Valley Commerce Bancorp Reports First Quarter 2016 Results

VISALIA, Calif., April 15, 2016 /PRNewswire/ -- Valley Commerce Bancorp, (OTCBB: VCBP), a bank holding company and the parent company of Valley Business Bank, today announced unaudited first quarter 2016 net income of $1.1 million, or $0.38 per diluted common share.  This compared to earnings of $795 thousand or $0.27 per diluted common share for the first quarter of 2015.  

Allan W. Stone, President and Chief Executive Officer, remarked, "On April 8, 2016, the Company completed its 20^th year of operations.  I am very pleased to announce that our first quarter 2016 earnings of over $1.1 million were the highest first quarter earnings ever reported by Valley Business Bank.  Our team's success at growing the loan portfolio in 2015 resulted in stronger loan revenue in 2016.  In addition, we experienced significant loan loss recoveries in the first quarter of 2016.  These recoveries were initially recorded as an addition to our allowance for loan and lease losses but the continuing high quality of our loan portfolio made it appropriate to record a reversal of our loan loss provision resulting in a benefit to net income."  Stone added, "In the first quarter we completed our most recent round of scheduled regulatory examinations and I am more convinced than ever that our very strong team of banking professionals will continue to achieve success despite a challenging economic and regulatory environment."

Selected financial information is presented in the following table:

Loans

Net loans were $298.9 million at March 31, 2016, an increase of $337 thousand or 0.1% from the $298.5 million of net loans at December 31, 2015 and an increase of $38.3 million or 15% from the $260.6 million of net loans at March 31, 2015.  The bank's historical pattern is for loan growth to accelerate as the year progresses.  Average gross loans were $300.9 million for the three months ended March 31, 2016 and $265.0 million for the three months ended March 31, 2015, an increase of $35.9 million or 14%.

Net loans at March 31, 2016, December 31, 2015, and March 31, 2015 are summarized in the following table:

Investment Securities

Available-for-sale investment securities were $65.6 million at March 31, 2016 compared to $71.1 million at December 31, 2015, a decrease of $5.5 million or 8%.  There were $3.5 million of investment securities sold during the three months ended March 31, 2016, along with normal repayments and calls.  Gain on sale of investment securities was $60,000 in 2016 compared to none for the same period in 2015.  Securities sales in 2016 were for the purpose of portfolio maintenance.

The amortized cost and estimated fair value of available-for-sale investment securities at the dates indicated consisted of the following:

Deposits

Total deposits increased by $8.1 million or 2%, from $352.2 million at December 31, 2015 to $360.3 million at March 31, 2016.  The increase resulted from a $5.1 million or 3% increase in noninterest bearing deposits, a $2.5 million or 2% increase in interest bearing deposits and a $441 thousand or 0.8% increase in time deposits.  Average total deposits were $356.3 million for the three months ended March 31, 2016, a $15.4 million or 4% decrease from the $371.9 million in average total deposits for the three months ended March 31, 2015.

Total deposits at March 31, 2016, December 31, 2015, and March 31, 2015 are summarized in the following table:

Shareholders' Equity

Total shareholders' equity was $47.4 million at March 31, 2016, a $653 thousand or 1% increase from the $46.8 million in shareholders' equity at December 31, 2015.  The increase was due to quarterly earnings of $1.1 million and an increase in accumulated other comprehensive income of $129 thousand that resulted from an increase in the value of investment securities. These increases were offset by the repurchase of common stock and cash dividends paid.  During the quarter ended March 31, 2016 the Company paid common stock cash dividends totaling $285 thousand or $0.10 per share.  Common stock cash dividends totaled $1.1 million or $0.38 per share for the year ended December 31, 2015.  Common stock repurchased during the quarter ended March 31, 2016 totaled $462.6 thousand, at an average of $15.58 per share.  Common stock repurchased during the year ended December 31, 2015 totaled $751.8 thousand, at an average of $15.57 per share.

Asset Quality

Nonperforming loans at March 31, 2016 were comprised of five nonaccrual loans spread among two customer relationships with an aggregate balance of $1.4 million compared with six nonaccrual loans spread among three customer relationships at December 31, 2015 with an aggregate balance of $1.8 million. 

Impaired loans totaled $4.0 million and $4.4 million at March 31, 2016 and December 31, 2015, respectively, and were comprised of the nonaccrual loans included in nonperforming assets and certain accruing loans whose terms have been modified from the original loan agreement.  The Company had no loans over 30 days past due, including the nonaccrual loans described above, at March 31, 2016 and December 31, 2015.

The following table summarizes the changes in the allowance for loan and lease losses (ALLL) for the periods indicated:

The Company's ALLL was $3.3 million at December 31, 2015 and $3.4 million at March 31, 2016 a difference of $20 thousand or .06% due to a $550 thousand reversal of the provision for loan loss and $570 thousand in net recoveries during the three months ending March 31, 2016.  The ALLL represented 1.11% of total loans at March 31, 2016 and December 31, 2015 as total loans increased only slightly during the quarter.  

Net Interest Income and Net Interest Margin

The following table presents the Company's average balance sheet, including weighted average yields and rates on a taxable-equivalent basis, for the three-month periods indicated:

Net interest income before provision for loan losses for the quarters ended March 31, 2016 and 2015 was $3.9 million and $3.6 million, respectively.  There was a $313 thousand or 9% increase in interest income from loans that reflected a $36.0 million or 14% increase in the average balance of loans as well as an $8 thousand increase in income from nonaccrual loans.  The increase in loan interest was offset by a $58 thousand or 14% decrease in interest income from available-for-sale investment securities.  In 2016, investment securities saw a decrease in average volume and yield due to sales, calls, and normal paydowns.

Net interest margin was 4.32% and 4.01% for the quarters ended March 31, 2016 and 2015, respectively, due to a more favorable mix of assets and liabilities that offset declining asset yields.  More specifically, an increase in average loans of $36.0 million yielding 4.91% replaced $37.9 million in cash equivalents yielding 0.26% during the comparable periods. Average loan yield was 4.91% and 5.15% for the three months ended March 31, 2016 and 2015, respectively, a decrease of 24 basis points (bps).  The average rate paid on deposits was 0.32% for the three months ended March 31, 2016 and 0.36% at March 31, 2015.  Time deposits decreased to $57.1 million at March 31, 2016 compared to $59.1 million at March 31, 2015.  Average noninterest bearing deposits increased by $56 thousand or 0.04%. 

Non-Interest Income

The following table describes the components of non-interest income for the three-month periods ended March 31, 2016 and 2015:                                                    

For the quarter ended March 31, 2016, non-interest income totaled $405 thousand, an increase of $45 thousand or 13% from the $360 thousand recorded during the first quarter of 2015.  Increases in gains on sales of investment securities and increases in service charges contributed to the increase in non-interest income during the 2016 period, which were offset by decreases in gains from the sale of loans.

Non-Interest Expense

The following table describes the components of non-interest expense for the three-month periods ended March 31, 2016 and 2015:                                                   

For the quarters ended March 31, 2016 and 2015, non-interest expense increased by $298 thousand or 11%.  Salaries and employee benefit expense increased by $110 thousand or 6% due primarily to new hires related to business development and risk management as well as normal adjustments to salaries and post-retirement benefits.  Full time equivalent employees totaled 86.1 and 84.9 at March 31, 2016 and 2015, respectively.  Occupancy and equipment expenses increased by $12 thousand or 3%, due primarily to risk management and information security software costs. There also was a $13 thousand or 22% increase in operational costs due to increased mobile banking, bill pay, and other service charges.  Telephone and postal increased by $61 thousand or 279% due to a nonrecurring credit adjustment involving a change in data service plans in 2015.  Other expenses increased $108 thousand due to nonrecurring expenses within director fees and sundry losses. 

For the quarters ended March 31, 2016 and 2015 the effective tax rate increased to 36.1% from 32.6%, due primarily to nontaxable investment income decreasing as a percent of total taxable income.

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 a branch office in Woodlake, 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.

SOURCE Valley Commerce Bancorp

Related Links

http://www.valleybusinessbank.net