CBOA Financial, Inc. Reports Consolidated Earnings of $510,000 in 3Q 2021

Rhea-AI Summary

CBOA Financial, Inc. (OTCMKTS:CBOF) reported a 12% increase in consolidated after-tax net income for Q3 2021, totaling $510,000, compared to $457,000 a year earlier. Notably, the bank achieved $29 million in new loan fundings during the quarter and saw a 67% reduction in nonperforming assets year-over-year. Total assets rose 1% to $340.4 million compared to the previous quarter. Despite a 5.7% decrease in total gross loans, total deposits increased by 0.9% to $303 million.

Positive

• Net income rose 12% to $510,000.
• Achieved $29 million in new loan fundings.
• Nonperforming assets decreased 67% year-over-year.
• Total assets increased 1% to $340.4 million.

Negative

• Total gross loans decreased by 5.7% to $237 million.

TUCSON, Ariz., Nov. 1, 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 September 30, 2021 increased 12% to $510 thousand, from $457 thousand in the third quarter of last year.

Chris Webster, Bank President and Chief Executive Officer commented, "It is significant that we were able to add $29 million in organic loan fundings during the third quarter." He added, "Many banks have struggled to generate meaningful loan growth this year." Webster also stated, "We remain diligent on new loan pricing. This pricing strategy demonstrates our ability to consistency achieve Net Interest Margin which is among the top performing banks in our peer group." Regarding credit quality, the Company's loan portfolio is performing as expected. Webster further remarked, "We are closely watching certain commercial real estate segments such as strip malls and other sub-markets where the pandemic has potentially impacted tenants. Additionally, due to aggressive loan management practices, we are pleased to report our legacy classified loans fell below .50% of assets for the first time since 2006. On top of that, reserve levels remain healthy at 1.33%."

Third Quarter 2021 Highlights

• $29 million in new loans funded during the quarter
• Pre-tax earnings year to date grew 104% to $2,499M compared to a year ago
• Nonperforming assets decreased 29% for the quarter

Operational Highlights
Interest income during the quarter was aided by recognized fee income of PPP loans that bolstered earnings by $384 thousand, as well as a recovery of interest income on a classified asset that added $260 thousand.  There remains $400 thousand in PPP origination fee income that will likely be recognized over the next several quarters as the remaining loans are forgiven. Further contributing to the growth in net interest income was a $47 thousand 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 67% from $4.4 million or 1.3% of assets to $1.4 million or 0.41% of assets.

Balance Sheet
Total assets increased by 1% to $340.4 million during the quarter ended September 30, 2021 and increased 2.6% compared to $331.6 million a year ago. Total asset growth from September 2020 to September 2021 consisted of cash and net deposit growth which were bolstered by PPP loans.

Traditional gross loans decreased $500M since second quarter 2021 ending the third quarter 2021 at $216 million. The small net decrease was driven by PPP loan forgiveness in the quarter of $14 million. Total gross loans decreased by 5.7% to $237 million in the quarter and decreased 5% compared to $250 million a year ago. Total deposits increased by 0.9% to $303 million during the quarter and increased 8.5% compared to $279 million a year ago.

The allowance for loan losses totaled $3.16 million at September 30, 2021, or 1.46% of "traditional" non-PPP loans, compared to 1.46% in the previous quarter, and was 1.33% for the quarter with the PPP loans included. During the quarter, the Bank recorded a single full loan chargeoff of $207 thousand. Pandemic economic effects were not a factor in the specific borrower situation that led to the chargeoff, and management feels credit quality in the portfolio remains excellent.

The Bank recorded a $384 thousand adjustment that reduced its deferred tax asset and increased tax provision expense in the quarter to true up the account after the full valuation allowance against it was reversed in 2020. For the year, net tax provision expense is $152 thousand. The Bank does not anticipate further large adjustments to this account in the near future.

Shareholders' equity increased to $28 million at September 30, 2021, from the preceding quarter. At September 30, 2021, tangible book value was $2.96 per share compared to $2.86 per share at June 30, 2021 and $2.81 per share a year ago. The Bank's September 30, 2021 Tier 1 Leverage ratio was 9.45%, compared to 8.80% at September 30, 2020. Excluding the PPP loans, the Bank's September 30, 2021 Tier 1 Leverage ratio would have been 10.1%, and 10.6% as of September 30, 2020.

Capital Management
Capital ratios exceeded regulatory guidelines for a well-capitalized institution under Basel III and Dodd Frank Wall Street Reform requirements at September 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.

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

 

Unaudited Consolidated Summary Financial Information
Dollars in thousands - Unaudited		For the quarter ended				Year to Date
		9/30/2021	6/30/2021	9/30/2020		9/30/2021	9/30/2020
Summary Income Data
Interest Income		3,884	3,299	3,202		10,670	9,577
Interest expense		174	221	356		674	1,168
Net Interest Income		3,710	3,078	2,846		9,996	8,409
Provision for (reduction in) loan losses		146	193	-		339	(279)
Non-interest income		74	84	(49)		228	(501)
Realized gains (losses) on sales of securities		2	-	-		2	168
Non-interest expense		2,424	2,440	2,340		7,388	7,132
Income (loss) before income taxes		1,214	529	457		2,499	1,223
Provision for income tax		704	(764)	-		152	-
Net Income		510	1,293	457		2,347	1,223
Per Share Data
Shares outstanding end-of-period		8,911	8,550	8,208		8,911	8,208
Earnings per common share ($'s)		0.06	0.15	0.06		0.26	0.15
Earnings per common share (Diluted) ($'s)		0.05	0.14	0.04		0.25	0.12
Cash dividend declared		-	-	-		-	-
Total shareholders' equity		28,233	27,033	23,589		28,233	23,589
Tangible Book value per share ($'s)		2.96	2.86	2.87		2.96	2.87
Selected Balance Sheet Data
Total assets		340,373	336,551	331,636		340,373	331,636
Securities available-for-sale		44,356	42,831	36,636		44,356	36,636
Loans		237,234	251,449	249,684		237,234	249,684
Allowance for loan losses		3,160	3,170	2,996		3,160	2,996
Deposits		302,994	300,366	279,187		302,994	279,187
Other borrowings		-	-	21,574		-	21,574
Shareholders' equity		28,233	27,033	23,589		28,233	23,589
Performance Ratios (%)
Return on average shareholders' equity  (annualized)		9.20	12.53	7.10		9.20	7.10
Net interest margin		4.01	3.63	4.03		4.01	4.03
Efficiency ratio		71.06	76.11	82.45		71.06	82.45
Asset Quality Data (%)
Nonperforming assets to total assets		0.40	0.57	1.30		0.40	1.30
Reserve for loan losses to total loans		1.33	1.26	1.20		1.33	1.20
Charge-offs to average loans for period		0.1	(0.02)	(0.0)		0.1	(0.0)
Regulatory Capital Ratios (%)
Common Equity Tier 1		12.90	11.96	12.95		12.90	12.95
Tier 1 risk-based capital ratio		12.90	11.96	12.95		12.90	12.95
Total risk-based capital ratio		14.12	13.21	14.20		14.12	14.20
Tier 1 leverage capital ratio		9.45	8.43	8.80		9.45	8.80

 

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SOURCE Commerce Bank of Arizona

FAQ

What is CBOF's net income for Q3 2021?

CBOA Financial reported a net income of $510,000 for Q3 2021.

How much did CBOF fund in new loans during Q3 2021?

CBOA Financial funded $29 million in new loans during Q3 2021.

What was the percentage decrease in CBOF's total gross loans?

CBOA Financial's total gross loans decreased by 5.7% in Q3 2021.

How much did CBOF's nonperforming assets decrease?

CBOA Financial's nonperforming assets decreased by 67% year-over-year.