Continued Progress against Strategic Action Plan to Reduce Loan Exposure,
Diversify Stable Funding, Reduce Operating Expenses and Explore Capital
Alternatives
TEMECULA, Calif.--(Business Wire)--
Temecula Valley Bancorp Inc. (NASDAQ:TMCV), today reported a net loss of $36.2
million, or $3.61 per share, for the three months ended March 31, 2009, compared
to net earnings of $1.5 million, or $0.14 per share for the same period of 2008.
Results were driven primarily by loan loss provisions of $22.5 million, a
decrease in net interest income to $5.9 million due principally to an increase
in non accrual loans and the reversal of interest income for new non accrual
loans, and other losses related to deteriorating Real Estate and Secondary
Market conditions.
Other first quarter 2009 highlights include:
* Total Loans Held in Portfolio remained relatively flat at $1.1 Billion.
* Total deposits increased nearly 10% year-over-year to $1.33 billion; while
core deposits increased 5% over previous quarter.
* The balance of loans 90 days or more past due and still accruing was at zero
for the quarter.
* Total Non Interest expense was essentially flat at $11.7 million despite
achieving a 25% reduction in year over year Salaries and Employee Benefits
expense. The effect of this improvement was negated by increased loan collection
and REO related expenses.
* The company significantly expanded the size and scope of its Special Assets
Group (SAG), charged with managing the collection activity of all SBA,
conventional and OREO portfolios.
Frank Basirico, Chief Executive Officer of Temecula Valley Bancorp, said,
"Although the economy and real estate markets remain challenging, we continued
to make progress this quarter against our strategic plan to deleverage our
balance sheet, increase deposits, maintain solid liquidity and reduce our costs.
As part of this effort, we`ve taken a number of steps intended to diversify our
sources of stable funding, reduce classified assets, shrink our land and
construction loans and strengthen our ability to collect on existing loans
through our newly expanded Special Assets Group. At the same time, we are
continuing to move forward with Stifel, Nicolaus & Co. on exploring capital
alternatives, and we hope to reach the end of that process in the near future if
the opportunities we`ve identified progress. We have also submitted a new
capital raising plan to our regulators and are working closely with them to
ensure that Temecula Valley Bank is taking all of the necessary steps to enhance
its strength, security and performance."
Marty Plourd, President and COO, said, "Our increase in deposits - which grew by
$36 million since year end, despite the current unfavorable economic
environment-reflects the success of our efforts to return to our roots as a
traditional community-focused bank, one that puts the needs and interests of our
local customers before anything else. Similarly, we`ve also transformed our SBA
program from 'niche' property financing to lower risk multi-purpose property
financing, and we are steadily reducing our reliance on brokered deposits.
Looking ahead, we are highly focused on continuing to deliver the highest levels
of service and quality that our customers have come to expect for all of their
savings needs."
Asset Quality
Gross non-performing assets were $182.3 million, or 12.2% of total assets, at
the end of the first quarter. The balance of loans 90 days or more past due and
still accruing was zero at March 31, 2009, compared to $1.5 million at the end
of the fourth quarter of 2008.
At the end of the first quarter, net other real estate owned (OREO) consisted of
35 properties totaling $35.7 million. The four properties in San Bernardino
County totaling $6.3 million include a restaurant, an eight acre commercial lot,
residential lots and a development project for 14 condos and 28 lots. The seven
properties in San Diego County totaling $7.3 million include four homes, two
lots and an 11 unit condo project with six sales completed. The five properties
in Riverside County totaling $3.0 million consist of two duplexes, a home, a
land development project and a commercial building. There were ten properties in
other California counties totaling $13.2 million and seven properties outside of
California totaling $2.4 million, all net of SBA guarantees. By type of
properties, there are 12 SBA properties totaling $5.2 million and 18
construction related properties totaling $22.1 million, with the remainder in
other real estate loans.
Net Non-Accrual Loans by Type
(dollars in 000's)
March 31, 2009 December 31, 2008
Amount % Amount %
Construction - SFR 8,583 6 % 1,291 1 %
Construction - SFR - speculative 11,809 9 % 13,598 12 %
Construction - multifamily 31,980 23 % 26,889 25 %
Construction - commercial 13,926 10 % 3,797 4 %
Construction - land development 14,641 11 % 4,619 4 %
Construction - tract 5,945 4 % 13,212 12 %
Construction - SBA 545 0 % 3,597 3 %
Total Construction 87,429 63 % 67,003 61 %
Commercial real estate 21,795 16 % 18,414 17 %
SBA 29,991 21 % 23,751 21 %
Commercial 182 0 % 667 1 %
Consumer 0 0 % 0 0 %
139,397 100 % 109,835 100 %
Net Non-Accrual Loans by Market
(dollars in 000's)
March 31, 2009 December 31, 2008
Amount % Amount %
San Diego County 38,381 28 % 24,063 22 %
Riverside County 17,228 12 % 10,606 10 %
San Bernardino County 10,053 7 % 4,746 4 %
Other California counties 54,685 39 % 55,284 50 %
Outside California 19,050 14 % 15,136 14 %
Total Construction 139,397 100 % 109,835 100 %
Temecula Valley Bancorp`s provision for loan losses for the first quarter of
2009 was $22.5 million, compared to $2.2 million in the same period for 2008. As
a result, the total allowance for loan losses increased to $55.9 million as of
March 31, 2009, as compared to $51.5 million as of December 31, 2008. The
allowance for loan loss during the quarter increased to 5.11% of total loans, up
from 4.71% of total loans in the immediate prior quarter and 1.34% from a year
ago.
Net charge-offs in the first quarter of 2009 were $18.1 million, or an
annualized rate of 5.37% of average total loans.
Balance Sheet
Total assets at March 31, 2009 were $1.5 billion, compared to $1.4 billion
during the same quarter last year and $1.5 billion at December 31, 2008. Total
Loans Held in Portfolio plus Loans Held for Sale were $1.3 billion at March 31,
2009, compared to $1.4 billion at December 31, 2008. Construction and Loans Held
for Sale decreased by $25 million and $52 million, respectively since year end.
SBA loans increased by 8.0 % during the first quarter to $ 241.9 million.
Commercial loans also increased by 5.1% from the previous quarter and are now $
101.3 million.
Total Deposits at March 31, 2009 were $1.3 billion, a year-over-year increase of
9.7%. Core deposits (excluding CD`s of $100,000 or more) increased nearly 5%
over the immediate prior quarter to $1.03 billion and account for 77% of total
deposits. Time deposits under $100,000 increased to $819.7 million, or 8.5%,
from $755.3 million in the immediate prior quarter.
The cost of interest-bearing deposits decreased 107 basis points to 3.28% for
the first three months of 2009, compared to 4.31% for the first three months of
2008, as a result of the overall decreases in interest rates between periods.
The Capital Ratios of the Company and the Bank were as follows:
Holding Company (1) March 31, 2009 December 31, 2008
Tier 1 Leverage Ratio 0.63 % 3.49 %
Tier 1 Risk Based Ratio 0.66 % 3.61 %
Total Risk Based Ratio 1.31 % 6.69 %
Bank Only (1)
Tier 1 Leverage Ratio 3.99 % 6.00 %
Tier 1 Risk Based Ratio 4.16 % 6.22 %
Total Risk Based Ratio 5.44 % 7.49 %
(1) The principal difference between the Capital Ratios for the Bank and the Company relates to the Regulatory treatment of junior Subordinated debt.
Shareholder equity was $10.5 million at March 31, 2009, or $1.04 per share, a
decrease from $46.6 million, or $4.64 per share, at December 31, 2008. Liquidity
remains solid with a variety of funding sources and borrowing capacity.
Income Statement
Total revenue, consisting of net interest income and non interest income, was
$1.06 million for the first quarter of 2009, compared with $16.2 million in the
immediate prior quarter and $16.2 million for the first quarter of 2008. Net
interest income was $5.9 million, compared to $13.5 million in the first quarter
a year ago. The decline in net interest income includes $1.8 million in reversal
of interest of non accrual loans in the first quarter.
Net interest margin was 1.70% in the first quarter, compared to 4.16% for the
three months ending March 31, 2008. This compression was principally due to
reduced loan yields as the result of a lower interest rate environment and
increased non accruing loans.
Non interest income was negative at $4.9 million for the first quarter of 2009,
compared to negative $5.8 million in the fourth quarter of 2008 and positive at
$2.8 million in the first quarter a year ago, primarily due to losses on the
sale of loans, an increase in the provision for fair value adjustment on loans
held for sale and losses on OREO. For the first quarter of 2009, the SBA net
servicing income was $729,000 compared to a negative $29,000 in the first
quarter of 2008. Gains on the sale of loans were negative at $1.5 million in the
first three months of 2009, compared to negative at $0.8 million in the
immediate prior quarter.
Salaries and employee benefits decreased by $1.9 million, or 25%, to $5.7
million in the first three months of 2009, compared to $7.6 million for the same
period in 2008. The decreases are primarily a result of lower commissions on SBA
brokered loan sales, lower bonus accruals and lower full-time equivalent. Non
interest expense for the first quarter was $11.8 million, compared to $11.6
million for the same period in 2008.
About Temecula Valley Bank
Temecula Valley Bank was established in 1996 and operates eleven full service
banking offices in California, in the communities of Temecula, Murrieta, Corona,
Carlsbad, El Cajon, Escondido, Fallbrook, Rancho Bernardo, San Marcos, Solana
Beach and Ontario. The Bank is an SBA Preferred Lender. Temecula Valley Bancorp
Inc. was established in June 2002 and operates as a bank holding company for the
Bank. For more information about the Company, visit Temecula`s website at
www.temvalbank.com.
Statements concerning future performance, developments, or events concerning
expectations for growth and market forecasts, and any other guidance on future
periods, constitute forward-looking statements that are subject to a number of
risks and uncertainties. Actual results may differ materially from stated
expectations. Specific factors include, but are not limited to, the effect of
interest rate changes, the ability to control costs and expenses, the impact of
consolidation in the banking industry, financial policies of the U.S.
government, and general economic conditions. Additional information on these and
other factors that could affect financial results are included in the filings
made with the Securities and Exchange Commission by Temecula Valley Bancorp Inc.
The Company undertakes no obligation to update forward-looking statements,
whether as a result of new information, future events, or otherwise.
TEMECULA VALLEY BANCORP INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
(Stated in Thousands, Except Per Share Data)
March 31, 2009 December 31, 2008
ASSETS (Unaudited) (Audited)
Cash and Due from Banks $ 18,562 $ 22,817
Federal Funds Sold 42,400 -
TOTAL CASH AND CASH EQUIVALENTS 60,962 22,817
Interest-bearing deposits in financial institutions 1,000 1,000
Investment securities available-for-sale 19,317 20,283
Investment securities held-to-maturity 3,162 3,168
(fair value of $3,318 at March 31, 2009 and $3,297 at December 31, 2008)
Loans Held for Sale 228,772 280,483
Loans:
Commercial 101,276 96,371
Real Estate - Construction 424,807 450,184
Real Estate - Other 320,885 316,927
SBA 241,868 224,022
Consumer and other 6,404 6,402
TOTAL LOANS HELD IN PORTFOLIO 1,095,240 1,093,906
Net Deferred Loan Cost 5,193 5,490
Allowance for Loan Losses (55,941 ) (51,537 )
TOTAL NET LOANS HELD IN PORTFOLIO 1,044,492 1,047,859
Federal Home Loan Bank Stock, at Cost 5,592 5,592
Premises and Equipment 5,096 5,510
Other Real Estate Owned 35,660 33,739
Cash Surrender Value of Life Insurance 31,293 30,999
Deferred Tax Assets, Net of Valuation Allowance 14,136 16,335
Income Taxes Receivable 17,303 18,097
SBA Servicing Assets 5,501 4,966
SBA Interest-Only Strips Receivable 6,825 6,983
Accrued Interest Receivable 4,413 6,045
Other Assets 11,840 9,566
TOTAL ASSETS $ 1,495,364 $ 1,513,442
LIABILITIES AND SHAREHOLDERS` EQUITY
Deposits:
Non Interest-Bearing Demand $ 124,708 $ 128,049
Money Market and NOW 63,812 76,760
Savings 21,522 21,970
Time Deposits, Under $100,000 819,737 755,341
Time Deposits, $100,000 and Over 301,577 312,924
TOTAL DEPOSITS 1,331,356 1,295,044
Accrued Interest Payable 4,650 3,477
Federal Reserve Bank, Discount Window Advance - 13,400
Federal Home Loan Bank, Advance 81,500 88,500
Junior Subordinated Debt 56,924 56,924
Other Liabilities 10,481 9,482
TOTAL LIABILITIES 1,484,911 1,466,827
Shareholders` Equity:
Common Stock No Par Value; 40,000,000 Shares Authorized; 10,040,267
Issued and Outstanding at March 31, 2009 and December 31, 2008 36,262 36,219
Retained (Deficit) Earnings (25,679 ) 10,536
Accumulated other comprehensive loss (130 ) (140 )
TOTAL SHAREHOLDERS` EQUITY 10,453 46,615
TOTAL LIABILITIES AND SHAREHOLDERS` EQUITY $ 1,495,364 $ 1,513,442
TEMECULA VALLEY BANCORP INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Stated in Thousands, Except Per Share Data)
For the Three Months Ended
March 31,
2009 2008
INTEREST INCOME (Unaudited)
Loans, including fees $ 16,398 $ 25,646
Investment Securities 106 45
Interest-bearing deposits in financial institutions 8 13
Federal Funds Sold 11 225
TOTAL INTEREST INCOME 16,523 25,929
INTEREST EXPENSE
Money Market and NOW 129 669
Savings Deposits 30 31
Time Deposits 9,469 10,695
Other Borrowings 138 -
Junior Subordinated Debt 847 1,038
TOTAL INTEREST EXPENSE 10,613 12,433
NET INTEREST INCOME 5,910 13,496
Provision for Loan Losses 22,500 2,200
NET INTEREST (LOSS) INCOME AFTER PROVISION FOR LOAN LOSSES (16,590 ) 11,296
NON INTEREST INCOME
Service Charges and Fees 154 152
(Loss) Gain on Sale of Loans (1,461 ) 830
Provision for fair value adjustment on Loans Held for sale (1,524 ) -
Impairment of Loans Held for sale (1,435 ) -
(Loss) Gain on Other Real Estate Owned (2,019 ) 52
(Loss) Gain on Sale of Premises and Equipment (2 ) -
Servicing Income (loss) 729 (29 )
Loan Broker Income 4 616
Loan Related Income 159 413
Cash Surrender Value of Life Insurance 334 299
Other Income 208 418
TOTAL NON INTEREST (LOSS) INCOME (4,853 ) 2,751
NON INTEREST EXPENSE
Salaries and Employee Benefits 5,746 7,612
Occupancy Expenses 940 846
Furniture and Equipment 354 490
Data Processing 368 347
Marketing and Business Promotion 92 263
Legal and Professional 820 381
Regulatory Assessments 1,019 244
Travel & Entertainment 53 211
Loan Related Expense 174 468
Office Expenses 537 582
Loan Collection Expenses 577 140
Other Real Estate Owned Expenses 1,011 -
Other Expenses 81 61
TOTAL NON INTEREST EXPENSE 11,772 11,645
(LOSS) INCOME BEFORE INCOME TAX EXPENSE (33,215 ) 2,402
Income Tax Expense 3,000 944
NET (LOSS) INCOME $ (36,215 ) $ 1,458
Per Share Data:
Earnings (Loss) Per Share - Basic $ (3.61 ) $ 0.14
Earnings (Loss) Per Share - Diluted $ (3.61 ) $ 0.14
Cash Dividend Per Share - $ 0.04
Average number of shares outstanding 10,040,267 10,100,558
Average number of shares and equivalents 10,040,267 10,217,048
SELECTED BALANCE SHEET DATA March 31, 2009 December 31, 2008
Book value per share, end of period $ 1.04 $ 4.64
Tier 1 leverage capital ratio 0.63 % 3.49 %
Tier 1 risk-based capital ratio 0.66 % 3.61 %
Total risk-based capital ratio 1.31 % 6.69 %
Allowance for loan losses as a % of total loans 4.21 % 3.73 %
Gross nonperforming assets as a % of total assets 9.81 % 9.78 %
Net nonperforming assets as a % of total assets 11.37 % 9.31 %
Net chargeoffs as a % of ytd average loans annualized 5.37 % 3.25 %
Temecula Valley Bancorp Inc.
Frank Basirico, CEO
951-694-9940
Copyright Business Wire 2009
