California Bank of Commerce (OTCBB: CABC) reported net income of
$920 thousand, or $0.32 per share, for the second quarter 2014, up
from $597 thousand, or $0.21 per share, for the second quarter of
2013. For the first six month of 2014, net income was $1.7 million,
or $0.58 per share, up from $1.2 million, or $0.40 per share, for
the same period in 2013.
On June 30, 2014, the Bank announced the successful completion
of its $16 million public stock offering. “Our Bank is growing and
this new capital will help open up additional growth opportunities.
We were very pleased and gratified that our existing and new
shareholders were not only able to participate in our capital raise
but supported it beyond our expectations,” said Steve Cortese,
Chairman of California Bank of Commerce.
“Our strong results for the second quarter and first six months
of 2014 reflects a continuing story of quality balance sheet growth
and accelerating earnings, driven by an experienced team of banking
professionals,” said Terry A. Peterson President and CEO. “With our
successful capital raise behind us, we are also accelerating our
search for additional experienced bankers to join our team and
further fuel our growth,” said Peterson.
Continued strong quarterly financial results versus 2013:
- Net income of $920 thousand, up 54%
from 2Q 2013
- Earnings per share of $0.32, up
55%
- Net interest income of $3.6 million up
17%
- Net interest margin improved to 4.17%,
up from 3.88% last year
- Return on average assets reached 1%
versus 0.71% last year
Strong loan and deposit growth:
- Total loans of $302 million, up $43
million or 16% from 2Q 2013
- Total deposits of $334 million, up $53
million or 19%
- Total noninterest bearing deposits of
$125 million, up $36 million or 40%
Continued strong credit quality:
- Total nonperforming assets declined to
0.97% of assets, from 1.31% last year
- Loan loss reserve of $5.4 million
increased 9% over last year
- Reserve ratio fell to 1.80% of total
loans from 1.92% as a result of improvement in credit
performance
Improved book value and stronger capital ratio:
- Tangible book value per share $10.62,
up $1.02 or 11% from last year
- Capital ratios improved on stronger
earnings and additional equity capital
Net Interest Income and Margin
For the quarter ended June 30, 2014 compared to the quarter
ended June 30, 2013, net interest income increased by 17% to $3.6
million compared to $3.1 million last year. The year over year
increase in net interest income was primarily driven by a
combination of strong growth in average loan balances as well as an
improved net interest margin.
The net interest margin for the second quarter 2014 was 4.17%,
improving 29 basis points compared to the 3.88% average margin in
the second quarter of 2013, while the margin was down six basis
points from first quarter 2014. “We were able to improve net
interest margin year over year, however with our stronger loan to
deposit ratio, continuing this improvement will be our challenge
and opportunity,” said Peterson.
Non-Interest Income
Non-interest income reached $612 thousand in the second quarter
of 2014 compared to $322 in the second quarter of 2013 and $427
thousand in the first quarter 2014. The increase in non-interest
income was due to a combination of an SBA loan sale, increased
commercial loan and deposit volumes, and related fees.
Non-Interest Expense
Non-Interest Expense during the second quarter of 2014 increased
$410 thousand or 18% compared to the same period in 2013. The
increased costs were primarily due to staff additions to support
expanded business development efforts, enhance client support
services, and new product development and delivery services.
The Bank continues to balance its overall growth with service
level operating efficiency. Consequently, the Bank’s efficiency
ratio, (total overhead as a percent of revenue) decreased to 63.6%
in the second quarter of 2014 compared to 67.7% for the same period
in 2013.
Net Income
Net income reached $920 thousand for the second quarter 2014,
increasing $323 thousand or 54% compared to the same period in
2013. Net income improved for the quarter on increased average
earning assets and an improved net interest margin. Return on
average assets was 1.00% during the second quarter of 2014,
compared to 0.71% for the same period in 2013, while return on
average common equity reached 12.12% during the second quarter of
2014 compared to 8.97% for the second quarter of 2013.
Balance Sheet
As of June 30, 2014, Total Assets were up by $73 million or 21%
to $422 million with loans up by $43 million or 16% year over year
to $302 million compared to June 30, 2013. Commercial and
Industrial (C&I) loans were the primary driver of loan growth,
increasing $26 million over the second quarter of 2013 to $151
million. “We remain focused on our core business banking strategy
exemplified by C&I loans comprising 50% of our total loan
portfolio. The majority of our C&I portfolio floats with the
Prime Rate making us well positioned for an eventual rising
interest rate environment,” said Peterson.
For the quarter ended June, 2014, total asset growth was funded
primarily with deposits, which were up by $53 million or 19%, with
non-interest bearing deposits increasing by $36 million or 40% over
the quarter ended June 30, 2013. Non-interest bearing deposits
represented 38% of total deposits at June 30, 2014 compared to 32%
at June 30, 2013.
Credit Quality
The Bank’s overall loan quality remains strong. For the second
quarter of 2014, total non-performing loans were $4.1 million or
0.97% of total assets at June 30, 2014, compared to $4.6 million or
1.31% of total assets at June 30, 2013. The reserve for loan losses
increased to $5.43 million as of June 30, 2014 compared to $4.97
million at June 30, 2013. As a percent of total loans, the reserve
level continues to reflect the conservative posture of the Bank, at
a healthy level of 1.80% of total loans at the end of the current
period.
“We are pleased the investment community validated our business
model by quickly oversubscribing to our $16 million capital raise.
We are proud to announce these financial results to our new and
existing shareholders,” said Peterson.
About California Bank of
Commerce
California Bank of Commerce was designed and built to provide a
unique banking experience for its clients. The Bank offers a broad
range of commercial banking services to closely held businesses and
professionals throughout the San Francisco Bay Area. For more
information on California Bank of Commerce and our unique banking
experience, call us at (925) 283-2265, or visit us at
www.californiabankofcommerce.com.
CALIFORNIA BANK OF COMMERCE UNAUDITED SUMMARY FINANCIAL
STATEMENTS
INCOME
STATEMENT ($ Thousands)
Three Months Ended Year
Over Year Change 30-Jun-14 31-Mar-14
30-Jun-13 $ % Interest
income $ 3,954 $ 3,859 $ 3,446 $ 508 15 % Interest expense
(307 ) (298 ) (342 ) 35 -10 % Net
interest income before provision 3,647 3,561 3,104 543 17 %
Provision to the Loan Loss Reserve (3 ) 153
(58 ) 55 -95 % Net interest income after
provision $ 3,644 $ 3,714 $ 3,046 $ 598 20 % Non-interest
income 612 427 290 322 111 % Non-interest expense (2,707 )
(2,857 ) (2,297 ) (410 ) 18 % Income before
tax provision 1,549 1,284 1,039 510 49 % Provision for income taxes
(629 ) (528 ) (442 ) (187 ) 42 % Net
income $ 920 $ 756 $ 597 $ 323 54 %
Preferred Dividends 27 27
28 (1 ) -4 % Income to Common Shareholders $ 893
$ 729 $ 569 $ 324 57 % Basic
Earnings per Common share $ 0.320 $ 0.263 $ 0.207 $ 0.114 55 %
Weighted average shares outstanding 2,787,061 2,768,893
2,757,243 Return on Average Assets 1.00 % 0.85 % 0.71 %
Return on Average Tangible Common Equity 12.12 % 10.69 % 8.97 %
Non Interest Expense to Average Total Assets 2.93 % 3.22 %
2.73 % Efficiency Ratio 63.6 % 71.6 % 67.7 %
CALIFORNIA BANK OF COMMERCE UNAUDITED SUMMARY FINANCIAL
STATEMENTS INCOME STATEMENT ($ Thousands)
Six
Months Ended Year Over Year Change 30-Jun-14
30-Jun-13 $ % Interest
income $ 7,813 $ 6,811 $ 1,002 15 % Interest expense (605 )
(722 ) 117 -16 % Net interest income before
provision 7,208 6,089 1,119 18 % Provision to the Loan Loss Reserve
150 (269 ) 419 -156 % Net
interest income after provision $ 7,358 $ 5,820 $ 1,538 26 %
Non-interest income 1,039 639 400 63 % Non-interest expense
(5,564 ) (4,636 ) (928 ) 20 % Income before tax
provision 2,833 1,823 1,010 55 % Provision for income taxes
(1,157 ) (672 ) (485 ) 72 % Net income $ 1,676
$ 1,151 $ 525 46 % Preferred Dividends
54 55 (1 ) -2 % Income to Common
Shareholders $ 1,622 $ 1,096 $ 526 48 %
Basic Earnings per Common share $ 0.584 $ 0.398 $ 0.186 47 %
Weighted average shares outstanding 2,778,027 2,757,243
Return on Average Assets 0.92 % 0.68 % Return on Average Common
Equity 11.43 % 8.78 % Non Interest Expense to Avg. Total
Assets 3.07 % 2.73 % Efficiency Ratio 67.5 % 68.9 %
CALIFORNIA BANK OF COMMERCE UNAUDITED
SUMMARY FINANCIAL STATEMENTS BALANCE SHEET ($ Thousands)
Year Over Year Change Assets 30-Jun-14
31-Mar-14 30-Jun-13 $ %
Total Cash and Investments $ 110,742 $ 71,859 $ 83,149 $
27,593 33 % Loans, net of deferred costs/fees 301,520 291,422
258,963 $ 42,557 16 % Loan Loss Reserve (5,425 ) (5,420 ) (4,970 )
$ (455 ) 9 % Other 15,081 14,946
12,035 $ 3,046 25 %
Total Assets $ 421,918
$ 372,807 $ 349,177 $ 72,741 21 %
Liabilities & Shareholders' Equity Non-interest
Bearing Deposits $ 125,449 $ 101,643 $ 89,518 $ 35,931 40 %
Interest Bearing Deposits 209,042 201,105
191,644 $ 17,398 9 % Total Deposits $
334,491 $ 302,748 $ 281,162 $ 53,329 19 % Total Borrowings and
Other Liabilities 30,682 30,209
30,601 $ 81 0 % Total Liabilities $ 365,173 $ 332,957
$ 311,763 $ 53,410 17 % Shareholder's Equity $ 56,745
$ 39,850 $ 37,414 $ 19,331 52 %
Total
Liabilities & Shareholders' Equity $ 421,918 $
372,807 $ 349,177 $ 72,741 21 % Common
Shares Outstanding 4,311,248 2,768,893 2,757,243 1,554,005 56 %
Book Value per Common Share $ 10.62 $ 10.44 $ 9.60 $ 1.02 11 %
Average Balances
- Period
2Q 2014 1Q 2014 2Q 2013 Total Assets $ 370,544
$ 360,431 $ 337,711 Total Loans $ 294,837 $ 283,559 $ 249,442 Total
Investments $ 40,584 $ 46,252 $ 43,238 Total Earning Assets $
350,558 $ 341,620 $ 320,909 Total Non-Interest Bearing Deposits $
98,439 $ 98,713 $ 82,947 Total Deposits $ 295,574 $ 289,685 $
269,315 Total Borrowings $ 29,731 $ 29,112 $ 29,000 Tangible Common
Equity $ 30,450 $ 28,697 $ 26,691
Average Yields
and Cost
2Q 2014 1Q 2014 2Q 2013 Net Interest Margin
4.17 % 4.23 % 3.88 % Yield on Earning Assets 4.52 % 4.58 % 4.31 %
Cost of Interest Bearing Liabilities 0.54 % 0.55 % 0.64 %
End of
Period
30-Jun-14 31-Mar-14 30-Jun-13 Loan Loss
Reserve to Total Loans 1.80 % 1.87 % 1.92 % NPAs (incl non
performing TDRs) to Total Assets 0.88 % 1.00 % 0.39 % Performing
TDRs to Total Assets 0.09 % 0.22 % 0.92 %
Total NPAs 0.97 % 1.22 % 1.31 % Tier I Leverage Ratio 15.20
% 11.07 % 11.10 %
California Bank of CommerceTerry A. Peterson,
925-444-2910President and CEOtpeterson@bankcbc.comorMark
DeVincenzi, 925-444-2916EVP Shareholder Relations &
CMOmdevincenzi@bankcbc.com