VISALIA, Calif., Oct. 23, 2013 /PRNewswire/ -- Valley Commerce Bancorp, (OTCBB: VCBP), a bank holding company and the parent company of Valley Business Bank, today announced third quarter 2013 net income of $905 thousand or $0.32 per diluted share.  This compared to earnings of $839 thousand, or $0.30 per diluted share, for the third quarter of 2012.  For the nine months ended September 30, 2013, the Company reported net income of $3.3 million, or $1.16 per diluted share.  This compared to earnings of $2.6 million, or $0.89 per diluted share, for the nine months ended September 30, 2012.  

Allan W. Stone, President and Chief Executive Officer, remarked, "I am very pleased to report solid earnings for the third quarter of 2013 and that we are on track for record earnings in 2013.  Our determined efforts to maintain high credit quality are evidenced by our continued reduction in classified loans, net recoveries of loans previously charged-off and the release of loan loss reserves.  We anticipate that the overall quality of our loan portfolio will remain favorable which will enhance our ability to meet the many economic and regulatory challenges facing the community banking industry."  Mr. Stone commented further, "As we commence our annual planning efforts, our team is already in high gear addressing these challenges.  I am very confident in our team and believe that our bank will continue to demonstrate strong financial performance as it makes the changes needed to remain successful over the longer term."

Selected financial information is presented in the following table:

Loans

Net loans were $232.6 million at September 30, 2013, an increase of $5.4 million or 2% from the $227.3 million at December 31, 2012.  The increase occurred primarily in real estate-mortgage and construction loans.  Average gross loans were $230.0 million for the nine months ended September 30, 2013 and $226.0 million for the nine months ended September 30, 2012, an increase of $4.0 million or 2%.

Net loans at September 30, 2013, December 31, 2012, and September 30, 2012 are summarized in the following table:

Investment Securities

Available-for-sale investment securities were $65.7 million at September 30, 2013 compared to $53.0 million at December 31, 2012, an increase of $12.7 million or 24%.  There were $23.1 million of investment securities purchased during the nine months ended September 30, 2013 which were offset by normal repayments, maturities, calls, and sales.  Gain on sale of investment securities was $126 thousand for the nine months of 2013 compared to $152 thousand for the same period in 2012. 

The amortized cost and estimated fair value of available-for-sale investment securities at the dates indicated consisted of the following:

Deposits

Total deposits decreased by $4.5 million or 1%, from $315.5 million at December 31, 2012 to $311.0 million at September 30, 2013.  The decrease resulted from management's decision to not renew approximately $18 million in public funds deposit contracts for the purpose of managing deposit concentrations.  However, these public funds were replaced by organic deposit growth in the areas of both time deposits and non-interest bearing deposits.  Average total deposits were $317.3 million for the nine months ended September 30, 2013, a $13.6 million or 4% increase from the $303.7 million in average total deposits for the nine months ended September 30, 2012.

Total deposits at September 30, 2013, December 31, 2012, and September 30, 2012 are summarized in the following table:

Shareholders' Equity

Total shareholders' equity was $39.5 million at September 30, 2013, an increase of $2.4 million or 6%, from the $37.9 million at December 31, 2012.  The increase was due to earnings of $3.3 million offset by a reduction in accumulated other comprehensive income of $1.0 million resulting from a decrease in the value of investment securities and to a lesser extent the repurchase of common stock and cash dividends paid.  During the nine months ended September 30, 2013 and 2012 the Company paid common stock cash dividends totaling $336 thousand or $0.12 per share and $222.8 thousand or $0.08 per share, respectively.  Common stock repurchases during the nine months ended September 30, 2013 totaled $602 thousand, at an average of $13.47 per share.  There were no common stock repurchases during 2012.

Asset Quality

Nonperforming loans at September 30, 2013 were comprised of ten nonaccrual loans spread among six customer relationships with an aggregate balance of $4.1 million compared with twelve nonaccrual loans spread among eight customer relationships at December 31, 2012 with an aggregate balance of $4.4 million.  The Company had no other real estate owned at December 31, 2012 or September 30, 2013.

Impaired loans totaled $7.6 million and $8.0 million at September 30, 3013 and December 31, 2012, respectively, and were comprised of the nonaccrual loans included in nonperforming assets and certain accruing loans whose terms have been modified from the original loan agreement.

A summary of nonperforming assets is set forth below:

A summary of troubled debt restructured loans outstanding as of the dates indicated are set forth below:

The following table summarizes the changes in the allowance for loan and lease losses (ALLL) for the periods indicated:

During the nine months ended September 30, 2013 we recorded a $1.5 million reversal of provision for loan losses. The reversal was recorded during the second quarter.  There was no loan loss provisioning in the third quarter of 2013 or for the year ended 2012.  In determining the amount of ALLL required at September 30, 2013, management analyzed the composition and strength of the Company's loan portfolio, including borrower performance trends, the potential for losses in loans classified nonperforming, the potential for loan loss recoveries, and the results of recent internal credit reviews. 

Net Interest Income and Net Interest Margin

The following table presents the Company's average balance sheet, including weighted average yields and rates on a taxable-equivalent basis, for the nine-month periods indicated:

Net interest income before provision for loan and lease losses for the nine month periods ended September 30, 2013 and 2012 was $9.9 million and $10.2 million, respectively, a decrease of $306 thousand or 3%.  Net interest income decreased during the 2013 period due to a decrease in the average yields of loans and investment securities offset by reduced cost of interest-bearing liabilities.  The impact of decreasing loan yield was slightly offset by a $4.0 million or 2 percent increase in the average balance of loans.

Net interest margin was 4.20% and 4.49% for the periods ended September 30, 2013 and 2012, a 29 basis point (bps) decrease.  Average loan yield was 5.55% and 5.82% for the nine months ended September 30, 2013 and 2012, respectively, a decrease of 27 bps, which reflected the strongly competitive environment for high quality loan customers.  This decrease was offset by a 12 bps decrease in the average rate paid on deposits and other interest-bearing liabilities that reflected weak competition for deposits as well as a reduction in the average balances of time deposits.  Average noninterest-bearing deposits increased by $12.8 million or 12 percent.  These funds were primarily deployed into low yielding overnight deposits which adversely impacted the net interest margin for the 2013 period but provided an overall beneficial contribution to the growth in net interest income and net income.

Non-Interest Income

The following table describes the components of non-interest income for the nine-month periods ended September 30, 2013 and 2012:                      

For the period ended September 30, 2013, non-interest income totaled $1.1 million, a decrease of $63 thousand or 5% from the $1.2 million recorded during the period ended September 30, 2012.  Decreases in service charges, reduced gains on sales of investment securities, mortgage loan underwriting fees and cash surrender value of life insurance policies contributed to the decrease in non-interest income during the 2013 period, which were offset by an increase in FHLB stock dividends.  Service charge income decreased due to fewer occurrences of non-sufficient funds charges.

Non-Interest Expense

The following table describes the components of non-interest expense for the nine-month periods ended September 30, 2013 and 2012: 

For the periods ended September 30, 2013 and 2012, non-interest expense was $7.5 million and $7.6 million a decrease of $19 thousand or .03%.  Occupancy and equipment expense increased by $115 thousand or 12% due to contracted costs for new software applications, supplies increased by $31 thousand or 25% due to timing of forms ordered, and other expenses increased by $104 thousand or 30% due to increased training expense and sundry losses.  These were offset by a $121 thousand or 3% decrease in salaries and employee benefit expense due to staff reductions and reductions in stock option expense. In addition, FDIC insurance and assessment expense decreased by $19 thousand or 8% due to more favorable methodology for calculating insurance premiums.  There also was a $91 thousand or 19% decrease in data processing costs due to renegotiation of data processing service contracts.

OTHER INFORMATION:  Valley Commerce Bancorp stock trades on NASDAQ's Over the Counter Bulletin Board under the symbol VCBP.  Valley Business Bank, the wholly owned subsidiary of Valley Commerce Bancorp, is a commercial bank that commenced operations in 1996.  Valley Business Bank operates through Business Banking Centers in Visalia, Tulare, and Fresno, California and has branch offices in Woodlake and Tipton, California.  Additional information about Valley Business Bank is available from the Bank's website at http://www.valleybusinessbank.net.

FORWARD-LOOKING STATEMENTS:  In addition to historical information, this release includes forward-looking statements, which reflect management's current expectations for Valley Commerce Bancorp's future financial results, business prospects and business developments.  Management's expectations for Valley Commerce Bancorp's future necessarily involve assumptions, estimates and the evaluation of risks and uncertainties. Various factors could cause actual events or results to differ materially from those expectations.  The forward-looking statements contained herein represent management's expectations as of the date of this release. Valley Commerce Bancorp undertakes no obligation to release publicly the results of any revisions to the forward-looking statements included herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events.  For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

 

 

 

SOURCE Valley Commerce Bancorp

RELATED LINKShttp://www.valleybusinessbank.net