SAN JOSE, CA--(Marketwired - May 3, 2013) - Focus Business Bank (
President and Chief Executive Officer Richard L. Conniff commented on the quarterly results, "Having now completed 12 consecutive quarters of profitability, Focus Business Bank is preparing for the future by continuing to invest in key personnel and infrastructure. These investments support the Bank's long term strategy to grow through the acquisition of new business relationships while staying vigilant on credit quality and performance. Having built a fortress balance sheet with good liquidity, core deposits and strong capital ratios, the Bank is very well positioned to serve local closely-held businesses and professionals."
Highlights of the Quarter ended March 31, 2013
- Total assets of $233.4 million and total deposits of $206.3 million were at all-time highs.
- The Bank has now gone more than 12 consecutive quarters with no loan losses.
- Although total loans declined from $119.4 million at December 31, 2012 to $115.7 million at March 31, 2013, they have grown 14% from $101.2 million at March 31, 2012.
- The Bank's Specialty Banking Division continues to be a market leader in providing banking solutions to public benefit companies and businesses requiring customized cash management services including condominium homeowner associations. Our commitment to these markets resulted in substantial growth in core deposits over the past year which has continued through the first quarter of 2013.
Assets and Liabilities
Deposits increased 11% from $186.4 million at December 31, 2012 to $206.3 million at March 31, 2013. The deposit portfolio is primarily core deposits, with certificates of deposit over $100,000 representing less than 10% of total deposits at March 31, 2013. Non-interest bearing demand deposits represent 29% of total deposits at March 31, 2013.
At March 31, 2013, The Bank's loan portfolio continues to be a mix of commercial and industrial and commercial real estate loans, primarily to businesses in Santa Clara County. At the current time, the market for lending of all types is very competitive and the market the Bank specializes in, business loans in Santa Clara County, is especially so. The Bank's strategy to compete in this arena consists of maintaining a disciplined credit culture combined with expanded resources, primarily personnel and marketing, to achieve growth.
The Bank's success in growing core deposits has funded the balance sheet liquidity required for our continued growth in earnings assets. The Bank's strategy is to deploy a portion of these funds into loans, as market conditions allow. While continuing to focus our efforts on credit quality and loan growth, this balance sheet liquidity will be invested in a combination of investment grade securities, insured deposits with other financial institutions and overnight funds.
Net Interest Income
Net interest income for the three months ended March 31, 2013 was $1,562,000 compared to $1,432,000 for the quarter ended March 31, 2012. The increase in net interest income is the result of the growth in interest earning assets, partially offset by a decrease in net interest margin. Net interest margin was 2.98% for the three months ended March 31, 2013 compared to 3.77% for the same three-month period in 2012. The decrease in net interest margin is attributable primarily to a change in the mix of earning assets as loans, the highest yielding earning assets, were a smaller percentage of total earning assets at March 31, 2013 compared to March 31, 2012. The loan to deposit ratio at March 31, 2013 was 56% compared to 73% at March 31, 2012.
Non-interest income was $270,000 for the quarter ended March 31, 2013 compared to $201,000 for the quarter ended March 31, 2012. Non-interest income for both periods consisted primarily of gains on the sale of SBA loans, a core business of the Bank. Other non-interest income includes service charges and income from the servicing of loans sold in the secondary market.
Non-interest expense was $1,605,000 for the quarter ended March 31, 2013, compared to $1,360,000 for the quarter ended March 31, 2012. The Bank has made the strategic decision to invest in people and infrastructure to support growth. These investments for growth are reflected in increased operating expenses for the first quarter of 2013 compared to the first quarter of 2012. The Bank expects these investments to significantly increase long term revenue generation and be accretive to earnings. Compensation expense is the largest component of non-interest expense. The Bank had 24 full-time employees at March 31, 2012 compared to 30 full-time employees at March 31, 2013.
There were no loan charge-offs for the quarters ended March 31, 2013 or March 31, 2012. The Bank made no provision for loan losses in the quarters ended March 31, 2013 or March 31, 2012. The allowance for loan losses was 2.20% of total loans at March 31, 2013. At March 31, 2013, the Bank had no non-performing loans and the Bank has never had other real estate owned. At March 31, 2013, the Bank had 2 loans past due more than 30 days totaling only $1,582,000. As of May 6, 2013, one of those loans for $1,500,000 was paid in full.
Focus Business Bank has capital ratios substantially in excess of the minimum regulatory requirements for a bank to be considered well capitalized. At March 31, 2013, the total risk-based capital ratio was 18.14%. The Bank has not participated in any government sponsored capital programs, including the Troubled Asset Relief Program ("TARP") or the Small Business Lending Fund ("SBLF").
About Focus Business Bank
Focus Business Bank is dedicated to meeting the banking needs of closely-held businesses and professionals in Santa Clara County. The Bank's office is located at 10 Almaden Boulevard in downtown San Jose, California and offers a variety of commercial banking products including loans, deposits, remote deposit capture and other cash management services oriented toward closely-held businesses and their owners. The Bank specializes in commercial loans and is also an SBA Preferred Lender. The Bank also serves not-for-profit businesses and condominium homeowner associations by offering expertise, market knowledge and specialized products and services to these customers.
This release may contain forward-looking statements, such as, among others, statements about plans, expectations and goals concerning growth and improvement. Forward-looking statements are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates, inflation, government regulations and general economic conditions, including the real estate market in California and other factors beyond the Bank's control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. The Bank undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.
|Focus Business Bank|
|Unaudited Summary Financial Information|
|March 31. 2013|
|BALANCE SHEET||31-Mar-13||31-Dec-12||31-Mar-12||12 Month % Change|
|Cash and due from banks|
|Federal funds sold||505||505||505||0||%|
|Allowance for loan losses||(2,544||)||(2,545||)||(2,541||)||0||%|
|LIABILITIES AND STOCKHOLDERS' EQUITY||$||233,425||$||213,435||$||162,542||44||%|
|Balance Sheet Ratios|
|Regulatory Capital Ratios|
|Tier-1 risk based capital||16.88||%||16.81||%||18.73||%|
|Total risk-based capital||18.14||%||18.07||%||19.99||%|
|Asset Quality Metrics|
|Non-performing loans/total loans||0.00||%||0.00||%||0.00||%|
|Focus Business Bank|
|Unaudited Summary Financial Information|
|March 31. 2013|
|Net interest income||1,562||1,646||1,432|
|Provision for loan losses||-||-||-|
|Pre-tax income (loss)||227||375||273|
|Net income (loss)||151||391||243|
|Net income per diluted share||$||0.05||$||0.14||$||0.09|
|Net interest margin||2.98||%||3.35||%||3.77||%|
|Return on average assets||0.27||%||0.75||%||0.62||%|
|Return on average equity||2.32||%||5.98||%||4.28||%|