SYS-CON MEDIA Authors: Yeshim Deniz, Doug Masi, Mat Mathews, PR.com Newswire, David Smith

News Feed Item

Commonwealth Business Bank Reports Record Earnings, 22% Loan Growth in 2013, and Announces a 10% Stock Dividend

LOS ANGELES, CA -- (Marketwired) -- 01/31/14 -- Commonwealth Business Bank ("CBB") (OTCQB: CWBB) announced today record net income available to common shareholders for the full year 2013 totaling $9.3 million, or $2.67 per diluted share, compared to $7.5 million, or $2.32 per diluted share, for the full year 2012. For the fourth quarter 2013, net income available to common shareholders was $2.3 million, or $0.62 per diluted share, compared to $2.4 million, or $0.65 per diluted share, for the third quarter 2013, and $2.2 million, or $0.69 per diluted share, for the fourth quarter 2012.

"The record earnings achieved in 2013 reflect our solid performance," said Joanne Kim, President and CEO. "We believe our continuing focus on identifying new lending and deposit opportunities and providing efficient and personal services to customers have contributed to our strong performance. We will continue to grow the Bank by exploring branch and expansion opportunities in strategic key markets, assemble a team of seasoned commercial bankers, and support our activities with efficient operations and prudent risk management."

STOCK DIVIDEND:
In light of the Bank's strong performance and earnings growth in 2012 and 2013, and in recognition of, and appreciation for, the long-time support of our shareholders, CBB's Board of Directors has declared a one-time 10% stock dividend payable in whole shares to the Bank's shareholders of record as of February 14, 2014, with cash being paid for any fractional shares. Future dividends on common stock, if any, rests within the discretion of the Board of Directors and will depend, among other things, upon earnings, capital requirements and the financial condition of the Bank, as well as other relevant factors. The Bank can provide no assurance that future dividends will be paid on common stock.

FINANCIAL HIGHLIGHTS:

  • A 6.3% increase in year-over-year fourth quarter net income available to common shareholders to $2.3 million, or $0.62 per diluted share.
  • A 29.7% increase in year-over-year net income available to common shareholders to $9.3 million, or $2.67 per diluted share.
  • Fourth quarter pre-tax pre-provision income grew to $3.7 million, compared to $3.2 million for the third quarter 2013, and $2.8 million for the fourth quarter 2012.
  • Fourth quarter net interest margin expanded to 3.95% from 3.93%.
  • Fourth quarter efficiency ratio improved to 51.1%, compared to 56.7% for the third quarter 2013, and 52.4% for the fourth quarter 2012.
  • Return on average assets in 2013 increased to 1.85% compared to 1.73% in 2012; and return on average equity increased to 15.41% in 2013 compared to 14.31% in 2012.
  • Total net loans increased 6.2% to $460.9 million during the fourth quarter of 2013 and 22.3% year-over-year.
  • Total deposits increased 12.3% to $503.4 million during the fourth quarter of 2013 and 19.0% year-over-year.
  • All outstanding shares of TARP preferred stock were redeemed at a 4.9% discount, financed by retained earnings and from the proceeds of a $4.0 million private offering of common stock.

RESULTS OF OPERATIONS
Fourth quarter pre-tax pre-provision income was $3.7 million, compared to $3.2 million for the third quarter 2013, and $2.8 million for the fourth quarter 2012. Net interest income before provision for loan losses for the fourth quarter 2013 increased 4.6% to $5.1 million from $4.9 million for the third quarter 2013, and increased 10.9% from $4.6 million for the fourth quarter 2012. The increase was attributable to increase in yields on interest-earning assets, primarily from growth of loans.

Overall cost of funds were 0.81%, 0.78% and 0.85%, respectively, for the fourth and third quarter of 2013, and the fourth quarter 2012; and 0.81% and 0.91%, respectively, for the twelve months ended 2013 and 2012. The ten basis points decline in cost of funds year-over-year was a result of the growth in demand deposits, coupled with repricing of interest-bearing liabilities to lower rates. The three basis points increase in between quarters was mainly due to the decrease in average balances of Demand Deposits. CBB also increased wholesale certificate of deposits with three to five years maturities to partially hedge for fixed rate loan originations.

"Our goal is to expand core deposits to fund our growing lending activities, and keep building sustained client relationships. To complement an increase in cost of funds associated with the growth of interest- bearing deposits, we will focus on building a larger non-interest bearing demand deposits base," noted Kim.

For the fourth quarter 2013, interest income increased by 5.2%, compared to the third quarter 2013, and by 10.6% compared to the fourth quarter 2012. Interest expense also increased by 8.5% and 8.9%, compared to the third and fourth quarter of 2013 and 2012, respectively.

CBB had no provision for loan losses during 2013 and 2012. Despite the growth in loan balances during the four quarters of 2013, CBB has not increased its allowance for loan losses as the effect of a reduction in problem loans offset new loan loss provision requirements for new loan growth.

Non-interest income declined 9.2% to $2.3 million for the fourth quarter 2013, compared to $2.6 million for the third quarter 2013, due primarily to a reduction in gains on sale of SBA loans. During the fourth quarter 2013, $24.9 million in SBA loans were sold, compared to $30.2 million in third quarter 2013 and $11.1 million in the fourth quarter 2012. A smaller volume of SBA loans sold during the quarter and a lower market premiums contributed to a decline in gains on sale. For 2013, CBB sold a total of $95.1 million in SBA loans, compared to $38.5 million in 2012.

Other income including service charges increased 42.3% to $430,000 during the fourth quarter 2013, as compared to $302,000 for the third quarter 2013, and increased 12.7% from $382,000 for the fourth quarter 2012. Non-interest income increased 91.1%, compared to $1.2 million for the same period of 2012, primarily from an increase in gains on sale of SBA loans; but it decreased 9.2%, compared to the prior quarter in 2013, primarily due to a lower gains on sale of SBA loans. For the year ended December 31, 2013, non-interest income increased 88% to $9.6 million, compared to $5.1 million for 2012.

During the fourth quarter 2013, non-interest expense decreased 10.0% to $3.8 million, from $4.3 million for the third quarter 2013, and increased 24.6% from $3.1 million for the fourth quarter 2012. The fluctuation between quarters was due primarily to a $466,000 one-time settlement of occupancy expenses related to the early termination of lease contracts in the third quarter 2013. Salaries and employee benefits expense increased 38.9% and 43.2% for the three and twelve months ended December 31, 2013, respectively, from comparable periods in prior year, due primarily to new hires in the SBA and commercial business development areas, and higher stock option compensation cost and commission expenses. Non-interest expense increased 38.2% year-over-year primarily from addition of personnel, accelerated expenses associated with early terminations of the headquarters and the Wilshire Branch lease contracts, and other increases related to the expansion of operations. While operating costs increased, CBB's efficiency ratio continues to compare favorably to its peers. CBB's efficiency ratio improved to 51.1% for the fourth quarter 2013, as compared to 56.7% for the third quarter of 2013 and 52.4% for the same period in prior year.

BALANCE SHEET AND CAPITAL
Total gross loans grew 6.0% to $469.8 million at December 31, 2013, compared to $443.0 million at September 30, 2013. The increase in total loans quarter-over-quarter was due mainly to the growth in SBA and commercial real estate loans and reflects, in part, the retention of SBA loans held-for-sale. It grew 21.2% from $387.5 million at December 31, 2012.

CBB produced a total of $64.3 million and $281.6 million, respectively, in new loans during fourth quarter and full year of 2013. SBA loans represented 51.9% of new loans, while commercial real estate and term loans and lines of credit represented 31.8% and 16.3%, respectively, of the total loan production. CBB ranked as the 17th largest SBA lender in the nation in terms of dollars approved during the twelve months period from October 2012 to September 2013, according to the National Association of Government Guarantee Lenders report.

Total Fed funds sold and the Federal Reserve Bank excess reserve balance increased 81.5% to $62.0 million during the fourth quarter 2013, compared to $34.1 million at the third quarter-end primarily as a result of deposit volatility.

Total deposits at December 31, 2013 increased 12.3% to $503.4 million, compared to $448.2 million at September 30, 2013, and increased 19.0%, compared to $423.0 million at December 31, 2012. Demand deposits, NOW and Money Market, and Savings accounts increased 7.8%, 4.0%, 18.1%, respectively, at December 31, 2013 from September 30, 2013; and 35.7%, 16.8%, 45.4%, respectively, from December 31, 2012. The spike in demand deposits and money market account balances at the year-end was due to the transfer of loan proceeds to the borrower's deposit accounts and the month-end fluctuations of certain deposit accounts. The increase in certificate of deposit was due to normal growth augmented by ongoing certificate of deposits campaign.

The Bank continues to be well capitalized under the regulatory standards. As of December 31, 2013, Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 12.07%, 13.55%, 14.81%, respectively, as compared to 12.18%, 14.47%, and 15.74%, respectively, as of December 31, 2012.

ASSET QUALITY

Non-accrual loans totaled $5.0 million, or 1.06% of total loans, at December 31, 2013, compared with $5.2 million, or 1.18% of total loans, at September 30, 2013 and $3.3 million, or 0.85% of total loans, at December 31, 2012. There were no new non-accrual loans during the fourth quarter 2013. The legal dispute between the principals of the $2.6 million loans placed on non-accrual during the third quarter of 2013 will likely be resolved in early 2014. The Bank expects to work out an agreement with the prevailing principals without any additional potential losses. Loan delinquencies continued a declining trend to $83,000, or 0.02% of total loans, at December 31, 2013 compared with $183,000 or 0.04% at September 30, 2013 and $215,000 or 0.06% at December 31, 2012.

Accruing troubled debt restructuring ("TDR") loans totaled $10.4 million at December 31, 2013, up slightly from $10.3 million at September 30, 2013, and down from $11.0 million at December 31, 2012.

The asset quality remained stable and non-performing assets (loans past due 90 days or more and non-accrual, accruing TDR loans and OREO) were $15.3 million, or 2.69% of total assets, as of December 31, 2013, compared to $15.5 million, or 3.02% of total assets as of September 30, 2013, and $14.3 million, or 2.97% of total assets as of December 31, 2012.

Classified assets were $12.5 million, or 2.19% of total assets, as of December 31, 2013, compared to $14.5 million, or 2.83% of total assets at September 30, 2013, and $17.5 million, or 3.63% of total assets as of December 31, 2012. The decrease is mainly attributable to a $1.8 million commercial property loan that was paid off in December 2013.

There was no new loan charge-offs during the fourth quarter, and the charge-offs (recoveries) were ($56,000) for the fourth quarter of 2013, as compared to $1.1 million for the third quarter of 2013, and $312,000 for the fourth quarter of 2012. The allowance for loan losses as a percentage of total loans was 1.9%, 2.0%, and 2.8%, as of December 31, 2013, September 30, 2012, and December 31, 2012, respectively.

Kim concluded: "Our strategy to increase productivity and generate growth through our Los Angeles headquarters' operations as well as loan production offices in other markets, has driven consistent earnings growth and increased shareholder value. We continue to focus on expanding banking relationships, particularly to support core deposit growth, and to examine opportunities to replicate our success in additional markets. We feel the generally improving economic climate will support the positive trends CBB has achieved."

ABOUT COMMONWEALTH BUSINESS BANK ("CBB BANK")
Commonwealth Business Bank is a full-service commercial bank specializing in small- to medium-sized businesses and headquartered in the business districts of Korea town, Los Angeles, California.

FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking information about Commonwealth Business Bank that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements, and include statements related to the Bank's outlook. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of Commonwealth Business Bank. Commonwealth Business Bank cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. Risks and uncertainties include, but are not limited to, revenues that are lower than expected and credit quality deterioration which could cause an increase in the provision for credit losses.
These forward-looking statements involve known and unknown risks, uncertainties and factors such as: changes in consumer spending, borrowing and savings habits, technological changes, the cost of additional capital is more than expected, a change in the interest rate environment reduces interest margins, asset/liability repricing risks and liquidity risks, general economic conditions, particularly those affecting real estate values, either nationally or in the market areas in which Commonwealth Business Bank does or anticipates doing business, including the possibility of a U.S. recession, a slowdown in construction activity, recent volatility in the credit or equity markets and its effect on the general economy, loan delinquency rates, the ability of Commonwealth Business Bank to retain customers, demographic changes, demand for the products or services of Commonwealth Business Bank as well as its ability to attract and retain qualified people, competition with other banks and financial institutions, and other factors. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, Commonwealth Business Bank's results could differ materially from those expressed in, or implied or projected by such forward-looking statements. Commonwealth Business Bank assumes no obligation to update such forward-looking statements.


                         BALANCE SHEET (Unaudited)
                           (Dollars in Thousands)


                          December    September           December
                             31,         30,        %        31,        %
                            2013        2013     Change     2012     Change
                         ----------  ----------  ------  ----------  ------
ASSETS
  Cash and Cash
   Equivalent            $   22,103  $   18,452    19.8% $    7,990   176.6%
  Due from Federal
   Reserve Bank              61,945      34,130    81.5%     70,789   -12.5%
  Investment Securities       7,556       7,729    -2.2%     11,542   -34.5%
  Loans, net                469,796     443,013     6.0%    387,467    21.2%
  Less: Allowance for
   loan losses               (8,925)     (8,869)    0.6%    (10,729)  -16.8%
                         ----------  ----------  ------  ----------  ------
LOANS,NET                   460,871     434,144     6.2%    376,738    22.3%

  FHLB & FRB stock            3,649       3,649     0.0%      3,288    11.0%
  Other assets               14,031      14,090    -0.4%     11,506    21.9%
                         ----------  ----------  ------  ----------  ------
TOTAL ASSETS             $  570,155  $  512,194    11.3% $  481,853    18.3%
                         ==========  ==========  ======  ==========  ======

LIABILITIES AND
 STOCKHOLDERS' EQUITY
  DDA                    $   92,723  $   86,018     7.8% $   68,330    35.7%
  Money market & NOW        154,167     148,172     4.0%    131,973    16.8%
  Savings                     7,647       6,475    18.1%      5,260    45.4%
  Time deposits < $100K      75,718      63,330    19.6%     80,654    -6.1%
  Time deposits > $100K     173,171     144,229    20.1%    136,777    26.6%
                         ----------  ----------  ------  ----------  ------
TOTAL DEPOSITS              503,426     448,224    12.3%    422,994    19.0%

TOTAL LIABILITIES           506,544     451,364    12.2%    425,452    19.1%
SHAREHOLDERS' EQUITY         63,611      60,830     4.6%     56,401    12.8%
                         ----------  ----------  ------  ----------  ------
TOTAL LIABILITIES &
 SHAREHOLDERS' EQUITY    $  570,155  $  512,194    11.3% $  481,853    18.3%
                         ==========  ==========  ======  ==========  ======



            INCOME STATEMENT (Unaudited)
(Dollars in Thousands, Except Per Share Information)

                                      Three Months Ended
                    ======================================================

                       31-Dec     30-Sep       %         31-Dec       %
NET INTEREST INCOME     2013       2013      Change       2012     Change
                    ---------- ----------  ---------  ----------  --------
  Interest income   $    6,077 $    5,777        5.2% $    5,496      10.6%
  Interest expense         939        865        8.5%        863       8.9%
                    ---------- ----------  ---------  ----------  --------
    Total net
     interest
     income              5,138      4,912        4.6%      4,633      10.9%
  Provision for
   loan losses               -          -          -           -         -
                    ---------- ----------  ---------  ----------  --------
    Net interest
     income after
     provisionfor
     loan losses         5,138      4,912        4.6%      4,633      10.9%
                    ---------- ----------  ---------  ----------  --------

NON-INTEREST INCOME
  Gain on sale of
   loans                 1,918      2,283      -16.0%        847     126.4%
  Service charges
   and other income        430        302       42.3%        382      12.7%
                    ---------- ----------  ---------  ----------  --------
    Total non-
     interest
     income              2,348      2,585       -9.2%      1,229      91.1%

NON-INTEREST
 EXPENSE
  Salaries and
   employee
   benefits              2,685      2,567        4.6%      1,933      38.9%
  Occupancy and
   equipment               374        886      -57.8%        327      14.5%
  Other expenses           766        797       -3.9%        809      -5.4%
                    ---------- ----------  ---------  ----------  --------
    Total non-
     interest
     expense             3,825      4,250      -10.0%      3,069      24.6%
INCOME BEFORE
 PROVISION FOR
 INCOME TAXES            3,661      3,247       12.7%      2,793      31.1%

  Provision for
   income tax
   expense               1,357      1,134       19.7%        494     174.6%
                    ---------- ----------  ---------  ----------  --------

NET INCOME          $    2,304 $    2,113        9.0% $    2,299       0.2%
                    ========== ==========  =========  ==========  ========

  Preferred Stock
   Adjustments
  Preferred stock
   cash dividend             -        (78)    -100.0%       (105)   -100.0%
  Accretion of
   preferred stock
   discount                  -        (72)    -100.0%        (26)   -100.0%
  Redemption of
   preferred stock           -        396     -100.0%          -
                    ---------- ----------  ---------  ----------  --------
    Total preferred
     stock
     adjustments             -        246     -100.0%       (131)   -100.0%
                    ---------- ----------  ---------  ----------  --------
NET INCOME
 AVAILABLE TO
 COMMON
 SHAREHOLDERS
                    $    2,304 $    2,359       -2.4% $    2,168       6.3%
                    ========== ==========  =========  ==========  ========

WEIGHTED-AVERAGE
 COMMON SHARES
 OUTSTANDING:
  BASIC              3,488,122  3,398,507        2.6%  3,098,967      12.6%
  DILUTED            3,697,296  3,628,551        1.9%  3,159,081      17.0%

  BASIC EPS         $     0.66 $     0.69       -4.9% $     0.70      -5.6%
  DILUTED EPS       $     0.62 $     0.65       -4.2% $     0.69      -9.2%




                           Twelve Months Ended
                   ===================================

                      31-Dec       31-Dec        %
NET INTEREST INCOME    2013         2012      Change
                   ----------   ----------  ----------
  Interest income  $   22,566   $   20,758         8.7%
  Interest expense      3,551        3,447         3.0%
                   ----------   ----------  ----------
    Total net
     interest
     income            19,015       17,311         9.8%
  Provision for
   loan losses         (1,464)         717          NM
                   ----------   ----------  ----------
    Net interest
     income after
     provisionfor
     loan losses       20,479       16,594        23.4%
                   ----------   ----------  ----------

NON-INTEREST INCOME
  Gain on sale of
   loans                8,013        3,462          NM
  Service charges
   and other income     1,575        1,641        -4.0%
                   ----------   ----------  ----------
    Total non-
     interest
     income             9,587        5,103        87.9%

NON-INTEREST
 EXPENSE
  Salaries and
   employee
   benefits             9,492        6,630        43.2%
  Occupancy and
   equipment            2,157        1,186        81.8%
  Other expenses        3,127        2,873         8.8%
                   ----------   ----------  ----------
    Total non-
     interest
     expense           14,777       10,690        38.2%
INCOME BEFORE
 PROVISION FOR
 INCOME TAXES          15,289       11,007        38.9%

  Provision for
   income tax
   expense              6,025        3,489        72.7%
                   ----------   ----------  ----------

NET INCOME         $    9,264   $    7,518        23.2%
                   ==========   ==========  ==========

  Preferred Stock
   Adjustments
  Preferred stock
   cash dividend         (183)        (210)      -12.8%
  Accretion of
   preferred stock
   discount              (128)         (97)       32.1%
  Redemption of
   preferred stock        396            -
                   ----------   ----------  ----------
    Total preferred
     stock
     adjustments           85         (307)     -127.7%
                   ----------   ----------  ----------
NET INCOME
 AVAILABLE TO
 COMMON
 SHAREHOLDERS
                   $    9,349   $    7,211        29.7%
                   ==========   ==========  ==========

WEIGHTED-AVERAGE
 COMMON SHARES
 OUTSTANDING:
  BASIC             3,278,473    3,098,967         5.8%
  DILUTED           3,503,083    3,110,424        12.6%

  BASIC EPS        $     2.85   $     2.33        22.6%
  DILUTED EPS      $     2.67   $     2.32        15.1%



SELECTED FINANCIAL RATIOS
  (Dollars in Thousands)

                                         Three Months Ended
                          ================================================
                           4th Qtr   3rd Qtr      %      4th Qtr      %
                            2013      2013     Change     2012     Change
                          --------  --------  --------  --------  --------
Performance Ratios:
 Return on Average Assets     1.74%     1.66%     0.07%     1.98%    -0.24%
 Return on Average Equity    14.80%    14.00%     0.81%    16.58%    -1.78%
 Net Interest Margin          3.95%     3.93%     0.02%     4.03%    -0.08%
 Cost of Funds                0.81%     0.78%     0.03%     0.85%    -0.04%
 Efficiency Ratio            51.09%    56.69%    -5.60%    52.36%    -1.27%
 Liquidity ratio             21.38%    15.89%     5.48%    23.14%    -1.76%

Capital Ratios:
 Core Capital (Leverage)
  Ratio                      12.07%    12.06%     0.01%    12.18%    -0.11%
 Tier 1 Risk-Based
  Capital Ratio              13.55%    13.63%    -0.08%    14.47%    -0.92%
 Total Risk-Based Capital
  Ratio                      14.81%    14.89%    -0.08%    15.74%    -0.93%
 Tangible common equity
  per share               $  18.18  $  17.46      4.12% $  15.63     16.31%
 Tangible common
  equity/Total Assets        11.16%    11.88%    -0.72%    10.05%     1.11%

Selected Quarterly
 Information:

 Average Balances:
 Loans, Net of Deferred
  Fees/Costs              $456,563  $432,388      5.59% $392,469     16.33%
 Total Securities            7,663     9,595    -20.14%   12,821    -40.23%
 Total Deposits            461,367   440,015      4.85%  403,281     14.40%
 Stockholder's Equity       61,745    59,887      3.10%   55,143     11.97%
 Interest Earning Assets   516,147   496,050      4.05%  457,185     12.90%
 Interest Bearing
  Liabilities              383,092   355,202      7.85%  343,579     11.50%
 Total Assets              526,830   504,276      4.47%  461,543     14.15%




                              Twelve Months Ended
                         ============================
                          31-Dec    31-Dec       %
                           2013      2012     Change
                         --------  --------  --------
Performance Ratios:
 Return on Average Assets    1.85%     1.73%     0.12%
 Return on Average Equity   15.41%    14.31%     1.10%
 Net Interest Margin         3.86%     4.02%    -0.16%
 Cost of Funds               0.81%     0.91%    -0.10%
 Efficiency Ratio           51.66%    47.69%     3.97%
 Liquidity ratio            21.38%    23.14%    -1.77%

Capital Ratios:
 Core Capital (Leverage)
  Ratio                     12.07%    12.18%    -0.11%
 Tier 1 Risk-Based
  Capital Ratio             13.55%    14.47%    -0.92%
 Total Risk-Based Capital
  Ratio                     14.81%    15.74%    -0.93%
 Tangible common equity
  per share              $  18.18  $  15.63     16.31%
 Tangible common
  equity/Total Assets       11.16%    10.05%     1.11%

Selected Quarterly
 Information:

 Average Balances:
 Loans, Net of Deferred
  Fees/Costs             $419,221  $362,728     15.57%
 Total Securities           9,231    17,299    -46.64%
 Total Deposits           437,212   378,465     15.52%
 Stockholder's Equity      60,104    52,523     14.43%
 Interest Earning Assets  493,059   430,977     14.40%
 Interest Bearing
  Liabilities             361,148   325,858     10.83%
 Total Assets             500,730   433,887     15.41%


More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.