SOURCE: Focus Business Bank

Focus Business Bank

October 30, 2014 19:26 ET

Focus Business Bank Announces Unaudited Financial Results for the Quarter and Nine-Months Ending September 30, 2014

SAN JOSE, CA--(Marketwired - Oct 30, 2014) - Focus Business Bank (OTCQB: FCSB) announced unaudited financial results for the quarter and nine-months ended September 30, 2014. Net income for the quarter and nine-months ended September 30, 2014 was $273,000 ($0.09/diluted share) and $838,000 ($0.29/per diluted share), respectively, compared to $241,000 ($0.08/per diluted share) and $555,000 ($0.19/per diluted share) for the quarter and nine-months ending September 30, 2013. The increases in net income for the quarter and nine-months ending September 30, 2014 compared to the same periods in 2013 were primarily attributable to growth in net interest income resulting from a significant increase in earning assets and an increase in non-interest income from gains on sales of SBA loans, partially offset by increases in operating expenses, the provision for loan losses and income taxes.

Chairman and Chief Executive Officer Richard L. Conniff commented on the September 30, 2014 results, "We are very pleased to report that year-to-date net income has increased 51% in 2014 compared to the same period in 2013. For the past two years, the Bank has invested heavily in its specialty business lines, particularly in providing services to condominium homeowner associations and public benefit companies. As a result of these efforts, core deposits have more than doubled, increasing by 131% between September 2012 and September 2014. The growth in earning assets that accompanied the increase in deposits positions the Bank for continued long term growth in earnings and shareholder value."

Balance Sheet Highlights as of September 30, 2014

  • Total assets of $407.0 million at September 30, 2014 were an all time record high and represented an increase of 45% over September 30, 2013.

  • Total loans of $170.7 million at September 30, 2014 were an all time record and 28% above September 30, 2013.

  • Interest bearing deposits of $272.6 million at September 30, 2014 increased 58% from September 30, 2013. 

  • Non-interest bearing demand deposits of $104.7 million were 28% of total deposits at September 30, 2014 and increased 29% over September 30, 2013.

Assets and Liabilities

As a result of deposit growth, the Bank continues to maintain high levels of liquidity. The Bank's liquid assets, consisting of cash and due from banks, federal funds sold and investment securities, totaled $229.7 million, or 56% of total assets, at September 30, 2014 compared to $140.9 million, or 50% of total assets, at September 30, 2013. The loan to deposit ratio at September 30, 2014 was 45% compared to 49% at December 31, 2013 and 53% at September 30, 2013.

Mr. Conniff noted, "While Santa Clara County has one of the strongest economies in the nation it is also heavily banked. Focus Business Bank has identified local closely-held businesses as a market well suited to the Bank's high-touch approach built around long term relationships. We compliment our business banking with specialized services to condominium homeowner associations and public benefit companies. The Bank is extremely well positioned to meet the needs of these clients with creative lending and cash management solutions tailored to their individual needs."

Net Interest Income

Net interest income for the quarter and nine-months ended September 30, 2014 was $2.2 million and $6.3 million, respectively, compared to $1.7 million and $4.9 million for the same periods ended September 30, 2013. The increase in net interest income was directly related to the higher volume of earning assets funded by growth in deposits. The increase in net interest income attributable to higher volumes of earning assets was partially offset by decreases in the net interest margin related to a lower loan to deposit ratio and market interest rates which remain at historically low levels. The net interest margin for the quarter ended September 30, 2014 was 2.44% compared to 2.95% for the quarter ended September 30, 2013.

Non-interest Income

Non-interest income includes service charges and fees, securities gains and losses, SBA loan sales gains and loan servicing fees. Total non-interest income was $508,000 and $1,552,000 respectively, for the quarter and nine-months ended September 30, 2014 compared to $447,000 and $1,043,000 for the same periods ending September 30, 2013. The increase in non-interest income for the quarter and nine-months ended September 30, 2014 compared to the same periods the previous year relates primarily to gains on the sale of SBA loans in the secondary market. Gains on the sale of SBA loans totaled $279,000 and $957,000, respectively, for the three and nine month periods ended September 30, 2014, respectively, compared to $323,000 and $771,000 for the same periods ending September 30, 2013. Focus Business Bank is an SBA Preferred Lender and the origination and sale of SBA loans has been a material and recurring source of revenue for the Bank since operations commenced in 2007.

Non-Interest Expense

Non-interest expense for the quarter and nine-months ended September 30, 2014 was $2.2 million and $6.3 million, respectively, compared to $1.9 million and $5.2 million for the same periods ended September 30, 2013. The increase in non-interest expense is primarily attributable to the Bank's growth. FTEs increased from 29 at September 30, 2013 to 41 at September 30, 2014. The increase in headcount also resulted in higher occupancy expense as the Bank expanded its leased premises in mid-2013.

Asset Quality

At September 30, 2014, the Bank had no non-performing loans compared to $1.1 million at December 31, 2013 and no non-performing loans at September 30, 2013. The provision for loan losses for the quarter and nine-months ended September 30, 2014 was $25,000 and $200,000, respectively, compared to no provision for loan losses in 2013. At September 30, 2014, the reserve for loan losses was 1.51% of total loans, compared to 1.82% at December 31, 2013 and 1.90% at September 30, 2013.

At September 30, 2014, the Bank had other real estate owned of $575,000 representing two commercial real estate properties acquired through foreclosure. The properties are in the process of being sold.

Capital

Focus Business Bank has capital ratios in excess of the minimum regulatory requirements for a bank to be considered well capitalized. Regulatory capital ratios compared to the minimum ratios to be considered well capitalized are as follows:

         
   
At September 30,
2014
  Minimum to be considered
well capitalized
Tier-1 leverage   6.90%   5.00%
Tier-1 risk based capital   11.20%   6.00%
Total risk-based capital   12.32%   10.00%
         

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 also serves not-for-profit organizations and condominium homeowner associations with expertise, market knowledge, products and services tailored to these specific industries. The Bank specializes in business cash management services and commercial loans of all types. The Bank's office is located at 10 Almaden Boulevard in downtown San Jose, California.

Forward-Looking Statements

This release may contain forward-looking statements, such as, among others, statements about plans, expectations and goals concerning future 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      
BALANCE SHEET   30-Sep-14     31-Dec-13     30-Sep-13     12 Month % Change
($ in ',000s except per share data)                            
ASSETS                            
Cash and due from banks                            
  Interest bearing   $ 113,758     $ 89,507     $ 50,312     126%
  Non-interest bearing     23,512       13,484       42,467     -45%
Federal funds sold     501       501       505     -1%
Investment securities     91,947       63,293       47,602     93%
Loans     170,684       140,342       134,315     27%
  Allowance for loan losses     (2,578 )     (2,548 )     (2,547 )   1%
    Net Loans     168,106       137,794       131,768     28%
Other assets     9,227       8,080       8,257     12%
TOTAL ASSETS   $ 407,051     $ 312,659     $ 280,911     45%
                             
LIABILITIES                            
Deposits                            
  Non-interest bearing   $ 104,754     $ 94,661     $ 80,980     29%
  Interest bearing     272,552       190,354       172,509     58%
    Total deposits     377,306       285,015       253,489     49%
Other liabilities     1,631       949       1,035     58%
TOTAL LIABILITIES     378,937       285,964       254,524     49%
Stockholders' equity     28,114       26,695       26,387     7%
LIABILITIES AND STOCKHOLDERS' EQUITY   $ 407,051     $ 312,659     $ 280,911     45%
Shares outstanding     2,989,722       2,934,930       2,930,904      
Book value / share   $ 9.40     $ 9.10     $ 9.00     4%
Balance Sheet Ratios                            
  Loan/deposit     45 %     49 %     53 %    
  Non-interest/total deposit     28 %     33 %     32 %    
Regulatory Capital Ratios                            
  Tier-1 leverage     6.90 %     8.50 %     9.12 %    
  Tier-1 risk based capital     11.20 %     13.58 %     14.04 %    
  Total risk-based capital     12.32 %     14.84 %     15.30 %    
Asset Quality Metrics                            
  Non-performing loans   $ -     $ 1,098     $ -      
  Non-performing loans/total loans     0.00 %     0.78 %     0.00 %    
  ALLL/total loans     1.51 %     1.82 %     1.90 %    
  Other real estate owned   $ 575     $ -     $ -      
                               
                               
                               
Focus Business Bank  
Unaudited Summary Financial Information (cont.)  
   
    Quarters Ended     Nine-months Ended  
INCOME STATEMENT   30-Sep-14     30-Sep-13     30-Sep-14     30-Sep-13  
($ in ',000s except per share data)                                
Interest income   $ 2,317     $ 1,885     $ 6,824     $ 5,378  
Interest expense     157       170       523       467  
  Net interest income     2,160       1,715       6,301       4,911  
Provision for loan losses     25       -       200          
Non-interest income     508       447       1,552       1,043  
Non-interest expense     2,197       1,854       6,296       5,161  
    Pre-tax income     446       308       1,357       793  
    Income taxes     173       67       519       238  
Net income   $ 273     $ 241     $ 838     $ 555  
Net income per diluted share   $ 0.09     $ 0.08       0.28     $ 0.19  
Performance Metrics                                
  Net interest margin     2.44 %     2.95 %     2.59 %     2.96 %
  Return on average assets     0.28 %     0.35 %     0.32 %     0.30 %
  Return on average equity     3.86 %     3.64 %     4.06 %     2.81 %
                                   

Contact Information

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