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CBB Bancorp, Inc. Reports 2018 Second Quarter Results
[July 17, 2018]

CBB Bancorp, Inc. Reports 2018 Second Quarter Results


CBB Bancorp, Inc. ("CBB" or the "Company") (OTCQB: CBBI), the parent company of Commonwealth Business Bank (the "Bank"), today announced net income of $4.5 million, or $0.47 per diluted share, for the second quarter of 2018, compared to $4.2 million, or $0.44 per diluted share, for the prior quarter and $3.8 million, or $0.40 per diluted share, for the second quarter of 2017.

For the six months ended June 30, 2018, net income increased 17.7% to $8.6 million, or $0.91 per diluted share, compared to $7.3 million, or $0.78 per diluted share, for the same period in 2017.

"Our new loan originations continued to be strong in the second quarter, both in commercial and SBA lending. Our net interest margin increased 30 basis points, reflecting the impact of the rise in short term interest rates and our asset-sensitive balance sheet. Going forward, our focus will be in managing funding costs and operating expenses to further maximize earnings," said Joanne Kim, President and CEO.

RESULTS OF OPERATIONS



                                               
Three Months Ended Six Months Ended
June 30, March 31, % June 30, % June 30, June 30, %
2018 2018 Change 2017 Change 2018 2017 Change
(Dollars in thousands, except per share amounts)
 
Net income $ 4,478 $ 4,154 7.8 % $ 3,772 18.7 % $ 8,632 $ 7,331 17.7 %
Diluted EPS $ 0.47 $ 0.44 6.8 % $ 0.40 17.5 % $ 0.91 $ 0.78 16.7 %
 
Return on average assets 1.65 % 1.61 % 2.5 % 1.59 % 3.8 % 1.63 % 1.59 % 2.5 %
Return on average equity 14.85 % 14.40 % 3.1 % 13.95 % 6.5 % 14.63 % 13.90 % 5.3 %
 
Noninterest income/average assets 1.30 % 1.27 % 2.4 % 1.60 % (18.8 %) 1.29 % 1.50 % (14.0 %)
Pre-tax, pre-provision earnings/average assets 2.65 % 2.32 % 14.2 % 2.83 % (6.4 %) 2.49 % 2.76 % (9.8 %)
Noninterest expense/average assets 2.94 % 2.96 % (0.7 %) 2.84 % 3.5 % 2.95 % 2.76 % 6.9 %
Efficiency ratio 52.60 % 56.09 % (6.2 %) 50.09 % 5.0 % 54.26 % 49.95 % 8.6 %
Net interest margin¹ 4.45 % 4.15 % 7.2 % 4.24 % 5.0 % 4.30 % 4.19 % 2.6 %
 
¹ Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate
 

Net Interest Income and Net Interest Margin

Net interest income was $11.6 million for the second quarter of 2018, an increase of $1.2 million, or 12.0%, compared to $10.4 million for the prior quarter, and an increase of $1.9 million, or 19.9%, compared to $9.7 million for the same quarter last year. The quarter-over-quarter increase was primarily due to a $1.8 million increase in interest earned on loans, including $535,000 earned on non-accrual loans, which was partially offset by a $579,000 increase in interest paid on deposits. The quarter-over-quarter increase in interest earned on loans was primarily due to a $49.5 million increase in the average balance of loans, including loans held-for-sale, to $864.1 million from $814.6 million for the prior quarter, combined with 43 basis points increase in the yield on loans to 6.30% from 5.87% in the prior quarter. The year-over-year quarterly increase was primarily due to a $2.7 million increase in interest earned on loans, a $353,000 increase in interest earned on investment securities and a $147,000 increase in interest earned on deposits at the FRB and other banks, which were offset by a $1.2 million increase in interest paid on deposits. The year-over-year quarterly increase in interest earned on loans was primarily due to a $72.8 million increase in the average balance of loans, combined with 77 basis points increase in the yield on loans from 5.53% in the same quarter last year.

Net interest income was $22.0 million for the six months ended June 30, 2018, an increase of $3.5 million, or 18.8%, compared to $18.5 million for the same period last year. The annual year-over-year increase was primarily attributable to a $4.7 million increase in interest earned on loans, a $669,000 increase in interest earned on investment securities, and a $334,000 increase in interest earned on deposits at the FRB and the other banks, which were partially offset by a $2.1 million increase in interest paid on deposits. The annual year-over-year increase in interest earned on loans was primarily due to a $71.1 million increase in the average balance of loans combined with 66 basis points increase in the yield on loans to 6.09% from 5.43%.

The reported yield on our loan portfolio is impacted by a number of factors, including changes in the average contractual interest rate earned on the portfolio and the amount of discount accretion on the retained portion of SBA loans. The following table reconciles the contractual yield on our loan portfolio to the reported yield for the periods indicated.

                                                           
Three Months Ended Six Months Ended
June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
(Dollars in thousands)
Contractual yield $ 12,064 5.60 % $ 10,825 5.39 % $ 10,164 5.15 % $ 22,889 5.50 % $ 19,323 5.07 %
SBA discount accretion 1,096 0.51 % 1,106 0.55 % 750 0.38 % 2,202 0.53 % 1,438 0.38 %
Prepayment penalties & late fees 81 0.03 % 23 0.01 % 113 0.05 % 104 0.02 % 190 0.05 %
Amortization of net deferred costs (197 ) (0.09 %) (167 ) (0.08 %) (108 ) (0.05 %) (364 ) (0.09 %) (245 ) (0.07 %)
Interest recognized on nonaccrual loans   535   0.25 %   -   -     -   -     535   0.13 %   -   -  
As reported yield on loans $ 13,579   6.30 % $ 11,787   5.87 % $ 10,919   5.53 % $ 25,366   6.09 % $ 20,706   5.43 %
 

The net interest margin was 4.45% for the current quarter, an increase of 30 basis points, from 4.15% in the prior quarter, and an increase of 21 basis points from 4.24% in the year ago quarter. The quarter-over-quarter increase was primarily due to 46 basis points increase in the yield on interest-earning assets to 5.59% from 5.13% in the prior quarter, which was partially offset by 17 basis points increase in our cost of funds to 1.26% from 1.09% in the prior quarter. The year-over-year quarterly increase was primarily due to 58 basis points increase in the yield on interest-earning assets from 5.01% in the year ago quarter, which was partially offset by 41 basis points increase in our cost of funds from 0.85% in the same period last year. The quarter-over-quarter increase in our cost of funds was primarily due to 18 basis points increase in our cost of deposits to 1.25% in the current quarter from 1.07% in the prior quarter and the year-over-year quarterly increase in our cost of funds was primarily due to 41 basis points increase in our cost of deposits from 0.84% 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 75 basis points during the twelve-month period.

For the six months ended June 30, 2018, the net interest margin was 4.30%, an increase of 11 basis points, compared to 4.19% for the same period last year. The annual year-over-year increase was primarily driven by 44 basis points increase in the yield on interest-earning assets to 5.37% from 4.93% for the same period last year, which was partially offset by 36 basis points increase in our cost of funds to 1.18% from 0.82% for the same period last year. The annual year-over-year increase in CBB's yield on interest-earning assets was primarily due to 66 basis points increase in the yield on loans to 6.09% from 5.43%, while the annual year-over-year increase in our cost of funds was primarily attributable to 36 basis points increase in our cost of deposits to 1.16% from 0.80% for the same period last year.

Provision for Loan Losses

CBB recorded an $800,000 provision for loan losses in the current quarter, compared to no provision for loan losses in the prior quarter and a $350,000 provision for loan losses in the year ago quarter. The quarter-over-quarter increase in provision for loan losses was primarily due to a $73.7 million, or 8.9% increase in loans receivable, including loans held-for-sale. For the six months ended June 30, 2018, CBB recorded an $800,000 provision for loan losses, an increase of $450,000, compared to $350,000 in the same period in 2017.

Noninterest Income

For the current quarter, noninterest income totaled $3.5 million, an increase of $224,000, or 6.8%, and a decrease of $272,000, or 7.2%, from $3.3 million and $3.8 million in the prior and year ago quarters, respectively. The quarter-over-quarter increase was primarily driven by an $81,000 increase in SBA loan servicing income and an $89,000 increase in other income. The year-over-year quarterly decrease was primarily due to a $214,000 decrease in gains on sales of loans, which was primarily driven by a 68 basis point decrease in the average premium we received on sales of SBA loans combined with a $1.3 million decrease in the amount of SBA loans we sold.

For the six months ended June 30, 2018, noninterest income decreased $86,000, or 1.2% to $6.8 million from $6.9 million in the same period last year. The decrease was primarily due to a $177,000 decrease in SBA loan servicing fee income, a $130,000 decrease in other income, and a $103,000 decrease in gains on sales of other real estate owned ("OREO"), which were partially offset by a $244,000 increase in gains on sales of loans. The annual year-over-year increase in gains on sales of loans was primarily driven by an increase in the amount of SBA loans we sold, which was offset by a 16 basis point decrease in the average premium we received on sales of SBA loans.

As the following table indicates, during the second quarter of 2018, the Company sold $35.0 million of SBA loans, compared to $34.9 million in the preceding quarter and $36.3 million in the same quarter last year. For the six months ended June 30, 2018, the Company sold $69.9 million of SBA loans, compared to $64.1 million in the same period last year. The quarterly average premium on sales of SBA loans for the current quarter was 9.52%, compared to 9.71% in the prior quarter and 10.20% in the year ago quarter. The average premium on sales of SBA loans for the six months ended June 30, 2018 was 9.62%, compared to 9.78% 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.

                                               

 

 

Three Months Ended

Six Months Ended
June 30, March 31, % June 30, % June 30, June 30, %
2018 2018 Change 2017 Change 2018 2017 Change
(Dollars in thousands)
SBA loans held-for-sale at beginning of the quarter $ 23,608 $ 28,346 (16.7 %) $ 33,253 (29.0 %) $ 28,346 $ 18,096 56.6 %
SBA loans originated/transferred from held-for-
investment during the quarter 50,856 30,377 67.4 % 38,716 31.4 % 81,233 81,735 (0.6 %)
SBA loans sold during the quarter (35,015 ) (34,923 ) 0.3 % (36,317 ) (3.6 %) (69,938 ) (64,091 ) 9.1 %
SBA loans principal payment, net of advance   (106 )   (192 ) (44.8 %)   (53 ) 100.0 %   (298 )   (141 ) 111.3 %
SBA loans held-for-sale at end of the quarter $ 39,343   $ 23,608   66.7 % $ 35,599   10.5 % $ 39,343   $ 35,599   10.5 %
 
Gain on sale of SBA loans $ 2,478 $ 2,436 1.7 % $ 2,692 (7.9 %) 4,914 4,670 5.2 %
Premium on sale (weighted average) 9.52 % 9.71 % (2.0 %) 10.20 % (6.7 %) 9.62 % 9.78 % (1.6 %)
 
SBA loan production $ 62,003 $ 35,681 73.8 % $ 57,326 8.2 % 97,684 114,905 (15.0 %)
 

Noninterest Expense

Noninterest expense for the second quarter of 2018 was $8.0 million, an increase of $296,000, or 3.9%, from $7.7 million in the prior quarter and an increase of $1.2 million, or 17.9%, from $6.7 million in the year ago quarter. The quarter-over-quarter increase was primarily due to a $185,000 increase in salaries and employee benefits and a $195,000 increase in other expense, which were partially offset by a $58,000 decrease in marketing expense and a $143,000 decrease in professional expense. The quarter-over-quarter increase in salaries and employee benefits was primarily driven by an annual merit increase and an 8 person increase in the average number of full time equivalent employees ("FTEs") to 172 during the current quarter from 164 during the prior quarter. The quarter-over-quarter increase in other expense was attributable to a $236,000 business franchise tax payment to the State of Delaware for CBB Bancorp, Inc., which was incorporated in 2017.

The year-over-year quarterly increase in noninterest expense was primarily due to a $648,000 increase in salaries and employee benefits, a $171,000 increase in occupancy and equipment related expense, a $100,000 increase in professional expense, and a $251,000 increase in other expense. The year-over-year quarterly increase in salaries and employee benefits was primarily due to a 16 person increase in the average number of FTEs from 156 during the year ago quarter combined with increases in annual employee merit and employee incentive compensation. The increase in occupancy and equipment related expenses were primarily due to the increased lease and depreciation expense resulting from the opening of three new branches during the later part of the prior year. The increase in professional expense was attributable to an increase in external and internal audit fees related primarily to FDICIA reporting requirements.

For the six months ended June 30, 2018, noninterest expense was $15.6 million, an increase of $2.9 million, or 23.2%, from $12.7 million for the same period last year. The increase was primarily due to a $1.4 million increase in salaries and employee benefits, a $439,000 increase in occupancy and equipment related expense, a $423,000 increase in professional expense, and a $373,000 increase in other expense. The increase in salaries and employee benefits was primarily due to an 18 person increase in the average number of FTEs to 168 in the six months ended June 30, 2018 from 150 in the same period in 2017, combined with increases in annual employee merit and employee incentive compensation. The increases in occupancy and equipment related expense, professional expense, and other expense were primarily driven by the same reasons aforementioned.

                                 
At or for the Three Months Ended At or for the Six Months Ended
June 30,       March 31, % June 30, % June 30,       June 30,   %
2018 2018 Change 2017 Change 2018 2017 Change
(Dollars in thousands)
 
Salaries and benefits $ 4,923 $ 4,738 3.9 % $ 4,275 15.2 % $ 9,661 $ 8,290 16.5 %
FTE at the end of period 173 164 5.5 % 159 8.8 % 173 159 8.8 %
Average FTE during the period 172 164 4.7 % 156 10.5 % 168 150 12.0 %
Salaries and benefit/average FTE¹ $ 115 $ 117 (1.7 %) $ 110 4.5 % $ 116 $ 111 4.5 %
Salaries and benefit/average assets¹ 1.82 % 1.83 % (0.5 %) 1.80 % 1.1 % 1.83 % 1.80 % 1.7 %
Noninterest expense/average assets¹ 2.94 % 2.96 % (0.7 %) 2.84 % 3.5 % 2.95 % 2.76 % 6.9 %
 
1 Annualized
 

Income Tax Expense

Income tax expense was $1.9 million for the quarter, or an effective tax rate of 29.67%, compared to $1.8 million, or an effective tax rate of 30.70%, for the prior quarter and $2.6 million, or an effective tax rate of 40.78%, for the year ago quarter. For the six months ended June 30, 2018, the provision for income taxes was $3.7 million, or an effective tax rate of 30.17%, compared to $5.0 million, or an effective tax rate of 40.65%, in the same period last year. The year-over-year quarterly and the annual year-over-year decreases in income tax expense, and the related effective tax rate, were due to the reduced federal corporate tax rate to 21% from 35% effective January 1, 2018.

Pre-Tax, Pre-Provision Income

For the second quarter of 2018, the Company's pre-tax, pre-provision ("PTPP") income was $7.2 million, an increase of $1.2 million, or 19.6%, from $6.0 million for the prior quarter and an increase of $447,000, or 6.7%, from $6.7 million for the same quarter last year. The quarter-over-quarter increase in PTPP income was primarily due to increases in net interest income and noninterest income, which were offset by an increase in noninterest expense. The year-over-year quarterly increase in PTPP income was primarily driven by an increase in net interest income, which was partially offset by a decrease in noninterest income and an increase in noninterest expense. Annualized PTPP income to average assets increased to 2.65% for the current quarter, compared to 2.32% for the prior quarter, but decreased compared to 2.83% for the year ago quarter. The year-over-year quarterly decrease in PTPP income to average assets was primarily due to a larger proportional increase in average assets than PTPP income.

For the six months ended June 30, 2018, PTPP income was $13.2 million, an increase of $459,000, or 3.6%, from $12.7 million for the same period last year. PTPP income to average assets for the six months ended June 30, 2018 decreased 27 basis points to 2.49% from 2.76% for the same period last year.

                                   
Three Months Ended Six Months Ended
June 30,       March 31, % June 30, % June 30,       June 30, %
2018 2018 Change 2017 Change 2018 2017 Change
(Dollars in thousands)
 
PTPP income $ 7,167 $ 5,994 19.6 % $ 6,720 6.7 % $ 13,161 $ 12,702 3.6 %
Average assets $ 1,085,460 $ 1,049,295 3.4 % $ 952,589 13.9 % $ 1,067,265 $ 926,867 15.1 %
Annualized PTPP/average assets 2.65 % 2.32 % 14.2 % 2.83 % (6.4 %) 2.49 % 2.76 % (9.8 %)
PTPP, excluding gain on sale of SBA loans $ 4,689 $ 3,558 31.8 % $ 4,028 16.4 % $ 8,247 $ 8,032 2.7 %
 

BALANCE SHEET

At June 30, 2018, the Company had total assets of $1.14 billion, an increase of $67.0 million, or 6.3%, from $1.07 billion at March 31, 2018, and an increase of $143.4 million, or 14.4%, from $994.0 million at June 30, 2017. Earning assets totaled $1.10 billion at June 30, 2018, an increase of $65.3 million, or 6.3%, from $1.04 billion at March 31, 2018, and an increase of $142.3 million, or 14.8%, from $960.2 million at June 30, 2017.

                                         
June 30, March 31, $ % June 30, $ %
2018 2018 Change Change 2017 Change Change
(Dollars in thousands, except per share amounts)
 
Assets $ 1,137,338 $ 1,070,370 $ 66,968 6.3 % $ 993,978 $ 143,360 14.4 %
Earning assets 1,102,542 1,037,252 65,290 6.3 % 960,212 142,330 14.8 %
Interest-earning deposits at the FRB and other banks 77,018 80,468 (3,450 ) (4.3 %) 83,481 (6,463 ) (7.7 %)
Investment securities 112,022 117,634 (5,612 ) (4.8 %) 71,215 40,807 57.3 %
Loans held-for-sale 39,343 23,608 15,735 66.7 % 35,599 3,744 10.5 %
Loans receivable 867,280 809,281 57,999 7.2 % 763,670 103,610 13.6 %
Deposits 985,857 931,233 54,624 5.9 % 867,691 118,166 13.6 %
 
Tangible common equity ratio 10.81 % 11.06 % -0.25 % (2.3 %) 11.07 % (0.26 %) (2.3 %)
Tangible common equity per share $ 13.48 $ 12.98 $ 0.50 3.9 % $ 12.10 $ 1.38 11.4 %
 

Interest-earning Deposits at the FRB and Other Banks

Interest-earning deposits at the FRB and other banks totaled $77.0 million at the end of the current quarter, a decrease of $3.5 million, or 4.3%, compared to $80.5 million at the end of the prior quarter, and a decrease of $6.5 million, or 7.7%, compared to $83.5 million at the end of the year ago quarter. The quarter-over-quarter decrease in interest-earning deposits at the FRB and other banks was primarily due to the greater growth in loans, compared to deposit growth during the current period. The year-over-year quarterly decrease in interest-earning deposits at the FRB and other banks was primarily due to an increase in investment securities during the current period.

Investment Securities

Investment securities totaled $112.0 million at the end of the current quarter, a decrease of $5.6 million, or 4.8%, compared to $117.6 million at the end of the prior quarter, and an increase of $40.8 million, or 57.3%, compared to $71.2 million at the end of the year ago quarter. The year-over-year increase in investment securities was due to investing the Company's excess liquidity into higher yielding investment securities.

Loans Receivable

The following table details loans by type at the dates indicated:

                                         
June 30, March 31, $ % June 30, $ %
2018 2018 Change Change 2017 Change Change
(Dollars in thousands)
 
Construction $ 10,508 $ 9,032 $ 1,476 16.3 % $ 8,972 $ 1,537 17.1 %
Commercial real estate 706,360 668,649 37,711 5.6 % 616,213 90,147 14.6 %
Commercial and industrial 146,654 126,057 20,597 16.3 % 132,766 13,888 10.5 %
Consumer   1,907     3,952     (2,045 ) (51.7 %)   3,789     (1,882 ) (49.7 %)
Gross loans 865,429 807,690 57,739 7.1 % 761,740 103,689 13.6 %
 
Net deferred loan fees/costs   1,851     1,591     259   16.3 %   1,930     (79 ) (4.1 %)
Loans receivable $ 867,280   $ 809,281   $ 57,999   7.2 % $ 763,670   $ 103,610   13.6 %
 
Loans held-for-sale $ 39,343 $ 23,608 $ 15,735 66.7 % $ 35,599 $ 3,744 10.5 %
Loans receivable, including loans held-for-sale $ 906,623 $ 832,889 $ 73,734 8.9 % $ 799,269 $ 107,354 13.4 %
 
Loan-to-deposit (LTD) ratio 88.0 % 86.9 % 1.1 % 1.2 % 88.0 % 0.0 % 0.0 %
LTD ratio including loans held-for-sale 92.0 % 89.4 % 2.6 % 2.8 % 92.1 % (0.1 %) (0.2 %)
 

At June 30, 2018, loans receivable, including loans held-for-sale, were $906.6 million, an increase of $73.7 million, or 8.9%, from $832.9 million at March 31, 2018, and an increase of $107.4 million, or 13.4%, from $799.3 million at June 30, 2017. During the second quarter of 2018, total new loan production, including revolving lines of credit, was $167.8 million, compared to $103.5 million for the prior quarter and $108.8 million for the same quarter last year. For the six months ended June 30, 2018, total new loan production, including revolving lines of credit, was $271.2 million, compared to $220.0 million for the same period last year.

During the second quarter of 2018, $52.6 million of loans paid off, compared to $38.3 million in the prior quarter and $18.6 million in year ago quarter. During the current quarter, we sold $35.0 million of SBA loans, compared to sales of $34.9 million in the prior quarter and sales of $36.3 million in the year ago quarter. During the current, prior and year ago quarters, the Company did not sell any non-SBA loans. During the six months ended June 30, 2018 and 2017, we did not sell any non-SBA loans.

Deposits

The following table details deposits by category at the dates indicated:

                                         
June 30, 2018 March 31, 2018 $ % June 30, 2017 $ %
Balance       % Balance       % Change Change Balance       % Change Change
(Dollars in thousands)
 
Noninterest-bearing demand $ 197,500 20.0 % $ 188,328 20.2 % $ 9,172 4.9 % $ 213,347 24.6 % $ (15,847 ) (7.4 %)
Money market & NOW 196,432 19.9 % 166,960 17.9 % 29,472 17.7 % 170,992 19.7 % 25,440 14.9 %
Savings 19,211 1.9 % 18,080 1.9 % 1,131 6.3 % 13,434 1.5 % 5,777 43.0 %
Time deposits 572,714 58.1 % 557,865 59.9 % 14,849 2.7 % 469,918 54.2 % 102,796 21.9 %
                   
Total Deposits $ 985,857   100.0 % $ 931,233   100.0 % $ 54,624   5.9 % $ 867,691   100.0 % $ 118,166   13.6 %
 
Cost of deposits 1.25 % 1.07 % 0.18 % 17.1 % 0.84 % 0.41 % 49.9 %
 

Total deposits were $985.9 million at the end of the current quarter, an increase of $54.6 million, or 5.9%, compared to $931.2 million at the end of the prior quarter, and an increase of $118.2 million, or 13.6%, compared to $867.7 million at the end of the year ago quarter. Noninterest-bearing deposits increased $9.2 million, or 4.9%, to $197.5 million at the end of the current quarter from $188.3 million at the end of the prior quarter and decreased $15.8 million, or 7.4%, compared to $213.3 million at the end of the year ago quarter. Noninterest-bearing deposits to total deposits were 20.0%, 20.2%, and 24.6% at the end of the current, prior, and year ago quarters, respectively.

ASSET QUALITY

                                           
June 30, March 31, $ % June 30, $ %
2018 2017 Change Change 2017 Change Change
(Dollars in thousands)

Delinquent Loans:¹

Loans 30-89 days past due $ 3,307 $ 1,844 $ 1,463 79.3 % $ 523 $ 2,784 532.6 %
90 days or more past due and still accruing - - - - - - -
Nonaccrual loans   520     2,105     (1,585 ) (75.3 %)   2,855     (2,335 ) (81.8 %)
Delinquent loans $ 3,827   $ 3,949   $ (122 ) (3.1 %) $ 3,378   $ 449   13.3 %
 

Nonperforming Assets:¹

90 days or more past due and still accruing $ - $ - $ - - $ - $ - -
Nonaccrual loans   520     2,105     (1,585 ) (75.3 %)   2,855     (2,335 ) (81.8 %)
Nonperforming loans 520 2,105 (1,585 ) (75.3 %) 2,855 (2,335 ) (81.8 %)
 
Other real estate owned   -     -     -   -     -     -   -  
Nonperforming assets $ 520   $ 2,105   $ (1,585 ) (75.3 %) $ 2,855   $ (2,335 ) (81.8 %)
 
Nonaccrual loans to loans receivable 0.06 % 0.26 % (0.20 %) (76.9 %) 0.37 % (0.31 %) (83.8 %)
Nonperforming loans to loans receivable 0.06 % 0.26 % (0.20 %) (76.9 %) 0.37 % (0.31 %) (83.8 %)
Nonperforming assets to total assets 0.05 % 0.20 % (0.15 %) (75.0 %) 0.29 % (0.24 %) (82.8 %)
Texas Ratio² 0.39 % 1.66 % (1.27 %) (76.5 %) 2.40 % (2.01 %) (83.8 %)
 

Classified Assets:¹

Substandard $ 10,889 $ 12,107 $ (1,218 ) (10.1 %) $ 11,520 $ (631 ) (5.5 %)
Doubtful - - - - - - -
Loss   -     -     -   -     -     -   -  
Classified loans $ 10,889 $ 12,107 $ (1,218 ) (10.1 %) $ 11,520 $ (631 ) (5.5 %)
 
Other real estate owned   -     -     -   -     -     -   -  
Classified assets $ 10,889   $ 12,107   $ (1,218 ) (10.1 %) $ 11,520   $ (631 ) (5.5 %)
 
Classified loans to loans receivable 1.26 % 1.50 % (0.24 %) (16.0 %) 1.51 % (0.25 %) (16.6 %)
Classified loans to Tier 1 and ALLL 8.23 % 9.54 % (1.31 %) (13.7 %) 9.70 % (1.47 %) (15.2 %)
Classified assets to total assets 0.96 % 1.13 % (0.17 %) (15.0 %) 1.16 % (0.20 %) (17.2 %)
Classified assets to Tier 1 and ALLL 8.23 % 9.54 % (1.31 %) (13.7 %) 9.70 % (1.47 %) (15.2 %)
 

Performing TDR loans:

$ 1,017 $ 1,155 $ (138 ) (12.0 %) $ 4,262 $ (3,245 ) (76.1 %)
 

Allowance for Loan Losses Items:

Balance at beginning of period $ 8,556 $ 8,653 $ (97 ) (1.1 %) $ 8,399 $ 157 1.9 %
Provision for loan losses 800 - 800 100.0 % 350 450 128.6 %
Charge-offs 92 116 (24 ) (21 %) - 92 100.0 %
Recoveries   113     19     94   494.7 %   29     84   289.7 %
Balance at the end of period $ 9,377   $ 8,556   $ 821   9.6 % $ 8,778   $ 599   6.8 %
 
ALLL to loans receivable 1.08 % 1.06 % 1.9 % 1.15 % (6.1 %)
ALLL to nonperforming loans 1803.27 % 406.46 % 343.7 % 307.46 % 486.5 %
 
1 Net of SBA guaranteed balance
² Nonperforming assets divided by tangible common equity and ALLL
 

Loans 30 to 89 days past due and on accrual status at June 30, 2018 were $3.3 million, an increase of $1.5 million from $1.8 million at March 31, 2018, and an increase of $2.8 million from $523,000 at June 30, 2017. The quarter-over-quarter increase in loans 30 to 89 days past due was primarily due to a $903,000 loan, which became current in July 2018, and a $1.0 million loan, which is in the process of a loan modification. There were no loans 90 days or more past due and still accruing at June 30, 2018, March 31, 2018, and June 30, 2017, respectively. Nonaccrual loans decreased $1.6 million to $520,000, or 0.06% of loans receivable at June 30, 2018 from $2.1 million, or 0.26% of loans receivable at March 31, 2018, and decreased $2.3 million from $2.9 million, or 0.37% of loans receivable at June 30, 2017. The quarter-over-quarter decrease in nonaccrual loans was primarily due to a lending relationship with a $1.1 million loan, which was returned to accrual status and a lending relationship with a $477,000 loan, which was paid off during the current quarter.

Nonperforming loans at June 30, 2018 were $520,000, or 0.06% of loans receivable, a decrease of $1.6 million, compared to $2.1 million, or 0.26% of loans receivable at March 31, 2018, and a decrease of $2.3 million from $2.9 million, or 0.37% of loans receivable at June 30, 2017.

The Company did not have any OREO at the end of the current, prior, and year ago quarters.

Nonperforming assets at June 30, 2018 were $520,000, or 0.05% of total assets, a decrease of $1.6 million, compared to $2.1 million, or 0.20% of total assets at March 31, 2018, and a decrease of $2.3 million from $2.9 million, or 0.29% of total assets at June 30, 2017. The year-over-year quarterly decrease in nonperforming assets was primarily driven by the aforementioned two lending relationships with the $1.1 million loan, which was returned to accrual status and the $477,000 loan, which was paid off during the current quarter, and another lending relationship with a $457,000 loan, which was fully charged off during the first quarter of 2018.

Classified loans at June 30, 2018 were $10.9 million, or 1.26% of loans receivable, a decrease of $1.2 million, or 10.1%, compared to $12.1 million, or 1.50% of loans receivable at March 30, 2018, and a decrease of $631,000, or 5.5%, compared to $11.5 million, or 1.51% of loans receivable at June 30, 2017.

The allowance for loan losses at June 30, 2018 was $9.4 million, or 1.08% of loans receivable, compared to $8.6 million, or 1.06% of loans receivable at March 31, 2018, and $8.8 million, or 1.15%, of loans receivable at June 30, 2017. The allowance for loan losses to nonperforming loans was 1803.27%, 406.46%, and 307.46% at June 30, 2018, March 31, 2018, and June 30, 2017, respectively.

CAPITAL

At June 30, 2018, CBB and the Bank continued to exceed all minimum regulatory capital requirements and they 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 minimum capital conservation buffer requirement was 1.875% and 1.250% in 2018 and 2017, respectively. The capital conservation buffer is calculated as the smallest excess of a bank holding company's and a bank's common equity tier 1, tier 1 risk-based and total risk-based capital ratios over the regulatory "adequately" capitalized minimum ratios of 4.50%, 6.00% and 8.00%, respectively. The minimum capital conservation buffer will increase 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. The following are the CBB's and the Bank's regulatory capital ratios and capital conservation buffers:

                                   
Well-
Capitalized June 30, March 31, December 31, September 30, June 30,
Minimum 2018 2018 2017 2017 2017
Leverage ratio
Company N/A 11.39 % 11.34 % 11.06 % 11.26 % N/A
Bank 5.00 % 11.37 % 11.30 % 11.02 % 11.22 % 11.52 %
Common equity tier 1 capital ratio
Company N/A 13.25 % 13.66 % 13.63 % 13.70 % N/A
Bank 6.50 % 13.22 % 13.61 % 13.58 % 13.65 % 13.43 %
Tier 1 risk-based capital ratio
Company N/A 13.25 % 13.66 % 13.63 % 13.70 % N/A
Bank 8.00 % 13.22 % 13.61 % 13.58 % 13.65 % 13.43 %
Total risk-based capital ratio
Company N/A 14.36 % 14.76 % 14.78 % 14.82 % N/A
Bank 10.00 % 14.34 % 14.72 % 14.74 % 14.77 % 14.61 %
Capital conservation buffer
Company 6.368 % 6.765 % 6.788 % 6.826 % N/A
Bank 6.346 % 6.721 % 6.742 % 6.774 % 6.611 %
 

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, Orange, and Dallas Counties; two SBA regional offices in Los Angeles and Dallas counties; and six loan production offices in the states of Texas, Georgia, Colorado, Utah and Washington.

For additional information, please go to 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 CBB Bancorp, Inc. conducts its operations, including the real estate market in California, and other factors beyond CBB Bancorp, Inc.'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. CBB Bancorp, Inc. undertakes no obligation to revise these forward-looking statements publicly to reflect subsequent events or circumstances.

 
BALANCE SHEET (Unaudited)
(Dollars in thousands)
                                           
June 30, March 31, $ % June 30, $ %
2018 2018 Change       Change 2017 Change       Change
ASSETS
Cash and due from banks $ 13,349 $ 9,868 $ 3,481 35.3 % $ 12,931 $ 418 3.2 %
Interest-earning deposits at the FRB and other banks 77,018 80,468 (3,450 ) (4.3 %) 83,481 (6,463 ) (7.7 %)
Investment securities 112,022 117,634 (5,612 ) (4.8 %) 71,215 40,807 57.3 %
Loans held-for-sale, at the lower of cost or fair value 39,343 23,608 15,735 66.7 % 35,599 3,744 10.5 %
 
Loans receivable 867,280 809,281 57,999 7.2 % 763,670 103,610 13.6 %
Allowance for loan losses   (9,377 )   (8,556 )   (821 )       9.6 %   (8,778 )   (599 )       6.8 %
Loans receivable, net 857,903 800,725 57,178 7.1 % 754,892 103,011 13.6 %
 
FHLB, FRB & PCBB stocks 6,879 6,261 618 9.9 % 6,247 632 10.1 %
Servicing assets 11,869 11,610 259 2.2 % 10,739 1,130 10.5 %
Other assets   18,955     20,196     (1,241 )       (6.1 %)   18,874     81         0.4 %
TOTAL ASSETS $ 1,137,338   $ 1,070,370   $ 66,968         6.3 % $ 993,978   $ 143,360         14.4 %
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing $ 197,500 $ 188,328 $ 9,172 4.9 % $ 213,347 $ (15,847 ) (7.4 %)
Interest-bearing   788,357     742,905     45,452         6.1 %   654,344     134,013         20.5 %
Total deposits 985,857 931,233 54,624 5.9 % 867,691 118,166 13.6 %
 
FHLB advances 20,000 10,000 10,000 100.0 % 10,000 10,000 100.0 %
Other liabilities   8,490     10,784     (2,294 )       (21.3 %)   6,274     2,216         35.3 %
Total liabilities   1,014,347     952,017     62,330         6.5 %   883,965     130,382         14.7 %
 
Stockholders' Equity   122,991     118,353     4,638         3.9 %   110,013     12,978         11.8 %
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,137,338   $ 1,070,370   $ 66,968         6.3 % $ 993,978   $ 143,360         14.4 %
 
 
STATEMENT OF INCOME (Unaudited)
(Dollars in thousands, except per share amounts)
                                                                     
Three Months Ended Six Months Ended
June 30, March 31, $ % June 30, $ % June 30, June 30, $ %
2018 2018 Change       Change 2017 Change       Change 2018 2017 Change       Change
 
Interest income $ 14,605 $ 12,825 $ 1,780 13.9 % $ 11,440 $ 3,165 27.7 % $ 27,430 $ 21,770 $ 5,660 26.0 %
Interest expense   3,005   2,470   535         21.7 %   1,768   1,237         70.0 %   5,475   3,295   2,180         66.2 %
Net interest income 11,600 10,355 1,245 12.0 % 9,672 1,928 19.9 % 21,955 18,475 3,480 18.8 %
 
Provision for loan losses   800   -   800         100.0

%

 

  350   450         128.6 %   800   350   450         128.6 %
Net interest income after provision for loan losses 10,800 10,355 445 4.3 % 9,322 1,478 15.9 % 21,155 18,125 3,030 16.7 %
 
Gain on sale of loans 2,478 2,436 42 1.7 % 2,692 (214 ) (7.9 %) 4,914 4,670 244 5.2 %
Gain (loss) on sale of OREO - - - - - - - - 103 (103 ) (100.0 %)
Service charges and other income   1,042   860   182         21.2 %   1,100   (58 )       (5.3 %)   1,902   2,129   (227 )       (10.7 %)
Noninterest income 3,520 3,296 224 6.8 % 3,792 (272 ) (7.2 %) 6,816 6,902 (86 ) (1.2 %)
 
Salaries and employee benefits 4,923 4,738 185 3.9 % 4,275 648 15.2 % 9,661 8,290 1,371 16.5 %
Occupancy and equipment 834 839 (5 ) (0.6 %) 663 171 25.8 % 1,673 1,234 439 35.6 %
Other expenses   2,196   2,080   116         5.6 %   1,806   390         21.6 %   4,276   3,151   1,125         35.7 %
Noninterest expense 7,953 7,657 296 3.9 % 6,744 1,209 17.9 % 15,610 12,675 2,935 23.2 %
 
Income before income tax expense 6,367 5,994 373 6.2 % 6,370 (3 ) (0.0 %) 12,361 12,352 9 0.1 %
 
Income tax expense 1,889 1,840 49 2.7 % 2,598 (709 ) (27.3 %) 3,729 5,021 (1,292 ) (25.7 %)
                                         
Net income $ 4,478 $ 4,154 $ 324         7.8 % $ 3,772 $ 706         18.7 % $ 8,632 $ 7,331 $ 1,301         17.7 %
 
PTPP $ 7,167 $ 5,994 $ 1,173 19.6 % $ 6,720 $ 447 6.7 % $ 13,161 $ 12,702 $ 459 3.6 %
PTPP excluding gain on sale of SBA loans $ 4,689 $ 3,558 $ 1,131 31.8 % $ 4,028 $ 661 16.4 % $ 8,247 $ 8,032 $ 215 2.7 %
 
Outstanding number of shares 9,125,009 9,121,009 4,000 0.0 % 9,095,159 29,850 0.3 % 9,125,009 9,095,159 29,850 0.3 %
 
Weighted average shares for basic EPS 9,123,223 9,121,009 2,214 0.0 % 9,095,159 28,064 0.3 % 9,122,122 9,095,159 26,963 0.3 %
Weighted average shares for diluted EPS 9,479,007 9,513,255 (34,248 ) (0.4 %) 9,439,060 39,947 0.4 % 9,496,137 9,433,185 62,952 0.7 %
 
Basic EPS $ 0.49 $ 0.46 $ 0.03 6.5 % $ 0.42 $ 0.07 16.7 % $ 0.95 $ 0.81 $ 0.14 17.3 %
Diluted EPS $ 0.47 $ 0.44 $ 0.03 6.8 % $ 0.40 $ 0.07 17.5 % $ 0.91 $ 0.78 $ 0.13 16.7 %
 
                                   
SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share amounts)
             
Three Months Ended Six Months Ended
June 30, March 31, % June 30, % June 30, June 30, %
2018 2018 Change 2017 Change 2018 2017 Change

Performance Ratios:

Return on average assets 1.65 % 1.61 % 2.5 % 1.59 % 3.8 % 1.63 % 1.59 % 2.5 %
Return on average equity 14.85 % 14.40 % 3.1 % 13.95 % 6.5 % 14.63 % 13.90 % 5.3 %
Net interest margin 4.45 % 4.15 % 7.2 % 4.24 % 5.0 % 4.30 % 4.19 % 2.6 %
Cost of funds 1.26 % 1.07 % 17.8 % 0.85 % 48.2 % 1.18 % 0.82 % 43.9 %
Efficiency ratio 52.60 % 56.09 % (6.2 %) 50.09 % 5.0 % 54.26 % 49.95 % 8.6 %
 

Capital Ratios:

Core capital (leverage) ratio 11.39 % 11.34 % 0.4 % 11.52 % (1.1 %) 11.39 % 11.52 % (1.1 %)
Common equity tier 1 risk-based capital ratio 13.25 % 13.66 % (3.0 %) 13.43 % (1.3 %) 13.25 % 13.43 % (1.3 %)
Tier 1 risk-based capital ratio 13.25 % 13.66 % (3.0 %) 13.43 % (1.3 %) 13.25 % 13.43 % (1.3 %)
Total risk-based capital ratio 14.36 % 14.76 % (2.7 %) 14.61 % (1.7 %) 14.36 % 14.61 % (1.7 %)
Minimum required capital conservation buffer 1.875 % 1.875 % 0.0 % 1.250 % 50.0 % 1.875 % 1.250 % 50.0 %
CBB Capital conservation buffer 6.368 % 6.765 % (5.9 %) 6.611 % (3.7 %) 6.368 % 6.611 % (3.7 %)
Tangible common equity/total assets 10.81 % 11.06 % (2.3 %) 11.07 % (2.3 %) 10.81 % 11.07 % (2.3 %)
Tangible common equity per share $ 13.48 $ 12.98 3.9 % $ 12.10 11.4 % $ 13.48 $ 12.10 11.4 %
 

Selected Average Balances:

Loans receivable including loans held-for-sale $ 864,073 $ 814,600 6.1 % $ 791,307 9.2 % $ 839,473 $ 768,403 9.2 %
Total investment securities 115,447 120,944 (4.5 %) 72,565 59.1 % 118,181 73,540 60.7 %
Interest-earning assets 1,050,823 1,017,278 3.3 % 922,080 14.0 % 1,034,144 896,704 15.3 %
Total assets 1,085,460 1,049,295 3.4 % 952,589 13.9 % 1,067,265 926,867 15.1 %
Noninterest-bearing deposits 190,308 178,179 6.8 % 186,510 2.0 % 184,277 182,547 0.9 %
Total deposits 939,277 892,343 5.3 % 810,628 15.9 % 915,940 793,930 15.4 %
Interest-bearing liabilities 765,459 745,053 2.7 % 650,821 17.6 % 755,313 631,549 19.6 %
Stockholders' equity 120,965 117,019 3.4 % 108,457 11.5 % 119,003 106,347 11.9 %
 
                 
SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited)
(Dollars in thousands)
           
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
2018 2018 2017 2017 2017

Allowance for Loan Losses

Balance at beginning of period $ 8,556 $ 8,653 $ 8,249 $ 8,778 $ 8,399
Provision for loan losses 800 - - 164 350
Charge-offs 92 116 244 726 -
Recoveries   113     19     648     33     29  
Balance at the end of period $ 9,377   $ 8,556   $ 8,653   $ 8,249   $ 8,778  
 

Nonperforming Assets:¹

Over 90 days still accruing $ - $ - $ - $ 57 $ -
Nonaccrual loans   520     2,105     2,467     2,638     2,855  
Total nonperforming loans 520 2,105 2,467 2,695 2,855
 
Other real estate owned   -     -     -     -     -  
Total nonperforming assets $ 520   $ 2,105   $ 2,467   $ 2,695   $ 2,855  
 

Classified Assets:¹

Substandard $ 10,889 $ 12,107 $ 10,103 $ 11,885 $ 11,520
Doubtful - - - - -
Loss   -     -     -     -     -  
Total classified loans $ 10,889 $ 12,107 $ 10,103 $ 11,885 $ 11,520
 
Other real estate owned   -     -     -     -     -  
Total classified assets $ 10,889   $ 12,107   $ 10,103   $ 11,885   $ 11,520  
 

Performing TDR loans:

$ 1,017 $ 1,155 $ 1,200 $ 4,185 $ 4,262
 

Delinquent Loans:¹

Loans 30-89 days past due $ 3,307 $ 1,844 $ 131 $ 232 $ 523
90 days or more past due and still accruing - - - 57 -
Nonaccrual   520     2,105     2,467     2,638     2,855  
Total delinquent loans $ 3,827   $ 3,949   $ 2,598   $ 2,927   $ 3,378  
 

Asset Quality Ratios:

Net charge-offs to average loans² (0.01 %) 0.05 % (0.20 %) 0.34 % (0.01 %)
Nonaccrual loans to loans receivable 0.06 % 0.26 % 0.31 % 0.34 % 0.37 %
Nonperforming loans to loans receivable 0.06 % 0.26 % 0.31 % 0.35 % 0.37 %
Nonperforming assets to total assets 0.05 % 0.20 % 0.23 % 0.26 % 0.29 %
Classified loans to loans receivable 1.26 % 1.50 % 1.28 % 1.54 % 1.51 %
Classified loans to Tier 1 and ALLL 8.23 % 9.54 % 8.16 % 9.71 % 9.70 %
Classified assets to total assets 0.96 % 1.13 % 0.94 % 1.14 % 1.16 %
Classified assets to Tier 1 and ALLL 8.23 % 9.54 % 8.16 % 9.71 % 9.70 %
ALLL to loans receivable 1.08 % 1.06 % 1.10 % 1.07 % 1.15 %
ALLL to nonaccrual loans 1803.27 % 406.46 % 350.75 % 312.70 % 307.46 %
ALLL to nonperforming loans 1803.27 % 406.46 % 350.75 % 306.09 % 307.46 %
ALLL to nonperforming assets 1803.27 % 406.46 % 350.75 % 306.09 % 307.46 %
Texas ratio ³ 0.39 % 1.66 % 1.99 % 2.20 % 2.40 %
 
1 Net of SBA guaranteed balance
2 Includes loans held-for-sale
3 Nonperforming assets divided by tangible common equity and ALLL
 
                                                     
MARGIN ANALYSIS (Unaudited)
(Dollars in thousands)
 
Three Months Ended
June 30, 2018 March 31, 2018 June 30, 2017
Avg Balance       Interest       Yield Avg Balance       Interest       Yield Avg Balance       Interest       Yield

 

 

INTEREST-EARNING ASSETS
Loans ¹ $ 864,073 $ 13,579 6.30 % $ 814,600 $ 11,787 5.87 % $ 791,307 $ 10,919 5.53 %
Investment securities² 115,447 692 2.40 % 120,944 699 2.34 % 72,565 371 2.05 %
Interest-earning deposits at the FRB and other banks 64,553 283 1.76 % 75,473 280 1.50 % 52,092 136 1.05 %
Other earning assets   6,750           100       5.94 %   6,261           107       6.93 %   6,116           95       6.23 %
Total interest-earning assets ² 1,050,823 14,654 5.59 % 1,017,278 12,873 5.13 % 922,080 11,521 5.01 %
 
NONINTEREST-EARNING ASSETS
Cash and due from banks 12,900 11,985 11,819
Other noninterest-earning assets   30,356     28,682     27,106  
Total noninterest-earning assets 43,256 40,667 38,925
 
Less: Allowance for loan losses (8,619 ) (8,650 ) (8,416 )
     
TOTAL ASSETS $ 1,085,460   $ 1,049,295   $ 952,589  
 
INTEREST-BEARING DEPOSITS
Interest-bearing demand $ 1,702 $ 1 0.15 % $ 1,434 $ 1 0.15 % $ 1,888 $ 1 0.15 %
Money market 166,317 558 1.35 % 168,083 423 1.02 % 169,569 391 0.92 %
Savings 19,075 73 1.54 % 17,219 65 1.53 % 12,797 54 1.69 %
Time deposits   561,875           2,301       1.64 %   527,428           1,865       1.43 %   439,864           1,243       1.13 %
Total interest-bearing deposits 748,969 2,933 1.57 % 714,164 2,354 1.34 % 624,118 1,689 1.09 %
 
Borrowings   16,490           72       1.75 %   30,889           116       1.52 %   26,703           79       1.19 %
Total interest-bearing liabilities 765,459 3,005 1.57 % 745,053 2,470 1.34 % 650,821 1,768 1.09 %
 
Noninterest-bearing deposits 190,308 178,179 186,510
Other liabilities 8,728 9,044 6,801
 
Stockholders' equity   120,965     117,019     108,457  
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,085,460   $ 1,049,295   $ 952,589  
 
Net interest income $ 11,649 $ 10,403 $ 9,753
 
 
Cost of deposits 1.25 % 1.07 % 0.84 %
 
Cost of funds 1.26 % 1.09 % 0.85 %
 
Net interest spread 4.02 % 3.79 % 3.92 %
 
Net interest margin² 4.45 % 4.15 % 4.24 %
 
1 Includes loans held-for-sale
² Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate
 
                                   
MARGIN ANALYSIS (Unaudited)
(Dollars in thousands)
 
Six Months Ended
June 30, 2018 June 30, 2017
Avg Balance       Interest       Yield Avg Balance       Interest       Yield
Number of Days in the Period
INTEREST-EARNING ASSETS
Loans ¹ $ 839,473 $ 25,366 6.09 % $ 768,403 $ 20,706 5.43 %
Investment securities² 118,181 1,391 2.37 % 73,540 786 2.16 %
Interest-earning deposits at the FRB and other banks 69,983 563 1.62 % 48,882 229 0.94 %
Other earning assets   6,507           207       6.42 %   5,879           210       7.20 %
Total interest-earning assets ² 1,034,144 27,527 5.37 % 896,704 21,931 4.93 %
 
NONINTEREST-EARNING ASSETS
Cash and due from banks 12,445 11,426
Other noninterest-earning assets   29,311     27,174  
Total noninterest-earning assets 41,756 38,600
 
Less: Allowance for loan losses (8,635 ) (8,437 )
   
TOTAL ASSETS $ 1,067,265   $ 926,867  
 
INTEREST-BEARING DEPOSITS
Interest-bearing demand $ 1,568 $ 2 0.15 % $ 2,040 $ 2 0.15 %
Money market 167,195 981 1.18 % 170,308 769 0.91 %
Savings 18,152 138 1.53 % 12,808 107 1.68 %
Time deposits   544,748           4,166       1.54 %   426,227           2,291       1.08 %
Total interest-bearing deposits 731,663 5,287 1.46 % 611,383 3,169 1.05 %
 
Short-term borrowings   23,650           188       1.60 %   20,166           126       1.26 %
Total interest-bearing liabilities 755,313 5,475 1.47 % 631,549 3,295 1.05 %
 
Noninterest-bearing deposits 184,277 182,547
Other Liabilities 8,672 6,424
 
Stockholders' equity   119,003     106,347  
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,067,265   $ 926,867  
 
Net interest income $ 22,052 $ 18,636
 
 
Cost of deposits 1.16 % 0.80 %
 
Cost of funds 1.18 % 0.82 %
 
Net interest spread 3.90 % 3.88 %
 
Net interest margin² 4.30 % 4.19 %
 
1 Includes loans held-for-sale
² Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate
 


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