Central Valley Community Bancorp Reports Earnings Results

Tag : sole sheets
Central Valley Community Bancorp Reports Earnings Results for theSix-Months and Second Quarter Ended June 30, 2008 (Marketwire Via Acquire Media NewsEdge) FRESNO, CA, July 11 /MARKET WIRE/ --

The Board of Directors of Central Valley
Community Bancorp (Company) (NASDAQ: CVCY), the parent company ofCentral
Valley Community Bank (Bank), reported today unaudited consolidatednet
income of $2,620,000, or $0.42 per diluted share, for the six-monthperiod
ended June 30, 2008, compared to $3,071,000, or $0.48 per dilutedshare for
the same period of 2007.

Annualized return on average equity for the first half of 2008 was9.63%,
compared to 12.11% for the same period in 2007. This comparison is
reflective of a decrease in net income and an increase in capitalfrom
retained earnings. Annualized return on average assets was 1.06%for the
first half of 2008, compared to 1.29% for the same period in 2007.

The Company's asset quality remains strong. Non-accrual loans atJune 30,
2008 totaled $366,000 or 0.10% of total loans compared to $179,000or 0.05%
of total loans at December 31, 2007 and $86,000 or 0.03% at June30, 2007.
The Company expects the loss exposure on these loans to be minimaldue to
government guarantees. During the first six months of 2008, theCompany
recorded $81,000 in net loan charge-offs, compared to $306,000 forthe same
period in 2007. The Company had no Other Real Estate Owned at June30,
2008, December 31, 2007 or June 30, 2007.

The Company is not involved in any sub-prime mortgage lendingactivities
and the investment portfolio does not include any sub-primemortgage loans.
During the first half of 2008, the Company recorded a $270,000addition to
the allowance for credit losses, compared to $240,000 for the sameperiod
in 2007. The allowance for credit losses as a percentage of totalloans
was 1.16% at June 30, 2008, 1.14% at December 31, 2007 and 1.10% atJune
30, 2007.

The Company's annualized net interest margin (fully tax equivalentbasis)
was 5.22% for the six months ended June 30, 2008, compared to 5.68%for the
same period in 2007. The net interest margin was 5.53% for thetrailing
12-month period ended June 30, 2008, compared to 5.74% for thetrailing
12-month period ended June 30, 2007. The decrease in margin is a
reflection of the 325 basis points decline in interest rates by theFederal
Reserve Bank since September 2007, coupled with competition fordeposits
that continues to challenge the Company along with most otherfinancial
institutions. In comparing the two periods, the effective yield ontotal
earning assets decreased 70 basis points to 6.81% compared to 7.51%for the
same period in 2007, while the cost of total interest bearingliabilities
decreased only 46 basis points to 2.34% compared to 2.80% for thesame
period in 2007. The cost of total deposits decreased 29 basispoints to
1.57% compared to 1.86% for the same period in 2007. Net interestincome
for the six months ended June 30, 2008 was $11,575,000, compared to
$12,098,000 for the same period in 2007, a decrease of $523,000 or4.32%.

Total average assets for the six months ended June 30, 2008 were
$495,944,000, compared to $477,140,000 for the same period in 2007,an
increase of 3.9%. Total average loans were $346,970,000 for thefirst half
of 2008, compared to $325,541,000 for the same period in 2007,representing
a 6.6% increase. Total average investments decreased from$108,923,000 for
the first half of 2007 to $105,954,000 for the first half of 2008.Total
average deposits decreased 2.6% to $406,734,000 for the six monthsended
June 30, 2008, compared to $417,678,000 for the same period in2007. The
decrease in average deposits is due primarily to an $8,692,000decrease in
average non-interest bearing deposits and a $2,252,000 decrease inaverage
interest bearing deposits. The Company's ratio of averagenon-interest
bearing deposits to total deposits continued to be above industryaverages
at 31.2% for the first half of 2008.

Non-interest income for the six months ended June 30, 2008increased
$237,000, or 10.4% to $2,512,000, compared to $2,275,000 for thesame
period in 2007, mainly due to a $289,000 increase in income fromcustomer
service charges partially offset by a $73,000 decrease in brokeredloan
fees. Non-interest expense for the six months ended June 30, 2008
increased $477,000, or 5.0% compared to the same period in 2007,primarily
due to a $344,000 increase in salary and benefits expensesattributable to
an increase in the number of employees and ordinary increases insalaries
and benefits. The six month period ended June 30, 2008 alsoincluded
non-interest expenses of $40,000 related to the Herndon and Fowleroffice
relocation in Clovis from an in-store location to a new expanded
traditional branch located across the street.

In May 2008, the Company entered into a definitive merger agreementto
acquire Service 1st Bancorp and has filed the required regulatory
applications with federal and state banking regulators and asecurities
registration statement with the Securities and Exchange Commission.The
Company anticipates it will receive regulatory and shareholderapprovals
and expects to complete the merger near the end of the thirdquarter of
2008.

Quarter Ended June 30, 2008

For the quarter ended June 30, 2008, the Company reported unaudited
consolidated net income of $1,315,000, or $0.21 per diluted share,compared
to $1,619,000, or $0.25 per diluted share, for the same period in2007, and
$1,305,000, or $0.21 per diluted share, for the quarter ended March31,
2008.

Annualized return on average equity for the second quarter of 2008was
9.71%, compared to 12.67% for the same period of 2007. Thisdecrease is
reflective of a decrease in net income and an increase in capitalfrom
retained earnings. Annualized return on average assets was 1.04%for the
second quarter of 2008 compared to 1.35% for the same period in2007.

In comparing second quarter 2008 to second quarter 2007, averagetotal
loans increased $20,106,000, or 6.0%. During the second quarter of2008,
the Company recorded a $135,000 addition to the allowance forcredit
losses, compared to $120,000 for the same period in 2007. Theincrease in
2008 is principally due to the increase in the level of outstandingloans
and our assessment of the overall adequacy of the allowance forcredit
losses. During the second quarter of 2008, the Company recorded$35,000 in
net loan charge-offs compared to $58,000 for the same period in2007.

Average total deposits for the second quarter of 2008 decreased2.9% to
$409,154,000 compared to $421,473,000 for the same period of 2007.

The Company's net interest margin (fully tax equivalent basis)decreased 65
basis points to 5.04% for the three months ended June 30, 2008,from 5.69%
for the three months ended June 30, 2007. Net interest incomedecreased
6.6% to $5,726,000 for the second quarter of 2008, compared to$6,130,000
for the same period in 2007. The decreases in net interest marginand in
net interest income reflects the impact of the 325 basis pointdecline in
interest rates by the Federal Reserve Bank since September 2007.

Non-interest income increased $158,000 to $1,274,000 for the secondquarter
of 2008 compared to $1,116,000 for the same period in 2007, driven
primarily by an increase in customer service charges. Non-interestexpense
increased $210,000, or 4.4% for the same periods mainly due toincreases in
salary and occupancy expenses.

"While the second quarter 2008 net income was lower than thesecond quarter
2007, this is primarily a result of the 325 basis point decrease in
interest rates and was not driven by credit costs of problem loans.The
slight increase in non-accrual loans consists of five smallbusiness
customers and each loan is supported by government guarantees. Weare
seeing more stress in the markets we serve due to the slowdown inthe
economy, rising costs of food and energy, and increases inunemployment.
However, the overall quality of the loan portfolio remains strongwhich
reflects the quality of our borrowers and the diversification ofthe loans.
The slower growth in loans is a reflection of a slower localeconomy, fewer
credit-worthy borrowers, and the full payoff received in the secondquarter
of an $11 million adversely risk-rated loan," stated Daniel J.Doyle,
President and CEO of Central Valley Community Bancorp and CentralValley
Community Bank.

"During the second quarter, we announced the pending mergerwith Service
1st Bancorp which has three full-service offices in Tracy,Stockton, and
Lodi. We believe adding these offices, their professional employeesand
customers to our current structure will provide a long-term benefitto the
growth and profitability of our company. This merger is subject to
regulatory approval as well as shareholder approval from bothcompanies and
is expected to close near the end of the third quarter of2008," concluded
Doyle.

Central Valley Community Bancorp trades on the NASDAQ stockexchange under
the symbol CVCY. Central Valley Community Bank, headquartered inFresno,
California, was founded in 1979 and is the sole subsidiary ofCentral
Valley Community Bancorp. Central Valley Community Bank currentlyoperates
twelve offices in Clovis, Fresno, Kerman, Madera, Oakhurst,Prather,
Sacramento, and a loan production office in Modesto, California. InMay
2008, Central Valley Community Bancorp entered into a definitivemerger
agreement to acquire Service 1st Bancorp with three banking officesin
Tracy, Stockton and Lodi, California which is expected to becompleted
during 2008. Additionally, the Bank operates Commercial Real Estate
Lending, SBA Lending and Agribusiness Lending Departments.Insurance
services are offered through Central Valley Community InsuranceServices
LLC and investment services are provided by Investment Centers ofAmerica.
Members of Central Valley Community Bancorp's and the Bank's Boardof
Directors are: Daniel N. Cunningham (Chairman), Sidney B. Cox,Edwin S.
Darden, Jr., Daniel J. Doyle, Steven D. McDonald, Louis McMurray,Wanda L.
Rogers, William S. Smittcamp, and Joseph B. Weirick.

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

Forward-looking Statements - Certain matters discussed in thispress
release constitute forward-looking statements within the meaning ofthe
Private Securities Litigation Reform Act of 1995. All statementscontained
herein that are not historical facts, such as statements regardingthe
Company's current business strategy and the Company's plans forfuture
development and operations, are based upon current expectations.These
statements are forward-looking in nature and involve a number ofrisks and
uncertainties. Such risks and uncertainties include, but are notlimited
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 levelon the
Company's results of operations, the Company's ability to continueits
internal growth at historical rates, the Company's ability tomaintain its
net interest margin, and the quality of the Company's earningassets; (3)
changes in the regulatory environment; (4) fluctuations in the realestate
market; (5) changes in business conditions and inflation; (6)changes in
securities markets; and (7) the other risks set forth in theCompany's
reports filed with the Securities and Exchange Commission,including its
Annual Report on Form 10-K for the year ended December 31, 2007.Therefore,
the information set forth in such forward-looking statements shouldbe
carefully considered when evaluating the business prospects of theCompany.

CENTRAL VALLEY COMMUNITY BANCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

June 30, December 31, June 30,
(In thousands, except share amounts) 2008 2007 2007
----------- ------------ -----------
ASSETS
Cash and due from banks $ 21,911 $ 17,108 $ 23,853
Federal funds sold 17,369 14,536 9,530
----------- ------------ -----------
Total cash and cash equivalents 39,280 31,644 33,383
Interest bearing deposits in other