Commonwealth Business Bank (OTCBB: CWBB) today reported a net income available to common stockholders of $32,000, or $0.01 per diluted share, for the third quarter of 2010, compared to a net loss available to common stockholders of $538,000, or ($0.17) per diluted common share, for the second quarter 2010.

?The third quarter was the result of a successful execution of our ongoing strategic focus on asset quality management and planned growth of quality loans,? said Jack Choi, President & CEO. ?Our loan losses have tapered off and absent further downturns in the economy, we are projecting declining provision expenses. Net interest income grew from the combination of an expanded base and higher yields on earning assets. This, coupled with a lower provision for loan losses, will promote sustained profitability. Despite some concerns of a slowing economy, we expect to carry on the positive momentum to foster a stronger performance in the fourth quarter and 2011.?

Third Quarter 2010 Highlights

  • Net income available to common stockholders was $32,000, or $0.01 per diluted share, compared with the net loss of $538,000, or ($0.17) per diluted share, in the previous quarter 2010, and $397,000, or $0.13 per diluted share, year-over-year.
  • Net interest margin increased 25 basis points to 3.52% from the previous quarter and 60 basis points from the prior year, mainly from the reduction in cost of funds.
  • Non-interest income decreased $254,000 and $103,000 from the previous quarter and year-over-year, respectively, due to a decrease in gains on sale of investment securities, offset by an increase in gain on sale of SBA loans and other service income.
  • Non-interest expense increased $112,000 from the previous quarter and $77,000 year-over-year.
  • Total assets grew 4.2%, or $15.4 million, to $382.8 million from the previous quarter.
  • Total deposits increased 4.7%, or $14.3 million, to $320.6 million from an increase in core deposits.
  • Gross loans increased 2.1%, or $6.0 million, to $289.8 million.
  • ALLL increased to 2.72% of gross loans compared to 2.43% at 6/30/2010 and 2.28% at 12/31/09.
  • Non-accrual loans was 1.97% of gross loans at 9/30/10 compared to 2.59% at 6/30/10 and 0.09% at 12/31/109.
  • Non-performing loans including trouble debt restructured loans were 3.98% of gross loans at 9/30/2010 from 2.16% at 6/30/2010 and 0.09% at 12/31/09.
  • Net charge offs decreased to 0.86% of average loans on an annualized basis from 2.95% in previous quarter and 1.29% from the same period of prior year.
  • No OREOs.
  • Well capitalized with the leverage ratio of 12.31%, tier one capital ratio of 15.23%, total risk-based capital ratio of 16.50% and tangible common equity ratio of 10.57%.
  • Efficiency ratio was 50.51%, compared to 49.05% of previous quarter and 61.37% of the prior year.
                               
BALANCE SHEETS
($ in thousands, except per share amounts)
 

September 30,
2010

June 30,
2010

December 31,
2009

Assets
Cash & due from banks $ 3,376 $ 3,394 $ 3,661
Interest-bearing due from banks 61,423 54,937 27,508
Fed funds sold - - -
Investment securities 24,518 19,434 28,321
Total Loans 289,837 283,881 271,401
Allowance for loan losses (7,874 ) (6,887 ) (6,188 )
Net loans 281,963 276,994 265,213
FRB & FHLB Stocks 2,960 2,960 2,863
Accrued interest receivable 1,200 1,012 1,101

Premises and equipment, net

1,046 1,254 1,356
Customer liability on acceptances - - 391
Other assets   6,277     7,347     5,763  
Total Assets $ 382,763   $ 367,332   $ 336,177  
 
Liabilities and Shareholders' Equity

Non-interest-bearing deposits

$ 38,306 $ 36,084 $ 34,341
Interest-bearing deposits 282,313 270,247 241,223
Total deposits 320,619 306,331 275,564
FHLB advance 9,000 9,000 9,000
Other Borrowings 2,895 2,242 -
Accrued interest payable 735 609 961
Bank liability on acceptances - - 391
Other liabilities 1,338 1,056 1,501
Total Liabilities 334,587 319,238 287,417
Total shareholders' equity   48,176     48,094     48,760  
Total Liabilities and Shareholders' Equity $ 382,763   $ 367,332   $ 336,177  
Book value per common share $ 13.04 $ 13.02 $ 13.24
 
 
                             
STATEMENTS OF OPERATIONS
($ in thousands, except per share amounts)
 
Three Months Ended

Sept 30, 2010

June 30, 2010

Sept 30, 2009
Interest income $ 4,417 $ 4,100 $ 3,937
Interest Expense 1,109 1,161 1,532
Net interest income 3,308 2,939 2,405
Provision for loan losses 1,744 2,761 602

Non-interest income

503 757 606

Non-interest expense

1,925 1,813 1,848
Income before income taxes 142 (878 ) 561
Provision for income taxes   (12 )   (356 )   254  
Net income (loss) $ 154   $ (522 ) $ 307  
Dividend and discount accretion on preferred stock $ (122 ) $ (16 ) $ 90  
Net income (loss) available to common stockholders $ 32   $ (538 ) $ 397  
 
Basic EPS $ 0.01 $ (0.17 ) $ 0.13
Diluted EPS $ 0.01 $ (0.17 ) $ 0.13
 
INCOME STATEMENT RATIOS
Return on average assets 0.16 % -0.56 % 0.37 %
Return on average equity 1.26 % -4.28 % 2.50 %
Net interest margin 3.52 % 3.27 % 2.92 %
Efficiency ratio 50.51 % 49.05 % 61.37 %
 
 
Nine Months Ended
Sept 30,
2010 2009
Interest income $ 12,504 $ 11,384
Interest expense 3,438 4,792
Net interest income 9,066 6,592
Provision for loan losses 6,325 3,407

Non-interest income

1,545 1,469

Non-interest expense

5,595 5,513
Income before income taxes (1,309 ) (859 )
Income tax provision   (602 )   (319 )
Net loss $ (707 ) $ (540 )
Dividend and discount accretion on preferred stock $ (153 ) $ (62 )
Net loss available to common stockholders $ (860 ) $ (602 )
 
Basic EPS $ (0.28 ) $ (0.19 )
Diluted EPS $ (0.28 ) $ (0.19 )
 
INCOME STATEMENT RATIOS
Return on average assets -0.26 % -0.23 %
Return on average equity -1.93 % -1.49 %
Net interest margin 3.38 % 2.81 %
Efficiency ratio 52.73 % 68.39 %
 
 

The Bank's Call Reports are available for review or download directly from the FDIC website at www.fdic.gov, or through the link at the Bank's website at www.cwbbank.com.

This press release contains certain forward-looking information about Commonwealth Business Bank (CBB) 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 CBB. CBB 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 CBB 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 CBB to retain customers, demographic changes, demand for the products or services of CBB 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, CBB's results could differ materially from those expressed in, or implied or projected by such forward-looking statements. CBB assumes no obligation to update such forward-looking statements.

Commonwealth Business Bank
K. Kaye Kim, EVP & CFO
323-988-3007
Kayek@cwbbank.com