OAKLAND, Calif., Oct. 28, 2022 (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 certified Community Development Financial Institution (CDFI) with full-service offices in Oakland, Danville and San Mateo, today reported earnings increased 41.1% to a record $2.21 million for the third quarter of 2022, compared to $1.57 million for the third quarter of 2021. Strong core loan growth, combined with the recent $119.4 million investment from the US Treasury Department contributed to profitability for the third quarter of 2022. All financial results are unaudited.
The Companys Board of Directors declared a quarterly cash dividend of $0.045 per share. The dividend is payable on December 5, 2022 to shareholders of record on November 28, 2022. This marks the seventh consecutive quarterly cash dividend since the Company initiated quarterly cash dividends on April 30, 2021.
The third quarter began to reflect the earnings potential of Junes $119.4 million preferred capital raise. That capital immediately supported $60.8 million of loan growth and $95.6 million of investment security purchases, mostly short term Treasuries. Those earning assets, combined with the Federal Reserves rate increases, resulted in a quarter over quarter increase in total interest income of $1.4 million, or 18 percent, stated William S. Keller, President and CEO. While loan closings moderated in the third quarter, we have a robust pipeline and expect to see loan growth return in the coming quarter. True to our mission and purpose, many of these loans are located in targeted communities, and represent the kind of market-based investment opportunities that the US Treasury envisioned enabling when it developed the preferred stock investment program.
Our purpose driven, relationship banking model also continues to resonate with businesses and organizations who maintain deposits with us. Strong third quarter deposit growth, especially in Money Markets pushed Total Assets above $1 billion for the first time. In addition to a $136.6 million increase in money market accounts, we also continued to add duration to our deposit base by increasing Time Deposits by $17.9 million. We have now increased Time Deposits by $71.1 million in the last six months, said Keller. While we expect continued core deposit growth, it should be noted that historically the second and third quarters have represented seasonal highs for deposits, and we would not be surprised by some end of year run off. Further, we are not immune from deposit rate pressure and we are seeing increasing migration from non-interest bearing to interest bearing accounts.
Higher than typical liquidity levels, and the resulting effect on the mix of our earning assets, put pressure our net interest margin during the quarter. As we continue to deploy this new capital into loan production and other higher yielding assets, we should better recognize the full benefit of the Federal Reserve interest rate increases, and expect to see our net interest margin improve in future quarters, said Keller. The Companys net interest margin was 3.48% in the third quarter of 2022, compared to 3.63% in the preceding quarter, and 3.39% in the third quarter a year ago. PPP loan fees and interest added 2 basis points to the net interest margin for the third quarter of 2022, compared to 14 basis points in the preceding quarter, and 3 basis points in the third quarter a year ago.
Overall credit quality remains very strong and we believe that we have adequate provisions in place to navigate the uncertain economic environment and our coming conversion to the CECL loan loss methodology, said Mukhtar Ali, Chief Credit Officer. As a result, we did not record a provision for loan losses for the quarter ended September 30, 2022. Our loan loss reserves now represent 1.17% of total non-guaranteed loans, compared to 1.37% a year earlier. The Bank had $538,000 of loans past due 30 days or more at September 30, 2022.
Third Quarter 2022 Financial Highlights (at or for the period ended September 30, 2022)
On June 7, 2022, the Company announced that it had completed a $119.4 million investment from the US Treasury Department. Treasurys 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. On October 18, 2021 Treasury announced that 204 credit unions, banks, and savings and loan holding companies applied for total investments of over $12.88 billion under the ECIP Program and that the demand exceeded the amount available by $4.13 billion.
On December 14, 2021, the US Treasury announced it would invest $8.7 billion in up to 186 Minority Depository Institutions (MDI) and CDFI banks and credit unions to accelerate the recovery of small businesses, minority-owned businesses, and consumers, especially those in low-income and underserved communities that may have been disproportionately impacted by the economic effects of the COVID-19 pandemic. The Bank previously announced that it was one of only five banks and six credit unions in California to be approved by the US Treasury for an ECIP investment.
While the ECIP capital investment was an extraordinary event brought on by the Federal response to the pandemic, the Bank has maintained a long and important relationship with the US Treasurys CDFI Fund since inception. Since our founding we have received twenty-one Bank Enterprise Awards and a Rapid Response Grant totaling over $10.6 million in support of our lending activities in low to moderate income communities, said Keller. In addition, in September we submitted our application to participate in the CDFI Funds $1.75 billion Equitable Recovery Program and we are excited by the opportunity this program offers to the communities we serve.
For additional information on the US Treasurys 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 Funds Rapid Response Program please visit
https://www.cdfifund.gov/programs-training/programs/rrp
For additional information on the CDFI Funds Equitable Recovery Program please visit
https://www.cdfifund.gov/programs-training/programs/erp
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 Californias 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.
FINANCIAL TABLES TO FOLLOW:
BAY COMMUNITY BANCORP | ||||||||||||||||||||
UNAUDITED SUMMARY FINANCIAL STATEMENTS | ||||||||||||||||||||
(Dollars in thousands, except earnings per share) | ||||||||||||||||||||
INCOME STATEMENT | Three Months Ended | |||||||||||||||||||
2022 | 2022 | Qtr over Qtr | 2021 | Qtr over Yr Ago Qtr | ||||||||||||||||
Sep 30 | Jun 30 | % Change | Sep 30 | % Change | ||||||||||||||||
Interest income | $ | 9,151 | $ | 7,756 | 18.0 | % | $ | 6,677 | 37.1 | % | ||||||||||
Interest expense | 1,377 | 544 | 153.1 | % | 432 | 218.8 | % | |||||||||||||
Net interest income before provision | 7,774 | 7,212 | 7.8 | % | 6,245 | 24.5 | % | |||||||||||||
Provision for Loan Losses | – | 400 | -100.0 | % | 150 | -100.0 | % | |||||||||||||
Net interest income after provision | 7,774 | 6,812 | 14.1 | % | 6,095 | 27.5 | % | |||||||||||||
Non-interest income | 205 | 376 | -45.5 | % | 173 | 18.5 | % | |||||||||||||
Non-interest expense | 4,835 | 4,583 | 5.5 | % | 4,045 | 19.5 | % | |||||||||||||
Income before provision for income taxes | 3,144 | 2,605 | 20.7 | % | 2,223 | 41.4 | % | |||||||||||||
Provision for income taxes | 930 | 769 | 20.9 | % | 654 | 42.2 | % | |||||||||||||
Net income | $ | 2,214 | $ | 1,836 | 20.6 | % | $ | 1,569 | 41.1 | % | ||||||||||
Basic earnings per common share | $ | 0.25 | $ | 0.21 | 23.2 | % | $ | 0.18 | 43.2 | % | ||||||||||
Weighted average common shares outstanding | 8,685,400 | 8,871,052 | 8,811,945 | |||||||||||||||||
Return on average assets | 0.96 | % | 0.89 | % | 0.82 | % | ||||||||||||||
Return on average common equity | 13.37 | % | 11.02 | % | 9.39 | % | ||||||||||||||
BAY COMMUNITY BANCORP | ||||||||||||||||||||
UNAUDITED SUMMARY FINANCIAL STATEMENTS | ||||||||||||||||||||
(Dollars in thousands, except book value per share) | ||||||||||||||||||||
BALANCE SHEET | At Period End | |||||||||||||||||||
2022 | 2021 | Qtr over Qtr | 2021 | Year over Year | ||||||||||||||||
ASSETS | Sep 30 | Jun 30 | % Change | Sep 30 | % Change | |||||||||||||||
Total cash and investments | 396,257 | 278,106 | 42.5 | % | 217,429 | 82.2 | % | |||||||||||||
Loans, net of unearned income | 597,790 | 590,368 | 1.3 | % | 518,702 | 15.2 | % | |||||||||||||
Loan loss reserve | (6,911 | ) | (6,902 | ) | 0.1 | % | (6,081 | ) | 13.6 | % | ||||||||||
Other assets | 27,114 | 24,824 | 9.2 | % | 19,669 | 37.9 | % | |||||||||||||
Total Assets | $ | 1,014,250 | $ | 886,396 | 14.4 | % | $ | 749,719 | 35.3 | % | ||||||||||
LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||||||||||||||
Non-interest bearing demand deposits | 228,651 | 238,608 | -4.2 | % | 255,813 | -10.6 | % | |||||||||||||
Interest bearing deposits | 574,930 | 433,921 | 32.5 | % | 398,632 | 44.2 | % | |||||||||||||
Total deposits | 803,581 | 672,529 | 19.5 | % | 654,445 | 22.8 | % | |||||||||||||
Total borrowings and other liabilities | 28,785 | 27,887 | 3.2 | % | 28,422 | 1.3 | % | |||||||||||||
Total Liabilities | $ | 832,366 | $ | 700,416 | 18.8 | % | $ | 682,867 | 21.9 | % | ||||||||||
Preferred equity | 119,413 | 119,413 | 0.0 | % | – | n/a% | ||||||||||||||
Common equity | 62,471 | 66,567 | -6.2 | % | 66,852 | -6.6 | % | |||||||||||||
Total Equity | $ | 181,884 | $ | 185,980 | -2.2 | % | $ | 66,852 | 172.1 | % | ||||||||||
Total Liabilities and Total Equity | $ | 1,014,250 | $ | 886,396 | 14.4 | % | $ | 749,719 | 35.3 | % | ||||||||||
Book value per common share | $ | 7.27 | $ | 7.50 | -3.1 | % | $ | 7.54 | -3.5 | % | ||||||||||
SELECTED FINANCIAL DATA | |||||||||
(In thousands of dollars, except for ratios and per share amounts) | |||||||||
Unaudited | |||||||||
At or for the Three Months Ended | |||||||||
2022 | 2022 | 2021 | |||||||
Sep 30 | Jun 30 | Sep 30 | |||||||
ASSET QUALITY RATIOS | |||||||||
Net (charge-offs) recoveries | 8 | 2 | – | ||||||
Net (charge-offs) recoveries to average loans | 0.001 | % | 0.000 | % | 0.000 | % | |||
Non-performing loans as a % of loans | 0.000 | % | 0.000 | % | 0.006 | % | |||
Non-performing assets as a % of assets | 0.000 | % | 0.000 | % | 0.004 | % | |||
Allowance for loan losses as a % of total loans | 1.16 | % | 1.17 | % | 1.17 | % | |||
Allowance for loan losses as a % of total unguaranteed loans | 1.17 | % | 1.19 | % | 1.37 | % | |||
Allowance for loan losses as a % of non-performing loans | n/a | n/a | 19508 | % | |||||
AVERAGE BALANCE SHEET DATA | |||||||||
Average assets | 910,388 | 825,630 | 758,371 | ||||||
Average total loans | 596,001 | 545,985 | 520,637 | ||||||
Average total deposits | 697,174 | 695,944 | 660,673 | ||||||
Average shareholders’ common equity | 65,688 | 66,833 | 66,315 | ||||||
FINANCIAL RATIOSSTATISTICS | |||||||||
Return on average assets | 0.96 | % | 0.89 | % | 0.82 | % | |||
Return on average common equity | 13.37 | % | 11.02 | % | 9.39 | % | |||
Net interest margin | 3.48 | % | 3.63 | % | 3.39 | % | |||
Efficiency ratio | 60.60 | % | 60.40 | % | 63.03 | % | |||
Contacts:
William S. Keller, President & CEO
510-433-5404
wkeller@BankCBB.com
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