SOURCE: Focus Business Bank

January 29, 2008 12:23 ET

Focus Business Bank Announces Financial Results for the Quarter and Year Ended December 31, 2007

SAN JOSE, CA--(Marketwire - January 29, 2008) - Focus Business Bank (OTCBB: FCSB) announced unaudited financial results for the quarter and year ended December 31, 2007, the Bank's first year of operations. President and Chief Executive Officer Richard L. Conniff stated, "Focus Business Bank performed well in a very challenging economic environment. While the Bank did not participate in subprime mortgage lending which has caused many of the current economic problems, we are negatively impacted by disruptions in the capital markets which result in lower net interest margins in our business banking activities and reduced opportunities for gain on sale revenue from SBA loan originations." The following is a summary of certain key balance sheet items at the end of the third and fourth quarters of operations:

Unaudited                        As of
(All dollar amounts in  September 30, December 31,
 thousands)                 2007         2007      Net Change    % Change
                        ------------ ------------ -----------  -----------
Gross Loans             $     20,078 $     33,613 $    13,535         67.4%
Allowance for Loan Loss          242          400         158         65.3%
Deposits                      38,003       45,039       7,036         18.5%
Shareholders' Equity          25,775       25,514        (261)        -1.0%
Total Assets                  64,022       70,851       6,829         10.7%

The Bank reported a loss of $411,110 ($0.15 per basic share) for the quarter ended December 31 2007, compared to a loss of $420,990 ($0.15 per basic share) for the quarter ended September 30, 2007. For the year ending December 31, 2007, the Bank had a loss of $2,416,819 ($0.88 per basic share). The loss for the year included pre-opening expenses of $764,142 ($0.28 per basic share).

Summary income information for the quarters ended September 30, 2007 and December 31, 2007 and the year ended December 31, 2007 is as follows:

Unaudited                              Quarter Ended           Year Ended
(All dollar amounts in            September 30, December 31,  December 31,
 thousands)                           2007          2007          2007
                                  ------------  ------------  ------------
Interest Income                   $        842  $        965  $      2,904
Interest Expense                           261           273           804
Net Interest Income                        581           692         2,099
Provision for Loan Losses                  112           158           400
Non-interest Income                         20             3           113
Non-interest Expense                       910           949         4,229
Net Income                                (421)         (411)       (2,417)

The increase in net interest income for the quarter ended December 31, 2007 compared to the quarter ended September 30, 2007 was primarily related to growth and a change in the mix of earning assets to a higher percentage of higher yielding assets, primarily loans, partially offset by a reduction in market rates of interest. The majority of the Bank's earning assets, including federal funds sold and variable rate loans, reprice immediately when the Federal Reserve Board changes the target federal funds rate. Although many of the Bank's interest bearing liabilities are also variable rate they do not necessarily reprice immediately or by the same amount as variable rate assets. Focus Business Bank, like most de novo banks in California, has more variable rate interest bearing assets than variable interest rate liabilities, which is commonly referred to as being "asset sensitive." Asset sensitive banks tend to experience a reduction in net interest margin in a falling interest rate environment such as we experienced in 2007 and have continued to experience in early 2008.

Conniff further stated, "The Bank has been positively received since opening for business on January 16, 2007. Growth in loans and deposits exceeded our initial plans and we are especially gratified by the quality of those relationships. We believe that our model for a bank dedicated to closely held businesses in Santa Clara County is sound and that we have created a good platform for future growth. Current economic conditions create headwinds but we believe that careful execution of our business plan with disciplined credit underwriting will lead to success in these challenging times."

Focus Business Bank is dedicated to meeting the banking needs of closely held businesses and entrepreneurs in Santa Clara County. The Bank has one office located in downtown San Jose, California and offers a variety of commercial banking products including loans, deposits, remote capture and other cash management services oriented toward closely held businesses and their owners. The Bank specializes in commercial loans, SBA 7a and 504 loans and interim construction loans.

This release may contain forward-looking statements that 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.

Contact Information

  • Contact:

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