Valley Commerce Bancorp Reports First Quarter 2015 Results

VISALIA, Calif., April 27, 2015 /PRNewswire/ -- Valley Commerce Bancorp, (OTCBB: VCBP), a bank holding company and the parent company of Valley Business Bank, today announced unaudited first quarter 2015 net income of $795 thousand, or $0.27 per diluted common share.  This compared to earnings of $743 thousand or $0.25 per diluted common share for the first quarter of 2014.  

Allan W. Stone, President and Chief Executive Officer, remarked, "I am pleased to announce a strong start to 2015. With a string of successful years behind us, we are not planning on slowing down.  In fact, 2015 is shaping up to be a very exciting year for Valley Business Bank.  We are very confident in the strength of our portfolios and are ramping up our business development efforts to achieve additional quality growth.  We are also putting the fundamentals in place to move our bank to the next tier of community banking.  Although we have minimal direct exposure to agricultural loans, we operate in one of the premier locations for agricultural production and are therefore keeping close watch on the ongoing drought conditions.  As serious as the drought is, we believe that resilient small business owners will continue to thrive and that our team of experienced bankers will contribute to their success."

Selected financial information is presented in the following table:

Loans

Net loans were $260.6 million at March 31, 2015, a decrease of $3.9 million or 2% from the $264.5 million of net loans at December 31, 2014 and an increase of $16.4 million or 7% from the $244.2 million of net loans at March 31, 2014.  The decrease for the first quarter of 2015 occurred primarily in real estate-construction loans and agricultural loans.  Average gross loans were $265.0 million for the three months ended March 31, 2015 and $240.3 million for the three months ended March 31, 2014, an increase of $24.7 million or 10%.

Net loans at March 31, 2015, December 31, 2014, and March 31, 2014 are summarized in the following table:

Investment Securities

Available-for-sale investment securities were $74.6 million at March 31, 2015 compared to $68.1 million at December 31, 2014, an increase of $6.6 million or 10%.  There were $8.5 million of investment securities purchased during the three months ended March 31, 2015 which were offset by normal repayments, maturities, and calls.  Gain on sale of investment securities was $0 in 2015 compared to $76 thousand for the same period in 2014.  Securities sales normally result from portfolio maintenance and repositioning transactions.

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 $11.0 million or 3%, from $359.4 million at December 31, 2014 to $370.4 million at March 31, 2015.  The increase resulted from a $7.5 million or 5% increase in noninterest bearing deposits and a $4.1 million or 3% increase in interest bearing deposits offset by a $551 thousand or 1% decrease in time deposits.  Average total deposits were $371.9 million for the three months ended March 31, 2015, a $33.0 million or 10% increase from the $338.9 million in average total deposits for the three months ended March 31, 2014.

Total deposits at March 31, 2015, December 31, 2014, and March 31, 2014 are summarized in the following table:

Shareholders' Equity

Total shareholders' equity was $44.9 million at March 31, 2015, a $665 thousand or 2% increase from the $44.2 million in shareholders' equity at December 31, 2014.  The increase was due to quarterly earnings of $795 thousand and an increase in accumulated other comprehensive income of $87 thousand resulting 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, 2015 the Company paid common stock cash dividends totaling $233 thousand or $0.08 per share.  Common stock cash dividends totaled $860 thousand or $0.30 per share for the year ended December 31, 2014.  Common stock repurchased during the quarter ended March 31, 2015 totaled $22 thousand, at an average of $15.35 per share.  Common stock repurchased during the year ended December 31, 2014 totaled $351 thousand, at an average of $14.57 per share.

Asset Quality

Nonperforming loans at March 31, 2015 were comprised of nine nonaccrual loans spread among five customer relationships with an aggregate balance of $2.8 million compared with nine nonaccrual loans spread among five customer relationships at December 31, 2014 with an aggregate balance of $2.8 million. 

Impaired loans totaled $5.5 million and $5.6 million at March 31, 2015 and December 31, 2014, 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 at December 31, 2014, including the nonaccrual loans described above and one loan over 30 days past due at March 31, 2015 that was in the process of being renewed.

A summary of nonperforming assets is set forth below:

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, 2014 and March 31, 2015 due to no loan loss provisions and $13 thousand in net recoveries during the three months ending March 31, 2015.  The ALLL represented 1.34% of total loans at March 31, 2015 compared to 1.23% at December 31, 2014.  The ALLL percentage increased due to a decline in loan volume.  The portion of the ALLL relating to specific impaired loans was $316 thousand at March 31, 2015 and $358 thousand at December 31, 2014. 

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 for the quarters ended March 31, 2015 and 2014 was $3.6 million and $3.4 million, respectively.  Net interest income increased during the 2015 period due to increases in the average balances of earning assets, investment securities and loans and reduced cost of interest bearing liabilities due to the elimination of junior subordinated deferrable interest debentures in the fourth quarter of 2014.  These improvements were partially offset by declines in the yields earned on loans and investment securities.

Net interest margin was 4.01% and 4.08% for the quarters ended March 31, 2015 and 2014, respectively.  Average loan yield was 5.15% and 5.33% for the three months ended March 31, 2015 and 2014, respectively, a decrease of 18 basis points (bps).  The average rate paid on deposits was 0.36% for the three months ended March 31, 2015 and 2014.  Time deposits decreased to $59.1 million at March 31, 2015 compared to $62.2 million at March 31, 2014.  Average noninterest bearing deposits increased by $20.4 million or 15%.  These funds were primarily deployed into average loans and investment securities which favorably impacted the Company's net interest income and net income. 

Non-Interest Income

The following table describes the components of non-interest income for the three-month periods ended March 31, 2015 and 2014:                                                    

For the quarter ended March 31, 2015, non-interest income totaled $360 thousand, a decrease of $47 thousand or 11% from the $407 thousand recorded during the first quarter of 2014.  Decreases in gains on sales of investment securities and mortgage loan underwriting fees contributed to the decrease in non-interest income during the 2015 period, which were offset by increases in service charges and gains from the sale of loans.  The Company discontinued underwriting mortgage loans in 2015.

Non-Interest Expense

The following table describes the components of non-interest expense for the three-month periods ended March 31, 2015 and 2014:                                                   

For the quarters ended March 31, 2015 and 2014, non-interest expense increased from $2.7 million to $2.8 million.  Salaries and employee benefit expense increased by $134 thousand or 8% due to new hires related to business development, and risk management.  Occupancy and equipment expense increased by $48 thousand or 15% due to increased technology and operational risk management expenses.  These were offset by a $24 thousand or 30% decrease in advertising expense due to reduced first quarter advertising costs.  Telephone and postal decreased by $52 thousand or 70% due to nonrecurring adjustment involving change in data service plans.  There also was a $13 thousand or 18% decrease in operational costs due to reduced courier costs.

For the quarters ended March 31, 2015 and 2014 the effective tax rate decreased to 32.6% from 33.4%, due primarily to increased nontaxable investment 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 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.

SOURCE Valley Commerce Bancorp