SOURCE: North Valley Bancorp

North Valley Bancorp

May 04, 2010 09:00 ET

North Valley Bancorp Reports Results for the Quarter Ended March 31, 2010

REDDING, CA--(Marketwire - May 4, 2010) - 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)
                                =========  =========  ========== =========

Contact Information

  • 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