CBB Bancorp, Inc. Reports First Quarter 2022 Financial Results

Rhea-AI Summary

CBB Bancorp (CBBI) reported a net income of $8.4 million ($0.80 per diluted share) for Q1 2022, a 4.9% increase from Q4 2021 and a 57.6% rise from Q1 2021. Key drivers included improved credit quality and strong SBA loan sales, totaling $50.5 million. The return on average assets improved to 1.91%, while return on average equity reached 18.08%. However, net interest income decreased by 2.9% from the previous quarter. The allowance for loan losses was reduced to $13.1 million, representing 1.07% of portfolio loans, signaling enhanced asset quality.

Positive

• Net income increased 4.9% quarter-over-quarter and 57.6% year-over-year.
• Strong SBA loan sales at $50.5 million with an average premium of 11.0%.
• Return on average assets improved to 1.91% from 1.68% in Q4 2021.
• Return on average equity rose to 18.08% compared to 17.54% in Q4 2021.
• Reduction in allowance for loan losses to $13.1 million, 1.07% of portfolio loans.

Negative

• Net interest income decreased 2.9% from Q4 2021 due to lower average loan balances.
• Loans receivable decreased by $24 million, or 1.7%, from Q4 2021.

LOS ANGELES--(BUSINESS WIRE)-- CBB Bancorp, Inc. ("CBB" or the "Company') (OTCQX: CBBI), the holding company of Commonwealth Business Bank (the "Bank"), announced today net income for first quarter 2022 of $8.4 million, or $0.80 per diluted share, an increase of 4.9% compared to $8.0 million, or $0.77 per diluted share, in the prior quarter and 57.6% compared to $5.3 million, or $0.52 per diluted share, in the same period last year.

Overall Results

Net income for first quarter 2022 was positively impacted by improving credit quality as well as continued strength in SBA loan originations and sales. The return on average assets for first quarter 2022 was 1.91% compared to 1.68% for fourth quarter 2021 and 1.58% for first quarter 2021. The return on average equity for first quarter 2022 was 18.08% compared to 17.54% for fourth quarter 2021 and 13.26% for first quarter 2021. The net interest margin for first quarter 2022 was 3.68% compared to 3.49% for fourth quarter 2021 and 3.90% for first quarter 2021. The efficiency ratio for first quarter 2022 was 50.71% compared to 52.84% for fourth quarter 2021 and 51.78% for first quarter 2021.

James Hong, President and CEO commented, “We are pleased to announce strong earnings for the first quarter of 2022. We reduced our allowance for loan losses during the quarter based on improved credit metrics and better than anticipated results from earlier Covid-19 related provisions. The origination and sale of SBA loans was a major contributor to the quarter’s profits, and is an ongoing focus for the Bank’s management team."

Net Interest Income and Margin:

Net Interest Income

Net interest income for first quarter 2022 was $15.8 million, a decrease of $465 thousand, or 2.9%, from fourth quarter 2021, and an increase of $3.0 million, or 23.2%, from first quarter 2021. The decrease in net interest income compared with the fourth quarter of 2021 was due primarily to the decrease in average loan balances of $22.4 million. The increase in net interest income compared with the first quarter of 2021 was driven by loan growth, as well as the completion of the acquisition of Ohana Pacific Bank(OPB) during 2021.

Net Interest Margin

Our net interest margin for first quarter 2022 was 3.68% compared to 3.49% for fourth quarter 2021 and 3.90% for first quarter 2021. The increase in net interest margin was primarily attributable to having reduced levels of lower yielding assets relative to higher yielding loan receivables. Our cost of funds increased for first quarter 2022 to 0.31% from 0.30% for fourth quarter 2021 and decreased from 0.52% for first quarter 2021. The Net interest margin during the quarter also benefited from an improved mix of earning assets, as we reduced our cash and due from banks balances to fund loan originations.

Provision for Loan Losses:

The Company recorded negative provisions for loan losses of $1.2 million for first quarter 2022 and $800 thousand for the fourth quarter of 2021. The provision for loan losses for first quarter 2021 was $500 thousand. The negative loan loss provision during the first quarter of 2022 was due to continued improvement in asset quality ratios and the absence of significant charge-offs, combined with a reduction of the loans outstanding balance at March 31, 2022. See Table 10 for additional information and trends.

Noninterest Income:

Noninterest income for first quarter 2022 was $5.6 million, compared to $5.3 million for fourth quarter 2021 and $3.7 million for first quarter 2021. The increase in noninterest income in first quarter 2022 was the result of higher gains on sales of loans. Sales of SBA loans were $50.5 million with an average premium percentage received of 11.0% during the first quarter of 2022, compared with $42.2 million with an average premium percentage received of 11.1% in the fourth quarter of 2021 and $30.2 million with an average premium percentage received of 10.9% during the first quarter of 2021.

Noninterest Expense:

Noninterest expense for first quarter 2022 was $10.9 million compared to $11.4 million for fourth quarter 2021 and $8.6 million for first quarter 2021. Salaries and employee benefits increased by $451 thousand to $7.1 million compared to $6.7 million in the prior quarter, due to increased 401k matching and payroll taxes associated with bonus payments . Additionally, lower loan originations resulted in a decrease in the amount of compensation deferred as loan origination costs. Other noninterest expense in first quarter 2022 was lower than in the fourth quarter of 2021 due to the absence of merger-related expenses and a provision for probable loss of $800 thousand on the repurchase of SBA loans sold that was booked in December 2021.

Income Taxes:

The Company’s effective tax rate for first quarter 2022 was 28.4% compared to 27.1% for fourth quarter 2021 and 28.6% for first quarter 2021.

Balance Sheet:

Investment Securities:

Investment securities were $80.1 million at March 31, 2022, a decrease of $4.1 million from December 31, 2021 and $3.3 million from March 31, 2021. The decreases were due to principal paydowns and an absence of portfolio additions in the first quarter 2022, or in the fourth and first quarters 2021.

Loans Receivable:

Loans receivable (including loans held for sale) at March 31, 2022 was $1.4 billion, a decrease of $24.0 million, or 1.7%, from December 31, 2021, and an increase of $185.8 million, or 15.6% from March 31, 2021. The decrease in loans compared to December 31, 2021 was due to higher than normal loan payoffs. The increase in loan balances compared with the first quarter of 2021 was due to the $149.2 million in loan receivable that were acquired in the OPB merger at July 1, 2021 as well as organic growth.

Our weighted average loan-to-value ratio of Commercial Real Estate loans was 67.8.% at March 31, 2022. Excluding SBA loans, our weighted average loan-to-value of CRE loans was 47.8%. For additional information, please go to www.cbb-bank.com under tab “About Us” and select “Investors Relations” to see 1Q 2022 Overview and COVID-19 update presentation.

Paycheck Protection Program (PPP):

PPP loans totaled $22.1 million at March 31, 2022. Net unearned fees as of March 31, 2022 were $765 thousand and are being accreted to income based on the two-year contractual maturity. The SBA approved $13.0 million in PPP loan forgiveness applications processed for our PPP loans in the first quarter 2022.

Allowance for Loan Losses and Asset Quality:

The allowance for loan losses at March 31, 2022 was $13.1 million, or 1.07% of portfolio loans, compared to $14.2 million, or 1.14% of portfolio loans, at December 31, 2021 and compared to $14.9 million, or 1.34% of portfolio loans, at March 31, 2021. Excluding PPP loans of $22.1 million, which are government guaranteed, the allowance for loan losses at March 31, 2022 was 1.09% compared to 1.18% and 1.48%, respectively, at December 31, 2021 and March 31, 2021. The decrease in the allowance as a percentage of the portfolio in the current quarter compared with the prior year is primarily due to loans acquired in the OPB acquisition, which have been marked to market value and do not currently require any loan loss allowance. Non-performing loans as of March 31, 2022 were $723 thousand, compared to $747 thousand at December 31, 2021. Certain loans with payment deferments are considered to be performing loans in accordance with regulatory guidance. Our coverage ratio of allowance for loan losses to nonperforming assets exceeded 1800%. For additional information, please go to www.cbb-bank.com under tab “About Us” and select “Investors Relations” to see 1Q 2022 Overview and COVID-19 update presentation.

SBA Loans Held for Sale:

SBA loans held for sale at March 31, 2022 were $149.7 million, compared to $158.1 million at December 31, 2021 and $76.1million at March 31, 2021. We continue to assess SBA loan sale premiums and plan to sell loans when we believe it is advantageous to do so. See comments under “Noninterest Income”, and Table 7 for additional SBA loan origination and sale data.

Deposits:

Deposits were $1.5 billion at March 31, 2022, down $24.1 million from $1.6 billion at December 31, 2021 and up $342.5 million from $1.2 billion at March 31, 2021. Noninterest-bearing demand deposits (“DDAs”) decreased $43.4 million, or 7.0%, to $576.4 million at March 31, 2022 from December 31, 2021 and increased $167.6. million, or 41.0%, from March 31, 2021. DDAs were 38.4% of total deposits at March 31, 2022 compared to 40.5% at December 31, 2021 and 34.3% at March 31, 2021. NOW and MMDA increased $19.2 million, or 5.9%, to $344.5 million at March 31, 2022 from December 31, 2021 and increased $74.0 million, or 27.3%, from March 31, 2021. Time deposits decreased $4.3 million, or 0.8%, to $521.4 million at March 31, 2022 from December 31, 2021 and increased $55.4 million, or 11.9%, from March 31, 2021. Time deposits at March 31, 2022 were 34.0% of total deposits compared to $525.7 million, or 33.7% of total deposits, at December 31, 2021, and $466.0 million, or 39.1% of total deposits, at March 31, 2021. The primary cause of the decreases in deposit balances during 2022 compared with the fourth quarter of 2021 was a decline in escrow-related deposits from our Specialty Deposit Group. The increase compared with the first quarter of 2021 was due to normal growth combined with the completion of the merger with OPB during the third quarter of 2021.

Borrowings:

Borrowings at March 31, 2022 consisted of $50.0 million of Federal Home Loan Bank of San Francisco (“FHLB-SF”) advances unchanged from December 31, 2021, and decreased $15.0 million compared to $65 million of FHLB-SF advances at March 31, 2021.

Capital:

Stockholders’ equity was $191.1 million at March 31, 2022, representing an increase of $5.8 million, or 3.2%, over stockholders’ equity of $185.2 million at December 31, 2021. Tangible book value per share at March 31, 2022 was $18.31 compared with $17.76 at December 31, 2021, an increase of $0.55 per share, or 3.1%.

All of our regulatory capital ratios continue to exceed the minimum levels required to be considered “Well Capitalized” as defined for bank regulatory purposes and in compliance with the fully phased-in Basel III requirements, which went into effect on January 1, 2021, as shown on Table 11 in this press release. Importantly, our Common Equity Tier 1 risked-based capital at March 31, 2022 was 14.63% at the Company level and 14.62% at the Bank level.

About CBB Bancorp, Inc.:

CBB Bancorp, Inc. is the holding company of Commonwealth Business Bank, a full-service commercial bank which specializes in loans to small-to medium-sized businesses and does business as “CBB Bank.” As of March 31, 2022, the Bank has ten full-service banking offices in Los Angeles and Orange Counties in California, Dallas County in Texas and Honolulu, Hawaii; two SBA regional offices in Los Angeles and Dallas Counties; and five loan production offices in Texas, Georgia, Colorado and Washington. For additional information, please go to www.cbb-bank.com under tab “About Us” and select “Investors Relations” to see 1Q 2022 Overview and COVID-19 update presentation.

FORWARD-LOOKING STATEMENTS:

This news release contains forward-looking statements. These statements typically include words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar terms and phrases, including references to assumptions. You should not place undue reliance on such statements. Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management’s experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company’s control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Factors that could affect our results include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; increases in competitive pressure among financial institutions or from non-financial institutions may occur; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Company and the Bank; significant increases in loan losses may occur; the possibility that changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company’s financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, the effects of the COVID-19 pandemic, and of other widespread outbreaks of disease or pandemics, together with related impacts on general economic conditions, including adverse impacts on our customers’ ability to make timely payments on their loans from us, reduced fee income due to reduced loan origination activity, reductions in or absence of gains on loan sales due to uncertainty in the loan sale market, and increased operating expense due to required changes in how we conduct our business may adversely affect us; conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive to implement or accommodate than the Company anticipates; there may be failures or breaches of our information technology security systems or those of our third party service providers; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates; we may encounter greater difficulty, delay and expense than we anticipate in integrating the personnel and operations of Ohana Pacific Bank or any other companies we acquire. The Company undertakes no obligation to revise any forward-looking statement contained herein to reflect any future events or circumstances, except to the extent required by law.

Schedules and Financial Data: All tables and data to follow.

STATEMENT OF INCOME AND PERFORMANCE HIGHLIGHT (Unaudited) - Table 1
	(Dollars in thousands, except per share amounts)
		Three Months Ended
		March 31,				December 31,				$			%			March 31,				$			%
			2022				2021			Change			Change				2021			Change			Change
Interest income		$	17,032			$	17,553			$	(521	)	(3.0	%)		$	14,372			$	2,660		18.5	%
Interest expense			1,209				1,265				(56	)	(4.4	%)			1,533				(324	)	(21.1	%)
Net interest income			15,823				16,288				(465	)	(2.9	%)			12,839				2,984		23.2	%
Provision for loan losses			(1,167	)			(800	)			(367	)	45.9	%			500				(1,667	)	(333.4	%)
Net interest income after provision for loan losses			16,990				17,088				(98	)	(0.6	%)			12,339				4,651		37.7	%
Gain on sale of loans			4,668				4,151				517		12.5	%			2,456				2,212		90.1	%
Gain (loss) on sale of OREO			-				-				-		-				-				-		-
SBA servicing fee income, net			469				683				(214	)	(31.3	%)			847				(378	)	(44.6	%)
Reversal of valuation allowance on servicing assets			-				-				-		-				-				-		-
Service charges and other income			498				499				(1	)	(0.2	%)			379				119		31.4	%
Noninterest income			5,635				5,333				302		5.7	%			3,682				1,953		53.0	%
Salaries and employee benefits			7,065				6,614				451		6.8	%			4,853				2,212		45.6	%
Occupancy and equipment			1,120				1,028				92		8.9	%			979				141		14.4	%
Marketing expense			485				111				374		336.9	%			287				198		69.0	%
Professional expense			415				368				47		12.8	%			455				(40	)	(8.8	%)
Merger related expense			-				454				(454	)	(100.0	%)			681				(681	)	(100.0	%)
Other expenses			1,796				2,850				(1,054	)	(37.0	%)			1,300				496		38.2	%
Noninterest expense			10,881				11,425				(544	)	(4.8	%)			8,555				2,326		27.2	%
Income before income tax expense			11,744				10,996				748		6.8	%			7,466				4,278		57.3	%
Income tax expense			3,336				2,984				352		11.8	%			2,132				1,204		56.5	%
Net income		$	8,408			$	8,012			$	396		4.9	%		$	5,334			$	3,074		57.6	%
Effective tax rate			28.4	%			27.1	%			1.3	%	4.7	%			28.6	%			(0.2	%)	(0.5	%)
Outstanding number of shares			10,299,361				10,284,962				14,399		0.1	%			10,247,292				52,069		0.5	%
Weighted average shares for basic EPS			10,291,071				10,284,962				6,109		0.1	%			10,247,292				43,779		0.4	%
Weighted average shares for diluted EPS			10,479,488				10,424,771				54,717		0.5	%			10,300,518				178,970		1.7	%
Basic EPS		$	0.82			$	0.78			$	0.04		5.1	%		$	0.52			$	0.30		57.7	%
Diluted EPS		$	0.80			$	0.77			$	0.03		3.9	%		$	0.52			$	0.28		53.8	%
Return on average assets			1.91	%			1.68	%			0.23	%	13.7	%			1.58	%			0.33	%	20.9	%
Return on average equity			18.08	%			17.54	%			0.54	%	3.1	%			13.26	%			4.82	%	36.4	%
Efficiency ratio¹			50.71	%			52.84	%			(2.13	%)	(4.0	%)			51.78	%			(1.07	%)	(2.1	%)
Yield on interest-earning assets²			3.96	%			3.76	%			0.20	%	5.3	%			4.37	%			(0.41	%)	(9.4	%)
Cost of funds			0.31	%			0.30	%			0.01	%	3.3	%			0.52	%			(0.21	%)	(40.4	%)
Net interest margin²			3.68	%			3.49	%			0.19	%	5.4	%			3.90	%			(0.22	%)	(5.6	%)

¹ Represents the ratio of noninterest expense less other real estate owned operations to the sum of net interest income before provision for credit losses and total noninterest income, less gains/(loss) on sale of securities, other-than-temporary impairment recovery/(loss) on investment securities and gain/(loss) from other real estate owned.

² Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

BALANCE SHEET, CAPITAL AND OTHER DATA (Unaudited) - Table 2
(Dollars in thousands)
		March 31,				December 31,				$			%			March 31,				$			%
			2022				2021			Change			Change				2021			Change			Change
ASSETS
	Cash and due from banks	$	14,579			$	7,702			$	6,877		89.3	%		$	9,215			$	5,364		58.2	%
	Interest-earning deposits at the FRB and other banks		288,603				284,583				4,020		1.4	%			129,713				158,890		122.5	%
	Investment securities¹		80,104				84,238				(4,134	)	(4.9	%)			83,409				(3,305	)	(4.0	%)
	Loans held-for-sale, at the lower of cost or fair value		149,733				158,128				(8,395	)	(5.3	%)			76,066				73,667		96.8	%
	Loans receivable		1,225,739				1,241,319				(15,580	)	(1.3	%)			1,113,629				112,110		10.1	%
	Allowance for loan losses		(13,089	)			(14,192	)			1,103		7.8	%			(14,888	)			1,799		12.1	%
	Loans receivable, net		1,212,650				1,227,127				(14,477	)	(1.2	%)			1,098,741				113,909		10.4	%
	OREO		-				-				-		-				-				-		-
	Restricted stock investments		8,850				8,850				-		-				8,196				654		8.0	%
	Servicing assets		10,671				10,632				39		0.4	%			10,000				671		0
	Goodwill		2,185				2,185				-		0.0	%			-				2,185		100.0	%
	Intangible assets		346				360				(14	)	(3.9	%)			-				346		100.0	%
	Other assets		24,061				25,450				(1,389	)	(5.5	%)			21,431				2,630		12.3	%
	Total assets	$	1,791,782			$	1,809,255			$	(17,473	)	(1.0	%)		$	1,436,771			$	355,011		24.7	%
LIABILITIES AND STOCKHOLDERS' EQUITY
	Noninterest-bearing	$	576,378			$	619,774			$	(43,396	)	(7.0	%)		$	408,738			$	167,640		41.0	%
	Interest-bearing		957,633				938,338				19,295		2.1	%			782,778				174,855		22.3	%
	Total deposits		1,534,011				1,558,112				(24,101	)	(1.5	%)			1,191,516				342,495		28.7	%
	FHLB advances and other borrowing		50,000				50,000				-		-				65,000				(15,000	)	(23.1	%)
	Other liabilities		16,687				15,901				786		4.9	%			15,170				1,517		10.0	%
	Total liabilities		1,600,698				1,624,013				(23,315	)	(1.4	%)			1,271,686				329,012		25.9	%
	Stockholders' Equity		191,084				185,242				5,842		3.2	%			165,085				25,999		15.7	%
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY		$	1,791,782			$	1,809,255			$	(17,473	)	(1.0	%)		$	1,436,771			$	355,011		24.7	%
CAPITAL RATIOS
	Leverage ratio
	Company		10.56	%			9.55	%			1.01	%	10.5	%			11.89	%			(1.33	%)	(11.2	%)
	Bank		10.55	%			9.55	%			1.00	%	10.5	%			11.87	%			(1.32	%)	(11.1	%)
	Common equity tier 1 risk-based capital ratio
	Company		14.50	%			13.83	%			0.67	%	4.8	%			15.00	%			(0.50	%)	(3.3	%)
	Bank		14.50	%			13.82	%			0.68	%	4.9	%			14.98	%			(0.48	%)	(3.2	%)
	Tier 1 risk-based capital ratio
	Company		14.50	%			13.83	%			0.67	%	4.8	%			15.00	%			(0.50	%)	(3.3	%)
	Bank		14.50	%			13.82	%			0.68	%	4.9	%			14.98	%			(0.48	%)	(3.2	%)
	Total risk-based capital ratio
	Company		15.57	%			14.98	%			0.59	%	3.9	%			16.25	%			(0.68	%)	(4.2	%)
	Bank		15.57	%			14.97	%			0.60	%	4.0	%			16.23	%			(0.66	%)	(4.1	%)
	Earning Assets		1,753,029				1,777,118				(24,089	)	(1.4	%)			1,411,013			$	342,016		24.2	%
	Outstanding Number of Shares¹		10,299,361				10,284,962				14,399		0.1	%			10,247,292				52,069		0.5	%
	Tangible Common Equity Ratio		10.54	%			10.11	%			0.43	%	4.3	%			11.49	%			(0.95	%)	(8.3	%)
	Tangibel common equity per share	$	18.31			$	17.76			$	0.55		3.1	%		$	16.11			$	2.20		13.7	%
	Loan-to-Deposit (LTD) ratio		79.90	%			79.67	%			0.23	%	0.3	%			93.46	%			(13.56	%)	(14.5	%)
	Nonperforming assets	$	723			$	747			$	(24	)	(3.2	%)		$	1,347			$	(624	)	(46.3	%)
	Nonperforming assets as a % of loans receivable		0.06	%			0.06	%			-		-				0.12	%			(0.06	%)	(50.0	%)
	ALLL as a % of loans receivable		1.07	%			1.14	%			(0.07	%)	(6.1	%)			1.34	%			(0.27	%)	(20.1	%)
	ALLL as a % of loans receivable exc. SBA PPP loans		1.09	%			1.18	%			(0.09	%)	(7.6	%)			1.48	%			(0.39	%)	(26.4	%)
¹ Includes AFS and HTM

FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3
(Dollars in thousands, except per share amounts)
		Three Months Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
			2022				2021				2021				2021				2021
Interest income		$	17,032			$	17,553			$	17,437			$	14,923			$	14,372
Interest expense			1,209				1,265				1,337				1,358				1,533
Net interest income			15,823				16,288				16,100				13,565				12,839
Provision for loan losses			(1,167	)			(800	)			-				-				500
Net interest income after provision for loan losses			16,990				17,088				16,100				13,565				12,339
Gain on sale of loans			4,668				4,151				4,305				3,988				2,456
Gain (loss) on sale of OREO			-				-				-				-				-
SBA servicing fee income, net			469				683				698				622				847
Reversal of valuation allowance on servicing assets			-				-				-				-				-
Service charges and other income			498				499				540				395				379
Noninterest income			5,635				5,333				5,543				5,005				3,682
Salaries and employee benefits			7,065				6,614				6,500				6,000				4,853
Occupancy and equipment			1,120				1,028				1,067				945				979
Marketing expense			485				111				287				309				287
Professional expense			415				368				495				491				455
Merger related expense			-				454				450				600				681
Other expenses			1,796				2,850				1,807				1,356				1,300
Noninterest expense			10,881				11,425				10,606				9,701				8,555
Income before income tax expense			11,744				10,996				11,037				8,869				7,466
Income tax expense			3,336				2,984				3,156				2,566				2,132
Net income		$	8,408			$	8,012			$	7,881			$	6,303			$	5,334
Effective tax rate			28.4	%			27.1	%			28.6	%			28.9	%			28.6	%
Outstanding number of shares			10,299,361				10,284,962				10,284,962				10,279,962				10,247,292
Weighted average shares for basic EPS			10,291,071				10,284,962				10,280,016				10,262,956				10,247,292
Weighted average shares for diluted EPS			10,479,488				10,424,771				10,427,687				10,392,427				10,300,518
Basic EPS		$	0.82			$	0.78			$	0.77			$	0.61			$	0.52
Diluted EPS		$	0.80			$	0.77			$	0.75			$	0.61			$	0.52

FIVE-QUARTER SALARIES BENEFIT METRICS (Unaudited) - Table 4
(Dollars in thousands)
		At or for the Three Months Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
			2022				2021				2021				2021				2021
Salaries and benefits		$	7,065			$	6,614			$	6,500			$	6,000			$	4,853
FTE at the end of period			208				205				200				183				186
Average FTE during the period			206				201				202				182				187
Salaries and benefits/average FTE¹		$	139			$	131			$	127			$	132			$	105
Salaries and benefits/average assets¹			1.60	%			1.39	%			1.43	%			1.62	%			1.44	%
Noninterest expense/average assets¹			2.47	%			2.40	%			2.33	%			2.62	%			2.54	%
1 Annualized

FIVE-QUARTER BALANCE SHEET (Unaudited) - Table 5
(Dollars in thousands)
		March 31,				December 31,				September 30,				June 30,				March 31,
			2022				2021				2021				2021				2021
ASSETS
	Cash and due from banks	$	14,579			$	7,702			$	11,621			$	10,509			$	9,215
	Interest-earning deposits at the FRB and other banks		288,603				284,583				386,087				240,932				129,713
	Investment securities¹		80,104				84,238				86,440				82,354				83,409
	Loans held-for-sale, at the lower of cost or fair value		149,733				158,128				136,394				96,554				76,066
	Loans receivable		1,225,739				1,241,319				1,255,814				1,133,371				1,113,629
	Allowance for loan losses		(13,089	)			(14,192	)			(15,000	)			(14,908	)			(14,888	)
	Loans receivable, net		1,212,650				1,227,127				1,240,814				1,118,463				1,098,741
	OREO		-				-				-				-				-
	Restricted stock investments		8,850				8,850				8,850				8,850				8,196
	Servicing assets		10,671				10,632				10,392				10,189				10,000
	Goodwill		2,185				2,185				2,269				-				-
	Intangible assets		346				360				375				-				-
	Other assets		24,061				25,450				25,859				45,071				21,431
	Total assets	$	1,791,782			$	1,809,255			$	1,909,101			$	1,612,922			$	1,436,771
LIABILITIES AND STOCKHOLDERS' EQUITY
	Noninterest-bearing	$	576,378			$	619,774			$	670,489			$	572,284			$	408,738
	Interest-bearing		957,633				938,338				995,574				806,397				782,778
	Total deposits		1,534,011				1,558,112				1,666,063				1,378,681				1,191,516
	FHLB advances		50,000				50,000				50,000				50,000				65,000
	Other liabilities		16,687				15,901				14,719				13,026				15,170
	Total liabilities		1,600,698				1,624,013				1,730,782				1,441,707				1,271,686
	Stockholders' Equity		191,084				185,242				178,319				171,215				165,085
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY		$	1,791,782			$	1,809,255			$	1,909,101			$	1,612,922			$	1,436,771
¹ Includes AFS and HTM

FIVE-QUARTER LOANS RECEIVABLE COMPONENTS (Unaudited) - Table 6
(Dollars in thousands)
	March 31, 2022						December 31, 2021						September 30, 2021						June 30, 2021						March 31, 2021
	Balance			%			Balance			%			Balance			%			Balance			%			Balance			%
Construction	$	18,541		1.5	%		$	23,939		1.9	%		$	21,725		1.7	%		$	18,753		1.7	%		$	15,858		1.4	%
Commercial real estate		976,924		79.7	%			978,995		78.9	%			971,387		77.4	%			893,700		78.9	%			855,861		76.9	%
Commercial and industrial		159,111		13.0	%			169,489		13.7	%			198,217		15.8	%			217,350		19.2	%			237,865		21.4	%
Home mortgage		59,836		4.9	%			61,030		4.9	%			60,075		0				-		-				-		-
Consumer		7,589		0.6	%			4,269		0.3	%			2,185		0.2	%			2,236		0.2	%			3,504		0.3	%
Gross loans		1,222,001		99.7	%			1,237,722		99.7	%			1,253,589		99.8	%			1,132,039		99.9	%			1,113,088		100.0	%
Net deferred loan fees/costs		3,738		0.3	%			3,597		0.3	%			2,225		0.2	%			1,332		0.1	%			541		0.0	%
Loans receivable	$	1,225,739		100.0	%		$	1,241,319		100.0	%		$	1,255,814		100.0	%		$	1,133,371		100.0	%		$	1,113,629		100.0	%
Loans held-for-sale	$	149,733					$	158,128					$	136,394					$	96,554					$	76,066
Loans receivable, including loans held-for-sale	$	1,375,472					$	1,399,447					$	1,392,208					$	1,229,925					$	1,189,695

FIVE-QUARTER SBA LOAN PRODUCTIONS/SALES DATA (Unaudited) - Table 7
(Dollars in thousands)
	Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
		2022				2021				2021				2021				2021
SBA loans held-for-sale at beginning of the quarter/year	$	158,128			$	136,394			$	96,554			$	76,066			$	59,077
SBA loans originated/transferred from/to held-for-
investment during the quarter/year		43,132				68,136				82,303				62,864				48,152
SBA loans sold during the quarter/year		(50,531	)			(42,210	)			(42,019	)			(42,163	)			(30,238	)
SBA loans principal payment, net of advance		(996	)			(4,193	)			(444	)			(213	)			(925	)
SBA loans held-for-sale at end of the quarter/year	$	149,733			$	158,128			$	136,394			$	96,554			$	76,066
Gain on sale of SBA loans	$	4,668			$	4,151			$	4,305			$	3,988			$	2,456
Premium on sale (weighted average)		11.0	%			11.1	%			11.5	%			11.9	%			10.9	%
SBA loan production	$	54,523			$	82,448			$	93,986			$	78,058			$	123,762
Non-PPP loans		54,523				82,448				93,986				75,065				71,204
PPP loans		-				-				-				2,994				52,558

FIVE QUARTER SBA SERVICING ASSETS AND SERVICING FEES (Unaudited) - Table 8
(Dollars in thousands)
	Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
		2022				2021				2021				2021				2021
SBA servicing assets @ beginning of the quarter/year	$	10,632			$	10,392			$	10,189			$	10,000			$	9,873
Newly added SBA servicing assets from SBA loans sold		1,052				1,006				920				897				635
Regular quarterly/annual servicing assets amortization		(462	)			(453	)			(421	)			(422	)			(358	)
SBA servicing assets amortized from SBA loans paid off/charged off		(551	)			(313	)			(296	)			(286	)			(150	)
Subtotal before impairment		10,671				10,632				10,392				10,189				10,000
Reversal of valuation allowance on servicing assets		-				-				-				-
SBA servicing assets @ the end of the quarter/year	$	10,671			$	10,632			$	10,392			$	10,189			$	10,000

FIVE-QUARTER DEPOSIT COMPONENTS (Unaudited) - Table 9
(Dollars in thousands)
	March 31, 2022						December 31, 2021						September 30, 2021						June 30, 2021						March 31, 2021
	Balance			%			Balance			%			Balance			%			Balance			%			Balance			%
Noninterest-bearing demand	$	576,378		37.6	%		$	619,774		39.8	%		$	670,489		40.2	%		$	572,284		41.5	%		$	408,738		34.3	%
Interest-bearing demand		12,059		0.8	%			10,723		0.7	%			10,904		0.7	%			-		-				-		-
NOW & MMDA		344,501		22.5	%			325,313		20.9	%			376,549		22.6	%			291,437		21.1	%			270,531		22.7	%
Savings		79,685		5.2	%			76,588		4.9	%			75,497		4.5	%			41,284		3.0	%			46,280		3.9	%
TCDs of $250K and under		253,617		16.5	%			259,758		16.7	%			264,130		15.9	%			219,174		15.9	%			226,611		19.0	%
TCDs of $250K over		176,754		11.5	%			174,939		11.2	%			177,477		10.7	%			158,485		11.5	%			151,094		12.7	%
Wholesale TCDs		91,017		5.9	%			91,017		5.8	%			91,017		5.5	%			96,017		7.0	%			88,262		7.4	%
Total Deposits	$	1,534,011		100.0	%		$	1,558,112		100.0	%		$	1,666,063		100.0	%		$	1,378,681		100.0	%		$	1,191,516		100.0	%
Recap:
Noninterest-bearing demand	$	576,378		37.6	%		$	619,774		39.8	%		$	670,489		40.2	%		$	572,284		41.5	%		$	408,738		34.3	%
Interest-bearing demand		12,059		0.8	%			10,723		0.7	%			10,904		0.7	%			-		-				-		-
NOW & MMDA		344,501		22.5	%			325,313		20.9	%			376,549		22.6	%			291,437		21.1	%			270,531		22.7	%
Savings		79,685		5.2	%			76,588		4.9	%			75,497		4.5	%			41,284		3.0	%			46,280		3.9	%
TCDs of $250K and under		253,617		16.5	%			259,758		16.7	%			264,130		15.9	%			219,174		15.9	%			226,611		19.0	%
Core Deposits		1,266,240		82.5	%			1,292,156		82.9	%			1,397,569		83.9	%			1,124,179		81.5	%			952,160		79.9	%
TCDs of $250K over		176,754		11.5	%			174,939		11.2	%			177,477		10.7	%			158,485		11.5	%			151,094		12.7	%
Wholesale TCDs		91,017		5.9	%			91,017		5.8	%			91,017		5.5	%			96,017		7.0	%			88,262		7.4	%
Noncore Deposits		267,771		17.5	%			265,956		17.1	%			268,494		16.1	%			254,502		18.5	%			239,356		20.1	%
Total Deposits	$	1,534,011		100.0	%		$	1,558,112		100.0	%		$	1,666,063		100.0	%		$	1,378,681		100.0	%		$	1,191,516		100.0	%

FIVE-QUARTER SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited) - Table 10
(Dollars in thousands)
			1st Qtr.				4th Qtr.				3rd Qtr.				2nd Qtr.				1st Qtr.
				2022				2021				2021				2021				2021
Allowance for Loan Losses
	Balance at beginning of period		$	14,192			$	15,000			$	14,908			$	14,888			$	14,366
	Provision for loan losses			(1,167	)			(800	)			-				-				500
	Charge-offs			-				(89	)			-				-				(2	)
	Recoveries			64				81				92				20				24
	Balance at the end of period		$	13,089			$	14,192			$	15,000			$	14,908			$	14,888
Nonperforming Assets:¹
	Over 90 days still accruing		$	-			$	-			$	-			$	-			$	-
	Nonaccrual loans			723				747				768				1,339				1,347
	Total nonperforming loans			723				747				768				1,339				1,347
	Other real estate owned			-				-				-				-				-
	Total nonperforming assets		$	723			$	747			$	768			$	1,339			$	1,347
Classified Assets:¹
	Substandard		$	9,300			$	11,156			$	10,672			$	10,052			$	9,843
	Doubtful			-				-				-				-				-
	Loss			-				-				-				-				-
	Total classified loans		$	9,300			$	11,156			$	10,672			$	10,052			$	9,843
	Other real estate owned			-				-				-				-				-
	Total classified assets		$	9,300			$	11,156			$	10,672			$	10,052			$	9,843
Performing TDR loans:			$	3,253			$	3,521			$	3,658			$	3,776			$	2,516
Delinquent Loans:¹
	Loans 30-89 days past due		$	6,275			$	267			$	1,688			$	2,524			$	1,681
	90 days or more past due and still accruing			-				-				-				-				-
	Nonaccrual			723				747				768				1,339				1,347
	Total delinquent loans		$	6,998			$	1,014			$	2,456			$	3,863			$	3,028
Asset Quality Ratios:
	Net (recoveries) charge-offs to average loans²			(0.02	%)			0.00	%			(0.03	%)			(0.01	%)			(0.01	%)
	Nonaccrual loans to loans receivable			0.06	%			0.06	%			0.06	%			0.12	%			0.12	%
	Nonperforming loans to loans receivable			0.06	%			0.06	%			0.06	%			0.12	%			0.12	%
	Nonperforming assets to total assets			0.04	%			0.04	%			0.04	%			0.08	%			0.09	%
	Classified loans to loans receivable			0.76	%			0.90	%			0.85	%			0.89	%			0.88	%
	Classified loans to Tier 1 and ALLL			4.61	%			5.67	%			5.53	%			5.40	%			5.47	%
	Classified assets to total assets			0.52	%			0.62	%			0.56	%			0.62	%			0.69	%
	Classified assets to Tier 1 and ALLL			4.61	%			5.67	%			5.53	%			5.40	%			5.47	%
	ALLL to loans receivable			1.07	%			1.14	%			1.19	%			1.32	%			1.34	%
	ALLL to loans receivable exc. SBA PPP loans			1.09	%			1.18	%			1.26	%			1.42	%			1.48	%
	ALLL to nonaccrual loans			1810.37	%			1899.87	%			1953.13	%			1113.37	%			1105.27	%
	ALLL to nonperforming loans			1810.37	%			1899.87	%			1953.13	%			1113.37	%			1105.27	%
	ALLL to nonperforming assets			1810.37	%			1899.87	%			1953.13	%			1113.37	%			1105.27	%
	Texas ratio ³			0.36	%			0.38	%			0.40	%			0.72	%			0.75	%
1 Net of SBA guaranteed balance
2 Includes loans held-for-sale
3 Nonperforming assets divided by tangible common equity and ALLL

FIVE-QUARTER CAPITAL RATIOS (Unaudited) - Table 11
		Well Capitalized			Adequately Capitalized			March 31,				December 31,				September 30,				June 30,				March 31,
		Regulatory			BASEL III
		Requirement			Fully Phased In				2022				2021				2021				2021				2021
Leverage ratio
Company		N/A			N/A				10.56	%			9.55	%			9.61	%			11.35	%			11.89	%
Bank		5.00	%		4.00	%			10.55	%			9.55	%			9.60	%			11.33	%			11.87	%
Common equity tier 1 risk-based capital ratio
Company		N/A			N/A				14.50	%			13.83	%			13.61	%			14.39	%			15.00	%
Bank		6.50	%		7.00	%			14.50	%			13.82	%			13.59	%			14.37	%			14.98	%
Tier 1 risk-based capital ratio
Company		N/A			N/A				14.50	%			13.83	%			13.61	%			14.39	%			15.00	%
Bank		8.00	%		8.50	%			14.50	%			13.82	%			13.59	%			14.37	%			14.98	%
Total risk-based capital ratio
Company		N/A			N/A				15.57	%			14.98	%			14.86	%			15.64	%			16.25	%
Bank		10.00	%		10.50	%			15.57	%			14.97	%			14.84	%			15.62	%			16.23	%
Tangible common equity/total assets									10.54	%			10.11	%			9.21	%			10.62	%			11.49	%
Tangibel common equity per share								$	18.31			$	17.76			$	17.76			$	16.66			$	16.11

FIVE-QUARTER MARGIN ANALYSIS (Unaudited) -Table 12
(Dollars in thousands)
	Three Months Ended
	March 31, 2022										December 31, 2021										September 30, 2021										June 30, 2021										March 31, 2021
	Avg Balance				Interest			Yield			Avg Balance				Interest			Yield			Avg Balance				Interest			Yield			Avg Balance				Interest			Yield			Avg Balance				Interest			Yield
Number of Days in the Period
INTEREST-EARNING ASSETS
Loans ¹	$	1,368,996			$	16,352		4.84	%		$	1,396,201			$	16,893		4.80	%		$	1,390,851			$	16,800		4.79	%		$	1,195,908			$	14,338		4.81	%		$	1,138,134			$	13,837		4.93	%
Investment securities²		82,818				471		2.31	%			85,555				454		2.11	%			87,585				460		2.08	%			83,152				442		2.13	%			84,679				448		2.15	%
Interest-earning deposits at the FRB and other banks		288,966				141		0.20	%			365,501				144		0.16	%			282,512				112		0.16	%			168,677				54		0.13	%			108,127				36		0.14	%
Other earning assets		8,850				119		5.45	%			8,850				115		5.16	%			8,925				116		5.16	%			8,737				135		6.20	%			8,196				97		4.80	%
Total interest-earning assets ²		1,749,630				17,083		3.96	%			1,856,107				17,606		3.76	%			1,769,873				17,488		3.92	%			1,456,474				14,969		4.12	%			1,339,136				14,418		4.37	%
NONINTEREST-EARNING ASSETS
Cash and due from banks		13,338										13,318										13,079										10,752										10,025
Other noninterest-earning assets		36,714										37,779										36,548										32,002										31,156
Total noninterest-earning assets		50,052										51,097										49,627										42,754										41,181
Less: Allowance for loan losses		(14,200	)									(14,849	)									(14,958	)									(14,899	)									(14,381	)
TOTAL ASSETS	$	1,785,482									$	1,892,355									$	1,804,542									$	1,484,329									$	1,365,936
INTEREST-BEARING DEPOSITS
Interest-bearing demand	$	27,442			$	3		0.04	%		$	27,904			$	3		0.04	%		$	36,670			$	4		0.04	%		$	13,373			$	2		0.06	%		$	15,813			$	2		0.05	%
Money market		321,694				356		0.45	%			338,937				401		0.47	%			312,606				388		0.49	%			263,845				352		0.54	%			265,856				366		0.56	%
Savings		76,967				61		0.32	%			77,057				68		0.35	%			74,266				71		0.38	%			43,433				55		0.51	%			48,284				60		0.50	%
Time deposits		529,421				673		0.52	%			527,634				674		0.51	%			542,901				756		0.55	%			469,000				831		0.71	%			451,347				975		0.88	%
Total interest-bearing deposits		955,524				1,093		0.46	%			971,532				1,146		0.47	%			966,443				1,219		0.50	%			789,651				1,240		0.63	%			781,300				1,403		0.73	%
Borrowings		50,000				116		0.94	%			50,000				119		0.94	%			50,000				118		0.94	%			51,539				118		0.92	%			65,667				130		0.80	%
Total interest-bearing liabilities		1,005,524				1,209		0.49	%			1,021,532				1,265		0.49	%			1,016,443				1,337		0.52	%			841,190				1,358		0.65	%			846,967				1,533		0.73	%
Noninterest-bearing deposits		574,436										673,154										597,056										459,695										343,904
Other liabilities		16,966										16,425										16,046										13,906										11,942
Stockholders' equity		188,556										181,244										174,997										169,538										163,123
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,785,482									$	1,892,355									$	1,804,542									$	1,484,329									$	1,365,936
Net interest income²					$	15,874									$	16,341									$	16,151									$	13,611									$	12,885
Net interest spread								3.47	%									3.27	%									3.40	%									3.47	%									3.64	%
Effect of noninterest-bearing sources								0.21	%									0.22	%									0.22	%									0.28	%									0.26	%
Net interest margin²								3.68	%									3.49	%									3.62	%									3.75	%									3.90	%
Cost of deposits	$	1,529,960			$	1,093		0.29	%		$	1,644,686			$	1,146		0.28	%		$	1,563,499			$	1,219		0.31	%		$	1,249,346			$	1,240		0.40	%		$	1,125,204			$	1,403		0.51	%
Cost of funds	$	1,579,960			$	1,209		0.31	%		$	1,694,686			$	1,265		0.30	%		$	1,613,499			$	1,337		0.33	%		$	1,300,885			$	1,358		0.42	%		$	1,190,871			$	1,533		0.52	%
1 Includes loans held-for-sale
² Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

FIVE-QUARTER COMPONENTS OF YIELD ON LOANS (Unaudited) - Table 13
(Dollars in thousands)
		Three Months Ended
		March 31, 2022						December 31, 2021						September 30, 2021						June 30, 2021						March 31, 2021
		Amount			Yield			Amount			Yield			Amount			Yield			Amount			Yield			Amount			Yield
Contractual yield		$	14,596		4.32	%		$	15,142		4.30	%		$	15,032		4.29	%		$	12,670		4.25	%		$	12,148		4.33	%
SBA discount accretion			1,421		0.42	%			1,024		0.29	%			1,038		0.30	%			1,027		0.34	%			738		0.26	%
Prepayment penalties & late fees			107		0.03	%			72		0.02	%			41		0.01	%			89		0.03	%			121		0.04	%
Amortization of net deferred costs			228		0.07	%			655		0.19	%			689		0.20	%			552		0.19	%			830		0.30	%
As reported yield on loans		$	16,352		4.84	%		$	16,893		4.80	%		$	16,800		4.79	%		$	14,338		4.81	%		$	13,837		4.93	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220428006150/en/

Douglas J Goddard, EVP & CFO

(323) 988-3010

DouglasG@cbb-bank.com

Source: CBB Bancorp, Inc.

FAQ

What were CBB Bancorp's earnings for Q1 2022?

CBB Bancorp reported a net income of $8.4 million, or $0.80 per diluted share, for Q1 2022.

How did net income for CBB Bancorp change compared to previous quarters?

Net income increased by 4.9% from Q4 2021 and by 57.6% from Q1 2021.

What drove the earnings growth for CBB Bancorp in Q1 2022?

The growth was primarily driven by improving credit quality and strong SBA loan originations.

What is the return on average equity for CBB Bancorp in Q1 2022?

The return on average equity was 18.08% for Q1 2022.

What was the status of CBB Bancorp's allowance for loan losses?

The allowance for loan losses was reduced to $13.1 million, or 1.07% of portfolio loans.