CBB Bancorp, Inc. ("CBB" or the "Company') CBBI, the holding company of Commonwealth Business Bank (the "Bank"), today announced net income for the fourth quarter of 2018 of $3.7 million, or $0.35 per diluted share, an increase of 260.8% compared to $1.0 million or $0.10 per diluted share of net income in the same period last year.
Additionally, CBB reported net income for the year ended December 31, 2018 of $16.7 million or $1.60 per diluted share, an increase of 38.2% from the $12.1 million or $1.16 per diluted share of net income for the same period in 2017.
Fourth quarter 2018 net income generated returns on average assets ("ROA") and returns on average equity ("ROE") of 1.25% and 11.16% respectively, with both measures up from the same quarter in 2017. For the full-year 2018, ROA and ROE were 1.50% and 13.49%, respectively. The fourth quarter and full year financial performance was driven by loan portfolio growth and over $189.4 million in year-to-date SBA loan originations and the lower federal tax rate in 2018. The fourth quarter and year ended December 31 2017 included a write-down of the Company's deferred tax asset of approximately $2.0 million related the enactment of the Tax Cuts and Jobs Act, which was signed into law on December 22, 2017. Excluding the impact of the write down of the Company's net deferred tax asset, net income would have been $3.0 million, or $0.29 per diluted share, for the fourth quarter of 2017 and $14.1 million, or $1.35 per diluted share, for the 12 months ended December 31, 2017.
Joanne Kim, President and CEO, commented that "while we are pleased with our financial performance for 2018, we are starting to see the impact of higher interest rates being reflected in our funding costs, along with a slowdown in SBA loan originations and an increase in SBA loan prepayments. Additionally, the premiums we historically earned on SBA loan sales have declined from an average premium of over 10% for the quarter ended December 31, 2017 to less than 7% for the quarter ended December 31, 2018. Accordingly, we may begin to hold more SBA loan production on our balance sheet."
Ms. Kim further commented, "With regard to our non-interest expenses, we added to staff and spent more in professional fees, primarily in the compliance area."
Net Interest Income and Margin:
Net Interest Income
Net interest income for the quarter ended December 31, 2018 was $12.2 million, an increase of $2.0 million, or 20.0% over the same period last year. For the twelve months ended December 31, 2018, net interest income improved to $46.2 million, an increase of $7.1 million, or 18.3% over the corresponding period last year. The increase in net interest income was primarily driven by loan growth and higher SBA loan discount accretion combined with approximately 55% of our loan portfolio having adjustable rates. Average loans (including loans receivable and loans held for sale) outstanding increased from $805.6 million for the quarter ended December 31, 2017 to $922.0 million for the quarter ended December 31, 2018, an increase of $116.4 million or 14.5% Average loans outstanding increased from $790.6 million for the year ended December 31, 2017 to $882.2 million for the year ended December 31, 2018, an increase of $91.6 million or 11.6%.
Net Interest Margin
The net interest margin for the quarter ended December 31, 2018 of 4.32% compares favorably with the net interest margin of 4.06% in the same period last year, primarily due to loan yields rising faster than funding costs. For the year ended December 31, 2018, the margin was 4.30% compared to 4.17% for the corresponding period in 2017. The net interest margin for the full-year 2018 also benefited from an increase in SBA loan discount accretion of $1.68 million and the recovery of $535 thousand of non-accrual interest which resulted in an increase in the reported loan yield by 15 and 6 basis points, respectively. Loan discount accretion accelerates when the retained portion of an SBA loan is prepaid.
Partially offsetting the increase in our loan yields was an increase in our total funding costs, which increased to 1.96% for the quarter ended December 31, 2018 compared with 1.26% or 70 basis points higher from the quarter ended December 31, 2017. The increases were primarily in money market accounts and certificates of deposits.
Ms. Kim noted, "On the funding side, we are seeing heightened competition in deposit pricing. To address this, we are taking steps to broaden and diversify our funding sources including more emphasis on savings and money market accounts and less emphasis on short term certificates of deposit."
Provision for Loan Losses:
The provision for loan losses for the quarter and year ended December 31, 2018 was $170 thousand and $1.37 million, respectively, compared with $0 and $514 thousand, respectively, for the corresponding periods last year. Nonperforming assets as of December 31, 2018 were $410 thousand and the coverage ratio of the allowance for loan losses to nonperforming assets was over 24 times, compared with year earlier levels of $2.5 million, or 3.5 times coverage, respectively. The provision for loan losses for the quarter and year ended December 31, 2018 reflect the Bank's continued strong loan credit quality metrics and continued growth of the loan portfolio.
Noninterest Income:
Noninterest income for quarterly periods in 2018 were $1.3 million, $2.2 million, $3.5 million and $3.3 million (Q4, Q3, Q2 and Q1, respectively). For the year ended December 31, 2018, noninterest income was $10.3 million compared to $13.5 million in 2017, a decrease of $3.2 million or 23.7%. The declines in the quarterly and full year periods were primarily due to the following:
The net premium percentage realized on loans sold in the 2018 quarters was 6.28%, 8.10%, 9.52%, and 9.71% (Q4, Q3, Q2 and Q1, respectively) on sales volumes of $23.8 million, $34.7 million, $35.0 million and $34.9 million, respectively. The quarterly gain on the sale of the loans declined to $996 thousand for the quarter ended December 31, 2018, compared to $1.9 million, $2.5 million and $2.4 million, respectively, three previous quarters of 2018. The decline in the net premium percentage reflects the rising interest rate environment and increasing prepayment speeds on SBA loans.
As part of management's periodic review of the value of its SBA servicing assets, management looked at various model inputs, including the discount rate, prepayment speeds and other market conditions such as the increases in the prime rates and the decline in the premium earned on SBA loan sales. As a result of this analysis, an impairment charge of $374 thousand was recorded in noninterest income in the quarter ended December 31, 2018 and $908 thousand for the year ended December 31, 2018.
Noninterest Expense:
Noninterest expense for the quarter ended December 31, 2018 was $8.4 million compared to $8.0 million in the corresponding period last year, an increase of $443 thousand or 5.6%. For the year ended December 31, 2018, noninterest expense was $32.0 million compared to $28.4 million for the corresponding period last year, an increase of $3.7 million or 12.9%. The primary contributors to the increased noninterest expenses were a $1.76 million increase in salaries and employee benefits and a $1.13 million increase in professional expense. The increase in salaries and employee benefits resulted from staffing additions related to compliance and corporate overhead positions, along with staff additions and facilities costs associated with two new branch offices and one loan production department.
Staffing and Salaries:
Salary expense remained relatively flat at $5.0, $5.0 and $4.9 million for the quarters ended December 31, 2018, September 30, 2018 and December 31, 2017, respectively. Salary expense for the years ended December 31, 2018 and 2017 was $19.6 million and $17.8 million. The year over year increase primarily relates to an increase in FTE from 161 at December 31, 2017 to 187 FTE at December 31, 2018. The increase in FTE primarily relates to the opening of a new commercial lending department office, new branches and additional staff to comply with regulatory requirements.
Occupancy and Equipment:
Occupancy and equipment expenses for the quarter ended December 31, 2018 were $886 thousand, compared to $859 thousand in the corresponding period last year. For the year ended December 31, 2018, occupancy and equipment expenses were $3.45 million compared to $2.90 million for the corresponding period last year, an increase of $544 thousand or 18.8%. This increase is primarily due to the 2017 openings of the Olympic branch in Los Angeles, California and the Carrolton branch in Dallas, Texas.
Professional Fees:
Professional fees for the quarter ended December 31, 2018 were $1.20 million, compared to $537 thousand in the corresponding period last year. For the twelve months ended December 31, 2018, professional fees were $2.59 million compared to $1.46 million for the corresponding period last year, an increase of $1.13 million or 77.4%. This increase is due to regulatory compliance requirements and costs associated with enhancing internal controls over financial reporting.
Income Taxes:
The Company's effective tax rate for the quarter ended December 31, 2018 was approximately 25.9%, compared with 80.3% in the quarter ended December 31, 2017. Comparisons of tax rates between 2018 and 2017 are impacted by the Tax Cuts and Jobs Act of December 22, 2017 in which the federal corporate tax rate decreased to 21.0% from 35.0% for 2018. Income tax expense for quarter ended December 31, 2017 included an additional charge of $2.0 million (41.2% plus an additional 39.1% for a total of 80.3%) relating to the write-down of deferred tax assets due to the reduction in the federal corporate rate. The effective income tax rate for the year ended December 31, 2018 was 27.9% compared to 49.1% (40.7% plus an additional 8.4%) for the same period last year for the same reasons discussed above.
Balance Sheet:
Investment Securities:
Investment securities were $104.4 million at December 31, 2018, down $19.2 million since December 31, 2017 due to principal paydowns that were not offset by portfolio additions.
Loans Receivable:
Portfolio loans at December 31, 2018 were $875.8 million, an increase of $88.4 million, or 11.2% since December 31, 2017. This increase is net of loan portfolio risk reduction activities, which included the $28.4 million of non-owner occupied commercial real estate loan participations sold to other institutions.
Ms. Kim further commented that "Organic portfolio loan growth is expected to slow down in 2019, due to the combined effects of rising interest rates, economic uncertainties and prepayments as property owners take advantage of high real estate values and aggressive pricing and terms from other financial institutions."
Allowance for Loan Losses and Asset Quality:
The allowance for loan losses at December 31, 2018 was $10.023 million or 1.14% of portfolio loans compared with $8.653 million or 1.10% of portfolio loans as of December 31, 2017. Non-performing loans and other real estate owned REO as of December 31, 2018 was $410 thousand, down from $2.5 million at December 31, 2017. See Table 10 for additional details and trends.
SBA Loans Held for Sale:
SBA loans held for sale at December 31, 2018 of $45.7 million are up $7.7 million from the previous quarter end and up $17.3 million from December 31, 2017. Management has decided, at least in the near term, to hold more of its SBA loan production on the balance sheet due to the expected gain on sale premium being less than 7.0%. These loans are classified as held for sale on the balance sheet.
SBA loan production for quarter ended December 31, 2018 2018 was $50.1 million compared to $54.5 million in the same quarter last year. SBA loan production was $189.4 million for the twelve months ended December 31, 2018 compared with $200.6 million in the same period last year. See the Table 7 for additional SBA loan origination and sale data. No new SBA preferred lender approvals have been received since the start of the US Government shutdown which, if it continues, will significantly reduce SBA originations in the first quarter of 2019.
Deposits:
Total deposits grew to $1.01 billion at December 31, 2018, an increase of $112.9 million or 12.6%, since December 31, 2017. Of this increase, $100.4 million or 19.8% of the deposit growth was in certificates of deposit, as a result of several marketing campaigns in 2018 combined with the 2017 opening of the Olympic, LA Koreatown and Carrollton, Dallas metro area branches. As noted above, management is taking steps to broaden and diversify its funding sources including more emphasis on savings and money market accounts and less emphasis on short term certificates of deposit. The savings product is now more competitive as the rate has been increased to 1.70% as of December 31, 2018. Additionally, the Bank added additional money market tiers and now offers up to 1.80%% on balances over $1.0 million.
The Bank had $20.0 million and $71.5 million of wholesale certificates of deposits with the State of California at December 31, 2018 and 2017, respectively, which require a pledge of collateral as security. The Bank utilizes the Federal Home Loan Bank ("FHLB") stand-by letter of credit program to satisfy this requirement. The decline in State of California balances year over year was by design and is part the deposit strategy discussed above.
Borrowings:
Borrowings at December 31, 2018 consisted of $10.0 million of FHLB (San Francisco) term advances due in 2020, down $50 million from December 31, 2017. Borrowing capacity at the FHLB was $359 million (with $326 million being available or 91% availability) at December 31, 2018 compared to $232 million (with $94 million being available or 41% availability) as of December 31, 2017. The increase in capacity of $127 million and availability of $232 million represents lower overnight borrowings, lower usage under the stand-by letter requirement (due to lower State of California deposits) and from additional loan collateral pledged to the FHLB.
Capital:
Stockholder's equity at December 31, 2018 was $131.9 million compared to $115.2 million at December 31, 2017. This represents an increase of $16.7 million or 14.5% over the prior period. Book value per share at quarter end was $13.06 compared with $11.48 at December 31, 2017, an increase of $1.58 per share or 13.7%. Capital growth during the year primarily consisted of net income of $16.7 million, partially offset by an increase in unrealized losses on investment securities of $762 thousand.
All regulatory capital ratios increased at December 31, 2018 from their levels at December 31, 2017. The change in the ratios is due to net capital growth, substantially from retained earnings, growing faster than loan balances. Additionally, all regulatory capital levels and ratios exceed the minimum required to be considered "Well Capitalized" as defined for bank regulatory purposes and in compliance with the fully phased-in Basel III requirements, which go into effect on January 1, 2019, as shown on Table 11 in this press release.
About CBB Bancorp, Inc.:
CBB Bancorp, Inc. is the holding company of Commonwealth Business Bank, a full-service commercial bank which specializes in small- to medium-sized businesses and does business as "CBB Bank." The Bank has eight full service branches in Los Angeles, Orange, and Dallas Counties; two SBA regional offices in Los Angeles and Dallas Counties; and six loan production offices in Texas, Georgia, Colorado, Utah and Washington.
For additional information, please go to www.cbb-bank.com.
FORWARD-LOOKING STATEMENTS
This news release contains a number of forward-looking statements. These statements may be identified by use of words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "likely," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions. Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. You should not place undue reliance on such statements. Factors that could affect our results include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company's control; increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Company and the Bank; unanticipated or significant increases in loan losses; changes in accounting principles, policies or guidelines may cause the Company's financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company's financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company's business; technological changes may be more difficult or expensive than the Company anticipates; there may be failures or breaches of information technology security systems; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates.
Schedules and Financial Data: All tables and data to follow;
STATEMENT OF INCOME AND PERFORMANCE HIGHLIGHT (Unaudited) - Table 1 | ||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||||||
December 31, | September 30, | $ | % | December 31, | $ | % | December 31, | December 31, | $ | % | ||||||||||||||||||||||||||||||||
2018 | 2018 | Change | Change | 2017 | Change | Change | 2018 | 2017 | Change | Change | ||||||||||||||||||||||||||||||||
Interest income | $ | 16,256 | $ | 15,661 | $ | 595 | 3.8 | % | $ | 12,471 | $ | 3,785 | 30.4 | % | $ | 59,347 | $ | 46,703 | $ | 12,644 | 27.1 | % | ||||||||||||||||||||
Interest expense | 4,035 | 3,678 | 357 | 9.7 | % | 2,287 | 1,748 | 76.4 | % | 13,188 | 7,680 | 5,508 | 71.7 | % | ||||||||||||||||||||||||||||
Net interest income | 12,221 | 11,983 | 238 | 2.0 | % | 10,184 | 2,037 | 20.0 | % | 46,159 | 39,023 | 7,136 | 18.3 | % | ||||||||||||||||||||||||||||
Provision for loan losses | 170 | 400 | (230 | ) | (57.5 | %) | - | 170 | 100.0 | % | 1,370 | 514 | 856 | 166.5 | % | |||||||||||||||||||||||||||
Net interest income after provision for loan losses | 12,051 | 11,583 | 468 | 4.0 | % | 10,184 | 1,867 | 18.3 | % | 44,789 | 38,509 | 6,280 | 16.3 | % | ||||||||||||||||||||||||||||
Gain on sale of loans | 996 | 1,937 | (941 | ) | (48.6 | %) | 1,859 | (863 | ) | (46.4 | %) | 7,847 | 9,321 | (1,474 | ) | (15.8 | %) | |||||||||||||||||||||||||
Gain (loss) on sale of OREO | - | (43 | ) | 43 | 100.0 | % | - | - | - | (43 | ) | 103 | (146 | ) | (141.7 | %) | ||||||||||||||||||||||||||
SBA servicing fee income, net | 179 | 304 | (125 | ) | (41.1 | %) | 514 | (335 | ) | (65.2 | %) | 1,286 | 1,872 | (586 | ) | (31.3 | %) | |||||||||||||||||||||||||
SBA servicing right impairment | (374 | ) | (534 | ) | 160 | (30.0 | %) | - | (374 | ) | (100.0 | %) | (908 | ) | - | (908 | ) | (100.0 | %) | |||||||||||||||||||||||
Service charges and other income | 484 | 573 | (89 | ) | (15.5 | %) | 543 | (59 | ) | (10.9 | %) | 2,156 | 2,248 | (92 | ) | (4.1 | %) | |||||||||||||||||||||||||
Noninterest income | 1,285 | 2,237 | (952 | ) | (42.6 | %) | 2,916 | (1,631 | ) | (55.9 | %) | 10,338 | 13,544 | (3,206 | ) | (23.7 | %) | |||||||||||||||||||||||||
Salaries and employee benefits | 4,988 | 4,956 | 32 | 0.6 | % | 4,941 | 47 | 1.0 | % | 19,605 | 17,846 | 1,759 | 9.9 | % | ||||||||||||||||||||||||||||
Occupancy and equipment | 886 | 886 | - | - | 859 | 27 | 3.1 | % | 3,445 | 2,901 | 544 | 18.8 | % | |||||||||||||||||||||||||||||
Marketing expense | 433 | 342 | 91 | 26.6 | % | 294 | 139 | 47.3 | % | 995 | 888 | 107 | 12.0 | % | ||||||||||||||||||||||||||||
Professional expense | 1,195 | 537 | 658 | 122.5 | % | 551 | 644 | 116.9 | % | 2,593 | 1,462 | 1,131 | 77.4 | % | ||||||||||||||||||||||||||||
Other expenses | 901 | 1,302 | (401 | ) | (30.8 | %) | 1,315 | (414 | ) | (31.5 | %) | 5,398 | 5,267 | 131 | 2.5 | % | ||||||||||||||||||||||||||
Noninterest expense | 8,403 | 8,023 | 380 | 4.7 | % | 7,960 | 443 | 5.6 | % | 32,036 | 28,364 | 3,672 | 12.9 | % | ||||||||||||||||||||||||||||
Income before income tax expense | 4,933 | 5,797 | (864 | ) | (14.9 | %) | 5,140 | (207 | ) | (4.0 | %) | 23,091 | 23,689 | (598 | ) | (2.5 | %) | |||||||||||||||||||||||||
Income tax expense | 1,278 | 1,426 | (148 | ) | (10.4 | %) | 4,127 | (2,849 | ) | (69.0 | %) | 6,433 | 11,639 | (5,206 | ) | (44.7 | %) | |||||||||||||||||||||||||
Net income | $ | 3,655 | $ | 4,371 | $ | (716 | ) | (16.4 | %) | $ | 1,013 | $ | 2,642 | 260.8 | % | $ | 16,658 | $ | 12,050 | $ | 4,608 | 38.2 | % | |||||||||||||||||||
Effective tax rate | 25.9 | % | 24.6 | % | 1.3 | % | 5.3 | % | 80.3 | % |
(54.4 |
%) |
(67.7 |
%) |
27.9 | % | 49.1 | % | (21.3 | %) | (43.3 | %) | ||||||||||||||||||||
Outstanding number of shares ¹ | 10,102,161 | 10,091,294 | 10,867 | 0.1 | % | 10,033,110 | 69,051 | 0.7 | % | 10,102,161 | 10,033,110 | 69,051 | 0.7 | % | ||||||||||||||||||||||||||||
Basic EPS ¹ | $ | 0.36 | $ | 0.44 | $ | (0.08 | ) | (18.2 | %) | $ | 0.10 | $ | 0.26 | 260.0 | % | $ | 1.66 | $ | 1.20 | $ | 0.46 | 38.3 | % | |||||||||||||||||||
Diluted EPS¹ | $ | 0.35 | $ | 0.42 | $ | (0.07 | ) | (16.7 | %) | $ | 0.10 | $ | 0.25 | 250.0 | % | $ | 1.60 | $ | 1.16 | $ | 0.44 | 37.9 | % | |||||||||||||||||||
Return on average assets | 1.25 | % | 1.51 | % | (0.3 | %) | (17.2 | %) | 0.39 | % | 0.86 | % | 220.5 | % | 1.50 | % | 1.23 | % | 0.3 | % | 22.0 | % | ||||||||||||||||||||
Return on average equity | 11.16 | % | 13.77 | % | (2.6 | %) | (19.0 | %) | 3.46 | % | 7.70 | % | 222.5 | % | 13.49 | % | 10.92 | % | 2.6 | % | 23.5 | % | ||||||||||||||||||||
Efficiency ratio² | 62.22 | % | 56.42 | % | 5.8 | % | 10.3 | % | 60.76 | % | 1.5 | % | 2.4 | % | 56.70 | % | 53.96 | % | 2.7 | % | 5.1 | % | ||||||||||||||||||||
Yield on interest-earning assets³ |
5.73 | % | 5.60 | % | 0.1 | % | 2.3 | % | 4.96 | % | 0.8 | % | 15.5 | % | 5.53 | % | 4.98 | % | 0.6 | % | 11.0 | % | ||||||||||||||||||||
Cost of funds | 1.57 | % | 1.44 | % | 0.1 | % | 9.0 | % | 0.99 | % | 0.6 | % | 58.2 | % | 1.35 | % | 0.89 | % | 0.5 | % | 50.7 | % | ||||||||||||||||||||
Net interest margin³ |
4.32 | % | 4.29 | % | 0.0 | % | 0.6 | % | 4.06 | % | 0.3 | % | 6.4 | % | 4.30 | % | 4.17 | % | 0.1 | % | 3.2 | % | ||||||||||||||||||||
|
¹ | Restated for 10% stock dividend declared on 10/02/18 | |
² | Represents the ratio of noninterest expense less other real estate owned operations to the sum of net interest income before provision for credit losses and total noninterest income, less gains/(loss) on sale of securities, other-than-temporary impairment recovery/(loss) on investment securities and gain/(loss) from other real estate owned. | |
³ | Amounts include tax-equivalent adjustments of $192 thousand, reflecting tax rate of 21% for 2018 and $330 thousand, reflecting tax rate of 35% for 2017 | |
BALANCE SHEET, CAPITAL AND OTHER DATA (Unaudited) - Table 2 | |||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||
December 31, | September 30, | $ | % | December 31, | $ | % | |||||||||||||||||||||
2018 | 2018 | Change | Change | 2017 | Change | Change | |||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||
Cash and due from banks | $ | 11,029 | $ | 12,228 | $ | (1,199 | ) | (9.8 | %) | $ | 9,353 | $ | 1,676 | 17.9 | % | ||||||||||||
Interest-earning deposits at the FRB and other banks | 97,211 | 119,246 | (22,035 | ) | (18.5 | %) | 103,391 | (6,180 | ) | (6.0 | %) | ||||||||||||||||
Investment securities¹ | 104,431 | 107,406 | (2,975 | ) | (2.8 | %) | 123,657 | (19,226 | ) | (15.5 | %) | ||||||||||||||||
Loans held-for-sale, at the lower of cost or fair value | 45,665 | 38,007 | 7,658 | 20.1 | % | 28,346 | 17,319 | 61.1 | % | ||||||||||||||||||
Loans receivable | 875,797 | 896,580 | (20,783 | ) | (2.3 | %) | 787,399 | 88,398 | 11.2 | % | |||||||||||||||||
Allowance for loan losses | (10,023 | ) | (9,814 | ) | (209 | ) | 2.1 | % | (8,653 | ) | (1,370 | ) | 15.8 | % | |||||||||||||
Loans receivable, net | 865,774 | 886,766 | (20,992 | ) | (2.4 | %) | 778,746 | 87,028 | 11.2 | % | |||||||||||||||||
OREO | 25 | 25 | - | - | - | 25 | 100.0 | % | |||||||||||||||||||
Restricted stock investments | 7,879 | 6,879 | 1,000 | 14.5 | % | 6,261 | 1,618 | 25.8 | % | ||||||||||||||||||
Servicing assets | 10,541 | 11,403 | (862 | ) | (7.6 | %) | 11,377 | (836 | ) | (7.3 | %) | ||||||||||||||||
Other assets | 18,519 | 22,346 | (3,827 | ) | (17.1 | %) | 17,723 | 796 | 4.5 | % | |||||||||||||||||
Total assets | $ | 1,161,074 | $ | 1,204,306 | $ | (43,232 | ) | (3.6 | %) | $ | 1,078,854 | $ | 82,220 | 7.6 | % | ||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||
Noninterest-bearing | $ | 206,764 | $ | 222,018 | $ | (15,254 | ) | (6.9 | %) | $ | 203,641 | $ | 3,123 | 1.5 | % | ||||||||||||
Interest-bearing | 801,830 | 835,110 | (33,280 | ) | (4.0 | %) | 692,080 | 109,750 | 15.9 | % | |||||||||||||||||
Total deposits | 1,008,594 | 1,057,128 | (48,534 | ) | (4.6 | %) | 895,721 | 112,873 | 12.6 | % | |||||||||||||||||
FHLB advances | 10,000 | 10,000 | - | - | 60,000 | (50,000 | ) | (83.3 | %) | ||||||||||||||||||
Other liabilities | 10,567 | 9,585 | 982 | 10.2 | % | 7,955 | 2,612 | 32.8 | % | ||||||||||||||||||
Total liabilities | 1,029,161 | 1,076,713 | (47,552 | ) | (4.4 | %) | 963,676 | 65,485 | 6.8 | % | |||||||||||||||||
Stockholders' Equity | 131,913 | 127,593 | 4,320 | 3.4 | % | 115,178 | 16,735 | 14.5 | % | ||||||||||||||||||
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | $ | 1,161,074 | $ | 1,204,306 | $ | (43,232 | ) | (3.6 | %) | $ | 1,078,854 | $ | 82,220 | 7.6 | % | ||||||||||||
CAPITAL RATIOS | |||||||||||||||||||||||||||
Leverage ratio | |||||||||||||||||||||||||||
Company | 11.39 | % | 11.19 | % | 0.2 | % | 1.8 | % | 11.06 | % | 0.3 | % | 3.0 | % | |||||||||||||
Bank | 11.36 | % | 11.14 | % | 0.2 | % | 2.0 | % | 11.02 | % | 0.3 | % | 3.1 | % | |||||||||||||
Common equity tier 1 risk-based capital ratio | |||||||||||||||||||||||||||
Company | 14.27 | % | 13.47 | % | 0.8 | % | 5.9 | % | 13.63 | % | 0.6 | % | 4.7 | % | |||||||||||||
Bank | 14.24 | % | 13.42 | % | 0.8 | % | 6.1 | % | 13.58 | % | 0.7 | % | 4.9 | % | |||||||||||||
Tier 1 risk-based capital ratio | |||||||||||||||||||||||||||
Company | 14.27 | % | 13.47 | % | 0.8 | % | 5.9 | % | 13.63 | % | 0.6 | % | 4.7 | % | |||||||||||||
Bank | 14.24 | % | 13.42 | % | 0.8 | % | 6.1 | % | 13.58 | % | 0.7 | % | 4.9 | % | |||||||||||||
Total risk-based capital ratio | |||||||||||||||||||||||||||
Company | 15.42 | % | 14.61 | % | 0.8 | % | 5.5 | % | 14.78 | % | 0.6 | % | 4.3 | % | |||||||||||||
Bank | 15.38 | % | 14.56 | % | 0.8 | % | 5.6 | % | 14.74 | % | 0.6 | % | 4.3 | % | |||||||||||||
Book value per share² | $ | 13.06 | $ | 12.64 | $ | 0.41 | 3.3 | % | $ | 11.48 | $ | 1.58 | 13.7 | % | |||||||||||||
Loan-to-Deposit (LTD) ratio | 86.8 | % | 84.8 | % | 2.0 | % | 2.4 | % | 87.9 | % | (1.1 | %) | (1.2 | %) | |||||||||||||
Nonperforming assets | 410 | 464 | (54 | ) | (11.6 | %) | 2,467 | $ | (2,057 | ) | (83.4 | %) | |||||||||||||||
Nonperforming assets as a % of loans receivable | 0.04 | % | 0.05 | % | (0.0 | %) | (20.0 | %) | 0.31 | % | (0.3 | %) | (87.1 | %) | |||||||||||||
ALLL as a % of loans receivable | 1.14 | % | 1.09 | % | 0.1 | % | 4.6 | % | 1.10 | % | 0.0 | % | 3.6 | % | |||||||||||||
¹ | Includes AFS and HTM | |
² | Restated for 10% stock dividend declared on 10/02/18 | |
FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3 | |||||||||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||||
Interest income | $ | 16,256 | $ | 15,661 | $ | 14,605 | $ | 12,825 | $ | 12,471 | |||||||||||
Interest expense | 4,035 | 3,678 | 3,005 | 2,470 | 2,287 | ||||||||||||||||
Net interest income | 12,221 | 11,983 | 11,600 | 10,355 | 10,184 | ||||||||||||||||
Provision for loan losses | 170 | 400 | 800 | - | - | ||||||||||||||||
Net interest income after provision for loan losses | 12,051 | 11,583 | 10,800 | 10,355 | 10,184 | ||||||||||||||||
Gain on sale of loans | 996 | 1,937 | 2,478 | 2,436 | 1,859 | ||||||||||||||||
Gain (loss) on sale of OREO | - | (43 | ) | - | - | - | |||||||||||||||
SBA servicing fee income, net | 179 | 304 | 442 | 361 | 514 | ||||||||||||||||
SBA servicing right impairment | (374 | ) | (534 | ) | - | - | - | ||||||||||||||
Service charges and other income | 484 | 573 | 600 | 499 | 543 | ||||||||||||||||
Noninterest income | 1,285 | 2,237 | 3,520 | 3,296 | 2,916 | ||||||||||||||||
Salaries and employee benefits | 4,988 | 4,956 | 4,923 | 4,738 | 4,941 | ||||||||||||||||
Occupancy and equipment | 886 | 886 | 834 | 839 | 859 | ||||||||||||||||
Marketing expense | 433 | 342 | 322 | 380 | 294 | ||||||||||||||||
Professional expense | 1,195 | 537 | 359 | 502 | 551 | ||||||||||||||||
Other expenses | 901 | 1,302 | 1,515 | 1,198 | 1,315 | ||||||||||||||||
Noninterest expense | 8,403 | 8,023 | 7,953 | 7,657 | 7,960 | ||||||||||||||||
Income before income tax expense | 4,933 | 5,797 | 6,367 | 5,994 | 5,140 | ||||||||||||||||
Income tax expense | 1,278 | 1,426 | 1,889 | 1,840 | 4,127 | ||||||||||||||||
Net income | $ | 3,655 | $ | 4,371 | $ | 4,478 | $ | 4,154 | $ | 1,013 | |||||||||||
Effective tax rate | 25.9 | % | 24.6 | % | 29.7 | % | 30.7 | % | 80.3 | % | |||||||||||
Outstanding number of shares ¹ | 10,102,161 | 10,091,294 | 10,037,510 | 10,033,110 | 10,033,110 | ||||||||||||||||
Weighted average shares for basic EPS¹ | 10,098,618 | 10,038,095 | 10,035,545 | 10,033,110 | 10,033,110 | ||||||||||||||||
Weighted average shares for diluted EPS¹ | 10,390,326 | 10,389,263 | 10,426,907 | 10,464,580 | 10,450,257 | ||||||||||||||||
Basic EPS ¹ | $ | 0.36 | $ | 0.44 | $ | 0.45 | $ | 0.41 | $ | 0.10 | |||||||||||
Diluted EPS¹ | $ | 0.35 | $ | 0.42 | $ | 0.43 | $ | 0.40 | $ | 0.10 | |||||||||||
¹ |
Restated for 10% stock dividend declared on 10/02/18 | |
QUARTERLY SALARIES BENEFIT METRICS (Unaudited) - Table 4 | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
At or for the Three Months Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | ||||||||||||||||
FTE at the end of period | 187 | 175 | 173 | 164 | 161 | |||||||||||||||
Average FTE during the period | 185 | 177 | 172 | 164 | 162 | |||||||||||||||
Salaries and benefits/average FTE¹ | $ | 107 | $ | 111 | $ | 115 | $ | 117 | $ | 121 | ||||||||||
Salaries and benefits/average assets¹ | 1.71 | % | 1.71 | % | 1.82 | % | 1.83 | % | 1.89 | % | ||||||||||
Noninterest expense/average assets¹ | 2.87 | % | 2.77 | % | 2.94 | % | 2.96 | % | 3.04 | % | ||||||||||
¹ |
Annualized | |
FIVE-QUARTER BALANCE SHEET (Unaudited) - Table 5 | |||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||||
ASSETS | |||||||||||||||||||||
Cash and due from banks | $ | 11,029 | $ | 12,228 | $ | 13,349 | $ | 9,868 | $ | 9,353 | |||||||||||
Interest-earning deposits at the FRB and other banks | 97,211 | 119,246 | 77,018 | 80,468 | 103,391 | ||||||||||||||||
Investment securities¹ | 104,431 | 107,406 | 112,022 | 117,634 | 123,657 | ||||||||||||||||
Loans held-for-sale, at the lower of cost or fair value | 45,665 | 38,007 | 39,343 | 23,608 | 28,346 | ||||||||||||||||
Loans receivable | 875,797 | 896,580 | 867,280 | 809,281 | 787,399 | ||||||||||||||||
Allowance for loan losses | (10,023 | ) | (9,814 | ) | (9,377 | ) | (8,556 | ) | (8,653 | ) | |||||||||||
Loans receivable, net | 865,774 | 886,766 | 857,903 | 800,725 | 778,746 | ||||||||||||||||
1 Annualized | |||||||||||||||||||||
OREO | 25 | 25 | - | - | - | ||||||||||||||||
Restricted stock investments | 7,879 | 6,879 | 6,879 | 6,261 | 6,261 | ||||||||||||||||
Servicing assets | 10,541 | 11,403 | 11,869 | 11,610 | 11,377 | ||||||||||||||||
Other assets | 18,519 | 22,346 | 18,955 | 20,196 | 17,723 | ||||||||||||||||
Total assets | $ | 1,161,074 | $ | 1,204,306 | $ | 1,137,338 | $ | 1,070,370 | $ | 1,078,854 | |||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||||
Noninterest-bearing | $ | 206,764 | $ | 222,018 | $ | 197,500 | $ | 188,328 | $ | 203,641 | |||||||||||
Interest-bearing | 801,830 | 835,110 | 788,357 | 742,905 | 692,080 | ||||||||||||||||
Total deposits | 1,008,594 | 1,057,128 | 985,857 | 931,233 | 895,721 | ||||||||||||||||
FHLB advances | 10,000 | 10,000 | 20,000 | 10,000 | 60,000 | ||||||||||||||||
Other liabilities | 10,567 | 9,585 | 8,490 | 10,784 | 7,955 | ||||||||||||||||
Total liabilities | 1,029,161 | 1,076,713 | 1,014,347 | 952,017 | 963,676 | ||||||||||||||||
Stockholders' Equity | 131,913 | 127,593 | 122,991 | 118,353 | 115,178 | ||||||||||||||||
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | $ | 1,161,074 | $ | 1,204,306 | $ | 1,137,338 | $ | 1,070,370 | $ | 1,078,854 | |||||||||||
¹ | Includes AFS and HTM | |
FIVE-QUARTER LOANS RECEIVABLE COMPONENTS (Unaudited) - Table 6 | ||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||
December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||
Balance | % | Balance | % | Balance | % | Balance | % | Balance | % | |||||||||||||||||||||
Construction | $ | 12,327 | 1.4 | % | $ | 13,168 | 1.5 | % | $ | 10,508 | 1.2 | % | $ | 9,032 | 1.1 | % | $ | 12,575 | 1.6 | % | ||||||||||
Commercial real estate | 703,088 | 80.3 | % | 728,322 | 81.2 | % | 706,360 | 81.4 | % | 668,649 | 82.6 | % | 645,211 | 81.9 | % | |||||||||||||||
Commercial and industrial | 152,381 | 17.4 | % | 150,892 | 16.8 | % | 146,654 | 16.9 | % | 126,057 | 15.6 | % | 122,917 | 15.6 | % | |||||||||||||||
Consumer | 5,548 | 0.6 | % | 2,362 | 0.3 | % | 1,907 | 0.2 | % | 3,952 | 0.5 | % | 4,928 | 0.6 | % | |||||||||||||||
Gross loans | 873,344 | 99.7 | % | 894,744 | 99.8 | % | 865,429 | 99.8 | % | 807,690 | 99.8 | % | 785,631 | 99.8 | % | |||||||||||||||
Net deferred loan fees/costs | 2,453 | 0.3 | % | 1,836 | 0.2 | % | 1,851 | 0.2 | % | 1,591 | 0.2 | % | 1,768 | 0.2 | % | |||||||||||||||
Loans receivable | $ | 875,797 | 100.0 | % | $ | 896,580 | 100.0 | % | $ | 867,280 | 100.0 | % | $ | 809,281 | 100.0 | % | $ | 787,399 | 100.0 | % | ||||||||||
Loans held-for-sale | $ | 45,665 | $ | 38,007 | $ | 39,343 | $ | 23,608 | $ | 28,346 | ||||||||||||||||||||
Loans receivable, including loans held-for-sale | $ | 921,462 | $ | 934,587 | $ | 906,623 | $ | 832,889 | $ | 815,745 | ||||||||||||||||||||
SBA LOAN PRODUCTIONS/SALES DATA (Unaudited) - Table 7 | |||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
SBA loans held-for-sale at beginning of the quarter/year | $ | 38,007 | $ | 39,343 | $ | 23,608 | $ | 28,346 | $ | 18,626 | $ | 28,346 | $ | 18,096 | |||||||||||||||||
SBA loans originated/transferred from/to held-for- | |||||||||||||||||||||||||||||||
investment during the quarter/year | 31,640 | 33,832 | 50,856 | 30,377 | 32,447 | 146,705 | 135,039 | ||||||||||||||||||||||||
SBA loans sold during the quarter/year | (23,766 | ) | (34,745 | ) | (35,015 | ) | (34,923 | ) | (22,618 | ) | (128,449 | ) | (124,398 | ) | |||||||||||||||||
SBA loans principal payment, net of advance | (216 | ) | (423 | ) | (106 | ) | (192 | ) | (109 | ) | (937 | ) | (391 | ) | |||||||||||||||||
SBA loans held-for-sale at end of the quarter/year | $ | 45,665 | $ | 38,007 | $ | 39,343 | $ | 23,608 | $ | 28,346 | $ | 45,665 | $ | 28,346 | |||||||||||||||||
Gain on sale of SBA loans | $ | 996 | $ | 1,937 | $ | 2,478 | $ | 2,436 | $ | 1,852 | $ | 7,847 | $ | 9,300 | |||||||||||||||||
Premium on sale (weighted average) | 6.28 | % | 8.10 | % | 9.52 | % | 9.71 | % | 10.41 | % | 8.59 | % | 10.05 | % | |||||||||||||||||
SBA loan production | $ | 50,054 | $ | 41,685 | $ | 62,003 | $ | 35,681 | $ | 54,496 | $ | 189,423 | $ | 200,574 | |||||||||||||||||
SBA SERVICING ASSETS AND SERVICING FEES (Unaudited) - Table 8 | |||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
SBA servicing assets @ beginning of the quarter/year | $ | 11,403 | $ | 11,869 | $ | 11,610 | $ | 11,377 | $ | 11,241 | $ | 11,377 | $ | 9,709 | |||||||||||||||
Newly added SBA servicing assets from SBA loans sold | 559 | 995 | 1,016 | 997 | 756 | 3,568 | 3,998 | ||||||||||||||||||||||
Regular quarterly/annual servicing assets amortization | (404 | ) | (399 | ) | (398 | ) | (380 | ) | (383 | ) | (1,581 | ) | (1,449 | ) | |||||||||||||||
SBA servicing assets amortized from SBA loans paid off/charged off | (641 | ) | (544 | ) | (360 | ) | (384 | ) | (237 | ) | (1,928 | ) | (881 | ) | |||||||||||||||
Subtotal before impairment | 10,917 | 11,921 | 11,869 | 11,610 | 11,377 | 11,436 | 11,377 | ||||||||||||||||||||||
SBA servicing assets impairment | (376 | ) | (519 | ) | - | - | - | (895 | ) | - | |||||||||||||||||||
SBA servicing liability impairment | 2 | (15 | ) | (13 | ) | - | |||||||||||||||||||||||
SBA servicing assets @ end of the quarter/year | $ | 10,541 | $ | 11,403 | $ | 11,869 | $ | 11,610 | $ | 11,377 | $ | 10,541 | $ | 11,377 | |||||||||||||||
FIVE-QUARTER DEPOSIT COMPONENTS (Unaudited) - Table 9 | ||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||
December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||
Balance | % | Balance | % | Balance | % | Balance | % | Balance | % | |||||||||||||||||||||
Noninterest-bearing demand | $ | 206,764 | 20.5 | % | $ | 222,018 | 21.0 | % | $ | 197,500 | 20.0 | % | $ | 188,328 | 20.2 | % | $ | 203,641 | 22.7 | % | ||||||||||
NOW & MMDA | 175,843 | 17.4 | % | 177,961 | 16.8 | % | 196,432 | 19.9 | % | 166,960 | 17.9 | % | 169,710 | 18.9 | % | |||||||||||||||
Savings | 19,102 | 1.9 | % | 17,460 | 1.7 | % | 19,211 | 1.9 | % | 18,080 | 1.9 | % | 15,876 | 1.8 | % | |||||||||||||||
TCDs of $250K and under | 333,325 | 33.0 | % | 347,873 | 32.9 | % | 290,449 | 29.5 | % | 286,269 | 30.7 | % | 253,015 | 28.2 | % | |||||||||||||||
TCDs of $250K over | 154,748 | 15.3 | % | 157,126 | 14.9 | % | 125,687 | 12.7 | % | 114,521 | 12.3 | % | 103,915 | 11.6 | % | |||||||||||||||
Wholesale TCDs | 118,812 | 11.8 | % | 134,690 | 12.7 | % | 156,578 | 15.9 | % | 157,075 | 16.9 | % | 149,564 | 16.7 | % | |||||||||||||||
Total Deposits | $ | 1,008,594 | 100.0 | % | $ | 1,057,128 | 100.0 | % | $ | 985,857 | 100.0 | % | $ | 931,233 | 100.0 | % | $ | 895,721 | 100.0 | % | ||||||||||
Recap: | ||||||||||||||||||||||||||||||
Noninterest-bearing demand | $ | 206,764 | 20.5 | % | $ | 222,018 | 21.0 | % | $ | 197,500 | 20.0 | % | $ | 188,328 | 20.2 | % | $ | 203,641 | 22.7 | % | ||||||||||
NOW & MMDA | 175,843 | 17.4 | % | 177,961 | 16.8 | % | 196,432 | 19.9 | % | 166,960 | 17.9 | % | 169,710 | 18.9 | % | |||||||||||||||
Savings | 19,102 | 1.9 | % | 17,460 | 1.7 | % | 19,211 | 1.9 | % | 18,080 | 1.9 | % | 15,876 | 1.8 | % | |||||||||||||||
TCDs of $250K and under | 333,325 | 33.0 | % | 347,873 | 32.9 | % | 290,449 | 29.5 | % | 286,269 | 30.7 | % | 253,015 | 28.2 | % | |||||||||||||||
Core Deposits | 735,034 | 72.9 | % | 765,312 | 72.4 | % | 703,592 | 71.4 | % | 659,637 | 70.8 | % | 642,242 | 71.7 | % | |||||||||||||||
TCDs of $250K over | 154,748 | 15.3 | % | 157,126 | 14.9 | % | 125,687 | 12.7 | % | 114,521 | 12.3 | % | 103,915 | 11.6 | % | |||||||||||||||
Wholesale TCDs | 118,812 | 11.8 | % | 134,690 | 12.7 | % | 156,578 | 15.9 | % | 157,075 | 16.9 | % | 149,564 | 16.7 | % | |||||||||||||||
Noncore Deposits | 273,560 | 27.1 | % | 291,816 | 27.6 | % | 282,265 | 28.6 | % | 271,596 | 29.2 | % | 253,479 | 28.3 | % | |||||||||||||||
Total Deposits | $ | 1,008,594 | 100.0 | % | $ | 1,057,128 | 100.0 | % | $ | 985,857 | 100.0 | % | $ | 931,233 | 100.0 | % | $ | 895,721 | 100.0 | % | ||||||||||
SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited) - Table 10 | |||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
4th Qtr. | 3rd Qtr. | 2nd Qtr. | 1st Qtr. | 4th Qtr. | |||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||||
Allowance for Loan Losses | |||||||||||||||||||||
Balance at beginning of period | $ | 9,814 | $ | 9,377 | $ | 8,556 | $ | 8,653 | $ | 8,249 | |||||||||||
Provision for loan losses | 170 | 400 | 800 | - | - | ||||||||||||||||
Charge-offs | - | 3 | 92 | 116 | 244 | ||||||||||||||||
Recoveries | 39 | 40 | 113 | 19 | 648 | ||||||||||||||||
Balance at the end of period | $ | 10,023 | $ | 9,814 | $ | 9,377 | $ | 8,556 | $ | 8,653 | |||||||||||
Nonperforming Assets:¹ | |||||||||||||||||||||
Over 90 days still accruing | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Nonaccrual loans | 385 | 439 | 520 | 2,105 | 2,467 | ||||||||||||||||
Total nonperforming loans | 385 | 439 | 520 | 2,105 | 2,467 | ||||||||||||||||
Other real estate owned | 25 | 25 | - | - | - | ||||||||||||||||
Total nonperforming assets | $ | 410 | $ | 464 | $ | 520 | $ | 2,105 | $ | 2,467 | |||||||||||
Classified Assets:¹ | |||||||||||||||||||||
Substandard | $ | 15,984 | $ | 16,617 | $ | 10,889 | $ | 12,107 | $ | 10,103 | |||||||||||
Doubtful | - | - | - | - | - | ||||||||||||||||
Loss | - | - | - | - | - | ||||||||||||||||
Total classified loans | $ | 15,984 | $ | 16,617 | $ | 10,889 | $ | 12,107 | $ | 10,103 | |||||||||||
Other real estate owned | 25 | 25 | - | - | - | ||||||||||||||||
Total classified assets | $ | 16,009 | $ | 16,642 | $ | 10,889 | $ | 12,107 | $ | 10,103 | |||||||||||
Performing TDR loans: | $ | 5,144 | $ | 4,325 | $ | 2,148 | $ | 1,155 | $ | 1,200 | |||||||||||
Delinquent Loans:¹ | |||||||||||||||||||||
Loans 30-89 days past due | $ | 3,551 | $ | 231 | $ | 3,307 | $ | 1,844 | $ | 131 | |||||||||||
90 days or more past due and still accruing | - | - | - | - | - | ||||||||||||||||
Nonaccrual | 385 | 439 | 520 | 2,105 | 2,467 | ||||||||||||||||
Total delinquent loans | $ | 3,936 | $ | 670 | $ | 3,827 | $ | 3,949 | $ | 2,598 | |||||||||||
Asset Quality Ratios: | |||||||||||||||||||||
Net charge-offs to average loans² | (0.02 | %) | (0.02 | %) | (0.01 | %) | 0.05 | % | (0.20 | %) | |||||||||||
Nonaccrual loans to loans receivable | 0.04 | % | 0.05 | % | 0.06 | % | 0.26 | % | 0.31 | % | |||||||||||
Nonperforming loans to loans receivable | 0.04 | % | 0.05 | % | 0.06 | % | 0.26 | % | 0.31 | % | |||||||||||
Nonperforming assets to total assets | 0.04 | % | 0.04 | % | 0.05 | % | 0.20 | % | 0.23 | % | |||||||||||
Classified loans to loans receivable | 1.83 | % | 1.85 | % | 1.26 | % | 1.50 | % | 1.28 | % | |||||||||||
Classified loans to Tier 1 and ALLL | 11.26 | % | 12.09 | % | 8.23 | % | 9.54 | % | 8.16 | % | |||||||||||
Classified assets to total assets | 1.38 | % | 1.38 | % | 0.96 | % | 1.13 | % | 0.94 | % | |||||||||||
Classified assets to Tier 1 and ALLL | 11.28 | % | 12.11 | % | 8.23 | % | 9.54 | % | 8.16 | % | |||||||||||
ALLL to loans receivable | 1.14 | % | 1.09 | % | 1.08 | % | 1.06 | % | 1.10 | % | |||||||||||
ALLL to nonaccrual loans | 2603.4 | % | 2235.5 | % | 1803.3 | % | 406.5 | % | 350.8 | % | |||||||||||
ALLL to nonperforming loans | 2603.4 | % | 2235.5 | % | 1803.3 | % | 406.5 | % | 350.8 | % | |||||||||||
ALLL to nonperforming assets | 2444.6 | % | 2115.1 | % | 1803.3 | % | 406.5 | % | 350.8 | % | |||||||||||
Texas ratio ³ | 0.3 | % | 0.3 | % | 0.4 | % | 1.7 | % | 2.0 | % | |||||||||||
1 | Net of SBA guaranteed balance | |
2 | Includes loans held-for-sale | |
3 | Nonperforming assets divided by tangible common equity and ALLL | |
FIVE-QUARTER CAPITAL RATIOS (Unaudited) - Table 11 | |||||||||||||||||||||||||||
Well Capitalized | Adequately Capitalized | December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
Regulatory | BASEL III | ||||||||||||||||||||||||||
Requirement | Fully Phased In | 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||||||||
Leverage ratio | |||||||||||||||||||||||||||
Company | N/A | N/A | 11.39 | % | 11.19 | % | 11.39 | % | 11.34 | % | 11.06 | % | |||||||||||||||
Bank | 5.00 | % | 4.00 | % | 11.36 | % | 11.14 | % | 11.37 | % | 11.30 | % | 11.02 | % | |||||||||||||
Common equity tier 1 risk-based capital ratio | |||||||||||||||||||||||||||
Company | N/A | N/A | 14.27 | % | 13.47 | % | 13.25 | % | 13.66 | % | 13.63 | % | |||||||||||||||
Bank | 6.50 | % | 7.00 | % | 14.24 | % | 13.42 | % | 13.22 | % | 13.61 | % | 13.58 | % | |||||||||||||
Tier 1 risk-based capital ratio | |||||||||||||||||||||||||||
Company | N/A | N/A | 14.27 | % | 13.47 | % | 13.25 | % | 13.66 | % | 13.63 | % | |||||||||||||||
Bank | 8.00 | % | 8.50 | % | 14.24 | % | 13.42 | % | 13.22 | % | 13.61 | % | 13.58 | % | |||||||||||||
Total risk-based capital ratio | |||||||||||||||||||||||||||
Company | N/A | N/A | 15.42 | % | 14.61 | % | 14.36 | % | 14.76 | % | 14.78 | % | |||||||||||||||
Bank | 10.00 | % | 10.50 | % | 15.38 | % | 14.56 | % | 14.34 | % | 14.72 | % | 14.74 | % | |||||||||||||
Common equity/total assets | 11.36 | % | 10.59 | % | 10.81 | % | 11.06 | % | 10.68 | % | |||||||||||||||||
Common equity per share¹ | $ | 13.06 | $ | 12.64 | $ | 12.25 | $ | 11.80 | $ | 11.48 | |||||||||||||||||
¹ |
Restated for 10% stock dividend declared on 10/02/18 | |
MARGIN ANALYSIS (Unaudited) - Table 12 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Avg Balance | Interest | Yield | Avg Balance | Interest | Yield | Avg Balance | Interest | Yield | Avg Balance | Interest | Yield | Avg Balance | Interest | Yield | ||||||||||||||||||||||||||||||||||||||||
INTEREST-EARNING ASSETS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans ¹ | $ | 922,000 | $ | 14,903 | 6.41 | % | $ | 926,542 | $ | 14,578 | 6.24 | % | $ | 864,073 | $ | 13,579 | 6.30 | % | $ | 814,600 | $ | 11,787 | 5.87 | % | $ | 805,581 | $ | 11,567 | 5.70 | % | ||||||||||||||||||||||||
Investment securities² | 105,595 | 693 | 2.60 | % | 110,205 | 683 | 2.46 | % | 115,447 | 692 | 2.40 | % | 120,944 | 699 | 2.34 | % | 96,789 | 584 | 2.39 | % | ||||||||||||||||||||||||||||||||||
Interest-earning deposits at the FRB and other banks | 93,372 | 521 | 2.21 | % | 69,127 | 333 | 1.91 | % | 64,553 | 283 | 1.76 | % | 75,473 | 280 | 1.50 | % | 95,703 | 307 | 1.27 | % | ||||||||||||||||||||||||||||||||||
Other earning assets | 6,933 | 187 | 10.70 | % | 6,879 | 114 | 6.57 | % | 6,750 | 100 | 5.94 | % | 6,261 | 107 | 6.93 | % | 6,254 | 101 | 6.41 | % | ||||||||||||||||||||||||||||||||||
Total interest-earning assets ² | 1,127,900 | 16,304 | 5.73 | % | 1,112,753 | 15,708 | 5.60 | % | 1,050,823 | 14,654 | 5.59 | % | 1,017,278 | 12,873 | 5.13 | % | 1,004,327 | 12,559 | 4.96 | % | ||||||||||||||||||||||||||||||||||
NONINTEREST-EARNING ASSETS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and due from banks | 12,277 | 13,801 | 12,900 | 11,985 | 11,879 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other noninterest-earning assets | 29,605 | 30,750 | 30,356 | 28,682 | 30,645 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total noninterest-earning assets | 41,882 | 44,551 | 43,256 | 40,667 | 42,524 | |||||||||||||||||||||||||||||||||||||||||||||||||
Less: Allowance for loan losses | (9,829 | ) | (9,409 | ) | (8,619 | ) | (8,650 | ) | (8,274 | ) | ||||||||||||||||||||||||||||||||||||||||||||
TOTAL ASSETS | $ | 1,159,953 | $ | 1,147,895 | $ | 1,085,460 | $ | 1,049,295 | $ | 1,038,577 | ||||||||||||||||||||||||||||||||||||||||||||
INTEREST-BEARING DEPOSITS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing demand | $ | 6,936 | $ | 4 | 0.25 | % | $ | 1,861 | $ | 1 | 0.25 | % | $ | 1,702 | $ | 1 | 0.24 | % | $ | 1,434 | $ | 1 | 0.15 | % | $ | 1,725 | $ | 1 | 0.15 | % | ||||||||||||||||||||||||
Money market | 167,659 | 671 | 1.59 | % | 181,302 | 664 | 1.45 | % | 166,317 | 556 | 1.34 | % | 168,083 | 423 | 1.02 | % | 174,102 | 432 | 0.98 | % | ||||||||||||||||||||||||||||||||||
Savings | 18,309 | 79 | 1.71 | % | 17,628 | 73 | 1.64 | % | 19,075 | 75 | 1.58 | % | 17,219 | 65 | 1.53 | % | 15,457 | 62 | 1.59 | % | ||||||||||||||||||||||||||||||||||
Time deposits | 615,224 | 3,239 | 2.09 | % | 596,306 | 2,836 | 1.89 | % | 561,875 | 2,301 | 1.64 | % | 527,428 | 1,865 | 1.43 | % | 512,407 | 1,726 | 1.34 | % | ||||||||||||||||||||||||||||||||||
Total interest-bearing deposits | 808,128 | 3,993 | 1.96 | % | 797,097 | 3,574 | 1.78 | % | 748,969 | 2,933 | 1.57 | % | 714,164 | 2,354 | 1.34 | % | 703,691 | 2,221 | 1.25 | % | ||||||||||||||||||||||||||||||||||
Borrowings | 10,000 | 42 | 1.67 | % | 22,066 | 104 | 1.87 | % | 16,490 | 72 | 1.75 | % | 30,889 | 116 | 1.52 | % | 16,632 | 66 | 1.57 | % | ||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 818,128 | 4,035 | 1.96 | % | 819,163 | 3,678 | 1.78 | % | 765,459 | 3,005 | 1.57 | % | 745,053 | 2,470 | 1.34 | % | 720,323 | 2,287 | 1.26 | % | ||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits | 201,701 | 193,730 | 190,308 | 178,179 | 194,366 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 10,235 | 9,094 | 8,728 | 9,044 | 7,721 | |||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' equity | 129,889 | 125,908 | 120,965 | 117,019 | 116,167 | |||||||||||||||||||||||||||||||||||||||||||||||||
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | $ | 1,159,953 | $ | 1,147,895 | $ | 1,085,460 | $ | 1,049,295 | $ | 1,038,577 | ||||||||||||||||||||||||||||||||||||||||||||
Net interest income | $ | 12,269 | $ | 12,030 | $ | 11,649 | $ | 10,403 | $ | 10,272 | ||||||||||||||||||||||||||||||||||||||||||||
Net interest spread | 3.77 | % | 3.82 | % | 4.02 | % | 3.79 | % | 3.70 | % | ||||||||||||||||||||||||||||||||||||||||||||
Effect of noninterest-bearing sources | 0.55 | % | 0.47 | % | 0.43 | % | 0.36 | % | 0.36 | % | ||||||||||||||||||||||||||||||||||||||||||||
Net interest margin² | 4.32 | % | 4.29 | % | 4.45 | % | 4.15 | % | 4.06 | % | ||||||||||||||||||||||||||||||||||||||||||||
Cost of deposits | $ | 1,009,829 | $ | 3,993 | 1.57 | % | $ | 990,827 | $ | 3,574 | 1.43 | % | $ | 939,277 | $ | 2,933 | 1.25 | % | $ | 892,343 | $ | 2,354 | 1.07 | % | $ | 898,057 | $ | 2,221 | 0.98 | % | ||||||||||||||||||||||||
Cost of funds | $ | 1,019,829 | $ | 4,035 | 1.57 | % | $ | 1,012,893 | $ | 3,678 | 1.44 | % | $ | 955,767 | $ | 3,005 | 1.26 | % | $ | 923,232 | $ | 2,470 | 1.09 | % | $ | 914,689 | $ | 2,287 | 0.99 | % | ||||||||||||||||||||||||
|
¹ |
Includes loans held-for-sale | |
² | Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate | |
COMPONENTS OF YIELD ON LOANS (Unaudited) - Table 13 | ||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||
December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||||
Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | |||||||||||||||||||||||||||
Contractual yield | $ | 13,540 | 5.83 | % | $ | 13,313 | 5.70 | % | $ | 12,064 | 5.60 | % | $ | 10,825 | 5.39 | % | $ | 10,717 | 5.28 | % | ||||||||||||||||
SBA discount accretion | 1,364 | 0.59 | % | 1,370 | 0.59 | % | 1,096 | 0.51 | % | 1,106 | 0.55 | % | 850 | 0.42 | % | |||||||||||||||||||||
Prepayment penalties & late fees | 101 | 0.04 | % | 45 | 0.02 | % | 81 | 0.03 | % | 23 | 0.01 | % | 82 | 0.04 | % | |||||||||||||||||||||
Amortization of net deferred costs | (102 | ) | (0.05 | %) | (150 | ) | (0.07 | %) | (197 | ) | (0.09 | %) | (167 | ) | (0.08 | %) | (82 | ) | (0.04 | %) | ||||||||||||||||
Interest recognized on nonaccrual loans | - | - | - | - | 535 | 0.25 | % | - | - | - | - | |||||||||||||||||||||||||
As reported yield on loans | $ | 14,903 | 6.41 | % | $ | 14,578 | 6.24 | % | $ | 13,579 | 6.30 | % | $ | 11,787 | 5.87 | % | $ | 11,567 | 5.70 | % | ||||||||||||||||
MARGIN ANALYSIS (Unaudited) - Table 14 |
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(Dollars in thousands) | |||||||||||||||||||||
Twelve Months Ended | |||||||||||||||||||||
December 31, 2018 | December 31, 2017 | ||||||||||||||||||||
Avg Balance | Interest | Yield | Avg Balance | Interest | Yield | ||||||||||||||||
INTEREST-EARNING ASSETS | |||||||||||||||||||||
Loans ¹ | $ | 882,221 | $ | 54,847 | 6.22 | % | $ | 790,627 | $ | 44,054 | 5.57 | % | |||||||||
Investment securities² | 112,998 | 2,767 | 2.45 | % | 78,631 | 1,781 | 2.27 | % | |||||||||||||
Interest-earning deposits at the FRB and other banks | 75,662 | 1,417 | 1.87 | % | 68,613 | 789 | 1.15 | % | |||||||||||||
Other earning assets | 6,708 | 508 | 7.57 | % | 6,067 | 409 | 6.74 | % | |||||||||||||
Total interest-earning assets ² | 1,077,589 | 59,539 | 5.53 | % | 943,938 | 47,033 | 4.98 | % | |||||||||||||
NONINTEREST-EARNING ASSETS | |||||||||||||||||||||
Cash and due from banks | 12,745 | 11,679 | |||||||||||||||||||
Other noninterest-earning assets | 29,723 | 28,697 | |||||||||||||||||||
Total noninterest-earning assets | 42,468 | 40,376 | |||||||||||||||||||
Less: Allowance for loan losses | (9,131 | ) | (8,465 | ) | |||||||||||||||||
TOTAL ASSETS | $ | 1,110,926 | $ | 975,849 | |||||||||||||||||
INTEREST-BEARING DEPOSITS | |||||||||||||||||||||
Interest-bearing demand | $ | 2,995 | $ | 7 | 0.23 | % | $ | 2,080 | $ | 3 | 0.15 | % | |||||||||
Money market | 170,868 | 2,314 | 1.35 | % | 172,059 | 1,618 | 0.94 | % | |||||||||||||
Savings | 18,060 | 292 | 1.62 | % | 13,901 | 226 | 1.63 | % | |||||||||||||
Time deposits | 575,506 | 10,241 | 1.78 | % | 466,482 | 5,594 | 1.20 | % | |||||||||||||
Total interest-bearing deposits | 767,429 | 12,854 | 1.67 | % | 654,522 | 7,441 | 1.14 | % | |||||||||||||
Short-term borrowings | 19,810 | 334 | 1.69 | % | 17,100 | 239 | 1.40 | % | |||||||||||||
Total interest-bearing liabilities | 787,239 | 13,188 | 1.68 | % | 671,622 | 7,680 | 1.14 | % | |||||||||||||
Noninterest-bearing deposits | 191,051 | 186,977 | |||||||||||||||||||
Other Liabilities | 9,148 | 6,901 | |||||||||||||||||||
Stockholders' equity | 123,488 | 110,349 | |||||||||||||||||||
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | $ | 1,110,926 | $ | 975,849 | |||||||||||||||||
Net interest income | $ | 46,351 | $ | 39,353 | |||||||||||||||||
Net interest spread | 3.85 | % | 3.84 | % | |||||||||||||||||
Effect of noninterest-bearing sources | 0.45 | % | 0.33 | % | |||||||||||||||||
Net interest margin² | 4.30 | % | 4.17 | % | |||||||||||||||||
Cost of deposits | $ | 958,480 | $ | 12,854 | 1.34 | % | $ | 841,499 | $ | 7,441 | 0.88 | % | |||||||||
Cost of funds | $ | 978,290 | $ | 13,188 | 1.35 | % | $ | 858,599 | $ | 7,680 | 0.89 | % | |||||||||
|
¹ | Includes loans held-for-sale | |
² | Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate | |
COMPONENTS OF YIELD ON LOANS (Unaudited) - Table 15 | ||||||||||||||
(Dollars in thousands) | ||||||||||||||
Twelve Months Ended | ||||||||||||||
December 31, 2018 | December 31, 2017 | |||||||||||||
Amount | Yield | Amount | Yield | |||||||||||
Contractual yield | $ | 49,641 | 5.63 | % | $ | 40,864 | 5.17 | % | ||||||
SBA discount accretion | 4,936 | 0.56 | % | 3,258 | 0.41 | % | ||||||||
Prepayment penalties & late fees | 250 | 0.03 | % | 389 | 0.05 | % | ||||||||
Amortization of net deferred costs | (515 | ) | (0.06 | %) | (457 | ) | (0.06 | %) | ||||||
Interest recognized on nonaccrual loans | 535 | 0.06 | % | - | - | |||||||||
As reported yield on loans | $ | 54,847 | 6.22 | % | $ | 44,054 | 5.57 | % |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190128005126/en/
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