Market Overview

Community Business Bank Announces Record Earnings in 3rd 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 September 30, 2016, of $787,000, or $0.31 per diluted share, compared with net income in the third quarter of 2015 of $622,000, or $0.28 per diluted share. YTD net income at September 30, 2016, was $2.3 million, or $0.91 per diluted share, compared to $1.6 million at September 30, 2015, or $0.73 per diluted share. The Bank also retired 100% of its outstanding preferred stock at a 10% discount during the second quarter of 2016. This nonrecurring event favorably impacted the Bank's earnings available to common stock shareholders by $0.17 per share. This increased the September 30, 2016 YTD earnings to $1.08 per diluted share.

Net interest income increased to $2.8 million in the third quarter of 2016, compared with $2.4 million in the third quarter of the prior year. This increase was due primarily to higher volume in loans and securities as of September 30, 2016, than in the prior year. Total loans were $205.9 million and $169.6 million as of September 30, 2016 and 2015, respectively, representing an increase of $36.2 million, or 21%. Investment totals reflected an increase of $3.1 million, or 5%, ending the third quarter of 2016 at $69.5 million as compared to $66.4 million as of September 30, 2015.

The Bank realized an increase in deposits of $41.5 million, or 21%, as of September 30, 2016, compared with September 30, 2015. This deposit increase was primarily in DDA deposits, up $23.8 million, or 33%, time deposits, up $20.8 million, or 63%, and wholesale deposits, up $8.1 million, or 26%, as of September 30, 2016, as compared to September 30, 2015. These increases were partially offset by a decrease in savings and money market deposit totals of $11.3 million, or 18%. 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 $281,000 for the quarter ended September 30, 2016, as compared to $94,000 for the similar period in the prior year. The increase of $187,000 was primarily due to higher other noninterest income - gain on loan sales and a partial OREO recovery. Noninterest expense for the quarter ended September 30, 2016, was $1.7 million, up $210,000 from September 30, 2015. This was primarily due to an increase of approximately $108,000 in salaries and employee benefits expense, and an increase of approximately $92,000 in other noninterest expense due to higher professional fees, promotional-related, and other operating and organizational expenses. The Bank's QTD efficiency ratio is 54% as of September 30, 2016, an improvement from 58% as of September 30, 2015, as the Bank grows its balance sheet.

Total assets as of September 30, 2016, were $284.4 million as compared with $241.8 million as of September 30, 2015, an increase of 18%. The Bank's loan-to-deposit ratio as of September 30, 2016, was 84.8%, up from 84.3% as of September 30, 2015.

The Bank's capital ratios remain very strong. The total risk-based capital ratio was 13.6% and the equity ratio was 10.6% as of September 30, 2016. These ratios were 15.3% and 11.4%, respectively, as of September 30, 2015. The September 30, 2016, risk-based capital ratio reflects $10.7 million in excess capital (i.e., the amount in reserve above the 10% "well capitalized" level as defined by the regulators). In the second quarter of 2016, the Bank repurchased its $4.2 million outstanding preferred stock at a discount.

The Bank's ALLL was 1.19% as of September 30, 2016, down from 1.25% as of September 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 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 the Bank continued to have an excess (unallocated reserves) in its ALLL as of September 30, 2016. The overall dollars in reserve actually increased from $2.11 million as of September 30, 2015, to $2.45 million as of September 30, 2016, due primarily to the renewed loan loss provisions of $315,000 recorded thus far in 2016. The Bank's total NPAs (nonaccrual loans + OREO) were zero as of September 30, 2016, consistent with the balance as of the same period in 2015. Nonaccrual loans were zero as of September 30, 2016, equal to the balance as of the end of the third quarter of 2015. The OREO balance was zero as of September 30, 2016, consistent with the balance as of September 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 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 these expectations will prove to have been correct.

FINANCIAL TABLES FOLLOW

 
Consolidated
       

Sept. 2016

   

Sept. 2015

Assets
Cash and Due from Banks $ 1,644,039 $ 1,133,952
Fed Funds Sold 2,962,000 14,000
Investment Securities 69,520,287 66,410,804
Loans, Net of Unearned Income 205,863,167 169,622,118
Less: Allowance for Loan Losses   (2,450,695 )       (2,115,855 )
Net Loans 203,412,472 167,506,263
Premises and Equipment, Net 143,272 206,407
Accrued Interest Receivable 1,327,736 1,272,085
Other Assets   5,412,433         5,305,914  
Total Assets $ 284,422,239       $ 241,849,425  
 
Liabilities & Shareholders' Equity
Noninterest Bearing Deposits 88,948,955 65,527,003
Interest-bearing Deposits:
Core Deposits (including CDARs) 128,745,776 129,540,484
Brokered Deposits   25,033,963         6,210,051  
Total Deposits 242,728,694 201,277,538
Accrued Expenses/Other Liabilities   12,079,123         13,304,172  
Total Liabilities 254,807,817 214,581,710
Total Shareholders' Equity   29,614,422         27,267,715  
Total Liabilities & Shareholders' Equity $ 284,422,239       $ 241,849,425  
             
BV per share (net of preferred stock) $ 11.92 $ 10.61
BV per share (net of preferred stock, OCI)     $ 11.83       $ 10.60  
 

YTD
Sept. 2016

   

YTD
Sept. 2015

Net Interest Income $ 8,113,760 $ 6,573,303
Provision for Loan Losses 315,000 0
Noninterest Income 635,419 279,114
Noninterest Expense   4,719,832         4,295,029  
Income Before Taxes 3,714,347 2,557,388
Income Taxes   1,425,800         934,000  
Net Income $ 2,288,547       $ 1,623,388  
Diluted EPS $ 0.91 $ 0.73
Diluted EPS-revised* $ 1.08 $ 0.73
             
Return on Average Assets (ROAA) 1.17 % 0.98 %
Return on Average Equity (ROAE) 10.15 % 8.28 %
Net Interest Margin       4.28 %       4.13 %

 

QTD
Sept. 2016

   

QTD
Sept. 2015

Net Interest Income $ 2,751,259 $ 2,359,615
Provision for Loan Losses 105,000 0
Noninterest Income 280,971 94,024
Noninterest Expense   1,674,654         1,464,508  
Income Before Taxes 1,252,576 989,131
Income Taxes   466,000         367,000  
Net Income $ 786,576       $ 622,131  
Diluted EPS $ 0.31 $ 0.28
             
Return on Average Assets (ROAA) 1.14 % 1.05 %
Return on Average Equity (ROAE) 10.71 % 9.25 %
Net Interest Margin       4.10 %       4.10 %
 

Note: Includes $0.17 increase in earnings per share due to discount received on repurchase of 100% of outstanding preferred stock in the second quarter of 2016.

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

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