WALNUT CREEK, Calif., Oct. 27, 2016 (GLOBE NEWSWIRE) -- Bay Commercial Bank, “Bank”, (OTCBB:BCML), announced quarterly earnings of $1.2 million in the third quarter of 2016, compared to $1.5 million in the second quarter of 2016 and $1.3 million in the first quarter of 2016. Diluted earnings per share were $0.22 in the third quarter, compared to $0.27 in the prior quarter and $0.21 in the same quarter a year ago. Year-to-date earnings of $4.0 million compared to $8.5 million for the same nine-month period a year ago. Diluted earnings per share were $0.73 in the first nine months of 2016, an increase from $1.49 for the same period in 2015.  The lower earnings per share in the third quarter 2016 compared to the second quarter 2016 is attributed to lower non-recurring gains on payoff of purchase credit impaired loans.  The Bank’s earnings per share for the first nine months of 2015 included $0.77 net earnings attributed to merger accounting.

President and Chief Executive Officer, George J. Guarini stated, “Our 2016 financial performance has primarily been about building our organic platform and expanding our product offerings. Our previous bank acquisitions have created the opportunities. We now have the earnings performance which enable us to commit resources to growth in Commercial and Industrial, Agricultural and SBA lending.  Expanding these business lines will add diversification to our revenue stream and enhance our management of loan concentration risks. Our strong earnings history combined with our strong capital position permit us to take immediate advantage of strategic opportunities currently available in the marketplace. We anticipate that the M&A environment will allow us to attain scale, move toward a liquid security and significantly expand our geographical market reach.”

Bank also provided the following highlights on its operating and financial performance for the third quarter of 2016:

• Loans totaled $513.5 million at September 30, 2016, compared to $504.9 million at June 30, 2016 and $420.1 million at September 30, 2015. New loan volume was approximately $26.8 million in the third quarter of 2016 compared to $32.9 million in the second quarter.
• Deposits totaled $568.7 million at September 30, 2016 compared to $535.7 million at June 30, 2016 and $545.7 million at September 30, 2015.   Non-interest bearing deposits represent 24.0% of total deposits and the cost of total deposits increased slightly to 0.62%.
• Non-accrual loans represented 0.29% of total loans as of September 30, 2016 resulting in a Texas ratio of 3.07%. The provision for loan losses recorded in the quarter totaled $256 thousand primarily related to charge-offs for loans transferred to Other Real Estate Owned.
• All capital ratios are well above regulatory requirements for a well-capitalized institution. The total risk-based capital ratio was 13.91% at September 30, 2016 compared to 13.65% at June 30, 2016, and tangible common equity to tangible assets increased to 11.53% at September 30, 2016 from 11.48% at June 30, 2016.

Loans and Credit Quality

Loan originations in the third quarter of 2016 were spread throughout our markets with the majority focused in Solano County, Contra Costa County and San Mateo County. By loan type, owner-user real estate, investor real estate and residential real estate accounted for the majority of the new loan volume for the quarter.

Year-to-date loan originations of $112.2 million are approx. $27.4 million higher than compared to the same period in 2015, while year-to-date payoffs are slightly lower than the first nine months of 2015. Payoffs of $15.8 million in the quarter ended September 30, 2016 were primarily the result of property sales or planned events.

Non-accrual loans totaled $1.5 million, or 0.29% of the loan portfolio at September 30, 2016, compared to $1.9 million, or 0.38%, at June 30, 2016 and $340 thousand, or 0.08% a year ago. The increase in non-accrual loans from a year ago primarily relates to Agriculture related loans which have experienced some credit deterioration. Accruing loans past due 30 to 89 days totaled $751 thousand at September 30, 2016, compared to $228 thousand at June 30, 2016 and zero a year ago.

The provision for loan losses recorded in the third quarter of 2016 totaled $256 thousand as the quality of the loan portfolio did not warrant a provision offset by charge-offs related to loans transferred to Other Real Estate Owned.  Net charge-offs for the third quarter totaled $250 thousand compared to small recoveries in the prior quarter and in the same quarter a year ago. The ratio of loan loss reserve to loans totaled 0.83% at September 30, 2016 compared to 0.84% at June 30, 2016 and compared to 0.79% at June 30, 2015.  As of September 30, 2016, acquired loans totaling $86.9 million are coved by mark to market valuations.

Investments and Borrowings

The investment portfolio totaled $28.1 million at September 30, 2016, a decline of $2.9 million from June 30, 2016 mainly due to the maturity of investment securities.

Deposits

Deposits totaled $568.7 million at September 30, 2016, compared to $535.7 million at June 30, 2016 and $545.7 million at September 30, 2015. While day-to-day volatility continues due to the normal business activity of our customers, the trend is upward in both average and ending balances. Non-interest bearing deposits totaled $136.2 million, or 24.0% of total deposits, compared to 24.8% at June 30, 2016 and 27.7% at September 30, 2015.

Earnings

Net interest income totaled $19.3 million in the first nine months of 2016 compared to $16.6 million for the same period of 2015. The increase of $2.6 million was primarily due to a combination of an increase in average earning assets of $47.1 million and a more profitable asset mix. Additionally, an increase in acquired loan income of $490 thousand in 2016 contributed to the positive results.

Net interest income totaled $6.3 million in the third quarter of 2016, compared to $6.6 million in the prior quarter and $16.5 million in the same quarter a year ago. Net interest income decreased $391 thousand in the third quarter compared to the prior quarter partially due to higher gains on payoffs of Purchased Credit Impaired ("PCI") loans in the second quarter of 2016 compared to the third quarter of 2016.

The tax-equivalent net interest margin was 4.07% in the third quarter of 2016, compared to 4.41% in the prior quarter and 3.95% in the same quarter a year ago. The decrease from last quarter includes 24 basis points related to the absence of payoffs of PCI loans.

Loans acquired through the acquisition of other banks are classified as PCI or non-PCI loans and are recorded at fair value at acquisition date. For acquired loans not considered credit impaired, the level of accretion varies due to maturities and early payoffs. Accretion on PCI loans fluctuates based on changes in cash flows expected to be collected. Gains on payoffs of PCI loans are recorded as interest income when the payoff amounts exceed the recorded investment. PCI loans totaled $8.8 million, $8.9 million, and $9.7 million at September 30, 2016, June 30, 2016 and September 30, 2015, respectively.

Accretion and gains on payoffs of purchased loans recorded to interest income were $439 thousand for the third quarter 2016 compared to $815 thousand for the second quarter 2016 and $2.1 million for the nine months ended 2016.

Non-interest income in the third quarter of 2016 totaled $339 thousand, compared to $308 thousand in the prior quarter and $369 thousand in the same quarter a year ago. The increase compared to the prior quarter primarily relates to a decline in servicing income as a result of serviced loan prepayments in the second quarter of 2016 compared to the third quarter of 2016. The decrease from the same quarter last year is primarily due to the declining level of loans serviced for others.

Non-interest expense totaled $4.2 million in the third quarter of 2016 up slightly from the prior quarter and unchanged from the same quarter a year ago. The increase from the second quarter of 2016 was due to lower salaries and benefits in the second quarter 2016 as a result of a one-time adjustment for severance related expenses.

About Bay Commercial Bank

The Bank offers a full-range of loans, including SBA, FSA and USDA guaranteed loans, and deposit products and services to businesses and its affiliates throughout the Greater Bay Area.  The Bank also offers business escrow services and facilitates tax free exchanges through its Bankers Exchange Division.  The Bank is an Equal Housing Lender and member FDIC.  It is traded Over the Counter Bulletin Board under the symbol “BCML”.  For more information, go to www.baycommercialbank.com.

Forward-Looking Statements

This release may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact Bank's earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "intend," "estimate" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may." Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, economic uncertainty in the United States and abroad, changes in interest rates, deposit flows, real estate values, costs or effects of future acquisitions, competition, changes in accounting principles, policies or guidelines, legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cyber-security threats) affecting Bank's operations, pricing, products and services. These and other important factors are detailed in various securities law filings made periodically by Bank, copies of which are available from Bank without charge. The Bank undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.  

FINANCIAL HIGHLIGHTS

BAY COMMERCIAL BANK
FINANCIAL HIGHLIGHTS
				September 30, 2016			June 30, 2016			March 31, 2016			September 30, 2015
Quarter-To-Date
	Net Income			$	1,206,952		$	1,455,334		$	1,348,753		$	1,195,494
	Diluted Earnings Per Common Share			$	0.22		$	0.27		$	0.25		$	0.21
	Return On Average Assets (ROA)				0.76	%		0.92	%		0.84	%		0.77	%
	Return On Average Equity (ROE)				6.38	%		7.86	%		7.39	%		6.32	%
	Efficiency Ratio				63.87	%		58.15	%		64.75	%		65.29	%
	Net Interest Margin				4.10	%		4.40	%		4.15	%		4.13	%
	Net Charge-Offs/(Recoveries)			$	225,802		$	(4,173	)	$	(3,875	)	$	(15,051	)
	Net Charge-Offs/(Recoveries) To Average Loans				0.04	%		0.00	%		0.00	%		0.00	%
Year-To-Date
	Net Income			$	4,011,039		$	2,804,087		$	1,348,753		$	8,472,392
	Diluted Earnings Per Common Share			$	0.73		$	0.51		$	0.25		$	1.57
	Return On Average Assets (ROA)				0.84	%		0.88	%		0.84	%		1.91	%
	Return On Average Equity (ROE)				7.20	%		7.63	%		7.39	%		16.03	%
	Efficiency Ratio				62.20	%		61.39	%		64.75	%		58.13	%
	Net Interest Margin				4.21	%		4.27	%		4.15	%		3.94	%
	Net Charge-Offs/(Recoveries)			$	217,754		$	(8,048	)	$	(3,875	)	$	85,000
	Net Charge-Offs/(Recoveries) To Average Loans				0.04	%		0.00	%		0.00	%		0.02	%
At Period End
	Total Assets			$	652,692,040		$	641,773,583		$	632,975,577		$	630,038,628
	Loans:
		Real Estate		$	451,704,833		$	443,545,296		$	429,483,371		$	355,775,764
		Non-real estate			66,556,048			66,098,087			70,955,885			72,423,935
		Non-accrual loans			1,508,962			1,909,952			333,676			340,131
		Mark to market on acquired loans			(6,252,419	)		(6,636,817	)		(6,810,830	)		(8,478,273	)
		Total Loans		$	513,517,424		$	504,916,518		$	493,962,102		$	420,061,557
	Classified Loans (Graded Substandard and Doubtful)			$	9,042,648		$	9,150,090		$	8,159,128		$	11,699,590
	Total Accruing Loans 30-89 Days Past Due			$	751,000		$	228,000		$	174,000		$	-
	Loan Loss Reserve To Loans				0.83	%		0.84	%		0.78	%		0.79	%
	Loan Loss Reserve to Non-accrual loans				281.65	%		220.95	%		1153.81	%		977.56	%
	Non-Accrual Loans To Total Loans				0.29	%		0.38	%		0.07	%		0.08	%
	Texas Ratio				3.07	%		2.42	%		0.43	%		2.24	%
	Total Deposits			$	568,696,915		$	535,660,525		$	552,935,627		$	545,722,145
	Loan-To-Deposit Ratio				90.30	%		95.50	%		90.57	%		78.53	%
	Stockholders' Equity			$	76,021,952		$	74,555,843		$	73,214,928		$	76,227,656
	Book Value Per Share			$	13.93		$	13.71		$	13.41		$	13.79
	Tangible Common Equity To Tangible Assets				11.53	%		11.48	%		11.41	%		11.92	%
	Total Risk-Based Capital Ratio-Bank				13.91	%		13.65	%		13.57	%		15.34	%
	Full-Time Equivalent Employees				104			106			103			106

 

BAY COMMERCIAL BANK
STATEMENT OF CONDITION (UNAUDITED)
At September 30, 2016, June 30, 2016, March 31, 2016 and September 30, 2015
				September 30, 2016			June 30, 2016			March 31, 2016			September 30, 2015
Assets
	Cash and due from banks			$	99,259,774		$	93,803,247		$	91,660,648		$	147,845,533
	Investments				28,133,192			30,984,459			34,352,659			44,171,847
	Loans, net of allowance for loan losses and deferred fees				509,320,697			500,777,284			490,235,878			416,609,643
	Bank premises and equipment, net				1,206,631			1,283,335			1,209,327			1,278,013
	Deposit Premium				885,500			990,500			1,095,500			1,305,500
	Interest receivable and other assets				13,886,244			13,934,758			14,421,565			18,828,092
			Total assets	$	652,692,039		$	641,773,583		$	632,975,577		$	630,038,628
Liabilities and Stockholders' Equity
Liabilities
	Deposits
		Non-interest bearing		$	136,246,446		$	132,864,909		$	148,676,442		$	150,992,318
		Interest bearing
			MMA/NOW/SVG		129,531,642			144,929,898			149,101,077			144,778,968
			Premium MM		162,282,939			127,455,442			127,608,116			115,300,215
			Time Deposits		140,635,888			130,410,276			127,549,992			134,650,644
	Total deposits			$	568,696,915		$	535,660,525		$	552,935,627		$	545,722,145
	Federal Home Loan Bank (FHLB) and other borrowings				1,000,000			25,000,000			-			-
	Interest payable and other liabilities				6,973,173			6,557,215			6,825,022			8,088,827
		Total liabilities		$	576,670,088		$	567,217,740		$	559,760,649		$	553,810,972
Stockholders' Equity
	Common Stock, no par value			$	47,324,304		$	47,041,124		$	47,344,174		$	50,457,005
	Retained earnings				24,522,001			24,522,001			24,522,001			17,069,557
	Accumulated other comprehensive income				4,175,647			2,992,718			1,348,753			8,701,094
		Total stockholders' equity			76,021,952			74,555,843			73,214,928			76,227,656
			Total liabilities and stockholders' equity	$	652,692,039		$	641,773,583		$	632,975,577		$	630,038,628

 

BAY COMMERCIAL BANK
STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
							Three months ended													Nine months ended
							September 30,			June 30,			March 31,			September 30,				September 30,			September 30,
								2016			2016			2016			2015				2016			2015
Interest income
	Interest Income - Non RE						$	892,219		$	873,450		$	939,074		$	1,030,722			$	2,704,743		$	3,065,382
	Interest Income - RE							5,520,245			5,487,036			5,092,414			4,940,350				16,099,695			13,331,146
	Interest on investment securities							150,635			187,224			241,268			218,957				579,127			739,029
	Interest on Federal funds sold and other bank deposits							119,092			102,847			60,664			53,329				282,603			241,547
	Mark to market accretion and FAS 91 Fee amortization							438,906			815,134			809,653			610,932				2,063,693			1,573,883
			Total interest income				$	7,121,097		$	7,465,691		$	7,143,073		$	6,854,290			$	21,729,861		$	18,950,987
Interest expense
	Interest on transaction accounts							392,029			367,712			374,435			348,803				1,134,176			983,442
	Interest on time deposits							366,532			344,445			315,794			350,680				1,026,771			1,032,384
	Premium on core deposits							105,000			105,000			105,000			112,559				315,000			323,089
			Total interest expense				$	863,561		$	817,157		$	795,229		$	812,042			$	2,475,947		$	2,338,915
				Net interest income				6,257,536			6,648,534			6,347,844			6,042,248				19,253,914			16,612,072
	Provision for loan losses							255,801			365,828			(3,875	)		209,950				617,754			909,548
			Net interest income after provision for loan losses				$	6,001,735		$	6,282,706		$	6,351,719		$	5,832,298			$	18,636,160		$	15,702,524
Non-interest income
	Total Loan Fee Income							109,232			74,671			68,023			117,441				251,926			325,887
	Total Service Charge Income							52,788			53,310			63,602			53,585				169,700			167,440
	Total Other Fees & Service Charges							88,865			94,133			95,816			90,139				278,814			269,969
	Total Other Income							88,412			86,227			111,979			107,654				286,618			7,769,753
			Total non-interest income				$	339,297		$	308,341		$	339,420		$	368,819			$	987,058		$	8,533,049
Non-interest expense
	Salaries and Benefits							2,676,450			2,575,184			2,832,004			2,687,965				8,083,638			8,722,560
	Occupancy							518,447			544,666			537,227			538,935				1,600,340			1,580,600
	Professional							187,086			175,474			239,481			160,938				602,041			656,348
	Insurance							115,490			106,875			91,173			70,171				313,538			283,185
	Data processing							352,171			355,951			323,091			364,747				1,031,213			1,906,342
	Office							173,641			162,982			163,385			194,180				500,008			564,362
	Marketing							68,035			55,411			59,313			65,032				182,759			241,072
	Net Loan							64,782			11,611			24,389			47,736				100,782			262,227
	Other Miscellaneous							57,380			57,160			60,218			55,918				174,758			400,387
			Total non-interest expense				$	4,213,482		$	4,045,314		$	4,330,281		$	4,185,622			$	12,589,077		$	14,617,083
			Income before provision for income taxes					2,127,552			2,545,733			2,360,856			2,015,495				7,034,141			9,618,490
	Provision for income taxes							920,600			1,090,400			1,012,100			820,000				3,023,100			1,146,100
						Net income	$	1,206,952		$	1,455,333		$	1,348,754		$	1,195,495			$	4,011,039		$	8,472,390
	Net income per common share:
						Basic	$	0.22		$	0.27		$	0.25		$	0.21			$	0.73		$	1.49
						Diluted		0.22			0.27			0.25			0.21				0.73			1.49
	Weighted average shares used to compute net income per common share:
						Basic	$	0.22		$	0.27		$	0.25		$	0.21			$	0.74		$	1.57
						Diluted		0.22			0.27			0.25			0.21				0.74			1.57
Comprehensive income:
	Net income						$	1,206,952		$	1,455,333		$	1,348,754		$	1,195,495			$	4,011,039		$	8,472,390
	Other comprehensive income
		Change in net unrealized gain (loss) on available-for-sale securities						(26,982	)		82,733			31,802			133,191				87,553			276,564
		Deferred tax expense (benefit)						2,959			(34,333	)		(13,199	)		(55,274	)			(44,573	)		(94,929	)
			Other comprehensive income (loss), net of tax					(24,023	)		48,400			18,603			77,917				42,980			181,635
				Comprehensive income			$	1,182,929		$	1,503,733		$	1,367,357		$	1,273,412			$	4,054,019		$	8,654,025

Bay Commercial Bank
Keary Colwell, 925-476-1800
kcolwell@bcb-ca.com