North Valley Bancorp (NASDAQ: NOVB), a bank holding company with
$887 million in assets, today reported results for the quarter
ended March 31, 2010. North Valley Bancorp ("the Company") is the
parent company for North Valley Bank ("NVB").
The Company reported a net loss for the quarter ended March 31,
2010 of $312,000, or $0.04 per diluted share compared to a net loss
for the quarter ended March 31, 2009 of $3,107,000, or $0.41 per
diluted share. "We are pleased with the progress made in the first
quarter despite expenses associated with the sale of foreclosed
real estate that added to a small loss for the quarter. We just
completed our capital raise of $40 million through a private
placement in April and are positioned well going forward," stated
Mike Cushman, President and CEO.
The Company recorded a provision for credit losses in the amount
of $1,000,000 for the quarter ended March 31, 2010 compared to a
provision for credit losses of $7,000,000 for the quarter ended
March 31, 2009. The allowance for loan and lease losses at March
31, 2010 was $17,708,000, or 3.05% of total loans, compared to
$18,539,000, or 3.08% of total loans, at December 31, 2009 and
$15,887,000, or 2.40% of total loans, at March 31, 2009.
At March 31, 2010, total assets were $887,386,000, a decrease of
$16,463,000, or 1.8%, from $903,849,000 at March 31, 2009. The loan
portfolio totaled $580,929,000 at March 31, 2010, a decrease of
$79,724,000, or 12.1%, compared to March 31, 2009. The loan to
deposit ratio at March 31, 2010 was 73.6% as compared to 84.0% at
March 31, 2009, and 76.5% at December 31, 2009. Total deposits grew
$2,500,000, or 0.3%, to $789,332,000 at March 31, 2010 compared to
$786,832,000 at March 31, 2009. Available-for-sale investment
securities and Federal funds sold increased $43,521,000 and
$25,950,000, respectively, from March 31, 2009 to March 31, 2010
primarily as a result of the decrease in loans. When compared to
December 31, 2009, total assets increased $3,024,000 from
$884,362,000, driven by an increase in deposits of $1,523,000 from
$787,809,000, while loans decreased by $21,488,000 from
$602,417,000. Available-for-sale investment securities decreased
$5,300,000 from December 31, 2009 to March 31, 2010, while Federal
funds sold increased $27,615,000 from December 31, 2009 to March
31, 2010 primarily as a result of the decrease in loans.
On April 22, 2010, the Company completed a $40 million capital
raise through a private placement to further strengthen the
Company's and Bank's capital levels and ratios. Set forth below is
a table showing the actual capital ratios of the Company and North
Valley Bank at March 31, 2010 and the pro forma effect of the
private placement on such capital ratios, assuming net proceeds of
$37,500,000, full conversion of the Series A Preferred Stock into
shares of common stock (upon receipt of shareholder approval for
such conversion), and contribution of the entire net proceeds to
the capital of North Valley Bank.
(Dollars in thousands) Actual Pro Forma
3/31/2010 3/31/2010
---------------- ------------------
Capital Ratio Capital Ratio
-------- ------- --------- -------
Company:
Tier 1 capital (to average
assets) $ 61,560 7.10% $ 111,560 12.34%
Tier 1 capital (to risk
weighted assets) $ 61,560 8.84% $ 111,560 16.02%
Total capital (to risk weighted
assets) $ 83,679 12.02% $ 121,179 17.40%
Bank:
Tier 1 capital (to average
assets) $ 78,094 9.01% $ 115,594 12.78%
Tier 1 capital (to risk
weighted assets) $ 78,094 11.22% $ 115,594 16.60%
Total capital (to risk weighted
assets) $ 86,910 12.48% $ 124,410 17.87%
Credit
Quality
The overall level of nonperforming loans (defined as nonaccrual
loans and loans 90 days or more past due and still accruing
interest) decreased $723,000 to $45,875,000 at March 31, 2010 from
$46,598,000 at December 31, 2009. During the first quarter of 2010,
the Company added sixteen loans with aggregate amounts outstanding
of $5,560,000 to nonperforming loans. These additions were offset
by reductions in nonperforming loans totaling $6,283,000 due
primarily to transfers to OREO of eight properties totaling
$2,825,000, charge-offs of $1,795,000, and collections received on
certain loans. Nonperforming loans as a percentage of total loans
were 7.90% at March 31, 2010, compared to 3.02% at March 31, 2009,
and 7.74% at December 31, 2009.
Nonperforming assets (nonperforming loans and OREO) totaled
$58,873,000 at March 31, 2010, an increase of $33,004,000 from the
March 31, 2009 balance of $25,869,000, and a $102,000 decrease from
the December 31, 2009 balance of $58,975,000. Nonperforming assets
as a percentage of total assets were 6.63% at March 31, 2010
compared to 2.86% at March 31, 2009 and 6.67% at December 31,
2009.
The Company's OREO properties increased $621,000 to $12,998,000
at March 31, 2010 from $12,377,000 at December 31, 2009. The
increase in OREO was due to the transfer of eight properties
totaling $2,847,000, which was partially offset by the sale of five
properties for a total of $1,432,000. The Company recorded a loss
on sale for those five properties totaling $256,000, and recorded a
write-down of OREO properties during the quarter ended March 31,
2010 of $538,000.
Gross loan and lease charge offs for the first quarter of 2010
were $1,795,000 and recoveries totaled $182,000 resulting in net
charge offs of $1,613,000. Gross loan and lease charge offs for the
first quarter of 2009 were $2,635,000 and recoveries totaled
$195,000 resulting in net charge offs of $2,440,000.
During the first quarter of 2010, the Company identified fifteen
loans totaling $5,560,000 as nonaccrual loans. The addition was
centered in three loans totaling $2,920,000. The largest loan of
this group is a commercial real estate loan in the amount of
$1,069,000 for a multi-tenant mixed-use property located in Shasta
County. The Company has completed an internal evaluation of the
property and established a specific reserve of $372,000. The second
relationship in this group is a commercial real estate loan in the
amount of $967,000 for an owner occupied multi-tenant building loan
located in Sacramento County. The Company has completed an internal
evaluation of the property and established a specific reserve of
$287,000. The third loan in this group is an SBA 504 loan for a
single-tenant office building in the amount of $884,000 located in
Sacramento County. The Company has completed an internal evaluation
of the property and no specific reserve has been established for
this loan. The remaining twelve loans in this group that were
placed on nonaccrual during the first quarter of 2010 total
$2,640,000 and specific reserves totaling $495,000 have been
established.
Operating
Results
Net interest income, which represents the Company's largest
component of revenues and is the difference between interest earned
on loans and investments and interest paid on deposits and
borrowings, decreased $766,000, or 9.4%, for the three months ended
March 31, 2010 compared to the same period in 2009. Interest income
decreased by $1,544,000, primarily due to both the lower yield on
earning assets and the decrease in the average loan balances and
secondarily due to foregone interest income of $585,000 related to
loans currently on nonaccrual status. Offsetting this was a
decrease in interest expense of $778,000, or 23.5%, due to a
decrease in the rates paid on deposits for the quarter ended March
31, 2010 compared to the same period in 2009. Average loans
decreased $89,327,000 in the first quarter of 2010 compared to the
first quarter of 2009, and the yield on the loan portfolio
decreased 37 basis points to 5.91%. Overall, average earning assets
increased $12,483,000 in the first quarter of 2010 compared to the
first quarter of 2009. Average yields on earning assets decreased
88 basis points from the quarter ended March 31, 2009, to 5.06% for
the quarter ended March 31, 2010 while the average rate paid on
interest-bearing liabilities decreased by 55 basis points to 1.55%.
The Company's net interest margin for the quarter ended March 31,
2010 was 3.78%, a decrease of 45 basis points from the margin of
4.23% for the first quarter in 2009 but an increase of 10 basis
points from the 3.68% net interest margin for the linked quarter
ended December 31, 2009. "We continue to have an excellent low cost
of funds, but our net interest margin has been impacted by the
reduction in our loan book and because we continue to maintain high
on-balance sheet liquidity which has reduced our yield on earning
assets," stated Kevin R. Watson, Chief Financial Officer.
Noninterest income for the quarter ended March 31, 2010
decreased $152,000, or 4.8%, to $3,012,000 compared to $3,164,000
for the same period in 2009. Service charges on deposits decreased
by $47,000 to $1,481,000 for the first quarter of 2010 compared to
$1,528,000 for the same period in 2009. Other fees and charges
increased by $67,000 to $1,031,000 for the first quarter of 2010
compared to $964,000 for the first quarter of 2009. Other
noninterest income decreased $48,000, to $624,000 for the quarter
ended March 31, 2010 compared to $672,000 for the same period in
2009. The Company recorded a loss on the sale of assets of $124,000
for the first quarter of 2010 due to the closure of its Fairfield
office.
Noninterest expense decreased $316,000, or 3.1%, to $10,019,000
for the first quarter of 2010 from $10,335,000 for the first
quarter in 2009. Salaries and employee benefits decreased $777,000,
for the first quarter of 2010 compared to the first quarter of 2009
due primarily to reductions in staffing. Occupancy and furniture
and equipment expense decreased $73,000 for the first quarter of
2010 compared to the first quarter of 2009 due to a decrease in
depreciation and rent expense. OREO expense decreased $148,000 to
$850,000, for the first quarter of 2010 compared to $998,000 for
the same period in 2009. Other expense increased $682,000 to
$3,725,000 compared to $3,043,000 for the same period in 2009. The
primary cause of the increase was an increase in professional fees
of $365,000 driven by an external loan review and legal expenses
and an increase in FDIC insurance premiums of $295,000.
The benefit for income taxes for the quarter ended March 31,
2010 was $353,000, resulting in an effective benefit rate of 53.1%,
compared to a benefit for income taxes of $2,956,000, or an
effective benefit rate of 48.8%, for the quarter ended March 31,
2009.
North Valley Bancorp is a bank holding company headquartered in
Redding, California. Its subsidiary, North Valley Bank ("NVB"),
operates twenty-five commercial banking offices in Shasta,
Humboldt, Del Norte, Mendocino, Yolo, Sonoma, Placer and Trinity
Counties in Northern California, including two in-store supermarket
branches and six Business Banking Centers. North Valley Bancorp,
through NVB, offers a wide range of consumer and business banking
deposit products and services including internet banking and cash
management services. In addition to these depository services, NVB
engages in a full complement of lending activities including
consumer, commercial and real estate loans. Additionally, NVB has
SBA Preferred Lender status and provides investment services to its
customers. Visit the Company's website address at www.novb.com for
more information.
Cautionary Statement: This release
contains certain forward-looking statements that are subject to
risks and uncertainties that could cause actual results to differ
materially from those stated herein. Management's assumptions and
projections are based on their anticipation of future events and
actual performance may differ materially from those projected.
Risks and uncertainties which could impact future financial
performance include, among others, (a) competitive pressures in the
banking industry; (b) changes in the interest rate environment; (c)
general economic conditions, either nationally, regionally or
locally, including fluctuations in real estate values; (d) changes
in the regulatory environment; (e) changes in business conditions
or the securities markets and inflation; (f) possible shortages of
gas and electricity at utility companies operating in the State of
California, and (g) the effects of terrorism, including the events
of September 11, 2001, and thereafter, and the conduct of the war
on terrorism by the United States and its allies. Therefore, the
information set forth herein, together with other information
contained in the periodic reports filed by the Company with the
Securities and Exchange Commission, should be carefully considered
when evaluating the business prospects of the Company. North Valley
Bancorp undertakes no obligation to update any forward-looking
statements contained in this release, except as required by
law.
NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
Three Months Ended
March 31,
Statement of Income Data 2010 2009 $ Change % Change
--------- --------- --------- ---------
Interest income:
Loans and leases (including
fees) $ 8,616 $ 10,536 $ (1,920) (18.2%)
Investment securities 1,227 874 353 40.4%
Federal funds sold and other 32 9 23 255.6%
--------- --------- --------- --------
Total interest income 9,875 11,419 (1,544) (13.5%)
--------- --------- --------- --------
Interest expense:
Deposits 2,019 2,768 (749) (27.1%)
Subordinated debentures 514 542 (28) (5.2%)
Other borrowings - 1 (1) (100.0%)
--------- --------- --------- --------
Total interest expense 2,533 3,311 (778) (23.5%)
--------- --------- --------- --------
Net interest income 7,342 8,108 (766) (9.4%)
Provision for loan and lease
losses 1,000 7,000 (6,000) (85.7%)
--------- --------- --------- --------
Net interest income after
provision for loan and lease
losses 6,342 1,108 5,234 472.4%
--------- --------- --------- --------
Noninterest income:
Service charges on deposit
accounts 1,481 1,528 (47) (3.1%)
Other fees and charges 1,031 964 67 7.0%
Loss on sale of other assets (124) - (124) -
Other 624 672 (48) (7.1%)
--------- --------- --------- --------
Total noninterest income 3,012 3,164 (152) (4.8%)
--------- --------- --------- --------
Noninterest expenses:
Salaries and employee
benefits 4,287 5,064 (777) (15.3%)
Occupancy 734 761 (27) (3.5%)
Furniture and equipment 423 469 (46) (9.8%)
Other real estate owned
expense 850 998 (148) (14.8%)
Other 3,725 3,043 682 22.4%
--------- --------- --------- --------
Total noninterest
expenses 10,019 10,335 (316) (3.1%)
--------- --------- --------- --------
Loss before benefit for income
taxes (665) (6,063) 5,398 (89.0%)
Benefit for income taxes (353) (2,956) 2,603 (88.1%)
--------- --------- --------- --------
Net loss $ (312) $ (3,107) $ 2,795 (90.0%)
========= ========= ========= ========
Common Share Data
Loss per share
Basic $ (0.04) $ (0.41) $ 0.37 (90.2%)
Diluted $ (0.04) $ (0.41) $ 0.37 (90.2%)
Weighted average shares
outstanding 7,495,817 7,495,817
Weighted average shares
outstanding -
diluted 7,495,817 7,495,817
Book value per share $ 7.03 $ 10.00
Tangible book value $ 6.94 $ 7.86
Shares outstanding 7,495,817 7,495,817
NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
March 31, December 31, March 31,
Balance Sheet Data 2010 2009 2009
----------- ----------- -----------
Assets
Cash and due from banks $ 20,546 $ 19,378 $ 19,595
Federal funds sold 75,865 48,250 49,915
Time deposits at other financial
institutions 425 425 -
Available-for-sale securities - at
fair value 141,035 146,335 97,514
Held-to-maturity securities - at
amortized cost 8 9 15
Loans and leases, net of deferred
loan fees 580,929 602,417 660,653
Less: Allowance for loan and
lease losses (17,708) (18,539) (15,887)
----------- ----------- -----------
Net loans and leases 563,221 583,878 644,766
Premises and equipment, net 9,898 10,319 11,191
Other real estate owned 12,998 12,377 5,943
Goodwill and core deposit
intangibles, net 656 692 15,989
Accrued interest receivable and
other assets 62,734 62,699 58,921
----------- ----------- -----------
Total assets $ 887,386 $ 884,362 $ 903,849
=========== =========== ===========
Liabilities and Stockholders' Equity
Deposits:
Demand, noninterest bearing $ 148,171 $ 152,421 $ 149,681
Demand, interest bearing 155,236 160,216 163,023
Savings and money market 215,865 189,782 172,534
Time 270,060 285,390 301,594
----------- ----------- -----------
Total deposits 789,332 787,809 786,832
Other borrowed funds - - -
Accrued interest payable and other
liabilities 13,409 12,290 10,133
Subordinated debentures 31,961 31,961 31,961
----------- ----------- -----------
Total liabilities 834,702 832,060 828,926
Stockholders' equity 52,684 52,302 74,923
----------- ----------- -----------
Total liabilities and stockholders'
equity $ 887,386 $ 884,362 $ 903,849
=========== =========== ===========
Asset Quality
Nonaccrual loans and leases $ 45,577 $ 46,598 $ 19,926
Loans and leases past due 90 days
and accruing interest 298 - -
Other real estate owned 12,998 12,377 5,943
----------- ----------- -----------
Total nonperforming assets $ 58,873 $ 58,975 $ 25,869
=========== =========== ===========
Allowance for loan and lease
losses to total loans and leases 3.05% 3.08% 2.40%
Allowance for loan and lease
losses to Nonperforming Loans 38.60% 39.78% 79.73%
Allowance for loan and lease
losses to Nonperforming Assets 30.08% 31.44% 61.41%
NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
Selected Financial Ratios 2010 2009
----------- -----------
Loss on average total assets (0.14%) (1.43%)
Loss on average stockholders' equity (2.39%) (16.26%)
Net interest margin (tax equivalent basis) 3.78% 4.23%
Efficiency ratio 96.76% 91.69%
Selected Average Balances
Loans $ 591,511 $ 680,838
Taxable investments 134,457 73,279
Tax-exempt investments 15,570 15,898
Federal funds sold and other 55,970 15,010
----------- -----------
Total earning assets $ 797,508 $ 785,025
----------- -----------
Total assets $ 875,756 $ 878,376
----------- -----------
Demand deposits - interest bearing $ 157,314 $ 153,395
Savings and money market 196,775 167,802
Time deposits 277,276 285,662
Other borrowings 31,961 33,328
----------- -----------
Total interest bearing liabilities $ 663,326 $ 640,187
----------- -----------
Demand deposits - noninterest bearing $ 146,988 $ 149,582
----------- -----------
Stockholders' equity $ 52,881 $ 77,501
----------- -----------
NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share data)
For the Quarter Ended
------------------------------------------
March December September June
2010 2009 2009 2009
--------- --------- ---------- ---------
Interest income $ 9,875 $ 10,399 $ 10,896 $ 11,241
Interest expense 2,533 2,852 3,226 3,332
--------- --------- ---------- ---------
Net interest income 7,342 7,547 7,670 7,909
Provision for loan and lease
losses 1,000 9,000 1,500 9,000
Noninterest income 3,012 3,266 4,142 3,438
Noninterest expense 10,019 23,874 8,999 10,782
--------- --------- ---------- ---------
(Loss) income before (benefit)
provision for income taxes (665) (22,061) 1,313 (8,435)
(Benefit) provision for income
taxes (353) (2,721) 629 (4,346)
--------- --------- ---------- ---------
Net (loss) income $ (312) $ (19,340) $ 684 $ (4,089)
========= ========= ========== =========
(Loss) earnings per share:
Basic $ (0.04) $ (2.58) $ 0.09 $ (0.55)
========= ========= ========== =========
Diluted $ (0.04) $ (2.58) $ 0.09 $ (0.55)
========= ========= ========== =========
For further information contact: Michael J. Cushman President
& Chief Executive Officer (530) 226-2900 Fax: (530) 221-4877 or
Kevin R. Watson Executive Vice President & Chief Financial
Officer (530) 226-2900 Fax: (530) 221-4877
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