Orange County Business Bank Announces Financial Results

IRVINE, Calif.--(BUSINESS WIRE)--Orange County Business Bank (the “Bank”) (OTCBB:OCBB) announced financial results for the twelve months ended December 31, 2012.

“We have made 2012 a year of change at Orange County Business Bank. As we have emerged from an extended period of asset quality challenges, the Bank is well positioned for growth despite the extremely low interest rate environment. 2013 is a year of exciting opportunity.”

The Bank ended 2012 with net income of $792 thousand, which was a $1.1 million improvement over the net loss of $376 thousand for the year ended 2011. The Bank continued to experience improvements in asset quality along with cash recoveries from borrowers of previously charged-off loans which resulted in a reversal of $1.6 million from the allowance. The allowance reversal helped to offset the decrease in interest income, which was as a result of fewer loans coupled with lower interest rates compared to the previous year.

On a year-end to year-end comparison, as of December 31, 2012, the Bank’s assets rose to $170.3 million versus $168.7 million at the end of 2011. Total deposits, primarily in checking and money market accounts, increased by $12.6 million from $108.3 million at December 31, 2011 to $120.9 million at the end of 2012. Total loans decreased from $103.5 million at the end of 2011 to $94.1 million at the end of 2012, but the Bank experienced strong loan growth with $15 million of new loans in the fourth quarter.

2012 was a year of change. The Bank moved to a better location in Irvine (approximately 2 miles from the old location) which offers better visibility, easier access to parking and other amenities along with a lower cost to the Bank over the life of the lease. In addition, the Bank made several strategic and organizational modifications which positioned the Bank to take advantage of improving markets and growing client acquisition opportunities. The Bank was able to complete these strategic adjustments while still reducing its noninterest expense for the year. This is the third consecutive year of reductions in the Bank’s overhead costs which has resulted in noninterest expenses being lower than they were in 2006.

In the last quarter of 2012, the Bank prepaid a Federal Home Loan Bank $15 million loan, incurring a one-time charge of $500 thousand – which lowered the Bank’s cost of funds to approximately 40 basis points going forward despite the fact that the initial impact of this payoff resulted in a lower reported net interest margin for the year 2012. This restructuring of the liability side of the Bank was done to position the Bank for the continued low interest rate environment.

JP Gough, Chairman and CEO, stated, “We have made 2012 a year of change at Orange County Business Bank. As we have emerged from an extended period of asset quality challenges, the Bank is well positioned for growth despite the extremely low interest rate environment. 2013 is a year of exciting opportunity.”

The Bank’s capital ratios continue to demonstrate the financial strength of the Bank by exceeding all regulatory guidelines for ‘well-capitalized’ institutions at December 31, 2012.

As one of the most highly capitalized banks of its size in Southern California, the Bank continues to offer substantial resources to the business banking community in Orange County as it has since its inception.

Orange County Business Bank offers complete relationship banking services for locally owned and operated businesses, professional practices and commercial/industrial companies of Orange County and adjacent markets. The Bank provides services that include a broad selection of depository as well as business and commercial real estate financing products uniquely designed for each client. The Bank, which opened for business on December 26, 2002, maintains its administrative offices at 17901 Von Karman Avenue, Irvine, CA 92614. The Bank’s website is www.ocbusinessbank.com.

This press release includes ‘forward-looking’ statements within the meaning of Section 21E of the Securities Exchange Act of 1934. All of the statements contained in this press release, other than statements of historical fact, should be considered forward-looking statements, including but not limited to, any statements which may concern (i) the Bank’s strategies, objectives and plans for expansion of its operations, product and services, and growth of its portfolio of loans, deposits and investments, (ii) the Bank’s beliefs and expectations regarding actions that may be taken by regulatory authorities having oversight of the Bank, (iii) the Bank’s beliefs as to the adequacy of the allowance for loan losses, and (iv) the Bank’s beliefs and expectations of the future operating results. Although the Bank believes the expectation reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. All subsequent written and oral forward-looking statements by or attributable to the Bank or persons acting on its behalf are expressly qualified in their entirety by this qualification. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are not intended to give any assurance as to future results. The Bank undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

	As of and for the
	Year Ended December 31,
	2012			2011
Operating Data
Interest income	$	5,545,000		$	6,719,000
Interest expense		1,424,000			1,213,000
Net interest income		4,121,000			5,506,000
Provision for loan and lease losses		(1,630,000	)		-
Net interest income after provision for loan and lease losses		5,751,000			5,506,000
Noninterest income		1,538,000			586,000
Noninterest expense		6,497,000			6,679,000
Income before provision for income taxes		792,000			(587,000	)
Provision for income taxes		-			(211,000	)
Net income		792,000			(376,000	)
Per Share Data and Other Ratios
Net Earnings – Basic	$	0.17		$	(0.08	)
Return on Average Assets		0.46	%		-0.20	%
Return on Average Equity		2.06	%		-0.98	%
Net Interest Margin		2.52	%		3.09	%
	December 31, 2012			December 31, 2011
Balance Sheet Data and Related Ratios
Total Assets	$	170,250,000		$	168,690,000
Total Loans		94,149,000			103,536,000
Allowance for Loan Losses (ALLL)		1,935,000			2,849,000
Investment Securities		59,573,000			34,688,000
Total Deposits		120,942,000			108,267,000
Total Shareholders’ Equity		38,949,000			38,365,000
ALLL as a Percentage of Total Loans		2.06	%		2.75	%
Book Value	$	8.24		$	8.12
Actual Number of Shares Outstanding		4,724,576			4,724,576