SOURCE: Central Valley Community Bancorp

Central Valley Community Bancorp

July 18, 2012 17:00 ET

Central Valley Community Bancorp Reports Earnings Results for the Quarter and Six Months Ended June 30, 2012

FRESNO, CA--(Marketwire - Jul 18, 2012) - 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 $3,422,000, and diluted earnings per common share of $0.34 for the six months ended June 30, 2012, compared to $3,361,000 and $0.33 per diluted common share for the six months ended June 30, 2011. Net income increased 1.81%, primarily driven by a decrease in non-interest expense, partially offset by a higher provision for credit losses and decreases in non-interest income in 2012 compared to 2011. Non-performing assets decreased $2,094,000 or 14.51% to $12,340,000 at June 30, 2012, compared to $14,434,000 at December 31, 2011. Included in non-performing assets is $2,098,000 in OREO as of June 30, 2012 compared to none at December 31, 2011. Shareholders' equity increased $5,777,000, or 5.37% during the six months ended June 30, 2012. The growth in shareholders' equity was driven by net income during the period, an increase in other comprehensive income, and the issuance of common stock from the exercise of stock options. Unaudited consolidated net income and diluted earnings per common share for the quarter ended June 30, 2012, were marginally lower than in the first quarter of 2012 and the corresponding quarter in 2011.

During the first two quarters of 2012, the Company's total assets decreased 1.53%, total liabilities decreased 2.53%, and shareholders' equity increased 5.37% compared to December 31, 2011. Return on average equity (ROE) for the six months ended June 30, 2012 was 6.12%, compared to 6.67% for the six months ended June 30, 2011. The decrease in ROE reflects an increase in capital from an increase in other comprehensive income and an increase in retained earnings, which were greater than the increase in net income. Return on average assets (ROA) was 0.82% and 0.87% for the six months ended June 30, 2012 and 2011, respectively.

During the six months ended June 30, 2012, the Company recorded a provision for credit losses of $500,000, compared to $350,000 for the six months ended June 30, 2011. During the six months ended June 30, 2012, the Company recorded $1,756,000 in net loan charge-offs, compared to $330,000 for the six months ended June 30, 2011. The net charge-off ratio, which reflects net charge-offs to average loans, was 0.85% for the six months ended June 30, 2012, compared to 0.15% for the same period in 2011. The Company also recorded OREO related expenses of $72,000 during 2012 compared to $2,000 for the six months ended June 30, 2011.

At June 30, 2012, the allowance for credit losses stood at $10,140,000, compared to $11,396,000 at December 31, 2011, a net decrease of $1,256,000. The allowance for credit losses as a percentage of total loans was 2.45% at June 30, 2012, and 2.67% at December 31, 2011. The Company believes the allowance for credit losses is adequate to provide for probable losses inherent within the loan portfolio at June 30, 2012.

Total non-performing assets were $12,340,000, or 1.48% of total assets as of June 30, 2012 compared to $14,434,000 or 1.70% of total assets as of December 31, 2011. Total non-performing assets as of June 30, 2011 were $14,959,000 or 1.89% of total assets. 

The following provides a reconciliation of the change in non-accrual loans for the first two quarters of 2012.

                             
(Dollars in thousands)   Balances December 31, 2011   Additions to Non-accrual Loans   Net Pay Downs   Transfer to Foreclosed Collateral - OREO   Returns to Accrual Status   Charge Offs   Balances June 30, 2012
Non-accrual loans:                                          
  Commercial and industrial   $ 267   $ 4   $ (32 ) $ (155 ) $ --   $ (84 ) $ --
  Real estate     2,787     --     (11 )   (2,175 )   --     (381 )   220
  Equity loans and lines of credit     705     79     (390 )   --     --     (76 )   318
  Consumer     74     --     (3 )   --     --     --     71
Restructured loans (non-accruing):                                          
  Real estate     2,129     425     (33 )   (7 )   --     (1,103 )   1,411
  Real estate construction and land development     6,823     --     (261 )   --     --     --     6,562
  Equity loans and lines of credit     1,649     75     (64 )   --     --     --     1,660
    Total non-accrual   $ 14,434   $ 583   $ (794 ) $ (2,337 ) $ --   $ (1,644 ) $ 10,242
                                               

The following provides a summary of the change in the OREO balance for the six months ended June 30, 2012:

     
(Dollars in thousands) Six Months Ended June 30, 2012  
Balance, Beginning of period $ --  
Additions   2,337  
Dispositions   (251 )
Write-downs   --  
Net gain (loss) on disposition   12  
Balance, End of period $ 2,098  
       

The Company's net interest margin (fully tax equivalent basis) was 4.35% for the six months ended June 30, 2012, compared to 4.69% for the six months ended June 30, 2011. 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 partially offset by a decrease in the Company's cost of funds. For the six months ended June 30, 2012, the effective yield on total earning assets decreased 51 basis points to 4.64% compared to 5.15% for the six months ended June 30, 2011, while the cost of total interest-bearing liabilities decreased 23 basis points to 0.42% compared to 0.65% for the six months ended June 30, 2011. For the six months ended June 30, 2012, the amount of the Company's average investment securities, including interest-earning deposits in other banks and Federal funds sold, increased 24.75% compared to the six months ended June 30, 2012. The effective yield on average investment securities decreased to 3.02% for the six months ended June 30, 2012, compared to 3.48% for the six months ended June 30, 2011. The decrease in yield in the Company's investment securities during 2012 resulted primarily from the purchase of lower yielding investment securities. Average loans, which generally yield higher rates than investment securities, decreased 4.17%, from $429,737,000 for the six months ended June 30, 2011 to $411,810,000 for the six months ended June 30, 2012. The effective yield on average loans decreased to 6.09% from 6.35% between June 30, 2011 and June 30, 2012. The cost of total deposits decreased 17 basis points to 0.27% for the six months ended June 30, 2012, compared to 0.44% for the six months ended June 30, 2011. Net interest income before the provision for credit losses for the six months ended June 30, 2012 was $15,176,000, compared to $15,392,000 for the six months ended June 30, 2011, a decrease of $216,000 or 1.40%. Net interest income decreased as a result of these yield changes and an increase in interest-bearing liabilities, partially offset by an increase in average earning assets.

Total average assets for the six months ended June 30, 2012 were $833,345,000 compared to $775,625,000, for the six months ended June 30, 2011, an increase of $57,720,000 or 7.44%. Total average loans were $411,810,000 for 2012, compared to $429,737,000 for 2011, representing a decrease of $17,927,000 or 4.17%. Total average investments, including deposits in other banks and Federal funds sold, increased to $343,836,000 for the six months ended June 30, 2012, from $275,623,000 for the six months ended June 30, 2011, representing an increase of $68,213,000 or 24.75%. Total average deposits increased $47,288,000 or 7.22% to $702,559,000 for the six months ended June 30, 2012, compared to $655,271,000 for the six months ended June 30, 2011. Average interest-bearing deposits increased $15,109,000, or 3.12%, and average non-interest bearing demand deposits increased $32,179,000, or 18.77%, for the six months ended June 30, 2012, compared to the six months ended June 30, 2011. The Company's ratio of average non-interest bearing deposits to total deposits was 28.99% for the six months ended June 30, 2012, compared to 26.17% for the six months ended June 30, 2011. 

Non-interest income for the six months ended June 30, 2012 was $3,129,000, compared to $3,345,000 for the six months ended June 30, 2011. For the six months ended June 30, 2011, the Company had $521,000 more in gains on the sale of other real estate owned, and $83,000 more in service charge income than during the six months ended June 30, 2012. These differences, netted against a $418,000 increase in net realized gains on sales and calls of investment securities, a $93,000 increase in loan placement fees, and a $31,000 change in net impairment loss recognized in earnings, were primarily the reasons for the $216,000 decrease in non-interest income for the first six months of 2012 compared to the first six months of 2011.

Non-interest expense for the six months ended June 30, 2012 decreased $584,000, or 4.11%, to $13,636,000 compared to $14,220,000 for the six months ended June 30, 2011, primarily due to decreases in occupancy and equipment expenses of $112,000, advertising fees of $86,000, legal fees of $94,000, and regulatory assessments of $158,000, partially offset by increases in other real estate owned expenses of $72,000 and salaries and employee benefits of $10,000. 

The Company recorded an income tax expense of $747,000 for the six months ended June 30, 2012, compared to $806,000 for the six months ended June 30, 2011. The effective tax rate for 2012 was 17.92% compared to 19.34% for the six months ended June 30, 2011.

Quarter Ended June 30, 2012

For the quarter ended June 30, 2012, the Company reported unaudited consolidated net income of $1,709,000 and diluted earnings per common share of $0.17, compared to $1,773,000 and $0.18 per diluted share, for the same period in 2011, and $1,713,000 and $0.17 per diluted share, for the quarter ended March 31, 2012. The decrease in net income during the second quarter of 2012 compared to the same period in 2011 is primarily due to decreases in interest income and decreases in non-interest income partially offset by decreases in interest expense and a decrease in non-interest expense.

Annualized return on average equity for the second quarter of 2012 was 6.06%, compared to 6.92% for the same period of 2011. This decrease is reflective of a decrease in net income and an increase in capital. Annualized return on average assets was 0.82% for the second quarter of 2012 compared to 0.91% for the same period in 2011. This decrease is due to a decrease in net income and an increase in average assets.

In comparing the second quarter of 2012 to the second quarter of 2011, average total loans decreased $22,278,000, or 5.14%. During the second quarter of 2012, the Company recorded a $100,000 provision for credit losses, compared to $250,000 for the same period in 2011. During the second quarter of 2012, the Company recorded $245,000 in net loan charge-offs compared to $235,000 for the same period in 2011. The net charge-off ratio, which reflects annualized net charge-offs to average loans, was 0.24% for the quarter ended June 30, 2012 compared to 0.22% for the quarter ended June 30, 2011.

The following provides a reconciliation of the change in non-accrual loans for the quarter ended June 30, 2012.

                             
(Dollars in thousands)   Balances March 31, 2012   Additions to Non-accrual Loans   Net Pay Downs   Transfer to Foreclosed Collateral - OREO   Returns to Accrual Status   Charge Offs   Balances June 30, 2012
Non-accrual loans:                                          
  Commercial and industrial   $ 24   $ --   $ (21 ) $ --   $ --   $ (3 ) $ --
  Real estate     225     --     (5 )   --     --     --     220
  Equity loans and lines of credit     504     79     (265 )   --     --     --     318
  Consumer     73     --     (2 )   --     --     --     71
Restructured loans (non-accruing):                                          
  Real estate     1,004     425     (18 )   --     --     --     1,411
  Real estate construction and land development     6,696     --     (134 )   --     --     --     6,562
  Equity loans and lines of credit     1,616     75     (31 )   --     --     --     1,660
    Total non-accrual   $ 10,142   $ 579   $ (476 ) $ --   $ --   $ (3 ) $ 10,242
                                               

The following provides a summary of the change in the OREO balance for the quarter ended June 30, 2012:

       
(Dollars in thousands)   Quarter Ended June 30, 2012  
Balance, Beginning of period   $ 2,253  
Additions     --  
Dispositions     (169 )
Write-downs     --  
Net gain (loss) on disposition     14  
Balance, End of period   $ 2,098  
         

Average total deposits for the second quarter of 2012 increased $39,557,000 or 5.98% to $700,598,000 compared to $661,041,000 for the same period of 2011. 

The Company's net interest margin (fully tax equivalent basis) decreased 38 basis points to 4.33% for the three months ended June 30, 2012, from 4.71% for the three months ended June 30, 2011. Net interest income, before provision for credit losses, decreased $284,000 or 3.64% to $7,510,000 for the second quarter of 2012, compared to $7,794,000 for the same period in 2011. The decreases in net interest margin and in net interest income are primarily due to a decrease in the yield on interest-earning assets and a decrease in average loan balances. Over the same periods, the cost of total deposits decreased 17 basis points to 0.26% compared to 0.43% in 2011.

Non-interest income decreased $126,000 or 7.89% to $1,471,000 for the second quarter of 2012 compared to $1,597,000 for the same period in 2011. The second quarter of 2011 non-interest income included a $142,000 gain related to the final distribution of the Service 1st escrow account and an $85,000 gain related to the collection of life insurance proceeds. Non-interest expense decreased $349,000 or 4.94% for the same periods mainly due to decreases in regulatory assessments, advertising, salaries and employee benefits, and occupancy expenses, partially offset by increases in other real estate owned expense.

"The second quarter of 2012 demonstrates overall earnings consistency. Net income for the second quarter of 2012 is flat compared to first quarter 2012, slightly lower than the same quarter of 2011, and slightly higher for the first six months of 2012 compared to the first six months of 2011," stated Daniel J. Doyle, President and CEO of Central Valley Community Bancorp and Central Valley Community Bank.

"Asset quality continues to improve with no significant change from first quarter 2012 as the one identified OREO, comprising the bulk of OREO total at June 30, 2012, is in escrow and expected to close during the third quarter of 2012. Loan demand remains a challenge and, combined with low yields on securities, has muted the growth of gross revenue. We are seeing slow, but improving trends in the communities we serve, which we regard as a positive indicator in the economic landscape," concluded Doyle.

Central Valley Community Bancorp trades on the NASDAQ-GS 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 17 full service offices in Clovis, Fresno, Kerman, Lodi, Madera, Merced, Modesto, Oakhurst, Prather, Sacramento, Stockton and Tracy, California. 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, 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, 2011. Therefore, the information set forth in such forward-looking statements should be carefully considered when evaluating the business prospects of the Company.

 
CENTRAL VALLEY COMMUNITY BANCORP
CONSOLIDATED BALANCE SHEETS
 
    June 30,   December 31,
(In thousands, except share amounts)   2012   2011
    (Unaudited)    
ASSETS            
Cash and due from banks   $ 18,643   $ 19,409
Interest-earning deposits in other banks     28,231     24,467
Federal funds sold     610     928
    Total cash and cash equivalents     47,484     44,804
Available-for-sale investment securities (Amortized cost of $312,175 at June 30, 2012 and $321,405 at December 31, 2011)     322,931     328,413
Loans, less allowance for credit losses of $10,140 at June 30, 2012 and $11,396 at December 31, 2011     404,203     415,999
Bank premises and equipment, net     6,287     5,872
Other real estate owned     2,098     --
Bank owned life insurance     11,961     11,655
Federal Home Loan Bank stock     3,850     2,893
Goodwill     23,577     23,577
Core deposit intangibles     683     783
Accrued interest receivable and other assets     12,970     15,027
      Total assets   $ 836,044   $ 849,023
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Deposits:            
  Non-interest bearing   $ 202,253   $ 208,025
  Interest bearing     500,498     504,961
    Total deposits     702,751     712,986
Short-term borrowings     4,000     --
Long-term debt     --     4,000
Junior subordinated deferrable interest debentures     5,155     5,155
Accrued interest payable and other liabilities     10,879     19,400
      Total liabilities     722,785     741,541
Commitments and contingencies            
Shareholders' equity:            
Preferred stock, no par value, $1,000 per share liquidation preference; 10,000,000 shares authorized, Series C, issued and outstanding: 7,000 shares at June 30, 2012 and December 31, 2011     7,000     7,000
Common stock, no par value; 80,000,000 shares authorized; issued and outstanding: 9,592,166 at June 30, 2012 and 9,547,816 at December 31, 2011     40,877     40,552
Retained earnings     59,053     55,806
Accumulated other comprehensive income, net of tax     6,329     4,124
      Total shareholders' equity     113,259     107,482
      Total liabilities and shareholders' equity   $ 836,044   $ 849,023
   
   
CENTRAL VALLEY COMMUNITY BANCORP  
CONSOLIDATED STATEMENTS OF INCOME  
   
    For the Three Months
Ended June 30,
    For the Six Months Ended June 30,  
(In thousands, except share and per share amounts)   2012   2011     2012   2011  
    (Unaudited)   (Unaudited)     (Unaudited)   (Unaudited)  
INTEREST INCOME:                            
  Interest and fees on loans   $ 6,053   $ 6,560     $ 12,137   $ 13,022  
  Interest on deposits in other banks     16     45       34     95  
  Interest on Federal funds sold     1     --       1     1  
  Interest and dividends on investment securities:                            
    Taxable     880     1,131       1,953     2,228  
    Exempt from Federal income taxes     1,078     830       2,115     1,630  
      Total interest income     8,028     8,566       16,240     16,976  
INTEREST EXPENSE:                            
  Interest on deposits     455     712       936     1,429  
  Interest on junior subordinated deferrable interest debentures     26     24       55     49  
  Other     37     36       73     106  
    Total interest expense     518     772       1,064     1,584  
    Net interest income before provision for credit losses     7,510     7,794       15,176     15,392  
PROVISION FOR CREDIT LOSSES     100     250       500     350  
    Net interest income after provision for credit losses     7,410     7,544       14,676     15,042  
NON-INTEREST INCOME:                            
  Service charges     676     749       1,365     1,448  
  Appreciation in cash surrender value of bank owned life insurance     96     96       190     193  
  Loan placement fees     99     77       227     134  
  Gain (loss) on disposal of other real estate owned     14     (12 )     12     533  
  Net realized gain on sale of assets     4     --       4     --  
  Net realized gains on sales and calls of investment securities     97     42       444     26  
  Other-than-temporary impairment loss:                            
    Total impairment loss     --     --       --     (31 )
    Loss recognized in other comprehensive income     --     --       --     --  
      Net impairment loss recognized in earnings     --     --       --     (31 )
  Federal Home Loan Bank dividends     3     3       7     5  
  Other income     482     642       880     1,037  
    Total non-interest income     1,471     1,597       3,129     3,345  
NON-INTEREST EXPENSES:                            
  Salaries and employee benefits     3,957     3,998       8,086     8,076  
  Occupancy and equipment     877     936       1,758     1,870  
  Regulatory assessments     169     194       325     483  
  Data processing expense     283     286       577     562  
  Advertising     140     182       280     366  
  Audit and accounting fees     125     113       253     225  
  Legal fees     54     83       82     176  
  Other real estate owned     9     (7 )     72     2  
  Amortization of core deposit intangibles     50     103       100     207  
  Other expense     1,054     1,179       2,103     2,253  
    Total non-interest expenses     6,718     7,067       13,636     14,220  
      Income before provision for income taxes     2,163     2,074       4,169     4,167  
PROVISION FOR INCOME TAXES     454     301       747     806  
    Net income   $ 1,709   $ 1,773     $ 3,422   $ 3,361  
Net income   $ 1,709   $ 1,773     $ 3,422   $ 3,361  
Preferred stock dividends and accretion     87     99       175     198  
    Net income available to common shareholders   $ 1,622   $ 1,674     $ 3,247   $ 3,163  
Net income per common share:                            
  Basic earnings per common share   $ 0.17   $ 0.18     $ 0.34   $ 0.33  
  Weighted average common shares used in basic computation     9,592,045     9,516,110       9,581,172     9,495,890  
  Diluted earnings per common share   $ 0.17   $ 0.18     $ 0.34   $ 0.33  
  Weighted average common shares used in diluted computation     9,618,976     9,540,615       9,604,056     9,522,664  
 
 
CENTRAL VALLEY COMMUNITY BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
    Jun. 30,   Mar 31,   Dec. 31,   Sep. 30,   Jun. 30,
For the three months ended   2012   2012   2011   2011   2011
(In thousands, except share and per share amounts)                              
Net interest income   $ 7,510   $ 7,666   $ 8,016   $ 7,949   $ 7,794
Provision for credit losses     100     400     300     400     250
Net interest income after provision for credit losses     7,410     7,266     7,716     7,549     7,544
Total non-interest income     1,471     1,658     1,336     1,595     1,597
Total non-interest expense     6,718     6,918     6,803     7,222     7,067
Provision for income taxes     454     293     541     514     301
Net income   $ 1,709   $ 1,713   $ 1,708   $ 1,408   $ 1,773
Net income available to common shareholders   $ 1,622   $ 1,625   $ 1,622   $ 1,206   $ 1,674
Basic earnings per common share   $ 0.17   $ 0.17   $ 0.17   $ 0.13   $ 0.18
Weighted average common shares used in basic computation     9,592,045     9,570,297     9,547,816     9,547,816     9,516,110
Diluted earnings per common share   $ 0.17   $ 0.17   $ 0.17   $ 0.13   $ 0.18
Weighted average common shares used in diluted computation     9,618,976     9,577,432     9,552,043     9,557,609     9,540,615
   
   
CENTRAL VALLEY COMMUNITY BANCORP  
SELECTED RATIOS  
(Unaudited)  
   
    Jun. 30,     Mar. 31,     Dec. 31,     Sep. 30,     Jun. 30,  
As of and for the three months ended   2012     2012     2011     2011     2011  
(Dollars in thousands, except per share amounts)                                        
Allowance for credit losses to total loans     2.45 %     2.52 %     2.67 %     2.59 %     2.53 %
Nonperforming assets to total assets     1.48 %     1.48 %     1.70 %     2.04 %     1.89 %
Total nonperforming assets   $ 12,340     $ 12,395     $ 14,434     $ 17,064     $ 14,959  
Net loan charge offs (recoveries)   $ 245     $ 1,511     $ (66 )   $ 404     $ 235  
Net charge offs (recoveries) to average loans (annualized)     0.24 %     1.46 %     (0.06 )%     0.37 %     0.22 %
Book value per share   $ 11.08     $ 10.82     $ 10.52     $ 10.41     $ 10.15  
Tangible book value per share   $ 8.55     $ 8.28     $ 7.97     $ 7.84     $ 7.58  
Tangible common equity   $ 81,999     $ 79,422     $ 76,122     $ 74,883     $ 72,389  
Interest and dividends on investment securities exempt from Federal income taxes   $ 1,078     $ 1,037     $ 942     $ 892     $ 830  
Net interest margin (calculated on a fully tax equivalent basis) (1)     4.33 %     4.37 %     4.50 %     4.66 %     4.71 %
Return on average assets (2)     0.82 %     0.82 %     0.81 %     0.70 %     0.91 %
Return on average equity (2)     6.06 %     6.19 %     6.41 %     5.34 %     6.92 %
Tier 1 leverage - Bancorp     10.70 %     10.33 %     10.13 %     10.19 %     10.22 %
Tier 1 leverage - Bank     10.60 %     10.21 %     10.01 %     10.07 %     10.04 %
Tier 1 risk-based capital - Bancorp     17.29 %     16.97 %     16.20 %     15.95 %     15.26 %
Tier 1 risk-based capital - Bank     17.14 %     16.78 %     16.02 %     15.76 %     14.99 %
Total risk-based capital - Bancorp     18.58 %     18.25 %     17.49 %     17.25 %     16.53 %
Total risk based capital - Bank     18.43 %     18.06 %     17.31 %     17.05 %     16.26 %

(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)  
   
AVERAGE AMOUNTS   For the Three Months
Ended June 30,
    For the Six Months
Ended June 30,
 
(Dollars in thousands)   2012     2011     2012     2011  
Federal funds sold   $ 541     $ 563     $ 535     $ 660  
Interest-bearing deposits in other banks     25,298       70,339       27,178       73,460  
Investments     314,884       206,500       316,123       201,503  
Loans (1)     400,703       418,121       400,918       413,749  
Federal Home Loan Bank stock     3,576       2,986       3,235       3,018  
Earning assets     745,002       698,509       747,989       692,390  
Allowance for credit losses     (10,197 )     (10,952 )     (10,587 )     (10,979 )
Non-accrual loans     10,235       15,095       10,892       15,988  
Other real estate owned     2,248       56       1,559       337  
Other non-earning assets     83,853       77,758       83,492       77,889  
Total assets   $ 831,141     $ 780,466     $ 833,345     $ 775,625  
                                 
Interest bearing deposits   $ 498,834     $ 491,074     $ 498,904     $ 483,795  
Other borrowings     9,155       9,155       9,158       11,393  
Total interest-bearing liabilities     507,989       500,229       508,062       495,188  
Non-interest bearing demand deposits     201,764       169,967       203,655       171,476  
Non-interest bearing liabilities     8,525       7,909       9,859       8,222  
Total liabilities     718,278       678,105       721,576       674,886  
Total equity     112,863       102,361       111,769       100,739  
Total liabilities and equity   $ 831,141     $ 780,466     $ 833,345     $ 775,625  
                                 
AVERAGE RATES                                
Federal funds sold     0.25 %     0.25 %     0.25 %     0.30 %
Interest-earning deposits in other banks     0.25 %     0.26 %     0.25 %     0.26 %
Investments     3.19 %     4.62 %     3.26 %     4.66 %
Loans     6.06 %     6.29 %     6.09 %     6.35 %
Earning assets     4.61 %     5.15 %     4.64 %     5.15 %
Interest-bearing deposits     0.37 %     0.58 %     0.38 %     0.60 %
Other borrowings     2.76 %     2.63 %     2.81 %     2.74 %
Total interest-bearing liabilities     0.41 %     0.62 %     0.42 %     0.65 %
Net interest margin (calculated on a fully tax equivalent basis) (2)     4.33 %     4.71 %     4.35 %     4.69 %

(1) Average loans do not include non-accrual loans.
(2) Calculated on a fully tax equivalent basis, which includes Federal tax benefits relating to income earned on municipal bonds totaling $555 and $426 for the quarters ended June 30, 2012 and 2011, respectively. The Federal tax benefits relating to income earned on municipal bonds totaled $1,090 and $838 for the six months ended June 30, 2012 and 2011, respectively.