Valley Commerce Bancorp Reports Strong First Half Of 2012

VISALIA, Calif., July 27, 2012 /PRNewswire/ -- Valley Commerce Bancorp, (OTCBB: VCBP), a bank holding company and the parent company of Valley Business Bank, today announced second quarter 2012 net income of $892 thousand, or $0.32 per diluted common share.  This compared to earnings of $859 thousand, or $0.27 per diluted common share, for the second quarter of 2011.  For the six months ended June 30, 2012, the Company reported net income of $1.8 million, or $0.59 per diluted common share, compared to earnings of $1.5 million, or $0.46 per diluted common share, for the six months ended June 30, 2011.  Annualized return on average assets and average equity for the six months ended June 30, 2012 was 1.00% and 9.00%, respectively, compared to 0.87% and 7.57% for the six months ended June 30, 2011.

Allan W. Stone, President and Chief Executive Officer, remarked, "While we remain fully cognizant of the challenges facing the economy and our industry, we are pleased to announce a very successful first half of 2012.  First and foremost, our bottom line earnings continue to reflect our strong core financial strength and favorable credit risk profile.  We also take satisfaction in noting our repurchase of our U.S. Treasury preferred stock and the payment of our first cash dividend to our common shareholders."  He added, "Our team of banking professionals is striving for success on several fronts including aggressively pursuing new business customers, modernizing our operations through technology, and implementing the measures needed to succeed in the new regulatory environment."

Asset Quality

Non-performing loans as a percentage of total loans decreased from 3.73% at June 30, 2011 to 2.51% at December 31, 2011 to 1.96% at June 30, 2012.   Non-performing assets as a percentage of total assets decreased from 2.63% at June 30, 2011 to 1.85% at December 31, 2011 to 1.68% at June 30, 2012.

Nonperforming assets consist of nonperforming loans and other real estate owned.  At June 30, 2012 and December 31, 2011 nonperforming assets totaled $5.8 million and $8.9 million, respectively.  Nonperforming assets at June 30, 2012 were comprised of twelve nonaccrual loans spread among nine customer relationships with an aggregate balance of $4.3 million and $1.5 million of other real estate owned.  Nonperforming assets at December 31, 2011 were comprised of eleven nonaccrual loans spread among eight customer relationships with an aggregate balance of $5.6 million and $1.1 million of other real estate owned.

Impaired loans totaled $10.5 million and $10.8 million at June 30, 2012 and December 31, 2011, respectively.  At June 30, 2012 and December 31, 2011, impaired loans were comprised of the nonaccrual loans included in nonperforming assets and certain performing loans that are not expected to continue to perform in accordance with the original loan agreement.

The Company's allowance for loan and lease losses (ALLL) decreased from $5.5 million at December 31, 2011 to $5.3 million at June 30, 2012 due to net charge-offs of $193 thousand during the six month period ended June 30, 2012.  The Company did not book a loan loss provision during the six months ended June 30, 2012 compared to $225 thousand during the same period in 2011.  The ALLL represented 2.35% of total loans at June 30, 2012 compared to 2.38% at December 31, 2011 and 2.94% at June 30, 2011.  The portion of the ALLL relating to specific impaired loans was $818 thousand at June 30, 2012 and $528 thousand at December 31, 2011. 

Loans, Investment Securities, Deposits and Borrowings

Net loans were $219.5 million at June 30, 2012 a decrease of $5.0 million or 2% from the $224.5 million at December 31, 2011.  The decrease occurred primarily in real estate mortgage and commercial loans and was attributable primarily to strong competition for creditworthy loan customers.  Average gross loans were $222.8 million for the six months ended June 30, 2012 and $234.1 million for the six months ended June 30, 2011, a decrease of $11.3 million or 5%.

Available-for-sale investment securities increased to $57.1 million at June 30, 2012 compared to $56.7 million at December 31, 2011 due to purchases made to replace normal cash flows from the investment portfolio.

Total deposits decreased by $13.1 million or 4%, from $315.9 million at December 31, 2011 to $302.8 million at June 30, 2012.  The decrease primarily reflected the drawdown of a significant deposit that was received just before year end 2011.  Average total deposits were $303.5 million for the six months ended June 30, 2012 compared to $296.9 million in average total deposits for the six months ended June 30, 2011, an increase of $6.6 million or 2%.  Average deposits increased despite the absence of brokered deposits in the 2012 period compared to $9.1 million in the 2011 period.  This was attributable to the Company's successful efforts to attract core deposits in its local market.

The Company had no Federal Home Loan Bank (FHLB) term borrowings at June 30, 2012 compared to $1.0 million in FHLB term borrowings at December 31, 2011.  FHLB borrowings decreased in 2011 due to scheduled maturities.  There were no FHLB short term borrowings at either date.

Net Interest Income and Net Interest Margin

For the quarters ended June 30, 2012 and 2011, net interest income before provision for loan losses remained constant at $3.4 million.  Net interest income before provision for loan losses totaled $6.8 million for the six months ended June 30, 2012 compared to $6.9 million earned during the same period of 2011. 

Net interest margin was 4.53% and 4.46% for the six-month periods ended June 30, 2012 and 2011, respectively, an increase of 7 basis points (bps).  The improvement was attributable to a 24 bps decrease in the average rate paid on deposits which was .52% and .76% for the six months ended June 30, 2012 and 2011, respectively.  The lower cost of deposits was primarily due to a reduction in the average balances of time deposits and brokered deposits, which decreased to $194.7 million at June 30, 2012 compared to $206.0 million at June 30, 2011.

Non-Interest Income

For the quarter ended June 30, 2012, non-interest income totaled $461 thousand, an increase of $127 thousand or 38% from the $334 thousand recorded during the second quarter of 2011.  For the six months ended June 30, 2012, non-interest income totaled $820 thousand, an increase of $160 thousand or 24% over the $660 thousand received in the same period of 2011.  Increased gains on sale of investment securities and increased income from cash surrender value of life insurance policies contributed to the increase in non-interest income during the 2012 periods.

Non-Interest Expense

For the quarters ended June 30, 2012 and 2011, non-interest expense remained constant at $2.5 million.  Salaries and employee benefits increased by $119 thousand or 9% due to normal payroll adjustments and increased stock-related compensation.  This was offset primarily by a $43 thousand or 30% decrease in FDIC insurance expense which reflected the implementation of revised methodology for calculating insurance premiums.

For the first six months of 2012 and 2011, non-interest expense remained constant at $5.1 million.  Salaries and employee benefits increased by $254 thousand or 9% in the first half of 2012 due to normal payroll adjustments and increased stock-related compensation.  These increases were offset by a $182 thousand or 58% decrease in FDIC insurance cost, and a $32 thousand or 5% decrease in occupancy and equipment expense.

Shareholders' Equity

Book value per common share increased to $12.97 at June 30, 2012 from $12.50 at December 31, 2011 due to earnings of $1.8 million.  During the first quarter of 2012, the Company repurchased $8.1 million of preferred stock that had been issued under the United States Treasury's Capital Purchase Program in 2009.  Accordingly, total shareholder's equity was $36.1 million at June 30, 2012, a change of $6.4 million or 15%, from the $42.5 million at December 31, 2011.  Valley Commerce Bancorp's Total Risk-Based Capital Ratio decreased to 16.5% at June 30, 2012 compared to 18.9% at December 31, 2011.  In June 2012, the Company paid its first quarterly cash dividend in the amount of $0.04 per share.

OTHER INFORMATION:  Valley Commerce Bancorp stock trades on NASDAQ's Over the Counter Bulletin Board under the symbol VCBP.  Valley Business Bank, the wholly owned subsidiary of Valley Commerce Bancorp, is a commercial bank that commenced operations in 1996.  Valley Business Bank operates through Business Banking Centers in Visalia, Tulare, and Fresno, California and has branch offices in Woodlake and Tipton, California.  Additional information about Valley Business Bank is available from the Bank's website at http://www.valleybusinessbank.net.

FORWARD-LOOKING STATEMENTS:  In addition to historical information, this release includes forward-looking statements, which reflect management's current expectations for Valley Commerce Bancorp's future financial results, business prospects and business developments.  Management's expectations for Valley Commerce Bancorp's future necessarily involve assumptions, estimates and the evaluation of risks and uncertainties. Various factors could cause actual events or results to differ materially from those expectations.  The forward-looking statements contained herein represent management's expectations as of the date of this release. Valley Commerce Bancorp undertakes no obligation to release publicly the results of any revisions to the forward-looking statements included herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events.  For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Condensed Consolidated

Balance Sheet

(in thousands) (Unaudited)

                   As of June 30,

                  As of December 31,



2012



2011



2011



2010

Assets












Cash and Due from Banks

$

44,630


$

24,426


$

60,421


$

32,668

Available-for-Sale Investment Securities


57,149



59,396



56,705



50,823

Loans (net)


219,516



232,033



224,532



234,304

Bank Premises and Equipment (net)


8,037



8,331



8,168



8,511

Cash Surrender Value of Bank-Owned Life Insurance


7,847



6,760



7,693



6,627

Other real estate owned


1,505



-



1,141



-

Other Assets


7,052



8,145



7,860



8,488

TOTAL ASSETS

$

345,736


$

339,091


$

366,520


$

341,421













Liabilities & Equity












Non-Interest Bearing Deposits

$

106,042


$

91,154


$

128,453


$

91,203

Interest Bearing Deposits


127,366



117,675



116,373



119,446

Time Deposits


69,350



81,125



71,051



83,629

Total Deposits


302,758



289,954



315,877



294,278

Long-Term Debt


-



2,357



1,000



2,562

Junior Subordinated Deferrable Interest Debentures


3,093



3,093



3,093



3,093

Other Liabilities


3,780



3,029



4,045



2,738

Total Liabilities


309,631



298,433



324,015



302,671

Shareholders' Equity


36,105



40,658



42,505



38,750

TOTAL LIABILITIES & EQUITY

$

345,736


$

339,091


$

366,520


$

341,421













Condensed Consolidated

Statement of Income

(in thousands except share data) (Unaudited)

     Three Months Ended

   June 30,

        Six Months Ended

          June 30,



2012



2011



2012



2011













Interest Income

$

3,666


$

3,869


$

7,400


$

7,762

Interest Expense


279



442



562



899

NET INTEREST INCOME  


3,387



3,427



6,838



6,863

Provision for Loan Losses


-



-



-



225

NET INTEREST INCOME AFTER

   PROVISION FOR LOAN LOSSES


3,387



3,427



6,838



6,638

Non-interest Income


461



334



820



660

Non-interest Expense


2,530



2,485



5,060



5,060

INCOME BEFORE INCOME TAXES


1,318



1,276



2,598



2,238

Income Taxes


426



417



847



754

NET INCOME

$

892


$

859


$

1,751


$

1,484

DIVIDENDS ACCRUED AND DISCOUNT

   ACCRETED ON PREFERRED SHARES

$

-


$

106


$

93


$

207

NET INCOME AVAILABLE

   TO COMMON SHAREHOLDERS

$

892


$

753


$

1,658


$

1,277

EARNINGS PER COMMON SHARE – BASIC

$

0.32


$

0.27


$

0.60


$

0.46

EARNINGS PER COMMON SHARE – DILUTED

$

0.32


$

0.27


$

0.59


$

0.46

COMMON SHARES OUTSTANDING – END OF PERIOD


2,784,593



2,762,723



2,784,593



2,762,723













 

VALLEY COMMERCE BANCORP

SELECTED FINANCIAL INFORMATION

(In thousands, except share and per share data)

(Unaudited)



June 30,



December 31,



2012


2011



2011*











    CREDIT QUALITY DATA










    Allowance for loan and lease losses


$

5,276


$

7,032


$

5,469

    Allowance for loan and lease losses as a percentage of total loans



2.35%



2.94%



2.38%

    Nonperforming loans


$

4,302


$

8,912


$

5,646

    Nonperforming assets


$

5,807


$

8,912


$

6,787

    Nonperforming loans as a percentage of total loans



1.96%



3.73%



2.51%

    Nonperforming assets as a percentage of total assets



1.68%



2.63%



1.85%











    SHARE AND PER SHARE DATA








    Basic earnings per common share for the quarter


$

0.32


$

0.27




    Diluted earnings per common share for the quarter


$

0.32


$

0.27




    Quarterly weighted average common shares outstanding



2,784,593



2,762,723




    Quarterly weighted average diluted common shares outstanding



2,793,799



2,774,847




    Basic earnings per common share, year-to-date


$

0.60


$

0.46


$

0.97

    Diluted earnings per common share, year-to-date


$

0.59


$

0.46


$

0.97

    Year-to-date weighted average common shares outstanding



2,784,593



2,762,469



2,768,114

    Year-to-date weighted average diluted common shares outstanding



2,789,570



2,771,802



2,773,519

    Book value per common share


$

12.97


$

11.93


$

12.50

     Total common shares outstanding



2,784,593



2,762,723



2,784,593











    QUARTERLY KEY FINANCIAL RATIOS







    Annualized return on average equity



9.97%



8.62%




    Annualized return on average assets



1.03%



1.00%




    Net interest margin



4.56%



4.30%




    Efficiency ratio



65.74%



67.27%














 ANNUALIZED KEY FINANCIAL RATIOS







 Return on average equity



9.00%



7.57%



7.63%

 Return on average assets



1.00%



0.87%



0.90%

 Net interest margin



4.53%



4.46%



4.55%

 Efficiency ratio



66.07%



67.27%



66.01%

 Loan to deposit ratio



72.51%



82.6%



71.08%

 Total Risk-Based Capital Ratio at period end



16.5%



17.8%



18.9%

      *As of or for the year ended December 31, 2011







 

SOURCE Valley Commerce Bancorp



RELATED LINKS
http://www.valleybusinessbank.net

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