California Bank of Commerce Reports Record First Quarter 2014 Net Income

LAFAYETTE, Calif.--()--California Bank of Commerce (OTCBB: CABC) reported net income of $756 thousand for the quarter ending March 31, 2014, an increase of 36% over the same quarter of 2013. Basic earnings per share was $0.26 for the first quarter of 2014, compared to $0.19 per share for the same period in 2013.

“We are very pleased with the Bank’s growth and profitability, building our commercial and niche business lines to drive earnings and solid shareholder returns. We continue to attract business clients with sizable operating deposit accounts, resulting in record non-interest bearing deposits,” said Terry A. Peterson President and CEO. Other financial highlights include:

Highlights: First Quarter 2014 versus First Quarter 2013

  • Total Loans increased $45 million or 18% to $291 million
  • Total Deposits increased $22 million or 8% to $303 million
  • Net Interest Income increased $577 thousand or 19% to $3.6 million
  • Net Income increased $202 thousand or 36% to $756 thousand
  • Basic Earnings per Share increased 38% to $0.26

Net Interest Income and Margin

For the quarter ended March 31, 2014 compared to the quarter ended March 31, 2013, net interest income increased by 19% to $3.6 million compared to $3.0 million last year. The year over year increase in net interest income was primarily driven by a combination of strong growth in average loan balances, non-interest bearing deposits, as well as an improved net interest margin.

The net interest margin for the first quarter 2014 was 4.23%, improving 56 basis points compared to the 3.67% average margin in the first quarter of 2013. “Our improving NIM compares favorably to local peers and the banking industry in general,” said Peterson.

Non-Interest Income

Non-interest income increased by $78 thousand or 22% to $427 thousand during the first quarter of 2014 compared to the same period last year. The increase in non-interest income was primarily due to increased commercial loan and deposit volumes and related fees.

Non-Interest Expense

Non-Interest Expense during the first quarter of 2014 increased $518 thousand or 22% compared to the same period in 2013. The increased costs were primarily due to staff additions to support business development efforts, enhance client support services, and product development and delivery.

The Bank continues to closely balance its overall growth with service level operating efficiency. Consequently, the Bank’s efficiency ratio, (total overhead as a percent of revenue) moderately increased to 72% in the first quarter of 2014 from 70% in the first quarter of 2013 due to the opportunity to hire quality staff to support future growth.

Net Income

Net income reached $756 thousand for the first quarter ending March 31, 2014, increasing $202 thousand or 36% compared to the same period in 2013. Net income improved for the quarter on increased average earning assets and an improved net interest margin. Return on average assets was 0.85% during the first quarter of 2014, compared to 0.65% for the same period in 2013, while return on average common equity reached 10.69% during the first quarter of 2014 compared to 8.60% for the first quarter of 2012.

Balance Sheet

As of March 31, 2014, Total Assets were up by $24 million or 7% to $373 million with loans up by $45 million or 18% year over year to $291 million compared to March 31, 2013. Asset growth was tempered over last year as some higher cost deposits were reduced and partially replaced by non-interest bearing demand accounts, thereby strengthening our net interest margin and increasing our loan to deposit ratio. “Our loan growth was driven by a $25 million or 21% increase in commercial and industrial loans, representing 50% of our loan portfolio, as we remain focused on our core business banking strategy,” said Peterson.

For the quarter ended March 31, 2014, total asset growth was funded primarily with deposits, which were up by $22 million or 8%, with non-interest bearing deposits increasing by $17 million or 20% over the quarter ended March 31, 2013. Non-interest bearing deposits represented 34% of total deposits at March 31, 2014 compared to 29% at March 31, 2013. “Growth in our non-interest bearing operating accounts continues to fuel our growth and remains a strategic focus and a testament to our business model success,” said Peterson.

Credit Quality

The Bank’s overall loan quality remains strong. For the first quarter of 2014, total non-performing loans were $4.5 million or 1.22% of total assets at March 31, 2014, compared to $4.2 million or 1.19% of total assets at March 31, 2013. The reserve for loan losses increased to $5.42 million as of March 31, 2014 compared to $5.25 million at December 31, 2013 and $4.9 million at March 31, 2013, an 11% increase over the prior year. As a percent of total loans, the reserve level continues to reflect the conservative posture of the Bank, at a healthy level of 1.86% of total loans at the end of the current period.

About California Bank of Commerce

California Bank of Commerce was designed and built to provide a unique banking experience for its clients. The Bank offers a broad range of commercial banking services to closely held businesses and professionals throughout the San Francisco Bay Area. For more information on California Bank of Commerce and our unique banking experience, call us at (925) 283-2265, or visit us at www.californiabankofcommerce.com.

                             
 
CALIFORNIA BANK OF COMMERCE
UNAUDITED SUMMARY FINANCIAL STATEMENTS

 

INCOME STATEMENT
($ Thousands)
 
Three Months Ended Year Over Year Change
31-Mar-14 31-Dec-13 31-Mar-13   $   %  
Interest income $ 3,859 $ 3,908 $ 3,364 $ 495 15 %
Interest expense   (298 )   (319 )   (380 )   82   -22 %
Net interest income before provision 3,561 3,589 2,984 577 19 %
Provision to the Loan Loss Reserve   153     85     (211 )   364   -173 %
Net interest income after provision $ 3,714 $ 3,674 $ 2,773 $ 941 34 %
 
Non-interest income 427 429 349 78 22 %
Non-interest expense   (2,857 )   (2,890 )   (2,339 )   (518 ) 22 %
Income before tax provision 1,284 1,213 783 501 64 %
Provision for income taxes   (528 )   (552 )   (229 )   (299 ) 131 %
Net income $ 756   $ 661   $ 554   $ 202   36 %
 
Preferred Dividends   27     27     27     -   0 %
Income to Common Shareholders $ 729   $ 634   $ 527   $ 202   38 %
 
Basic Earnings per Common share $ 0.263 $ 0.229 $ 0.191 $ 0.072 38 %
 
Shares Outstanding 2,768,893 2,768,893 2,757,243
 
Return on Average Assets 0.85 % 0.70 % 0.65 %
Return on Average Tangible Common Equity 10.69 % 9.38 % 8.60 %
 
Non Interest Expense to Average Total Assets 3.22 % 3.04 % 2.74 %
Efficiency Ratio 71.6 % 71.9 % 70.2 %
 
                         
 
CALIFORNIA BANK OF COMMERCE
UNAUDITED SUMMARY FINANCIAL STATEMENTS
 
BALANCE SHEET
($ Thousands)
 
Year Over Year Change
Assets 31-Mar-14 31-Dec-13 31-Mar-13   $   %  
Total Cash and Investments $ 71,859 $ 72,255 $ 94,224 $ (22,365 ) -24 %
Loans, net of deferred costs/fees 291,422 282,829 246,673 $ 44,749 18 %
Loan Loss Reserve (5,420 ) (5,250 ) (4,900 ) $ 520 11 %
Other   14,946     14,522     12,398   $ 2,548   21 %
Total Assets $ 372,807   $ 364,356   $ 348,395   $ 24,412   7 %
 
Liabilities & Shareholders' Equity
Non-interest Bearing Deposits $ 101,643 $ 104,642 $ 84,474 $ 17,169 20 %
Interest Bearing Deposits   201,105     189,499     195,965   $ 5,140   3 %
Total Deposits $ 302,748 $ 294,141 $ 280,439 $ 22,309 8 %
Total Borrowings and Other Liabilities   30,209     31,334     30,726   $ (517 ) -2 %
Total Liabilities $ 332,957 $ 325,475 $ 311,165 $ 21,792 7 %
 
Shareholder's Equity $ 39,850 $ 38,881 $ 37,230 $ 2,620 7 %
Total Liabilities & Shareholders' Equity $ 372,807   $ 364,356   $ 348,395   $ 24,412   7 %
 
Shares Outstanding 2,768,893 2,768,893 2,757,243 11,650 -
Book Value per Common Share $ 10.44 $ 10.09 $ 9.53 $ 0.91 10 %
 
 

Average Balances - Period

1Q 2014 4Q 2013 31-Mar-13
Total Assets $ 360,431 $ 377,405 $ 346,057
Total Loans $ 283,559 $ 272,267 $ 244,153
Total Investments $ 46,252 $ 45,479 $ 49,046
Total Earning Assets $ 341,620 $ 359,143 $ 329,417
Total Non-Interest Bearing Deposits $ 98,713 $ 110,192 $ 79,853
Total Deposits $ 289,685 $ 307,259 $ 277,960
Total Borrowings $ 29,112 $ 29,000 $ 29,010
Tangible Common Equity $ 28,697 $ 27,983 $ 26,161
 
 

Average Yields and Cost

1Q 2014 4Q 2013 1Q 2013
Net Interest Margin 4.23 % 3.97 % 3.67 %
Yield on Earning Assets 4.58 % 4.32 % 4.14 %
Cost of Interest Bearing Liabilities 0.55 % 0.56 % 0.68 %
 

End of Period

31-Mar-14 31-Dec-13 31-Mar-13
Loan Loss Reserve to Total Loans 1.87 % 1.86 % 1.99 %
 
NPAs (incl non performing TDRs) to Total Assets 1.00 % 0.37 % 0.38 %
Performing TDRs to Total Assets   0.22 %   0.33 %   0.81 %
Total NPAs 1.22 % 0.70 % 1.19 %
 
Tier I Leverage Ratio 11.07 % 10.36 % 10.65 %

Contacts

California Bank of Commerce
Terry A. Peterson, 925-444-2910
President and CEO
tpeterson@bankcbc.com
or
Mark DeVincenzi, 925-444-2916
EVP Shareholder Relations & CMO
mdevincenzi@bankcbc.com

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Contacts

California Bank of Commerce
Terry A. Peterson, 925-444-2910
President and CEO
tpeterson@bankcbc.com
or
Mark DeVincenzi, 925-444-2916
EVP Shareholder Relations & CMO
mdevincenzi@bankcbc.com