CBB Bancorp, Inc. Reports Third Quarter 2022 Financial Results

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 third quarter 2022 of $5.7 million, or $.54 per diluted share, a decrease of 11.3% compared to $6.5 million, or $.62 per diluted share, in the prior quarter and a decrease of 27.3% compared to $7.9 million, or $.75 per diluted share, in the same period last year.

Overall Results

Net income for third quarter 2022 was lower than prior periods due to the absence of SBA loan sales during the period. The recent volatility in pricing for SBA loans in the secondary market and the higher value of holding the variable-rate assets until the premiums stabilize were the two reasons for temporarily suspending the SBA loans sales. Net interest margin improved from the prior quarter, but the reduction in gains on SBA loan sales affected the return ratios for the period. Our return on average assets for third quarter 2022 was 1.27% compared to 1.43% for second quarter 2022 and 1.73% for third quarter 2021. Our return on average equity for third quarter 2022 was 11.24%, compared to 13.30% for second quarter 2022 and 17.87% for third quarter 2021. Our net interest margin for third quarter 2022 was 4.28%, compared to 3.75% for second quarter 2022 and 3.62% for third quarter 2021.

James Hong, President and CEO, commented, “In spite of the uncertainty in the markets caused by rising interest rates, we continue to see opportunities to add to our core earnings going forward through the addition of quality loan and deposit customers. We remain committed to continued growth while managing the risks of a more uncertain economic environment for the coming year.”

Net Interest Income and Margin

Net Interest Income

Net interest income for third quarter 2022 was $18.8 million, an increase of $2.4 million, or 14.5%, from second quarter 2022, and an increase of $2.7 million, or 16.9%, from third quarter 2021. The increase in net interest income compared with the prior quarter was driven by the increase in loans held for sale, as well as increased variable rate asset yields due to recent increases in interest rates by the Federal Reserve Bank.

Net Interest Margin

Our net interest margin for third quarter 2022 was 4.28%, compared to 3.75% for second quarter 2022 and 3.62% for third quarter 2021. The increase in net interest margin compared to second quarter 2022 was due to increased loan yields as well as interest income on cash and due from banks balances. Variable Rate loans comprised 45.6% of the loan portfolio at September 30, 2022. Our cost of funds for third quarter 2022 increased to 0.63% from 0.34% for second quarter 2022 and from 0.33% for third quarter 2021, as the rising interest rate environment has affected costs for both money market accounts and certificates of deposit.

Provision for Loan Losses:

The Company had a provision for loan losses for third quarter 2022 of $0.9 million, compared to $1.6 million for second quarter 2022 and no provision for loan losses for third quarter 2021. The provision recorded for the current quarter was due both loan growth and an increase of potential risks in the economy. See Table 10 in this press release for additional information and trends.

Noninterest Income:

Noninterest income for third quarter 2022 was $1.2 million, compared to $4.5 million for second quarter 2022 and $5.5 million for third quarter 2021. The decrease in noninterest income in third quarter 2022 was primarily the result of decreased gains on sales of loans. There were no sales of SBA loans during the third quarter of 2022, compared with SBA loan sales of $50.8 million with an average premium percentage received of 8.0% during the second quarter of 2022 and SBA loan sales of $42.0 million with an average premium percentage received of 11.5% during the third quarter of 2021.

Noninterest Expense:

Noninterest expense for third quarter 2022 was $11.2 million, compared to $10.4 million for second quarter 2022 and $10.6 million for third quarter 2021The increase in other expenses compared to the second quarter of 2022 was due to a credit to expense that occurred in the second quarter of $800 thousand. That credit related to the reversal of an earlier provision for probable loss on the anticipated repurchase of SBA loans sold. The noninterest expense in the third quarter of 2022 compared to the same period of 2021 increased by $553 thousand, or 5.2%. Salaries and employee benefits were substantially unchanged at $6.9 million in third quarter 2022 compared with the prior quarter, and up from $6.5 million in the third quarter of 2021.

Income Taxes:

The Company’ s effective tax rate for third quarter 2022 was 28.3% compared to 28.3% for second quarter 2022 and 28.6% for third quarter 2021.

Balance Sheet:

Investment Securities:

Investment securities were $75.8 million on September 30, 2022, a decrease of $1.6 million from June 30, 2022, and $10.6 million from September 30, 2021. The decreases were due to principal paydowns along with an increase in unrealized loss on securities available for sale. There were no portfolio additions in third quarter 2022, or in the comparable period of 2021.

Loans Receivable:

Loans receivable (including loans held for sale) on September 30, 2022 were $1.4 billion, an increase of $45.0 million, or 3.2%, from loans receivable at June 30, 2022, and an increase of $54.8 million, or 3.9%, from loans receivable at September 30, 2021. The increase in loan balances compared with earlier periods was primarily due to the increase in SBA loans held for sale, which typically yield between 1% and 2.50% over the prime rate.

Our weighted average loan-to-value ratio of commercial real estate loans was 69.3% at September 30, 2022. Excluding SBA loans, our weighted average loan-to-value ratio of CRE loans was 53.4%. For additional information, please go to www.cbb-bank.com under tab “About Us” and select “Investors Relations” to see 3Q 2022 Overview.

Allowance for Loan Losses and Asset Quality:

Our allowance for loan losses at September 30, 2022 was $15.6 million, or 1.24% of portfolio loans, compared to $14.7 million, or 1.17% of portfolio loans, at June 30 2022 and compared to $15.0 million, or 1.19% of portfolio loans, at September 30, 2021. Excluding Paycheck Protection Program (PPP) loans of $2.0 million, which are government guaranteed, the allowance for loan losses at September 30, 2022 was 1.24%, compared to 1.18% and 1.26%, respectively, at June 30 2022 and September 30, 2021. Non-performing loans were $690 thousand at September 30, 2022, compared to $2.5 million at June 30, 2022 and $768 thousand at September 30, 2021. Loans with payment deferments are considered to be performing loans in accordance with regulatory guidance. For additional information, please go to www.cbb-bank.com under tab “About Us” and select “Investors Relations” to see 3Q 2022 Overview.

SBA Loans Held for Sale:

SBA loans held for sale at September 30, 2022 were $186.4 million, compared to $141.1 million at June 30 2022 and $136.4 million at September 30, 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 September 30, 2022, up $17.9 million, or 1.2%, from June 30 2022 and down $132.7 million, or 8.0%, from September 30, 2021. Noninterest-bearing demand deposits (“DDAs”) decreased $4.6 million, or 0.8%, to $562.0 million at September 30, 2022 from June 30 2022 and decreased $108.4 million, or 16.2%, from September 30, 2021. DDAs were 36.7% of total deposits at September 30, 2022, compared to 37.4% at June 30 2022 and 40.2% at September 30, 2021. NOW and MMDA accounts decreased $13.8 million, or 4.2%, to $313.7 million at September 30, 2022 from June 30 2022 and decreased $62.8 million, or 16.7%, from September 30, 2021. Time deposits increased $45.9 million, or 8.6%, at September 30, 2022 from June 30 2022 and increased $48.0 million, or 9.0%, from September 30, 2021. Time deposits at September 30, 2022 were $580.6 million, or 37.8% of total deposits, compared to $534.7 million, or 35.3% of total deposits, at June 30, 2022, and $532.6 million, or 32.1% of total deposits, at September 30, 2021. The primary cause of the decreases in noninterest bearing deposit balances during 2022 compared with the comparable period of 2021 was a decline in escrow-related deposits. The reduction in escrow related deposits is due to both the impact of the rising interest rate environment, and reduced marketing efforts in this area.

Borrowings:

Borrowings at September 30, 2022, June 30, 2022 and September 30, 2021 consisted of $50.0 million of Federal Home Loan Bank of San Francisco advances at each date.

Capital:

Stockholders’ equity was $202.7 million at September 30, 2022, representing an increase of $5.6 million, or 2.9%, over stockholders’ equity of $197.1 million at June 30, 2022. Tangible book value per share at September 30, 2022 was $18.95, compared with $18.68 at June 30, 2022, an increase of $0.27 per share or 1.5%.

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 capital requirements, as shown in Table 11 in this press release. Our Common Equity Tier 1 risked-based capital at September 30, 2022 was 14.82% at the Company level and 14.70% 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 September 30, 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 3Q 2022 Overview.

FORWARD-LOOKING STATEMENTS:

This press 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 that could cause actual results to differ materially from the anticipated 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 anticipated 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; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently by investors and stock market analysts; changes in corporate and/or individual income tax laws may adversely affect the Company’s financial condition or results of operations or the results of operations or behavior of our loan and deposit customers; changes in 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																								Nine Months Ended
		September 30,				June 30,				$			%			September 30,				$			%			September 30,				September 30,				$			%
			2022				2022			Change			Change				2021			Change			Change				2022				2021			Change			Change
Interest income		$	21,334			$	17,807			$	3,527		19.8	%		$	17,437			$	3,897		22.3	%		$	56,173			$	46,732			$	9,441		20.2	%
Interest expense			2,507				1,369				1,138		83.1	%			1,337				1,170		87.5	%			5,085				4,228				857		20.3	%
Net interest income			18,827				16,438				2,389		14.5	%			16,100				2,727		16.9	%			51,088				42,504				8,584		20.2	%
Provision for loan losses			910				1,600				(690	)	(43.1	%)			-				910		100.0	%			1,343				500				843		168.6	%
Net interest income after provision for loan losses			17,917				14,838				3,079		20.8	%			16,100				1,817		11.3	%			49,745				42,004				7,741		18.4	%
Gain on sale of loans			-				3,298				(3,298	)	(100.0	%)			4,305				(4,305	)	(100.0	%)			7,966				10,749				(2,783	)	(25.9	%)
Gain (loss) on sale of OREO			-				-				-		-				-				-		-				-				-				-		-
SBA servicing fee income, net			709				778				(69	)	(8.9	%)			698				11		1.6	%			1,956				2,167				(211	)	(9.7	%)
Reversal of valuation allowance on servicing assets			-				-				-		-				-				-		-				-				-				-		-
Service charges and other income			518				462				56		12.1	%			540				(22	)	(4.1	%)			1,478				1,314				164		12.5	%
Noninterest income			1,227				4,538				(3,311	)	(73.0	%)			5,543				(4,316	)	(77.9	%)			11,400				14,230				(2,830	)	(19.9	%)
Salaries and employee benefits			6,861				6,994				(133	)	(1.9	%)			6,500				361		5.6	%			20,920				17,353				3,567		20.6	%
Occupancy and equipment			1,118				1,114				4		0.4	%			1,067				51		4.8	%			3,352				2,991				361		12.1	%
Marketing expense			489				511				(22	)	(4.3	%)			287				202		70.4	%			1,485				883				602		68.2	%
Professional expense			519				517				2		0.4	%			495				24		4.8	%			1,451				1,441				10		0.7	%
Merger related expense			47				123				(76	)	(61.8	%)			450				(403	)	(89.6	%)			170				1,731				(1,561	)	(90.2	%)
Other expenses			2,125				1,114				1,011		90.8	%			1,807				318		17.6	%			5,035				4,463				572		12.8	%
Noninterest expense			11,159				10,373				786		7.6	%			10,606				553		5.2	%			32,413				28,862				3,551		12.3	%
Income before income tax expense			7,985				9,003				(1,018	)	(11.3	%)			11,037				(3,052	)	(27.7	%)			28,732				27,372				1,360		5.0	%
Income tax expense			2,258				2,547				(289	)	(11.3	%)			3,156				(898	)	(28.5	%)			8,141				7,854				287		3.7	%
Net income		$	5,727			$	6,456			$	(729	)	(11.3	%)		$	7,881			$	(2,154	)	(27.3	%)		$	20,591			$	19,518			$	1,073		5.5	%
Effective tax rate			28.3	%			28.3	%			(0.0	%)	(0.0	%)			28.6	%			(0.3	%)	(1.1	%)			28.3	%			28.7	%			(0.4	%)	(1.3	%)
Outstanding number of shares			10,569,601				10,416,601				153,000		1.5	%			10,284,962				284,639		2.8	%			10,569,601				10,284,962				284,639		2.8	%
Weighted average shares for basic EPS			10,516,394				10,305,014				211,380		2.1	%			10,279,962				236,432		2.3	%			10,371,652				10,263,523				108,129		1.1	%
Weighted average shares for diluted EPS			10,545,544				10,409,663				135,881		1.3	%			10,427,632				117,912		1.1	%			10,476,560				10,373,645				102,915		1.0	%
Basic EPS		$	0.54			$	0.62			$	(0.08	)	(12.9	%)		$	0.77			$	(0.23	)	(29.9	%)		$	1.98			$	1.90			$	0.08		4.2	%
Diluted EPS		$	0.54			$	0.62			$	(0.08	)	(12.9	%)		$	0.75			$	(0.21	)	(28.0	%)		$	1.96			$	1.88			$	0.08		4.3	%
Return on average assets			1.27	%			1.43	%			(0.16	%)	(11.2	%)			1.73	%			(0.46	%)	(26.6	%)			1.53	%			1.68	%			(0.15	%)	(8.9	%)
Return on average equity			11.24	%			13.30	%			(2.06	%)	(15.5	%)			17.87	%			(6.63	%)	(37.1	%)			14.10	%			15.42	%			(1.32	%)	(8.6	%)
Efficiency ratio¹			55.64	%			49.45	%			6.19	%	12.5	%			49.00	%			6.64	%	13.6	%			51.87	%			50.87	%			1.00	%	2.0	%
Yield on interest-earning assets²			4.85	%			4.06	%			0.79	%	19.5	%			3.92	%			0.93	%	23.7	%			4.29	%			4.11	%			0.18	%	4.4	%
Cost of funds			0.63	%			0.34	%			0.29	%	85.3	%			0.33	%			0.30	%	90.9	%			0.43	%			0.41	%			0.02	%	4.9	%
Net interest margin²			4.28	%			3.75	%			0.53	%	14.1	%			3.62	%			0.66	%	18.2	%			3.91	%			3.74	%			0.17	%	4.5	%
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)
		September 30,				June 30,				$			%			September 30,				$			%
			2022				2022			Change			Change				2021			Change			Change
ASSETS
	Cash and due from banks	$	17,232			$	18,087			$	(855	)	(4.7	%)		$	11,621			$	5,611		48.3	%
	Interest-earning deposits at the FRB and other banks		225,044				243,072				(18,028	)	(7.4	%)			386,087				(161,043	)	(41.7	%)
	Investment securities¹		75,839				77,469				(1,630	)	(2.1	%)			86,440				(10,601	)	(12.3	%)
	Loans held-for-sale, at the lower of cost or fair value		186,438				141,104				45,334		32.1	%			136,394				50,044		36.7	%
	Loans receivable		1,260,590				1,260,939				(349	)	(0.0	%)			1,255,814				4,776		0.4	%
	Allowance for loan losses		(15,602	)			(14,739	)			(863	)	(5.9	%)			(15,000	)			(602	)	(4.0	%)
	Loans receivable, net		1,244,988				1,246,200				(1,212	)	(0.1	%)			1,240,814				4,174		0.3	%
	OREO		-				-				-		-				-				-		-
	Restricted stock investments		10,121				10,111				10		0.1	%			8,850				1,271		14.4	%
	Servicing assets		10,158				10,996				(838	)	(7.6	%)			10,392				(234	)	(2.3	%)
	Goodwill		2,185				2,185				-		-				2,269				(84	)	(3.7	%)
	Intangible assets		317				331				(14	)	(4.2	%)			375				(58	)	(15.5	%)
	Other assets		27,845				28,060				(215	)	(0.8	%)			25,859				1,986		7.7	%
	Total assets	$	1,800,167			$	1,777,615			$	22,552		1.3	%		$	1,909,101			$	(108,934	)	(5.7	%)
LIABILITIES AND STOCKHOLDERS' EQUITY
	Noninterest-bearing	$	562,051			$	566,610			$	(4,559	)	(0.8	%)		$	670,489			$	(108,438	)	(16.2	%)
	Interest-bearing		971,263				948,760				22,503		2.4	%			995,574				(24,311	)	(2.4	%)
	Total deposits		1,533,314				1,515,370				17,944		1.2	%			1,666,063				(132,749	)	(8.0	%)
	FHLB advances and other borrowing		50,000				50,000				-		-				50,000				-		-
	Other liabilities		14,109				15,134				(1,025	)	(6.8	%)			14,719				(610	)	(4.1	%)
	Total liabilities		1,597,423				1,580,504				16,919		1.1	%			1,730,782				(133,359	)	(7.7	%)
	Stockholders' Equity		202,744				197,111				5,633		2.9	%			178,319				24,425		13.7	%
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY		$	1,800,167			$	1,777,615			$	22,552		1.3	%		$	1,909,101			$	(108,934	)	(5.7	%)
CAPITAL RATIOS
	Leverage ratio
	Company		11.25	%			10.80	%			0.45	%	4.1	%			9.61	%			1.63	%	17.0	%
	Bank		11.15	%			10.73	%			0.42	%	3.9	%			9.60	%			1.55	%	16.2	%
	Common equity tier 1 risk-based capital ratio
	Company		14.82	%			14.47	%			0.35	%	2.4	%			13.61	%			1.21	%	8.9	%
	Bank		14.70	%			14.38	%			0.32	%	2.2	%			13.59	%			1.10	%	8.1	%
	Tier 1 risk-based capital ratio
	Company		14.82	%			14.47	%			0.35	%	2.4	%			13.61	%			1.21	%	8.9	%
	Bank		14.70	%			14.38	%			0.32	%	2.2	%			13.59	%			1.10	%	8.1	%
	Total risk-based capital ratio
	Company		16.02	%			15.63	%			0.39	%	2.5	%			14.86	%			1.16	%	7.8	%
	Bank		15.89	%			15.53	%			0.36	%	2.3	%			14.84	%			1.06	%	7.1	%
	Tangible common equity per share	$	18.95			$	18.68			$	0.27		1.5	%		$	17.08			$	1.87		11.0	%
	Loan-to-Deposit (LTD) ratio		82.21	%			83.21	%			(1.00	%)	(1.2	%)			75.38	%			6.83	%	9.1	%
	Nonperforming assets	$	690			$	2,532			$	(1,842	)	(72.7	%)		$	768			$	(78	)	(10.2	%)
	Nonperforming assets as a % of loans receivable		0.05	%			0.20	%			-0.15	%	-75.0	%			0.06	%			(0.01	%)	(16.7	%)
	ALLL as a % of loans receivable		1.24	%			1.17	%			0.07	%	6.0	%			1.19	%			0.05	%	4.2	%
	ALLL as a % of loans receivable exc. SBA PPP loans		1.24	%			1.18	%			0.06	%	5.1	%			1.26	%			(0.02	%)	(1.6	%)

FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3
(Dollars in thousands, except per share amounts)
		September 30,				June 30,				March 31,				December 31,				September 30,
			2022				2022				2022				2021				2021
Interest income		$	21,334			$	17,807			$	17,032			$	17,553			$	17,437
Interest expense			2,507				1,369				1,209				1,265				1,337
Net interest income			18,827				16,438				15,823				16,288				16,100
Provision for loan losses			910				1,600				(1,167	)			(800	)			-
Net interest income after provision for loan losses			17,917				14,838				16,990				17,088				16,100
Gain on sale of loans			-				3,298				4,668				4,151				4,305
Gain (loss) on sale of OREO			-				-				-				-				-
SBA servicing fee income, net			709				778				469				683				698
Reversal of valuation allowance on servicing assets			-				-				-				-				-
Service charges and other income			518				462				498				499				540
Noninterest income			1,227				4,538				5,635				5,333				5,543
Salaries and employee benefits			6,861				6,994				7,065				6,614				6,500
Occupancy and equipment			1,118				1,114				1,120				1,028				1,067
Marketing expense			489				511				485				111				287
Professional expense			519				517				415				368				495
Merger related expense			47				123				-				454				450
Other expenses			2,125				1,114				1,796				2,850				1,807
Noninterest expense			11,159				10,373				10,881				11,425				10,606
Income before income tax expense			7,985				9,003				11,744				10,996				11,037
Income tax expense			2,258				2,547				3,336				2,984				3,156
Net income		$	5,727			$	6,456			$	8,408			$	8,012			$	7,881
Effective tax rate			28.3	%			28.3	%			28.4	%			27.1	%			28.6	%
Outstanding number of shares			10,569,601				10,416,601				10,299,361				10,284,962				10,284,962
Weighted average shares for basic EPS			10,516,394				10,305,014				10,291,071				10,284,962				10,280,016
Weighted average shares for diluted EPS			10,545,544				10,409,663				10,479,488				10,424,771				10,427,687
Basic EPS		$	0.54			$	0.62			$	0.82			$	0.78			$	0.77
Diluted EPS		$	0.54			$	0.62			$	0.80			$	0.77			$	0.75

FIVE-QUARTER SALARIES BENEFIT METRICS (Unaudited) - Table 4
(Dollars in thousands)
		At or for the Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
			2022				2022				2022				2021				2021
Salaries and benefits		$	6,861			$	6,994			$	7,065			$	6,614			$	6,500
FTE at the end of period			190				199				208				205				200
Average FTE during the period			193				201				206				201				202
Salaries and benefits/average FTE¹		$	141			$	140			$	139			$	131			$	127
Salaries and benefits/average assets¹			1.52	%			1.55	%			1.60	%			1.39	%			1.43	%
Noninterest expense/average assets¹			2.47	%			2.30	%			2.47	%			2.40	%			2.33	%
1 Annualized

FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3
(Dollars in thousands, except per share amounts)
		September 30,				June 30,				March 31,				December 31,				September 30,
			2022				2022				2022				2021				2021
ASSETS
	Cash and due from banks	$	17,232			$	18,087			$	14,579			$	7,702			$	11,621
	Interest-earning deposits at the FRB and other banks		225,044				243,072				288,603				284,583				386,087
	Investment securities		75,839				77,469				80,104				84,238				86,440
	Loans held-for-sale, at the lower of cost or fair value		186,438				141,104				149,733				158,128				136,394
	Loans receivable		1,260,590				1,260,939				1,225,739				1,241,319				1,255,814
	Allowance for loan losses		(15,602	)			(14,739	)			(13,089	)			(14,192	)			(15,000	)
	Loans receivable, net		1,244,988				1,246,200				1,212,650				1,227,127				1,240,814
	OREO		-				-				-				-				-
	Restricted stock investments		10,121				10,111				8,850				8,850				8,850
	Servicing assets		10,158				10,996				10,671				10,632				10,392
	Goodwill		2,185				2,185				2,185				2,185				2,269
	Intangible assets		317				331				346				360				375
	Other assets		27,845				28,060				24,061				25,450				25,859
	Total assets	$	1,800,167			$	1,777,615			$	1,791,782			$	1,809,255			$	1,909,101
LIABILITIES AND STOCKHOLDERS' EQUITY
	Noninterest-bearing	$	562,051			$	566,610			$	576,378			$	619,774			$	670,489
	Interest-bearing		971,263				948,760				957,633				938,338				995,574
	Total deposits		1,533,314				1,515,370				1,534,011				1,558,112				1,666,063
	FHLB advances		50,000				50,000				50,000				50,000				50,000
	Other liabilities		14,109				15,134				16,687				15,901				14,719
	Total liabilities		1,597,423				1,580,504				1,600,698				1,624,013				1,730,782
	Stockholders' Equity		202,744				197,111				191,084				185,242				178,319
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY		$	1,800,167			$	1,777,615			$	1,791,782			$	1,809,255			$	1,909,101

FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3
(Dollars in thousands, except per share amounts)
	September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021
	Balance		%		Balance		%		Balance		%		Balance		%		Balance		%
Construction	$ 14,919		1.2%		$ 23,431		1.9%		$ 18,541		1.5%		$ 23,939		1.9%		$ 21,725		1.7%
Commercial real estate	1,050,154		83.3%		1,023,298		81.1%		976,924		79.7%		978,995		78.9%		971,387		77.3%
Commercial and industrial	128,099		10.1%		146,175		11.6%		159,111		13.0%		169,489		13.7%		198,217		15.8%
Home mortgage	57,773		4.6%		57,612		4.6%		59,836		4.9%		61,030		4.9%		60,075		4.8%
Consumer	4,839		0.4%		6,609		0.5%		7,589		0.6%		4,269		0.3%		2,185		0.2%
Gross loans	1,255,784		99.6%		1,257,125		99.7%		1,222,001		99.7%		1,237,722		99.7%		1,253,589		99.8%
Net deferred loan fees/costs	4,806		0.4%		3,814		0.3%		3,738		0.3%		3,597		0.3%		2,225		0.2%
Loans receivable	$ 1,260,590		100.0%		$ 1,260,939		100.0%		$ 1,225,739		100.0%		$ 1,241,319		100.0%		$ 1,255,814		100.0%
Loans held-for-sale	$ 186,438				$ 141,104				$ 149,733				$ 158,128				$ 136,394
Loans receivable, including loans held-for-sale	$ 1,447,028				$ 1,402,043				$ 1,375,472				$ 1,399,447				$ 1,392,208

FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3
(Dollars in thousands, except per share amounts)
	Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
		2022				2022				2022				2021				2021
SBA loans held-for-sale at beginning of the quarter/year	$	141,104			$	149,733			$	158,128			$	136,394			$	96,554
SBA loans originated/transferred from/to held-for-
investment during the quarter/year		49,922				43,451				43,132				68,136				82,303
SBA loans sold during the quarter/year		-				(50,845	)			(50,531	)			(42,210	)			(42,019	)
SBA loans principal payment, net of advance		(4,588	)			(1,235	)			(996	)			(4,193	)			(444	)
SBA loans held-for-sale at end of the quarter/year	$	186,438			$	141,104			$	149,733			$	158,128			$	136,394
Gain on sale of SBA loans	$	-			$	3,298			$	4,668			$	4,151			$	4,305
Premium on sale (weighted average)		-				8.0	%			11.0	%			11.1	%			11.5	%
SBA loan production	$	69,234			$	56,676			$	54,523			$	82,448			$	93,986

FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3
(Dollars in thousands, except per share amounts)
	Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
		2022				2022				2022				2021				2021
SBA servicing assets @ beginning of the quarter/year	$	10,996			$	10,671			$	10,632			$	10,392			$	10,189
Newly added SBA servicing assets from SBA loans sold		-				1,081				1,052				1,006				920
Regular quarterly/annual servicing assets amortization		(471	)			(478	)			(462	)			(453	)			(421	)
SBA servicing assets amortized from SBA loans paid off/charged off		(367	)			(278	)			(551	)			(313	)			(296	)
Subtotal before impairment		10,158				10,996				10,671				10,632				10,392
Reversal of valuation allowance on servicing assets		-				-				-				-				-
SBA servicing assets @ the end of the quarter/year	$	10,158			$	10,996			$	10,671			$	10,632			$	10,392

FIVE-QUARTER DEPOSIT COMPONENTS (Unaudited) - Table 9
(Dollars in thousands, except per share amounts)
	September 30, 2022						June 30, 2022						March 31, 2022						December 31, 2021						September 30, 2021
	Balance			%			Balance			%			Balance			%			Balance			%			Balance			%
Noninterest-bearing demand	$	562,051		36.7	%		$	566,610		37.4	%		$	576,378		37.6	%		$	619,774		39.8	%		$	670,489		40.2	%
Interest-bearing demand		10,268		0.7	%			12,754		0.8	%			12,059		0.8	%			10,723		0.7	%			10,904		0.7	%
NOW & MMDA		313,719		20.5	%			327,477		21.6	%			344,501		22.5	%			325,313		20.9	%			376,549		22.6	%
Savings		66,673		4.3	%			73,791		4.9	%			79,685		5.2	%			76,588		4.9	%			75,497		4.5	%
TCDs of $250K and under		246,886		16.1	%			245,203		16.2	%			253,617		16.5	%			259,758		16.7	%			264,130		15.9	%
TCDs of $250K over		242,700		15.8	%			198,518		13.1	%			176,754		11.5	%			174,939		11.2	%			177,477		10.7	%
Wholesale TCDs		91,017		5.9	%			91,017		6.0	%			91,017		5.9	%			91,017		5.8	%			91,017		5.5	%
Total Deposits	$	1,533,314		100.00	%		$	1,515,370		100.0	%		$	1,534,011		100.0	%		$	1,558,112		100.0	%		$	1,666,063		100.0	%
Recap:
Noninterest-bearing demand	$	562,051		36.7	%		$	566,610		37.4	%		$	576,378		37.6	%		$	619,774		39.8	%		$	670,489		40.2	%
Interest-bearing demand		10,268		0.7	%			12,754		0.8	%			12,059		0.8	%			10,723		0.7	%			10,904		0.7	%
NOW & MMDA		313,719		20.5	%			327,477		21.6	%			344,501		22.5	%			325,313		20.9	%			376,549		22.6	%
Savings		66,673		4.3	%			73,791		4.9	%			79,685		5.2	%			76,588		4.9	%			75,497		4.5	%
TCDs of $250K and under		246,886		16.1	%			245,203		16.2	%			253,617		16.5	%			259,758		16.7	%			264,130		15.9	%
Core Deposits		1,199,597		78.3	%			1,225,835		80.9	%			1,266,240		82.6	%			1,292,156		83.0	%			1,397,569		83.9	%
TCDs of $250K over		242,700		15.8	%			198,518		13.1	%			176,754		11.5	%			174,939		11.2	%			177,477		10.7	%
Wholesale TCDs		91,017		5.9	%			91,017		6.0	%			91,017		5.9	%			91,017		5.8	%			91,017		5.4	%
Noncore Deposits		333,717		21.7	%			289,535		19.1	%			267,771		17.4	%			265,956		17.0	%			268,494		16.1	%
Total Deposits	$	1,533,314		100.0	%		$	1,515,370		100.0	%		$	1,534,011		100.0	%		$	1,558,112		100.0	%		$	1,666,063		100.0	%

FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3
(Dollars in thousands, except per share amounts)
			3rd Qtr.				2nd Qtr.				1st Qtr.				4th Qtr.				3rd Qtr.
				2022				2022				2022				2021				2021
Allowance for Loan Losses
	Balance at beginning of period		$	14,739			$	13,089			$	14,192			$	15,000			$	14,908
	Provision for loan losses			910				1,600				(1,167	)			(800	)			-
	Charge-offs			(89	)			-				-				(89	)			-
	Recoveries			42				50				64				81				92
	Balance at the end of period		$	15,602			$	14,739			$	13,089			$	14,192			$	15,000
Nonperforming Assets:¹
	Over 90 days still accruing		$	-			$	-			$	-			$	-			$	-
	Nonaccrual loans			690				2,532				723				747				768
	Total nonperforming loans			690				2,532				723				747				768
	Other real estate owned			-				-				-				-				-
	Total nonperforming assets		$	690			$	2,532			$	723			$	747			$	768
Classified Assets:¹
	Substandard		$	9,146			$	11,133			$	9,300			$	11,156			$	10,672
	Doubtful							-				-				-				-
	Loss							-				-				-				-
	Total classified loans		$	9,146			$	11,133			$	9,300			$	11,156			$	10,672
	Other real estate owned			-				-				-				-				-
	Total classified assets		$	9,146			$	11,133			$	9,300			$	11,156			$	10,672
Performing TDR loans:¹			$	4,797			$	4,744			$	3,253			$	3,521			$	3,658
Delinquent Loans:¹
	Loans 30-89 days past due		$	3,936			$	11,553			$	6,275			$	267			$	1,688
	90 days or more past due and still accruing			-				-				-				-				-
	Nonaccrual			690				2,532				723				747				768
	Total delinquent loans		$	4,626			$	14,085			$	6,998			$	1,014			$	2,456
Asset Quality Ratios:
	Net (recoveries) charge-offs to average loans²			0.01	%			(0.01	%)			(0.02	%)			0.00	%			(0.03	%)
	Nonaccrual loans to loans receivable			0.05	%			0.20	%			0.06	%			0.06	%			0.06	%
	Nonperforming loans to loans receivable			0.05	%			0.20	%			0.06	%			0.06	%			0.06	%
	Nonperforming assets to total assets			0.04	%			0.14	%			0.04	%			0.04	%			0.04	%
	Classified loans to loans receivable			0.73	%			0.88	%			0.76	%			0.90	%			0.85	%
	Classified loans to Tier 1 and ALLL			4.24	%			5.32	%			4.61	%			5.67	%			5.53	%
	Classified assets to total assets			0.51	%			0.63	%			0.52	%			0.62	%			0.56	%
	Classified assets to Tier 1 and ALLL			4.24	%			5.32	%			4.61	%			5.67	%			5.53	%
	ALLL to loans receivable			1.24	%			1.17	%			1.07	%			1.14	%			1.19	%
	ALLL to loans receivable exc. SBA PPP loans			1.24	%			1.18	%			1.09	%			1.18	%			1.26	%
	ALLL to nonaccrual loans			2261.16	%			582.11	%			1810.37	%			1899.87	%			1953.13	%
	ALLL to nonperforming loans			2261.16	%			582.11	%			1810.37	%			1899.87	%			1953.13	%
	ALLL to nonperforming assets			2261.16	%			582.11	%			1810.37	%			1899.87	%			1953.13	%
	Texas ratio ³			0.32	%			1.21	%			0.36	%			0.38	%			0.40	%
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		September 30,		June 30,		March 31,		December 31,		September 30,
		Regulatory		BASEL III
		Requirement		Fully Phased In		2022		2022		2022		2021		2021
Leverage ratio
Company		N/A		N/A		11.25%		10.80%		10.56%		9.55%		9.61%
Bank		5.00%		4.00%		11.15%		10.73%		10.55%		9.55%		9.60%
Common equity tier 1 risk-based capital ratio
Company		N/A		N/A		14.82%		14.47%		14.50%		13.83%		13.61%
Bank		6.50%		7.00%		14.70%		14.38%		14.50%		13.82%		13.59%
Tier 1 risk-based capital ratio
Company		N/A		N/A		14.82%		14.47%		14.50%		13.83%		13.61%
Bank		8.00%		8.50%		14.70%		14.38%		14.50%		13.82%		13.59%
Total risk-based capital ratio
Company		N/A		N/A		16.02%		15.63%		15.57%		14.98%		14.86%
Bank		10.00%		10.50%		15.89%		15.53%		15.57%		14.97%		14.84%
Tangible common equity/total assets						11.14%		10.96%		10.54%		10.11%		9.21%
Tangible common equity per share						$ 18.95		$ 18.68		$ 18.31		$ 17.76		$ 17.08

FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3
(Dollars in thousands, except per share amounts)
	Three Months Ended
	September 30, 2022								June 30, 2021								March 31, 2022								December 31, 2021								September 30, 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	$	1,413,632		$	19,299	5.42	%		$	1,389,968		$	16,643	4.80	%		$	1,368,996		$	16,352	4.84	%		$	1,396,201		$	16,893	4.80	%		$	1,390,851		$	16,800	4.79	%
Investment securities²		77,304			543	2.79	%			78,709			488	2.49	%			82,818			471	2.31	%			85,555			454	2.11	%			87,585			460	2.08	%
Interest-earning deposits at the FRB and other banks		246,955			1,398	2.25	%			286,974			599	0.84	%			288,966			141	0.20	%			365,501			144	0.16	%			282,512			112	0.16	%
Other earning assets		10,121			145	5.68	%			9,861			129	5.25	%			8,850			119	5.45	%			8,850			115	5.16	%			8,925			116	5.16	%
Total interest-earning assets ²		1,748,012			21,385	4.85	%			1,765,512			17,859	4.06	%			1,749,630			17,083	3.96	%			1,856,107			17,606	3.76	%			1,769,873			17,488	3.92	%
NONINTEREST-EARNING ASSETS
Cash and due from banks		17,429								14,866								13,338								13,318								13,079
Other noninterest-earning assets		40,251								38,621								36,714								37,779								36,548
Total noninterest-earning assets		57,680								53,487								50,052								51,097								49,627
Less: Allowance for loan losses		(14,756	)							(13,126	)							(14,200	)							(14,849	)							(14,958	)
TOTAL ASSETS	$	1,790,936							$	1,805,873							$	1,785,482							$	1,892,355							$	1,804,542
INTEREST-BEARING DEPOSITS
Interest-bearing demand	$	23,461		$	8	0.14	%		$	26,781		$	4	0.06	%		$	27,442		$	3	0.04	%		$	27,904		$	3	0.04	%		$	36,670		$	4	0.04	%
Money market		316,964			894	1.12	%			308,377			443	0.58	%			321,694			356	0.45	%			338,937			401	0.47	%			312,606			388	0.49	%
Savings		71,519			85	0.47	%			75,306			59	0.31	%			76,967			61	0.32	%			77,057			68	0.35	%			74,266			71	0.38	%
Time deposits		556,919			1,401	1.00	%			523,504			746	0.57	%			529,421			673	0.52	%			527,634			674	0.51	%			542,901			756	0.55	%
Total interest-bearing deposits		968,863			2,388	0.98	%			933,968			1,252	0.54	%			955,524			1,093	0.46	%			971,532			1,146	0.47	%			966,443			1,219	0.50	%
Borrowings		50,001			119	0.94	%			50,000			117	0.94	%			50,000			116	0.94	%			50,000			119	0.94	%			50,000			118	0.94	%
Total interest-bearing liabilities		1,018,864			2,507	0.98	%			983,968			1,369	0.56	%			1,005,524			1,209	0.49	%			1,021,532			1,265	0.49	%			1,016,443			1,337	0.52	%
Noninterest-bearing deposits		555,291								611,395								574,436								673,154								597,056
Other liabilities		14,596								15,818								16,966								16,425								16,046
Stockholders' equity		202,185								194,692								188,556								181,244								174,997
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,790,936							$	1,805,873							$	1,785,482							$	1,892,355							$	1,804,542
Net interest income²				$	18,878							$	16,490							$	15,874							$	16,341							$	16,151
Net interest spread						3.87	%							3.50	%							3.47	%							3.27	%							3.40	%
Effect of noninterest-bearing sources						0.41	%							0.25	%							0.21	%							0.22	%							0.22	%
Net interest margin²						4.28	%							3.75	%							3.68	%							3.49	%							3.62	%
Cost of deposits	$	1,524,154		$	2,388	0.62	%		$	1,545,363		$	1,252	0.32	%		$	1,529,960		$	1,093	0.29	%		$	1,644,686		$	1,146	0.28	%		$	1,563,499		$	1,219	0.31	%
Cost of funds	$	1,574,155		$	2,507	0.63	%		$	1,595,363		$	1,369	0.34	%		$	1,579,960		$	1,209	0.31	%		$	1,694,686		$	1,265	0.30	%		$	1,613,499		$	1,337	0.33	%
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
		September 30, 2022							June 30, 2022						March 31, 2022						December 31, 2021						September 30, 2021
		Amount				Yield			Amount			Yield			Amount			Yield			Amount			Yield			Amount			Yield
Contractual yield		$	18,134			5.09	%		$	15,496		4.47	%		$	14,596		4.32	%		$	15,142		4.30	%		$	15,032		4.29	%
SBA discount accretion			1,078			0.30	%			1,035		0.30	%			1,421		0.42	%			1,024		0.29	%			1,038		0.30	%
Prepayment penalties & late fees			94			0.03	%			56		0.02	%			107		0.03	%			72		0.02	%			41		0.01	%
Amortization of net deferred costs			(7	)		0.00	%			56		0.01	%			228		0.07	%			655		0.19	%			689		0.20	%
As reported yield on loans		$	19,299			5.42	%		$	16,643		4.80	%		$	16,352		4.84	%		$	16,893		4.80	%		$	16,800		4.79	%

MARGIN ANALYSIS (Unaudited) - Table 14
(Dollars in thousands)
	Nine Months Ended
	September 30,2022								September 30,2021
	Avg Balance			Interest		Yield			Avg Balance			Interest		Yield
Number of Days in the Period
INTEREST-EARNING ASSETS
Loans ¹	$	1,391,029		$	52,294	5.03	%		$	1,242,557		$	44,975	4.84	%
Investment securities²		79,590			1,502	2.52	%			85,149			1,350	2.12	%
Interest-earning deposits at the FRB and other banks		274,180			2,138	1.04	%			187,078			202	0.14	%
Other earning assets		9,615			393	5.46	%			8,622			348	5.40	%
Total interest-earning assets ²		1,754,414			56,327	4.29	%			1,523,406			46,875	4.11	%
NONINTEREST-EARNING ASSETS
Cash and due from banks		15,226								11,296
Other noninterest-earning assets		38,542								33,218
Total noninterest-earning assets		53,768								44,514
Less: Allowance for loan losses		(14,029	)							(14,748	)
TOTAL ASSETS	$	1,794,153							$	1,553,172
INTEREST-BEARING DEPOSITS
Interest-bearing demand	$	25,880		$	15	0.08	%		$	22,028		$	8	0.05	%
Money market		315,661			1,692	0.72	%			280,940			1,107	0.53	%
Savings		74,577			206	0.37	%			55,423			185	0.45	%
Time deposits		536,715			2,820	0.70	%			488,085			2,562	0.70	%
Total interest-bearing deposits		952,833			4,733	0.66	%			846,476			3,862	0.61	%
Borrowings		50,000			352	0.94	%			55,678			366	0.88	%
Total interest-bearing liabilities		1,002,833			5,085	0.68	%			902,154			4,228	0.63	%
Noninterest-bearing deposits		580,340								467,812
Other Liabilities		15,785								13,943
Stockholders' equity		195,195								169,263
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,794,153							$	1,553,172
Net interest income²				$	51,242							$	42,647
Net interest spread						3.61	%							3.48	%
Effect of noninterest-bearing sources						0.30	%							0.26	%
Net interest margin²						3.91	%							3.74	%
Cost of deposits	$	1,533,173		$	4,733	0.41	%		$	1,314,288		$	3,862	0.39	%
Cost of funds	$	1,583,173		$	5,085	0.43	%		$	1,369,966		$	4,228	0.41	%
1 Includes loans held-for-sale
² Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

COMPONENTS OF YIELD ON LOANS (Unaudited) - Table 15
(Dollars in thousands)
		Nine Months Ended
		September 30, 2022						September 30, 2021
		Amount			Yield			Amount			Yield
Contractual yield		$	48,226		4.64	%		$	39,850		4.29	%
SBA discount accretion			3,534		0.34	%			2,803		0.30	%
Prepayment penalties & late fees			257		0.02	%			251		0.03	%
Amortization of net deferred costs			277		0.03	%			2,071		0.22	%
As reported yield on loans		$	52,294		5.03	%		$	44,975		4.84	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221027005982/en/

Douglas J Goddard, EVP & CFO

(323) 988-3010

DouglasG@cbb-bank.com

Source: CBB Bancorp, Inc.

FAQ

What was CBBI's net income for Q3 2022?

CBBI reported a net income of $5.7 million for Q3 2022.

How much did CBBI's net interest income increase in Q3 2022?

CBBI's net interest income increased by 14.5% to $18.8 million in Q3 2022.

What is the net interest margin reported by CBBI for Q3 2022?

CBBI's net interest margin for Q3 2022 was 4.28%.

Why did CBBI's noninterest income decrease in Q3 2022?

The decrease in noninterest income to $1.2 million was primarily due to no SBA loan sales during the quarter.

How did the stockholders' equity change for CBBI in Q3 2022?

Stockholders' equity increased by 2.9% to $202.7 million in Q3 2022.