2021 1st Quarter Earnings
Bay Community Bancorp First Quarter Earnings Nearly Double to a Record $1.68 Million; Loans Increase 35% and Deposits Increase 53% Year Over Year
OAKLAND, CA – April 30, 2021 — 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 first quarter ended March 31, 2021. Earnings increased 90.0% to $1.68 million for the first quarter of 2021, compared to $886,000 for the first quarter of 2020. Interest and fee income from the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) loans, as well as significant core loan and deposit growth contributed to record profitability for the quarter. All financial results are unaudited.
“Our record first quarter results were fueled by strong revenue generation, robust loan and deposit growth and the continued success of our outreach to new and existing customers, as we all navigate through the economic impact of the pandemic,” stated William S. Keller, President and CEO. “During the quarter, asset quality continued to be very strong with loan modifications decreasing again, and our allowance for loan losses remains robust. While there still remains uncertainty in the overall economy, with improving consumer confidence, lower levels of unemployment and the robust vaccine rollout in California, we believe we are well positioned to emerge even stronger as we continue to grow the company.”
“At the onset of the pandemic, we were strong participants in the SBA’s PPP, servicing the needs of our business customers as well as new customers in our community,” 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 March 31, 2021, we had received payments from the SBA for forgiveness of $32.8 million for 166 of first round PPP borrowers. Approximately $213,000 of the fee income recognized during the first quarter of 2021 related to these loan payoffs, compared to $527,000 of the fee income recognized during the prior quarter.”
Our PPP activity continued into the first quarter of 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 certified Community Development Financial Institution, 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 could access this valuable economic recovery program. As a result of our early efforts, we closed 436 loans with total originations of $63.9 million in the first quarter of 2021, and generated deferred fee income of nearly $2.5 million that will be recognized over the loan’s five year term or at loan forgiveness. Many of these loans were smaller dollar first time PPP applicants that are often eligible for faster rates of forgiveness,” said Keller.
The Company’s net interest margin was 3.71% in the first quarter of 2021, compared to 3.65% in the preceding quarter, and 3.95% in the first quarter a year ago. “Our net interest margin improved six basis points compared to the prior quarter due to the recognition of PPP loan fees and a lower cost of funds. The decrease compared to the first quarter a year ago was due to the 150 basis point reduction in short-term interest rates during the last twelve months and the mix of our earning assets due to increase liquidity” said Keller. The Company’s net interest margin continues to remain above the peer average posted by the SNL Microcap U.S. Bank index as of December 31, 2020.
“We booked a $250,000 loan loss provision in the first quarter of 2021, in recognition of non-PPP loan growth as well as positive economic indicators in our market,” said Mukhtar Ali, Chief Credit Officer. “Our loan loss reserves now represent 1.36% of total non-guaranteed loans at March 31, 2021, compared to 1.21% a year earlier. We continue to review our loan portfolio and communicate with our borrowers and we believe that we have adequate provisions in place to navigate through this pandemic.”
The Bank’s exposure to the industry segments generally considered most at risk from the effects of the pandemic as of March 31, 2021 consists of:
|Industry Segments ($ in thousands)||Balances||% of Total
|Entertainment and Recreation||14,085||3.3%|
|Retail, Excluding Grocers and Gasoline Stations||3,520||0.8%|
“Since the start of the pandemic we have offered loan accommodation options in accordance with regulatory guidance to support our clients who had been most affected by the economic impacts of the pandemic. As of March 31, 2021, only one loan totaling $600,000, or approximately 0.14% of the non-PPP loans, remains on deferral, and it is scheduled to resume full payment terms during April, 2021,” said Ali.
First Quarter 2021 Financial Highlights (at or for the period ended March 31, 2021)
- Net income increased 90.0% to $1.68 million in the first quarter of 2021, compared to $886,000 in the first quarter a year ago. Earnings per share was $0.19 in the first quarter of 2021, compared to $0.10 in the first quarter a year ago.
- Pre-tax core earnings excluding gains on loan sales, PPP loan fees and loan loss provisions, was up $418,000, or 28.3%, to $1.89 million in the first quarter compared to the first quarter a year ago.
- Total assets increased $234.7 million, or 44.5%, to $762.1 million at March 31, 2021, compared to $527.4 million a year earlier, and increased $128.1 million, or 20.2% compared to $634.0 million three months earlier. Average earning assets for the quarter totaled $685.2 million, an increase of $191.8 million, or 38.9%, from the first quarter a year ago and an increase of $28.5 million, or 4.3%, compared with the prior quarter.
- Net interest income, before the provision for loan losses, increased 28.7% to $5.96 million in the first quarter of 2021, compared to $4.63 million in the first quarter a year ago. Operating net income increased $797,000 in the first quarter of 2021 compared to the first quarter a year ago, due to a $1.33 million increase in net interest income and a $250,000 decrease in the provision for loan losses, which was partly offset by a $159,000 decrease in non-interest income, and a $337,000 increase in non-interest expense.
- Net interest margin for the first quarter expanded six basis points to 3.71%, compared to 3.65% in the preceding quarter. The net interest margin was 3.95% in the first quarter a year ago. Accelerated accretion from PPP loan forgiveness added 13 basis points to the net interest margin for the first quarter of 2021, and added 38 basis points to the net interest margin for the fourth quarter of 2020. The average interest yield on non-PPP loans in the first quarter was 5.02%, compared to 5.05% in the prior quarter. The average Cost of Funds in the first quarter was 0.32%, a decline of 11 basis points compared to the prior quarter.
- Net loans increased $141.4 million, or 35.3%, to $541.6 million at March 31, 2021, compared to $400.2 million a year ago. $111.7 million of the increase in net loans compared to the prior year reflects the origination of SBA PPP loans. At March 31, 2021, net non-PPP loans totaled $432.2 million, a 2.1% increase compared to $422.5 million at December 31, 2020, and a 7.4% increase compared to $29.6 million at March 31, 2020. In addition, at March 31, 2021 the unused portion of commercial credit line commitments totaled $59 million compared to $38.6 million at March 31, 2020.
- Total deposits increased $229.7 million, or 53.2%, to $661.6 million at March 31, 2021, compared to $432.0 million a year ago and increased $130.4 million, or 24.5% compared to $531.3 million three months earlier. A second round of PPP loan funds deposited into customer accounts, as well as two additional federal stimulus payments contributed to strong quarterly deposit growth. Noninterest bearing demand deposit accounts increased 73.1% compared to a year ago and represented 38.6% of total deposits. Savings, NOW and money market accounts increased 57.9% compared to a year ago and represented 45.9% of total deposits. CDs increased 11.5% when compared to a year ago and comprised 15.5% of the total deposit portfolio, at March 31, 2021.
- Asset quality remained strong with $112,000 of nonperforming loans at March 31, 2021, representing 0.02% of total loans. This compares to nonperforming loans at 0.09% of total loans at December 31, 2020, and 0.04% at March 31, 2020.
- The allowance for loan losses totaled $5.68 million, or 1.05% of total loans at March 31, 2021, compared to $4.61 million, or 1.15% of total loans at March 31, 2020. The allowance, as a percentage of non-guaranteed loans, was 1.36% at March 31, 2021, compared to 1.21% a year ago. The allowance for loan losses now stands at 5,069% of non-performing loans and reflects management’s assessment of the current economic environment.
- Total equity increased 10.1% to $63.2 million as of March 31, 2021, compared to a year ago. The Bank’s capital levels remained well above FDIC “Well Capitalized” standards as of March 31, 2021, with a Tier 1 Common Equity capital ratio of 13.56%; Total risk-based capital ratio of 14.81%; and Tier 1 leverage ratio of 9.19%.
- Book value per common share totaled $7.20 as of March 31, 2021, an increase of 9.5% from a year ago.
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 first quarter 2021 results and fourth quarter 2020 results. The results for the first quarter of 2021 and the fourth quarter of 2020 are comparable to prior Bank-only quarters.
About 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.
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: