North Valley Bancorp (NOVB, Financial) filed Quarterly Report for the period ended 2010-09-30.
North Valley Bancorp has a market cap of $54.66 million; its shares were traded at around $1.6 with and P/S ratio of 0.94. NOVB is in the portfolios of Jim Simons of Renaissance Technologies LLC.
The Company had a net operating loss of $7,633,000 and $8,517,000 for the three and nine months ended September 30, 2010, respectively. This compares with net operating income of $684,000 and a net operating loss of $6,512,000 for the three and nine months ended September 30, 2009, respectively. On July 16, 2010, the Company obtained shareholder approval to convert its Series A Preferred Stock into shares of common stock at a conversion price of $1.50 per share, and mandatory conversion occurred on July 21, 2010. The market value of the Company s common stock on April 22, 2010, the commitment date for the preferred stock issuance, was $2.20 per share. Under applicable accounting rules, this beneficial conversion feature of the preferred stock had an intrinsic value on April 22, 2010 of $18,667,000, based on the difference between the conversion price of $1.50 per share and the market value of the Company s common stock at the commitment date. Upon conversion of the Series A Preferred Stock, this feature of $18,667,000 was recognized as the accretion of a preferred stock discount. As a result, the Company reported a loss available to common shareholders of $26,300,000, or $0.94 per diluted share, for the third quarter ended September 30, 2010, and a loss available to common shareholders of $27,184,000, or $1.89 per diluted share, for the nine months ended September 30, 2010, compared with net income of $684,000, or $0.09 per diluted share, and a net loss of $6,512,000, or $0.87 per diluted share, for the three and nine months ended September 30, 2009, respectively.
The net operating loss for three months ended September 30, 2010 compared to the net operating income for three months ended September 30, 2009 was primarily attributed to the increase in the provision for credit losses and the recording of a $4,500,000 valuation allowance against the Company s deferred tax assets which resulted in no benefit recorded for income taxes for three month period ended September 30, 2010 as compared to the same period in 2009. The increase in net operating loss for the nine months ended September 30, 2010 compared to the same period in 2009 was principally driven by the recording of a $4,500,000 valuation allowance against the Company s deferred tax assets which resulted in a reduced benefit recorded for income taxes. The Company s provision for credit losses were $8,200,000 for the nine months ended September 30, 2010, compared to a provision for credit losses of $17,500,000 for the nine months ended September 30, 2009. Net interest income decreased $80,000 for the three months ended September 30, 2010 and a total decrease of $1,369,000 for the nine months ended September 30, 2010 compared to the same periods in 2009. Noninterest income decreased $779,000 and $992,000 for the three and nine months ended September 30, 2010 compared to the same periods in 2009 primarily due to the recording of gain on sale of investments and lower service charge income. Noninterest expense increased due to other real estate owned expense increases offset by lower salaries and benefit costs for the three and nine months ended September 30, 2010.
Net interest income is the difference between interest earned on loans and investments and interest paid on deposits and borrowings, and is the primary revenue source for the Company. Net interest margin is net interest income expressed as a percentage of average earning assets. These items have been adjusted to give effect to $90,000 and $86,000 in taxable-equivalent interest income on tax-free investments for the three month periods ended September 30, 2010 and 2009, respectively.
Net interest income for the three months ended September 30, 2010 was $7,680,000, a $76,000, or 1.0%, decrease from net interest income of $7,756,000 for the same period in 2009. Interest income decreased $1,119,000, or 10.2%, to $9,863,000 for the three month period ended September 30, 2010 due primarily to a decrease in average loans and leases. The Company had foregone interest income for the loans placed on nonaccrual status of $553,000 during the three months ended September 30, 2010 compared to $557,000 for the same period in 2009. The average loans outstanding during the three months ended September 30, 2010 decreased $87,132,000, or 13.6%, to $554,471,000. This lower loan volume decreased interest income by $1,274,000. The average yield earned on the loan portfolio increased 9 basis points to 5.9% for the three months ended September 30, 2010. This increase in yield increased interest income by $106,000. The total decrease to interest income from the loan portfolio was $1,168,000. The average balance of the investment portfolio increased $62,970,000, or 40.4%, which accounted for a $541,000 increase in interest income and a decrease in average yield of the investment portfolio of 102 basis points reduced interest income by $503,000.
Interest expense for the three months ended September 30, 2010 decreased $1,043,000, or 32.3%, to $2,183,000 compared to the same period in 2009. The largest decrease to interest expense was in time deposit accounts which decreased $73,634,000 as the average rates paid on these accounts decreased 86 basis points to 1.8% and reduced interest expense by $558,000 while a decrease in the average balances of these accounts decreased interest expense by $490,000. The average rate paid on savings and money market accounts decreased 17 basis points to 0.7% for the three month period ended September 30, 2010 compared to 0.9% for the same period in 2009, resulting in a decrease to interest expense of $93,000. This decrease was offset partially by higher average balances in savings and money market accounts of $35,753,000, resulting in a $78,000 increase in interest expense.
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North Valley Bancorp has a market cap of $54.66 million; its shares were traded at around $1.6 with and P/S ratio of 0.94. NOVB is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Capital Plan. Within 60 days of signing the Written Agreement, the Company was required to submit to the Reserve Bank a plan to maintain sufficient capital, on a consolidated basis, and the Company and NVB were required to jointly submit to the Reserve Bank a plan to maintain sufficient capital at NVB, as a separate entity. These plans were submitted to the Reserve Bank within the 60-day period, addressing among other things, the Company s current and future capital needs, including compliance with capital adequacy guidelines for bank holding companies; NVB s current and future capital needs, including compliance with the capital adequacy guidelines for state member banks; the adequacy of NVB s capital, taking into account the volume of classified credits, concentrations of credit, the allowance for loan and lease losses, current and projected asset growth and projected retained earnings; the source and timing of additional funds to fulfill the Company s and NVB s future capital requirements; and the requirements of Regulation Y, that the Company serve as a source of strength to NVB. The Reserve Bank accepted these plans and the Company completed a capital raise of $40,000,000, (net $37,500,000 after costs) on April 22, 2010 and contributed $33,500,000 of the net proceeds to the capital of NVB.The Company had a net operating loss of $7,633,000 and $8,517,000 for the three and nine months ended September 30, 2010, respectively. This compares with net operating income of $684,000 and a net operating loss of $6,512,000 for the three and nine months ended September 30, 2009, respectively. On July 16, 2010, the Company obtained shareholder approval to convert its Series A Preferred Stock into shares of common stock at a conversion price of $1.50 per share, and mandatory conversion occurred on July 21, 2010. The market value of the Company s common stock on April 22, 2010, the commitment date for the preferred stock issuance, was $2.20 per share. Under applicable accounting rules, this beneficial conversion feature of the preferred stock had an intrinsic value on April 22, 2010 of $18,667,000, based on the difference between the conversion price of $1.50 per share and the market value of the Company s common stock at the commitment date. Upon conversion of the Series A Preferred Stock, this feature of $18,667,000 was recognized as the accretion of a preferred stock discount. As a result, the Company reported a loss available to common shareholders of $26,300,000, or $0.94 per diluted share, for the third quarter ended September 30, 2010, and a loss available to common shareholders of $27,184,000, or $1.89 per diluted share, for the nine months ended September 30, 2010, compared with net income of $684,000, or $0.09 per diluted share, and a net loss of $6,512,000, or $0.87 per diluted share, for the three and nine months ended September 30, 2009, respectively.
The net operating loss for three months ended September 30, 2010 compared to the net operating income for three months ended September 30, 2009 was primarily attributed to the increase in the provision for credit losses and the recording of a $4,500,000 valuation allowance against the Company s deferred tax assets which resulted in no benefit recorded for income taxes for three month period ended September 30, 2010 as compared to the same period in 2009. The increase in net operating loss for the nine months ended September 30, 2010 compared to the same period in 2009 was principally driven by the recording of a $4,500,000 valuation allowance against the Company s deferred tax assets which resulted in a reduced benefit recorded for income taxes. The Company s provision for credit losses were $8,200,000 for the nine months ended September 30, 2010, compared to a provision for credit losses of $17,500,000 for the nine months ended September 30, 2009. Net interest income decreased $80,000 for the three months ended September 30, 2010 and a total decrease of $1,369,000 for the nine months ended September 30, 2010 compared to the same periods in 2009. Noninterest income decreased $779,000 and $992,000 for the three and nine months ended September 30, 2010 compared to the same periods in 2009 primarily due to the recording of gain on sale of investments and lower service charge income. Noninterest expense increased due to other real estate owned expense increases offset by lower salaries and benefit costs for the three and nine months ended September 30, 2010.
Net interest income is the difference between interest earned on loans and investments and interest paid on deposits and borrowings, and is the primary revenue source for the Company. Net interest margin is net interest income expressed as a percentage of average earning assets. These items have been adjusted to give effect to $90,000 and $86,000 in taxable-equivalent interest income on tax-free investments for the three month periods ended September 30, 2010 and 2009, respectively.
Net interest income for the three months ended September 30, 2010 was $7,680,000, a $76,000, or 1.0%, decrease from net interest income of $7,756,000 for the same period in 2009. Interest income decreased $1,119,000, or 10.2%, to $9,863,000 for the three month period ended September 30, 2010 due primarily to a decrease in average loans and leases. The Company had foregone interest income for the loans placed on nonaccrual status of $553,000 during the three months ended September 30, 2010 compared to $557,000 for the same period in 2009. The average loans outstanding during the three months ended September 30, 2010 decreased $87,132,000, or 13.6%, to $554,471,000. This lower loan volume decreased interest income by $1,274,000. The average yield earned on the loan portfolio increased 9 basis points to 5.9% for the three months ended September 30, 2010. This increase in yield increased interest income by $106,000. The total decrease to interest income from the loan portfolio was $1,168,000. The average balance of the investment portfolio increased $62,970,000, or 40.4%, which accounted for a $541,000 increase in interest income and a decrease in average yield of the investment portfolio of 102 basis points reduced interest income by $503,000.
Interest expense for the three months ended September 30, 2010 decreased $1,043,000, or 32.3%, to $2,183,000 compared to the same period in 2009. The largest decrease to interest expense was in time deposit accounts which decreased $73,634,000 as the average rates paid on these accounts decreased 86 basis points to 1.8% and reduced interest expense by $558,000 while a decrease in the average balances of these accounts decreased interest expense by $490,000. The average rate paid on savings and money market accounts decreased 17 basis points to 0.7% for the three month period ended September 30, 2010 compared to 0.9% for the same period in 2009, resulting in a decrease to interest expense of $93,000. This decrease was offset partially by higher average balances in savings and money market accounts of $35,753,000, resulting in a $78,000 increase in interest expense.
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