Valley Republic Bancorp Reports 1st Quarter 2020 Financial Results

BAKERSFIELD, Calif., April 10, 2020 /PRNewswire/ -- Valley Republic Bancorp (the "Company") (OTCQX: VLLX), the parent company of Valley Republic Bank (the "Bank"), today announced its financial results for the quarter ended March 31, 2020. 

1^st Quarter Ended March 31, 2020 Compared to 1^st Quarter Ended March 31, 2019:

• Net income before taxes increased 29.3%
• Total assets increased 16.4% to $955.5 million
• Deposits increased 17.1% to $841.1 million
• Loans increased 16.7% to $633.6 million
• Shareholder equity increased 17.1% to $82.2 million
• Book value increased 15.2% to $19.67

These results generated a strong return on average equity and assets of 11% and 1%, respectively.

Overview:

The Company generated strong results despite the very challenging business environment created by the COVID-19 pandemic.  The significant investments in additional credit and compliance staff made in 2019 and our historically strong credit underwriting, combined with our successful capital raise, have put the Bank in an excellent position to support our customers and community as we navigate these uncertain times.  As of March 31, 2020 the Company had $124.9 million of liquidity. 

The Valley Republic Team has responded to the current situation with a determination to act as quickly and accurately as possible, in spite of the constant changes and lack of clarity about the new government programs.  Even though our business has had to adapt to the "shelter in place" mandate by the state of California, we continue to serve our customers and grow our business.  We recognize how important our organization is to the communities we serve and are prepared to work with our customers as they experience challenges.  We are thankful to our customers and shareholders for their continued support and confidence in the Bank.    

Balance Sheet Composition:

The shelter in place mandate by the state of California has put significant pressure on the local business community.  Three sectors which have been materially impacted include: hospitality, restaurant and food service, and oil and gas.  The following table provides some insight into the composition of the Bank's loan portfolio:

Although the Bank's loan portfolio contains all three impacted sectors, the concentration limits remain acceptable, with no sector representing more than 100% of the Bank's capital.  The following are general comments about the Bank's loan commitments to these sectors:

• Hospitality:  The Bank's hospitality portfolio consists primarily of select service, nationally branded flags that were modestly leveraged prior to the pandemic (less than 60% LTVs).  The properties are owner operated by families with extensive hospitality experience.  The portfolio is secured by 1^st Deeds of Trust with full guaranty recourse to the principals.  
• Restaurant and Food Service:  The Bank's exposure in this category is less than $6.5 million and consists of national franchises and locally owned and operated independent restaurants.  The majority of customers in this category have remained open by providing delivery, curbside and drive-up services.
• Oil & Gas: The Oil & Gas portfolio is concentrated in service companies that focus on maintaining production, transportation, and construction.  While there has been a significant slowdown in new well development because of low oil prices, the service companies focused on maintaining production and transportation continue to see demand for their services.  The construction-focused companies had solid backlogs prior to the pandemic and are able to continue working on this backlog.

Financial Performance

The Company reported net income before taxes of $3.07 million for the 1^st quarter ended March 31, 2020 compared to $2.38 million for the same period last year.  The Company reported net income after tax for the 1^st quarter ended March 31, 2020 of $2.49 million compared to $2.97 million for the 1^st quarter ended March 31, 2019.  This negative variance is solely the result of a $1.14 million tax benefit associated with stock options which were exercised during the 1^st quarter ended March 31, 2019.  Removing this tax benefit would result in a 25% period over period increase of $451,000.  The 1^st quarter ended March 31, 2020 results represented basic earnings per share of $.54. 

Geraud Smith, President and CEO stated, "I am very proud of our 1^st quarter numbers and how our team has responded to these unprecedented times caused by the COVID-19 pandemic.  These last few weeks have been very challenging, but the Valley Republic Team remains steadfast in our commitment to our customers and to our organization.  Our balance sheet has never been stronger, which provides us the ability to serve our customers and our community in this time of need."

Growth

Total assets for the 1^st quarter ended March 31, 2020 were $955.5 million, which represents a year over year increase of $134.9 million, or 16.4%.  Total deposits increased $123 million, or 17.1%, ending the quarter at $841.1 million. Total net loans were $633.6 million, which represents a year over year increase of $90.7 million, or 16.7%.  At March 31, 2020, the Bank's loan portfolio remained exceptionally strong with no non-performing loans. 

Eugene Voiland, Chairman of the Board of Directors added, "VRB has had an amazing run since we opened the Bank in 2009 and this continues.  We are committed to responsibly implementing the new government assistance programs to the best of our ability.  Hopefully, the current crisis will peak soon and we can focus on how to assist the community in recovering and rebuilding the area's economy."

Capital

Total shareholders' equity at March 31, 2020 was $82.2 million. Total shareholders' equity increased by $12.0 million, or 17.1%, over the last 12 months.  Book value per share for the same time period was $19.67. 

About Valley Republic Bancorp and Valley Republic Bank

Valley Republic Bancorp is a bank holding company formed in 2016.  Valley Republic Bank is a wholly-owned subsidiary of Valley Republic Bancorp, headquartered in Bakersfield, California.  The Bancorp is subject to the regulatory oversight of the Federal Reserve Bank, and the Bank is subject to the regulatory oversight of the Federal Deposit Insurance Corporation and the California Department of Business Oversight.  Valley Republic Bank is an insured, state-chartered, non-member bank of the Federal Reserve System.  The Bank is in its twelfth year of operation, having been established in 2009.  Valley Republic Bank is a full-service, community bank with three full-service banking offices in Bakersfield, one full-service banking office in Delano, and a loan production office in Fresno. Valley Republic Bank emphasizes professional, high quality banking services provided to a wide range of businesses and professionals. The Bank also provides a full complement of banking services that are available to individuals and non-profit organizations.

SOURCE Valley Republic Bancorp