CBB Bancorp, Inc. Reports First Quarter 2023 Financial Results

LOS ANGELES--(BUSINESS WIRE)-- CBB Bancorp, Inc. ("CBB" or the "Company”) (OTCQX: CBBI), the holding company of Commonwealth Business Bank, doing business as CBB Bank (the "Bank"), announced today net income for first quarter 2023 of $7.1 million, or $0.67 per diluted share, a decrease of 3.3% compared to $7.3 million, or $0.70 per diluted share, in the prior quarter and a decrease of 15.7% compared to $8.4 million, or $0.80 per diluted share, in the same period last year.

Overall Results

Net income for first quarter 2023 declined as a result of lower loan volume and the impact of interest rate increases on the Bank’s cost of funds. The return on average assets for first quarter 2023 was 1.59% compared to 1.64% for fourth quarter 2022 and 1.91% for first quarter 2022. The return on average equity for first quarter 2023 was 13.45% compared to 14.04% for fourth quarter 2022 and 18.05% for first quarter 2022. The net interest margin for first quarter 2023 was 4.38% compared to 4.59% for fourth quarter 2022 and 3.68% for first quarter 2022. The efficiency ratio for first quarter 2023 was 51.04% compared to 51.41% for fourth quarter 2022 and 50.71% for first quarter 2022.

“With the recent uncertainty in the banking sector, we are pleased to be able to report reliable earnings combined with continual strengthening of our capital and liquidity ratios for the current quarter.,” said James Hong, President and CEO.

Net Interest Income and Margin:

Net Interest Income

Net interest income for first quarter 2023 was $19.1 million, a decrease of $987 thousand, or 4.9%, from fourth quarter 2022, and an increase of $3.3 million, or 20.6%, from first quarter 2022. The decrease in net interest income compared with the fourth quarter of 2022 was primarily due to the impact of interest rate increases on the cost of deposits. The increase in net interest income compared with the first quarter of 2022 was due to the increased yield on the Bank’s variable rate loans which were impacted by the rising interest rate environment for the past year.

Net Interest Margin

Our net interest margin for first quarter 2023 was 4.38% compared to 4.59% for fourth quarter 2022 and 3.68% for first quarter 2022. The decrease in net interest margin from the prior quarter was primarily attributable to the rising cost of deposits. Our average cost of funds increased for first quarter 2023 to 2.10% from 1.19% for fourth quarter 2022 and from 0.31% for first quarter 2022.

Provision for Credit Losses:

The Company implemented the current expected credit losses methodology (“CECL”) as of January 1, 2023, which resulted in an increase in the allowance for credit losses of $250 thousand and was reflected in an adjustment to retained earnings as of January 1, 2023. No provision for credit losses was recorded for first quarter 2023 as asset quality metrics remained steady and there was a decline in loan balances. The provision for loan losses for fourth quarter of 2022 was also zero, compared with a negative provision for loan losses of $1.2 million for first quarter 2022. See Table 10 for additional information.

Noninterest Income:

Noninterest income for first quarter 2023 was $1.1 million, compared to $0.9 million for fourth quarter 2022 and $5.6 million for first quarter 2022. There were no sales of SBA loans during the first quarter of 2023 and fourth quarter of 2022, compared with SBA loan sales of $50.5 million, with an average premium percentage received of 11.0%, during the first quarter of 2022.

Noninterest Expense:

Noninterest expense for first quarter 2023 was $10.3 million, compared to $10.8 million for fourth quarter 2022 and $10.9 million for first quarter 2022. Salaries and employee benefits decreased by $154 thousand to $6.1 million, compared to $6.2 million in the prior quarter, due to a decrease in the number of employees. Other noninterest expense in first quarter 2023 was lower than in fourth quarter 2022, due primarily to a decrease in third-party processing fees.

Income Taxes:

The Company’s effective tax rate for first quarter 2023 was 28.1% compared to 28.2% for fourth quarter 2022 and 28.4% for first quarter 2022.

Balance Sheet:

Investment Securities:

Investment securities were $69.0 million at March 31, 2023, a decrease of $3.6 million from December 31, 2022 and $11.2 million from March 31, 2022. The decreases were due to principal paydowns and an absence of portfolio additions in the first quarter 2023, or in the fourth and first quarters 2022.

Loans Receivable:

Loans receivable (including loans held for sale) at March 31, 2023 was $1.5 billion, a decrease of $49.1.0 million, or 3.2%, from December 31, 2022, and an increase of $91.1 million, or 6.6%, from March 31, 2022. The decrease in loans compared to December 31, 2022 was due to slower loan originations as higher interest rates have affected the level of loan demand.

The weighted average loan-to-value ratio of Commercial Real Estate (“CRE”) loans was 69.4% at March 31, 2023. Excluding SBA loans, the weighted average loan-to-value of CRE loans was 52.8%.

Allowance for Credit Losses and Asset Quality:

The allowance for credit losses at March 31, 2023 was $15.6 million, or 1.28% of portfolio loans, compared to $15.5 million, or 1.21% of portfolio loans, at December 31, 2022 and compared to $13.1 million, or 1.07% of portfolio loans, at March 31, 2022. Non-performing loans as of March 31, 2023 were $636 thousand, compared to $6.8 million at December 31, 2022 and compared to $723 thousand at March 31, 2022. Our coverage ratio of allowance for credit losses to nonperforming assets exceeded 2400%.

SBA Loans Held for Sale:

Total SBA loans held for sale at March 31, 2023 was $243.8 million, compared to $230.4 million at December 31, 2022 and $149.7 million at March 31, 2022. 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 $1.537 billion at March 31, 2023, down $0.9 million from $1.538 billion at December 31, 2022 and up $3.3 million from $1.534 billion at March 31, 2022. Noninterest-bearing demand deposits decreased $23.1 million, or 5.1%, to $428.6 million at March 31, 2023, from December 31, 2022 and decreased $147.8 million, or 25.6%, from March 31, 2022. Demand deposits were 28.6% of total deposits at March 31, 2023 compared to 30.0% at December 31, 2022 and 38.4% at March 31, 2022. NOW and MMDA balances at March 31, 2023 decreased $62.7 million, or 22.8%, to $211.8 million, from December 31, 2022 and $132.7 million, or 38.5%, from March 31, 2022. Time deposits at March 31, 2023 increased $73.5 million, or 9.8%, to $823.9 million from December 31, 2022 and increased $302.5 million, or 58.0%, from March 31, 2022. Time deposits at March 31, 2023 were 53.6% of total deposits compared to 48.7% of total deposits, at December 31, 2022, and 34.0% of total deposits, at March 31, 2022. The increases in time deposits during the first quarter of 2023 and fourth quarter of 2022 reflect a shift in depositors’ preferences for the higher rate term deposits over money market and checking accounts as rates have risen over the course of the past year.

Borrowings:

Borrowings at March 31, 2023, December 31, 2022, and March 31, 2022, consisted of $50.0 million of Federal Home Loan Bank of San Francisco (FHLB-SF) advances at each date.

Capital:

Stockholders’ equity was $216.2 million at March 31, 2023, representing an increase of $6.7 million, or 3.2%, over stockholders’ equity of $209.5 million at December 31, 2022. Tangible book value per share at March 31, 2023 was $20.18, compared with $19.59 at December 31, 2022, an increase of $0.59 per share, or 3.0%.

Each of the Company’s and the Bank’s regulatory capital ratios increased at March 31, 2023 from December 31, 2022 and from March 31, 2022 and continue to exceed the minimum levels required to be considered “Well Capitalized” under the applicable regulatory capital rules and in compliance with the fully phased-in Basel III requirements, which went into effect on January 1, 2022, as shown on Table 11 in this press release. The Common Equity Tier 1 risked-based capital at March 31, 2023 was 16.15% at the Company level and 16.10% 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, 2023, 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 the tab “About Us” and select “Investors Relations” to see 1Q 2023 Overview.

FORWARD-LOOKING STATEMENTS:

This news release may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, and CBB Bancorp and Commonwealth Business Bank (together, the “Company”) intend that such forward-looking statements be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Future events are difficult to predict, and the expectations described herein are necessarily subject to risks and uncertainties that may cause actual results to differ materially and adversely from those described herein. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Actual results may differ materially from those presented, either expressed or implied, in this news release. Factors that might cause such differences include, but are not limited to: the Company’s ability to successfully execute its business plans and achieve its objectives; changes in general economic and financial market conditions, either nationally or locally in areas in which the Company conducts its operations; changes in interest rates; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; increased competitive challenges and expanding product and pricing pressures among financial institutions; legislation or regulatory changes which adversely affect the Company’s operations or business; loss of key personnel; 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 publicly revise these forward-looking statements to reflect subsequent 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,				$			%
	2023				2022				Change			Change			2022				Change			Change
Interest income	$	27,248			$	24,744			$	2,504		10.1	%		$	17,032			$	10,216		60.0	%
Interest expense		8,168				4,677				3,491		74.6	%			1,209				6,959		575.6	%
Net interest income		19,080				20,067				(987	)	(4.9	%)			15,823				3,257		20.6	%
Provision for credit losses		-				-				-		-				(1,167	)			1,167		(100.0	%)
Net interest income after provision for credit losses		19,080				20,067				(987	)	(4.9	%)			16,990				2,090		12.3	%
Gain on sale of loans		-				-				-		-				4,668				(4,668	)	(100.0	%)
Gain (loss) on sale of OREO		-				-				-		-				-				-		-
SBA servicing fee income, net		654				491				163		33.2	%			469				185		39.4	%
Service charges and other income		398				457				(59	)	(12.9	%)			498				(100	)	(20.1	%)
Noninterest income		1,052				948				104		11.0	%			5,635				(4,583	)	(81.3	%)
Salaries and employee benefits		6,079				6,233				(154	)	(2.5	%)			7,065				(986	)	(14.0	%)
Occupancy and equipment		1,124				1,133				(9	)	(0.8	%)			1,120				4		0.4	%
Marketing expense		374				434				(60	)	(13.8	%)			485				(111	)	(22.9	%)
Professional expense		454				418				36		8.6	%			415				39		9.4	%
Merger related expense		9				7				2		28.6	%			-				9		100.0	%
Other expenses		2,235				2,579				(344	)	(13.3	%)			1,796				439		24.4	%
Noninterest expense		10,275				10,804				(529	)	(4.9	%)			10,881				(606	)	(5.6	%)
Income before income tax expense		9,857				10,211				(354	)	(3.5	%)			11,744				(1,887	)	(16.1	%)
Income tax expense		2,767				2,882				(115	)	(4.0	%)			3,336				(569	)	(17.1	%)
Net income	$	7,090			$	7,329			$	(239	)	(3.3	%)		$	8,408			$	(1,318	)	(15.7	%)
Effective tax rate		28.1	%			28.2	%			(0.2	%)	(0.5	%)			28.4	%			(0.3	%)	(1.2	%)
Outstanding number of shares		10,588,136				10,569,601				18,535		0.18	%			10,299,361				288,775		2.8	%
Weighted average shares for basic EPS		10,576,191				10,569,601				6,590		0.1	%			10,291,071				285,120		2.8	%
Weighted average shares for diluted EPS		10,600,189				10,600,053				136		0.0	%			10,479,488				120,701		1.2	%
Basic EPS	$	0.67			$	0.70			$	(0.03	)	(4.3	%)		$	0.82			$	(0.15	)	(18.3	%)
Diluted EPS	$	0.67			$	0.70			$	(0.03	)	(4.3	%)		$	0.80			$	(0.13	)	(16.3	%)
Return on average assets		1.59	%			1.64	%			(0.05	%)	(3.1	%)			1.91	%			(0.32	%)	(16.8	%)
Return on average equity		13.45	%			14.04	%			(0.59	%)	(4.2	%)			18.08	%			(4.63	%)	(25.6	%)
Efficiency ratio¹		51.04	%			51.41	%			(0.37	%)	(0.7	%)			50.71	%			0.33	%	0.7	%
Yield on interest-earning assets²		6.24	%			5.66	%			0.58	%	10.3	%			3.96	%			2.28	%	57.6	%
Cost of funds		2.10	%			1.19	%			0.91	%	76.5	%			0.31	%			1.79	%	577.4	%
Net interest margin²		4.38	%			4.59	%			(0.21	%)	(4.6	%)			3.68	%			0.70	%	19.0	%

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,				$			%
	2023				2022				Change			Change			2022				Change			Change
ASSETS
Cash and due from banks	$	13,788			$	20,134			$	(6,346	)	(31.5	%)		$	14,579			$	(791	)	(5.4	%)
Interest-earning deposits at the FRB and other banks		240,602				170,839				69,763		40.8	%			288,603				(48,001	)	(16.6	%)
Investment securities¹		68,943				72,550				(3,607	)	(5.0	%)			80,104				(11,161	)	(13.9	%)
Loans held-for-sale		243,753				230,431				13,322		5.8	%			149,733				94,020		62.8	%
Loans held-for-investment		1,222,867				1,285,278				(62,411	)	(4.9	%)			1,225,739				(2,872	)	(0.2	%)
Less: Allowance for credit losses ("ACL")		(15,627	)			(15,525	)			(102	)	(0.7	%)			(13,089	)			(2,538	)	(19.4	%)
Loans held-for-investment, net		1,207,240				1,269,753				(62,513	)	(4.9	%)			1,212,650				(5,410	)	(0.4	%)
OREO		-				-				-		-				-				-		-
Restricted stock investments		10,121				10,121				-		-				8,850				1,271		14.4	%
Servicing assets		8,528				9,232				(704	)	(7.6	%)			10,671				(2,143	)	(20.1	%)
Goodwill		2,185				2,185				-		-				2,185				-		-
Intangible assets		291				303				(12	)	(4.0	%)			346				(55	)	(15.9	%)
Other assets		25,697				26,939				(1,242	)	(4.6	%)			24,061				1,636		6.8	%
Total assets	$	1,821,148			$	1,812,487			$	8,661		0.5	%		$	1,791,782			$	29,366		1.6	%
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing	$	428,559			$	451,651			$	(23,092	)	(5.1	%)		$	576,378			$	(147,819	)	(25.6	%)
Interest-bearing		1,108,754				1,086,599				22,155		2.0	%			957,633				151,121		15.8	%
Total deposits		1,537,313				1,538,250				(937	)	(0.1	%)			1,534,011				3,302		0.2	%
FHLB advances and other borrowing		50,000				50,000				-		-				50,000				-		-
Other liabilities		17,651				14,706				2,945		20.0	%			16,687				964		5.8	%
Total liabilities		1,604,964				1,602,956				2,008		0.1	%			1,600,698				4,266		0.3	%
Stockholders' Equity		216,184				209,531				6,653		3.2	%			191,084				25,100		13.1	%
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,821,148			$	1,812,487			$	8,661		0.5	%		$	1,791,782			$	29,366		1.6	%
CAPITAL RATIOS
Leverage ratio
Company		11.86	%			11.71	%			0.15	%	1.3	%			10.56	%			1.30	%	12.3	%
Bank		11.82	%			11.67	%			0.15	%	1.3	%			10.55	%			1.27	%	12.0	%
Common equity tier 1 risk-based capital ratio
Company		16.15	%			14.92	%			1.23	%	8.3	%			14.50	%			1.65	%	11.4	%
Bank		16.10	%			14.87	%			1.23	%	8.3	%			14.50	%			1.60	%	11.0	%
Tier 1 risk-based capital ratio
Company		16.15	%			14.92	%			1.23	%	8.3	%			14.50	%			1.65	%	11.4	%
Bank		16.10	%			14.87	%			1.23	%	8.3	%			14.50	%			1.60	%	11.0	%
Total risk-based capital ratio
Company		17.37	%			16.08	%			1.28	%	8.0	%			15.57	%			1.80	%	11.5	%
Bank		17.31	%			16.03	%			1.28	%	8.0	%			15.57	%			1.74	%	11.2	%
Tangible common equity per share	$	20.18			$	19.59			$	0.59		3.0	%		$	18.31			$	1.87		10.2	%
Loan-to-Deposit (LTD) ratio		79.55	%			83.55	%			(4.00	%)	(4.8	%)			79.90	%			(0.35	%)	(0.4	%)
Nonperforming assets	$	636			$	6,807			$	(6,171	)	(90.7	%)		$	723			$	(87	)	(12.0	%)
Nonperforming assets as a % of loans held-for-investment		0.05	%			0.53	%			(0.48	%)	(90.57	%)			0.06	%			(0.01	%)	(16.7	%)
ACL as a % of loans held-for-investment		1.28	%			1.21	%			0.07	%	5.79	%			1.07	%			0.21	%	19.6	%
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,
	2023				2022				2022				2022				2022
Interest income	$	27,248			$	24,744			$	21,334			$	17,807			$	17,032
Interest expense		8,168				4,677				2,507				1,369				1,209
Net interest income		19,080				20,067				18,827				16,438				15,823
Provision for credit losses		-				-				910				1,600				(1,167	)
Net interest income after provision for credit losses		19,080				20,067				17,917				14,838				16,990
Gain on sale of loans		-				-				-				3,298				4,668
Gain (loss) on sale of OREO		-				-				-				-				-
SBA servicing fee income, net		654				491				709				778				469
Service charges and other income		398				457				518				462				498
Noninterest income		1,052				948				1,227				4,538				5,635
Salaries and employee benefits		6,079				6,233				6,861				6,994				7,065
Occupancy and equipment		1,124				1,133				1,118				1,114				1,120
Marketing expense		374				434				489				511				485
Professional expense		454				418				519				517				415
Merger related expense		9				7				47				123				-
Other expenses		2,235				2,579				2,125				1,114				1,796
Noninterest expense		10,275				10,804				11,159				10,373				10,881
Income before income tax expense		9,857				10,211				7,985				9,003				11,744
Income tax expense		2,767				2,882				2,258				2,547				3,336
Net income	$	7,090			$	7,329			$	5,727			$	6,456			$	8,408
Effective tax rate		28.1	%			28.2	%			28.3	%			28.3	%			28.4	%
Outstanding number of shares		10,588,136				10,569,601				10,569,601				10,416,601				10,299,361
Weighted average shares for basic EPS		10,576,191				10,569,601				10,516,394				10,305,014				10,291,071
Weighted average shares for diluted EPS		10,600,189				10,600,053				10,545,544				10,409,663				10,479,488
Basic EPS	$	0.67			$	0.70			$	0.54			$	0.62			$	0.82
Diluted EPS	$	0.67			$	0.70			$	0.54			$	0.62			$	0.80

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,
		2023				2022				2022				2022				2022
Salaries and benefits		$	6,079			$	6,233			$	6,861			$	6,994			$	7,065
FTE at the end of period			170				179				190				199				208
Average FTE during the period			174				184				193				201				206
Salaries and benefits/average FTE¹		$	142			$	134			$	141			$	140			$	139
Salaries and benefits/average assets¹			1.36	%			1.39	%			1.52	%			1.55	%			1.60	%
Noninterest expense/average assets¹			2.30	%			2.41	%			2.47	%			2.30	%			2.47	%
1 Annualized

FIVE-QUARTER BALANCE SHEET (Unaudited) - Table 5
(Dollars in thousands)
	March 31,				December 31,				September 30,				June 30,				March 31,
	2023				2022				2022				2022				2022
ASSETS
Cash and due from banks	$	13,788			$	20,134			$	17,232			$	18,087			$	14,579
Interest-earning deposits at the FRB and other banks		240,602				170,839				225,044				243,072				288,603
Investment securities		68,943				72,550				75,839				77,469				80,104
Loans held-for-sale		243,753				230,431				186,438				141,104				149,733
Loans held-for-investment		1,222,867				1,285,278				1,260,590				1,260,939				1,225,739
Less: Allowance for credit losses		(15,627	)			(15,525	)			(15,602	)			(14,739	)			(13,089	)
Loans held-for-investment, net		1,207,240				1,269,753				1,244,988				1,246,200				1,212,650
OREO		-				-				-				-				-
Restricted stock investments		10,121				10,121				10,121				10,111				8,850
Servicing assets		8,528				9,232				10,158				10,996				10,671
Goodwill		2,185				2,185				2,185				2,185				2,185
Intangible assets		291				303				317				331				346
Other assets		25,697				26,939				27,845				28,060				24,061
Total assets	$	1,821,148			$	1,812,487			$	1,800,167			$	1,777,615			$	1,791,782
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing	$	428,559			$	451,651			$	562,051			$	566,610			$	576,378
Interest-bearing		1,108,754				1,086,599				971,263				948,760				957,633
Total deposits		1,537,313				1,538,250				1,533,314				1,515,370				1,534,011
FHLB advances		50,000				50,000				50,000				50,000				50,000
Other liabilities		17,651				14,706				14,109				15,134				16,687
Total liabilities		1,604,964				1,602,956				1,597,423				1,580,504				1,600,698
Stockholders' Equity		216,184				209,531				202,744				197,111				191,084
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,821,148			$	1,812,487			$	1,800,167			$	1,777,615			$	1,791,782

FIVE-QUARTER LOANS RECEIVABLE COMPONENTS (Unaudited) - Table 6
(Dollars in thousands)
	March 31, 2023						December 31, 2022						September 30, 2022						June 30, 2022						March 31, 2022
	Balance			%			Balance			%			Balance			%			Balance			%			Balance			%
Construction	$	19,550		1.6	%		$	17,537		1.4	%		$	14,919		1.2	%		$	23,431		1.9	%		$	18,541		1.5	%
Commercial real estate		1,033,124		84.5	%			1,078,588		83.9	%			1,050,154		83.3	%			1,023,298		81.1	%			976,924		79.7	%
Commercial and industrial		114,184		9.3	%			125,298		9.7	%			128,099		10.1	%			146,175		11.6	%			159,111		13.0	%
Home mortgage		49,155		4.0	%			52,031		4.1	%			57,773		4.6	%			57,612		4.6	%			59,836		4.9	%
Consumer		1,049		0.1	%			6,260		0.5	%			4,839		0.4	%			6,609		0.5	%			7,589		0.6	%
Gross loans held-for-investment		1,217,062		99.5	%			1,279,714		99.6	%			1,255,784		99.6	%			1,257,125		99.7	%			1,222,001		99.7	%
Deferred loan fees/costs, net		5,805		0.5	%			5,564		0.4	%			4,806		0.4	%			3,814		0.3	%			3,738		0.3	%
Loans held-for-investment	$	1,222,867		100.0	%		$	1,285,278		100.0	%		$	1,260,590		100.0	%		$	1,260,939		100.0	%		$	1,225,739		100.0	%
Loans held-for-sale	$	243,753					$	230,431					$	186,438					$	141,104					$	149,733
Total loans receivable	$	1,466,620					$	1,515,709					$	1,447,028					$	1,402,043					$	1,375,472

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,
	2023				2022				2022				2022				2022
SBA loans held-for-sale at beginning of the quarter/year	$	230,431			$	186,438			$	141,104			$	149,733			$	158,128
SBA loans originated/transferred from/to held-for-investment during the quarter/year		16,890				45,184				49,922				43,451				43,132
SBA loans sold during the quarter/year		-				-				-				(50,845	)			(50,531	)
SBA loans principal paydown/payoff, net of advance		(3,568	)			(1,191	)			(4,588	)			(1,235	)			(996	)
SBA loans held-for-sale at end of the quarter/year	$	243,753			$	230,431			$	186,438			$	141,104			$	149,733
Gain on sale of SBA loans	$	-			$	-			$	-			$	3,298			$	4,668
Premium on sale (weighted average)		-				-				-				8.0	%			11.0	%
SBA loan production	$	21,719			$	60,746			$	69,234			$	56,676			$	54,523

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,
	2023				2022				2022				2022				2022
SBA servicing assets @ beginning of the quarter/year	$	9,232			$	10,158			$	10,996			$	10,671			$	10,632
Newly added SBA servicing assets from SBA loans sold		-				-				-				1,081				1,052
Regular quarterly/annual servicing assets amortization		(403	)			(434	)			(471	)			(478	)			(462	)
SBA servicing assets amortized from SBA loans paid off/charged off		(301	)			(492	)			(367	)			(278	)			(551	)
Subtotal before impairment		8,528				9,232				10,158				10,996				10,671
Reversal of valuation allowance on servicing assets		-				-				-				-				-
SBA servicing assets @ the end of the quarter/year	$	8,528			$	9,232			$	10,158			$	10,996			$	10,671

FIVE-QUARTER DEPOSIT COMPONENTS (Unaudited) - Table 9
(Dollars in thousands)
	March 31, 2023						December 31, 2022						September 30, 2022						June 30, 2022						March 31, 2022
	Balance			%			Balance			%			Balance			%			Balance			%			Balance			%
Noninterest-bearing demand	$	428,559		27.9	%		$	451,651		29.4	%		$	562,051		36.7	%		$	566,610		37.4	%		$	576,378		37.6	%
Interest-bearing demand		10,883		0.7	%			8,878		0.6	%			10,268		0.7	%			12,754		0.8	%			12,059		0.8	%
NOW & MMDA		211,793		13.8	%			274,521		17.9	%			313,719		20.5	%			327,477		21.6	%			344,501		22.5	%
Savings		62,188		4.0	%			52,845		3.4	%			66,673		4.3	%			73,791		4.9	%			79,685		5.2	%
TCDs of $250K and under		294,074		19.1	%			278,952		18.1	%			246,886		16.1	%			245,203		16.2	%			253,617		16.5	%
TCDs of $250K over		367,167		23.9	%			320,386		20.8	%			242,700		15.8	%			198,518		13.1	%			176,754		11.5	%
Wholesale TCDs		162,649		10.6	%			151,017		9.8	%			91,017		5.9	%			91,017		6.0	%			91,017		5.9	%
Total Deposits	$	1,537,313		100.0	%		$	1,538,250		100.0	%		$	1,533,314		100.0	%		$	1,515,370		100.0	%		$	1,534,011		100.0	%
Recap:
Noninterest-bearing demand	$	428,559		27.9	%		$	451,651		29.4	%		$	562,051		36.7	%		$	566,610		37.4	%		$	576,378		37.6	%
Interest-bearing demand		10,883		0.7	%			8,878		0.6	%			10,268		0.7	%			12,754		0.8	%			12,059		0.8	%
NOW & MMDA		211,793		13.8	%			274,521		17.8	%			313,719		20.5	%			327,477		21.6	%			344,501		22.5	%
Savings		62,188		4.0	%			52,845		3.5	%			66,673		4.3	%			73,791		4.9	%			79,685		5.2	%
TCDs of $250K and under		294,074		19.1	%			278,952		18.1	%			246,886		16.1	%			245,203		16.2	%			253,617		16.5	%
Core Deposits		1,007,497		65.5	%			1,066,847		69.4	%			1,199,597		78.3	%			1,225,835		80.9	%			1,266,240		82.6	%
TCDs of $250K over		367,167		23.9	%			320,386		20.8	%			242,700		15.8	%			198,518		13.1	%			176,754		11.5	%
Wholesale TCDs		162,649		10.6	%			151,017		9.8	%			91,017		5.9	%			91,017		6.0	%			91,017		5.9	%
Noncore Deposits		529,816		34.5	%			471,403		30.6	%			333,717		21.7	%			289,535		19.1	%			267,771		17.4	%
Total Deposits	$	1,537,313		100.0	%		$	1,538,250		100.0	%		$	1,533,314		100.0	%		$	1,515,370		100.0	%		$	1,534,011		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.
		2023				2022				2022				2022				2022
Allowance for Credit Losses
Balance at beginning of period		$	15,525			$	15,602			$	14,739			$	13,089			$	14,192
CECL transition provision			250
Provision for credit losses			-				-				910				1,600				(1,167	)
Charge-offs			(159	)			(90	)			(89	)			-				-
Recoveries			11				13				42				50				64
Balance at the end of period		$	15,627			$	15,525			$	15,602			$	14,739			$	13,089
Nonperforming Assets:¹
Over 90 days still accruing						$	6,006			$	-			$	-			$	-
Nonaccrual loans			636				801				690				2,532				723
Total nonperforming loans			636				6,807				690				2,532				723
Other real estate owned			-				-				-				-				-
Total nonperforming assets		$	636			$	6,807			$	690			$	2,532			$	723
Classified Assets:¹
Substandard		$	7,673			$	8,165			$	9,146			$	11,133			$	9,300
Doubtful			-												-				-
Loss															-				-
Total classified loans		$	7,673			$	8,165			$	9,146			$	11,133			$	9,300
Other real estate owned			-				-				-				-				-
Total classified assets		$	7,673			$	8,165			$	9,146			$	11,133			$	9,300
Performing TDR loans:¹		$	4,332			$	4,471			$	4,797			$	4,744			$	3,253
Delinquent Loans:¹
Loans 30-89 days past due		$	3,551			$	381			$	3,936			$	11,553			$	6,275
90 days or more past due and still accruing			-				6,006				-				-				-
Nonaccrual			636				801				690				2,532				723
Total delinquent loans		$	4,187			$	7,188			$	4,626			$	14,085			$	6,998
Asset Quality Ratios:
Net (recoveries) charge-offs to average loans²			0.04	%			0.02	%			0.01	%			(0.01	%)			(0.02	%)
Nonaccrual loans to loans held-for-investment			0.05	%			0.06	%			0.05	%			0.20	%			0.06	%
Nonperforming loans to loans held-for-investment			0.05	%			0.53	%			0.05	%			0.20	%			0.06	%
Nonperforming assets to total assets			0.03	%			0.38	%			0.04	%			0.14	%			0.04	%
Classified loans to loans held-for-investment			0.63	%			0.64	%			0.73	%			0.88	%			0.76	%
Classified loans to Tier 1 and ACL			3.35	%			3.67	%			4.24	%			5.32	%			4.61	%
Classified assets to total assets			0.42	%			0.45	%			0.51	%			0.63	%			0.52	%
Classified assets to Tier 1 and ACL			3.35	%			3.67	%			4.24	%			5.32	%			4.61	%
ACL to loans held-for-investment			1.28	%			1.21	%			1.24	%			1.17	%			1.07	%
ACL to nonaccrual loans			2457.08	%			1938.20	%			2261.16	%			582.11	%			1810.37	%
ACL to nonperforming loans			2457.08	%			228.07	%			2261.16	%			582.11	%			1810.37	%
ACL to nonperforming assets			2457.08	%			228.07	%			2261.16	%			582.11	%			1810.37	%
Texas ratio ³			0.28	%			3.06	%			0.32	%			1.21	%			0.36	%

1		Net of SBA guaranteed balance
2		Includes loans held-for-sale
3		Nonperforming assets divided by tangible common equity and ACL

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		2023			2022			2022			2022			2022
Leverage ratio
Company	N/A		N/A			11.86%			11.71%			11.25%			10.80%			10.56%
Bank	5.00%		4.00%			11.82%			11.67%			11.15%			10.73%			10.55%
Common equity tier 1 risk-based capital ratio
Company	N/A		N/A			16.15%			14.92%			14.82%			14.47%			14.50%
Bank	6.50%		7.00%			16.10%			14.87%			14.70%			14.38%			14.50%
Tier 1 risk-based capital ratio
Company	N/A		N/A			16.15%			14.92%			14.82%			14.47%			14.50%
Bank	8.00%		8.50%			16.10%			14.87%			14.70%			14.38%			14.50%
Total risk-based capital ratio
Company	N/A		N/A			17.37%			16.08%			16.02%			15.63%			15.57%
Bank	10.00%		10.50%			17.31%			16.03%			15.89%			15.53%			15.57%
Tangible common equity/total assets						11.75%			11.44%			11.14%			10.96%			10.54%
Tangible common equity per share					$	20.18		$	19.59		$	18.95		$	18.68		$	18.31

FIVE-QUARTER MARGIN ANALYSIS (Unaudited) -Table 12
(Dollars in thousands)
	Three Months Ended
	March 31, 2023											December 31, 2022											September 30, 2022											June 30, 2022											March 31, 2022
	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 Receivable¹	$	1,502,078			$	24,379			6.58	%		$	1,473,100			$	22,407			6.03	%		$	1,413,632			$	19,299			5.42	%		$	1,389,968			$	16,643			4.80	%		$	1,368,996			$	16,352			4.84	%
Investment securities ²		70,146				577			3.34	%			73,371				552			2.98	%			77,304				543			2.79	%			78,709				488			2.49	%			82,818				471			2.31	%
Interest-earning deposits at the FRB and other banks		190,692				2,178			4.63	%			180,358				1,666			3.66	%			246,955				1,398			2.25	%			286,974				599			0.84	%			288,966				141			0.20	%
Other earning assets		10,121				164			6.57	%			10,121				169			6.62	%			10,121				145			5.68	%			9,861				129			5.25	%			8,850				119			5.45	%
Total interest-earning assets ²		1,773,037				27,298			6.24	%			1,736,950				24,794			5.66	%			1,748,012				21,385			4.85	%			1,765,512				17,859			4.06	%			1,749,630				17,083			3.96	%
NONINTEREST-EARNING ASSETS
Cash and due from banks		14,262											15,632											17,429											14,866											13,338
Other noninterest-earning assets		36,643											38,529											40,251											38,621											36,714
Total noninterest-earning assets		50,905											54,161											57,680											53,487											50,052
Less: Allowance for credit losses		(15,552	)										(15,581	)										(14,756	)										(13,126	)										(14,200	)
TOTAL ASSETS	$	1,808,390										$	1,775,530										$	1,790,936										$	1,805,873										$	1,785,482
INTEREST-BEARING DEPOSITS
Interest-bearing demand	$	18,021			$	9			0.20	%		$	20,352			$	10			0.19	%		$	23,461			$	8			0.14	%		$	26,781			$	4			0.06	%		$	27,442			$	3			0.04	%
Money market		231,865				1,469			2.57	%			288,611				1,433			1.97	%			316,964				894			1.12	%			308,377				443			0.58	%			321,694				356			0.45	%
Savings		55,576				164			1.20	%			61,152				96			0.62	%			71,519				85			0.47	%			75,306				59			0.31	%			76,967				61			0.32	%
Time deposits		797,072				6,410			3.26	%			625,823				3,020			1.91	%			556,919				1,401			1.00	%			523,504				746			0.57	%			529,421				673			0.52	%
Total interest-bearing deposits		1,102,534				8,052			2.96	%			995,938				4,559			1.82	%			968,863				2,388			0.98	%			933,968				1,252			0.54	%			955,524				1,093			0.46	%
Borrowings		50,000				116			0.94	%			50,001				118			0.94	%			50,001				119			0.94	%			50,000				117			0.94	%			50,000				116			0.94	%
Total interest-bearing liabilities		1,152,534				8,168			2.87	%			1,045,939				4,677			1.77	%			1,018,864				2,507			0.98	%			983,968				1,369			0.56	%			1,005,524				1,209			0.49	%
Noninterest-bearing deposits		425,190											507,719											555,291											611,395											574,436
Other liabilities		16,947											14,732											14,596											15,818											16,966
Stockholders' equity		213,719											207,140											202,185											194,692											188,556
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,808,390										$	1,775,530										$	1,790,936										$	1,805,873										$	1,785,482
Net interest income²					$	19,130										$	20,117										$	18,878										$	16,490										$	15,874
Net interest spread									3.37	%										3.89	%										3.87	%										3.50	%										3.47	%
Effect of noninterest-bearing sources									1.01	%										0.70	%										0.41	%										0.25	%										0.21	%
Net interest margin²									4.38	%										4.59	%										4.28	%										3.75	%										3.68	%
Cost of deposits	$	1,527,724			$	8,052			2.14	%		$	1,503,657			$	4,559			1.20	%		$	1,524,154			$	2,388			0.62	%		$	1,545,363			$	1,252			0.32	%		$	1,529,960			$	1,093			0.29	%
Cost of funds	$	1,577,724			$	8,168			2.10	%		$	1,553,658			$	4,677			1.19	%		$	1,574,155			$	2,507			0.63	%		$	1,595,363			$	1,369			0.34	%		$	1,579,960			$	1,209			0.31	%

¹		Loan held-for-investment, plus 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, 2023							December 31, 2022							September 30, 2022							June 30, 2022						March 31, 2022
		Amount				Yield			Amount				Yield			Amount				Yield			Amount			Yield			Amount			Yield
Contractual yield		$	23,643			6.38	%		$	21,534			5.80	%		$	18,134			5.09	%		$	15,496		4.47	%		$	14,596		4.32	%
SBA discount accretion			937			0.25	%			1,172			0.32	%			1,078			0.30	%			1,035		0.30	%			1,421		0.42	%
Prepayment penalties & late fees			30			0.01	%			17			0.00	%			94			0.03	%			56		0.02	%			107		0.03	%
Amortization of net deferred costs			(231	)		-0.06	%			(316	)		-0.09	%			(7	)		0.00	%			56		0.01	%			228		0.07	%
As reported yield on loans		$	24,379			6.58	%		$	22,407			6.03	%		$	19,299			5.42	%		$	16,643		4.80	%		$	16,352		4.84	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230427005846/en/

Douglas J Goddard, EVP & CFO

(323) 988-3010

DouglasG@cbb-bank.com

Source: CBB Bancorp, Inc.