WALNUT CREEK, Calif., Feb. 17, 2017 (GLOBE NEWSWIRE) -- Bay Commercial Bank, "Bank", (OTCBB:BCML), announced quarterly earnings of $1.9 million in the fourth quarter of 2016, compared to $1.2 million in the third quarter of 2016. Diluted earnings per share were $0.35 in the fourth quarter, compared to $0.22 in the prior quarter and an increase over the same quarter last year. Full year 2016 earnings totaled $5.9 million compared to $7.5 million for 2015. Diluted earnings per share were $1.09 for the year ended December 31, 2016, a decrease from $1.36 for the same period in 2015. The Bank’s earnings per share in 2015 were higher due to net earnings attributed to merger accounting.
Founder, President and Chief Executive Officer, George J. Guarini stated, "While we are satisfied with our 2016 financial performance, the year has primarily been about advancing initiatives designed to diversify our loan portfolio over time, diversify our earnings stream over time and ensuring our organic platform supports these initiatives. We are committed to expanding our SBA Platform thereby deriving revenues from the sale of loans. We also continue to seek out the talent to take advantage of Agricultural Lending opportunities which exist in some of the markets we serve. Our previous bank acquisitions have opened these doors. We now have the earnings performance which enables us to commit resources to growing our Commercial and Industrial, Agricultural and SBA lending business lines."
Guarini added, "2017 has brought with it a commitment to reducing our funding costs in a rising interest rate environment and diversifying the markets in which we serve. Our recently executed definitive agreement in connection with the acquisition of United Business Bank represents a significant step in that direction. The transaction, which will result in a combined institution of over $1.1B, is expected to close early in the 2nd quarter subject to Shareholder and Regulatory approvals. The combined institution will also increase our number of locations from 10 to 18 and increase our market reach to Seattle, Albuquerque and Southern California."
Guarini concluded, "We believe there are additional M&A opportunities available in the marketplace which will benefit our franchise."
The Bank also provided the following highlights on its operating and financial performance for the fourth quarter of 2016:
- Loans totaled $508.3 million at December 31, 2016, compared to $513.5 million at September 30, 2016 and $464.4 million at December 31, 2015. New loan volume was approximately $24.3 million in the fourth quarter of 2016 compared to $26.8 million in the third quarter.
- Deposits totaled $590.7 million at December 31, 2016 compared to $568.6 million at September 30, 2016 and $543.3 million at December 31, 2015. Non-interest bearing deposits represent 21.78% of total deposits and the cost of total deposits increased slightly to 0.65%.
- Non-accrual loans represented 0.21% of total loans as of December 31, 2016 resulting in a Texas ratio of 2.28%. The provision for loan losses recorded in the fourth quarter totaled reduction of $19 thousand.
- All capital ratios are well above regulatory requirements for a Well-capitalized institution. The total risk-based capital ratio was 13.86% at December 31, 2016 compared to 13.91% at September 30, 2016, and the tangible common equity to tangible assets ratio was 11.45% at December 31, 2016 compared to 11.53% at September 30, 2016.
Loans and Credit Quality
Loan originations in the fourth 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 in the quarter.
Year-to-date loan originations of $137.1 million are approx. $9.9 million lower than compared to the same period in 2015. Payoffs of $15.4 million in the quarter ended December 31, 2016 were primarily the result of property sales or planned events.
Non-accrual loans totaled $1 million, or 0.21% of the loan portfolio at December 31, 2016, compared to $1.5 million, or 0.29%, at September 30, 2016 and $333 thousand, or 0.07% 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 $625 thousand at December 31, 2016, compared to $751 thousand at September 30, 2016 and zero a year ago.
The provision for loan losses recorded in the fourth quarter of 2016 totaled reduction of $19 thousand as the quality of the loan portfolio did not warrant a provision. Net charge-offs for the fourth quarter totaled $456 thousand compared to $226 thousand in the prior quarter and recoveries of $23 thousand in the same quarter a year ago. The ratio of allowance for loan losses to loans totaled 0.74% at December 31, 2016 compared to 0.83% at September 30, 2016. As of December 31, 2016, acquired loans totaling $79.3 million are coved by mark to market valuations.
Investments and Borrowings
The investment portfolio totaled $26.3 million at December 31, 2016, a decline of $1.7 million from September 30, 2016 mainly due to the maturity of investment securities. No borrowings were outstanding as of the end of the year.
Deposits
Deposits totaled $590.7 million at December 31, 2016, compared to $568.6 million at September 30, 2016 and $543.3 million at December 31, 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 $128.6 million, or 21.7% of total deposits, compared to 24.8% at September 30, 2016 and 27.9% at December 31, 2015.
Earnings
Net interest income totaled $26.1 million for the year ended December 31, 2016 compared to $22.5 million for the year ended December 31, 2015. The increase of $3.6 million was primarily due to a combination of an increase in average earning assets of $50.7 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 $6.8 million in the fourth quarter of 2016, compared to $6.2 million in the prior quarter and $5.9 million in the same quarter a year ago.
The tax-equivalent net interest margin was 4.12% in the fourth quarter of 2016, compared to 4.07% in the prior quarter and 3.92% in the same quarter a year ago. The increase from last quarter includes 24 basis points related to the 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 $7.4 million, $8.8 million, and $9.8 million at December 31, 2016, September 30, 2016 and December 31, 2015, respectively.
Accretion and gains on payoffs of purchased loans recorded to interest income were $1.2 million for the fourth quarter 2016 compared to $439 thousand for the third quarter 2016, and $3.3 million for the year ended December 31, 2016 and $2.3 million for the year ended December 31, 2015.
Non-interest income in the fourth quarter of 2016 totaled $371 thousand, compared to $339 thousand in the prior quarter and $709 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 third quarter of 2016 compared to the fourth 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 $3.9 million in the fourth quarter of 2016 down slightly from the prior quarter and the same quarter a year ago.
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 wwww.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
| December 31, 2016 | September 30, 2016 | December 31, 2015 | ||||||||||
| Quarter-To-Date | ||||||||||||
| Net Income | $ | 1,900,897 | $ | 1,206,952 | $ | 1,170,052 | ||||||
| Diluted Earnings Per Common Share | $ | 0.35 | $ | 0.22 | $ | 0.22 | ||||||
| Return On Average Assets (ROA) | 1.10 | % | 0.76 | % | 0.74 | % | ||||||
| Return On Average Equity (ROE) | 9.82 | % | 6.38 | % | 6.14 | % | ||||||
| Efficiency Ratio | 54.70 | % | 63.87 | % | 66.46 | % | ||||||
| Net Interest Margin | 4.15 | % | 4.10 | % | 3.95 | % | ||||||
| Net Charge-Offs/(Recoveries) | $ | 455,709 | $ | 225,802 | $ | (22,838 | ) | |||||
| Net Charge-Offs/(Recoveries) To Average Loans | 0.09 | % | 0.04 | % | -0.01 | % | ||||||
| Year-To-Date | ||||||||||||
| Net Income | $ | 5,911,936 | $ | 4,011,039 | $ | 7,452,444 | ||||||
| Diluted Earnings Per Common Share | $ | 1.09 | $ | 0.74 | $ | 1.36 | ||||||
| Return On Average Assets (ROA) | 0.91 | % | 0.84 | % | 1.24 | % | ||||||
| Return On Average Equity (ROE) | 7.88 | % | 7.20 | % | 10.36 | % | ||||||
| Efficiency Ratio | 60.21 | % | 62.20 | % | 64.12 | % | ||||||
| Net Interest Margin | 4.20 | % | 4.21 | % | 3.94 | % | ||||||
| Net Charge-Offs/(Recoveries) | $ | 673,463 | $ | 217,754 | $ | 61,973 | ||||||
| Net Charge-Offs/(Recoveries) To Average Loans | 0.14 | % | 0.04 | % | 0.02 | % | ||||||
| At Period End | ||||||||||||
| Total Assets | $ | 675,298,520 | $ | 652,692,040 | $ | 623,303,633 | ||||||
| Loans: | ||||||||||||
| Real Estate | $ | 440,261,309 | $ | 451,704,833 | $ | 398,692,354 | ||||||
| Non-real estate | 72,310,938 | 66,556,048 | 72,941,512 | |||||||||
| Non-accrual loans | 1,090,007 | 1,508,962 | 333,676 | |||||||||
| Mark to market on acquired loans | (5,312,008 | ) | (6,252,419 | ) | (7,567,843 | ) | ||||||
| Total Loans | $ | 508,350,246 | $ | 513,517,424 | $ | 464,399,699 | ||||||
| Classified Assets (Graded Substandard and Doubtful) | $ | 8,376,365 | $ | 9,042,648 | $ | 9,619,471 | ||||||
| Total Accruing Loans 30-89 Days Past Due | $ | 624,865 | $ | 751,000 | $ | - | ||||||
| Loan Loss Reserve To Loans | 0.74 | % | 0.83 | % | 0.83 | % | ||||||
| Loan Loss Reserve to Non-accrual loans | 346.33 | % | 281.65 | % | 1153.81 | % | ||||||
| Non-Accrual Loans To Total Loans | 0.21 | % | 0.29 | % | 0.07 | % | ||||||
| Texas Ratio | 2.28 | % | 3.07 | % | 0.44 | % | ||||||
| Total Deposits | $ | 590,758,760 | $ | 568,696,915 | $ | 543,303,834 | ||||||
| Loan-To-Deposit Ratio | 86.05 | % | 90.30 | % | 85.48 | % | ||||||
| Stockholders' Equity | $ | 78,063,179 | $ | 76,021,952 | $ | 74,570,265 | ||||||
| Book Value Per Share | $ | 14.26 | $ | 13.93 | $ | 13.57 | ||||||
| Tangible Common Equity To Tangible Assets | 11.45 | % | 11.53 | % | 11.79 | % | ||||||
| Total Risk-Based Capital Ratio-Bank | 13.86 | % | 13.91 | % | 14.13 | % | ||||||
| Full-Time Equivalent Employees | 110 | 104 | 106 | |||||||||
| BAY COMMERCIAL BANK | ||||||||||
| STATEMENT OF CONDITION (UNAUDITED) | ||||||||||
| At December 31, 2016, September 30, 2016, and December 31, 2015 | ||||||||||
| December 31, 2016 | September 30, 2016 | December 31, 2015 | ||||||||
| Assets | ||||||||||
| Cash and due from banks | $ | 128,684,416 | $ | 99,259,774 | $ | 108,171,768 | ||||
| Investments | 26,393,451 | 28,133,192 | 37,198,092 | |||||||
| Loans, net of allowance for loan losses and deferred fees | 504,264,026 | 509,320,697 | 460,207,614 | |||||||
| Bank premises and equipment, net | 1,106,030 | 1,206,631 | 1,390,560 | |||||||
| Core Deposit Premium | 802,436 | 885,500 | 1,200,500 | |||||||
| Interest receivable and other assets | 14,048,162 | 13,886,244 | 15,135,099 | |||||||
| Total assets | $ | 675,298,520 | $ | 652,692,039 | $ | 623,303,633 | ||||
| Liabilities and Stockholders' Equity | ||||||||||
| Liabilities | ||||||||||
| Deposits | ||||||||||
| Non-interest bearing | $ | 128,696,712 | $ | 136,246,446 | $ | 152,012,575 | ||||
| Interest bearing | ||||||||||
| MMA/NOW/SVG | 128,970,967 | 129,531,642 | 176,498,461 | |||||||
| Premium MM | 171,947,166 | 162,282,939 | 88,005,876 | |||||||
| Time Deposits | 161,143,915 | 140,635,888 | 126,786,922 | |||||||
| Total deposits | $ | 590,758,760 | $ | 568,696,915 | $ | 543,303,834 | ||||
| Federal Home Loan Bank (FHLB) and other borrowings | - | 1,000,000 | - | |||||||
| Interest payable and other liabilities | 6,476,580 | 6,973,173 | 7,619,534 | |||||||
| Total liabilities | $ | 597,235,340 | $ | 576,670,088 | $ | 550,923,368 | ||||
| Stockholders' Equity | ||||||||||
| Common Stock, no par value | $ | 47,540,808 | $ | 47,324,304 | $ | 47,736,637 | ||||
| Retained earnings | 24,522,001 | 24,522,001 | 17,069,557 | |||||||
| Accumulated other comprehensive income | 6,000,370 | 4,175,647 | 7,574,071 | |||||||
| Total stockholders' equity | 78,063,179 | 76,021,952 | 72,380,265 | |||||||
| Total liabilities and stockholders' equity | $ | 675,298,520 | $ | 652,692,039 | $ | 623,303,633 | ||||
| BAY COMMERCIAL BANK | |||||||||||||||||||||||
| STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | |||||||||||||||||||||||
| Three months ended | Years Ended | ||||||||||||||||||||||
| December 31, | September 30, | June 30, | December 31, | December 31, | |||||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest Income - Non RE | $ | 837,538 | $ | 892,219 | $ | 873,450 | $ | 3,542,281 | $ | 4,038,747 | |||||||||||||
| Interest Income - RE | 5,397,132 | 5,520,245 | 5,487,036 | 21,496,827 | 18,092,093 | ||||||||||||||||||
| Interest on investment securities | 230,271 | 150,635 | 187,224 | 809,398 | 985,011 | ||||||||||||||||||
| Interest on Federal funds sold and other bank deposits | 139,907 | 119,092 | 102,847 | 422,510 | 315,299 | ||||||||||||||||||
| Mark to market accretion and FAS 91 Fee amortization | 1,290,778 | 438,906 | 815,134 | 3,354,471 | 2,283,922 | ||||||||||||||||||
| Total interest income | $ | 7,895,626 | $ | 7,121,097 | $ | 7,465,691 | $ | 29,625,487 | $ | 25,715,072 | |||||||||||||
| Interest expense | |||||||||||||||||||||||
| Interest on transaction accounts | 463,264 | 392,029 | 367,712 | 1,597,440 | 1,348,598 | ||||||||||||||||||
| Interest on time deposits | 449,363 | 366,532 | 344,445 | 1,476,134 | 1,342,123 | ||||||||||||||||||
| Premium on core deposits | 83,064 | 105,000 | 105,000 | 398,064 | 449,389 | ||||||||||||||||||
| Total interest expense | $ | 995,691 | $ | 863,561 | $ | 817,157 | $ | 3,471,638 | $ | 3,140,110 | |||||||||||||
| Net interest income | 6,899,935 | 6,257,536 | 6,648,534 | 26,153,849 | 22,574,962 | ||||||||||||||||||
| Provision for loan losses | (19,291 | ) | 255,801 | 365,828 | 598,463 | 1,412,000 | |||||||||||||||||
| Net interest income after provision for loan losses | $ | 6,919,226 | $ | 6,001,735 | $ | 6,282,706 | $ | 25,555,386 | $ | 21,162,962 | |||||||||||||
| Non-interest income | |||||||||||||||||||||||
| Loan Fee Income | 79,410 | 109,232 | 74,671 | 331,336 | 434,634 | ||||||||||||||||||
| Service Charge Income | 58,204 | 52,788 | 53,310 | 227,904 | 220,335 | ||||||||||||||||||
| Other Fees & Service Charges | 100,318 | 88,865 | 94,133 | 379,132 | 364,533 | ||||||||||||||||||
| Other Income | 133,548 | 88,412 | 86,227 | 420,166 | 5,882,458 | ||||||||||||||||||
| Total non-interest income | $ | 371,480 | $ | 339,297 | $ | 308,341 | $ | 1,358,538 | $ | 6,901,960 | |||||||||||||
| Non-interest expense | |||||||||||||||||||||||
| Salaries and Benefits | 2,526,873 | 2,676,450 | 2,575,184 | 10,610,511 | 11,281,382 | ||||||||||||||||||
| Occupancy | 547,132 | 518,447 | 544,666 | 2,147,472 | 2,117,424 | ||||||||||||||||||
| Professional | 171,032 | 187,086 | 175,474 | 773,073 | 861,358 | ||||||||||||||||||
| Insurance | 35,534 | 115,490 | 106,875 | 349,072 | 364,020 | ||||||||||||||||||
| Data processing | 354,902 | 352,171 | 355,951 | 1,386,115 | 2,251,206 | ||||||||||||||||||
| Office | 170,751 | 173,641 | 162,982 | 670,759 | 784,952 | ||||||||||||||||||
| Marketing | 86,817 | 68,035 | 55,411 | 269,576 | 297,974 | ||||||||||||||||||
| Net Loan | 17,848 | 64,782 | 11,611 | 118,630 | 464,272 | ||||||||||||||||||
| Other Miscellaneous | 66,521 | 57,380 | 57,160 | 241,279 | 478,660 | ||||||||||||||||||
| Total non-interest expense | $ | 3,977,410 | $ | 4,213,482 | $ | 4,045,314 | $ | 16,566,487 | $ | 18,901,248 | |||||||||||||
| Income before provision for income taxes | 3,313,296 | 2,127,552 | 2,545,733 | 10,347,437 | 9,163,674 | ||||||||||||||||||
| Provision for income taxes | 1,412,400 | 920,600 | 1,090,400 | 4,435,500 | 1,711,230 | ||||||||||||||||||
| Net income | $ | 1,900,897 | $ | 1,206,952 | $ | 1,455,333 | $ | 5,911,936 | $ | 7,452,444 | |||||||||||||
| Net income per common share: | |||||||||||||||||||||||
| Basic | $ | 0.35 | $ | 0.22 | $ | 0.27 | $ | 1.10 | $ | 1.37 | |||||||||||||
| Diluted | 0.35 | 0.22 | 0.27 | 1.09 | 1.36 | ||||||||||||||||||
| Weighted average shares used to compute net income per common share: | |||||||||||||||||||||||
| Basic | 5,403,024 | 5,366,474 | 5,359,762 | 5,392,597 | 5,437,790 | ||||||||||||||||||
| Diluted | 5,437,679 | 5,381,452 | 5,377,257 | 5,433,719 | 5,493,398 | ||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||
| Net income | $ | 1,900,897 | $ | 1,206,952 | $ | 1,455,333 | $ | 5,911,936 | $ | 7,452,444 | |||||||||||||
| Other comprehensive income | |||||||||||||||||||||||
| Change in net unrealized gain (loss) on available-for-sale securities | (136,207 | ) | (26,982 | ) | 82,733 | (231,687 | ) | 54,316 | |||||||||||||||
| Deferred tax expense (benefit) | 60,033 | 2,959 | (34,333 | ) | 198,493 | ||||||||||||||||||
| Other comprehensive income (loss), net of tax | (76,174 | ) | (24,023 | ) | 48,400 | (33,194 | ) | 54,316 | |||||||||||||||
| Comprehensive income | $ | 1,824,723 | $ | 1,182,929 | $ | 1,503,733 | $ | 5,878,742 | $ | 7,506,760 | |||||||||||||