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North Valley Bancorp Reports Increased Third Quarter Earnings
25 October 2006 For the third quarter of 2006: Return on Average Equity was 16.49%; Return on Average Tangible Equity was 22.28%; Return on Average Assets was 1.28%.
The third quarter net income of $2,919,000, or $0.39 per diluted share, represents an increase in net income of $486,000, or 20.0%, and an increase in diluted earnings per share of 25.8%, compared to the same period in 2005. The increase in net income for the third quarter of 2006 was driven by an increase in net interest income of $126,000, or 1.2%, to $10,510,000 over net interest income of $10,384,000 in the third quarter of 2005, an increase in noninterest income of $531,000, or 17.3% for the same period, and a decrease in provision for income taxes of $439,000 due to the changes described above. The increases were partially offset by an increase in noninterest expense of $335,000 or 3.5%, to $9,859,000 over noninterest expense of $9,524,000 in the third quarter of 2005 and an increase in provision for loan and lease losses of $275,000.
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 $126,000, or 1.2%, for the quarter ended September 30, 2006 compared to the same period in 2005. This was due to an increase in interest income of $1,541,000, or 11.9%, which was mostly offset by an increase in interest expense of $1,415,000. The increase in interest income was due to total average outstanding loans increasing from $603,103,000 in the third quarter of 2005 to $651,367,000 in the same period this year. This represents an increase of $48,264,000, or 8.0%. The Company's net interest margin for the quarter ended September 30, 2006 was 5.28%, which represents margin expansion of 5 basis points ("bps") over the net interest margin of 5.23% reported for the third quarter of 2005, but contraction of 24 bps from 5.52% for the linked quarter. Average yields on earning assets increased 73 bps to 7.27% for the third quarter of 2006 and the average rate paid on interest-bearing liabilities increased by 87 bps to 2.50% from the third quarter of 2005. The increase in asset yields was primarily due to the increase in total loans relative to other earning assets coupled with an increase in average loan yields, which increased from 7.25% in 2005 to 7.86% in 2006. "Our net interest margin contracted 24 basis points from the linked quarter as our cost of funds incrementally increased more than our asset yields incrementally increased. Looking forward, we anticipate continued margin compression in the short term," commented Kevin Watson, Chief Financial Officer.
Noninterest income increased $531,000, or 17.3%, for the quarter ended September 30, 2006 compared to the quarter ended September 30, 2005. The increase was driven by an increase in service charges on deposits of $40,000, other fees and charges which increased $181,000, and a non-recurring gain on sale of bank property of $198,000. In addition, the Company is currently selling its fixed-rate mortgage production in order to maintain a loan portfolio with a shorter overall duration and recorded $171,000 in gains on mortgage loan sales in the third quarter of 2006. Noninterest income increased $1,431,000, or 17.9%, for the nine months ended September 30, 2006 compared to the same period in 2005, primarily due to increases in service charges on deposit accounts and other fees and charges of $801,000 and $396,000, respectively, as well as the gain on sale of property described above.
Noninterest expense totaled $9,859,000 for the quarter ended September 30, 2006 compared to $9,524,000 for the same period in 2005, which is an increase of $335,000 or 3.5%. Salaries and benefits increased by $412,000, or 8.2%, over the third quarter of 2005. Occupancy expense increased from $666,000 in the third quarter of 2005 to $772,000 in the same period in 2006, while other expenses decreased from $3,323,000 in 2005 to $3,147,000 in 2006. Noninterest expense totaled $29,755,000 for the nine months ended September 30, 2006, an increase of $2,334,000, or 8.5%, from $27,421,000 for the same period in 2005. The increase for the nine months ended September 30, 2006 was primarily due to an increase in salaries and employee benefits of $2,089,000 primarily resulting from the Company's continued investment in lending teams in higher growth markets, most notably Sonoma and Placer Counties.
The Company recorded a provision for loan and lease losses for the quarter ended September 30, 2006 of $555,000, an increase of $275,000 compared to the $280,000 recorded for the quarter ended September 30, 2005. The provision for loan and lease losses of $925,000 was recorded for the nine months ended September 30, 2006 an increase from the $730,000 for the same period in 2005. The increase in provision for loan and lease losses reflected continued growth in the Company's loan portfolio and management's concern for current economic uncertainty.
The provision for income taxes for the quarter ended September 30, 2006 was $775,000, resulting in an effective tax rate of 21.0%, compared to $1,214,000, or an effective tax rate of 33.3%, for the same period in 2005. The decrease is due to the change in estimate for the provision for taxes as described above. We expect the effective tax rate for the year to be approximately 29% - 30%.
The loan portfolio increased 9.2% from a year ago to $666,148,000 outstanding at September 30, 2006. Year-over-year and year-to-date loan growth at September 30, 2006 was $55,952,000 and $41,636,000, respectively. The majority of the loan growth was in Commercial loans and Real Estate Construction loans generated out of our new Business Banking centers in Roseville and Santa Rosa which reflects the benefit of expanding into these new markets.
Nonperforming loans (defined as nonaccrual loans and loans 90 days or more past due and still accruing interest) decreased $270,000 to $727,000, or 0.11% of total loans, at September 30, 2006 from $997,000, or 0.16% of total loans, at September 30, 2005. The allowance for loan and lease losses at September 30, 2006 was $8,853,000, or 1.33% of total loans, compared to $7,715,000, or 1.26% of total loans, at September 30, 2005. The increase reflects growth in the loan portfolio and management's concern for current economic uncertainty in the real estate market and business conditions generally. Other Real Estate Owned at September 30, 2006 was $902,000, consisting of land originally purchased for branch expansion in Yolo County which management has listed for sale due to the acquisition of Yolo Community Bank.
Total deposits increased $9,551,000 at September 30, 2006 to $760,895,000 compared to $751,344,000 at September 30, 2005. The increase in deposits was concentrated in Time and Money Market accounts largely offset by the decrease in Interest Bearing Demand accounts. The Company continues to maintain a strong deposit mix with 26% in noninterest bearing demand deposits, 22% in interest bearing demand deposits, 28% in savings and money market accounts, and 24% in time deposits.
Summary
"The third quarter results reflected solid growth in loans, deposits and steady earnings. The investment in new markets over the past two years is now rewarding shareholders. We're committed to remaining disciplined in the management of noninterest expense," stated Mike Cushman, President and CEO.
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. 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.
NORTH VALLEY BANCORP CONDENSED CONSOLIDATED FINANCIAL DATA (Unaudited) (Dollars in thousands)
September December September 30, 31, 30, Balance Sheet Data 2006 2005 2005 --------- --------- --------- Assets Cash and due from banks $ 38,015 $ 48,294 $ 44,598 Federal funds sold and other 680 7,800 8,829 Available-for-sale securities - at fair value 138,486 164,258 172,132 Held-to-maturity securities - at amortized cost 82 91 126
Loans and leases net of deferred loan fees 666,148 624,512 610,196 Allowance for loan and lease losses (8,853) (7,864) (7,715) --------- --------- --------- Net loans and leases 657,295 616,648 602,481
Premises and equipment, net 14,081 14,946 15,676 Other real estate owned 902 902 902 Goodwill and core deposit intangibles, net 17,236 17,690 17,981 Accrued interest receivable and other assets 47,826 47,786 45,555 --------- --------- --------- Total assets $ 914,603 $ 918,415 $ 908,280 ========= ========= =========
Liabilities and Shareholders' Equity Deposits: Demand, noninterest bearing $ 195,490 $ 186,555 $ 193,989 Demand, interest bearing 164,336 194,735 195,328 Savings and money market 212,564 195,866 197,533 Time 188,505 169,534 164,494 --------- --------- --------- Total deposits 760,895 746,690 751,344 Other borrowed funds 38,100 56,500 55,538 Accrued interest payable and other liabilities 10,784 11,463 9,234 Subordinated debentures 31,961 31,961 21,651 --------- --------- --------- Total liabilities 841,740 846,614 837,767 Shareholders' equity 72,863 71,801 70,513 --------- --------- --------- Total liabilities and shareholders' equity $ 914,603 $ 918,415 $ 908,280 ========= ========= =========
Asset Quality Nonaccrual loans and leases $ 24 $ 686 $ 696 Loans and leases past due 90 days and accruing interest 703 67 301 Other real estate owned 902 902 902 --------- --------- --------- Total nonperforming assets $ 1,629 $ 1,655 $ 1,899 ========= ========= =========
Allowance for loan and lease losses to total loans 1.33% 1.26% 1.26% Allowance for loan and lease losses to NPL's 1217.74% 1044.36% 773.82% Allowance for loan and lease losses to NPA's 543.46% 475.17% 406.27%
NORTH VALLEY BANCORP CONDENSED CONSOLIDATED FINANCIAL DATA (Unaudited) (Dollars in thousands, except share and per share data)
Three Months Ended September 30, Statement of Income Data 2006 2005 $ Change % Change --------- --------- -------- -------- Interest income Loans and leases (including fees) $ 12,899 $ 10,993 $ 1,906 17.3% Investment securities 1,587 1,859 (272) -14.6% Federal funds sold and other 20 113 (93) -82.3% --------- --------- -------- -------- Total interest income 14,506 12,965 1,541 11.9% --------- --------- -------- -------- Interest expense Interest on deposits 2,782 1,651 1,131 68.5% Subordinated debentures 611 450 161 35.8% Other borrowings 603 480 123 25.6% --------- --------- -------- -------- Total interest expense 3,996 2,581 1,415 54.8% --------- --------- -------- -------- Net interest income 10,510 10,384 126 1.2% Provision for loan and lease losses 555 280 275 98.2% --------- --------- -------- -------- Net interest income after provision for loan and lease losses 9,955 10,104 (149) -1.5% --------- --------- -------- --------
Noninterest income Service charges on deposit accounts 1,723 1,683 40 2.4% Other fees and charges 902 721 181 25.1% Other 973 663 310 46.8% --------- --------- -------- -------- Total noninterest income 3,598 3,067 531 17.3% --------- --------- -------- --------
Noninterest expenses Salaries and employee benefits 5,407 4,995 412 8.2% Occupancy 772 666 106 15.9% Furniture and equipment 533 540 (7) -1.3% Other 3,147 3,323 (176) -5.3% --------- --------- -------- -------- Total noninterest expenses 9,859 9,524 335 3.5% --------- --------- -------- -------- Income before provision for income taxes 3,694 3,647 47 1.3% Provision for income taxes 775 1,214 (439) -36.2% --------- --------- -------- -------- Net income $ 2,919 $ 2,433 $ 486 20.0% ========= ========= ======== ========
Common Share Data Earnings per share Basic $ 0.40 $ 0.33 $ 0.07 21.2% Diluted $ 0.39 $ 0.31 $ 0.08 25.8%
Weighted average shares outstanding 7,277,102 7,450,967 Weighted average shares outstanding - diluted 7,530,447 7,809,184 Book value per share $ 10.00 $ 9.41 Tangible book value $ 7.64 $ 7.01 Shares outstanding 7,285,283 7,492,999
NORTH VALLEY BANCORP CONDENSED CONSOLIDATED FINANCIAL DATA (Unaudited) (Dollars in thousands, except share and per share data)
Nine Months Ended September 30, Statement of Income Data 2006 2005 $ Change % Change --------- --------- -------- -------- Interest income Loans and leases (including fees) $ 36,862 $ 30,699 $ 6,163 20.1% Investment securities 5,085 5,855 (770) -13.2% Federal funds sold and other 196 374 (178) -47.6% --------- --------- -------- --------
Total interest income 42,143 36,928 5,215 14.1% --------- --------- -------- -------- Interest expense Interest on deposits 6,913 4,370 2,543 58.2% Subordinated debentures 1,843 1,272 571 44.9% Other borrowings 1,789 1,236 553 44.7% --------- --------- -------- -------- Total interest expense 10,545 6,878 3,667 53.3% --------- --------- -------- -------- Net interest income 31,598 30,050 1,548 5.2% Provision for loan and lease losses 925 730 195 26.7% --------- --------- -------- -------- Net interest income after provision for loan and lease losses 30,673 29,320 1,353 4.6% --------- --------- -------- --------
Noninterest income Service charges on deposit accounts 4,806 4,005 801 20.0% Other fees and charges 2,334 1,938 396 20.4% Other 2,271 2,037 234 11.5% --------- --------- -------- -------- Total noninterest income 9,411 7,980 1,431 17.9% --------- --------- -------- --------
Noninterest expenses Salaries and employee benefits 16,458 14,369 2,089 14.5% Occupancy 2,255 1,985 270 13.6% Furniture and equipment 1,610 1,513 97 6.4% Other 9,432 9,554 (122) -1.3% --------- --------- -------- -------- Total noninterest expenses 29,755 27,421 2,334 8.5% --------- --------- -------- -------- Income before provision for income taxes 10,329 9,879 450 4.6% Provision for income taxes 2,987 3,200 (213) -6.7% --------- --------- -------- -------- Net income $ 7,342 $ 6,679 $ 663 9.9% ========= ========= ======== ========
Common Share Data Earnings per share Basic $ 0.99 $ 0.90 $ 0.09 10.0% Diluted $ 0.95 $ 0.86 $ 0.09 10.5%
Weighted average shares outstanding 7,411,336 7,400,372 Weighted average shares outstanding - diluted 7,691,507 7,794,230 Book value per share $ 10.00 $ 9.41 Tangible book value $ 7.64 $ 7.01 Shares outstanding 7,285,283 7,492,999
NORTH VALLEY BANCORP CONDENSED CONSOLIDATED FINANCIAL DATA (Unaudited) (Dollars in thousands)
Three Months Ended Nine Months Ended September 30, September 30, Selected Financial Ratios 2006 2005 2006 2005 -------- -------- -------- -------- Return on average total assets 1.28% 1.07% 1.09% 0.99% Return on average shareholders' equity 16.49% 13.95% 13.75% 13.25% Net interest margin (tax equivalent basis) 5.28% 5.23% 5.37% 5.15% Efficiency ratio 69.88% 70.81% 72.56% 72.10%
Selected Average Balances Loans $651,367 $603,103 $634,837 $581,080 Taxable investments 123,665 162,659 132,830 171,939 Tax-exempt investments 22,504 23,919 23,121 24,900 Federal funds sold and other 1,517 13,282 5,398 17,860 -------- -------- -------- -------- Total earning assets $799,053 $802,963 $796,186 $795,779 -------- -------- -------- -------- Total assets $902,373 $905,291 $899,050 $898,314 -------- -------- -------- --------
Demand deposits - interest bearing $185,339 $195,290 $191,011 $195,389 Savings and money market 180,273 198,882 179,297 204,047 Time deposits 183,363 155,959 175,399 155,605 Other borrowings 86,195 77,908 88,839 76,743 -------- -------- -------- -------- Total interest bearing liabilities $635,170 $628,039 $634,546 $631,784 -------- -------- -------- -------- Demand deposits - noninterest bearing $187,497 $198,501 $182,976 $187,063 -------- -------- -------- -------- Shareholders' equity $ 70,210 $ 69,179 $ 71,397 $ 67,387 -------- -------- -------- --------
NORTH VALLEY BANCORP CONDENSED CONSOLIDATED FINANCIAL DATA (Unaudited) (Dollars in thousands, except per share data)
For the Quarter Ended ----------------------------------- September June March December 2006 2006 2006 2005 -------- -------- -------- -------- Interest income $ 14,506 $ 14,010 $ 13,627 $ 13,750 Interest expense 3,996 3,315 3,234 2,825 -------- -------- -------- -------- Net interest income 10,510 10,695 10,393 10,925 Provision for loan and lease losses 555 370 - 200 Noninterest income 3,598 3,015 2,798 3,234 Noninterest expense 9,859 9,880 10,016 10,171 -------- -------- -------- -------- Income before provision for income taxes 3,694 3,460 3,175 3,788 Provision for income taxes 775 1,166 1,046 1,318 -------- -------- -------- -------- Net Income $ 2,919 $ 2,294 $ 2,129 $ 2,470 ======== ======== ======== ======== Earnings per share: Basic $ 0.40 $ 0.31 $ 0.28 $ 0.33 ======== ======== ======== ======== Diluted $ 0.39 $ 0.30 $ 0.27 $ 0.32 ======== ======== ======== ========
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
SOURCE: North Valley Bancorp
Source: marketwire
All trademarks and copyrighted information contained herein are the property of their respective owners.
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