Central Valley Community Bancorp Reports Earnings Results for the Quarter and Nine Months Ended September 30, 2012

Marketwired

FRESNO, CA--(Marketwire - Oct 17, 2012) -  The Board of Directors of Central Valley Community Bancorp (Company) (NASDAQ: CVCY), the parent company of Central Valley Community Bank (Bank), reported today unaudited consolidated net income of $5,878,000, and diluted earnings per common share of $0.58 for the nine months ended September 30, 2012, compared to $4,769,000 and $0.46 per diluted common share for the nine months ended September 30, 2011. Net income increased 23.25%, primarily driven by a decrease in non-interest expense and increases in non-interest income, partially offset by a decrease in net interest income in the first three quarters of 2012 compared to the first three quarters of 2011. Non-performing assets decreased $4,244,000 or 29.40% to $10,190,000 at September 30, 2012, compared to $14,434,000 at December 31, 2011. Shareholders' equity increased $10,004,000, or 9.31% during the nine months ended September 30, 2012. The growth in shareholders' equity was driven by net income during the period, an increase in other comprehensive income, and the issuance of common stock from the exercise of stock options. Unaudited consolidated net income and diluted earnings per common share for the quarter ended September 30, 2012, were higher than in the first two quarters of 2012 and the corresponding quarter in 2011.

During the first three quarters of 2012, the Company's total assets increased 4.56%, total liabilities increased 3.87%, and shareholders' equity increased 9.31% compared to December 31, 2011. Annualized return on average equity (ROE) for the nine months ended September 30, 2012 was 6.91%, compared to 6.21% for the nine months ended September 30, 2011. The increase in ROE reflects an increase in net income, notwithstanding an increase in capital from an increase in other comprehensive income and an increase in retained earnings. Annualized return on average assets (ROA) was 0.93% and 0.81% for the nine months ended September 30, 2012 and 2011, respectively. The increase in ROA is due to an increase in net income, notwithstanding an increase in average assets.

During the nine months ended September 30, 2012, the Company recorded a provision for credit losses of $500,000, compared to $750,000 for the nine months ended September 30, 2011. During the nine months ended September 30, 2012, the Company recorded $1,682,000 in net loan charge-offs, compared to $733,000 for the nine months ended September 30, 2011. The net charge-off ratio, which reflects net charge-offs to average loans, was 0.55% for the nine months ended September 30, 2012, compared to 0.23% for the same period in 2011. The Company also recorded OREO related expenses of $78,000 during 2012 compared to $11,000 for the nine months ended September 30, 2011.

At September 30, 2012, the allowance for credit losses stood at $10,214,000, compared to $11,396,000 at December 31, 2011, a net decrease of $1,182,000. The allowance for credit losses as a percentage of total loans was 2.56% at September 30, 2012, and 2.67% at December 31, 2011. The Company believes the allowance for credit losses is adequate to provide for probable losses inherent within the loan portfolio at September 30, 2012.

Total non-performing assets were $10,190,000, or 1.15% of total assets as of September 30, 2012 compared to $14,434,000 or 1.70% of total assets as of December 31, 2011. Total non-performing assets as of September 30, 2011 were $17,064,000 or 2.04% of total assets. 

The following provides a reconciliation of the change in non-accrual loans for the first three quarters of 2012.

                                 
(Dollars in thousands) Balances December 31, 2011   Additions to Non-accrual Loans   Net Pay Downs     Transfer to Foreclosed Collateral - OREO     Returns to Accrual Status   Charge Offs     Balances September 30, 2012
Non-accrual loans:                                              
  Commercial and industrial $ 267   $ 4   $ (32 )   $ (155 )   $ --   $ (84 )   $ --
  Real estate   2,787     294     (15 )     (2,175 )     --     (381 )     510
  Equity loans and lines of credit   705     79     (470 )     --       --     (75 )     239
  Consumer   74     73     (4 )     --       --     (143 )     --
Restructured loans (non-accruing):                                              
  Real estate   2,129     425     (58 )     (7 )     --     (1,103 )     1,386
  Real estate construction and land development   6,823     --     (395 )     --       --     --       6,428
  Equity loans and lines of credit   1,649     75     (97 )     --       --     --       1,627
    Total non-accrual $ 14,434   $ 950   $ (1,071 )   $ (2,337 )   $ --   $ (1,786 )   $ 10,190
                                               

The following provides a summary of the change in the OREO balance for the nine months ended September 30, 2012:

         
  (Dollars in thousands) Nine Months Ended September 30, 2012    
  Balance, Beginning of period $ --    
  Additions   2,337    
  Dispositions   (2,349 )  
  Write-downs   --    
  Net gain on disposition   12    
  Balance, End of period $ --    
           

The Company's net interest margin (fully tax equivalent basis) was 4.30% for the nine months ended September 30, 2012, compared to 4.68% for the nine months ended September 30, 2011. The decrease in net interest margin in the period-to-period comparison resulted primarily from a decrease in the yield on the Company's investment portfolio partially offset by a decrease in the Company's cost of funds. For the nine months ended September 30, 2012, the effective yield on total earning assets decreased 54 basis points to 4.57% compared to 5.11% for the nine months ended September 30, 2011, while the cost of total interest-bearing liabilities decreased 22 basis points to 0.39% compared to 0.61% for the nine months ended September 30, 2011. The cost of total deposits decreased 17 basis points to 0.25% for the nine months ended September 30, 2012, compared to 0.42% for the nine months ended September 30, 2011. For the nine months ended September 30, 2012, the amount of the Company's average investment securities, including interest-earning deposits in other banks and Federal funds sold, increased $71,200,000 or 25.11% compared to the nine months ended September 30, 2012. The effective yield on average investment securities decreased to 2.88% for the nine months ended September 30, 2012, compared to 3.42% for the nine months ended September 30, 2011. The decrease in yield in the Company's investment securities during 2012 resulted primarily from the purchase of lower yielding investment securities. Average loans, which generally yield higher rates than investment securities, decreased $22,416,000, from $431,506,000 for the nine months ended September 30, 2011 to $409,090,000 for the nine months ended September 30, 2012. The effective yield on average loans decreased to 6.12% from 6.32% between September 30, 2011 and September 30, 2012. Net interest income before the provision for credit losses for the nine months ended September 30, 2012 was $22,748,000, compared to $23,341,000 for the nine months ended September 30, 2011, a decrease of $593,000 or 2.54%. Net interest income decreased as a result of these yield changes and an increase in interest-bearing liabilities, partially offset by an increase in average earning assets.

Total average assets for the nine months ended September 30, 2012 were $842,477,000 compared to $786,394,000, for the nine months ended September 30, 2011, an increase of $56,083,000 or 7.13%. Total average loans were $409,090,000 for the first three quarters of 2012, compared to $431,506,000 for the same period in 2011, representing a decrease of $22,416,000. Total average investments, including deposits in other banks and Federal funds sold, increased to $354,767,000 for the nine months ended September 30, 2012, from $283,567,000 for the nine months ended September 30, 2011, representing an increase of $71,200,000 or 25.11%. Total average deposits increased $45,505,000 or 6.84% to $710,698,000 for the nine months ended September 30, 2012, compared to $665,193,000 for the nine months ended September 30, 2011. Average interest-bearing deposits increased $11,380,000, or 2.33%, and average non-interest bearing demand deposits increased $34,125,000, or 19.39%, for the nine months ended September 30, 2012, compared to the nine months ended September 30, 2011. The Company's ratio of average non-interest bearing deposits to total deposits was 29.57% for the nine months ended September 30, 2012, compared to 26.46% for the nine months ended September 30, 2011. 

Non-interest income for the nine months ended September 30, 2012 increased $473,000 to $5,413,000, compared to $4,940,000 for the nine months ended September 30, 2011, driven primarily by an increase of $1,038,000 in net realized gains on sales and calls of investment securities, and a $223,000 increase in loan placement fees, partially offset by a decrease of $596,000 in gains on the sale of other real estate owned, and a $128,000 decrease in service charge income. The net gain realized on sales and calls of investment securities was the result of a partial restructuring of the investment portfolio designed to improve the future performance of the portfolio. 

Non-interest expense for the nine months ended September 30, 2012 decreased $1,151,000, or 5.37%, to $20,291,000 compared to $21,442,000 for the nine months ended September 30, 2011, primarily due to decreases in occupancy and equipment expenses of $184,000, advertising fees of $129,000, legal fees of $148,000, salaries and employee benefits of $275,000, and regulatory assessments of $176,000, partially offset by increases in other real estate owned expenses of $67,000 and audit and accounting fees of $42,000. 

The Company recorded an income tax expense of $1,492,000 for the nine months ended September 30, 2012, compared to $1,320,000 for the nine months ended September 30, 2011. The effective tax rate for 2012 was 20.24% compared to 21.68% for the nine months ended September 30, 2011.

Quarter Ended September 30, 2012
For the quarter ended September 30, 2012, the Company reported unaudited consolidated net income of $2,456,000 and diluted earnings per common share of $0.25, compared to $1,408,000 and $0.13 per diluted share, for the same period in 2011, and $1,709,000 and $0.17 per diluted share, for the quarter ended June 30, 2012. The increase in net income during the third quarter of 2012 compared to the same period in 2011 is primarily due to decreases in net interest income, provision for credit losses, and non-interest expense; and increases in non-interest income.

Annualized return on average equity for the third quarter of 2012 was 8.43%, compared to 5.34% for the same period of 2011. This increase is reflective of an increase in net income partially offset by an increase in capital. Annualized return on average assets was 1.14% for the third quarter of 2012 compared to 0.7% for the same period in 2011. This increase is due to an increase in net income notwithstanding an increase in average assets.

In comparing the third quarter of 2012 to the third quarter of 2011, average total loans decreased $31,274,000, or 7.19%. During the third quarter of 2012, the Company did not record a provision for credit losses, compared to $400,000 for the same period in 2011. During the third quarter of 2012, the Company recorded $74,000 in net loan recoveries compared to $404,000 net loan charge-offs for the same period in 2011. The net charge-off ratio, which reflects annualized net charge-offs (recoveries) to average loans, was (0.07)% for the quarter ended September 30, 2012 compared to 0.37% for the quarter ended September 30, 2011.

The following provides a reconciliation of the change in non-accrual loans for the quarter ended September 30, 2012.

                               
(Dollars in thousands) Balances June 30, 2012   Additions to Non-accrual Loans   Net Pay Downs     Transfer to Foreclosed Collateral - OREO   Returns to Accrual Status   Charge Offs     Balances September 30, 2012
Non-accrual loans:                                            
  Real estate $ 220   $ 294   $ (4 )   $ --   $ --   $ --     $ 510
  Equity loans and lines of credit   318     --     (79 )     --     --     --       239
  Consumer   71     73     (1 )     --     --     (143 )     --
Restructured loans (non-accruing):                                            
  Real estate   1,411     --     (25 )     --     --     --       1,386
  Real estate construction and land development   6,562     --     (134 )     --     --     --       6,428
  Equity loans and lines of credit   1,660     --     (33 )     --     --     --       1,627
    Total non-accrual $ 10,242   $ 367   $ (276 )   $ --   $ --   $ (143 )   $ 10,190
                                                 

The following provides a summary of the change in the OREO balance for the quarter ended September 30, 2012:

         
  (Dollars in thousands) Quarter Ended September 30, 2012    
  Balance, Beginning of period $ 2,098    
  Additions   --    
  Dispositions   (2,098 )  
  Write-downs   --    
  Net gain (loss) on disposition   --    
  Balance, End of period $ --    
           

Average total deposits for the third quarter of 2012 increased $35,168,000 or 5.14% to $719,889,000 compared to $684,721,000 for the same period of 2011. 

The Company's net interest margin (fully tax equivalent basis) decreased 45 basis points to 4.21% for the quarter ended September 30, 2012, from 4.66% for the quarter ended September 30, 2011. Net interest income, before provision for credit losses, decreased $377,000 or 4.74% to $7,572,000 for the third quarter of 2012, compared to $7,949,000 for the same period in 2011. The decreases in net interest margin and in net interest income are primarily due to a decrease in the yield on interest-earning assets and a decrease in average loan balances. Over the same periods, the cost of total deposits decreased 17 basis points to 0.20% compared to 0.37% in 2011.

Non-interest income increased $689,000 or 43.20% to $2,284,000 for the third quarter of 2012 compared to $1,595,000 for the same period in 2011. The third quarter of 2012 non-interest income included $843,000 in net realized gains on sales and calls of investment securities compared to $223,000 for the same period in 2011. Non-interest expense decreased $567,000 or 7.85% for the same periods mainly due to decreases in salaries and employee benefits, occupancy expense, regulatory assessments, advertising expense, and legal fees, partially offset by increases in audit and accounting fees.

"The third quarter of 2012 showed consistent and improved earnings due to expense reduction and non-interest income increase from securities called/sold and from loan placement fees. This along with continued asset quality improvement highlights the safety and financial strength of our company," stated Daniel J. Doyle, President and CEO of Central Valley Community Bancorp and Central Valley Community Bank.

"Gross loans decreased during the quarter as a result of customer paydowns. The market for loans continues to experience competitive pricing and terms. We are seeing some increase in loan commitments, but reduced usage on lines of credit due to the economic uncertainty factors affecting our business borrowers and the profitability of many of our agriculture-related borrowers," concluded Doyle.

Central Valley Community Bancorp trades on the NASDAQ stock exchange under the symbol CVCY. Central Valley Community Bank, headquartered in Fresno, California, was founded in 1979 and is the sole subsidiary of Central Valley Community Bancorp. Central Valley Community Bank currently operates 17 full service offices in Clovis, Fresno, Kerman, Lodi, Madera, Merced, Modesto, Oakhurst, Prather, Sacramento, Stockton, and Tracy, California. Additionally, the Bank operates Commercial Real Estate Lending, SBA Lending and Agribusiness Lending Departments. Investment services are provided by Investment Centers of America and insurance services are offered through Central Valley Community Insurance Services LLC. Members of Central Valley Community Bancorp's and the Bank's Board of Directors are: Daniel N. Cunningham (Chairman), Sidney B. Cox, Edwin S. Darden, Jr., Daniel J. Doyle, Steven D. McDonald, Louis McMurray, Wanda L. Rogers (Director Emeritus), William S. Smittcamp, and Joseph B. Weirick.

More information about Central Valley Community Bancorp and Central Valley Community Bank can be found at www.cvcb.com.

Forward-looking Statements -- Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained herein that are not historical facts, such as statements regarding the Company's current business strategy and the Company's plans for future development and operations, are based upon current expectations. These statements are forward-looking in nature and involve a number of risks and uncertainties. Such risks and uncertainties include, but are not limited to (1) significant increases in competitive pressure in the banking industry; (2) the impact of changes in interest rates, a decline in economic conditions at the international, national or local level on the Company's results of operations, the Company's ability to continue its internal growth at historical rates, the Company's ability to maintain its net interest margin, and the quality of the Company's earning assets; (3) changes in the regulatory environment; (4) fluctuations in the real estate market; (5) changes in business conditions and inflation; (6) changes in securities markets; and (7) the other risks set forth in the Company's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2011. Therefore, the information set forth in such forward-looking statements should be carefully considered when evaluating the business prospects of the Company.

 
CENTRAL VALLEY COMMUNITY BANCORP
CONSOLIDATED BALANCE SHEETS
 
    September 30,   December 31,
(In thousands, except share amounts)   2012   2011
    (Unaudited)    
ASSETS            
Cash and due from banks   $ 21,124   $ 19,409
Interest-earning deposits in other banks     55,074     24,467
Federal funds sold     721     928
      Total cash and cash equivalents     76,919     44,804
Available-for-sale investment securities (Amortized cost of $351,037 at September 30, 2012 and $321,405 at December 31, 2011)     364,808     328,413
Loans, less allowance for credit losses of $10,214 at September 30, 2012 and $11,396 at December 31, 2011     388,922     415,999
Bank premises and equipment, net     6,296     5,872
Bank owned life insurance     12,063     11,655
Federal Home Loan Bank stock     3,850     2,893
Goodwill     23,577     23,577
Core deposit intangibles     633     783
Accrued interest receivable and other assets     10,669     15,027
      Total assets   $ 887,737   $ 849,023
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Deposits:            
  Non-interest bearing   $ 229,089   $ 208,025
  Interest bearing     508,197     504,961
    Total deposits     737,286     712,986
Short-term borrowings     4,000     --
Long-term debt     --     4,000
Junior subordinated deferrable interest debentures     5,155     5,155
Accrued interest payable and other liabilities     23,810     19,400
      Total liabilities     770,251     741,541
Commitments and contingencies            
Shareholders' equity:            
Preferred stock, no par value, $1,000 per share liquidation preference; 10,000,000 shares authorized, Series C, issued and outstanding: 7,000 shares at September 30, 2012 and December 31, 2011     7,000     7,000
Common stock, no par value; 80,000,000 shares authorized; issued and outstanding: 9,605,766 at September 30, 2012 and 9,547,816 at December 31, 2011     40,960     40,552
Retained earnings     61,422     55,806
Accumulated other comprehensive income, net of tax     8,104     4,124
      Total shareholders' equity     117,486     107,482
      Total liabilities and shareholders' equity   $ 887,737   $ 849,023
             
             
             
CENTRAL VALLEY COMMUNITY BANCORP  
CONSOLIDATED STATEMENTS OF INCOME  
(Unaudited)  
   
    For the Three Months
Ended September 30,
  For the Nine Months Ended September 30,  
(In thousands, except share and per share amounts)   2012   2011   2012   2011  
                           
INTEREST INCOME:                          
  Interest and fees on loans   $ 6,111   $ 6,640   $ 18,248   $ 19,662  
  Interest on deposits in other banks     36     46     70     141  
  Interest on Federal funds sold     --     --     1     1  
  Interest and dividends on investment securities:                          
    Taxable     741     1,079     2,694     3,307  
    Exempt from Federal income taxes     1,118     892     3,233     2,522  
      Total interest income     8,006     8,657     24,246     25,633  
INTEREST EXPENSE:                          
  Interest on deposits     371     647     1,307     2,076  
  Interest on junior subordinated deferrable interest debentures     27     24     82     73  
  Other     36     37     109     143  
    Total interest expense     434     708     1,498     2,292  
    Net interest income before provision for credit losses     7,572     7,949     22,748     23,341  
PROVISION FOR CREDIT LOSSES     --     400     500     750  
    Net interest income after provision for credit losses     7,572     7,549     22,248     22,591  
NON-INTEREST INCOME:                          
  Service charges     690     735     2,055     2,183  
  Appreciation in cash surrender value of bank owned life insurance     101     96     291     289  
  Loan placement fees     181     51     408     185  
  Net gain on disposal of other real estate owned     --     75     12     608  
  Net realized gain on sale of assets     --     --     4     --  
  Net realized gains on sales and calls of investment securities     843     223     1,287     249  
  Other-than-temporary impairment loss:                          
    Total impairment loss     --     --     --     (31 )
    Loss recognized in other comprehensive income     --     --     --     --  
      Net impairment loss recognized in earnings     --     --     --     (31 )
  Federal Home Loan Bank dividends     4     1     11     6  
  Other income     465     414     1,345     1,451  
    Total non-interest income     2,284     1,595     5,413     4,940  
NON-INTEREST EXPENSES:                          
  Salaries and employee benefits     3,773     4,058     11,859     12,134  
  Occupancy and equipment     906     978     2,664     2,848  
  Regulatory assessments     163     181     488     664  
  Data processing expense     274     295     851     857  
  Advertising     139     182     419     548  
  Audit and accounting fees     126     112     379     337  
  Legal fees     36     90     118     266  
  Other real estate owned     6     9     78     11  
  Amortization of core deposit intangibles     50     104     150     311  
  Other expense     1,182     1,213     3,285     3,466  
    Total non-interest expenses     6,655     7,222     20,291     21,442  
      Income before provision for income taxes     3,201     1,922     7,370     6,089  
PROVISION FOR INCOME TAXES     745     514     1,492     1,320  
    Net income   $ 2,456   $ 1,408   $ 5,878   $ 4,769  
Net income   $ 2,456   $ 1,408   $ 5,878   $ 4,769  
Preferred stock dividends and accretion     87     202     262     400  
    Net income available to common shareholders   $ 2,369   $ 1,206   $ 5,616   $ 4,369  
Net income per common share:                          
  Basic earnings per common share   $ 0.25   $ 0.13   $ 0.59   $ 0.46  
  Weighted average common shares used in basic computation     9,602,473     9,547,816     9,588,321     9,513,387  
  Diluted earnings per common share   $ 0.25   $ 0.13   $ 0.58   $ 0.46  
  Weighted average common shares used in diluted computation     9,635,339     9,557,609     9,613,202     9,534,426  
                           
                           
                           
CENTRAL VALLEY COMMUNITY BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
For the three months ended    Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,
    2012   2,012   2,012   2,011   2,011
(In thousands, except share and per share amounts)                              
Net interest income   $ 7,572   $ 7,510   $ 7,666   $ 8,016   $ 7,949
Provision for credit losses     --     100     400     300     400
Net interest income after provision for credit losses     7,572     7,410     7,266     7,716     7,549
Total non-interest income     2,284     1,471     1,658     1,336     1,595
Total non-interest expense     6,655     6,718     6,918     6,803     7,222
Provision for income taxes     745     454     293     541     514
Net income   $ 2,456   $ 1,709   $ 1,713   $ 1,708   $ 1,408
Net income available to common shareholders   $ 2,369   $ 1,622   $ 1,625   $ 1,622   $ 1,206
Basic earnings per common share   $ 0.25   $ 0.17   $ 0.17   $ 0.17   $ 0.13
Weighted average common shares used in basic computation     9,602,473     9,592,045     9,570,297     9,547,816     9,547,816
Diluted earnings per common share   $ 0.25   $ 0.17   $ 0.17   $ 0.17   $ 0.13
Weighted average common shares used in diluted computation     9,635,339     9,618,976     9,577,432     9,552,043     9,557,609
                               
                               
                               
CENTRAL VALLEY COMMUNITY BANCORP  
SELECTED RATIOS  
(Unaudited)  
   
                               
As of and for the three months ended   Sep. 30 2012     Jun. 30, 2012     Mar. 31, 2012     Dec. 31, 2011     Sep. 30, 2011  
(Dollars in thousands, except per share amounts)                                        
Allowance for credit losses to total loans     2.56 %     2.45 %     2.52 %     2.67 %     2.59 %
Nonperforming assets to total assets     1.15 %     1.48 %     1.48 %     1.70 %     2.04 %
Total nonperforming assets   $ 10,190     $ 12,340     $ 12,395     $ 14,434     $ 17,064  
Net loan charge offs (recoveries)   $ (74 )   $ 245     $ 1,511     $ (66 )   $ 404  
Net charge offs (recoveries) to average loans (annualized)     (0.07 )%     0.24 %     1.46 %     (0.06 )%     0.37 %
Book value per share   $ 11.5     $ 11.08     $ 10.82     $ 10.52     $ 10.41  
Tangible book value per share   $ 8.98     $ 8.55     $ 8.28     $ 7.97     $ 7.84  
Tangible common equity   $ 86,276     $ 81,999     $ 79,422     $ 76,122     $ 74,883  
Interest and dividends on investment securities exempt from Federal income taxes   $ 1,118     $ 1,078     $ 1,037     $ 942     $ 892  
Net interest margin (calculated on a fully tax equivalent basis) (1)     4.21 %     4.33 %     4.37 %     4.50 %     4.66 %
Return on average assets (2)     1.14 %     0.82 %     0.82 %     0.81 %     0.70 %
Return on average equity (2)     8.43 %     6.06 %     6.19 %     6.41 %     5.34 %
Tier 1 leverage - Bancorp     10.78 %     10.70 %     10.33 %     10.13 %     10.19 %
Tier 1 leverage - Bank     10.35 %     10.60 %     10.21 %     10.01 %     10.07 %
Tier 1 risk-based capital - Bancorp     18.27 %     17.29 %     16.97 %     16.20 %     15.95 %
Tier 1 risk-based capital - Bank     17.56 %     17.14 %     16.78 %     16.02 %     15.76 %
Total risk-based capital - Bancorp     19.57 %     18.58 %     18.25 %     17.49 %     17.25 %
Total risk based capital - Bank     18.86 %     18.43 %     18.06 %     17.31 %     17.05 %
                                         
(1) Net Interest Margin is computed by dividing annualized quarterly net interest income by quarterly average interest-bearing assets.
(2) Computed by annualizing quarterly net income.
   
   
   
CENTRAL VALLEY COMMUNITY BANCORP  
AVERAGE BALANCES AND RATES  
(Unaudited)  
   
AVERAGE AMOUNTS   For the Three Months
Ended September 30,
    For the Nine Months
Ended September 30,
 
(Dollars in thousands)   2012     2011     2012     2011  
Federal funds sold   $ 653     $ 610     $ 575     $ 643  
Interest-bearing deposits in other banks     51,441       72,532       35,326       73,148  
Investments     324,291       226,050       318,866       209,776  
Loans (1)     393,600       420,392       398,459       415,983  
Federal Home Loan Bank stock     3,850       2,907       3,441       2,981  
Earning assets     773,835       722,491       756,667       702,531  
Allowance for credit losses     (10,200 )     (11,024 )     (10,457 )     (10,994 )
Non-accrual loans     10,111       14,593       10,631       15,523  
Other real estate owned     570       128       1,227       266  
Other non-earning assets     86,223       81,407       84,409       79,068  
Total assets   $ 860,539     $ 807,595     $ 842,477     $ 786,394  
                                 
Interest bearing deposits   $ 496,915     $ 499,773     $ 500,555     $ 489,175  
Other borrowings     9,155       9,155       9,157       10,639  
Total interest-bearing liabilities     506,070       508,928       509,712       499,814  
Non-interest bearing demand deposits     222,974       184,948       210,143       176,018  
Non-interest bearing liabilities     14,960       8,234       9,264       8,241  
Total liabilities     744,004       702,110       729,119       684,073  
Total equity     116,535       105,485       113,358       102,321  
Total liabilities and equity   $ 860,539     $ 807,595     $ 842,477     $ 786,394  
                                 
                                 
AVERAGE RATES                                
Federal funds sold     0.25 %     0.25 %     0.30 %     0.21 %
Interest-earning deposits in other banks     0.28 %     0.25 %     0.26 %     0.26 %
Investments     3.00 %     4.30 %     3.17 %     4.53 %
Loans     6.16 %     6.27 %     6.12 %     6.32 %
Earning assets     4.44 %     5.05 %     4.57 %     5.11 %
Interest-bearing deposits     0.30 %     0.51 %     0.35 %     0.57 %
Other borrowings     2.73 %     2.64 %     2.79 %     2.71 %
Total interest-bearing liabilities     0.34 %     0.55 %     0.39 %     0.61 %
Net interest margin (calculated on a fully tax equivalent basis) (2)     4.21 %     4.66 %     4.30 %     4.68 %
                                 
(1) Average loans do not include non-accrual loans.
(2) Calculated on a fully tax equivalent basis, which includes Federal tax benefits relating to income earned on municipal bonds totaling $576 and $461 for the quarters ended September 30, 2012 and 2011, respectively. The Federal tax benefits relating to income earned on municipal bonds totaled $1,665 and $1,299 for the nine months ended September 30, 2012 and 2011, respectively.

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