REDDING, CA--(Marketwire - April 29, 2008) - North Valley Bancorp (
NASDAQ:
NOVB), a bank
holding company with $945 million in assets, today reported results for the
quarter ended March 31, 2008. North Valley Bancorp ("the Company") is the
parent company for North Valley Bank ("NVB").
The Company reported net income for the first quarter ended March 31, 2008
of $280,000, or $0.04 per diluted share, compared to $2,204,000, or $0.29
per diluted share, for the same period in 2007. This represents a decrease
in net income of $1,924,000, or 87.3%, compared to the first quarter of
2007. The Company recorded a provision for loan and lease losses in the
amount of $2,400,000 for the quarter ended March 31, 2008 and did not
record a provision for the quarter ended March 31, 2007. For the first
quarter of 2008, the Company realized an annualized return on average
shareholders' equity of 1.35% and an annualized return on average assets of
0.12%, as compared to 11.69% and 1.00%, respectively, for the first quarter
of 2007.
At March 31, 2008, total assets were $945,481,000, up from the $906,744,000
at March 31, 2007. The loan portfolio increased $99,935,000, or 15.4%
compared to March 31, 2007, and totaled $750,588,000 at March 31, 2008.
The loan to deposit ratio at March 31, 2008 was 98.4% as compared to 85.5%
at March 31, 2007. Total deposits grew $2,049,000, or 0.3%, to total
$762,749,000 at March 31, 2008 compared to March 31, 2007. When compared
to December 31, 2007, total assets decreased slightly from $949,019,000,
while loans increased by $4,335,000, or 0.6%, from $746,253,000 and
deposits increased by $26,010,000, or 3.5%, from $736,739,000. Other
borrowed funds decreased $28,797,000, or 33.0%, to $58,395,000 at March 31,
2008 compared to December 31, 2007.
Nonperforming loans (defined as nonaccrual loans and loans 90 days or more
past due and still accruing interest) totaled $25,750,000 at March 31,
2008, an increase of $25,291,000 from March 31, 2007, and an increase of
$24,142,000 from December 31, 2007. Nonperforming loans as a percentage of
total loans were 3.43% at March 31, 2008, compared to 0.08% at March 31,
2007, and 0.24% at December 31, 2007. The increase in nonperforming loans
is centered in four real estate projects with loans totaling $24,047,000 at
March 31, 2008: two loans are for residential development projects and the
other two are residential acquisition and development loans. The two
largest loans are residential development projects for $9,509,000 and
$6,750,000 located in Placer County and Shasta County, respectively. The
other two loans are residential acquisition and development loans totaling
$4,876,000 and $2,911,000, respectively, and both are located in Shasta
County. Other real estate owned at March 31, 2008 was $902,000, consisting
of land originally purchased for bank expansion, which management has
listed for sale as the land is no longer needed.
"The effects of a nationwide housing crisis have impacted our markets and
our clients as they experience slow sales activity and declining home
values. Higher housing inventory as a result of foreclosures has
contributed to the problem but more significant are the large price cuts
made by the national public home builders as they exit projects and
markets. I don't expect to see price stability until inventory levels
normalize. However, in our markets, I believe we have already experienced
the largest discounts. Our strategy is to work closely with our borrowers
and to recognize possible defaults early, while increasing our allowance
for loan and lease losses through our provision as considered necessary
until a final resolution is accomplished," stated Mike Cushman, President
and CEO.
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
$1,209,000, or 11.7%, for the three months ended March 31, 2008 compared to
the same period in 2007. Interest income decreased by $346,000, primarily
due to the reversal of interest income of $526,000 previously recorded for
the loans placed on nonaccrual status in the first quarter of 2008 and a
reduction in the interest earned on investment securities. Interest
expense increased $863,000 due primarily to an increase in average balance
of time deposits of $45,407,000 and an increase in average borrowings of
$44,167,000 for the quarter ended March 31, 2008 compared to the same
period in 2007. Average loans increased $89,294,000 in the first quarter
of 2008 compared to the first quarter of 2007, however the yield on the
loan portfolio decreased 96 basis points to 7.00% over that same period.
The increase in average total loans was primarily funded by an increase in
average borrowings mentioned above and a decrease in average investments of
$35,651,000. Average yields on earning assets decreased 72 basis points
from the quarter ended March 31, 2007, to 6.72% for the quarter ended March
31, 2008 and the average rate paid on interest-bearing liabilities
increased by 22 basis points to 2.92%. As a result of the above, the
Company's net interest margin for the quarter ended March 31, 2008 was
4.35%, a decrease of 98 basis points from the margin of 5.33% for the first
quarter in 2007 and a decrease of 54 basis points from the 4.89% net
interest margin for the linked quarter ended December 31, 2007. "The
repricing of our variable-rate loans tied to prime, which has decreased 300
basis points since September 2007 as a result of the reductions from the
Federal Reserve, and the impact of the reversal of interest from loans on
nonaccrual during the quarter had a sizable adverse impact on our net
interest margin as it contracted 54 basis points from the linked quarter,
even though we did recognize some relief from the repricing of certain
deposits," commented Kevin R. Watson, Chief Financial Officer.
Noninterest income for the quarter ended March 31, 2008 increased $357,000,
or 11.4%, to $3,491,000 compared to $3,134,000 for the same period in 2007.
Service charges on deposits increased by $72,000 to $1,716,000 for the
first quarter of 2008 compared to $1,644,000 for the same period in 2007.
Other fees and charges increased by $73,000 to $965,000 for the first
quarter of 2008 compared to $892,000 for the first quarter of 2007. Other
noninterest income increased $212,000, to $810,000 for the quarter ended
March 31, 2008 compared to $598,000 for the same period in 2007, due to the
mandatory redemption of the Company's VISA shares related to VISA's initial
public offering completed in March 2008, an increase in sales volume of
annuity and security products to customers, and an increase in the amount
of gain on loan sales.
Noninterest expense decreased $425,000, or 4.2%, to $9,805,000 for the
first quarter of 2008 from $10,230,000 for the first quarter in 2007.
Salaries and employee benefits decreased $23,000, occupancy and equipment
expense decreased $85,000 and other expenses decreased $317,000 for the
first quarter of 2008 compared to the first quarter of 2007.
The Company recorded a $2,400,000 provision for loan and lease losses for
the quarter ended March 31, 2008 and did not record a provision for the
quarter ended March 31, 2007. The allowance for loan and lease losses at
March 31, 2008 was $13,022,000, or 1.73% of total loans, compared to
$10,755,000, or 1.44% of total loans at December 31, 2007 and $8,815,000,
or 1.35% of total loans, at March 31, 2007. The increase in the provision
for loan and lease losses is due primarily to the increase in nonperforming
loans, and secondarily to the increase in the Company's loan portfolio.
The provision for income taxes for the quarter ended March 31, 2008 was
$134,000, resulting in an effective tax rate of 32.4%, compared to
$1,037,000, or an effective tax rate of 32.0%, for the quarter ended March
31, 2007.
The Company continues to maintain strong capital levels. At March 31,
2008, the Company's Tier 1 Capital was $93,888,000, and its risk-based
capital ratios were: Tier 1
risk-based Capital ratio -- 10.45%; Total Risk-based Capital ratio --
12.10%; and Tier 1 Leverage ratio -- 10.15%. "Our capital position remains
strong and we remain well-capitalized as we work through the challenges of
this credit cycle," remarked Mr. Watson.
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, 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 2008 2007 $ Change % Change
--------- --------- -------- --------
Interest income
Loans and leases (including
fees) $ 12,976 $ 12,824 $ 152 1.2%
Investment securities 1,169 1,535 (366) -23.8%
Federal funds sold and other 5 137 (132) -96.4%
--------- --------- -------- --------
Total interest income 14,150 14,496 (346) -2.4%
--------- --------- -------- --------
Interest expense
Interest on deposits 3,828 3,256 572 17.6%
Subordinated debentures 595 608 (13) -2.1%
Other borrowings 599 295 304 103.1%
--------- --------- -------- --------
Total interest expense 5,022 4,159 863 20.8%
--------- --------- -------- --------
Net interest income 9,128 10,337 (1,209) -11.7%
Provision for loan and lease losses 2,400 - 2,400 -
--------- --------- -------- --------
Net interest income after provision
for loan and lease losses 6,728 10,337 (3,609) -34.9%
--------- --------- -------- --------
Noninterest income
Service charges on deposit
accounts 1,716 1,644 72 4.4%
Other fees and charges 965 892 73 8.2%
Other 810 598 212 35.5%
--------- --------- -------- --------
Total noninterest income 3,491 3,134 357 11.4%
--------- --------- -------- --------
Noninterest expenses
Salaries and employee benefits 5,536 5,559 (23) -0.4%
Occupancy 754 769 (15) -2.0%
Furniture and equipment 465 535 (70) -13.1%
Other 3,050 3,367 (317) -9.4%
--------- --------- -------- --------
Total noninterest expenses 9,805 10,230 (425) -4.2%
--------- --------- -------- --------
Income before provision for
income taxes 414 3,241 (2,827) -87.2%
Provision for income taxes 134 1,037 (903) -87.1%
--------- --------- -------- --------
Net income $ 280 $ 2,204 $ (1,924) -87.3%
========= ========= ======== ========
Common Share Data
Earnings per share
Basic $ 0.04 $ 0.30 $ (0.26) -86.7%
Diluted $ 0.04 $ 0.29 $ (0.25) -86.2%
Weighted average shares
outstanding 7,416,867 7,340,456
Weighted average shares
outstanding - diluted 7,544,813 7,635,369
Book value per share $ 10.98 $ 10.62
Tangible book value $ 8.79 $ 8.32
Shares outstanding 7,422,366 7,352,625
NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
March December March
Balance Sheet Data 31, 2008 31, 2007 31, 2007
--------- --------- ---------
Assets
Cash and due from banks $ 28,793 $ 28,659 $ 27,593
Federal funds sold and other - 6,237 33,295
Available-for-sale securities - at fair
value 98,586 104,341 124,765
Held-to-maturity securities - at
amortized cost 31 31 67
Loans and leases net of deferred loan
fees 750,588 746,253 650,563
Allowance for loan and lease losses (13,022) (10,755) (8,815)
--------- --------- ---------
Net loans and leases 737,566 735,498 641,748
Premises and equipment, net 12,066 12,431 13,838
Other real estate owned 902 902 902
Goodwill and core deposit intangibles,
net 16,260 16,423 16,911
Accrued interest receivable and other
assets 51,277 44,587 47,625
--------- --------- ---------
Total assets $ 945,481 $ 949,109 $ 906,744
========= ========= =========
Liabilities and Shareholders' Equity
Deposits:
Demand, noninterest bearing $ 158,529 $ 167,615 $ 186,209
Demand, interest bearing 174,326 147,056 167,899
Savings and money market 181,799 181,192 198,715
Time 248,095 240,876 207,876
--------- --------- ---------
Total deposits 762,749 736,739 760,699
Other borrowed funds 58,395 87,192 25,000
Accrued interest payable and other
liabilities 10,857 11,656 10,973
Subordinated debentures 31,961 31,961 31,961
--------- --------- ---------
Total liabilities 863,962 867,548 828,633
Shareholders' equity 81,519 81,471 78,111
--------- --------- ---------
Total liabilities and shareholders' equity $ 945,481 $ 949,019 $ 906,744
========= ========= =========
Asset Quality
Nonaccrual loans and leases $ 25,750 $ 1,608 $ 459
Loans and leases past due 90 days and
accruing interest - 156 60
Other real estate owned 902 902 902
--------- --------- ---------
Total nonperforming assets $ 26,652 $ 2,666 $ 1,421
========= ========= =========
Allowance for loan and lease losses to
total loans 1.73% 1.44% 1.35%
Allowance for loan and lease losses to
NPL's 50.57% 609.69% 1698.46%
Allowance for loan and lease losses to
NPA's 48.86% 403.41% 620.34%
NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
Selected Financial Ratios 2008 2007
----------- -----------
Return on average total assets 0.12% 1.00%
Return on average shareholders' equity 1.35% 11.69%
Net interest margin (tax equivalent basis) 4.35% 5.33%
Efficiency ratio 77.70% 75.94%
Selected Average Balances
Loans $ 743,004 $ 653,710
Taxable investments 88,608 113,306
Tax-exempt investments 20,539 21,789
Federal funds sold and other 591 10,294
----------- -----------
Total earning assets $ 852,742 $ 799,099
----------- -----------
Total assets $ 941,318 $ 891,070
----------- -----------
Demand deposits - interest bearing $ 154,950 $ 160,598
Savings and money market 181,670 199,529
Time deposits 248,202 202,795
Other borrowings 104,924 60,757
----------- -----------
Total interest bearing liabilities $ 689,746 $ 623,679
----------- -----------
Demand deposits - noninterest bearing $ 155,541 $ 178,232
----------- -----------
Shareholders' equity $ 83,136 $ 76,457
----------- -----------
NORTH VALLEY BANCORP
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share data)
For the Quarter Ended
---------------------------------------
March December September June
2008 2007 2007 2007
--------- --------- --------- ---------
Interest income $ 14,150 $ 15,345 $ 15,083 $ 14,600
Interest expense 5,022 5,133 4,838 4,508
--------- --------- --------- ---------
Net interest income 9,128 10,212 10,245 10,092
Provision for loan and lease losses 2,400 1,200 850 -
Noninterest income 3,491 1,505 3,350 3,170
Noninterest expense 9,805 9,943 9,481 10,732
--------- --------- --------- ---------
Income before provision for income
taxes 414 574 3,264 2,530
Provision for income taxes 134 184 1,044 810
--------- --------- --------- ---------
Net income $ 280 $ 390 $ 2,220 $ 1,720
========= ========= ========= =========
Earnings per share:
Basic $ 0.04 $ 0.05 $ 0.30 $ 0.23
========= ========= ========= =========
Diluted $ 0.04 $ 0.05 $ 0.29 $ 0.22
========= ========= ========= =========
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