Community Bank Reports Financial Results for 2017; The Impact of the TCJA; and a $0.50 Per Share Dividend

PASADENA, Calif.--()--Community Bank (OTC:CYHT) (“Bank”), 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.

Impact of Tax Cuts and Jobs Act (TCJA):

  • Community Bank recorded a $6.8 million or $1.95 per share one-time non-cash charge in the fourth quarter of 2017 as a result of the recently enacted TCJA. This charge results solely from the revaluation of our deferred tax assets.
  • Based on information presently available, the Bank anticipates its Federal and state statutory income tax rate for 2018 and beyond to decline from approximately 42.1% to 29.6%.

Financial highlights:

  • Net income was $26.7 million in 2017 compared with $26.8 million in 2016. The decrease in net income during 2017 of $99 thousand was primarily due to a $3.4 million decrease in gain on loan sales, a $1.8 million 2016 gain on the sale of OREO that did not recur in 2017, the $6.8 million non-cash charge discussed above offset by a $4.5 million release in the provision for loan losses. Diluted earnings per share in 2017 were $8.52 compared with $8.57 in 2016.
  • Net income before effect of the tax rate change was $33.5 million in the year ended December 31, 2017, an increase of $6.7 million or 24.9% over the same period last year. The increase in net income before the effect of the tax rate change during 2017 of $6.7 million resulted primarily from an increase in net interest income of $4.2 million and a $4.5 million release in the provision for loan losses during the year. These increases were partially offset by a $3.9 million decrease in non-interest income. Diluted earnings per share before the effect of the tax rate change were $10.68 compared with $8.57 in 2016. (See Non-GAAP measures disclosure below.)
  • The increase in net interest income of $4.2 million was primarily the result of $99 million of average loan growth and slightly higher yields on loans driven by Fed rate increases and collections of past due loan interest, partially offset by increased funding costs. The $3.9 million decrease in non-interest income was primarily the result of lower loan sale revenue in 2017 and a large OREO property gain on sale in 2016, partially offset by smaller other amounts. Net interest margin increased to 3.35% from 3.31% in the same period due to the above plus growth in non-interest bearing deposits.
  • Total loan balances at December 31, 2017 were a record $2.740 billion, representing a $245.4 million or 9.8% increase from the $2.495 billion at December 31, 2016. The Bank believes this growth reflects continued strong focus on origination of high quality loans in the greater Los Angeles area, primarily real estate and SBA loans.
  • During the 3rd quarter of 2017, an impaired loan of $5.4 million with a related charge off of $4.5 million was paid in full, resulting in a recovery of $4.5 million and past due interest of $711 thousand. This recovery, along with the pay-off of approximately $30 million of substandard loans in Q 1 2017, were the primary drivers behind the 2017 YTD reserve release of $4.5 million.
  • Loan credit quality continues to improve as criticized loan totals decreased from $66.2 million at December 31, 2016 to $17.1 million at December 31, 2017. Non-performing assets at December 31, 2017 were $9.9 million compared to $19.2 million at the end of 2016.
  • The allowance for loan losses decreased to 1.29% at December 31, 2017 compared to 1.41% at December 31, 2016, reflecting overall improvement in credit quality. The coverage ratio related to non-performing loans at December 31, 2017 was 391% compared to 217% at the end of 2016.
  • Deposits grew to a total of $2.860 billion as of December 31, 2017, an increase of $178.2 million or 6.6% from December 31, 2016.
  • Non-interest bearing deposits increased 12.4%, or $130.2 million to $1.177 billion at December 31, 2017 compared to $1.047 billion as of December 31, 2016, in part due to a Bank wide focus on increasing deposits throughout the branch system and the Bank’s specialty deposit group. Average non-interest bearing deposits grew $124.8 million or 12.4% during 2017 over the prior year.
  • Non-interest bearing deposits as a percentage of core deposits were 47.9% and at December 31, 2017, up from 45.6% at December 31, 2016. Non-interest bearing deposits as a percentage of total deposits were 41.2% compared to 39.0% at the prior year end.
  • Details of changes in non-interest income and non-interest expenses are provided in the financial reports attached to the document including a reduction in loan sales of $3.4 million, an increase in salary related expenses of $2.8 million, an increase in deferral of loan origination costs of $2.9 million and an increase in professional services of $1.9 million during 2017 as compared to 2016.
  • Community Bank’s capital ratios continue to exceed “well capitalized” regulatory requirements
  • The Kroll Bond Rating Agency (KBRA) affirmed Community Bank’s ratings as follows as of December 31, 2017:
                       

Type

Rating

Outlook

Action

Deposit BBB+ Stable Affirmed
Senior Unsecured Debt BBB+ Stable Affirmed
Subordinated Debt BBB+ Stable Affirmed
Short-term Deposit K2 N/A Affirmed
Short-term Debt K2 N/A Affirmed
 

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 February 12, 2018 and payable on or about March 1, 2018. This represents the thirteenth 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 January 25, 2018.

Provisional Estimate:

  • The $6.8 million charge for deferred tax assets is a provisional estimate that could change as the Bank anticipates subsequent regulations and interpretations to be released associated with TCJA that will provide additional guidance on the application of the law; it is anticipated that the provisional estimate will be finalized by March 31, 2018, but could take up to 12 months.

Non-GAAP Financial Measures:

  • The Bank believes the presentation of net income before the effect of tax rate change, and the effect of the tax rate change which are both non-GAAP financial measures provides useful supplemental information that is essential to an investor’s proper understanding of the results of the operations and financial condition of the Bank. See the Statement on Non-GAAP measures and related table later in this document for additional disclosures and reconciliations.

Market Makers

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

D.A. Davidson & Co.

John T. Cavender, SVP Financial Institutions Michael R. Natzic, Senior Vice President
415-616-8935 1-800-288-2811

John.cavender@raymondjames.com

mnatzic@dadco.com

http://www.raymondjames.com

https://dadavidson.com

 

Keefe Bruyette & Woods, a Stifel Company

Sandler O’Neill + Partners, L.P.

Cathy Bellina, Equity Trader

Tom Thurston, Principal
212-887-8996 1-212-466-8027

cbellina@kbw.com

tthurston@sandleroneill.com

www.kbw.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 document may contain forward-looking statements concerning projections of revenues, income/loss, earnings/loss per share, capital expenditures, dividends, capital structure, or other financial items, plans and objectives of management for future operations, future economic performance, or any of the assumptions underlying or relating to any of the foregoing. Forward-looking statements can be identified by the fact that they do not relate

strictly to historical or current facts, and may include the words "believes," "plans," "expects," "anticipates," "forecasts," "intends," "hopes," "should," "estimates," or words of similar meaning. While the Bank believes that our forward-looking statements and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could materially differ from projections for a variety of reasons, to include, but not limited to: the effect of, and our failure to comply with any regulatory orders we are or may become subject to; adverse economic conditions in California; adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality, and losses in our loan portfolio; the impact of local, national, and international economies and events (including political events, acts of war or terrorism, natural disasters such as wildfires and earthquakes) on the Bank’s business; deterioration or malaise in economic conditions, including destabilizing factors in the financial industry and deterioration of the real estate market, as well as the impact from any declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular; the impact of regulatory action on the Bank and legislation affecting the financial services industry; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; the Dodd-Frank Wall Street Reform and Consumer Protection Act, other regulatory reform, and any related rules and regulations on our business operations and competitiveness; the costs and effects of legal and regulatory developments, including legal proceedings or regulatory or other governmental inquiries and proceedings and the resolution thereof, and the results of regulatory examinations or reviews; changes in our business plan; the effect of the Tax Cuts and Jobs Act; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate,securities market and monetary fluctuations; changes in consumer spending, borrowings and savings habits; technological changes and developments; changes in the competitive environment among financial holding companies and other financial service providers, including fintech businesses; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; changes in our capital position; our ability to attract and retain skilled executives and employees; changes in our organization, compensation and benefit plans; and our success at managing the risks involved in any of the foregoing items.

 
COMMUNITY BANK - FINANCIAL HIGHLIGHTS
(Unaudited)
(Amounts in Thousands, except shares and per share data)
 
  As of    

December 31,

 

December 31,

Dollar

Percent

BALANCE SHEET 2016   2017 Change Change
Cash and cash equivalents $ 47,552 $ 44,298 $ (3,254 ) (6.8 %)
Investments 913,781 837,415 (76,366 ) (8.4 %)
FHLB Stock 17,250 17,250 - -
Non-owner occupied real estate loans 823,621 919,714 96,093 11.7 %
Owner occupied real estate loans   1,078,652     1,191,757     113,105   10.5 %
Total real estate loans 1,902,273 2,111,471 209,198 11.0 %
Commercial & industrial loans 545,332 590,462 45,130 8.3 %
Other loans   46,902     37,926     (8,976 ) (19.1 %)
Total loans 2,494,507 2,739,859 245,352 9.8 %
Loan loss reserve   (35,166 )   (35,346 )   (180 ) (0.5 %)
Net loans 2,459,341 2,704,513 245,172 10.0 %
Other assets   147,035     143,922     (3,113 ) (2.1 %)
Total assets $ 3,584,959   $ 3,747,398   $ 162,439   4.5 %
 
Earning assets $ 3,440,426 $ 3,606,816 $ 166,390 4.8 %
 
Non-interest bearing deposits $ 1,047,221 $ 1,177,453 $ 130,232 12.4 %
Interest bearing deposits   1,634,773     1,682,761     47,988   2.9 %
Total deposits 2,681,994 2,860,214 178,220 6.6 %
Borrowings - short term 228,000 197,500 (30,500 ) (13.4 %)
Borrowings - long term 315,000 305,000 (10,000 ) (3.2 %)
Other liabilities   32,256     32,274     18   0.1 %
Total liabilities 3,257,250 3,394,988 137,738 4.2 %
Stockholders' equity   327,709     352,410     24,701   7.5 %

Total liabilities & stockholders' equity

$ 3,584,959   $ 3,747,398   $ 162,439   4.5 %
 
Shares outstanding 3,128,266 3,134,095
 
 

December 31,

Minimum Ratios for a

CAPITAL RATIOS 2016 2017 Well-Capitalized Bank
 
Tier 1 leverage capital 9.36 % 9.43 % 5.00 %
Tier 1 risk-based capital 10.88 % 10.91 % 8.00 %
Total risk-based capital 12.08 % 12.04 % 10.00 %
Common equity tier 1 capital 10.88 % 10.91 % 6.50 %
 
           
For the Quarters Ended For the Year Ended
December 31,   December 31,  
  Dollar Percent   Dollar Percent
INCOME STATEMENT 2016 2017 Change Change 2016 2017 Change Change
 
Interest income $ 31,976 $ 35,126 $ 3,150 9.9 % $ 128,384 $ 136,078 $ 7,694 6.0 %
Interest expense   3,488   4,400   912   26.1 %   13,357   16,840     3,483   26.1 %
Net interest income 28,488 30,726 2,238 7.9 % 115,027 119,238 4,211 3.7 %
Provision for loan losses   3,498   104   (3,394 ) (97.0 %)   6,948   (4,496 )   (11,444 ) (164.7 %)
Net interest income after provision 24,990 30,622 5,632 22.5 % 108,079 123,734 15,655 14.5 %
Non-interest income 1,972 1,903 (69 ) (3.5 %) 13,307 9,378 (3,929 ) (29.5 %)
Non-interest expense   20,537   21,123   586   2.9 %   78,328   78,887     559   0.7 %
Income before income tax 6,425 11,402 4,977 77.5 % 43,058 54,225 11,167 25.9 %
Income tax   2,197   10,960   8,763   398.9 %   16,235   27,501     11,266   69.4 %
Net income $ 4,228 $ 442 $ (3,786 ) (89.5 %) $ 26,823 $ 26,724   $ (99 ) (0.4 %)
 
       
For the Quarters Ended For the Year Ended
December 31,   December 31,
Selected Financial Data and Highlights 2016   2017 2016   2017
 
Return on average equity 5.01 % 0.49 % 8.07 % 7.71 %
Return on average equity before effect of tax rate change 1) 5.01 % 8.00 % 8.07 % 9.66 %
 
Return on average assets 0.47 % 0.05 % 0.74 % 0.72 %
Return on average assets before effect of tax rate change 1) 0.47 % 0.76 % 0.74 % 0.91 %
 
 
 
Earning Asset Yields 3.73 % 3.84 % 3.70 % 3.82 %
Cost of Funds   0.40 %   0.48 %   0.39 %   0.47 %
Net interest margin 3.33 % 3.36 % 3.31 % 3.35 %
Efficiency ratio 67.42 % 64.85 % 61.07 % 61.40 %
 
Book value per common share $ 104.76 $ 112.44
 
Basic earnings per common share $ 1.35 $ 0.14 $ 8.57 $ 8.53
Earnings per share - basic before effect of tax rate change 1) $ 1.35 $ 2.30 $ 8.57 $ 10.69
 
Diluted earnings per common share $ 1.35 $ 0.14 $ 8.57 $ 8.52

Diluted earnings per common before effect of tax rate change 1)

$ 1.35 $ 2.29 $ 8.57 $ 10.68
Weighted average shares outstanding - basic 3,128,266 3,134,095 3,128,266 3,133,472
Weighted average shares outstanding - dilutive 3,128,609 3,143,534 3,128,350 3,136,431
Dividend declared $ 0.50 $ 0.50 $ 2.00 $ 2.00
 

1) See Statement of non-GAAP measures at the end of this document

 
For the Year Ended
December 31,
Interest income 2016     2017
Loans $ 106,463 $ 114,938
Securities 19,550 19,507
FHLB dividends 2,277 1,335
Interest bearing bank balances   94     298  
Total interest income $ 128,384   $ 136,078  
 
Interest expense
Money market $ 2,927 $ 4,015
CD's 4,380 5,661
Other interest bearing deposits 416 148
Borrowings - Short term (<92 days) 1,378 2,176
Borrowings - long term   4,256     4,840  
Total interest expense $ 13,357   $ 16,840  
 
For the Year Ended
December 31,
Non-interest income 2016 2017
Service charges on deposits $ 3,838 $ 4,081
Fees and commissions 2,234 1,896
Bank owned life insurance 1,576 1,519
Gain on sale of OREO / fixed / other assets 1,702 480
Gain (loss) on sale of securities 83 145
Gain on sale of loans 3,599 168
Swap fee income - 494
Other non-interest income   275     595  
Total non-interest income $ 13,307   $ 9,378  
 
Non-interest expense
Salary and employee benefits $ 56,789 $ 59,616
Deferral of loan origination costs (2,955 ) (5,873 )
Occupancy 6,919 6,808
Professional Services 3,114 4,975
FDIC Insurance 1,724 1,241
Net OREO income (expense) 388 106
Data processing 3,489 3,401
Other expense   8,860     8,613  
Total non-interest expense $ 78,328   $ 78,887  
 
 
COMMUNITY BANK - FINANCIAL HIGHLIGHTS
(Unaudited)
(Amounts in Thousands, except per share data)
         
 
As of
BALANCE SHEET December 31, March 31, June 30, September 30, December 31,
2016 2017 2017 2017 2017
Cash and cash equivalents $ 47,552 $ 57,612 $ 59,386 $ 48,546 $ 44,298
Investments 913,781 924,826 924,821 887,257 837,415
FHLB Stock 17,250 18,765 17,512 17,250 17,250
Non-owner occupied real estate loans 823,621 824,506 883,811 883,199 919,714
Owner occupied real estate loans   1,078,652     1,095,176     1,145,592     1,175,410     1,191,757  
Total real estate loans 1,902,273 1,919,682 2,029,403 2,058,609 2,111,471
Commercial & industrial loans 545,332 555,708 576,854 585,369 590,462
Other loans   46,902     41,133     43,433     43,303     37,926  
Total loans 2,494,507 2,516,523 2,649,690 2,687,281 2,739,859
Loan loss reserve   (35,166 )   (33,449 )   (34,824 )   (35,345 )   (35,346 )
Net loans 2,459,341 2,483,074 2,614,866 2,651,936 2,704,513
Other assets   147,035     140,766     132,863     135,723     143,922  
Total assets $ 3,584,959   $ 3,625,043   $ 3,749,448   $ 3,740,712   $ 3,747,398  
 
Earning assets $ 3,440,426   $ 3,479,318   $ 3,614,466   $ 3,601,919   $ 3,606,816  
 
 
Non-interest bearing deposits $ 1,047,221 $ 1,055,942 $ 1,135,140 $ 1,188,818 $ 1,177,453
Interest bearing deposits   1,634,773     1,589,917     1,611,711     1,682,461     1,682,761  
Total deposits 2,681,994 2,645,859 2,746,851 2,871,279 2,860,214
Borrowings - short term 228,000 300,000 313,000 166,000 197,500
Borrowings - long term 315,000 315,000 315,000 315,000 305,000
Other liabilities   32,256     28,452     27,782     31,888     32,274  
Total liabilities 3,257,250 3,289,311 3,402,633 3,384,167 3,394,988
Stockholders' equity   327,709     335,732     346,815     356,545     352,410  
Total liabilities & stockholders'equity $ 3,584,959   $ 3,625,043   $ 3,749,448   $ 3,740,712   $ 3,747,398  
 
 
DEPOSIT COMPONENTS
Treasury deposits $ 385,662 $ 399,970 $ 407,647 $ 416,431 $ 400,752
Core Bank deposits   2,296,332     2,245,889     2,339,204     2,454,848     2,459,462  
Total Deposits $ 2,681,994   $ 2,645,859   $ 2,746,851   $ 2,871,279   $ 2,860,214  
Core deposits / total deposits 85.62 % 84.88 % 85.16 % 85.50 % 85.99 %
Non-interest bearing deposits/core deposits   45.60 % 47.02 % 48.53 % 48.43 %   47.87 %
 
 
As of
CAPITAL RATIOS December 31, March 31, June 30, September 30, December 31,
2016 2017 2017 2017   2017
Tier 1 leverage capital 9.36 % 9.35 % 9.39 % 9.50 % 9.43 %
Tier 1 risk-based capital 10.88 % 11.08 % 10.97 % 11.14 % 10.91 %
Total risk-based capital 12.08 % 12.21 % 12.11 % 12.29 % 12.04 %
Common equity tier 1 capital 10.88 % 11.08 % 10.97 % 11.14 % 10.91 %
 
         
For the Quarters Ended
INCOME STATEMENT December 31, March 31, June 30, September 30, December 31,
2016 2017 2017 2017   2017
 
 
Interest income $ 31,976 $ 31,582 $ 34,114 $ 35,256 $ 35,126
Interest expense   3,488     3,809     4,192     4,439     4,400  
Net interest income 28,488 27,773 29,922 30,817 30,726
Provision for loan losses   3,498     (1,600 )   1,000     (4,000 )   104  
Net interest income after provision 24,990 29,373 28,922 34,817 30,622
Non-interest income 1,972 1,981 3,141 2,353 1,903
Non-interest expense   20,537     18,730     18,436     20,598     21,123  
Income before income tax 6,425 12,624 13,627 16,572 11,402
Income tax   2,197     4,837     5,273     6,431     10,960  
Net income $ 4,228   $ 7,787   $ 8,354   $ 10,141   $ 442  
 
 
For the Quarters Ended
PERFORMANCE AND PER SHARE DATA December 31, March 31, June 30, September 30, December 31,
2016 2017 2017 2017   2017
 
Return on average equity 5.01 % 9.51 % 9.74 % 11.40 % 0.49 %
Return on average equity before effect of tax rate change 1) 5.01 % 9.51 % 9.74 % 11.40 % 8.00 %
 
Return on average assets 0.47 % 0.87 % 0.91 % 1.08 % 0.05 %
Return on average assets before effect of tax rate change 1) 0.47 % 0.87 % 0.91 % 1.08 % 0.76 %
 
 
Earning Asset Yields 3.73 % 3.69 % 3.87 % 3.88 % 3.84 %
Cost of Funds   0.40 %   0.45 %   0.48 %   0.49 %   0.48 %
Net interest margin 3.33 % 3.24 % 3.39 % 3.39 % 3.36 %
Efficiency ratio 67.42 % 62.92 % 55.76 % 62.29 % 64.85 %
 
Book value per common share $ 104.76 $ 107.12 $ 110.66 $ 113.76 $ 112.44
Earnings per share - basic $ 1.35 $ 2.49 $ 2.67 $ 3.24 $ 0.14
Earnings per share - basic before effect of tax rate change 1) $ 1.35 $ 2.49 $ 2.67 $ 3.24 $ 2.30
 
Diluted earnings per common share $ 1.35 $ 2.49 $ 2.66 $ 3.23 $ 0.14
Diluted earnings per common share before effect of tax rate change 1) $ 1.35   $ 2.49 $ 2.66 $ 3.23 $ 2.29  
 

1) See Statement of non-GAAP measures at the end of this document

       
For the Quarters Ended
December 31,   March 31, June 30, September 30, December 31,
2016 2017 2017 2017 2017
 
Interest income
Loans $ 26,229 $ 26,124 $ 28,702 $ 30,064 $ 30,048
Securities 4,672 5,031 5,045 4,790 4,641
FHLB dividends 1,049 394 314 320 307

Interest bearing bank balances

  26     33     53     82     130  
Total interest income $ 31,976   $ 31,582   $ 34,114   $ 35,256   $ 35,126  
 
Interest expense
Money market 845 800 837 1,034 1,344
CD's 1,213 1,216 1,438 1,522 1,485
Other interest bearing deposits 39 40 35 36 37
Borrowings - Short term (<92 days) 155 560 641 633 342
Borrowings - long term   1,236     1,193     1,241     1,214     1,192  
Total interest expense $ 3,488   $ 3,809   $ 4,192   $ 4,439   $ 4,400  
 
 
For the Quarters Ended
December 31, March 31, June 30, September 30, December 31,
2016 2017 2017 2017 2017
 
Non-interest income
Service charges on deposits $ 955 $ 1,021 $ 1,022 $ 1,013 $ 1,025
Fees and commissions 576 502 503 488 403
Bank owned life insurance 393 353 384 417 365
Gain on sale of OREO / fixed / other assets (12 ) 8 521 1 (50 )
Gain (loss) on sale of securities - (15 ) - 104 56
Gain on sale of loans 6 63 19 56 30
Swap fee income - - 494 - -
Other non-interest income   54     49     198     274     74  
Total non-interest income $ 1,972   $ 1,981   $ 3,141   $ 2,353   $ 1,903  
 
Non-interest expense
Salary and employee benefits 15,923 14,595 14,302 15,181 15,538
Deferral of loan origination costs (1,231 ) (1,256 ) (1,896 ) (1,492 ) (1,229 )
Occupancy 1,698 1,710 1,640 1,776 1,682
Professional Services 498 575 1,000 1,126 2,274
FDIC Insurance 282 308 355 339 239
Net OREO income (expense) 140 39 21 3 43
Data processing 1,057 807 908 1,059 627
Other expense   2,170     1,952     2,106     2,606     1,949  
Total non-interest expense $ 20,537   $ 18,730   $ 18,436   $ 20,598   $ 21,123  
 
 
AVERAGE BALANCE SHEET AND YIELDS
(Unaudited)
       
For the Year Ended For the Year Ended
(In thousands)   December 31, 2016 December 31, 2017
Average     Yield/ Average     Yield/
Balance   Interest   Rate Balance   Interest   Rate
INTEREST EARNING ASSETS
Loans and leases $ 2,508,726 $ 106,463 4.24 % $ 2,607,885 $ 114,938 4.41 %
Investment securities 927,427 19,550 2.11 % 910,132 19,507 2.14 %
FHLB Stock/Dividends 18,744 2,277 12.15 % 17,793 1,335 7.50 %
FFSold/Fed balances/Due from Time   19,261     94   0.48 %   26,549     298   1.11 %
Total Earning Assets 3,474,158 128,384 3.70 % 3,562,359 136,078 3.82 %
 
Nonearning assets   126,758   138,615
Total Assets $ 3,600,916 $ 3,700,974
 
INTEREST BEARING LIABILITIES
Time deposits 617,508 4,380 0.71 % 564,348 5,661 1.00 %
Interest bearing demand 164,244 397 0.24 % 77,362 122 0.16 %
Money market 854,987 2,927 0.34 % 955,272 4,015 0.42 %
Savings and other   39,347     19   0.05 %   46,150     26   0.06 %
Total Interest Bearing Deposits 1,676,086 7,723 0.46 % 1,643,132 9,824 0.60 %
 
Borrowings - short term 304,382 1,378 0.45 % 233,951 2,176 0.93 %
Borrowings - long term   253,361     4,256   1.68 %   312,131     4,840   1.55 %
Total Interest Bearing Liabilities 2,233,829 13,357 0.60 % 2,189,214 16,840 0.77 %
Non-interest bearing deposits 1,007,703 1,132,495

Accrued interest payable and other liabilities

  27,167   32,519
Total Liabilities 3,268,699 3,354,228
Shareholders' equity   332,217   346,746

Total Liabilities and Shareholders' Equity

$ 3,600,916 $ 3,700,974
Net Interest Spread 3.10 % 3.05 %
Effect of noninterest-bearing sources 0.21 % 0.30 %
Net Interest Income and Margin $ 115,027   3.31 % $ 119,238   3.35 %
 
 
COMMUNITY BANK - FINANCIAL HIGHLIGHTS
AVERAGE BALANCE SHEET AND YIELDS
(Unaudited)
 
  Quarters Ended
(In thousands)   December 31, 2016   March 31, 2017   June 30, 2017   September 30, 2017   December 31, 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 $ 2,481,496 $ 26,229 4.20 % $ 2,510,592 $ 26,124 4.22 % $ 2,563,327 $ 28,702 4.49 % $ 2,652,270 $ 30,064 4.50 % $ 2,702,750 $ 30,048 4.41 %
Investment securities 889,076 4,672 2.10 % 924,218 5,031 2.18 % 937,691 5,045 2.15 % 911,808 4,790 2.10 % 867,418 4,641 2.14 %
FHLB Stock/Dividends 17,250 1,049 24.19 % 18,170 394 8.79 % 18,388 314 6.85 % 17,378 320 7.31 % 17,250 307 7.06 %
FFSold/Fed balances/Due from Time   19,861     26   0.51 %   18,194     33   0.73 %   20,743     53   1.01 %   27,274     82   1.18 %   39,739     130   1.28 %
Total Earning Assets 3,407,683 31,976 3.73 % 3,471,174 31,582 3.69 % 3,540,149 34,114 3.87 % 3,608,730 35,256 3.88 % 3,627,157 35,126 3.84 %
 
Nonearning assets   136,952   145,407   139,026   130,200   139,469
Total Assets $ 3,544,635 $ 3,616,581 $ 3,679,175 $ 3,738,930 $ 3,766,626
 
INTEREST BEARING LIABILITIES
Time deposits 602,108 1,213 0.80 % 568,364 1,216 0.87 % 588,910 1,438 0.98 % 570,096 1,522 1.06 % 530,375 1,485 1.11 %
Interest bearing demand 81,051 34 0.17 % 84,890 34 0.16 % 75,851 29 0.15 % 75,528 29 0.15 % 73,327 30 0.16 %
Money market 931,832 845 0.36 % 887,016 800 0.37 % 880,323 837 0.38 % 979,452 1,034 0.42 % 1,071,997 1,344 0.50 %
Savings and other   43,456     5   0.05 %   43,992     6   0.06 %   44,248     6   0.05 %   47,567     7   0.06 %   48,725     7   0.06 %
Total Interest Bearing Deposits 1,658,447 2,097 0.50 % 1,584,262 2,056 0.53 % 1,589,332 2,310 0.58 % 1,672,643 2,592 0.61 % 1,724,424 2,866 0.66 %
 
Borrowings - short term 128,587 155 0.48 % 327,984 560 0.69 % 288,088 641 0.89 % 212,728 633 1.18 % 109,635 342 1.24 %
Borrowings - long term   318,261     1,236   1.54 %   315,000     1,193   1.54 %   313,494     1,241   1.59 %   315,000     1,214   1.53 %   305,109     1,192   1.55 %
 
Total Interest Bearing Liabilities 2,105,295 3,488 0.66 % 2,227,246 3,809 0.69 % 2,190,914 4,192 0.77 % 2,200,371 4,439 0.80 % 2,139,168 4,400 0.82 %
 
Non-interest bearing deposits 1,070,434 1,023,236 1,113,374 1,154,496 1,236,292

Accrued interest payable and other liabilities

  33,160   34,141   31,019   31,037   33,387
 
Total Liabilities 3,208,889 3,284,623 3,335,307 3,385,904 3,408,847
Shareholders' equity   335,746   331,958   343,868   353,026   357,779

Total Liabilities and Shareholders' Equity

$ 3,544,635 $ 3,616,581 $ 3,679,175 $ 3,738,930 $ 3,766,626
Net Interest Spread 3.07 % 3.00 % 3.10 % 3.08 % 3.02 %
Effect of noninterest-bearing sources 0.25 % 0.24 % 0.29 % 0.31 % 0.34 %
Net Interest Income and Margin $ 28,488   3.33 % $ 27,773   3.24 % $ 29,922   3.39 % $ 30,817   3.39 % $ 30,726   3.36 %
 
 
COMMUNITY BANK - FINANCIAL HIGHLIGHTS
 
ALLL Trend and Statistics (Unaudited)
(Amounts in Thousands)
 
    For the Year Ended
ALLL ROLLFORWARD     December 31, 2016     December 31, 2017
Beginning Balance $ 36,327     $ 35,166
 
Provision for / (Release of) Loan Losses 6,948 (4,496 )
 
Charge Offs (9,161 ) (690 )
Recoveries   1,052     5,366  
Net (Charge Offs) Recoveries (8,109 ) 4,676
   
Ending Balance $ 35,166   $ 35,346  
 
Period End Loan Balance $ 2,494,507 $ 2,739,859
 
Average Loan Balance for the period $ 2,508,726 $ 2,607,885
 
ASSET QUALITY INDICATORS            
 
Non-Performing Loans 16,188 9,041
OREO 3,000 825
   
Total Non-Performing Assets (NPA) $ 19,188   $ 9,866  
   
Criticized Loan Totals $ 66,196   $ 17,097  
 
Loans and Leases 30 - 89 days past due 2,708 4,175
Loans and Leases >89 days past due   2     -  
Total Delinquent Loans and Leases $ 2,710   $ 4,175  
 
Delinquent Loans and Leases to Total Loans 0.11 % 0.15 %
Net Charge Offs to Avg Loans (Annualized) -0.32 % 0.18 %
NPL as a % of Total Loans 0.65 % 0.33 %
NPA as a % of Total Loans + OREO 0.77 % 0.36 %
ALLL/Non Performing loans 217.2 % 391.0 %
ALLL as a % of Total Loans 1.41 % 1.29 %
 
 
COMMUNITY BANK - FINANCIAL HIGHLIGHTS
 
ALLL Trend and Statistics (Unaudited)
(Amounts in Thousands)
 
  For the Quarters Ended
ALLL ROLLFORWARD   December 31,   March 31,   June 30,   September 30,   December 31,
2016   2017   2017   2017   2017
Beginning Balance $ 35,826   $ 35,166   $ 33,449   $ 34,824   $ 35,345
 
Provision for / (Release of) Loan Losses 3,498 (1,600 ) 1,000 (4,000 ) 104
 
Charge Offs (4,941 ) (295 ) (24 ) (156 ) (215 )
Recoveries   783     178     399     4,677     112  
Net Charge Offs (4,158 ) (117 ) 375 4,521 (103 )
         
Ending Balance $ 35,166   $ 33,449   $ 34,824   $ 35,345   $ 35,346  
 
Period End Loan Balance $ 2,494,507 $ 2,516,523 $ 2,649,690 $ 2,687,281 $ 2,739,859
 
Average Loan Balance for the period $ 2,481,496 $ 2,510,592 $ 2,563,327 $ 2,652,270 $ 2,702,750
 
ASSET QUALITY INDICATORS                    
 
Non-Performing Loans 16,188 14,979 12,157 3,951 9,041
OREO   3,000     -     -     825     825  
Total Non-Performing Assets (NPA) $ 19,188   $ 14,979   $ 12,157   $ 4,776   $ 9,866  
 
Criticized Loan Totals $ 66,196   $ 25,893   $ 22,366   $ 26,954   $ 17,097  
 
Loans and Leases 30 - 89 days past due 2,708 494 701 1,624 4,175
Loans and Leases >89 days past due   2     -     -     -     -  
Total Delinquent Loans and Leases $ 2,710   $ 494   $ 701   $ 1,624   $ 4,175  
 
Delinquent Loans and Leases to Total Loans 0.11 % 0.02 % 0.03 % 0.06 % 0.15 %
Net Charge Offs to Avg Loans (Annualized) -0.67 % -0.02 % 0.06 % 0.68 % -0.02 %
NPL as a % of Total Loans 0.65 % 0.60 % 0.46 % 0.15 % 0.33 %
NPA as a % of Total Loans + OREO 0.77 % 0.60 % 0.46 % 0.18 % 0.36 %
ALLL/Non Performing loans 217.2 % 223.3 % 286.5 % 894.6 % 391.0 %
ALLL as a % of Total Loans 1.41 % 1.33 % 1.31 % 1.32 % 1.29 %
 
 

COMMUNITY BANK
Statement on Non-GAAP Measures
GAAP to Non-GAAP Reconciliation and Calculation of Non-GAAP Performance Measures (unaudited)
(Amounts in Thousands, except shares and per share data)

Community Bank believes the presentation of the following non-GAAP financial measures provides useful supplemental information that is essential to an investor’s proper understanding of the results of operations and financial condition of the Bank. Management uses non-GAAP financial measures in its analysis of the Bank’s performance. These non-GAAP measures should not be viewed as substitutes for the financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

           
For the Quarters Ended For the Year Ended
December 31,   December 31,
  Dollar Percent   Dollar Percent
2016 2017 Change Change 2016 2017 Change Change
Selected Financial Data and Highlights
Net income 4,228 442 (3,786 ) (89.5 %) 26,823 26,724 (99 ) (0.4 %)
Effect of tax rate change   -     6,771     6,771   -     -     6,771     6,771   -  
Net income before effect of tax rate change $ 4,228   $ 7,213   $ 2,985   70.6 % $ 26,823   $ 33,495   $ 6,672   24.9 %
 
Return on average equity 5.01 % 0.49 % 8.07 % 7.71 %
Effect of tax rate change   -     7.51     -     1.95  
Return on average equity before effect of tax rate change   5.01 %   8.00 %   8.07 %   9.66 %
 
Return on average assets 0.47 % 0.05 % 0.74 % 0.72 %
Effect of tax rate change   -     0.71     -     0.19  
Return on average assets before the effect of tax rate change   0.47 %   0.76 %   0.74 %   0.91 %
 
 
Earnings per share - basic $ 1.35 $ 0.14 $ (1.21 ) (89.6 %) $ 8.57 $ 8.53 $ (0.04 ) (0.5 %)
Effect of tax rate change   -     2.16     2.16   -     -     2.16     2.16   -  
Earnings per share - basic before effect of tax rate change $ 1.35   $ 2.30   $ 0.95   70.4 % $ 8.57   $ 10.69   $ 2.12   24.7 %
 
Earnings per share - diluted $ 1.35 $ 0.14 $ (1.21 ) (89.6 %) $ 8.57 $ 8.52 $ (0.05 ) (0.6 %)
Effect of tax rate change   -     2.15     2.15   -     -     2.16     2.16   -  
Earnings per share - diluted before effect of tax rate change $ 1.35   $ 2.29   $ 0.94   69.6 % $ 8.57   $ 10.68   $ 2.11   24.6 %
 
Weighted average shares outstanding - basic 3,128,266 3,134,095 3,128,266 3,133,472
Weighted average shares outstanding - dilutive 3,128,609 3,143,534 3,128,350 3,136,431
 

Contacts

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

Contacts

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