Communities First Financial Corporation Earns Record $7.70 Million, or $2.43 per Diluted Share, for First quarter 2023

Rhea-AI Summary

Communities First Financial Corporation (OTCQX: CFST) reported a strong performance for Q1 2023, with net income rising 33% to $7.70 million ($2.43 per diluted share) compared to $5.79 million ($1.84 per diluted share) in Q1 2022. The company also saw a 1% increase from Q4 2022's $7.62 million. Key highlights include:

• Net interest margin improved by 91 basis points year-over-year to 5.17%.
• Pre-tax, pre-provision income grew 36% to $10.77 million.
• Total assets rose 16% to $1.28 billion.
• Total deposits increased by 14% to $1.10 billion.
• Shareholder equity increased 18% to $100.99 million.

CEO Steve Miller emphasized the company's operational efficiency and strong credit quality, buoyed by rising interest rates and a growing core deposit base.

Positive

• Net income increased 33% to $7.70 million compared to Q1 2022.
• Net interest margin expanded to 5.17%, up 91 basis points year-over-year.
• Total assets grew 16% to $1.28 billion.
• Total portfolio loans rose 24% to $861.46 million.
• Total deposits increased by 14% to $1.10 billion.
• Shareholder equity climbed by 18% to $100.99 million.

Negative

• Non-interest expense surged 46% to $8.57 million, impacting earnings.
• Loss on sale of investment securities amounted to $1.32 million.

FRESNO, Calif., April 19, 2023 (GLOBE NEWSWIRE) -- Communities First Financial Corporation (the “Company”) (OTCQX: CFST), the parent company of FFB Bank (the “Bank”), today reported net income increased 33% to $7.70 million, or $2.43 per diluted share, for the first quarter of 2023, compared to $5.79 million, or $1.84 per diluted share, for the first quarter of 2022, and increased 1% compared to $7.62 million, or $2.42 per diluted share, for the fourth quarter of 2022. First quarter 2023 results were highlighted by continued net interest margin expansion, which improved to 5.17% at March 31, 2023. All results are unaudited.

First Quarter 2023 Highlights: As of, or for the quarter ended March 31, 2023, compared to the quarter ended March 31, 2022:

• Pre-tax, pre-provision income increased 36% to $10.77 million.
• Net income grew 33% to $7.70 million, or $2.43 per diluted share.
• Return on average equity (“ROAE”) increased 23% to 32.49%.
• Return on average assets (“ROAA”) increased 15% to 2.47%.
• Net interest margin expanded 91 basis points to 5.17% from 4.26% a year earlier.
• Gross revenue (net interest income, before the provision for loan losses, plus non-interest income) increased 40% to $19.34 million.
• Total assets grew 16% to $1.28 billion.
• Total portfolio loans grew 24% to $861.46 million.
• Total deposits increased 14% to $1.10 billion.
• Shareholder equity was $100.99 million.
• Book value per common share was $31.87.
• The Company’s tangible common equity ratio was 7.90%, while the Bank’s regulatory leverage capital ratio was 12.29% and total risk-based capital ratio was 17.87%, at March 31, 2023.

“Following our stellar performance in 2022, we delivered yet another record earnings for first quarter 2023, supported by strong year-over-year growth in net interest income, noninterest income, a higher net interest margin and an improved efficiency ratio,” said Steve Miller, President and Chief Executive Officer. “Our capital levels and excess on and off-balance sheet liquidity positions all remain strong, and together with a solid earnings performance, a large core deposit base and excellent credit quality, we have a solid foundation upon which to continue to expand our franchise.”

“The first quarter was exciting to say the least. But when you sift through most of the noise in the market, the fundamental issues still revolve around the impact of rising rates. We feel that overall there is still much more business that can flow downstream to a strong, relationship based community bank. We continue to manage through the market anxiety well because we have tremendous goodwill with our customer base, and we can respond quicker than our larger peers. During the mid-March volatility, we were able to onboard new relationships and open accounts online, within the same day, while customers are waiting 2 weeks or never getting a return call from some of our larger competitors,” said Miller.

“Total deposits increased 14% from a year ago with non-interest bearing deposits representing 69% of total deposits,” said Miller. “As a result of the higher interest rate environment, we saw new and existing customers seek CDs with a higher yield, resulting in CDs increasing 30% from the linked quarter. As a result of the deposit growth, our borrowings fell from $65 million on December 31, 2022, to $22 million.”

“Also adding to our revenue growth was the fee income generated from our merchant services, which grew from a year ago and increased from the linked quarter,” said Miller. “We strategically sold $18.48 million in SBA loans to improve our liquidity position and recognized an immediate gain of $838,000.” The allowance for credit losses was 1.08% of total loans, and 1.16% of total loans, less government guaranteed balances, at March 31, 2023. The Company adopted the CECL (Current Expected Credit Losses) methodology as of January 1, 2023.

“In mid-March 2023, we also successfully changed our Bank’s name to ‘FFB Bank’ after being known as Fresno First Bank for 17 years. This new branding will allow us to further pursue our growth strategy, as we develop a better name recognition on a national level,” said Miller.

Return on average equity (“ROAE”) was 32.49%, return on average assets (“ROAA”) was 2.47% and the efficiency ratio was 41.46%, while the net interest margin improved to 5.17% for the first quarter of 2023. Total assets increased 16% to $1.28 billion at March 31, 2023, compared to $1.10 billion at March 31, 2022.

Results of Operations

Operating revenue, consisting of net interest income and non-interest income, increased 40% to $19.34 million for the first quarter of 2023, compared to $13.80 million for the first quarter a year ago, and grew 6% from $18.22 million from the fourth quarter of 2022.

Net interest income, before the provision for loan losses, increased 40% to $14.78 million for the first quarter of 2023, compared to $10.54 million for the first quarter a year ago, and increased 3% from $14.31 million for the fourth quarter of 2022. “The increase in net interest income in the first quarter was mainly due to higher yields from our investment and loan portfolios, partially offset by an increase in deposit and borrowing costs,” said Bhavneet Gill, EVP and Chief Financial Officer.

The Company’s net interest margin (“NIM”), which excludes interest expense on the holding company’s sub-debt, improved by 91 basis points to 5.17% for the first quarter of 2023, compared to 4.26% for the first quarter of 2022, and expanded 19 basis points from 4.98% for the preceding quarter. “With the Fed’s recent rapid rise in interest rates, and the resulting higher Prime and Fed Funds rates, many of our earning assets have repriced higher with new business producing higher yields as well,” said Gill. “Our NIM also continued to improve during the first quarter with our low cost of deposit funding these earnings assets.”

The yield on earning assets was 5.59% for the first quarter of 2023, compared to 4.34% for the first quarter a year ago, and 5.18% on a linked quarter basis. The cost of funds increased to 0.43% for the first quarter of 2023, as a result of customers seeking a higher yield due to significant hikes in interest rates. The cost of funds was 0.08% for the first quarter a year earlier, and 0.20% for the fourth quarter of 2022. “While non-interest bearing checking accounts represent 69% of total deposits, we increased interest rates paid on interest-bearing deposits during the first quarter to retain and grow deposit balances,” commented Gill. Uninsured deposit balances, excluding affiliate deposits (FFB Bank-owned funds) and collateralized deposits, totaled $599.07 million or 54.5% of total deposits as of March 31, 2023.

Total non-interest income was $4.56 million for the first quarter of 2023, compared to $3.26 million for the first quarter of 2022, and $3.92 million for the preceding quarter. The growth in non-interest income during the first quarter of 2023 was mainly due to gain on sale of loans and the increase in merchant services income from a year ago and also from the linked quarter basis. Merchant services revenue increased as a result of increases in ISO Partner sponsorship net revenue and organic FFB Payments gross revenue. Gross expenses related to organic FFB Payments lines of business are recognized in other non-interest expense. Deposit fee income also increased year-over-year and from the preceding quarter. Partially offsetting the growth in non-interest income from the fourth quarter of 2022 was $1.32 million in loss on sale of investment securities recognized during the first quarter of 2023.

“We continue to see significant progress across our ISO partner sponsorships and from our own organic ISO business, as our net merchant services income grew from $1.70 million during the first quarter of 2022 to $2.64 million for the first quarter of 2023. Compared to the linked quarter, Organic ISO revenue grew 21.9% to $679,000 while Sponsored ISO revenue increased 5.2% to $1.96 million. Net Merchant Services Income grew 9% from the linked quarter. The team continues to build a strong pipeline of payment related partners that will help fuel further revenue expansion. The evolution of the payments space is quite dynamic, and we are working diligently to ensure the bank and our partners can capitalize on current and future payment rails,” said Miller.

Merchant ISO Processing Volumes ($ in thousands)
Source	Q1 2022		Q2 2022		Q3 2022		Q4 2022		Q1 2023
ISO Partner Sponsorship	$	1,306,116		1,794,688	$	2,439,610	$	2,909,360	$	3,526,911
FFB Payments- Sub-ISO Merchants		-		-		964		3,701		19,683
FFB Payments - Direct Merchants		346		24,657		39,363		43,013		42,725
	$	1,306,462	$	1,819,345	$	2,479,937	$	2,956,074	$	3,589,319

Merchant ISO Processing Revenues ($ in thousands)
Source of Revenue	Q1 2022		Q2 2022		Q3 2022		Q4 2022		Q1 2023
Net Revenue*:
ISO Partner Sponsorship	$	1,561		1,692	$	1,628	$	1,864	$	1,961
Gross Revenue:
FFB Payments- Sub-ISO Merchants		-		-		43		144		281
FFB Payments - Direct Merchants		118		1,231		1,331		1,431		1,455
		118		1,231		1,374		1,575		1,736
Gross Expense:
FFB Payments- Sub-ISO Merchants		-		-		22		80		148
FFB Payments - Direct Merchants		-		754		814		938		909
		-		754		836		1,018		1,057
Net Revenue:
FFB Payments- Sub-ISO Merchants		-		-		21		64		133
FFB Payments - Direct Merchants		118		477		517		493		546
FFB Payments Net Revenue		118		477		538		557		679
Net Merchant Services Income:	$	1,679	$	2,169	$	2,166	$	2,421	$	2,640
* ISO Partnership Sponsorship is recognized net of expense in Merchant Services Income. FFB Payments revenues are
recognized gross in Merchant Services Income and gross expenses are recognized in Other Operating Expense. Reclassifications
have been made between Non-interest income and Non-interest expense in prior periods for the change.

Total deposit fee income increased 38% to $655,000 for the first quarter of 2023, compared to $475,000 for the first quarter of 2022, and grew 8% from $600,000 for the fourth quarter of 2022. Merchant services income increased 120% to $3.70 million for the first quarter, compared to $1.68 million for the first quarter 2022.

During the first quarter 2023, there was a $904,000 gain on sale of loans, compared to a gain on sale of loans of $803,000 from the first quarter 2022, and a $309,000 loss on sale of loans from the linked quarter. In addition, there was a $1.32 million loss on sale of investment securities during the first quarter. $950,000 of the $1.32 million loss was related to the sale of one bank holding company subordinated debt security. “We continue to monitor the sale of loans and investments and will sell a portion when we believe it strategic to do so, to expand capacity to replace with higher yielding loans and securities. This strategy is expected to improve earnings both in the short and in the long term,” added Miller.

Non-interest expense increased 46% to $8.57 million for the first quarter of 2023, compared to $5.88 million for the first quarter of 2022, and increased 9% from $7.85 million for the fourth quarter of 2022. “The higher operating expenses incurred during the first quarter were across the board as we absorbed existing people related costs and continued to hire additional key talent and invest in modern technology during the year,” said Miller. “These key investments will be ongoing during 2023, as we expand into new markets and add key positions related to risk management, technology and sales.”

Full-time employees increased to 107 at March 31, 2023, compared to 86 full-time employees a year earlier, and 103 full-time employees from the linked quarter. As a result of the increased headcount from a year ago, salaries and employee benefits increased 23% to $4.72 million at March 31, 2023, compared to $3.85 million at March 31, 2022, and increased 16% from $4.07 at December 31, 2022.

Occupancy and equipment expense increased 54% from a year ago, representing 4% of non-interest expense, and increased 16% from the preceding quarter. Other operating expense increased 94% or $1.69 million from a year earlier. The increase was primarily attributed to $1.06 million in operating expenses for the FFB Payments lines of business, which launched in the first quarter of 2022. Merchant operating expenses include interchange fees, chargebacks, partnership, and other card brand fees. Increases in data processing expense, software licenses and subscriptions, and loan origination expenses were the secondary drivers of the year-over-year increase.

The efficiency ratio improved to 41.46% for the first quarter of 2023, compared to 42.60% for the first quarter a year ago, and decreased compared to 38.99% for the fourth quarter of 2022.

Balance Sheet Review

Total assets increased 16% to $1.28 billion at March 31, 2023, from $1.10 billion at March 31, 2022, and declined 1% from $1.29 at December 31, 2022.

“The total portfolio of loans increased 24%, or $167.87 million, to $861.18 million, compared to $693.31 million at March 31, 2022, and grew 2%, or $15.72 million, from $845.46 million on a linked quarter basis. The remaining SBA-PPP loans were down to $204,000 at March 31, 2023, representing a fraction of the total loan portfolio. During the first quarter of 2023, we sold $18.48 million in SBA and $11.06 million in multi-family loans while still growing the portfolio overall,” said Gill.

The commercial and industrial (C&I) portfolio increased 8% to $200.71 million, at March 31, 2023, compared to $185.42 million a year earlier, and declined by 5% from $211.92 million at December 31, 2022. C&I loans represented 23% of total loans at March 31, 2023. Commercial real estate loans increased 37% year-over-year to $513.61 million, representing 60% of total loans at March 31, 2023, and grew 4% on a linked quarter basis. The CRE portfolio includes approximately $230.10 million in multi-family loans originated by the Southern California team that the Company may consider selling at some point in the future. Agriculture loans, representing 7% of the loan portfolio, at March 31, 2023, increasing 1% to $58.79 million from a year ago and remained flat from $58.49 million at December 31, 2022. Real estate construction and land development loans increased 92% from a year ago to $72.09 million, or 8% of total loans, while residential RE 1-4 family loans totaled $15.78 million, or 2% of loans, at March 31, 2023. At March 31, 2023, the SBA, USDA, and other government agencies guaranteed loans totaled $62.31 million, or 7.2% of the loan portfolio.

The investment portfolio increased 13%, or $36.60 million, to $328.58 million at March 31, 2023, from $291.98 million at March 31, 2022, and declined 4% compared to $343.84 million at December 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. At March 31, 2023, the Company had a net unrealized loss position on its investment securities portfolio of $31.71 million, compared to a net unrealized loss of $31.91million at December 31, 2022. Held to maturity securities totaled $3.45 million, or 1.05% of the portfolio, at March 31, 2023. The Company’s investment securities portfolio had an effective duration of 5.13 years at March 31, 2023, compared to 5.05 years at December 31, 2022.

Total deposits increased $137.80 million, or 14%, to $1.10 billion at March 31, 2023, compared to $961.51 million from a year earlier, and grew 2% from $1.08 billion at December 31, 2022. Noninterest-bearing demand deposits increased $147.53 million, or 24%, to $759.42 million at March 31, 2023, compared to $611.89 million at March 31, 2022, and increased 3% from $737.08 million at December 31, 2022. Noninterest-bearing demand deposits represented 69% of total deposits at March 31, 2023.

Total short-term borrowings were $22 million at March 31, 2023, compared to no borrowings at March 31, 2022, and decreased 66% from $65 million at December 31, 2022.

The following table summarizes the Company’s primary and secondary sources of liquidity which were available at March 31, 2023.

Liquidity Source ($ in thousands)	March 31, 2023
Cash and cash equivalents	$	53,545
Unpledged investment securities, fair value		71,809
FHLB advance availability		236,668
Federal Reserve discount window availability		210,966
Correspondent bank unsecured lines of credit		71,500
	$	644,488

The total primary and secondary liquidity of $644.49 million represents 108% of uninsured deposits as of March 31, 2023.

Shareholders’ equity increased 18% to $100.99 million at March 31, 2023, compared to $85.58 million from a year ago, and grew 9% from $92.36 million at December 31, 2022. Book value per common share increased to $31.87, at March 31, 2023, compared to $27.53 at March 31, 2022, and increased 8% from $29.41 at December 31, 2022.

“The tangible common equity ratio was 7.90% at March 31, 2023, compared to 7.76% a year earlier, and 7.13% at December 31, 2022,” stated Gill. “With the Federal Reserve aggressively raising interest rates, market rates have risen considerably. Consequently, our tangible common equity and tangible book value have been adversely impacted by the increase in rates and the related impact on our securities portfolio through marks on accumulated other comprehensive income (‘AOCI’).”

At the Bank level, unrealized losses and gains reflected in AOCI are not included in regulatory capital. As a result, Tier-1capital at the Bank for regulatory purposes was $158.10 million at quarter end excluding the unrealized loss. The regulatory leverage capital ratio was 12.29% for the current quarter, while the total risk-based capital ratio was 17.87%, exceeding regulatory minimums to be considered well-capitalized.

Asset Quality

Nonperforming assets were unchanged from the preceding quarter at $6.37 million, or 0.49% of total assets, at March 31, 2023, compared to $2.90 million, or 0.26% of total assets at March 31, 2022. Included in nonperforming assets was one loan totaling $740,000 restructured and performing under the terms of its agreements at March 31, 2023, compared to $766,000 in performing restructured loans at December 31, 2022, and $800,000 in performing restructured loans at March 31, 2022. Of the $6.32 million nonperforming loans, $4.20 million are covered by SBA guarantees.

Total delinquent loans declined significantly to $7.53 million at March 31, 2023, compared to $12.75 million at December 31, 2022, and were primarily related to government guaranteed loans purchased by the Bank.

Past due loans 30-60 days were $148,000 at March 31, 2023, compared to $8.27 million at March 31, 2022, and $364,000 at December 31, 2022. There were $98,000 past due loans from 60-90 days at March 31, 2023 compared to $173,000 at March 31, 2022, and $397,000 at December 31, 2022. Past due loans 90+ days at quarter end totaled $7.29 million, compared to $11.99 three months earlier and $16,052 past due loans at March 31, 2022. Of the $7.53 million in past due loans, $7.48 million were purchased government guaranteed loans with an unconditional guarantee.

The Bank continues to hold approximately $28 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 would process the conversion of certificates, which caused further delays. A reconciliation between Guidehouse, Colson and the Bank has taken place, and all are in agreement. The Bank has submitted all paperwork and original certificates to Colson | Guidehouse for processing and is awaiting reissue of the certificates and payment. The Bank is fully guaranteed; however, until the unwind process is completed it will continue to carry these loans as past due. The balance of these past due loans decreased from $12.19 million at December 31, 2022 to $7.48 million at March 31, 2023.

“As detailed in the chart below, most of the delinquencies are purchased government guaranteed loans, which are guaranteed by the SBA for the full payment of the principal plus interest,” commented Miller. “The SBA continues to deal with backlogs and consequently we continue to incur delays in payments. We are assured that full payment can be expected in the coming quarters.” The chart below breaks out the government guaranteed portion compared to organic delinquencies.

Delinquent Loan Summary	Organic		Purchased Govt. Guaranteed		Total
($ in thousands)
Delinquent accruing loans 30-60 days	$	55	$	93	$	148
Delinquent accruing loans 60-90 days		0		98		98
Delinquent accruing loans 90+ days		0		7,288		7,288
Total delinquent accruing loans	$	55	$	7,478	$	7,534
Non Accrual Loan Summary	Organic		Purchased Govt. Guaranteed		Total
($ in thousands)
Loans on non accrual	$	6,323	$	0	$	6,323
Non accrual loans with SBA guarantees		4,198		0		4,198
Net Bank exposure to non accrual loans	$	2,125	$	0	$	2,125

 

There was a $400,000 provision for credit loss in the first quarter of 2023, compared to zero provision for loan losses in the first quarter a year ago, and a $300,000 provision for loan losses booked in the fourth quarter of 2022.

“We incurred net charge offs of $409,000 during the quarter, compared to zero net charge offs in the fourth quarter a year ago, and $187,000 in net charge offs in the immediate prior quarter,” said Miller. “Our loan portfolio increased 24% from a year ago with commercial real estate (“CRE”) loans representing nearly 60% of the total loan portfolio. Within the CRE portfolio, there are $40.39 million in loans for CRE office as shown in the table below. Since the majority of our CRE office exposure is concentrated in the Central Valley, we feel the volatility that the city center markets are experiencing in regard to ‘return to work’ dynamics is not as pronounced in our local area. Our credit metrics remain strong as we continue to maintain conservative underwriting standards.”

CRE Office Exposure as of 3/31/2023
Region	Owner-Occupied				Non-Owner Occupied				Total
Central Valley	$	15,037			$	16,431			$	31,468
Southern California		1,798				363				2,161
Other California		1,914				4,298				6,212
Total California		18,749				21,092				39,841
Out of California		-				553				553
Total CRE Office	$	18,749			$	21,645			$	40,394

The ratio of allowance for credit loss to total loans was 1.08% at March 31, 2023, compared to 1.41% a year earlier and 1.17% at December 31, 2022.

“The SBA portfolio is a segment we watch very closely as rates continue to rise,” added Miller. “A substantial portion of the portfolio consists of loans guaranteed by the U.S. Government. This group of loans consists of fully guaranteed loans the Company has purchased, 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 1.16%, as of March 31, 2023, and our total unguaranteed exposure on these SBA loans is $25.17 million spread over 179 loans.”

About Communities First Financial Corporation

Communities First Financial Corporation, a bank holding company established in 2014, is the parent company of FFB Bank, founded in 2005 in Fresno, California. FFB 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. For 2021 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. In 2020 S&P Global ranked the Bank the #20 best performing community bank under $3 billion in assets, 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.ffb.bank 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.

Member FDIC

 

SELECT FINANCIAL INFORMATION AND RATIOS (unaudited)		For the Quarter Ended:										Percentage Change From:
		Mar. 31, 2023			Dec. 31, 2022			Mar. 31, 2022				Dec. 31, 2022		Mar. 31, 2022
BALANCE SHEET DATA - PERIOD END BALANCES:
	Total assets	$	1,278,514		$	1,294,464		$	1,102,540			-1	%	16	%
	Total portfolio loans		861,181			845,463			693,312			2	%	24	%
	Investment securities		328,575			343,843			291,975			-4	%	13	%
	Total deposits		1,099,311			1,081,228			961,510			2	%	14	%
	Shareholders equity, net	$	100,986		$	92,358		$	85,577			9	%	18	%
SELECT INCOME STATEMENT DATA:
	Gross revenue	$	19,337		$	18,224		$	13,801			6	%	40	%
	Operating expense		8,565			7,846			5,880			9	%	46	%
	Pre-tax, pre-provision income		10,772			10,378			7,921			4	%	36	%
	Net income after tax	$	7,698		$	7,618		$	5,789			1	%	33	%
SHARE DATA:
	Basic earnings per share	$	2.43		$	2.43		$	1.86			0	%	30	%
	Fully diluted earnings per share	$	2.43		$	2.42		$	1.84			0	%	32	%
	Book value per common share	$	31.87		$	29.41		$	27.53			8	%	16	%
	Common shares outstanding		3,169,148			3,139,880			3,108,219			1	%	2	%
	Fully diluted shares		3,171,228			3,146,117			3,140,706			1	%	1	%
	CFST - Stock price	$	62.90		$	60.50		$	59.75			4	%	5	%
RATIOS:
	Return on average assets		2.47	%		2.41	%		2.14	%		3	%	15	%
	Return on average equity		32.49	%		34.86	%		26.49	%		-7	%	23	%
	Efficiency ratio		41.46	%		38.99	%		42.60	%		6	%	-3	%
	Yield on earning assets		5.59	%		5.18	%		4.34	%		8	%	29	%
	Yield on investment securities		4.38	%		4.21	%		2.82	%		4	%	56	%
	Yield on portfolio loans		6.12	%		5.65	%		5.15	%		8	%	19	%
	Cost to fund earning assets		0.43	%		0.20	%		0.08	%		118	%	435	%
	Net Interest Margin		5.17	%		4.98	%		4.26	%		4	%	21	%
	Equity to assets		7.90	%		7.13	%		7.76	%		11	%	2	%
	Loan to deposits ratio		78.34	%		78.19	%		72.11	%		0	%	9	%
	Full time equivalent employees		107.0			103.0			86.0			4	%	24	%
BALANCE SHEET DATA - AVERAGES:
	Total assets	$	1,264,171		$	1,255,212		$	1,097,173			1	%	15	%
	Total loans		845,659			810,811			725,136			4	%	17	%
	Investment securities		335,662			342,132			297,048			-2	%	13	%
	Deposits		1,088,664			1,091,317			953,547			0	%	14	%
	Shareholders equity, net	$	96,081		$	86,687		$	88,627			11	%	8	%
ASSET QUALITY:
	Total delinquent accruing loans	$	7,534		$	12,750		$	24,495			-41	%	-69	%
	Nonperforming assets	$	6,323		$	6,373		$	2,899			-1	%	118	%
	Non Accrual / Total Loans		.73	%		.75	%		.42	%		-3	%	76	%
	Nonperforming assets to total assets		.49	%		.49	%		.26	%		0	%	88	%
	LLR / Total loans		1.08	%		1.17	%		1.41	%		-8	%	-24	%

 

STATEMENT OF INCOME ($ in thousands)		For the Quarter Ended:									Percentage Change From:
(unaudited)		Mar. 31, 2023			Dec. 31, 2022			Mar. 31, 2022			Dec. 31, 2022		Mar. 31, 2022
Interest Income
	Loan interest income	$	12,729		$	11,545		$	9,228		10	%	38	%
	Investment income		3,484			3,401			1,961		2	%	78	%
	Int. on fed funds & CDs in other banks		228			309			19		-26	%	1100	%
	Dividends from non-marketable equity		75			105			8		-29	%	838	%
	Interest income		16,516			15,360			11,216		8	%	47	%
	Int. on deposits		957			458			208		109	%	360	%
	Int. on short-term borrowings		313			129			1		143	%	31200	%
	Int. on long-term debt		464			464			464		0	%	0	%
	Interest expense		1,734			1,051			673		65	%	158	%
	Net interest income		14,782			14,309			10,543		3	%	40	%
	Provision for credit losses		400			300			0		33	%	0	%
	Net interest income after provision		14,382			14,009			10,543		3	%	36	%
Non-Interest Income:
	Total deposit fee income		655			600			475		9	%	38	%
	Debit / credit card interchange income		141			137			127		3	%	11	%
	Merchant services income		3,697			3,439			1,679		8	%	120	%
	Gain on sale of loans		904			(309	)		803		-393	%	13	%
	Other operating income		(842	)		48			174		-1854	%	-584	%
	Non-interest income		4,555			3,915			3,258		16	%	40	%
Non-Interest Expense:
	Salaries & employee benefits		4,716			4,067			3,848		16	%	23	%
	Occupancy expense		362			305			235		19	%	54	%
	Other operating expense		3,487			3,474			1,797		0	%	94	%
	Non-interest expense		8,565			7,846			5,880		9	%	46	%
	Net income before tax		10,372			10,078			7,921		3	%	31	%
	Tax provision		2,674			2,460			2,132		9	%	25	%
	Net income after tax	$	7,698		$	7,618		$	5,789		1	%	33	%

 

 

 

BALANCE SHEET ($ in thousands )		End of Period:										Percentage Change From:
(unaudited)		Mar. 31, 2023			Dec. 31, 2022			Mar. 31, 2022				Dec. 31, 2022		Mar. 31, 2022
ASSETS
	Cash and due from banks	$	27,696		$	19,558		$	17,992			42	%	54	%
	Fed funds sold and deposits in banks		22,972			37,415			67,384			-39	%	-66	%
	CDs in other banks		2,877			2,983			1,490			-4	%	93	%
	Investment securities		328,575			343,843			291,975			-4	%	13	%
	Loans held for sale		0			11,063			5,430			-100	%	-100	%
	Portfolio loans outstanding:
	RE constr & land development		72,090			63,265			37,630			14	%	92	%
	Residential RE 1-4 Family		15,783			17,802			15,733			-11	%	0	%
	Commercial Real Estate		513,613			493,358			373,954			4	%	37	%
	Agriculture		58,735			58,494			58,022			0	%	1	%
	Commercial and Industrial		200,705			211,915			185,424			-5	%	8	%
	SBA PPP Loans		204			242			22,378			-16	%	-99	%
	Consumer and Other		51			387			171			-87	%	-70	%
	Total Portfolio Loans		861,181			845,463			693,312			2	%	24	%
	Deferred fees & discounts		(3,220	)		(2,910	)		(2,492	)		11	%	29	%
	Allowance for loan losses		(9,271	)		(9,914	)		(9,785	)		-6	%	-5	%
	Loans, net		848,690			832,639			681,035			2	%	25	%
	Non-marketable equity investments		5,592			5,554			4,131			1	%	35	%
	Cash value of life insurance		8,641			8,592			8,447			1	%	2	%
	Accrued interest and other assets		33,471			32,817			24,656			2	%	36	%
	Total assets	$	1,278,514		$	1,294,464		$	1,102,540			-1	%	16	%
LIABILITIES AND EQUITY
	Non-interest bearing deposits	$	759,417		$	737,078		$	611,890			3	%	24	%
	Interest checking		32,637			41,816			28,401			-22	%	15	%
	Savings		71,542			77,311			95,902			-7	%	-25	%
	Money market		163,995			169,901			171,589			-3	%	-4	%
	Certificates of deposits		71,720			55,122			53,728			30	%	33	%
	Total deposits		1,099,311			1,081,228			961,510			2	%	14	%
	Short-term borrowings		22,000			65,000			0			-66	%	0	%
	Long-term debt		39,481			39,441			39,323			0	%	0	%
	Other liabilities		16,736			16,437			16,130			2	%	4	%
	Total liabilities		1,177,528			1,202,106			1,016,963			-2	%	16	%
	Common stock & paid in capital		35,073			34,369			33,136			2	%	6	%
	Retained earnings		88,167			80,469			59,737			10	%	48	%
	Total equity		123,240			114,838			92,873			7	%	33	%
	Accumulated other comprehensive loss		(22,254	)		(22,480	)		(7,296	)		-1	%	205	%
	Shareholders equity, net		100,986			92,358			85,577			9	%	18	%
	Total Liabilities and shareholders' equity	$	1,278,514		$	1,294,464		$	1,102,540			-1	%	16	%

 

ASSET QUALITY ($ in thousands)	Period Ended:
(unaudited)	Mar. 31, 2023			Dec. 31, 2022			Mar. 31, 2022
Delinquent accruing loans 30-60 days	$	148		$	364		$	8,270
Delinquent accruing loans 60-90 days	$	98		$	397		$	173
Delinquent accruing loans 90+ days	$	7,288		$	11,989		$	16,052
Total delinquent accruing loans	$	7,534		$	12,750		$	24,495
Loans on non accrual	$	6,323		$	6,373		$	2,899
Other real estate owned	$	0		$	0		$	0
Nonperforming assets	$	6,323		$	6,373		$	2,899
Performing restructured loans	$	740		$	766		$	800
Delq 30-60 / Total Loans		.02	%		.04	%		1.19	%
Delq 60-90 / Total Loans		.01	%		.05	%		.02	%
Delq 90+ / Total Loans		.85	%		1.42	%		2.32	%
Delinquent Loans / Total Loans		.87	%		1.51	%		3.53	%
Non Accrual / Total Loans		.73	%		.75	%		.42	%
Nonperforming assets to total assets		.49	%		.49	%		.26	%
Year-to-date charge-off activity
Charge-offs	$	409		$	187		$	0
Recoveries	$	3		$	16		$	0
Net charge-offs	$	406		$	171		$	0
Annualized net loan losses (recoveries) to average loans		.19	%		.02	%		.00	%
CREDIT LOSS RESERVE RATIOS:
Reserve for credit losses	$	9,271		$	9,914		$	9,785
Total loans	$	861,181		$	845,463		$	693,312
Purchased govt. guaranteed loans	$	28,224		$	29,906		$	38,533
Originated govt. guaranteed loans	$	34,090		$	45,519		$	64,721
LLR / Total loans		1.08	%		1.17	%		1.41	%
LLR / Loans less 100% govt. gte. loans (PPP and purchased)		1.11	%		1.22	%		1.55	%
LLR / Loans less all govt. guaranteed loans		1.16	%		1.29	%		1.66	%
LLR / Total assets		.73	%		.77	%		.89	%

 

SELECT FINANCIAL TREND INFORMATION (unaudited)		For the Quarter Ended:
		Mar. 31, 2023			Dec. 31, 2022			Sept. 30, 2022			June 30, 2022			Mar. 31, 2022
BALANCE SHEET DATA - PERIOD END BALANCES:
	Total assets	$	1,278,514		$	1,294,464		$	1,188,441		$	1,144,334		$	1,102,540
	Loans held for sale		0			11,063			0			6,062			5,430
	Loans held for investment ex. PPP		860,977			845,221			774,801			718,698			670,934
	PPP Loans		204			242			1,389			3,934			22,378
	Investment securities		328,575			343,843			339,523			320,279			291,975
	Non-interest bearing deposits		759,417			737,078			724,425			695,977			611,890
	Interest bearing deposits		339,894			344,150			320,308			308,175			349,620
	Total deposits		1,099,311			1,081,228			1,044,733			1,004,152			961,510
	Short-term borrowings		22,000			65,000			0			0			0
	Long-term debt		39,481			39,441			39,402			39,362			39,323
	Total equity		123,240			114,838			106,788			99,424			92,873
	Accumulated other comprehensive loss		(22,254	)		(22,480	)		(25,368	)		(17,672	)		(7,296	)
	Shareholders equity, net	$	100,986		$	92,358		$	81,420		$	81,752		$	85,577
INCOME STATEMENT - QUARTERLY VALUES:
	Interest income	$	16,516		$	15,360		$	13,210		$	11,358		$	11,216
	Int. on dep. & short-term borrowings		1,270			587			213			191			209
	Int. on long-term debt		464			464			464			465			464
	Interest expense		1,734			1,051			677			656			673
	Net interest income		14,782			14,309			12,533			10,702			10,543
	Non-interest income		4,555			3,915			4,528			4,244			3,258
	Gross revenue		19,337			18,224			17,061			14,946			13,801
	Provision for loan losses		400			300			0			0			0
	Non-interest expense		8,565			7,846			7,650			6,290			5,880
	Net income before tax		10,372			10,078			9,411			8,656			7,921
	Tax provision		2,674			2,460			2,506			2,448			2,132
	Net income after tax	$	7,698		$	7,618		$	6,905		$	6,208		$	5,789

 

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

 

FAQ

What were Communities First Financial Corporation's Q1 2023 earnings?

In Q1 2023, Communities First Financial Corporation reported net income of $7.70 million, a 33% increase from Q1 2022.

How did the net interest margin change for CFST in Q1 2023?

The net interest margin for CFST improved to 5.17% in Q1 2023, up 91 basis points compared to the previous year.

What is the current total asset value for CFST?

As of March 31, 2023, CFST's total assets were valued at $1.28 billion.

How much did total deposits increase for CFST in Q1 2023?

Total deposits for CFST increased by 14% to $1.10 billion in Q1 2023.

What was the growth in shareholder equity for CFST in Q1 2023?

Shareholder equity for CFST rose 18% to $100.99 million as of March 31, 2023.