,000
for the first half of 2009, compared to $346,970,000 for the same period in
2008, representing an increase of $141,433,000 or 40.8%. Total average
investments increased to $193,255,000 for the first half of 2009 from
$105,954,000 for the same period in 2008, representing an increase of
$87,301,000 or 82.4%. Total average deposits increased $222,674,000 or
54.8% to $629,408,000 for the six months ended June 30, 2009, compared to
$406,734,000 for the same period in 2008. Average interest-bearing
deposits increased $195,576,000, or 69.9% and average non-interest bearing
demand deposits increased $27,098,000 or 21.4% for the six months ended
June 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 24.5% for the first half of 2009. The increases
in balance sheet averages during 2009 reflect the acquisition of Service
1st in November 2008 and our organic growth.
Non-interest income for the six months ended June 30, 2009 increased
$627,000, or 25.0% to $3,139,000, compared to $2,512,000 for the same
period in 2008, mainly due to a $511,000 increase in net realized gains on
sales and calls of investment securities, a $71,000 increase in
appreciation of cash surrender value of bank owned life insurance, a
$32,000 increase in income from customer service charges, and a $66,000
increase in loan placement fees, partially offset by a decrease in Federal
Home Loan Bank stock dividends of $56,000. 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 six months ended June 30, 2009 increased
$4,031,000, or 40.6% to $13,969,000 compared to $9,938,000 for the same
period in 2008, primarily due to a $1,614,000 increase in salary and
benefit expenses, a $579,000 increase in occupancy and equipment expenses,
and a $1,838,000 increase in other expenses. The increases in non-interest
expense in the first half of 2009 reflect the addition of employees and
properties in connection with the acquisition of Service 1st and expected
increases in salaries and benefits. In addition, the Company's FDIC
insurance assessments increased significantly to $979,000 for the six
months ended June 30, 2009 compared to $104,000 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 $184,000 during the six months
ended June 30, 2009.
Quarter Ended June 30, 2009
For the quarter ended June 30, 2009, the Company reported unaudited
consolidated net income of $464,000 and diluted earnings per common share
of $0.04, compared to $1,315,000 and $0.21 per diluted share, for the same
period in 2008, and $1,259,000 and $0.16 per diluted share, for the quarter
ended March 31, 2009. The decrease in net income during the second 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 second quarter of 2009 was
2.28%, compared to 9.71% for the same period of 2008. This decrease is
reflective of a decrease in net income and an increase in capital from
retained earnings and the issuance of the Preferred Stock. Annualized
return on average assets was 0.25% for the second quarter of 2009 compared
to 1.04% for the same period in 2008. This decrease is due to the
reduction in net income and the increase in average assets.
In comparing second quarter 2009 to second quarter 2008, average total
loans increased $136,688,000, or 38.7%. During the second quarter of 2009,
the Company recorded a $2,500,000 provision for credit losses, compared to
$135,000 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 second quarter of 2009, the Company recorded $1,574,000 in net
loan charge offs compared to $35,000 for the same period in 2008.
Average total deposits for the second quarter of 2009 increased
$207,968,000 or 50.8% to $617,122,000 compared to $409,154,000 for the same
period of 2008.
The Company's net interest margin (fully tax equivalent basis) increased 47
basis points to 5.51% for the three months ended June 30, 2009, from 5.04%
for the three months ended June 30, 2008. Net interest income increased
$3,022,000 or 52.8% to $8,748,000 for the second quarter of 2009, compared
to $5,726,000 for the same period in 2008. The increases in net interest
margin and in net interest income are primarily due to an 85 basis point
reduction in the cost of interest bearing liabilities to 1.35% for the
quarter ended June 30, 2009 compared to 2.20% for the same period in 2008,
while the yield on interest earning assets remained relatively unchanged
comparing the same periods. Over the same periods, the cost of total
deposits decreased 51 basis points to 0.97% compared to 1.48% in 2008.
Non-interest income increased $127,000 to $1,401,000 for the second quarter
of 2009 compared to $1,274,000 for the same period in 2008, driven
primarily by an increase in gains on sales of investment securities and
loan placement fees. Non-interest expense increased $2,163,000, or 43.6%
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.
"While we remained profitable, the disappointing earnings in the second
quarter is a reflection of the increased provision for credit losses in
light of the overall weak economy and the potential impact it may have on
our borrowing customers during this economic cycle and the significant
increase in the FDIC insurance premiums from both the increase in regular
assessment rates as well as the special assessment rate placed on all FDIC
insured institutions in the second quarter," stated Daniel J. Doyle,
President and CEO of Central Valley Community Bancorp and Central Valley
Community Bank. "These items had a significant impact on the net income
of the Company. However, the good news is reflected in a significant
increase in net interest income and the net interest margin which is 5.51%
for the second quarter and represents an increase from the previous
quarter. While non-performing assets are significantly higher than
historical norms for the Company, it is important to note our level of
non-performing assets is below that of many of our peers in California and
we had very slight increases during the second quarter. The Company is
aggressively working to reduce these problem assets through various loss
mitigation and loan workout efforts," 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
15 offices in Clovis, Fresno, Kerman, Lodi, Madera, Oakhurst, Prather,
Sacramento, Stockton, Tracy, and a loan production office in Modesto,
California. A new office (the Bank's 16th branch) is planned to open in
Merced, California during the third quarter of 2009. 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.