Focus Business Bank Announces Unaudited Financial Results for the Quarter and Year Ended December 31, 2012
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 | |||||||||||||||||
BALANCE SHEET | 31-Dec-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 |
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 | % | ||||||||||
