Community 1st Bancorp (OTCBB:CFBN), with $358.6 million in assets, today reported net income of $304 thousand, or $0.05 per diluted share, for the quarter ended December 31, 2016, compared to $282 thousand, or $0.04 per diluted share for the quarter ended December 31, 2015. Community 1st Bancorp (the “Company”) reported net income of $1.208 million, or $0.18 per diluted share, for the year ended December 31, 2016, compared to net income of $1.218 million, or $0.19 per diluted share, for the year ended December 31, 2015.
James J. Kim, President and CEO commented, “The results for our Company are very encouraging for the fourth quarter and twelve months ended December 31, 2016. Our growth has been transformative, fully utilizing the subordinated debt raised in 2015. An additional $3,000,000 of subordinated debt was raised in December 2016 paving the way for future growth and increased earnings. I want to give a big thank you to our team members for always stepping up and doing the right thing.”
Total assets at December 31, 2016 were $358.6 million, representing an increase of $7.8 million from $350.8 million at September 30, 2016. The Company was successful in growing gross loans by $20.8 million from $188.3 million at September 30, 2016 to $209.1 million at December 31, 2016. Total deposits increased by $6.0 million from $319.9 million at September 30, 2016 to $325.9 million at December 31, 2016. The Company’s investment securities were up $13.4 million from $100.9 million at September 30, 2016 to $114.3 million at December 31, 2016.
When compared to December 31, 2015, total assets increased by $94.8 million, or 35.9%, primarily due to the increase in deposits of $91.7 million, or 39.1%, when compared to December 31, 2015. Total loans increased from $164.4 million at December 31, 2015, to $209.1 million at December 31, 2016, an increase of $44.7 million, or 27.2%. Non-interest bearing deposits increased from $65.7 million at December 31, 2015, to $116.0 million at December 31, 2016, an increase of $50.3 million, or 76.6%.
Operating Results - Quarter
The Company reported net income for the quarter ended December 31, 2016 of $304 thousand, compared to net income of $282 thousand for the quarter ended December 31, 2015. For the quarter ended December 31, 2016, the Company had net interest income of $2.6 million, a provision for loan losses of $230 thousand, non-interest income of $144 thousand, and noninterest expense of $2.1 million. This compares to December 31, 2015 net interest income of $2.1 million, no provision for loan losses, non-interest income of $124 thousand, and non-interest expense of $1.7 million.
The Company had an increase in interest income of $721 thousand to total $3.036 million for the quarter ended December 31, 2016 compared to $2.315 million in interest income for the same period in 2015. The growth in interest income was driven by the growth in the loan portfolio, and secondarily by the growth in the investment security portfolio. Interest expense increased by $193 thousand to total $444 thousand for the quarter ended December 31, 2016 compared to the same period in 2015. Interest expense on the subordinated debentures was $104 thousand and interest expense on deposits increased $89 thousand for the quarter ended December 31, 2016. Net interest income increased by $528 thousand to total $2.6 million for the fourth quarter of 2016 compared to the same period in 2015. The net interest margin for the quarter ended December 31, 2016 was 2.99% and the net interest margin was 3.47% for the quarter ended December 31, 2015. The decrease in net interest margin is primarily due to subordinated debt and the interest expense associated with it, which in turn was downstreamed to the Bank to increase capacity for growth.
Operating Results - Year
The Company reported net income for the full-year 2016 of $1.208 million, which included a $230 thousand provision for loan losses, and there were no loan sales or security sales. This compares to the Company’s net income of $1.218 million for 2015, which included zero in provision for loan losses, gain on sales of loans of $163 thousand, and loss on sales of securities of $96 thousand. Non-interest expense increased by $1.2 million, or 17.9%, to total $7.6 million for the twelve month period ended December 31, 2016 compared to the same period in 2015, partly due to the addition of our third full-service branch in Sacramento during 2016.
Interest income increased by $1.96 million, or 22.3%, to total $10.7 million for the twelve month period ended December 31, 2016 compared to the same period in 2015. Interest expense increased by $667 thousand, or 71.8%, to total $1.6 million for the twelve month period ended December 31, 2016 compared to the same period in 2015. The increase in interest expense was driven by the addition of interest expense associated with the subordinated debt which was $412 thousand, and secondarily, interest expense associated with deposits increased by $255 thousand. Net interest income increased by $1.3 million, or 16.5%, for the twelve month period ended December 31, 2016 compared to the same period in 2015. The net interest margin for the twelve month period ended December 31, 2016 was 3.00% and the net interest margin was 3.54% for the year ended December 31, 2015. The decrease in net interest margin is primarily due to subordinated debt and the interest expense associated with it, which in turn was downstreamed to the Bank to increase capacity for growth.
Credit Quality
The allowance for loan losses at December 31, 2016 was $3.0 million, or 1.43% of gross loans, compared to $2.7 million, or 1.67% of gross loans at December 31, 2015. There were no loan charge-offs, recoveries totaled $14 thousand, and provisions for loan losses were $230 thousand for the year ended December 31, 2016. Loan charge-offs for the twelve month period ended December 31, 2015 was $320 thousand with recoveries of $463 thousand, and no provision for loan losses.
Nonperforming loans at December 31, 2016 were $669 thousand, resulting in an increase of $452 thousand from the balance of $217 thousand at December 31, 2015. Other real estate owned was $3.6 million at December 31, 2016 representing a decrease of $400 thousand from the $4.0 million at December 31, 2015. The reduction in other real estate owned was due to the sale of one property at a loss of $35 thousand.
Capital
The Company maintains a strong capital position and raised an additional $3.0 million in subordinated debentures during the fourth quarter of 2016 and down-streamed $2.5 million to Community 1st Bank (the “Bank”). At December 31 2016, the Company had Common Tier 1 Equity of 10.69%, Tier 1 Leverage ratio of 8.45%, Tier 1 Capital ratio of 10.69%, and Total Risk-based Capital ratio of 15.13%. At December 31, 2016, the Bank had Common Equity Tier 1 ratio of 13.56%, Tier 1 Leverage ratio of 9.25%, Tier 1 Risk-based Capital ratio of 13.56% and Total Risk-based Capital ratio of 14.81%. The Bank’s capital is in excess of that required to be considered “well-capitalized” by regulatory standards.
James J. Kim, President and Chief Executive Officer, commented, “Community 1st Bancorp is well positioned to continue its balance sheet growth and improve core earnings by repositioning earning assets towards higher yielding loans and lowering the cost of our funding base by our continued focus on increasing non-interest bearing deposits. We will be able to continue our growth with the addition of sub debt that was downstreamed to the Bank.”
Community 1st Bancorp is a holding company for its Bank, Community 1st Bank. The Bank is headquartered in Auburn, California, with branches in Roseville, Auburn, and Sacramento, California. Community 1st Bank offers a wide range of business and consumer deposit products including remote deposit capture, health savings accounts, online banking, mobile banking and cash management services. The Bank also offers a full complement of loan products, including commercial, consumer, and real estate loans. For more information about the Bank, visit the Bank’s website at www.community1bank.com.
Forward-Looking Statements
Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, loan production, competitive pressure in the banking industry, balance sheet management, net interest margin variations, the ability to control costs and expenses, changes in the interest rate environment and financial policies of the United States government and general economic conditions. The Company disclaims any obligation to update any such factors.
| COMMUNITY 1ST BANCORP CONSOLIDATED BALANCE SHEETS | ||||||
| December 31, 2016 | December 31, 2015 * | |||||
| (Unaudited) | ||||||
| ASSETS | ||||||
| Cash and cash equivalents | $ | 20,001,000 | $ | 27,684,000 | ||
| Federal funds sold | 1,914,000 | 2,590,000 | ||||
| Available-for-sale investment securities, at fair value | 114,310,000 | 56,437,000 | ||||
Loans, less allowance for loan losses of $2,986,000 at December 31, 2016 and $2,742,000 at December 31, 2015 | 206,156,000 | 161,611,000 | ||||
| Bank premises and equipment, net | 1,778,000 | 1,397,000 | ||||
| Interest receivable | 941,000 | 626,000 | ||||
| Other real estate owned | 3,559,000 | 4,040,000 | ||||
| Federal Home Loan Bank stock and other securities | 1,368,000 | 1,329,000 | ||||
| Bank-owned life insurance policies | 5,136,000 | 4,986,000 | ||||
| Other assets | 3,421,000 | 3,099,000 | ||||
| Total assets | $ | 358,584,000 | $ | 263,799,000 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Deposits: | ||||||
| Non-interest bearing | $ | 115,950,000 | $ | 65,655,000 | ||
| Interest bearing | 209,945,000 | 168,581,000 | ||||
| Total deposits | 325,895,000 | 234,236,000 | ||||
Subordinated Debentures of $5,000,000, net of Debt Issuance costs of $99,000 at December 31, 2016 and $110,000 at December 31, 2015. | 4,901,000 | 4,890,000 | ||||
Subordinated Debentures of $3,000,000, net of Debt Issuance costs of $60,000 at December 31, 2016. | 2,940,000 | - | ||||
| Interest payable and other liabilities | 600,000 | 601,000 | ||||
| Total liabilities | 334,336,000 | 239,727,000 | ||||
| Shareholders' equity | 24,248,000 | 24,072,000 | ||||
| Total liabilities and shareholders' equity | $ | 358,584,000 | $ | 263,799,000 | ||
| * Derived from audited Consolidated Financial Statements | ||||||
| COMMUNITY 1ST BANCORP CONSOLIDATED STATEMENTS OF INCOME DATA (Unaudited) For the Three Months Ended December 31, 2016 and 2015 | ||||||
| 2016 | 2015 | |||||
| Interest income: | ||||||
| Interest and fees on loans | $ | 2,382,000 | $ | 2,036,000 | ||
Interest on investment securities and interest-bearing deposits in other financial institutions | 654,000 | 279,000 | ||||
| Total interest income | 3,036,000 | 2,315,000 | ||||
| Interest expense: | ||||||
| Deposits | 340,000 | 251,000 | ||||
| Subordinated debentures | 104,000 | - | ||||
| Total interest expense | 444,000 | 251,000 | ||||
| Net interest income | 2,592,000 | 2,064,000 | ||||
| Provision for loan losses | 230,000 | - | ||||
| Net interest income after provision for loan losses | 2,362,000 | 2,064,000 | ||||
| Non-interest income: | ||||||
| Service charges and fees | 23,000 | 12,000 | ||||
| Other | 121,000 | 112,000 | ||||
| Total non-interest income | 144,000 | 124,000 | ||||
| Non-interest expense: | ||||||
| Salaries and employee benefits | 1,002,000 | 891,000 | ||||
| Occupancy and equipment | 225,000 | 152,000 | ||||
| Other | 824,000 | 706,000 | ||||
| Total non-interest expense | 2,051,000 | 1,749,000 | ||||
| Net income before provision for income taxes | 455,000 | 439,000 | ||||
| Provision for income taxes | 151,000 | 157,000 | ||||
| Net income | $ | 304,000 | $ | 282,000 | ||
| Net income | $ | 304,000 | $ | 282,000 | ||
| Preferred stock dividends and accretion of discount | - | 36,000 | ||||
| Net income available to common shareholders | $ | 304,000 | $ | 246,000 | ||
| Common Share Data | ||||||
| Basic earnings per share | $ | 0.05 | $ | 0.04 | ||
| Diluted earnings per share | $ | 0.05 | $ | 0.04 | ||
| Weighted average shares outstanding | 6,524,741 | 5,649,872 | ||||
| Weighted average shares outstanding - diluted | 6,567,280 | 6,520,337 | ||||
| COMMUNITY 1ST BANCORP CONSOLIDATED STATEMENT OF INCOME DATA (Unaudited) For the Years Ended December 31, 2016 and 2015 | |||||||
| 2016 | 2015 | ||||||
| Interest income: | |||||||
| Interest and fees on loans | $ | 8,677,000 | $ | 7,592,000 | |||
Interest on investment securities and interest-bearing deposits in other financial institutions | 2,035,000 | 1,164,000 | |||||
| Total interest income | 10,712,000 | 8,756,000 | |||||
| Interest expense: | |||||||
| Deposits | 1,184,000 | 929,000 | |||||
| Subordinated debentures | 412,000 | - | |||||
| Total interest expense | 1,596,000 | 929,000 | |||||
| Net interest income | 9,116,000 | 7,827,000 | |||||
| Provision for loan losses | 230,000 | - | |||||
| Net interest income after provision for loan losses | 8,886,000 | 7,827,000 | |||||
| Non-interest income: | |||||||
| Service charges and fees | 76,000 | 46,000 | |||||
| (Loss) gain on sales of available-for-sale investment securities | - | (96,000 | ) | ||||
| Gain on sales of loans | - | 163,000 | |||||
| Other | 473,000 | 449,000 | |||||
| Total non-interest income | 549,000 | 562,000 | |||||
| Non-interest expense: | |||||||
| Salaries and employee benefits | 3,896,000 | 3,359,000 | |||||
| Occupancy and equipment | 772,000 | 588,000 | |||||
| Other | 2,908,000 | 2,485,000 | |||||
| Total non-interest expense | 7,576,000 | 6,432,000 | |||||
| Net income before provision for income taxes | 1,859,000 | 1,957,000 | |||||
| Provision for income taxes | 651,000 | 739,000 | |||||
| Net income | $ | 1,208,000 | $ | 1,218,000 | |||
| Net income | $ | 1,208,000 | $ | 1,218,000 | |||
| Preferred stock dividends and accretion of discount | - | 141,000 | |||||
| Net income available to common shareholders | $ | 1,208,000 | $ | 1,077,000 | |||
| Common Share Data | |||||||
| Basic earnings per share | $ | 0.19 | $ | 0.19 | |||
| Diluted earnings per share | $ | 0.18 | $ | 0.19 | |||
| Weighted average shares outstanding | 6,523,753 | 5,533,989 | |||||
| Weighted average shares outstanding - diluted | 6,544,432 | 6,530,483 | |||||
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