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 September 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 October 1,
1996, was 1,846,158 .
INDEX
NORTH VALLEY BANCORP AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets-- September 30, 1996
and December 31, 1995
Condensed consolidated statements of income-- Nine months
ended September 30, 1996 and 1995; three months ended
September 30, 1996 and 1995
Consolidated statement of cash flows-- Nine months ended
September 30, 1996 and 1995
Notes to condensed consolidated financial statements--
September 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
September 30 December 31
1996 1995
(Unaudited) (Note)
(000's omitted)
ASSETS:
Cash and due from banks $ 13,193 $ 11,868
Federal funds sold 13,000 16,600
Investment securities:
Available for sale, at market 11,553 12,684
Held to maturity, at amortized cost 40,315 35,217
(market value of $41,567 and $37,057
at September 30, 1996 and December
31, 1995, respectively)
Loans receivable 165,721 149,133
Less: Allowance for possible loan losses 1,658 1,325
Net Loans Receivable 164,063 147,808
Premises and equipment owned, net 3,759 3,805
FHLB stock 722 662
Accrued interest receivable 1,750 1,715
Other assets 5,185 4,713
TOTAL ASSETS $253,540 $235,072
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Non interest bearing $ 29,631 $ 25,006
Interest bearing 197,635 186,069
Total deposits 227,266 211,075
Accrued interest and other liabilities 2,857 3,024
TOTAL LIABILITIES $230,123 $214,099
SHAREHOLDERS' EQUITY:
Common stock, no par value--
Authorized 20,000,000 shares,
issued and outstanding 1,846,158 for
September 30, 1996 and 1,841,078 for
December 31, 1995 9,814 9,766
Retained Earnings 13,464 11,086
Unrealized gain on investment
securities, available for sale 139 121
TOTAL STOCKHOLDERS' EQUITY 23,417 20,973
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $253,540 $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)
Nine Months Ended
September 30
1996 1995
(000's omitted,
except per share data)
Interest Income:
Loans including fees $ 10,702 $ 9,687
Investment securities:
Taxable 574 806
Exempt from federal taxes 1,782 1,617
Federal funds sold 705 797
TOTAL INTEREST INCOME 13,763 12,907
Interest Expense on Deposits 5,984 5,567
NET INTEREST INCOME 7,779 7,340
Provision for loan losses 465 350
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 7,314 6,990
Other Operating Income:
Service charges on deposit accounts 1,004 1,008
Other customer fees and charges 568 563
Gain on sale of loans 152 145
Gain on sale of securities 2 40
Other 154 315
TOTAL OTHER OPERATING INCOME 1,880 2,071
Other Operating Expenses:
Salaries & employee benefits 2,944 2,748
Occupancy 336 318
Furniture & equipment 358 332
Other 1,372 1,419
TOTAL OTHER OPERATING EXPENSES 5,010 4,817
Income before provision for income taxes 4,184 4,244
Provision for income taxes 1,160 1,222
NET INCOME $ 3,024 $ 3,022
Net income per common share $ 1.62 $ 1.63
Weighted average shares outstanding
used to compute net income per share 1,868,097 1,856,005
====================================================================
See notes to condensed consolidated financial statements (unaudited).
NORTH VALLEY BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended
September 30
1996 1995
(000's omitted,
except per share data)
Interest Income:
Loans including fees $ 3,674 $ 3,441
Investment securities:
Taxable 207 257
Exempt from federal taxes 606 555
Federal funds sold 223 215
TOTAL INTEREST INCOME 4,710 4,468
Interest Expense on Deposits 2,040 1,973
NET INTEREST INCOME 2,670 2,495
Provision for loan losses 255 200
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,415 2,295
Other Operating Income:
Service charges on deposit accounts 336 343
Other customer fees and charges 184 192
Gain on sale of loans 72 66
Gain on sale of securities 19 16
Other 47 118
TOTAL OTHER OPERATING INCOME 658 735
Other Operating Expenses:
Salaries & employee benefits 978 903
Occupancy 120 105
Furniture & equipment 115 105
Other 463 386
TOTAL OTHER OPERATING EXPENSES 1,676 1,499
Income before provision for income taxes 1,397 1,531
Provision for income taxes 393 457
NET INCOME $ 1,004 $ 1,074
Net income per common share $ .54 $ .58
Weighted average shares outstanding
used to compute net income per share 1,868,097 1,856,005
====================================================================
See notes to condensed consolidated financial statements (unaudited).
NORTH VALLEY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Nine Months Ended
September 30
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES: (000's omitted)
Net income $ 3,024 $ 3,022
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 300 277
Amortization of premium on investment securities 9 14
Provision for loan losses 465 350
Loss (gain) on sale of available
for sale securities ( 8) ( 28)
Realized loss (gain) on trading securities 6 ( 12)
Gain on sale of loans ( 152) ( 145)
Provision for deferred taxes 0 ( 15)
Effect of changes in:
Accrued interest receivable ( 35) ( 173)
Other assets ( 428) ( 329)
Accrued interest and other liabilities 278 224
Total adjustments 435 163
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,459 3,185
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of FHLB stock ( 60) ( 45)
Purchase of trading securities ( 1,980) ( 2,996)
Proceeds from sales of trading securities 1,972 3,008
Purchase of available for sale securities ( 2,594) ( 2,216)
Proceeds from sales of available for sale securities 0 102
Proceeds from maturities of available
for sale securities 3,763 7,000
Purchase of held to maturity securities ( 8,358) ( 5,182)
Proceeds from maturities or calls of held
to maturity securities 3,249 5,140
Proceeds from sale of loans 7,791 2,828
Net increase in loans (24,359) (22,124)
Purchases of premises and equipment ( 254) ( 455)
Net cash used in investing activities (20,830) (14,940)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in demand deposits, NOW
accounts and savings accounts 12,558 106
Net increase in time certificates 3,633 16,532
Cash dividends paid ( 1,143) ( 880)
Cash received for stock options exercised 48 65
Net cash provided by financing activities 15,096 15,823
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 2,275) 4,068
CASH AND CASH EQUIVALENTS, beginning of period 28,468 19,997
CASH AND CASH EQUIVALENTS, end of period $26,193 $24,065
=========================================================================
See notes to condensed consolidated financial statements (unaudited).
NORTH VALLEY BANCORP AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 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 NINE MONTHS ENDING SEPTEMBER 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 $3,024,000, a slight increase from
$3,022,000 for the period ended September 30, 1995. On a per share
basis, September 30, 1996 and 1995 profits were $1.62 and $1.63.
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
$8,589,000 for the nine months ending September 30, 1996, an increase
of 4.83% over $8,193,000 for the nine months ending September 30,
1995.
The increase in loan balances helped to offset decreasing yields on
interest earning assets and increases in volumes 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 nine months ending September 30, 1996,
slightly decreased to 5.15% from 5.24% for the same period ending
September 30, 1995. The increases on interest bearing liabilities
were 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 $191,000 to $1,880,000 for the nine months ended
September 30, 1996, compared to $2,071,000 for the nine months ended
September 30, 1995.
A summary of non-interest income for the nine months ended September
30, 1996 and 1995, is presented below:
Non-Interest Income September 30
(in thousands) 1996 1995
Service charges on deposit accounts $1,004 $1,008
Other fees and charges 568 563
Gain on sale of loans 152 145
Gain on sale of securities 2 40
Other 154 315
Total Non-Interest income $1,880 $2,071
Non-Interest Expense
Non-interest expense increased by $193,000 for the nine month period
in 1996 compared to the nine months ending September 30, 1995.
Salaries and employee benefits expenses were $2,944,000 for September
30, 1996, and $2,748,000 for the period ending September 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 $18,000
for nine months ended September 30, 1996 compared to $223,000 for the
same period ended September 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 51.9% compared to 51.2%
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 nine months ended September
30, 1996 and 1995, is presented below:
Non-Interest Expense September 30
(in thousands) 1996 1995
Salaries & employee benefits $ 2,944 $ 2,748
Occupancy expense 336 318
Furniture & equipment expense 358 332
Professional services 106 107
Data processing expenses 186 193
Printing & supplies 167 151
Postage 131 121
FDIC & State banking assessments 18 223
Messenger Expense 102 93
ATM expense 92 98
Other 570 433
Total non-interest expense $ 5,010 $ 4,817
Income Taxes
The provision for income taxes for the third quarter 1996 was
$1,160,000 compared to $1,222,000 for the same period in 1995.
Impaired, Nonaccrual, Past Due and Restructured Loans and Other
Assets
At September 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
$2,766,000. Of that balance approximately $1,152,000 has a related
valuation allowance of $404,000. The remaining $1,614,000 did not
require a valuation allowance. For the nine months ended September
30, 1996, the average recorded investment in loans for which
impairment has been recognized was approximately $2,156,000. During
the portion of the period that the loans were impaired the Company
recognized approximately $128,000 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 September 30, 1996 and December
31, 1995, is as follows:
Non-Performing Assets September 30 December 31
(in thousands) 1996 1995
Nonaccrual loans $ 1,384 $ 282
Accruing loans past due 90 days
or more 6 15
Restructured loans -0- -0-
Other real estate owned 333 87
Total $ 1,723 $ 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
$1,658,000 or 1.0% of total loans at September 30, 1996, compared to
$1,325,000 or .89% at December 31, 1995. Net charge-offs were
$132,000 or .09% of average loans for the nine months ended September
30, 1996. A provision for loan losses of $465,000 and $350,000 was
charged to income during the nine month period ended September 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 meet 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 $6,000,000 as of September 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 $4,754,750 secured by first deeds of trust on eligible 1-4 unit
residential loans. The Company had not borrowed from FHLB as of
September 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
$78,061,000 and $76,369,000 (or 30.79% and 32.49% of total assets) at
September 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
$40,315,000 and $35,217,000 for September 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 $208,924,000 and $193,731,000 at
September 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:
Within 3 3 months 1-5 5+
September 30, 1996 months to 1 Year Years Years TOTAL
(in thousands)
EARNING ASSETS:
Held to maturity
securities $ 250 $ 440 $12,414 $27,211 $ 40,315
Available for sale
securities & FHLB stock 1,399 260 2,544 7,350 11,553
Trading account
securities -0- -0- -0- -0- -0-
Fed Funds Sold 13,000 -0- -0- -0- 13,000
Loans 52,717 19,194 48,102 45,708 165,721
Total earning assets $67,366 $ 19,894 $ 63,060 $80,269 $230,589
INTEREST BEARING LIABILITIES:
Interest bearing demand
deposits $ -0- $ 40,313 $ -0- $ -0- $ 40,313
Savings deposits -0- 46,114 -0- -0- 46,114
Time deposits 40,233 63,630 7,345 -0- 111,208
Total interest bearing
liabilities $40,233 $ 150,057 $ 7,345 $ -0- $197,635
INTEREST RATE SENSITIVITY
GAP $27,133 $(130,163) $ 55,715 $80,269
CUMULATIVE INTEREST RATE
SENSITIVITY GAP $27,133 $(103,030)$(47,315)$32,954
At September 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 September 30, 1996, the asset liability simulation model showed
the Bank was slightly liability sensitive as of September 30, 1996.
Financial Condition
Total assets at September 30, 1996, were $253,540,000, representing
an increase of 7.86% over December 31, 1995 assets of $235,072,000.
During third quarter 1996, net loans increased to $164,063,000, 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 69.52%
and 66.86% at September 30, 1996 and December 31, 1995, respectively.
Investment securities and federal funds sold totaled $64,868,000 at
September 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 $16,191,000 as of
September 30, 1996, to $227,266,000, 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 $23,417,000 as of September 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 Bank's risk based
capital ratio and leverage ratio to the minimum regulatory guidelines
for the periods indicated:
MINIMUM
REGULATORY
September 30 December 31 REQUIREMENTS
1996 1995
RISK-BASED CAPITAL RATIOS:
Tier 1 13.04% 12.76% 4.00%
Total 13.97% 13.57% 8.00%
LEVERAGE RATIO 9.25% 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
1.5% at September 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 SEPTEMBER 30, 1996,
AS COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995.
North Valley Bancorp recorded a net profit for the three months ended
September 30, 1996, of $1,004,000, as compared to a net profit of
$1,074,000 for the same period in 1995. The net income for the three
month period ended September 30, 1996, resulted in net income per
share of fifty-four cents ($.54).
Net Interest Income
Net interest income on a fully tax-equivalent basis (FTE) increased
$73,000, or 2.6%, to $2,874,000 for the three months ended September
30, 1996, as compared to $2,801,000 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 4.90% and
5.22% for the three months ending September 30, 1996 and 1995,
respectively.
Other Operating Income
Total other operating income decreased to $658,000, compared to
$735,000 for the three months ended September 30, 1996 and 1995,
respectively.
A summary of other operating income for the three month periods
ending September 30, 1996 and 1995, is presented below:
Other Operating Income September
(in thousands) 1996 1995
Service charges on deposit
accounts $ 336 $ 343
Other customer fees and charges 184 192
Gain on sale of loans 72 66
Loss on sale of securities 19 16
Other 47 118
TOTAL OTHER OPERATING INCOME $ 658 $ 735
Other Operating Expense
Other operating expense increased during the third three months of
1996 to $1,676,000 compared to $1,499,000 for the same period in
1995.
Personnel expense increased to $978,000, or 8.31%, during the third
three months of 1996, compared to $903,000 for the same period in
1995.
A summary of other operating expense for the three month periods
ended September 30, 1996 and 1995, is presented below:
Other Operating Expense September
(in thousands) 1996 1995
Salaries & employee benefits $ 978 $ 903
Occupancy 120 105
Furniture & equipment 115 105
Professional services 74 35
Data processing 71 66
Printing & supplies 57 50
Postage 45 38
FDIC & State Banking Assessments 4 ( 6)
Messenger 34 31
ATM expense 30 32
Other 148 140
TOTAL OTHER OPERATING EXPENSE $1,676 $1,499
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K:
The Company did not file any reports on Form 8-K during the nine
months ended September 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 November 14 1996
J. F. Cowee
Chief Financial Officer
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<DEPOSITS> 227,266
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<LONG-TERM> 0
0
0
<COMMON> 9,814
<OTHER-SE> 13,603
<TOTAL-LIABILITIES-AND-EQUITY> 253,540
<INTEREST-LOAN> 3,674
<INTEREST-INVEST> 1,036
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 4,710
<INTEREST-DEPOSIT> 2,040
<INTEREST-EXPENSE> 2,040
<INTEREST-INCOME-NET> 2,670
<LOAN-LOSSES> 255
<SECURITIES-GAINS> 19
<EXPENSE-OTHER> 1,676
<INCOME-PRETAX> 1,397
<INCOME-PRE-EXTRAORDINARY> 1,397
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,004
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
<YIELD-ACTUAL> 4.52
<LOANS-NON> 1,384
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<ALLOWANCE-OPEN> 1,325
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<ALLOWANCE-CLOSE> 1,658
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
