Market Overview

Commonwealth Business Bank Reports Third Quarter Earnings

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LOS ANGELES--(BUSINESS WIRE)--

Commonwealth Business Bank ("CBB") (OTCQB: CWBB) today announced net income of $2.9 million for the third quarter of 2015, compared with $3.0 million for the second quarter of 2015 and $2.9 million for the third quarter of 2014. Diluted earnings per share were $0.35 for the third quarter of 2015, compared with $0.36 for both the second quarter of 2015 and third quarter of 2014.

"Our third quarter performance reflects the current competitive environment. We recorded strong earnings as shown in quarterly ROA and ROE of 1.52% and 13.58%, respectively, and although our net interest margin declined during the quarter, it was 4.03% on a year-to-date basis, which is favorable compared to the industry. Our loan growth was strong this quarter, spurred by more than $84 million new loan originations in commercial loans and commercial real estate loans," said Joanne Kim, President and CEO.

RESULTS OF OPERATIONS

 

Quarterly Results Summary (Unaudited)

  Three Months Ended   Nine Months Ended
September 30,   June 30,   September 30,   September 30,   September 30,
  2015     2015     2014     2015     2014  
(Dollars in thousands, except per share information)
 
Net income $ 2,933 $ 3,024 $ 2,939 $ 8,729 $ 8,802
Net income per diluted common share $ 0.35 $ 0.36 $ 0.36 $ 1.05 $ 1.07
 
Return on average assets 1.52 % 1.72 % 1.88 % 1.64 % 1.97 %
Return on average equity 13.58 % 14.72 % 16.31 % 14.22 % 17.22 %
 
Noninterest income/average assets 1.25 % 1.61 % 1.86 % 1.48 % 1.99 %
Pre-tax, pre-provision earnings/average assets 2.68 % 2.94 % 3.15 % 2.83 % 3.10 %
Noninterest expense/average assets 2.35 % 2.78 % 2.51 % 2.58 % 2.60 %
Efficiency ratio 46.65 % 48.61 % 44.34 % 47.67 % 45.64 %
Net interest margin 3.86 % 4.21 % 3.90 % 4.03 % 3.78 %
 

Net income for the third quarter of 2015 decreased $91,000 over the second quarter of 2015, and $6,000 over the third quarter of 2014. The quarter-over-quarter decrease came from a decrease in gains on sale of Small Business Administration ("SBA") loans, partially offset by a decrease in noninterest expense.

Net income for the nine months ended September 30, 2015 decreased slightly by $73,000, compared to the previous year. The decrease was primarily due to a $1.2 million negative loan loss provision for the nine months ended September 30, 2014, compared to a $150,000 provision for loan loss for the same period in 2015. However, net Interest income continued to drive CBB's financial results and increased $4.4 million, or 26.7% for the nine months ended September 30, 2015.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses and loan commitments was $7.3 million for the third quarter of 2015, an increase of $64,000, or 0.9%, from $7.2 million for the second quarter of 2015, and an increase of $1.3 million, or 22.0%, from $6.0 million for the third quarter of 2014. The year-over-year increase in net interest income was primarily attributable to an increase of $126.2 million in average loan balances.

The net interest margin declined during the third quarter of 2015 to 3.86%, compared to 4.21% for the second quarter of 2015 and 3.90% for the third quarter of 2014. This decrease from the second quarter of 2015 was attributable to a 33 basis point decrease in the yield on earning assets. The yield on average earning assets decreased to 4.58% for the third quarter of 2015, from 4.91% for the second quarter of 2015 and 4.59% for the third quarter of 2014, primarily from a decrease in loan yield. Higher accelerated accretion of discount on paid off SBA loans during the second quarter of 2015 partially contributed to the difference in loan yield between the quarters. The cost of funds was 0.80% for the third quarter of 2015, compared with 0.78% for both the second quarter of 2015 and third quarter of 2014. The year-over-year increase in cost of funds was attributable to an increase in cost of interest-bearing deposits, primarily from time deposit promotions.

Noninterest Income

For the third quarter of 2015, noninterest income totaled $2.4 million, approximately a $424,000 and $488,000 decrease from the second quarter of 2015 and the third quarter of 2014, respectively. The quarter-over-quarter decrease was primarily due to a $493,000 decrease in the gains on the sale of SBA loans, partially offset by a $54,000 increase in fee income and a $15,000 increase in SBA servicing income. The year-over-year decrease in noninterest income was due primarily to a $454,000 decrease in the gains on the sale of SBA loans and a $34,000 decrease in fees and loan servicing income. Gains on sale of SBA loans are tied to the volume of, and premium on, sales of such loans.

During the third quarter of 2015, CBB sold $24.6 million of SBA loans, compared with $27.1 million for the second quarter of 2015 and $25.0 million for the third quarter of 2014. SBA loan sales are dependent upon the volume of loans originated as well as the liquidity needs and market conditions, and, therefore, will vary from quarter to quarter.

 
Three Months Ended
September 30,   June 30,   March 31,   December 31,   September 30,
  2015     2015     2015     2014     2014  
(Dollars in thousands)
SBA Loans held-for-sale @ beginning of the quarter $ 25,286 $ 16,543 $ 21,267 $ 15,057 $ 15,779
SBA Loans originated/transferred from held-for-investment during the quarter 20,534 36,014 21,096 33,214 24,401
SBA Loans sold during the quarter (24,594 ) (27,106 ) (25,671 ) (26,888 ) (25,013 )
SBA Loans principal payment, net of advance   (183 )     (165 )     (149 )   (116 )   (110 )
SBA Loans held-for-sale @ end of the quarter $ 21,043   $ 25,286   $ 16,543   $ 21,267   $ 15,057  

 

 

Gain on sale of SBA loans $ 1,801 $ 2,294 $ 2,096 $ 2,281 $ 2,255
Premium in sale (weighted average) 10.40 % 11.62 % 11.07 % 10.89 % 11.67 %
 
SBA Loan production (including held-for-investment) $ 28,213 $ 37,164 $ 38,672 $ 45,306 $ 34,770
 

Noninterest Expense

Noninterest expense for the third quarter of 2015 decreased to $4.5 million, down 7.5% from $4.9 million for the second quarter of 2015, and up $589,000, or 15.0% from $3.9 million in the third quarter of 2014. The quarter-over-quarter decrease was primarily contributed by a decrease in marketing expense, professional expense, and other operating expense. The year-over-year increase was due primarily to an increase in salaries and employee benefits resulting from the addition of staffing to support business expansion and to strengthen the infrastructure. For the third quarter of 2015, salaries and employee benefits increased to $3.2 million, up $86,000 from $3.1 million for the second quarter of 2015, and up $517,000 from $2.7 million for the third quarter of 2014.

     
Three Months Ended Nine Months Ended
September 30,   June 30,   %   September 30,   % September 30,   September 30,   %
  2015     2015   Change   2014   Change   2015     2014   Change
(Dollars in thousands)
 
Salaries and benefits $ 3,178 $ 3,092 2.8 % $ 2,661 19.4 % $ 9,182 $ 7,867 16.7 %
Full time equivalent employees(FTE) 119 118 0.8 % 101 17.8 % 119 101 17.8 %
Salaries and benefit/FTE $ 107 $ 104 2.7 % $ 103 3.8 % $ 103 $ 104 -1.3 %
Salaries and benefit/average assets 1.65 % 1.76 % -6.3 % 1.70 % -2.9 % 1.73 % 1.76 % -1.7 %
Noninterest expense/average assets 2.35 % 2.78 % -15.5 % 2.51 % -6.4 % 2.58 % 2.60 % -0.8 %
 

Pre-Tax, Pre-Provision Income

For the third quarter of 2015, CBB's pre-tax, pre-provision ("PTPP") income was $5.2 million, up 0.1% from $5.2 million for the second quarter of 2015 and up 4.7%, from $4.9 million for the third quarter of 2014. Annualized PTPP income decreased to 2.68% of average assets for the third quarter of 2015, compared with 2.94% and 3.15% of average assets for the second quarter of 2015 and the third quarter of 2014, respectively.

The effective income tax rate for the nine months ended September 30, 2015 was 41.57%, compared with 41.31% for the same period of 2014.

   
Three Months Ended Nine Months Ended
September 30,   June 30,   %   September 30,   % September 30,   September 30,   %
2015 2015 Change 2014 Change 2015 2014 Change
(Dollars in thousands)
 
PTPP income $ 5,162 $ 5,158 0.1 % $ 4,928 4.7 % $ 15,088 $ 13,820 9.2 %
Annualized PTPP/average assets 2.68 % 2.94 % -8.8 % 3.15 % -14.9 % 2.83 % 3.10 % -8.7 %
PTPP, excluding gain on sale of SBA loans $ 3,361 $ 2,864 17.4 % $ 2,673 25.7 % $ 8,897 $ 6,710 32.6 %
 

BALANCE SHEET SUMMARY

At September 30, 2015, CBB had total assets of $778.8 million, an increase of $34.8 million, or 4.7%, from $744.0 million at June 30, 2015, and an increase of $150.4 million, or 23.9%, from $628.4 million at September 30, 2014. Earning assets totaled $760.3 million at September 30, 2015, an increase of $145.4 million, or 23.6%, from $614.9 million at September 30, 2014. The year-over-year increase in earning assets was mainly from a $135.6 million growth in total loans.

           
September 30, June 30, March 31, December 31, September 30,
  2015     2015     2015     2014     2014  
(Dollars in thousands)
 
Assets $ 778,807 $ 744,028 $ 703,891 $ 653,450 $ 628,371
Loans receivable, net 640,687 587,917 581,655 539,810 511,482
Deposits 675,225 644,646 608,893 572,812 550,490
 
Tangible common equity/total assets 11.20 % 11.30 % 11.46 % 11.61 % 11.66 %
Tangible common equity per common share $ 10.78 $ 10.40 $ 10.03 $ 9.77 $ 9.45
 
Nonperforming assets to assets 0.91 % 1.01 % 1.13 % 1.25 % 1.28 %
ALLL to nonperforming assets 130.04 % 119.74 % 112.76 % 109.50 % 110.01 %
Nonperforming assets to tangible common equity and ALLL 7.36 % 8.11 % 8.89 % 9.66 % 9.81 %
 

Loans Receivable

The following table lists gross loans by type at the dates indicated:

         

September 30,
2015

June 30,
2015

March 31,
2015

December 31,
2014

September 30,
2014

(Dollars in thousands)
 
Construction $ 7,938 $ 7,460 $ 5,616 $ 4,088 $ 3,133
Commercial real estate 498,659 453,915 444,878 418,071 391,565
Commercial and industrial 140,194 131,144 136,231 122,861 121,489
Consumer   1,872       3,236     2,879     2,667     3,224  
Gross loans 648,663 595,755 589,604 547,687 519,411
Deferred loan costs/fees   1,262       1,201     1,046     1,100     931  
Gross loans, net $ 649,925     $ 596,956   $ 590,650   $ 548,787   $ 520,342  
 
Loans held-for-sale $ 21,043 $ 25,286 $ 16,543 $ 21,267 $ 15,057
Gross loans including loans held-for-sale $ 670,968 $ 622,242 $ 607,193 $ 570,054 $ 535,399
 
Loan-to-deposit (LTD) ratio: 96.3 % 92.6 % 97.0 % 95.8 % 94.5 %
LTD ratio: including loans held-for-sale 99.4 % 96.5 % 99.7 % 99.5 % 97.3 %
 

At September 30, 2015, total loans (including loans held-for-sale) were $671.0 million, which was a $48.7 million, or 7.8% increase from $622.2 million at June 30, 2015 and a $135.6 million, or 25.3% increase from $535.4 million at September 30, 2014. During the third quarter of 2015, total new loan production (including revolving lines of credit) was approximately $113.4 million, compared to $97.7 million for the second quarter of 2015 and $71.2 million for the third quarter of 2014.

Deposits

The following table sets forth the amount of deposits by category at the dates indicated:

         
September 30, 2015 June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014
Balance   Percent Balance   Percent Balance   Percent Balance   Percent Balance   Percent
(Dollars in thousands)
 
Noninterest-bearing demand $ 145,348 21.5 % $ 140,284 21.8 % $ 134,999 22.2 % $ 125,893 22.0 % $ 123,805 22.5 %
Money market & NOW 141,722 21.0 % 134,731 20.9 % 143,313 23.5 % 152,503 26.6 % 151,635 27.5 %
Savings 7,354 1.1 % 7,482 1.2 % 7,345 1.2 % 8,805 1.5 % 9,953 1.8 %
Time deposits   380,801   56.4 %   362,149   56.2 %   323,236   53.1 %   285,611   49.9 %   265,097   48.2 %
Total Deposits $ 675,225   100.0 % $ 644,646   100.0 % $ 608,893   100.0 % $ 572,812   100.0 % $ 550,490   100.0 %
 
Cost of deposits for the quarter ended 0.79 % 0.76 % 0.76 % 0.75 % 0.78 %
 

Total deposits increased $30.6 million, or 4.7% during the quarter and increased $124.7 million, or 22.7%, compared to September 30, 2014. Noninterest-bearing deposits grew $5.1 million, or 3.6% during the quarter and $21.5 million, or 17.4%, compared to September 30, 2014. However, due to a larger increase in time deposits, noninterest-bearing deposit decreased to 21.5% of total deposits at September 30, 2015 from 21.8% at June 30, 2015 and 22.5% at September 30, 2014. The lower proportional increase in noninterest-bearing deposit balances and higher cost of interest-bearing deposits resulted in a slight increase in the cost of deposits, when compared to the second quarter of 2015 and third quarter of 2014.

ASSET QUALITY

           
September 30, June 30, March 31, December 31, September 30,
  2015     2015     2015    

2014

   

2014

 
(Dollars in thousands)
 

Delinquent Loans:

Loans 30-89 days past due $ 1,369 $ 92 $ 18 $ 83 $ 727
90 days or more past due and still accruing - - - - -
Nonaccrual   2,682     1,930     2,162     2,175     1,919  
Total delinquent loans $ 4,051   $ 2,022   $ 2,180   $ 2,258   $ 2,646  
 

Nonperforming Assets:

Over 90 days still accruing $ - $ - $ - $ - $ -
Nonaccrual loans (1) 2,682 1,930 2,162 2,175 1,919
Performing TDR loans   4,422     5,619     5,815     6,023     6,135  
Total nonperforming loans   7,104     7,549     7,977     8,198     8,054  
 
Other real estate owned   -     -     -     -     -  
Total nonperforming assets $ 7,104   $ 7,549   $ 7,977   $ 8,198   $ 8,054  
 
Nonaccrual loans to gross loans 0.41 % 0.32 % 0.37 % 0.40 % 0.37 %
Nonperforming loans to gross loans (exc. LHFS) 1.09 % 1.26 % 1.35 % 1.49 % 1.55 %
Total nonperforming assets to total assets 0.91 % 1.01 % 1.13 % 1.25 % 1.28 %
 

Classified Loans (1):

Substandard $ 7,483 $ 6,471 $ 6,910 $ 7,110 $ 8,113
Doubtful - - -

-

-

Loss   -     -     -     -  

-

 
Total classified assets $ 7,483   $ 6,471   $ 6,910   $ 7,110   $ 8,113  
 
Classified assets to total assets 0.96 % 0.87 % 0.98 % 1.09 % 1.29 %
Classified assets to Tier 1 and ALLL 7.75 % 6.95 % 7.70 % 8.38 % 9.88 %
 
(1) Net of SBA guaranteed balance.
 

Nonaccrual loans increased during the third quarter of 2015 primarily due to a single commercial real estate loan with an outstanding balance of $1.1 million that was placed on nonaccrual during the third quarter of 2015.

The $1.0 million quarter-over-quarter increase in classified loans was due primarily to the addition of one commercial business loan with outstanding balance of $1.4 million.

The allowance for loan losses at September 30, 2015 was $9.2 million, or 1.42% of total gross loans (excluding loans held-for-sale), compared to $9.0 million, or 1.51%, at June 30, 2015, and $8.9 million, or 1.70%, at September 30, 2014. CBB recorded a $150,000 provision for loan losses for the first nine months of 2015, compared to a $1.2 million reversal in loan loss reserves for the same period of 2014. The $150,000 provision for loan losses was primarily due to organic loan growth but also due to an increase in specific reserves on impaired loans during the third quarter of 2015. The CBB recorded no provision for unfunded loan commitments for the first nine months of 2015 and 2014.

CAPITAL

Effective January 1, 2015, the federal banking regulators changed the ratios and ratio thresholds for capital evaluations to conform to the prompt corrective action and the Basel III capital rules. As of September 30, 2015, the impact of such change on capital is minimal and CBB exceeded the regulatory capital requirements under the new Basel III capital rules to be classified as "well-capitalized."

         
Well Capitalized Well Capitalized

Regulatory
Requirement

September 30,

2015

June 30,

2015

Regulatory
Requirement

September 30,

2014

 
Leverage ratio 5.00 % 11.40 % 11.91 % 5.00 % 11.82 %
Common equity tier 1 capital ratio 6.50 % 12.84 % 13.42 % N/A N/A
Tier 1 risk-based ratio 8.00 % 12.84 % 13.42 % 6.00 % 13.57 %
Total risk-based ratio 10.00 % 14.10 % 14.68 % 10.00 % 14.83 %
 

"We are very excited about the upcoming core system conversion, which we have been working on since early 2015," said Ms. Kim. "We understand the critical role of IT in the successful operations of our bank. The core system we have chosen will provide us the platform that will enable us to upgrade our products and services offered to our customers, and differentiate us from peers in our community," commented Ms. Kim.

ABOUT COMMONWEALTH BUSINESS BANK ("CBB BANK")

Commonwealth Business Bank is a full-service commercial bank also doing business as "CBB Bank," and specializes in small- to medium-sized businesses. CBB has five full service branches in Los Angeles and Orange Counties and four loan production offices in Texas, Georgia and Colorado.

For additional information, please visit CBB's website at www.cbb-bank.com.

NON-GAAP FINANCIAL MEASURES

CBB may use certain non-GAAP financial measures to provide meaningful supplemental information regarding CBB's operational performance and to enhance investors' overall understanding of such financial performance. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under the GAAP.

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)
 
September 30, June 30, % December 31, % September 30, %
  2015     2015   Change   2014   Change   2014   Change
ASSETS
Cash and due from banks $ 7,118 $ 5,799 22.7 % $ 5,874 21.2 % $ 5,455 30.5 %
Interest-earning due from FRB and other banks 80,077 93,043 -13.9 % 56,901 40.7 % 68,198 17.4 %
Investment securities 4,485 7,640 -41.3 % 7,058 -36.5 % 7,159 -37.4 %
Loans held-for-sale, at the lower of cost or fair value 21,043 25,286 -16.8 % 21,267 -1.1 % 15,057 39.8 %
Loans 649,925 596,956 8.9 % 548,787 18.4 % 520,342 24.9 %
Less: Allowance for loan losses   (9,238 )   (9,039 ) 2.2 %   (8,977 ) 2.9 %   (8,860 ) 4.3 %
Loans receivable, net of ALLL 640,687 587,917 9.0 % 539,810 18.7 % 511,482 25.3 %
 
FHLB & FRB stock 4,781 4,781 0.0 % 4,171 14.6 % 4,171 14.6 %
Other assets   20,616     19,562   5.4 %   18,369   12.2 %   16,849   22.4 %
TOTAL ASSETS $ 778,807   $ 744,028   4.7 % $ 653,450   19.2 % $ 628,371   23.9 %
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing $ 145,348 $ 140,284 3.6 % $ 125,893 15.5 % $ 123,805 17.4 %
Interest-bearing   529,877     504,362   5.1 %   446,919   18.6 %   426,685   24.2 %
Total deposits 675,225 644,646 4.7 % 572,812 17.9 % 550,490 22.7 %
 
FHLB advances 10,000 10,000

0.0

% - 100.0 % - 100.0 %
Other liabilities   6,322     5,337  

18.5

%   4,772   32.5 %   4,610   37.1 %
Total liabilities   691,547     659,983  

4.8

%   577,584   19.7 %   555,100   24.6 %
 
Stockholders' Equity   87,260     84,045   3.8 %   75,866   15.0 %   73,271   19.1 %
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 778,807   $ 744,028   4.7 % $ 653,450   19.2 % $ 628,371   23.9 %
 
 
STATEMENT OF INCOME (Unaudited)
(Dollars in thousands, except per share information)
                 
Three Months Ended Nine Months Ended
September 30, June 30, % September 30, % September 30, September 30, %
  2015   2015 Change   2014 Change   2015   2014   Change
 
Interest income $ 8,617 $ 8,394 2.7 % $ 7,023 22.7 % $ 24,606 $ 19,725 24.7 %
Interest expense   1,351   1,192 13.3 %   1,068 26.5 %   3,656   3,186   14.8 %
Net interest income 7,266 7,202 0.9 % 5,955 22.0 % 20,950 16,539 26.7 %
 
Provision for loan losses and loan commitments   150   - 100.0 %   - 100.0 %   150   (1,178 ) -112.7 %
Net interest income after provision for ALLL 7,116 7,202 -1.2 % 5,955 19.5 % 20,800 17,717 17.4 %
 
Gain on sale of loans 1,801 2,294 -21.5 % 2,255 -20.1 % 6,191 7,110 -12.9 %
Service charges and other income   609   540 12.8 %   643 -5.3 %   1,691   1,773   -4.6 %
Noninterest income 2,410 2,834 -15.0 % 2,898 -16.8 % 7,882 8,883 -11.3 %
 
Salaries and employee benefits 3,178 3,092 2.8 % 2,661 19.4 % 9,182 7,867 16.7 %
Occupancy and equipment 489 523 -6.5 % 403 21.3 % 1,465 1,150 27.4 %
Other expenses   847   1,263 -32.9 %   861 -1.6 %   3,097   2,585   19.8 %
Noninterest expense 4,514 4,878 -7.5 % 3,925 15.0 % 13,744 11,602 18.5 %
 
Income before Income Taxes 5,012 5,158 -2.8 % 4,928 1.7 % 14,938 14,998 -0.4 %
 
Income tax provision 2,079 2,134 -2.6 % 1,989 4.5 % 6,209 6,196 0.2 %
         
Net income $ 2,933 $ 3,024 -3.0 % $ 2,939 -0.2 % $ 8,729 $ 8,802   -0.8 %
 
 
Weighted average shares for basic EPS 8,091,332 8,070,020 0.3 % 7,749,706 4.4 % 8,005,591 7,722,076 3.7 %
Weighted average shares for diluted EPS 8,360,698 8,342,094 0.2 % 8,234,498 1.5 % 8,322,907 8,215,212 1.3 %
 
Basic EPS $ 0.36 $ 0.37 -2.7 % $ 0.38 -5.3 % $ 1.09 $ 1.14 -4.4 %
Diluted EPS $ 0.35 $ 0.36 -2.8 % $ 0.36 -2.8 % $ 1.05 $ 1.07 -1.9 %
 
Note: All earnings per share data, including weighted average common shares outstanding has been retroactively adjusted to reflect the 2:1 stock split in March 2015.
 
           
SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share information)
     
Three Months Ended Nine Months Ended
September 30, June 30, % September 30, % September 30, %
  2015     2015   Change   2014   Change   2015     2014   Change

Performance Ratios:

Return on average assets 1.52 % 1.72 % -11.6 % 1.88 % -19.1 % 1.64 % 1.97 % -16.7 %
Return on average equity 13.58 % 14.72 % -7.7 % 16.31 % -16.7 % 14.22 % 17.22 % -17.4 %
Net interest margin 3.86 % 4.21 % -8.3 % 3.90 % -1.0 % 4.03 % 3.78 % 6.7 %
Cost of funds 0.80 % 0.78 % 2.6 % 0.78 % 2.6 % 0.78 % 0.81 % -3.3 %
Efficiency ratio 46.65 % 48.61 % -4.0 % 44.34 % 5.2 % 47.67 % 45.64 % 4.4 %
 

Capital Ratios:

Core capital (leverage) ratio 11.40 % 11.91 % -4.3 % 11.82 % -3.6 % 11.40 % 11.82 % -3.6 %
Tier 1 risk-based capital ratio 12.84 % 13.42 % -4.3 % 13.57 % -5.4 % 12.84 % 13.57 % -5.4 %
Total risk-based capital ratio 14.10 % 14.68 % -4.0 % 14.83 % -4.9 % 14.10 % 14.83 % -4.9 %
Tangible common equity / total assets 11.20 % 11.30 % -0.8 % 11.66 % -3.9 % 11.20 % 11.66 % -3.9 %
Tangible common equity per share $ 10.78 $ 10.40 3.7 % $ 9.45 14.1 % $ 10.78 $ 9.45 14.1 %
 

Selected Average Balances:

Loans, net of deferred fees/costs (1) $ 647,725 $ 606,434 6.8 % $ 521,502 24.2 % $ 610,729 $ 493,257 23.8 %
Total investment securities 7,331 5,732 27.9 % 7,228 1.4 % 6,449 7,357 -12.3 %
Interest-earning assets 745,895 686,202 8.7 % 606,388 23.0 % 694,573 584,383 18.9 %
Total assets 763,574 703,948 8.5 % 619,738 23.2 % 711,582 596,204 19.4 %
Noninterest-bearing deposits 131,954 117,928 11.9 % 117,648 12.2 % 121,696 99,414 22.4 %
Total deposits 661,463 606,355 9.1 % 543,325 21.7 % 614,633 523,652 17.4 %
Interest-bearing liabilities 539,509 498,427 8.2 % 425,679 26.7 % 502,476 424,240 18.4 %
Stockholders' equity 85,667 82,406 4.0 % 71,479 19.8 % 82,083 68,338 20.1 %
 
(1) Includes loans held-for-sale.
 
     
SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited)
(Dollars in thousands)
   
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
  2015     2015     2015     2014     2014  
 

Allowance for Loan Losses

Balance at beginning of period $ 9,039 $ 8,995 $ 8,977 $ 8,860 $ 8,837
Provision for loan losses 150 - - 540 -
Charge-offs - 19 7 455 -
Recoveries   49     63     25     32     23  
Balance at the end of period $ 9,238   $ 9,039   $ 8,995   $ 8,977   $ 8,860  
 

Nonperforming Assets:

Over 90 days still accruing $ - $ - $ - $ - $ -
Nonaccrual loans (1) 2,682 1,930 2,162 2,175 1,919
Performing TDR loans   4,422     5,619     5,815     6,023     6,135  
Total nonperforming loans   7,104     7,549     7,977     8,198   $ 8,054  
 
Other real estate owned   -     -     -     -     -  
Total nonperforming assets $ 7,104   $ 7,549   $ 7,977   $ 8,198   $ 8,054  
 

Classified Loans (1):

Substandard $ 7,483 $ 6,471 $ 6,910 $ 7,110 $ 8,113
Doubtful - - - - -
Loss   -     -     -     -     -  
Total classified assets $ 7,483   $ 6,471   $ 6,910   $ 7,110   $ 8,113  
 

Delinquent Loans:

Loans 30-89 days past due $ 1,369 $ 92 $ 18 $ 83 $ 727
90 days or more past due and still accruing - - - - -
Nonaccrual   2,682     1,930     2,162     2,175     1,919  
Total delinquent loans $ 4,051   $ 2,022   $ 2,180   $ 2,258   $ 2,646  
 

Asset Quality Ratios:

Net charge-offs to average gross loans (2) -0.03 % -0.03 % -0.01 % 0.30 % -0.02 %
Nonaccrual loans to gross loans 0.41 % 0.32 % 0.37 % 0.40 % 0.37 %
Total NPA to total assets 0.91 % 1.01 % 1.13 % 1.25 % 1.28 %
Classified assets to total assets 0.96 % 0.87 % 0.98 % 1.09 % 1.29 %
Classified assets to Tier 1 and ALLL 7.75 % 6.95 % 7.70 % 8.38 % 9.88 %
Nonperforming loans to gross loans (exc. LHFS) 1.09 % 1.26 % 1.35 % 1.49 % 1.55 %
ALLL to gross loans (exc. LHFS) 1.42 % 1.51 % 1.52 % 1.64 % 1.70 %
ALLL to nonaccrual loans 344.44 % 468.34 % 416.05 % 412.74 % 461.70 %
ALLL to nonperforming loans 130.04 % 119.74 % 112.76 % 109.50 % 110.01 %
Texas ratio (3) 7.36 % 8.11 % 8.89 % 9.66 % 9.81 %
 
(1) Net of SBA guaranteed balance.
(2) Includes loans held-for-sale.
(3) Nonperforming assets divided by tangible common equity and ALLL.
 
                 
MARGIN ANALYSIS (Unaudited)
(Dollars in thousands)
 
Three Months Ended
September 30, 2015 June 30, 2015 September 30, 2014
Avg Balance Interest Yield Avg Balance Interest Yield Avg Balance Interest Yield
 
INTEREST-EARNING ASSETS
Loans (1) $ 647,725 $ 8,425 5.16 % $ 606,434 $ 8,150 5.39 % $ 521,502 $ 6,855 5.22 %
Investment securities 7,331 37 2.00 % 5,732 33 2.31 % 7,228 39 2.14 %
Interest-earning due from FRB and other banks 86,058 60 0.28 % 69,405 52 0.30 % 73,496 58 0.31 %
Other earning assets   4,781     95 7.88 %   4,631     159 13.77 %   4,162     71 6.77 %
Total interest-earning assets 745,895 8,617 4.58 % 686,202 8,394 4.91 % 606,388 7,023 4.59 %
 
NONINTEREST-EARNING ASSETS
Cash and due from banks 7,324 6,876 6,245
Other noninterest-earning assets   19,411     19,882     15,949  
Total noninterest-earning assets 26,735 26,758 22,194
 
Less: Allowance for loan losses (9,056 ) (9,012 ) (8,844 )
     
TOTAL ASSETS $ 763,574   $ 703,948   $ 619,738  
 
INTEREST-BEARING DEPOSITS
Interest-bearing demand $ 1,271 $ - 0.15 % $ 1,135 $ 1 0.15 % $ 634 $ - 0.15 %
Money market 138,731 318 0.91 % 142,462 312 0.88 % 152,984 368 0.95 %
Savings 7,408 35 1.87 % 7,374 29 1.58 % 9,618 54 2.23 %
Time deposits   382,099     957 0.99 %   337,456     809 0.96 %   262,441     646 0.98 %
Total interest-bearing deposits 529,509 1,310 0.98 % 488,427 1,151 0.95 % 425,677 1,068 1.00 %
 
Borrowings   10,000     41 1.65 %   10,000     41 1.65 %   2     - 0.39 %
Total interest-bearing liabilities 539,509 1,351 0.99 % 498,427 1,192 0.96 % 425,679 1,068 1.00 %
 
Noninterest-bearing deposits 131,954 117,928 117,648
Other liabilities 6,444 5,187 4,932
 
Stockholders' equity 85,667 82,406 71,479
     

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$ 763,574   $ 703,948   $ 619,738  
 
Net interest income $ 7,266 $ 7,202 $ 5,955
 
 
Net interest spread 3.59 % 3.95 % 3.59 %
 
Net interest margin 3.86 % 4.21 % 3.90 %
 
Cost of funds 0.80 % 0.78 % 0.78 %
 
(1) Includes loans-held-for-sale.
 
MARGIN ANALYSIS (Nine Months) (Unaudited)
(Dollars in thousands)
           
Nine Months Ended
September 30, 2015 September 30, 2014
Avg Balance Interest Yield Avg Balance Interest Yield
 
INTEREST-EARNING ASSETS
Loans (1) $ 610,729 $ 24,019 5.26 % $ 493,257 $ 19,235 5.21 %
Investment securities 6,449 99 2.05 % 7,357 121 2.20 %
Interest-earning due from banks 72,864 163 0.30 % 79,741 176 0.30 %
Other earning assets   4,531     325 9.59 %   4,028     193 6.41 %
Total interest-earning assets 694,573 24,606 4.74 % 584,383 19,725 4.51 %
 
NONINTEREST-EARNING ASSETS
Cash and due from banks 6,896 6,248
Other noninterest-earning assets   19,132     14,553  
Total noninterest-earning assets 26,028 20,801
 
Less: Allowance for loan losses (9,019 ) (8,980 )
   
TOTAL ASSETS $ 711,582   $ 596,204  
 
INTEREST-BEARING DEPOSITS
Interest-bearing demand $ 1,027 $ 1 0.15 % $ 368 $ - 0.15 %
Money market 141,349 953 0.90 % 152,130 1,115 0.98 %
Savings 7,513 103 1.83 % 8,890 157 2.36 %
Time deposits   343,048     2,482 0.97 %   262,850     1,914 0.97 %
Total interest-bearing deposits 492,937 3,539 0.96 % 424,238 3,186 1.00 %
 
Short-term borrowings   9,539     117 1.65 %   2     - 0.26 %
Total interest-bearing liabilities 502,476 3,656 0.97 % 424,240 3,186 1.00 %
 
Noninterest-bearing deposits 121,696 99,414
Other Liabilities 5,327 4,212
 
Stockholders' equity 82,083 68,338
   
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 711,582   $ 596,204  
 
Net interest income $ 20,950 $ 16,539
 
Net interest spread 3.77 % 3.51 %
 
Net interest margin 4.03 % 3.78 %
 
Cost of funds 0.78 % 0.81 %
 
(1) Includes loans-held-for-sale.
 

Commonwealth Business Bank
Joanne Kim, 323-988-3005
President & CEO
joannek@CBB-Bank.com


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