Market Overview

Community Business Bank Reports June 30, 2016 Quarter-End Results

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WEST SACRAMENTO, Calif.--(BUSINESS WIRE)--

Community Business Bank (OTCBB: CBBC) today reported net income for the quarter ended June 30, 2016, of $870,000 or $0.34 per diluted share, compared with net income in the second quarter of 2015 of $526,000, or $0.24 per diluted share. YTD net income at June 30, 2016, was $1.5 million or $0.60 per diluted share, compared to $1.0 million at June 30, 2015, or $0.45 per diluted share. The Bank also retired 100% of its outstanding preferred stock at a 10% discount during the second quarter. This nonrecurring event favorably impacted the Bank's earnings available to common stock shareholders by $0.17 per share. This increased the second quarter 2016 QTD earnings to $0.51 per diluted share and the June 30, 2016, YTD earnings to $0.77 per diluted share.

Net interest income increased to $2.8 million in the second quarter of 2016 compared with $2.2 million in the second quarter of the prior year. This increase was due primarily to higher volume in loans and securities as of June 30, 2016, than in the prior year. Total loans were $194.6 million and $160.1 million as of June 30, 2016, and 2015, respectively, representing an increase of $34.4 million, or 22%. Investment totals reflected an increase of $3.7 million, or 7%, ending the second quarter of 2016 at $59.8 million as compared to $56.1 million as of June 30, 2015.

The Bank realized an increase in deposits of $30.5 million, or 16%, as of June 30, 2016, compared with June 30, 2015. This deposit increase was primarily in time deposits, up $19.4 million or 63%; DDA deposits, up $13.7 million or 20%; and wholesale deposits, up $6.3 million or 19%, as of June 30, 2016, as compared to June 30, 2015. These increases were partially offset by a decrease in savings and money market deposit totals of $8.9 million or 14%. The decrease in money market totals was due to the loss of one large relationship that was acquired by an east coast organization and was originally scheduled to leave several years ago.

Noninterest income was $255,000 for the quarter ended June 30, 2016, as compared to $77,000 for the similar period in the prior year. The increase of $178,000 was primarily due to higher other noninterest income - gain on loan sales and a partial OREO recovery. Noninterest expense for the quarter ended June 30, 2016, was $1.5 million, up $96,000 from June 30, 2015. This was primarily due to an increase of approximately $107,000 in other noninterest expense due to higher professional fees, promotional-related and other operating expenses. The Bank's QTD efficiency ratio is 48% as of June 30, 2016, an improvement from 62% as of June 30, 2015, as the Bank grows its balance sheet.

Total assets as of June 30, 2016, were $259.8 million as compared with $230.8 million as of June 30, 2015, an increase of 13%. The Bank's loan-to-deposit ratio as of June 30, 2016, was 85.6%, up from 81.4% as of June 30, 2015.

The Bank's ALLL was 1.21% as of June 30, 2016, down from 1.32% as of June 30, 2015. This decrease was due to new loan volume and not a result of any loan losses. Due to this increased loan volume, the Bank began recognizing a provision for monthly loan losses in 2016 after suspending this provision for the last several years. Despite this increased loan volume and the reduction in the overall ratio, our calculations indicate that the Bank continues to have an excess (unallocated reserves) in its ALLL as of June 30, 2016. The overall dollars in reserve actually increased from $2.11 million as of June 30, 2015 to $2.35 million as of June 30, 2016 due primarily to the renewed loan loss provisions of $210,000 recorded thus far in 2016. The Bank's total NPAs (nonaccrual loans + OREO) are zero as of June 30, 2016, consistent with the balance as of the same period in 2015. Nonaccrual loans were zero as of June 30, 2016, equal to the balance as of the end of the second quarter of 2015. OREO balance was zero as of June 30, 2016, consistent with the balance as of June 30, 2015.

About Community Business Bank

The Bank's market area includes the greater Yolo, Solano, Sacramento, San Joaquin, and contiguous counties. The Bank focuses on and provides highly personalized commercial banking services to the businesses, professionals and nonprofit organizations. The Bank's Call Reports are available for review or download directly from the FDIC website at www.fdic.gov, or through the link at the Bank's website at www.communitybizbank.com.

Forward Looking Statement

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, the Bank achieving its projected efficiency ratio and addressing its preferred stock. These forward-looking statements involve known and unknown risks, uncertainties, and factors such as: (1) the impact of changes in interest rates, (2) fluctuation in economic conditions and continued deterioration of the real estate market, (3) competition in the Company's defined market, (4) the Company's ability to sustain its internal growth rate and to preserve its earning assets quality, and (5) government regulations. Although the Company believes the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct.

FINANCIAL TABLES FOLLOW

Consolidated
   
Actual
Jun 2016
    Actual
Jun 2015
 
Assets
Cash and due from banks $ 795,237 $ 1,795,668
Fed funds sold 410,000 8,497,000
Investment securities 59,809,918 56,132,428
Loans, net of unearned income 194,551,717 160,113,050
Less: Allowance for loan losses   (2,345,695 )     (2,114,739 )
Net loans 192,206,022 157,998,311
Premises and equipment, net 158,835 233,552
Accrued interest receivable 1,052,388 1,003,876
Other assets   5,339,297       5,143,626  
Total Assets $ 259,771,697     $ 230,804,461  
 
Liabilities & Shareholders' Equity
Non-interest bearing deposits 74,811,448 62,098,012
Interest bearing deposits:
Core deposits (including CDARs) 127,592,482 125,064,016
Brokered deposits   24,755,000       9,513,813  
Total deposits 227,158,930 196,675,841
Accrued expenses / other liabilities   3,919,443       7,945,322  
Total liabilities 231,078,373 204,621,163
Total shareholders' equity   28,693,325       26,183,298  
Total liabilities & shareholders' equity $ 259,771,698     $ 230,804,461  
             
BV per share (net of preferred stock) $ 11.65 $ 10.18
BV per share (net of preferred stock, OCI)   $ 11.58     $ 10.31  
 
YTD
Actual
Jun 2016
    YTD
Actual
Jun 2015
 
Net interest income $ 5,362,501 $ 4,213,688
Provision for loan losses 210,000 0
Noninterest income 354,448 185,090
Noninterest expense   3,045,178       2,830,521  
Income before taxes 2,461,771 1,568,257
Income taxes   959,800       567,000  
Net income $ 1,501,971     $ 1,001,257  
Diluted EPS $ 0.60 $ 0.45
Diluted EPS-revised* $ 0.77 $ 0.45
             
Return on average assets (ROAA) 1.19 % 0.95 %
Return on average equity (ROAE) 9.88 % 7.77 %
Net interest margin     4.37 %     4.15 %

 

QTD
Actual
Jun 2016
    QTD
Actual
Jun 2015
 
Net interest income $ 2,832,018 $ 2,187,200
Provision for loan losses 105,000 0
Noninterest income 254,708 76,911
Noninterest Expense   1,513,069       1,416,694  
Income before taxes 1,468,657 847,417
Income taxes   599,000       321,000  
Net Income $ 869,657     $ 526,417  
Diluted EPS $ 0.34 $ 0.24
Diluted EPS-revised* $ 0.51 $ 0.24
             
Return on average assets (ROAA) 1.36 % 0.96 %
Return on average equity (ROAE) 11.60 % 8.04 %
Net interest margin     4.56 %     4.15 %

Note: Includes $0.17 per share increase in earnings per share due to discount received on repurchase of 100% of outstanding preferred stock.

Community Business Bank
John A. DiMichele, CEO
916-830-3580
Mark Day, CFO
916-830-3582

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