Categories: Wire Stories

Bay Community Bancorp Earns $1.66 Million in First Quarter 2024; Increases Quarterly Cash Dividend by 10% to $0.055 Per Share

OAKLAND, Calif., May 01, 2024 (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 FDIC-insured Community Development Financial Institution (“CDFI”) with full-service offices in Oakland, Danville, San Jose and San Mateo, and a production office in San Francisco, today reported net income of $1.66 million for the first quarter of 2024, compared to $1.31 million for the fourth quarter and $1.94 million for the first quarter of 2023. All financial results are unaudited.

The Company’s Board of Directors increased its quarterly cash dividend by 10% to $0.055 per share. The dividend is payable June 4, 2024, to shareholders of record on May 23, 2024. This marks the thirteenth consecutive cash dividend payment, and third increase in the dividend payment since the Company initiated quarterly cash dividends on April 30, 2021.

“Our first quarter operating performance reflects good progress toward our plan to reinvest recent CDFI grant income into core deposit generating capabilities. These investments drove an almost 16% increase in non-interest bearing deposits and more modest loan growth that resulted in a 30 bp improvement in net interest margin quarter over quarter, and another 8 bp improvement in the month of March,” stated William S. Keller, CEO. “Last year’s loss of five Bay Area competitors almost simultaneous with our being awarded $2.9 million of CDFI-related grants created an unprecedented opportunity for us. Not only did we expand our branch network by adding a new full-service banking office in San Jose, relocating and expanding our San Mateo office and establishing a new San Francisco Production Office, we were able to attract talent that was previously unavailable. We are grateful that these professionals and their clients appreciated our unique story, capabilities and the safety and stability that comes with a capital position that ranks in the top three percent of our nationwide peer group. As the year progresses, we expect to continue to integrate and evaluate our expanded team and we will look for ways to further drive growth and improve operating efficiencies.”

“With these investments in place and gaining momentum, we decided to lean into our capital position by paying down $30.0 million in FHLB borrowings, which we were able to replace almost entirely with DDA account balances,” Keller continued. “In addition to improving our deposit mix and lowering our cost of funds we were able to recognize a $685 thousand gain by paying off the FHLB advance early.”

“Our commercial real estate loan portfolio continues to perform well” said Mukhtar Ali, President and Chief Credit Officer. “So far, the major price declines and foreclosures in commercial real estate in our markets have been centered in the larger downtown office properties where we have no direct exposure, so our loan portfolio remains extremely strong. Commercial real estate loans against office properties totaled $69.3 million at March 31, 2024, and represented 34.0% of capital. The non-owner occupied office segment consisted of 23 notes totaling $53.4 million and carried a weighted average loan-to-value of 40.9% at quarter end. All relationships in this category are performing as agreed. We are also pleased to report that soon after quarter end we successfully resolved our one large non-performing asset without any loss of principal and the full collection of accrued interest and fees.”

First Quarter 2024 Financial Highlights (at or for the period ended March 31, 2024)

  • Net income was $1.66 million in the first quarter of 2024, compared to $1.94 million in the first quarter a year ago, and $1.31 million in the preceding quarter. Earnings per common share was $0.19 in the first quarter of 2024, compared to $0.22 in the first quarter a year ago, and $0.15 in the preceding quarter.
  • Pre-tax, pre-provision, pre-CDFI grant income was $2.77 million in the first quarter of 2024, compared to $2.79 million in the year ago quarter, and $1.68 million in the fourth quarter of 2023.  
  • Total assets decreased $26.0 million, or 2.6%, to $983.1 million at March 31, 2024, compared to $1.01 billion a year earlier, and increased $8.10 million, or 0.8%, compared to $975.0 million three months earlier. Average assets for the quarter totaled $978.0 million, a decrease of $9.09 million, or 0.9%, from the first quarter a year ago and a decrease of $66.0 million, or 6.3%, compared with $1.04 billion the prior quarter.
  • Net interest income, before the provision for credit losses, increased 7.9% to $8.26 million in the first quarter of 2024, compared to $7.66 million in the first quarter a year ago, and increased 1.1% compared to $8.17 million in the preceding quarter. There was a $374,000 provision for credit losses recorded in the first quarter of 2024. This compared to a $39,000 provision for credit losses in the first quarter of 2023, and a $106,000 negative provision for credit losses recorded for the preceding quarter.
  • Noninterest income was $946,000 in the first quarter of 2024, compared to $248,000 in the first quarter of 2023, and $345,000 in the fourth quarter of 2023. $685,000 of the quarter’s income was due to a gain on the repayment of the FHLB advance.
  • Operating revenue (net interest income before the provision for loan losses plus non-interest income) was $9.20 million in the first quarter of 2024, a 16.5% increase compared to $7.90 million in the first quarter a year ago, and an 8.1% increase compared to $8.51 million in the fourth quarter of 2023.
  • Net interest margin was 3.46% in the first quarter, compared to 3.16% in the preceding quarter, and 3.28% in the first quarter a year ago. The 30 basis point increase in net interest margin during the first quarter of 2024 was due to an improved deposit mix and the decrease in deposit costs compared to the linked quarter. The average interest yield on loans in the first quarter of 2024 was 5.72%, compared to 5.42% in the year ago quarter and 5.69% in the prior quarter. The average cost of funds in the first quarter was 2.25%, a 31 basis point increase compared to the first quarter a year ago and a 16 basis point decrease compared to the prior quarter.
  • Noninterest expense was $6.44 million in the first quarter of 2024, compared to $5.31 million in the first quarter of 2023, and $6.84 million in the fourth quarter of 2023. Noninterest expense during the current quarter and preceding quarter reflected expenses associated with the Company’s market expansion. Also impacting expenses during the preceding quarter was $322,000 of extraordinary charges associated with altered or otherwise unauthorized checks. The Company believes it has legal recourse against the bank of first deposit and is vigorously pursuing restitution.
  • Loans, net of unearned income, increased $25.8 million, or 3.9%, to $692.6 million at March 31, 2024, compared to $666.9 million a year ago, and increased $16.2 million, or 2.4%, compared to $676.4 million three months earlier. In addition, at March 31, 2024, the unused portion of credit commitments totaled $144.3 million compared to $134.9 million in the prior quarter and $153.8 million a year ago.
  • Total deposits increased $10.8 million, or 1.6%, to $671.2 million at March 31, 2024, compared to $660.4 million a year ago, and increased $37.3 million, or 5.9%, compared to $633.9 million three months earlier. Noninterest bearing demand deposit accounts increased 4.4% compared to a year ago and represented 30.5% of total deposits. Savings, NOW and money market accounts decreased 11.0% compared to a year ago and represented 38.3% of total deposits. Reflective of the rising interest rate environment, CDs increased 19.3% compared to a year ago and comprised 31.1% of the total deposit portfolio, at March 31, 2024. For the quarter, the overall cost of funds was 225 basis points compared to 241 basis points in the prior quarter, and 194 basis points in the first quarter a year ago.
  • Asset quality remains strong with 1.011% nonperforming loans to gross loans at March 31, 2024. This compares to 1.056% of nonperforming loans to gross loans at December 31, 2023, and 0.021% of nonperforming loans to gross loans at March 31, 2023.  
  • The allowance for credit losses on loans was $6.52 million, or 0.94% of gross loans at March 31, 2024, compared to $6.48 million, or 0.97% of total loans at March 31, 2023. The allowance for credit losses reflects management’s assessment of the current economic environment.
  • Primarily due to retained earnings, total equity increased 2.7% to $191.6 million as of March 31, 2024, compared to $186.6 million a year ago. The Bank’s capital levels remained well above FDIC “Well Capitalized” standards as of March 31, 2024, with a Tier 1 capital ratio of 25.2%; Common Equity Tier 1 capital ratio of 9.96%; Total capital ratio of 26.11%; and Leverage ratio of 20.20%.
  • Book value per common share increased 7.4% to $8.44 as of March 31, 2024, compared to $7.86 per common share a year ago.
  • Declared a quarterly cash dividend of $0.055 per share. The dividend is payable June 4, 2024, to shareholders of record on May 23, 2024.

On October 23, 2023, the Company’s board of directors adopted a share repurchase program authorizing the repurchase of up to 436,440 shares of the Company’s outstanding shares of Series A common stock. As of March 31, 2024, the Company had repurchased 202,000 outstanding shares of Series A common stock and 234,440 shares remain available under the repurchase program ending September 30, 2024.

In 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 dividend rate shall be zero percent (0%) per annum, and thereafter dividend payments begin accruing with a maximum dividend rate of two percent (2%) but may be reduced to one half percent (0.5%) based on the level of increased qualified lending undertaken by the Bank.

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

While the ECIP investment was a transformative event brought on by the unprecedented 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 22 Bank Enterprise Awards and 2 grants totaling $13.5 million. All of these awards and grants support our lending and investment activities in low- and moderate-income communities, and we are now building capacity to actively participate in the Clean Communities Investment Accelerator (“CCIA”) program administered by the Environmental Protection Agency (“EPA”) and authorized by the Inflation Reduction Act to “finance clean technology deployment in low-income and disadvantage communities, while simultaneously building the capacity of community lenders that serve those communities.”   In March the EPA awarded $940 million in CCIA program funds to a coalition led by the Justice Climate Fund. As members of this coalition, we are eager to help deploy these funds in the communities we serve.  

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, San Mateo and San Jose, and a production office in San Francisco. Community Bank of the Bay serves the financial needs of closely held businesses, professional service firms, real estate investors and developers 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, and is California’s first FDIC-insured certified Community Development Financial Institution. 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.

FINANCIAL TABLES TO FOLLOW:

Bay Community Bancorp
Quarterly Financial Summary (Unaudited)
(Dollars in thousands, except per share data)
                       
    Three Months Ended
Earnings and dividends: Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023
  Interest income $ 12,609   $ 13,297   $ 13,268   $ 12,278   $ 11,442  
  Interest expense   4,353     5,130     5,064     4,473     3,790  
  Net interest income   8,256     8,167     8,204     7,805     7,652  
  Provision for credit losses, loans   374     (106 )   626     (96 )   39  
  Noninterest income   946     345     3,332     234     248  
  Noninterest expense   6,436     6,844     6,464     5,495     5,134  
  Provision for income taxes   735     462     1,322     786     784  
  Net income   1,657     1,312     3,124     1,854     1,943  
                       
Share data:                    
  Basic earnings per common share $ 0.19   $ 0.15   $ 0.36   $ 0.21   $ 0.22  
  Dividends declared per common share   0.050     0.050     0.050     0.050     0.050  
  Book value per common share   8.44     8.56     8.14     7.92     7.86  
                       
  Common shares outstanding, 30,000,000 authorized   8,560,956     8,580,956     8,771,302     8,728,802     8,728,802  
  Average common shares outstanding   8,562,055     8,684,272     8,756,981     8,728,802     8,728,802  
                       
Balance sheet – average balances:                    
  Loans receivable, net $ 680,259   $ 667,896   $ 673,313   $ 662,470   $ 653,181  
  PPP loans   330     394     453     500     595  
  Earning assets   955,812     1,024,733     1,032,794     980,094     945,121  
  Total assets   977,981     1,043,990     1,058,475     1,021,564     987,071  
  Deposits   652,911     704,643     716,450     684,328     668,397  
  Borrowings   124,505     140,000     140,000     139,940     122,278  
  Preferred equity (ECIP)   119,413     119,413     119,413     119,413     119,413  
  Shareholders’ common equity   72,325     69,889     68,947     68,088     65,676  
                       
Ratios:                    
  Return on average assets   0.68 %   0.50 %   1.17 %   0.73 %   0.80 %
  Return on average common equity   9.19 %   7.45 %   17.98 %   10.92 %   12.00 %
  Yield on earning assets   5.29 %   5.15 %   5.10 %   5.03 %   4.91 %
  Cost of interest-bearing deposits   2.73 %   2.91 %   2.86 %   2.61 %   2.25 %
  Cost of funds   2.25 %   2.41 %   2.35 %   2.18 %   1.94 %
  Net interest margin   3.46 %   3.16 %   3.15 %   3.19 %   3.28 %
  Efficiency ratio   69.90 %   81.03 %   76.15 %   68.10 %   64.99 %
                       
Asset quality:                    
  Net loan (charge-offs) recoveries to average loans   -0.002 %   -0.009 %   -0.085 %   0.004 %   -0.023 %
  Nonperforming loans to gross loans   1.011 %   1.056 %   1.057 %   1.131 %   0.021 %
  Nonperforming assets to total assets   0.712 %   0.732 %   0.677 %   0.725 %   0.014 %
  Allowance for credit losses to gross loans   0.94 %   0.92 %   0.93 %   0.92 %   0.95 %
                       

Bay Community Bancorp
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except per share data)
     
                   
Assets Mar. 31, 2024   Dec. 31, 2023   Mar. 31, 2023
  Cash and due from $ 89,302     $ 51,128     $ 77,823  
  Interest bearing deposits   9,478       9,926       11,166  
  Available-for-sale securities   137,097       185,739       195,872  
  Held-to-maturity securities   31,500       34,500       34,500  
  Allowance for credit losses, investments   (139 )     (96 )      
                   
  Commercial   66,992       62,628       129,800  
  PPP   330       379       529  
  CRE (Owner occupied)   144,406       144,468       109,128  
  CRE (Non-owner occupied)   341,764       336,361       337,891  
  Construction and land   82,640       76,904       50,793  
  Consumer and other   58,233       57,433       40,496  
  Unearned fees, net   (1,726 )     (1,755 )     (1,773 )
  Allowance for credit losses, loans   (6,523 )     (6,207 )     (6,479 )
  Net Loans   686,116       670,210       660,385  
                   
  Premises and equipment   3,458       1,145       993  
  Life insurance assets   8,058       8,001       7,837  
  Accrued interest receivable and other assets   18,252       14,472       20,565  
  Total assets $ 983,122     $ 975,025     $ 1,009,141  
                   
Liabilities and Shareholders’ Equity                
Liabilities                
  Deposits                
  Demand $ 204,805     $ 176,515     $ 196,131  
  Saving, NOW and money market   257,320       249,331       288,978  
  Time   209,047       208,020       175,276  
  Total deposits   671,172       633,866       660,385  
  FHLB Advances   110,000       140,000       149,500  
  Interest payable and other liabilities   6,495       8,297       11,376  
  Total liabilities   787,667       782,163       821,261  
                   
Shareholders’ Equity                
  Preferred stock, $1,000 par value   119,413       119,413       119,413  
  Common stock, without par value   54,616       54,518       51,264  
  Retained earnings   26,856       24,299       23,486  
  Accumulated other comprehensive income (expense)   (5,430 )     (5,368 )     (6,283 )
  Total shareholders’ equity   195,455       192,862       187,880  
  Total liabilities and shareholders’ equity $ 983,122     $ 975,025     $ 1,009,141  
                   

Bay Community Bancorp
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)
                     
    Three Months Ended  
Interest Income Mar. 31, 2024   Dec. 31, 2023   Mar. 31, 2023  
  Loans $ 9,978   $ 9,670     $ 9,051  
  Securities   1,759     2,014       1,894  
  Federal funds sold and deposits in banks   872     1,613       497  
  Total interest income   12,609     13,297       11,442  
Interest Expense                  
  Deposits   3,104     3,723       2,551  
  Borrowings   1,249     1,406       1,239  
  Total interest expense   4,353     5,129       3,790  
Net Interest Income   8,256     8,168       7,652  
Provision for Credit Losses   374     (106 )     39  
Net Interest Income After Provision for Loan Losses   7,882     8,274       7,613  
Noninterest income                  
  Service charges   45     36       60  
  Gains on sale of loans       75        
  Other   901     234       188  
  Total noninterest income   946     345       248  
Noninterest Expense                  
  Salaries and employee benefits   3,911     3,727       3,134  
  Net occupancy and equipment expense   524     572       311  
  Software and data processing fees   726     808       514  
  Professional fees   389     312       295  
  Marketing and business development   181     235       168  
  FDIC insurance premiums   138     149       75  
  Other   567     1,034       637  
  Total noninterest expense   6,436     6,837       5,134  
Income before Income Tax   2,392     1,782       2,727  
Provision for Income Taxes   735     470       784  
Net Income $ 1,657   $ 1,312     $ 1,943  
Basic Earnings Per Share $ 0.19   $ 0.15     $ 0.22  
                     

Bay Community Bancorp
Additional Financial Information
(Dollars in thousands except per share amounts)(Unaudited)
             
Asset Quality Ratios and Data:    
    Mar. 31, 2024   Dec. 31, 2023   Mar. 31, 2023
Nonaccrual loans (excluding restructured loans)   $ 7,000     $ 7,141     $ 140  
Nonaccrual restructured loans                  
Loans past due 90 days and still accruing                  
Total non-performing loans     7,000       7,141       140  
             
OREO and other non-performing assets                  
Total non-performing assets   $ 7,000     $ 7,141     $ 140  
             
Nonperforming loans to gross loans     1.011 %     1.056 %     0.021 %
Nonperforming assets to total assets     0.712 %     0.732 %     0.014 %
Allowance for loan losses to gross loans     0.94 %     0.92 %     0.97 %
             
Performing restructured loans (RC-C)   $ 120     $ 119     $ 122  
             
Net (charge-offs) recoveries quarter ending   $ (16 )   $ (60 )   $ (150 )
                         

 

Contact:
William S. Keller, CEO
510-433-5404
wkeller@BankCBB.com

 

Alex

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