FRESNO, Calif., July 21, 2020 (GLOBE NEWSWIRE) -- Communities First Financial Corporation (the “Company”) (OTCQX: CFST), the parent company of Fresno First Bank (the “Bank”), today reported net income increased 31% to $2.98 million, or $0.98 per diluted share for the second quarter of 2020 (2Q-2020), compared to $2.27 million, or $0.76 per diluted share, for the second quarter of 2019 (2Q-2019), and grew 32% from $2.26 million, or $0.75 per diluted share, for the first quarter of 2020 (1Q-2020). For the first six months of 2020, net income increased 19% to $5.24 million, or $1.73 per diluted share, compared to $4.40 million, or $1.48 per diluted share, for the first six months of 2019. All results are unaudited.
Highlights: As of, or for the quarter ended June 30, 2020, compared to quarter ended June 30, 2019:
- 656 Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans totaling $184.2 million funded in 2Q-2020.
- 352 new customer relationships opened in 2Q-2020 compared to 121 added in 2Q-2019.
- 555 new deposit accounts opened in 2Q-2020 compared to 155 opened in 2Q-2019.
- Pre-tax, pre-provision income increased 54% to $4.9 million.
- Net income increased 31% to $2.98 million or $0.98 per diluted share.
- Return on average equity of 20.63%.
- Return on average assets of 1.71%.
- Total assets increased 64% to $756.7 million.
- Total loans (ex. HFS) increased 86% to $572.7 million.
- Total deposits increased 66% to $678.8 million.
- Shareholder equity increased 29% to $60.8 million.
- Tangible shareholders’ equity to total assets decreased 22% to 8.03%.
- Book value increased 26% to $20.23 per share.
“We generated strong second quarter 2020 earnings, bolstered by a 50% sequential growth in loan balances, which included $184.2 million of SBA PPP loans that funded during the second quarter. We funded 656 PPP loans to new and existing customers and expect to realize approximately $5.5 million in fee income from loan originations over the next couple of years,” said Steve Miller, President and Chief Executive Officer. “Total deposits also grew substantially, up 44% from the linked quarter. Many new customers we granted PPP loans to have established a relationship with our bank and opened up deposit accounts, while our existing clients further deepened their relationship with us by depositing loan proceeds into their existing accounts.” Non-interest-bearing accounts represented 61% of total deposits at June 30, 2020.
“We are excited about our new relationships and thank our existing customers for their loyalty. We look forward to assisting all of our customers as we navigate through these uncertain times presented by the current Coronavirus (COVID-19) pandemic,” added Miller.
COVID-19 Update
Effective July 13, 2020 -- SACRAMENTO – Governor Gavin Newsom and the California Department of Public Health expanded statewide its indoor closures for businesses that encourage mixing of individuals beyond immediate households and make physical distancing and wearing face coverings difficult. Affected businesses include restaurants, wineries and tasting rooms, movie theaters, family entertainment centers, zoos and museums and cardrooms. These sectors may modify operations to provide services outside or by pick-up. This order is effective immediately, and the closures will remain in effect until the State Public Health Officer determines it is appropriate to modify the order based on public health conditions. California will continue to update and issue guidance based on the best available public health data and the best practices currently employed. More information about the state's COVID-19 guidance is on the California Department of Public Health's Guidance web page.
“The economic fallout from the Coronavirus pandemic continues to cause financial hardship for many, and we are intently focused on supporting our customers, communities and employees as they contend with the Coronavirus pandemic,” said Miller. “Our employees working remotely have the resources needed to fully assist our clients with their banking needs as our customers continue to take advantage of the remote channels we offer. Our loan officers have also reached out to borrowers that have been affected by the decline in economic activity, offering assistance with payment deferrals and interest-only payment options for those in need. Our team is performing above and beyond, and I thank them for their hard work and dedication during these difficult times.”
Credit Risk as a Result of the Pandemic
The Bank’s loan portfolio is very diverse, and management continues to monitor and evaluate the Bank’s exposure to potentially increased loan losses related to the COVID-19 pandemic in multiple ways. As a result of massive amounts of government stimulus money, state and federally encouraged payment deferrals, and the SBA waiving payments for six months on SBA loans, normal metrics such as delinquencies may understate potential credit issues. Due to the potential distortion of traditional metrics, management and staff are actively monitoring other sources of data more frequently for early indications of distress within the portfolio such as average deposits, overdrafts, line of credit usage, and guarantors’ credit history. In addition, management and staff are engaging with borrowers more frequently to understand the pandemic effects on their business, customers, suppliers, vertical markets, and are obtaining more frequent financial data. Management has segmented the loan portfolio in several ways and examined risk exposure based on quantitative and qualitative information. Management and staff actively communicate with borrowing and key deposit clients to assess the health of and stress their business may be experiencing as well as to gauge and compile information on what may be affecting suppliers and customers of these industries. Following is a recap of several specific areas management is monitoring for increased signs of credit stress.
Loan Portfolio Segmentation:
| Loan Portfolio Segments | |||||||||||||
| # of Loans | Book Balance | % of Portfolio | Guaranteed Balance | Balance Net of Guarantees | Undisbursed | Exposure with UnDisbursed | |||||||
| Fully Government Guaranteed Portfolio | |||||||||||||
| Purchased SBA and USDA | 95 | $ | 53,690 | 9.1 | % | $ | 53,690 | 0 | 0 | 0 | |||
| PPP Loans | 656 | 184,151 | 31.2 | % | 184,151 | 0 | 0 | 0 | |||||
| Total 100% Govt. Gte. Portfolio | 751 | $ | 237,841 | 40.2 | % | $ | 237,841 | 0 | 0 | 0 | |||
| Real Estate Secured Portfolio | |||||||||||||
| 1-4 Family Residential | 18 | $ | 3,799 | 0.6 | % | 0 | $ | 3,799 | $ | 750 | $ | 4,550 | |
| Construction & Land Development | 18 | 18,746 | 3.2 | % | 0 | 18,746 | 9,359 | 28,105 | |||||
| Secured by Farmland | 15 | 11,070 | 1.9 | % | 0 | 11,070 | 3,037 | 14,107 | |||||
| 1-4 Family Revolving Lines of Credit | 3 | 2,249 | 0.4 | % | 0 | 2,249 | 631 | 2,880 | |||||
| Closed End 1-4 Family 1st | 22 | 11,581 | 2.0 | % | 389 | 11,192 | 0 | 11,192 | |||||
| Closed End 1-4 Family 2nd | 2 | 60 | 0.0 | % | 51 | 9 | 0 | 9 | |||||
| Multifamily 5 or More | 38 | 25,469 | 4.3 | % | 0 | 25,469 | 0 | 25,469 | |||||
| Held for Sale Multifamily 5 or More | 14 | 18,306 | 3.1 | % | 0 | 18,306 | 0 | 18,306 | |||||
| Owner Occupied Commercial Real Estate | 104 | 82,136 | 13.9 | % | 11,658 | 70,478 | 3,621 | 74,099 | |||||
| Non Owner Occupied Commercial Real Estate | 44 | 50,289 | 8.5 | % | 2,936 | 47,353 | 1,249 | 48,602 | |||||
| Total RE Portfolio | 278 | $ | 223,706 | 37.9 | % | $ | 15,033 | $ | 208,672 | $ | 18,648 | $ | 227,321 |
| Non Government Guaranteed Commercial | |||||||||||||
| Loans to Finance Ag Production & Other Farm | 35 | $ | 11,639 | 2.0 | % | 0 | $ | 11,639 | $ | 8,960 | $ | 20,600 | |
| Commercial & Industrial Loans | 252 | 54,933 | 9.3 | % | 0 | 54,933 | 64,951 | 119,884 | |||||
| Accounts Receivable Lines | 9 | 4,204 | 0.7 | % | 0 | 4,204 | 6,195 | 10,399 | |||||
| Municipal / Public Entities | 5 | 12,602 | 2.1 | % | 0 | 12,602 | 0 | 12,602 | |||||
| Loans to Non Depository Financial Institutions | 14 | 3,667 | 0.6 | % | 0 | 3,667 | 1,109 | 4,776 | |||||
| All Other Loans Ex. Consumer | 16 | 6,729 | 1.1 | % | 0 | 6,729 | 4,992 | 11,721 | |||||
| Lease Financing Receivables | 1 | 724 | 0.1 | % | 0 | 724 | 0 | 724 | |||||
| Consumer / Personal | 64 | 8 | 0.0 | % | 0 | 8 | 161 | 169 | |||||
| Total Non-SBA Commercial Portfolio | 396 | $ | 94,506 | 16.0 | % | 0 | $ | 94,506 | $ | 86,368 | $ | 180,874 | |
| Commercial Loans with SBA Guarantees | |||||||||||||
| Loans to Finance Ag Production & Other Farm | 2 | $ | 40 | 0.0 | % | $ | 36 | $ | 4 | $ | 60 | $ | 64 |
| Commercial & Industrial Loans | 142 | 34,909 | 5.9 | % | 24,568 | 10,341 | 1,055 | 11,396 | |||||
| Total SBA Commercial Portfolio | 144 | $ | 34,949 | 5.9 | % | $ | 24,604 | $ | 10,345 | $ | 1,115 | $ | 11,460 |
| Total Loan Portfolio | 1,569 | $ | 591,001 | 100.0 | % | $ | 277,478 | $ | 313,523 | $ | 106,131 | $ | 419,654 |
“We look at four major segments within our loan portfolio with different risk profiles,” said Miller. “The fully government guaranteed portion of our portfolio represents 40.2% of total loans and consists of both 100% guaranteed SBA and USDA loans we have purchased on the secondary market and the PPP loans we originated during 2Q-2020. With 100% of the balances guaranteed by the US government, we consider this segment as having little to no risk of loss.”
The second segment consists of loans collateralized with real property. This segment represents 37.9% of the portfolio and consists primarily of owner- and non-owner occupied commercial real estate, multi-family and single-family properties, and farmland. Primary repayment is generally from business cash flow; however, all are supported by tangible collateral in the event of default.
The third segment represents 16.0%, or $94.5 million, and consists of commercial loans for various purposes. “Within this group, we have a variety of risk profiles with the highest risk in the commercial & industrial group. These are loans for general business purposes and include both term loans and lines of credit. While each are underwritten based on business history, cash flow, and borrower and guarantor support, we consider them higher risk as most are not supported with traditional tangible collateral should the business fail,” said Miller.
The final segment represents 5.9% of the portfolio and consists of commercial loans supported with SBA guarantees. When the SBA guarantee is considered, the net exposure to the Company drops to less than 2% of the total portfolio. These loans could arguably be considered a part of segment three as they consist of loans for general business purposes. “We look at this portion of the portfolio on its own because most of these businesses are either smaller, have repayments based on projections, are undercollateralized, have extended repayment term, or have less operating history. Some may be in industry segments that have been disproportionally impacted by the pandemic,” Miller continued.
RE Secured Portfolio Segment – Collateral Devaluation Exposure
| RE Secured Portfolio - Stress Loss Exposure Based on Devaluation of Collateral | ||||||||||||||||||||||||
| # of Loans | Book Balance | Guaranteed Balance | Balance Net of Guarantees | Undisbursed | Exposure with UnDisbursed | Potential Exposure if Entire Portfolio Value Declined by | ||||||||||||||||||
| 10 | % | 20 | % | 30 | % | 40 | % | |||||||||||||||||
| Real Estate Secured Portfolio | ||||||||||||||||||||||||
| Real Estate Secured with LTV below 60% | 125 | $ | 90,278 | 0 | 0 | $ | 9,312 | $ | 99,590 | 0 | 0 | 0 | 0 | |||||||||||
| 60% - 70% | 52 | 49,015 | 0 | 49,015 | 1,821 | 50,836 | 0 | 0 | 0 | 3,180 | ||||||||||||||
| 70% - 80% | 50 | 52,981 | 0 | 52,981 | 6,099 | 59,081 | 0 | 0 | 2,262 | 8,170 | ||||||||||||||
| 80% - 90% | 9 | 9,753 | 0 | 9,753 | 1,401 | 11,155 | 0 | 146 | 1,261 | 2,377 | ||||||||||||||
| 90% - 100% | 1 | 286 | 0 | 286 | 0 | 286 | 24 | 53 | 82 | 110 | ||||||||||||||
| SBA Guaranteed - RE Secured Loans | 41 | 21,392 | 15,033 | 6,359 | 14 | 6,373 | 22 | 95 | 304 | 693 | ||||||||||||||
| Total RE Portfolio | 278 | $ | 223,706 | $ | 15,033 | $ | 118,394 | $ | 18,648 | $ | 227,321 | $ | 46 | $ | 293 | $ | 3,909 | $ | 14,530 | |||||
Although cash flow, rents, and borrower support are the primary sources of repayment for our CRE loans, secondary collateral support is the backstop should the business fail. Management has examined real estate collateral support values based on the most recent appraisals and valuations. The table above is segmented based on each loan’s relative loan to value, as of June 30, 2020. Although unlikely that all real estate loans would default simultaneously, collateral values generally do not become impaired until we assume values have dropped by 30% to 40%. The portfolio is diverse and has limited exposure to the segments that have seen the greatest COVID impact – lodging and retail. “At present, few of our CRE customers have indicated significant issues with tenants or collection of rents,” said Miller.
Requests for Deferral of Payments
| Payment Deferrals Granted by Industry | |||||||||||||||
| # of Loans | Book Loan Balance | Govt. Guaranteed Balances | Net Exposure (Book - Govt. Gte.) | % of Total Loans less Govt. Gte. | Undisbursed | Exposure Including Undisbursed | % of Total Commitments less Govt. Gte. | ||||||||
| Drinking Places (Alcoholic Beverages) | 2 | $ | 255 | $ | 126 | $ | 129 | 0.0 | % | $ | 70 | $ | 199 | 0.0 | % |
| Full-Service Restaurants | 5 | 1,451 | 1,018 | 433 | 0.1 | % | 0 | 433 | 0.1 | % | |||||
| Hotels and Motels | 4 | 11,648 | 1,662 | 9,987 | 3.2 | % | 0 | 9,987 | 2.4 | % | |||||
| Limited-Service Restaurants | 1 | 484 | 0 | 484 | 0.2 | % | 0 | 484 | 0.1 | % | |||||
| Snack and Nonalcoholic Beverage Bars | 2 | 273 | 199 | 74 | 0.0 | % | 0 | 74 | 0.0 | % | |||||
| Convention and Trade Show Organizers | 1 | 8 | 0 | 8 | 0.0 | % | 0 | 8 | 0.0 | % | |||||
| Amusement Venues | 1 | 108 | 92 | 16 | 0.0 | % | 0 | 16 | 0.0 | % | |||||
| Health Care and Social Assistance | 3 | 1,383 | 0 | 1,383 | 0.4 | % | 0 | 1,383 | 0.3 | % | |||||
| Radio & Television Stations | 1 | 948 | 0 | 948 | 0.3 | % | 0 | 948 | 0.2 | % | |||||
| Breweries | 3 | 732 | 533 | 199 | 0.1 | % | 0 | 199 | 0.0 | % | |||||
| Commercial Printing | 6 | 1,191 | 0 | 1,191 | 0.4 | % | 0 | 1,191 | 0.3 | % | |||||
| Wineries | 1 | 14 | 0 | 14 | 0.0 | % | 0 | 14 | 0.0 | % | |||||
| Marketing Consulting Services | 1 | 103 | 88 | 16 | 0.0 | % | 0 | 16 | 0.0 | % | |||||
| Offices of Lawyers | 1 | 0 | 0 | 0 | 0.0 | % | 3,000 | 3,000 | 0.7 | % | |||||
| Other Scientific and Technical Consulting Services | 1 | 33 | 0 | 33 | 0.0 | % | 0 | 33 | 0.0 | % | |||||
| Lessors of Nonresidential Buildings | 5 | 2,472 | 0 | 2,472 | 0.8 | % | 0 | 2,472 | 0.6 | % | |||||
| Lessors of Residential Buildings and Dwellings | 6 | 1,295 | 0 | 1,295 | 0.4 | % | 0 | 1,295 | 0.3 | % | |||||
| Offices of Real Estate Agents and Brokers | 3 | 356 | 283 | 73 | 0.0 | % | 0 | 73 | 0.0 | % | |||||
| Confectionery and Nut Stores | 1 | 130 | 0 | 130 | 0.0 | % | 0 | 130 | 0.0 | % | |||||
| Gasoline Stations with Convenience Stores | 1 | 997 | 0 | 997 | 0.3 | % | 0 | 997 | 0.2 | % | |||||
| Musical Instrument and Supplies Stores | 1 | 365 | 274 | 91 | 0.0 | % | 0 | 91 | 0.0 | % | |||||
| Used Car Dealers | 2 | 532 | 399 | 133 | 0.0 | % | 0 | 133 | 0.0 | % | |||||
| General Freight Trucking, Long-Distance, Truckload | 2 | 259 | 0 | 259 | 0.1 | % | 0 | 259 | 0.1 | % | |||||
| Industrial Supplies Merchant Wholesalers | 2 | 666 | 0 | 666 | 0.2 | % | 0 | 666 | 0.2 | % | |||||
| Recyclable Material Merchant Wholesalers | 1 | 141 | 0 | 141 | 0.0 | % | 0 | 141 | 0.0 | % | |||||
| Grand Total | 57 | $ | 25,845 | $ | 4,673 | $ | 21,172 | 6.8 | % | $ | 3,070 | $ | 24,243 | 5.8 | % |
| Total Loan Portfolio | 1,569 | $ | 591,001 | $ | 277,478 | $ | 313,523 | 100.0 | % | $ | 106,131 | $ | 419,654 | 100.0 | % |
“We have granted payment deferrals on 57 individual loans covering 36 borrowers,” added Miller. The table above reflects the loan deferrals based upon the industry and not surprisingly includes loans in the restaurant, hospitality, and retail/services industries that have been most impacted by the pandemic. In terms of total dollars of loans deferred, 47% of deferral requests were for three months, while 8% and 45% were for four and six months respectively. 85% of deferrals were for traditional commercial loans while 15% were for SBA guaranteed loans.
Higher Risk Industries:
| Industry Segments Considered Higher Risk due to COVID | |||||||||||||||
| # of Loans | Book Loan Balance | Govt. Guaranteed Balances | Net Exposure (Book - Govt. Gte.) | % of Total Loans less Govt. Gte. | Undisbursed | Exposure Including Undisbursed | % of Total Commitments less Govt. Gte. | ||||||||
| Higher Risk | |||||||||||||||
| Lodging | 10 | $ | 15,304 | $ | 1,847 | $ | 13,457 | 4.3 | % | 0 | $ | 13,457 | 3.2 | % | |
| Restaurants & Bars | 32 | 8,139 | 4,774 | 3,366 | 1.1 | % | 2,612 | 5,978 | 1.4 | % | |||||
| Entertainment | 5 | 2,418 | 1,113 | 1,305 | 0.4 | % | 200 | 1,505 | 0.4 | % | |||||
| Retail Sales | 43 | 10,186 | 5,023 | 5,163 | 1.6 | % | 5,123 | 10,286 | 2.5 | % | |||||
| Gasoline Stations with Convenience Stores | 21 | 23,640 | 1,874 | 21,766 | 6.9 | % | 3,708 | 25,474 | 6.1 | % | |||||
| Supermarkets and Grocery (ex. Convenience) | 3 | 2,214 | 1,661 | 554 | 0.2 | % | 0 | 554 | 0.1 | % | |||||
| Total | 114 | $ | 61,902 | $ | 16,293 | $ | 45,610 | 14.5 | % | $ | 11,643 | $ | 57,253 | 13.6 | % |
| Higher Risk (group above) that have requested temporary payment deferral | |||||||||||||||
| Lodging | 4 | $ | 11,648 | $ | 1,662 | $ | 9,987 | 3.2 | % | 0 | $ | 9,987 | 2.4 | % | |
| Restaurants & Bars | 10 | 2,464 | 1,343 | 1,121 | 0.4 | % | 70 | 1,191 | 0.3 | % | |||||
| Entertainment | 2 | 1,057 | 92 | 965 | 0.3 | % | 0 | 965 | 0.2 | % | |||||
| Retail Sales | 4 | 1,027 | 673 | 355 | 0.1 | % | 0 | 355 | 0.1 | % | |||||
| Gasoline Stations with Convenience Stores | 1 | 997 | 0 | 997 | 0.3 | % | 0 | 997 | 0.2 | % | |||||
| Supermarkets and Grocery (ex. Convenience) | 0 | 0 | 0 | 0 | 0.0 | % | 0 | 0 | 0.0 | % | |||||
| Total | 21 | $ | 17,193 | $ | 3,769 | $ | 13,424 | 4.3 | % | $ | 70 | $ | 13,494 | 3.2 | % |
| Total Loan Portfolio | 1,569 | $ | 591,001 | $ | 277,478 | $ | 313,523 | 100.0 | % | $ | 106,131 | $ | 419,654 | 100.0 | % |
Management has identified the following industry segments most at risk, as of June 30, 2020, due to the effects of the pandemic. The first table is a complete list of exposures to these industries while the second table is a subset of the first reflecting the borrowers who have been granted payment deferrals. Certain industries, such as lodging and restaurants, have been severely impacted by mandated closures; other industries have been impacted in varying degrees. For example, the Company’s largest retail segment concentration is in gas stations with convenience stores that have seen slower sales but continue operations. As reflected above only one of these loans has asked for a payment deferral and the remainder are current on their payments.
Many of these customers received PPP loans and SBA guaranteed customers are having six months of payments made by the government as part of the stimulus package. As a result, it is too early to tell who may ultimately have credit issues.
Select Balance Sheet, Income Statement and Key Ratios adjusted for PPP Loan Impact:
| SELECT FINANCIAL INFORMATION AND RATIOS (unaudited) | For the Quarter Ended: | Year to Date as of: | ||||||||||||||||||
| June 30, 2020 | PPP Impact | Estimate if no PPP | June 30, 2020 | PPP Impact | Estimate if no PPP | |||||||||||||||
| BALANCE SHEET DATA - PERIOD END BALANCES: | ||||||||||||||||||||
| Total assets | $ | 756,739 | $ | (86,761 | ) | $ | 669,978 | |||||||||||||
| Total Loans (ex. HFS) | 572,695 | (184,151 | ) | 388,544 | ||||||||||||||||
| Investment securities | 139,688 | - | 139,688 | |||||||||||||||||
| Total deposits | 678,830 | (75,000 | ) | 603,830 | ||||||||||||||||
| Shareholders equity, net | 60,775 | |||||||||||||||||||
| SELECT INCOME STATEMENT DATA: | ||||||||||||||||||||
| Gross revenue | $ | 8,338 | $ | (640 | ) | $ | 7,698 | $ | 15,623 | $ | (640 | ) | $ | 14,983 | ||||||
| Operating expense | 3,461 | 328 | 3,789 | 7,246 | 328 | 7,574 | ||||||||||||||
| Pre-tax, pre-provision income | 4,877 | (968 | ) | 3,909 | 8,377 | (968 | ) | 7,409 | ||||||||||||
| Net income after tax | $ | 2,978 | $ | (707 | ) | $ | 2,271 | $ | 5,239 | $ | (707 | ) | $ | 4,532 | ||||||
| SHARE DATA: | ||||||||||||||||||||
| Basic earnings per share | $ | 0.99 | $ | (0.24 | ) | $ | 0.76 | $ | 1.75 | $ | (0.24 | ) | $ | 1.51 | ||||||
| Fully diluted earnings per share | $ | 0.98 | $ | (0.23 | ) | $ | 0.75 | $ | 1.73 | $ | (0.23 | ) | $ | 1.50 | ||||||
| Book value per common share | $ | 20.23 | ||||||||||||||||||
| Common shares outstanding | 3,004,331 | |||||||||||||||||||
| Fully diluted shares | 3,033,308 | |||||||||||||||||||
| CFST - Stock price | $ | 23.00 | ||||||||||||||||||
| RATIOS: | ||||||||||||||||||||
| Return on average assets | 1.71 | % | 1.63 | % | 1.72 | % | 1.67 | % | ||||||||||||
| Return on average equity | 20.63 | % | 15.73 | % | 18.88 | % | 16.33 | % | ||||||||||||
| Efficiency ratio | 41.51 | % | 49.22 | % | 46.56 | % | 50.76 | % | ||||||||||||
| Yield on earning assets | 4.01 | % | 4.40 | % | 4.37 | % | 4.62 | % | ||||||||||||
| Cost to fund earning assets | 0.14 | % | 0.17 | % | 0.18 | % | 0.21 | % | ||||||||||||
| Net Interest Margin | 3.87 | % | 4.23 | % | 4.19 | % | 4.42 | % | ||||||||||||
| Equity to assets | 8.12 | % | 9.07 | % | ||||||||||||||||
| Loan to deposits ratio | 84.37 | % | 64.35 | % | ||||||||||||||||
| Full time equivalent employees | 59 | |||||||||||||||||||
| ASSET QUALITY: | ||||||||||||||||||||
| Total delinquent accruing loans | $ | 5,181 | ||||||||||||||||||
| Nonperforming assets | $ | 1,083 | ||||||||||||||||||
| Non Accrual / Total Loans | .19 | % | .28 | % | ||||||||||||||||
| Nonperforming assets to total assets | .14 | % | .16 | % | ||||||||||||||||
| LLR / Total loans | 1.01 | % | 1.49 | % | ||||||||||||||||
“During the second quarter, there was substantial growth in our balance sheet and to earnings,” said Steve Canfield, Executive Vice President and Chief Financial Officer. “The primary cause of the growth in both was our origination of 656 SBA PPP loans totaling $184.2 million. The origination of these PPP loans generated $5.5 million in fee income, which will be recognized over the life of these loans. The majority of these loans were made to existing customers with the majority depositing the loan proceeds into operating accounts with the Bank. “We expect that many of the non-customers we granted PPP loans to who opened deposit accounts to manage the funds may move their entire relationship to the Bank due to their PPP loan experience with us,” said Canfield. “As a result of our PPP lending, both loans and deposits grew substantially during the quarter. We anticipate that as the funds are used, we will need to fund the gap by borrowing. We plan on utilizing the Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) as a source of funding, however, to date we have used low cost deposits to fund these loans.
“We expect the majority of these loans will apply for and be granted forgiveness by the SBA at which time the balance sheet will shrink as borrowings and temporary funding is repaid and the remaining deferred fees are taken into income,” added Canfield. “The table above reflects our calculation of what the Company would have earned in 2Q-2020 without the income from PPP loans, and our projection of what the balance sheet would look like if the PPP loans were removed as of June 30, 2020. Key ratios affected by the balance sheet growth and income have been recalculated to reflect our estimation of what these financial metrics would look like without PPP loans on the books.”
Results of Operations
Operating revenue, consisting of net interest income and non-interest income, increased 35% to $8.34 million for the second quarter of 2020, compared to $6.20 million for the second quarter a year ago and was higher by 14% from $7.29 million for the first quarter of 2020. For the first six months of 2020, operating revenue grew 29% to $15.62 million, compared to $12.04 million for the first half of 2019.
Net interest income, before the provision for loan losses, increased 23% to $6.55 million for the second quarter of 2020, compared to $5.32 million for the second quarter a year ago and increased 12% from $5.84 million for the first quarter of 2020. For the first six months of 2020, net interest income increased 18% to $12.39 million from $10.53 million for the first half of 2019. Net interest income in the second quarter of 2020, and for the first six months of 2020, benefitted primarily from interest income generated from the loan portfolio, which offset the overall lower interest rate environment.
The net interest margin contracted to 3.87% for the second quarter of 2020, from 4.94% for the second quarter of 2019, and 4.61% for the first quarter of 2020. “The 150-basis point reduction in short term interest rates in March 2020, and the resulting effect on yields in the loan and investment portfolios, contributed to the net interest margin decline during the second quarter,” said Canfield. “Although we benefited in terms of interest income earned from the PPP loans originated, their lower yield pushed the overall yield on earning assets down and contributed to the lower net interest margin for the quarter”. For the first six months of 2020, the interest margin was 4.19% compared to 4.88% for the first half of 2019.
The yield on earning assets was 4.01% for the second quarter of 2020, compared to 5.17% for the second quarter a year ago, and 4.85% on a linked quarter basis. The cost of funds was substantially lower at 0.14% for the second quarter of 2020, compared to 0.23% for the second quarter a year ago, and 0.24% from the preceding quarter. For the first six months of 2020, the yield on earning assets was 4.37% compared to 5.09% for the first half of 2019.
Total non-interest income more than doubled to $1.79 million for the second quarter of 2020, compared to $872,000 for the second quarter of 2019, and grew by 24% from $1.45 million for the first quarter of 2020, primarily due to substantial growth in merchant services revenue. Merchant services revenue grew by 518% in the second quarter of 2020, compared to the second quarter of 2019, and was up 65% on a linked quarter basis. Growth in merchant services revenue resulted from continued strong customer growth from organic sources and through ISO partners. Gain on sale of loans increased by 19% in the second quarter from the first quarter of 2020. For the first six months of 2020, non-interest income increased 110% to $3.24 million from $1.54 million for the first six months of 2019. The growth in non-interest income in the first half of 2020 was primarily due to the higher merchant service revenue, and to a lesser extent fees derived from deposit and transaction charges.
Non-interest expense for the second quarter of 2020 was $3.46 million, a 15% increase compared to $3.02 million for the second quarter of 2019. Operating expenses declined 9% from $3.79 million from the first quarter of 2020. For the first six months of 2020, non-interest expense totaled $7.25 million compared to $5.94 million for the first half of 2019. The growth in non-interest expense in the first half of 2020, compared to 2019, was primarily due to the result of higher consulting fees associated with third party support related to the expansion of merchant services, additional marketing expense, and data processing expense related to automation and remote banking initiatives. The efficiency ratio improved to 41.51% for the second quarter of 2020, compared to 48.74% for the second quarter a year ago, and 52.39% for the first quarter of 2020.
Balance Sheet Review
Total assets increased 64% to $756.74 million at June 30, 2020, from $460.03 million at June 30, 2019. Total assets grew 38% from $548.3 million at March 31, 2020, primarily due to the addition of SBA PPP loans and the related deposits inflows.
Total portfolio loans increased $265.50 million, or 86%, to $572.70 million at June 30, 2020, from $307.20 million a year ago, and grew $191.60 million, or 50%, from $381.09 million at March 31, 2020. Total loans at June 30, 2020 included $184.15 million of SBA PPP loans. The loans held for sale portfolio with multi-family loans originated by our SoCal team totaled $18.31 million at quarter end, up 303% from the second quarter a year ago.
The commercial and industrial (C&I) portfolio increased 11% to $163.81 million at June 30, 2020, compared to a year earlier, and represented 29% of total loans. Commercial real estate loans grew 49% year-over-year to $157.89 million, or 28% of total loans. Agriculture loans grew 11% from a year ago to $30.38 million and represented 5% of total loans; real estate construction and land development totaled $22.55 million, or 4% of loans, while residential RE 1-4 family loans totaled $13.89 million, or 2% of loans. SBA PPP loans represented 32% of total portfolio loans. At June 30, 2020, the SBA, USDA or other government agencies, guaranteed $277.47 million, or 47% of the loan portfolio.
Total deposits increased 66% to $678.83 million at June 30, 2020, compared to $410.00 million from a year earlier, and grew 44% from $470.53 million at March 31, 2020. Linked quarter growth in deposits was primarily due to deposits resulting from SBA PPP loans funded and record quarterly new client acquisition.
Noninterest-bearing demand deposits grew 69% to $414.40 million at June 30, 2020, compared to $245.24 million at June 30 2019, and represented 61% of total deposits. “Growth in noninterest-bearing demand deposits was consistent with our historic ratios across new clients acquired and existing clients with increased deposits resulting from SBA PPP loans,” added Canfield. “Overall liquidity remains solid; we have over $160 million in secured and unsecured credit facilities currently in place. We also plan to use the Federal Reserve’s PPPLF for funding a portion of the PPP loans if needed.”
Net shareholder’s equity increased 29% to $60.78 million at June 30, 2020, compared to $47.13 million a year ago and grew 7% from $56.80 million at March 31, 2020. Book value per common share grew 26% to $20.23 at June 30, 2020, compared to $16.09 at June 30, 2019 and 6% compared to $19.00 at March 31, 2020.
Asset Quality
Nonperforming assets (“NPAs”) declined to $1.08 million, or 0.14% of total assets, at June 30, 2020, from $1.15 million, or 0.21% of total assets at March 31, 2020. NPAs were slightly higher than the $793,000, or 0.17% of total assets, at June 30, 2019. There were no charge-offs in the second quarter of 2020 and $47,000 in recoveries. Performing restructured loans decreased to $508,000 at June 30, 2020. This one loan continues to perform under a restructured arrangement that is being closely monitored.
“While nonperforming assets improved on a linked quarter basis, total delinquent and accruing loans increased by almost $3.0 million to $5.2 million from the first quarter,” said Canfield. “While technically past due at the end of the current quarter, the majority of past due loans are guaranteed by the SBA and will be made current once we receive payments from the SBA which we expect in July.”
Past due loans 30 to 89 days increased by $1.36 million to $3.65 million from $2.29 million at March 31, 2020. Past due loans 90 days and over and still accruing increased to $1.12 million at June 30, 2020. There were no loans past due more than 90 days at March 31, 2020. All past due loans, except for one loan for $13,000 are SBA loans and should be paid current with receipt of the July loan payments from the SBA as part of the CARES Act. The one commercial loan for $13,000 was paid current shortly after the quarter end.
The provision for loan losses was $800,000 for the second quarter of 2020, compared to $400,000 recorded in the preceding quarter. “Although our asset quality remained strong at quarter end, we proactively increased our provision for loan losses in response to the Coronavirus pandemic and the impact to our markets,” said Miller. No provision for loan losses was booked in the second quarter a year ago. The ratio of allowance for loan losses to total portfolio held for investment loans was 1.01%, at June 30, 2020, compared to 1.27% a year earlier and 1.30% at March 31, 2020.
“A large portion of our portfolio consists of loans guaranteed by the US government. This group of loans consists of fully guaranteed loans the Company has purchased, the PPP loans, as well as organic SBA and USDA loans the bank has originated. When the effect of these guarantees is considered relative to the loan portfolio, the ratio of allowance for loan losses to total portfolio non-guaranteed loans was 1.96% as of June 30, 2020”, added Miller.
About Communities First Financial Corporation
Communities First Financial Corporation, a bank holding company established in 2014, is the parent company of Fresno First Bank, founded in 2005 in Fresno, California. Fresno First Bank is a leading SBA Lender in California’s Central Valley and has expanded into Southern California. The Bank is also a direct acquiring bank with VISA and MasterCard and processes payments for merchants across the country directly and through partners. Named to the 2019 OTCQX Best 50 and ranked one of the top performing OTCQX companies in the country, based on total return and growth in average daily dollar volume for 2018. The Bank was named to the Inc. 5000 Fastest Growing Companies list in 2017 and to Forbes Best 25 Small Businesses in America for 2016. Additional information is available from the Company’s website at www.fresnofirstbank.com or by calling 559-439-0200.
Forward Looking Statements
This earnings release may contain forward-looking statements. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. The forward-looking statements are based on managements’ expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation, the current COVID-19 pandemic and government responses thereto, the Company’s ability to effectively execute its business plans; changes in general economic and financial market conditions; changes in interest rates; changes in the competitive environment; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; losses, customer bankruptcy, claims and assessments; changes in banking regulations or other regulatory or legislative requirements affecting the Company’s business; international developments; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. The Company undertakes no obligation to release publicly the results of any revisions to the forward-looking statements included herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events. The Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
| SELECT FINANCIAL INFORMATION AND RATIOS (unaudited) | For the Quarter Ended: | Percentage Change From: | Year to Date as of: | |||||||||||||||||||||
| June 30, 2020 | Mar. 31, 2020 | June 30, 2019 | Mar. 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | Percent Change | |||||||||||||||||
| BALANCE SHEET DATA - PERIOD END BALANCES: | ||||||||||||||||||||||||
| Total assets | $ | 756,739 | $ | 548,322 | $ | 460,033 | 38 | % | 64 | % | ||||||||||||||
| Total Loans | 572,695 | 381,092 | 307,196 | 50 | % | 86 | % | |||||||||||||||||
| Investment securities | 139,688 | 120,037 | 94,216 | 16 | % | 48 | % | |||||||||||||||||
| Total deposits | 678,830 | 470,528 | 409,975 | 44 | % | 66 | % | |||||||||||||||||
| Shareholders equity, net | 60,775 | 56,804 | 47,130 | 7 | % | 29 | % | |||||||||||||||||
| SELECT INCOME STATEMENT DATA: | ||||||||||||||||||||||||
| Gross revenue | $ | 8,338 | $ | 7,285 | $ | 6,196 | 14 | % | 35 | % | $ | 15,623 | $ | 12,074 | 29 | % | ||||||||
| Operating expense | 3,461 | 3,785 | 3,020 | -9 | % | 15 | % | 7,246 | 5,942 | 22 | % | |||||||||||||
| Pre-tax, pre-provision income | 4,877 | 3,500 | 3,176 | 39 | % | 54 | % | 8,377 | 6,132 | 37 | % | |||||||||||||
| Net income after tax | $ | 2,978 | $ | 2,261 | $ | 2,270 | 32 | % | 31 | % | $ | 5,239 | $ | 4,400 | 19 | % | ||||||||
| SHARE DATA: | ||||||||||||||||||||||||
| Basic earnings per share | $ | 0.99 | $ | 0.76 | $ | 0.77 | 31 | % | 28 | % | $ | 1.75 | $ | 1.51 | 16 | % | ||||||||
| Fully diluted earnings per share | $ | 0.98 | $ | 0.75 | $ | 0.76 | 32 | % | 29 | % | $ | 1.73 | $ | 1.48 | 17 | % | ||||||||
| Book value per common share | $ | 20.23 | $ | 19.00 | $ | 16.09 | 6 | % | 26 | % | ||||||||||||||
| Common shares outstanding | 3,004,331 | 2,989,524 | 2,929,757 | 0 | % | 3 | % | |||||||||||||||||
| Fully diluted shares | 3,033,308 | 3,033,809 | 2,985,259 | -0 | % | 2 | % | |||||||||||||||||
| CFST - Stock price | $ | 23.00 | $ | 23.00 | $ | 25.15 | 0 | % | -9 | % | ||||||||||||||
| RATIOS: | ||||||||||||||||||||||||
| Return on average assets | 1.71 | % | 1.72 | % | 2.01 | % | -0 | % | -15 | % | 1.72 | % | 1.94 | % | -12 | % | ||||||||
| Return on average equity | 20.63 | % | 16.98 | % | 20.00 | % | 22 | % | 3 | % | 18.88 | % | 20.20 | % | -7 | % | ||||||||
| Efficiency ratio | 41.51 | % | 52.39 | % | 48.74 | % | -21 | % | -15 | % | 46.56 | % | 49.23 | % | -5 | % | ||||||||
| Yield on earning assets | 4.01 | % | 4.85 | % | 5.17 | % | -17 | % | -23 | % | 4.37 | % | 5.09 | % | -14 | % | ||||||||
| Cost to fund earning assets | 0.14 | % | 0.24 | % | 0.23 | % | -42 | % | -41 | % | 0.18 | % | 0.21 | % | -16 | % | ||||||||
| Net Interest Margin | 3.87 | % | 4.61 | % | 4.94 | % | -16 | % | -22 | % | 4.19 | % | 4.88 | % | -14 | % | ||||||||
| Equity to assets | 8.03 | % | 10.36 | % | 10.24 | % | -22 | % | -22 | % | ||||||||||||||
| Loan to deposits ratio | 84.37 | % | 80.99 | % | 74.93 | % | 4 | % | 13 | % | ||||||||||||||
| Full time equivalent employees | 59 | 55 | 47 | 6 | % | 24 | % | |||||||||||||||||
| BALANCE SHEET DATA - AVERAGES: | ||||||||||||||||||||||||
| Total assets | $ | 698,446 | $ | 529,257 | $ | 452,763 | 32 | % | 54 | % | $ | 613,851 | $ | 457,209 | 34 | % | ||||||||
| Total loans | 517,775 | 369,888 | 309,393 | 40 | % | 67 | % | 443,832 | 303,554 | 46 | % | |||||||||||||
| Investment securities | 129,574 | 108,744 | 94,940 | 19 | % | 36 | % | 119,159 | 94,516 | 26 | % | |||||||||||||
| Deposits | 622,281 | 464,401 | 404,081 | 34 | % | 54 | % | 543,341 | 410,896 | 32 | % | |||||||||||||
| Shareholders equity, net | $ | 58,044 | $ | 53,563 | $ | 45,516 | 8 | % | 28 | % | $ | 55,804 | $ | 43,933 | 27 | % | ||||||||
| ASSET QUALITY: | ||||||||||||||||||||||||
| Total delinquent accruing loans | $ | 4,768 | $ | 2,291 | $ | 147 | 108 | % | 3144 | % | ||||||||||||||
| Nonperforming assets | $ | 1,083 | $ | 1,146 | $ | 793 | -5 | % | 37 | % | ||||||||||||||
| Non Accrual / Total Loans | .19 | % | .30 | % | .26 | % | -37 | % | -27 | % | ||||||||||||||
| Nonperforming assets to total assets | .14 | % | .21 | % | .17 | % | -32 | % | -17 | % | ||||||||||||||
| LLR / Total loans | 1.01 | % | 1.30 | % | 1.27 | % | -22 | % | -20 | % | ||||||||||||||
| STATEMENT OF INCOME ($ in thousands) | For the Quarter Ended: | Percentage Change From: | For the Year Ended | ||||||||||||||
| (unaudited) | June 30, 2020 | Mar. 31, 2020 | June 30, 2019 | Mar. 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | Percent Change | |||||||||
| Interest Income | |||||||||||||||||
| Loan interest income | $ | 5,949 | $ | 5,318 | $ | 4,735 | 12 | % | 26 | % | 11,267 | 9,211 | 22 | % | |||
| Investment income | 726 | 695 | 668 | 4 | % | 9 | % | 1,421 | 1,319 | 8 | % | ||||||
| Int. on fed funds & CDs in other banks | 78 | 94 | 141 | -17 | % | -45 | % | 172 | 401 | -57 | % | ||||||
| Dividends from non-marketable equity | 28 | 33 | 33 | -15 | % | -15 | % | 61 | 65 | -6 | % | ||||||
| Interest income | 6,781 | 6,140 | 5,577 | 10 | % | 22 | % | 12,921 | 10,996 | 18 | % | ||||||
| Total interest expense | 234 | 300 | 253 | -22 | % | -8 | % | 534 | 462 | 16 | % | ||||||
| Net interest income | 6,547 | 5,840 | 5,324 | 12 | % | 23 | % | 12,387 | 10,534 | 18 | % | ||||||
| Provision for loan losses | 800 | 400 | - | 100 | % | 0 | % | 1,200 | 0 | 0 | % | ||||||
| Net interest income after provision | 5,747 | 5,440 | 5,324 | 6 | % | 8 | % | 11,187 | 10,534 | 6 | % | ||||||
| Non-Interest Income: | |||||||||||||||||
| Total deposit fee income | 118 | 123 | 114 | -4 | % | 4 | % | 241 | 204 | 18 | % | ||||||
| Debit / credit card interchange income | 66 | 66 | 60 | 0 | % | 10 | % | 132 | 111 | 19 | % | ||||||
| Merchant services income | 1,155 | 699 | 187 | 65 | % | 518 | % | 1,854 | 342 | 442 | % | ||||||
| Gain on sale of loans | 351 | 295 | 386 | 19 | % | -9 | % | 646 | 627 | 3 | % | ||||||
| Other operating income | 101 | 262 | 125 | -61 | % | -19 | % | 363 | 256 | 42 | % | ||||||
| Non-interest income | 1,791 | 1,445 | 872 | 24 | % | 105 | % | 3,236 | 1,540 | 110 | % | ||||||
| Non-Interest Expense: | |||||||||||||||||
| Salaries & employee benefits | 1,908 | 2,255 | 1,878 | -15 | % | 2 | % | 4,163 | 3,742 | 11 | % | ||||||
| Occupancy expense | 204 | 215 | 198 | -5 | % | 3 | % | 419 | 393 | 7 | % | ||||||
| Other operating expense | 1,349 | 1,315 | 944 | 3 | % | 43 | % | 2,664 | 1,807 | 47 | % | ||||||
| Non-interest expense | 3,461 | 3,785 | 3,020 | -9 | % | 15 | % | 7,246 | 5,942 | 22 | % | ||||||
| Net income before tax | 4,077 | 3,100 | 3,176 | 32 | % | 28 | % | 7,177 | 6,132 | 17 | % | ||||||
| Tax provision | 1,099 | 839 | 906 | 31 | % | 21 | % | 1,938 | 1,732 | 12 | % | ||||||
| Net income after tax | $ | 2,978 | $ | 2,261 | $ | 2,270 | 32 | % | 31 | % | 5,239 | 4,400 | 19 | % | |||
| BALANCE SHEET ($ in thousands ) | End of Period: | Percentage Change From: | |||||||||||||
| (unaudited) | June 30, 2020 | Mar. 31, 2020 | June 30, 2019 | Mar. 31, 2020 | June 30, 2019 | ||||||||||
| ASSETS | |||||||||||||||
| Cash and due from banks | $ | 9,965 | $ | 8,331 | $ | 11,215 | 20 | % | -11 | % | |||||
| Fed funds sold and deposits in banks | 606 | 719 | 20,492 | -16 | % | -97 | % | ||||||||
| CDs in other banks | 9,914 | 9,914 | 10,657 | 0 | % | -7 | % | ||||||||
| Investment securities | 139,688 | 120,037 | 94,216 | 16 | % | 48 | % | ||||||||
| Loans held for sale | 18,306 | 17,534 | 4,542 | 4 | % | 303 | % | ||||||||
| Portfolio loans outstanding: | |||||||||||||||
| RE constr & land development | 22,545 | 20,070 | 14,146 | 12 | % | 59 | % | ||||||||
| Residential RE 1-4 Family | 13,890 | 13,709 | 11,714 | 1 | % | 19 | % | ||||||||
| Commercial Real Estate | 157,894 | 148,945 | 105,819 | 6 | % | 49 | % | ||||||||
| Agriculture | 30,367 | 31,419 | 27,345 | -3 | % | 11 | % | ||||||||
| Commercial and Industrial | 163,805 | 166,178 | 148,063 | -1 | % | 11 | % | ||||||||
| SBA PPP Loans | 184,151 | - | - | 0 | % | 0 | % | ||||||||
| Consumer and Other | 43 | 771 | 109 | -94 | % | -61 | % | ||||||||
| Total Portfolio Loans | 572,695 | 381,092 | 307,196 | 50 | % | 86 | % | ||||||||
| Deferred fees & discounts | (4,881 | ) | 4 | 55 | -122125 | % | -8975 | % | |||||||
| Allowance for loan losses | (5,788 | ) | (4,945 | ) | (3,892 | ) | 17 | % | 49 | % | |||||
| Loans, net | 562,026 | 376,151 | 303,359 | 49 | % | 85 | % | ||||||||
| Non-marketable equity investments | 3,019 | 2,647 | 2,512 | 14 | % | 20 | % | ||||||||
| Cash value of life insurance | 8,095 | 8,043 | 7,885 | 1 | % | 3 | % | ||||||||
| Accrued interest and other assets | 5,120 | 4,946 | 5,155 | 4 | % | -1 | % | ||||||||
| Total assets | $ | 756,739 | $ | 548,322 | $ | 460,033 | 38 | % | 64 | % | |||||
| LIABILITIES AND EQUITY | |||||||||||||||
| Non-interest bearing deposits | $ | 414,395 | $ | 292,449 | $ | 245,244 | 42 | % | 69 | % | |||||
| Interest checking | 24,417 | 14,780 | 12,183 | 65 | % | 100 | % | ||||||||
| Savings | 55,550 | 43,910 | 36,024 | 27 | % | 54 | % | ||||||||
| Money market | 130,356 | 84,926 | 83,043 | 53 | % | 57 | % | ||||||||
| Certificates of deposits | 54,112 | 34,463 | 33,481 | 57 | % | 62 | % | ||||||||
| Total deposits | 678,830 | 470,528 | 409,975 | 44 | % | 66 | % | ||||||||
| Borrowings | 11,761 | 17,000 | - | -31 | % | 0 | % | ||||||||
| Other liabilities | 5,373 | 3,990 | 2,928 | 35 | % | 84 | % | ||||||||
| Total liabilities | 695,964 | 491,518 | 412,903 | 42 | % | 69 | % | ||||||||
| Common stock & paid in capital | 30,715 | 30,571 | 29,527 | 0 | % | 4 | % | ||||||||
| Retained earnings | 27,148 | 24,170 | 17,108 | 12 | % | 59 | % | ||||||||
| Total equity | 57,863 | 54,741 | 46,635 | 6 | % | 24 | % | ||||||||
| Accumulated other comprehensive income | 2,912 | 2,063 | 495 | 41 | % | 488 | % | ||||||||
| Shareholders equity, net | 60,775 | 56,804 | 47,130 | 7 | % | 29 | % | ||||||||
| Total Liabilities and shareholders' equity | $ | 756,739 | $ | 548,322 | $ | 460,033 | 38 | % | 64 | % | |||||
| ASSET QUALITY ($ in thousands) | Period Ended: | ||||||||
| (unaudited) | June 30, 2020 | Mar. 31, 2020 | June 30, 2019 | ||||||
| Delinquent accruing loans 30-60 days | $ | 1,771 | $ | 1,138 | $ | 145 | |||
| Delinquent accruing loans 60-90 days | $ | 1,880 | $ | 1,153 | 0.0 | ||||
| Delinquent accruing loans 90+ days | $ | 1,117 | 0.0 | $ | 2 | ||||
| Total delinquent accruing loans | $ | 4,768 | $ | 2,291 | $ | 147 | |||
| Loans on non accrual | $ | 1,083 | $ | 1,146 | $ | 793 | |||
| Other real estate owned | 0.0 | 0.0 | 0.0 | ||||||
| Nonperforming assets | $ | 1,083 | $ | 1,146 | $ | 793 | |||
| Performing restructured loans | $ | 508 | $ | 547 | $ | 557 | |||
| Delq 30-60 / Total Loans | .31 | % | .30 | % | .05 | % | |||
| Delq 60-90 / Total Loans | .33 | % | .30 | % | .00 | % | |||
| Delq 90+ / Total Loans | .19 | % | .00 | % | .00 | % | |||
| Delinquent Loans / Total Loans | .83 | % | .60 | % | .05 | % | |||
| Non Accrual / Total Loans | .19 | % | .30 | % | .26 | % | |||
| Nonperforming assets to total assets | .14 | % | .21 | % | .17 | % | |||
| Year-to-date charge-off activity | |||||||||
| Charge-offs | 0.0 | 0.0 | $ | 163 | |||||
| Recoveries | $ | 47 | $ | 3 | $ | 6 | |||
| Net charge-offs | $ | (47 | ) | $ | (3 | ) | $ | 157 | |
| Annualized net loan losses (recoveries) to average loans | -.02 | % | -.00 | % | .10 | % | |||
| LOAN LOSS RESERVE RATIOS: | |||||||||
| Reserve for loan losses | $ | 5,788 | $ | 4,945 | $ | 3,892 | |||
| Total loans | $ | 572,695 | $ | 381,092 | $ | 307,196 | |||
| Purchased govt. guaranteed loans | $ | 53,690 | $ | 55,707 | $ | 60,839 | |||
| Originated govt. guaranteed loans | $ | 223,788 | $ | 37,099 | $ | 30,626 | |||
| LLR / Total loans | 1.01 | % | 1.30 | % | 1.27 | % | |||
| LLR / Loans less 100% govt. gte. loans (PPP and purchased) | 1.73 | % | 1.52 | % | 1.58 | % | |||
| LLR / Loans less all govt. guaranteed loans | 1.96 | % | 1.72 | % | 1.80 | % | |||
| LLR / Total assets | .76 | % | .90 | % | .85 | % | |||
| Contact: | Steve Miller – President & CEO |
| Steve Canfield – Executive Vice President & CFO | |
| (559) 439-0200 |