Community Bank Reports Strong Loan Growth and Record Earnings for the Six Months Ended June 30, 2017

PASADENA, Calif.--()--Community Bank (CYHT-OTC), founded in 1945, is an independent Southern California regional community bank, with assets of $3.7 billion, and headquartered in Pasadena with 16 business centers.

Financial highlights:

  • Net income for the 2nd quarter and the first six months of 2017 was $8.4 million and $16.1 million, a 3.0% and 1.8% increase, respectively, over the same periods last year.
  • In a strategic move to add high quality floating rate loans to its balance sheet, the Bank started to hold all of its SBA loans in the 4th quarter of 2016, instead of selling them in the secondary market for a fee. The incremental interest income and deferred loan costs on the SBA loans held during the six month period ending June 30, 2017, more than offset the decrease in fees from loan sales in the same period last year.
  • The SBA hold strategy, along with strong commercial real estate production drove loans up $155.2 million or 6.2% to $2.6 billion at June 30, 2017 as compared to December 31, 2016, with $133.2 million of that growth coming during the 2nd quarter of 2017.
  • Loan credit quality continues to improve as criticized and classified loan totals decreased year over year from $68.6 million at June 30, 2016 to $22.4 million at June 30, 2017. These positive factors translated to a lower reserve for loan losses at June 30, 2017 than at December 31, 2016.
  • The Bank’s reserve for loan losses as of June 30, 2017 was $34.8 million or 1.31% of total loans compared to $35.1 million or 1.41% of total loans as of December 31, 2016. In the first six months of 2017, a net recovery of $600 thousand was recognized in the provision for loan losses compared to a provision of $2.25 million during the same period in 2016.
  • Non-interest bearing deposits increased 8.4%, or $87.9 million to $1.135 billion at June 30, 2017 compared to $1.047 billion as of December 31, 2016, due to specialty deposit group efforts and other seasonal fluctuations. Partially offsetting this growth was a $23.0 million or 1.4% decrease in interest bearing deposits, resulting in a deposit growth of $64.9 million or 2.4% for the six month period ended June 30, 2017.
  • Strong loan growth, combined with increases in non-interest bearing demand deposits, contributed to the positive growth in net interest income in the 2nd quarter of 2017 which was $29.9 million compared with $27.8 million in 1st quarter of 2017. The improved net interest margin for the quarter ended June 30, 2017 of 3.39%, compared to 1st quarter 2017 of 3.24%, was driven by higher asset yields.
  • Net interest income decreased in the first six months of 2017 to $57.7 million from $58.1 million in the same period last year and the net interest margin decreased slightly to 3.32% from 3.33% in the same period. The decrease in net interest income and the net interest margin are primarily due to the June 2016 extension of $300 million of funding from overnight to 5 years. The extension of the funding was a strategic decision to reduce the interest rate risk profile of the Bank.
  • Non-interest income decreased $3.5 million in the first six month of 2017 compared to the same period of 2016. This decline relates to lower gain on sales of SBA loans and the timing of certain OREO and fixed asset sales.
  • Non-interest expense decreased $1.5 million in the first six month of 2017 compared to the same period of 2016, related to a decrease in salaries and employee benefits, increased deferrals of loan costs, and other smaller items.
  • Community Bank’s capital ratios continue to exceed “well capitalized” regulatory requirements

Dividend:

  • The Board of Directors declared a $0.50 per share cash dividend (aggregating $1.6 million) on its outstanding common stock for common shareholders of record as of August 15, 2017 and payable on or about September 1, 2017. This represents the eleventh consecutive quarter that the Bank has declared a dividend since introducing a formal dividend practice. The dividend was approved at the regularly scheduled Board of Directors meeting held on July 28, 2017.

CBank is pleased to include the following as market makers in Community Bank stock. Community Bank stock trades on OTC pink sheets under the ticket of CYHT. Contact information for our market makers is as follows:

Raymond James & Associates
John T. Cavender, SVP Financial Institutions
415-616-8935
John.cavender@raymondjames.com
http://www.raymondjames.com

D.A. Davidson & Co.
Michael R. Natzic, Senior Vice President
1-800-288-2811
mnatzic@dadco.com
https://dadavidson.com

Keefe Bruyette & Woods, a Stifel Company
Cathy Bellina, Equity Trader
212-887-8996
cbellina@kbw.com
www.kbw.com

Sandler O’Neill + Partners, L.P.
Tom Thurston, Principal
1-212-466-8027
tthurston@sandleroneill.com
http://www.sandleroneill.com/

Wedbush Securities
Joey Warmenhoven, Managing Director Community Banking Group
1-866-662-0351
Joey.warmenhoven@wedbush.com
https://www.wedbush.com/

Community Bank, partnering to be YOUR community bank, has offices in Anaheim, Burbank, Century City, Commerce, Corona, Glendale, Huntington Beach, Irvine, Laguna Niguel, Ontario, Pasadena, Redlands, Santa Clarita, Santa Fe Springs, South Bay, and Woodland Hills. For more information, visit the Community Bank Website at www.cbank.com.

This press release contains certain forward-looking statements, including certain plans, expectations, goals and projections, which are subject to numerous assumptions, risks and uncertainties. Actual results could differ materially from those contained in or implied by such statements for a variety of factors including: changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of business strategies; the nature and extent of governmental actions and reforms; and rapidly changing technology and evolving banking industry standards.

 
COMMUNITY BANK - FINANCIAL HIGHLIGHTS
(Unaudited)
(Amounts in Thousands, except shares and per share data)
   
For the Quarters Ended     For the Six Months Ended  
June 30, June 30,
  Dollar Percent   Dollar Percent
INCOME STATEMENT   2016   2017 Change Change   2016   2017   Change Change
 
Interest income $ 32,241 $ 34,114 $ 1,873 5.8 % $ 64,268 $ 65,696 $ 1,428 2.2 %
Interest expense   3,117   4,192   1,075   34.5 %   6,182   8,001     1,819   29.4 %
Net interest income 29,124 29,922 798 2.7 % 58,086 57,695 (391 ) (0.7 %)
Provision for loan losses   1,250   1,000   (250 ) (20.0 %)   2,250   (600 )   (2,850 ) (126.7 %)
Net interest income after provision 27,874 28,922 1,048 3.8 % 55,836 58,295 2,459 4.4 %
Non-interest income 4,673 3,141 (1,532 ) (32.8 %) 8,670 5,122 (3,548 ) (40.9 %)
Non-interest expense   19,332   18,436   (896 ) (4.6 %)   38,705   37,166     (1,539 ) (4.0 %)
Income before income tax 13,215 13,627 412 3.1 % 25,801 26,251 450 1.7 %
Income tax   5,106   5,273   167   3.3 %   9,944   10,110     166   1.7 %
Net income $ 8,109 $ 8,354 $ 245   3.0 % $ 15,857 $ 16,141   $ 284   1.8 %
 
 
      As of  
As of June 30,   Dollar   Percent December 31,   June 30, Dollar   Percent
BALANCE SHEET   2016       2017   Change Change   2016       2017   Change Change
Cash and cash equivalents $ 59,347 $ 59,386 $ 39 0.1 % $ 47,552 $ 59,386 $ 11,834 24.9 %
Investments 930,398 924,821 (5,577 ) (0.6 %) 913,781 924,821 11,040 1.2 %
FHLB Stock 19,845 17,512 (2,333 ) (11.8 %) 17,250 17,512 262 1.5 %
Non-owner occupied real estate loans 798,090 883,811 85,721 10.7 % 823,621 883,811 60,190 7.3 %
Owner occupied real estate loans   1,058,368     1,145,592     87,224   8.2 %   1,078,652     1,145,592     66,940   6.2 %
Total real estate loans 1,856,458 2,029,403 172,945 9.3 % 1,902,273 2,029,403 127,130 6.7 %
Commercial & industrial loans 626,262 576,854 (49,408 ) (7.9 %) 545,332 576,854 31,522 5.8 %
Other loans   56,984     43,433     (13,551 ) (23.8 %)   46,902     43,433     (3,469 ) (7.4 %)
Total loans 2,539,704 2,649,690 109,986 4.3 % 2,494,507 2,649,690 155,183 6.2 %
Loan loss reserve   (34,489 )   (34,824 )   (335 ) 1.0 %   (35,166 )   (34,824 )   342   (1.0 %)
Net loans 2,505,215 2,614,866 109,651 4.4 % 2,459,341 2,614,866 155,525 6.3 %
Other assets   119,994     132,863     12,869   10.7 %   147,035     132,863     (14,172 ) (9.6 %)
Total assets $ 3,634,799   $ 3,749,448   $ 114,649   3.2 % $ 3,584,959   $ 3,749,448   $ 164,489   4.6 %
 
Earning assets $ 3,510,884 $ 3,614,466 $ 103,582 3.0 % $ 3,440,426 $ 3,611,466 $ 171,040 5.0 %
 
Non-interest bearing deposits $ 968,887 $ 1,135,140 $ 166,253 17.2 % $ 1,047,221 $ 1,135,140 $ 87,919 8.4 %
Interest bearing deposits   1,746,113     1,611,711     (134,402 ) (7.7 %)   1,634,773     1,611,711     (23,062 ) (1.4 %)
Total deposits 2,715,000 2,746,851 31,851 1.2 % 2,681,994 2,746,851 64,857 2.4 %
Borrowings - short term 210,000 313,000 103,000 49.0 % 228,000 313,000 85,000 37.3 %
Borrowings - long term 352,500 315,000 (37,500 ) (10.6 %) 315,000 315,000 - -
Other liabilities   20,129     27,782     7,653   38.0 %   32,256     27,782     (4,474 ) (13.9 %)
Total liabilities 3,297,629 3,402,633 105,004 3.2 % 3,257,250 3,402,633 145,383 4.5 %
Stockholders' equity   337,170     346,815     9,645   2.9 %   327,709     346,815     19,106   5.8 %
Total liabilities & stockholders'equity $ 3,634,799   $ 3,749,448   $ 114,649   3.2 % $ 3,584,959   $ 3,749,448   $ 164,489   4.6 %
 
Shares outstanding 3,128,266 3,134,095 3,128,266 3,134,095
 
 
Selected Financial Data and Highlights
 
    For the Quarters Ended           For the Six Months Ended
June 30, June 30,
  2016       2017     2016       2017  
Return on average equity 9.85 % 9.74 % 9.77 % 9.63 %
Return on average assets 0.89 % 0.91 % 0.88 % 0.89 %
Earning Asset Yields 3.68 % 3.87 % 3.68 % 3.78 %
Cost of Funds   0.36 %   0.48 %   0.35 %   0.46 %
Net interest margin 3.32 % 3.39 % 3.33 % 3.32 %
Efficiency ratio 57.20 % 55.76 % 57.98 % 59.15 %
 
Book value per common share $ 107.78 $ 110.66
Basic earnings per common share $ 2.59 $ 2.67 $ 5.07 $ 5.15
Diluted earnings per common share $ 2.59 $ 2.66 $ 5.07 $ 5.15
Weighted average shares outstanding - basic 3,128,266 3,134,095 3,128,266 3,132,839
Weighted average shares outstanding - dilutive 3,128,266 3,136,435 3,128,266 3,134,689
Dividend declared $ 0.50 $ 0.50 $ 1.00 $ 1.00
 
 
    June 30,   Minimum Ratios for a
CAPITAL RATIOS 2016     2017   Well-Capitalized Bank
Tier 1 leverage capital 8.90 % 9.39 % 5.00 %
Tier 1 risk-based capital 10.57 % 10.97 % 8.00 %
Total risk-based capital 11.75 % 12.11 % 10.00 %
Common equity tier 1 capital 10.57 % 10.97 % 6.50 %
 
 

COMMUNITY BANK - FINANCIAL HIGHLIGHTS

 
ALLL Trend and Statistics (Unaudited)
(Amounts in Thousands)
 
    For the Quarters Ended
ALLL ROLLFORWARD June 30, 2016   September 30, 2016   December 31, 2016   March 31, 2017   June 30, 2017
Beginning Balance $ 37,364 $ 34,489 $ 35,826 $ 35,166 $ 33,449
 
Provision for / (Release of) Loan Losses 1,250 1,200 3,498 (1,600 ) 1,000
 
Charge Offs (4,182 ) (5 ) (4,941 ) (295 ) (24 )
Recoveries   57     142     783     178     399  
Net Charge Offs (4,125 ) 137 (4,158 ) (117 ) 375
         
Ending Balance $ 34,489   $ 35,826   $ 35,166   $ 33,449   $ 34,824  
 
Period End Loan Balance $ 2,539,704 $ 2,501,970 $ 2,494,507 $ 2,516,523 $ 2,649,690
 
Average Loan Balance for the period $ 2,541,240 $ 2,522,881 $ 2,481,496 $ 2,510,592 $ 2,563,327
 
ASSET QUALITY INDICATORS                                
 
Non-Performing Loans 6,720 6,132 16,188 14,979 12,157
OREO 3,848 3,093 3,000 - -
         
Total Non-Performing Assets (NPA) $ 10,568   $ 9,225   $ 19,188   $ 14,979   $ 12,157  
         
Criticized and Classified Loan Totals $ 68,816   $ 78,351   $ 66,196   $ 25,893   $ 22,366  
 
Loans and Leases 30 - 89 days past due 466 2,129 2,708 494 701
Loans and Leases >89 days past due   3     51     2     -     -  
Total Delinquent Loans and Leases $ 469   $ 2,180   $ 2,710   $ 494   $ 701  
 
Delinquent Loans and Leases to Total Loans 0.02 % 0.09 % 0.11 % 0.02 % 0.03 %
Net Charge Offs to Avg Loans (Annualized) -0.65 % 0.02 % -0.67 % -0.02 % 0.06 %
NPL as a % of Total Loans 0.26 % 0.25 % 0.65 % 0.60 % 0.46 %
NPA as a % of Total Loans + OREO 0.42 % 0.37 % 0.77 % 0.60 % 0.46 %
ALLL/Non Performing loans 513.2 % 584.2 % 217.2 % 223.3 % 286.5 %
ALLL as a % of Total Loans 1.36 % 1.43 % 1.41 % 1.33 % 1.31 %
 
 
COMMUNITY BANK - FINANCIAL HIGHLIGHTS
AVERAGE BALANCE SHEET AND YIELDS
(Unaudited)
 
  Quarters Ended
(In thousands)       June 30, 2016   September 30, 2016   December 31, 2016   March 31, 2017   June 30, 2017
  Average       Yield/   Average       Yield/   Average       Yield/   Average       Yield/   Average       Yield/
Balance   Interest     Rate Balance   Interest     Rate Balance   Interest     Rate Balance   Interest     Rate Balance   Interest     Rate
INTEREST EARNING ASSETS
Loans and leases $ 2,541,240 $ 26,806 4.24 % $ 2,522,881 $ 27,008 4.26 % $ 2,481,496 $ 26,229 4.20 % $ 2,510,592 $ 26,124 4.22 % $ 2,563,327 $ 28,702 4.49 %
Investment securities 944,005 4,986 2.11 % 911,566 4,654 2.04 % 889,076 4,672 2.10 % 924,218 5,031 2.18 % 937,691 5,045 2.15 %
FHLB Stock/Dividends 19,845 427 8.65 % 18,576 453 9.70 % 17,250 1,049 24.19 % 18,170 394 8.79 % 18,388 314 6.85 %
FFSold/Fed balances/Due from Time 18,392 22 0.47 % 20,076 25 0.49 % 19,861 26 0.51 % 18,194 33 0.73 % 20,743 53 1.01 %
                                                           
Total Earning Assets 3,523,482 32,241 3.68 % 3,473,099 32,140 3.68 % 3,407,683 31,976 3.73 % 3,471,174 31,582 3.69 % 3,540,149 34,114 3.87 %
 
Nonearning assets 122,020 123,289 136,952 145,407 139,026
         
Total Assets $ 3,645,502 $ 3,596,388 $ 3,544,635 $ 3,616,581 $ 3,679,175
 
INTEREST BEARING LIABILITIES
Time deposits 610,849 997 0.66 % 672,316 1,281 0.76 % 602,108 1,213 0.80 % 568,364 1,216 0.87 % 588,910 1,438 0.98 %
NOW and money market accounts 1,022,272 800 0.31 % 1,042,277 904 0.35 % 1,012,883 879 0.35 % 971,906 834 0.35 % 956,174 866 0.36 %
Savings and other 36,629 5 0.05 % 40,208 5 0.05 % 43,456 5 0.05 % 43,992 6 0.06 % 44,248 6 0.05 %
                                                           
Total Interest Bearing Deposits 1,669,750 1,802 0.43 % 1,754,801 2,190 0.50 % 1,658,447 2,097 0.50 % 1,584,262 2,056 0.53 % 1,589,332 2,310 0.58 %
 
Borrowings - short term 432,395 470 0.44 % 138,272 149 0.43 % 128,587 155 0.48 % 327,984 560 0.69 % 288,088 641 0.89 %
Borrowings - long term 176,127 845 1.93 % 336,169 1,348 1.60 % 318,261 1,236 1.54 % 315,000 1,193 1.54 % 313,494 1,241 1.59 %
                                                           
 
Total Interest Bearing Liabilities 2,278,272 3,117 0.55 % 2,229,242 3,687 0.66 % 2,105,295 3,488 0.66 % 2,227,246 3,809 0.69 % 2,190,914 4,192 0.77 %
 
Non-interest bearing deposits 1,012,964 1,000,650 1,070,434 1,023,236 1,113,374
Accrued interest payable and
other liabilities   23,142   26,253   33,160   34,141   31,019
 
Total Liabilities 3,314,378 3,256,145 3,208,889 3,284,623 3,335,307
Shareholders' equity   331,124   340,243   335,746   331,958   343,868
Total Liabilities and
Shareholders' Equity $ 3,645,502 $ 3,596,388 $ 3,544,635 $ 3,616,581 $ 3,679,175
 
Net Interest Spread 3.13 % 3.02 % 3.07 % 3.00 % 3.10 %
 
Effect of noninterest-bearing sources 0.19 % 0.24 % 0.25 % 0.24 % 0.29 %
 
 
Net Interest Income and Margin $ 29,124     3.32 % $ 28,453     3.26 % $ 28,488     3.33 % $ 27,773     3.24 % $ 29,922     3.39 %
 
COMMUNITY BANK - FINANCIAL HIGHLIGHTS
(Unaudited)
(Amounts in Thousands, except per share data)
 
 
    For the Quarters Ended
INCOME STATEMENT June 30, 2016   September 30, 2016   December 31, 2016   March 31, 2017   June 30, 2017
 
Interest income $ 32,241 $ 32,140 $ 31,976 $ 31,582 $ 34,114
Interest expense   3,117     3,687     3,488     3,809     4,192  
Net interest income 29,124 28,453 28,488 27,773 29,922
Provision for loan losses   1,250     1,200     3,498     (1,600 )   1,000  
Net interest income after provision 27,874 27,253 24,990 29,373 28,922
Non-interest income 4,673 2,665 1,972 1,981 3,141
Non-interest expense   19,332     19,086     20,537     18,730     18,436  
Income before income tax 13,215 10,832 6,425 12,624 13,627
Income tax   5,106     4,094     2,197     4,837     5,273  
Net income $ 8,109   $ 6,738   $ 4,228   $ 7,787   $ 8,354  
   
As of
BALANCE SHEET June 30, 2016 September 30, 2016 December 31, 2016 March 31, 2017 June 30, 2017
Cash and cash equivalents $ 59,347 $ 38,304 $ 47,552 $ 57,612 $ 59,386
Investments 930,398 886,522 913,781 924,826 924,821
FHLB Stock 19,845 17,250 17,250 18,765 17,512
Non-owner occupied real estate loans 870,538 826,728 823,621 824,506 883,811
Owner occupied real estate loans   1,072,893     1,063,247     1,078,652     1,095,176     1,145,592  
Total real estate loans 1,943,431 1,889,975 1,902,273 1,919,682 2,029,403
Commercial & industrial loans 571,045 567,365 545,332 555,708 576,854
Other loans   25,228     44,630     46,902     41,133     43,433  
Total loans 2,539,704 2,501,970 2,494,507 2,516,523 2,649,690
Loan loss reserve   (34,489 )   (35,826 )   (35,166 )   (33,449 )   (34,824 )
Net loans 2,505,215 2,466,144 2,459,341 2,483,074 2,614,866
Other assets   119,994     129,206     147,035     140,766     132,863  
Total assets $ 3,634,799   $ 3,537,426   $ 3,584,959   $ 3,625,043   $ 3,749,448  
 
Earning assets $ 3,510,884   $ 3,409,264   $ 3,440,426   $ 3,479,318   $ 3,614,466  
 
 
Non-interest bearing deposits $ 968,887 $ 1,032,914 $ 1,047,221 $ 1,055,942 $ 1,135,140
Interest bearing deposits   1,746,113     1,650,809     1,634,773     1,589,917     1,611,711  
Total deposits 2,715,000 2,683,723 2,681,994 2,645,859 2,746,851
Borrowings - short term 210,000 162,000 228,000 300,000 313,000
Borrowings - long term 352,500 320,000 315,000 315,000 315,000
Other liabilities   20,129     29,933     32,256     28,452     27,782  
Total liabilities 3,297,629 3,195,656 3,257,250 3,289,311 3,402,633
Stockholders' equity   337,170     341,770     327,709     335,732     346,815  
Total liabilities & stockholders'equity $ 3,634,799   $ 3,537,426   $ 3,584,959   $ 3,625,043   $ 3,749,448  
 
   
DEPOSIT COMPONENTS
Treasury deposits $ 460,332 $ 410,496 $ 385,662 $ 399,970 $ 407,647
Core Bank deposits   2,254,668     2,273,227     2,296,332     2,245,889     2,339,204  
Total Deposits $ 2,715,000   $ 2,683,723   $ 2,681,994   $ 2,645,859   $ 2,746,851  
Core deposits / total deposits 83.04 % 84.70 % 85.62 % 84.88 % 85.16 %
Non-interest bearing deposits/core deposits   42.97 % 45.44 % 45.60 % 47.02 %   48.53 %
 
For the Quarters Ended
PERFORMANCE AND PER SHARE DATA June 30, 2016 September 30, 2016 December 31, 2016 March 31, 2017 June 30, 2017
Return on average equity 9.85 % 7.88 % 5.01 % 9.51 % 9.74 %
Return on average assets 0.89 % 0.75 % 0.47 % 0.87 % 0.91 %
 
Earning Asset Yields 3.68 % 3.68 % 3.73 % 3.69 % 3.87 %
Cost of Funds   0.36 %   0.42 %   0.40 %   0.45 %   0.48 %
Net interest margin 3.32 % 3.26 % 3.33 % 3.24 % 3.39 %
Efficiency ratio 57.20 % 61.50 % 67.42 % 62.92 % 55.76 %
 
Book value per common share $ 107.78 $ 109.25 $ 104.76 $ 107.12 $ 110.66
Basic earnings per common share $ 2.59 $ 2.15 $ 1.35 $ 2.49 $ 2.67
Diluted earnings per common share $ 2.59 $ 2.15 $ 1.35 $ 2.49 $ 2.66
   
As of
CAPITAL RATIOS June 30, 2016 September 30, 2016 December 31, 2016 March 31, 2017 June 30, 2017
Tier 1 leverage capital 8.90 % 9.17 % 9.36 % 9.35 % 9.39 %
Tier 1 risk-based capital 10.57 % 10.88 % 10.88 % 11.08 % 10.97 %
Total risk-based capital 11.75 % 12.11 % 12.08 % 12.21 % 12.11 %
Common equity tier 1 capital 10.57 % 10.88 % 10.88 % 11.08 % 10.97 %
   
 
 
For the Quarters Ended
June 30, 2016 September 30, 2016 December 31, 2016 March 31, 2017 June 30, 2017
 
Non-interest income
Service charges on deposits $ 981 $ 964 $ 955 $ 1,021 $ 1,022
Fees and commissions 558 611 576 502 503
Bank owned life insurance 387 391 393 353 384
Gain on sale of OREO / fixed assets 1,351 (18 ) (12 ) 8 521
Gain (loss) on sale of securities - 83 - (15 ) -
Gain on sale of loans 1,258 585 6 63 19
Other non-interest income   138     49     54     49     692  
Total non-interest income $ 4,673   $ 2,665   $ 1,972   $ 1,981   $ 3,141  
 
Non-interest expense
Salary and employee benefits 12,954 12,954 14,692 13,339 12,406
Other expense   6,378     6,132     5,845     5,391     6,030  
Total non-interest expense $ 19,332   $ 19,086   $ 20,537   $ 18,730   $ 18,436  
 

Contacts

Community Bank
J. Duncan Smith, 626-568-2009
Chief Financial Officer

Contacts

Community Bank
J. Duncan Smith, 626-568-2009
Chief Financial Officer