SOURCE: Focus Business Bank

Focus Business Bank

October 31, 2013 17:00 ET

Focus Business Bank Announces Record Growth and Unaudited Financial Results for September 30, 2013

SAN JOSE, CA--(Marketwired - Oct 31, 2013) - Focus Business Bank (OTCQB: FCSB) announced unaudited financial results for the quarter and nine months ended September 30, 2013. Net income for the quarter was $241,000, or $0.08 per diluted share. For the nine months ended September 30, 2013, net income was $555,000, or $0.19 per diluted share. Compared to the quarter and nine months ended September 30, 2012, increases in net interest income related to the growth in earning assets during 2013 were offset by increased operating expenses related to 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 nine months of 2012 compared to 2013.

President and Chief Executive Officer Richard L. Conniff commented on the September 30, 2013 results, "Continuing a trend evident in the first two quarters of 2013, the Bank had another quarter of solid growth with deposits up 55% and loans up 18% over the same quarter in 2012. Assets, loans and deposits were all at record high levels. Although the growth was spread across all of the Bank's business lines, it was especially positive in our specialty businesses including cash management services for condominium homeowner associations and public benefit companies. The Bank recognizes that increasing earning assets is necessary for long term shareholder value and believes that the planned investments in growth in 2013 will lead to improved performance in the future."

Highlights of the Quarter ended September 30, 2013

  • Non-interest bearing deposits of $81.0 million at September 30, 2013 represent a 46% increase over September 30, 2012. Non-interest bearing deposits reflect the growth in business banking relationships.
  • Interest bearing deposits of $172.5 million represent a 61% increase over September 30, 2012. The increase is primarily related to growth in the Bank's specialty businesses.
  • Total loans of $131.8 million at September 30, 2013 were 18% above September 30, 2012 and 10% above the linked quarter ended June 30, 2013.
  • Net interest income of $1.7 million represented 13% growth over the same quarter in 2012.
  • The Bank achieved its 14th consecutive quarterly profit.

Assets and Liabilities
As the result of continued deposit growth the Bank has liquidity to fund future loan and investment security growth. Investment securities of $47.6 million have grown 92% since September 30, 2012. While the Bank has continued to grow loans, the loan to deposit ratio at September 30, 2013 is 53% compared to 70% at September 30, 2012.

Although the Bank has had good success growing loans, our focus on maintaining discipline and strong credit metrics have made it difficult to grow loans at the same pace as deposits. The Bank has added to its lending and business development staff in 2013 and expects those investments to increase loan originations in the future. At September 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.

Net Interest Income
Net interest income increased from $1,518,000 for the quarter ended September 30, 2012 to $1,715,000 for the quarter ended September 30, 2013. For the nine months ended September 30, 2013, net interest income was $4,911,000 compared to $4,444,000 for the same nine-month period the prior year. The increase in net interest income is the result of substantially higher levels of earning assets with that growth being centered primarily in securities and other short-term investments. The mix of earning assets caused the net interest margin to decline from 3.50% for the quarter ended September 30, 2012 to 2.95% for the quarter ended September 30, 2013. Short term market interest rates remain at historically low levels.

Non-interest Income
Non-interest income was $447,000 and $1,043,000 for the quarter and nine months ended September 30, 2013, respectively, compared to $286,000 and $737,000 for the quarter and nine months ended September 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 nine months of 2013 was $5,161,000 compared to $4,272,000 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 September 30, 2013 was 32 compared to 25 at September 30, 2012.

Asset Quality
The Bank had no loan charge-offs for all of 2012 and has had no loan charge-offs through the first nine months of 2013. The Bank made no provision for loan losses in 2012 or through the first three quarters of 2013. The allowance for loan losses was 1.90% of total loans at September 30, 2013 compared to 2.13% at December 31, 2012. At September 30, 2013, 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 September 30, 2013, the total risk-based capital ratio was 15.30%. 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  
   
    As of     12 Month   
BALANCE SHEET   30-Sep-13     31-Dec-12     30-Sep-12     % Change  
($'000 except share data)                              
ASSETS                              
Cash and due from banks                              
  Interest bearing   $ 50,312     $ 52,560     $ 39,397     28 %
  Non-interest bearing     42,467       6,895       6,231     582 %
Federal funds sold     505       505       505     0 %
Investment securities     47,602       29,368       24,803     92 %
Loans     134,315       119,415       114,190     18 %
  Allowance for loan losses     (2,547 )     (2,545 )     (2,544 )   0 %
    Net Loans     131,768       116,870       111,646     18 %
Other assets     8,257       7,237       7,030     17 %
TOTAL ASSETS   $ 280,911     $ 213,435     $ 189,612     48 %
LIABILITIES                              
Deposits                              
  Non-interest bearing   $ 80,980     $ 63,065     $ 55,649     46 %
  Interest bearing     172,509       123,295       107,451     61 %
    Total deposits     253,489       186,360       163,100     55 %
Other liabilities     1,035       880       721     44 %
TOTAL LIABILITIES     254,524       187,240       163,821     55 %
Stockholders' equity     26,387       26,195       25,791     2 %
LIABILITIES AND STOCKHOLDERS' EQUITY   $ 280,911     $ 213,435     $ 189,612     48 %
Book value/share   $ 9.02     $ 8.97     $ 8.83     2 %
Balance Sheet Ratios                              
  Loan/deposit     53 %     64 %     70 %      
  Non-interest/total deposit     32 %     34 %     34 %      
Regulatory Capital Ratios                              
  Tier-1 leverage     9.12 %     11.77 %     13.40 %      
  Tier-1 risk based capital     14.04 %     16.81 %     17.65 %      
  Total risk-based capital     15.30 %     18.07 %     18.91 %      
Asset Quality Metrics                              
  Non-performing loans   $ -     $ -     $ -        
  Non-performing loans/total loans     0.00 %     0.00 %     0.00 %      
  ALLL/total loans     1.90 %     2.13 %     2.23 %      
                                 
                                 
   
Focus Business Bank  
Unaudited Summary Financial Information  
   
    Quarters Ended     Nine-months Ended  
INCOME STATEMENT   30-Sep-13     30-Sep-12     30-Sep-13     30-Sep-12  
($'000 except share data)                                
Interest income   $ 1,885     $ 1,635     $ 5,378     $ 4,762  
Interest expense     170       117       467       318  
  Net interest income     1,715       1,518       4,911       4,444  
Provision for loan losses     -       -               -  
Non-interest income     447       286       1,043       737  
Non-interest expense     1,854       1,477       5,161       4,272  
    Pre-tax income     308       327       793       909  
    Income taxes     67       (2,233 )     238       (2,158 )
Net income   $ 241     $ 2,560     $ 555     $ 3,067  
Net income per diluted share   $ 0.08     $ 0.87     $ 0.19     $ 1.05  
Performance Metrics                                
  Net interest margin     2.95 %     3.50 %     2.96 %     3.70 %
  Return on average assets     0.35 %     5.65 %     0.30 %     2.44 %
  Return on average equity     3.64 %     43.26 %     2.81 %     17.68 %
                                 
                                 

Contact Information

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