Pacific Valley Bank Announces Third Quarter 2013 Financial Results

Pacific Valley Bank Announces Third Quarter 2013 Financial Results 
SALINAS, CA -- (Marketwired) -- 10/25/13 --  Pacific Valley Bank
(OTCQB: PVBK) announced its unaudited third quarter 2013 net income
of $411,000, or $0.11 basic earnings per share, as compared to the
same quarter last year when we reported net income of $677,000, or
$0.19 basic earnings per share. Our net income for the first nine
months of 2013 was $1,496,000, or $0.42 basic earnings per share, as
compared to the first nine months of 2012 for which we reported net
income of $1,422,000, or $0.40 basic earnings per share. As
previously announced, in recognition of our solid earnings over the
past few years, we distributed a 10% stock dividend to our
shareholders on May 31, 2013. Consequently, per share amounts for all
periods presented have been retroactively adjusted for the effect of
the dividend. 
Third Quarter 2013 Financial Highlights (annualized):
 Return on
Average Assets (ROAA): 0.83%
 Net Interest Margin (NIM): 4.05% 
Efficiency Ratio: 80.02% 
Year-to-Date 2013 Financial Highlights (annualized):
 Return on
Average Assets (ROAA): 1.07%
 Net Interest Margin (NIM): 4.39% 
Efficiency Ratio: 76.43% 
"We are pleased to be able to report stable earnings for the third
quarter and first nine months of 2013 -- and this quarter marks our
12th consecutive quarter of profitability," stated David B. Warner,
President and Chief Executive Officer. "Despite the sustained soft
economy in which we continue to operate, we successfully expanded and
deepened our customer relationships within the communities we serve
-- driving 'double-digit' year-over-year percentage growth in total
assets, deposits and loans. All of this speaks well for responsibly
building the long-term value of our franchise and enabled us to
achieve a 9% year-over-year increase in net interest income, the key
revenue driver for the Bank. More specifically, in comparison to the
prior year, interest income generated by organic loan growth has
outpaced the pressure placed on our interest rate margins by the
low-rate environment in which we continue to operate. Equally
important, thus far in 2013, the overall asset quality of our
portfolio has mitigated the need for us to recognize additional loan
loss reserves. Despite strong year-over-year deposit growth, our
funding costs have declined slightly -- primarily due to a
combination of favorable changes in our deposit mix and the current
interest rate environment. On a year-over-year basis, operating
expenses have risen 10%, driven in part by director compensation that
we believe will serve us well for the long term. Additionally, but to
a slightly lesser extent, we have experienced an overall increase in
the cost of doing business, principally due to a combination of asset
growth and increased regulatory compliance requirements. Capital
ratios remain very strong and we continue to be well positioned with
funds for additional lending." Mr. Warner continued, "Pacific Valley
Bank's Board of Directors would again like to recognize the support
of our loyal shareholders, valued customers, and dedicated employees
for their contributions to our success as a leading community bank in
our home market of Monterey County." 
Balance Sheet and Loan Quality Review:
 Total assets were $203.9
million at September 30, 2013, which is an increase of $26.9 million
from the same period last year when assets were $177.0 million. Our
gross loans at September 30, 2013 were $155.0 million, which is an
increase of $17.4 million as compared to $137.6 million at September
30, 2012.  
The allowance for loan losses as of September 30, 2013 was $3.4
million, which is nominally lower than the same period last year when
it was $3.6 million. The percentage of allowance for loan losses to
gross loans outstanding at September 30, 2013 was 2.21% as compared
to 2.60% at September 30, 2012. The allowance for loan loss ratio has
gradually been trending down since the same quarter last year due to
net charge-offs of measured impairments and an overall improvement in
loan quality.  
A significant component of our current liquidity position is
reflected in our excess balances held at the Federal Reserve, which
totaled $33.9 million as of September 30, 2013, and which is $7.7
million higher than the $26.2 million reported as of September 30,
2012. The Bank's liquidity is in a solid position and continues to be
available to support future loan growth. Deposits moved higher to
$180.3 million as of September 30, 2013, as compared to $155.3
million at September 30, 2012.  
Stockholders' equity at September 30, 2013 was $22.7 million as
compared to $20.8 million for the period ending September 30, 2012.
At September 30, 2013 our Tier 1 capital to average assets ratio was
11.50% as compared to 11.83% as of September 30, 2012.  
Review of Operations:
 The core earnings of the Bank are measured by
the interest income plus non-interest income less interest expense.
During the third quarter 2013, core earnings were $2.1 million, which
is slightly lower than the same quarter a year ago. The core earnings
for the nine month period ending September 30, 2013 were $6.4 million
as compared to the same period ending September 30, 2012 when the
core earnings were $5.9 million. 
Interest income for the quarter ending September 30, 2013 was $2.2
million which is slightly higher versus the same quarter a year ago.
The interest income for the nine month period ending September 30,
2013 was $6.7 million as compared to the same period ending September
30, 2012 when it was $6.3 million. The increase in interest income
for the nine month period of $0.4 million is due in large part to the
recognition of interest income from a previously classified
nonaccrual status loan that was paid off during the first quarter of
2013. This allowed for the recognition as interest income of just
under $0.3 million of prior interest payments that were previously
applied to principal. Interest expense during the current quarter was
$0.2 million which is slightly lower than the same quarter a year
ago. The interest expense for the nine month period ending September
30, 2013 was $0.7 million as compared to the same period ending
September 30, 2012 when it was $0.8 million. Our interest costs
continue to trend nominally lower, as over the past few years we have
been able to gradually re-price maturing deposits into current lower
market rates. The Bank achieved net interest margins of 4.05% and
4.49% for the quarter-ending periods September 30, 2013 and September
30, 2012, respectively. On a year-to-date basis, the Bank achieved
net interest margins of 4.39% and 4.59% for the nine month periods
ending September 30, 2013 and September 30, 2012, respectively.  
There were no provisions for loan losses in the third quarter or
first nine months of 2013 nor were there any in the comparable
periods of 2012. The Bank's methodology did not identify the need for
a provision for loan loss due to management's judgment regarding
adequate reserves to cover measured probable losses in our loan
portfolio. Despite the fact that no loan loss provisions were
recorded for the first nine months of 2013 and 2012, the Bank
continually monitors its loan portfolio and it is therefore possible
that loss provisioning may be required in future periods due to
either loan growth or changes in asset quality, or some combination
of both. 
Non-interest expenses totaled $1.6 million for the third quarter
ending September 30, 2013. This compares to $1.4 million for the same
period ending in 2012. Non-interest expenses for the nine month
period ending September 30, 2013 were $4.9 million as compared to the
same nine month period ending September 30, 2012 when they were $4.4
million. The efficiency ratio, which measures the amount of overhead
expense per net interest income plus noninterest income, was 80.02%
for the third quarter of 2013 as compared to 66.80% for the same
period ending in 2012. On a year-to-date basis, the Bank's efficiency
ratios were 76.43% and 75.16% for the nine month periods ending
September 30, 2013 and September 30, 2012, respectively.  


 
                                                                            
                      FINANCIAL HIGHLIGHTS (UNAUDITED)                      
--------------------------------------------------------------------------- 
                                                                            
                                   ------------  ------------  ------------ 
Assets                               9/30/2012     9/30/2013   Y-O-Y Change 
                                   ------------  ------------  ------------ 
Cash and Due From Bank             $      5,350  $     12,064  $      6,714 
Investment Securities                     7,906         3,424        (4,482)
Federal Funds Sold                       26,210        33,860         7,650 
Loans Outstanding                       137,619       154,999        17,380 
Loan Loss Reserve                        (3,582)       (3,433)          149 
Other Assets                              3,475         3,017          (458)
                                   ------------  ------------  ------------ 
Total Assets                       $    176,978  $    203,931  $     26,953 
                                   ============  ============  ============ 
                                                                            
                                   ------------  ------------  ------------ 
Liabilities and Capital              9/30/2012     9/30/2013   Y-O-Y Change 
                                   ------------  ------------  ------------ 
Deposits                           $    155,349  $    180,343  $     24,994 
Borrowings                                    -             -             - 
Other Liabilities                           871           938            67 
Equity                                   20,758        22,650         1,892 
                                   ------------  ------------  ------------ 
Total Liaibilities and Capital     $    176,978  $    203,931  $     26,953 
                                   ============  ============  ============ 
                                                                            
                                              Three Months Ended            
                                   ---------------------------------------- 
Income Statement                     9/30/2012     9/30/2013   Q-O-Q Change 
                                   ------------  ------------  ------------ 
Interest Income                    $      2,160  $      2,196  $         36 
Interest Expense                            254           244           (10)
                                   ------------  ------------  ------------ 
Net Interest Income                       1,906         1,952            46 
                                   ------------  ------------  ------------ 
Provision for Loan Losses                     -             -             - 
Other Income                                177           105           (72)
Operating Expenses                        1,391         1,646           255 
Tax                                          15             -           (15)
                                   ------------  ------------  ------------ 
Net Income                         $        677  $        411  $       (266)
                                   ============  ============  ============ 
                                                                            
                                               Nine Months Ended            
                                   ---------------------------------------- 
Income Statement                     9/30/2012     9/30/2013   Y-O-Y Change 
                                   ------------  ------------  ------------ 
Interest Income                    $      6,315  $      6,716  $        401 
Interest Expense                            780           709           (71)
                                   ------------  ------------  ------------ 
Net Interest Income                       5,535         6,007           472 
                                   ------------  ------------  ------------ 
Provision for Loan Losses                     -             -             - 
Other Income                                342           343             1 
Operating Expenses                        4,417         4,853           436 
Tax                                          38             1           (37)
                                   ------------  ------------  ------------ 
Net Income                         $      1,422  $      1,496  $         74 
                                   ============  ============  ============ 
                                                                            
Ratios                                9/30/2012     9/30/2013               
                                    ------------  ------------              
Tier One Leverage Ratio                    11.83%        11.50%             
YTD Return on Average Assets                1.14%         1.07%             
YTD Return on Average Equity                9.52%         9.11%             
YTD Earnings Per Share (Basic)      $       0.40  $       0.42              
Book Value Per Share (Basic)        $       5.77  $       6.30              
YTD Efficiency Ratio                       75.16%        76.43%             

 
Note: Amounts in the above presentation are shown in thousands, except
for per share amounts and financial ratios.  Additionally, per share
amounts for all periods presented have been retroactively adjusted
for the effect of the Bank's 10% stock dividend that was distributed
on May 31, 2013.  
About Pacific Valley Bank:
 Pacific Valley Bank is a California State
chartered bank that commenced operations in September 2004. Pacific
Valley Bank serves three locations; administrative headquarters and
branch offices in Salinas, King City and Monterey, California. The
Bank offers a broad range of banking products and services, including
credit and deposit services to small and medium sized businesses,
agriculture related businesses, non-profit organizations,
professional service providers and individuals. The Bank serves
customers primarily in Monterey County. For more information, visit
www.pacificvalleybank.com.  
Safe Harbor Statement:
 Except for the historical information in this
news release, the matters described herein contain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 and are subject to risks and uncertainties that
could cause actual results to differ materially. Such risks and
uncertainties include: the credit risks of lending activities,
including changes in the level and trend of loan delinquencies and
charge-offs, results of examinations by our banking regulators, our
ability to maintain adequate levels of capital and liquidity, our
ability to manage loan delinquency rates, our ability to price
deposits to retain existing customers and achieve low-cost deposit
growth, manage expenses and lower the efficiency ratio, expand or
maintain the net interest margin, mitigate interest rate risk for
changes in the interest rate environment, competitive pressures in
the banking industry, access to available sources of credit to manage
liquidity, the local and national economic environment, and other
risks and uncertainties. Accordingly, undue reliance should not be
placed on forward-looking statements. These forward-looking
statements speak only as of the date of this release. Pacific Valley
Bank undertakes no obligation to update publicly any forward-looking
statements to reflect new information, events or circumstances after
the date of this release or to reflect the occurrence of
unanticipated events. Investors are encouraged to read the Pacific
Valley Bank annual reports which are available on our website. 
Contacts:
David B. Warner, CEO
(831) 771-4323
Robert J. Lampert, CFO
(831) 771-4317 
 
 
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