Commonwealth Business Bank (“CBB”) (OTCQB: CWBB) today announced that for the second quarter of 2014, net income available to common shareholders was $2.4 million, or $0.59 per diluted common share from $3.4 million, or $0.84 per diluted common share, for the first quarter of 2014, and from $2.2 million, or $0.58 per diluted common share, for the same quarter of 2013.
“Our second quarter results continue our Bank’s trend of solid performance,” said Joanne Kim, President and CEO. “Earnings remain strong as evidenced by the current quarter’s 2.78% annualized pre-tax pre-provision earnings to average assets. Loan originations grew 44.8% from the prior quarter, although net balance growth was slower than projected due to increased payoff and refinancing activities, coupled with lower utilization of new lines of credit. We continue to develop stable funding sources to augment loan growth. We remain disciplined and focused on risk management, as evidenced by a 20.7% decrease in nonperforming assets from the prior quarter.”
2nd QUARTER 2014 FINANCIAL HIGHLIGHTS
- Net income available to common shareholders was $2.4 million, or $0.59 per diluted common share compared with $3.4 million, or $0.84 per diluted common share for the first quarter of 2014.
- Return on average assets was 1.61% compared with 2.47% for the first quarter of 2014 and 1.81% of the same quarter of 2013.
- Return on average equity was 14.20% compared with 21.47% for the first quarter of 2014 and 14.44% for the same quarter of 2013.
- The efficiency ratio was 47.44% compared with 45.31% for the first quarter of 2014, and 46.83% for the same quarter of 2013.
- Nonperforming assets declined to 1.33% of total assets compared with 1.85% and 2.40% at March 31, 2014 and at June 30, 2013, respectively.
STATEMENT OF OPERATIONS
Pre-Tax, Pre-Provision Income
For the second quarter of 2014, Pre-Tax, Pre-Provision (“PTPP”) income was $4.2 million, compared with $4.7 million and $3.9 million for the first quarter of 2014 and for the same quarter of 2013, respectively. The lower gains on sales of SBA loans in the current quarter and the recapture of non-recurring loan loss provision in the prior quarter were the primary reasons for the reduction in PTPP income. The annualized PTPP income to average assets was 2.78%, 3.38%, and 3.23% at June 30, 2014, March 31, 2014, and June 30, 2013, respectively.
Net Interest Income and Net Interest Margin
For the second quarter of 2014, net interest income before provision for loan losses was $5.3 million, up 1.8% from $5.2 million for the first quarter of 2014, and up 15.8% from $4.6 million for the same quarter of 2013. The quarter over quarter increase was due primarily to an increase in loan volume and a decrease in the cost of funds in the second quarter of 2014, which was offset by a reduction in loan yields.
Although net interest income was up compared to the prior quarters, the net interest margin was 3.61%, down from 3.85% and 3.84% for the first quarter of 2014 and the same quarter of 2013, respectively. The primary reason for the reduction in the net interest margin was the increase in short-term assets with lower yields during the second quarter of 2014. Loan growth was less than projected in the second quarter, causing an increase in the FRB excess reserve account, which lowered the yield on earning assets.
Our cost of funds was 0.82% for the second quarter of 2014, compared with 0.85% and 0.81% for the first quarter of 2014 and the same quarter of 2013, respectively. Although the average rates paid on interest-bearing deposits remained relatively stable over the comparative quarters, our cost of funds decreased three basis points in the second quarter of 2014 due primarily to the growth in noninterest-bearing demand deposits.
“Our net interest margin is compressed due to prolonged low interest rates and fierce competition for business. To offset the effects of the net interest margin compression, we remain focused on growing our loan portfolio by retaining current customers and developing new business relationships. At the same time, we strive to mitigate the risks inherent in a growing loan portfolio by maintaining a balanced and proactive approach to asset-liability management,” commented Joanne Kim.
Provision for Loan Losses
There was no loan loss provision for the second quarter of 2014, compared with a negative $1.2 million loan loss provision for the first quarter of 2014 and no loan loss provision for the same quarter of 2013. The improvement in asset quality enabled us to provide adequately for inherent loan losses without having to increase the allowance for loan losses associated with the growth.
Noninterest Income
For the second quarter of 2014, noninterest income decreased 21.2% to $2.6 million from $3.3 million for the first quarter of 2014 and decreased 5.2% from $2.8 million for the same quarter of 2013, primarily due to a reduction in gains on sales of SBA loans. Although CBB increased its SBA lending in the second quarter by $10.2 million or 30.3%, there was a lower volume of SBA loans sold and, accordingly, gains on sales of SBA loans decreased relative to the prior quarter. During the second quarter of 2014, $23.5 million of SBA loans were sold, compared with $31.7 million and $24.4 million for the first quarter of 2014 and the same quarter of 2013, respectively.
The reduction in gains on sales of SBA loans in the second quarter of 2014 was partially offset by an increase in service charges and other income. During the second quarter of 2014, service charges and other income increased 33.0% to $645,000 from $485,000 for the first quarter of 2014 and increased 47.5% from $437,000 for the same quarter of 2013. This increase in service charges and other income was due primarily to higher deposit related fees from the growth of transaction accounts, and higher servicing fee income generated from a larger SBA loan portfolio.
Noninterest Expense
Noninterest expense decreased 2.8% to $3.8 million, from $3.9 million for the first quarter of 2014, but increased 9.3% from $3.5 million for the same quarter of 2013. The decrease in noninterest expense from the first quarter of 2014 was due primarily to reductions in salaries and employee benefits and professional fees. Salaries and employee benefits decreased due to a reduction in third party service fees related to the administration of human resources, payroll and employee benefits. Professional fees decreased due to a reduced workout volume of problem loans. The increase in noninterest expense from the same quarter of 2013 was due primarily to increased salaries and employee benefits associated with an increase in new hires and expansion of marketing activities, partially offset by reduced occupancy expense.
There was a larger decrease in noninterest income than in noninterest expense, therefore, the efficiency ratio increased during the second quarter of 2014. Efficiency ratios were 47.4%, 45.3% and 46.8% for the second and first quarters of 2014, and for the same quarter of 2013, respectively.
Income Tax Provision
In the second quarter of 2014, income tax expense decreased 27.9% to $1.8 million, compared with $2.4 million for the first quarter 2014. This decrease in income tax expense was due primarily to a reduction in income that was partially offset by a higher effective tax rate attributable to the expiration of the California Enterprise Zone net interest deduction. The effective income tax rates were 42.0%, 41.6%, and 44.0% for the second and first quarters of 2014, and the same quarter of 2013, respectively.
BALANCE SHEET
Loans and Allowance for Loan Losses
CBB increased its loan production by 44.8% to $93.9 million during the second quarter of 2014, compared with 64.9 million in the prior quarter; but gross loan balances increased only 6.1% to $501.6 million at June 30, 2014 as loan payoffs accelerated and lines of credit were not utilized as anticipated. Although loan production was higher, a smaller volume of SBA loans was sold to partially mitigate high loan payoffs. The inventory of the loans held-for-sale increased to $15.8 million. Gross loans grew 19.0% year over year with the majority of the growth coming from commercial real estate and SBA loans.
The allowance for loan losses at June 30, 2014 was $8.8 million, or 1.82% of total gross loans (excluding loans held-for-sale), compared with $8.7 million, or 1.89%, at March 31, 2014 and $10.0 million, or 2.46%, at June 30, 2013.
Loan recoveries were $100,000 during the second quarter of 2014, compared with $1.1 million for the first quarter of 2014, and $88,000 for the same quarter of 2013. The recoveries were primarily from a loan partially charged-off in the first quarter of 2014.
There were no loans charged-off during the second quarter of 2014, compared with $123,000 and $290,000 in charge-offs during the first quarter of 2014 and the same quarter of 2013, respectively.
The following table lists gross loans by type at the dates indicated:
| (Dollars in thousands) | June 30, | March 31, | June 30, | ||||||||||||
| 2014 | 2014 | 2013 | |||||||||||||
| Construction | $ | 2,459 | $ | 2,985 | $ | 4,429 | |||||||||
| Real Estate Loans | 389,545 | 352,443 | 299,400 | ||||||||||||
| Commercial and Industrial Loans | 106,268 | 111,983 | 114,575 | ||||||||||||
| Consumer Loans | 2,638 | 4,572 | 2,884 | ||||||||||||
| 500,910 | 471,983 | 421,288 | |||||||||||||
| Deferred Loan Fees/Costs | 718 | 593 | 305 | ||||||||||||
| Gross Loans, net | $ | 501,628 | $ | 472,576 | $ | 421,593 | |||||||||
Deposits
Total deposits increased $54.7 million, or 10.9%, to $556.1 million at June 30, 2014 from $501.3 million at March 31, 2014, and increased $106.0 million, or 23.6%, from $450.0 million at June 30, 2013. Noninterest-bearing demand and money market and NOW deposits increased 52.2% and 7.4%, respectively, from the prior quarter. The increase was due primarily to the balances increase in existing relationships as well as promotions of new accounts. However, a substantial portion of the increase in existing accounts is expected to be short-term, and the funds were kept in low yielding short-term asset accounts. Noninterest-bearing demand deposits increased to 22.6% of total deposits, compared with 16.5% at March 31, 2014 and 21.4% at June 30, 2013.
With the increase in deposits, the loan-to-deposit ratio decreased to 90.2%, compared with 94.3% and 93.7% at March 31, 2014, and June 30, 2013, respectively.
The following table sets forth the amount of deposits by category and as a percentage of total deposits at the dates indicated:
| (Dollars in thousands) | June 30, | March 31, | June 30, | |||||||||||||||||||||||
| 2014 | 2014 | 2013 | ||||||||||||||||||||||||
| Amount | Percentage | Amount | Percentage | Amount | Percentage | |||||||||||||||||||||
| Noninterest-Bearing DDA | $ | 125,788 | 22.6 | % | $ | 82,638 | 16.5 | % | $ | 96,408 | 21.4 | % | ||||||||||||||
| Money Market & NOW | 155,318 | 27.9 | % | 144,587 | 28.8 | % | 145,034 | 32.2 | % | |||||||||||||||||
| Savings | 9,650 | 1.7 | % | 8,589 | 1.7 | % | 6,176 | 1.4 | % | |||||||||||||||||
| Time Deposits less than $100K | 58,644 | 10.5 | % | 60,018 | 12.0 | % | 58,969 | 13.1 | % | |||||||||||||||||
| Time Deposits more than $100K | 144,464 | 26.0 | % | 142,005 | 28.3 | % | 93,684 | 20.8 | % | |||||||||||||||||
| Wholesale Deposits | 62,195 | 11.2 | % | 63,503 | 12.7 | % | 49,742 | 11.1 | % | |||||||||||||||||
| Total Deposits | $ | 556,059 | 100.0 | % | $ | 501,340 | 100.0 | % | $ | 450,013 | 100.0 | % | ||||||||||||||
ASSET QUALITY
Following a $2.4 million reduction in the prior quarter, nonaccrual loans further decreased to $2.2 million, or 0.43% of total gross loans at June 30, 2014, from $2.6 million, or 0.56% of total gross loans at March 31, 2014, and from $2.7 million, or 0.64% of total gross loans at June 30, 2013. The reduction was primarily due to the principal paydown of a nonaccrual loan. Loans past due 30 - 89 days also decreased to $19,000, compared with $446,000 and $3.7 million at March 31, 2014, and June 30, 2013, respectively. During the second quarter of 2014, three delinquent loans were brought to “current” status.
Nonperforming assets (nonaccrual loans, accruing troubled debt restructuring loans and OREO) also further decreased to $8.4 million, or 1.33% of total assets, at June 30, 2014, from $10.6 million, or 1.85% of total assets, at March 31, 2014, and from $12.5 million, or 2.40% of total assets, at June 30, 2013. The reduction in nonperforming assets was primarily attributable to the payoff of $1.6 million performing troubled debt restructuring loan, and $320,000 in principal paydown on a nonaccrual loan.
Classified assets declined to $8.5 million, or 1.34% of total assets, at June 30, 2014, from $10.7 million, or 1.86% of total assets, at March 31, 2014, and from $15.2 million, or 2.93% of total assets, at March 31, 2013.
CAPITAL
As of June 30, 2014, the Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio decreased to 11.57%, 13.83%, and 15.09%, respectively, compared with 11.93%, 14.19%, and 15.45%, respectively, as of March 31, 2014. The decreases in the ratios were mainly the result of the continuing growth in loans. CBB continues to be “well capitalized” under applicable regulatory standards.
ABOUT COMMONWEALTH BUSINESS BANK (“CBB BANK”)
Commonwealth Business Bank is a full-service commercial bank doing business as “CBB Bank” and specializes in small- to medium-sized businesses located in the business districts of Koreatown, Los Angeles, California. The Bank has three full service branches in Los Angeles and Orange Counties and loan production offices in Texas and Georgia.
For additional information, please visit CBB’s website at www.cbb-bank.com.
FORWARD-LOOKING STATEMENTS
This release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include, but are not necessarily limited to, fluctuations in interest rates, inflation, government regulations and general economic conditions, and competition within the business areas in which Commonwealth Business Bank is conducting its operations, including the real estate market in California, and other factors beyond Commonwealth Business Bank’s control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management’s view only as of the date hereof. Commonwealth Business Bank undertakes no obligation to revise these forward-looking statements publicly to reflect subsequent events or circumstances.
| BALANCE SHEET (Unaudited) | |||||||||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||
| June 30, | March 31, | % | June 30, | % | |||||||||||||||||||
| 2014 | 2014 | Change | 2013 | Change | |||||||||||||||||||
ASSETS | |||||||||||||||||||||||
| Cash and Cash Equivalents | $ | 18,285 | $ | 15,343 | 19.2 | % | $ | 13,644 | 34.0 | % | |||||||||||||
| Due from Federal Reserve Bank | 91,860 | 67,546 | 36.0 | % | 67,600 | 35.9 | % | ||||||||||||||||
| Investment Securities | 7,278 | 7,387 | -1.5 | % | 10,110 | -28.0 | % | ||||||||||||||||
| Gross Loans, net | 501,628 | 472,576 | 6.1 | % | 421,593 | 19.0 | % | ||||||||||||||||
| Less: Allowance for Loan Losses | (8,837 | ) | (8,737 | ) | 1.1 | % | (9,960 | ) | -11.3 | % | |||||||||||||
| LOANS,NET | 492,791 | 463,839 | 6.2 | % | 411,633 | 19.7 | % | ||||||||||||||||
| FHLB & FRB Stock | 3,971 | 3,649 | 8.8 | % | 3,513 | 13.0 | % | ||||||||||||||||
| Other Assets | 15,994 | 14,348 | 11.5 | % | 13,179 | 21.4 | % | ||||||||||||||||
| TOTAL ASSETS | $ | 630,179 | $ | 572,112 | 10.1 | % | $ | 519,679 | 21.3 | % | |||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||
| Noninterest-Bearing DDA | $ | 125,788 | $ | 82,638 | 52.2 | % | $ | 96,408 | 30.5 | % | |||||||||||||
| Money Market & NOW | 155,318 | 144,587 | 7.4 | % | 145,034 | 7.1 | % | ||||||||||||||||
| Savings | 9,650 | 8,589 | 12.4 | % | 6,176 | 56.3 | % | ||||||||||||||||
| Time Deposits < $100K | 75,351 | 78,033 | -3.4 | % | 68,463 | 10.1 | % | ||||||||||||||||
| Time Deposits ≥ $100K | 189,952 | 187,493 | 1.3 | % | 133,932 | 41.8 | % | ||||||||||||||||
| TOTAL DEPOSITS | 556,059 | 501,340 | 10.9 | % | 450,013 | 23.6 | % | ||||||||||||||||
| TOTAL LIABILITIES | 560,210 | 504,838 | 11.0 | % | 454,126 | 23.4 | % | ||||||||||||||||
| SHAREHOLDERS' EQUITY | 69,969 | 67,274 | 4.0 | % | 65,553 | 6.7 | % | ||||||||||||||||
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ | 630,179 | $ | 572,112 | 10.1 | % | $ | 519,679 | 21.3 | % | |||||||||||||
| INCOME STATEMENT (Unaudited) | |||||||||||||||||||||||||||||||||||||
| (Dollars in Thousands, Except Per Share Information) | |||||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||
| June 30, | March 31, | % | June 30, | % | June 30, | June 30, | % | ||||||||||||||||||||||||||||||
| NET INTEREST INCOME | 2014 | 2014 | Change | 2013 | Change | 2014 | 2013 | Change | |||||||||||||||||||||||||||||
| Interest Income | $ | 6,423 | $ | 6,279 | 2.3 | % | $ | 5,467 | 17.5 | % | $ | 12,702 | $ | 10,712 | 18.6 | % | |||||||||||||||||||||
| Interest Expense | 1,084 | 1,034 | 4.8 | % | 858 | 26.3 | % | 2,118 | 1,747 | 21.2 | % | ||||||||||||||||||||||||||
| Total Net Interest Income | 5,339 | 5,245 | 1.8 | % | 4,609 | 15.8 | % | 10,584 | 8,965 | 18.1 | % | ||||||||||||||||||||||||||
| Provision for Loan Losses | - | (1,178 | ) | - | - | - | (1,178 | ) | (1,464 | ) | -19.5 | % | |||||||||||||||||||||||||
Net Interest Income after Provision for Loan Losses | 5,339 | 6,423 | -16.9 | % | 4,609 | 15.8 | % | 11,762 | 10,429 | 12.8 | % | ||||||||||||||||||||||||||
| NONINTEREST INCOME | |||||||||||||||||||||||||||||||||||||
| Gains on Sales of Loans | 1,992 | 2,863 | -30.4 | % | 2,345 | -15.1 | % | 4,854 | 3,812 | 27.3 | % | ||||||||||||||||||||||||||
| Service Charges and Other Income | 645 | 485 | 33.0 | % | 437 | 47.5 | % | 1,130 | 842 | 34.2 | % | ||||||||||||||||||||||||||
| Total Noninterest Income | 2,637 | 3,348 | -21.2 | % | 2,782 | -5.2 | % | 5,984 | 4,654 | 28.6 | % | ||||||||||||||||||||||||||
| NONINTEREST EXPENSE | |||||||||||||||||||||||||||||||||||||
| Salaries and Employee Benefits | 2,566 | 2,640 | -2.8 | % | 2,253 | 13.9 | % | 5,206 | 4,238 | 22.8 | % | ||||||||||||||||||||||||||
| Occupancy and Equipment | 386 | 362 | 6.6 | % | 454 | -15.0 | % | 749 | 893 | -16.1 | % | ||||||||||||||||||||||||||
| Other Expenses | 832 | 891 | -6.6 | % | 754 | 10.3 | % | 1,721 | 1,570 | 9.6 | % | ||||||||||||||||||||||||||
| Total Noninterest Expense | 3,784 | 3,893 | -2.8 | % | 3,461 | 9.3 | % | 7,676 | 6,701 | 14.6 | % | ||||||||||||||||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 4,192 | 5,878 | -28.7 | % | 3,930 | 6.7 | % | 10,070 | 8,382 | 20.1 | % | ||||||||||||||||||||||||||
| Provision for Income Taxes | 1,762 | 2,445 | -27.9 | % | 1,728 | 2.0 | % | 4,207 | 3,535 | 19.0 | % | ||||||||||||||||||||||||||
| NET INCOME | $ | 2,430 | $ | 3,433 | -29.2 | % | $ | 2,202 | 10.3 | % | $ | 5,863 | $ | 4,847 | 21.0 | % | |||||||||||||||||||||
| Preferred Stock Adjustments | |||||||||||||||||||||||||||||||||||||
| Preferred Stock Cash Dividend | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Accretion of Preferred Stock Discount | - | - | - | (29 | ) | -100.0 | % | - | (161 | ) | -100.0 | % | |||||||||||||||||||||||||
| Redemption of Preferred Stock | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Total Preferred Stock Adjustments | - | - | - | (29 | ) | -100.0 | % | - | (161 | ) | -100.0 | % | |||||||||||||||||||||||||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 2,430 | $ | 3,433 | -29.2 | % | $ | 2,173 | 11.8 | % | $ | 5,863 | $ | 4,686 | 25.1 | % | |||||||||||||||||||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||||||||||||||||||||||||||||
| BASIC | 3,858,416 | 3,849,564 | 0.2 | % | 3,522,064 | ^ | 9.5 | % | 3,854,017 | 3,489,153 | ^ | 10.5 | % | ||||||||||||||||||||||||
| DILUTED | 4,108,611 | 4,100,348 | 0.2 | % | 3,770,603 | ^ | 9.0 | % | 4,102,670 | 3,705,396 | ^ | 10.7 | % | ||||||||||||||||||||||||
| BASIC EPS | $ | 0.63 | $ | 0.89 | -29.4 | % | $ | 0.62 | ^ | 2.1 | % | $ | 1.52 | $ | 1.34 | ^ | 13.3 | % | |||||||||||||||||||
| DILUTED EPS | $ | 0.59 | $ | 0.84 | -29.4 | % | $ | 0.58 | ^ | 2.6 | % | $ | 1.43 | $ | 1.26 | ^ | 13.0 | % | |||||||||||||||||||
| Note: ^ Restated for 10% stock dividend declared on 1/30/2014 | |||||||||||||||||||||||||||||||||||||
| SELECTED FINANCIAL RATIOS (Unaudited) | ||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands, Except Per Share Amount) | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
| 2nd Qtr | 1st Qtr | % | 2nd Qtr | % | June 30, | June 30, | % | |||||||||||||||||||||||||||||||
| 2014 | 2014 | Change | 2013 | Change | 2014 | 2013 | Change | |||||||||||||||||||||||||||||||
| Performance Ratios: | ||||||||||||||||||||||||||||||||||||||
| Return on Average Assets | 1.61 | % | 2.47 | % | -0.86 | % | 1.81 | % | -0.20 | % | 2.02 | % | 2.01 | % | 0.01 | % | ||||||||||||||||||||||
| Return on Average Equity | 14.20 | % | 21.47 | % | -7.27 | % | 14.44 | % | -0.24 | % | 17.71 | % | 16.46 | % | 1.25 | % | ||||||||||||||||||||||
| Net Interest Margin | 3.61 | % | 3.85 | % | -0.24 | % | 3.84 | % | -0.23 | % | 3.72 | % | 3.77 | % | -0.05 | % | ||||||||||||||||||||||
| Cost of Funds | 0.82 | % | 0.85 | % | -0.03 | % | 0.81 | % | 0.01 | % | 0.83 | % | 0.83 | % | 0.00 | % | ||||||||||||||||||||||
| Efficiency Ratio | 47.44 | % | 45.31 | % | 2.13 | % | 46.83 | % | 0.61 | % | 46.33 | % | 49.20 | % | -2.87 | % | ||||||||||||||||||||||
| Capital Ratios: | ||||||||||||||||||||||||||||||||||||||
| Core Capital (Leverage) Ratio | 11.57 | % | 11.93 | % | -0.36 | % | 13.43 | % | -1.86 | % | 11.57 | % | 13.43 | % | -1.86 | % | ||||||||||||||||||||||
| Tier 1 Risk-Based Capital Ratio | 13.83 | % | 14.19 | % | -0.36 | % | 15.62 | % | -1.79 | % | 13.83 | % | 15.62 | % | -1.79 | % | ||||||||||||||||||||||
| Total Risk-Based Capital Ratio | 15.09 | % | 15.45 | % | -0.36 | % | 16.89 | % | -1.80 | % | 15.09 | % | 16.89 | % | -1.80 | % | ||||||||||||||||||||||
| Tangible Common Equity to Total Assets | 11.10 | % | 11.76 | % | -0.66 | % | 11.07 | % | 0.03 | % | 11.10 | % | 11.07 | % | 0.03 | % | ||||||||||||||||||||||
| Tangible Common Equity Per Share | $ | 18.07 | $ | 17.48 | 3.38 | % | $ | 15.36 | ^ | 17.64 | % | $ | 18.07 | $ | 15.36 | ^ | 17.64 | % | ||||||||||||||||||||
| Average Balances: | ||||||||||||||||||||||||||||||||||||||
| Gross Loans, net | $ | 483,090 | $ | 474,663 | 1.78 | % | $ | 401,557 | 20.30 | % | $ | 483,090 | $ | 401,557 | 20.30 | % | ||||||||||||||||||||||
| Total Investment Securities | 7,349 | 7,497 | -1.97 | % | 9,475 | -22.44 | % | 7,349 | 9,475 | -22.44 | % | |||||||||||||||||||||||||||
| Interest-Earning Assets | 593,076 | 553,095 | 7.23 | % | 480,892 | 23.33 | % | 593,076 | 480,892 | 23.33 | % | |||||||||||||||||||||||||||
| Total Assets | 604,637 | 563,684 | 7.27 | % | 487,986 | 23.90 | % | 604,637 | 487,986 | 23.90 | % | |||||||||||||||||||||||||||
| Total Deposits | 532,054 | 495,045 | 7.48 | % | 422,977 | 25.79 | % | 532,054 | 422,977 | 25.79 | % | |||||||||||||||||||||||||||
| Interest-Bearing Liabilities | 429,081 | 417,872 | 2.68 | % | 343,907 | 24.77 | % | 429,081 | 343,907 | 24.77 | % | |||||||||||||||||||||||||||
| Shareholders' Equity | 68,622 | 64,840 | 5.83 | % | 61,155 | 12.21 | % | 68,622 | 61,155 | 12.21 | % | |||||||||||||||||||||||||||
| Note: ^ Restated for 10% stock dividend declared on 1/30/2014 | ||||||||||||||||||||||||||||||||||||||
| Selected Quarterly Information (Unaudited) | |||||||||||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||||
| 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||||||||||||
| 2014 | 2014 | 2013 | 2013 | 2013 | |||||||||||||||||||||
| Allowance for Loan Losses: | |||||||||||||||||||||||||
| Balance at Beginning-of-Period | $ | 8,737 | $ | 8,925 | $ | 8,869 | $ | 9,960 | $ | 10,162 | |||||||||||||||
| Provision for Loan Losses | - | (1,178 | ) | - | - | - | |||||||||||||||||||
| Charge-offs | - | 123 | - | 1,145 | 290 | ||||||||||||||||||||
| Recoveries | 100 | 1,113 | 56 | 54 | 88 | ||||||||||||||||||||
| Balance at End-of-Period | $ | 8,837 | $ | 8,737 | $ | 8,925 | $ | 8,869 | $ | 9,960 | |||||||||||||||
| Allowance for Off-Balance-Sheet Items: | |||||||||||||||||||||||||
| Balance at Beginning-of-Period | $ | 721 | $ | 721 | $ | 721 | $ | 721 | $ | 721 | |||||||||||||||
| Provision for Off-Balance-Sheet Items | - | - | - | - | - | ||||||||||||||||||||
| Balance at End-of-Period | $ | 721 | $ | 721 | $ | 721 | $ | 721 | $ | 721 | |||||||||||||||
| Delinquent Loans: | |||||||||||||||||||||||||
| Loans 30-89 Days Past Due | $ | 19 | $ | 446 | $ | 83 | $ | 183 | $ | 3,710 | |||||||||||||||
| Loans 90 Days Past Due and Nonaccruals | 2,159 | 2,646 | 4,983 | 5,230 | 2,707 | ||||||||||||||||||||
| Total Delinquent Loans | $ | 2,178 | $ | 3,092 | $ | 5,066 | $ | 5,413 | $ | 6,417 | |||||||||||||||
| Nonperforming Loans/Assets: | |||||||||||||||||||||||||
| Nonaccrual Loans | $ | 2,159 | $ | 2,646 | $ | 4,983 | $ | 5,230 | $ | 2,707 | |||||||||||||||
| Performing TDR Loans | 6,217 | 7,915 | 10,362 | 10,250 | 9,770 | ||||||||||||||||||||
| Total Nonperforming Loans | $ | 8,376 | $ | 10,561 | $ | 15,345 | $ | 15,480 | $ | 12,477 | |||||||||||||||
| Other Real Estate Owned | - | - | - | - | - | ||||||||||||||||||||
| Total Nonperforming Assets | $ | 8,376 | $ | 10,561 | $ | 15,345 | $ | 15,480 | $ | 12,477 | |||||||||||||||
| Watch List Loans: | |||||||||||||||||||||||||
| Special Mention | $ | 289 | $ | 520 | $ | 6,390 | $ | 6,360 | $ | 6,095 | |||||||||||||||
| Substandard | 8,452 | 10,655 | 12,854 | 14,922 | 15,203 | ||||||||||||||||||||
| Doubtful | - | - | - | - | - | ||||||||||||||||||||
| Loss | - | - | - | - | - | ||||||||||||||||||||
| Total Watch List Loans | $ | 8,741 | $ | 11,175 | $ | 19,244 | $ | 21,282 | $ | 21,298 | |||||||||||||||
| Total Classified Assets | $ | 8,452 | $ | 10,655 | $ | 12,854 | $ | 14,922 | $ | 15,203 | |||||||||||||||
| Asset Quality Ratios: | |||||||||||||||||||||||||
| Annualized Net Charge-offs to Average Gross Loans | -0.08 | % | -0.83 | % | -0.05 | % | 1.00 | % | 0.20 | % | |||||||||||||||
| Nonaccrual Loans to Gross Loans, net | 0.43 | % | 0.56 | % | 1.06 | % | 1.18 | % | 0.64 | % | |||||||||||||||
| Nonperforming Loans to Gross Loans, net | 1.67 | % | 2.23 | % | 3.27 | % | 3.49 | % | 2.96 | % | |||||||||||||||
| Total NPA to Total Assets | 1.33 | % | 1.85 | % | 2.69 | % | 3.02 | % | 2.40 | % | |||||||||||||||
| Classified Assets to Total Assets | 1.34 | % | 1.86 | % | 2.25 | % | 2.91 | % | 2.93 | % | |||||||||||||||
| Classified Assets to Tier 1 and ALLL | 10.73 | % | 14.02 | % | 17.73 | % | 21.42 | % | 20.14 | % | |||||||||||||||
| ALLL to Gross Loans, net | 1.76 | % | 1.85 | % | 1.90 | % | 2.00 | % | 2.36 | % | |||||||||||||||
| ALLL to Gross Loans, net (excluding loans held-for-sale) | 1.82 | % | 1.89 | % | 1.98 | % | 2.07 | % | 2.46 | % | |||||||||||||||
| ALLL to Nonaccrual Loans | 409.31 | % | 330.20 | % | 179.10 | % | 169.58 | % | 367.94 | % | |||||||||||||||
| ALLL to Nonperforming Loans | 105.50 | % | 82.73 | % | 58.16 | % | 57.30 | % | 79.83 | % | |||||||||||||||
| Yield Analysis | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||
| June 30, 2014 | March 31, 2014 | June 30, 2013 | ||||||||||||||||||||||||||||||||||||||
| Avg | Avg | Avg | ||||||||||||||||||||||||||||||||||||||
| Balance | Interest | Yield | Balance | Interest | Yield | Balance | Interest | Yield | ||||||||||||||||||||||||||||||||
| INTEREST-EARNING ASSETS | ||||||||||||||||||||||||||||||||||||||||
| Gross Loans, net | $ | 483,090 | $ | 6,255 | 5.19 | % | $ | 474,663 | $ | 6,125 | 5.23 | % | $ | 401,557 | $ | 5,325 | 5.32 | % | ||||||||||||||||||||||
| Investment Securities | 7,349 | 39 | 2.13 | % | 7,497 | 41 | 2.22 | % | 9,475 | 51 | 2.16 | % | ||||||||||||||||||||||||||||
| Interest-Bearing Deposits | 9,805 | 14 | 0.57 | % | 8,889 | 13 | 0.59 | % | 6,989 | 9 | 0.52 | % | ||||||||||||||||||||||||||||
| Federal Funds Sold | 88,753 | 56 | 0.25 | % | 58,207 | 36 | 0.25 | % | 59,228 | 37 | 0.25 | % | ||||||||||||||||||||||||||||
| Other Earning Assets | 4,079 | 59 | 5.80 | % | 3,839 | 64 | 6.76 | % | 3,643 | 45 | 4.95 | % | ||||||||||||||||||||||||||||
| Total Interest-Earning Assets | 593,076 | 6,423 | 4.34 | % | 553,095 | 6,279 | 4.60 | % | 480,892 | 5,467 | 4.56 | % | ||||||||||||||||||||||||||||
| NONINTEREST-EARNING ASSETS | ||||||||||||||||||||||||||||||||||||||||
| Cash and Due from Banks | 6,321 | 6,176 | 5,312 | |||||||||||||||||||||||||||||||||||||
| Other Noninterest-Earning Assets | 14,039 | 13,711 | 11,971 | |||||||||||||||||||||||||||||||||||||
| Total Noninterest-Earning Assets | 20,360 | 19,887 | 17,283 | |||||||||||||||||||||||||||||||||||||
| Less: Allowance for Loan Losses | (8,799 | ) | (9,298 | ) | (10,189 | ) | ||||||||||||||||||||||||||||||||||
| TOTAL ASSETS | $ | 604,637 | $ | 563,684 | $ | 487,986 | ||||||||||||||||||||||||||||||||||
| INTEREST-BEARING DEPOSITS | ||||||||||||||||||||||||||||||||||||||||
| Interest-Bearing Demand | $ | 206 | $ | - | 0.15 | % | $ | 259 | $ | - | 0.15 | % | $ | 187 | $ | - | 0.15 | % | ||||||||||||||||||||||
| Money Market & NOW | 153,497 | 379 | 0.99 | % | 149,875 | 367 | 0.99 | % | 139,369 | 363 | 1.04 | % | ||||||||||||||||||||||||||||
| Savings | 9,034 | 54 | 2.40 | % | 7,998 | 49 | 2.48 | % | 5,695 | 35 | 2.47 | % | ||||||||||||||||||||||||||||
| CD < 100K | 59,493 | 162 | 1.09 | % | 59,315 | 159 | 1.09 | % | 60,626 | 168 | 1.11 | % | ||||||||||||||||||||||||||||
| CD > 100K | 141,493 | 409 | 1.16 | % | 134,729 | 384 | 1.16 | % | 91,017 | 254 | 1.12 | % | ||||||||||||||||||||||||||||
| CDARS | 2,630 | 4 | 0.61 | % | 2,631 | 4 | 0.62 | % | 2,630 | 4 | 0.61 | % | ||||||||||||||||||||||||||||
| Wholesale Deposits | 62,728 | 76 | 0.49 | % | 63,063 | 71 | 0.46 | % | 44,383 | 34 | 0.31 | % | ||||||||||||||||||||||||||||
| Total Interest-Bearing Deposits | 429,081 | 1,084 | 1.01 | % | 417,870 | 1,034 | 1.00 | % | 343,907 | 858 | 1.00 | % | ||||||||||||||||||||||||||||
| FHLB Advance | - | - | - | 2 | - | 0.32 | % | - | - | - | ||||||||||||||||||||||||||||||
| Total Interest-Bearing Liabilities | 429,081 | 1,084 | 1.01 | % | 417,872 | 1,034 | 1.00 | % | 343,907 | 858 | 1.00 | % | ||||||||||||||||||||||||||||
| NONINTEREST-BEARING DEPOSITS | ||||||||||||||||||||||||||||||||||||||||
| Demand Deposits | 102,973 | 77,175 | 79,070 | |||||||||||||||||||||||||||||||||||||
| Total Noninterest-Bearing Deposits | 102,973 | 77,175 | 79,070 | |||||||||||||||||||||||||||||||||||||
| Other Liabilities | 3,961 | 3,797 | 3,854 | |||||||||||||||||||||||||||||||||||||
| Total Noninterest-Bearing liabilities | 106,934 | 80,972 | 82,924 | |||||||||||||||||||||||||||||||||||||
| Shareholders' Equity | 68,622 | 64,840 | 61,155 | |||||||||||||||||||||||||||||||||||||
| TOTAL LIAB & SH EQUITY | $ | 604,637 | $ | 563,684 | $ | 487,986 | ||||||||||||||||||||||||||||||||||
| Net Interest Income | $ | 5,339 | $ | 5,245 | $ | 4,609 | ||||||||||||||||||||||||||||||||||
| Net Interest Spread | 3.33 | % | 3.60 | % | 3.56 | % | ||||||||||||||||||||||||||||||||||
| Net Interest Margin | 3.61 | % | 3.85 | % | 3.84 | % | ||||||||||||||||||||||||||||||||||
| Cost of Funds | 0.82 | % | 0.85 | % | 0.81 | % | ||||||||||||||||||||||||||||||||||
| Yield Analysis | |||||||||||||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||||||
| Six Months Ended | |||||||||||||||||||||||||||
| June 30, 2014 | June 30, 2013 | ||||||||||||||||||||||||||
| Avg | Avg | ||||||||||||||||||||||||||
| Balance | Interest | Yield | Balance | Interest | Yield | ||||||||||||||||||||||
| INTEREST-EARNING ASSETS | |||||||||||||||||||||||||||
| Gross Loans, net | $ | 478,900 | $ | 12,380 | 5.21 | % | $ | 393,548 | $ | 10,454 | 5.36 | % | |||||||||||||||
| Investment Securities | 7,422 | 82 | 2.23 | % | 9,843 | 81 | 1.66 | % | |||||||||||||||||||
| Interest-Bearing Deposits | 9,350 | 27 | 0.58 | % | 5,939 | 15 | 0.52 | % | |||||||||||||||||||
| Federal Funds Sold | 73,564 | 91 | 0.25 | % | 66,912 | 84 | 0.25 | % | |||||||||||||||||||
| Other Earning Assets | 3,960 | 122 | 6.21 | % | 3,561 | 78 | 4.42 | % | |||||||||||||||||||
| Total Interest-Earning Assets | 573,196 | 12,702 | 4.47 | % | 479,803 | 10,712 | 4.50 | % | |||||||||||||||||||
| NONINTEREST-EARNING ASSETS | |||||||||||||||||||||||||||
| Cash and Due from Banks | 6,249 | 5,288 | |||||||||||||||||||||||||
| Other Noninterest-Earning Assets | 13,843 | 11,598 | |||||||||||||||||||||||||
| Total Noninterest-Earning Assets | 20,092 | 16,886 | |||||||||||||||||||||||||
| Less: Allowance for Loan Losses | (9,047 | ) | (10,597 | ) | |||||||||||||||||||||||
| TOTAL ASSETS | $ | 584,241 | $ | 486,092 | |||||||||||||||||||||||
| INTEREST-BEARING DEPOSITS | |||||||||||||||||||||||||||
| Interest-Bearing Demand | $ | 232 | $ | - | 0.15 | % | $ | 218 | $ | - | 0.15 | % | |||||||||||||||
| Money Market & NOW | 151,696 | 748 | 0.99 | % | 140,058 | 737 | 1.06 | % | |||||||||||||||||||
| Savings | 8,519 | 103 | 2.44 | % | 5,420 | 66 | 2.46 | % | |||||||||||||||||||
| CD < 100K | 59,404 | 320 | 1.09 | % | 61,568 | 345 | 1.13 | % | |||||||||||||||||||
| CD > 100K | 138,130 | 792 | 1.16 | % | 90,480 | 507 | 1.13 | % | |||||||||||||||||||
| CDARS | 2,631 | 8 | 0.61 | % | 2,630 | 8 | 0.65 | % | |||||||||||||||||||
| Wholesale Deposits | 62,894 | 147 | 0.47 | % | 52,642 | 84 | 0.32 | % | |||||||||||||||||||
| Total Interest-Bearing Deposits | 423,506 | 2,118 | 1.01 | % | 353,016 | 1,747 | 1.00 | % | |||||||||||||||||||
| FHLB Advance | 1 | - | 0.38 | % | 1 | - | 0.26 | % | |||||||||||||||||||
| Total Interest-Bearing Liabilities | 423,507 | 2,118 | 1.01 | % | 353,017 | 1,747 | 1.00 | % | |||||||||||||||||||
| NONINTEREST-BEARING DEPOSITS | |||||||||||||||||||||||||||
| Demand Deposits | 90,145 | 70,494 | |||||||||||||||||||||||||
| Total Noninterest-Bearing Deposits | 90,145 | 70,494 | |||||||||||||||||||||||||
| Other Liabilities | 3,847 | 3,200 | |||||||||||||||||||||||||
| Total Noninterest-Bearing liabilities | 93,992 | 73,694 | |||||||||||||||||||||||||
| Shareholders' Equity | 66,742 | 59,381 | |||||||||||||||||||||||||
| TOTAL LIAB & SH EQUITY | $ | 584,241 | $ | 486,092 | |||||||||||||||||||||||
| Net Interest Income | $ | 10,584 | $ | 8,965 | |||||||||||||||||||||||
| Net Interest Spread | 3.46 | % | 3.50 | % | |||||||||||||||||||||||
| Net Interest Margin | 3.72 | % | 3.77 | % | |||||||||||||||||||||||
| Cost of Funds | 0.83 | % | 0.83 | % | |||||||||||||||||||||||
Contacts:
K. Kaye Kim, 323-988-3007
EVP &
Chief Financial Officer
Kayek@CBB-Bank.com
