Bay Community Bancorp Second Quarter 2021 Earnings More Than Double to a Record $2.41 Million; Awarded CDFI Rapid Response Program Grant; and Declares Quarterly Cash Dividend of $0.04 Per Share

Thursday, 29. July 2021 15:00

OAKLAND, Calif., July 29, 2021 (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 with full-service offices in Oakland, Danville and San Mateo, today reported record net income for second quarter ended June 30, 2021. Consolidated earnings increased 104.5% to $2.41 million for the second quarter of 2021, compared to $1.18 million for the second quarter of 2020. Interest and fee income from the Small Business Administration's (SBA) Paycheck Protection Program (PPP) loans, as well as a substantial CDFI Rapid Response Grant award, contributed to record profitability for the quarter. All financial results are unaudited.

The Company also announced its Board of Directors declared a quarterly cash dividend of $0.04 per share. The dividend is payable on September 3, 2021 to shareholders of record on August 24, 2021. This marks the second dividend payment since the Company initiated quarterly cash dividends on April 30, 2021.

“Our earnings for the second quarter were highlighted by strong revenue generation, higher deposit growth and the continued success of our outreach to new and existing customers. Overall, these factors contributed to a return on average assets of 1.24% and a return on average equity of 15.04% for the quarter,” stated William S. Keller, President and CEO. “During the quarter, asset quality continued to improve with loan modifications and reportable past due loans decreasing to zero. Nonetheless, with unused commitments and loans approved but not yet boarded increasing by $45.6 million during the quarter we made an appropriate provision to our allowance for loan losses. As the vaccine rollout continues and COVID-19 restrictions continue to lift in California, we remain optimistic for additional growth during the second half of the year.”

“One of the highlights of the quarter was being named a recipient of the CDFI Rapid Response Program,” said Keller. “We were granted and fully deployed $1.83 million, which was the largest award made available to any institution, and we were just one of 149 commercial banks around the country to receive the grant.”  On June 15, 2021, the U.S. Department of the Treasury awarded $1.25 billion in COVID-19 relief funds to 863 Community Development Financial Institutions (CDFIs). The grants were made through Treasury’s CDFI Rapid Response Program (CDFI RRP) to provide capital for CDFIs to respond to the economic challenges created by the COVID-19 pandemic, particularly in underserved communities. The grant funds may be used to support eligible activities such as the development and delivery of financial products and services, certain operational activities, and to enable CDFIs to build capital reserves and loan-loss reserves. The CDFI RRP was authorized by the Consolidated Appropriations Act of 2021, which included a number of important opportunities to assist CDFI banks in serving their communities.

“Our focus since the onset of the pandemic has been to support the businesses and their employees in our communities,” said Keller. “During the second and third quarters of 2020, we helped 395 customers receive $81.2 million in PPP funding, with approximately one-third of the loans going to potential new clients. Many of these new PPP borrowers have already transitioned into full client relationships. The first round of PPP expired on August 8, 2020 and, as of June 30, 2021, we had received payments from the SBA for forgiveness of $65.7 million for 284 of first round PPP borrowers. Approximately $191,000 of the fee income recognized during the second quarter of 2021 related to these loan payoffs, compared to $213,000 of the fee income recognized during the prior quarter.”

The Company’s PPP activity continued into 2021 when the CARES Act that was signed into law in late 2020 authorized additional COVID-19 stimulus relief through a second round of PPP funding. The program offers PPP loans for companies that did not receive PPP funds in 2020 and additional “second draw” loans for those businesses that were hit the hardest by the pandemic. “As a CDFI, our Bank was able to begin offering these loans before other institutions, and we conducted significant outreach and educational efforts in order to support the SBA’s goal of ensuring that all qualified applicants had access to this valuable economic recovery program. As of June 30, 2021, we had closed 600 second round loans with total originations of $73.0 million, and generated net deferred fee income of nearly $2.8 million that we will recognize over the loan’s five-year term or at loan forgiveness,” said Keller.

The Company’s net interest margin was 2.93% in the second quarter of 2021, compared to 3.71% in the preceding quarter, and 3.38% in the second quarter a year ago. “Increased liquidity due to higher deposit balances and the resultant effect on the mix of our earning assets caused by higher Excess Reserves at the Fed continued to put pressure on our net interest margin during the quarter,” said Keller.  Excess Reserves had a 0.41% negative effect on the net interest margin for the second quarter of 2021 compared to a 0.12% negative effect for the first quarter of 2021.

“We booked a $250,000 loan loss provision in the second quarter of 2021 in recognition of substantial growth in loan commitments and in the event that the increasing COVID-19 case counts negatively impact what has to date been positive economic indicators in our market,” said Mukhtar Ali, Chief Credit Officer. “Our loan loss reserves now represent 1.42% of total non-guaranteed loans at June 30, 2021, compared to 1.36% a year earlier. We continue to review our loan portfolio and communicate with our borrowers. We believe we have adequate provisions in place to navigate through the pandemic.”  The Bank had no loans on deferral at June 30, 2021.

Second Quarter 2021 Financial Highlights (at or for the period ended June 30, 2021)

  • Net income increased 104.5% to $2.41 million in the second quarter of 2021, compared to $1.68 million in the prior quarter, and $1.18 million in the second quarter a year ago. Earnings per share was $0.27 in the second quarter of 2021, compared to $0.19 in the prior quarter, and $0.13 in the second quarter a year ago.
  • Pre-tax core earnings excluding gains on loan sales, PPP loan fees and loan loss provisions, was up $1.33 million, or 61.1%, to $3.50 million in the second quarter compared to the second quarter a year ago.
  • Total assets increased $183.9 million, or 30.1%, to $795.9 million at June 30, 2021, compared to $612.0 million a year earlier, and increased $33.8 million, or 4.4% compared to $672.1 million three months earlier. Average assets for the quarter totaled $780.6 million, an increase of $207.8 million, or 36.3%, from the second quarter a year ago and an increase of $95.4 million, or 13.9%, compared with the prior quarter.
  • Net interest income, before the provision for loan losses, increased 17.3% to $5.44 million in the second quarter of 2021, compared to $4.64 million in the second quarter a year ago.   The provision for loan losses was $250,000 in the second quarter of 2021, compared to $500,000 in the second quarter of 2020.
  • Non-interest income increased substantially to $2.13 million during the second quarter of 2021, compared to $168,000 for the second quarter a year ago. Impacting non-interest income for the second quarter of 2021 was the proceeds from the $1.83 million CDFI Rapid Response Grant.
  • Operating revenue (net interest income before the provision for loan losses plus non-interest income) increased 57.6% to $7.58 million in the second quarter of 2021, compared to $4.81 million in the second quarter of 2020.
  • Net interest margin for the second quarter was 2.93%, compared to 3.71% in the preceding quarter and 3.38% in the second quarter a year ago. The second quarter margin compression was driven by a $36.3 million increase in deposit balances and $22.8 million in PPP loan forgiveness. In the second quarter, the net interest margin exclusive of all PPP-related income and balances would have been 3.26%.  The average interest yield on non-PPP loans in the second quarter was 4.87%, compared to 5.02% in the prior quarter. The average cost of funds in the second quarter was 0.26%, a decline of six basis points compared to the prior quarter and a decline of 40 basis points compared to the prior year.  
  • Net loans increased $44.8 million, or 9.5%, to $519.0 million at June 30, 2021, compared to $474.2 million a year ago, and decreased 4.2% compared to $541.6 million, largely due to $23.3 million in PPP loan forgiveness during the current quarter. At June 30, 2021, net non-PPP loans totaled $432.9 million, a 0.2% increase compared to $432.2 million at March 31, 2021, and a 9.4% increase compared to $395.7 million at June 30, 2020.   In addition, at June 30, 2021 the unused portion of credit commitments totaled $112.6 million compared to $95.4 million in the prior quarter and $42.4 million a year ago.
  • Total deposits increased $191.0 million, or 37.7%, to $697.9 million at June 30, 2021, compared to $506.9 million a year ago and increased $36.3 million, or 5.5% compared to $661.6 million three months earlier. Growth in new customer accounts, as well as a second round of PPP loan funds deposited into customer accounts, contributed to strong quarterly deposit growth year-over-year. Noninterest bearing demand deposit accounts increased 28.3% compared to a year ago and represented 37.8% of total deposits. Savings, NOW and money market accounts increased 83.8% compared to a year ago and represented 49.9% of total deposits. CDs decreased 23.2% when compared to a year ago and comprised 12.3% of the total deposit portfolio, at June 30, 2021.
  • Asset quality remained exemplary with $36,000 of nonperforming loans at June 30, 2021, representing 0.01% of total loans. This compares to nonperforming loans at 0.02% of total loans at March 31, 2021, and at June 30, 2020.
  • The allowance for loan losses totaled $5.93 million, or 1.14% of total loans at June 30, 2021, compared to $5.12 million, or 1.08% of total loans at June 30, 2020. The allowance, as a percentage of non-guaranteed loans, was 1.42% at June 30, 2021, compared to 1.36% a year ago. The allowance for loan losses reflects management’s assessment of the current economic environment.
  • Total equity increased 11.5% to $65.5 million as of June 30, 2021, compared to a year ago. The Bank’s capital levels remained well above FDIC “Well Capitalized” standards as of June 30, 2021, with a Tier 1 Common Equity capital ratio of 13.26%; Total risk-based capital ratio of 14.49%; and Tier 1 leverage ratio of 8.35%.
  • Book value per common share totaled $7.44 as of June 30, 2021, an increase of 10.8% from a year ago.
  • Declared a quarterly cash dividend of $0.04 per share. The dividend is payable September 3, 2021 to shareholders of record on August 24, 2021.  

In December, 2020, Bay Community Bancorp was formed, a bank holding company that is now the parent company of Community Bank of the Bay. The holding company structure provides more capital options to support its growing San Francisco Bay Area franchise, in addition to providing additional revenue generating opportunities. The financial data presented in this release is now consolidated, which only affected second quarter 2021 results, first quarter 2021 results and fourth quarter 2020 results. The results for the second quarter of 2021, the first quarter of 2021 and the fourth quarter of 2020 are comparable to prior Bank-only quarters.

For additional information on the CDFI Rapid Response Program please visit
https://www.cdfifund.gov/programs-training/programs/rrp

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 also California’s 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
    2021 2021 Qtr over Qtr 2020 Qtr over Yr Ago Qtr
    Jun 30 Mar 31 % Change Jun 30 % Change
             
Interest income  $5,898  $6,448  -8.5% $5,480  7.6%
Interest expense   456   493  -7.5%  841  -45.8%
Net interest income before provision 5,442   5,955  -8.6%  4,639  17.3%
Provision for Loan Losses  250   250  0.0%  500  -50.0%
Net interest income after provision 5,192   5,705  -9.0%  4,139  25.4%
             
Non-interest income  2,134   334  538.9%  168  1170.2%
Non-interest expense  3,869   3,665  5.6%  2,609  48.3%
Income before provision for income taxes 3,457   2,374  45.6%  1,698  103.6%
Provision for income taxes  1,050   691  52.0%  521  101.5%
Net income  $2,407  $1,683  43.0% $1,177  104.5%
             
             
Basic earnings per common share$0.27  $0.19  42.9% $0.13  103.2%
Weighted average common shares outstanding    8,794,445   8,786,830     8,739,338   
             
Return on average assets  1.24%  1.00%    0.82%  
Return on average common equity 15.04%  10.89%    8.05%  
             



    BAY COMMUNITY BANCORP
UNAUDITED SUMMARY FINANCIAL STATEMENTS
    (Dollars in thousands, except book value per share)
             
             
 BALANCE SHEET At Period End
    2021 2021 Qtr over Qtr 2020 Year over Year
 ASSETS  Jun 30 Mar 31 % Change Jun 30 % Change
             
Total cash and investments$249,325  $197,828  26.0% $119,338  108.9%
Loans, net of unearned income 519,043   541,589  -4.2%  474,205  9.5%
Loan loss reserve  (5,931)  (5,679) 4.4%  (5,115) 16.0%
Other assets   33,476   28,336  18.1%  23,573  42.0%
Total Assets  $795,913  $762,074  4.4% $612,001  30.1%
             
 LIABILITIES AND SHAREHOLDERS EQUITY        
             
Non-interest bearing demand deposits 263,697   255,310  3.3%  205,580  28.3%
Interest bearing deposits  434,238   406,326  6.9%  301,324  44.1%
Total deposits   697,935   661,636  5.5%  506,904  37.7%
Total borrowings and other liabilities 32,497   37,216  -12.7%  46,391  -29.9%
Total Liabilities  $730,432  $698,852  4.5% $553,295  32.0%
             
Total equity   65,481   63,222  3.6%  58,706  11.5%
Total Liabilities and Total Equity$795,913  $762,074  4.4% $612,001  30.1%
             
Book value per common share$7.44  $7.20  3.4% $6.71  10.8%
             



SELECTED FINANCIAL DATA      
(In thousands of dollars, except for ratios and per share amounts)    
Unaudited      
  At or for the Three Months Ended
  2021 2021 2020
  Jun 30 Mar 31 Jun 30
ASSET QUALITY RATIOS      
Net (charge-offs) recoveries 1  (268) 2 
Net (charge-offs) recoveries to average loans 0.0002% -0.0513% 0.0004%
Non-performing loans as a % of loans 0.01% 0.02% 0.02%
Non-performing assets as a % of assets 0.00% 0.01% 0.02%
Allowance for loan losses as a % of total loans 1.14% 1.05% 1.08%
Allowance for loan losses as a % of total unguaranteed loans1.42% 1.36% 1.36%
Allowance for loan losses as a % of non-performing loans 16627% 5069% 4427%
       
AVERAGE BALANCE SHEET DATA      
Average assets 780,587  685,225  572,778 
Average total loans 529,734  522,595  452,619 
Average total deposits 682,091  581,577  471,924 
Average shareholders' equity 64,187  62,704  58,644 
       
FINANCIAL RATIOS\STATISTICS      
Return on average assets 1.24% 1.00% 0.82%
Return on average equity 15.04% 10.89% 8.05%
Net interest margin 2.93% 3.71% 3.38%
Efficiency ratio 51.07% 58.28% 54.28%
       

 

Contacts: William S. Keller, President & CEO
510-433-5404
wkeller@BankCBB.com

 


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