WALNUT CREEK, Calif., Oct. 27, 2016 (GLOBE NEWSWIRE) -- Bay Commercial Bank, “Bank”, (OTCBB:BCML), announced quarterly earnings of $1.2 million in the third quarter of 2016, compared to $1.5 million in the second quarter of 2016 and $1.3 million in the first quarter of 2016. Diluted earnings per share were $0.22 in the third quarter, compared to $0.27 in the prior quarter and $0.21 in the same quarter a year ago. Year-to-date earnings of $4.0 million compared to $8.5 million for the same nine-month period a year ago. Diluted earnings per share were $0.73 in the first nine months of 2016, an increase from $1.49 for the same period in 2015. The lower earnings per share in the third quarter 2016 compared to the second quarter 2016 is attributed to lower non-recurring gains on payoff of purchase credit impaired loans. The Bank’s earnings per share for the first nine months of 2015 included $0.77 net earnings attributed to merger accounting.
President and Chief Executive Officer, George J. Guarini stated, “Our 2016 financial performance has primarily been about building our organic platform and expanding our product offerings. Our previous bank acquisitions have created the opportunities. We now have the earnings performance which enable us to commit resources to growth in Commercial and Industrial, Agricultural and SBA lending. Expanding these business lines will add diversification to our revenue stream and enhance our management of loan concentration risks. Our strong earnings history combined with our strong capital position permit us to take immediate advantage of strategic opportunities currently available in the marketplace. We anticipate that the M&A environment will allow us to attain scale, move toward a liquid security and significantly expand our geographical market reach.”
Bank also provided the following highlights on its operating and financial performance for the third quarter of 2016:
- Loans totaled $513.5 million at September 30, 2016, compared to $504.9 million at June 30, 2016 and $420.1 million at September 30, 2015. New loan volume was approximately $26.8 million in the third quarter of 2016 compared to $32.9 million in the second quarter.
- Deposits totaled $568.7 million at September 30, 2016 compared to $535.7 million at June 30, 2016 and $545.7 million at September 30, 2015. Non-interest bearing deposits represent 24.0% of total deposits and the cost of total deposits increased slightly to 0.62%.
- Non-accrual loans represented 0.29% of total loans as of September 30, 2016 resulting in a Texas ratio of 3.07%. The provision for loan losses recorded in the quarter totaled $256 thousand primarily related to charge-offs for loans transferred to Other Real Estate Owned.
- All capital ratios are well above regulatory requirements for a well-capitalized institution. The total risk-based capital ratio was 13.91% at September 30, 2016 compared to 13.65% at June 30, 2016, and tangible common equity to tangible assets increased to 11.53% at September 30, 2016 from 11.48% at June 30, 2016.
Loans and Credit Quality
Loan originations in the third quarter of 2016 were spread throughout our markets with the majority focused in Solano County, Contra Costa County and San Mateo County. By loan type, owner-user real estate, investor real estate and residential real estate accounted for the majority of the new loan volume for the quarter.
Year-to-date loan originations of $112.2 million are approx. $27.4 million higher than compared to the same period in 2015, while year-to-date payoffs are slightly lower than the first nine months of 2015. Payoffs of $15.8 million in the quarter ended September 30, 2016 were primarily the result of property sales or planned events.
Non-accrual loans totaled $1.5 million, or 0.29% of the loan portfolio at September 30, 2016, compared to $1.9 million, or 0.38%, at June 30, 2016 and $340 thousand, or 0.08% a year ago. The increase in non-accrual loans from a year ago primarily relates to Agriculture related loans which have experienced some credit deterioration. Accruing loans past due 30 to 89 days totaled $751 thousand at September 30, 2016, compared to $228 thousand at June 30, 2016 and zero a year ago.
The provision for loan losses recorded in the third quarter of 2016 totaled $256 thousand as the quality of the loan portfolio did not warrant a provision offset by charge-offs related to loans transferred to Other Real Estate Owned. Net charge-offs for the third quarter totaled $250 thousand compared to small recoveries in the prior quarter and in the same quarter a year ago. The ratio of loan loss reserve to loans totaled 0.83% at September 30, 2016 compared to 0.84% at June 30, 2016 and compared to 0.79% at June 30, 2015. As of September 30, 2016, acquired loans totaling $86.9 million are coved by mark to market valuations.
Investments and Borrowings
The investment portfolio totaled $28.1 million at September 30, 2016, a decline of $2.9 million from June 30, 2016 mainly due to the maturity of investment securities.
Deposits
Deposits totaled $568.7 million at September 30, 2016, compared to $535.7 million at June 30, 2016 and $545.7 million at September 30, 2015. While day-to-day volatility continues due to the normal business activity of our customers, the trend is upward in both average and ending balances. Non-interest bearing deposits totaled $136.2 million, or 24.0% of total deposits, compared to 24.8% at June 30, 2016 and 27.7% at September 30, 2015.
Earnings
Net interest income totaled $19.3 million in the first nine months of 2016 compared to $16.6 million for the same period of 2015. The increase of $2.6 million was primarily due to a combination of an increase in average earning assets of $47.1 million and a more profitable asset mix. Additionally, an increase in acquired loan income of $490 thousand in 2016 contributed to the positive results.
Net interest income totaled $6.3 million in the third quarter of 2016, compared to $6.6 million in the prior quarter and $16.5 million in the same quarter a year ago. Net interest income decreased $391 thousand in the third quarter compared to the prior quarter partially due to higher gains on payoffs of Purchased Credit Impaired ("PCI") loans in the second quarter of 2016 compared to the third quarter of 2016.
The tax-equivalent net interest margin was 4.07% in the third quarter of 2016, compared to 4.41% in the prior quarter and 3.95% in the same quarter a year ago. The decrease from last quarter includes 24 basis points related to the absence of payoffs of PCI loans.
Loans acquired through the acquisition of other banks are classified as PCI or non-PCI loans and are recorded at fair value at acquisition date. For acquired loans not considered credit impaired, the level of accretion varies due to maturities and early payoffs. Accretion on PCI loans fluctuates based on changes in cash flows expected to be collected. Gains on payoffs of PCI loans are recorded as interest income when the payoff amounts exceed the recorded investment. PCI loans totaled $8.8 million, $8.9 million, and $9.7 million at September 30, 2016, June 30, 2016 and September 30, 2015, respectively.
Accretion and gains on payoffs of purchased loans recorded to interest income were $439 thousand for the third quarter 2016 compared to $815 thousand for the second quarter 2016 and $2.1 million for the nine months ended 2016.
Non-interest income in the third quarter of 2016 totaled $339 thousand, compared to $308 thousand in the prior quarter and $369 thousand in the same quarter a year ago. The increase compared to the prior quarter primarily relates to a decline in servicing income as a result of serviced loan prepayments in the second quarter of 2016 compared to the third quarter of 2016. The decrease from the same quarter last year is primarily due to the declining level of loans serviced for others.
Non-interest expense totaled $4.2 million in the third quarter of 2016 up slightly from the prior quarter and unchanged from the same quarter a year ago. The increase from the second quarter of 2016 was due to lower salaries and benefits in the second quarter 2016 as a result of a one-time adjustment for severance related expenses.
About Bay Commercial Bank
The Bank offers a full-range of loans, including SBA, FSA and USDA guaranteed loans, and deposit products and services to businesses and its affiliates throughout the Greater Bay Area. The Bank also offers business escrow services and facilitates tax free exchanges through its Bankers Exchange Division. The Bank is an Equal Housing Lender and member FDIC. It is traded Over the Counter Bulletin Board under the symbol “BCML”. For more information, go to www.baycommercialbank.com.
Forward-Looking Statements
This release may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact Bank's earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "intend," "estimate" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may." Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, economic uncertainty in the United States and abroad, changes in interest rates, deposit flows, real estate values, costs or effects of future acquisitions, competition, changes in accounting principles, policies or guidelines, legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cyber-security threats) affecting Bank's operations, pricing, products and services. These and other important factors are detailed in various securities law filings made periodically by Bank, copies of which are available from Bank without charge. The Bank undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
FINANCIAL HIGHLIGHTS
| BAY COMMERCIAL BANK | |||||||||||||||
| FINANCIAL HIGHLIGHTS | |||||||||||||||
| September 30, 2016 | June 30, 2016 | March 31, 2016 | September 30, 2015 | ||||||||||||
| Quarter-To-Date | |||||||||||||||
| Net Income | $ | 1,206,952 | $ | 1,455,334 | $ | 1,348,753 | $ | 1,195,494 | |||||||
| Diluted Earnings Per Common Share | $ | 0.22 | $ | 0.27 | $ | 0.25 | $ | 0.21 | |||||||
| Return On Average Assets (ROA) | 0.76 | % | 0.92 | % | 0.84 | % | 0.77 | % | |||||||
| Return On Average Equity (ROE) | 6.38 | % | 7.86 | % | 7.39 | % | 6.32 | % | |||||||
| Efficiency Ratio | 63.87 | % | 58.15 | % | 64.75 | % | 65.29 | % | |||||||
| Net Interest Margin | 4.10 | % | 4.40 | % | 4.15 | % | 4.13 | % | |||||||
| Net Charge-Offs/(Recoveries) | $ | 225,802 | $ | (4,173 | ) | $ | (3,875 | ) | $ | (15,051 | ) | ||||
| Net Charge-Offs/(Recoveries) To Average Loans | 0.04 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||
| Year-To-Date | |||||||||||||||
| Net Income | $ | 4,011,039 | $ | 2,804,087 | $ | 1,348,753 | $ | 8,472,392 | |||||||
| Diluted Earnings Per Common Share | $ | 0.73 | $ | 0.51 | $ | 0.25 | $ | 1.57 | |||||||
| Return On Average Assets (ROA) | 0.84 | % | 0.88 | % | 0.84 | % | 1.91 | % | |||||||
| Return On Average Equity (ROE) | 7.20 | % | 7.63 | % | 7.39 | % | 16.03 | % | |||||||
| Efficiency Ratio | 62.20 | % | 61.39 | % | 64.75 | % | 58.13 | % | |||||||
| Net Interest Margin | 4.21 | % | 4.27 | % | 4.15 | % | 3.94 | % | |||||||
| Net Charge-Offs/(Recoveries) | $ | 217,754 | $ | (8,048 | ) | $ | (3,875 | ) | $ | 85,000 | |||||
| Net Charge-Offs/(Recoveries) To Average Loans | 0.04 | % | 0.00 | % | 0.00 | % | 0.02 | % | |||||||
| At Period End | |||||||||||||||
| Total Assets | $ | 652,692,040 | $ | 641,773,583 | $ | 632,975,577 | $ | 630,038,628 | |||||||
| Loans: | |||||||||||||||
| Real Estate | $ | 451,704,833 | $ | 443,545,296 | $ | 429,483,371 | $ | 355,775,764 | |||||||
| Non-real estate | 66,556,048 | 66,098,087 | 70,955,885 | 72,423,935 | |||||||||||
| Non-accrual loans | 1,508,962 | 1,909,952 | 333,676 | 340,131 | |||||||||||
| Mark to market on acquired loans | (6,252,419 | ) | (6,636,817 | ) | (6,810,830 | ) | (8,478,273 | ) | |||||||
| Total Loans | $ | 513,517,424 | $ | 504,916,518 | $ | 493,962,102 | $ | 420,061,557 | |||||||
| Classified Loans (Graded Substandard and Doubtful) | $ | 9,042,648 | $ | 9,150,090 | $ | 8,159,128 | $ | 11,699,590 | |||||||
| Total Accruing Loans 30-89 Days Past Due | $ | 751,000 | $ | 228,000 | $ | 174,000 | $ | - | |||||||
| Loan Loss Reserve To Loans | 0.83 | % | 0.84 | % | 0.78 | % | 0.79 | % | |||||||
| Loan Loss Reserve to Non-accrual loans | 281.65 | % | 220.95 | % | 1153.81 | % | 977.56 | % | |||||||
| Non-Accrual Loans To Total Loans | 0.29 | % | 0.38 | % | 0.07 | % | 0.08 | % | |||||||
| Texas Ratio | 3.07 | % | 2.42 | % | 0.43 | % | 2.24 | % | |||||||
| Total Deposits | $ | 568,696,915 | $ | 535,660,525 | $ | 552,935,627 | $ | 545,722,145 | |||||||
| Loan-To-Deposit Ratio | 90.30 | % | 95.50 | % | 90.57 | % | 78.53 | % | |||||||
| Stockholders' Equity | $ | 76,021,952 | $ | 74,555,843 | $ | 73,214,928 | $ | 76,227,656 | |||||||
| Book Value Per Share | $ | 13.93 | $ | 13.71 | $ | 13.41 | $ | 13.79 | |||||||
| Tangible Common Equity To Tangible Assets | 11.53 | % | 11.48 | % | 11.41 | % | 11.92 | % | |||||||
| Total Risk-Based Capital Ratio-Bank | 13.91 | % | 13.65 | % | 13.57 | % | 15.34 | % | |||||||
| Full-Time Equivalent Employees | 104 | 106 | 103 | 106 | |||||||||||
| BAY COMMERCIAL BANK | ||||||||||||||||
| STATEMENT OF CONDITION (UNAUDITED) | ||||||||||||||||
| At September 30, 2016, June 30, 2016, March 31, 2016 and September 30, 2015 | ||||||||||||||||
| September 30, 2016 | June 30, 2016 | March 31, 2016 | September 30, 2015 | |||||||||||||
| Assets | ||||||||||||||||
| Cash and due from banks | $ | 99,259,774 | $ | 93,803,247 | $ | 91,660,648 | $ | 147,845,533 | ||||||||
| Investments | 28,133,192 | 30,984,459 | 34,352,659 | 44,171,847 | ||||||||||||
| Loans, net of allowance for loan losses and deferred fees | 509,320,697 | 500,777,284 | 490,235,878 | 416,609,643 | ||||||||||||
| Bank premises and equipment, net | 1,206,631 | 1,283,335 | 1,209,327 | 1,278,013 | ||||||||||||
| Deposit Premium | 885,500 | 990,500 | 1,095,500 | 1,305,500 | ||||||||||||
| Interest receivable and other assets | 13,886,244 | 13,934,758 | 14,421,565 | 18,828,092 | ||||||||||||
| Total assets | $ | 652,692,039 | $ | 641,773,583 | $ | 632,975,577 | $ | 630,038,628 | ||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Deposits | ||||||||||||||||
| Non-interest bearing | $ | 136,246,446 | $ | 132,864,909 | $ | 148,676,442 | $ | 150,992,318 | ||||||||
| Interest bearing | ||||||||||||||||
| MMA/NOW/SVG | 129,531,642 | 144,929,898 | 149,101,077 | 144,778,968 | ||||||||||||
| Premium MM | 162,282,939 | 127,455,442 | 127,608,116 | 115,300,215 | ||||||||||||
| Time Deposits | 140,635,888 | 130,410,276 | 127,549,992 | 134,650,644 | ||||||||||||
| Total deposits | $ | 568,696,915 | $ | 535,660,525 | $ | 552,935,627 | $ | 545,722,145 | ||||||||
| Federal Home Loan Bank (FHLB) and other borrowings | 1,000,000 | 25,000,000 | - | - | ||||||||||||
| Interest payable and other liabilities | 6,973,173 | 6,557,215 | 6,825,022 | 8,088,827 | ||||||||||||
| Total liabilities | $ | 576,670,088 | $ | 567,217,740 | $ | 559,760,649 | $ | 553,810,972 | ||||||||
| Stockholders' Equity | ||||||||||||||||
| Common Stock, no par value | $ | 47,324,304 | $ | 47,041,124 | $ | 47,344,174 | $ | 50,457,005 | ||||||||
| Retained earnings | 24,522,001 | 24,522,001 | 24,522,001 | 17,069,557 | ||||||||||||
| Accumulated other comprehensive income | 4,175,647 | 2,992,718 | 1,348,753 | 8,701,094 | ||||||||||||
| Total stockholders' equity | 76,021,952 | 74,555,843 | 73,214,928 | 76,227,656 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 652,692,039 | $ | 641,773,583 | $ | 632,975,577 | $ | 630,038,628 | ||||||||
| BAY COMMERCIAL BANK | |||||||||||||||||||||||||||
| STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | |||||||||||||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | September 30, | September 30, | September 30, | ||||||||||||||||||||||
| 2016 | 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||||||
| Interest Income - Non RE | $ | 892,219 | $ | 873,450 | $ | 939,074 | $ | 1,030,722 | $ | 2,704,743 | $ | 3,065,382 | |||||||||||||||
| Interest Income - RE | 5,520,245 | 5,487,036 | 5,092,414 | 4,940,350 | 16,099,695 | 13,331,146 | |||||||||||||||||||||
| Interest on investment securities | 150,635 | 187,224 | 241,268 | 218,957 | 579,127 | 739,029 | |||||||||||||||||||||
| Interest on Federal funds sold and other bank deposits | 119,092 | 102,847 | 60,664 | 53,329 | 282,603 | 241,547 | |||||||||||||||||||||
| Mark to market accretion and FAS 91 Fee amortization | 438,906 | 815,134 | 809,653 | 610,932 | 2,063,693 | 1,573,883 | |||||||||||||||||||||
| Total interest income | $ | 7,121,097 | $ | 7,465,691 | $ | 7,143,073 | $ | 6,854,290 | $ | 21,729,861 | $ | 18,950,987 | |||||||||||||||
| Interest expense | |||||||||||||||||||||||||||
| Interest on transaction accounts | 392,029 | 367,712 | 374,435 | 348,803 | 1,134,176 | 983,442 | |||||||||||||||||||||
| Interest on time deposits | 366,532 | 344,445 | 315,794 | 350,680 | 1,026,771 | 1,032,384 | |||||||||||||||||||||
| Premium on core deposits | 105,000 | 105,000 | 105,000 | 112,559 | 315,000 | 323,089 | |||||||||||||||||||||
| Total interest expense | $ | 863,561 | $ | 817,157 | $ | 795,229 | $ | 812,042 | $ | 2,475,947 | $ | 2,338,915 | |||||||||||||||
| Net interest income | 6,257,536 | 6,648,534 | 6,347,844 | 6,042,248 | 19,253,914 | 16,612,072 | |||||||||||||||||||||
| Provision for loan losses | 255,801 | 365,828 | (3,875 | ) | 209,950 | 617,754 | 909,548 | ||||||||||||||||||||
| Net interest income after provision for loan losses | $ | 6,001,735 | $ | 6,282,706 | $ | 6,351,719 | $ | 5,832,298 | $ | 18,636,160 | $ | 15,702,524 | |||||||||||||||
| Non-interest income | |||||||||||||||||||||||||||
| Total Loan Fee Income | 109,232 | 74,671 | 68,023 | 117,441 | 251,926 | 325,887 | |||||||||||||||||||||
| Total Service Charge Income | 52,788 | 53,310 | 63,602 | 53,585 | 169,700 | 167,440 | |||||||||||||||||||||
| Total Other Fees & Service Charges | 88,865 | 94,133 | 95,816 | 90,139 | 278,814 | 269,969 | |||||||||||||||||||||
| Total Other Income | 88,412 | 86,227 | 111,979 | 107,654 | 286,618 | 7,769,753 | |||||||||||||||||||||
| Total non-interest income | $ | 339,297 | $ | 308,341 | $ | 339,420 | $ | 368,819 | $ | 987,058 | $ | 8,533,049 | |||||||||||||||
| Non-interest expense | |||||||||||||||||||||||||||
| Salaries and Benefits | 2,676,450 | 2,575,184 | 2,832,004 | 2,687,965 | 8,083,638 | 8,722,560 | |||||||||||||||||||||
| Occupancy | 518,447 | 544,666 | 537,227 | 538,935 | 1,600,340 | 1,580,600 | |||||||||||||||||||||
| Professional | 187,086 | 175,474 | 239,481 | 160,938 | 602,041 | 656,348 | |||||||||||||||||||||
| Insurance | 115,490 | 106,875 | 91,173 | 70,171 | 313,538 | 283,185 | |||||||||||||||||||||
| Data processing | 352,171 | 355,951 | 323,091 | 364,747 | 1,031,213 | 1,906,342 | |||||||||||||||||||||
| Office | 173,641 | 162,982 | 163,385 | 194,180 | 500,008 | 564,362 | |||||||||||||||||||||
| Marketing | 68,035 | 55,411 | 59,313 | 65,032 | 182,759 | 241,072 | |||||||||||||||||||||
| Net Loan | 64,782 | 11,611 | 24,389 | 47,736 | 100,782 | 262,227 | |||||||||||||||||||||
| Other Miscellaneous | 57,380 | 57,160 | 60,218 | 55,918 | 174,758 | 400,387 | |||||||||||||||||||||
| Total non-interest expense | $ | 4,213,482 | $ | 4,045,314 | $ | 4,330,281 | $ | 4,185,622 | $ | 12,589,077 | $ | 14,617,083 | |||||||||||||||
| Income before provision for income taxes | 2,127,552 | 2,545,733 | 2,360,856 | 2,015,495 | 7,034,141 | 9,618,490 | |||||||||||||||||||||
| Provision for income taxes | 920,600 | 1,090,400 | 1,012,100 | 820,000 | 3,023,100 | 1,146,100 | |||||||||||||||||||||
| Net income | $ | 1,206,952 | $ | 1,455,333 | $ | 1,348,754 | $ | 1,195,495 | $ | 4,011,039 | $ | 8,472,390 | |||||||||||||||
| Net income per common share: | |||||||||||||||||||||||||||
| Basic | $ | 0.22 | $ | 0.27 | $ | 0.25 | $ | 0.21 | $ | 0.73 | $ | 1.49 | |||||||||||||||
| Diluted | 0.22 | 0.27 | 0.25 | 0.21 | 0.73 | 1.49 | |||||||||||||||||||||
| Weighted average shares used to compute net income per common share: | |||||||||||||||||||||||||||
| Basic | $ | 0.22 | $ | 0.27 | $ | 0.25 | $ | 0.21 | $ | 0.74 | $ | 1.57 | |||||||||||||||
| Diluted | 0.22 | 0.27 | 0.25 | 0.21 | 0.74 | 1.57 | |||||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||||||
| Net income | $ | 1,206,952 | $ | 1,455,333 | $ | 1,348,754 | $ | 1,195,495 | $ | 4,011,039 | $ | 8,472,390 | |||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||
| Change in net unrealized gain (loss) on available-for-sale securities | (26,982 | ) | 82,733 | 31,802 | 133,191 | 87,553 | 276,564 | ||||||||||||||||||||
| Deferred tax expense (benefit) | 2,959 | (34,333 | ) | (13,199 | ) | (55,274 | ) | (44,573 | ) | (94,929 | ) | ||||||||||||||||
| Other comprehensive income (loss), net of tax | (24,023 | ) | 48,400 | 18,603 | 77,917 | 42,980 | 181,635 | ||||||||||||||||||||
| Comprehensive income | $ | 1,182,929 | $ | 1,503,733 | $ | 1,367,357 | $ | 1,273,412 | $ | 4,054,019 | $ | 8,654,025 | |||||||||||||||