Commonwealth Business Bank Reports Strong Second Quarter Earnings

Second Quarter 2015 Financial Highlights:

  • Net income of $3.0 million, or $0.36 per diluted common share;
  • Total assets increased to $744.0 million, up 5.7% from 1Q15 and up 18.1% from 2Q14;
  • Total loans increased to $622.2 million, up 2.5% from 1Q15 and up 24.0% from 2Q14;
  • Total deposits increased to $644.6 million, up 5.9% from 1Q15 and up 15.9% from 2Q14;
  • Return on average equity was 14.72% and return on average assets was 1.72% annualized;
  • Net interest margin improved to 4.21%, compared to 4.04% for 1Q15 and 3.61% for 2Q14

LOS ANGELES--()--Commonwealth Business Bank (“CBB”) (OTCQB: CWBB) today announced net income of $3.0 million for the second quarter of 2015, compared with $2.8 million for the first quarter of 2015 and $2.4 million for the second quarter of 2014. Diluted earnings per share were $0.36 for the second quarter of 2015, compared with $0.34 for the first quarter of 2015 and $0.30 for the second quarter of 2014.

“Our second quarter results continue a trend of solid performance,” said Joanne Kim, President and CEO. “Our earnings of $3.0 million represented an increase of 24% over the same period in 2014 and a 9% increase over the first quarter of this year. We experienced solid loan growth and margin expansion, supported by deposit growth. Since its opening in April of this year, our Fullerton Branch has added over $20 million in deposits. We also added the new Commercial Banking Department during the quarter to facilitate commercial and industrial loan production. To support our growing operations, we strengthened our infrastructure, continuing our commitment to a disciplined focus on risk management.”

RESULTS OF OPERATIONS

 

Quarterly Results Summary

  Three Months Ended   Six Months Ended
June 30,   March 31,   June 30,   June 30,   June 30,
2015 2015 2014 2015 2014
(Dollars in thousands, except per share information)
 
Net income $ 3,024 $ 2,772 $ 2,430 $ 5,796 $ 5,863
Net income per diluted common share $ 0.36 $ 0.34 $ 0.30 $ 0.70 $ 0.71
 
Return on average assets 1.72 % 1.69 % 1.61 % 1.71 % 2.02 %
Return on average equity 14.72 % 14.40 % 14.20 % 14.56 % 17.71 %
 
Noninterest income/average assets 1.61 % 1.61 % 1.75 % 1.61 % 2.07 %
Pre-tax, pre-provision earnings/average assets 2.94 % 2.90 % 2.78 % 2.92 % 3.07 %
Noninterest expense/average assets 2.78 % 2.65 % 2.51 % 2.72 % 2.65 %
Efficiency ratio 48.61 % 47.72 % 47.44 % 48.18 % 46.33 %
Net interest margin 4.21 % 4.04 % 3.61 % 4.13 % 3.72 %
 

Net income for the second quarter of 2015 increased $252,000 over the first quarter of 2015, and $594,000 over the second quarter of 2014. The improvement came from an increase in net interest income and gains on sale of Small Business Administration (“SBA”) loans, partially offset by increases in compensation, occupancy and marketing costs.

Net income for the six months ended June 30, 2015 decreased slightly compared to the previous year, primarily due to a $1.2 million negative loan loss reserves in the prior year.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses and loan commitments was $7.2 million for the second quarter of 2015, an increase of $720,000, or 11.1%, from $6.5 million for the first quarter of 2015, and an increase of $1.9 million, or 34.9%, from $5.3 million for the second quarter of 2014. The year-over-year increase in net interest income was primarily attributable to an increase of $123.3 million in average loan balances and a 20 basis point increase in the loan yield to 5.39%.

The net interest margin improved during the second quarter of 2015 to 4.21%, compared to 4.04% for the first quarter of 2015 and 3.61% for the second quarter of 2014. This improvement from the first quarter of 2015 was attributable to an 18 basis point increase in the yield on earning assets. The yield on average earning assets increased to 4.91% for the second quarter of 2015, from 4.73% for the first quarter of 2015 and 4.34% for the second quarter of 2014, primarily from an increase in loan yield. An accelerated accretion of discount on certain paid off SBA loans partially contributed to the increase in loan yield. The cost of funds was 0.78% for the second quarter of 2015, compared with 0.77% for the first quarter of 2015 and 0.82% for the second quarter of 2014. The year-over-year decrease in cost of funds was attributable to a decrease in cost of interest-bearing deposits and an increase in noninterest-bearing deposit balances.

Noninterest Income

For the second quarter of 2015, noninterest income totaled $2.8 million, approximately $200,000 increase from both the first quarter of 2015 and the second quarter of 2014. The quarter-over-quarter increase was primarily due to a $198,000 increase in the gains on the sale of SBA loans and a $42,000 increase in fee income, partially offset by a $44,000 decrease in SBA servicing income. The year-over-year increase in noninterest income was due primarily to a $302,000 increase in the gains on the sale of SBA loans, partially offset by a $105,000 decrease in fees and loan servicing income.

During the second quarter of 2015, CBB sold $27.1 million of SBA loans, compared with $25.7 million for the first quarter of 2015 and $23.5 million for the second quarter of 2014. SBA loan sales are dependent upon the volume of loans originated as well as the liquidity needs and market conditions, and, therefore, will vary from quarter to quarter.

         
Three Months Ended
June 30, March 31, December 31,

September 30,

June 30,
2015 2015 2014 2014 2014
(Dollars in thousands)
SBA Loans held-for-sale @ beginning of the quarter $ 16,543 $ 21,267 $ 15,057 $ 15,779 $ 11,272
SBA Loans originated/transferred from held-for-investment during the quarter 36,014 21,096 33,214 24,401 28,055
SBA Loans sold during the quarter (27,106 ) (25,671 ) (26,888 ) (25,013 ) (23,497 )
SBA Loans principal payment, net of advance   (165 )     (149 )   (116 )   (110 )   (51 )
SBA Loans held-for-sale @ end of the quarter $ 25,286   $ 16,543   $ 21,267   $ 15,057   $ 15,779  

 

Gain on sale of SBA loans $ 2,294 $ 2,096 $ 2,281 $ 2,255 $ 1,992
Premium in sale (weighted average) 11.62 % 11.07 % 10.89 % 11.67 % 11.21 %
 
SBA Loan production (including held-for-investment) $ 37,164 $ 38,672 $ 45,306 $ 34,770 $ 43,898
 

Noninterest Expense

Noninterest expense for the second quarter of 2015 increased to $4.9 million, up 12.1% from $4.4 million for the first quarter of 2015, and up $1.1 million, or 28.9% from $3.8 million in the second quarter of 2014. The increase was due primarily to an increase in salaries and employee benefits resulting from the addition of staffing to support business expansion and to strengthen the infrastructure, as well as the annual merit adjustments. For the second quarter of 2015, salaries and employee benefits increased to $3.1 million, up $180,000 from $2.9 million for the first quarter of 2015, and up $526,000 from $2.6 million for the second quarter of 2014. Occupancy and equipment expense, as well as higher marketing expense associated with the new Fullerton Branch, also contributed to an increase in noninterest expense.

   
Three Months Ended Six Months Ended
June 30,   March 31,   %   June 30,   % June 30,   June 30,   %
2015 2015 Change 2014 Change 2015 2014 Change
(Dollars in thousands)
 
Salaries and benefits $ 3,092 $ 2,912 6.2 % $ 2,566 20.5 % $ 6,004 $ 5,206 15.3 %
Full time equivalent employees(FTE) 118 106 11.3 % 94 25.5 % 118 94 25.5 %
Salaries and benefit/FTE $ 104 $ 110 -4.8 % $ 108 -3.7 % $ 103 $ 111 -7.3 %
Salaries and benefit/average assets 1.76 % 1.77 % -0.6 % 1.70 % 3.5 % 1.77 % 1.80 % -1.7 %
Noninterest expense/average assets 2.78 % 2.65 % 4.9 % 2.51 % 10.8 % 2.72 % 2.65 % 2.6 %
 

Pre-Tax, Pre-Provision Income

For the first quarter of 2015, CBB’s pre-tax, pre-provision (“PTPP”) income was $5.2 million, up 8.2% from $4.8 million for the first quarter of 2015 and up 23.0%, from $4.2 million for the second quarter of 2014. Annualized PTPP income increased to 2.94% of average assets for the second quarter of 2015, compared with 2.90% and 2.78% of average assets for the first quarter of 2015 and the second quarter of 2014, respectively.

The effective income tax rate for the six months ended June 30, 2015 was 41.61%, compared with 41.78% for the same period of 2014.

   
Three Months Ended Six Months Ended
June 30,   March 31,   %   June 30,   % June 30,   June 30,   %
2015 2015 Change 2014 Change 2015 2014 Change
(Dollars in thousands)
 
PTPP income $ 5,158 $ 4,768 8.2 % $ 4,192 23.0 % $ 9,926 $ 8,892 11.6 %
Annualized PTPP/average assets 2.94 % 2.90 % 1.4 % 2.78 % 5.8 % 2.92 % 3.07 % -4.9 %
PTPP, excluding gain on sale of SBA loans $ 2,864 $ 2,672 7.2 % $ 2,200 30.2 % $ 5,536 $ 4,038 37.1 %
 

BALANCE SHEET SUMMARY

At June 30, 2015, CBB had total assets of $744.0 million, an increase of $40.1 million, or 5.7%, from $703.9 million at March 31, 2015, and an increase of $113.8 million, or 18.1%, from $630.2 million at June 30, 2014. Earning assets totaled $727.7 million at June 30, 2015, an increase of $112.9 million, or 18.4%, from $614.8 million at June 30, 2014. The year-over-year increase in earning assets was mainly from a $120.6 million growth in total loans.

         
June 30, March 31, December 31, September 30, June 30,
  2015     2015     2014     2014     2014  
(Dollars in thousands)
 
Assets $ 744,028 $ 703,891 $ 653,450 $ 628,371 $ 630,179
Loans receivable, net 587,917 581,655 539,810 511,482 477,012
Deposits 644,646 608,893 572,812 550,490 556,059
 
Tangible common equity/total assets 11.30 % 11.46 % 11.10 % 11.30 % 11.10 %
Tangible common equity per common share

$

10.40

$ 10.03 $ 9.04

$

10.40

$ 9.04
 
Nonperforming assets to average assets 1.01 % 1.13 % 1.25 % 1.28 % 1.30 %
ALLL to nonperforming assets 119.74 % 112.76 % 109.50 % 110.01 % 107.80 %
Nonperforming assets to tangible common equity and ALLL 8.11 % 8.89 % 9.66 % 9.81 % 10.40 %
 

Loans Receivable

The following table lists gross loans by type at the dates indicated:

         

June 30,

2015

March 31,

2015

December 31,

2014

September 30,

2014

June 30,

2014

(Dollars in thousands)
 
Construction $ 7,460 $ 5,616 $ 4,088 $ 3,133 $ 2,459
Commercial real estate 453,915 444,878 418,071 391,565 374,572
Commercial and industrial 131,144 136,231 122,861 121,489 105,462
Consumer   3,236       2,879     2,667     3,224     2,638  
Gross loans 595,755 589,604 547,687 519,411 485,131
Deferred loan costs/fees   1,201       1,046     1,100     931     718  
Gross loans, net $ 596,956     $ 590,650   $ 548,787   $ 520,342   $ 485,849  
 
Loans held-for-sale $ 25,286 $ 16,543 $ 21,267 $ 15,057 $ 15,779
Gross loans including loans held-for-sale $ 622,242 $ 607,193 $ 570,054 $ 535,399 $ 501,628
 
Loan-to-deposit (LTD) ratio: 92.6 % 97.0 % 95.8 % 94.5 % 87.4 %
LTD ratio: including loans held-for-sale 96.5 % 99.7 % 99.5 % 97.3 % 90.2 %
 

At June 30, 2015, total loans (including loans held-for-sale) were $622.2 million, which was a $15.0 million, or 2.5% increase from $607.2 million at March 31, 2015 and a $120.6 million, or 24.0% increase from $501.6 million at June 30, 2014. During the second quarter of 2015, total new loan production (including revolving lines of credit) was approximately $97.7 million, compared to $74.1 million for the first quarter of 2015 and $93.9 million for the second quarter of 2014.

Deposits

The following table sets forth the amount of deposits by category at the dates indicated:

                   
June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014
Balance Percent Balance Percent Balance Percent Balance Percent Balance Percent
(Dollars in thousands)
 
Noninterest-bearing demand $ 140,284 21.8 % $ 134,999 22.2 % $ 125,893 22.0 % $ 123,805 22.5 % $ 125,788 22.6 %
Money market & NOW 134,731 20.9 % 143,313 23.5 % 152,503 26.6 % 151,635 27.5 % 155,318 27.9 %
Savings 7,482 1.2 % 7,345 1.2 % 8,805 1.5 % 9,953 1.8 % 9,650 1.7 %
Time deposits   362,149   56.2 %   323,236   53.1 %   285,611   49.9 %   265,097   48.2 %   265,303   47.7 %
Total Deposits $ 644,646   100.0 % $ 608,893   100.0 % $ 572,812   100.0 % $ 550,490   100.0 % $ 556,059   100.0 %
 
Cost of deposits for the quarter ended 0.76 % 0.76 % 0.75 % 0.78 % 0.82 %
 

Total deposits increased $35.8 million, or 5.9% during the quarter and increased $88.6 million, or 15.9%, compared to June 30, 2014. The deposits from the two new branches and organic growth from existing branches, coupled with an increase in wholesale deposits contributed to the increase. Noninterest-bearing deposits grew $5.3 million, or 3.9% during the quarter and $14.5 million, or 11.5%, compared to June 30, 2014. However, due to a larger increase in time deposits, noninterest-bearing deposit decreased to 21.76% of total deposits at June 30, 2015 from 22.17% at March 31, 2015 and 22.62% at June 30, 2014. The increase in noninterest-bearing deposit balances and lower cost of interest-bearing deposits were the primary contributors to the year-over-year reduction in the cost of funds.

ASSET QUALITY

           
June 30, March 31, December 31, September 30, June 30,
2015 2015

2014

2014

2014
(Dollars in thousands)
 

Delinquent Loans:

Loans 30-89 days past due $ 92 $ 18 $ 83 $ 727 $ 19
90 days or more past due and still accruing - - - - -
Nonaccrual   1,930     2,162     2,175     1,919     1,981  
Total delinquent loans $ 2,022   $ 2,180   $ 2,258   $ 2,646   $ 2,000  
 

Nonperforming Assets:

Over 90 days still accruing $ - $ - $ - $ - $ -
Nonaccrual loans (1) 1,930 2,162 2,175 1,919 1,981
Performing TDR loans   5,619     5,815     6,023     6,135     6,217  
Total nonperforming loans   7,549     7,977     8,198     8,054     8,198  
 
Other real estate owned   -     -     -     -     -  
Total nonperforming assets $ 7,549   $ 7,977   $ 8,198   $ 8,054   $ 8,198  
 
Nonaccrual loans to gross loans 0.32 % 0.37 % 0.40 % 0.37 % 0.41 %
Nonperforming loans to gross loans (exc. LHFS) 1.26 % 1.35 % 1.49 % 1.55 % 1.69 %
Total nonperforming assets to total assets 1.01 % 1.13 % 1.25 % 1.28 % 1.30 %
 

Classified Loans (1):

Substandard $ 6,471 $ 6,910 $ 7,110 $ 8,113 $ 8,274
Doubtful - - - -
Loss   -     -     -       -  
Total classified assets $ 6,471   $ 6,910   $ 7,110   $ 8,113   $ 8,274  
 
Classified assets to total assets 0.87 % 0.98 % 1.09 % 1.29 % 1.31 %
Classified assets to Tier 1 and ALLL 6.95 % 7.70 % 8.38 % 9.88 % 10.50 %
 
(1) Net of SBA guaranteed balance.
 

Nonperforming assets decreased during the second quarter of 2015 due to pay-off of a nonaccrual commercial real estate loan.

The $1.8 million year-over-year reduction in classified loans was due primarily to a pay-off as noted above and upgrades of certain classified commercial real estate loans.

The allowance for loan losses at June 30, 2015 was $9.0 million, or 1.51% of total gross loans (excluding loans held-for-sale), compared to $9.0 million, or 1.52%, at March 31, 2015, and $8.8 million, or 1.82%, at June 30, 2014. There was no provision for loan losses recorded for the first half of 2015, compared to a $1.2 million reversal in loan loss reserves for the same period of 2014. CBB also recorded no provision for unfunded loan commitments for the first half of 2015 and 2014.

CAPITAL

Effective January 1, 2015, the federal banking regulators changed the ratios and ratio thresholds for capital evaluations to conform to the prompt corrective action and the Basel III capital rules. As of June 30, 2015, the impact of such change on capital is minimal and CBB exceeded the regulatory capital requirements under the new Basel III capital rules to be classified as “well-capitalized.”

 

 

     

 

 

Well Capitalized

Regulatory Requirement

June 30,

2015

March 31,

2015

Well Capitalized

Regulatory Requirement

June 30,

2014

 
Leverage ratio 5.00% 11.91% 12.08% 5.00% 11.57%
Common equity tier 1 capital ratio 6.50% 13.42% 13.22% N/A N/A
Tier 1 risk-based ratio 8.00% 13.42% 13.22% 6.00% 13.83%
Total risk-based ratio 10.00% 14.68% 14.47% 10.00% 15.09%
 

“We are very pleased with the upward trends of our net interest margin and core earnings. We continue to benefit from an improving economy and business climate resulting in an improvement in our asset quality, coupled with strong loan originations. We remain optimistic about the expansion of our franchise and the financial outlook for the remainder of 2015,” commented Ms. Kim.

ABOUT COMMONWEALTH BUSINESS BANK (“CBB BANK”)

Commonwealth Business Bank is a full-service commercial bank also doing business as “CBB Bank,” and specializes in small- to medium-sized businesses. CBB has five full service branches in Los Angeles and Orange Counties and four loan production offices in Texas, Georgia and Colorado.

For additional information, please visit CBB’s website at www.cbb-bank.com.

NON-GAAP FINANCIAL MEASURES

CBB may use certain non-GAAP financial measures to provide meaningful supplemental information regarding CBB’s operational performance and to enhance investors’ overall understanding of such financial performance. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under the GAAP.

FORWARD-LOOKING STATEMENTS

This release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include, but are not necessarily limited to, fluctuations in interest rates, inflation, government regulations and general economic conditions, and competition within the business areas in which Commonwealth Business Bank is conducting its operations, including the real estate market in California, and other factors beyond Commonwealth Business Bank’s control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management’s view only as of the date hereof. Commonwealth Business Bank undertakes no obligation to revise these forward-looking statements publicly to reflect subsequent events or circumstances.

 
BALANCE SHEET (Unaudited)
(Dollars in thousands)
             
June 30, March 31, % December 31, % June 30, %
  2015     2015   Change   2014   Change   2014   Change
ASSETS
Cash and due from banks $ 5,799 $ 7,291 -20.5 % $ 5,874 -1.3 % $ 8,395 -30.9 %
Interest-earning due from FRB and other banks 93,043 68,078 36.7 % 56,901 63.5 % 101,750 -8.6 %
Investment securities 7,640 5,756 32.7 % 7,058 8.2 % 7,278 5.0 %
Loans held-for-sale, at the lower of cost or fair value 25,286 16,543 52.9 % 21,267 18.9 % 15,779 60.3 %
Loans 596,956 590,650 1.1 % 548,787 8.8 % 485,849 22.9 %
Less: Allowance for loan losses   (9,039 )   (8,995 ) 0.5 %   (8,977 ) 0.7 %   (8,837 ) 2.3 %
Loans receivable, net of ALLL 587,917 581,655 1.1 % 539,810 8.9 % 477,012 23.2 %
 
FHLB & FRB stock 4,781 4,189 14.1 % 4,171 14.6 % 4,161 14.9 %
Other assets   19,562     20,379   -4.0 %   18,369   6.5 %   15,804   23.8 %
TOTAL ASSETS $ 744,028     703,891   5.7 % $ 653,450   13.9 % $ 630,179   18.1 %
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing $ 140,284 134,999 3.9 % $ 125,893 11.4 % $ 125,788 11.5 %
Interest-bearing   504,362     473,894   6.4 %   446,919   12.9 %   430,271   17.2 %
Total deposits 644,646 608,893 5.9 % 572,812 12.5 % 556,059 15.9 %
 
FHLB advances 10,000 10,000 0 % - 100.0 % - 100.0 %
Other liabilities   5,337     4,304   24 %   4,772   11.8 %   4,151   28.6 %
Total liabilities   659,983     623,197   6 %   577,584   14.3 %   560,210   17.8 %
 
Stockholders' Equity   84,045     80,694   4.2 %   75,866   10.8 %   69,969   20.1 %
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 744,028   $ 703,891   5.7 % $ 653,450   13.9 % $ 630,179   18.1 %
 
             
STATEMENT OF INCOME (Unaudited)
(Dollars in thousands, except per share information)
 
Three Months Ended Six Months Ended
June 30, March 31, % June 30, % June 30, June 30, %
2015 2015 Change 2014 Change 2015   2014   Change
 
Interest income $ 8,394 $ 7,595 10.5 % $ 6,423 30.7 % $ 15,989 $ 12,702 25.9 %
Interest expense   1,192   1,113 7.1 %   1,084 10.0 %   2,305   2,118   8.8 %
Net interest income 7,202 6,482 11.1 % 5,339 34.9 % 13,684 10,584

29.3

%
 
Provision for loan losses and loan commitments   -   - -   - -   -   (1,178 ) -100.0 %
Net interest income after provision for ALLL 7,202 6,482 11.1 % 5,339 34.9 % 13,684 11,762 16.3 %
 
Gain on sale of loans 2,294 2,096 9.4 % 1,992 15.2 % 4,390 4,854 -9.6 %
Service charges and other income   540   542 -0.4 %   645 -16.3 %   1,082   1,130   -4.2 %
Noninterest income 2,834 2,638 7.4 % 2,637 7.5 % 5,472 5,984 -8.6 %
 
Salaries and employee benefits 3,092 2,912 6.2 % 2,566 20.5 % 6,004 5,206 15.3 %
Occupancy and equipment 523 453 15.5 % 386 35.5 % 976 749 30.3 %
Other expenses   1,263   987 28.0 %   832 51.8 %   2,250   1,721   30.7 %
Noninterest expense 4,878 4,352 12.1 % 3,784 28.9 % 9,230 7,676 20.2 %
 
Income before Income Taxes 5,158 4,768 8.2 % 4,192 23.0 % 9,926 10,070 -1.4 %
 
Income tax provision 2,134 1,996 6.9 % 1,762 21.1 % 4,130 4,207 -1.8 %
         
Net income $ 3,024 $ 2,772 9.1 % $ 2,430 24.4 % $ 5,796 $ 5,863   -1.1 %
 
 
Weighted average shares for basic EPS 8,070,020 7,852,799 2.8 % 7,716,832 4.6 % 7,962,010 7,708,034 3.3 %
Weighted average shares for diluted EPS 8,342,094 8,263,307 1.0 % 8,217,222 1.5 % 8,303,301 8,205,340 1.2 %
 
Basic EPS $ 0.37 $ 0.35 5.7 % $ 0.31 19.4 % $ 0.73 $ 0.76 -3.9 %
Diluted EPS $ 0.36 $ 0.34 5.9 % $ 0.30 20.0 % $ 0.70 $ 0.71 -1.4 %
 
Note: All earnings per share data, including weighted average common shares outstanding has been retroactively adjusted to reflect the 2:1 stock split in March 2015.
 
           
SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share information)
       
Three Months Ended Six Months Ended
June 30, March 31, % June 30, % June 30, June 30, %
  2015     2015   Change   2014   Change   2015     2014   Change

Performance Ratios:

Return on average assets 1.72 % 1.69 % 1.8 % 1.61 % 6.8 % 1.71 % 2.02 % -15.6 %
Return on average equity 14.72 % 14.40 % 2.2 % 14.20 % 3.7 % 14.56 % 17.71 % -17.8 %
Net interest margin 4.21 % 4.04 % 4.2 % 3.61 % 16.6 % 4.13 % 3.72 % 11.0 %
Cost of funds 0.78 % 0.77 % 1.3 % 0.82 % -4.9 % 0.77 % 0.83 % -6.7 %
Efficiency ratio 48.61 % 47.72 % 1.9 % 47.44 % 2.5 % 48.18 % 46.33 % 4.0 %
 

Capital Ratios:

Core capital (leverage) ratio 11.91 % 12.08 % -1.4 % 11.57 % 2.9 % 11.91 % 11.57 % 2.9 %
Tier 1 risk-based capital ratio 13.42 % 13.22 % 1.5 % 13.83 % -3.0 % 13.42 % 13.83 % -3.0 %
Total risk-based capital ratio 14.68 % 14.47 % 1.5 % 15.09 % -2.7 % 14.68 % 15.09 % -2.7 %
Tangible common equity / total assets 11.30 % 11.46 % -1.4 % 11.10 % 1.8 % 11.30 % 11.10 % 1.8 %
Tangible common equity per share $ 10.40 $ 10.03 3.7 % $ 9.04 15.0 % $ 10.40 $ 9.04 15.0 %
 

Selected Average Balances:

Loans, net of deferred fees/costs (1) $ 606,434 $ 577,255 5.1 % $ 483,090 25.5 % $ 591,925 $ 478,900 23.6 %
Total investment securities 5,732 6,274 -8.6 % 7,349 -22.0 % 6,001 7,422 -19.1 %
Interest-earning assets 686,202 650,574 5.5 % 593,076 15.7 % 668,486 573,196 16.6 %
Total assets 703,948 666,432 5.6 % 604,637 16.4 % 685,293 584,241 17.3 %
Noninterest-bearing deposits 117,928 115,019 2.5 % 102,973 14.5 % 116,481 90,145 29.2 %
Total deposits 606,355 575,131 5.4 % 532,054 14.0 % 590,829 513,651 15.0 %
Interest-bearing liabilities 498,427 468,715 6.3 % 429,081 16.2 % 483,653 423,507 14.2 %
Stockholders' equity 82,406 78,091 5.5 % 68,622 20.1 % 80,260 66,742 20.3 %
 
(1) Includes loans held-for-sale.
 
 
SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited)
(Dollars in thousands)
             
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
2015 2015 2014 2014 2014
 

Allowance for Loan Losses

Balance at beginning of period $ 8,995 $ 8,977 $ 8,860 $ 8,837 $ 8,737
Provision for loan losses - - 540 - -
Charge-offs 19 7 455 - -

Recoveries

  63     25     32     23     100  
Balance at the end of period $ 9,039   $ 8,995   $ 8,977   $ 8,860   $ 8,837  
 

Nonperforming Assets:

Over 90 days still accruing $ - $ - $ - $ - $ -
Nonaccrual loans (1) 1,930 2,162 2,175 1,919 1,981
Performing TDR loans   5,619     5,815     6,023     6,135     6,217  
Total nonperforming loans   7,549     7,977     8,198     8,054   $ 8,198  
 
Other real estate owned   -     -     -     -     -  
Total nonperforming assets $ 7,549   $ 7,977   $ 8,198   $ 8,054   $ 8,198  
 

Classified Loans (1):

Substandard $ 6,471 $ 6,910 $ 7,110 $ 8,113 $ 8,274
Doubtful - - - - -
Loss   -     -     -     -     -  
Total classified assets $ 6,471   $ 6,910   $ 7,110   $ 8,113   $ 8,274  
 

Delinquent Loans:

Loans 30-89 days past due $ 92 $ 18 $ 83 $ 727 $ 19
90 days or more past due and still accruing - - - - -
Nonaccrual   1,930     2,162     2,175     1,919     1,981  
Total delinquent loans $ 2,022   $ 2,180   $ 2,258   $ 2,646   $ 2,000  
 

Asset Quality Ratios:

Net charge-offs to average gross loans (2) -0.03 % -0.01 % 0.30 % -0.02 % -0.08 %
Nonaccrual loans to gross loans 0.32 % 0.37 % 0.40 % 0.37 % 0.41 %
Total NPA to total assets 1.01 % 1.13 % 1.25 % 1.28 % 1.30 %
Classified assets to total assets 0.87 % 0.98 % 1.09 % 1.29 % 1.31 %
Classified assets to Tier 1 and ALLL 6.95 % 7.70 % 8.38 % 9.88 % 10.50 %
Nonperforming loans to gross loans (exc. LHFS) 1.26 % 1.35 % 1.49 % 1.55 % 1.69 %
ALLL to gross loans (exc. LHFS) 1.51 % 1.52 % 1.64 % 1.70 % 1.82 %
ALLL to nonaccrual loans 468.34 % 416.05 % 412.74 % 461.70 % 446.09 %
ALLL to nonperforming loans 119.74 % 112.76 % 109.50 % 110.01 % 107.80 %
Texas ratio (3) 8.11 % 8.89 % 9.66 % 9.81 % 10.40 %
 
(1) Net of SBA guaranteed balance.
(2) Includes loans held-for-sale.
(3) Nonperforming assets divided by tangible common equity and ALLL.
 
                     
MARGIN ANALYSIS (Unaudited)
(Dollars in thousands)
 
Three Months Ended
June 30, 2015 March 31, 2015 June 30, 2014
Avg Balance  

Interest

  Yield Avg Balance  

Interest

  Yield

Avg Balance

 

Interest

  Yield

 

 

 

INTEREST-EARNING ASSETS
Loans (1) $ 606,434 $ 8,150 5.39 % $ 577,255

$

7,444

5.23 % $ 483,090

$

6,255

5.19 %
Investment securities 5,732 33 2.31 % 6,274

29

1.87 % 7,349

39

2.13 %
Interest-earning due from FRB and other banks 69,405 52 0.30 % 62,872

51

0.33 % 98,558

70

0.28 %
Other earning assets   4,631       159   13.77 %   4,173      

71

  6.90 %   4,079    

59

5.80 %
Total interest-earning assets 686,202 8,394 4.91 % 650,574

7,595

4.73 % 593,076

6,423

4.34 %
 
NONINTEREST-EARNING ASSETS
Cash and due from banks 6,876 6,479 6,321
Other noninterest-earning assets   19,882     18,367     14,039  
Total noninterest-earning assets 26,758 24,846 20,360
 
Less: Allowance for loan losses (9,012 ) (8,988 ) (8,799 )
     
TOTAL ASSETS $ 703,948   $ 666,432   $ 604,637  
 
INTEREST-BEARING DEPOSITS
Interest-bearing demand $ 1,135 $ 1 0.15 % $ 667 - 0.15 % $ 206

$

- 0.15 %
Money market 142,462 312 0.88 % 142,901

323

0.92 % 153,497

379

0.99 %
Savings 7,374 29 1.58 % 7,760

39

2.04 % 9,034

54

2.40 %
Time deposits   337,456       809   0.96 %   308,784      

716

  0.94 %   266,344      

651

  0.98 %
Total interest-bearing deposits 488,427 1,151 0.95 % 460,112

1,078

0.95 % 429,081

1,084

1.01 %
 
Borrowings   10,000       41   1.65 %   8,603      

35

  1.65 %   -       -   -  
Total interest-bearing liabilities 498,427 1,192 0.96 % 468,715 1,113 0.96 % 429,081 1,084 1.01 %
 
Noninterest-bearing deposits 117,928 115,019 102,973
Other liabilities 5,187 4,607 3,961
 
Stockholders' equity 82,406 78,091 68,622
     

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$ 703,948   $ 666,432   $ 604,637  
 
Net interest income $ 7,202 $ 6,482 $ 5,339
 
 
Net interest spread 3.95 % 3.77 % 3.33 %
 
Net interest margin 4.21 % 4.04 % 3.61 %
 
Cost of funds 0.78 % 0.77 % 0.82 %
 
(1) Includes loans-held-for-sale.
 
 
MARGIN ANALYSIS (Six Months) (Unaudited)
(Dollars in thousands)
             
Six Months Ended
June 30, 2015

June 30, 2014

Avg Balance   Interest   Yield

Avg Balance

  Interest   Yield
 
INTEREST-EARNING ASSETS
Loans (1) $ 591,925 $ 15,594 5.31 %

$

478,900

$ 12,380 5.21 %
Investment securities 6,001 62 2.08 %

7,422

82 2.23 %
Interest-earning due from banks 66,157 103 0.31 %

82,914

118 0.29 %
Other earning assets   4,403       230   10.52 %  

3,960

      122   6.21 %
Total interest-earning assets 668,486 15,989 4.82 %

573,196

12,702 4.47 %
 
NONINTEREST-EARNING ASSETS
Cash and due from banks 6,679

6,249

Other noninterest-earning assets   19,128    

13,843

 
Total noninterest-earning assets 25,807

20,092

 
Less: Allowance for loan losses (9,000 )

(9,047

)

   
TOTAL ASSETS $ 685,293  

$

584,241

 
 
INTEREST-BEARING DEPOSITS
Interest-bearing demand $ 903 $ 1 0.15 %

$

232

$ - 0.15 %
Money market 142,680 635 0.90 %

151,696

748 0.99 %
Savings 7,566 68 1.81 %

8,519

103 2.44 %
Time deposits   323,199       1,525   0.95 %  

263,059

      1,267   0.97 %
Total interest-bearing deposits 474,348 2,229 0.95 %

423,506

2,118 1.01 %
 
Short-term borrowings   9,305       76   1.65 %   1       -   0.38 %
Total interest-bearing liabilities 483,653 2,305 0.96 % 423,507 2,118 1.01 %
 
Noninterest-bearing deposits 116,481 90,145
Other Liabilities 4,899 3,847
 
Stockholders' equity 80,260 66,742
   
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 685,293   $ 584,241  
 
Net interest income $ 13,684 $ 10,584
 
Net interest spread 3.86 % 3.46 %
 
Net interest margin 4.13 % 3.72 %
 
Cost of funds 0.77 % 0.83 %
 
(1) Includes loans-held-for-sale.
 

Contacts

Commonwealth Business Bank
K. Kaye Kim
EVP & Chief Financial Officer
(323) 988-3007
Kayek@CBB-Bank.com

Contacts

Commonwealth Business Bank
K. Kaye Kim
EVP & Chief Financial Officer
(323) 988-3007
Kayek@CBB-Bank.com