CBOA Financial, Inc. Reports Consolidated Earnings of $1,277,000 in 2Q 2021

Rhea-AI Summary

CBOA Financial, Inc. (OTCMKTS:CBOF) reported a remarkable 223% increase in consolidated after-tax net income for the quarter ending June 30, 2021, totaling $1,277,000 compared to $395,000 in the previous year. The strong performance was supported by a traditional loan growth of $19 million (7%) and significant processing of $27 million in second-round Paycheck Protection Program (PPP) loans. Despite an 8% decrease in total assets to $336.5 million, total asset growth year-over-year remained positive at 7%. Total deposits increased by 12% compared to the prior year, reaching $300 million.

Positive

• 223% increase in consolidated net income to $1,277,000.
• Traditional loan growth of $19 million (7%) for the quarter.
• Total deposits increased by 12% year-over-year to $300 million.
• Nonperforming assets decreased by 23% for the quarter.

Negative

• Total assets decreased by 8% to $336.5 million.
• Total gross loans decreased by 8.4% to $251 million.

TUCSON, Ariz., July 30, 2021 /PRNewswire/ -- CBOA Financial, Inc. (OTCMKTS:CBOF) (the "Company"), parent company of Commerce Bank of Arizona (the "Bank" or "CBAZ"), announced that consolidated after tax net income for quarter ending June 30, 2021 increased 223% to $1,277,000, from $395,000 year-over-year.

Chris Webster, Bank President and Chief Executive Officer commented, "The strong loan growth performance seen earlier in the year continued through the second quarter. Our highly experienced and accomplished lending team worked hard to originate significant new loan opportunities while at the same time processing another $27 million in second round Paycheck Protection Program ("PPP") loans. However Total Loan balances were impacted as the Bank received a significant level of PPP loan forgiveness during the quarter," Webster added. He further commented, "In terms of our funding costs, 39% of our Total Deposits are Non-interest bearing. As a result, we are able to consistently maintain a very healthy Net Interest Margin as we organically grow our loan portfolio."

First Quarter 2021 Highlights

• Traditional (non-PPP) Loan Growth was $19 million, or 7% for the quarter
• Nonperforming assets decreased 23% for the quarter

Operational Highlights
Interest income was aided by recognized fee income of PPP loans that bolstered earnings by $290,000. Further contributing to the growth in net interest income was a $57,000 decline in interest expense.

The Bank continues to make progress on its legacy classified assets. Year-over-year, non-performing assets which include loans and OREO are down 57% from $4.6 million or 1.5% of assets to $2 million or 0.57% of assets.

Balance Sheet
Total assets decreased by 8% to $336.5 million during the quarter ended June 30, 2021 and increased 7% compared to $315.2 million a year ago. Total asset growth from June 2020 to June 2021 consisted of PPP loans funding CBAZ deposit accounts totaling $27 million and organic net deposit growth of roughly $4 million.

Traditional gross loans increased $19 million since first quarter 2021 ending the first quarter 2021 at $217 million. Total gross loans decreased by 8.4% to $251 million in the quarter and increased 4.3% compared to $241 million a year ago. Total deposits decreased by 1.5% to $300 million during the quarter and increased 12% compared to $269 million a year ago.

The allowance for loan losses totaled $3.17 million at June 30, 2021, or 1.46% of "traditional" non-PPP loans, compared to 1.50% in the previous quarter, and was 1.26% for the quarter with the PPP loans included.

Shareholders' equity increased at $27 million at June 30, 2021, from the preceding quarter. At June 30, 2021, tangible book value was $2.86 per share compared to $2.81 per share at March 31, 2021 and $2.81 per share a year ago. Excluding the PPP loans, the Bank's June 30, 2021 Tier 1 Leverage ratio would have been 9.3%, and 11.7% as of June 30, 2020. Growth in total assets associated with the PPP loans was the primary driver of a decline in the Bank's Tier 1 Leverage ratio.

Capital Management
Capital ratios exceeded regulatory guidelines for a well-capitalized institution under Basel III and Dodd Frank Wall Street Reform requirements at June 30, 2021. Capital ratios are presented below.

About the Company
Commerce Bank of Arizona, established in 2002 in Tucson, Arizona, is a full-service community bank that caters to small-to mid-sized businesses and real estate professionals. CBAZ offers commercial clients with a variety of services ranging from U.S. Small Business Administration (SBA) financing solutions, construction loans, and commercial real estate loans. CBOA Financial, Inc is a single-bank holding company and parent of the Bank. The Company is traded over-the-counter as CBOF. For additional information, visit: www.commercebankaz.com.

Forward-looking Statements
This press release may include forward-looking statements about CBOA Financial, Inc. or Commerce Bank of Arizona. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: competition, fluctuations in interest rates, dependency on key individuals, loan defaults, geographical concentration, litigation and changes in federal laws, regulations and interpretations thereof. All forward-looking statements included in this press release are based on information available at the time of the release, and CBOA Financial, Inc. and Commerce Bank of Arizona assume no obligation to update any forward-looking statement.

 

Unaudited Consolidated Summary Financial Information
Dollars in thousands - Unaudited		For the quarter ended				Year to Date
		6/30/2021	3/31/2021	6/30/2020		6/30/2021	6/30/2020
Summary Income Data
Interest Income		3,299	3,486	3,549		6,785	6,375
Interest expense		221	278	366		500	812
Net Interest Income		3,078	3,208	3,183		6,285	5,563
Provision for (reduction in) loan losses		193	-	-		193	(279)
Non-interest income		84	70	(460)		154	(452)
Realized gains (losses) on sales of securities		-	-	47		-	168
Non-interest expense		2,440	2,523	2,375		4,965	4,792
Income (loss) before income taxes		529	755	395		1,281	766
Provision for income tax		(748)	212	-		(536)	-
Net Income		1,277	543	395		1,817	766
Per Share Data
Shares outstanding end-of-period		8,550	8,268	8,208		8,550	8,208
Earnings per common share ($'s)		0.15	0.07	0.05		0.21	0.09
Earnings per common share (Diluted) ($'s)		0.14	0.06	0.04		0.19	0.07
Cash dividend declared		-	-	-		-	-
Total shareholders' equity		27,033	25,000	23,049		27,033	23,049
Tangible Book value per share ($'s)		2.86	2.81	2.81		2.86	2.81
Selected Balance Sheet Data
Total assets		336,551	365,470	315,157		336,551	315,157
Securities available-for-sale		42,831	38,630	28,888		42,831	28,888
Loans		251,449	259,893	240,979		251,449	240,979
Allowance for loan losses		3,170	2,972	2,991		3,170	2,991
Deposits		300,366	305,012	268,836		300,366	268,836
Other borrowings		-	25,539	14,808		-	14,808
Shareholders' equity		27,033	25,000	23,049		27,033	23,049
Performance Ratios (%)
Return on average shareholders' equity  (annualized)		12.53	8.16	6.62		10.36	6.59
Net interest margin		3.63	3.83	4.51		3.73	4.37
Efficiency ratio		76.11	75.25	85.38		75.67	91.58
Asset Quality Data (%)
Nonperforming assets to total assets		0.57	0.77	1.45		0.57	1.45
Reserve for loan losses to total loans		1.26	1.14	1.24		1.26	1.24
Charge-offs to average loans for period		(0.0)	(0.03)	(0.0)		(0.0)	(0.0)
Regulatory Capital Ratios (%)
Common Equity Tier 1		11.96	12.24	13.40		11.96	13.40
Tier 1 risk-based capital ratio		11.96	12.24	13.40		11.96	13.40
Total risk-based capital ratio		13.21	13.49	14.65		13.21	14.65
Tier 1 leverage capital ratio		8.43	8.41	9.22		8.43	9.22

 

Contact:
Chris Webster
President & CEO
480-253-4511
cwebster@commercebankaz.com

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SOURCE Commerce Bank of Arizona

FAQ

What were the earnings results for CBOF in Q2 2021?

CBOA Financial reported a consolidated net income of $1,277,000 for Q2 2021, representing a 223% increase from $395,000 in Q2 2020.

How did CBOF's loan growth perform in the second quarter of 2021?

CBOF experienced a traditional loan growth of $19 million, equating to a 7% increase during the second quarter of 2021.

What impact did the Paycheck Protection Program have on CBOF's financial results?

CBOF processed $27 million in second-round PPP loans, which contributed to its interest income.

What changes occurred in CBOF's asset quality in Q2 2021?

Nonperforming assets at CBOF decreased by 23% during the quarter.

How did total deposits change for CBOF compared to last year?

CBOF's total deposits increased by 12% year-over-year, reaching $300 million.