North Valley Bancorp Reports Increased Earnings for the Three Months and Six
Months Ending June 30, 2000
July 20, 2000 - REDDING, CA - North Valley Bancorp (NASDAQ:NOVB), today reported
results for the three months and six months ending June 30, 2000. North Valley
Bancorp (the Company) is the holding company for its wholly owned subsidiary,
North Valley Bank (the Bank).
The Company's consolidated net earnings grew 18.71% for the three months ended
June 30, 2000, to $1,123,000, or $0.30 basic and diluted earnings per share,
compared to $946,000, or $0.26 basic and $0.25 diluted earnings per share for
the comparable period of 1999. The second quarter 2000 operating results include
$127,000 in non- recurring merger and acquisition expense.
The Company's consolidated net earnings grew 16.67% for the six months ended
June 30, 2000, to $2,407,000, or $0.65 basic and $0.64 diluted earnings per
share, compared to $2,063,000, or $0.56 basic and $0.55 diluted earnings per
share for the comparable period of 1999. Return on average assets was 1.52 % and
return on average equity was 14.12% for the six months ended June 30, 2000,
compared to 1.40% and 13.30%, respectively, for the same period of 1999.
The higher earnings for the three months and six months ended June 30, 2000,
resulted from increased interest income from loan growth and rising interest
rates, increased non-interest income from service charges on deposit accounts,
and a one-time pre-tax revenue item received in the first quarter from the
demutualization of an insurance company from which the Bank owns policies. The
increased income was offset somewhat by higher levels of interest expense on
deposits, and salary and benefit expense and merger related expenses. Loan
volume increased due to the continued growth of the Bank's Business Banking
Center, which focuses on development of existing and new commercial banking
relationships, and consumer loan growth.
Loan portfolio performance continues to strengthen. The Company's Allowance for
Loan Loss Reserve (ALLR) is $2,693,000 or 1.20% of total loans at June 30, 2000,
compared to $2,260,000 or 1.04% of total loans at December 31, 1999.
Nonperforming loans were $103,000 at June 30, 2000, compared to $569,000 at
December 31, 1999, and include loans 90 days past due and still accruing
interest of $23,000 and $223,000 at June 30, 2000 and December 31, 1999,
respectively. Overall while loan growth has been slower than projected, the net
interest margin has increased from 5.18% at June 30, 1999, to 5.34% at June 30,
2000.
During the six months ending June 30, 2000, the Company incurred merger and
acquisition charges in the amount of $356,000 relating to the pending
transaction with Six Rivers National Bank (NASDAQ:SIXR). Additionally, increased
salary and benefit expenses and infrastructure costs were higher in preparation
for the closing of the transaction. The closing was projected to occur early in
the third quarter 2000 but has been delayed mainly due to competitive issues
raised by the Federal Reserve Bank with respect to Trinity County. Final closing
is subject to regulatory approvals, which are anticipated in September 2000,
with a closing of the merger shortly thereafter.
"We are proud of our over 16% growth in net income and earnings per share for
the first six months of 2000 when compared to the similar period of 1999.
Included in the operating results are increased levels of backroom and support
departments that are fully staffed and ready to integrate Six Rivers upon
closing. This current increased expense will be offset by efficiencies gained by
integrating the two companies," stated Michael J. Cushman, President and CEO of
North Valley Bancorp and North Valley Bank. "During the first six months of 2000
we have been extremely proactive in developing and implementing new products and
services that enable us to better compete for retail and commercial customers on
a regional basis. The investment in technology and personnel required to deliver
these programs has resulted in increased operating costs, and has created
additional revenue sources for the Company."
<PAGE>
North Valley Bancorp Press Release
July 20, 2000
Page 2
The Company has recently implemented marketing programs that have resulted in
improved penetration in the retail and commercial deposit customer market base
in Shasta and Trinity Counties, increasing the number of deposit accounts and
corresponding service charge income and demand deposit levels. Our "Positively
Free Checking" program is designed to build the number of customers we serve and
provides us a tremendous opportunity to present other products and services. The
success of the program is changing our deposit mix by increasing demand deposit
accounts and enabling us to reduce reliance on certificates of deposits, thereby
reducing our cost of funds and also increasing noninterest income. Additionally,
our recently enhanced Online Banking product, which we began marketing April
2000, has resulted in over 6% of our checking customers subscribing to the
service. Our on-line banking department currently supports North Valley's
internet banking products and will support both Six Rivers and North Valley
customers upon completion of the merger.
Our technology investments during 2000 include the recently completed
state-of-the-art PC-based Call Center, implementation of the previously
discussed on-line banking center, and development of automated teller and
platform processes that will be implemented during 2000. The Call Center is
designed to process all incoming calls to North Valley Bank, and Six Rivers
National Bank upon completion of the merger, and offers enhanced customer
service and marketing capabilities. The teller and platform automation will be
utilized by both institutions upon completion of the merger and will improve
customer service and efficiency of operations.
North Valley Bancorp is a one-bank holding company headquartered in Redding,
California. The Company's principal subsidiary, North Valley Bank, operates
twelve commercial banking offices in Shasta and Trinity Counties in Northern
California including two in-store supermarket branches and a Business Banking
Center. The Bank offers a wide range of consumer and business banking products
and services. In addition to depository services, North Valley Bank engages in a
full complement of lending activities including consumer, commercial and real
estate loans, with particular emphasis on short and medium term loans. The Bank
also processes installment loans through its Dealer Finance Division, has SBA
Preferred Lender status, and provides investment services to its customers
through an affiliated relationship.
Cautionary Statement: This release contains certain forward-looking statements
that are subject to risks and uncertainties that could cause actual results to
differ materially from those stated herein. Management's assumptions and
projections are based on their anticipation of future events and actual
performance may differ materially from those projected. Risks and uncertainties
which could impact future financial performance include, among others, (a)
competitive pressures in the banking industry; (b) changes in the interest rate
environment; (c) general economic conditions, either nationally or regionally;
(d) changes in the regulatory environment; and (e) changes in business
conditions or the securities markets and inflation. Therefore, the information
set forth herein, together with other information contained in the periodic
reports filed by the company with the Securities and Exchange Commission, should
be carefully considered when evaluating the business prospects of the company.
North Valley Bancorp undertakes no obligation to update any forward-looking
statements contained in this release.
For further information contact:
Michael J. Cushman or Sharon L. Benson
President & Chief Executive Officer Senior Vice President and
Chief Financial Officer
880 E. Cypress Avenue
Redding, CA 96002
(530) 226-2900 Fax: (530) 221-4877
<PAGE>
Press Release - North Valley Bancorp
July 20, 2000
Page 3
Statements of Income North Valley Bancorp and subsidiaries
(dollars in thousands except per share data)
(unaudited)
For the six months For the three months
ended June 30, ended June 30,
2000 1999 2000 1999
INTEREST INCOME
Loans and leases including fees $9,614 $8,428 $4,886 $4,261
Securities
Taxable 830 566 437 279
Exempt from federal taxes 832 1,008 413 498
Federal funds sold 576 431 286 186
------ ------ ----- -----
Total interest income 11,852 10,433 6,022 5,224
INTEREST EXPENSE - DEPOSITS 4,517 4,001 2,283 1,989
------ ------ ----- -----
NET INTEREST INCOME 7,335 6,432 3,739 3,235
PROVISION FOR LOAN AND LEASE LOSSES 600 555 120 300
------ ------ ----- -----
NET INTEREST INCOME AFTER PROVISION 6,735 5,877 3,619 2,935
FOR LOAN AND LEASE LOSSES
NONINTEREST INCOME:
Service charges on deposit accounts 1,467 1,023 839 536
Other fees and charges 454 431 223 216
Gain (loss) on sale of loans 54 (87) (50)
Gain on shares received from insur-
rance company demutualization 683
Gain on sale or calls of securities 4 16 4
Other 158 352 71 121
------ ------ ----- -----
Total noninterest income 2,820 1,735 1,137 823
------ ------ ----- -----
NONINTEREST EXPENSES:
Salaries and employee benefits 3,018 2,293 1,543 1,154
Occupancy expense 358 315 198 155
Furniture and equipment expense 366 352 184 166
Merger & acquisition expense 356 127
Other 2,113 1,765 1,144 962
------ ------ ----- -----
Total noninterest expenses 6,211 4,725 3,196 2,437
------ ------ ----- -----
INCOME BEFORE PROVISION FOR INCOME
TAXES 3,344 2,887 1,560 1,321
PROVISION FOR INCOME TAXES 937 824 437 375
------ ------ ----- -----
NET INCOME $2,407 $2,063 $1,123 $946
====== ====== ====== ====
EARNINGS PER SHARE:
Basic $0.65 $0.56 $0.30 $0.26
===== ===== ===== =====
Diluted $0.64 $0.55 $0.30 $0.25
===== ===== ===== =====
<PAGE>
Press Release - North Valley Bancorp
July 20, 2000
Page 4
North Valley Bancorp and subsidiaries
(dollars in thousands except per share data)
(unaudited)
ASSETS June 30, December 31,
2000 1999
Cash and due from banks $13,262 $12,783
Federal funds sold 13,000 14,600
Cash held in trust 218 282
Securities:
Available for sale, at fair value 24,911 25,569
Held to maturity, at amortized cost 27,247 28,146
Loans and leases receivable net of allowance
for loan and lease losses and deferred loan fees 222,460 215,397
Premises and equipment, net of accumulated
depreciation and amortization 5,852 5,060
Other real estate owned 80
FHLB stock 666 911
Accrued interest receivable 1,982 2,035
Other assets 9,465 7,947
-------- --------
TOTAL ASSETS $319,063 $312,810
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing demand deposits $42,138 $40,071
Interest-bearing deposits 237,158 235,190
-------- --------
Total deposits 279,296 275,261
Accrued interest and other liabilities 4,835 4,303
-------- --------
Total liabilities 284,131 279,564
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, no par value: authorized
5,000,000 shares none outstanding
Common stock, no par value: authorized
20,000,000 shares, outstanding 3,715,818 and
3,714,418 at June 30, 2000 and December 31, 1999 10,439 10,427
Retained Earnings 24,662 22,936
Accumulated other comprehensive loss, net of tax (169) (117)
-------- --------
Total stockholders' equity 34,932 33,246
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $319,063 $312,810
======== ========
<PAGE>
Press Release - North Valley Bancorp
July 20, 2000
Page 5
North Valley Bancorp and subsidiaries
(dollars in thousands except per share data)
(unaudited)
FINANCIAL RATIOS:
For the six months ended
June 30
2000 1999
Return on average assets 1.52% 1.40%
Return on average equity 14.12% 13.30%
Efficiency ratio 61.16% 57.90%
Net interest margin 5.34% 5.18%
Average equity to average assets 10.76% 10.52%
Balance beginning of year $2,260 $1,902
Provision for loan losses 600 555
Net charge offs (net recoveries) 167 525
------ ------
Balance end of period $2,693 $1,932
====== ======
NON-PERFORMING ASSETS:
June 30, December 31,
2000 1999
Total nonaccrual loans $ 80 $ 346
Loans 90 days past due and still accruing 23 223
------ ------
Total nonperforming loans $ 103 569
Other real estate owned 80
------ ------
Total nonperforming assets $ 103 $ 649
====== ======
Nonaccrual loans to total gross loans 0.04% 0.16%
Nonperforming loans to total gross loans 0.05% 0.26%
Total nonperforming assets to total assets 0.03% 0.21%
Allowance for loans losses to nonaccrual loans 3366.25% 653.18%
Allowance for loan losses to nonperforming loans 2614.56% 397.19%
Allowance for loans losses to total gross loans 1.20% 1.04%
Allowance for loan losses to nonperforming assets 2614.56% 348.23%
Ratio of net charge-offs to average loans
outstanding 0.08% 0.33%
Total Gross Loans 225,153 217,657
Total Assets 319,063 312,810
Average Loans Outstanding 218,429 204,300
Average Assets 317,536 303,474
Average Equity 34,179 31,862
