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Community Bank Reports 2016 Earnings of $28.6 Million and Declares Ninth Consecutive Cash Dividend on Common Stock

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January 31, 2017 7:04 PM EST

PASADENA, Calif.--(BUSINESS WIRE)-- Community Bank, founded in 1945, is an independent Southern California regional community bank, with assets of $3.6 billion, and headquartered in Pasadena with 17 business centers.

Financial highlights:

  • Net income for 2016 increased $.8 million or 3.0%, over the prior year.
  • Net interest income increased during 2016 to $115.0 million from $111.3 million in the prior year. Net interest margin also increased for 2016 to 3.33% from 3.30% during 2015.
  • Total loans as of December 31, 2016 increased 2.9%, or $71.1 million, to $2.5 billion compared to $2.4 billion as of December 31, 2015. The increase is net of $35 million in loan sales and $33 million in strategic repositioning of certain credit exposures.
  • In a strategic move to add high quality floating rate loans to its balance sheet, the Bank began to hold all of its SBA loans in the 4th quarter of 2016 versus selling them in the secondary market. Accordingly, fees from loan sales declined from $1.3 million in the 4th quarter of 2015 to $6 thousand in the same period in 2016.
  • Non-interest bearing deposits increased 14.2%, or $130.5 million, to $1,047.2 million compared to $916.8 million as of December 31, 2015.
  • Core deposits represented 85.6% of total deposits, as of December 31, 2016, with the non-interest bearing component representing 45.6% of core deposits as compared to 40.6% in the prior year. (Community Bank defines core deposits as those deposits generated by its branch network including specialty areas and excludes deposits placed through the Treasury area.)
  • Non-interest expense in the 4th quarter of 2016 includes approximately $1.3 million of stock based compensation costs. Additionally, year to date non-interest expense reflects start-up expenses of hiring several key relationship mangers in our Specialty Deposits Group, along with the hiring of a five-person team in the San Gabriel Valley to expand the C. H Cook Brand.
  • The Bank’s reserve for loan losses as of December 31, 2016 was $36.6 million or 1.47% of total loans compared to $36.3 million or 1.50% of total loans as of December 31, 2015. In 2016, a provision for loan losses of $3.9 million was recognized compared with no provision in 2015.
  • The Bank’s nonperforming loans totaled $6.8 million as of December 31, 2016 compared to $12.0 as of December 31, 2015.
  • Community Bank’s capital ratios continue to exceed “well capitalized” regulatory requirements

Other highlights:

  • In the 2nd quarter of 2016, we took advantage of the Brexit decline in long term rates to extend and lock in 5 year rates on approximately $300 million of borrowings and wholesale deposits. This strategy enabled the Bank to secure fixed rate funding for its lending activities with the offset being higher borrowing costs.
  • The Bank was recently assigned a senior unsecured debt rating and long term deposit rating of BBB+ and subordinated debt rating of BBB by Kroll Bond Rating Agency (KBRA). KBRA has also assigned short-term deposit and short-term debt ratings of K2. The ratings reflect the company’s strong asset quality and conservative credit culture, strong core and risk-based capital levels, consistent and stable earnings and efficiency metrics and extensive executive and board banking experience coupled with emphasis on prudent risk management, according to Kroll.
  • The Bank recently added a $700,000 equity investment in Clearinghouse Community Development Financial Institution (Clearinghouse CDFI) Class A stock. This is Community Bank’s second investment in Clearinghouse CDFI which enhances Clearinghouse CDFI’s ability to address unmet credit needs in distressed areas throughout California.
  • The Board of Directors declared a $0.50 per share cash dividend (aggregating $1.6 million) on its outstanding common stock for common shareholders of record as of February 13, 2017 and payable on or about March 1, 2017. This represents the ninth consecutive quarter that the Bank has declared a dividend since introducing a formal dividend practice. The dividend was approved at the regularly scheduled Board of Directors meeting held on January 26, 2017.

CBank is pleased to announce that Raymond James Inc., DA Davidson and Keefe, Bruyette & Woods are market makers in Community Bank stock. Community Bank stock trades on OTC pink sheets under the ticket of CYHT. Contact information for our market makers is as follows:

John T. Cavender, SVP Financial InstitutionsRaymond James & Associates415-616-8935[email protected]http://www.raymondjames.com

and

Michael R. Natzic, Senior Vice PresidentD.A. Davidson & Co.1-800-288-2811[email protected]https://dadavidson.com

and

Keefe Bruyette & Woods, a Stifel CompanyCathy BellinaEquity Trader212-887-8996[email protected]www.kbw.com

Community Bank, partnering to be YOUR community bank, has offices in Anaheim, Burbank, Century City, Commerce, Corona, Fontana, Glendale, Huntington Beach, Irvine, Laguna Niguel, Ontario, Pasadena, Redlands, Santa Clarita, Santa Fe Springs, South Bay, and Woodland Hills. For more information, visit the Community Bank Website at www.cbank.com.

This press release contains certain forward-looking statements, including certain plans, expectations, goals and projections, which are subject to numerous assumptions, risks and uncertainties. Actual results could differ materially from those contained in or implied by such statements for a variety of factors including: changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of business strategies; the nature and extent of governmental actions and reforms; and rapidly changing technology and evolving banking industry standards.

 
COMMUNITY BANK - FINANCIAL HIGHLIGHTS
(Unaudited)
(Amounts in Thousands, except per share data)
 
  For the Quarters Ended   For the Years Ended
December 31, December 31,
  Dollar   Percent     Dollar   Percent
INCOME STATEMENT 2016 2015 Change Change 2016 2015 Change Change
 
Interest income $ 31,976 $ 30,630 $ 1,346 4.4 % $ 128,384 $ 125,468 $ 2,916 2.3 %
Interest expense   3,488   2,765   723   26.1 %   13,357   14,129   (772 ) (5.5 %)
Net interest income 28,488 27,865 623 2.2 % 115,027 111,339 3,688 3.3 %
Provision for loan losses   450   -   450   -     3,900   -   3,900   -  
Net interest income after provision 28,038 27,865 173 0.6 % 111,127 111,339 (212 ) (0.2 %)
Non-interest income 1,972 3,212 (1,240 ) (38.6 %) 13,307 17,701 (4,394 ) (24.8 %)
Non-interest expense   20,537   17,307   3,230   18.7 %   78,328   84,224   (5,896 ) (7.0 %)
Income before income tax 9,473 13,770 (4,297 ) (31.2 %) 46,106 44,816 1,290 2.9 %
Income tax   3,479   5,077   (1,598 ) (31.5 %)   17,517   17,051   466   2.7 %
Net income $ 5,994 $ 8,693 $ (2,699 ) (31.0 %) $ 28,589 $ 27,765 $ 824   3.0 %
 
 
  As of December 31, Dollar   Percent
BALANCE SHEET   2016       2015   Change Change
Cash and cash equivalents $ 47,552 $ 48,907 $ (1,355 ) (2.8 %)
Investments 913,781 958,392 (44,611 ) (4.7 %)
Non-owner occupied real estate loans 823,621 834,671 (11,050 ) (1.3 %)
Owner occupied real estate loans   1,078,652     986,007     92,645   9.4 %
Total real estate loans 1,902,273 1,820,678 81,595 4.5 %
Commercial & industrial loans 549,832 588,956 (39,124 ) (6.6 %)
Other loans   46,902     18,291     28,611   156.4 %
Total loans 2,499,007 2,427,925 71,082 2.9 %
Loan loss reserve   (36,618 )   (36,327 )   (291 ) 0.8 %
Net loans 2,462,389 2,391,598 70,791 3.0 %
Other assets   163,333     151,358     11,975   7.9 %
Total assets $ 3,587,055   $ 3,550,255   $ 36,800   1.0 %
 
Earning assets $ 3,427,676   $ 3,409,689   $ 17,987   0.5 %
 
Non-interest bearing deposits $ 1,047,221 $ 916,753 $ 130,468 14.2 %
Interest bearing deposits   1,634,773     1,672,689     (37,916 ) (2.3 %)
Total deposits 2,681,994 2,589,442 92,552 3.6 %
Funds purchased/borrowed 543,000 625,000 (82,000 ) (13.1 %)
Other liabilities   32,586     24,911     7,675   30.8 %
Total liabilities 3,257,580 3,239,353 18,227 0.6 %
Stockholders' equity   329,475     310,902     18,573   6.0 %
Total liabilities & stockholders'equity $ 3,587,055   $ 3,550,255   $ 36,800   1.0 %
 
 
  For the Quarters Ended       For the Years Ended
December 31, December 31,
PERFORMANCE AND PER SHARE DATA   2016       2015       2016       2015  
Return on average equity 7.10 % 11.11 % 8.61 % 9.08 %
Return on average assets 0.67 % 0.99 % 0.79 % 0.79 %
 
Earning Asset Yields 3.75 % 3.65 % 3.72 % 3.72 %
Cost of Funds   0.41 %   0.33 %   0.39 %   0.42 %
Net interest margin   3.34 %   3.32 %   3.33 %   3.30 %
 
Efficiency ratio 67.4 % 55.7 % 61.1 % 68.1 %
 
Book value per common share $ 105.32 $ 99.38 $ 105.32 $ 99.38
Basic earnings per common share $ 1.92 $ 2.78 $ 9.14 $ 8.88
Diluted earnings per common share $ 1.92 $ 2.78 $ 9.14 $ 8.88
Employee head count 432 416 432 416
 
 
COMMUNITY BANK - FINANCIAL HIGHLIGHTS
(Unaudited)
(Amounts in Thousands)
 
 
  December 31,     Minimum Ratios for a
CAPITAL RATIOS   2016       2015   Well-Capitalized Bank
Tier 1 leverage capital 9.41 % 8.97 %   5.00 %
Tier 1 risk-based capital 10.94 % 10.57 % 8.00 %
Total risk-based capital 12.19 % 11.82 % 10.00 %
Common equity tier 1 capital 10.94 % 10.57 % 6.50 %
 
 
 
December 31, Dollar Percent
OTHER SELECTED DATA   2016     2015   Change Change
Other real estate owned $ 3,000 $ 8,089 $ (5,089 ) (62.9 %)
Nonperforming loans $ 6,811 $ 11,979 $ (5,168 ) (43.1 %)
Reserve for loan losses to total loans 1.47 % 1.50 % (2.0 %)
Reserve for loan losses to nonperforming loans 537.6 % 303.3 % 77.3 %
Nonperforming loans to total loans 0.27 % 0.49 % (44.9 %)
Nonperforming assets to total assets 0.27 % 0.57 % (52.6 %)
 
 
  For the Quarters Ended     For the Years Ended  
December 31, December 31,
  Dollar   Percent   Dollar   Percent
  2016   2015   Change Change   2016   2015 Change Change
 
Non-interest income
Service charges on deposits $ 955 $ 958 $ (3 ) (0.3 %) $ 3,838 $ 4,084 $ (246 ) (6.0 %)
Fees and commissions 576 530 46 8.7 % 2,234 2,166 68 3.1 %
Bank owned life insurance 393 444 (51 ) (11.5 %) 1,576 1,539 37 2.4 %
Gain on sale of OREO - - - - 1,795 - 1,795 -
Gain on sale of securities - - - - 83 5,302 (5,219 ) (98.4 %)
Gain on sale of loans 6 1,297 (1,291 ) (99.5 %) 3,599 4,368 (769 ) (17.6 %)
Other non-interest income   42   (17 )   59   (347.1 %)   182   242   (60 ) (24.8 %)
Total non-interest income $ 1,972 $ 3,212   $ (1,240 ) (38.6 %) $ 13,307 $ 17,701 $ (4,394 ) (24.8 %)
 
Non-interest expense
Salary and employee benefits 14,692 12,400 2,292 18.5 % 53,834 50,221 3,613 7.2 %
Other expense 5,845 4,907 938 19.1 % 24,494 22,589 1,905 8.4 %
Debt termination expense   -   -     -   -     -   11,414   (11,414 ) (100.0 %)
Total non-interest expense $ 20,537 $ 17,307   $ 3,230   18.7 % $ 78,328 $ 84,224 $ (5,896 ) (7.0 %)
 
 
AVERAGE BALANCE SHEET AND YIELDS
 
  Year Ended   Year Ended
(In thousands)   December 31, 2016   December 31, 2015
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
INTEREST EARNING ASSETS
Loans and leases $ 2,508,726 $ 106,463 4.24 % $ 2,314,701 $ 98,969 4.28 %
Investment securities 927,427 21,827 2.35 % 1,036,900 26,446 2.55 %

FFSold/Fed balances/Due from Time

19,261 94 0.48 % 20,914 53 0.25 %
           
Total Earning Assets 3,455,414 128,384 3.72 % 3,372,515 125,468 3.72 %
 
Nonearning assets 145,502 137,192
   
Total Assets $ 3,600,916 $ 3,509,707
 
INTEREST BEARING LIABILITIES
Time deposits 617,508 4,380 0.71 % 677,495 4,165 0.61 %
Demand/MM accounts 1,019,231 3,324 0.33 % 1,019,962 3,170 0.31 %
Savings and other 39,347 19 0.05 % 37,162 18 0.05 %
           
Total Interest Bearing Deposits 1,676,086 7,723 0.46 % 1,734,619 7,353 0.42 %
 
Federal funds purchased/borrowed funds 557,743 5,634 1.01 % 547,649 6,776 1.24 %
           
 
Total Interest Bearing Liabilities 2,233,829 13,357 0.60 % 2,282,268 14,129 0.62 %
 
Non-interest bearing deposits 1,007,703 900,987
Accrued interest payable and
other liabilities   27,167   20,812
 
Total Liabilities 3,268,699 3,204,067
Shareholders' equity   332,217   305,640
Total Liabilities and
Shareholders' Equity $ 3,600,916 $ 3,509,707
 
 
Net Interest Spread 3.12 % 3.10 %
 
Effect of noninterest-bearing sources 0.21 % 0.20 %
 
 
Net Interest Income and Margin $ 115,027 3.33 % $ 111,339 3.30 %
 

Note: Non accrual loans are included in loans and leases. The tax effective net interest margin is approximately 5 basis points higher for both 2016 and 2015.

Community Bank
J. Duncan Smith, 626-568-2009
Chief Financial Officer

Source: Community Bank


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