REDDING, CA--(Marketwire - April 28, 2009) - North Valley Bancorp (
NASDAQ:
NOVB), a bank
holding company with $904 million in assets, today reported results for the
quarter ended March 31, 2009. 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, 2009 of
$3,107,000, or $0.41 per diluted share compared to net income for the
quarter ended March 31, 2008 of $280,000, or $0.04 per diluted share. For
the first quarter of 2009, the Company realized an annualized loss on
average shareholders' equity of 16.26% and an annualized loss on average
assets of 1.43%, as compared to an annualized return on average
shareholders' equity of 1.35% and an annualized return on average assets
0.12% for the first quarter of 2008.
The Company recorded a provision for loan and lease losses in the amount of
$7,000,000 for the quarter ended March 31, 2009 compared to a provision for
loan and lease losses of $2,400,000 for the quarter ended March 31, 2008.
The increase in provision for loan and lease losses was a result of
revisions made to the qualitative and quantitative factors used in the
calculation of its allowance for loan and lease losses at March 31, 2009
considering the depth and breadth of the continuing recession and the
declines in real estate values. These changes are consistent with industry
best practices being used to account for the uncertainties associated with
current economic conditions and the continued depressed valuation of real
estate. The allowance for loan and lease losses at March 31, 2009 was
$15,887,000, or 2.40% of total loans, compared to $11,327,000, or 1.63% of
total loans, at December 31, 2008 and $13,022,000, or 1.73% of total loans,
at March 31, 2008.
"The quarter was challenging, however, we achieved successes in several
important areas as planned, which will position the Company for the
future. Deposits grew by $32 million as we continued to attract new
customers and we were successful in reducing concentrations in certain loan
categories, specifically commercial loans of $16 million and construction
loans of $15 million during the first quarter of 2009. Our capital ratios
continue to be a strength as they exceed the "well capitalized" criteria
under regulatory standards," stated Mike Cushman, President and CEO.
At March 31, 2009, total assets were $903,849,000, down $41,632,000, or
4.4%, from $945,481,000 at March 31, 2008. The loan portfolio totaled
$660,653,000 at March 31, 2009, a decrease of $89,935,000, or 12.0%,
compared to March 31, 2008. The loan to deposit ratio at March 31, 2009
was 84.0% as compared to 98.4% at March 31, 2008, and 91.9% at December 31,
2008. Total deposits grew $24,083,000, or 3.2%, to $786,832,000 at March
31, 2009 compared to $762,749,000 at March 31, 2008. When compared to
December 31, 2008, total assets increased $24,298,000 from $879,551,000,
driven by an increase in deposits of $31,888,000 from $754,944,000, while
loans decreased by $32,769,000 from $693,422,000. Available-for-sale
investment securities and Federal funds sold increased $21,169,000 and
$49,915,000, respectively, from December 31, 2008 to March 31, 2009 as a
result of the increase in deposits and decrease in loans. At March 31,
2009, other real estate owned and other borrowings also decreased from the
December 31, 2008 balances.
At March 31, 2009, the Company's Total Risk-based Capital was $100,793,000,
and its risk-based capital ratios were: Tier 1 risk-based Capital ratio -
10.85%; Total Risk-based Capital ratio - 12.84%; and Tier 1 Leverage ratio
- 9.88%. At March 31, 2009, the Bank's Total Risk-based Capital was
$99,194,000, and its risk-based capital ratios were: Tier 1 risk-based
Capital ratio - 11.39%; Total Risk-based Capital ratio - 12.65%; and Tier 1
Leverage ratio - 10.38%. "Our capital ratios continue to exceed all
regulatory requirements at both the Bank and Company, as we continue to
aggressively provide for our allowance for credit losses," commented Kevin
R. Watson, Chief Financial Officer.
Credit Quality
Nonperforming loans (defined as nonaccrual loans and loans 90 days or more
past due and still accruing interest) totaled $19,926,000 at March 31,
2009, a decrease of $5,824,000 from the March 31, 2008 balance of
$25,750,000, and an increase of $990,000 from the December 31, 2008 balance
of $18,936,000. Nonperforming loans as a percentage of total loans were
3.02% at March 31, 2009, compared to 3.43% at March 31, 2008, and 2.73% at
December 31, 2008.
Nonperforming assets (nonperforming loans and OREO) totaled $25,869,000 at
March 31, 2009, a decrease of $783,000 from the March 31, 2008 balance of
$26,652,000, and a $3,475,000 decrease from the December 31, 2008 balance
of $29,344,000. Nonperforming assets as a percentage of total assets were
2.86% at March 31, 2009 compared to 2.82% at March 31, 2008 and 3.34% at
December 31, 2008.
The overall level of nonperforming loans increased $990,000 to $19,926,000
at March 31, 2009 from $18,936,000 at December 31, 2008. During the first
quarter of 2009 the Company added sixteen loans totaling $7,604,000 to the
nonperforming loans. These additions were offset by collections received
on certain loans, charge-offs recorded, and one transfer from loans to
OREO. The overall level of nonperforming assets decreased $3,475,000 to
$25,869,000 at March 31, 2009 from $29,344,000 at December 31, 2008. This
decrease was a result of a reduction in OREO of $3,768,000 from the sale of
three properties during the first quarter, which resulted in $890,000 being
recognized as a loss on sale/writedown of OREO. This reduction in
nonperforming assets was partially offset by the addition of one property
to OREO for $193,000.
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. Gross loan and lease charge offs for the first quarter of 2008
were $185,000 and recoveries totaled $52,000 resulting in net charge offs
of $133,000.
The total dollar amount of reductions in nonperforming loans during the
first quarter of 2009 of $6,614,000 was due primarily to the paydowns,
charge-offs, and one transfer to OREO. This decrease was offset by the
addition of sixteen loans in the amount of $7,604,000 as nonaccrual loans
during the first quarter of 2009. The addition was centered in three loans
totaling $4,385,000. The largest loan of this group is a $2,007,000
commercial real estate loan located in Shasta County. No specific reserve
is currently required on this loan. The second loan in this group is a
$1,465,000 residential development loan consisting of two single-family
residences that are listed for sale located in Napa County. No specific
reserve is currently required on this loan. The third loan in this group
is a $913,000 residential land loan located in Nevada County. No specific
reserve is currently required on this loan. For the other thirteen loans
placed on nonaccrual in the aggregate amount of $3,219,000, specific
reserves of $164,000 were established for these loans.
2008 - 2009 Credit Activity
As discussed in the Company's first quarter earnings release and Form 10-Q
for the period ended March 31, 2008, there were four nonperforming real
estate projects with loans totaling $24,047,000 which were the primary
contributors to the increase in nonperforming loans at March 31, 2008. At
December 31, 2008, only two of these projects remained: one of the loans
which was on nonaccrual was a residential development project in Placer
County with a balance of $2,463,000 and the other project was a residential
acquisition and development loan which was taken into OREO during the
second quarter of 2008 and had a balance of $4,059,000 at December 31,
2008. Collections were received on the residential development project in
Placer County during the first quarter of 2009 resulting in the full payoff
of the remaining balance of the loan with no additional losses to the
Company. Portions of the OREO property were sold during the first quarter
of 2009 for $1,001,000 resulting in the Company recording a pre-tax loss on
the sale of this portion of the OREO of $183,000. The remaining property
in OREO has a balance of $2,875,000 at March 31, 2009.
As discussed in the Company's second quarter earnings release and Form 10-Q
for the period ended June 30, 2008, there were two construction loans
identified as impaired, totaling $10,201,000, added to the nonperforming
loans during the second quarter of 2008. As of March 31, 2009 the larger
of the two loans, a mixed-use construction loan located in Sonoma County
with a remaining balance of $3,489,000 continues on nonaccrual. During the
first quarter of 2009, $357,000 in payments from the borrower were received
and applied to the principal balance of the loan reducing it from the
December 31, 2008 balance of $3,846,000. This loan has a specific reserve
of $250,000. The other loan was a residential development project located
in Placer County that was taken into OREO through foreclosure during the
fourth quarter of 2008 at its carrying value of $2,259,000 with no further
charge to the allowance. This property was sold for $1,831,000 during the
first quarter of 2009 and the Company recorded a pre-tax loss on the sale
of OREO of $428,000.
As discussed in the Company's third quarter earnings release and Form 10-Q
for the period ended September 30, 2008, 23 loans were placed on nonaccrual
status totaling $7,592,000 (which are primarily secured by real-estate)
during the third quarter of 2008. The largest of this group was a
$1,125,000 residential lot development loan located in Shasta County. The
principal balance of the loan was reduced by $74,000 to $1,051,000 during
the fourth quarter of 2008 from collections from the borrower. This
property was taken into OREO through a deed in lieu of foreclosure during
the fourth quarter of 2008 at a carrying value of $1,051,000 with no charge
to the allowance. This property was sold for $936,000 during the first
quarter of 2009 and the Company recorded a pre-tax loss on the sale of OREO
of $115,000.
As discussed in the Company's fourth quarter earnings release and Form 10-K
for the period ended December 31, 2008, there was an additional $7,575,000
of loans placed on nonaccrual during the fourth quarter of 2008, which was
made up primarily of four relationships. The largest relationship of this
group represents residential lot development and residential construction
loans located in Solano County which had a balance of $3,773,000 at
December 31, 2008. During the first quarter of 2009, the Company
charged-off $660,000 resulting in a balance of $3,113,000 at March 31, 2009
and a specific reserve of $47,000 has been established for these loans.
The second relationship in this group is a residential land loan located in
Sutter County. This loan had an original balance of $2,500,000, however
the Company charged off $1,225,000 in the fourth quarter of 2008 to write
the loan down to its current net realizable value of $1,275,000. This loan
remains on nonaccrual at March 31, 2009 and does not have any additional
specific reserve. The third relationship in this group was a commercial
loan for $921,000 located in Sonoma County which was fully reserved for
through a specific reserve. This entire loan was charged-off during the
first quarter of 2009. The fourth relationship in this group is an SBA-504
loan for $870,000 located in Humboldt County. This loan remains on
nonaccrual at March 31, 2009 with a balance of $870,000. No specific
reserve has been established for this loan.
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
$1,020,000, or 11.2%, for the three months ended March 31, 2009 compared to
the same period in 2008. Interest income decreased by $2,731,000, primarily
due to both the lower yield on earning assets and the decrease in the
average balances of earning assets and secondarily due to foregone interest
income of $374,000 related to loans currently on nonaccrual status.
Offsetting this was a decrease in interest expense of $1,711,000, or 34.1%,
due to a decrease in the rates paid on deposits and a decrease in the
average balance of borrowings for the quarter ended March 31, 2009 compared
to the same period in 2008. Average loans decreased $62,166,000 in the
first quarter of 2009 compared to the first quarter of 2008, and the yield
on the loan portfolio decreased 72 basis points to 6.28% over the same
period. Overall, average earning assets decreased $67,717,000 in the first
quarter of 2009 compared to the first quarter of 2008. Average yields on
earning assets decreased 78 basis points from the quarter ended March 31,
2008, to 5.94% for the quarter ended March 31, 2009 while the average rate
paid on interest-bearing liabilities decreased by 82 basis points to 2.10%.
The decrease in both yields earned and rates paid is reflective of the
declining interest rate environment as the Federal Reserve has reduced
interest rates by 500 basis points since September 2007. As a result of
the above, the Company's net interest margin for the quarter ended March
31, 2009 was 4.23%, a decrease of 12 basis points from the margin of 4.35%
for the first quarter in 2008 but an increase of 8 basis points from the
4.15% net interest margin for the linked quarter ended December 31, 2008.
"Our net interest margin expanded slightly from the linked quarter as the
benefit from the decrease in our cost of funds outpaced the decrease in
asset yields," stated Mr. Watson.
Noninterest income for the quarter ended March 31, 2009 decreased
$1,217,000, or 34.9%, to $2,274,000 compared to $3,491,000 for the same
period in 2008. The decrease in noninterest income was primarily driven by
the recording of the loss on the sale/writedown of OREO of $890,000.
Service charges on deposits decreased by $188,000 to $1,528,000 for the
first quarter of 2009 compared to $1,716,000 for the same period in 2008.
Other fees and charges remained constant at $964,000 for the first quarter
of 2009 compared to $965,000 for the first quarter of 2008. Other
noninterest income decreased $138,000, to $672,000 for the quarter ended
March 31, 2009 compared to $810,000 for the same period in 2008, due to the
mandatory redemption of the Company's VISA shares related to VISA's initial
public offering completed in March 2008, and a decrease in sales volume of
annuity and security products to customers.
Noninterest expense decreased $360,000, or 3.7%, to $9,445,000 for the
first quarter of 2009 from $9,805,000 for the first quarter in 2008.
Salaries and employee benefits decreased $472,000, due primarily to the
elimination of the bonus accrual and a reduction in staffing through normal
attrition. Occupancy and furniture and equipment expense increased $11,000
and other expenses increased $101,000 for the first quarter of 2009
compared to the first quarter of 2008.
The benefit for income taxes for the quarter ended March 31, 2009 was
$2,956,000, resulting in an effective benefit rate of 48.8%, compared to a
provision for income taxes of $134,000, or an effective tax rate of 32.4%,
for the quarter ended March 31, 2008.
North Valley Bancorp is a bank holding company headquartered in Redding,
California. Its subsidiary, North Valley Bank ("NVB"), operates twenty-six
commercial banking offices in Shasta, Humboldt, Del Norte, Mendocino, Yolo,
Solano, Sonoma, Placer and Trinity Counties in Northern California,
including two in-store supermarket branches and seven Business Banking
Centers, and a loan production office in Vacaville, CA. 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 2009 2008 $ Change % Change
--------- ---------- --------- ---------
Interest income
Loans and leases (including
fees) $ 10,536 $ 12,976 $ (2,440) -18.8%
Investment securities 874 1,169 (295) -25.2%
Federal funds sold and other 9 5 4 80.0%
--------- ---------- --------- ---------
Total interest income 11,419 14,150 (2,731) -19.3%
--------- ---------- --------- ---------
Interest expense
Interest on deposits 2,768 3,828 (1,060) -27.7%
Subordinated debentures 542 595 (53) -8.9%
Other borrowings 1 599 (598) -99.8%
--------- ---------- --------- ---------
Total interest expense 3,311 5,022 (1,711) -34.1%
--------- ---------- --------- ---------
Net interest income 8,108 9,128 (1,020) -11.2%
Provision for loan and lease
losses 7,000 2,400 4,600 191.7%
--------- ---------- --------- ---------
Net interest income after
provision for loan and lease
losses 1,108 6,728 (5,620) -83.5%
--------- ---------- --------- ---------
Noninterest income
Service charges on deposit
accounts 1,528 1,716 (188) -11.0%
Other fees and charges 964 965 (1) -0.1%
Loss on sale/writedown of
OREO (890) - (890) -
Other 672 810 (138) -17.0%
--------- ---------- --------- ---------
Total noninterest income 2,274 3,491 (1,217) -34.9%
--------- ---------- --------- ---------
Noninterest expenses
Salaries and employee
benefits 5,064 5,536 (472) -8.5%
Occupancy 761 754 7 0.9%
Furniture and equipment 469 465 4 0.9%
Other 3,151 3,050 101 3.3%
--------- ---------- --------- ---------
Total noninterest
expenses 9,445 9,805 (360) -3.7%
--------- ---------- --------- ---------
(Loss) income before
provision for income
taxes (6,063) 414 (6,477) -1564.5%
(Benefit) provision for income
taxes (2,956) 134 (3,090) -2306.0%
--------- ---------- --------- ---------
Net (loss) income $ (3,107) $ 280 $ (3,387) -1209.6%
========= ========== ========= =========
Common Share Data
(Loss) earnings per share
Basic $ (0.41) $ 0.04 $ (0.45) -1125.0%
Diluted $ (0.41) $ 0.04 $ (0.45) -1125.0%
Weighted average shares
outstanding 7,495,817 7,416,867
Weighted average shares
outstanding - diluted 7,495,817 7,544,813
Book value per share $ 10.00 $ 10.98
Tangible book value $ 7.86 $ 8.79
Shares outstanding 7,495,817 7,422,366
NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
March 31, December 31, March 31,
Balance Sheet Data 2009 2008 2008
------------ ------------ ------------
Assets
Cash and due from banks $ 19,595 $ 27,153 $ 28,793
Federal funds sold 49,915 - -
Available-for-sale securities -
at fair value 97,514 76,345 98,586
Held-to-maturity securities -
at amortized cost 15 21 31
Loans and leases net of
deferred loan fees 660,653 693,422 750,588
Allowance for loan and lease
losses (15,887) (11,327) (13,022)
------------ ------------ ------------
Net loans and leases 644,766 682,095 737,566
Premises and equipment, net 11,191 11,418 12,066
Other real estate owned 5,943 10,408 902
Goodwill and core deposit
intangibles, net 15,989 16,025 16,260
Accrued interest receivable and
other assets 58,921 56,086 51,277
------------ ------------ ------------
Total assets $ 903,849 $ 879,551 $ 945,481
============ ============ ============
Liabilities and Shareholders'
Equity
Deposits:
Demand, noninterest bearing $ 149,681 $ 161,748 $ 158,529
Demand, interest bearing 163,023 151,873 174,326
Savings and money market 172,534 157,089 181,799
Time 301,594 284,234 248,095
------------ ------------ ------------
Total deposits 786,832 754,944 762,749
Other borrowed funds - 3,516 58,395
Accrued interest payable and
other liabilities 10,133 11,872 10,857
Subordinated debentures 31,961 31,961 31,961
------------ ------------ ------------
Total liabilities 828,926 802,293 863,962
Shareholders' equity 74,923 77,258 81,519
------------ ------------ ------------
Total liabilities and
shareholders' equity $ 903,849 $ 879,551 $ 945,481
============ ============ ============
Asset Quality
Nonaccrual loans and leases $ 19,926 $ 18,936 $ 25,750
Other real estate owned 5,943 10,408 902
------------ ------------ ------------
Total nonperforming assets $ 25,869 $ 29,344 $ 26,652
============ ============ ============
Allowance for loan and lease
losses to total loans 2.40% 1.63% 1.73%
Allowance for loan and lease
losses to NPL's 79.73% 59.82% 50.57%
Allowance for loan and lease
losses to NPA's 61.41% 38.60% 48.86%
NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
Selected Financial Ratios 2009 2008
--------- ---------
Return on average total assets, annualized (1.43%) 0.12%
Return on average shareholders' equity, annualized (16.26%) 1.35%
Net interest margin (tax equivalent basis) 4.23% 4.35%
Efficiency ratio 90.97% 77.70%
Selected Average Balances
Loans $ 680,838 $ 743,004
Taxable investments 73,279 88,608
Tax-exempt investments 15,898 20,539
Federal funds sold and other 15,010 591
--------- ---------
Total earning assets $ 785,025 $ 852,742
--------- ---------
Total assets $ 878,376 $ 941,318
--------- ---------
Demand deposits - interest bearing $ 153,395 $ 154,950
Savings and money market 167,802 181,670
Time deposits 285,662 248,202
Other borrowings 33,328 104,924
--------- ---------
Total interest bearing liabilities $ 640,187 $ 689,746
--------- ---------
Demand deposits - noninterest bearing $ 149,582 $ 155,541
--------- ---------
Shareholders' equity $ 77,501 $ 83,136
--------- ---------
NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share data)
For the Quarter Ended
------------------------------------------
March December September June
2009 2008 2008 2008
--------- --------- --------- ---------
Interest income $ 11,419 $ 11,834 $ 12,744 $ 13,363
Interest expense 3,311 3,706 3,932 4,294
--------- --------- --------- ---------
Net interest income 8,108 8,128 8,812 9,069
Provision for loan and lease
losses 7,000 3,000 1,500 5,200
Noninterest income 2,274 2,900 284 3,477
Noninterest expense 9,445 9,583 9,694 9,577
--------- --------- --------- ---------
Loss before benefit for income
taxes (6,063) (1,555) (2,098) (2,231)
Benefit for income taxes (2,956) (2,409) (679) (722)
--------- --------- --------- ---------
Net (loss) income $ (3,107) $ 854 $ (1,419) $ (1,509)
========= ========= ========= =========
(Loss) earnings per share:
Basic $ (0.41) $ 0.11 $ (0.19) $ (0.20)
========= ========= ========= =========
Diluted $ (0.41) $ 0.11 $ (0.19) $ (0.20)
========= ========= ========= =========
Contact Information: For further information contact:
Michael J. Cushman
President & Chief Executive Officer
(530) 226-2900
Fax: (530) 221-4877
Kevin R. Watson
Executive Vice President & Chief Financial Officer
(530) 226-2900
Fax: (530) 221-4877