SOURCE: North Valley Bancorp

North Valley Bancorp

November 01, 2011 08:30 ET

North Valley Bancorp Reports Results for the Quarter and Nine Months Ended September 30, 2011

REDDING, CA--(Marketwire - Nov 1, 2011) - North Valley Bancorp (NASDAQ: NOVB), a bank holding company with approximately $911 million in assets, today reported results for the third quarter and nine months ended September 30, 2011. North Valley Bancorp ("the Company") is the parent company for North Valley Bank ("the Bank").

The Company reported net operating income for the third quarter ended September 30, 2011 of $1,320,000, or $0.19 per diluted share, compared to a net operating loss of $7,633,000, or ($1.36) per diluted share for the same period in 2010. The Company reported net operating income for the nine months ended September 30, 2011 of $2,238,000, or $0.33 per diluted share, compared to a net operating loss of $8,517,000, or ($2.97) per diluted share, for the same period in 2010. "Our efforts to reduce nonperforming assets and gain efficiency are showing significant results. Our goal to generate new loan production has been the most challenging, although we are encouraged by the hiring of key personnel who have a strong banking presence in their respective markets. A renewed focus on two regions, Sacramento/Placer counties and Sonoma/Mendocino counties, is showing positive results and the formation of new advisory boards in these markets should continue the momentum as the economy improves. I am proud of our accomplishments during the quarter and throughout the year," stated Michael J. Cushman, President and CEO.

The Company recorded provisions for loan losses of $400,000 and $2,650,000 for the third quarter and nine months ended September 30, 2011, respectively, compared to provisions for loan losses of $4,600,000 and $8,200,000 for the third quarter and nine months ended September 30, 2010, respectively. The allowance for loan losses at September 30, 2011 was $13,671,000, or 2.90% of total loans, compared to $14,993,000, or 2.92% of total loans at December 31, 2010 and $15,249,000, or 2.84% of total loans at September 30, 2010.

At September 30, 2011, total assets were $911,289,000, an increase of $16,296,000, or 1.8%, from $894,993,000 at September 30, 2010. The loan portfolio totaled $471,758,000 at September 30, 2011, a decrease of $64,538,000, or 12.0%, compared to $536,296,000 at September 30, 2010. The loan to deposit ratio at September 30, 2011 was 61.3% as compared to 70.0% at September 30, 2010, and 68.1% at December 31, 2010. Total deposits increased $3,755,000, or 0.5%, to $769,408,000 at September 30, 2011 compared to $765,653,000 at September 30, 2010. When compared to December 31, 2010, total assets at September 30, 2011 increased $26,348,000 from $884,941,000, as loans decreased by $41,708,000 from $513,466,000 and deposits increased by $15,618,000 from $753,790,000. Available-for-sale investment securities and Federal funds sold increased $7,236,000 and $59,530,000, respectively, from December 31, 2010 to September 30, 2011 resulting from the increase in deposits and decrease in loans.

At September 30, 2011, the Company's Total Risk-based Capital was $116,703,000, and its risk-based capital ratios were: Total Risk-based Capital ratio - 19.3%; Tier 1 risk-based Capital ratio - 17.7%; and Tier 1 Leverage ratio - 12.0%. The Bank's Total Risk-based Capital at September 30, 2011 was $121,400,000, and its risk-based capital ratios were: Total Risk-based Capital ratio - 20.1%; Tier 1 risk-based Capital ratio - 18.8%; and Tier 1 Leverage ratio - 12.8%.

Credit Quality

Nonperforming loans (defined as nonaccrual loans and loans 90 days or more past due and still accruing interest) decreased $17,501,000 to $12,142,000 at September 30, 2011 from $29,643,000 at September 30, 2010, and decreased $7,923,000 when compared to the December 31, 2010 balance of $20,065,000. Nonperforming loans as a percentage of total loans were 2.57% at September 30, 2011, compared to 5.53% at September 30, 2010, and 3.91% at December 31, 2010.

Nonperforming assets (nonperforming loans and OREO) totaled $33,030,000 at September 30, 2011, a decrease of $15,463,000 from the September 30, 2010 balance of $48,493,000, and a $12,819,000 decrease from the December 31, 2010 balance of $45,849,000. Nonperforming assets as a percentage of total assets were 3.62% at September 30, 2011 compared to 5.42% at September 30, 2010 and 5.18% at December 31, 2010.

Gross loan charge-offs for the third quarter of 2011 were $1,572,000 and recoveries totaled $97,000 resulting in net charge-offs of $1,475,000 compared to gross loan charge-offs for the third quarter of 2010 of $5,705,000 and recoveries of $203,000 resulting in net charge-offs of $5,502,000. Gross charge-offs for the nine months ended September 30, 2011 were $4,375,000 and recoveries totaled $403,000 resulting in net charge-offs of $3,972,000, compared to gross charge-offs for the nine months ended September 30, 2010 of $11,740,000 and recoveries of $480,000 resulting in net charge-offs of $11,260,000.

The overall level of nonperforming loans decreased $5,443,000 to $12,142,000 at September 30, 2011 from $17,585,000 at June 30, 2011. During the third quarter of 2011, the Company added nine loans with aggregate amounts outstanding of $790,000 to nonperforming loans. These additions were offset by reductions in nonperforming loans totaling $6,233,000 due primarily to transfers to OREO of five properties totaling $4,052,000, and secondarily due to charge-offs and collections received on certain loans. For the nine loans totaling $790,000 identified as nonaccrual loans and added to nonperforming loans during the third quarter of 2011, specific reserves of $71,000 have been established.

The Company's OREO properties decreased $2,977,000 to $20,888,000 at September 30, 2011 from $23,865,000 at June 30, 2011. The decrease in OREO was due to the sale of eight properties totaling $6,273,000, a loss on sale for those eight properties totaling $297,000, and a write-down of certain other OREO properties during the quarter ended September 30, 2011 of $459,000. The decrease was partially offset by the transfer of five properties into OREO totaling $4,052,000.

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 $257,000, or 3.4%, for the three months ended September 30, 2011 compared to the same period in 2010. Interest income decreased by $535,000, primarily due to the decrease in interest income on loans due to the decrease in average loan balances. The Company had foregone interest income of $89,000 related to loans currently on nonaccrual status for the three months ended September 30, 2011 compared to $553,000 for the same period in 2010. Offsetting this was a decrease in interest expense of $792,000, or 36.3%, primarily due to a decrease in the rates paid on deposits. Average loans decreased $80,055,000 in the third quarter of 2011 compared to the third quarter of 2010, while the yield on the loan portfolio increased 3 basis points to 5.97% for the third quarter of 2011. Overall, average earning assets decreased $29,272,000 in the third quarter of 2011 compared to the third quarter of 2010. Average yields on earning assets decreased 9 basis points from the quarter ended September 30, 2010, to 4.59% for the quarter ended September 30, 2011 while the average rate paid on interest-bearing liabilities decreased by 43 basis points to 0.88%. The Company's net interest margin for the quarter ended September 30, 2011 was 3.90%, an increase of 25 basis points from the margin of 3.65% for the third quarter in 2010 and a decrease of 22 basis points from the 4.12% net interest margin for the quarter ended June 30, 2011. Net interest income increased $1,493,000 for the nine months ended September 30, 2011 compared to the same period in 2010. Total interest income decreased by $1,219,000 for the nine months ended September 30, 2011 compared to the same period in 2010, primarily due to a decrease in income on loans of $3,398,000 as a result of the decrease in the average balance of loans. Interest expense decreased $2,712,000 due primarily to a decrease on rates paid on deposits for the nine months ended September 30, 2011 compared to the same period in 2010. The net interest margin for the nine months ended September 30, 2011 increased 33 basis points to 4.00% from the net interest margin of 3.67% for the nine months ended September 30, 2010.

Noninterest income for the quarter ended September 30, 2011 was $4,012,000 compared to $3,363,000 for the same period in 2010 representing an increase of $649,000. The primary reason for the increase in noninterest income was the Company recognized a gain on sale of investment securities of $859,000 for the quarter ended September 30, 2011. Service charges on deposits decreased $284,000 to $1,205,000 for the third quarter of 2011 compared to $1,489,000 for the third quarter of 2010, while other fees and charges increased by $23,000 to $1,204,000 for the third quarter of 2011 compared to $1,181,000 for the same period in 2010. Noninterest income for the nine months ended September 30, 2011 increased $896,000 to $10,648,000 from $9,752,000 for the same period in 2010. Service charges on deposits decreased $973,000 to $3,543,000 for the nine months ended September 30, 2011 compared to $4,516,000 for the same period in 2010, while other fees and charges increased by $113,000 to $3,483,000 for the nine months ended September 30, 2011 compared to $3,370,000 for the same period in 2010.

Noninterest expense decreased $2,182,000 to $9,597,000 for the third quarter of 2011 from $11,779,000 for the third quarter of 2010. Salaries and employee benefits increased $479,000 to $4,702,000 for the third quarter of 2011 compared to the third quarter of 2010 due primarily to the hiring of production personnel. The increase in salaries and benefits expense was offset by a decrease in occupancy and equipment expense of $101,000, a decrease in other real estate owned expense of $2,364,000, a decrease in FDIC insurance premiums and state assessments of $144,000, and a decrease in other noninterest expense of $52,000 for the third quarter of 2011 compared to the third quarter of 2010. Noninterest expense for the nine months ended September 30, 2011 was $28,803,000 compared to $31,670,000 for the same period in 2010. For the nine months ended September 30, 2011, salaries and employee benefits increased $1,246,000 while occupancy and equipment expense decreased $323,000. Other real estate owned expense was $2,506,000 for the first nine months of 2011 compared to $5,344,000 for the first nine months of 2010 and FDIC insurance premiums and state assessments were $1,040,000 for the first nine months of 2011 compared to $1,840,000 for the first nine months of 2010.

The Company recorded a provision for income taxes for the quarter ended September 30, 2011 of $542,000, resulting in an effective tax rate of 29.1%, compared to a provision for income taxes of $2,207,000, for the quarter ended September 30, 2010. The provision for income taxes for the nine month period ended September 30, 2011 was $768,000, resulting in an effective tax rate of 25.6%, compared to a provision for income taxes of $717,000, for the same period in 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
September 30,
Statement of Operations Data 2011 2010 $ Change % Change
Interest income
Loans (including fees) $ 7,134 $ 8,297 $ (1,163 ) (14.02 %)
Investment securities 2,082 1,439 643 44.68 %
Federal funds sold and other 22 37 (15 ) (40.54 %)
Total interest income 9,238 9,773 (535 ) (5.47 %)
Interest expense
Interest on deposits 940 1,640 (700 ) (42.68 %)
Subordinated debentures 451 543 (92 ) (16.94 %)
Total interest expense 1,391 2,183 (792 ) (36.28 %)
Net interest income 7,847 7,590 257 3.39 %
Provision for loan losses 400 4,600 (4,200 ) (91.30 %)
Net interest income after provision for loan losses
7,447

2,990

4,457

149.06
%
Noninterest income
Service charges on deposit accounts 1,205 1,489 (284 ) (19.07 %)
Other fees and charges 1,204 1,181 23 1.95 %
Gain on sales of securities, net 859 - 859 -
Other 744 693 51 7.36 %
Total noninterest income 4,012 3,363 649 19.30 %
Noninterest expenses
Salaries and employee benefits 4,702 4,223 479 11.34 %
Occupancy 732 726 6 0.83 %
Furniture and equipment 229 336 (107 ) (31.85 %)
Other real estate owned expense 877 3,241 (2,364 ) (72.94 %)
FDIC and state assessments 294 438 (144 ) (32.88 %)
Other 2,763 2,815 (52 ) (1.85 %)
Total noninterest expenses 9,597 11,779 (2,182 ) (18.52 %)
Income (loss) before provision for income taxes 1,862 (5,426 ) 7,288 134.32 %
Provision for income taxes 542 2,207 (1,665 ) 75.44 %
Net income (loss) 1,320 (7,633 ) 8,953 117.29 %
Preferred stock discount - (18,667 ) 18,667 100.00 %
Net income (loss) available to common shareholders $ 1,320 $ (26,300 ) $ 27,620 105.02 %
Common Share Data
Earnings (loss) per share
Basic $ 0.19 $ (4.68 ) $ 4.87 104.06 %
Diluted $ 0.19 $ (4.68 ) $ 4.87 104.06 %
Weighted average shares outstanding 6,833,369 5,615,102
Weighted average shares outstanding - diluted
6,833,369

5,615,102
Book value per share $ 13.28 $ 12.19
Tangible book value $ 13.22 $ 12.11
Shares outstanding 6,833,752 6,832,492

NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
Nine Months Ended
September 30,
Statement of Operations Data 2011 2010 $ Change % Change
Interest income
Loans (including fees) $ 21,978 $ 25,376 $ (3,398 ) (13.39 %)
Investment securities 6,251 3,985 2,266 56.86 %
Federal funds sold and other 37 124 (87 ) (70.16 %)
Total interest income 28,266 29,485 (1,219 ) (4.13 %)
Interest expense
Interest on deposits 3,034 5,588 (2,554 ) (45.71 %)
Subordinated debentures 1,420 1,579 (159 ) (10.07 %)
Other borrowings 1 - 1 -
Total interest expense 4,455 7,167 (2,712 ) (37.84 %)
Net interest income 23,811 22,318 1,493 6.69 %
Provision for loan losses 2,650 8,200 (5,550 ) (67.68 %)
Net interest income after provision for loan losses
21,161

14,118

7,043

49.89
%
Noninterest income
Service charges on deposit accounts 3,543 4,516 (973 ) (21.55 %)
Other fees and charges 3,483 3,370 113 3.35 %
Gain on sales of securities, net 849 - 849 -
Other 2,773 1,866 907 48.61 %
Total noninterest income 10,648 9,752 896 9.19 %
Noninterest expenses
Salaries and employee benefits 13,894 12,648 1,246 9.85 %
Occupancy 2,124 2,155 (31 ) (1.44 %)
Furniture and equipment 819 1,111 (292 ) (26.28 %)
Other real estate owned expense 2,506 5,344 (2,838 ) (53.11 %)
FDIC and state assessments 1,040 1,840 (800 ) (43.48 %)
Other 8,420 8,572 (152 ) (1.77 %)
Total noninterest expenses 28,803 31,670 (2,867 ) (9.05 %)
Income (loss) before provision for income taxes 3,006 (7,800 ) 10,806 138.54 %
Provision for income taxes 768 717 51 (7.11 %)
Net income (loss) 2,238 (8,517 ) 10,755 126.28 %
Preferred stock discount - (18,667 ) 18,667 100.00 %
Net income (loss) available to common shareholders $ 2,238 $ (27,184 ) $ 29,422 108.23 %
Common Share Data
Earnings (loss) per share
Basic $ 0.33 $ (9.47 ) $ 9.80 103.48 %
Diluted $ 0.33 $ (9.47 ) $ 9.80 103.48 %
Weighted average shares outstanding 6,832,787 2,871,143
Weighted average shares outstanding - diluted
6,832,787

2,871,143
Book value per share $ 13.28 $ 12.19
Tangible book value $ 13.22 $ 12.11
Shares outstanding 6,833,752 6,832,492

NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
September 30, December 31, September 30,
Balance Sheet Data 2011 2010 2010
Assets
Cash and due from banks $ 21,662 $ 14,629 $ 20,465
Federal funds sold 68,535 9,005 21,035
Time deposits at other financial institutions 459 459 425
Available-for-sale securities - at fair value 272,880 265,644 241,987
Held-to-maturity securities - at amortized cost 6 6 6
Loans net of deferred loan fees 471,758 513,466 536,296
Allowance for loan losses (13,671 ) (14,993 ) (15,249 )
Net loans 458,087 498,473 521,047
Premises and equipment, net 8,158 8,799 9,194
Other real estate owned 20,888 25,784 18,850
Core deposit intangibles, net 437 546 583
Accrued interest receivable and other assets 60,177 61,596 61,401
Total assets $ 911,289 $ 884,941 $ 894,993
Liabilities and Shareholders' Equity
Deposits:
Demand, noninterest bearing $ 163,241 $ 155,499 $ 150,433
Demand, interest bearing 169,030 161,241 152,230
Savings and money market 219,438 208,476 212,128
Time 217,699 228,574 250,862
Total deposits 769,408 753,790 765,653
Accrued interest payable and other liabilities 19,170 15,212 14,067
Subordinated debentures 31,961 31,961 31,961
Total liabilities 820,539 800,963 811,681
Shareholders' equity 90,750 83,978 83,312
Total liabilities and shareholders' equity $ 911,289 $ 884,941 $ 894,993
Asset Quality
Nonaccrual loans $ 11,953 $ 20,065 $ 29,643
Loans past due 90 days and accruing interest 189 - -
Other real estate owned 20,888 25,784 18,850
Total nonperforming assets $ 33,030 $ 45,849 $ 48,493
Allowance for loan losses to total loans 2.90 % 2.92 % 2.84 %
Allowance for loan losses to NPL's 112.59 % 74.72 % 51.44 %
Allowance for loan losses to NPA's 41.39 % 32.70 % 31.45 %

NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
Selected Financial Ratios 2011 2010 2011 2010
Return on average total assets 0.58 % (3.29 %) 0.33 % (1.26 %)
Return on average shareholders' equity 5.85 % (33.23 %) 3.45 % (15.00 %)
Net interest margin (tax equivalent basis) 3.90 % 3.65 % 4.00 % 3.67 %
Efficiency ratio 80.93 % 107.54 % 83.59 % 98.75 %
Selected Average Balances
Loans $ 474,416 $ 554,471 $ 489,692 $ 572,127
Taxable investments 279,548 203,741 278,685 164,858
Tax-exempt investments 14,092 15,155 14,283 15,393
Federal funds sold and other 38,076 62,037 21,394 71,063
Total earning assets $ 806,132 $ 835,404 $ 804,054 $ 823,441
Total assets $ 898,452 $ 920,335 $ 895,754 $ 905,431
Demand deposits - interest bearing $ 163,610 $ 159,027 $ 163,140 $ 157,625
Savings and money market 221,669 218,048 220,911 210,943
Time deposits 211,521 254,183 216,650 265,764
Other borrowings 31,961 31,961 31,961 31,961
Total interest bearing liabilities $ 628,761 $ 663,219 $ 632,662 $ 666,293
Demand deposits - noninterest bearing $ 161,939 $ 147,920 $ 157,923 $ 146,735
Shareholders' equity $ 89,446 $ 91,126 $ 86,743 $ 75,898

NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share data)
For the Quarter Ended
September June March December
2011 2011 2011 2010
Interest income $ 9,238 $ 9,610 $ 9,418 $ 9,437
Interest expense 1,391 1,452 1,612 1,818
Net interest income 7,847 8,158 7,806 7,619
Provision for loan losses 400 1,250 1,000 -
Noninterest income 4,012 3,483 3,153 3,192
Noninterest expense 9,597 9,735 9,471 10,244
Income before provision (benefit) for income taxes 1,862 656 488 567
Provision (benefit) for income taxes 542 137 89 (1,702 )
Net income $ 1,320 $ 519 $ 399 $ 2,269
Earnings per common share:
Basic $ 0.19 $ 0.08 $ 0.06 $ 0.33
Diluted $ 0.19 $ 0.08 $ 0.06 $ 0.33

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