Focus Business Bank Announces Unaudited Financial Results for the Quarter and Year Ended December 31, 2012

Marketwired

SAN JOSE, CA--(Marketwire - Jan 31, 2013) - Focus Business Bank (OTCQB: FCSB) announced unaudited financial results for the quarter and year ended December 31, 2012. Net income was $391,000, or $0.14 per share, and $3,458,000, or $1.24 per share, for the quarter and year ended December 31, 2012, respectively. These results included an income tax benefit of $2,174,000 for the year ended December 31, 2012 resulting from the reversal of the valuation allowance on deferred tax assets. Reversal of the valuation allowance was based on the Bank's assessment that after eleven consecutive quarters of pre-tax net income it was likely that the benefits from the deferred tax assets would be realized.

President and Chief Executive Officer Richard L. Conniff remarked, "We are proud of the continuing success of Focus Business Bank. The three months ending December 31, 2012 marked the Bank's best quarter of pre-tax income, driven by growth in loans and deposits, both of which are at all time high levels. The Bank has remained disciplined in its control of operating expenses and the management of asset quality. We believe we are ideally positioned to assist and support our target customers, closely-held businesses in our market."

Assets and Liabilities
The balance sheet of the Bank experienced solid growth in 2012:

  • Deposits increased 28% from $145.2 million at December 31, 2011 to $186.4 million at December 31, 2012. During 2012, the fastest growing deposit segment was interest-bearing demand, which grew 144% from $28.1 million to $68.8 million. Interest bearing demand is primarily composed of the Bank's specialty deposit businesses including condominium homeowner associations and non-profit corporations where it has significantly grown its local market share. The Bank considers these specialty businesses to be core deposits.

  • Loans increased 23% from $97.4 million at December 31, 2011 to $119.4 million at December 31, 2012. Growth in loans in 2012 was balanced between commercial and industrial, which grew 21% and commercial real estate, primarily first mortgages on commercial properties in Santa Clara County, which grew 24%.

  • The Bank also experienced growth in investment securities and interest bearing deposits with other banks. Investment securities and interest bearing deposits provide funds for day to day operations and secondary liquidity to manage balance sheet fluctuations. The growth in these asset classes was funded primarily by growth in deposits, partially offset by growth in loans.

Net Interest Income
Net interest income for the three months and year ended December 31, 2012 was $1,646,000 and $6,089,000, up 21% and 26%, respectively, compared to the same periods ending December 31, 2011. The increase in net interest income is attributable to the growth in interest earning assets, partially offset by a decrease in net interest margin. Net interest margin was 3.35% for the three months ended December 31, 2012 compared to 3.47% for the same three-month period in 2011. The decrease in net interest margin is attributable primarily to declines in market rates of interest and a change in the Bank's mix of earning assets as the loan to deposit ratio was 64% at December 31, 2012 compared to 67% at December 31, 2011.

Non-interest Income
Non-interest income was $421,000 and $1,159,000 for the quarter and year ended December 31, 2012, respectively, compared to $137,000 and $1,027,000 for the same periods in 2011. Gains on the sale of SBA loans originated by the Bank and sold in the secondary market remain the largest component of non-interest income. The remaining balance of non-interest income is primarily related to loan servicing fees, deposit activities and changes in the cash surrender value of bank owned life insurance.

Non-Interest Expense
Non-interest expense was $1,692,000 and $5,964,000 for the quarter and year ended December 31, 2012, respectively, compared to $1,268,000 and $5,211,000 for the comparable periods in 2011. The increase in non-interest expense is a result of the Bank's increase in infrastructure costs required to support our existing and planned growth in assets. The largest component of non-interest expense is related to compensation of the Bank's employees. The Bank had 27 full-time employees at December 31, 2012 compared to 24 full-time employees at December 31, 2011.

Asset Quality
The Bank made no provision for loan losses in the quarter or year ended December 31, 2012 and December 31, 2011. The allowance for loan losses was 2.13% of total loans at December 31, 2012, as compared to 2.61% at December 31, 2011. There were no loan charge-offs for the quarter or year ended December 31, 2012. At December 31, 2012, the Bank had no non-performing loans and the Bank has never had other real estate owned.

Capital
Focus Business Bank has capital ratios substantially in excess of the minimum regulatory requirements for a bank to be considered well capitalized. At December 31, 2012, the total risk-based capital ratio was 18.07%. 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.

Forward-Looking Statements
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
Summary Financial Information
Unaudited
       
BALANCE SHEET   31-Dec-12    
As of
30-Sep-12
    31-Dec-11     12 Month % Change  
($ in ',000s except per share data)                              
ASSETS                              
Cash and due from banks                              
  Interest bearing   $ 52,560     $ 39,397     $ 40,906     28 %
  Non-interest bearing     6,895       6,231       4,309     60 %
Federal funds sold     505       505       505     0 %
Investment securities     29,368       24,803       26,204     12 %
Loans     119,378       114,168       97,401     23 %
  Net deferred loan costs     37       22       37     0 %
  Allowance for loan losses     (2,545 )     (2,544 )     (2,541 )   0 %
    Net Loans     116,870       111,646       94,897     23 %
Other assets     7,237       7,030       1,703     325 %
TOTAL ASSETS   $ 213,435     $ 189,612     $ 168,524     27 %
LIABILITIES                              
Deposits                              
  Non-interest bearing   $ 63,065     $ 55,649     $ 63,196     0 %
  Interest bearing     123,295       107,451       81,986     50 %
    Total deposits     186,360       163,100       145,182     28 %
Other liabilities     880       721       716     23 %
TOTAL LIABILITIES     187,240       163,821       145,898     28 %
Stockholders' equity     26,195       25,791       22,626     16 %
LIABILITIES AND STOCKHOLDERS' EQUITY   $ 213,435     $ 189,612     $ 168,524     27 %
Book value/share   $ 9.42     $ 9.28     $ 8.15     16 %
Balance Sheet Ratios                              
  Loan/deposit     64 %     70 %     67 %      
  Non-interest/total deposit     34 %     34 %     44 %      
Regulatory Capital Ratios                              
  Tier-1 leverage     11.77 %     13.40 %     13.82 %      
  Tier-1 risk based capital     16.81 %     17.65 %     19.48 %      
  Total risk-based capital     18.07 %     18.91 %     20.75 %      
Asset Quality Metrics                              
  Non-performing loans   $ -     $ -     $ 1,044        
  Non-performing loans/total loans     0.00 %     0.00 %     1.07 %      
  ALLL/total loans     2.13 %     2.23 %     2.61 %      
                                 
                                 
 
 
Focus Business Bank
Summary Financial Information
Unaudited
             
    Quarters Ended     Years Ended  
INCOME STATEMENT   31-Dec-12     31-Dec-11     31-Dec-12     31-Dec-11  
($ in ',000s except per share data)                                
Interest income   $ 1,769     $ 1,465     $ 6,531     $ 5,275  
Interest expense     123       100       442       428  
  Net interest income     1,646       1,365       6,089       4,847  
Provision for loan losses     -       -       -       -  
Non-interest income     421       137       1,159       1,027  
Non-interest expense     1,692       1,268       5,964       5,211  
    Pre-tax income (loss)     375       234       1,284       663  
    Income taxes     (16 )     (5 )     (2,174 )     62  
Net income (loss)   $ 391     $ 239     $ 3,458     $ 601  
Net income (Loss) per basic share   $ 0.14     $ 0.09     $ 1.24     $ 0.22  
Performance Metrics                                
  Net interest margin     3.35 %     3.47 %     3.60 %     3.46 %
  Return on average assets     0.75 %     0.59 %     1.95 %     0.42 %
  Return on average equity     5.98 %     4.20 %     14.47 %     2.72 %
                                 
                                 
Contact:

Richard L. Conniff
President and Chief Executive Officer
408.200.8701
Email Contact

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