LOS ANGELES--(BUSINESS WIRE)--Commonwealth Business Bank (“CBB” or the “Bank”) (OTCQB: CWBB) today announced net income of $3.1 million for the first quarter of 2016, compared with $2.5 million for the fourth quarter of 2015 and $2.8 million for the first quarter of 2015. Diluted earnings per share were $0.37 for the first quarter of 2016, compared with $0.30 for the fourth quarter of 2015 and $0.34 for the first quarter of 2015.
“In addition to strong quarterly earnings, we opened our first out of state branch at our Dallas, Texas LPO location at the beginning of the year. Opening the branch was part of our continuing efforts to expand our market presence and we believe the Dallas branch will make a significant contribution to deposit growth,” said Joanne Kim, President and CEO.
STOCK DIVIDEND
On April 28, 2016, the Bank’s Board of Directors approved a 10 percent common stock dividend payable in whole shares to shareholders of record as of the close of business on May 16, 2016, with any fractional shares paid in cash. No assurances can be provided that any additional or future dividends, whether payable in cash or stock of the Bank, will be declared or paid, or the amount or timing of such dividends, if any. The future declaration and payment of any dividend is subject to applicable law, will be made at the discretion of the Board of Directors and will be based on such factors as the Bank’s earnings, financial condition, cash requirements and other factors deemed relevant by the Bank’s Board of Directors.
RESULTS OF OPERATIONS
|
Quarterly Results Summary (Unaudited) |
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| Three Months Ended | |||||||||||||||||||||||
| March 31, | December 31, | % | March 31, | % | |||||||||||||||||||
| 2016 | 2015 | Change | 2015 | Change | |||||||||||||||||||
| (Dollars in thousands, except per share information) | |||||||||||||||||||||||
| Net income | $ | 3,103 | $ | 2,546 | 21.9 | % | $ | 2,772 | 11.9 | % | |||||||||||||
| Net income per diluted common share | $ | 0.37 | $ | 0.30 | 23.3 | % | $ | 0.34 | 8.8 | % | |||||||||||||
| Return on average assets | 1.62 | % | 1.31 | % | 23.2 | % | 1.69 | % | -4.2 | % | |||||||||||||
| Return on average equity | 13.53 | % | 11.31 | % | 19.6 | % | 14.40 | % | -6.0 | % | |||||||||||||
| Noninterest income/average assets | 1.52 | % | 1.60 | % | -4.7 | % | 1.64 | % | ¹ | -6.8 | % | ||||||||||||
| Pre-tax, pre-provision earnings/average assets | 2.98 | % | 2.40 | % | 24.1 | % | 2.90 | % | 2.7 | % | |||||||||||||
| Noninterest expense/average assets | 2.89 | % | 3.11 | % | -7.1 | % | 2.68 | % | ¹ | 7.9 | % | ||||||||||||
| Efficiency ratio | 49.24 | % | 56.44 | % | -12.7 | % | 48.00 | % | ¹ | 2.6 | % | ||||||||||||
| Net interest margin | 4.46 | % | 4.00 | % | 11.6 | % | 4.04 | % | 10.5 | % | |||||||||||||
| 1 Restated due to the reclassification of certain SBA fees | |||||||||||||||||||||||
Net income for the first quarter of 2016 increased $557,000 compared to the prior quarter and increased $331,000 compared to the first quarter of 2015. The quarter-over-quarter increase was primarily due to a $764,000 increase in net interest income, a $691,000 decrease in the data service expense, and a $144,000 decrease in marketing expense, which were partially offset by a $459,000 increase in salary and employee benefits expense and a $454,000 increase in income tax expense.
The year-over-year quarterly increase was primarily due to $1.8 million increase in net interest income, and a $228,000 increase in gain on sales of loans, which were partially offset by a $400,000 increase in provision for loan losses, an $854,000 increase in salary and employee benefits expense, a $221,000 increase in data service expense, and a $210,000 increase in income tax expense.
Net Interest Income and Net Interest Margin
Net interest income before provision for loan losses was $8.3 million for the first quarter of 2016, an increase of $764,000, or 10.1%, compared to $7.6 million for the prior quarter, and an increase of $1.8 million, or 28.5%, compared to $6.5 million for the year ago quarter. These increases were primarily due to $2.1 million and $89.6 million increases, respectively, in average loan balances, and 51 and 48 basis point increases, respectively, in the average yield on loans.
The net interest margin improved to 4.46% for the current quarter, from 4.00% in the prior quarter and 4.04% in the same quarter of 2015. The increase in the net interest margin from the prior and year ago quarters was primarily due to a 48 basis point increase in the yield on interest-earning assets to 5.20% from 4.72% in the prior quarter, and a 47 basis point increase in the yield on interest-earning assets from 4.73% in the year ago quarter. These increases were primarily driven by increases in the average yield on loans. The increase in the average yield on loans in the current quarter was primarily due to (i) the December 2015 increase in the prime interest rate, (ii) recognition of $275,000 of interest income due to the payoff of a nonaccrual loan, and (iii) a $77,000 increase in prepayment penalties. Our cost of funds increased to 0.82% for the current quarter, from 0.80% in the prior quarter and from 0.77% in the same period last year. The increase in our cost of funds in the comparative quarters was due to increases in the ratio of higher-cost time deposits to total deposits.
Noninterest Income
For the current quarter, noninterest income totaled $2.9 million, a decrease of $186,000 compared to the prior quarter, and an increase of $234,000 compared to the year ago quarter. The quarter-over-quarter decrease was primarily due to a $148,000 decrease in SBA loan servicing income. The year-over-year quarterly increase was due to a $228,000 increase in gains on sales of SBA loans, which was partially offset by a $77,000 decrease in SBA loan servicing income. The declines in SBA loan servicing income were primarily due to an increased level of SBA loan prepayments.
During the first quarter of 2016, the Bank sold $31.4 million of SBA loans, compared with $33.8 million in the fourth quarter of 2015 and $25.7 million in the first quarter of 2015. The amount of SBA loan sales varies based on the volume of loans we originate, our liquidity needs and market conditions.
| Three Months Ended | |||||||||||||||||||
| March 31, | December 31 | % | March 31, | % | |||||||||||||||
| 2016 | 2015 | Change | 2015 | Change | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| SBA loans held-for-sale at beginning of the quarter | $ | 17,809 | $ | 21,043 | -15.4 | % | $ | 21,267 | -16.3 | % | |||||||||
| SBA loans originated/transferred from held-for-investment during the quarter | 23,276 | 30,676 | -24.1 | % | 21,097 | 10.3 | % | ||||||||||||
| SBA loans sold during the quarter | (31,409 | ) | (33,762 | ) | -7.0 | % | (25,672 | ) | 22.3 | % | |||||||||
| SBA loans principal payment, net of advance | (74 | ) | (148 | ) | -50.0 | % | (149 | ) | -50.3 | % | |||||||||
| SBA loans held-for-sale at end of the quarter | $ | 9,602 | $ | 17,809 | -46.1 | % | $ | 16,543 | -42.0 | % | |||||||||
| Gain on sale of SBA loans | $ | 2,324 | $ | 2,333 | -0.4 | % | $ | 2,096 | 10.9 | % | |||||||||
| Premium on sale (weighted average) | 9.88 | % | 9.48 | % | 4.2 | % | 11.07 | % | -10.8 | % | |||||||||
| SBA loan production | $ | 41,334 | $ | 43,313 | -4.6 | % | $ | 45,306 | -8.8 | % | |||||||||
Noninterest Expense
Noninterest expense for the first quarter of 2016 was $5.5 million, a decrease of $483,000, or 8.0%, from $6.0 million in the prior quarter and an increase of $1.1 million, or 25.8%, from $4.4 million in the same quarter last year. The quarter-over-quarter decrease was primarily due to a $691,000 decrease in data service expense and a $144,000 decrease in marketing expense which were partially offset by a $459,000 increase in salary and employee benefits expense. The decrease in data service expenses was primarily due to a $751,000 reduction in core system conversion expenses. The Bank changed core data system providers in the fourth quarter of 2015. The year-over-year quarterly increase was primarily due to an $866,000 increase in salary and employee benefits expense and a $221,000 increase in data servicing expense. The increase in salary and employee benefits expense was due to an increase in full time equivalent employees (“FTE”) to 132 at the end of the current quarter compared to 127 at the end of 2015 and 106 at the end of the year ago quarter. We increased our employee count at the management and employee level to support growth and to strengthen our infrastructure.
| At or for the Three Months Ended | |||||||||||||||||||||||
| March 31, | December 31 | % | March 31, | % | |||||||||||||||||||
| 2016 | 2015 | Change | 2015 | Change | |||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Salaries and benefits | $ | 3,778 | $ | 3,319 | 13.8 | % | $ | 2,912 | 29.7 | % | |||||||||||||
| FTE at end of period | 132 | 127 | 3.9 | % | 106 | 24.5 | % | ||||||||||||||||
| Average FTE during the period | 130 | 123 | 5.3 | % | 105 | 23.8 | % | ||||||||||||||||
| Salaries and benefit/average FTE¹ | $ | 117 | $ | 107 | 8.9 | % | $ | 114 | 2.7 | % | |||||||||||||
| Salaries and benefit/average assets¹ | 1.97 | % | 1.71 | % | 15.1 | % | 1.77 | % | 11.2 | % | |||||||||||||
| Noninterest expense/average assets¹ | 2.89 | % | 3.11 | % | -7.1 | % | 2.68 | % | 7.8 | % | |||||||||||||
| 1 Annualized | |||||||||||||||||||||||
Income Tax Expense
The income tax expense was $2.2 million, or an effective tax rate of 41.55%, compared to $1.8 million, or an effective tax rate of 40.76%, in the prior quarter and $2.0 million, or an effective tax rate of 41.86%, in the year ago quarter.
Pre-Tax, Pre-Provision Income
For the first quarter of 2016, our pre-tax, pre-provision (“PTPP”) income was $5.7 million, an increase of $1.1 million, or 22.8%, from $4.6 million for the prior quarter and an increase of $941,000, or 19.7%, from $4.8 million for the same quarter of 2015. Annualized PTPP income to average assets increased to 2.98% in the current quarter, compared with 2.40% and 2.90% in the prior and year ago quarters, respectively.
| Three Months Ended | ||||||||||||||||||
| March 31, | December 31, | % | March 31, | % | ||||||||||||||
| 2016 | 2015 | Change | 2015 | Change | ||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||
| PTPP income | $ | 5,709 | $ | 4,648 | 22.8 | % | $ | 4,768 | 19.7 | % | ||||||||
| Annualized PTPP/average assets | 2.98 | % | 2.40 | % | 24.2 | % | 2.90 | % | 2.8 | % | ||||||||
| PTPP, excluding gain on sale of SBA loans | $ | 3,385 | $ | 2,315 | 46.2 | % | $ | 2,672 | 26.7 | % | ||||||||
BALANCE SHEET SUMMARY
At March 31, 2016, the Bank had total assets of $805.0 million, an increase of $18.6 million, or 2.4%, from $786.4 million at December 31, 2015, and an increase of $101.1 million, or 14.4%, from $703.9 million at March 31, 2015. Earning assets totaled $784.2 million at March 31, 2016, an increase of $18.5 million, or 2.42%, from $765.7 million at December 31, 2015 and an increase of $99.0 million, or 14.4%, from $685.2 million at March 31, 2015. The year-over-year increase in earning assets was primarily due to a $37.8 million increase in cash and interest-bearing deposits at the FRB and other banks, and a $60.9 million growth in loans including loans held-for-sale. These increases were partially funded by an $87.1 million increase in deposits.
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||||||||||
| Assets | $ | 805,001 | $ | 786,423 | $ | 778,807 | $ | 744,028 | $ | 703,891 | |||||||||||
| Loans receivable, net | 649,452 | 641,145 | 640,687 | 587,917 | 581,655 | ||||||||||||||||
| Deposits | 695,954 | 680,512 | 675,225 | 644,646 | 608,893 | ||||||||||||||||
| Tangible common equity/total assets | 11.62 | % | 11.44 | % | 11.20 | % | 11.30 | % | 11.46 | % | |||||||||||
| Tangible common equity per common share | $ | 11.48 | $ | 11.06 | $ | 10.78 | $ | 10.40 | $ | 10.03 | |||||||||||
| Nonperforming assets to assets | 0.91 | % | 0.92 | % | 0.91 | % | 1.01 | % | 1.13 | % | |||||||||||
| ALLL to nonperforming assets | 123.10 | % | 117.58 | % | 130.04 | % | 119.74 | % | 112.76 | % | |||||||||||
| Nonperforming assets to tangible common equity and ALLL | 7.15 | % | 7.38 | % | 7.36 | % | 8.11 | % | 8.89 | % | |||||||||||
Loans Receivable
The following table lists gross loans by type at the dates indicated:
|
March 31,
2016 |
December 31,
2015 |
September 30,
2015 |
June 30,
2015 |
March 31,
2015 |
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| (Dollars in thousands) | |||||||||||||||||||||
| Construction | $ | 10,820 | $ | 10,577 | $ | 7,938 | $ | 7,460 | $ | 5,616 | |||||||||||
| Commercial real estate | 507,294 | 502,679 | 498,659 | 453,915 | 444,878 | ||||||||||||||||
| Commercial and industrial | 136,911 | 131,869 | 140,194 | 131,144 | 136,231 | ||||||||||||||||
| Consumer | 2,082 | 3,153 | 1,872 | 3,236 | 2,879 | ||||||||||||||||
| Gross loans | 657,107 | 648,278 | 648,663 | 595,755 | 589,604 | ||||||||||||||||
| Net deferred loan costs | 1,371 | 1,413 | 1,262 | 1,201 | 1,046 | ||||||||||||||||
| Gross loans, net | $ | 658,478 | $ | 649,691 | $ | 649,925 | $ | 596,956 | $ | 590,650 | |||||||||||
| Loans held-for-sale | $ | 9,602 | $ | 17,809 | $ | 21,043 | $ | 25,286 | $ | 16,543 | |||||||||||
| Gross loans, net, including loans held-for-sale | $ | 668,080 | $ | 667,500 | $ | 670,968 | $ | 622,242 | $ | 607,193 | |||||||||||
| Loan-to-deposit (LTD) ratio: | 94.6 | % | 95.5 | % | 96.3 | % | 92.6 | % | 97.0 | % | |||||||||||
| LTD ratio including loans held-for-sale | 96.0 | % | 98.1 | % | 99.4 | % | 96.5 | % | 99.7 | % | |||||||||||
At March 31, 2016, gross loans, net, including loans held-for-sale were $668.1 million, an increase of $580,000, or 0.1%, from $667.5 million at the end of the prior quarter and an increase of $60.9 million, or 10.0%, from $607.2 million at the end of the year ago quarter. During the first quarter of 2016, total new loan production, including revolving lines of credit, was $76.2 million, compared to $76.4 million in the prior quarter and $74.1 million in the same quarter last year. As discussed earlier, during the current quarter we sold $31.4 million of SBA loans, compared to $33.8 million in the prior quarter and $25.7 million in the year ago quarter.
Deposits
The following table sets forth the amount of deposits by category at the dates indicated:
| March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | |||||||||||||||||||||||||||||||||||
| Balance | % | Balance | % | Balance | % | Balance | % | Balance | % | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 156,022 | 22.4 | % | $ | 163,385 | 24.0 | % | $ | 145,348 | 21.5 | % | $ | 140,284 | 21.8 | % | $ | 134,999 | 22.2 | % | |||||||||||||||||||
| Money market & NOW | 138,977 | 20.0 | % | 133,343 | 19.6 | % | 141,722 | 21.0 | % | 134,731 | 20.9 | % | 143,313 | 23.5 | % | ||||||||||||||||||||||||
| Savings | 9,277 | 1.3 | % | 8,845 | 1.3 | % | 7,354 | 1.1 | % | 7,482 | 1.2 | % | 7,345 | 1.2 | % | ||||||||||||||||||||||||
| Time deposits | 391,678 | 56.3 | % | 374,939 | 55.1 | % | 380,801 | 56.4 | % | 362,149 | 56.2 | % | 323,236 | 53.1 | % | ||||||||||||||||||||||||
| Total Deposits | $ | 695,954 | 100.0 | % | $ | 680,512 | 100.0 | % | $ | 675,225 | 100.0 | % | $ | 644,646 | 100.0 | % | $ | 608,893 | 100.0 | % | |||||||||||||||||||
| Cost of deposits for the quarter | 0.81 | % | 0.79 | % | 0.79 | % | 0.76 | % | 0.76 | % | |||||||||||||||||||||||||||||
Total deposits were $696.0 million at quarter end, an increase of $15.4 million, or 2.3%, compared to $680.5 million at the end of the prior quarter and an increase of $87.1 million, or 14.3%, compared to $608.9 million at the end of the same quarter last year. Noninterest-bearing deposits decreased $7.4 million, or 4.5%, to $156.0 million at the end of the current quarter and increased $21.0 million, or 15.6%, compared to the end of the year ago quarter. Noninterest-bearing deposits to total deposits were 22.4%, 24.0% and 22.2% at the end of the current, prior and year ago quarters, respectively. The Bank’s cost of deposits increased 2 basis points to 0.81% in the current quarter from 0.79% in the prior quarter and increased 5 basis points from 0.76% for the same quarter last year due to increases in the ratio of higher-cost time deposits to total deposits in the comparative quarters.
ASSET QUALITY
| March 31 | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||
|
Delinquent Loans: |
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| Loans 30-89 days past due | $ | 2,270 | $ | 175 | $ | 1,369 | $ | 92 | $ | 18 | |||||||||||||||||
| 90 days or more past due and still accruing | - | - | - | - | - | ||||||||||||||||||||||
| Nonaccrual | 1,895 | 2,927 | 2,682 | 1,930 | 2,162 | ||||||||||||||||||||||
|
Total delinquent loans |
$ | 4,165 | $ | 3,102 | $ | 4,051 | $ | 2,022 | $ | 2,180 | |||||||||||||||||
|
Nonperforming Assets: |
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| Over 90 days still accruing | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||
| Nonaccrual loans ¹ | 1,895 | 2,927 | 2,682 | 1,930 | 2,162 | ||||||||||||||||||||||
| Performing TDR loans | 4,282 | 4,341 | 4,422 | 5,619 | 5,815 | ||||||||||||||||||||||
| Total nonperforming loans | 6,177 | 7,268 | 7,104 | 7,549 | 7,977 | ||||||||||||||||||||||
| Other real estate owned | 1,155 | - | - | - | - | ||||||||||||||||||||||
| Total nonperforming assets | $ | 7,332 | $ | 7,268 | $ | 7,104 | $ | 7,549 | $ | 7,977 | |||||||||||||||||
| Nonaccrual loans to gross loans (exc. LHFS) | 0.29 | % | 0.45 | % | 0.41 | % | 0.32 | % | 0.37 | % | |||||||||||||||||
| Nonperforming loans to gross loans (exc. LHFS) | 0.94 | % | 1.12 | % | 1.09 | % | 1.26 | % | 1.35 | % | |||||||||||||||||
| Total nonperforming assets to total assets | 0.91 | % | 0.92 | % | 0.91 | % | 1.01 | % | 1.13 | % | |||||||||||||||||
|
Classified Loans: ¹ |
|||||||||||||||||||||||||||
| Substandard | $ | 8,346 | $ | 7,056 | $ | 7,483 | $ | 6,471 | $ | 6,910 | |||||||||||||||||
| Doubtful | - | - | - | - | - | ||||||||||||||||||||||
| Loss | - | - | - | - | - | ||||||||||||||||||||||
| Total classified assets | $ | 8,346 | $ | 7,056 | $ | 7,483 | $ | 6,471 | $ | 6,910 | |||||||||||||||||
| Classified assets to total assets | 1.04 | % | 0.90 | % | 0.96 | % | 0.87 | % | 0.98 | % | |||||||||||||||||
| Classified assets to Tier 1 and ALLL | 8.14 | % | 7.16 | % | 7.75 | % | 6.95 | % | 7.70 | % | |||||||||||||||||
| 1 Net of SBA guaranteed balance | |||||||||||||||||||||||||||
Loans 30 to 89 days past due and on accrual status at the end of the current quarter were $2.3 million, an increase of $2.1 million compared to $175,000 at the end of the prior quarter, and an increase of $2.3 million from $18,000 a year ago. Nonaccrual loans decreased $1.0 million to $1.9 million at the end of the current quarter from $2.9 million at the end of the prior quarter, primarily due to our foreclosure of a $1.1 million commercial real estate loan. The foreclosed property is currently in escrow and no loss is anticipated if the escrow closes.
The allowance for loan losses at the end of the current quarter was $9.0 million, or 1.37% of gross loans excluding loans held-for-sale, compared to $8.5 million, or 1.32% of gross loans excluding loans held-for-sale, at December 31, 2015, and $9.0 million, or 1.52% of gross loans excluding loans held-for-sale, at March 31, 2015. The Bank recorded a $400,000 provision for loan losses in the current quarter, compared to a $350,000 provision for loan losses, and no provision for loan losses in the prior and year ago quarters, respectively.
CAPITAL
At March 31, 2016, the Bank continued to exceed all regulatory capital requirements to be classified as a “well-capitalized” institution, and maintained a capital conservation buffer in excess of the minimum required to avoid limitations on capital distributions, including dividend payments, and certain discretionary bonus payments. The minimum capital conservation buffer requirement was 0.625% in 2016 and there was no capital conservation buffer requirement in 2015. The Bank’s regulatory capital ratios and capital conservation buffer are summarized below:
| Required To Be | |||||||||||||
| Well-Capitalized | |||||||||||||
| Under Prompt | |||||||||||||
| Corrective Action | March 31, | December 31, | March 31, | ||||||||||
| Provisions | 2016 | 2015 | 2015 | ||||||||||
| Leverage ratio | 5.00 | % | 12.09 | % | 11.67 | % | 12.08 | % | |||||
| Common equity tier 1 capital ratio | 6.50 | % | 13.62 | % | 13.25 | % | 13.22 | % | |||||
| Tier 1 risk-based capital ratio | 8.00 | % | 13.62 | % | 13.25 | % | 13.22 | % | |||||
| Total risk-based capital ratio | 10.00 | % | 14.87 | % | 14.50 | % | 14.47 | % | |||||
| Capital conservation buffer | 6.87 | % | N/A | N/A | |||||||||
| Minimum capital conservation buffer | 0.625 | % | N/A | N/A | |||||||||
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) |
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| (Dollars in thousands) | |||||||||||||||||||
| March 31, | December 31, | % | March 31, | % | |||||||||||||||
| 2016 | 2015 | Change | 2015 | Change | |||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 6,307 | $ | 7,878 | -19.9 | % | $ | 7,291 | -13.5 | % | |||||||||
| Interest-earning deposits at the FRB and other banks | 106,899 | 88,951 | 20.2 | % | 68,078 | 57.0 | % | ||||||||||||
| Investment securities | 4,304 | 4,363 | -1.4 | % | 5,756 | -25.2 | % | ||||||||||||
| Loans held-for-sale, at the lower of cost or fair value | 9,602 | 17,809 | -46.1 | % | 16,543 | -42.0 | % | ||||||||||||
| Loans | 658,478 | 649,691 | 1.4 | % | 590,650 | 11.5 | % | ||||||||||||
| Allowance for loan losses | (9,026 | ) | (8,546 | ) | 5.6 | % | (8,995 | ) | 0.3 | % | |||||||||
| Loans receivable, net | 649,452 | 641,145 | 1.3 | % | 581,655 | 11.7 | % | ||||||||||||
| FHLB & FRB stock | 4,867 | 4,853 | 0.3 | % | 4,189 | 16.2 | % | ||||||||||||
| Other assets | 23,570 | 21,424 | 10.0 | % | 20,379 | 15.7 | % | ||||||||||||
| TOTAL ASSETS | $ | 805,001 | $ | 786,423 | 2.4 | % | $ | 703,891 | 14.4 | % | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||
| Noninterest-bearing | $ | 156,022 | $ | 163,385 | -4.5 | % | $ | 134,999 | 15.6 | % | |||||||||
| Interest-bearing | 539,932 | 517,127 | 4.4 | % | 473,894 | 13.9 | % | ||||||||||||
| Total deposits | 695,954 | 680,512 | 2.3 | % | 608,893 | 14.3 | % | ||||||||||||
| FHLB advances | 10,000 | 10,000 | 0.0 | % | 10,000 | 100.0 | % | ||||||||||||
| Other liabilities | 5,496 | 5,924 | -7.2 | % | 4,304 | 27.7 | % | ||||||||||||
| Total liabilities | 711,450 | 696,436 | 2.2 | % | 623,197 | 14.2 | % | ||||||||||||
| Stockholders' Equity | 93,551 | 89,987 | 4.0 | % | 80,694 | 15.9 | % | ||||||||||||
| TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | $ | 805,001 | $ | 786,423 | 2.4 | % | $ | 703,891 | 14.4 | % | |||||||||
| STATEMENT OF INCOME (Unaudited) | |||||||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| March 31, | December 31, | % | March 31, | % | |||||||||||||
| 2016 | 2015 | Change | 2015 | Change | |||||||||||||
| Interest income | $ | 9,698 | $ | 8,917 | 8.8 | % | $ | 7,595 | 27.7 | % | |||||||
| Interest expense | 1,372 | 1,355 | 1.3 | % | 1,113 | 23.3 | % | ||||||||||
| Net interest income | 8,326 | 7,562 | 10.1 | % | 6,482 | 28.4 | % | ||||||||||
| Provision for loan losses | 400 | 350 | 14.3 | % | - | ||||||||||||
| Net interest income after provision for loan losses | 7,926 | 7,212 | 9.9 | % | 6,482 | 22.3 | % | ||||||||||
| Gain on sale of loans | 2,324 | 2,333 | -0.4 | % | 2,096 | 10.9 | % | ||||||||||
| Service charges and other income | 598 | 775 | -22.8 | % | 592 | 1.0 | % | ||||||||||
| Noninterest income | 2,922 | 3,108 | -6.0 | % | 2,688 | 8.7 | % | ||||||||||
| Salaries and employee benefits | 3,778 | 3,319 | 13.8 | % | 2,912 | 29.7 | % | ||||||||||
| Occupancy and equipment | 499 | 503 | -0.8 | % | 453 | 10.2 | % | ||||||||||
| Other expenses | 1,262 | 2,200 | -42.6 | % | 1,037 | 21.7 | % | ||||||||||
| Noninterest expense | 5,539 | 6,022 | -8.0 | % | 4,402 | 25.8 | % | ||||||||||
| Income before income tax expense | 5,309 | 4,298 | 23.5 | % | 4,768 | 11.3 | % | ||||||||||
| Income tax expense | 2,206 | 1,752 | 25.9 | % | 1,996 | 10.5 | % | ||||||||||
| Net income | $ | 3,103 | $ | 2,546 | 21.9 | % | $ | 2,772 | 11.9 | % | |||||||
| Weighted average shares for basic EPS | 8,134,858 | 8,103,456 | 0.4 | % | 7,852,799 | 3.6 | % | ||||||||||
| Weighted average shares for diluted EPS | 8,354,719 | 8,364,379 | -0.1 | % | 8,263,307 | 1.1 | % | ||||||||||
| Basic EPS | $ | 0.38 | $ | 0.31 | 22.6 | % | $ | 0.35 | 8.6 | % | |||||||
| Diluted EPS | $ | 0.37 | $ | 0.30 | 23.3 | % | $ | 0.34 | 8.8 | % | |||||||
|
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 amounts) | ||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||
| March 31, | December 31 | % | March 31, | % | ||||||||||||||||||
| 2016 | 2015 | Change | 2015 | Change | ||||||||||||||||||
|
Performance Ratios: |
||||||||||||||||||||||
| Return on average assets | 1.62 | % | 1.31 | % | 23.7 | % | 1.69 | % | -4.0 | % | ||||||||||||
| Return on average equity | 13.53 | % | 11.31 | % | 19.6 | % | 14.40 | % | -6.0 | % | ||||||||||||
| Net interest margin | 4.46 | % | 4.00 | % | 11.5 | % | 4.04 | % | 10.4 | % | ||||||||||||
| Cost of funds | 0.82 | % | 0.80 | % | 2.5 | % | 0.77 | % | 6.0 | % | ||||||||||||
| Efficiency ratio | 49.24 | % | 56.44 | % | -12.7 | % | 48.00 | % | 2.6 | % | ||||||||||||
|
Capital Ratios: |
||||||||||||||||||||||
| Core capital (leverage) ratio | 12.09 | % | 11.68 | % | 3.5 | % | 12.08 | % | 0.1 | % | ||||||||||||
| Common equity tier 1 risk-based capital ratio | 13.60 | % | 13.26 | % | 2.6 | % | 13.22 | % | 2.9 | % | ||||||||||||
| Tier 1 risk-based capital ratio | 13.60 | % | 13.26 | % | 2.6 | % | 13.22 | % | 2.9 | % | ||||||||||||
| Total risk-based capital ratio | 14.85 | % | 14.51 | % | 2.3 | % | 14.47 | % | 2.6 | % | ||||||||||||
| Capital conservation buffer | 6.87 | % | N/A | N/A | N/A | N/A | ||||||||||||||||
| Minimum capital conservation buffer | 0.625 | % | N/A | N/A | N/A | N/A | ||||||||||||||||
| Tangible common equity / total assets | 11.62 | % | 11.44 | % | 1.6 | % | 11.46 | % | 1.4 | % | ||||||||||||
| Tangible common equity per share | $ | 11.48 | $ | 11.06 | 3.8 | % | $ | 10.03 | 14.5 | % | ||||||||||||
|
Selected Average Balances: |
||||||||||||||||||||||
| Gross loans, net ¹ | $ | 668,788 | $ | 666,831 | 0.3 | % | $ | 577,255 | 15.9 | % | ||||||||||||
| Total investment securities | 4,339 | 4,448 | -2.5 | % | 6,274 | -30.8 | % | |||||||||||||||
| Interest-earning assets | 750,262 | 749,850 | 0.1 | % | 650,574 | 15.3 | % | |||||||||||||||
| Total assets | 770,840 | 768,885 | 0.3 | % | 666,432 | 15.7 | % | |||||||||||||||
| Noninterest-bearing deposits | 134,277 | 140,452 | -4.4 | % | 115,019 | 16.7 | % | |||||||||||||||
| Total deposits | 662,248 | 662,374 | 0.0 | % | 575,131 | 15.1 | % | |||||||||||||||
| Interest-bearing liabilities | 537,971 | 531,922 | 1.1 | % | 468,715 | 14.8 | % | |||||||||||||||
| Stockholders' equity | 92,217 | 89,271 | 3.3 | % | 78,091 | 18.1 | % | |||||||||||||||
| 1 Includes loans held-for-sale | ||||||||||||||||||||||
| SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited) | |||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||
| 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | |||||||||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||
|
Allowance for Loan Losses |
|||||||||||||||||||||
| Balance at beginning of period | $ | 8,546 | $ | 9,238 | $ | 9,039 | $ | 8,995 | $ | 8,977 | |||||||||||
| Provision for loan losses | 400 | 350 | 150 | - | - | ||||||||||||||||
| Charge-offs | 18 | 1,227 | - | 19 | 7 | ||||||||||||||||
| Recoveries | 98 | 185 | 49 | 63 | 25 | ||||||||||||||||
| Balance at the end of period | $ | 9,026 | $ | 8,546 | $ | 9,238 | $ | 9,039 | $ | 8,995 | |||||||||||
|
Nonperforming Assets: |
|||||||||||||||||||||
| Over 90 days still accruing | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
| Nonaccrual loans ¹ | 1,895 | 2,927 | 2,682 | 1,930 | 2,162 | ||||||||||||||||
| Performing TDR loans | 4,282 | 4,341 | 4,422 | 5,619 | 5,815 | ||||||||||||||||
| Total nonperforming loans | 6,177 | 7,268 | 7,104 | 7,549 | 7,977 | ||||||||||||||||
| Other real estate owned | 1,155 | - | - | - | - | ||||||||||||||||
| Total nonperforming assets | $ | 7,332 | $ | 7,268 | $ | 7,104 | $ | 7,549 | $ | 7,977 | |||||||||||
|
Classified Loans:¹ |
|||||||||||||||||||||
| Substandard | $ | 8,346 | $ | 7,056 | $ | 7,483 | $ | 6,471 | $ | 6,910 | |||||||||||
| Doubtful | - | - | - | - | - | ||||||||||||||||
| Loss | - | - | - | - | - | ||||||||||||||||
| Total classified assets | $ | 8,346 | $ | 7,056 | $ | 7,483 | $ | 6,910 | $ | 7,110 | |||||||||||
|
Delinquent Loans: |
|||||||||||||||||||||
| Loans 30-89 days past due | $ | 2,270 | $ | 175 | $ | 1,369 | $ | 92 | $ | 18 | |||||||||||
| 90 days or more past due and still accruing | - | - | - | - | - | ||||||||||||||||
| Nonaccrual | 1,895 | 2,927 | 2,682 | 1,930 | 2,162 | ||||||||||||||||
| Total delinquent loans | $ | 4,165 | $ | 3,102 | $ | 4,051 | $ | 2,022 | $ | 2,180 | |||||||||||
|
Asset Quality Ratios: |
|||||||||||||||||||||
| Net charge-offs to average gross loans ² | -0.05 | % | 0.62 | % | -0.03 | % | -0.03 | % | -0.01 | % | |||||||||||
| Nonaccrual loans to gross loans | 0.29 | % | 0.45 | % | 0.41 | % | 0.32 | % | 0.37 | % | |||||||||||
| Total NPA to total assets | 0.91 | % | 0.92 | % | 0.91 | % | 1.01 | % | 1.13 | % | |||||||||||
| Classified assets to total assets | 1.04 | % | 0.90 | % | 0.96 | % | 0.87 | % | 0.98 | % | |||||||||||
| Classified assets to Tier 1 and ALLL | 8.14 | % | 7.16 | % | 7.75 | % | 6.95 | % | 7.70 | % | |||||||||||
| Nonperforming loans to gross loans (exc. LHFS) | 0.94 | % | 1.12 | % | 1.09 | % | 1.26 | % | 1.35 | % | |||||||||||
| ALLL to gross loans (exc. LHFS) | 1.37 | % | 1.32 | % | 1.42 | % | 1.51 | % | 1.52 | % | |||||||||||
| ALLL to nonaccrual loans | 476.31 | % | 291.97 | % | 344.44 | % | 468.34 | % | 416.05 | % | |||||||||||
| ALLL to nonperforming loans | 146.11 | % | 117.58 | % | 130.04 | % | 119.74 | % | 112.76 | % | |||||||||||
| ALLL to nonperforming assets | 123.10 | % | 117.58 | % | 130.04 | % | 119.74 | % | 112.76 | % | |||||||||||
| Texas ratio ³ | 7.15 | % | 7.38 | % | 7.36 | % | 8.11 | % | 8.89 | % | |||||||||||
| 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 | |||||||||||||||||||||||||||||||||
| March 31, 2016 | December 31, 2015 | March 31, 2015 | |||||||||||||||||||||||||||||||
| Avg Balance | Interest | Yield | Avg Balance | Interest | Yield | Avg Balance | Interest | Yield | |||||||||||||||||||||||||
| INTEREST-EARNING ASSETS | |||||||||||||||||||||||||||||||||
| Loans ¹ | $ | 668,788 | $ | 9,495 | 5.71 | % | $ | 666,831 | $ | 8,746 | 5.20 | % | $ | 577,255 | $ | 7,444 | 5.23 | % | |||||||||||||||
| Investment securities | 4,339 | 21 | 1.95 | % | 4,448 | 22 | 1.96 | % | 6,274 | 29 | 1.87 | % | |||||||||||||||||||||
| Interest-earning due from FRB and other banks | 72,283 | 92 | 0.51 | % | 73,735 | 59 | 0.32 | % | 62,872 | 51 | 0.33 | % | |||||||||||||||||||||
| Other earning assets | 4,852 | 90 | 7.46 | % | 4,836 | 90 | 7.38 | % | 4,173 | 71 | 6.90 | % | |||||||||||||||||||||
| Total interest-earning assets | 750,262 | 9,698 | 5.20 | % | 749,850 | 8,917 | 4.72 | % | 650,574 | 7,595 | 4.73 | % | |||||||||||||||||||||
| NONINTEREST-EARNING ASSETS | |||||||||||||||||||||||||||||||||
| Cash and due from banks | 7,348 | 7,274 | 6,479 | ||||||||||||||||||||||||||||||
| Other noninterest-earning assets | 21,814 | 20,535 | 18,367 | ||||||||||||||||||||||||||||||
| Total noninterest-earning assets | 29,162 | 27,809 | 24,846 | ||||||||||||||||||||||||||||||
| Less: Allowance for loan losses | (8,584 | ) | (8,774 | ) | (8,988 | ) | |||||||||||||||||||||||||||
| TOTAL ASSETS | $ | 770,840 | $ | 768,885 | $ | 666,432 | |||||||||||||||||||||||||||
| INTEREST-BEARING DEPOSITS | |||||||||||||||||||||||||||||||||
| Interest-bearing demand | $ | 1,235 | $ | - | 0.15 | % | $ | 1,026 | $ | - | 0.15 | % | $ | 667 | - | 0.15 | % | ||||||||||||||||
| Money market | 134,966 | 294 | 0.88 | % | 135,415 | 306 | 0.90 | % | 142,901 | 323 | 0.92 | % | |||||||||||||||||||||
| Savings | 8,892 | 36 | 1.63 | % | 8,071 | 37 | 1.82 | % | 7,760 | 39 | 2.04 | % | |||||||||||||||||||||
| Time deposits | 382,878 | 1,001 | 1.05 | % | 377,410 | 970 | 1.02 | % | 308,784 | 716 | 0.94 | % | |||||||||||||||||||||
| Total interest-bearing deposits | 527,971 | 1,331 | 1.01 | % | 521,922 | 1,313 | 1.00 | % | 460,112 | 1,078 | 0.95 | % | |||||||||||||||||||||
| Borrowings | 10,000 | 41 | 1.65 | % | 10,000 | 42 | 1.65 | % | 8,603 | 35 | 1.65 | % | |||||||||||||||||||||
| Total interest-bearing liabilities | 537,971 | 1,372 | 1.03 | % | 531,922 | 1,355 | 1.01 | % | 468,715 | 1,113 | 0.96 | % | |||||||||||||||||||||
| Noninterest-bearing deposits | 134,277 | 140,452 | 115,019 | ||||||||||||||||||||||||||||||
| Other liabilities | 6,375 | 7,240 | 4,607 | ||||||||||||||||||||||||||||||
| Stockholders' equity | 92,217 | 89,271 | 78,091 | ||||||||||||||||||||||||||||||
|
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY |
$ | 770,840 | $ | 768,885 | $ | 666,432 | |||||||||||||||||||||||||||
| Net interest income | $ | 8,326 | $ | 7,562 | $ | 6,482 | |||||||||||||||||||||||||||
| Net interest spread | 4.17 | % | 3.71 | % | 3.77 | % | |||||||||||||||||||||||||||
| Net interest margin | 4.46 | % | 4.00 | % | 4.04 | % | |||||||||||||||||||||||||||
| Cost of funds | 0.82 | % | 0.80 | % | 0.77 | % | |||||||||||||||||||||||||||
| 1 Includes loans-held-for-sale | |||||||||||||||||||||||||||||||||