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Focus Business Bank Announces Unaudited Financial Results for June 30, 2013 and Continued Strong Growth

SAN JOSE, CA--(Marketwired - Jul 24, 2013) - Focus Business Bank ( OTCQB : FCSB ) announced unaudited financial results for the quarter and six months ended June 30, 2013. Net income for the quarter was $162,000, or $0.06 per diluted share, compared to $264,000 or $0.10 per diluted share, for the quarter ended June 30, 2012. For the six months ended June 30, 2013, net income was $313,000, or $0.11 per diluted share, compared to $507,000, or $0.18 per diluted share, for the comparable period in 2012. Changes in net income were primarily the result of increases in net interest income which were offset by increases in non-interest expense associated with infrastructure growth and income taxes. As a result of the reversal of the valuation allowance on the deferred tax asset in late 2012, income taxes were significantly lower in the first six months of 2012 compared to 2013. 

President and Chief Executive Officer Richard L. Conniff commented on the quarterly results, "As planned, the first two quarters of 2013 have been about building assets to position the Bank for sustained higher earnings performance going forward. We are pleased with the growth we have achieved, especially in our specialty businesses serving non-profit organizations and condominium homeowner associations. The growth in core deposits has created high levels of liquidity which are being carefully deployed in loans to businesses in our primary market. While the Bank has grown substantially, credit quality has remained high and the Bank continues to have no non-performing loans. We are ideally positioned to profitably serve closely-held businesses and professionals."

Highlights of the Quarter ended June 30, 2013

  • Net interest income of $1.6 million represented 9.3% growth from the same quarter in 2012 and 4.5% growth over the trailing quarter.

  • Deposits of $233.4 million at June 30, 2013 were an all-time high and represent a 62% increase over June 30, 2012.

  • Total loans of $119.9 million at June 30, 2013 were also at an all-time high and 6% above June 30, 2012.

  • The Bank achieved its 13th consecutive quarterly profit.

Assets and Liabilities

Deposit growth is centered in core deposits. While deposits from condominium homeowner associations are up sharply and represent a significant component of growth over the past twelve months, non-interest bearing deposits have also grown and are up 48% from June 30, 2012 to June 30, 2013. The substantial growth in deposits has led to significant increases in investment securities, insured deposits with other financial institutions and cash. As the economy continues to improve the Bank intends to allocate an increasing portion of its earning assets to loans.

At June 30, 2013, The Bank's loan portfolio is a mix of commercial and industrial loans and commercial real estate loans, primarily to businesses in Santa Clara County. While the market in Santa Clara County for loans of all types remains highly competitive the Bank continues to invest in personnel and marketing to increase market share. 

Net Interest Income

Net interest income increased from $1,494,000 for the quarter ended June 30, 2012 to $1,633,000 for the quarter ended June 30, 2013. For the six months ended June 30, 2013, net interest income was $3,195,000 compared to $2,926,000 for the same six-month period the prior year. The increase in net interest income is the result of substantially higher levels of earning assets but, since the growth in earning assets was centered primarily in lower yielding securities and other short-term investments, the net interest margin declined from 3.81% in the first six months of 2012 to 2.97% in the first six months of 2013. The loan to deposit ratio, a good measure of the mix of earning assets, was 51% at June 30, 2013 compared to 64% at December 31, 2012 and 78% at June 30, 2012.

Non-interest Income

Non-interest income was $326,000 and $596,000 for the quarter and six months ended June 30, 2013, respectively, compared to $250,000 and $451,000 for the quarter and six months ended June 30, 2012, respectively. 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

Non-interest expense for the first six months of 2013 was $3,307,000 compared to $2,795,000 for the comparable period in 2012. The increase in operating expenses is primarily the result of investments in personnel, marketing and infrastructure to support the Bank's substantial growth in earning assets. The number of full-time equivalents at June 30, 2013 totaled 30, an increase of 4 from June 30, 2012. Long-term, the Bank strongly believes that these investments will be accretive to earnings and provide a strong platform for continued growth.

Asset Quality

The Bank had no loan charge-offs for all of 2012 and has had no loan charge-offs through the first half of 2013. The Bank made no provision for loan losses in 2012 or through the first two quarters of 2013. The allowance for loan losses was approximately 2.12% of total loans at June 30, 2013 and December 31, 2012. At June 30, 2013, the Bank had no non-performing loans and the Bank has never had other real estate owned. At June 30, 2013, the Bank had only one loan past due more than 30 days for $80,000.


Focus Business Bank has capital ratios substantially in excess of the minimum regulatory requirements for a bank to be considered well capitalized. At June 30, 2013, the total risk-based capital ratio was 16.98%. 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 performance. 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
June 30, 2013
  As of      
BALANCE SHEET 30-Jun-13     31-Dec-12     30-Jun-12     12 Month % Change
($'000 except share data)                          
Cash and due from banks                          
  Interest bearing $ 71,656     $ 52,560     $ 22,454     219%
  Non-interest bearing   23,061       6,895       5,850     294%
Federal funds sold   505       505       505     0%
Investment securities   40,400       29,368       24,045     68%
Loans   119,907       119,415       112,563     6%
  Allowance for loan losses   (2,546 )     (2,545 )     (2,541 )   0%
    Net Loans   117,361       116,870       110,022     7%
Other assets   7,688       7,237       4,870     58%
TOTAL ASSETS $ 260,671     $ 213,435     $ 167,746     55%
  Non-interest bearing $ 70,433     $ 63,065     $ 47,466     48%
  Interest bearing   162,949       123,295       96,216     69%
    Total deposits   233,382       186,360       143,682     62%
Other liabilities   1,093       880       808     35%
TOTAL LIABILITIES   234,475       187,240       144,490     62%
Stockholders' equity   26,196       26,195       23,256     13%
LIABILITIES AND STOCKHOLDERS' EQUITY $ 260,671     $ 213,435     $ 167,746     55%
Book value/share $ 9.40     $ 9.42     $ 8.35     13%
Balance Sheet Ratios                          
  Loan/deposit   51%       64%       78%      
  Non-interest/total deposit   30%       34%       33%      
Regulatory Capital Ratios                          
  Tier-1 leverage   9.95%       11.77%       13.84%      
  Tier-1 risk based capital   15.72%       16.81%       17.33%      
  Total risk-based capital   16.98%       18.07%       18.59%      
Asset Quality Metrics                          
  Non-performing loans $ -     $ -     $ -      
  Non-performing loans/total loans   0.00%       0.00%       0.00%      
  ALLL/total loans   2.12%       2.13%       2.26%      
Focus Business Bank
Unaudited Summary Financial Information
June 30, 2013
  Quarters Ended   Six months Ended
INCOME STATEMENT 30-Jun-13   30-Jun-12   30-Jun-13   30-Jun-12
($'000 except share data)                      
Interest income $ 1,794   $ 1,600   $ 3,492   $ 3,127
Interest expense   161     106     297     201
  Net interest income   1,633     1,494     3,195     2,926
Provision for loan losses   -     -           -
Non-interest income   326     250     596     451
Non-interest expense   1,702     1,435     3,307     2,795
    Pre-tax income   257     309     484     582
    Income taxes   95     45     171     75
Net income $ 162   $ 264   $ 313   $ 507
Net income per diluted share $ 0.06   $ 0.09   $ 0.11   $ 0.18
Performance Metrics                      
  Net interest margin   2.96%     3.84%     2.97%     3.81%
  Return on average assets   0.26%     0.65%     0.27%     0.63%
  Return on average equity   2.46%     4.58%     2.39%     4.43%