SOURCE: North Valley Bancorp

North Valley Bancorp

May 03, 2011 08:30 ET

North Valley Bancorp Reports Results for the Quarter Ended March 31, 2011

REDDING, CA--(Marketwire - May 3, 2011) - North Valley Bancorp (NASDAQ: NOVB), a bank holding company with $894 million in assets, today reported results for the quarter ended March 31, 2011. North Valley Bancorp ("the Company") is the parent company for North Valley Bank ("NVB").

The Company reported net income for the quarter ended March 31, 2011 of $399,000, or $0.06 per diluted share compared to a net loss for the quarter ended March 31, 2010 of $312,000, or ($0.21) per diluted share. "We are pleased with the continued progress made in achieving our three key goals which are to reduce the level of nonperforming assets, operate profitably and focus on high quality relationship-based loans," stated Mike Cushman, President and CEO.

The Company recorded a provision for loan losses in the amount of $1,000,000 for the quarter ended March 31, 2011 compared to a provision for loan losses of $782,000 for the quarter ended March 31, 2010. The allowance for loan losses at March 31, 2011 was $14,471,000, or 2.93% of total loans, compared to $14,993,000, or 2.92% of total loans, at December 31, 2010 and $17,708,000, or 3.05% of total loans, at March 31, 2010.

At March 31, 2011, total assets were $893,815,000, an increase of $6,429,000, or 0.7%, from $887,386,000 at March 31, 2010. The loan portfolio totaled $494,509,000 at March 31, 2011, a decrease of $86,420,000, or 14.9%, compared to March 31, 2010. The loan to deposit ratio at March 31, 2011 was 65.2% as compared to 73.6% at March 31, 2010, and 68.1% at December 31, 2010. Total deposits decreased $30,697,000, or 3.9%, to $758,635,000 at March 31, 2011 compared to $789,332,000 at March 31, 2010. Available-for-sale investment securities increased $148,879,000 from March 31, 2010 to March 31, 2011, while Federal funds sold decreased $71,125,000 during the same period. The increase in available-for-sale investment securities was primarily due to the decrease in loans and the decrease in Federal funds sold. When compared to December 31, 2010, total assets increased $8,874,000 from $884,941,000, driven by an increase in deposits of $4,845,000 from $753,790,000, while loans decreased by $18,957,000 from $513,466,000. Available-for-sale investment securities increased $24,270,000 from December 31, 2010 to March 31, 2011, while Federal funds sold decreased $4,265,000 from December 31, 2010 to March 31, 2011.

At March 31, 2011, the Company's Total Risk-based Capital was $114,344,000, and its capital ratios were: Total Risk-based Capital ratio - 18.17%; Tier 1 risk-based Capital ratio - 16.49%; and Tier 1 Leverage ratio - 11.74%. At March 31, 2011, the Bank's Total Risk-based Capital was $117,922,000, and its capital ratios were: Total Risk-based Capital ratio - 18.74%; Tier 1 risk-based Capital ratio - 17.48%; and Tier 1 Leverage ratio - 12.43%.

Credit Quality

Nonperforming loans (defined as nonaccrual loans and loans 90 days or more past due and still accruing interest) decreased $31,083,000, or 68.2%, to $14,494,000 at March 31, 2011 from $45,875,000 at March 31, 2010, and decreased $5,571,000 from the December 31, 2010 balance of $20,065,000. Nonperforming loans as a percentage of total loans were 2.93% at March 31, 2011, as compared to 3.91% at December 31, 2010 and to 7.90% at March 31, 2010.

Nonperforming assets (nonperforming loans and OREO) totaled $37,813,000 at March 31, 2011, a decrease of $21,060,000 from the March 31, 2010 balance of $58,873,000, and a $8,036,000 decrease from the December 31, 2010 balance of $45,849,000. Nonperforming assets as a percentage of total assets were 4.23% at March 31, 2011 compared to 6.63% at March 31, 2010 and 5.18% at December 31, 2010.

Gross loan charge offs for the first quarter of 2011 were $1,605,000 and recoveries totaled $83,000 resulting in net charge offs of $1,522,000. Gross loan 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.

The overall level of nonperforming loans decreased $5,571,000 to $14,494,000 at March 31, 2011 from $20,065,000 at December 31, 2010. During the first quarter of 2011, the Company identified six loans totaling $3,716,000 as nonperforming loans. The additions were offset by reductions in nonperforming loans totaling $9,287,000 due primarily to collections received on certain loans and secondarily due to charge-offs and the transfer of three properties to OREO totaling $816,000. Of the six loans totaling $3,716,000 identified as nonperforming loans during the first quarter of 2011, one relationship consisting of two loans totaled $3,086,000 for a commercial real estate building located in Shasta County. A specific reserve of $557,000 has been established for this relationship. The remaining four loans in this group that were placed on nonaccrual during the first quarter of 2011 total $630,000 and specific reserves totaling $39,000 have been established.

The Company's OREO properties decreased $2,465,000 to $23,319,000 at March 31, 2011 from $25,784,000 at December 31, 2010. The decrease in OREO was due to the sale of seven properties totaling $2,915,000, which was partially offset by the transfer of three properties to OREO totaling $816,000, and the write-down of the value of OREO properties during the quarter ended March 31, 2011 of $366,000.

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, increased $464,000, or 6.3%, for the three months ended March 31, 2011 compared to the same period in 2010. Interest income decreased by $457,000, primarily due to both the lower yield on earning assets and the decrease in the average loan balances. The Company had foregone interest income of $259,000 and $585,000 for the loans on nonaccrual status for the three months ended March 31, 2011 and 2010, respectively. Offsetting the decrease in interest income was a decrease in interest expense of $921,000, or 36.4%, due to a decrease in the rates paid on deposits for the quarter ended March 31, 2011 compared to the same period in 2010. Average loans decreased $89,080,000 in the first quarter of 2011 compared to the first quarter of 2010, while the yield on the loan portfolio increased 10 basis points to 6.01% for the quarter ended March 31, 2011. Overall, average earning assets increased $4,714,000 in the first quarter of 2011 compared to the first quarter of 2010. Average yields on earning assets decreased 26 basis points from the quarter ended March 31, 2010, to 4.80% for the quarter ended March 31, 2011 while the average rate paid on interest-bearing liabilities decreased by 52 basis points to 1.03%. The Company's net interest margin for the quarter ended March 31, 2011 was 3.99%, an increase of 21 basis points from the margin of 3.78% for the first quarter in 2010 and an increase of 23 basis points from the 3.76% net interest margin for the linked quarter ended December 31, 2010.

Noninterest income for the quarter ended March 31, 2011 increased $141,000, or 4.7%, to $3,153,000 compared to $3,012,000 for the same period in 2010. Service charges on deposits decreased by $315,000 to $1,166,000 for the first quarter of 2011 compared to $1,481,000 for the same period in 2010. Other fees and charges increased by $90,000 to $1,121,000 for the first quarter of 2011 compared to $1,031,000 for the first quarter of 2010. Other noninterest income increased $366,000, to $866,000 for the quarter ended March 31, 2011 compared to $500,000 for the same period in 2010, due primarily to a gain on sale of SBA loans of $212,000 in the first quarter of 2011, and 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 $766,000, or 7.5%, to $9,471,000 for the first quarter of 2011 from $10,237,000 for the first quarter in 2010. Salaries and employee benefits increased $430,000, for the first quarter of 2011 compared to the first quarter of 2010 due primarily to hiring of production personnel. Occupancy and furniture and equipment expense decreased $169,000 for the first quarter of 2011 compared to the first quarter of 2010 due to a decrease in depreciation and rent expense. OREO expense decreased $398,000 to $452,000, for the first quarter of 2011 compared to $850,000 for the same period in 2010, and FDIC and state assessments decreased $263,000 to $443,000 for the first quarter of 2011, compared to $706,000 for the same period in 2010. Other expense decreased $366,000 to $2,871,000 for the first quarter of 2011 compared to $3,237,000 for the same period in 2010 due to a decrease in professional fees.

The Company recorded a provision for income taxes for the quarter ended March 31, 2011 of $89,000, resulting in an effective tax rate of 18.2%, compared to a benefit for income taxes of $353,000, or an effective benefit rate of 53.1%, for the quarter ended March 31, 2010.

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 Operations Data     2011       2010     $ Change   % Change
                               ---------- ---------  ---------  ---------
Interest income
   Loans (including fees)      $    7,450 $   8,616  $  (1,166)    (13.53%)
   Investment securities            1,960     1,227        733      59.74%
   Federal funds sold and
    other                               8        32        (24)    (75.00%)
                               ---------- ---------  ---------  ---------
       Total interest income        9,418     9,875       (457)     (4.63%)
                               ---------- ---------  ---------  ---------
Interest expense
   Interest on deposits             1,082     2,019       (937)    (46.41%)
   Subordinated debentures            530       514         16       3.11%
                               ---------- ---------  ---------  ---------
       Total interest expense       1,612     2,533       (921)    (36.36%)
                               ---------- ---------  ---------  ---------
Net interest income                 7,806     7,342        464       6.32%
Provision for loan losses           1,000       782        218      27.88%
                               ---------- ---------  ---------  ---------
Net interest income after
 provision for loan losses          6,806     6,560        246       3.75%
                               ---------- ---------  ---------  ---------

Noninterest income
   Service charges on deposit
    accounts                        1,166     1,481       (315)    (21.27%)
   Other fees and charges           1,121     1,031         90       8.73%
   Other                              866       500        366      73.20%
                               ---------- ---------  ---------  ---------
       Total noninterest
        income                      3,153     3,012        141       4.68%
                               ---------- ---------  ---------  ---------

Noninterest expenses
   Salaries and employee
    benefits                        4,717     4,287        430      10.03%
   Occupancy                          692       734        (42)     (5.72%)
   Furniture and equipment            296       423       (127)    (30.02%)
   Other real estate owned
    expense                           452       850       (398)    (46.82%)
   FDIC and state assessments         443       706       (263)    (37.25%)
   Other                            2,871     3,237       (366)    (11.31%)
                               ---------- ---------  ---------  ---------
       Total noninterest
        expenses                    9,471    10,237       (766)     (7.48%)
                               ---------- ---------  ---------  ---------
       Income (loss) before
        provision (benefit)
        for income taxes              488      (665)     1,153     173.38%
Provision (benefit) for income
 taxes                                 89      (353)       442     125.21%
                               ---------- ---------  ---------  ---------
       Net income (loss)       $      399 $    (312) $     711     227.88%
                               ========== =========  =========  =========


Common Share Data
  Earnings (loss) per share
     Basic                     $     0.06 $   (0.21) $    0.27     128.57%
     Diluted                   $     0.06 $   (0.21) $    0.27     128.57%

  Weighted average shares
   outstanding                  6,832,492 1,499,163
  Weighted average shares
   outstanding -
      diluted                   6,832,492 1,499,163
  Book value per share         $    12.41 $   56.02
  Tangible book value          $    12.33 $   55.65
  Shares outstanding            6,832,492 1,499,163




                           NORTH VALLEY BANCORP
                  CONDENSED CONSOLIDATED FINANCIAL DATA
                                (Unaudited)
                          (Dollars in thousands)

                                           March 31, December 31, March 31,
Balance Sheet Data                           2011       2010       2010
                                           ---------  ---------  ---------
Assets
  Cash and due from banks                  $  23,934  $  14,629  $  20,546
  Federal funds sold                           4,740      9,005     75,865
  Time deposits at other financial
   institutions                                  459        459        425
  Available-for-sale securities - at fair
   value                                     289,914    265,644    141,035
  Held-to-maturity securities - at
   amortized cost                                  6          6          8

  Loans net of deferred loan fees            494,509    513,466    580,929
  Allowance for loan losses                  (14,471)   (14,993)   (17,708)
                                           ---------  ---------  ---------
    Net loans                                480,038    498,473    563,221

  Premises and equipment, net                  8,552      8,799      9,898
  Other real estate owned                     23,319     25,784     12,998
  Core deposit intangibles, net                  510        546        656
  Accrued interest receivable and other
   assets                                     62,343     61,596     62,734
                                           ---------  ---------  ---------
Total assets                               $ 893,815  $ 884,941  $ 887,386
                                           =========  =========  =========

Liabilities and Shareholders' Equity
  Deposits:
    Demand, noninterest bearing            $ 153,062  $ 155,499  $ 148,171
    Demand, interest bearing                 161,807    161,241    155,236
    Savings and money market                 224,426    208,476    215,865
    Time                                     219,340    228,574    270,060
                                           ---------  ---------  ---------
        Total deposits                       758,635    753,790    789,332

  Accrued interest payable and other
   liabilities                                18,460     15,212     13,409
  Subordinated debentures                     31,961     31,961     31,961
                                           ---------  ---------  ---------
Total liabilities                            809,056    800,963    834,702
  Shareholders' equity                        84,759     83,978     52,684
                                           ---------  ---------  ---------
Total liabilities and shareholders' equity $ 893,815  $ 884,941  $ 887,386
                                           =========  =========  =========

Asset Quality
  Nonaccrual loans                         $  14,484  $  20,065  $  45,577
  Loans past due 90 days and accruing
   interest                                       10          -        298
  Other real estate owned                     23,319     25,784     12,998
                                           ---------  ---------  ---------
    Total nonperforming assets             $  37,813  $  45,849  $  58,873
                                           =========  =========  =========

  Allowance for loan losses to total loans      2.93%      2.92%      3.05%
  Allowance for loan losses to NPL's           99.84%     74.72%     38.60%
  Allowance for loan losses to NPA's           38.27%     32.70%     30.08%




                           NORTH VALLEY BANCORP
                  CONDENSED CONSOLIDATED FINANCIAL DATA
                                (Unaudited)
                          (Dollars in thousands)

                                                      Three Months Ended
                                                           March 31,
Selected Financial Ratios                              2011       2010
                                                     ---------  ---------
  Return on average total assets                          0.18%     (0.14%)
  Return on average shareholders' equity                  1.92%     (2.39%)
  Net interest margin (tax equivalent basis)              3.99%      3.78%
  Efficiency ratio                                       86.42%     96.76%

Selected Average Balances
  Loans                                              $ 502,431  $ 591,511
  Taxable investments                                  271,224    134,457
  Tax-exempt investments                                14,357     15,570
  Federal funds sold and other                          14,210     55,970
                                                     ---------  ---------
    Total earning assets                             $ 802,222  $ 797,508
                                                     ---------  ---------
    Total assets                                     $ 894,302  $ 875,756
                                                     ---------  ---------

  Demand deposits - interest bearing                 $ 161,324  $ 157,314
  Savings and money market                             217,535    196,775
  Time deposits                                        224,219    277,276
  Other borrowings                                      31,961     31,961
                                                     ---------  ---------
    Total interest bearing liabilities               $ 635,039  $ 663,326
                                                     ---------  ---------
  Demand deposits - noninterest bearing              $ 155,494  $ 146,988
                                                     ---------  ---------
  Shareholders' equity                               $  84,164  $  52,881
                                                     ---------  ---------




                           NORTH VALLEY BANCORP
                  CONDENSED CONSOLIDATED FINANCIAL DATA
                                (Unaudited)
              (Dollars in thousands, except per share data)

                                          For the Quarter Ended
                                -------------------------------------------
                                  March    December   September    June
                                  2011       2010       2010       2010
                                ---------- ---------  ---------  ---------
Interest income                 $    9,418 $   9,437  $   9,773  $   9,837
Interest expense                     1,612     1,818      2,183      2,451
                                ---------- ---------  ---------  ---------
  Net interest income                7,806     7,619      7,590      7,386

Provision for loan losses            1,000         -      4,600      2,600
Noninterest income                   3,153     3,192      3,363      3,377
Noninterest expense                  9,471    10,244     11,779      9,872
                                ---------- ---------  ---------  ---------

Income (loss) before provision
 (benefit) for income taxes            488       567     (5,426)    (1,709)
Provision (benefit) for income
 taxes                                  89    (1,702)     2,207     (1,137)
                                ---------- ---------  ---------  ---------
  Net income (loss)             $      399 $   2,269  $  (7,633) $    (572)
                                ---------- ---------  ---------  ---------

Preferred Stock Discount                 -         -    (18,667)         -
                                ---------- ---------  ---------  ---------
Net income (loss) available to
 common shareholder             $      399 $   2,269  $ (26,300) $    (572)
                                ========== =========  =========  =========
Earnings (loss) per common
 share:
  Basic                         $     0.06 $    0.33  $   (4.70) $   (0.40)
                                ========== =========  =========  =========
  Diluted                       $     0.06 $    0.33  $   (4.70) $   (0.40)
                                ========== =========  =========  =========

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