Communities First Financial Corporation Earns $6.21 Million, or $1.98 per Diluted Share, for the Second Quarter of 2022

Rhea-AI Summary

Communities First Financial Corporation (OTCQX: CFST) reported a record net income of $6.21 million for Q2 2022, marking a 9% increase year-over-year. This results in earnings of $1.98 per diluted share, up from $1.84 in the same period last year. Deposits surpassed $1 billion, with a 16% growth in total assets to $1.14 billion. Merchant services income doubled, contributing to a 25% increase in non-interest income. The company continues to optimize its digital offerings and remains well-positioned amid rising interest rates.

Positive

• Record net income of $6.21 million for Q2 2022, up 9% YoY.
• Total deposits exceeded $1 billion, a 16% year-over-year increase.
• Merchant services income doubled, significantly boosting non-interest income.
• Strong asset growth of 16% year-over-year to $1.14 billion.
• Solid net interest margin at 4.29% for Q2 2022.

Negative

• Unrealized losses in the securities portfolio totaled $17.67 million due to rising interest rates.
• Increased non-interest expense by 23% YoY, mainly due to compensation and benefits.

FRESNO, Calif., July 19, 2022 (GLOBE NEWSWIRE) -- Communities First Financial Corporation (the “Company”) (OTCQX: CFST), the parent company of Fresno First Bank (the “Bank”), today reported a record net income of $6.21 million, or $1.98 per diluted share for the second quarter of 2022, up 9% compared to $5.71 million, or $1.84 per diluted share, for the second quarter of 2021, and up 7% from $5.79 million, or $1.84 per diluted share, for the first quarter of 2022. For the first six months of 2022, net income increased 21% to $12.00 million, or $3.82 per diluted share, compared to $9.90 million, or $3.20 per diluted share, for the first six months of 2021. All results are unaudited.

“We delivered record earnings for the second quarter of 2022, highlighted by top line revenue growth, strong year-over-year deposit growth, which crossed the $1.0 billion mark in total deposits at quarter end. We generated solid organic loan growth during the quarter, while replacing SBA PPP loans as they continue to roll off at a rapid rate; PPP loans are down 97% from a year ago. Merchant services income doubled from a year ago adding significantly to non-interest income, while deposit fee income also contributed meaningfully to our non-interest income,” said Steve Miller, President and Chief Executive Officer. “We continue to benefit from the progress we are making on advancing our digital offerings, expanding our payment services capabilities, and enhancing our core technology.”

“Our capital and liquidity positions remain strong. As we head into the second half of 2022, we are well positioned to benefit from rising interest rates, as we continue to execute upon our strategic plan,” said Miller. “I would like to personally thank our employees for their continued dedication to help our clients, communities and shareholders.”

Return on average equity (“ROAE”) was 30.25%, return on average assets (“ROAA”) 2.25% and our efficiency ratio was 39.01% at quarter end. Net interest margin was also solid at 4.29% for the quarter and 4.28% for the first six months of 2022, while interest income was higher by 13% from a year earlier. Total assets increased 16% year-over-year to $1.14 billion at quarter end, compared to $988.48 million at June 30, 2021.  

Second Quarter 2022 Highlights: As of, or for the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021:

• Pre-tax, pre-provision income increased 1% to $8.66 million.
• Net income grew 9% to $6.21 million, or $1.98 per diluted share.
• ROAE of 30.25%, and ROAA of 2.25%.
• Gross revenue (net interest income, before the provision for loan losses, plus non-interest income) increased by 9% to $14.19 million.
• Total assets grew 16% to $1.14 billion.
• Total portfolio loans grew 3% to $722.63 million.
• Total deposits increased 16% to $1.00 billion.
• Shareholder equity increased 4% to $81.75 million.
• Book value increased 3% to $26.29 per share.
• The Company’s tangible common equity ratio was 7.14%, while the Bank’s regulatory leverage capital ratio was 12.34% and total risk based capital ratio was 17.96%, at June 30, 2022.

Results of Operations

Operating revenue, consisting of net interest income and non-interest income, increased 9% to $14.19 million for the second quarter of 2022, compared to $13.04 million for the second quarter a year ago, and grew 3% from $13.80 million for the first quarter of 2022. For the first six months of 2022, operating revenue increased 16% to $27.99 million, compared to $24.06 million for the first half of 2021.

Net interest income, before the provision for loan losses, increased 14% to $10.70 million for the second quarter of 2022, compared to $9.42 million for the second quarter a year ago, and increased 2% from $10.54 million for the first quarter of 2022. For the first six months of 2022, net interest income increased 14% to $21.25 million from $18.66 million for the first half of 2022. “The increase in net interest income in both the second quarter of 2022, and for the first six months of 2022, was primarily a result of a growing loan portfolio and a larger and higher yielding investment portfolio,” said Steve Canfield, Chief Financial Officer.

The Company’s net interest margin (“NIM”), which excludes interest expense on holding company sub-debt, improved by 9 basis points to 4.29% for the second quarter of 2022, compared to 4.20% for the second quarter of 2021, and expanded 3 basis points from 4.26% for the preceding quarter. For the first six months of 2022, the NIM contracted 6 basis point to 4.28% compared to 4.34% for the first half of 2021. “Our NIM remained solid during the second quarter, primarily due to the changes in the mix of our earning assets and the continued low cost of funding these earning assets,” stated Canfield.

The yield on earning assets was 4.37% for the second quarter of 2022, compared to 4.29% for the second quarter a year ago, and 4.34% on a linked quarter basis. The cost to fund earning assets declined to 0.07% for the second quarter of 2022, compared to 0.09% for the second quarter a year ago and 0.08% for the first quarter of 2022.   For the first six months of 2022, the yield on earning assets was 4.36% compared to 4.44% for the first half of 2021, while the cost to fund earning assets declined 18% to 0.08% for the first half of 2022 from 0.10% for the first half of 2021.

Total non-interest income was $3.49 million for the second quarter of 2022, compared to $3.62 million for the second quarter of 2021, and $3.26 million for the preceding quarter. For the first six months of 2022, non-interest income increased 25% to $6.75 million compared to $5.40 million for the first six months of 2021. The growth in non-interest income during the second quarter of 2022, and in the first half of 2022, was largely due to the increase in merchant services income and deposit fee income.

“Our merchant service revenue doubled from a year ago as we continue to see significant processing volume increases across our ISO partners and from our own organic ISO business,” said Miller. “We continue to maintain a strong pipeline of ISO Sponsorship partners that we will onboard over the remainder of the year and into the first quarter of 2023. At the beginning of this year, the bank launched its own ISO business as part of our overall payments strategy, which enables us to control a bigger part of the merchant payment experience. The bank now assumes more of the payment risk, but we also garner a larger share of the revenue stream. Our payments business will now have two distinct revenue streams: ISO sponsorship and Organic ISO. We will continue to invest in both of these business lines in our effort to maximize the entire payments ecosystem.”

For the second quarter Organic ISO revenue was $469,000 while ISO sponsorship revenue was $1.70 million.

Merchant ISO Processing Volume 5 Quarters ($ in thousands)
		2021									2022
ISOs	1Q Volume		2Q Volume		3Q Volume		4Q Volume			1Q Volume		2Q Volume		Start Date
1	$	282,258	$	324,996	$	293,220	$	232,303		$	259,139	$	243,719
2		290,376		414,164		390,147		469,503			538,136		664,086	***
3		8,303		10,824		20,362		25,891			26,390		30,570
4		0		62		4,949		29,091			53,731		85,468
5		0		130		5,379		44,378			89,180		145,434
6		0		0		0		126,224			268,747		579,779
7		0		0		0		32,196			70,793		44,601
8		0		0		0		0			0		0	1/22/2022
9		0		0		0		0			0		1,031	4/1/2022
10		0		0		0		0			346		180,737	3/1/2022
Total Volume	$	580,938	$	750,176	$	714,057	$	959,586		$	1,306,462	$	1,975,425
*** ISO 2 is the combination of two previous partners who have completed a merger

Total deposit fee income increased 31%, or $127,000, to $541,000 for the second quarter of 2022, compared to $414,000 for the second quarter of 2021, and grew 14%, or $66,000, from $475,000 on a linked quarter basis.   Debit/credit card interchange income grew 8% from the second quarter a year ago and increased 11% from the preceding quarter. For the first six months of 2022, total deposit fee income increased 49% to $1.02 million from $694,000 for the first half of 2021, while merchant services income grew 88% to $3.85 million year-to-date compared to $2.05 million for the first half of 2021. During the second quarter the Company sold $7.74 million of loans realizing $497,000 in gain on sale revenue compared to $1.88 million a year ago, and $803,000 in the first quarter of 2022.

Non-interest expense for the second quarter of 2022 was $5.54 million, an increase of 23% compared to $4.48 million for the second quarter of 2021, and a decrease of 6% from $5.88 million for the first quarter of 2022. For the first six months of 2022, non-interest income increased 28% to $11.42 million compared to $8.93 million for the first half of 2021.   Compensation and benefits expense was the largest component of non-interest expense for the second quarter of 2022 and for the first half of 2022.

Full-time employees increased to 93.5 at June 30, 2022, compared to 69 full-time employees from a year ago, and 86 full-time employees from the linked quarter. As a result of the increased headcount from a year ago, salaries and employee benefits increased 20% to $3.36 million at June 30, 2022, compared to $2.80 million but decreased 13% from $3.85 million from the preceding quarter. “As we continue to invest in key business strategies and focus on sales, payments and modernizing technology, we will be adding crucial talent to support our growth strategy,” said Miller.

Occupancy and equipment expense increased 46% from a year ago and represented 5% of non-interest expense. The increase in occupancy and equipment expense was primarily the result of new equipment acquisition and a lease of additional space adjacent to the company’s headquarters building. Other operating expense represented the remaining 33% of non-interest expense and increased 27% to $1.50 million from a year ago and declined 5% from the preceding quarter. Increases in data processing expense, software licenses and subscriptions, and loan origination expenses were the primary drivers of the increase.

The efficiency ratio was 39.01% for the second quarter of 2022, compared to 34.34% for the second quarter a year ago, and 42.60% for the first quarter of 2022.  

Balance Sheet Review

Total assets increased 16% to $1.14 billion at June 30, 2022, from $988.48 million at June 30, 2021, and grew 4% from $1.10 billion million at March 31, 2022.

The total portfolio of loans increased 3%, or $19.16 million, to $722.63 million, compared to $703.48 million at June 30, 2021, and grew 4%, or $29.31 million, from $693.31 million on a linked quarter basis.   Total loans at June 30, 2022, included $3.9 million of SBA-PPP loans, a decrease of 97% from the second quarter a year ago, down 82% from the preceding quarter and representing only 0.54% of the total loan portfolio at quarter end. There were $50,300 in unamortized PPP fees capitalized on the balance sheet at quarter end. “Over the last year we have sold $43.10 million in SBA and multi-family loans, and PPP loans forgiven or paid off totaled $136.38 million,” said Canfield. “Our lending teams have worked extremely hard in building out our loan portfolio and replacing loans that have either been sold or rolled off.”

The commercial and industrial (C&I) portfolio increased 4% to $184.62 million, at June 30, 2022, from $185.42 million recorded a year earlier.   C&I loans represented 26% of total loans at June 30, 2022.   Commercial real estate loans increased 39% year-over-year to $404.97 million at June 30, 2022, representing 56% of total loans, and grew 8% on a linked quarter basis. The CRE portfolio includes approximately $140.35 million in multi-family loans originated by our So Cal team.

Agriculture loans, representing 9% of the loan portfolio, at June 30, 2022, increased 27% to $63.37 million from a year ago and grew 9% from March 31, 2022. Real estate construction and land development loans totaled $49.54 million, or 7% of total loans, while residential RE 1-4 family loans totaled $16.02 million, or 2% of loans, at June 30, 2022.   At June 30, 2022, the SBA, USDA, or other government agencies, guaranteed loans totaled $80.83 million, or 11% of the loan portfolio.

The investment portfolio increased 27%, or $68.66 million, to $320.28 million at June 30, 2022, from $251.62 million at June 30, 2021, and grew 10% compared to $291.97 at March 31, 2022.   The investment portfolio consists of mortgage-backed and municipal securities, both tax exempt and taxable, treasury securities as well as other domestic debt.

Total deposits increased 16% to $1.00 billion at June 30, 2022, compared to $864.55 million from a year earlier, and grew 4% from $961.51 million at March 31, 2022. Noninterest-bearing demand deposits increased 32% to $695.98 million at June 30, 2022, compared to $527 million at June 30, 2021, and increased 14% from $611.89 million at March 31, 2022. Noninterest-bearing demand deposits represented 69% of total deposits at June 30, 2022. Short-term borrowed funds, excluding sub-debt, were zero at June 30, 2022, March 31, 2022 and December 31, 2021, compared to $5.00 million from a year earlier.

Shareholders’ equity increased 4% to $81.75 million at June 30, 2022, compared to $78.76 million from a year ago, and decreased 4% from $85.58 million at March 31, 2022. Book value per common share increased 19% to $26.29 at June 30, 2022, compared to $25.63 at June 30, 2021, and decreased by 5% from $27.53 at March 31, 2022.

“The tangible common equity ratio was 7.14% at June 30, 2022, compared to 7.76% at March 31, 2022, and 7.97% one year ago,” stated Canfield. “During 2022 the Federal Reserve has aggressively raised interest rates in their efforts to cool inflation. As a result, market rates have risen dramatically. Our tangible common equity and tangible book value have been negatively impacted by the marked increase in interest rates and related impact on accumulated other comprehensive income (“AOCI”). Our securities portfolio, which we mark to market monthly, has swung from a $3.42 million gain at June 30, 2021, to an unrealized loss of $17.67 million at the end of June 2022, a change of $21.09 million. This is the primary reason our total shareholders’ equity and book value per share have been flat to down year-over-year. This flat shareholders’ equity position divided by a larger base of assets has caused the tangible common equity ratio to drop to its present level. With further rate increases expected, we will likely see additional volatility in the market pricing of the portfolio, which will flow through to total equity. While these unrealized losses will decline over time or as rates decline, management continues to monitor our overall capital needs closely and plan for both growth and market fluctuations.”

At the Bank level, unrealized losses and gains are not included in regulatory capital. As a result, Tier-1 capital at the Bank was $136.55 million at quarter end excluding the unrealized loss. The regulatory leverage capital ratio was 12.34% for the current quarter, while the total risk based capital ratio was 17.96%.

Asset Quality

Nonperforming assets were $2.75 million, or 0.24% of total assets, at June 30, 2022, compared to $1.02 million, or 0.10% of total assets at June 30, 2021, and $2.90 million, or 0.26% of total assets at March 31, 2022.   Included in nonperforming assets were two loans totaling $1,310,000 restructured and performing under the terms of their agreements at June 30, 2022, compared to $800,000 in performing restructured loans at March 31, 2022. There were no performing restructured loans a year earlier.  

Total delinquent loans decreased by $9.10 million during the quarter, to $15.40 million at June 30, 2022, from $24.50 million at March 31, 2022 and were mainly related to government guaranteed loans purchased by the Bank.   Past due loans 30-60 days declined to $2.63 million at June 30, 2022, compared to $4.67 million at June 30, 2021, and $8.27 million at March 31, 2022. Past due loans from 60-90 days were $1.81 million at June 30, 2022, compared to $1.94 million a year earlier and $173,000 at the preceding quarter end. Past due loans 90+ days at quarter end totaled $11.0 million, compared to no past due loans 90+ days from a year ago and $16.05 million at March 31, 2022.

The Bank continues to hold approximately $32 million of the government guaranteed portion of Small Business Administration (“SBA”) and USDA loans originated by other banks. Many of these purchased loans were placed into a Direct Registration (“DR”) form by the SBA’s transfer agent, Colson Inc. Under the DR program, Colson was required to remit monthly payments to the investor holding the guaranteed balance, whether or not a payment had actually been received from the borrower. When Colson lost the contract in 2020 as the SBA’s fiscal transfer agent they began transitioning servicing over to the new company called Guidehouse. By late 2021, Guidehouse, under their contract with the SBA, declined to continue the DR program. As a result, all payments under the DR, and several similar programs, were being held by Guidehouse until the DR program could be unwound and the DR holdings converted into normal SBA pass through certificates.   Unfortunately, Colson started requesting investors, who had received payments in advance of the borrower, to return advanced funds before they will process the conversion of certificates, which caused further delays.   The SBA has informed us that Guidehouse is now receiving borrower payments and is holding all funds until a reconciliation with Colson can be completed. The Bank is fully guaranteed all principal and interest owed and is currently waiting for the reconciliation to be completed and payments forwarded. Until the unwind process is completed, it is carrying these loans as past due.

“As shown in the chart below, the majority of the delinquencies are purchased government guaranteed loans, which are guaranteed by the SBA for full payment of the principal plus interest,” commented Miller. “Although these unforeseen delays in payments are taking longer than anticipated, because of the backlog at the SBA, we are expecting full payment in the very near future.” The chart below breaks out the government guaranteed portion compared to the organic delinquencies.

Delinquent Loan Summary	Organic		Purchased Govt. Guaranteed		Total
($ in thousands)
Delinquent accruing loans 30-60 days	$	1,392	$	1,235	$	2,627
Delinquent accruing loans 60-90 days		1,563		251		1,813
Delinquent accruing loans 90+ days		0		10,955		10,955
Total delinquent accruing loans	$	2,955	$	12,440	$	15,395
Loans on non accrual	$	2,747		0.0	$	2,747

 

There was no provision for loan losses for the second quarter of 2022, compared to $750,000 recorded in the second quarter a year ago and zero provisioning in the linked quarter. “We incurred a small net charge off during the current quarter of $36,000, compared to no net charge off in the second quarter a year ago, or in the immediate prior quarter,” said Miller. “With the Fed tightening to control inflation and the uncertain future of the economy, we will continue to keep a close eye on credit quality.”

The ratio of allowance for loan losses to total loans was 1.35% at June 30, 2022, compared to 1.33% a year earlier and 1.41% at March 31, 2022.   “A substantial portion of our portfolio consists of loans guaranteed by the U.S. Government. This group of loans consists of fully guaranteed loans the Company has purchased, the remaining PPP loans, as well as organic SBA and USDA loans the Bank has originated. When the effect of these guarantees is considered relative to the loan portfolio, the ratio of allowance for loan losses to the total, non-guaranteed, loan portfolio was 1.52%, as of June 30, 2022,” added Miller.

About Communities First Financial Corporation

Communities First Financial Corporation, a bank holding company established in 2014, is the parent company of Fresno First Bank, founded in 2005 in Fresno, California. Fresno First Bank is a leading SBA Lender in California’s Central Valley and has expanded into Southern California. The Bank is also a direct acquiring bank with VISA and MasterCard and processes payments for merchants across the country directly and through partners. Communities First Financial Corp. ranked third in the nation against its peers in the Best Community Banks Category (below $5 billion in assets) and third in the Best Growth Strategy selected from the top 50 banks in the study, reported by Bank Director. A big jump from a year ago when S&P Global ranked the Bank the #20 best performing community bank under $3 billion in assets for 2020, and #1 in California. Named to the 2019 OTCQX Best 50 and ranked one of the top performing OTCQX companies in the country, based on total return and growth in average daily dollar volume for 2018. The Bank was named to the Inc. 5000 Fastest Growing Companies list in 2017 and to Forbes Best 25 Small Businesses in America for 2016. Additional information is available from the Company’s website at www.fresnofirstbank.com or by calling 559-439-0200.

Forward Looking Statements

This earnings release may contain forward-looking statements. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. The forward-looking statements are based on managements’ expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation, the Company’s ability to effectively execute its business plans; changes in general economic and financial market conditions; changes in interest rates; and, in particular, actions taken by the Federal Reserve to try and control inflation; changes in the competitive environment; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; losses, customer bankruptcy, claims and assessments; changes in banking regulations or other regulatory or legislative requirements affecting the Company’s business; international developments; 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 release publicly the results of any revisions to the forward-looking statements included herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events.   The Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

SELECT FINANCIAL INFORMATION AND RATIOS (unaudited)		For the Quarter Ended:										Percentage Change From:					Year to Date as of:
		June 30, 2022			Mar. 31, 2022			June 30, 2021				Mar. 31, 2022		June 30, 2021			June 30, 2022			June 30, 2021			Percent Change
BALANCE SHEET DATA - PERIOD END BALANCES:
	Total assets	$	1,144,334		$	1,102,540		$	988,481			4	%	16	%
	Total portfolio loans		722,632			693,312			703,477			4	%	3	%
	Investment securities		320,279			291,975			251,618			10	%	27	%
	Total deposits		1,004,152			961,510			864,547			4	%	16	%
	Shareholders equity, net	$	81,752		$	85,577		$	78,759			-4	%	4	%
SELECT INCOME STATEMENT DATA:
	Gross revenue	$	14,192		$	13,801		$	13,042			3	%	9	%		$	27,993		$	24,056		16	%
	Operating expense		5,536			5,880			4,484			-6	%	23	%			11,416			8,929		28	%
	Pre-tax, pre-provision income		8,656			7,921			8,558			9	%	1	%			16,577			15,130		10	%
	Net income after tax	$	6,208		$	5,789		$	5,708			7	%	9	%		$	11,997		$	9,904		21	%
SHARE DATA:
	Basic earnings per share	$	2.00		$	1.86		$	1.86			7	%	7	%		$	3.86		$	3.23		20	%
	Fully diluted earnings per share	$	1.98		$	1.84		$	1.84			7	%	7	%		$	3.82		$	3.20		19	%
	Book value per common share	$	26.29		$	27.53		$	25.63			-5	%	3	%
	Common shares outstanding		3,109,755			3,108,219			3,072,858			0	%	1	%
	Fully diluted shares		3,139,747			3,140,706			3,103,164			-0	%	1	%
	CFST - Stock price	$	55.20		$	59.75		$	43.00			-8	%	28	%
RATIOS:
	Return on average assets		2.25%			2.14%			2.33%			5	%	-4	%			2.20%			2.11%		4	%
	Return on average equity		30.25%			26.49%			30.99%			14	%	-2	%			28.31%			27.79%		2	%
	Efficiency ratio		39.01%			42.60%			34.34%			-8	%	14	%			40.78%			37.58%		9	%
	Yield on earning assets		4.37%			4.34%			4.29%			1	%	2	%			4.36%			4.44%		-2	%
	Cost to fund earning assets		0.07%			0.08%			0.09%			-9	%	-18	%			0.08%			0.10%		-18	%
	Net Interest Margin		4.29%			4.26%			4.20%			1	%	2	%			4.28%			4.34%		-2	%
	Equity to assets		7.14%			7.76%			7.97%			-8	%	-10	%
	Loan to deposits ratio		71.96%			72.11%			81.37%			-0	%	-12	%
	Full time equivalent employees		93.5			86.0			69.0			9	%	36	%
BALANCE SHEET DATA - AVERAGES:
	Total assets	$	1,105,754		$	1,097,173		$	980,937			1	%	13	%		$	1,101,488		$	946,027		16	%
	Total loans		693,985			725,136			698,740			-4	%	-1	%			709,475			676,441		5	%
	Investment securities		304,428			297,048			239,475			2	%	27	%			300,759			232,227		30	%
	Deposits		964,710			953,547			854,198			1	%	13	%			959,159			822,165		17	%
	Shareholders equity, net	$	82,304		$	88,627		$	73,870			-7	%	11	%		$	85,448		$	71,868		19	%
ASSET QUALITY:
	Total delinquent accruing loans	$	15,395		$	24,495		$	6,610			-37	%	133	%
	Nonperforming assets	$	2,747		$	2,899		$	1,018			-5	%	170	%
	Non Accrual / Total Loans		.38%			.42%			.14%			-9	%	163	%
	Nonperforming assets to total assets		.24%			.26%			.10%			-9	%	133	%
	LLR / Total loans		1.35%			1.41%			1.33%			-4	%	1	%

 

STATEMENT OF INCOME ($ in thousands)		For the Quarter Ended:							Percentage Change From:					For the Year Ended
(unaudited)		June 30, 2022		Mar. 31, 2022		June 30, 2021			Mar. 31, 2022		June 30, 2021			June 30, 2022		June 30, 2021		Percent Change
Interest Income
	Loan interest income	$	8,949	$	9,228	$	8,409		-3	%	6	%		$	18,177	$	16,758	8	%
	Investment income		2,208		1,961		1,625		13	%	36	%			4,169		3,133	33	%
	Int. on fed funds & CDs in other banks		108		19		18		468	%	500	%			128		69	86	%
	Dividends from non-marketable equity		93		8		43		1063	%	116	%			100		67	52	%
	Interest income		11,358		11,216		10,095		1	%	13	%			22,574		20,027	13	%
	Int. on deposits		189		208		208		-9	%	-9	%			397		436	-9	%
	Int. on short-term borrowings		2		1		2		100	%	0	%			3		3	0	%
	Int. on long-term debt		465		464		464		0	%	0	%			929		928	0	%
	Interest expense		656		673		674		-3	%	-3	%			1,329		1,367	-3	%
	Net interest income		10,702		10,543		9,421		2	%	14	%			21,245		18,660	14	%
	Provision for loan losses		0		0		750		0	%	-100	%			-		1,600	-100	%
	Net interest income after provision		10,702		10,543		8,671		2	%	23	%			21,245		17,060	25	%
Non-Interest Income:
	Total deposit fee income		541		475		414		14	%	31	%			1,016		684	49	%
	Debit / credit card interchange income		141		127		131		11	%	8	%			268		232	16	%
	Merchant services income		2,168		1,679		1,089		29	%	99	%			3,847		2,050	88	%
	Gain on sale of loans		497		803		1,882		-38	%	-74	%			1,300		1,899	-32	%
	Other operating income		143		174		105		-18	%	36	%			317		534	-41	%
	Non-interest income		3,490		3,258		3,621		7	%	-4	%			6,748		5,399	25	%
Non-Interest Expense:
	Salaries & employee benefits		3,361		3,848		2,798		-13	%	20	%			7,209		5,404	33	%
	Occupancy expense		297		235		203		26	%	46	%			532		413	29	%
	Other operating expense		1,878		1,797		1,483		5	%	27	%			3,675		3,112	18	%
	Non-interest expense		5,536		5,880		4,484		-6	%	23	%			11,416		8,929	28	%
	Net income before tax		8,656		7,921		7,808		9	%	11	%			16,577		13,530	23	%
	Tax provision		2,448		2,132		2,100		15	%	17	%			4,580		3,626	26	%
	Net income after tax	$	6,208	$	5,789	$	5,708		7	%	9	%		$	11,997	$	9,904	21	%

 

BALANCE SHEET ($ in thousands )		End of Period:										Percentage Change From:
(unaudited)		June 30, 2022			Mar. 31, 2022			June 30, 2021				Mar. 31, 2022		June 30, 2021
ASSETS
	Cash and due from banks	$	19,763		$	17,992		$	18,159			10	%	9	%
	Fed funds sold and deposits in banks		38,294			67,384			1,098			-43	%	3388	%
	CDs in other banks		1,490			1,490			2,237			0	%	-33	%
	Investment securities		320,279			291,975			251,618			10	%	27	%
	Loans held for sale		6,062			5,430			3,852			12	%	57	%
	Portfolio loans outstanding:
	RE constr & land development		49,543			37,630			25,373			32	%	95	%
	Residential RE 1-4 Family		16,018			15,733			18,341			2	%	-13	%
	Commercial Real Estate		404,971			373,954			291,042			8	%	39	%
	Agriculture		63,366			58,022			50,032			9	%	27	%
	Commercial and Industrial		184,618			185,424			178,361			-0	%	4	%
	SBA PPP Loans		3,934			22,378			140,317			-82	%	-97	%
	Consumer and Other		182			171			11			6	%	1555	%
	Total Portfolio Loans		722,632			693,312			703,477			4	%	3	%
	Deferred fees & discounts		(2,422	)		(2,492	)		(4,761	)		-3	%	-49	%
	Allowance for loan losses		(9,755	)		(9,785	)		(9,385	)		-0	%	4	%
	Loans, net		710,455			681,035			689,331			4	%	3	%
	Non-marketable equity investments		5,203			4,131			4,070			26	%	28	%
	Cash value of life insurance		8,495			8,447			8,299			1	%	2	%
	Accrued interest and other assets		34,293			24,656			9,817			39	%	249	%
	Total assets	$	1,144,334		$	1,102,540		$	988,481			4	%	16	%
LIABILITIES AND EQUITY
	Non-interest bearing deposits	$	695,977		$	611,890		$	527,259			14	%	32	%
	Interest checking		33,521			28,401			45,533			18	%	-26	%
	Savings		82,438			95,902			67,765			-14	%	22	%
	Money market		148,022			171,589			136,113			-14	%	9	%
	Certificates of deposits		44,194			53,728			87,877			-18	%	-50	%
	Total deposits		1,004,152			961,510			864,547			4	%	16	%
	Short-term borrowings		0			0			0			0	%	0	%
	Long-term debt		39,362			39,323			39,204			0	%	0	%
	Other liabilities		19,068			16,130			5,971			18	%	219	%
	Total liabilities		1,062,582			1,016,963			909,722			4	%	17	%
	Common stock & paid in capital		33,479			33,136			32,019			1	%	5	%
	Retained earnings		65,945			59,737			43,325			10	%	52	%
	Total equity		99,424			92,873			75,344			7	%	32	%
	Accumulated other comprehensive income		(17,672	)		(7,296	)		3,415			142	%	-617	%
	Shareholders equity, net		81,752			85,577			78,759			-4	%	4	%
	Total Liabilities and shareholders' equity	$	1,144,334		$	1,102,540		$	988,481			4	%	16	%

 

ASSET QUALITY ($ in thousands)	Period Ended:
(unaudited)	June 30, 2022			Mar. 31, 2022			June 30, 2021
Delinquent accruing loans 30-60 days	$	2,627		$	8,270		$	4,666
Delinquent accruing loans 60-90 days	$	1,813		$	173		$	1,944
Delinquent accruing loans 90+ days	$	10,955		$	16,052			0.0
Total delinquent accruing loans	$	15,395		$	24,495		$	6,610
Loans on non accrual	$	2,747		$	2,899		$	1,018
Other real estate owned		0.0			0.0			0.0
Nonperforming assets	$	2,747		$	2,899		$	1,018
Performing restructured loans	$	1,310		$	800			0.0
Delq 30-60 / Total Loans		.36%			1.19%			.66%
Delq 60-90 / Total Loans		.25%			.02%			.28%
Delq 90+ / Total Loans		1.52%			2.32%			.00%
Delinquent Loans / Total Loans		2.13%			3.53%			.94%
Non Accrual / Total Loans		.38%			.42%			.14%
Nonperforming assets to total assets		.24%			.26%			.10%
Year-to-date charge-off activity
Charge-offs	$	36			0.0		$	64
Recoveries	$	6			0.0			0.0
Net charge-offs	$	30			0.0		$	64
Annualized net loan losses (recoveries) to average loans		.01%			.00%			.02%
LOAN LOSS RESERVE RATIOS:
Reserve for loan losses	$	9,755		$	9,785		$	9,385
Total loans	$	722,632		$	693,312		$	703,477
Purchased govt. guaranteed loans	$	38,533		$	38,533		$	43,040
Originated govt. guaranteed loans	$	42,292		$	64,721		$	177,777
LLR / Total loans		1.35%			1.41%			1.33%
LLR / Loans less 100% govt. gte. loans (PPP and purchased)		1.43%			1.55%			1.80%
LLR / Loans less all govt. guaranteed loans		1.52%			1.66%			1.94%
LLR / Total assets		.85%			.89%			.95%

 

SELECT FINANCIAL TREND INFORMATION (unaudited)		For the Quarter Ended:
		June 30, 2022			Mar. 31, 2022			Dec. 31, 2021		Sept. 30, 2021		June 30, 2021
BALANCE SHEET DATA - PERIOD END BALANCES:
	Total assets	$	1,144,334		$	1,102,540		$	1,080,103	$	1,023,299	$	988,481
	Loans held for sale		6,062			5,430			3,811		3,835		3,852
	Loans held for investment ex. PPP		718,698			670,934			673,659		616,036		563,160
	PPP Loans		3,934			22,378			52,594		84,282		140,317
	Investment securities		320,279			291,975			291,969		269,236		251,618
	Non-interest bearing deposits		695,977			611,890			594,044		554,579		527,259
	Interest bearing deposits		308,175			349,620			342,505		338,670		337,288
	Total deposits		1,004,152			961,510			936,549		893,249		864,547
	Short-term borrowings		0			0			0		0		0
	Long-term debt		39,362			39,323			39,283		39,244		39,204
	Total equity		99,424			92,873			86,434		80,790		75,344
	Accumulated other comprehensive income		(17,672	)		(7,296	)		2,858		3,453		3,415
	Shareholders equity, net	$	81,752		$	85,577		$	89,292	$	84,243	$	78,759
INCOME STATEMENT - QUARTERLY VALUES:
	Interest income	$	11,358		$	11,216		$	11,096	$	10,435	$	10,095
	Int. on dep. & short-term borrowings		191			209			213		208		210
	Int. on long-term debt		465			464			464		464		464
	Interest expense		656			673			677		672		674
	Net interest income		10,702			10,543			10,419		9,763		9,421
	Non-interest income		3,490			3,258			2,278		2,293		3,621
	Gross revenue		14,192			13,801			12,697		12,056		13,042
	Provision for loan losses		0			0			0		400		750
	Non-interest expense		5,536			5,880			5,216		4,446		4,484
	Net income before tax		8,656			7,921			7,481		7,210		7,808
	Tax provision		2,448			2,132			2,076		1,990		2,100
	Net income after tax	$	6,208		$	5,789		$	5,405	$	5,220	$	5,708
BALANCE SHEET DATA - QUARTERLY AVERAGES:
	Total assets	$	1,105,754		$	1,097,173		$	1,074,440	$	1,017,060	$	980,937
	Loans held for sale		12,728			3,806			4,492		4,652		12,485
	Loans held for investment ex. PPP		680,584			686,639			640,412		583,254		521,676
	PPP Loans		13,401			38,497			67,283		117,564		177,065
	Investment securities		304,428			297,048			284,958		255,152		239,475
	Non-interest bearing deposits		654,968			603,185			593,190		555,860		502,819
	Interest bearing deposits		309,742			350,362			348,036		334,113		351,378
	Total deposits		964,710			953,547			941,227		889,973		854,198
	Short-term borrowings		2,330			1,432			3		411		7,516
	Long-term debt		39,344			39,305			39,265		39,225		39,186
	Total equity		95,137			88,468			82,751		77,136		71,477
	Accumulated other comprehensive income		(12,834	)		159			2,497		4,019		2,394
	Shareholders equity, net	$	82,304		$	88,627		$	85,248	$	81,155	$	73,870

 

Contact:	Steve Miller – President & CEO
	Steve Canfield – Executive Vice President & CFO
	(559) 439-0200

FAQ

What is the net income reported by Communities First Financial Corporation for Q2 2022?

The net income reported for Q2 2022 is $6.21 million.

How much did total deposits increase for Communities First Financial Corporation in Q2 2022?

Total deposits increased by 16%, surpassing $1 billion.

What was the earnings per diluted share for Communities First Financial Corporation in Q2 2022?

Earnings per diluted share for Q2 2022 were $1.98.

What factors contributed to the increase in non-interest income for Communities First Financial Corporation?

The doubling of merchant services income significantly contributed to the increase in non-interest income.

How has rising interest rates affected Communities First Financial Corporation's securities portfolio?

Rising interest rates led to unrealized losses in the securities portfolio totaling $17.67 million.