%
h J
As Ccntral Valley Community Rank
coinnieniol-atcs R qirarter-ccntury of succcss
:incl satishction, we're proud of h o w hr- the
Bank h s cmme. But we're wen more pro~rd
of continuing t o 1-crnaiii closc t o our core
v d u e s since 1980. Integrity. Trustworthiness.
Caring. L o y ~ It y . L e d er-ship. Te;irnwork.
At Centl-al killey Corninunity Llank, thcse
valires ;ire woven into the h h i c o f the way
tlw Hank does lmsincss. Tlwy dccpen o u r
comm i triient t o the coiiimu ni ty aroirnd us,
and chive LIS to comtmtly seek t o improve
it. And they provicle inspiration t o support
cha ritirs, progra ins m d cvc tits tlia t cri ha nce
the qL1:ility ol' life wvc all enjoy. 'I'hat's ;I
cornniitnient you can count on from Ccwtral
V d l e y Community Uank, f o r years t o ~mtiie.
P
Central Valle
Communi&
Bancorp
To Our Shareholders
A Success Story 25 Years In The Making
As your community lxink cclctxites 25 ye:irs in Inisincss, it is muzing how m i ~ : h has cliangccl since we opened
in 1980. From o i ~ r cxiginal 12-persvn team, tlic I3mk is now liomc t o ovcr 150 cniployees. Prom oiir single
Clovis office, w e now loc.)lc forw:ird to opening oiir tenth office in 2005. From oiir Iwginning nsscts of o n l y $2
million, the I3:ink's :issets now cxcced $/IS0 million. Fiwn our origind :tbility t o lend less than. $500,000, we can
now proviclc credit o f more than $7 niillion. 'I'lie kink's growtli lias truly Iwen rem:irk:iblc.
Yet, much remains the same :It (kntral Valley Col-1-iriiunity H:tnlc. Four ol' CNII- origind directors still serve on our
h):ird, while thrcc others 1i:ive servecl for uvei- 15 ye:trs. Tlir.ougliout our 25-year history, the Hank lias hac1 oiily
two (liief Executive Officers, providing :I scccire foundation i i pm wliicli t o grow. And o f the ~iic)rc tliari 30
Fresno Chiinty txinks :ind s:ivings-nncl-lc,ans opxiting when we opcnccl in 1980, only Central Valley Cotiitiicrtiity
k t
nk 11 :is riot changed ow nersli i I:, ,
In 1980, as tod:iy, the Hank has grown hy sewing tlic coiiiinunily :ind liclping the local ccononiy. We 1i:ive donc
this witli competitivta, liigli qiidity products ;inel services that I)uild long-term rclationships. 'l'lie Ikinlc has J x o
~~rovicled time- :ind inoncy-saving conveniences and niany other servic'rs t o the coniiiiiinities we serve.
A Solid Investment
Ownerdiip o f (:entr.;il Vallcy Coriirnunity H;incorp stwh has proven t o 1x~ '1 good invcstiiient, :is the (:ompiny
h s grown t o he l i w c l on the NASIIAC) rxcliangc. At h i \ writing, a n original irivrstnient o f $10,000 is now
v:iluecl
2004, the D o m i o f lhrcctors announcwl ;I $0 10 cash cliviclend on c0111~110~1 stock, py:itde t o sliarelioldcrs of
record on Jiuic 4, 2004 - yet mother way in whicli we :ire pleasc~l to iticrcase strareholder value.
:it approxini'itcly $268,000, not incliiclhig tlic irlany c:ih divid~vcls that w c i c p i c 1 tlirough the ye;ir.s. In
Milestones: Our First Acquisition and Continued Growth
The highlight ol' 2004 w:is the ;iccluisition o f h n l c o f Maclcra County, finalized Lifter the close of hisiness on
I>ecembcr 31, 2OO4. By bringing together IW O sinii1:ir hanlcing franchises and :I s1i;ired c:ultui'c o f cirswiiier
service, we cari iiieet the needs of custoniers in new inarlccts wliile providing cireer opportunities for
eiiiployccs. Tlic nierger :iddt.d ncw offices in M:idera and Oalrliurst, :is well as 3 temi o f ncw cmployees who
will coritiiiire to serve hotli new a r i d t.shl)lislied c:ustoincrs. Tlic Bank h:is suct:essfully compl
integr:ition axid we :ire excited d r o i i t the iniinecliate and fiituir bendits this acquisition will provide oiir Coiripany.
Tlic Bank's expansion is also taking p1:ic.e in 1)owntswii l?resno, where we await tlic opening o f o u r new o f f i c ~ ~
in tlic smiiiier o f 2005, allowing CIS t o inc'rt
this h c y district. We will also be relocating o u r Clovis M Herndon Tn-Store oU~-c tu :I new, expmded Save Mart
Siipcriil:irket 1oc:ition at Fnwlcr & Herndon Avenues.
c our local presence :ind contribute t o tlie economic. vitality of
Doing Our Part To Improve The Local Economy
With favorat+ long-term interest rates, the :irca's lioirsing and construc:tion trxlc did very well in 20C)4.
Likewise, it was :I hetter yew for ocir fitrm :ind agricii1tiir;iI customers, with geiicrnlly impi-oved crop prices in
tlic S:in Joaquin Valley. The niecli:in price o f homcs in this tnx+ket lias grown rapiclly in the last. two years,
a t one o f the highest paces in h e coimtry. Even witli I.li:it, this market is still m e o f tlie most affc)rclablc in
(hlifornia, and tlie popul:ition continues t o exceed tlic ;ivcla.gc growtli K i t e in the state, LTnfortunately, while the
cineriiploymcnt rate in lresno ( h i n t y impimved in the past year, it still remains in douhle digits. Tlic chllenge
fiicing this rcgjnn is t o provide meaiiingfiil ciireer opportimitics wtiilc increasing the level o f cclucatccl cinployres
in the workforce. To tlifit end, the Han-k is actively involved in several initiatives, such :is the Rcgiorial Jobs
Iniliative - :I pulAic./privatc partnership t o crcatc 30,000 new jobs ovcr tlic acxt five years.
2
Strong Performance Despite Obstacles
The first half o f ZOO4 providecl some challcngcs as interest wtcs were at their lowest Ic'vcl in over 40 years,
(Treating downward press~ire on o u r net interest iixirgin. In tlic second t i d f o f the ycar., w e s:iw improverncnt 3s
thc Federal Keserve Ixgan to incrc e interest r-atc's, aiicl likewise, improvc'incnt in oiir net consolidatcd earnings.
Tt appc;irs inierest Kites will continue t o move upward in the n e x term, which s1ic)iild provide for ;I more
t3vor.a hlc: rict interest margin and core earnings for 21)05.
Ovenll, 2004 was :I gre:it ye:ir, with xict conso1id:ited e;ir.nings increming l O ( X ) , (with a 36% increase in the fourth
qu:irter), average 1o:ins increasing .I 2?4, and a v e ~ i g e deposits incrc:ising 14?+ with nomintcrest k i r i n g deposits
itiiig 31% o f total :iver;igc deposits. bkjidly irxiportant w:is the HanIc's ability to niaintain :i high lcvcl
qidity in tlie loan prtf-c)lio with no net c:li;-trgc-c)ffs ~ O I - the ye:ir, and c'ncling the y e x with no iio~i-
pcrforining 1o:ins. As we ciitcr 2005, we will inhcrit a few non-performing loaiis froill TS:tnk of M a d c ~ i County,
h i t we will :ilso havc' tlic lwnefit o f :in increased Al1owanc:e for Crcdit Losses. We Ihelieve: the opportunities in
tliis new marlcct will allow LIS t o grow prolitaMy. And for the fifth ye:^ in :I row, the H a n k lias Iwen recognized
:is the :ires 1c:ackr in SBA 504 1o:ins.
Expanding lending rrlntionships within the Hank's 1)riiii:iry m:irlcct area continues to l7e :i nxijor focus. Likewise,
w e cxpecl to see inipr'ovcnicnt in the kink's cfficiciicy ratio in 2005, wliicli h s Iwen below o w peers in h e
p:ist. One o f the main rcasms for this has hccn OLII low lo:in-to-clcposit mtio, driven by strong core deposits,
:ind deriving rcvcnuc h i 1 1 investmc'nt sccurities :it :I 1esst.r. rntc than 1o:tn yield.
New Regulations Bring New Challenges
The lmilring industry cwntiniics to Lice esc:il:iting costs clue t o conipliancc: with new laws :ind growing oversight.
The l.T,S. Patriot Act, Ikinlc Secrwy Act and S:irh;incs Oxlcy regu1:itions aclcl layers o f reporting :ind expense i o
the Hank - iicitlicr o f w1iic:li prc'viclc :I return in profits to (I)CII- s1i:ireholders. Conitined with the ncccl to provicle
our employccs with competitivc' lxmcfits in this era o f rising Iiealtli c:ire costs, wc are looking for ways to be
hotli respcmsiblc and comp1i;int.
Anothclr iiinjor 1nancl:iie from thc Fccler31 Keseivel in 2004 w3s tlie (:heck 21 project, clesignecl to iiiovc the
sclttlcmcnt process for c~licc~lcs froin :i p:iper b,isc~ to electronic clexing system. Also, :is we arc n o w clefined :is
:I "1;ir;~c txmk" ~incler- the (:ornrnunity Reinvestinem Act (CKA), we 1i;ivc cxpmdecl o u r Inform,itioti Systems to
coiiiply with tlie :idditional reporting requir.cnicnts and ol)lig:itions, Tlic Bmk continues to tx well-positioned to
coiiipl y wit1 1 t1 i e regiil ato ry rcq ci iremen ts with no iicg:i Live i 111 p:ic't on (3 CII-
c CI stc miers.
Bright Future In 2005 And Beyond
Tn 2005, we will continue our' coniniitment to providing ouist:tndir~g scrvicc arid expanding oiii' services, including
lending opportuni~ies, to mcct ( ~ C I I - ciistoniers' neccls, :is we know o u r clients h v e m:iny :iv;.iilal~lc options for
fin;incial services. With r~xpaiiclccl tmncli lo(-ations, great er-nployees, conipctitive produc:ts, a h ~ c u s m i :I s:iles and
;I strong service c~iltiirt:, the Conipany is poisccl for continued swccss. We t1i:ink you for. your sLipport, :ind look
foiwarcl to continuing oiir' tradition of fin;inc-ial strength, security and sta Mity in 2005 and tlic f ~ i t ~ i r e .
3
A 25-Year Tradition of Service & Dedication
Central Valley Comiiiunity kincorp (the “Coiiilmiy”) was esr:il)lishcd on Novemt)er 15, 2000, 3s the holcling
company for Centr:tl V:illc=y Coniinunity Hank (the “Bank”) ;ind is registered :is :I b;mk liolcling cotiip’any with the
I3o:ird of Governors of tlic Fccle~il IiliLy. Yet despite the kink’s growth, it lias rem:iined true t o its
original “roots” - :I c:oinrnitnient t o tlic core values o f intcgrity, trustwortliincss, caring, loy:ilty, Icaclcrship m d
teamwork.
C:eiitr.Lil Valley Cornmiiiiity Bank distinguishes ilself from other financi:il institutions b y providing superior client
service aiicl tjy rem:iining independent siricc opening 25 y c x s :]go. In rwwit y c ~ s , 11ie Ikinlc lias cxpmcled its
uniquc: brnncl of personalized service by cxpndirig its markets in tlie (:entrxl Valley and opening new offices in
S:ic-r3mcnto, K e r i m n , Maclcr:~ :ind 0:ikhurst. Addition;illy, a ~ i c w lresiio 1)owntown office is unclcr ccmstrciclion
;ind is scliecluled t o open in tlie siiiiiiiicr o f 2005. C.iuidcil tjy a li:incls-on 1,oard o f directors arid a se:isoned
senior nian:igeiiicnt tc:irn, the Hank continues tu ti~cus on customcr service :ind retention while remaining
committed to the retentic )ii o f high-q CI :i lity employees.
Competitive Products, State-of-the-Art Convenience
Ccntral Wley Comniunity h n k maintains st:ite-of-tlic-art data processing and inform;.ition systems, :ind offers
:ind peimna 1 cl e pc 1s it :in (1 1 oa 11 p o d u c t s . For in asiiiiii 111 c( )iiven i twcc ,
a coniplete line o f conipetitivtt lxisin
persoixil :ind lmsiness Internct Ixinking is :iv;.iilablc a t www.cvc13.ccmi :ind L4-hoiii. hutoniated Teller Machines
(A’l’Ms) :ire ;.ivailal>le :it most C:cntral V:illey C:omiiiunity Ikink officcs. Addition:illy, HankLine 24-1ioiir tclcplioiic
txinking is availatile t o provide customer ;icccss t o :iccoiint inforiiiation, deposit and witliclr:iw;.tl history, interest
e:irwd or p i d , :tiid ttic atiility t o transfer checking ; I K I ~ snvirigs funcls via touch-tone plimc.
“Relationship Banking” Means Service
‘l’lie Bank is coniinittrcl t o increa\ing :ind en1i:incing the products :ind servicw offc.rcd to e-ustnrncry whilc
eii i p l ~ i s i h g needs- I ):ised c( )ns u It ing wit I1 in the hi.; in c-11 cw vi rm i n cn t , Sci-virig bot h new a nd long- time
customers continues t o I)e :in importmt factor in the Hank’s growth ‘is cvjclcncccl in ongoing custonicr referrals.
r>epend:il)le v:ilues :ind security have ;ilw;iys hwi important to America’s h i k i n g ccrstoniers, and the k i n k
is well-positioned t o provide them, with ;in increased criipllasis on pr~vacy, sccurity and convenience. The
Ikink t:ikes protecting the j7riv3c-y a i d scciirity oi cirstcmic‘r miorillation very seriously, as deiiionstr-ated hy :I
range of rAxpanded opcwtion:il security nic:iscircs These include speci:ilixd sofr w:ire, proc.ed~.ires ;tiid l i c ~ l p f d
cirstonicr tools lihc tlic Bank’s identity theft protection kit. All designed to give Ccntrxl Vnllcy Cornniunity Bank’s
customers ii1:ixiiriuiii protection and pcice o f mind
Central Valley Comniirnity Bank offers investment services provicled hy licensed represent:itivcs from tlic
Tnvcxstmc:nt Ccnrci.s nf Anierica. Tlic Bank’s Real Est:ite Ikpxtment provides comprehensive pror
rcsidcntial and c~mincrcial iritcriiii construction lams, d l types o f single-kimily residenti:il 1o:ins mid other real-
estate rclatccl transactions. Tlic Bank supports smdl Imsiness growth :ind wmmunity job rrc;ition, ;7s cviclcncccl
liy its ccitificntion in SBA’s Preferred Lencler Progrmi, which :illows for r:ipid loan icsponse t o local sriiall birsincss
customcrs tlircxighout tlic Ccntral killey. Centr:il Killey Commiinity Bank h;.is heen recognized for tlic fifth
consecutive ye:ir as Iwing tlie top lender in the Small Husincss Acliiiiiiistratiori 504 lonn prograin in tlie counties it
in pi‘ogrcssivc: aiicl specialized lciiclirig progr:iins for snl:ill hsinesses in d l :ire:is
serves. ’
of the C:entr.:il Vdley demonstt-:ites its ongoing conimitnicnt to t>irilcling :i stronger, Iiealtliier valley economy.
I k kink’s p:iitic:ip:ition
Central Milley C:ommunity kink Ius Imilt :i repiitation f o r superior barilriiig service hy offering person:ilized
“relationship Ixrnking” for Imsinesses, profession;ils ;.ind individuals. Scrving tlic tmsincss community has :ilways
heen a primary focus for Central Valley C:ornmunity H;ink, and the Bank continues t o expand its coil-imerci:il
Ixinking team to enhnce tlie level o f service t o cvcti niorc incliviclual :mc1 hisin
customers. This sector is
fiirtlier served by courier service for business c‘ustoinc:rs.
“Community”, It’s More Than Just the Bank’s Middle Name
A t C:cvitral Villcy Comniunity Bank, serving :I community nieiins niore t1i;in jiist lxling in Ixisincss tlicrc. More
than mcctiiig tlic rriatcrifil iicccls o f its people. It niems investing titiit., t;ilent, ~ n c l rcsoiirccs to iiiakc a
cwrnmiinity J strong ancl xitisfying place t o live. T1i:it’s :I role the 13,inlc takes v c ~ y sc~r~inusly.
Whic-11 is why Cclntrd Valley Conimlrnity Bank supports sucli :I wide vlii.icAty o f locA chritxcs, agencies ancl
I-71iil‘iiitliro1-7ics. Froni cc1uc:itiorlal c:icises t o dise:ise resr:irrli, the ;im to the unclcrprivilcgcd, :dl :ire Iielped
cncli year hy Ccritral Valley Coriiriiunity Ikinlc And not only with the Bank’s fiilaiicial slrpport, h i t also witli rls
1 x q - 7 1 ~ w h o gcncroirsly volunteer tlieir time t o serve thesc irnportniit causes. Coiiiiiiiriiity IS truly more tli:in just
tlic Bank’s iiiiclclle 11:iriie.
Strategic Vision
Tliroiigli the vision o f our Iiolding company, Central Villcy Coniniunily B:incorp, and the 1e:idership o f its
tcntly over tlic Ixist 25 ye:irs, keeping pace witli tlie needs o f its
tjo:ircl of directors, the 13:ink h:is grown c:on
cirstoinci-s :ind its coinrnunity. Now riiore than ever, Cciitral Villcy Coniinunity Dank is positioned to fulfill its
niission of providing “common sense solutions” t o its pcrson:il m c l tmsiness custoiiiers :iIike.
Central Vallev Communitv Bancorf, Trend Analvsis
J
A
J
J
$I.2C)
$1.00
$0.80
$0.00
$0.40
so. LO
0.0
LOO0
200 I
zoo.?
200.5
1004
c
I
ASSE’I’S
2004
2003
-
P;
17,507
5
20,307
45,814
2,(105
98.98.3
24,375
10,950
35,M 1
500
35,841
1 H 3,840
2,085
5,879
572
2,070
4
~
~
327 930
--
.~
Total liabilities and shareholders’ rquity
2004
2003
~.
-
2002
b
13,217
234
-
I ,79s
1x5
.~
1,978
14 821
~~
2,ZOj
735
2,728
I I ,sox
1.1.821
I2,OXI)
I 1,808
- _.
7,539
1,021
485
521
4,54h
7,152
1,570
6,252
1,234
077
3,545
11,*8
4,032
1 248
1,78 t
I os
I 0 2
~
b
$
$
Common Stock
S l m s
Alllourll
Retahicd
Bmiings
Acruinuhtrcl
Other
Cmnipmtensive
lncotnc
Total
'Ihtd
Shareholders' Coniprclicnsive
(Net of Taxcs) A u i t y ...
Income
2,784
2,784
c
2,784
812
811
812
AS72
3,372
$
5,572
( 7 5 5 )
2003
2002
$
3,371
b
L.7H.I
(IS01
2,100
2, 508
$
%
2,724
1,398
$
7s
3
80
'004
2003 --
' 0 0 2
2. AVAll.AH1.E-FOR-SA1.E INVESTMENT SE(:I JRITIES
7. B0KKC)WING AURANGEMENTS
2,802
$
57,058
5
1,035
I , 4 0 i
7. COMMI'II'MENTS ANI) CONTINGENCIES
L
402
3 3 2
2(:1 I
'48
253
07 i ~-
$
2,170
5.51,088 s 8.02
.
shires outmncling
520,430
. .. _. - .-
1 I. OTIIER EXPENSES
I
3,021 $
~~
.
.3,425 $
3,545
14. <:OMPRfiIIfiNSIVJZ INCOME
17,507
2(1,:%!7
A
17,507 $
26,307
21,375
I0,950
2, (105
OF;,OHS
200,582
0,075
1,420
2,605
9 8 , O X j
2 I I ,.wz
0,075
I , i 2 0
1,413
1,413
500
05,844
1 rj3,W)
5,870
57%
I ,239
16. PARENT ONLY CONDENSED FINANCIAI. STATEMENTS
BALANCE SHEET
Dcccmlier 31, 2004 arid 2003
(111 th~-~u~.llllls)
200.1
LOO3
%
700 9
30,201
1,257
'6 1
25,634
700
32,227
6
- -
- -
$
2,500
I21
$
7'4
I h .
PARENT 0NJ.Y CONDENSED FINANCML S'I'A'I'EMEN'I'S (I i ) i i l l n t i t * < l j
STM'EMENT OF LN(:OME
For the Years Endcd Dccciiil~cr J I , 2004, 2003 and 2002
( J n thousmds )
Nct incomc
200J
2002
$
3,572
$
2,784
( 3 , 5 3 2 )
(47)
(221
(229)
(1,857)
33
77
1,037
7
We c:onduc:tcd O U T :iuclits in :iccord:incc with the st:ind:ircls 01' the Public Conipnny Accounting (:)vrr.sight Ro;ird
(1 Jnitccl St:itcs). Those st:iIicl:ircIs require h i t we plm aricl perforni the xiclits to obtain re:isonnl~Ie ;.issii1':.inct! :ihoi.i1
teinent. A n :rudit inc.ludes cx:imining, 0 1 1 :I
wlictlicr tlic consoliclatecl financiul stritenients :ire free of ninterinl mi
test
rted finanr.i:il statemcnls. A n :iudit :ilso includes
hisis, cviclencc- supporting tlir miounts x i d elisclosures in the cvtisc
cssirig tlic accounting principles used and significmt estim:ites madp I>y man:igemt!nt, :is well :IS cv:ilu:iting tlic ovcrall
financial stiitciiieiit present;ition. we Ixlieve tlint our uudits provided ;t reasonslAe Ixisis for oui- opinion.
In our opinion, the cotisolict;rteti fin:inr.ial st;itements r e f c ~ e d to :il)ovc present f:iii-ly, in :[I1 nlatcrial rcspc
consoliclatecl firiniicinl psiticm of Central Milley Community Rsncorp and subsidiary :is of I)c(.cinlici- 31, 2004
aiid tlic coriso1icl:itecl results of their openitions mcl their cnsh flows f o r
I h u m t > c r s1, 2004, in conforniity with ;icc(mitiiig principles generrilly
1 of the ye;irs in the tl-ir.c:c-yc:ir period cndcd
ptecl in the 1.Jnited St:ilc:s of Anicri(x.
operations for tlic year:
2004;
2003
2002
200 I
ZOO0
Years Endcd ikceiiibcr 3 1,
(In thousands, rxccpt per share amounts)
Balariccs at end of year:
2004
2003
2002
ZOO1
2000
Dccemhcr 31,
(In t11ousands)
Average halaiicrs:
2004
2003
2002
2001
2000
COMPANY'S SOIJKCE OF INCOME
For 'The Year Ended Dcccrriher 31, 2003
Average
Interest
Rate
~-
Averagc
Halancc
Intcrest
Average
Interest
Rate
-. -
$
50i)
$
11
2.20'H!
1,100
Sll:tl/l
( 2 , 5 1 5 )
41
17,272
$
- -
$
$
57,282
72,720
3(1,551
24.239
-- -
190,795
8,231)
115
059
710
520
1,004
186
Net interest iiicorne and nct interest margin ( 4 )
$
17.171
1.')7H
6
-~
I 5,29 t
EXCEPTIONAL L1)MPLOY Ills
Quarter Ended
LnlW
H i d l
$
13.75
14.50
1O.XO
18.20
20.70
13.00
12,Ol J
21.75
joscph 13. Welrlck
1llvestlneIlts
Independent Auditors
I’errv-Smlth LLP. S:cc
i r : i t t i t ~ n l o , C A