Press Release

CBB Bancorp, Inc. Reports Full Year and Fourth Quarter 2018 Financial Results, Including Full Year Return on Assets of 1.50% and Return on Average Equity of 13.49%

Company Release - 1/28/2019 9:00 AM ET

LOS ANGELES--(BUSINESS WIRE)-- CBB Bancorp, Inc. ("CBB" or the "Company') (OTCQB: CBBI), the holding company of Commonwealth Business Bank (the "Bank"), today announced net income for the fourth quarter of 2018 of $3.7 million, or $0.35 per diluted share, an increase of 260.8% compared to $1.0 million or $0.10 per diluted share of net income in the same period last year.

Additionally, CBB reported net income for the year ended December 31, 2018 of $16.7 million or $1.60 per diluted share, an increase of 38.2% from the $12.1 million or $1.16 per diluted share of net income for the same period in 2017.

Fourth quarter 2018 net income generated returns on average assets (“ROA”) and returns on average equity (“ROE”) of 1.25% and 11.16% respectively, with both measures up from the same quarter in 2017. For the full-year 2018, ROA and ROE were 1.50% and 13.49%, respectively. The fourth quarter and full year financial performance was driven by loan portfolio growth and over $189.4 million in year-to-date SBA loan originations and the lower federal tax rate in 2018. The fourth quarter and year ended December 31 2017 included a write-down of the Company’s deferred tax asset of approximately $2.0 million related the enactment of the Tax Cuts and Jobs Act, which was signed into law on December 22, 2017. Excluding the impact of the write down of the Company’s net deferred tax asset, net income would have been $3.0 million, or $0.29 per diluted share, for the fourth quarter of 2017 and $14.1 million, or $1.35 per diluted share, for the 12 months ended December 31, 2017.

Joanne Kim, President and CEO, commented that “while we are pleased with our financial performance for 2018, we are starting to see the impact of higher interest rates being reflected in our funding costs, along with a slowdown in SBA loan originations and an increase in SBA loan prepayments. Additionally, the premiums we historically earned on SBA loan sales have declined from an average premium of over 10% for the quarter ended December 31, 2017 to less than 7% for the quarter ended December 31, 2018. Accordingly, we may begin to hold more SBA loan production on our balance sheet.”

Ms. Kim further commented, “With regard to our non-interest expenses, we added to staff and spent more in professional fees, primarily in the compliance area.”

Net Interest Income and Margin:

Net Interest Income

Net interest income for the quarter ended December 31, 2018 was $12.2 million, an increase of $2.0 million, or 20.0% over the same period last year. For the twelve months ended December 31, 2018, net interest income improved to $46.2 million, an increase of $7.1 million, or 18.3% over the corresponding period last year. The increase in net interest income was primarily driven by loan growth and higher SBA loan discount accretion combined with approximately 55% of our loan portfolio having adjustable rates. Average loans (including loans receivable and loans held for sale) outstanding increased from $805.6 million for the quarter ended December 31, 2017 to $922.0 million for the quarter ended December 31, 2018, an increase of $116.4 million or 14.5% Average loans outstanding increased from $790.6 million for the year ended December 31, 2017 to $882.2 million for the year ended December 31, 2018, an increase of $91.6 million or 11.6%.

Net Interest Margin

The net interest margin for the quarter ended December 31, 2018 of 4.32% compares favorably with the net interest margin of 4.06% in the same period last year, primarily due to loan yields rising faster than funding costs. For the year ended December 31, 2018, the margin was 4.30% compared to 4.17% for the corresponding period in 2017. The net interest margin for the full-year 2018 also benefited from an increase in SBA loan discount accretion of $1.68 million and the recovery of $535 thousand of non-accrual interest which resulted in an increase in the reported loan yield by 15 and 6 basis points, respectively. Loan discount accretion accelerates when the retained portion of an SBA loan is prepaid.

Partially offsetting the increase in our loan yields was an increase in our total funding costs, which increased to 1.96% for the quarter ended December 31, 2018 compared with 1.26% or 70 basis points higher from the quarter ended December 31, 2017. The increases were primarily in money market accounts and certificates of deposits.

Ms. Kim noted, “On the funding side, we are seeing heightened competition in deposit pricing. To address this, we are taking steps to broaden and diversify our funding sources including more emphasis on savings and money market accounts and less emphasis on short term certificates of deposit.”

Provision for Loan Losses:

The provision for loan losses for the quarter and year ended December 31, 2018 was $170 thousand and $1.37 million, respectively, compared with $0 and $514 thousand, respectively, for the corresponding periods last year. Nonperforming assets as of December 31, 2018 were $410 thousand and the coverage ratio of the allowance for loan losses to nonperforming assets was over 24 times, compared with year earlier levels of $2.5 million, or 3.5 times coverage, respectively. The provision for loan losses for the quarter and year ended December 31, 2018 reflect the Bank’s continued strong loan credit quality metrics and continued growth of the loan portfolio.

Noninterest Income:

Noninterest income for quarterly periods in 2018 were $1.3 million, $2.2 million, $3.5 million and $3.3 million (Q4, Q3, Q2 and Q1, respectively). For the year ended December 31, 2018, noninterest income was $10.3 million compared to $13.5 million in 2017, a decrease of $3.2 million or 23.7%. The declines in the quarterly and full year periods were primarily due to the following:

The net premium percentage realized on loans sold in the 2018 quarters was 6.28%, 8.10%, 9.52%, and 9.71% (Q4, Q3, Q2 and Q1, respectively) on sales volumes of $23.8 million, $34.7 million, $35.0 million and $34.9 million, respectively. The quarterly gain on the sale of the loans declined to $996 thousand for the quarter ended December 31, 2018, compared to $1.9 million, $2.5 million and $2.4 million, respectively, three previous quarters of 2018. The decline in the net premium percentage reflects the rising interest rate environment and increasing prepayment speeds on SBA loans.

As part of management’s periodic review of the value of its SBA servicing assets, management looked at various model inputs, including the discount rate, prepayment speeds and other market conditions such as the increases in the prime rates and the decline in the premium earned on SBA loan sales. As a result of this analysis, an impairment charge of $374 thousand was recorded in noninterest income in the quarter ended December 31, 2018 and $908 thousand for the year ended December 31, 2018.

Noninterest Expense:

Noninterest expense for the quarter ended December 31, 2018 was $8.4 million compared to $8.0 million in the corresponding period last year, an increase of $443 thousand or 5.6%. For the year ended December 31, 2018, noninterest expense was $32.0 million compared to $28.4 million for the corresponding period last year, an increase of $3.7 million or 12.9%. The primary contributors to the increased noninterest expenses were a $1.76 million increase in salaries and employee benefits and a $1.13 million increase in professional expense. The increase in salaries and employee benefits resulted from staffing additions related to compliance and corporate overhead positions, along with staff additions and facilities costs associated with two new branch offices and one loan production department.

Staffing and Salaries:

Salary expense remained relatively flat at $5.0, $5.0 and $4.9 million for the quarters ended December 31, 2018, September 30, 2018 and December 31, 2017, respectively. Salary expense for the years ended December 31, 2018 and 2017 was $19.6 million and $17.8 million. The year over year increase primarily relates to an increase in FTE from 161 at December 31, 2017 to 187 FTE at December 31, 2018. The increase in FTE primarily relates to the opening of a new commercial lending department office, new branches and additional staff to comply with regulatory requirements.

Occupancy and Equipment:

Occupancy and equipment expenses for the quarter ended December 31, 2018 were $886 thousand, compared to $859 thousand in the corresponding period last year. For the year ended December 31, 2018, occupancy and equipment expenses were $3.45 million compared to $2.90 million for the corresponding period last year, an increase of $544 thousand or 18.8%. This increase is primarily due to the 2017 openings of the Olympic branch in Los Angeles, California and the Carrolton branch in Dallas, Texas.

Professional Fees:

Professional fees for the quarter ended December 31, 2018 were $1.20 million, compared to $537 thousand in the corresponding period last year. For the twelve months ended December 31, 2018, professional fees were $2.59 million compared to $1.46 million for the corresponding period last year, an increase of $1.13 million or 77.4%. This increase is due to regulatory compliance requirements and costs associated with enhancing internal controls over financial reporting.

Income Taxes:

The Company’s effective tax rate for the quarter ended December 31, 2018 was approximately 25.9%, compared with 80.3% in the quarter ended December 31, 2017. Comparisons of tax rates between 2018 and 2017 are impacted by the Tax Cuts and Jobs Act of December 22, 2017 in which the federal corporate tax rate decreased to 21.0% from 35.0% for 2018. Income tax expense for quarter ended December 31, 2017 included an additional charge of $2.0 million (41.2% plus an additional 39.1% for a total of 80.3%) relating to the write-down of deferred tax assets due to the reduction in the federal corporate rate. The effective income tax rate for the year ended December 31, 2018 was 27.9% compared to 49.1% (40.7% plus an additional 8.4%) for the same period last year for the same reasons discussed above.

Balance Sheet:

Investment Securities:

Investment securities were $104.4 million at December 31, 2018, down $19.2 million since December 31, 2017 due to principal paydowns that were not offset by portfolio additions.

Loans Receivable:

Portfolio loans at December 31, 2018 were $875.8 million, an increase of $88.4 million, or 11.2% since December 31, 2017. This increase is net of loan portfolio risk reduction activities, which included the $28.4 million of non-owner occupied commercial real estate loan participations sold to other institutions.

Ms. Kim further commented that “Organic portfolio loan growth is expected to slow down in 2019, due to the combined effects of rising interest rates, economic uncertainties and prepayments as property owners take advantage of high real estate values and aggressive pricing and terms from other financial institutions.”

Allowance for Loan Losses and Asset Quality:

The allowance for loan losses at December 31, 2018 was $10.023 million or 1.14% of portfolio loans compared with $8.653 million or 1.10% of portfolio loans as of December 31, 2017. Non-performing loans and other real estate owned REO as of December 31, 2018 was $410 thousand, down from $2.5 million at December 31, 2017. See Table 10 for additional details and trends.

SBA Loans Held for Sale:

SBA loans held for sale at December 31, 2018 of $45.7 million are up $7.7 million from the previous quarter end and up $17.3 million from December 31, 2017. Management has decided, at least in the near term, to hold more of its SBA loan production on the balance sheet due to the expected gain on sale premium being less than 7.0%. These loans are classified as held for sale on the balance sheet.

SBA loan production for quarter ended December 31, 2018 2018 was $50.1 million compared to $54.5 million in the same quarter last year. SBA loan production was $189.4 million for the twelve months ended December 31, 2018 compared with $200.6 million in the same period last year. See the Table 7 for additional SBA loan origination and sale data. No new SBA preferred lender approvals have been received since the start of the US Government shutdown which, if it continues, will significantly reduce SBA originations in the first quarter of 2019.

Deposits:

Total deposits grew to $1.01 billion at December 31, 2018, an increase of $112.9 million or 12.6%, since December 31, 2017. Of this increase, $100.4 million or 19.8% of the deposit growth was in certificates of deposit, as a result of several marketing campaigns in 2018 combined with the 2017 opening of the Olympic, LA Koreatown and Carrollton, Dallas metro area branches. As noted above, management is taking steps to broaden and diversify its funding sources including more emphasis on savings and money market accounts and less emphasis on short term certificates of deposit. The savings product is now more competitive as the rate has been increased to 1.70% as of December 31, 2018. Additionally, the Bank added additional money market tiers and now offers up to 1.80%% on balances over $1.0 million.

The Bank had $20.0 million and $71.5 million of wholesale certificates of deposits with the State of California at December 31, 2018 and 2017, respectively, which require a pledge of collateral as security. The Bank utilizes the Federal Home Loan Bank (“FHLB”) stand-by letter of credit program to satisfy this requirement. The decline in State of California balances year over year was by design and is part the deposit strategy discussed above.

Borrowings:

Borrowings at December 31, 2018 consisted of $10.0 million of FHLB (San Francisco) term advances due in 2020, down $50 million from December 31, 2017. Borrowing capacity at the FHLB was $359 million (with $326 million being available or 91% availability) at December 31, 2018 compared to $232 million (with $94 million being available or 41% availability) as of December 31, 2017. The increase in capacity of $127 million and availability of $232 million represents lower overnight borrowings, lower usage under the stand-by letter requirement (due to lower State of California deposits) and from additional loan collateral pledged to the FHLB.

Capital:

Stockholder’s equity at December 31, 2018 was $131.9 million compared to $115.2 million at December 31, 2017. This represents an increase of $16.7 million or 14.5% over the prior period. Book value per share at quarter end was $13.06 compared with $11.48 at December 31, 2017, an increase of $1.58 per share or 13.7%. Capital growth during the year primarily consisted of net income of $16.7 million, partially offset by an increase in unrealized losses on investment securities of $762 thousand.

All regulatory capital ratios increased at December 31, 2018 from their levels at December 31, 2017. The change in the ratios is due to net capital growth, substantially from retained earnings, growing faster than loan balances. Additionally, all regulatory capital levels and ratios exceed the minimum required to be considered “Well Capitalized” as defined for bank regulatory purposes and in compliance with the fully phased-in Basel III requirements, which go into effect on January 1, 2019, as shown on Table 11 in this press release.

About CBB Bancorp, Inc.:

CBB Bancorp, Inc. is the holding company of Commonwealth Business Bank, a full-service commercial bank which specializes in small- to medium-sized businesses and does business as “CBB Bank.” The Bank has eight full service branches in Los Angeles, Orange, and Dallas Counties; two SBA regional offices in Los Angeles and Dallas Counties; and six loan production offices in Texas, Georgia, Colorado, Utah and Washington.

For additional information, please go to www.cbb-bank.com.

FORWARD-LOOKING STATEMENTS

This news release contains a number of forward-looking statements. These statements may be identified by use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar terms and phrases, including references to assumptions. Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management’s experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company’s control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. You should not place undue reliance on such statements. Factors that could affect our results include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Company and the Bank; unanticipated or significant increases in loan losses; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company’s financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive than the Company anticipates; there may be failures or breaches of information technology security systems; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates.

Schedules and Financial Data: All tables and data to follow;

STATEMENT OF INCOME AND PERFORMANCE HIGHLIGHT (Unaudited) - Table 1
(Dollars in thousands, except per share amounts)
                       
Three Months Ended Twelve Months Ended
December 31, September 30, $ % December 31, $ % December 31, December 31, $ %
2018 2018 Change Change 2017 Change Change 2018 2017 Change Change
 
Interest income $ 16,256 $ 15,661 $ 595 3.8 % $ 12,471 $ 3,785 30.4 % $ 59,347 $ 46,703 $ 12,644 27.1 %
Interest expense   4,035     3,678     357   9.7 %   2,287     1,748   76.4 %   13,188     7,680     5,508   71.7 %
Net interest income 12,221 11,983 238 2.0 % 10,184 2,037 20.0 % 46,159 39,023 7,136 18.3 %
 
Provision for loan losses   170     400     (230 ) (57.5 %)   -     170   100.0 %   1,370     514     856   166.5 %
Net interest income after provision for loan losses 12,051 11,583 468 4.0 % 10,184 1,867 18.3 % 44,789 38,509 6,280 16.3 %
 
Gain on sale of loans 996 1,937 (941 ) (48.6 %) 1,859 (863 ) (46.4 %) 7,847 9,321 (1,474 ) (15.8 %)
Gain (loss) on sale of OREO - (43 ) 43 100.0 % - - - (43 ) 103 (146 ) (141.7 %)
SBA servicing fee income, net 179 304 (125 ) (41.1 %) 514 (335 ) (65.2 %) 1,286 1,872 (586 ) (31.3 %)
SBA servicing right impairment (374 ) (534 ) 160 (30.0 %) - (374 ) (100.0 %) (908 ) - (908 ) (100.0 %)
Service charges and other income   484     573     (89 ) (15.5 %)   543     (59 ) (10.9 %)   2,156     2,248     (92 ) (4.1 %)
Noninterest income 1,285 2,237 (952 ) (42.6 %) 2,916 (1,631 ) (55.9 %) 10,338 13,544 (3,206 ) (23.7 %)
 
Salaries and employee benefits 4,988 4,956 32 0.6 % 4,941 47 1.0 % 19,605 17,846 1,759 9.9 %
Occupancy and equipment 886 886 - - 859 27 3.1 % 3,445 2,901 544 18.8 %
Marketing expense 433 342 91 26.6 % 294 139 47.3 % 995 888 107 12.0 %
Professional expense 1,195 537 658 122.5 % 551 644 116.9 % 2,593 1,462 1,131 77.4 %
Other expenses   901     1,302     (401 ) (30.8 %)   1,315     (414 ) (31.5 %)   5,398     5,267     131   2.5 %
Noninterest expense 8,403 8,023 380 4.7 % 7,960 443 5.6 % 32,036 28,364 3,672 12.9 %
 
Income before income tax expense 4,933 5,797 (864 ) (14.9 %) 5,140 (207 ) (4.0 %) 23,091 23,689 (598 ) (2.5 %)
 
Income tax expense 1,278 1,426 (148 ) (10.4 %) 4,127 (2,849 ) (69.0 %) 6,433 11,639 (5,206 ) (44.7 %)
                     
Net income $ 3,655   $ 4,371   $ (716 ) (16.4 %) $ 1,013   $ 2,642   260.8 % $ 16,658   $ 12,050   $ 4,608   38.2 %
 
Effective tax rate 25.9 % 24.6 % 1.3 % 5.3 % 80.3 %

(54.4

%)

(67.7

%)

27.9 % 49.1 % (21.3 %) (43.3 %)
 
Outstanding number of shares ¹ 10,102,161 10,091,294 10,867 0.1 % 10,033,110 69,051 0.7 % 10,102,161 10,033,110 69,051 0.7 %
 
 
Basic EPS ¹ $ 0.36 $ 0.44 $ (0.08 ) (18.2 %) $ 0.10 $ 0.26 260.0 % $ 1.66 $ 1.20 $ 0.46 38.3 %
Diluted EPS¹ $ 0.35 $ 0.42 $ (0.07 ) (16.7 %) $ 0.10 $ 0.25 250.0 % $ 1.60 $ 1.16 $ 0.44 37.9 %
 
Return on average assets 1.25 % 1.51 % (0.3 %) (17.2 %) 0.39 % 0.86 % 220.5 % 1.50 % 1.23 % 0.3 % 22.0 %
Return on average equity 11.16 % 13.77 % (2.6 %) (19.0 %) 3.46 % 7.70 % 222.5 % 13.49 % 10.92 % 2.6 % 23.5 %
 
Efficiency ratio² 62.22 % 56.42 % 5.8 % 10.3 % 60.76 % 1.5 % 2.4 % 56.70 % 53.96 % 2.7 % 5.1 %

Yield on interest-earning assets³

5.73 % 5.60 % 0.1 % 2.3 % 4.96 % 0.8 % 15.5 % 5.53 % 4.98 % 0.6 % 11.0 %
Cost of funds 1.57 % 1.44 % 0.1 % 9.0 % 0.99 % 0.6 % 58.2 % 1.35 % 0.89 % 0.5 % 50.7 %

Net interest margin³

4.32 % 4.29 % 0.0 % 0.6 % 4.06 % 0.3 % 6.4 % 4.30 % 4.17 % 0.1 % 3.2 %

 

¹   Restated for 10% stock dividend declared on 10/02/18
² Represents the ratio of noninterest expense less other real estate owned operations to the sum of net interest income before provision for credit losses and total noninterest income, less gains/(loss) on sale of securities, other-than-temporary impairment recovery/(loss) on investment securities and gain/(loss) from other real estate owned.
³ Amounts include tax-equivalent adjustments of $192 thousand, reflecting tax rate of 21% for 2018 and $330 thousand, reflecting tax rate of 35% for 2017
 
 
BALANCE SHEET, CAPITAL AND OTHER DATA (Unaudited) - Table 2
(Dollars in thousands)
               
December 31, September 30, $ % December 31, $ %
2018 2018 Change Change 2017 Change Change
ASSETS
Cash and due from banks $ 11,029 $ 12,228 $ (1,199 ) (9.8 %) $ 9,353 $ 1,676 17.9 %
Interest-earning deposits at the FRB and other banks 97,211 119,246 (22,035 ) (18.5 %) 103,391 (6,180 ) (6.0 %)
Investment securities¹ 104,431 107,406 (2,975 ) (2.8 %) 123,657 (19,226 ) (15.5 %)
Loans held-for-sale, at the lower of cost or fair value 45,665 38,007 7,658 20.1 % 28,346 17,319 61.1 %
 
Loans receivable 875,797 896,580 (20,783 ) (2.3 %) 787,399 88,398 11.2 %
Allowance for loan losses   (10,023 )   (9,814 )   (209 ) 2.1 %   (8,653 )   (1,370 ) 15.8 %
Loans receivable, net 865,774 886,766 (20,992 ) (2.4 %) 778,746 87,028 11.2 %
 
OREO 25 25 - - - 25 100.0 %
Restricted stock investments 7,879 6,879 1,000 14.5 % 6,261 1,618 25.8 %
Servicing assets 10,541 11,403 (862 ) (7.6 %) 11,377 (836 ) (7.3 %)
Other assets   18,519     22,346     (3,827 ) (17.1 %)   17,723     796   4.5 %
Total assets $ 1,161,074   $ 1,204,306   $ (43,232 ) (3.6 %) $ 1,078,854   $ 82,220   7.6 %
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing $ 206,764 $ 222,018 $ (15,254 ) (6.9 %) $ 203,641 $ 3,123 1.5 %
Interest-bearing   801,830     835,110     (33,280 ) (4.0 %)   692,080     109,750   15.9 %
Total deposits 1,008,594 1,057,128 (48,534 ) (4.6 %) 895,721 112,873 12.6 %
 
FHLB advances 10,000 10,000 - - 60,000 (50,000 ) (83.3 %)
Other liabilities   10,567     9,585     982   10.2 %   7,955     2,612   32.8 %
Total liabilities   1,029,161     1,076,713     (47,552 ) (4.4 %)   963,676     65,485   6.8 %
 
Stockholders' Equity   131,913     127,593     4,320   3.4 %   115,178     16,735   14.5 %
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,161,074   $ 1,204,306   $ (43,232 ) (3.6 %) $ 1,078,854   $ 82,220   7.6 %
 
CAPITAL RATIOS
Leverage ratio
Company 11.39 % 11.19 % 0.2 % 1.8 % 11.06 % 0.3 % 3.0 %
Bank 11.36 % 11.14 % 0.2 % 2.0 % 11.02 % 0.3 % 3.1 %
Common equity tier 1 risk-based capital ratio
Company 14.27 % 13.47 % 0.8 % 5.9 % 13.63 % 0.6 % 4.7 %
Bank 14.24 % 13.42 % 0.8 % 6.1 % 13.58 % 0.7 % 4.9 %
Tier 1 risk-based capital ratio
Company 14.27 % 13.47 % 0.8 % 5.9 % 13.63 % 0.6 % 4.7 %
Bank 14.24 % 13.42 % 0.8 % 6.1 % 13.58 % 0.7 % 4.9 %
Total risk-based capital ratio
Company 15.42 % 14.61 % 0.8 % 5.5 % 14.78 % 0.6 % 4.3 %
Bank 15.38 % 14.56 % 0.8 % 5.6 % 14.74 % 0.6 % 4.3 %
Book value per share² $ 13.06 $ 12.64 $ 0.41 3.3 % $ 11.48 $ 1.58 13.7 %
Loan-to-Deposit (LTD) ratio 86.8 % 84.8 % 2.0 % 2.4 % 87.9 % (1.1 %) (1.2 %)
Nonperforming assets 410 464 (54 ) (11.6 %) 2,467 $ (2,057 ) (83.4 %)
Nonperforming assets as a % of loans receivable 0.04 % 0.05 % (0.0 %) (20.0 %) 0.31 % (0.3 %) (87.1 %)
ALLL as a % of loans receivable 1.14 % 1.09 % 0.1 % 4.6 % 1.10 % 0.0 % 3.6 %
 
¹   Includes AFS and HTM
² Restated for 10% stock dividend declared on 10/02/18
 
 
FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3
(Dollars in thousands, except per share amounts)
           
Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2018 2018 2018 2018 2017
 
Interest income $ 16,256 $ 15,661 $ 14,605 $ 12,825 $ 12,471
Interest expense   4,035     3,678     3,005     2,470     2,287  
Net interest income 12,221 11,983 11,600 10,355 10,184
 
Provision for loan losses   170     400     800     -     -  
Net interest income after provision for loan losses 12,051 11,583 10,800 10,355 10,184
 
Gain on sale of loans 996 1,937 2,478 2,436 1,859
Gain (loss) on sale of OREO - (43 ) - - -
SBA servicing fee income, net 179 304 442 361 514
SBA servicing right impairment (374 ) (534 ) - - -
Service charges and other income   484     573     600     499     543  
Noninterest income 1,285 2,237 3,520 3,296 2,916
 
Salaries and employee benefits 4,988 4,956 4,923 4,738 4,941
Occupancy and equipment 886 886 834 839 859
Marketing expense 433 342 322 380 294
Professional expense 1,195 537 359 502 551
Other expenses   901     1,302     1,515     1,198     1,315  
Noninterest expense 8,403 8,023 7,953 7,657 7,960
 
Income before income tax expense 4,933 5,797 6,367 5,994 5,140
 
Income tax expense 1,278 1,426 1,889 1,840 4,127
         
Net income $ 3,655   $ 4,371   $ 4,478   $ 4,154   $ 1,013  
 
Effective tax rate 25.9 % 24.6 % 29.7 % 30.7 % 80.3 %
 
Outstanding number of shares ¹ 10,102,161 10,091,294 10,037,510 10,033,110 10,033,110
 
Weighted average shares for basic EPS¹ 10,098,618 10,038,095 10,035,545 10,033,110 10,033,110
Weighted average shares for diluted EPS¹ 10,390,326 10,389,263 10,426,907 10,464,580 10,450,257
 
Basic EPS ¹ $ 0.36 $ 0.44 $ 0.45 $ 0.41 $ 0.10
Diluted EPS¹ $ 0.35 $ 0.42 $ 0.43 $ 0.40 $ 0.10
 

¹

  Restated for 10% stock dividend declared on 10/02/18
 
 
QUARTERLY SALARIES BENEFIT METRICS (Unaudited) - Table 4
(Dollars in thousands)
         
At or for the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2018 2018 2018 2018 2017
 
FTE at the end of period 187 175 173 164 161
Average FTE during the period 185 177 172 164 162
Salaries and benefits/average FTE¹ $ 107 $ 111 $ 115 $ 117 $ 121
Salaries and benefits/average assets¹ 1.71 % 1.71 % 1.82 % 1.83 % 1.89 %
Noninterest expense/average assets¹ 2.87 % 2.77 % 2.94 % 2.96 % 3.04 %
 

¹

  Annualized
 
 
FIVE-QUARTER BALANCE SHEET (Unaudited) - Table 5
(Dollars in thousands)
           
December 31, September 30, June 30, March 31, December 31,
2018 2018 2018 2018 2017
ASSETS
Cash and due from banks $ 11,029 $ 12,228 $ 13,349 $ 9,868 $ 9,353
Interest-earning deposits at the FRB and other banks 97,211 119,246 77,018 80,468 103,391
Investment securities¹ 104,431 107,406 112,022 117,634 123,657
Loans held-for-sale, at the lower of cost or fair value 45,665 38,007 39,343 23,608 28,346
 
Loans receivable 875,797 896,580 867,280 809,281 787,399
Allowance for loan losses   (10,023 )   (9,814 )   (9,377 )   (8,556 )   (8,653 )
Loans receivable, net 865,774 886,766 857,903 800,725 778,746
1 Annualized
OREO 25 25 - - -
Restricted stock investments 7,879 6,879 6,879 6,261 6,261
Servicing assets 10,541 11,403 11,869 11,610 11,377
Other assets   18,519     22,346     18,955     20,196     17,723  
Total assets $ 1,161,074   $ 1,204,306   $ 1,137,338   $ 1,070,370   $ 1,078,854  
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing $ 206,764 $ 222,018 $ 197,500 $ 188,328 $ 203,641
Interest-bearing   801,830     835,110     788,357     742,905     692,080  
Total deposits 1,008,594 1,057,128 985,857 931,233 895,721
 
FHLB advances 10,000 10,000 20,000 10,000 60,000
Other liabilities   10,567     9,585     8,490     10,784     7,955  
Total liabilities   1,029,161     1,076,713     1,014,347     952,017     963,676  
 
Stockholders' Equity   131,913     127,593     122,991     118,353     115,178  
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,161,074   $ 1,204,306   $ 1,137,338   $ 1,070,370   $ 1,078,854  
 
¹   Includes AFS and HTM
 
 
FIVE-QUARTER LOANS RECEIVABLE COMPONENTS (Unaudited) - Table 6
(Dollars in thousands)
                   
December 31, 2018 September 30, 2018 June 30, 2018 March 31, 2018 December 31, 2017
Balance % Balance % Balance % Balance % Balance %
 
Construction $ 12,327 1.4 % $ 13,168 1.5 % $ 10,508 1.2 % $ 9,032 1.1 % $ 12,575 1.6 %
Commercial real estate 703,088 80.3 % 728,322 81.2 % 706,360 81.4 % 668,649 82.6 % 645,211 81.9 %
Commercial and industrial 152,381 17.4 % 150,892 16.8 % 146,654 16.9 % 126,057 15.6 % 122,917 15.6 %
Consumer   5,548 0.6 %   2,362 0.3 %   1,907 0.2 %   3,952 0.5 %   4,928 0.6 %
Gross loans 873,344 99.7 % 894,744 99.8 % 865,429 99.8 % 807,690 99.8 % 785,631 99.8 %
 
Net deferred loan fees/costs   2,453 0.3 %   1,836 0.2 %   1,851 0.2 %   1,591 0.2 %   1,768 0.2 %
Loans receivable $ 875,797 100.0 % $ 896,580 100.0 % $ 867,280 100.0 % $ 809,281 100.0 % $ 787,399 100.0 %
 
Loans held-for-sale $ 45,665 $ 38,007 $ 39,343 $ 23,608 $ 28,346
Loans receivable, including loans held-for-sale $ 921,462 $ 934,587