CBB Bancorp, Inc. Reports 2019 Second Quarter Results

Second Quarter 2019 Financial Highlights:

  • Net income of $3.5 million, or $0.33 per diluted share.
  • Return on average equity of 10.06% and return on average assets of 1.19%.
  • Net interest margin at 4.05%.
  • Efficiency ratio at 63.79%.
  • Nonperforming assets to total assets were 0.21%.
  • Net charge-offs to average loans were 0.02%.

LOS ANGELES--()--CBB Bancorp, Inc. (“CBB” or the “Company”) (OTCQX: CBBI), the holding company of Commonwealth Business Bank (the “Bank”), today announced net income of $3.5 million, or $0.33 per diluted share, for the second quarter of 2019, compared to $3.6 million, or $0.35 per diluted share, for the prior quarter and $4.5 million, or $0.43 per diluted share, for the second quarter of 2018.

For the six months ended June 30, 2019, net income decreased 18.1% to $7.1 million, or $0.68 per diluted share, compared to $8.6 million, or $0.83 per diluted share, for the same period in 2018.

“Our new loan originations were substantially stronger quarter over quarter, both in commercial and SBA lending. However, our net interest margin in the second quarter decreased 11 basis points, reflecting the impact of the rise in our costs of funds which increased 16 basis points. Going forward, our focus will be in managing funding costs aggressively and operating expenses to maximize earnings.” said Joanne Kim, President and CEO.

Net Interest Income and Net Interest Margin:

Net interest income was $11.4 million for the second quarter of 2019, an increase of $0.1 million, or 1.3%, compared to $11.3 million for the prior quarter, and a decrease of $0.2 million, or 1.5%, compared to $11.6 million for the same quarter last year. The quarter-over-quarter increase was primarily due to a $526,000 increase in interest earned on loans, which was offset by a $568,000 increase in interest paid on deposits. The quarter-over-quarter increase in interest earned on loans was primarily due to a $2.7 million increase in the average balance of loans, including loans held-for-sale, to $926.4 million from $923.7 million for the prior quarter, combined with a 14 basis point increase in the yield on loans to 6.46% from 6.32% in the prior quarter. The year-over-year quarterly increase was primarily due to a $1.3 million increase in interest earned on loans, and a $318,000 increase in interest earned on deposits at the FRB and other banks, which were offset by a $1.9 million increase in interest expense on deposits. The year-over-year quarterly increase in interest earned on loans was primarily due to a $62.4 million increase in the average balance of loans, combined with 16 basis points increase in the yield on loans to 6.46% from 6.30% in the same quarter last year.

Net interest income was $22.7 million for the six months ended June 30, 2019, an increase of $0.7 million, or 3.5%, compared to $22.0 million for the same period last year. The year-over-year increase was primarily attributable to a $4.0 million increase in interest earned on loans, a $454,000 increase in interest earned on deposits at the FRB and the other banks, which were partially offset by a $3.8 million increase in interest expense on deposits. The year-over-year increase in interest earned on loans was primarily due to a $85.6 million increase in the average balance of loans combined with 30 basis points increase in the yield on loans to 6.39% from 6.09%.

The reported yield on the loan portfolio is impacted by a number of factors, including changes in the average contractual interest rate earned on the portfolio due to change in loan composition and the amount of discount accretion on the retained portion of SBA loans.

The net interest margin was 4.05% for the current quarter, a decrease of 11 basis points, from 4.16% in the prior quarter, and a decrease of 40 basis points from 4.45% in the year ago quarter. The quarter-over-quarter decrease was primarily due to a 14 basis point increase in the yield on loans from 6.32% to 6.46% in the prior quarter, which was offset by a 16 basis point increase in our cost of funds to from 1.76% to 1.92% in the prior quarter. The year-over-year quarterly decrease was primarily due to a 16 basis point increase in the yield on loans from 6.30% in the year ago quarter, which was offset by a 66 basis point increase in our cost of funds from 1.26% in the same period last year. The quarter-over-quarter increase in our cost of funds was primarily due to a 16 basis point increase in our cost of deposits to 1.92% in the current quarter from 1.76% in the prior quarter and the year-over-year quarterly increase in our cost of funds was primarily due to 66 basis points increase in our cost of deposits from 1.25% in the same quarter last year. The increase in the contractual yield on our loans and cost of funds in the current quarter, compared to the year ago quarter was primarily due to increases in short-term market interest rates, with the overnight federal funds rate increasing 50 basis points during the twelve-month period.

For the six months ended June 30, 2019, the net interest margin was 4.10%, a decrease of 20 basis points, compared to 4.30% for the same period last year. The year-over-year decrease was primarily driven by a 38 basis point increase in the yield on interest-earning assets to 5.75% from 5.37% for the same period last year, which was offset by a 67 basis point increase in our cost of funds to 1.84% from 1.17% for the same period last year. The year-over-year increase in CBB’s yield on interest-earning assets was primarily due to a 30 basis point increase in the yield on loans to 6.39% from 6.09%, while the annual year-over-year increase in our cost of funds was primarily attributable to a 67 basis point increase in our cost of deposits to 1.84% from 1.17% for the same period last year.

Provision for Loan Losses:

CBB recorded a $300,000 provision for loan losses in the current quarter, compared to no provision for loan losses in the prior quarter and an $800,000 provision for loan losses in the year ago quarter. The quarter-over-quarter increase in provision for loan losses was primarily due to an increase in specific reserves set aside for two impaired loans. For the six months ended June 30, 2019, CBB recorded a $300,000 provision for loan losses, a decrease of $500,000, compared to $800,000 of loan loss provisions in the same period in 2018.

Noninterest Income:

For the current quarter, noninterest income totaled $3.0 million, an increase of $877,000, or 41.4%, and a decrease of $526,000, or 14.9%, from $2.1 million and $3.5 million in the prior and year ago quarters, respectively. The quarter-over-quarter increase was primarily driven by a $942,000 increase in gain on sale of loans. The year-over-year quarterly decrease was primarily due to a $369,000 decrease in gains on sales of loans, which was primarily driven by a 71 basis points decrease in the average premium we received on sales of SBA loans which offset a $1.6 million increase in the amount of SBA loan principal sold.

For the six months ended June 30, 2019, noninterest income decreased $1.7 million, or 25.0% to $5.1 million from $6.8 million in the same period last year. The decrease was primarily due to a $1.6 million decrease in gains on sales of loans. The year-over-year decrease in gains on sales of loans was primarily driven by a 129 basis point decrease in the average premium received from the sale of SBA loans and a volume decrease of $8.8 million in the SBA loan principal sold.

During the second quarter of 2019, the Company sold $36.7 million of SBA loans, compared to $24.5 million in the preceding quarter and $35.0 million in the same quarter last year. For the six months ended June 30, 2019, the Company sold $61.1 million of SBA loans, compared to $69.9 million in the same period last year. The quarterly average premium on sales of SBA loans for the current quarter was 8.81%, compared to 7.61% in the prior quarter and 9.52% in the year ago quarter. The average premium on sales of SBA loans for the six months ended June 30, 2019 was 8.33%, compared to 9.62% in the same period last year. The amount of SBA loans we sell varies based on the volume of loans we originate, our liquidity needs, and market conditions.

Noninterest Expense:

Noninterest expense for the second quarter of 2019 was $9.2 million, an increase of $837,000, or 10.0%, from $8.4 million in the prior quarter and an increase of $1.2 million, or 15.7%, from $8.0 million in the year ago quarter. The quarter-over-quarter increase was primarily due to a $369,000 increase in salaries and employee benefits and a $469,000 increase in marketing expense, which were partially offset by a $64,000 decrease in professional expense. The quarter-over-quarter increase in salaries and employee benefits was primarily driven by an annual merit increase and a seven person increase in the average number of full-time equivalent employees (“FTEs”) to 192 during the current quarter from 185 during the prior quarter. The quarter-over-quarter increase in marketing expense was attributable to our marketing and sponsorship of the LPGA LA Open.

The year-over-year quarterly increase in noninterest expense was primarily due to a $544,000 increase in salaries and employee benefits, a $667,000 increase in marketing and a $215,000 increase in professional expense. The year-over-year quarterly increase in salaries and employee benefits was primarily due to a 20 person increase in the average number of FTEs from 172 during the year ago quarter combined with annual employee compensation adjustments. The increase in marketing was primarily due to the marketing and sponsorship of the LPGA LA Open. Lastly, the increase in professional expense was attributable to an increase in external and internal audit fees related primarily to FDICIA and regulatory reporting requirements.

For the six months ended June 30, 2019, noninterest expense was $17.6 million, an increase of $2.0 million, or 12.5%, from $15.6 million for the same period last year. The increase was primarily due to a $904,000 increase in salaries and employee benefits, $807,000 increase in marketing expense, and $351,000 increase in professional expense. This was partially offset by a $97,000 decrease in other expense. The increase in salaries and employee benefits was primarily due to a 20 person increase in the average number of FTEs to 192 in the six months ended June 30, 2019 from 172 in the same period in 2018, combined with increases in annual employee compensation adjustments. The increases in marketing, professional expense, and other expense were primarily driven by the same reasons mentioned above.

Income Tax Expense:

Income tax expense was $1.4 million for the quarter, or an effective tax rate of 29.26%, compared to $1.5 million, or an effective tax rate of 28.77%, for the prior quarter and $1.9 million, or an effective tax rate of 29.67%, for the year ago quarter. For the six months ended June 30, 2019, the provision for income taxes was $2.9 million, or an effective tax rate of 29.01%, compared to $3.7 million, or an effective tax rate of 30.17%, in the same period last year.

Balance Sheet:

At June 30, 2019, the Company had total assets of $1.20 billion, an increase of $21.2 million, or 1.8%, from $1.18 billion at March 31, 2019, and an increase of $61.5 million, or 5.4%, from $1.14 billion at June 30, 2018. Interest earning assets totaled $1.16 billion at June 30, 2019, an increase of $23.0 million, or 2.0%, from $1.14 billion at March 31, 2019, and an increase of $61.1 million, or 5.5%, from $1.10 billion at June 30, 2018.

Interest-earning Deposits at the FRB and Other Banks:

Interest-earning deposits at the FRB and other banks totaled $127.2 million at the end of the current quarter, an increase of $15.9 million, or 14.3%, compared to $111.3 million at the end of the prior quarter, and an increase of $50.2 million, or 65.2%, compared to $77.0 million at the end of the year ago quarter. The quarter-over-quarter and year on year increases in interest-earning deposits at the FRB and other banks were primarily due to growth in the Bank’s customer deposits.

Investment Securities:

Investment securities totaled $99.8 million at the end of the current quarter, a decrease of $2.1 million, or 2.0%, compared to $101.8 million at the end of the prior quarter, and a decrease of $12.3 million, or 10.93%, compared to $112.0 million at the end of the year ago quarter. The year-over-year decrease in investment securities was due principal paydowns.

Loans Receivable:

At June 30, 2019, loans receivable, including loans held-for-sale, were $928.5 million, an increase of $8.9 million, or 1.0%, from $919.6 million at March 31, 2019, and an increase of $21.9 million, or 2.4%, from $906.6 million at June 30, 2018. During the second quarter of 2019, total new loan production, including revolving lines of credit, was $98.7 million, compared to $59.8 million for the prior quarter and $167.8 million for the same quarter last year. For the six months ended June 30, 2019, total new loan production, including revolving lines of credit, was $158.4 million, compared to $271.3 million for the same period last year.

During the second quarter of 2019, $29.2 million of loans paid off, compared to $26.8 million in the prior quarter and $57.5 million in year ago quarter. The year over year quarter decrease was attributable to lower demand related to the acquisition and deposition of property. During the current quarter, we sold $36.7 million of SBA loans, compared to sales of $24.5 million in the prior quarter and sales of $35.0 million in the year ago quarter. During the current, prior and year ago quarters, the Company did not sell any non-SBA loans.

Deposits:

Total deposits were $1.03 billion at the end of the current quarter, an increase of $16.2 million, or 1.6%, compared to $1.02 billion at the end of the prior quarter, and an increase of $45.9 million, or 4.7%, compared to $985.9 million at the end of the year ago quarter. Noninterest-bearing deposits increased $3.7 million, or 1.9%, to $202.7 million at the end of the current quarter from $198.9 million at the end of the prior quarter and increased $5.2 million, or 2.6%, compared to $197.5 million at the end of the year ago quarter. Noninterest-bearing deposits to total deposits were 19.6%, 19.6%, and 20.0% at the end of the current, prior, and year ago quarters, respectively.

ASSET QUALITY:

Loans 30 to 89 days past due and on accrual status at June 30, 2019 were $5.8 million, an increase of $3.3 million from $2.5 million at March 31, 2019, and an increase of $2.5 million from $3.3 million at June 30, 2018. The quarter-over-quarter increase in loans 30 to 89 days past due was primarily due to a $3.4 million loan, which became more than 30 days past due in the quarter. This note is SBA 504 loan with a low loan to value ratio. No loans 90 days or more past due and still accruing at June 30, 2019, March 31, 2019, or June 30, 2018. Nonaccrual loans at June 30, 2019 were $2.5 million, or 0.29% of loans receivable, an increase of $1.5 million, compared to $1.1 million, or 0.12% of loans receivable at March 31, 2019, and an increase of $2.0 million from $0.5 million, or 0.06% of loans receivable at June 30, 2018.

Classified loans at June 30, 2019 were $13.7 million, or 1.55% of loans receivable, an increase of $4.6 million, or 51.1%, compared to $9.1 million, or 1.04% of loans receivable at March 31, 2019, and an increase of $2.8 million, or 25.9%, compared to $10.9 million, or 1.26% of loans receivable at June 30, 2018.

The allowance for loan losses at June 30, 2019 was $10.0 million, or 1.14% of loans receivable, compared to $9.8 million, or 1.12% of loans receivable at March 31, 2019, and $9.4 million, or 1.08%, of loans receivable at June 30, 2018. The ratio of allowance for loan losses to nonperforming loans was 395.7%, 899.5%, and 1803.3% at June 30, 2019, March 31, 2019, and June 30, 2018, respectively.

CAPITAL:

At June 30, 2019, CBB and the Bank continued to exceed all minimum regulatory capital requirements and maintained capital conservation buffers in excess of the minimum required to avoid limitations on capital distributions, including dividend payments, and certain discretionary bonus payments. The fully phased-in capital conservation buffer requirement was 2.500% and 1.875% as of January 1, 2019 and December 31, 2018, respectively. The minimum capital conservation buffer increased an additional 0.625% at the beginning of 2019, reaching the fully phased-in minimum of 2.500%. As a result, effective January 1, 2019 bank holding companies and banks will be required to maintain common equity tier 1, tier 1 risk-based and total risk-based capital ratios that are at least 7.00%, 8.50%, and 10.50%, respectively, to avoid the aforementioned limitations on capital distributions and discretionary bonus payments.

About CBB Bancorp, Inc.:

CBB Bancorp, Inc. is the holding company of Commonwealth Business Bank, a full-service commercial bank which specializes in small-to medium-sized businesses and does business as “CBB Bank.” The Bank has eight full service branches in Los Angeles and Orange Counties in California, and Dallas County in Texas; two SBA regional offices in Los Angeles and Dallas Counties; and six loan production offices in Texas, Georgia, Colorado, Utah and Washington.

For additional information, please go to www.cbb-bank.com.

FORWARD-LOOKING STATEMENTS:

This news release contains a number of forward-looking statements. These statements may be identified by use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar terms and phrases, including references to assumptions. Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management’s experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company’s control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. You should not place undue reliance on such statements. Factors that could affect our results include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Company and the Bank; unanticipated or significant increases in loan losses; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company’s financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive than the Company anticipates; there may be failures or breaches of information technology security systems; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates. The Company undertakes no obligation to revise any forward-looking statement contain herein to reflect any future events or circumstances, except to the extent required by law.

STATEMENT OF INCOME AND PERFORMANCE HIGHLIGHT (Unaudited) - Table 1
(Dollars in thousands, except per share amounts)
 
Three Months Ended Six Months Ended

June 30,

March 31,

$

%

June 30,

$

%

June 30,

June 30,

$

%

 

2019

 

 

2019

 

Change

Change

 

2018

 

Change

Change

 

2019

 

 

2018

 

Change

Change

 
Interest income

$

16,296

 

$

15,584

 

$

712

 

4.6

%

$

14,605

 

$

1,691

 

11.6

%

$

31,880

 

$

27,430

 

$

4,450

 

16.2

%

Interest expense

 

4,865

 

 

4,297

 

 

568

 

13.2

%

 

3,005

 

 

1,860

 

61.9

%

 

9,162

 

 

5,475

 

 

3,687

 

67.3

%

Net interest income

 

11,431

 

 

11,287

 

 

144

 

1.3

%

 

11,600

 

 

(169

)

(1.5

%)

 

22,718

 

 

21,955

 

 

763

 

3.5

%

 
Provision for loan losses

 

300

 

 

-

 

 

300

 

100.0

%

 

800

 

 

(500

)

(62.5

%)

 

300

 

 

800

 

 

(500

)

(62.5

%)

Net interest income after provision for loan losses

 

11,131

 

 

11,287

 

 

(156

)

(1.4

%)

 

10,800

 

 

331

 

3.1

%

 

22,418

 

 

21,155

 

 

1,263

 

6.0

%

 
Gain on sale of loans

 

2,109

 

 

1,167

 

 

942

 

80.7

%

 

2,478

 

 

(369

)

(14.9

%)

 

3,276

 

 

4,914

 

 

(1,638

)

(33.3

%)

Gain (loss) on sale of OREO

 

(4

)

 

(10

)

 

6

 

60.0

%

 

-

 

 

(4

)

(100.0

%)

 

(14

)

 

-

 

 

(14

)

(100.0

%)

SBA servicing fee income, net

 

312

 

 

503

 

 

(191

)

(38.0

%)

 

442

 

 

(130

)

(29.4

%)

 

815

 

 

803

 

 

12

 

1.5

%

SBA servicing right impairment

 

-

 

 

-

 

 

-

 

-

 

 

-

 

 

-

 

-

 

 

-

 

 

-

 

 

-

 

-

 

Service charges and other income

 

577

 

 

457

 

 

120

 

26.3

%

 

600

 

 

(23

)

(3.8

%)

 

1,034

 

 

1,099

 

 

(65

)

(5.9

%)

Noninterest income

 

2,994

 

 

2,117

 

 

877

 

41.4

%

 

3,520

 

 

(526

)

(14.9

%)

 

5,111

 

 

6,816

 

 

(1,705

)

(25.0

%)

 
Salaries and employee benefits

 

5,467

 

 

5,098

 

 

369

 

7.2

%

 

4,923

 

 

544

 

11.1

%

 

10,565

 

 

9,661

 

 

904

 

9.4

%

Occupancy and equipment

 

831

 

 

832

 

 

(1

)

(0.1

%)

 

834

 

 

(3

)

(0.4

%)

 

1,663

 

 

1,673

 

 

(10

)

(0.6

%)

Marketing expense

 

989

 

 

520

 

 

469

 

90.2

%

 

322

 

 

667

 

207.1

%

 

1,509

 

 

702

 

 

807

 

115.0

%

Professional expense

 

574

 

 

638

 

 

(64

)

(10.0

%)

 

359

 

 

215

 

59.9

%

 

1,212

 

 

861

 

 

351

 

40.8

%

Other expenses

 

1,340

 

 

1,276

 

 

64

 

5.0

%

 

1,515

 

 

(175

)

(11.6

%)

 

2,616

 

 

2,713

 

 

(97

)

(3.6

%)

Noninterest expense

 

9,201

 

 

8,364

 

 

837

 

10.0

%

 

7,953

 

 

1,248

 

15.7

%

 

17,565

 

 

15,610

 

 

1,955

 

12.5

%

 
Income before income tax expense

 

4,924

 

 

5,040

 

 

(116

)

(2.3

%)

 

6,367

 

 

(1,443

)

(22.7

%)

 

9,964

 

 

12,361

 

 

(2,397

)

(19.4

%)

 
Income tax expense

 

1,441

 

 

1,450

 

 

(9

)

(0.6

%)

 

1,889

 

 

(448

)

(23.7

%)

 

2,891

 

 

3,729

 

 

(838

)

(22.5

%)

 
Net income

$

3,483

 

$

3,590

 

$

(107

)

(3.0

%)

$

4,478

 

$

(995

)

(22.2

%)

$

7,073

 

$

8,632

 

$

(1,559

)

(18.1

%)

 
Effective tax rate

 

29.3

%

 

28.8

%

 

0.5

%

1.7

%

 

29.7

%

 

(0.4

%)

(1.4

%)

 

29.0

%

 

30.2

%

 

(1.2

%)

(3.8

%)

 
Outstanding number of shares¹

 

10,140,760

 

 

10,107,485

 

 

33,275

 

0.3

%

 

10,037,510

 

 

103,250

 

1.0

%

 

10,140,760

 

 

10,037,510

 

 

103,250

 

1.0

%

 
Weighted average shares for basic EPS¹

 

10,125,622

 

 

10,102,220

 

 

23,402

 

0.2

%

 

10,035,545

 

 

90,077

 

0.9

%

 

10,113,986

 

 

10,034,334

 

 

79,652

 

0.8

%

Weighted average shares for diluted EPS¹

 

10,341,488

 

 

10,359,833

 

 

(18,345

)

(0.2

%)

 

10,426,907

 

 

(85,419

)

(0.8

%)

 

10,350,725

 

 

10,445,751

 

 

(95,026

)

(0.9

%)

 
Basic EPS¹

$

0.34

 

$

0.36

 

$

(0.02

)

-5.6

%

$

0.45

 

$

(0.11

)

(24.4

%)

$

0.70

 

$

0.86

 

$

(0.16

)

(18.6

%)

Diluted EPS¹

$

0.33

 

$

0.35

 

$

(0.02

)

-5.7

%

$

0.43

 

$

(0.10

)

(23.3

%)

$

0.68

 

$

0.83

 

$

(0.15

)

(18.1

%)

 
Return on average assets

 

1.19

%

 

1.28

%

 

(0.09

%)

(7.03

%)

 

1.65

%

 

(0.46

%)

(27.9

%)

 

1.24

%

 

1.63

%

 

(0.4

%)

(23.9

%)

Return on average equity

 

10.06

%

 

10.84

%

 

(0.78

%)

(7.20

%)

 

14.85

%

 

(4.79

%)

(32.3

%)

 

10.44

%

 

14.63

%

 

(4.2

%)

(28.6

%)

 
Efficiency ratio²

 

63.79

%

 

62.40

%

 

1.39

%

2.22

%

 

52.60

%

 

11.19

%

21.27

%

 

63.12

%

 

54.26

%

 

8.86

%

16.3

%

Yield on interest-earning assets³

 

5.76

%

 

5.73

%

 

0.03

%

0.52

%

 

5.59

%

 

0.17

%

3.04

%

 

5.75

%

 

5.37

%

 

0.38

%

7.1

%

Cost of funds

 

1.92

%

 

1.76

%

 

0.16

%

9.09

%

 

1.26

%

 

0.66

%

52.19

%

 

1.84

%

 

1.18

%

 

0.67

%

56.7

%

Net interest margin³

 

4.05

%

 

4.16

%

 

(0.11

%)

(2.63

%)

 

4.45

%

 

(0.40

%)

(8.96

%)

 

4.10

%

 

4.30

%

 

(0.20

%)

(4.6

%)

 
¹ Restated for 10% stock dividend declared on 10/02/18
² Represents the ratio of noninterest expense less other real estate owned operations to the sum of net interest income before provision for credit losses and total noninterest income, less gains/(loss) on sale of securities, other-than-temporary impairment recovery/(loss) on investment securities and gain/(loss) from other real estate owned.
³ Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate
BALANCE SHEET, CAPITAL AND OTHER DATA (Unaudited) - Table 2
(Dollars in thousands)
 
June 30, March 31,

$

%

June 30,

$

%

 

2019

 

 

2019

 

Change Change

 

2018

 

Change Change
ASSETS
Cash and due from banks

$

12,369

 

$

10,837

 

$

1,532

 

14.1

%

$

13,349

 

$

(980

)

(7.3

%)

Interest-earning deposits at the FRB and other banks

 

127,199

 

 

111,305

 

 

15,894

 

14.3

%

 

77,018

 

 

50,181

 

65.2

%

Investment securities¹

 

99,758

 

 

101,825

 

 

(2,067

)

(2.0

%)

 

112,022

 

 

(12,264

)

(10.9

%)

Loans held-for-sale, at the lower of cost or fair value

 

46,875

 

 

45,275

 

 

1,600

 

3.5

%

 

39,343

 

 

7,532

 

19.1

%

 
Loans receivable

 

881,614

 

 

874,330

 

 

7,284

 

0.8

%

 

867,280

 

 

14,334

 

1.7

%

Allowance for loan losses

 

(10,019

)

 

(9,760

)

 

(259

)

(2.7

%)

 

(9,377

)

 

(642

)

(6.8

%)

Loans receivable, net

 

871,595

 

 

864,570

 

 

7,025

 

0.8

%

 

857,903

 

 

13,692

 

1.6

%

 
OREO

 

11

 

 

15

 

 

(4

)

(26.7

%)

 

-

 

 

11

 

100.0

%

Restricted stock investments

 

8,194

 

 

7,879

 

 

315

 

4.0

%

 

6,879

 

 

1,315

 

19.1

%

Servicing assets

 

10,174

 

 

10,303

 

 

(129

)

(1.3

%)

 

11,869

 

 

(1,695

)

(14.3

%)

Other assets

 

22,662

 

 

25,610

 

 

(2,948

)

(11.5

%)

 

18,955

 

 

3,707

 

19.6

%

Total assets

$

1,198,837

 

$

1,177,619

 

$

21,218

 

1.8

%

$

1,137,338

 

$

61,499

 

5.4

%

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing

$

202,657

 

$

198,940

 

$

3,717

 

1.9

%

$

197,500

 

$

5,157

 

2.6

%

Interest-bearing

 

829,088

 

 

816,603

 

 

12,485

 

1.5

%

 

788,357

 

 

40,731

 

5.2

%

Total deposits

 

1,031,745

 

 

1,015,543

 

 

16,202

 

1.6

%

 

985,857

 

 

45,888

 

4.7

%

 
FHLB advances

 

10,000

 

 

10,000

 

 

-

 

-

 

 

20,000

 

 

(10,000

)

(50.0

%)

Other liabilities

 

15,990

 

 

15,595

 

 

395

 

2.5

%

 

8,490

 

 

7,500

 

88.3

%

Total liabilities

 

1,057,735

 

 

1,041,138

 

 

16,597

 

1.6

%

 

1,014,347

 

 

43,388

 

4.3

%

 
Stockholders' Equity

 

141,102

 

 

136,481

 

 

4,621

 

3.4

%

 

122,991

 

 

18,111

 

14.7

%

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

1,198,837

 

$

1,177,619

 

$

21,218

 

1.8

%

$

1,137,338

 

$

61,499

 

5.4

%

 
CAPITAL RATIOS
Leverage ratio
Company

 

11.93

%

 

11.96

%

 

(0.03

%)

(0.25

%)

 

11.39

%

 

0.54

%

4.74

%

Bank

 

11.89

%

 

11.94

%

 

(0.05

%)

(0.42

%)

 

11.37

%

 

0.52

%

4.57

%

Common equity tier 1 risk-based capital ratio
Company

 

14.69

%

 

14.54

%

 

0.15

%

1.03

%

 

13.25

%

 

1.44

%

10.87

%

Bank

 

14.65

%

 

14.51

%

 

0.14

%

0.96

%

 

13.22

%

 

1.43

%

10.82

%

Tier 1 risk-based capital ratio
Company

 

14.69

%

 

14.54

%

 

0.15

%

1.03

%

 

13.25

%

 

1.44

%

10.87

%

Bank

 

14.65

%

 

14.51

%

 

0.14

%

0.96

%

 

13.22

%

 

1.43

%

10.82

%

Total risk-based capital ratio
Company

 

15.81

%

 

15.65

%

 

0.16

%

1.02

%

 

14.36

%

 

1.45

%

10.10

%

Bank

 

15.76

%

 

15.62

%

 

0.14

%

0.90

%

 

14.34

%

 

1.42

%

9.90

%

Book value per share²

$

13.91

 

$

13.50

 

$

0.41

 

3.0

%

$

12.25

 

$

1.66

 

13.6

%

Loan-to-Deposit (LTD) ratio

 

85.45

%

 

86.09

%

 

(0.64

%)

(0.75

%)

 

88.0

%

 

(2.52

%)

(2.87

%)

Nonperforming assets

 

2,532

 

 

1,085

 

 

1,447

 

133.4

%

 

520

 

$

2,012

 

386.9

%

Nonperforming assets as a % of loans receivable

 

0.29

%

 

0.12

%

 

0.17

%

141.67

%

 

0.06

%

 

0.23

%

383.33

%

ALLL as a % of loans receivable

 

1.14

%

 

1.12

%

 

0.02

%

1.79

%

 

1.08

%

 

0.06

%

5.56

%

 
¹ Includes AFS and HTM
² Restated for 10% stock dividend declared on 10/02/18
FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3
(Dollars in thousands, except per share amounts)
 
Three Months Ended
June 30, March 31, December 31, September 30, June 30,

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2018

 

 
Interest income

$

16,296

 

$

15,584

 

$

16,256

 

$

15,661

 

$

14,605

 

Interest expense

 

4,865

 

 

4,297

 

 

4,035

 

 

3,678

 

 

3,005

 

Net interest income

 

11,431

 

 

11,287

 

 

12,221

 

 

11,983

 

 

11,600

 

 
Provision for loan losses

 

300

 

 

-

 

 

170

 

 

400

 

 

800

 

Net interest income after provision for loan losses

 

11,131

 

 

11,287

 

 

12,051

 

 

11,583

 

 

10,800

 

 
Gain on sale of loans

 

2,109

 

 

1,167

 

 

996

 

 

1,937

 

 

2,478

 

Gain (loss) on sale of OREO

 

(4

)

 

(10

)

 

-

 

 

(43

)

 

-

 

SBA servicing fee income, net

 

312

 

 

503

 

 

179

 

 

304

 

 

442

 

SBA servicing right impairment

 

-

 

 

-

 

 

(374

)

 

(534

)

 

-

 

Service charges and other income

 

577

 

 

457

 

 

484

 

 

573

 

 

600

 

Noninterest income

 

2,994

 

 

2,117

 

 

1,285

 

 

2,237

 

 

3,520

 

 
Salaries and employee benefits

 

5,467

 

 

5,098

 

 

4,988

 

 

4,956

 

 

4,923

 

Occupancy and equipment

 

831

 

 

832

 

 

886

 

 

886

 

 

834

 

Marketing expense

 

989

 

 

520

 

 

433

 

 

342

 

 

322

 

Professional expense

 

574

 

 

638

 

 

1,195

 

 

537

 

 

359

 

Other expenses

 

1,340

 

 

1,276

 

 

901

 

 

1,302

 

 

1,515

 

Noninterest expense

 

9,201

 

 

8,364

 

 

8,403

 

 

8,023

 

 

7,953

 

 
Income before income tax expense

 

4,924

 

 

5,040

 

 

4,933

 

 

5,797

 

 

6,367

 

 
Income tax expense

 

1,441

 

 

1,450

 

 

1,278

 

 

1,426

 

 

1,889

 

 
Net income

$

3,483

 

$

3,590

 

$

3,655

 

$

4,371

 

$

4,478

 

 
Effective tax rate

 

29.3

%

 

28.8

%

 

25.9

%

 

24.6

%

 

29.7

%

 
Outstanding number of shares¹

 

10,140,760

 

 

10,107,485

 

 

10,102,161

 

 

10,091,294

 

 

10,037,510

 

 
Weighted average shares for basic EPS¹

 

10,125,622

 

 

10,102,220

 

 

10,098,618

 

 

10,038,095

 

 

10,035,545

 

Weighted average shares for diluted EPS¹

 

10,341,488

 

 

10,359,833

 

 

10,390,326

 

 

10,389,263

 

 

10,426,907

 

 
Basic EPS¹

$

0.34

 

$

0.36

 

$

0.36

 

$

0.44

 

$

0.45

 

Diluted EPS¹

$

0.33

 

$

0.35

 

$

0.35

 

$

0.42

 

$

0.43

 

¹ Restated for 10% stock dividend declared on 10/02/18
 
QUARTERLY SALARIES BENEFIT METRICS (Unaudited) - Table 4
(Dollars in thousands)
 
At or for the Three Months Ended
June 30, March 31, December 31, September 30, June 30,

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2018

 

 
Salaries and benefits

$

5,467

 

$

5,098

 

$

4,988

 

$

4,956

 

$

4,923

 

FTE at the end of period

 

192

 

 

186

 

 

187

 

 

175

 

 

173

 

Average FTE during the period

 

192

 

 

185

 

 

185

 

 

177

 

 

172

 

Salaries and benefits/average FTE¹

$

114

 

$

112

 

$

107

 

$

111

 

$

115

 

Salaries and benefits/average assets¹

 

1.87

%

 

1.82

%

 

1.71

%

 

1.71

%

 

1.82

%

Noninterest expense/average assets¹

 

3.15

%

 

2.99

%

 

2.87

%

 

2.77

%

 

2.94

%

 
1 Annualized
FIVE-QUARTER BALANCE SHEET (Unaudited) - Table 5
(Dollars in thousands)
 
June 30, March 31, December 31, September 30, June 30,

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2018

 

ASSETS
Cash and due from banks

$

12,369

 

$

10,837

 

$

11,029

 

$

12,228

 

$

13,349

 

Interest-earning deposits at the FRB and other banks

 

127,199

 

 

111,305

 

 

97,211

 

 

119,246

 

 

77,018

 

Investment securities¹

 

99,758

 

 

101,825

 

 

104,431

 

 

107,406

 

 

112,022

 

Loans held-for-sale, at the lower of cost or fair value

 

46,875

 

 

45,275

 

 

45,665

 

 

38,007

 

 

39,343

 

 
Loans receivable

 

881,614

 

 

874,330

 

 

875,797

 

 

896,580

 

 

867,280

 

Allowance for loan losses

 

(10,019

)

 

(9,760

)

 

(10,023

)

 

(9,814

)

 

(9,377

)

Loans receivable, net

 

871,595

 

 

864,570

 

 

865,774

 

 

886,766

 

 

857,903

 

 
OREO

 

11

 

 

15

 

 

25

 

 

25

 

 

-

 

Restricted stock investments

 

8,194

 

 

7,879

 

 

7,879

 

 

6,879

 

 

6,879

 

Servicing assets

 

10,174

 

 

10,303

 

 

10,541

 

 

11,403

 

 

11,869

 

Other assets

 

22,662

 

 

25,610

 

 

18,519

 

 

22,346

 

 

18,955

 

Total assets

$

1,198,837

 

$

1,177,619

 

$

1,161,074

 

$

1,204,306

 

$

1,137,338

 

 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing

$

202,657

 

$

198,940

 

$

206,764

 

$

222,018

 

$

197,500

 

Interest-bearing

 

829,088

 

 

816,603

 

 

801,830

 

 

835,110

 

 

788,357

 

Total deposits

 

1,031,745

 

 

1,015,543

 

 

1,008,594

 

 

1,057,128

 

 

985,857

 

 
FHLB advances

 

10,000

 

 

10,000

 

 

10,000

 

 

10,000

 

 

20,000

 

Other liabilities

 

15,990

 

 

15,595

 

 

10,567

 

 

9,585

 

 

8,490

 

Total liabilities

 

1,057,735

 

 

1,041,138

 

 

1,029,161

 

 

1,076,713

 

 

1,014,347

 

 
Stockholders' Equity

 

141,102

 

 

136,481

 

 

131,913

 

 

127,593

 

 

122,991

 

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

1,198,837

 

$

1,177,619

 

$

1,161,074

 

$

1,204,306

 

$

1,137,338

 

 
¹ Includes AFS and HTM
FIVE-QUARTER LOANS RECEIVABLE COMPONENTS (Unaudited) - Table 6
(Dollars in thousands)
 
June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018
Balance % Balance % Balance % Balance % Balance %
 
Construction

$

17,853

2.0

%

$

15,043

1.7

%

$

12,327

1.4

%

$

13,168

1.5

%

$

10,508

1.2

%

Commercial real estate

 

691,859

78.5

%

 

695,367

79.5

%

 

703,088

80.3

%

 

728,322

81.2

%

 

706,360

81.4

%

Commercial and industrial

 

164,089

18.6

%

 

156,352

17.9

%

 

152,381

17.4

%

 

150,892

16.8

%

 

146,654

16.9

%

Consumer

 

5,366

0.6

%

 

5,015

0.6

%

 

5,548

0.6

%

 

2,362

0.3

%

 

1,907

0.2

%

Gross loans

 

879,167

99.7

%

 

871,777

99.7

%

 

873,344

99.7

%

 

894,744

99.8

%

 

865,429

99.8

%

 
Net deferred loan fees/costs

 

2,447

0.3

%

 

2,553

0.3

%

 

2,453

0.3

%

 

1,836

0.2

%

 

1,851

0.2

%

Loans receivable

$

881,614

100.0

%

$

874,330

100.0

%

$

875,797

100.0

%

$

896,580

100.0

%

$

867,280

100.0

%

 
Loans held-for-sale

$

46,875

$

45,275

$

45,665

$

38,007

$

39,343

Loans receivable, including loans held-for-sale

$

928,489

$

919,605

$

921,462

$

934,587

$

906,623

SBA LOAN PRODUCTIONS/SALES DATA (Unaudited) - Table 7
(Dollars in thousands)
 
Three Months Ended Six Months Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,

2019

2019

2018

2018

2018

2019

2018

 
SBA loans held-for-sale at beginning of the quarter/year

$

45,275

 

$

45,665

 

$

38,007

 

$

39,343

 

$

23,608

 

$

45,665

 

$

28,346

 

SBA loans originated/transferred from/to held-for-
investment during the quarter/year

 

38,785

 

 

24,496

 

 

31,640

 

 

33,832

 

 

50,856

 

 

63,281

 

 

81,233

 

SBA loans sold during the quarter/year

 

(36,653

)

 

(24,490

)

 

(23,766

)

 

(34,745

)

 

(35,015

)

 

(61,143

)

 

(69,938

)

SBA loans principal payment, net of advance

 

(532

)

 

(396

)

 

(216

)

 

(423

)

 

(106

)

 

(928

)

 

(298

)

SBA loans held-for-sale at end of the quarter/year

$

46,875

 

$

45,275

 

$

45,665

 

$

38,007

 

$

39,343

 

$

46,875

 

$

39,343

 

 
Gain on sale of SBA loans

$

2,109

 

$

1,167

 

$

996

 

$

1,937

 

$

2,478

 

$

3,276

 

$

4,914

 

Premium on sale (weighted average)

 

8.8

%

 

7.6

%

 

6.3

%

 

8.1

%

 

9.5

%

 

8.3

%

 

9.6

%

 
SBA loan production

$

48,497

 

$

27,687

 

$

50,054

 

$

41,685

 

$

62,003

 

$

76,184

 

$

97,684

 

 
 
SBA SERVICING ASSETS AND SERVICING FEES (Unaudited) - Table 8
(Dollars in thousands)
 
Three Months Ended Six Months Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,

2019

 

2019

 

2018

 

2018

 

2018

 

2019

 

2018

 

 
 
SBA servicing assets @ beginning of the quarter/year

$

 

10,303

 

$

 

10,541

 

$

 

11,403

 

$

 

11,869

 

$

 

11,610

 

$

 

10,541

 

$

 

11,377

 

 
Newly added SBA servicing assets from SBA loans sold

 

806

 

 

447

 

 

559

 

 

995

 

 

1,016

 

 

1,253

 

 

2,014

 

Regular quarterly/annual servicing assets amortization

 

(397

)

 

(393

)

 

(404

)

 

(399

)

 

(398

)

 

(790

)

 

(778

)

SBA servicing assets amortized from SBA loans paid off/charged off

 

(538

)

 

(292

)

 

(641

)

 

(544

)

 

(360

)

 

(830

)

 

(744

)

 
Subtotal before impairment

 

10,174

 

 

10,303

 

 

10,917

 

 

11,921

 

 

11,869

 

 

10,174

 

 

11,869

 

 
SBA servicing assets impairment

 

-

 

 

-

 

 

(376

)

 

(519

)

 

-

 

 

-

 

 

-

 

SBA servicing liability impairment

 

-

 

 

-

 

 

2

 

 

(15

)

 

-

 

 

-

 

 
SBA servicing assets @ end of the quarter/year

$

 

10,174

 

$

 

10,303

 

$

 

10,541

 

$

 

11,403

 

$

 

11,869

 

$

 

10,174

 

$

 

11,869

 

FIVE-QUARTER DEPOSIT COMPONENTS (Unaudited) - Table 9
(Dollars in thousands)
 
June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018
Balance % Balance % Balance % Balance % Balance %
 
Noninterest-bearing demand

$

202,657

19.6

%

$

198,940

19.6

%

$

206,764

20.5

%

$

222,018

21.0

%

$

197,500

20.0

%

NOW & MMDA

 

146,654

14.2

%

 

168,490

16.6

%

 

175,843

17.4

%

 

177,961

16.8

%

 

196,432

19.9

%

Savings

 

48,066

4.7

%

 

25,839

2.5

%

 

19,102

1.9

%

 

17,460

1.7

%

 

19,211

1.9

%

TCDs of $250K and under

 

356,563

34.6

%

 

343,051

33.8

%

 

333,325

33.1

%

 

347,873

32.9

%

 

290,449

29.5

%

TCDs of $250K over

 

172,060

16.7

%

 

163,483

16.1

%

 

154,748

15.3

%

 

157,126

14.9

%

 

125,687

12.7

%

Wholesale TCDs

 

105,745

10.2

%

 

115,740

11.4

%

 

118,812

11.8

%

 

134,690

12.7

%

 

156,578

15.9

%

Total Deposits

$

1,031,745

100.0

%

$

1,015,543

100.0

%

$

1,008,594

100.0

%

$

1,057,128

100.0

%

$

985,857

100.0

%

 
Recap:
Noninterest-bearing demand

$

202,657

19.6

%

$

198,940

19.6

%

$

206,764

20.5

%

$

222,018

21.0

%

$

197,500

20.0

%

NOW & MMDA

 

146,654

14.2

%

 

168,490

16.6

%

 

175,843

17.4

%

 

177,961

16.8

%

 

196,432

19.9

%

Savings

 

48,066

4.7

%

 

25,839

2.5

%

 

19,102

1.9

%

 

17,460

1.7

%

 

19,211

1.9

%

TCDs of $250K and under

 

356,563

34.6

%

 

343,051

33.8

%

 

333,325

33.1

%

 

347,873

32.9

%

 

290,449

29.5

%

Core Deposits

 

753,940

73.1

%

 

736,320

72.5

%

 

735,034

72.9

%

 

765,312

72.4

%

 

703,592

71.4

%

 
TCDs of $250K over

 

172,060

16.7

%

 

163,483

16.1

%

 

154,748

15.3

%

 

157,126

14.9

%

 

125,687

12.7

%

Wholesale TCDs

 

105,745

10.2

%

 

115,740

11.4

%

 

118,812

11.8

%

 

134,690

12.7

%

 

156,578

15.9

%

Noncore Deposits

 

277,805

26.9

%

 

279,223

27.5

%

 

273,560

27.1

%

 

291,816

27.6

%

 

282,265

28.6

%

Total Deposits

$

1,031,745

100.0

%

$

1,015,543

100.0

%

$

1,008,594

100.0

%

$

1,057,128

100.0

%

$

985,857

100.0

%

SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited) - Table 10
(Dollars in thousands)
 
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2018

 

Allowance for Loan Losses
Balance at beginning of period

$

9,760

 

$

10,023

 

$

9,814

 

$

9,377

 

$

8,556

 

Provision for loan losses

 

300

 

 

-

 

 

170

 

 

400

 

 

800

 

Charge-offs

 

(100

)

 

(295

)

 

-

 

 

(3

)

 

(92

)

Recoveries

 

59

 

 

32

 

 

39

 

 

40

 

 

113

 

Balance at the end of period

$

10,019

 

$

9,760

 

$

10,023

 

$

9,814

 

$

9,377

 

 
Nonperforming Assets:¹

Over 90 days still accruing

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

Nonaccrual loans

 

2,521

 

 

1,070

 

 

385

 

 

439

 

 

520

 

Total nonperforming loans

 

2,521

 

 

1,070

 

 

385

 

 

439

 

 

520

 

 

Other real estate owned

 

11

 

 

15

 

 

25

 

 

25

 

 

-

 

Total nonperforming assets

$

2,532

 

$

1,085

 

$

410

 

$

464

 

$

520

 

 
Classified Assets:¹
Substandard

$

13,708

 

$

9,072

 

$

15,984

 

$

16,617

 

$

10,889

 

Doubtful

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Loss

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Total classified loans

$

13,708

 

$

9,072

 

$

15,984

 

$

16,617

 

$

10,889

 

 
Other real estate owned

 

11

 

 

15

 

 

25

 

 

25

 

 

-

 

Total classified assets

$

13,719

 

$

9,087

 

$

16,009

 

$

16,642

 

$

10,889

 

 
Performing TDR loans:

$

5,030

 

$

4,005

 

$

5,144

 

$

4,325

 

$

2,148

 

 
Delinquent Loans:¹
Loans 30-89 days past due

$

5,764

 

$

2,468

 

$

3,551

 

$

231

 

$

3,307

 

90 days or more past due and still accruing

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Nonaccrual

 

2,521

 

 

1,070

 

 

385

 

 

439

 

 

520

 

Total delinquent loans

$

8,285

 

$

3,538

 

$

3,936

 

$

670

 

$

3,827

 

 
Asset Quality Ratios:
Net charge-offs to average loans²

 

(0.07

%)

 

0.12

%

 

(0.02

%)

 

(0.02

%)

 

(0.01

%)

Nonaccrual loans to loans receivable

 

0.29

%

 

0.12

%

 

0.04

%

 

0.05

%

 

0.06

%

Nonperforming loans to loans receivable

 

0.29

%

 

0.12

%

 

0.04

%

 

0.05

%

 

0.06

%

Nonperforming assets to total assets

 

0.21

%

 

0.09

%

 

0.04

%

 

0.04

%

 

0.05

%

Classified loans to loans receivable

 

1.55

%

 

1.04

%

 

1.83

%

 

1.85

%

 

1.26

%

Classified loans to Tier 1 and ALLL

 

9.07

%

 

6.20

%

 

11.26

%

 

12.09

%

 

8.23

%

Classified assets to total assets

 

1.14

%

 

0.77

%

 

1.38

%

 

1.38

%

 

0.96

%

Classified assets to Tier 1 and ALLL

 

9.08

%

 

6.21

%

 

11.28

%

 

12.11

%

 

8.23

%

ALLL to loans receivable

 

1.14

%

 

1.12

%

 

1.14

%

 

1.09

%

 

1.08

%

ALLL to nonaccrual loans

 

397.4

%

 

912.2

%

 

2603.4

%

 

2235.5

%

 

1803.3

%

ALLL to nonperforming loans

 

397.4

%

 

912.2

%

 

2603.4

%

 

2235.5

%

 

1803.3

%

ALLL to nonperforming assets

 

395.7

%

 

899.5

%

 

2444.6

%

 

2115.1

%

 

1803.3

%

Texas ratio ³

 

1.68

%

 

0.74

%

 

0.29

%

 

0.34

%

 

0.39

%

 
1 Net of SBA guaranteed balance
2 Includes loans held-for-sale
3 Nonperforming assets divided by tangible common equity and ALLL

 

 

FIVE-QUARTER CAPITAL RATIOS (Unaudited) - Table 11
 
Well Capitalized Adequately Capitalized
Regulatory BASEL III June 30, March 31, December 31, September 30, June 30,
Requirement Fully Phased In

2019

2019

2018

2018

2018

 
Leverage ratio
Company

N/A

N/A

11.93%

11.96%

11.39%

11.19%

11.39%

Bank

5.00%

4.00%

11.89%

11.94%

11.36%

11.14%

11.37%

Common equity tier 1 risk-based capital ratio
Company

N/A

N/A

14.69%

14.54%

14.27%

13.47%

13.25%

Bank

6.50%

7.00%

14.65%

14.51%

14.24%

13.42%

13.22%

Tier 1 risk-based capital ratio

 

Company

N/A

N/A

14.69%

14.54%

14.27%

13.47%

13.25%

Bank

8.00%

8.50%

14.65%

14.51%

14.24%

13.42%

13.22%

Total risk-based capital ratio
Company

N/A

N/A

15.81%

15.65%

15.42%

14.61%

14.36%

Bank

10.00%

10.50%

15.76%

15.62%

15.38%

14.56%

14.34%

Common equity/total assets

11.77%

11.59%

11.36%

10.59%

10.81%

Common equity per share¹

$ 13.91

$ 13.50

$ 13.06

$ 12.64

$ 12.25

 
 
¹ Restated for 10% stock dividend declared on 10/02/18

 

               
MARGIN ANALYSIS (Unaudited) -Table 12
(Dollars in thousands)
               

Three Months Ended

June 30, 2019   March 31, 2019   December 31, 2018   September 30, 2018 June 30, 2018
Avg Balance Interest   Yield   Avg Balance Interest   Yield   Avg Balance Interest   Yield   Avg Balance Interest   Yield Avg Balance Interest   Yield
               
INTEREST-EARNING ASSETS                
Loans ¹

$

926,425

 

$

14,926

 

6.46

%

 

$

923,727

 

$

14,400

 

6.32

%

 

$

922,000

 

$

14,903

 

6.41

%

 

$

926,542

 

$

14,578

 

6.24

%

$

864,073

 

$

13,579

 

6.30

%

Investment securities²

 

100,802

 

 

675

 

2.69

%

 

 

103,011

 

 

695

 

2.74

%

 

 

105,595

 

 

693

 

2.60

%

 

 

110,205

 

 

683

 

2.46

%

 

115,447

 

 

692

 

2.40

%

Interest-earning deposits at the FRB and other banks

 

101,901

 

 

601

 

2.37

%

 

 

71,071

 

 

416

 

2.37

%

 

 

93,372

 

 

521

 

2.21

%

 

 

69,127

 

 

333

 

1.91

%

 

64,553

 

 

283

 

1.76

%

Other earning assets

 

8,122

 

 

141

 

6.96

%

 

 

7,879

 

 

121

 

6.23

%

 

 

6,933

 

 

187

 

10.70

%

 

 

6,879

 

 

114

 

6.57

%

 

6,750

 

 

100

 

5.94

%

Total interest-earning assets ²

 

1,137,250

 

 

16,343

 

5.76

%

 

 

1,105,688

 

 

15,632

 

5.73

%

 

 

1,127,900

 

 

16,304

 

5.73

%

 

 

1,112,753

 

 

15,708

 

5.60

%

 

1,050,823

 

 

14,654

 

5.59

%

               
NONINTEREST-EARNING ASSETS                
Cash and due from banks

 

11,758

 

   

 

12,142

 

   

 

12,277

 

   

 

13,801

 

 

 

12,900

 

 
Other noninterest-earning assets

 

32,474

 

   

 

28,024

 

   

 

29,605

 

   

 

30,750

 

 

 

30,356

 

 
Total noninterest-earning assets

 

44,232

 

   

 

40,166

 

   

 

41,882

 

   

 

44,551

 

 

 

43,256

 

 
               
Less: Allowance for loan losses

 

(9,775

)

   

 

(9,976

)

   

 

(9,829

)

   

 

(9,409

)

 

 

(8,619

)

 
               
TOTAL ASSETS

$

1,171,707

 

   

$

1,135,878

 

   

$

1,159,953

 

   

$

1,147,895

 

 

$

1,085,460

 

 
               
INTEREST-BEARING DEPOSITS                
Interest-bearing demand

$

9,423

 

$

6

 

0.25

%

 

$

8,048

 

$

5

 

0.25

%

 

$

6,936

 

$

4

 

0.25

%

 

$

1,861

 

$

1

 

0.25

%

$

1,702

 

$

1

 

0.24

%

Money market

 

149,276

 

 

722

 

1.94

%

 

 

166,563

 

 

766

 

1.87

%

 

 

167,659

 

 

671

 

1.59

%

 

 

181,302

 

 

664

 

1.45

%

 

166,317

 

 

556

 

1.34

%

Savings

 

37,566

 

 

197

 

2.10

%

 

 

21,517

 

 

102

 

1.92

%

 

 

18,309

 

 

79

 

1.71

%

 

 

17,628

 

 

73

 

1.64

%

 

19,075

 

 

75

 

1.58

%

Time deposits

 

629,147

 

 

3,899

 

2.49

%

 

 

599,064

 

 

3,383

 

2.29

%

 

 

615,224

 

 

3,239

 

2.09

%

 

 

596,306

 

 

2,836

 

1.89

%

 

561,875

 

 

2,301

 

1.64

%

Total interest-bearing deposits

 

825,412

 

 

4,824

 

2.34

%

 

 

795,192

 

 

4,256

 

2.17

%

 

 

808,128

 

 

3,993

 

1.96

%

 

 

797,097

 

 

3,574

 

1.78

%

 

748,969

 

 

2,933

 

1.57

%

               
Borrowings

 

10,000

 

 

41

 

1.64

%

 

 

10,050

 

 

41

 

1.65

%

 

 

10,000

 

 

42

 

1.67

%

 

 

22,066

 

 

104

 

1.87

%

 

16,490

 

 

72

 

1.75

%

Total interest-bearing liabilities

 

835,412

 

 

4,865

 

2.34

%

 

 

805,242

 

 

4,297

 

2.16

%

 

 

818,128

 

 

4,035

 

1.96

%

 

 

819,163

 

 

3,678

 

1.78

%

 

765,459

 

 

3,005

 

1.57

%

               
Noninterest-bearing deposits

 

181,326

 

   

 

185,319

 

   

 

201,701

 

   

 

193,730

 

 

 

190,308

 

 
Other liabilities

 

16,091

 

   

 

11,030

 

   

 

10,235

 

   

 

9,094

 

 

 

8,728

 

 
               
Stockholders' equity

 

138,878

 

   

 

134,287

 

   

 

129,889

 

   

 

125,908

 

 

 

120,965

 

 
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

1,171,707

 

   

$

1,135,878

 

   

$

1,159,953

 

   

$

1,147,895

 

 

$

1,085,460

 

 
               
Net interest income²

$

11,478

   

$

11,335

   

$

12,269

   

$

12,030

 

$

11,649

 
               
Net interest spread  

3.42

%

   

3.57

%

   

3.77

%

   

3.82

%

 

4.02

%

               
Effect of noninterest-bearing sources  

0.63

%

   

0.59

%

   

0.55

%

   

0.47

%

 

0.43

%

               
Net interest margin²  

4.05

%

   

4.16

%

   

4.32

%

   

4.29

%

 

4.45

%

               
               
Cost of deposits

$

1,006,738

 

$

4,824

 

1.92

%

 

$

980,511

 

$

4,256

 

1.76

%

 

$

1,009,829

 

$

3,993

 

1.57

%

 

$

990,827

 

$

3,574

 

1.43

%

$

939,277

 

$

2,933

 

1.25

%

               
Cost of funds

$

1,016,738

 

$

4,865

 

1.92

%

 

$

990,561

 

$

4,297

 

1.76

%

 

$

1,019,829

 

$

4,035

 

1.57

%

 

$

1,012,893

 

$

3,678

 

1.44

%

$

955,767

 

$

3,005

 

1.26

%

               
1Includes loans held-for-sale
² Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate
 
COMPONENTS OF YIELD ON LOANS (Unaudited) - Table 13
(Dollars in thousands)
 
Three Months Ended
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
June 30,
2018
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
 
Contractual yield

$

13,670

 

5.92

%

$

13,572

 

5.96

%

$

13,540

 

5.83

%

$

13,313

 

5.70

%

$

12,064

 

5.60

%

SBA discount accretion

 

1,295

 

0.56

%

 

951

 

0.42

%

 

1,364

 

0.59

%

 

1,370

 

0.59

%

 

1,096

 

0.51

%

Prepayment penalties & late fees

 

66

 

0.03

%

 

45

 

0.01

%

 

101

 

0.04

%

 

45

 

0.02

%

 

81

 

0.03

%

Amortization of net deferred costs

 

(208

)

(0.09

%)

 

(168

)

(0.07

%)

 

(102

)

(0.05

%)

 

(150

)

(0.07

%)

 

(197

)

(0.09

%)

Interest recognized on nonaccrual loans

 

103

 

0.04

%

 

-

 

-

 

 

-

 

-

 

 

-

 

-

 

 

535

 

0.25

%

As reported yield on loans

$

14,926

 

6.46

%

$

14,400

 

6.32

%

$

14,903

 

6.41

%

$

14,578

 

6.24

%

$

13,579

 

6.30

%

MARGIN ANALYSIS (Unaudited) - Table 14
(Dollars in thousands)
 
Six Months Ended
June 30, 2019 June 30, 2018
Avg Balance Interest Yield Avg Balance Interest Yield
 
INTEREST-EARNING ASSETS
Loans ¹

$

925,083

 

$

29,326

6.39

%

$

839,473

 

$

25,366

6.09

%

Investment securities²

 

101,901

 

 

1,370

2.71

%

 

118,181

 

 

1,391

2.37

%

Interest-earning deposits at the FRB and other banks

 

86,571

 

 

1,017

2.37

%

 

69,983

 

 

563

1.62

%

Other earning assets

 

8,001

 

 

262

6.60

%

 

6,507

 

 

207

6.42

%

Total interest-earning assets ²

 

1,121,556

 

 

31,975

5.75

%

 

1,034,144

 

 

27,527

5.37

%

 
NONINTEREST-EARNING ASSETS
Cash and due from banks

 

11,949

 

 

12,445

 

Other noninterest-earning assets

 

30,262

 

 

29,311

 

Total noninterest-earning assets

 

42,211

 

 

41,756

 

 
Less: Allowance for loan losses

 

(9,875

)

 

(8,635

)

 
TOTAL ASSETS

$

1,153,892

 

$

1,067,265

 

 
INTEREST-BEARING DEPOSITS
Interest-bearing demand

$

8,739

 

$

11

0.25

%

$

1,568

 

$

2

0.20

%

Money market

 

157,872

 

 

1,488

1.90

%

 

167,195

 

 

979

1.18

%

Savings

 

29,586

 

 

299

2.04

%

 

18,152

 

 

140

1.56

%

Time deposits

 

614,189

 

 

7,282

2.39

%

 

544,748

 

 

4,166

1.54

%

Total interest-bearing deposits

 

810,386

 

 

9,080

2.26

%

 

731,663

 

 

5,287

1.46

%

 
Borrowings

 

10,025

 

 

82

1.65

%

 

23,650

 

 

188

1.60

%

Total interest-bearing liabilities

 

820,411

 

 

9,162

2.25

%

 

755,313

 

 

5,475

1.46

%

 
Noninterest-bearing deposits

 

183,311

 

 

184,277

 

Other Liabilities

 

13,575

 

 

8,672

 

 
Stockholders' equity

 

136,595

 

 

119,003

 

 
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

1,153,892

 

$

1,067,265

 

 
Net interest income²

$

22,813

$

22,052

 
Net interest spread

3.50

%

3.91

%

 
Effect of noninterest-bearing sources

0.60

%

0.39

%

 
Net interest margin²

4.10

%

4.30

%

 
 
Cost of deposits

$

993,697

 

$

9,080

1.84

%

$

915,940

 

$

5,287

1.16

%

 
Cost of funds

$

1,003,722

 

$

9,162

1.84

%

$

939,590

 

$

5,475

1.18

%

 
1 Includes loans held-for-sale
² Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate
 
COMPONENTS OF YIELD ON LOANS (Unaudited) - Table 15
(Dollars in thousands)
 
Six Months Ended
June 30, 2019 June 30, 2018
Amount Yield Amount Yield
 
Contractual yield

$

27,242

 

5.94

%

$

22,889

 

5.50

%

SBA discount accretion

 

2,246

 

0.49

%

 

2,202

 

0.53

%

Prepayment penalties & late fees

 

111

 

0.02

%

 

104

 

0.02

%

Amortization of net deferred costs

 

(376

)

(0.08

%)

 

(364

)

-0.09

%

Interest recognized on nonaccrual loans

 

103

 

0.02

%

 

535

 

0.13

%

As reported yield on loans

$

29,326

 

6.39

%

$

25,366

 

6.09

%

 

Contacts

Long T. Huynh, EVP & CFO
(323) 988-3010
LongH@cbb-bank.com

Contacts

Long T. Huynh, EVP & CFO
(323) 988-3010
LongH@cbb-bank.com