CENTRAL VALLEY COMMUNITY BANCORP Net income for the period increased 107.10% in 2015 compared to 2014, primarily driven by a decrease in provision for credit losses and an increase in non-interest income, offset by an increase in provision for income taxes and an increase in non-interest expenses. During the year ended December 31, 2015, the Company recorded a provision for credit losses of $600,000, compared to $7,985,000 during the year ended December 31, 2014. Net interest income before the provision for credit losses for the year ended December 31, 2015 was $40,775,000, compared to $39,883,000 for the year ended December 31, 2014, an increase of $892,000 or 2.24%. Net interest income during 2015 and 2014 was benefited by approximately $424,000 and $879,000, respectively, in net interest income from prepayment penalties and payoff of loans previously on nonaccrual status. Excluding these benefits, net interest income for the year ended December 31, 2015 increased by $1,347,000 compared to the year ended December 31, 2014.
Non-performing assets decreased by $11,639,000, or 82.83%, to $2,413,000 at December 31, 2015, compared to $14,052,000 at December 31, 2014. During the year ended December 31, 2015, the Company's
shareholders' equity increased $8,278,000, or 6.32%. The increase in shareholders' equity was driven by the retention of earnings net of dividends paid, partially offset by a decrease in unrealized gains on available-for-sale securities recorded in accumulated other comprehensive income (AOCI).
During the year ended December 31, 2015, the Company recorded a provision for credit losses of
$600,000, as compared to $7,985,000 during the year ended December 31, 2014. During the year ended December 31, 2015, the Company recorded $702,000 in net loan recoveries, compared to $8,885,000 in net loan charge-offs for the year ended December 31, 2014. The net (recovery) charge-off ratio, which reflects net (recoveries) charge-offs to average loans, was (0.12)% for the year ended December 31, 2015, compared to 1.65% for the same period in 2014.
At December 31, 2015, the allowance for credit losses stood at $9,610,000, compared to $8,308,000 at December 31, 2014, a net increase of $1,302,000 reflecting the provision of $600,000 and the net recoveries during the year. The allowance for credit losses as a percentage of total loans was 1.61% at December 31, 2015, and 1.45% at December 31, 2014. Total loans included loans acquired in the acquisition of Visalia Community Bank in 2013 ("VCB loans") that were recorded at fair value in connection with the acquisition. The value of the VCB loans totaled $62,395,000 at December 31, 2015 and $77,882,000 at December 31, 2014. Excluding these VCB loans from the calculation, the allowance for credit losses to total gross loans was 1.79% and 1.68% as of December 31, 2015 and December 31, 2014, respectively, and general reserves associated with non-impaired loans to total non-impaired loans was 1.79% and 1.62%, respectively. The Company believes the allowance for credit losses is adequate to provide for probable incurred losses inherent within the loan portfolio at December 31, 2015.
Total non-performing assets were $2,413,000, or 0.19% of total assets as of December 31, 2015, compared to $14,052,000, or 1.18% of total assets as of December 31, 2014. The decrease in non-performing assets resulted from the continued liquidation of certain assets serving as collateral for various impaired credits.
In connection with the partial charge-off of a single commercial and agricultural relationship in the fourth quarter of 2014, the Company is actively working to collect all balances legally owed to the Company. The Company plans to continue to track and identify any expenses, net of recoveries, associated with the collection efforts of this commercial and agricultural relationship. For the year ended December 31, 2015, collection expenses related to this relationship totaled $436,000.
The following provides a reconciliation of the change in nonaccrual loans for 2015.
(In thousands) | Balances December 31, 2014 | Additions to Nonaccrual Loans | Net Pay Downs | Foreclosed Returns Collateral - to Accrual Charge- OREO Status Offs | Balances December 31, 2015 | ||
Nonaccrual loans: | |||||||
Commercial and industrial | $ 7,209 | $ 190 | $ (6,620) | $ - $ - $ (779) | $ - | ||
Real estate | 2,831 | 720 | (2,660) | - - - | 891 | ||
Real estate construction and land development | - | 53 | (53) | - - - | - | ||
Agricultural real estate | 360 | - | (360) | - - - | - | ||
Equity loans and lines of | |||||||
credit | 1,751 | 152 | (1,364) | (227) | (111) | (29) | 172 |
Consumer | 19 | 3 | (6) | - | - | (3) | 13 |
Restructured loans (non-
accruing): Commercial and industrial | 56 | - | (27) | - - - 29 | |||
Real estate | - | 25 | (2) | - - - 23 | |||
Real estate construction and land development | 547 | - | (547) | - - - - | |||
Equity loans and lines of | |||||||
credit | 1,279 | 41 | (35) | - | - | - | 1,285 |
Total nonaccrual | $ 14,052 | $ 1,184 | $ (11,674) | $ (227) | $ (111) | $ (811) | $ 2,413 |
The Company's net interest margin (fully tax equivalent basis) was 4.01% for the year ended December 31, 2015, compared to 4.11% for the year ended December 31, 2014. The decrease in net interest
margin in the period-to-period comparison primarily resulted from a decrease in the yield on the Company's loan portfolio, partially offset by a decrease in the Company's cost of funds.
For the year ended December 31, 2015, the effective yield on total earning assets decreased 12 basis points to 4.10% compared to 4.22% for the year ended December 31, 2014, while the cost of total interest-bearing
liabilities decreased 2 basis points to 0.15% compared to 0.17% for the year ended December 31, 2014. The cost of total deposits decreased 2 basis points to 0.09% for the year ended December 31, 2015, compared to 0.11% for the year ended December 31, 2014.
For the year ended December 31, 2015, the Company's average investment securities, including interest- earning deposits in other banks and Federal funds sold, totaled $529,046,000, an increase of $15,180,000, or 2.95%, compared to the year ended December 31, 2014.
The effective yield on average investment securities, including interest earning deposits in other banks and Federal funds sold, decreased to 2.75% for the year ended December 31, 2015, compared to 2.83% for the year ended December 31, 2014. Total average loans, which generally yield higher rates than investment securities, increased $47,233,000, from $539,529,000 for the year ended December 31, 2014 to $586,762,000 for the year ended December 31, 2015. The effective yield on average loans decreased to 5.27% for the year ended December 31, 2015, compared to 5.53% for the year ended December 31, 2014 due to continued competitive and market rate pressures as well as a reduction in the amount of interest income recovered in more recent quarters on nonaccrual or charged-off loans.
Total average assets for the year ended December 31, 2015 were $1,222,526,000 compared to
$1,157,483,000, for the year ended December 31, 2014, an increase of $65,043,000 or 5.62%. During 2015 and 2014, the average loan to deposit ratio was 55.05% and 53.60%, respectively. Total average deposits increased
$59,238,000 or 5.89% to $1,065,798,000 for the year ended December 31, 2015, compared to $1,006,560,000 for the year ended December 31, 2014. Average interest-bearing deposits increased $20,129,000, or 3.06%, and average non-interest bearing demand deposits increased $39,109,000, or 11.21%, for the year ended
December 31, 2015, compared to the year ended December 31, 2014. The Company's ratio of average non- interest bearing deposits to total deposits was 36.40% for the year ended December 31, 2015, compared to 34.65% for the year ended December 31, 2014.
Non-interest income for the year ended December 31, 2015 increased by $1,223,000 to $9,387,000, compared to $8,164,000 for the year ended December 31, 2014, primarily driven by an increase of $591,000 in net realized gains on sales and calls of investment securities, a $498,000 increase in loan placement fees, a
$169,000 increase in other income, and a $253,000 increase in Federal Home Loan Bank dividends, partially
Central Valley Community Bancorp issued this content on 22 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 26 January 2016 21:53:22 UTC
Original Document: http://www.cvcb.com/ContentDocumentHandler.ashx?documentId=39163
