|By Marketwired .||
|July 30, 2014 08:19 PM EDT||
SAN JOSE, CA -- (Marketwired) -- 07/30/14 -- Focus Business Bank (OTCQB: FCSB) announced unaudited financial results for the quarter and six-months ended June 30, 2014. Net income for the quarter and six-months ended June 30, 2014 were $313,000 ($0.11/per diluted share) and $565,000 ($0.19/per diluted share), respectively, compared to $162,000 ($0.06/per diluted share) and $313,000 ($0.11/per diluted share) for the quarter and six-months ending June 30, 2013, respectively. The increases in net income for the quarter and six-months ending June 30, 2014 compared to the same periods in 2013 were primarily attributable to growth in net interest income resulting from a significant increase in earning assets and an increase in non-interest income from gains on sales of SBA loans, partially offset by increases in operating expenses, the provision for loan losses and income taxes.
Chairman and Chief Executive Officer Richard L. Conniff commented on the June 30, 2014 results, "The Bank has made strategic investments to support growth in core deposits, which we believe will significantly enhance the future value of our franchise. In the two year period from June 30, 2012 to June 30, 2014, deposits grew from $144 million to $340 million, an increase of 137%. As these deposits continue to be carefully deployed into loans and investments, we expect the core earnings of the Bank should continue to improve."
Highlights of the Quarter Ended June 30, 2014
- Total assets of $369.4 million at June 30, 2014 were an all time record high and represented an increase of 42% over June 30, 2013.
- Total loans of $145.6 million at June 30, 2014 were 21% above June 30, 2013.
- Interest bearing deposits of $244.2 million at June 30, 2014 increased 50% from June 30, 2013. The increase is primarily related to growth in the Bank's specialty deposit businesses including services to condominium homeowner associations and public benefit companies.
- Non-interest bearing demand deposits of $96.2 million at June 30, 2014 represent a 37% increase over June 30, 2013 and reflect growth in business banking relationships.
Assets and Liabilities
As a result of deposit growth, the Bank continues to maintain high levels of liquidity. The Bank's liquid assets, consisting of cash and due from banks, federal funds sold and investment securities, totaled $217.8 million, or 59% of total assets, at June 30, 2014 compared to $135.6 million, or 52% of total assets, at June 30, 2013. Although loans grew 21% from June 30, 2013 to June 30, 2014, the loan to deposit ratio at June 30, 2014 was 43% compared to 49% at December 31, 2013 and 51% at June 30, 2013.
Mr. Conniff noted, "The Santa Clara County economy remains one of the strongest in the country. It is also one of the most competitive banking markets with national, regional and community banks abundantly represented. Focus Business Bank competes by being tightly focused on closely-held local businesses seeking a long term banking relationship tailored to their specific needs. We continue to add to our business banking team and are well positioned to support the needs of our clients."
Net Interest Income
Net interest income for the quarter and six-months ended June 30, 2014 was $2.1 million and $4.1 million, respectively, compared to $1.6 million and $3.2 million for the same periods ended June 30, 2013. The increase in net interest income was directly related to the higher volume of earning assets funded by growth in deposits. The increase in net interest income attributable to higher volumes of earning assets was partially offset by decreases in the net interest margin related to a lower loan to deposit ratio and market interest rates which remain at historically low levels. The net interest margin for the quarter ended June 30, 2014 was 2.62% compared to 2.85% for the quarter ended June 30, 2013.
Non-interest income includes service charges and fees, securities gains and losses, SBA loan sales gains and loan servicing fees. Total non-interest income was $519,000 and $1,044,000, respectively, for the quarter and six-months ended June 30, 2014 compared to $326,000 and $596,000 for the same periods ending June 30, 2013. Most of the increase in non-interest income for the quarter and six-months ended June 30, 2014 compared to the same periods the previous year relates to gains on the sale of SBA loans in the secondary market. Gains from the sale of SBA loans totaled $366,000 and $678,000, respectively, for the three and six month periods ended June 30, 2014, respectively, compared to $280,000 and $448,000 for the same periods ending June 30, 2013. Focus Business Bank is an SBA Preferred Lender and the origination and sale of SBA loans has been a material and recurring source of revenue for many years.
Non-interest expense for the quarter and six-months ended June 30, 2014 was $2.0 million and $4.1 million, respectively, compared to $1.7 million and $3.3 million for the same periods ended June 30, 2013. The increase in non-interest expense is primarily attributable to the Bank's growth. FTEs increased from 29 at June 30, 2013 to 35 at June 30, 2014. The increase in headcount also resulted in higher occupancy expense as the Bank expanded its leased premises in mid-2013.
At June 30, 2014, the Bank had $143,000 in non-performing loans compared to $1.1 million at December 31, 2013 and no non-performing loans at June 30, 2013. The provision for loan losses for the quarter and six-months ended June 30, 2014 was $75,000 and $175,000, respectively, compared to no provision for loan losses in 2013. At June 30, 2014, the reserve for loan losses was 1.74% of total loans, compared to 1.82% at December 31, 2013 and 2.12% at June 30, 2013.
Focus Business Bank has capital ratios in excess of the minimum regulatory requirements for a bank to be considered well capitalized. At June 30, 2014, the total risk-based capital ratio was 13.73% compared to the regulatory well capitalized minimum of 10%. The Bank has not participated in any government sponsored capital programs, including the Troubled Asset Relief Program ("TARP") or the Small Business Lending Fund ("SBLF").
About Focus Business Bank
Focus Business Bank is dedicated to meeting the banking needs of closely-held businesses and professionals in Santa Clara County. The Bank also serves not-for-profit organizations and condominium homeowner associations with expertise, market knowledge, products and services tailored to these specific industries. The Bank specializes in business cash management services and commercial loans of all types. The Bank's office is located at 10 Almaden Boulevard in downtown San Jose, California.
This release may contain forward-looking statements, such as, among others, statements about plans, expectations and goals concerning future growth and performance. 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 undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.
Focus Business Bank Unaudited Summary Financial Information As of ---------------------------------- 12 Month % BALANCE SHEET 30-Jun-14 31-Dec-13 30-Jun-13 Change ----------------------------------------------- ($ in ',000s except per share data) ASSETS Cash and due from banks Interest bearing $ 100,031 $ 89,507 $ 71,656 40% Non-interest bearing 21,891 13,484 23,061 -5% Federal funds sold 501 501 505 -1% Investment securities 95,381 63,293 40,400 136% Loans 145,647 140,342 119,907 21% Allowance for loan losses (2,527) (2,548) (2,546) -1% ---------- ---------- ---------- Net Loans 143,120 137,794 117,361 22% Other assets 8,502 8,080 7,688 11% ---------- ---------- ---------- TOTAL ASSETS $ 369,426 $ 312,659 $ 260,671 42% ========== ========== ========== LIABILITIES Deposits Non-interest bearing $ 96,213 $ 94,661 $ 70,433 37% Interest bearing 244,216 190,354 162,949 50% ---------- ---------- ---------- Total deposits 340,429 285,015 233,382 46% Other liabilities 1,188 949 1,093 9% ---------- ---------- ---------- TOTAL LIABILITIES 341,617 285,964 234,475 46% Stockholders' equity 27,809 26,695 26,196 6% ---------- ---------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY $ 369,426 $ 312,659 $ 260,671 42% ========== ========== ========== Shares outstanding 2,947,722 2,934,930 2,918,356 Book value per share adjusted for 5% stock dividend on September 27, 2013 $ 9.43 $ 9.10 $ 8.98 5% Balance Sheet Ratios Loan/deposit 43% 49% 51% Non-interest/total deposit 28% 33% 30% Regulatory Capital Ratios Tier-1 leverage 7.39% 8.50% 9.95% Tier-1 risk based capital 12.48% 13.58% 15.72% Total risk-based capital 13.73% 14.84% 16.98% Asset Quality Metrics Non-performing loans $ 143 $ 1,098 $ - Non-performing loans/total loans 0.10% 0.78% 0.00% ALLL/total loans 1.74% 1.82% 2.12% Focus Business Bank Unaudited Summary Financial Information (cont.) Quarters Ended Six-months Ended ---------------------- ---------------------- INCOME STATEMENT 30-Jun-14 30-Jun-13 30-Jun-14 30-Jun-13 ---------- ---------- ---------- ---------- ($ in ',000s except per share data) Interest income $ 2,301 $ 1,794 $ 4,506 $ 3,492 Interest expense 184 161 366 297 ---------- ---------- ---------- ---------- Net interest income 2,117 1,633 4,140 3,195 Provision for loan losses 75 - 175 - Non-interest income 519 326 1,044 596 Non-interest expense 2,049 1,702 4,098 3,307 ---------- ---------- ---------- ---------- Pre-tax income 512 257 911 484 Income taxes 199 95 346 171 ---------- ---------- ---------- ---------- Net income $ 313 $ 162 $ 565 $ 313 ========== ========== ========== ========== Net income per diluted share $ 0.11 $ 0.06 0.19 $ 0.11 Performance Metrics Net interest margin 2.62% 2.96% 2.68% 2.97% Return on average assets 0.36% 0.26% 0.34% 0.27% Return on average equity 4.56% 2.46% 4.17% 2.39%
Richard L. Conniff
Chairman and Chief Executive Officer
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