Central Valley(CVCY) - 2019 Q2 - Quarterly Report

PART 1 FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS (Unaudited) The unaudited consolidated financial statements show asset growth and increased net income for the six months ended June 30, 2019 Consolidated Financial Statements Total assets grew to $1.61 billion, with net income rising to $11.3 million for the first six months of 2019 Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | $1,613,227 | $1,537,836 | | Total Loans, net | $950,806 | $909,591 | | Total Deposits | $1,294,087 | $1,282,298 | | Total Liabilities | $1,381,547 | $1,318,098 | | Total Shareholders' Equity | $231,680 | $219,738 | Consolidated Income Statement Highlights (in thousands) | Metric | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net Interest Income | $31,781 | $30,823 | | Provision for Credit Losses | $275 | $50 | | Non-Interest Income | $7,574 | $5,457 | | Non-Interest Expenses | $23,439 | $22,867 | | Net Income | $11,303 | $10,256 | | Diluted EPS | $0.83 | $0.74 | - Cash and cash equivalents increased to $48.6 million at the end of the period, up from $31.7 million at the beginning of the year, primarily driven by net cash provided by financing activities of $46.9 million[32] - Total shareholders' equity grew to $231.7 million from $219.7 million at the start of the year, influenced by net income of $11.3 million and a positive change in other comprehensive income of $9.2 million, partially offset by stock repurchases and dividends[29] Notes to Unaudited Consolidated Financial Statements The notes detail the basis of presentation, the impact of new accounting standards like ASU 2016-02, and portfolio disclosures - The Company adopted ASU 2016-02 (Leases) on January 1, 2019, recording a right-of-use asset and a lease liability of approximately $10 million on the balance sheet for its operating leases[36] - The Company is preparing for the implementation of ASU 2016-13 (CECL), which becomes effective January 1, 2020[37][40] Fair Value of Financial Instruments (June 30, 2019, in thousands) | Instrument | Carrying Amount | Fair Value (Total) | | :--- | :--- | :--- | | Financial Assets | | | | Available-for-sale debt securities | $476,211 | $476,211 | | Loans, net | $950,806 | $947,248 | | Financial Liabilities | | | | Deposits | $1,294,087 | $1,198,932 | | Short-term borrowings | $54,000 | $54,000 | Loan Portfolio Composition (in thousands) | Loan Type | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Commercial | $136,165 | $109,531 | | Real Estate | $708,870 | $699,576 | | Consumer | $113,452 | $107,996 | | Total Gross Loans | $960,211 | $918,695 | ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses strong financial performance, including a 10.21% increase in net income and an expanded net interest margin - For the first six months of 2019, consolidated net income was $11.3 million, a 10.21% increase from the same period in 2018, and Diluted EPS rose to $0.83 from $0.74[141] - Total assets grew by 4.90% to $1.61 billion in the first six months of 2019, while total gross loans increased by 4.52% to $960.2 million[153] - Asset quality remains strong, with nonperforming assets at $2.4 million, representing just 0.15% of total assets as of June 30, 2019[152][222] Key Performance Ratios (Annualized) | Ratio | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Return on Average Equity (ROE) | 10.06% | 9.84% | | Return on Average Assets (ROA) | 1.45% | 1.28% | | Net Interest Margin (FTE) | 4.56% | 4.33% | ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company's primary market risk is interest rate risk, with no material changes reported since year-end 2018 - The company's primary market risk is interest rate risk, which is assessed quarterly, and no material changes to this risk exposure were reported since the year-end 2018 Form 10-K[250] ITEM 4 CONTROLS AND PROCEDURES Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[251] - There were no changes in internal controls over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[251] PART II OTHER INFORMATION ITEM 1 LEGAL PROCEEDINGS The company reported no legal proceedings for the period - There are no legal proceedings to report[252] ITEM 1A RISK FACTORS No material changes were reported from the risk factors disclosed in the 2018 Annual Report on Form 10-K - No material changes from the risk factors disclosed in the 2018 Annual Report on Form 10-K were reported[253] ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The company details its stock repurchase program, having bought back 320,600 shares in the first half of 2019 - The stock repurchase program, approved on July 18, 2018, authorized up to $10 million in share buybacks and was set to expire on July 18, 2019[256] Stock Repurchase Activity (Six Months Ended June 30, 2019) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2019 | 46,281 | $18.71 | | Feb 2019 | 17,505 | $19.69 | | Mar 2019 | 33,693 | $19.60 | | Apr 2019 | 23,262 | $19.90 | | May 2019 | 145,199 | $20.02 | | Jun 2019 | 54,660 | $19.67 | | Total | 320,600 | $19.70 | ITEM 3 DEFAULTS UPON SENIOR SECURITIES The company reported no defaults upon senior securities - There are no defaults upon senior securities to report[257] ITEM 4 MINE SAFETY DISCLOSURES This item is not applicable to the company - There are no mine safety disclosures to report[258] ITEM 5 OTHER INFORMATION The company reported no other information - There is no other information to report[259] ITEM 6 EXHIBITS This section lists filed exhibits, including officer certifications and XBRL interactive data files - Exhibits filed include officer certifications (31.1, 31.2, 32.1, 32.2) and XBRL data files[261] SIGNATURES The report was signed by the CEO and CFO on August 7, 2019 - The report was signed on August 7, 2019, by James M. Ford, President and Chief Executive Officer, and David A. Kinross, Executive Vice President and Chief Financial Officer[263]