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Section 1: 8-K (8-K CVCY 3RD QUARTER 2019 EARNINGS RELEASE)

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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: October 16, 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 October 16, 2019, Central Valley Community Bancorp issued a press release containing unaudited financial information and accompanying discussion for the quarter and year ended September 30, 2019. 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 October 16, 2019, the Board of Directors of Central Valley Community Bancorp declared a $0.11 per share cash dividend payable on November 15, 2019 to shareholders of record as of November 1, 2019.

The information in this Form 8-K filed on October 16, 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 October 16, 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:
October 16, 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
 
October 16, 2019




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1 Q3 2019 EARNINGS PRESS RELEASE)

Exhibit

Central Valley Community Bancorp -- page 1


400414540_cvcbankcorplogoclra01a01a38.jpg
FOR IMMEDIATE RELEASE

CENTRAL VALLEY COMMUNITY BANCORP REPORTS EARNINGS RESULTS FOR THE NINE MONTHS AND QUARTER ENDED SEPTEMBER 30, 2019, AND QUARTERLY DIVIDEND

FRESNO, CALIFORNIA…October 16, 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 $16,994,000, and fully diluted earnings per common share of $1.25 for the nine months ended September 30, 2019, compared to $16,008,000 and $1.16 per fully diluted common share for the nine months ended September 30, 2018.
THIRD QUARTER FINANCIAL HIGHLIGHTS
Net loans increased $23.4 million or 2.57%, and total assets increased $46.3 million or 3.01% at September 30, 2019 compared to December 31, 2018.
Total deposits increased 2.14% to $1.31 billion at September 30, 2019 compared to December 31, 2018.
Total cost of deposits remains at low levels at 0.17% and 0.10% for the quarter ended September 30, 2019 and 2018, respectively.
Average non-interest bearing demand deposit accounts as a percentage of total average deposits was 43.24% and 42.09% for the quarters ended September 30, 2019 and 2018, respectively.
Capital positions remain strong at September 30, 2019 with a 11.47% Tier 1 Leverage Ratio; a 14.84% Common Equity Tier 1 Ratio; a 15.28% Tier 1 Risk-Based Capital Ratio; and a 16.13% Total Risk-Based Capital Ratio.
The Company declared a $0.11 per common share cash dividend, payable on November 15, 2019 to shareholders of record on November 1, 2019.
During the quarter ended September 30, 2019, the Company repurchased and retired a total of 188,383 shares of common stock at an average price paid per share of $20.53. During the nine months ended September 30, 2019, the Company has repurchased and retired a total of 508,983 shares at an average price paid per share of $20.01.

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“Average Loans and deposits grew on a linked quarter basis, notwithstanding our normal agricultural loan pay downs in the quarter,” stated James M. Ford, President & CEO of Central Valley Community Bank and Central Valley Community Bancorp.  “Our restructured sales teams are now in place with more emphasis on client revenue growth, so we believe we are positioned to finish the 2019 year strong and have a solid platform to begin 2020. As we enter 2020, the Company proudly celebrates the anniversary of our 40th year in business with solid capital levels to navigate whatever changes might be coming in interest rates and the economy.”
Net income for the nine months ended September 30, 2019 increased 6.16%, primarily driven by an increase in net interest income and an increase in net realized gains on sales and calls of investment securities, partially offset by an increase in non-interest expense and an increase in the provision for income taxes, compared to the nine months ended September 30, 2018. During the nine months ended September 30, 2019, the Company recorded a $525,000 provision for credit losses, compared to a $50,000 provision during the nine months ended September 30, 2018. Net interest income before the provision for credit losses for the nine months ended September 30, 2019 was $47,985,000, compared to $46,730,000 for the nine months ended September 30, 2018, an increase of $1,255,000 or 2.69%. The impact to interest income from the accretion of the loan marks on acquired loans was $750,000 and $906,000 for the nine months ended September 30, 2019 and 2018, respectively. In addition, net interest income before the provision for credit losses for the nine months ended September 30, 2019 was benefited by approximately $593,000 in nonrecurring income from prepayment penalties and payoff of loans previously on nonaccrual status, as compared to a $355,000 in nonrecurring income for the nine months ended September 30, 2018. Excluding these reversals and benefits, net interest income for the nine months ended September 30, 2019 increased by $1,017,000 compared to the nine months ended September 30, 2018.
During the nine months ended September 30, 2019, the Company’s shareholders’ equity increased $13,444,000, or 6.12%, compared to December 31, 2018. The increase in shareholders’ equity was driven by the retention of earnings, net of dividends paid, and an increase in net unrealized gains on available-for-sale (AFS) securities recorded, net of estimated taxes, in accumulated other comprehensive income (AOCI).
Return on average equity (ROE) for the nine months ended September 30, 2019 was 9.96%, compared to 10.16% for the nine months ended September 30, 2018. The decrease in ROE was primarily due to the increase in shareholders’ equity compared to the prior year period. The Company declared and paid $0.32 and $0.22 per

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share in cash dividends to holders of common stock during the nine months ended September 30, 2019 and 2018, respectively. Annualized return on average assets (ROA) was 1.44% for the nine months ended September 30, 2019 and 1.34% for the nine months ended September 30, 2018. During the nine months ended September 30, 2019, the Company’s total assets increased 3.01%, and total liabilities increased 2.49%, compared to December 31, 2018.
Non-performing assets decreased by $583,000, or 21.28%, to $2,157,000 at September 30, 2019, compared to $2,740,000 at December 31, 2018. During the nine months ended September 30, 2019, the Company recorded $134,000 in net loan charge-offs, compared to $197,000 in net recoveries for the nine months ended September 30, 2018. The net charge-off (recovery) ratio, which reflects annualized net recoveries to average loans, was 0.02% for the nine months ended September 30, 2019, compared to (0.03)% for the same period in 2018. Total non-performing assets were 0.14% and 0.18% of total assets as of September 30, 2019 and December 31, 2018, respectively.
At September 30, 2019, the allowance for credit losses was $9,495,000, compared to $9,104,000 at December 31, 2018, a net increase of $391,000 reflecting the net charge-offs and provision during the period. The allowance for credit losses as a percentage of total loans was 1.01% and 0.99% as of September 30, 2019 and December 31, 2018, respectively. Total loans includes loans acquired in the acquisitions of Folsom Lake Bank 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 $160,455,000 at September 30, 2019 and $189,719,000 at December 31, 2018. Excluding these acquired loans from the calculation, the allowance for credit losses to total gross loans was 1.21% and 1.25% as of September 30, 2019 and December 31, 2018, respectively, and general reserves associated with non-impaired loans to total non-impaired loans was 1.21% and 1.25%, respectively. The Company believes the allowance for credit losses is adequate to provide for probable incurred credit losses within the loan portfolio at September 30, 2019.
The Company’s net interest margin (fully tax equivalent basis) was 4.54% for the nine months ended September 30, 2019, compared to 4.40% for the nine months ended September 30, 2018. The increase in net interest margin in the period-to-period comparison resulted from the increase in the effective yield on interest

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earning deposits in other banks and Federal Funds sold, the increase in the effective yield on average investment securities, and the increase in the yield on the Company’s loan portfolio.
For the nine months ended September 30, 2019, the effective yield on average total earning assets increased 23 basis points to 4.73% compared to 4.50% for the nine months ended September 30, 2018, while the cost of average total interest-bearing liabilities increased to 0.35% for the nine months ended September 30, 2019 as compared to 0.18% for the nine months ended September 30, 2018. Over the same periods, the cost of average total deposits increased to 0.15% for the nine months ended September 30, 2019 compared to 0.08% for the same period in 2018.
For the nine months ended September 30, 2019, the Company’s average investment securities, including interest-earning deposits in other banks and Federal funds sold, totaled $492,766,000, a decrease of $44,785,000, or 8.33%, compared to the nine months September 30, 2018. The effective yield on average investment securities, including interest-earning deposits in other banks and Federal funds sold, increased to 3.13% for the nine months ended September 30, 2019, compared to 2.83% for the nine months ended September 30, 2018.
Total average loans (including nonaccrual), which generally yield higher rates than investment securities, increased $19,574,000, from $911,862,000 for the nine months ended September 30, 2018 to $931,436,000 for the nine months ended September 30, 2019. The effective yield on average loans increased to 5.58% for the nine months ended September 30, 2019, compared to 5.48% for the nine months ended September 30, 2018.
Total average assets for the nine months ended September 30, 2019 was $1,571,245,000 compared to $1,589,365,000 for the nine months ended September 30, 2018, a decrease of $18,120,000 or 1.14%. During the nine months ended September 30, 2019 and 2018, the loan-to-deposit ratio was 71.96% and 71.49%, respectively. Total average deposits decreased $56,006,000 or 4.16% to $1,289,192,000 for the nine months ended September 30, 2019, compared to $1,345,198,000 for the nine months ended September 30, 2018. Average interest-bearing deposits decreased $54,083,000, or 6.81%, and average non-interest bearing demand deposits decreased $1,923,000, or 0.35%, for the nine months ended September 30, 2019, compared to the nine months ended September 30, 2018. The Company’s ratio of average non-interest bearing deposits to total deposits was 42.60% for the nine months ended September 30, 2019, compared to 40.97% for the nine months ended September 30, 2018.

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Non-interest income for the nine months ended September 30, 2019 increased by $3,376,000 to $11,296,000, compared to $7,920,000 for the nine months ended September 30, 2018, primarily driven by an increase of $3,919,000 in net realized gains on sales and calls of investment securities, and an increase in loan placement fees of $101,000, offset by decrease in gain on sale of credit card portfolio of $462,000, a decrease in service charge income of $145,000, and a decrease of $45,000 in other income.
Non-interest expense for the nine months ended September 30, 2019 increased $1,314,000, or 3.90%, to $34,972,000 compared to $33,658,000 for the nine months ended September 30, 2018. The net increase year over year resulted from increases in information technology of $1,376,000, salaries and employee benefits of $497,000, amortization of core deposit intangible of $240,000, directors’ expenses of $171,000, and telephone expenses of $120,000, offset by decreases in occupancy and equipment expenses of $355,000, regulatory assessments of $259,000, acquisition and integration expenses of $217,000, professional services of $133,000, and operating losses of $112,000 in 2019 compared to 2018. The increase in the information technology expenses was a result of the Company outsourcing its network maintenance and IT support during the fourth quarter of 2018. The increase in the directors’ expenses was related to the change in the discount rate used to calculate the liability for deferred compensation and split dollar plans. The decrease in regulatory assessments was the result of the Company receiving a portion of its small bank assessment credit. The FDIC automatically applies small bank assessment credits to offset regular deposit insurance assessments for assessment periods where the Deposit Insurance Fund (DIF) reserve ratio is at or above 1.38 percent.
The Company recorded an income tax provision of $6,790,000 for the nine months ended September 30, 2019, compared to $4,934,000 for the nine months ended September 30, 2018. The effective tax rate for the nine months September 30, 2019 was 28.55% compared to 23.56% for the nine months September 30, 2018. The increase in the effective rate was a result of a decrease in tax-exempt interest.
Quarter Ended September 30, 2019
For the quarter ended September 30, 2019, the Company reported unaudited consolidated net income of $5,691,000 and earnings per diluted common share of $0.42, compared to consolidated net income of $5,752,000 and $0.42 per diluted share for the same period in 2018. The decrease in net income during the third quarter of 2019 compared to the same period in 2018 was primarily due to an increase in the provision for income taxes of

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$625,000, an increase in total non-interest expenses of $743,000, and an increase in provision for credit losses of $250,000, offset by an increase in net interest income of $298,000, and an increase in non-interest income of $1,259,000. The effective tax rate increased to 30.11% from 24.11% for the quarters ended September 30, 2019 and September 30, 2018, respectively. Net income for the immediately trailing quarter ended June 30, 2019 was $6,087,000, or $0.45 per diluted common share.
Annualized return on average equity (ROE) for the third quarter of 2019 was 9.77%, compared to 10.80% for the same period of 2018. The decrease in ROE reflects decrease in net income, notwithstanding an increase in shareholders’ equity. Annualized return on average assets (ROA) was 1.43% for the third quarter of 2019 compared to 1.48% for the same period in 2018. This decrease is due to a decrease in net income notwithstanding an increase in average assets.
In comparing the third quarter of 2019 to the third quarter of 2018, average total loans increased by $34,388,000, or 3.76%. During the third quarter of 2019, the Company recorded net loan charge-offs of $160,000 compared to $(105,000) net loan recoveries for the same period in 2018. The net charge-off (recovery) ratio, which reflects annualized net charge-offs to average loans, was 0.07% for the quarter ended September 30, 2019 compared to (0.05)% for the quarter ended September 30, 2018.
Average total deposits for the third quarter of 2019 decreased $12,187,000 or 0.93% to $1,303,263,000 compared to $1,315,450,000 for the same period of 2018. In comparing the third quarter of 2019 to the third quarter of 2018, average borrowed funds increased $15,516,000 or 220.02% to $22,568,000 compared to $7,052,000.
The Company’s net interest margin (fully tax equivalent basis) was 4.50% for the quarter ended September 30, 2019, compared to 4.53% for the quarter ended September 30, 2018. Net interest income, before provision for credit losses, increased $298,000, or 1.87%, to $16,205,000 for the third quarter of 2019, compared to $15,907,000 for the same period in 2018. The accretion of the loan marks on acquired loans increased interest income by $299,000 and $316,000 during the quarters ended September 30, 2019 and 2018, respectively. Net interest income during the third quarters of 2019 and 2018 benefited by approximately $250,000 and $180,000, respectively, from prepayment penalties and payoff of loans previously on nonaccrual status. The net interest margin period-to-period comparisons were impacted by the increase in the yield on total interest-bearing

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liabilities; offset by an increase in the yield on the average investment securities and an increase in the yield on the loan portfolio. Over the same periods, the cost of total deposits increased to 0.17% from 0.10%.
For the quarter ended September 30, 2019, the Company’s average investment securities, including interest-earning deposits in other banks and Federal funds sold, decreased by $16,953,000, or 3.37%, compared to the quarter ended September 30, 2018, and decreased by $10,093,000, or 2.03%, compared to the quarter ended June 30, 2019.
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 September 30, 2019, compared to 3.05% for the quarter ended September 30, 2018 and 3.17% for the quarter ended June 30, 2019. Total average loans, which generally yield higher rates than investment securities, increased by $34,388,000 to $948,673,000 for the quarter ended September 30, 2019, from $914,285,000 for the quarter ended September 30, 2018 and increased by $9,618,000 from $939,055,000 for the quarter ended June 30, 2019. The effective yield on average loans was 5.55% for the quarter ended September 30, 2019, compared to 5.53% and 5.55% for the quarters ended September 30, 2018 and June 30, 2019, respectively.
Total average assets for the quarter ended September 30, 2019 were $1,588,367,000 compared to $1,555,704,000 for the quarter ended September 30, 2018 and $1,584,122,000 for the quarter ended June 30, 2019, an increase of $32,663,000 and an increase of $4,245,000, or 2.10% and 0.27%, respectively.
Total average deposits decreased $12,187,000, or 0.93%, to $1,303,263,000 for the quarter ended September 30, 2019, compared to $1,315,450,000 for the quarter ended September 30, 2018. Total average deposits increased $29,104,000, or 2.28%, for the quarter ended September 30, 2019, compared to $1,274,159,000 for the quarter ended June 30, 2019. The Company’s ratio of average non-interest bearing deposits to total deposits was 43.24% for the quarter ended September 30, 2019, compared to 42.09% and 42.45% for the quarters ended September 30, 2018 and June 30, 2019, respectively.
Non-interest income increased $1,259,000, or 51.12%, to $3,722,000 for the third quarter of 2019 compared to $2,463,000 for the same period in 2018. For the quarter ended September 30, 2019, non-interest income included $1,685,000 net realized gains on sales and calls of investment securities compared to net realized gains of $380,000 for the same period in 2018, a $1,305,000 increase. During the third quarter of 2019 loan

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placement fees increased $81,000, offset by a decrease in other income of $168,000, and a decrease in service charge income of $67,000, compared to the same period in 2018. Credit card deconversion costs, which were deducted from the net gain on the sale of the credit card portfolio, were $116,000 during the quarter ended September 30, 2018. Non-interest income for the quarter ended September 30, 2019 decreased by $876,000 to $3,722,000, compared to $4,598,000 for the quarter ended June 30, 2019. The decrease compared to the trailing quarter was primarily a $774,000 decrease in net realized gains on sales and calls of investment securities, a $41,000 decrease in service charges, and a $104,000 decrease in other income.
Non-interest expense for the quarter ended September 30, 2019 increased $743,000, or 6.89%, to $11,534,000 compared to $10,791,000 for the quarter ended September 30, 2018. The net increase quarter over quarter was a result of an increase of $428,000 in information technology expenses, an increase in salaries and employee benefits of $344,000, an increase of $119,000 in telephone expenses, an increase of $78,000 in ATM/debit card expenses, an increase of $80,000 in amortization of core deposit intangibles, an increase in professional services of $61,000, and an increase of $43,000 in Internet banking expenses, partially offset by a decrease of $223,000 in regulatory assessments and a decrease in occupancy and equipment expenses of $172,000. The increase in salaries and employee benefits was the result of changes in long-term interest rates used to calculate the liability for deferred compensation plans and resulted in an additional expense of $391,000 during the quarter.
Non-interest expense for the quarter ended September 30, 2019 decreased by $238,000 compared to $11,772,000 for the trailing quarter ended June 30, 2019. The decrease compared to the trailing quarter was primarily due to a decrease in regulatory assessments of $203,000, a decrease in salaries and employee benefits of $181,000, and a decrease in occupancy and equipment expense of $135,000, partially offset by a non-recurring $120,000 increase in telephone expenses, a $67,000 increase in provision for income taxes, and a $75,000 increase in other non-interest expenses. The decrease in salaries and employee benefits of $181,000 was the result of decreased salaries, benefits, and interest on deferred compensation plans as a result of the change in the discount rate used to calculate the liability.
The Company recorded an income tax provision of $2,452,000 for the quarter ended September 30, 2019, compared to $1,827,000 for the quarter ended September 30, 2018. The effective tax rate for the quarter ended

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September 30, 2019 was 30.11% compared to 24.11% for the same period in 2018. The increase in the effective tax rate was the result of a decrease in tax exempt interest.
Quarterly Dividend Announcement
On October 16, 2019, the Board of Directors of the Company declared a regular quarterly cash dividend of $0.11 per share on the Company’s common stock. The dividend is payable on November 15, 2019 to shareholders of record as of November 1, 2019.
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 (Vice Chairman), 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, 2018.  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)
 
 
September 30,
 
December 31,
 
September 30,
(In thousands, except share amounts)
 
2019
 
2018
 
2018
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
Cash and due from banks
 
$
38,344

 
$
24,954

 
$
29,748

Interest-earning deposits in other banks
 
4,603

 
6,725

 
17,528

Federal funds sold
 
90

 
48

 
31

Total cash and cash equivalents
 
43,037

 
31,727

 
47,307

Available-for-sale investment securities
 
469,927

 
463,905

 
434,697

Equity securities
 
7,507

 
7,254

 
7,184

Loans, less allowance for credit losses of $9,495, $9,104 and $9,025 at September 30, 2019, December 31, 2018, and September 30, 2018, respectively
 
933,008

 
909,591

 
902,852

Bank premises and equipment, net
 
7,804

 
8,484

 
8,869

Bank owned life insurance
 
30,047

 
28,502

 
28,329

Federal Home Loan Bank stock
 
6,062

 
6,843

 
6,843

Goodwill
 
53,777

 
53,777

 
53,777

Core deposit intangibles
 
2,051

 
2,572

 
2,746

Accrued interest receivable and other assets
 
30,907

 
25,181

 
26,822

Total assets
 
$
1,584,127

 
$
1,537,836

 
$
1,519,426

 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
Non-interest bearing
 
$
572,736

 
$
550,657

 
$
534,636

Interest bearing
 
737,010

 
731,641

 
740,893

Total deposits
 
1,309,746

 
1,282,298

 
1,275,529

Short-term borrowings
 
5,000

 
10,000

 

Junior subordinated deferrable interest debentures
 
5,155

 
5,155

 
5,155

Accrued interest payable and other liabilities
 
31,044

 
20,645

 
25,307

Total liabilities
 
1,350,945

 
1,318,098

 
1,305,991

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: 13,301,395, 13,754,965, and 13,796,489, at September 30, 2019, December 31, 2018, and September 30, 2018, respectively
 
94,516

 
103,851

 
104,506

Retained earnings
 
132,935

 
120,294

 
116,255

Accumulated other comprehensive income (loss), net of tax
 
5,731

 
(4,407
)
 
(7,326
)
Total shareholders’ equity
 
233,182

 
219,738

 
213,435

Total liabilities and shareholders’ equity
 
$
1,584,127

 
$
1,537,836

 
$
1,519,426


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CENTRAL VALLEY COMMUNITY BANCORP
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
 
 
For the Three Months Ended,
 
For the Nine Months Ended
 
 
September 30,
 
June 30,
 
September 30,
 
September 30,
(In thousands, except share and per share amounts)
 
2019
 
2019
 
2018
 
2019
 
2018
INTEREST INCOME:
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
 
$
13,238

 
$
12,955

 
$
12,691

 
$
38,747

 
$
37,216

Interest on deposits in other banks
 
74

 
59

 
170

 
283

 
312

Interest and dividends on investment securities:
 
 
 
 
 
 
 
 
 
 
Taxable
 
3,462

 
3,337

 
2,533

 
9,821

 
7,277

Exempt from Federal income taxes
 
153

 
429

 
896

 
1,144

 
3,008

Total interest income
 
16,927

 
16,780

 
16,290

 
49,995

 
47,813

INTEREST EXPENSE:
 
 
 
 
 
 
 
 
 
 
Interest on deposits
 
566

 
469

 
320

 
1,428

 
810

Interest on junior subordinated deferrable interest debentures
 
51

 
55

 
52

 
163

 
147

Other
 
105

 
310

 
11

 
419

 
126

Total interest expense
 
722

 
834

 
383

 
2,010

 
1,083

Net interest income before provision for credit losses
 
16,205

 
15,946

 
15,907

 
47,985

 
46,730

PROVISION FOR CREDIT LOSSES
 
250

 
300

 

 
525

 
50

Net interest income after provision for credit losses
 
15,955

 
15,646

 
15,907

 
47,460

 
46,680

NON-INTEREST INCOME:
 
 
 
 
 
 
 
 
 
 
Service charges
 
672

 
713

 
739

 
2,075

 
2,220

Net realized gains (loss) on sale of credit card portfolio
 

 

 
(116
)
 

 
462

Appreciation in cash surrender value of bank owned life insurance
 
184

 
190

 
175

 
545

 
522

Interchange fees
 
374

 
384

 
381

 
1,101

 
1,106

Loan placement fees
 
288

 
220

 
207

 
647

 
546

Net realized gains on sales and calls of investment securities
 
1,685

 
2,459

 
380

 
5,196

 
1,277

Federal Home Loan Bank dividends
 
109

 
118

 
119

 
348

 
358

Other income
 
410

 
514

 
578

 
1,384

 
1,429

Total non-interest income
 
3,722

 
4,598

 
2,463

 
11,296

 
7,920

NON-INTEREST EXPENSES:
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
6,731

 
6,912

 
6,387

 
20,133

 
19,636

Occupancy and equipment
 
1,317

 
1,452

 
1,489

 
4,248

 
4,603

Professional services

404


280

 
343


1,011


1,144

Data processing expense
 
390

 
401

 
409

 
1,186

 
1,259

Directors’ expenses
 
184

 
193

 
158

 
552

 
381

ATM/Debit card expenses
 
270

 
186

 
192

 
647

 
569

Information technology
 
614

 
605

 
186

 
1,996

 
620

Regulatory assessments
 
(69
)
 
134

 
154

 
217

 
476

Advertising
 
190

 
198

 
192

 
590

 
569

Internet banking expenses
 
215

 
199

 
172

 
608

 
542

Amortization of core deposit intangibles
 
174

 
173

 
94

 
521

 
281

Other expense
 
1,114

 
1,039

 
1,015

 
3,263

 
3,578

Total non-interest expenses
 
11,534

 
11,772

 
10,791

 
34,972

 
33,658

Income before provision for income taxes
 
8,143

 
8,472

 
7,579

 
23,784

 
20,942

PROVISION FOR INCOME TAXES
 
2,452

 
2,385

 
1,827

 
6,790

 
4,934

Net income
 
$
5,691

 
$
6,087

 
$
5,752

 
$
16,994

 
$
16,008

 
 
 
 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.43

 
$
0.45

 
$
0.42

 
$
1.26

 
$
1.17


- more -


Central Valley Community Bancorp -- page 12


Weighted average common shares used in basic computation
 
13,360,030

 
13,533,724

 
13,715,141

 
13,515,109

 
13,692,657

Diluted earnings per common share
 
$
0.42

 
$
0.45

 
$
0.42

 
$
1.25

 
$
1.16

Weighted average common shares used in diluted computation
 
13,450,187

 
13,635,834

 
13,836,828

 
13,615,552

 
13,821,828

Cash dividends per common share
 
$
0.11

 
$
0.11

 
$
0.08

 
$
0.32

 
$
0.22


- more -


Central Valley Community Bancorp -- page 13


CENTRAL VALLEY COMMUNITY BANCORP
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
 
 
Sept. 30
 
Jun. 30
 
Mar. 31
 
Dec. 31,
 
Sept. 30
For the three months ended
 
2019
 
2019
 
2019
 
2018
 
2018
(In thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
16,205

 
$
15,946

 
$
15,835

 
$
15,973

 
$
15,907

Provision for (reversal of) credit losses
 
250

 
300

 
(25
)
 

 

Net interest income after provision for credit losses
 
15,955

 
15,646

 
15,860

 
15,973

 
15,907

Total non-interest income
 
3,722

 
4,598

 
2,976

 
2,404

 
2,463

Total non-interest expense
 
11,534

 
11,772

 
11,667

 
11,410

 
10,791

Provision for income taxes
 
2,452

 
2,385

 
1,953

 
1,686

 
1,827

Net income
 
$
5,691

 
$
6,087

 
$
5,216

 
$
5,281

 
$
5,752

Basic earnings per common share
 
$
0.43

 
$
0.45

 
$
0.38

 
$
0.38

 
$
0.42

Weighted average common shares used in basic computation
 
13,360,030

 
13,533,724

 
13,646,489

 
13,721,087

 
13,715,141

Diluted earnings per common share
 
$
0.42

 
$
0.45

 
$
0.38

 
$
0.38

 
$
0.42

Weighted average common shares used in diluted computation
 
13,450,187

 
13,635,834

 
13,755,615

 
13,834,662

 
13,836,828


CENTRAL VALLEY COMMUNITY BANCORP
SELECTED RATIOS
(Unaudited)
 
 
Sept. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sept. 30,
As of and for the three months ended
 
2019
 
2019
 
2019
 
2018
 
2018
(Dollars in thousands, except per share amounts)
 
 
 
 
 

 
 
 
 
Allowance for credit losses to total loans
 
1.01
%
 
0.98
%
 
0.99
 %
 
0.99
 %
 
0.99
 %
Non-performing assets to total assets
 
0.14
%
 
0.15
%
 
0.10
 %
 
0.18
 %
 
0.27
 %
Total non-performing assets
 
$
2,157

 
$
2,442

 
$
1,548

 
$
2,740

 
$
4,133

Total nonaccrual loans
 
$
2,157

 
$
2,442

 
$
1,548

 
$
2,740

 
$
4,133

Net loan charge-offs (recoveries)
 
$
160

 
$
13

 
$
(39
)
 
$
(79
)
 
$
(105
)
Net charge-offs (recoveries) to average loans (annualized)
 
0.07
%
 
0.01
%
 
(0.02
)%
 
(0.03
)%
 
(0.05
)%
Book value per share
 
$
17.53

 
$
17.18

 
$
16.63

 
$
15.98

 
$
15.47

Tangible book value per share
 
$
13.33

 
$
13.02

 
$
12.52

 
$
11.87

 
$
11.37

Tangible common equity
 
$
177,354

 
$
175,678

 
$
171,279

 
$
163,389

 
$
156,911

Cost of total deposits
 
0.17
%
 
0.15
%
 
0.12
 %
 
0.10
 %
 
0.10
 %
Interest and dividends on investment securities exempt from Federal income taxes
 
$
153

 
$
429

 
$
562

 
$
530

 
$
896

Net interest margin (calculated on a fully tax equivalent basis) (1)
 
4.50
%
 
4.50
%
 
4.63
 %
 
4.55
 %
 
4.53
 %
Return on average assets (2)
 
1.43
%
 
1.54
%
 
1.35
 %
 
1.37
 %
 
1.48
 %
Return on average equity (2)
 
9.77
%
 
10.68
%
 
9.42
 %
 
9.82
 %
 
10.80
 %
Loan to deposit ratio
 
71.96
%
 
74.20
%
 
71.32
 %
 
71.64
 %
 
71.49
 %
Efficiency ratio
 
62.07
%
 
63.64
%
 
63.92
 %
 
60.80
 %
 
58.65
 %
Tier 1 leverage - Bancorp
 
11.47
%
 
11.43
%
 
11.69
 %
 
11.48
 %
 
11.16
 %
Tier 1 leverage - Bank
 
11.36
%
 
11.36
%
 
11.64
 %
 
11.32
 %
 
11.06
 %
Common equity tier 1 - Bancorp
 
14.84
%
 
14.72
%
 
15.13
 %
 
15.13
 %
 
15.17
 %
Common equity tier 1 - Bank
 
15.13
%
 
15.08
%
 
15.50
 %
 
15.38
 %
 
15.51
 %
Tier 1 risk-based capital - Bancorp
 
15.28
%
 
15.16
%
 
15.58
 %
 
15.59
 %
 
15.64
 %
Tier 1 risk-based capital - Bank
 
15.13
%
 
15.08
%
 
15.50
 %
 
15.38
 %
 
15.51
 %
Total risk-based capital - Bancorp
 
16.13
%
 
16.00
%
 
16.41
 %
 
16.44
 %
 
16.51
 %
Total risk based capital - Bank
 
15.98
%
 
15.91
%
 
16.34
 %
 
16.23
 %
 
16.37
 %
(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 Nine Months Ended
AVERAGE AMOUNTS
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
September 30,
(Dollars in thousands)
 
2019
 
2019
 
2018
 
2019
 
2018
Federal funds sold
 
$
82

 
$
119

 
$
22

 
$
102

 
$
39

Interest-bearing deposits in other banks
 
13,943

 
11,195

 
33,939

 
16,531

 
23,509

Investments
 
472,227

 
485,031

 
469,244

 
476,133

 
514,003

Loans (1)
 
946,136

 
936,602

 
910,164

 
928,874

 
907,779

Earning assets
 
1,432,388

 
1,432,947

 
1,413,369

 
1,421,640

 
1,445,330

Allowance for credit losses
 
(9,423
)
 
(9,234
)
 
(9,005
)
 
(9,261
)
 
(8,873
)
Nonaccrual loans
 
2,537

 
2,453

 
4,121

 
2,562

 
4,083

Other non-earning assets
 
162,865

 
157,956

 
147,219

 
156,304

 
148,825

Total assets
 
$
1,588,367

 
$
1,584,122

 
$
1,555,704

 
$
1,571,245

 
$
1,589,365

 
 
 
 
 
 
 
 
 
 
 
Interest bearing deposits
 
$
739,765

 
$
733,291

 
$
761,736

 
$
739,950

 
$
794,033

Other borrowings
 
22,568

 
53,952

 
7,052

 
27,490

 
14,203

Total interest-bearing liabilities
 
762,333

 
787,243

 
768,788

 
767,440

 
808,236

Non-interest bearing demand deposits
 
563,498

 
540,868

 
553,714

 
549,242

 
551,165

Non-interest bearing liabilities
 
29,459

 
28,078

 
20,174

 
27,012

 
19,914

Total liabilities
 
1,355,290

 
1,356,189

 
1,342,676

 
1,343,694

 
1,379,315

Total equity
 
233,077

 
227,933

 
213,028

 
227,551

 
210,050

Total liabilities and equity
 
$
1,588,367

 
$
1,584,122

 
$
1,555,704

 
$
1,571,245

 
$
1,589,365

 
 
 
 
 
 
 
 
 
 
 
AVERAGE RATES
 
 
 
 
 
 
 
 
 
 
Federal funds sold
 
2.15
%
 
2.40
%
 
1.95
%
 
2.32
%
 
1.79
%
Interest-earning deposits in other banks
 
2.12
%
 
2.11
%
 
1.99
%
 
2.28
%
 
1.77
%
Investments
 
3.10
%
 
3.20
%
 
3.13
%
 
3.16
%
 
2.88
%
Loans (3)
 
5.55
%
 
5.55
%
 
5.53
%
 
5.58
%
 
5.48
%
Earning assets
 
4.70
%
 
4.73
%
 
4.64
%
 
4.73
%
 
4.50
%
Interest-bearing deposits
 
0.30
%
 
0.26
%
 
0.17
%
 
0.26
%
 
0.14
%
Other borrowings
 
2.76
%
 
2.71
%
 
3.52
%
 
2.82
%
 
2.56
%
Total interest-bearing liabilities
 
0.38
%
 
0.42
%
 
0.20
%
 
0.35
%
 
0.18
%
Net interest margin (calculated on a fully tax equivalent basis) (2)
 
4.50
%
 
4.50
%
 
4.53
%
 
4.54
%
 
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 $41, $114, and $238, for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018, respectively. The Federal tax benefits relating to income earned on municipal bonds totaled $305 and $800 for the nine months ended September 30, 2019 and 2018, respectively.
(3)
Loan yield includes loan fees (costs) for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018 of $72, $(42), and $176, respectively. Loan yield includes loan fees (costs) for the nine months ended September 30, 2019 and 2018 of $56 and $404, 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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