Shares of Central Valley Community Bancorp (CVCY) have gained momentum following its strong third quarter results, which included an earnings surprise of 47.1%. This provider of commercial banking services has recorded positive earnings surprises in the last four quarters with an average beat of 20.0%.
Strong estimate revisions helped Central Valley Community become a Zacks #1 Rank (Strong Buy) on October 18. In addition, a P/B multiple of just 0.8 makes this stock an attractive pick for value investors.
Impressive Third Quarter Results
On October 17, Central Valley Community reported third quarter earnings per share of 25 cents, topping the Zacks Consensus Estimate by 47.1% and the year-ago income by 92.3%. The upsurge was mainly driven by growth in non-interest income and lower non-interest expenses.
The company's non-interest income surged 43.8% year over year to $2.3 million. Moreover, non-interest expenses dipped 6.9% to $6.7 million. However, net interest income dropped 3.8% year over year to $7.6 million. Net interest margin also contracted 45 basis points to 4.21%. The drop was attributed to a decrease in the yield on interest-earning assets and a decline in average loan balances.
Credit metrics continued to improve at Central Valley Community. Nonperforming assets were $10.2 million, down 17.1% from the year-ago quarter with net charge-offs showing a declining trend. Net charge-offs were negative 0.07% of average loans outstanding, compared with positive 0.37% last year.
Earnings Momentum on an Upswing
Over the past 7 days, the Zacks Consensus Estimate for 2012 jumped 13.4% to 76 cents per share as both estimates moved higher. This implies a year-over-year growth of 21.4%. For 2013, the Zacks Consensus Estimate increased 5.8% to 73 cents over the same time frame.
Along with a P/B multiple of 0.8, Central Valley Community has a forward P/E ratio as low as 11.1. (A P/E ratio under 15.0 and a P/B ratio below 3.0 generally indicate value.) Furthermore, the company's share price has gained nearly 61.9% year-to-date.
Headquartered in Fresno, California, Central Valley Community Bancorp, holding company for the state chartered bank - Central Valley Community, provides various commercial banking services. The company was founded in 1979 and operates through 17 banking offices in Clovis, Fresno, Kerman, Lodi, Madera, Merced, Modesto, Oakhurst, Prather, Sacramento, Stockton, and Tracy. With a market capital of about $81.6 million, Central Valley Community competes with Pacific Continental Corp. (PCBK), among others.
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