FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission file number 0-10652
NORTH VALLEY BANCORP
(Exact name of small business issuer in its charter)
California 94-2751350
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
880 E. Cypress Avenue, Redding, CA. 96002
(Address of principal executive offices)(Zip code)
Issuer's telephone number (916) 221-8400
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
The number of shares outstanding of common stock as of July 1, 1996, was
1,845,778.
INDEX
NORTH VALLEY BANCORP AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets-- June 30, 1996 and
December 31, 1995
Condensed consolidated statements of income-- Six months
ended June 30, 1996 and 1995; three months ended June 30,
1996 and 1995
Consolidated statement of cash flows-- Six months ended
June 30, 1996 and 1995
Notes to condensed consolidated financial statements--
June 30, 1996
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8K
SIGNATURES
PART I. FINANCIAL INFORMATION
NORTH VALLEY BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS June 30 December 31
1996 1995
(unaudited) (Note)
ASSETS: (000's omitted)
Cash and due from banks $ 10,934 $ 11,868
Federal funds sold 11,900 16,600
Trading securities at market 1,964 -0-
Investment securities:
Available for sale, at market 11,541 12,684
Held to maturity, at amortized cost 39,583 35,217
(market value of $40,593 and $37,057
at June 30, 1996 and December 31, 1995,
respectively)
Loans receivable 159,589 149,133
Less: Allowance for possible loan losses 1,449 1,325
Net Loans Receivable 158,140 147,808
Premises and equipment owned, net 3,741 3,805
FHLB stock 712 662
Accrued interest receivable 1,846 1,715
Other assets 4,931 4,713
TOTAL ASSETS $245,292 $235,072
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Non interest bearing $ 28,505 $ 25,006
Interest bearing 191,759 186,069
Total deposits 220,264 211,075
Accrued interest and other liabilities 2,757 3,024
TOTAL LIABILITIES $223,021 $214,099
SHAREHOLDERS' EQUITY:
Common stock, no par value--
Authorized 20,000,000 shares,
issued and outstanding 1,845,778 for
June 30, 1996 and 1,841,078 for
December 31, 1995 9,812 9,766
Retained Earnings 12,460 11,086
Unrealized (loss) gain on investment
securities, available for sale ( 1) 121
TOTAL STOCKHOLDERS' EQUITY 22,271 20,973
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $245,292 $235,072
=======================================================================
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date.
=====================================================================
See notes to condensed consolidated financial statements (unaudited).
NORTH VALLEY BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Six Months Ended
June 30
1996 1995
(000's omitted,
except per share data)
Interest Income:
Loans including fees $ 7,028 $ 6,246
Investment securities:
Taxable 367 549
Exempt from federal taxes 1,176 1,062
Federal funds sold 482 582
TOTAL INTEREST INCOME 9,053 8,439
Interest Expense on Deposits 3,944 3,594
NET INTEREST INCOME 5,109 4,845
Provision for loan losses 210 150
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 4,899 4,695
Other Operating Income:
Service charges on deposit accounts 668 665
Other customer fees and charges 384 371
Gain on sale of loans 80 79
(Loss) gain on sale of securities ( 17) 24
Other 107 197
TOTAL OTHER OPERATING INCOME 1,222 1,336
Other Operating Expenses:
Salaries & employee benefits 1,966 1,845
Occupancy 216 213
Furniture & equipment 243 227
Other 909 1,033
TOTAL OTHER OPERATING EXPENSES 3,334 3,318
Income before provision for income taxes 2,787 2,713
Provision for income taxes 767 765
NET INCOME $ 2,020 $ 1,948
Net income per common share $ 1.08 $ 1.05
Weighted average shares outstanding
used to compute net income per share 1,867,709 1,856,535
====================================================================
See notes to condensed consolidated financial statements (unaudited).
NORTH VALLEY BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended
June 30
1996 1995
(000's omitted,
except per share data)
Interest Income:
Loans including fees $ 3,553 $ 3,190
Investment securities:
Taxable 200 279
Exempt from federal taxes 595 541
Federal funds sold 220 311
TOTAL INTEREST INCOME 4,568 4,321
Interest Expense on Deposits 1,949 1,927
NET INTEREST INCOME 2,619 2,394
Provision for loan losses 105 75
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,514 2,319
Other Operating Income:
Service charges on deposit accounts 333 341
Other customer fees and charges 181 185
Gain on sale of loans 28 69
(Loss) gain on sale of securities ( 17) 4
Other 65 74
TOTAL OTHER OPERATING INCOME 590 673
Other Operating Expenses:
Salaries & employee benefits 981 916
Occupancy 110 109
Furniture & equipment 121 116
Other 501 525
TOTAL OTHER OPERATING EXPENSES 1,713 1,666
Income before provision for income taxes 1,391 1,326
Provision for income taxes 395 389
NET INCOME $ 996 $ 937
Net income per common share $ .53 $ .50
Weighted average shares outstanding
used to compute net income per share 1,867,709 1,856,535
====================================================================
See notes to condensed consolidated financial statements (unaudited).
NORTH VALLEY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Six Months Ended
June 30
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES: (000's omitted)
Net income $ 2,020 $ 1,948
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 199 184
Amortization of premium on
investment securities 7 10
Provision for loan losses 210 150
Loss (gain)on sale of available for sale securities 1 ( 18)
Realized loss (gain) on trading securities 16 ( 6)
Gain on sale of loans ( 80) ( 79)
Provision for deferred taxes 0 ( 4)
Effect of changes in:
Accrued interest receivable ( 131) 48
Other assets ( 158) ( 235)
Accrued interest and other liabilities 201 292
Total adjustments 265 342
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,285 2,290
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of FHLB stock ( 50) ( 37)
Purchase of trading securities ( 1,980) ( 998)
Proceeds from sales of trading securities 0 1,004
Purchase of available for sale securities ( 2,505) ( 1,175)
Proceeds from sales of available for sale securities 0 70
Proceeds from maturities of available
for sale securities 3,494 5,000
Purchase of held to maturity securities ( 6,763) ( 4,196)
Proceeds from maturities or calls of held
to maturity securities 2,390 3,565
Proceeds from sale of loans 5,567 2,417
Net increase in loans (16,029) (12,319)
Purchases of premises and equipment ( 135) ( 234)
Net cash used in investing activities (16,011) ( 6,903)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in demand deposits, NOW
accounts, and savings accounts 6,738 ( 3,489)
Net increase in time certificates 2,451 17,201
Cash dividends paid ( 1,143) ( 880)
Cash received for stock options exercised 46 52
Net cash provided by financing activities 8,092 12,884
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 5,634) 8,271
CASH AND CASH EQUIVALENTS, beginning of period 28,468 19,997
CASH AND CASH EQUIVALENTS, end of period $22,834 $28,268
==========================================================================
See notes to condensed consolidated financial statements (unaudited).
NORTH VALLEY BANCORP AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements of North Valley Bancorp and subsidiaries (the "Company")
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-QSB and Article 10 of Regulation S-X. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation of
the results for the interim periods presented have been included.
They do not, however, include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements. For further information, refer to the
consolidated financial statements and notes thereto included in the
Company's annual report on Form 10-KSB for the fiscal year ended
December 31, 1995. Operating results for the interim periods
presented are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996.
The condensed consolidated financial statements include the accounts
of the Company. Significant intercompany items and transactions have
been eliminated.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Pronouncements
On January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 122, Accounting for Mortgage Servicing
Rights (SFAS No. 122). SFAS No. 122 requires that the Company
recognize as a separate asset rights to service mortgage loans for
others, whether those servicing rights are originated or purchased.
Previously, only purchased servicing rights were capitalizable as an
asset. SFAS No. 122 also requires that capitalized servicing rights
be assessed for impairment based on fair value, rather than an
estimate of undiscounted future cash flows. The adoption of SFAS No.
122 did not have a material effect on the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDING JUNE 30, 1996.
The following discussion should be read in conjunction with the
Consolidated Financial Statements and notes thereto included
elsewhere herein which are incorporated by reference herein. Since
the Company is a holding company whose principal asset is the Bank,
the following discussion relates principally to the financial
condition and results of operations of the Bank.
Overview
The Company's net income was $2,020,000, a 3.7% increase from
$1,948,000 for the period ending June 30, 1995. On a per share
basis, June 30, 1996 and 1995 profits were $1.08 and $1.05, as
adjusted to give effect to the three-for-two split effected in the
form of a 50% stock dividend.
Net Interest Income
Net interest income is the principal source of the Company's
earnings, which represents the difference between interest earned on
loans (including yield-related loan fees) and investments and
interest paid on deposits. Tax exempt interest income from
investment securities is adjusted to an amount which would have been
earned if such income were subject to federal income tax. Net
interest income on a fully taxable equivalent basis (FTE) was
$5,716,000 for the six months ending June 30, 1996, an increase of
6.01% over $5,392,000 for the six months ending June 30, 1995.
The increase in loan balances helped to offset decreasing yields on
interest earning assets and increases in interest paid on time
deposits.
Net interest income (FTE) expressed as a percentage of average
earning assets, is referred to as net interest margin. The net
interest margin for the six months ending June 30, 1996, slightly
decreased to 5.21% from 5.26% for the same period ending June 30,
1995. The higher rate on interest bearing liabilities was offset by
an increase in earning assets.
Non-Interest Income
Non-interest income is primarily derived from fees earned by the
Company for deposit-related customer services. Total non-interest
income decreased $114,000 to $1,222,000 in the six months ending June
30, 1996, compared to $1,336,000 for the six months ending June 30,
1995.
A summary of non-interest income for the six months ended June 30,
1996 and 1995, is presented below:
Non-Interest Income June 30
(in thousands) 1996 1995
Service charges on deposit accounts $ 668 665
Other fees and charges 384 371
Gain on sale of loans 80 79
Gain on sale of securities ( 17) 24
Other 107 197
Total Non-interest income $1,222 1,336
Non-Interest Expense
Non-interest expense increased slightly by $16,000 in the six month
quarter 1996 compared to the six months ending June 30, 1995.
Salaries and employee benefits expenses were $1,966,000 for June 30,
1996, and $1,845,000 for the period ending June 30, 1995. The
increase in salary and benefit expense is attributed to normal salary
increases, increased employer taxes and an increase in the net
pension cost for the supplemental retirement plans for directors and
key executives.
FDIC and California State Banking assessments decreased to $14,000
for six months ended June 30, 1996 compared to $229,000 for the same
period ended June 30, 1995. The FDIC determined that the Bank
Insurance Fund (BIF) was fully recapitalized at the end of May 1995.
As a result, on August 8, 1995, the FDIC reduced the assessment rates
for well capitalized institutions to $.04 per $100 in domestic
deposits from $.23 effective June 1, 1995. The Company paid $.23 per
$100 in deposits for the first five months of 1995 and $.04 per $100
for the remaining seven months. For the six month assessment period
beginning January 1, 1996, the FDIC reduced the assessment rate to
$.00 per $100 in domestic deposits.
The Company improved its efficiency ratio (derived by dividing total
non-interest expenses by net interest income exclusive of provision
for loan losses and non-interest income) to 52.7% compared to 53.7%
in 1995. The efficiency ratio is a measurement as to how efficiently
the Company allocates its resources.
A summary of non-interest expense for the six months ended June 30,
1996 and 1995, is presented below:
Non-Interest Expense June 30
(in thousands) 1996 1995
Salaries & employee benefits $ 1,966 1,845
Occupancy expense 216 213
Furniture & equipment expense 243 227
Professional services 32 72
Data processing expenses 115 127
Printing & supplies 110 101
Postage 86 83
FDIC & State banking assessments 14 229
Messenger expense 68 62
ATM expense 62 66
Other 422 293
Total Non-interest expense $ 3,334 3,318
Income Taxes
The provision for income taxes for the second quarter 1996 was
$767,000 as compared to $765,000 for the same period in 1995.
Impaired, Nonaccrual, Past Due and Restructured Loans and Other Real
Estate Owned
At June 30, 1996 the recorded investment in loans for which
impairment has been recognized in accordance with SFAS No. 114,
Accounting by Creditors for Impairment of a Loan, was approximately
$2,284,000. Of that balance approximately $1,081,000 has a related
valuation allowance of $327,000. The remaining $1,203,000 did not
require a valuation allowance. For the six months ended June 30,
1996, the average recorded investment in loans for which impairment
has been recognized was approximately $1,947,000. During the portion
of the period that the loans were impaired the Company recognized
approximately $43,000 of interest income.
At December 31, 1995, the recorded investment in loans for which
impairment has been recognized in accordance with SFAS No. 114,
Accounting by Creditors for Impairment of a Loan, was approximately
$1,715,000. Of that balance approximately $1,078,000 has a related
valuation allowance of $254,000. The remaining $637,000 did not
require a valuation allowance. For the year ended December 31, 1995,
the average recorded investment in loans for which impairment has
been recognized was approximately $1,473,000. During the portion of
the year that the loans were impaired the Company recognized
approximately $205,000 of interest income.
Nonaccrual loans are loans on which the accrual of interest has been
discontinued. Accrual of interest is discontinued on a loan when
management believes that borrowers' financial condition is such that
the collection of interest is doubtful, or when a loan becomes
contractually past due by 90 days or more with respect to interest or
principal. When a loan is placed on nonaccrual status, all interest
previously accrued but not collected is reversed against current
period interest income. Income on such loans is then recognized only
to the extent that cash is received and where the future collection
of principal is probable. Interest accruals are resumed on such
loans when in the judgement of management, the loans are estimated to
be fully collectible as to both principal and interest.
The Company's allowance for loan losses is maintained at a level
deemed by management to be adequate to provide for possible losses in
the loan portfolio based on the Bank's current loan portfolio
performance, anticipated growth in the portfolio, prevailing economic
conditions, historical credit loss experience, and other factors
deemed appropriate by management.
A summary of non-performing assets at June 30, 1996 and December 31,
1995, is as follows:
Non-Performing Assets June 30 December
(in thousands) 1996 1995
Nonaccrual loans $ 501 282
Accruing loans past due 90 days
or more 3 15
Restructured loans -0- -0-
Other real estate owned 129 87
Total $ 633 384
Allowance for Loan Losses
Management assesses the adequacy of the allowance for loan loss based
on loan loss experience, specific identification of potential losses
in the portfolio and economic conditions. Additions to the Allowance
are made by charges to operating expenses in the form of a provision
for possible loan losses. The Allowance for loan losses totaled
$1,449,000 or .91% of total loans at June 30, 1996, compared to
$1,325,000 or .89% at December 31, 1995. Net charge-offs were
$86,000 or .06% of average loans for the six months ended June 30,
1996. A provision for loan losses of $210,000 and $150,000 was
charged to income during the six month period ended June 30, 1996 and
1995, respectively. Management's continuing evaluation of the loan
portfolio and assessment of current economic conditions will dictate
future funding levels.
Liquidity and Interest Rate Sensitivity
Liquidity represents the Company's ability to satisfy cash flow
requirements created by fluctuations in deposits and to meet
borrowers' credit needs. Effective liquidity management insures that
sufficient funds are available to comply with demands from
depositors, borrowers and other commitments on a timely basis.
Collection of principal and interest on loans, the liquidations of
investment securities, deposit inflow and short term borrowing when
needed are primary sources of funds that contribute to liquidity.
Unused lines of credit from correspondent banks to provide federal
funds in the amount of $9,000,000 as of June 30, 1996, were available
to provide liquidity. In addition, the Bank is a member of the
Federal Home Loan Bank ("FHLB") system providing an additional line
of credit of $4,863,950 secured by first deeds of trust on eligible
1-4 unit residential loans. The Company had not borrowed from FHLB
as of June 30, 1996.
The Company manages both assets and liabilities to preserve liquidity
and earnings stability. Total liquid assets (cash and due from
banks, federal funds sold, and investment securities) totaled
$75,922,000 and $76,369,000 (or 30.95% and 32.49% of total assets) at
June 30, 1996 and December 31, 1995, respectively. Total liquid
assets include investment securities classified as held to maturity
based on the Company's intent to hold such securities to maturity of
$39,583,000 and $35,217,000 for June 30, 1996 and December 31, 1995,
respectively.
The Company's ability to generate retail core deposits consisting of
demand deposits, NOW, regular savings, money market deposit accounts
and time deposits of less than $100,000 provides a continued source
of liquidity. Core deposits totaled $202,494,000 and $193,731,000 at
June 30, 1996 and December 31, 1995, respectively.
Management considers the Company's liquidity sufficient to satisfy
its funding demand for normal banking transactions for the next
twelve months.
Interest rate sensitivity management concentrates on reducing the
impact on net interest income due to shifts in interest rates.
The Company measures its interest rate sensitivity with an asset
liability simulation model. The model analyzes the mix and repricing
characteristics of interest rate sensitive assets and liabilities
using multipliers (how interest rates change when Fed Funds rate
changes by 1%) and lags (time it takes for rates to change after Fed
Funds rate changes). The model simulates the effects on net interest
income when the Fed Funds rate experiences a 1% increase or decrease
compared to current levels. In management's view, the Company has
low interest rate risk in the short term as measured by the model,
specifically the next twelve months.
The following table shows the interest sensitive assets and
liabilities gap, which is the measure of interest sensitive assets
over interest bearing liabilities, for each individual repricing
period on a cumulative basis:
June 30, 1996 Within 3 3 months 1-5 5+
(in thousands) months to 1 Year Years Years TOTAL
EARNING ASSETS:
Held to maturity
securities $ 630 $ 179 $11,284 $27,490 $ 39,583
Available for sale
securities & FHLB stock 0 1,646 1,816 8,791 12,253
Trading account
securities 0 0 1,964 0 1,964
Fed Funds Sold 11,900 0 0 0 11,900
Loans 53,128 18,976 46,974 40,511 159,589
Total earning assets $65,658 $20,801 $62,038 $76,792 $225,289
INTEREST BEARING LIABILITIES:
Interest bearing demand
deposits $ 0 $38,350 $ 0 $ 0 $ 38,350
Savings deposits 0 43,383 0 0 43,383
Time deposits 31,570 71,185 7,271 0 110,026
Total interest bearing
liabilities $31,570 $152,918 $ 7,271 $ 0 $191,759
INTEREST RATE SENSITIVITY
GAP $34,088 $(132,117)$54,767 $76,792
CUMULATIVE INTEREST RATE
SENSITIVITY GAP $34,088 $( 98,029)$(43,262)$33,530
At June 30, 1996, the gap table indicates the Company as liability
sensitive in the twelve month period. Interest rate sensitivity
measured by the gap method does not consider the impact of different
multipliers (how interest rates change when Fed Funds rate changes by
1%) and lags (time it takes for rates to change after Fed Funds rate
changes). The Company's model analyzes the impact on earnings of
future rate changes by including factors for lags and multipliers for
key bank rates. Both methods of measuring interest rate sensitivity
do not take into account actions taken by management to modify the
effect to net interest income if interest rates were to rise or fall.
Even though the Bank had a negative gap in the twelve month period as
of June 30, 1996, the asset liability simulation model showed the
Bank was slightly asset sensitive as of June 30, 1996.
Financial Condition
Total assets at June 30, 1996, were $245,292,000, representing an
increase of 4.35% over December 31, 1995 assets of $235,072,000.
During second quarter 1996, net loans increased to $158,140,000, from
$147,808,000 at December 31, 1995. Loans are the major component of
earning assets. The Bank's average loan to deposit ratio was 70.79%
and 66.86% at June 30, 1996 and December 31, 1995, respectively.
Investment securities and federal funds sold totaled $64,988,000 at
June 30, 1996, compared to $64,501,000 at December 31, 1995.
Funding for increased loan and investment activity came from
increases in deposits. Total deposits increased $9,189,000 as of
June 30, 1996, to $220,264,000, as compared to $211,075,000 at
December 31, 1995. The increase was primarily in interest-bearing
instruments.
The Company maintains capital levels to support conservative internal
growth and to encourage confidence from depositors and investors.
Shareholders' equity increased to $22,271,000 as of June 30, 1996, as
compared to $20,973,000 for year end 1995.
Banking regulators require bank holding companies and banks to
maintain capital equal to at least 8% of their assets, weighted by
risk. At least 4% of the total 8% ratio must consist of Tier 1
capital (primarily shareholders' equity).
In addition, banking regulators also require bank holding companies
and banks to maintain a certain Tier 1 leverage ratio. The leverage
ratio is measured by the ratio of Tier 1 capital to adjusted average
assets.
The table below provides a comparison of the Company's risk based
capital ratio and leverage ratio to the minimum regulatory guidelines
for the periods indicated:
MINIMUM
REGULATORY
June 30 December 31 REQUIREMENTS
RISK-BASED CAPITAL RATIOS: 1996 1995
Tier 1 12.61% 12.76% 4.00%
Total 13.43% 13.57% 8.00%
LEVERAGE RATIO 9.21% 8.87% 3.00%-5.00%
Impact of Inflation
Impact of inflation on a financial institution differs significantly
from that exerted on an industrial concern, primarily because its
assets and liabilities consist largely of monetary items. The
relatively low proportion of the Company's fixed assets (less than
1.6% at June 30, 1996) reduces both the potential of inflated
earnings resulting from understated depreciation and the potential
understatement of absolute asset values.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1996, AS
COMPARED TO THE THREE MONTHS ENDED JUNE 30, 1995.
North Valley Bancorp recorded a net profit for the three months ended
June 30, 1996, of $996,000, as compared to a net profit of $937,000
for the same period in 1995. The net income for the three month
period ended June 30, 1996, resulted in net income per share of
fifty-three cents ($.53).
Net Interest Income
Net interest income on a fully tax-equivalent basis (FTE) increased
$262,000, or 9.79%, to $2,938,000 for the three months ended June 30,
1996, as compared to $2,676,000 for the same period in 1995.
Changes in net interest income are a result of changes in volume
between average earning assets and interest bearing liabilities and
in the difference between interest yields from average earning assets
and the cost of interest bearing liabilities. Net interest income
increased over 1995 levels primarily due to an increase in volume of
interest earning assets.
Net interest income on a fully taxable equivalent basis expressed as
a percentage of total average earning assets is referred to as the
net interest margin. The net interest margin (FTE) was 5.28% and
5.11% for the three months ending June 30, 1996 and 1995,
respectively.
Other Operating Income
Total other operating income decreased to $590,000, compared to
$673,000 for the three months ended June 30, 1996 and 1995,
respectively.
A summary of other operating income for the three month periods
ending June 30, 1996 and 1995, is presented below:
Other Operating Income June
(in thousands) 1996 1995
Service charges on deposit
accounts $ 333 $ 341
Other customer fees and charges 181 185
Gain on sale of loans 28 69
Loss on sale of securities ( 17) 4
Other 65 74
TOTAL OTHER OPERATING INCOME $ 590 $ 673
Other Operating Expense
Other operating expense increased during the second three months of
1996 to $1,713,000 compared to $1,666,000 for the same period in
1995.
Personnel expense increased to $981,000, or 7.10%, during the second
three months of 1996, compared to $916,000 for the same period in
1995.
A summary of other operating expense for the three month period ended
June 30, 1996 and 1995, is presented below:
Other Operating Expense June
(in thousands) 1996 1995
Salaries & employee benefits $ 981 $ 916
Occupancy 110 109
Furniture & equipment 121 116
Professional services 23 42
Data processing 60 64
Printing & supplies 54 49
Postage 39 39
FDIC & State Banking Assessments 7 115
Messenger expense 33 3
ATM 29 30
Other 256 183
TOTAL OTHER OPERATING EXPENSE $1,713 $1,666
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of North Valley Bancorp was held
on Monday, May 20, 1996. Shareholders of North Valley Bancorp
approved the slate of directors as proposed, and the ratification of
Deloitte & Touche LLP as independent public accountants for the
Company was approved. Results of the election are presented in
Exhibit 23.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K:
The following exhibits are included herein:
(23) Report regarding matters submitted to shareholders.
The Company did not file any reports on Form 8-K during the six
months ended June 30, 1996.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
North Valley Bancorp
(Registrant)
Date August 13, 1996 /s/ J. F. Cowee
J. F. Cowee
Chief Financial Officer
EXHIBIT 23
ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1996
TOTAL SHARES OUTSTANDING 1,842,558
TOTAL SHARES VOTING: 1,305,247
BY PROXY 955,893
IN PERSON 349,354
PERCENTAGE OF SHARES VOTED: 70.84%
1. TO ELECT DIRECTORS AS STATED IN THE PROXY STATEMENT:
FOR AUTHORITY WITHHELD TOTAL
1,304,687 560 1,305,247
2. RATIFICATION OF DELOITTE & TOUCHE:
FOR AGAINST ABSTAIN TOTAL
1,296,377 234 8,636 1,305,247
%
TOTAL SHARES VOTING BY PROXY: 955,893 73.23
TOTAL SHARES VOTING IN PERSON: 349,354 26.77
TOTAL VOTES CAST: 1,305,247 100.00
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000353191
<NAME> NORTH VALLEY BANCORP
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 10,934
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 11,900
<TRADING-ASSETS> 1,964
<INVESTMENTS-HELD-FOR-SALE> 11,541
<INVESTMENTS-CARRYING> 39,583
<INVESTMENTS-MARKET> 40,593
<LOANS> 159,589
<ALLOWANCE> 1,449
<TOTAL-ASSETS> 245,292
<DEPOSITS> 220,264
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,757
<LONG-TERM> 0
0
0
<COMMON> 22,271
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 245,292
<INTEREST-LOAN> 3,553
<INTEREST-INVEST> 1,015
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 4,568
<INTEREST-DEPOSIT> 1,949
<INTEREST-EXPENSE> 1,949
<INTEREST-INCOME-NET> 2,619
<LOAN-LOSSES> 105
<SECURITIES-GAINS> ( 17)
<EXPENSE-OTHER> 1,713
<INCOME-PRETAX> 1,391
<INCOME-PRE-EXTRAORDINARY> 1,391
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 996
<EPS-PRIMARY> .53
<EPS-DILUTED> .53
<YIELD-ACTUAL> 4.60
<LOANS-NON> 501
<LOANS-PAST> 3
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,325
<CHARGE-OFFS> 95
<RECOVERIES> 9
<ALLOWANCE-CLOSE> 1,449
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
