SOURCE: Beach Business Bank

Beach Business Bank

October 30, 2009 14:00 ET

Beach Business Bank Announces Results for the Quarter and Increased Provisions

MANHATTAN BEACH, CA--(Marketwire - October 30, 2009) - Beach Business Bank (OTCBB: BBBC) (the "Bank") reported special charges to earnings to bolster reserves during the quarter ending September 30, 2009. This action was taken in response to the continuing stress in the general economy. At the same time, the Bank showed significant growth in Liquidity and core deposits from the same date last year. Provisions for loan losses of $4,850,000 and charges for OREO reserves and expenses and other credit-related charges of $900,000, resulted in a net loss for the first nine months of the year of ($5.69) million or ($1.41) per common share, compared to loss after provisions of ($3.66) million or ($0.91) per common share in the same period of the prior year.

Total deposits of $211.7 million included core deposits (defined as checking, money market, savings accounts, and retail certificates of deposit in amounts less than $100,000) of $183.7 million (86.8%) at September 30, 2009, compared to total deposits of $176.2 million, and core deposits of $135.7 million (77.0%) at September 30, 2008. Gross loans amounted to $193.5 million at September 30, 2009, compared to $187.5 million at September 30, 2008. Non-interest bearing demand deposits totaled $31.6 million at September 30, 2009, compared to $23.7 million at September 30, 2008. Total new loan commitments in the quarter amounted to $10.4 million and $26.8 million for the year to date, and more than $556 million in the period of a little more than 5 years that the Bank has been serving its communities. Throughout the recent economic crisis, the Bank has continued to originate new loans.

At September 30, 2009, the Bank's regulatory capital measurements, the measures of a Bank's core strength, stood at Total Risk-based Capital Ratio of 17.28% for the Bank, compared to the regulatory minimum of 10.0% to be "Well Capitalized." The Bank's other regulatory Capital measurements also continued to be significantly above the regulatory minimums for Well Capitalized with the Bank's Tier 1 Risk-Based Capital of 16.00%, compared to the regulatory minimum of 6.0%, and the Bank's Tier 1 Leverage Ratio of 13.33%, compared to the regulatory minimum of 5.0%. The Bank's common shareholder equity, or tangible book value, stands at $28.7 million or $7.10 per share.

Robert Franko, President and Chief Executive Officer commented, "We are most fortunate that our strong capital base and cohesive management and board have equipped us to deal with the very difficult financial environment and unique opportunities that community banks are still facing as a result of the worst recession since the 1930's. Anecdotal evidence among our client base gives us hope that the situation is beginning to turn around. We are cautiously optimistic about the future, although we still see double digit unemployment in California. We also see hopeful signs in the Federal Reserve Bank's recent pronouncement that, "The recession that began in the fourth quarter of 2007 appears to be over". We find particular comfort in President Obama's support of proposed changes to the SBA loan programs, which are so important in providing the capital small businesses need to generate quality, private-sector jobs. It appears that the money that has been available to Wall Street for months now is finally starting to find its way to Main Street. We are particularly proud that throughout this crisis, Beach Business Bank has continued to lend money to keep America's small businesses functioning. Just in the last 3 months, we originated $10.4 million in new loan commitments. In a little over 5 years, our Bank has originated $556 million in new loan commitments, mostly to provide needed capital to America's small businesses. We believe that just Beach Business Bank's efforts alone have directly created thousands of private-sector jobs in America. Strengthening the Bank's reserves at this time allows us to better deal with lingering problems in the economy, so that we can continue to look forward and continue to serve the financial needs of our customers and the communities we serve."

The Bank was proud to announce this quarter that Jim Gray, the Bank's co-chairman, is one of only 15 members across the United States, and the only member from California, appointed to the FDIC's Advisory Committee on Community Banking. The Advisory Committee members provide the FDIC with advice and recommendations on a broad range of policy issues that have particular impact on community banks from around the nation.

Mr. Gray commented, "Two thirds of the Directors on our Bank Board are experienced bankers who have been through crises like this before. They know that the economy does not turn in an instant, which is why we have decided to increase our Loan Loss Reserves at this time. We have built up one of the strongest core deposit banks in our peer group. We believe that our Liquidity and our strong Capital position, including our Loan Loss Reserves, allow us to take this fiscally conservative action during these challenging times. Our constant goal is to be a source of banking strength for our small business clients and the communities we serve."

The Bank increased the Allowance for Loan & Lease Losses (ALLL) to $6.8 million, or 3.5% of loans outstanding at the quarter end, a significant portion as a qualitative addition to the ALLL.

Other selected financial data is included in the table below.

Financial statements in the form of the Bank's Call Report, as filed with the FDIC, will be available on the Bank's web site at, and should be available for review or downloading from the FDIC web site at in approximately four weeks. Beach Business Bank is headquartered at 1230 Rosecrans Avenue, Lobby Level, in Manhattan Beach, and has a second full-service office at 180 E. Ocean Blvd. in Long Beach, CA. The Bank is first and foremost a community business bank serving Los Angeles, Long Beach, and the South Bay area residents and businesses. The Bank also has a division named The Doctors Bank®, which serves physicians and dentists nationwide. In addition, Beach Business Bank provides loans to small businesses, focused around the SBA 7(a), 504, and Express lending programs. For more information on the Bank, please visit or call 866-862-3878 or 310-536-2260; in Long Beach, call 562-435-8600.

"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995:

The financial information in this press release is based on our unaudited financial results. Certain statements in this press release, including statements regarding the anticipated development and expansion of the Bank's business, and the intent, belief, and current expectations of the Bank, its directors, or its officers, are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements are subject to risks and uncertainties and therefore the Bank's actual results may differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that the Bank is subject to include, but are not limited to, risks related to the local and national economy, including fluctuations in interest rates and costs and changes in economic policy; the ability of the Bank to perform in accordance with its plans; competition; regulatory matters; and other risks detailed in its filings with the State of California Department of Financial Institutions and the Federal Deposit Insurance Corporation. The Bank cautions readers not to place undue reliance on any forward-looking statements. The Bank does not undertake, and specifically disclaims any obligation, to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Summary Financial Information

The following tables present relevent financial data from Beach Business
Bank's recent performance.

                                   September 30, December 31, September 30,
                                         2009         2008         2008
                                     -----------  -----------  -----------
Balance Sheet Results (In
 thousands), except per share data:
       Total Assets                  $   254,883  $   231,022  $   221,846
       Gross Loans                   $   193,518  $   199,315  $   187,586
       Loans Held for Sale           $     4,285  $     1,780  $     1,567
       Allowance for Loan Losses     $     6,819  $     5,104  $     4,292
       Total Net Loans               $   182,414  $   192,431  $   181,727
       Total Deposits                $   211,702  $   173,689  $   176,244
       Other Real Estate Owned       $     2,399  $     2,500  $     3,364
       Preferred Stock               $     6,018  $         -  $         -
       Common Stock                  $    28,680  $    34,409  $    33,988
       Total Shareholders' Equity    $    34,698  $    34,409  $    33,988
       Net Loans to Deposits               86.17%      110.79%      104.00%
       ALLL to Loans HTM                    3.60%        2.58%        2.31%
       Equity to Assets                    13.61%       14.89%       15.32%
       Ending Shares outstanding       4,036,984    4,036,984    4,036,984
       Ending Book Value per Common
        Share                        $      7.10  $      8.52  $      8.42

                                              Three Months Ended
                                   September 30, December 31, September 30,
                                         2009         2008         2008
                                     -----------  -----------  -----------
Quarterly Operating Results (In
       Net Interest Income           $     2,041  $     2,450  $       716
       Non-interest Income           $       122  $       284  $        56
       Non-interest Expense**        $     3,208  $     1,632  $       701
       Income Before Provision &
        Taxes                        $    (1,045) $     1,102  $        71
       Provision for Loan Losses     $     4,850  $       812  $        30
       Income Tax Expense            $         -  $         -  $         -
       Net Income                    $    (5,895) $       290  $        41
       Quarterly Return on Average
        Assets*                            -9.08%        0.50%        0.08%
       Quarterly Return on Average
        Equity*                           -58.12%        3.39%        0.49%
       Quarterly Net Interest
        Margin*                             3.33%        4.37%        4.25%
       Quarterly Efficiency Ratio*        148.34%       59.70%       90.82%

                                       Nine Months Ended
                                   September 30,  September 30,
                                         2009         2008
                                     -----------  -----------
YTD Operating Results (In
       Net Interest Income           $     6,411  $     6,422
       Non-interest Income           $       558  $       699
       Non-interest Expense**        $     7,741  $     8,812
       Income Before Provision &
        Taxes                        $      (773) $    (1,692)
       Provision for Loan Losses     $     4,920  $     1,974
       Income Tax Expense            $         -  $         -
       Net Income                    $    (5,693) $    (3,666)
       YTD Return on Average Assets*       -2.30%       -1.69%
       YTD Return on Average Equity*      -14.24%      -10.07%
       YTD Net Interest Margin*             3.56%        4.08%
       YTD Efficiency Ratio*              111.10%      123.76%
       YTD Efficiency Ratio (Absent
        OREO Charges)                     108.70%       89.15%
       ** Includes FDIC Special
        Assessment                   $       132            -

       *Percentages are reported on an annualized basis.
       Source: FDIC quarterly Call Reports for Beach Business Bank for
       the periods indicated.

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