OAKLAND, Calif., July 31, 2023 (GLOBE NEWSWIRE) -- Bay Community Bancorp, (OTCPink: CBOBA) (the “Company”), parent company of Community Bank of the Bay, (the “Bank”) a San Francisco Bay Area commercial bank and California’s first certified Community Development Financial Institution (“CDFI”) with full-service offices in Oakland, Danville and San Mateo, today reported earnings of $1.85 million for the second quarter of 2023, compared to $1.84 million for the second quarter of 2022. The completion of a $119.4 million perpetual preferred stock investment from the U.S. Treasury Department in June 2022, and its initial deployment into short term Treasury securities contributed to profitability for the second quarter of 2023. All financial results are unaudited.
The Company’s Board of Directors declared a quarterly cash dividend of $0.05 per share. The dividend is payable on September 1, 2023, to shareholders of record on August 18, 2023. This marks the tenth consecutive cash dividend payment since the Company initiated quarterly cash dividends on April 30, 2021.
“We delivered strong second quarter operating results in spite of a challenging banking environment where competition for deposits continue to pressure funding costs,” stated William S. Keller, CEO. “The Bank’s capital position remains near the top of its peer group with over three times the regulatory guidelines for well capitalized banks, and the CDFI Fund recently announced that we have been awarded a $2.48 million Equitable Recovery Program grant in recognition of our lending and investment activities that help low- and moderate-income communities recover from the pandemic. Year-to-date, we have booked 59 loans with new or increased commitments totaling $65.1 million, including 23 loans with new or increased commitments totaling $27.9 million in these target communities. We intend to accelerate these activities by utilizing the grant award and our strong capital position to enter new markets in San Francisco and San Jose, and we have already hired talented, mission-aligned professionals to lead these efforts.”
“Total deposits increased $59.5 million from the prior quarter, including $26.4 million that represents the sixth consecutive quarterly increase in traditional community deposits, and a $33.1 million increase in our real estate services business,” added Keller. “Deposit pricing reflects the realities of the Federal Reserve’s tightening monetary policy and a majority of the deposit growth was in saving, NOW, money market and time deposit accounts. As a result, funding costs marginally outpaced asset yields and resulted in a nine basis point reduction in the second quarter net interest margin compared to the preceding quarter. The deposit growth increased uninsured and collateralized public deposits by $28 million to approximately 36% of total deposits, while cash balances of $134 million and U.S. Treasury bills of $60 million represented a $57 million increase in on balance sheet liquidity. In addition, we continue to have access to significant FHLB borrowing capacity, as well as a variety of other contingent liquidity sources.”
“Beginning January 1, 2023, we implemented the Current Expected Credit Losses standard, which replaced the former “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. Utilizing CECL may have a more volatile impact on our allowance for credit losses going forward and may result in a lack of comparability between 2023 and 2022 quarterly periods,” said Mukhtar Ali, President and Chief Credit Officer. “At June 30, 2023, our loan loss reserves represent 0.94% of total non-guaranteed loans, compared to 1.20% a year earlier.”
“Commercial real estate loans against office properties totaled $67.2 million at June 30, 2023 and represented 33.45% of capital. The non-owner occupied loan segment consisted of 21 notes totaling $49.9 million and carried a weighted average loan-to-value of 41.3% at quarter end. All relationships in this category are performing as agreed,” added Ali. “We did however experience a modest increase in nonperforming loans that was almost entirely due to a $7.0 million commercial loan that is well secured by a residential property. The junior deedholder has foreclosed and we do not expect to incur any loss on this credit.”
Second Quarter 2023 Financial Highlights (at or for the period ended June 30, 2023)
- Net income was $1.85 million in the second quarter of 2023, compared to $1.84 million in the second quarter a year ago, and $1.94 million in the preceding quarter. Earnings per common share was $0.21 in the second quarter of 2023, compared to $0.21 in the second quarter a year ago, and $0.22 in the preceding quarter.
- Pre-tax, pre-provision, pre-CDFI grant income was $2.54 million in the second quarter of 2023, compared to $3.00 million in the year ago quarter, and $2.76 million in the first quarter of 2023.
- Total assets increased $174.2 million, or 19.7%, to $1.06 billion at June 30, 2023, compared to $886.4 million a year earlier, and increased $51.5 million, or 5.1%, compared to $1.01 billion three months earlier. Average assets for the quarter totaled $1.02 billion, an increase of $195.9 million, or 23.7%, from the second quarter a year ago and an increase of $34.5 million, or 3.5%, compared with the prior quarter.
- Net interest income, before the provision for credit losses, increased 8.2% to $7.81 million in the second quarter of 2023, compared to $7.21 million in the second quarter a year ago. There was a $96,000 negative provision for credit losses recorded in the second quarter of 2023. This compared to a $400,000 provision for loan losses in the second quarter of 2022, and a $39,000 provision for the preceding quarter.
- Non-interest income was $233,000 in the second quarter of 2023, compared to $377,000 in the second quarter a year ago, and $248,000 in the preceding quarter.
- Operating revenue (net interest income before the provision for loan losses plus non-interest income) increased 5.9% to $8.04 million in the second quarter of 2023, compared to $7.59 million in the second quarter a year ago, and increased 1.8% compared to $7.90 million in the first quarter of 2023.
- Net interest margin was 3.19% in the second quarter, compared to 3.28% in the preceding quarter, and 3.63% in the second quarter a year ago. The 9 basis point contraction in net interest margin in the second quarter of 2023 was due to a shift in the deposit mix and the reversal of interest from a non-accrual loan. The year-over-year contraction was due to an increase in deposit costs as well as increased liquidity from the capital raise during the current quarter, compared to the year ago quarter. The average interest yield on non-PPP loans in the second quarter of 2023 was 5.59%, compared to 4.47% in the year ago quarter and 5.42% in the prior quarter. The average cost of funds in the second quarter was 2.18%, a 187 basis point increase compared to the second quarter a year ago and a 23 basis point increase compared to the prior quarter.
- Loans, net of unearned income, increased $89.6 million, or 15.2%, to $680.0 million at June 30, 2023, compared to $590.4 million a year ago, and increased $13.1 million, or 2.0%, compared to $666.9 million three months earlier. Loan growth, excluding PPP loans, totaled $13.1 million for the quarter, driving increased interest income. At June 30, 2023, net non-PPP loans totaled $679.5 million, a 2.0% increase compared to $666.3 million at March 31, 2023, and a 16.3% increase compared to $584.2 million at June 30, 2022. In addition, at June 30, 2023, the unused portion of credit commitments totaled $127.7 million compared to $141.9 million in the prior quarter and $153.9 million a year ago.
- In 2020 and 2021, the Company was an active participant in the SBA PPP, resulting in over $158.0 million in PPP loans originated over the course of the two rounds of the program. At quarter end, the Company had a total of $471,000 in gross PPP loans remaining on its books. Approximately $1,000 of the fee income recognized during the second quarter of 2023 was related to these PPP loan payoffs, compared to $1,000 of the fee income recognized during the preceding quarter and $313,000 of fee income recognized during the second quarter of 2022.
- Total deposits increased $47.4 million, or 7.0%, to $719.9 million at June 30, 2023, compared to $672.5 million a year ago, and increased $59.5 million, or 9.0%, compared to $660.4 million three months earlier. Noninterest bearing demand deposit accounts decreased 14.1% compared to a year ago and represented 28.5% of total deposits. Savings, NOW and money market accounts increased 3.2% compared to a year ago and represented 43.6% of total deposits. Reflective of the rising interest rate environment, CDs increased 54.9% compared to a year ago and comprised 27.9% of the total deposit portfolio, at June 30, 2023. For the quarter, the overall cost of funds was 218 basis points compared to 194 basis points in the prior quarter, and 30 basis points in the second quarter a year ago.
- Asset quality remains strong with 1.131% nonperforming loans to gross loans at June 30, 2023. This compares to 0.021% of nonperforming loans to gross loans at March 31, 2023, and nonperforming loans at 0.000% of total loans at June 30, 2022.
- The allowance for credit losses on loans was $6.24 million, or 0.92% of gross loans at June 30, 2023, compared to $6.90 million, or 1.17% of total loans at June 30, 2022. The allowance, as a percentage of non-guaranteed loans, was 0.94% at June 30, 2023, compared to 1.20% a year ago. The allowance for credit losses reflects management’s assessment of the current economic environment.
- Primarily due to retained earnings, total equity increased 1.4% to $188.6 million as of June 30, 2023, compared to $186.0 million a year ago. The Bank’s capital levels remained well above FDIC “Well Capitalized” standards as of June 30, 2023, with a Tier 1 capital ratio of 27.22%; Common Equity Tier 1 capital ratio of 10.50%; Total capital ratio of 28.19%; and Leverage ratio of 19.03%.
- Book value per common share totaled $7.92 as of June 30, 2023, compared to $7.50 per common share a year ago.
- Declared a quarterly cash dividend of $0.05 per share. The dividend is payable September 1, 2023 to shareholders of record on August 18, 2023.
On June 7, 2022, the Company completed a $119.4 million investment from the US Treasury Department. Treasury’s investment, made under the Emergency Capital Investment Program (“ECIP”), is in the form of non-cumulative Senior Perpetual Preferred Stock. For the first two years from the date of issuance of the Senior Perpetual Preferred Stock the dividend rate shall be zero percent (0%) per annum, and thereafter dividend payments begin accruing with a maximum dividend rate of two percent (2%) and the dividend rate may be reduced to one half percent (0.5%) based on the level of increased qualified lending undertaken by the Bank.
While the ECIP investment was a transformative event brought on by the Federal response to the pandemic, the Bank has maintained a long and important relationship with the US Treasury’s CDFI Fund. Since its founding, the Bank has received 21 Bank Enterprise Awards totaling $8.8 million, a $1.8 million Rapid Response Grant in 2021, and the recently announced $2.5 million Equitable Recovery Grant that is now pending receipt. All of these funds, plus future opportunities that are available to us, such as participation in the Clean Communities Investment Accelerator program that is being financed by the Environmental Protection Agency’s Greenhouse Gas Reduction Fund, support our lending and investment activities in low to moderate income communities.
For additional information on the US Treasury’s ECIP Program please visit
https://home.treasury.gov/policy-issues/coronavirus/assistance-for-small-businesses/emergency-capital-investment-program
For additional information on the CDFI Fund’s Rapid Response Program please visit
https://www.cdfifund.gov/programs-training/programs/rrp
For additional information on the CDFI Fund’s Equitable Recovery Program please visit
https://www.cdfifund.gov/programs-training/programs/erp
For additional information on the EPA’s Clean Communities Investment Accelerator Program please visit
https://www.epa.gov/greenhouse-gas-reduction-fund/clean-communities-investment-accelerator
About Bay Community Bancorp
Bay Community Bancorp (OTCPink: CBOBA) is the parent company of Community Bank of the Bay, a San Francisco Bay Area commercial bank with full-service offices in Oakland, Danville and San Mateo. Community Bank of the Bay serves the financial needs of closely held businesses and professional service firms, as well as their owner-operators and non-profit organizations throughout the San Francisco Bay Area. Community Bank of the Bay is a member of the FDIC, an SBA Preferred Lender, and a CDARS depository institution, headquartered in Oakland, with full-service branches in Danville and San Mateo. It is California’s first FDIC-insured certified Community Development Financial Institution and one of only three operating in the Bay Area. The bank is recognized for establishing the Bay Area Green Fund to provide financing to sustainable businesses and projects and supports environmentally responsible values. Additional information on the bank is available online at www.BankCBB.com.
Forward-Looking Statements
This release may contain forward-looking statements, such as, among others, statements about plans, expectations and goals concerning growth and improvement. Forward-looking statements are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates, inflation, government regulations and general economic conditions, including the real estate market in California and other factors beyond the Bank's control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. The Bank does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking statements, whether to reflect new information, future events, or otherwise, except as required by law.
| Contacts: | William S. Keller, President & CEO |
| 510-433-5404 | |
| wkeller@BankCBB.com |
FINANCIAL TABLES TO FOLLOW:
| Bay Community Bancorp | ||||||||||||||||
| Quarterly Financial Summary (Unaudited) | ||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||
| Three Months Ended | ||||||||||||||||
| Earnings and dividends: | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | |||||||||||
| Interest income | $ | 12,279 | $ | 11,442 | $ | 11,099 | $ | 9,151 | $ | 7,756 | ||||||
| Interest expense | 4,473 | 3,790 | 2,354 | 1,377 | 544 | |||||||||||
| Net interest income | 7,806 | 7,652 | 8,745 | 7,774 | 7,212 | |||||||||||
| Provision for credit losses, loans | (96 | ) | 39 | - | - | 400 | ||||||||||
| Noninterest income | 233 | 248 | 253 | 205 | 376 | |||||||||||
| Noninterest expense | 5,495 | 5,134 | 5,609 | 4,835 | 4,583 | |||||||||||
| Provision for income taxes | 786 | 784 | 1,001 | 930 | 769 | |||||||||||
| Net income | 1,854 | 1,943 | 2,388 | 2,214 | 1,836 | |||||||||||
| Share data: | ||||||||||||||||
| Basic earnings per common share | $ | 0.21 | $ | 0.22 | $ | 0.28 | $ | 0.25 | $ | 0.21 | ||||||
| Dividends declared per common share | 0.050 | 0.050 | 0.045 | 0.045 | 0.045 | |||||||||||
| Book value per common share | 7.92 | 7.86 | 7.50 | 7.27 | 7.50 | |||||||||||
| Common shares outstanding, 30,000,000 authorized | 8,728,802 | 8,728,802 | 8,728,802 | 8,591,052 | 8,871,052 | |||||||||||
| Average common shares outstanding | 8,728,802 | 8,728,802 | 8,664,401 | 8,685,400 | 8,871,052 | |||||||||||
| Balance sheet - average balances: | ||||||||||||||||
| Loans receivable, net | $ | 662,470 | $ | 653,181 | $ | 627,608 | $ | 584,807 | $ | 530,579 | ||||||
| PPP loans | 500 | 595 | 1,215 | 4,289 | 8,900 | |||||||||||
| Earning assets | 980,094 | 945,121 | 972,965 | 885,777 | 797,259 | |||||||||||
| Total assets | 1,021,564 | 987,071 | 999,316 | 910,388 | 825,631 | |||||||||||
| Deposits | 684,328 | 668,397 | 764,127 | 697,174 | 695,945 | |||||||||||
| Borrowings | 139,940 | 122,278 | 42,652 | 19,500 | 24,170 | |||||||||||
| Preferred equity (ECIP) | 119,413 | 119,413 | 119,413 | 119,413 | 31,494 | |||||||||||
| Shareholders' common equity | 68,088 | 65,676 | 63,038 | 65,688 | 66,833 | |||||||||||
| Ratios: | ||||||||||||||||
| Return on average assets | 0.73 | % | 0.80 | % | 0.95 | % | 0.96 | % | 0.89 | % | ||||||
| Return on average common equity | 10.92 | % | 12.00 | % | 15.03 | % | 13.37 | % | 11.02 | % | ||||||
| Yield on earning assets | 5.03 | % | 4.91 | % | 4.53 | % | 4.10 | % | 3.90 | % | ||||||
| Cost of interest-bearing deposits | 2.61 | % | 2.25 | % | 1.49 | % | 1.08 | % | 0.40 | % | ||||||
| Cost of funds | 2.18 | % | 1.94 | % | 1.16 | % | 0.76 | % | 0.30 | % | ||||||
| Net interest margin | 3.19 | % | 3.28 | % | 3.57 | % | 3.48 | % | 3.63 | % | ||||||
| Efficiency ratio | 68.10 | % | 64.99 | % | 62.34 | % | 60.60 | % | 60.40 | % | ||||||
| Asset quality: | ||||||||||||||||
| Net loan (charge-offs) recoveries to average loans | 0.004 | % | -0.023 | % | -0.003 | % | 0.001 | % | 0.000 | % | ||||||
| Nonperforming loans to gross loans | 1.131 | % | 0.021 | % | 0.046 | % | 0.000 | % | 0.000 | % | ||||||
| Nonperforming assets to total assets | 0.725 | % | 0.014 | % | 0.031 | % | 0.000 | % | 0.000 | % | ||||||
| Allowance for credit losses to gross loans | 0.92 | % | 0.95 | % | 1.05 | % | 1.16 | % | 1.17 | % | ||||||
| Bay Community Bancorp | ||||||||||||
| Consolidated Balance Sheets (Unaudited) | ||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||
| Assets | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | |||||||||
| Cash and due from | $ | 134,869 | $ | 77,823 | $ | 86,585 | ||||||
| Interest bearing deposits | 10,923 | 11,166 | 11,164 | |||||||||
| Available-for-sale securities | 176,670 | 195,872 | 153,857 | |||||||||
| Held-to-maturity securities | 34,500 | 34,500 | 26,500 | |||||||||
| Allowance for credit losses, investments | (177 | ) | (177 | ) | - | |||||||
| Commercial | 73,405 | 71,316 | 81,774 | |||||||||
| PPP | 471 | 529 | 4,318 | |||||||||
| CRE (Owner occupied) | 130,339 | 121,554 | 92,769 | |||||||||
| CRE (Non-owner occupied) | 343,661 | 341,610 | 293,504 | |||||||||
| Construction and land | 74,089 | 71,028 | 65,156 | |||||||||
| Consumer and other | 59,860 | 62,747 | 54,532 | |||||||||
| Unearned fees, net | (1,852 | ) | (1,920 | ) | (1,685 | ) | ||||||
| Allowance for credit losses, loans | (6,236 | ) | (6,302 | ) | (6,902 | ) | ||||||
| Net Loans | 673,737 | 660,562 | 583,466 | |||||||||
| Premises and equipment | 956 | 993 | 1,153 | |||||||||
| Life insurance assets | 7,890 | 7,837 | 7,680 | |||||||||
| Accrued interest receivable and other assets | 21,272 | 20,565 | 15,991 | |||||||||
| Total assets | $ | 1,060,640 | $ | 1,009,141 | $ | 886,396 | ||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Liabilities | ||||||||||||
| Deposits | ||||||||||||
| Demand | $ | 205,060 | $ | 196,131 | $ | 238,608 | ||||||
| Saving, NOW and money market | 313,794 | 288,978 | 304,138 | |||||||||
| Time | 201,026 | 175,276 | 129,783 | |||||||||
| Total deposits | 719,880 | 660,385 | 672,529 | |||||||||
| FHLB Advances | 140,000 | 149,500 | 19,500 | |||||||||
| Interest payable and other liabilities | 12,202 | 11,376 | 8,387 | |||||||||
| Total liabilities | 872,082 | 821,261 | 700,416 | |||||||||
| Shareholders' Equity | ||||||||||||
| Preferred stock, $1,000 par value | 119,413 | 119,413 | 119,413 | |||||||||
| Common stock, without par value | 51,264 | 51,264 | 51,768 | |||||||||
| Retained earnings | 25,121 | 23,486 | 19,259 | |||||||||
| Accumulated other comprehensive income (expense) | (7,240 | ) | (6,283 | ) | (4,460 | ) | ||||||
| Total shareholders' equity | 188,558 | 187,880 | 185,980 | |||||||||
| Total liabilities and shareholders' equity | $ | 1,060,640 | $ | 1,009,141 | $ | 886,396 | ||||||
| Bay Community Bancorp | ||||||||||
| Consolidated Statements of Income (Unaudited) | ||||||||||
| (Dollars in thousands, except per share data) | ||||||||||
| Three Months Ended | ||||||||||
| Interest Income | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | |||||||
| Loans | $ | 9,264 | $ | 9,051 | $ | 6,639 | ||||
| Securities | 1,810 | 1,894 | 850 | |||||||
| Federal funds sold and deposits in banks | 1,205 | 497 | 267 | |||||||
| Total interest income | 12,279 | 11,442 | 7,756 | |||||||
| Interest Expense | ||||||||||
| Deposits | 3,086 | 2,551 | 437 | |||||||
| Borrowings | 1,387 | 1,239 | 107 | |||||||
| Total interest expense | 4,473 | 3,790 | 544 | |||||||
| Net Interest Income | 7,806 | 7,652 | 7,212 | |||||||
| Provision for Loan Losses | (96 | ) | 39 | 400 | ||||||
| Net Interest Income After Provision for Loan Losses | 7,902 | 7,613 | 6,812 | |||||||
| Noninterest income | ||||||||||
| Service charges | 59 | 60 | 57 | |||||||
| Other | 174 | 188 | 320 | |||||||
| Total noninterest income | 233 | 248 | 377 | |||||||
| Noninterest Expense | ||||||||||
| Salaries and employee benefits | 3,201 | 3,134 | 2,751 | |||||||
| Net occupancy and equipment expense | 319 | 311 | 299 | |||||||
| Software and data processing fees | 749 | 514 | 556 | |||||||
| Professional fees | 295 | 295 | 175 | |||||||
| Marketing and business development | 178 | 168 | 154 | |||||||
| FDIC insurance premiums | 111 | 75 | 114 | |||||||
| Other | 642 | 637 | 518 | |||||||
| Total noninterest expense | 5,495 | 5,134 | 4,567 | |||||||
| Income before Income Tax | 2,640 | 2,727 | 2,622 | |||||||
| Provision for Income Taxes | 786 | 784 | 786 | |||||||
| Net Income | $ | 1,854 | $ | 1,943 | $ | 1,836 | ||||
| Basic Earnings Per Share | $ | 0.21 | $ | 0.22 | $ | 0.21 | ||||
| Bay Community Bancorp | |||||||||||
| Additional Financial Information | |||||||||||
| (Dollars in thousands except per share amounts)(Unaudited) | |||||||||||
| Asset Quality Ratios and Data: | |||||||||||
| Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | |||||||||
| Nonaccrual loans (excluding restructured loans) | $ | 7,691 | $ | 140 | $ | - | |||||
| Nonaccrual restructured loans | - | - | - | ||||||||
| Loans past due 90 days and still accruing | - | - | - | ||||||||
| Total non-performing loans | 7,691 | 140 | - | ||||||||
| OREO and other non-performing assets | - | - | - | ||||||||
| Total non-performing assets | $ | 7,691 | $ | 140 | $ | - | |||||
| Nonperforming loans to gross loans | 1.131 | % | 0.021 | % | 0.000 | % | |||||
| Nonperforming assets to total assets | 0.725 | % | 0.014 | % | 0.000 | % | |||||
| Allowance for loan losses to gross loans | 0.92 | % | 0.95 | % | 1.17 | % | |||||
| Performing restructured loans (RC-C) | $ | 121 | $ | 122 | $ | 125 | |||||
| Net (charge-offs) recoveries quarter ending | $ | 29 | $ | (150 | ) | $ | 2 | ||||
