SOURCE: North Valley Bancorp

North Valley Bancorp

April 30, 2013 08:30 ET

North Valley Bancorp Reports Results for the Quarter Ended March 31, 2013

REDDING, CA--(Marketwired - Apr 30, 2013) -  North Valley Bancorp (NASDAQ: NOVB), a bank holding company with $911 million in assets, today reported results for the quarter ended March 31, 2013. 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, 2013 of $1,261,000, or $0.18 per diluted share compared to net income for the quarter ended March 31, 2012 of $480,000, or $0.07 per diluted share. "We are pleased with the results from the first quarter as we execute our 2013 Plan. Loan production met our goal; however, loan payoffs exceeded expectations resulting in a net reduction in total loans. We continue to negotiate the sale of OREO and to focus on reducing operating costs as we navigate through an improving economy amidst a challenging interest rate environment," stated Mike Cushman, President and CEO.

The Company did not record a provision for loan losses for the quarter ended March 31, 2013 compared to a provision for loan losses of $400,000 for the quarter ended March 31, 2012. The allowance for loan losses at March 31, 2013 was $9,651,000, or 1.98% of total loans, compared to $10,458,000, or 2.12% of total loans, at December 31, 2012 and $12,274,000, or 2.74% of total loans, at March 31, 2012.

At March 31, 2013, total assets were $910,734,000, a decrease of $2,995,000, or 0.3%, from $913,729,000 at March 31, 2012. The loan portfolio totaled $488,606,000 at March 31, 2013, an increase of $39,957,000, or 8.9%, compared to $448,649,000 at March 31, 2012. The loan to deposit ratio at March 31, 2013 was 63.0% as compared to 58.1% at March 31, 2012, and 64.0% at December 31, 2012. Total deposits increased $3,356,000, or 0.4%, to $775,920,000 at March 31, 2013 compared to $772,564,000 at March 31, 2012. Available-for-sale investment securities totaled $283,721,000 at March 31, 2013, a decrease of $70,433,000 from March 31, 2012. When compared to December 31, 2012, total assets increased $8,391,000 from $902,343,000, driven by an increase in deposits of $7,340,000 from $768,580,000, while loans decreased by $3,605,000 from $492,211,000. Available-for-sale investment securities decreased $2,094,000 from December 31, 2012 to March 31, 2013, while Federal funds sold increased $20,060,000 from December 31, 2012 to March 31, 2013. 

At March 31, 2013, the Company's Total Risk-based Capital was $115,023,000, and its capital ratios were: Total Risk-based Capital ratio - 18.6%; Tier 1 risk-based Capital ratio - 17.4%; and Tier 1 Leverage ratio - 12.1%. At March 31, 2013, the Bank's Total Risk-based Capital was $115,381,000, and its capital ratios were: Total Risk-based Capital ratio - 18.7%; Tier 1 risk-based Capital ratio - 17.4%; and Tier 1 Leverage ratio - 12.1%.

Credit Quality

Nonperforming loans (defined as nonaccrual loans and loans 90 days or more past due and still accruing interest) decreased $9,185,000, or 58.8%, to $6,449,000 at March 31, 2013 from $15,634,000 at March 31, 2012, and increased $614,000 from the December 31, 2012 balance of $5,835,000. Nonperforming loans as a percentage of total loans were 1.32% at March 31, 2013, as compared to 1.19% at December 31, 2012 and 3.48% at March 31, 2012.

During the first quarter of 2013, the Company identified eight loans totaling $2,001,000, net of charge-offs, as additional nonperforming loans. The additions were offset by reductions in nonperforming loans totaling $1,387,000 due primarily to collections received on certain loans and secondarily due to charge-offs and the transfer of three properties to OREO totaling $602,000. Of the eight loans totaling $2,001,000 identified as nonperforming loans during the first quarter of 2013, three relationships make up $1,828,000 of the balance. The first relationship is for a multi-family commercial real estate loan totaling $642,000 located in Yolo County. The Company has recorded a $239,000 charge-off for this loan and there is no specific reserve established. The second relationship consists of three loans totaling $617,000 to a contractor located in Shasta County. The Company has recorded an $86,000 charge-off for these loans and there is no specific reserve established. The third relationship consists of two hospitality commercial real estate loans totaling $569,000 located in Humboldt County. The Company has not recorded a charge-off for these loans and there is no specific reserve established. The remaining two loans of the eight identified as nonperforming loans in the first quarter total $173,000. Charge-offs of $71,000 were recorded against one of the loans and there were no specific reserves established. 

Gross loan charge offs for the first quarter of 2013 were $1,056,000 and recoveries totaled $249,000 resulting in net charge offs of $807,000. Gross loan charge offs for the first quarter of 2012 were $885,000 and recoveries totaled $103,000 resulting in net charge offs of $782,000.

Nonperforming assets (nonperforming loans and OREO) totaled $27,814,000 at March 31, 2013, a decrease of $4,726,000 from the March 31, 2012 balance of $32,540,000, and a $444,000 decrease from the December 31, 2012 balance of $28,258,000. Nonperforming assets as a percentage of total assets were 3.05% at March 31, 2013 compared to 3.56% at March 31, 2012 and 3.13% at December 31, 2012. 

The Company's OREO properties decreased $1,058,000 to $21,365,000 at March 31, 2013 from $22,423,000 at December 31, 2012. The decrease in OREO was due to the sale of three properties totaling $1,425,000 (a gain of $26,000 was recorded on the sale), and the write-down of the value of certain other OREO properties of $261,000 during the quarter ended March 31, 2013, which was partially offset by the transfer of three properties to OREO totaling $602,000.

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 $44,000, or 0.6%, for the three months ended March 31, 2013 compared to the same period in 2012. Interest income decreased by $741,000, or 8.6%, primarily due to both the lower yield on earning assets and a decrease in average earning asset balances. The Company had foregone interest income of $85,000 and $155,000 for the loans on nonaccrual status for the three months ended March 31, 2013 and 2012, respectively. Average loans increased $32,936,000 in the first quarter of 2013 compared to the first quarter of 2012, while the yield on the loan portfolio decreased 42 basis points to 5.33% for the quarter ended March 31, 2013. Offsetting the decrease in interest income was a decrease in interest expense of $785,000, or 64.5%, due to both a decrease in the rates paid on deposits and the rates paid on its subordinated debt for the quarter ended March 31, 2013 compared to the same period in 2012. Overall, average earning assets decreased $32,329,000 to $797,861,000 in the first quarter of 2013 compared to the first quarter of 2012. Average yields on earning assets decreased 17 basis points from the quarter ended March 31, 2012, to 4.03% for the quarter ended March 31, 2013 while the average rate paid on interest-bearing liabilities decreased by 48 basis points to 0.28%. The Company's net interest margin for the quarter ended March 31, 2013 was 3.81%, an increase of 20 basis points from the margin of 3.61% for the first quarter in 2012 and a decrease of 12 basis points from the 3.93% net interest margin for the linked quarter ended December 31, 2012.

Noninterest income for the quarter ended March 31, 2013 increased $1,070,000, or 32.8%, to $4,329,000 compared to $3,259,000 for the same period in 2012. Service charges on deposits decreased by $100,000 to $952,000 for the first quarter of 2013 compared to $1,052,000 for the same period in 2012. Other fees and charges decreased by $77,000 to $1,120,000 for the first quarter of 2013 compared to $1,197,000 for the first quarter of 2012. The Company recorded gains on the sale of mortgage loans of $757,000, and gains on the sale of SBA loans of $168,000 for the first quarter of 2013 compared to gains of $361,000 and $43,000, respectively, for the same period in 2012. The Company recognized gains on the sale of investment securities of $543,000 for the first quarter of 2013 compared to a loss on sale of investments securities of $9,000 for the same period in 2012. Other noninterest income increased $174,000, to $789,000 for the quarter ended March 31, 2013 compared to $615,000 for the same period in 2012. 

Noninterest expense increased $232,000, or 2.4%, to $9,888,000 for the first quarter of 2013 from $9,656,000 for the first quarter in 2012. Salaries and employee benefits increased $105,000, for the first quarter of 2013 compared to the first quarter of 2012 due primarily to incentive compensation for production personnel. Occupancy and furniture and equipment expense decreased $32,000 for the first quarter of 2013 compared to the first quarter of 2012 due to a decrease in depreciation and rent expense as a result of facilities consolidation initiatives completed in 2012. OREO expense decreased $258,000 to $376,000, for the first quarter of 2013 compared to $634,000 for the same period in 2012, and FDIC and state assessments decreased $95,000 to $218,000 for the first quarter of 2013, compared to $313,000 for the same period in 2012. Other expense increased $512,000 to $3,279,000 for the first quarter of 2013 compared to $2,767,000 for the same period in 2012 due primarily to the recording of a $500,000 additional reserve for expenses expected to be incurred during 2013 in connection with the anticipated settlement of a compliance exam conducted by the Federal Reserve Bank of San Francisco in 2010. 

The Company recorded a provision for income taxes for the quarter ended March 31, 2013 of $616,000, resulting in an effective tax rate of 32.8%, compared to a provision for income taxes of $115,000, or an effective tax rate of 19.3%, for the quarter ended March 31, 2012.

North Valley Bancorp is a bank holding company headquartered in Redding, California. Its subsidiary, North Valley Bank ("NVB"), operates twenty-two 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   2013   2012     $ Change     % Change  
Interest income                            
  Loans (including fees)   $ 6,366   $ 6,470     $ (104 )   (1.61 %)
  Investment securities     1,483     2,111       (628 )   (29.75 %)
  Federal funds sold and other     19     28       (9 )   (32.14 %)
    Total interest income     7,868     8,609       (741 )   (8.61 %)
Interest expense                            
  Interest on deposits     299     734       (435 )   (59.26 %)
  Subordinated debentures     133     483       (350 )   (72.46 %)
    Total interest expense     432     1,217       (785 )   (64.50 %)
Net interest income     7,436     7,392       44     0.60 %
Provision for loan losses     -     400       (400 )   (100.00 %)
Net interest income after provision for loan losses     7,436     6,992       444     6.35 %
                             
Noninterest income                            
  Service charges on deposit accounts     952     1,052       (100 )   (9.51 %)
  Other fees and charges     1,120     1,197       (77 )   (6.43 %)
  Gain on sales of mortgage loans     757     361       396     109.70 %
  Gain on sales of SBA loans     168     43       125     290.70 %
  Gain (loss) on sales of securities, net     543     (9 )     552     (6133.33 %)
  Other     789     615       174     28.29 %
    Total noninterest income     4,329     3,259       1,070     32.83 %
                             
Noninterest expenses                            
  Salaries and employee benefits     5,162     5,057       105     2.08 %
  Occupancy     633     640       (7 )   (1.09 %)
  Furniture and equipment     220     245       (25 )   (10.20 %)
  Other real estate owned expense     376     634       (258 )   (40.69 %)
  FDIC and state assessments     218     313       (95 )   (30.35 %)
  Other     3,279     2,767       512     18.50 %
    Total noninterest expenses     9,888     9,656       232     2.40 %
    Income before provision for income taxes     1,877     595       1,282     215.46 %
Provision for income taxes     616     115       501     435.65 %
    Net income   $ 1,261   $ 480     $ 781     162.71 %
                             
                             
Common Share Data                            
Earnings per share                            
  Basic   $ 0.18   $ 0.07     $ 0.11     157.14 %
  Diluted   $ 0.18   $ 0.07     $ 0.11     157.14 %
                             
Weighted average shares outstanding     6,835,192     6,833,752                
Weighted average shares outstanding - diluted     6,845,484     6,833,752                
Book value per share   $ 14.18   $ 13.31                
Tangible book value   $ 14.15   $ 13.26                
Shares outstanding     6,835,192     6,833,752                
                             
                             
                             
NORTH VALLEY BANCORP  
CONDENSED CONSOLIDATED FINANCIAL DATA  
(Unaudited)  
(Dollars in thousands)  
                   
    March 31,     December 31,     March 31,  
Balance Sheet Data   2013     2012     2012  
Assets                        
  Cash and due from banks   $ 15,890     $ 22,654     $ 19,314  
  Federal funds sold     35,925       15,865       16,400  
  Time deposits at other financial institutions     2,219       2,219       1,960  
  Available-for-sale securities - at fair value     283,721       285,815       354,154  
  Held-to-maturity securities - at amortized cost     6       6       6  
                         
  Loans     488,606       492,211       448,649  
  Allowance for loan losses     (9,651 )     (10,458 )     (12,274 )
    Net loans     478,955       481,753       436,375  
                         
  Premises and equipment, net     8,978       9,181       8,738  
  Other real estate owned     21,365       22,423       16,906  
  Core deposit intangibles, net     219       255       364  
  Accrued interest receivable and other assets     63,456       62,172       59,512  
Total assets   $ 910,734     $ 902,343     $ 913,729  
                         
Liabilities and Shareholders' Equity                        
  Deposits:                        
    Demand, noninterest bearing   $ 174,495     $ 177,855     $ 156,030  
    Demand, interest bearing     193,846       185,315       184,408  
    Savings and money market     245,094       233,034       223,475  
    Time     162,485       172,376       208,651  
      Total deposits     775,920       768,580       772,564  
                         
  Accrued interest payable and other liabilities     16,217       15,951       18,215  
  Subordinated debentures     21,651       21,651       31,961  
Total liabilities     813,788       806,182       822,740  
  Shareholders' equity     96,946       96,161       90,989  
Total liabilities and shareholders' equity   $ 910,734     $ 902,343     $ 913,729  
                         
Asset Quality                        
  Nonaccrual loans   $ 6,449     $ 5,835     $ 15,634  
  Loans past due 90 days and accruing interest     -       -       -  
  Other real estate owned     21,365       22,423       16,906  
    Total nonperforming assets   $ 27,814     $ 28,258     $ 32,540  
                         
  Classified assets   $ 39,113     $ 45,297     $ 51,441  
  Bank Tier 1 Capital + ALLL   $ 117,245     $ 115,580     $ 128,110  
  Classified assets ratio     33.36 %     39.19 %     40.15 %
                           
  Allowance for loan losses to total loans     1.98 %     2.12 %     2.74 %
  Allowance for loan losses to NPL's     149.65 %     179.23 %     78.51 %
                           
                           
                           
NORTH VALLEY BANCORP  
CONDENSED CONSOLIDATED FINANCIAL DATA  
(Unaudited)  
(Dollars in thousands)  
             
    Three Months Ended  
    March 31,  
Selected Financial Ratios   2013     2012  
  Return on average total assets     0.57 %     0.21 %
  Return on average shareholders' equity     5.30 %     2.12 %
  Net interest margin (tax equivalent basis)     3.81 %     3.61 %
  Efficiency ratio     84.05 %     90.66 %
                 
Selected Average Balances                
  Loans   $ 484,415     $ 451,479  
  Taxable investments     270,493       316,776  
  Tax-exempt investments     9,840       12,985  
  Federal funds sold and other     33,113       48,950  
    Total earning assets   $ 797,861     $ 830,190  
    Total assets   $ 897,178     $ 916,176  
                   
  Demand deposits - interest bearing   $ 188,138     $ 175,999  
  Savings and money market     238,785       219,729  
  Time deposits     166,198       212,900  
  Other borrowings     21,651       31,961  
    Total interest bearing liabilities   $ 614,772     $ 640,589  
  Demand deposits - noninterest bearing   $ 169,080     $ 158,384  
  Shareholders' equity   $ 96,483     $ 90,725  
                 
                   
                   
NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share data)
 
    For the Quarter Ended
    March   December   September     June
    2013   2012   2012     2012
Interest income   $ 7,868   $ 8,276   $ 8,426     $ 8,420
Interest expense     432     504     713       1,091
  Net interest income     7,436     7,772     7,713       7,329
                           
Provision for loan losses     -     -     700       1,000
Noninterest income     4,329     4,269     4,204       4,687
Noninterest expense     9,888     11,336     9,759       9,228
                           
Income before provision (benefit) for income taxes     1,877     705     1,458       1,788
Provision (benefit) for income taxes     616     160     (2,546 )     527
  Net income   $ 1,261   $ 545   $ 4,004     $ 1,261
                           
Earnings per common share:                          
  Basic   $ 0.18   $ 0.08   $ 0.59     $ 0.18
  Diluted   $ 0.18   $ 0.08   $ 0.59     $ 0.18

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