(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