Market Overview

Community Bank Reports 2017 First Quarter Earnings of $7.8 Million and Declares Cash Dividend on Common Stock

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Community Bank, founded in 1945, is an independent Southern California
regional community bank, with assets of $3.6 billion, and headquartered
in Pasadena with 16 business centers.

Financial highlights:

  • Net income for the first quarter of 2017 increased $39 thousand or
    0.5%, over the prior year.
  • In a strategic move to add high quality floating rate loans to its
    balance sheet, the Bank began to hold all of its SBA loans in the 4th
    quarter of 2016 versus selling them in the secondary market.
    Accordingly, fees from loan sales declined from $1.7 million in the 1st
    quarter of 2016 to $63 thousand in the same period in 2017.
  • Net interest income decreased during 2017 to $27.8 million from $29.0
    million in the first quarter of the prior year. Net interest margin
    also decreased for the first quarter of 2017 to 3.24% from 3.33%
    during the same period of 2016. The decrease in net interest income
    and the net interest margin is primarily due to the reversal of $320
    thousand in interest on nonaccrual loans and the July 2016 extension
    of $300 million of funding from overnight to 5 years. The extension of
    the funding was a strategic decision to reduce the interest rate risk
    profile of the Bank.
  • Total loans as of March 31, 2017 decreased $21 million to $2.5 billion
    as compared to March 31, 2016. The decrease is partially due to $40
    million in loan sales and $30 million in payoffs of substandard and
    special mention loans. Loan growth was $22.0 million or 0.9 % at March
    31, 2017 compared with December 31, 2016 (and $52 million or 2.1% when
    considering the $30 million in payoffs).
  • Non-interest bearing deposits increased 6.9%, or $68.5 million, to
    $1.1 billion compared to $987.5 million as of March 31, 2016, while
    total deposits decreased slightly at 0.6%.
  • Core deposits represented 84.9% of total deposits, as of March 31,
    2017, with the non-interest bearing component representing 47.0% of
    core deposits as compared to 43.2% as of the March 31, 2016.
    (Community Bank defines core deposits as those deposits generated by
    its branch network including specialty areas and excludes deposits
    placed through the Treasury area.)
  • The Bank's reserve for loan losses as of March 31, 2017 was $33.4
    million or 1.33% of total loans compared to $37.4 million or 1.47% of
    total loans as of March 31, 2016. In the 1st quarter 2017,
    a recovery of $1.6 million in the provision for loan losses was
    recognized compared to a provision of $1.0 million during the 1st
    quarter of 2016.
  • The Bank's nonperforming assets totaled $15.0 million as of March 31,
    2017 compared to $18.4 million as of March 31, 2016.
  • Community Bank's capital ratios continue to exceed "well capitalized"
    regulatory requirements

Other highlights:

  • The Board of Directors declared a $0.50 per share cash dividend
    (aggregating $1.6 million) on its outstanding common stock for common
    shareholders of record as of May 15, 2017 and payable on or about June
    1, 2017. This represents the tenth consecutive quarter that the Bank
    has declared a dividend since introducing a formal dividend practice.
    The dividend was approved at the regularly scheduled Board of
    Directors meeting held on April 27, 2017.

CBank is pleased to include the following as market makers in Community
Bank stock. Community Bank stock trades on OTC pink sheets under the
ticket of CYHT. Contact information for our market makers is as follows:

Raymond James & Associates   D.A. Davidson & Co.
John T. Cavender, SVP Financial Institutions Michael R. Natzic, Senior Vice President
415-616-8935 1-800-288-2811

John.cavender@raymondjames.com

mnatzic@dadco.com

http://www.raymondjames.com

https://dadavidson.com

 
Keefe Bruyette & Woods, a Stifel Company Sandler O'Neill + Partners, L.P.
Cathy Bellina, Equity Trader Tom Thurston, Principal
212-887-8996 1-212-466-8027

cbellina@kbw.com

tthurston@sandleroneill.com

www.kbw.com

http://www.sandleroneill.com/

 
Wedbush Securities
Joey Warmenhoven, Managing Director Community Banking Group
1-866-662-0351

Joey.warmenhoven@wedbush.com

https://www.wedbush.com/

Community Bank, partnering to be YOUR community bank, has offices in
Anaheim, Burbank, Century City, Commerce, Corona, Glendale, Huntington
Beach, Irvine, Laguna Niguel, Ontario, Pasadena, Redlands, Santa
Clarita, Santa Fe Springs, South Bay, and Woodland Hills. For more
information, visit the Community Bank Website at www.cbank.com.

This press release contains certain forward-looking statements,
including certain plans, expectations, goals and projections, which are
subject to numerous assumptions, risks and uncertainties. Actual results
could differ materially from those contained in or implied by such
statements for a variety of factors including: changes in economic
conditions; movements in interest rates; competitive pressures on
product pricing and services; success and timing of business strategies;
the nature and extent of governmental actions and reforms; and rapidly
changing technology and evolving banking industry standards.

COMMUNITY BANK - FINANCIAL HIGHLIGHTS
(Unaudited)
(Amounts in Thousands, except per share data)
             
 
For the Quarters Ended
INCOME STATEMENT March 31, 2016 June 30, 2016 September 30, 2016 December 31, 2016 March 31, 2017
 
Interest income $ 32,027 $ 32,241 $ 32,140 $ 31,976 $ 31,582
Interest expense   3,065     3,117     3,687     3,488     3,809  
Net interest income 28,962 29,124 28,453 28,488 27,773
Provision for loan losses   1,000     1,250     1,200     3,498     (1,600 )
Net interest income after provision 27,962 27,874 27,253 24,990 29,373
Non-interest income 3,997 4,673 2,665 1,972 1,981
Non-interest expense   19,373     19,332     19,086     20,537     18,730  
Income before income tax 12,586 13,215 10,832 6,425 12,624
Income tax   4,838     5,106     4,094     2,197     4,837  
Net income $ 7,748   $ 8,109   $ 6,738   $ 4,228   $ 7,787  
 
As of
BALANCE SHEET March 31, 2016 June 30, 2016 September 30, 2016 December 31, 2016 March 31, 2017
Cash and cash equivalents $ 52,181 $ 59,347 $ 38,304 $ 47,552 $ 57,612
Investments 955,907 930,398 886,522 913,781 924,826
FHLB Stock 19,845 19,845 17,250 17,250 18,765
Non-owner occupied real estate loans 870,461 870,538 826,728 823,621 824,506
Owner occupied real estate loans   1,081,807     1,072,893     1,063,247     1,078,652     1,095,176  
Total real estate loans 1,952,268 1,943,431 1,889,975 1,902,273 1,919,682
Commercial & industrial loans 565,933 571,045 567,365 545,332 555,708
Other loans   18,829     25,228     44,630     46,902     41,133  
Total loans 2,537,030 2,539,704 2,501,970 2,494,507 2,516,523
Loan loss reserve   (37,364 )   (34,489 )   (35,826 )   (35,166 )   (33,449 )
Net loans 2,499,666 2,505,215 2,466,144 2,459,341 2,483,074
Other assets   125,661     119,994     129,206     147,035     140,766  
Total assets $ 3,653,260   $ 3,634,799   $ 3,537,426   $ 3,584,959   $ 3,625,043  
 
Earning assets $ 3,533,904   $ 3,510,884   $ 3,409,264   $ 3,440,426   $ 3,479,318  
 
 
Non-interest bearing deposits $ 987,467 $ 968,887 $ 1,032,914 $ 1,047,221 $ 1,055,942
Interest bearing deposits   1,675,487     1,746,113     1,650,809     1,634,773     1,589,917  
Total deposits 2,662,954 2,715,000 2,683,723 2,681,994 2,645,859
Funds purchased/borrowed 640,000 562,500 482,000 543,000 615,000
Other liabilities   24,799     20,129     29,933     32,256     28,452  
Total liabilities 3,327,753 3,297,629 3,195,656 3,257,250 3,289,311
Stockholders' equity   325,507     337,170     341,770     327,709     335,732  

Total liabilities & stockholders' equity

$ 3,653,260   $ 3,634,799   $ 3,537,426   $ 3,584,959   $ 3,625,043  
 
 
For the Quarters Ended
PERFORMANCE AND PER SHARE DATA March 31, 2016 June 30, 2016 September 30, 2016 December 31, 2016 March 31, 2017
Return on average equity 9.69 % 9.85 % 7.88 % 5.01 % 9.51 %
Return on average assets 0.86 % 0.89 % 0.75 % 0.47 % 0.87 %
 
Earning Asset Yields 3.69 % 3.68 % 3.68 % 3.73 % 3.69 %
Cost of Funds   0.36 %   0.36 %   0.42 %   0.40 %   0.45 %
Net interest margin 3.33 % 3.32 % 3.26 % 3.33 % 3.24 %
Efficiency ratio 58.78 % 57.20 % 61.50 % 67.42 % 62.92 %
 
Book value per common share $ 104.05 $ 107.78 $ 109.25 $ 104.76 $ 107.12
Basic earnings per common share $ 2.48 $ 2.59 $ 2.15 $ 1.35 $ 2.49
Diluted earnings per common share $ 2.48 $ 2.59 $ 2.15 $ 1.35 $ 2.49
 
As of
CAPITAL RATIOS March 31, 2016 June 30, 2016 September 30, 2016 December 31, 2016 March 31, 2017
Tier 1 leverage capital 8.78 % 8.90 % 9.17 % 9.36 % 9.35 %
Tier 1 risk-based capital 10.35 % 10.57 % 10.88 % 10.88 % 11.08 %
Total risk-based capital 11.60 % 11.75 % 12.11 % 12.08 % 12.21 %
Common equity tier 1 capital 10.35 % 10.57 % 10.88 % 10.88 % 11.08 %
 
 
 
For the Quarters Ended
March 31, 2016 June 30, 2016 September 30, 2016 December 31, 2016 March 31, 2017
 
Non-interest income
Service charges on deposits $ 938 $ 981 $ 964 $ 955 $ 1,021
Fees and commissions 489 558 611 576 502
Bank owned life insurance 405 387 391 393 353
Gain on sale of OREO 381 1,351 63 - 8
Gain (loss) on sale of securities - - 83 - (15 )
Gain on sale of loans 1,750 1,258 585 6 63
Other non-interest income   34     138     (32 )   42     49  
Total non-interest income $ 3,997   $ 4,673   $ 2,665   $ 1,972   $ 1,981  
 
Non-interest expense
Salary and employee benefits 13,234 12,954 12,954 14,692 13,339
Other expense   6,139     6,378     6,132     5,845     5,391  
Total non-interest expense $ 19,373   $ 19,332   $ 19,086   $ 20,537   $ 18,730  
 
COMMUNITY BANK - FINANCIAL HIGHLIGHTS
       
ALLL Trend and Statistics (Unaudited)
(Amounts in Thousands)
 
For the Quarters Ended
ALLL ROLLFORWARD March 31, 2016 June 30, 2016 September 30, 2016 December 31, 2016 March 31, 2017
Beginning Balance $ 36,327 $ 37,364 $ 34,489 $ 35,826 $ 35,166
 
Provision for Loan Losses 1,000 1,250 1,200 3,498 (1,600 )
 
Charge Offs (33 ) (4,182 ) (5 ) (4,941 ) (295 )
Recoveries   70     57     142     783     178  
Net Charge Offs 37 (4,125 ) 137 (4,158 ) (117 )
         
Ending Balance $ 37,364   $ 34,489   $ 35,826   $ 35,166   $ 33,449  
 
Period End Loan Balance $ 2,537,030 $ 2,539,704 $ 2,501,970 $ 2,494,507 $ 2,516,523
 
Average Loan Balance for the period $ 2,489,434 $ 2,541,240 $ 2,522,881 $ 2,481,496 $ 2,510,592
 
ASSET QUALITY INDICATORS                            
 
Non-Performing Loans 11,930 6,720 6,132 16,188 14,979
OREO 6,479 3,848 3,093 3,000 -
         
Total Non-Performing Assets (NPA) $ 18,409   $ 10,568   $ 9,225   $ 19,188   $ 14,979  
 
 
Performing Loans 30 - 89 days past due 982 466 2,129 2,708 494
Performing Loans >89 days past due   1     3     51     2     -  
Total Delinquent Loans $ 983   $ 469   $ 2,180   $ 2,710   $ 494  
 
Delinquent Loans and Leases to Total Loans 0.04 % 0.02 % 0.09 % 0.11 % 0.02 %
Net Charge Offs to Avg Loans (Annualized) 0.01 % -0.65 % 0.02 % -0.67 % -0.02 %
NPL as a % of Total Loans 0.47 % 0.26 % 0.25 % 0.65 % 0.60 %
NPA as a % of Total Loans + OREO 0.72 % 0.42 % 0.37 % 0.77 % 0.60 %
ALLL/Non Performing loans 313.2 % 513.2 % 584.2 % 217.2 % 223.3 %
ALLL as a % of Total Loans   1.47 % 1.36 % 1.43 % 1.41 %   1.33 %
 
COMMUNITY BANK - FINANCIAL HIGHLIGHTS
AVERAGE BALANCE SHEET AND YIELDS
(Unaudited)
                           
Quarters Ended
(In thousands)   March 31, 2016   June 30, 2016   September 30, 2016   December 31, 2016   March 31, 2017
Average Yield/ Average Yield/ Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate
INTEREST EARNING ASSETS
Loans and leases $ 2,489,434 $ 26,420 4.27 % $ 2,541,240 $ 26,806 4.24 % $ 2,522,881 $ 27,008 4.26 % $ 2,481,496 $ 26,229 4.20 % $ 2,510,592 $ 26,124 4.22 %
Investment securities 965,653 5,239 2.17 % 944,005 4,986 2.11 % 911,566 4,654 2.04 % 889,076 4,672 2.10 % 924,218 5,031 2.18 %
FHLB Stock/Dividends 19,325 347 7.22 % 19,845 427 8.65 % 18,576 453 9.70 % 17,250 1,049 24.19 % 18,170 394 8.79 %
FFSold/Fed balances/Due from Time 18,765 21 0.44 % 18,392 22 0.47 % 20,076 25 0.49 % 19,861 26 0.51 % 18,194 33 0.73 %
                                                 
Total Earning Assets 3,493,177 32,027 3.69 % 3,523,482 32,241 3.68 % 3,473,099 32,140 3.68 % 3,407,683 31,976 3.73 % 3,471,174 31,582 3.69 %
 
Nonearning assets 124,649 122,020 123,289 136,952 145,407
         
Total Assets $ 3,617,826 $ 3,645,502 $ 3,596,388 $ 3,544,635 $ 3,616,581
 
INTEREST BEARING LIABILITIES
Time deposits 584,324 889 0.61 % 610,849 997 0.66 % 672,316 1,281 0.76 % 602,108 1,213 0.80 % 568,364 1,216 0.87 %
NOW and money market accounts 999,306 741 0.30 % 1,022,272 800 0.31 % 1,042,277 904 0.35 % 1,012,883 879 0.35 % 971,906 834 0.35 %
Savings and other 37,043 4 0.04 % 36,629 5 0.05 % 40,208 5 0.05 % 43,456 5 0.05 % 43,992 6 0.06 %
                                                 
Total Interest Bearing Deposits 1,620,673 1,634 0.41 % 1,669,750 1,802 0.43 % 1,754,801 2,190 0.50 % 1,658,447 2,097 0.50 % 1,584,262 2,056 0.53 %
 
FHLB / Other Borrowings 703,297 1,431 0.82 % 608,522 1,315 0.87 % 474,441 1,497 1.26 % 446,848 1,391 1.24 % 642,984 1,753 1.11 %
                                                 
 
Total Interest Bearing Liabilities 2,323,970 3,065 0.53 % 2,278,272 3,117 0.55 % 2,229,242 3,687 0.66 % 2,105,295 3,488 0.66 % 2,227,246 3,809 0.69 %
 
Non-interest bearing deposits 946,152 1,012,964 1,000,650 1,070,434 1,023,236
Accrued interest payable and
other liabilities   26,045   23,142   26,253   33,160   34,141
 
Total Liabilities 3,296,167 3,314,378 3,256,145 3,208,889 3,284,623
Shareholders' equity   321,659   331,124   340,243   335,746   331,958
Total Liabilities and
Shareholders' Equity $ 3,617,826 $ 3,645,502 $ 3,596,388 $ 3,544,635 $ 3,616,581
 
Net Interest Spread 3.16 % 3.13 % 3.02 % 3.07 % 3.00 %
 
Effect of noninterest-bearing sources 0.17 % 0.19 % 0.24 % 0.25 % 0.24 %
 
 
Net Interest Income and Margin $ 28,962   3.33 % $ 29,124   3.32 % $ 28,453   3.26 % $ 28,488   3.33 % $ 27,773   3.24 %

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