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Section 1: 8-K (8-K 4TH QTR 2018 EARNINGS RELEASE)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report: January 23, 2019
(Date of earliest event reported)

Central Valley Community Bancorp
(Exact name of registrant as specified in its charter)
 
CA
(State or other jurisdiction
of incorporation)
000-31977
(Commission File Number)
77-0539125
(IRS Employer
Identification Number)
 
7100 N. Financial Dr., Ste. 101, Fresno, CA
(Address of principal executive offices)
 
93720
(Zip Code)
559-298-1775
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former Name or Former Address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  o





Item 2.02. Results of Operations and Financial Condition

On January 23, 2019, Central Valley Community Bancorp issued a press release containing unaudited financial information and accompanying discussion for the quarter and year ended December 31, 2018. The press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

Item 8.01             Other Events
 
On January 23, 2019, the Board of Directors of Central Valley Community Bancorp declared a $0.10 per share cash dividend payable on February 22, 2019 to shareholders of record as of February 8, 2019.

The information in this Form 8-K filed on January 23, 2019 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits

(a) Financial statements:
            None
(b) Pro forma financial information:
            None
(c) Shell company transactions:
            None
(d) Exhibits
            99.1       Press Release of Central Valley Community Bancorp dated January 23, 2019




SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated:
January 23, 2019
CENTRAL VALLEY COMMUNITY BANCORP

By:  /s/ David A. Kinross                   
      David A. Kinross
      Executive Vice President and Chief Financial Officer (Principal
      Accounting Officer)

Exhibit Index
Exhibit No.
Description
99.1
Press Release of Central Valley Community Bancorp dated
 
January 23, 2019




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

Central Valley Community Bancorp -- page 1


396457994_cvcbankcorplogoclra01a01a34.jpg
FOR IMMEDIATE RELEASE

CENTRAL VALLEY COMMUNITY BANCORP REPORTS EARNINGS RESULTS FOR THE YEAR AND QUARTER ENDED DECEMBER 31, 2018, AND QUARTERLY DIVIDEND

FRESNO, CALIFORNIA…January 23, 2019… The Board of Directors of Central Valley Community Bancorp (Company) (NASDAQ: CVCY), the parent company of Central Valley Community Bank (Bank), reported today unaudited consolidated net income of $21,289,000, and fully diluted earnings per common share of $1.54 for the year ended December 31, 2018, compared to $14,026,000 and $1.10 per fully diluted common share for the year ended December 31, 2017.
FOURTH QUARTER FINANCIAL HIGHLIGHTS
Net loans increased $17.7 million or 1.98%, and total assets decreased $123.8 million or 7.45% at December 31, 2018 compared to December 31, 2017.
Total deposits decreased 10.06% to $1.28 billion at December 31, 2018 compared to December 31, 2017.
Total cost of deposits remain at record low levels at 0.10% and 0.08% for the quarter ended December 31, 2018 and 2017, respectively.
Average non-interest bearing demand deposit accounts as a percentage of total average deposits was 43.06% and 40.40% for the quarters ended December 31, 2018 and 2017, respectively.
Capital positions remain strong at December 31, 2018 with a 11.48% Tier 1 Leverage Ratio; a 15.13% Common Equity Tier 1 Ratio; a 15.59% Tier 1 Risk-Based Capital Ratio; and a 16.44% Total Risk-Based Capital Ratio.
The Company increased its quarterly dividend to $0.10 per common share, payable on February 22, 2019 to shareholders of record on February 8, 2019.
“2018 was another successful year for our Company with earnings at record highs and strong levels of capital. Our Central Valley Community Bank team has remained focused on serving client needs, a historic

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practice for our 39-year-old Bank that has resulted in improved financial performance, rewarding our long term shareholders. To that end, the Company began execution late in the fourth quarter on our stock repurchase authorization and the Directors have declared a third consecutive increase in our quarterly dividend to $0.10 per share on the Company’s common stock,” stated James M. Ford, President & CEO of Central Valley Community Bank and Central Valley Community Bancorp. 
“Our strategic plan remains viable as we continue to expand our presence in the San Joaquin Valley and Greater Sacramento regions by offering personalized financial service and competitive products,” concluded Ford.
Net income for the year ended December 31, 2018 increased 51.78% compared to 2017, primarily driven by an increase in net interest income and a decrease in the provision for income taxes, partially offset by a decrease in net realized gains on sales and calls of investment securities and an increase in non-interest expense compared to the year ended December 31, 2017. During the year ended December 31, 2018, the Company recorded a $50,000 provision for credit losses, compared to a $1,150,000 reverse provision during the year ended December 31, 2017. Net interest income before the provision for credit losses for the year ended December 31, 2018 was $62,703,000, compared to $56,239,000 for the year ended December 31, 2017, an increase of $6,464,000 or 11.49%. The impact to interest income from the accretion of the loan marks on acquired loans was $1,158,000 and $829,000 for the year ended December 31, 2018 and 2017, respectively. In addition, net interest income before the provision for credit losses for the year ended December 31, 2018 was benefited by approximately $498,000 in nonrecurring income from prepayment penalties and payoff of loans previously on nonaccrual status, as compared to a $1,313,000 net benefit for the year ended December 31, 2017. Excluding these reversals and benefits, net interest income for the year ended December 31, 2018 increased by $7,279,000 compared to the year ended December 31, 2017. Approximately, $4,304,000 of the increase in net interest income was attributable to the Folsom Lake Bank (FLB) acquisition completed in 2017, and approximately $2,975,000 from our continued organic growth.
During the year ended December 31, 2018, the Company’s shareholders’ equity increased $10,179,000, or 4.86%, compared to December 31, 2017. The increase in shareholders’ equity was driven by the retention of earnings, net of dividends paid, offset by a decrease in net unrealized gains on available-for-sale (AFS) securities recorded, net of estimated taxes, in accumulated other comprehensive income (AOCI).

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Return on average equity (ROE) for the year ended December 31, 2018 was 10.07%, compared to 7.69% for the year ended December 31, 2017. The increase in ROE was primarily due to the increase in net income compared to last year. The Company declared and paid $0.31 and $0.24 per share in cash dividends to holders of common stock during the year ended December 31, 2018 and 2017, respectively. Annualized return on average assets (ROA) was 1.35% for the year ended December 31, 2018 and 0.94% for the year ended December 31, 2017. During the year ended December 31, 2018, the Company’s total assets decreased 7.45%, and total liabilities decreased 9.23%, compared to December 31, 2017.
Non-performing assets decreased by $205,000, or 6.96%, to $2,740,000 at December 31, 2018, compared to $2,945,000 at December 31, 2017. During the year ended December 31, 2018, the Company recorded $276,000 in net loan recoveries, compared to $602,000 in net recoveries for the year ended December 31, 2017. The net charge-off (recovery) ratio, which reflects annualized net recoveries to average loans, was (0.03)% for the year ended December 31, 2018, compared to (0.08)% for the same period in 2017. Total non-performing assets were 0.18% of total assets as of December 31, 2018 and December 31, 2017.
At December 31, 2018, the allowance for credit losses was $9,104,000, compared to $8,778,000 at December 31, 2017, a net increase of $326,000 reflecting the net recoveries and provision during the period. The allowance for credit losses as a percentage of total loans was 0.99% at December 31, 2018, and 0.97% at December 31, 2017. Total loans includes loans acquired in the acquisitions of FLB on October 1, 2017, Sierra Vista Bank on October 1, 2016 and Visalia Community Bank on July 1, 2013 that, at their respective acquisition dates, were recorded at fair value and did not have a related allowance for credit losses. The recorded value of acquired loans totaled $189,719,000 at December 31, 2018 and $243,712,000 at December 31, 2017. Excluding these acquired loans from the calculation, the allowance for credit losses to total gross loans was 1.25% and 1.34% as of December 31, 2018 and December 31, 2017, respectively, and general reserves associated with non-impaired loans to total non-impaired loans was 1.25% and 1.34%, respectively. The Company believes the allowance for credit losses is adequate to provide for probable incurred credit losses within the loan portfolio at December 31, 2018.
The Company’s net interest margin (fully tax equivalent basis) was 4.44% for the year ended December 31, 2018, compared to 4.40% for the year ended December 31, 2017. The increase in net interest

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margin in the period-to-period comparison resulted primarily from the increase in the effective yield on interest earning deposits in other banks and Federal Funds sold, offset by the decrease in the effective yield on average investment securities, and the decrease in the yield on the Company’s loan portfolio.
For the year ended December 31, 2018, the effective yield on average total earning assets increased 6 basis points to 4.54% compared to 4.48% for the year ended December 31, 2017, while the cost of average total interest-bearing liabilities increased to 0.19% for the year ended December 31, 2018 as compared to 0.14% for the year ended December 31, 2017. Over the same periods, the cost of average total deposits increased to 0.09% for the year ended December 31, 2018 compared to 0.08% for the same period in 2017.
For the year ended December 31, 2018, the Company’s average investment securities, including interest-earning deposits in other banks and Federal funds sold, totaled $526,606,000, a decrease of $41,820,000, or 7.36%, compared to the year ended December 31, 2017. The effective yield on average investment securities, including interest earning deposits in other banks and Federal funds sold, decreased to 2.88% for the year ended December 31, 2018, compared to 3.06% for the year ended December 31, 2017.
Total average loans (including nonaccrual), which generally yield higher rates than investment securities, increased $118,785,000, from $793,343,000 for the year ended December 31, 2017 to $912,128,000 for the year ended December 31, 2018. The increase in loans was partially offset by the sale of the Company’s credit card portfolio of approximately $2,504,000 during the second quarter of 2018. The year-over-year loan growth was primarily due to the acquisition of FLB in 2017. The effective yield on average loans decreased slightly to 5.50% for the year ended December 31, 2018, compared to 5.51% for the year ended December 31, 2017 primarily due to competitive pressures in the Company’s lending markets.
Total average assets for the year ended December 31, 2018 was $1,577,410,000 compared to $1,491,696,000 for the year ended December 31, 2017, an increase of $85,714,000 or 5.75%. During the year ended December 31, 2018 and 2017, the loan-to-deposit ratio was 71.64% and 63.18%, respectively. Total average deposits increased $49,449,000 or 3.85% to $1,333,754,000 for the year ended December 31, 2018, compared to $1,284,305,000 for the year ended December 31, 2017. Average interest-bearing deposits decreased $3,869,000, or 0.49%, and average non-interest bearing demand deposits increased $53,318,000, or 10.66%, for the year ended December 31, 2018, compared to the year ended December 31, 2017. The Company’s ratio of

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average non-interest bearing deposits to total deposits was 41.48% for the year ended December 31, 2018, compared to 38.93% for the year ended December 31, 2017. The year-over-year growth was primarily driven by the FLB acquisition which closed on October 1, 2017.
Non-interest income for the year ended December 31, 2018 decreased by $512,000 to $10,324,000, compared to $10,836,000 for the year ended December 31, 2017, primarily driven by a decrease of $1,488,000 in net realized gains on sales and calls of investment securities. A net gain of $462,000 on the sale of the Company’s credit card portfolio, an increase in appreciation in cash surrender value of bank owned life insurance of $74,000, a $147,000 increase in Federal Home Loan Bank dividends, a $4,000 increase in interchange fees, and an increase in loan placement fees of $2,000, were offset by a $67,000 decrease in service charge income.
Non-interest expense for the year ended December 31, 2018 increased $662,000, or 1.49%, to $45,068,000 compared to $44,406,000 for the year ended December 31, 2017. The net increase year over year was primarily attributable to the FLB acquisition, which resulted in increases in salaries and employee benefits of $1,483,000, occupancy and equipment expenses of $786,000, operating losses of $302,000, and information technology of $295,000, offset by decrease in acquisition and integration expenses of $1,611,000, a decrease of $124,000 in credit card expenses, and a decrease of $132,000 in directors’ expenses in 2018 compared to 2017.
The Company recorded an income tax provision of $6,620,000 for the year ended December 31, 2018, compared to $9,793,000 for the year ended December 31, 2017. The effective tax rate for the year ended December 31, 2018 was 23.72% compared to 41.11% for the year ended December 31, 2017. The signing of the Tax Cuts and Jobs Act on December 22, 2017 changed the Company’s federal income tax rate from 35% to 21% effective as of the beginning of 2018.
Quarter Ended December 31, 2018
For the quarter ended December 31, 2018, the Company reported unaudited consolidated net income of $5,281,000 and earnings per diluted common share of $0.38, compared to consolidated net income of $335,000 and $0.02 per diluted share for the same period in 2017. The increase in net income during the fourth quarter of 2018 compared to the same period in 2017 was primarily due to an increase in net interest income of $406,000, a decrease in the provision for income taxes of $2,378,000, a decrease in total non-interest expenses of $1,699,000, and an increase in non-interest income of $463,000. The effective tax rate decreased to 24.20% from 92.38% for

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the quarters ended December 31, 2018 and December 31, 2017, respectively, primarily due to the revaluation of deferred tax assets in 2017 as a result of the change in the marginal 2018 federal tax rate from 35% to 21%. Net income for the immediately trailing quarter ended September 30, 2018 was $5,752,000, or $0.42 per diluted common share.
Annualized return on average equity (ROE) for the fourth quarter of 2018 was 9.82%, compared to 0.64% for the same period of 2017. The increase in ROE reflects increase in net income, notwithstanding an increase in shareholders’ equity. Annualized return on average assets (ROA) was 1.37% for the fourth quarter of 2018 compared to 0.08% for the same period in 2017. This increase is due to an increase in net income notwithstanding a decrease in average assets.
In comparing the fourth quarter of 2018 to the fourth quarter of 2017, average total loans increased by $22,565,000, or 2.53%. During the fourth quarter of 2018, the Company recorded net loan recoveries of $79,000 compared to $138,000 net loan charge-offs for the same period in 2017. The net charge-off (recovery) ratio, which reflects annualized net charge-offs to average loans, was (0.03)% for the quarter ended December 31, 2018 compared to 0.06% for the quarter ended December 31, 2017.
Average total deposits for the fourth quarter of 2018 decreased $106,083,000 or 7.55% to $1,299,796,000 compared to $1,405,879,000 for the same period of 2017. In comparing the fourth quarter of 2018 to the fourth quarter of 2017, average borrowed funds decreased $1,907,000 or (23.58)% to $6,179,000 compared to $8,086,000.
The Company’s net interest margin (fully tax equivalent basis) was 4.55% for the quarter ended December 31, 2018, compared to 4.34% for the quarter ended December 31, 2017. Net interest income, before provision for credit losses, increased $406,000, or 2.61%, to $15,973,000 for the fourth quarter of 2018, compared to $15,567,000 for the same period in 2017. The accretion of the loan marks on acquired loans increased interest income by $252,000 and $242,000 during the quarters ended December 31, 2018 and 2017, respectively. Net interest income during the fourth quarters of 2018 and 2017 benefited by approximately $142,000 and $96,000, respectively, from prepayment penalties and payoff of loans previously on nonaccrual status. The net interest margin period-to-period comparisons were impacted by an increase in the yield on the average investment securities and the loan portfolio. Over the same periods, the cost of total deposits increased to 0.10% from 0.08%.

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For the quarter ended December 31, 2018, the Company’s average investment securities, including interest-earning deposits in other banks and Federal funds sold, decreased by $111,645,000, or 18.43%, compared to the quarter ended December 31, 2017, and decreased by $9,076,000, or 1.80%, compared to the quarter ended September 30, 2018.
The effective yield on average investment securities, including interest earning deposits in other banks and Federal funds sold, was 3.07% for the quarter ended December 31, 2018, compared to 2.91% for the quarter ended December 31, 2017 and 3.05% for the quarter ended September 30, 2018. Total average loans, which generally yield higher rates than investment securities, increased by $22,565,000 to $912,916,000 for the quarter ended December 31, 2018, from $890,351,000 for the quarter ended December 31, 2017 and decreased by $1,369,000 from $914,285,000 for the quarter ended September 30, 2018. The effective yield on average loans was 5.54% for the quarter ended December 31, 2018, compared to 5.48% and 5.53% for the quarters ended December 31, 2017 and September 30, 2018, respectively.
Total average assets for the quarter ended December 31, 2018 were $1,541,936,000 compared to $1,644,685,000 for the quarter ended December 31, 2017 and $1,555,704,000 for the quarter ended September 30, 2018, a decrease of $102,749,000 and a decrease of $13,768,000, or 6.25% and 0.89%, respectively.
Total average deposits decreased $106,083,000, or 7.55%, to $1,299,796,000 for the quarter ended December 31, 2018, compared to $1,405,879,000 for the quarter ended December 31, 2017. Total average deposits decreased $15,654,000, or 1.19%, for the quarter ended December 31, 2018, compared to $1,315,450,000 for the quarter ended September 30, 2018. The Company’s ratio of average non-interest bearing deposits to total deposits was 43.06% for the quarter ended December 31, 2018, compared to 40.40% and 42.09% for the quarters ended December 31, 2017 and September 30, 2018, respectively.
Non-interest income increased $463,000, or 23.85%, to $2,404,000 for the fourth quarter of 2018 compared to $1,941,000 for the same period in 2017. For the quarter ended December 31, 2018, non-interest income included $37,000 net realized gains on sales and calls of investment securities compared to net realized losses of $6,000 for the same period in 2017, a $43,000 increase. Federal Home Loan Bank dividends increased $111,000 for the quarter ended December 31, 2018, compared to the quarter ended December 31, 2017. During the fourth quarter 2018 interchange fees decreased $27,000, loan placement fees decreased $18,000, and service

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charge income decreased $2,000 compared to the same period in 2017. Non-interest income for the quarter ended December 31, 2018 decreased by $59,000 to $2,404,000, compared to $2,463,000 for the quarter ended September 30, 2018. The decrease compared to the trailing quarter was primarily a $343,000 decrease in net realized gains on sales and calls of investment securities, offset by a $27,000 increase in service charges, and a $100,000 increase in other income.
Non-interest expense for the quarter ended December 31, 2018 decreased $1,699,000, or 12.96%, to $11,410,000 compared to $13,109,000 for the quarter ended December 31, 2017. The net decrease quarter over quarter was a result of a decrease in acquisition and integration expenses of $1,211,000, a decrease in salaries and employee benefits of $289,000, a decrease in occupancy and equipment expenses of $141,000, a decrease in professional services of $74,000, and a decrease of $27,000 in regulatory assessments, partially offset by an increase of $206,000 in operating losses, an increase of $264,000 in information technology expenses, an increase of $81,000 in amortization of core deposit intangibles, and an increase of $35,000 in advertising expenses.
Non-interest expense for the quarter ended December 31, 2018 increased by $619,000 compared to $10,791,000 for the trailing quarter ended September 30, 2018. The increase compared to the trailing quarter was primarily due to an increase in salaries and employee benefits of $198,000, a $306,000 increase in information technology expenses, and a $261,000 increase in other non-interest expenses, partially offset by a decrease in occupancy and equipment expense of $120,000, and a decrease of $74,000 in directors’ expenses.
The majority of the $261,000 increase in other non-interest expenses was comprised of an operations related loss of $146,000, in addition to a $26,000 increase in stationery and supplies, and a $41,000 increase in personnel costs. The increase in salaries and employee benefits of $198,000 was the result of increased profit sharing expense of $103,000 and increased 401K match of $26,000.
The Company recorded an income tax provision of $1,686,000 for the quarter ended December 31, 2018, compared to $4,064,000 for the quarter ended December 31, 2017. The effective tax rate for the quarter ended December 31, 2018 was 24.20% compared to 92.38% for the same period in 2017. The decrease in the effective tax rate was the result of the change in the federal rate offset by a sizable decrease in tax exempt interest.

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On July 17, 2018, the Company announced the approval of a stock repurchase plan to repurchase up to $10 million of the Company’s common stock. Through December 31, 2018, the Company repurchased 47,862 shares of common stock for approximately $894,000.
Quarterly Dividend Announcement
On January 23, 2019, the Board of Directors of the Company declared an increase in the regular quarterly cash dividend to $0.10 per share on the Company’s common stock. The dividend is payable on February 22, 2019 to shareholders of record as of February 8, 2019. This represents the fourth dividend increase within the past five quarters, and reflects the increased profitability of the Company.
Central Valley Community Bancorp trades on the NASDAQ stock exchange under the symbol CVCY. Central Valley Community Bank, headquartered in Fresno, California, was founded in 1979 and is the sole subsidiary of Central Valley Community Bancorp. Central Valley Community Bank operates 20 full-service offices throughout California’s San Joaquin Valley and Greater Sacramento Region.  Additionally, the Bank maintains Commercial Real Estate, Agribusiness and SBA Lending Departments. Central Valley Investment Services are provided by Raymond James Financial, Inc.
Members of Central Valley Community Bancorp’s and the Bank’s Board of Directors are: Daniel J. Doyle (Chairman), Daniel N. Cunningham (Lead Independent Director), Edwin S. Darden, Jr., F. T. “Tommy” Elliott, IV, James M. Ford, Robert J. Flautt, Gary D. Gall, Steven D. McDonald, Louis C. McMurray, Karen Musson, and William S. Smittcamp. Sidney B. Cox is Director Emeritus.
More information about Central Valley Community Bancorp and Central Valley Community Bank can be found at www.cvcb.com. Also, visit Central Valley Community Bank on Twitter and Facebook.
###
Forward-looking Statements- Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements contained herein that are not historical facts, such as statements regarding the Company’s current business strategy and the Company’s plans for future development and operations, are based upon current expectations. These statements are forward-looking in nature and involve a number of risks and uncertainties.  Such risks and uncertainties include, but are not limited to (1) significant increases in competitive pressure in the banking industry; (2) the impact of changes in interest rates; (3) a decline in economic conditions at the international, national or local level on the Company’s results of operations; (4) the Company’s ability to continue its internal growth at historical rates; (5) the Company’s ability to maintain its net interest margin; (6) the quality of the Company’s earning assets; (7) changes in the regulatory environment; (8) fluctuations in the real estate market; (9) changes in business conditions and inflation; (10) changes in securities markets; and (11) the other risks set forth in the Company’s reports filed with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K for the year ended December 31, 2017.  Therefore, the information set forth in such forward-looking statements should be carefully considered when evaluating the business prospects of the Company.

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CENTRAL VALLEY COMMUNITY BANCORP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
December 31,
 
September 30,
 
December 30,
(In thousands, except share amounts)
 
2018
 
2018
 
2017
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
Cash and due from banks
 
$
24,954

 
$
29,748

 
$
38,286

Interest-earning deposits in other banks
 
6,725

 
17,528

 
62,080

Federal funds sold
 
48

 
31

 
17

Total cash and cash equivalents
 
31,727

 
47,307

 
100,383

Available-for-sale investment securities
 
463,905

 
434,697

 
535,281

Equity securities
 
7,254

 
7,184

 
7,423

Loans, less allowance for credit losses of $9,104, $9,025 and $8,778 at December 31, 2018, September 30, 2018, and December 31, 2017, respectively
 
909,591

 
902,852

 
891,901

Bank premises and equipment, net
 
8,484

 
8,869

 
9,398

Bank owned life insurance
 
28,502

 
28,329

 
27,807

Federal Home Loan Bank stock
 
6,843

 
6,843

 
6,843

Goodwill
 
53,777

 
53,777

 
53,777

Core deposit intangibles
 
2,572

 
2,746

 
3,027

Accrued interest receivable and other assets
 
25,181

 
26,822

 
25,815

Total assets
 
$
1,537,836

 
$
1,519,426

 
$
1,661,655

 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
Non-interest bearing
 
$
550,657

 
$
534,636

 
$
585,039

Interest bearing
 
731,641

 
740,893

 
840,648

Total deposits
 
1,282,298

 
1,275,529

 
1,425,687

Short-term borrowings
 
10,000

 

 

Junior subordinated deferrable interest debentures
 
5,155

 
5,155

 
5,155

Accrued interest payable and other liabilities
 
20,645

 
25,307

 
21,254

Total liabilities
 
1,318,098

 
1,305,991

 
1,452,096

Shareholders’ equity:
 
 
 
 
 
 
Preferred stock, no par value; 10,000,000 shares authorized, none issued and outstanding
 

 

 

Common stock, no par value; 80,000,000 shares authorized; issued and outstanding: 13,754,965, 13,796,489, and 13,696,722, at December 31, 2018, September 30, 2018, and December 31, 2017, respectively
 
103,851

 
104,506

 
103,314

Retained earnings
 
120,294

 
116,255

 
103,419

Accumulated other comprehensive (loss) income, net of tax
 
(4,407
)
 
(7,326
)
 
2,826

Total shareholders’ equity
 
219,738

 
213,435

 
209,559

Total liabilities and shareholders’ equity
 
$
1,537,836

 
$
1,519,426

 
$
1,661,655


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CENTRAL VALLEY COMMUNITY BANCORP
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
 
 
For the Three Months Ended,
 
For the Years Ended
 
 
December 31,
 
September 30,
 
December 31,
 
December 31,
(In thousands, except share and per share amounts)
 
2018
 
2018
 
2017
 
2018
 
2017
INTEREST INCOME:
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
 
$
12,720

 
$
12,691

 
$
12,247

 
$
49,936

 
$
43,534

Interest on deposits in other banks
 
147

 
170

 
220

 
459

 
424

Interest and dividends on investment securities:
 
 
 
 
 
 
 
 
 
 
Taxable
 
2,977

 
2,533

 
1,962

 
10,254

 
6,526

Exempt from Federal income taxes
 
530

 
896

 
1,464

 
3,538

 
6,892

Total interest income
 
16,374

 
16,290

 
15,893

 
64,187

 
57,376

INTEREST EXPENSE:
 
 
 
 
 
 
 
 
 
 
Interest on deposits
 
343

 
320

 
279

 
1,153

 
969

Interest on junior subordinated deferrable interest debentures
 
52

 
52

 
39

 
199

 
147

Other
 
6

 
11

 
8

 
132

 
21

Total interest expense
 
401

 
383

 
326

 
1,484

 
1,137

Net interest income before provision for credit losses
 
15,973

 
15,907

 
15,567

 
62,703

 
56,239

PROVISION FOR (REVERSAL OF) CREDIT LOSSES
 

 

 

 
50

 
(1,150
)
Net interest income after provision for credit losses
 
15,973

 
15,907

 
15,567

 
62,653

 
57,389

NON-INTEREST INCOME:
 
 
 
 
 
 
 
 
 
 
Service charges
 
766

 
739

 
768

 
2,986

 
3,053

Net realized gains (losses) on sales of credit card portfolio
 

 
(116
)
 

 
462

 

Appreciation in cash surrender value of bank owned life insurance
 
173

 
175

 
171

 
695

 
621

Interchange fees
 
356

 
381

 
383

 
1,462

 
1,458

Loan placement fees
 
162

 
207

 
180

 
708

 
706

Net realized gains (losses) on sales and calls of investment securities
 
37

 
380

 
(6
)
 
1,314

 
2,802

Federal Home Loan Bank dividends
 
232

 
119

 
121

 
590

 
443

Other income
 
678

 
578

 
324

 
2,107

 
1,753

Total non-interest income
 
2,404

 
2,463

 
1,941

 
10,324

 
10,836

NON-INTEREST EXPENSES:
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
6,585

 
6,387

 
6,874

 
26,221

 
24,738

Occupancy and equipment
 
1,369

 
1,489

 
1,510

 
5,972

 
5,186

Acquisition and integration expenses
 

 

 
1,211

 
217

 
1,828

Professional services

331


343

 
405


1,475


1,509

Data processing expense
 
407

 
409

 
490

 
1,666

 
1,740

Directors’ expenses
 
84

 
158

 
105

 
465

 
597

ATM/Debit card expenses
 
170

 
192

 
197

 
739

 
750

Information technology
 
492

 
186

 
228

 
1,113

 
818

Regulatory assessments
 
143

 
154

 
170

 
619

 
652

Advertising
 
189

 
192

 
154

 
758

 
638

Internet banking expenses
 
190

 
172

 
182

 
732

 
705

Amortization of core deposit intangibles
 
174

 
94

 
93

 
455

 
234

Other expense
 
1,276

 
1,015

 
1,490

 
4,636

 
5,011

Total non-interest expenses
 
11,410

 
10,791

 
13,109

 
45,068

 
44,406

Income before provision for income taxes
 
6,967

 
7,579

 
4,399

 
27,909

 
23,819

PROVISION FOR INCOME TAXES
 
1,686

 
1,827

 
4,064

 
6,620

 
9,793

Net income
 
$
5,281

 
$
5,752

 
$
335

 
$
21,289

 
$
14,026


- more -


Central Valley Community Bancorp -- page 12


 
 
 
 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.38

 
$
0.42

 
$
0.02

 
$
1.55

 
$
1.12

Weighted average common shares used in basic computation
 
13,721,087

 
13,715,141

 
13,533,677

 
13,699,823

 
12,472,095

Diluted earnings per common share
 
$
0.38

 
$
0.42

 
$
0.02

 
$
1.54

 
$
1.10

Weighted average common shares used in diluted computation
 
13,834,662

 
13,836,828

 
13,730,434

 
13,825,008

 
12,722,350

Cash dividends per common share
 
$
0.09

 
$
0.08

 
$
0.06

 
$
0.31

 
$
0.24


- more -


Central Valley Community Bancorp -- page 13


CENTRAL VALLEY COMMUNITY BANCORP
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
 
 
Dec. 31,
 
Sep. 30
 
Jun. 30,
 
Mar. 31
 
Dec. 31,
For the three months ended
 
2018
 
2018
 
2018
 
2018
 
2017
(In thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
15,973

 
$
15,907

 
$
15,397

 
$
15,426

 
$
15,567

Provision for (reversal of) credit losses
 

 

 
50

 

 

Net interest income after provision for credit losses
 
15,973

 
15,907

 
15,347

 
15,426

 
15,567

Total non-interest income
 
2,404

 
2,463

 
2,686

 
2,771

 
1,941

Total non-interest expense
 
11,410

 
10,791

 
11,499

 
11,368

 
13,109

Provision for income taxes
 
1,686

 
1,827

 
1,569

 
1,538

 
4,064

Net income
 
$
5,281

 
$
5,752

 
$
4,965

 
$
5,291

 
$
335

Basic earnings per common share
 
$
0.38

 
$
0.42

 
$
0.36

 
$
0.39

 
$
0.02

Weighted average common shares used in basic computation
 
13,721,087

 
13,715,141

 
13,692,358

 
13,669,976

 
13,533,677

Diluted earnings per common share
 
$
0.38

 
$
0.42

 
$
0.36

 
$
0.38

 
$
0.02

Weighted average common shares used in diluted computation
 
13,834,662

 
13,836,828

 
13,823,278

 
13,804,480

 
13,730,434


CENTRAL VALLEY COMMUNITY BANCORP
SELECTED RATIOS
(Unaudited)
 
 
Dec. 31,
 
Sept. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
As of and for the three months ended
 
2018
 
2018
 
2018
 
2018
 
2017
(Dollars in thousands, except per share amounts)
 
 
 
 
 

 
 
 
 
Allowance for credit losses to total loans
 
0.99
 %
 
0.99
 %
 
0.95
 %
 
0.96
 %
 
0.97
%
Non-performing assets to total assets
 
0.18
 %
 
0.27
 %
 
0.26
 %
 
0.25
 %
 
0.18
%
Total non-performing assets
 
$
2,740

 
$
4,133

 
$
4,092

 
$
4,058

 
$
2,945

Total nonaccrual loans
 
$
2,740

 
$
4,133

 
$
4,092

 
$
4,058

 
$
2,875

Net loan charge-offs (recoveries)
 
$
(79
)
 
$
(105
)
 
$
(82
)
 
$
(10
)
 
$
138

Net charge-offs (recoveries) to average loans (annualized)
 
(0.03
)%
 
(0.05
)%
 
(0.04
)%
 
 %
 
0.06
%
Book value per share
 
$
15.98

 
$
15.47

 
$
15.32

 
$
15.12

 
$
15.30

Tangible book value per share
 
$
11.87

 
$
11.37

 
$
11.21

 
$
11.00

 
$
11.15

Tangible common equity
 
$
163,389

 
$
156,911

 
$
154,567

 
$
151,232

 
$
152,755

Cost of total deposits
 
0.10
 %
 
0.10
 %
 
0.08
 %
 
0.07
 %
 
0.08
%
Interest and dividends on investment securities exempt from Federal income taxes
 
$
530

 
$
896

 
$
1,045

 
$
1,067

 
$
1,464

Net interest margin (calculated on a fully tax equivalent basis) (1)
 
4.55
 %
 
4.53
 %
 
4.33
 %
 
4.26
 %
 
4.34
%
Return on average assets (2)
 
1.37
 %
 
1.48
 %
 
1.25
 %
 
1.30
 %
 
0.08
%
Return on average equity (2)
 
9.82
 %
 
10.80
 %
 
9.53
 %
 
10.15
 %
 
0.64
%
Loan to deposit ratio
 
71.64
 %
 
71.49
 %
 
70.60
 %
 
65.96
 %
 
63.18
%
Efficiency ratio
 
60.80
 %
 
58.65
 %
 
62.99
 %
 
62.59
 %
 
64.20
%
Tier 1 leverage - Bancorp
 
11.48
 %
 
11.16
 %
 
10.59
 %
 
10.10
 %
 
9.71
%
Tier 1 leverage - Bank
 
11.32
 %
 
11.06
 %
 
10.44
 %
 
9.89
 %
 
9.46
%
Common equity tier 1 - Bancorp
 
15.13
 %
 
15.17
 %
 
14.35
 %
 
14.01
 %
 
12.90
%
Common equity tier 1 - Bank
 
15.38
 %
 
15.51
 %
 
14.59
 %
 
14.17
 %
 
12.96
%
Tier 1 risk-based capital - Bancorp
 
15.59
 %
 
15.64
 %
 
14.80
 %
 
14.47
 %
 
13.28
%
Tier 1 risk-based capital - Bank
 
15.38
 %
 
15.51
 %
 
14.59
 %
 
14.17
 %
 
12.96
%
Total risk-based capital - Bancorp
 
16.44
 %
 
16.51
 %
 
15.64
 %
 
15.30
 %
 
14.07
%
Total risk based capital - Bank
 
16.23
 %
 
16.37
 %
 
15.43
 %
 
15.01
 %
 
13.74
%
(1) Net Interest Margin is computed by dividing annualized quarterly net interest income by quarterly average interest-bearing assets.
(2) Computed by annualizing quarterly net income.


- more -


Central Valley Community Bancorp -- page 14


CENTRAL VALLEY COMMUNITY BANCORP
AVERAGE BALANCES AND RATES
(Unaudited)
 
 
For the Three Months Ended
 
For the Years Ended
AVERAGE AMOUNTS
 
December 31,
 
September 30,
 
December 31,
 
December 31,
 
December 31,
(Dollars in thousands)
 
2018
 
2018
 
2017
 
2018
 
2017
Federal funds sold
 
$
42

 
$
22

 
$
7

 
$
40

 
$
35

Interest-bearing deposits in other banks
 
25,677

 
33,939

 
64,830

 
24,055

 
36,709

Investments
 
468,410

 
469,244

 
540,937

 
502,511

 
531,682

Loans (1)
 
910,330

 
910,164

 
887,374

 
908,419

 
790,504

Earning assets
 
1,404,459

 
1,413,369

 
1,493,148

 
1,435,025

 
1,358,930

Allowance for credit losses
 
(9,074
)
 
(9,005
)
 
(8,910
)
 
(8,924
)
 
(9,258
)
Nonaccrual loans
 
2,586

 
4,121

 
2,977

 
3,709

 
2,839

Other non-earning assets
 
143,965

 
147,219

 
157,470

 
147,600

 
139,185

Total assets
 
$
1,541,936

 
$
1,555,704

 
$
1,644,685

 
$
1,577,410

 
$
1,491,696

 
 
 
 
 
 
 
 
 
 
 
Interest bearing deposits
 
$
740,143

 
$
761,736

 
$
837,904

 
$
780,449

 
$
784,318

Other borrowings
 
6,179

 
7,052

 
8,086

 
12,180

 
6,930

Total interest-bearing liabilities
 
746,322

 
768,788

 
845,990

 
792,629

 
791,248

Non-interest bearing demand deposits
 
559,653

 
553,714

 
567,975

 
553,305

 
499,987

Non-interest bearing liabilities
 
20,859

 
20,174

 
20,047

 
20,152

 
17,954

Total liabilities
 
1,326,834

 
1,342,676

 
1,434,012

 
1,366,086

 
1,309,189

Total equity
 
215,102

 
213,028

 
210,673

 
211,324

 
182,507

Total liabilities and equity
 
$
1,541,936

 
$
1,555,704

 
$
1,644,685

 
$
1,577,410

 
$
1,491,696

 
 
 
 
 
 
 
 
 
 
 
AVERAGE RATES
 
 
 
 
 
 
 
 
 
 
Federal funds sold
 
2.20
%
 
1.95
%
 
1.50
%
 
2.10
%
 
1.50
%
Interest-earning deposits in other banks
 
2.29
%
 
1.99
%
 
1.36
%
 
1.91
%
 
1.16
%
Investments
 
3.12
%
 
3.13
%
 
3.09
%
 
2.93
%
 
3.19
%
Loans (3)
 
5.54
%
 
5.53
%
 
5.48
%
 
5.50
%
 
5.51
%
Earning assets
 
4.67
%
 
4.64
%
 
4.42
%
 
4.54
%
 
4.48
%
Interest-bearing deposits
 
0.18
%
 
0.17
%
 
0.13
%
 
0.15
%
 
0.12
%
Other borrowings
 
3.82
%
 
3.52
%
 
2.33
%
 
2.72
%
 
2.42
%
Total interest-bearing liabilities
 
0.21
%
 
0.20
%
 
0.15
%
 
0.19
%
 
0.14
%
Net interest margin (calculated on a fully tax equivalent basis) (2)
 
4.55
%
 
4.53
%
 
4.34
%
 
4.44
%
 
4.40
%
(1)
Average loans do not include nonaccrual loans.
(2)
Calculated on a fully tax equivalent basis, which includes Federal tax benefits relating to income earned on municipal bonds of $141, $238, and $754, for the three months ended December 31, 2018, September 30, 2018, and December 31, 2017, respectively. The Federal tax benefits relating to income earned on municipal bonds totaled $940 and $3,551 for the year ended December 31, 2018 and 2017, respectively.
(3)
Loan yield includes loan fees (costs) for the three months ended December 31, 2018, September 30, 2018, and December 31, 2017 of $(8), $176, and $264, respectively. Loan yield includes loan fees for the year ended December 31, 2018 and 2017 of $397 and $684, respectively.

CONTACT: Investor Contact:
Dave Kinross
Executive Vice President and Chief Financial Officer
Central Valley Community Bancorp
559-323-3420

Media Contact:
Debbie Nalchajian-Cohen
Marketing Director
Central Valley Community Bancorp
559-222-1322


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