CBOA Financial Inc (PK) News - CBOF

$CBOF CBOA Financial, Inc. Reports Consolidated Earnings of $1,522,000 in 4Q 2020
Press Release | 02/11/2021
CBOA Financial, Inc. Reports Consolidated Earnings of $1,522,000 in 4Q 2020
PR Newswire

TUCSON, Ariz., Feb. 11, 2021

TUCSON, Ariz., Feb. 11, 2021 /PRNewswire/ -- CBOA Financial, Inc. (OTCMKTS:CBOF) (the "Company"), parent company of Commerce Bank of Arizona (the "Bank" or "CBAZ"), announced that consolidated after tax net income for quarter ending December 31, 2020 increased 373% to $1,522,000, from $457,000 in the third quarter of 2020.

Commerce Bank of Arizona (PRNewsfoto/Commerce Bank of Arizona)

Chris Webster, Bank President and Chief Executive Officer said "The economic and operating challenges of 2020 were unprecedented. I am extremely proud of our team and how we were able to maintain our exceptional customer service performance standards." Webster added, "Our financial metrics for the year were excellent. The Bank generated strong loan and deposit growth, Net Interest Margin and bottom line Net Income. And, we were able to re-align key non-interest costs which will benefit the Bank in the years to come."

Fourth Quarter 2020 Highlights

After tax net income was up 233% quarter over quarter
Deposit growth was $24.7 million, or 8.9% for the quarter
Cost of funds improved 11 basis points during the quarter
Operational Highlights

Interest income was aided by recognized fee income of PPP loans that bolstered earnings by $399,000. Further contributing to the growth in net interest income was a $37,000 decline in interest expense despite the $10 million increase in total deposits during the quarter.

The $107,000 negative non-interest income was driven by further write-downs of OREO properties which the Bank acquired primarily in the 2012-2015 time period. The Bank has executed a strategy of aggressively pricing these assets in response to the continuing difficulty of marketing these types of properties, which was exacerbated by the pandemic. For the full year, non-performing assets which include loans and OREO are down 68% from $8.6 million or 3.6% of assets to $2.8MM or 0.78% of assets.

The 43% increase in non-interest expense during the quarter was driven by two large non-recurring events. The first was approximately $500,000 in lease and building expenses related to the moving of the Bank's two Tucson metro branches into superior locations with improved lease terms that will positively impact Bank earnings going forward. The second was approximately $400,000 in technology contract restructuring costs that will significantly improve the Bank's internal technology support while impacting income positively in 2021 and going forward.

A negative tax provision expense of $1.9 million was recorded in the quarter to recognize the full reversal of the valuation allowance recorded against the Company's deferred tax assets. The decision to reverse this allowance was driven by the Company's improvement in all financial results since the valuation allowance was originally recorded in 2012, and reflects management's confidence that sufficient future taxable earnings will be generated to utilize the deferred tax asset.

Balance Sheet

Total assets increased by 7.3% to $355.8 million during the quarter ended December 31, 2020 and increased 49.6% compared to $237.8 million a year ago. Total asset growth from December 2019 to December 2020 consisted of PPP loans funding CBAZ deposit accounts totaling $60 million, and organic net deposit growth of roughly $36 million.

Traditional gross loans dropped $6 million since third quarter 2020 ending the third quarter at $180 million. Including the $60 million in PPP loans, total loans decreased by 3.9% to $240 million in the quarter and increased 38% compared to $174 million a year ago. Total deposits increased by 8.9% to $304.2 million during the quarter and increased 47% compared to $208 million a year ago.

The allowance for loan losses totaled $2.95 million at December 31, 2020, or 1.64% of "traditional" non-PPP loans, compared to 1.61% in the previous quarter, and was 1.23% for the quarter with the PPP loans included. Though the Bank's recorded reserve did not materially change, worsening economic factors and pandemic related payment deferrals are being accounted for in the Bank's reserve calculation. Due to a large "unallocated" reserve, the Bank remained adequately reserved for the quarter.

Shareholders' equity increased to $25 million at December 31, 2020, from $23.6 million the preceding quarter. At December 31, 2020, book value and tangible book value were $2.81 per share compared to $2.81 per share at September 30, 2020 and $2.66 per share a year ago. The growth in total assets associated with the PPP loans was the primary driver of the decline in the Bank's Tier 1 Leverage ratio. Excluding the PPP loans, the Bank's third quarter 2020 Tier 1 Leverage ratio would have been 9.2%, just lower than 10.3% for third quarter 2020 and 11.1% as of December 31, 2019.

Finally, Chairman Bill Assenmacher stated, "I am excited to announce that we have made two extremely well qualified additions to our Board of Directors, Rhonda Pina and David Porter. We believe both Rhonda and David will provide valuable support to the strategic initiatives of Commerce Bank of Arizona going forward."

Rhonda Pina has 30 years of banking experience in southern Arizona. Most recently she was an elected Town Council Member for the Town of Oro Valley.

David Porter spent nearly 30 years in the banking industry within the Phoenix metropolitan area. He currently serves as the CFO of The Renaissance Companies, one the largest and most successful commercial property development companies in Arizona.

Capital Management

Capital ratios exceeded regulatory guidelines for a well-capitalized institution under Basel III and Dodd Frank Wall Street Reform requirements at December 31, 2020. Capital ratios are presented below.

About the Company

Commerce Bank of Arizona, established in 2002 in Tucson, Arizona, is a full-service community bank that caters to small-to mid-sized businesses and real estate professionals. CBAZ offers commercial clients with a variety of services ranging from U.S. Small Business Administration (SBA) financing solutions, construction loans, and commercial real estate loans. CBOA Financial, Inc is a single-bank holding company and parent of the Bank. The Company is traded over-the-counter as CBOF. For additional information, visit: www.commercebankaz.com.

Forward-looking Statements

This press release may include forward-looking statements about CBOA Financial, Inc. or Commerce Bank of Arizona. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: competition, fluctuations in interest rates, dependency on key individuals, loan defaults, geographical concentration, litigation and changes in federal laws, regulations and interpretations thereof. All forward-looking statements included in this press release are based on information available at the time of the release, and CBOA Financial, Inc. and Commerce Bank of Arizona assume no obligation to update any forward-looking statement.

Unaudited Consolidated Summary Financial Information

Dollars in thousands - Unaudited

For the quarter ended

Year to Date

12/31/2020

9/30/2020

12/31/2019

12/31/2020

12/31/2019

Summary Income Data

Interest Income

3,300

3,202

2,969

12,877

11,804

Interest expense

319

356

489

1,486

1,912

Net Interest Income

2,981

2,846

2,480

11,391

9,892

Provision for (reduction in) loan losses

-

-

(74)

(279)

(153)

Non-interest income

(107)

(49)

139

(608)

498

Realized gains (losses) on sales of securities

-

-

3

168

(2)

Non-interest expense

3,344

2,340

2,251

10,475

8,668

Income (loss) before income taxes

(470)

457

445

755

1,873

Provision for income tax

(1,992)

-

-

(1,992)

-

Net Income

1,522

457

445

2,747

1,873

Per Share Data

Shares outstanding end-of-period

8,218

8,208

7,878

8,218

7,878

Earnings per common share ($'s)

0.19

0.06

0.06

0.33

0.24

Earnings per common share (Diluted) ($'s)

0.19

0.04

0.04

0.33

0.04

Cash dividend declared

-

-

-

-

-

Total shareholders' equity

25,070

23,589

20,944

25,070

20,944

Book value per share ($'s)

2.81

2.87

2.66

2.81

2.66

Selected Balance Sheet Data

Total assets

355,798

331,636

237,788

355,798

237,788

Securities available-for-sale

37,128

36,636

26,162

37,128

26,162

Loans

240,016

249,684

173,976

240,016

173,976

Allowance for loan losses

2,955

2,996

2,969

2,955

2,969

Deposits

303,932

279,187

207,519

303,932

207,519

Other borrowings

16,563

21,574

-

16,563

-

Shareholders' equity

25,070

23,589

20,944

25,070

20,944

Performance Ratios (%)

Return on average shareholders' equity
(annualized)

10.56

7.10

8.50

10.64

8.50

Net interest margin

3.73

4.03

4.43

4.10

4.43

Efficiency ratio

114.92

82.45

83.91

95.39

83.91

Asset Quality Data (%)

Nonperforming assets to total assets

0.78

1.30

3.61

0.78

3.61

Reserve for loan losses to total loans

1.23

1.20

1.71

1.23

1.71

Charge-offs to average loans for period

0.07

(0.01)

(0.2)

(0.12)

(0.2)

Regulatory Capital Ratios (%)

Common Equity Tier 1

12.96

12.95

13.71

12.96

13.71

Tier 1 risk-based capital ratio

12.96

12.95

13.71

12.96

13.71

Total risk-based capital ratio

14.21

14.20

14.97

14.21

14.97

Tier 1 leverage capital ratio

8.56

8.80

11.07

8.56

11.07

Contact:
Chris Webster
President & CEO
480-253-4511
cwebster@commercebankaz.com

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/cboa-financial-inc-reports-consolidated-earnings-of-1-522-000-in-4q-2020--301227154.html

SOURCE Commerce Bank of Arizona

$CBOF CBOA Financial, Inc. Reports Consolidated Earnings of $395,000 in 2Q 2020
Press Release | 08/17/2020
CBOA Financial, Inc. Reports Consolidated Earnings of $395,000 in 2Q 2020
PR Newswire

TUCSON, Ariz., Aug. 13, 2020

TUCSON, Ariz., Aug. 13, 2020 /PRNewswire/ -- CBOA Financial, Inc. (OTCMKTS:CBOF) (the "Company"), parent company of Commerce Bank of Arizona (the "Bank" or "CBAZ"), announced that consolidated net income for quarter ending June 30, 2020 increased 6.5% to $395,000, from $371,000 in the first quarter of 2020.

Commerce Bank of Arizona (PRNewsfoto/Commerce Bank of Arizona)

Chris Webster, Bank President and Chief Executive Officer commented, "Despite the many operational challenges of the COVID-19 pandemic, we are proud to complete another strong quarter. We experienced significant loan growth related to SBA's Paycheck Protection Program (PPP), however organic loan growth was also meaningful. Deposit growth was strong as many new customers moved their entire business banking relationship to us." Webster added, "It's also important to note that although the effective yield on our PPP loans is substantially below our core loan portfolio, we continued to maintain a robust net interest margin despite the Federal Reserve swiftly cutting interest rates 150 basis points in March, which caused many of our assets to reprice. Lastly, we have fully adapted to serving the banking of our customers using a variety of means including branch banking by appointment, mobile and on-line banking services."

Second Quarter 2020 Highlights

Net Income for the quarter was $395,000;
NIM was 4.51% for the quarter;
Deposit grew 26% during the quarter.
Operational Highlights
Interest income was aided by an influx of PPP loans during the second quarter that bolstered earnings by $750,000 compared with prior periods due to recognized fee income. Further contributing to the growth in net interest income was a $64,000 decline in interest expense despite the $64.8 million increase in total deposits during the quarter.

The Bank's $460,000 negative non-interest income was driven by $548,000 in writedowns of OREO properties which the Bank acquired primarily in the 2012-2015 time period. The Bank has aggressively priced these assets in response to the continuing difficulty of marketing these types of properties, which was exacerbated by the pandemic.

Balance Sheet
Total assets increased by 29% to $315.2 million during the quarter ended June 30, 2020 and increased 35% compared to $233.9 million a year ago. Total asset growth from June 2019 to June 2020 consisted of PPP loans funding CBAZ deposit accounts totaling $63 million, and organic net deposit growth of roughly $15 million.

Traditional gross loans rose $3.5 million since first quarter 2020 ending the second quarter at $178 million. Including the $63 million in PPP loans, total gross loans increased by 38% to $241 million in the quarter and increased 35% compared to $179 million a year ago. Total deposits increased by 26% to $268.8 million during the quarter and increased 32% compared to $204 million a year ago.

The allowance for loan losses totaled $2.99 million at June 30, 2020, or 1.68% of "traditional" non-PPP loans, compared to 1.71% in the previous quarter, and was 1.24% for the quarter with the PPP loans included. Though the Bank's recorded reserve did not materially change, worsening economic factors and pandemic related payment deferrals are being accounted for in the Bank's reserve calculation. Due to a large "unallocated" reserve, the Bank remained adequately reserved for the quarter.

Shareholders' equity increased to $23.0 million at June 30, 2020, from $22.3 million the preceding quarter. At June 30, 2020, book value and tangible book value were $2.81 per share compared to $2.71 per share at March 31, 2020 and $2.57 per share a year ago. The growth in total assets associated with the PPP loans originated during the second quarter 2020 was the primary driver of the decline in the Bank's Tier 1 Leverage ratio. Excluding the PPP loans, the Bank's second quarter 2020 Tier 1 Leverage ratio would have been 10.7%, just slightly lower than 11.2% for first quarter 2020 and 10.7% as of June 30, 2019.

Capital Management
Capital ratios exceeded regulatory guidelines for a well-capitalized institution under Basel III and Dodd Frank Wall Street Reform requirements at June 30, 2020. Capital ratios are presented below.

About the Company
Commerce Bank of Arizona, established in 2002 in Tucson, Arizona, is a full-service community bank that caters to small-to mid-sized businesses and real estate professionals. CBAZ offers commercial clients with a variety of services ranging from U.S. Small Business Administration (SBA) financing solutions, construction loans, and commercial real estate loans. CBOA Financial, Inc is a single-bank holding company and parent of the Bank. The Company is traded over-the-counter as CBOF. For additional information, visit: www.commercebankaz.com.

Forward-looking Statements
This press release may include forward-looking statements about CBOA Financial, Inc. or Commerce Bank of Arizona. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: competition, fluctuations in interest rates, dependency on key individuals, loan defaults, geographical concentration, litigation and changes in federal laws, regulations and interpretations thereof. All forward-looking statements included in this press release are based on information available at the time of the release, and CBOA Financial, Inc. and Commerce Bank of Arizona assume no obligation to update any forward-looking statement.

Unaudited Consolidated Summary Financial Information

Dollars in thousands - Unaudited

For the quarter ended

Year to Date

6/30/2020

3/30/2020

6/30/2019

6/30/2020

6/30/2019

Summary Income Data

Interest Income

3,549

2,826

3,062

6,375

5,880

Interest expense

366

446

513

812

903

Net Interest Income

3,183

2,380

2,549

5,563

4,977

Provision for (reduction in) loan losses

-

(279)

-

(279)

-

Non-interest income

(460)

8

158

(452)

229

Realized gains (losses) on sales of securities

47

121

-

168

-

Non-interest expense

2,375

2,417

2,090

4,792

4,276

Income (loss) before income taxes

395

371

617

766

930

Provision for income tax

-

-

-

-

-

Net Income

395

371

617

766

930

Per Share Data

Shares outstanding end-of-period

8,208

8,208

7,878

8,208

7,878

Earnings per common share ($'s)

0.05

0.05

0.08

0.09

0.12

Earnings per common share (Diluted) ($'s)

0.04

0.04

0.06

0.07

0.09

Cash dividend declared

-

-

-

-

-

Total shareholders' equity

23,049

22,265

20,283

23,049

19,039

Book value per share ($'s)

2.81

2.71

2.57

2.81

2.42

Selected Balance Sheet Data

Total assets

315,157

243,630

233,913

315,157

233,913

Securities available-for-sale

28,888

29,178

18,941

28,888

18,941

Loans

240,979

174,471

178,971

240,979

178,971

Allowance for loan losses

2,991

2,978

2,920

2,991

2,920

Deposits

268,836

212,807

204,026

268,836

204,026

Other borrowings

14,808

-

-

14,808

-

Shareholders' equity

23,049

22,265

20,283

23,049

20,283

Performance Ratios (%)

Return on average shareholders' equity
(annualized)

6.62

6.56

10.89

6.59

8.77

Net interest margin

4.51

4.20

4.62

4.37

4.69

Efficiency ratio

85.38

98.61

75.41

91.58

79.75

Asset Quality Data (%)

Nonperforming assets to total assets

1.45

3.40

3.61

1.45

3.61

Reserve for loan losses to total loans

1.24

1.71

1.63

1.24

1.63

Charge-offs to average loans for period

(0.02)

(0.66)

(0.08)

(0.30)

(0.07)

Regulatory Capital Ratios (%)

Common Equity Tier 1

13.40

13.61

13.16

13.71

13.21

Tier 1 risk-based capital ratio

13.40

13.61

13.16

13.71

13.21

Total risk-based capital ratio

14.65

14.87

14.41

14.97

14.46

Tier 1 leverage capital ratio

9.22

11.12

10.73

11.07

11.61

Contact:
Chris Webster
President & CEO
480-253-4511
cwebster@commercebankaz.com

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/cboa-financial-inc-reports-consolidated-earnings-of-395-000-in-2q-2020--301112538.html

SOURCE Commerce Bank of Arizona

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