CBB Bancorp, Inc. Reports Third Quarter 2023 Financial Results

LOS ANGELES, October 27, 2023--(BUSINESS WIRE)--CBB Bancorp, Inc. ("CBB" or the "Company") (OTCQX: CBBI), the holding company of Commonwealth Business Bank (the "Bank"), announced today net income for third quarter 2023 of $6.7 million, or $0.63 per diluted share, a decrease of 17.1% compared to $8.1 million, or $0.76 per diluted share, in the prior quarter and an increase of 16.7% compared to $5.7 million, or $0.54 per diluted share, in the same period last year.

OVERALL RESULTS

Net income for the third quarter 2023 declined from the prior period due to lower gain on sale of SBA loans and reduced net interest margin caused by rising cost of deposits. The return on average assets for the third quarter 2023 was 1.46% compared to 1.79% for the second quarter 2023 and 1.27% for the third quarter 2022. The return on average equity for the third quarter 2023 was 11.66%, compared to 14.76% for the second quarter 2023 and 11.24% for the third quarter 2022. The net interest margin for the third quarter 2023 was 4.01%, compared to 4.23% for the second quarter 2023 and 4.28% for the third quarter 2022. The efficiency ratio for the third quarter 2023 was 52.23%, compared to 47.29% for the second quarter 2023 and 55.64% for the third quarter 2022. While the efficiency ratio has decreased year over year, it increased quarter over quarter due to lower gain on sale of loans compared to the second quarter.

James Hong, President and CEO, commented, "We are pleased to announce continuing profitability for the third quarter of 2023, with strong liquidity, credit, and capital metrics. While the decisions on the timing of when to sell SBA loans contributed to lower earnings compared to the second quarter, we remain committed to building the core earnings of the Company in a safe and sound manner over time."

INCOME STATEMENT

Net Interest Income

Net interest income for the third quarter 2023 was $18.0 million, a decrease of $726 thousand, or 3.9%, from the second quarter 2023, and a decrease of $819 thousand, or 4.4%, from the third quarter 2022. The decrease in net interest income compared with both the second quarter 2023 and the third quarter 2022 was primarily due to the impact of relatively higher increases in interest expense on deposits.

Net Interest Margin

The net interest margin for the third quarter 2023 was 4.01%, compared to 4.23% for the second quarter 2023 and 4.28% for the third quarter 2022. The quarter-over-quarter and year-over-year decreases in net interest margin were attributable to the rising cost of funds. The cost of funds for the third quarter 2023 increased to 2.91% compared to 2.53% for second quarter 2023 and 0.63% for third quarter 2022.

Provision for Credit Losses

No provision for credit losses was recorded for the third quarter 2023 or for the second quarter 2023, compared with a provision for credit losses of $0.9 million for the third quarter 2022. See Table 10 in this press release for additional information and trends.

Noninterest Income

Noninterest income in third quarter 2023 was $1.5 million compared to $2.8 million in second quarter 2023 and $1.2 million in third quarter 2022. The quarter-over-quarter decrease in noninterest income was primarily the result of lower gain on sale of loans. The Bank sold $9.2 million in SBA loans with an average premium of 8.3% during third quarter 2023 compared to sale of $42.4 million in SBA loans with an average premium of 6.8% during second quarter 2023. There was no sale of SBA loans during the third quarter 2022.

Noninterest Expense

Noninterest expense for the third quarter 2023 was $10.2 million, compared to $10.2 million for the second quarter 2023 and $11.2 million for the third quarter 2022. Salaries and employee benefits were $5.6 million in both third and second quarters of 2023, which decreased $1.3 million compared to the third quarter 2022. Lower salaries and employee benefits in the current quarter compared to the same quarter last year reflect both ongoing cost control efforts and efficiencies realized from completing the integration of Ohana Pacific Bank operations.

Income Taxes

The Company’s effective tax rate for third quarter 2023 was 28.3% compared to 28.6% for second quarter 2023 and 28.3% for third quarter 2022.

BALANCE SHEET

Investment Securities

Investment securities were $61.6 million on September 30, 2023, a decrease of $4.8 million or 7.2% from June 30, 2023, and a decrease of $14.2 million or 18.8% from September 30, 2022. The decreases were due to principal paydowns and an absence of portfolio additions in the nine months of 2023, or in the fourth quarter 2022. The unrealized losses on available for sale investments were approximately $1.1 million at September 30, 2023, $0.9 million at June 30, 2023, and $1.4 million at September 30, 2022, all net of tax effects. Management believes that the Bank currently has adequate liquidity and does not need to sell any securities for liquidity purposes.

Loans Receivable

Loans receivable (including loans held-for-sale) at September 30, 2023, was $1.4 billion, an increase of $4.3 million, or 0.3% from June 30, 2023, and a decrease of $26.4 million, or 1.8%, from September 30, 2022. The slow increase in loans receivable compared to last quarter and decrease from a year ago, reflects the difficult environment for loan originations due to reduced demand stemming from the higher interest rate environment.

The weighted average loan-to-value ratio of commercial real estate loans ("CRE") was 66.5% at September 30, 2023. Excluding SBA loans, the weighted average loan-to-value ratio of CRE loans was 49.2%.

Allowance for Credit Losses and Asset Quality

The allowance for credit losses at September 30, 2023, was $15.3 million, or 1.27% of total loans compared to $15.6 million, or 1.30% of total loans at June 30, 2023, and $15.6 million, or 1.24% of total loans at September 30, 2022. Nonperforming loans at September 30, 2023 were $618 thousand, compared to $684 thousand at June 30, 2023, and $690 thousand at September 30, 2022. The coverage ratio of allowance for credit losses to nonperforming assets exceeded 2200% at September 30, 2023.

SBA Loans Held-for-Sale

Total SBA loans held-for-sale at September 30, 2023, was $219.4 million, compared to $ 215.1 million at June 30 2023, and $186.4 million at September 30, 2022. We continue to assess SBA loan market premiums and plan to sell loans when it is advantageous to do so. See comments under "Noninterest Income," and Table 7 for additional SBA loan origination and sale data.

Deposits

Deposits were $1.5 billion at September 30, 2023, up $26.9 million, or 1.8%, from June 30, 2023, and up $16.0 million, or 1.0%, from September 30, 2022. Noninterest-bearing demand deposits ("DDAs") at September 30, 2023 decreased $20.3 million, or 4.8%, to $406.0 million from the previous quarter, and decreased $156.0 million, or 27.8%, from September 30, 2022. DDAs were 26.6% of total deposits at September 30, 2023, compared to 28.6% at June 30, 2023, and 37.3% at September 30, 2022. NOW and MMDA accounts increased $16.9 million, or 8.0%, to $227.3 million at September 30, 2023 from the previous quarter and decreased $86.4 million, or 27.6%, compared to September 30, 2022. The quarter over quarter and year over year declines in DDAs can be attributed to the growing interest rate environment. Depositors were eager to capitalize on the rising interest rates, leading to a decrease in DDAs and a simultaneous increase in NOW and MMDA balances.

As of September 30, 2023, time deposits increased $16.3 million, or 2.0%, quarter over quarter, and $250 million, or 43.1%, from September 30, 2022. Time deposits at September 30, 2023, were $830.6 million, or 53.6% of total deposits, compared to $814.3 million, or 53.5% of total deposits at June 30, 2023, and $580.6 million, or 37.9% of total deposits at September 30, 2022. The increase in time deposits during the third quarter of 2023 compared to a year ago reflects depositors’ preferences for higher paying term deposits over money market and checking accounts as rates have risen significantly since March 2022. The primary reason for the decrease in noninterest-bearing deposits during 2023 was a decline in escrow-related deposits as the higher interest rate environment caused a significant slowdown in business activities for that sector.

Other Liabilities

Other Liabilities increased 30% quarter over quarter and 121% year over year, primarily due to increases in accrued interest payable, as the Bank’s overall cost of funds increased during these periods.

Borrowings

The Bank has maintained $50.0 million of Federal Home Loan Bank advances since September 30, 2022. The blended cost of FHLB advances was 0.94% as of September 30, 2023.

Capital

Stockholders’ equity was $228.9 million at September 30, 2023 representing an increase of $5.6 million, or 2.5%, from $223.3 million at June 30, 2023. Tangible book value per share at September 30, 2023, was $21.39, compared with $20.85 at June 30, 2023, an increase of $0.54, or 2.6%, per share.

Each of the Company’s and the Bank’s regulatory capital ratios increased at September 30, 2023 when compared to June 30, 2023 and September 30, 2022. Capital ratios continue to exceed the minimum levels required to be considered "Well Capitalized" under the applicable regulatory capital rules and in compliance with the fully phased-in Basel III requirements as shown on Table 11 in this press release. The Common Equity Tier 1 risked-based capital at September 30, 2023, was 17.61% at the Company level and 17.57% at the Bank level, and total capital ratios were 18.83% and 18.79% for the Company and the Bank, respectively.

About CBB Bancorp, Inc.:

CBB Bancorp, Inc. is the holding company of Commonwealth Business Bank, a full-service commercial bank which specializes in loans to small-to-medium-sized businesses and does business as "CBB Bank." As of September 30, 2023, the Bank had eleven full-service banking offices in Los Angeles and Orange Counties in California, Dallas County in Texas and Honolulu, Hawaii; two SBA regional offices in Los Angeles and Dallas Counties; and five loan production offices in Texas, Georgia, Colorado, and Washington. For additional information, please go to www.cbb-bank.com under the tab "About Us" and select "Investors Relations" to see the 3Q 2023 Overview.

FORWARD-LOOKING STATEMENTS:

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. CBB Bancorp, Inc. (the "Company") intend that such forward-looking statements be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Future events are difficult to predict, and the expectations described herein are necessarily subject to risks and uncertainties that may cause actual results to differ materially and adversely from those described herein. 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," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Factors that might cause actual results to differ materially from those presented, either expressed or implied, in this news release include, but are not limited to: the Company’s ability to successfully execute its business plans and achieve its objectives; changes in general economic and financial market conditions, either nationally or locally in areas in which the Company conducts its operations; changes in interest rates; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; increased competitive challenges and expanding product and pricing pressures among financial institutions; legislation or regulatory changes which adversely affect the Company’s operations or business; loss of key personnel; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies.

The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances, except to the extent required by law.

Schedules and Financial Data: All tables and data to follow

STATEMENT OF INCOME AND PERFORMANCE HIGHLIGHT (Unaudited) - Table 1
(Dollars in thousands, except per share amounts)
	Three Months Ended																										Nine Months Ended
	September 30,				June 30,				$				%			September 30,				$				%			September 30,				September 30,				$				%
		2023				2023			Change				Change				2022			Change				Change				2023				2022			Change				Change
Interest income	$	29,450			$	28,664			$	786			2.7	%		$	21,334			$	8,116			38.0	%		$	85,362			$	56,173			$	29,189			52.0	%
Interest expense		11,442				9,930				1,512			15.2	%			2,507				8,935			356.4	%			29,540				5,085				24,455			480.9	%
Net interest income		18,008				18,734				(726	)		(3.9	%)			18,827				(819	)		(4.4	%)			55,822				51,088				4,734			9.3	%
Provision for credit losses		-				-				-			-				910				(910	)		(100.0	%)			-				1,343				(1,343	)		(100.0	%)
Net interest income after provision for credit losses		18,008				18,734				(726	)		(3.9	%)			17,917				91			0.5	%			55,822				49,745				6,077			12.2	%
Gain on sale of loans		419				1,952				(1,533	)		-78.5	%			-				419			100.0	%			2,371				7,966				(5,595	)		(70.2	%)
SBA servicing fee income, net		639				440				199			45.2	%			709				(70	)		(9.9	%)			1,733				1,956				(223	)		(11.4	%)
Service charges and other income		402				407				(5	)		(1.2	%)			518				(116	)		(22.4	%)			1,207				1,478				(271	)		(18.3	%)
Noninterest income		1,460				2,799				(1,339	)		(47.8	%)			1,227				233			19.0	%			5,311				11,400				(6,089	)		(53.4	%)
Salaries and employee benefits		5,569				5,581				(12	)		(0.2	%)			6,861				(1,292	)		(18.8	%)			17,229				20,920				(3,691	)		(17.6	%)
Occupancy and equipment		1,103				1,122				(19	)		(1.7	%)			1,118				(15	)		(1.3	%)			3,349				3,352				(3	)		(0.1	%)
Marketing expense		475				409				66			16.1	%			489				(14	)		(2.9	%)			1,258				1,485				(227	)		(15.3	%)
Professional expense		443				436				7			1.6	%			519				(76	)		(14.6	%)			1,333				1,451				(118	)		(8.1	%)
Merger related expense		5				2				3			150.0	%			47				(42	)		(89.4	%)			16				170				(154	)		(90.6	%)
Other expenses		2,574				2,633				(59	)		(2.2	%)			2,125				449			21.1	%			7,442				5,035				2,407			47.8	%
Noninterest expense		10,169				10,183				(14	)		(0.1	%)			11,159				(990	)		(8.9	%)			30,627				32,413				(1,786	)		(5.5	%)
Income before income tax provision		9,299				11,350				(2,051	)		(18.1	%)			7,985				1,314			16.5	%			30,506				28,732				1,774			6.2	%
Income tax provision		2,630				3,248				(618	)		(19.0	%)			2,258				372			16.5	%			8,645				8,141				504			6.2	%
Net income	$	6,669			$	8,102			$	(1,433	)		(17.7	%)		$	5,727			$	942			16.4	%		$	21,861			$	20,591			$	1,270			6.2	%
Effective tax rate		28.3	%			28.6	%			(0.3	%)		(1.2	%)			28.3	%			0.0	%		0.0	%			28.3	%			28.3	%			0.0	%		0.0	%
Outstanding number of shares		10,588,136				10,588,136				-			-				10,569,601				18,535			0.2	%			10,588,136				10,569,601				18,535			0.2	%
Weighted average shares for basic EPS		10,588,136		...		10,588,136				-			0.0	%			10,516,394				71,742			0.7	%			10,584,198				10,371,652				212,546			2.0	%
Weighted average shares for diluted EPS		10,594,155				10,591,351				2,804			0.0	%			10,545,544				48,611			0.5	%			10,595,275				10,476,560				118,715			1.1	%
Basic EPS	$	0.63			$	0.77			$	(0.14	)		(18.2	%)		$	0.54			$	0.09			16.7	%		$	2.07			$	1.98			$	0.09			4.5	%
Diluted EPS	$	0.63			$	0.76			$	(0.13	)		(17.1	%)		$	0.54			$	0.09			16.7	%		$	2.06			$	1.96			$	0.10			5.1	%
Return on average assets		1.46	%			1.79	%			(0.33	%)		(18.4	%)			1.27	%			0.19	%		15.0	%			1.61	%			1.53	%			0.08	%		5.2	%
Return on average equity		11.66	%			14.76	%			(3.10	%)		(21.0	%)			11.24	%			0.42	%		3.7	%			13.27	%			14.10	%			(0.83	%)		(5.9	%)
Efficiency ratio¹		52.23	%			47.29	%			4.94	%		10.5	%			55.64	%			(3.41	%)		(6.1	%)			50.10	%			51.87	%			(1.77	%)		(3.4	%)
Yield on interest-earning assets²		6.55	%			6.46	%			0.09	%		1.4	%			4.85	%			1.70	%		35.1	%			6.42	%			4.29	%			2.13	%		49.7	%
Cost of funds		2.91	%			2.53	%			0.38	%		15.0	%			0.63	%			2.28	%		361.9	%			2.51	%			0.43	%			2.08	%		483.7	%
Net interest margin²		4.01	%			4.23	%			(0.22	%)		(5.2	%)			4.28	%			(0.27	%)		(6.3	%)			4.20	%			3.91	%			0.29	%		7.4	%
¹ Represents the ratio of noninterest expense less other real estate owned operations to the sum of net interest income before provision for credit losses and total noninterest income.
² Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

BALANCE SHEET, CAPITAL AND OTHER DATA (Unaudited) - Table 2
(Dollars in thousands)
	September 30,				June 30,				$				%			September 30,				$				%
		2023				2023			Change				Change				2022			Change				Change
ASSETS
Cash and due from banks	$	11,188			$	12,704			$	(1,516	)		(11.9	%)		$	17,232			$	(6,044	)		(35.1	%)
Interest-earning deposits at the FRB and other banks		335,016				293,394				41,622			14.2	%			225,044				109,972			48.9	%
Investment securities¹		61,617				66,400				(4,783	)		(7.2	%)			75,839				(14,222	)		(18.8	%)
Loans held-for-sale		219,355				215,083				4,272			2.0	%			186,438				32,917			17.7	%
Loans held-for-investment		1,201,230				1,201,237				(7	)		(0.0	%)			1,260,590				(59,360	)		(4.7	%)
Less: Allowance for credit losses ("ACL")		(15,284	)			(15,626	)			342			2.2	%			(15,602	)			318			2.0	%
Loans held-for-investment, net		1,185,946				1,185,611				335			0.0	%			1,244,988				(59,042	)		(4.7	%)
Other real estate owned ("OREO")		55				-				55			100.0	%			-				55			100.0	%
Restricted stock investments		11,011				11,011				-			-				10,121				890			8.8	%
Servicing assets		7,873				8,426				(553	)		(6.6	%)			10,158				(2,285	)		(22.5	%)
Goodwill		2,185				2,185				-			-				2,185				-			-
Intangible assets		267				279				(12	)		(4.3	%)			317				(50	)		(15.8	%)
Other assets		24,799				24,537				262			1.1	%			27,845				(3,046	)		(10.9	%)
Total assets	$	1,859,312			$	1,819,630			$	39,682			2.2	%		$	1,800,167			$	59,145			3.3	%
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing	$	406,033			$	426,333			$	(20,300	)		(4.8	%)		$	562,051			$	(156,018	)		(27.8	%)
Interest-bearing		1,143,257				1,096,078				47,179			4.3	%			971,263				171,994			17.7	%
Total deposits		1,549,290				1,522,411				26,879			1.8	%			1,533,314				15,976			1.0	%
FHLB advances and other borrowing		50,000				50,000				-			-				50,000				-			-
Other liabilities		31,141				23,956				7,185			30.0	%			14,109				17,032			120.7	%
Total liabilities		1,630,431				1,596,367				34,064			2.1	%			1,597,423				33,008			2.1	%
Stockholders' Equity		228,881				223,263				5,618			2.5	%			202,744				26,137			12.9	%
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,859,312			$	1,819,630			$	39,682			2.2	%		$	1,800,167			$	59,145			3.3	%
CAPITAL RATIOS
Leverage ratio
Company		12.53	%			12.23	%			0.30	%		2.4	%			11.25	%			1.28	%		11.4	%
Bank		12.50	%			12.20	%			0.31	%		2.5	%			11.15	%			1.35	%		12.1	%
Common equity tier 1 risk-based capital ratio
Company		17.61	%			17.08	%			0.53	%		3.1	%			14.82	%			2.79	%		18.8	%
Bank		17.58	%			17.03	%			0.55	%		3.2	%			14.70	%			2.88	%		19.6	%
Tier 1 risk-based capital ratio
Company		17.61	%			17.08	%			0.53	%		3.1	%			14.82	%			2.79	%		18.8	%
Bank		17.57	%			17.03	%			0.54	%		3.2	%			14.70	%			2.88	%		19.6	%
Total risk-based capital ratio
Company		18.83	%			18.32	%			0.51	%		2.8	%			16.02	%			2.81	%		17.6	%
Bank		18.79	%			18.27	%			0.52	%		2.9	%			15.89	%			2.90	%		18.2	%
Tangible common equity per share	$	21.39			$	20.85			$	0.54			2.6	%		$	18.95			$	2.44			12.9	%
Loan-to-Deposit ("LTD") ratio		77.53	%			78.90	%			(1.37	%)		(1.7	%)			82.21	%			(4.68	%)		(5.7	%)
Nonperforming assets	$	673			$	684			$	(11	)		(1.6	%)		$	690			$	(17	)		(2.5	%)
Nonperforming assets as a % of loans held-for-investment		0.06	%			0.06	%			0.00	%		0.00	%			0.05	%			0.01	%		20.0	%
ACL as a % of loans held-for-investment		1.27	%			1.30	%			(0.03	%)		(2.31	%)			1.24	%			0.03	%		2.4	%
¹ Includes AFS and HTM

FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3
(Dollars in thousands, except per share amounts)
	Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
		2023				2023				2023				2022				2022
Interest income	$	29,450			$	28,664			$	27,248			$	24,744			$	21,334
Interest expense		11,442				9,930				8,168				4,677				2,507
Net interest income		18,008				18,734				19,080				20,067				18,827
Provision for credit losses		-				-				-				-				910
Net interest income after provision for credit losses		18,008				18,734				19,080				20,067				17,917
Gain on sale of loans		419				1,952				-				-				-
SBA servicing fee income, net		639				440				654				491				709
Service charges and other income		402				407				398				457				518
Noninterest income		1,460				2,799				1,052				948				1,227
Salaries and employee benefits		5,569				5,581				6,079				6,233				6,861
Occupancy and equipment		1,103				1,122				1,124				1,133				1,118
Marketing expense		475				409				374				434				489
Professional expense		443				436				454				418				519
Merger related expense		5				2				9				7				47
Other expenses		2,574				2,633				2,235				2,579				2,125
Noninterest expense		10,169				10,183				10,275				10,804				11,159
Income before income tax expense		9,299				11,350				9,857				10,211				7,985
Income tax expense		2,630				3,248				2,767				2,882				2,258
Net income	$	6,669			$	8,102			$	7,090			$	7,329			$	5,727
Effective tax rate		28.3	%			28.6	%			28.1	%			28.2	%			28.3	%
Outstanding number of shares		10,588,136				10,588,136				10,588,136				10,569,601				10,569,601
Weighted average shares for basic EPS		10,588,136				10,588,136				10,576,191				10,569,601				10,516,394
Weighted average shares for diluted EPS		10,594,155				10,591,351				10,600,189				10,600,053				10,545,544
Basic EPS	$	0.63			$	0.77			$	0.67			$	0.70			$	0.54
Diluted EPS	$	0.63			$	0.76			$	0.67			$	0.70			$	0.54

FIVE-QUARTER SALARIES BENEFIT METRICS (Unaudited) - Table 4
(Dollars in thousands)
		At or for the Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
			2023				2023				2023				2022				2022
Salaries and benefits		$	5,569			$	5,581			$	6,079			$	6,233			$	6,861
FTE at the end of period			172				165				170				179				190
Average FTE during the period			168				164				174				184				193
Salaries and benefits/average FTE¹		$	131			$	137			$	142			$	134			$	141
Salaries and benefits/average assets¹			1.22	%			1.23	%			1.36	%			1.39	%			1.52	%
Noninterest expense/average assets¹			2.22	%			2.25	%			2.30	%			2.41	%			2.47	%
1 Annualized

FIVE-QUARTER BALANCE SHEET (Unaudited) - Table 5
(Dollars in thousands)
	September 30,				June 30,				March 31,				December 31,				September 30,
		2023				2023				2023				2022				2022
ASSETS
Cash and due from banks	$	11,188			$	12,704			$	13,788			$	20,134			$	17,232
Interest-earning deposits at the FRB and other banks		335,016				293,394				240,602				170,839				225,044
Investment securities		61,617				66,400				68,943				72,550				75,839
Loans held-for-sale		219,355				215,083				243,753				230,431				186,438
Loans held-for-investment		1,201,230				1,201,237				1,222,867				1,285,278				1,260,590
Less: Allowance for credit losses		(15,284	)			(15,626	)			(15,627	)			(15,525	)			(15,602	)
Loans held-for-investment, net		1,185,946				1,185,611				1,207,240				1,269,753				1,244,988
Other real estate owned		55				-				-				-				-
Restricted stock investments		11,011				11,011				10,121				10,121				10,121
Servicing assets		7,873				8,426				8,528				9,232				10,158
Goodwill		2,185				2,185				2,185				2,185				2,185
Intangible assets		267				279				291				303				317
Other assets		24,799				24,537				25,697				26,939				27,845
Total assets	$	1,859,312			$	1,819,630			$	1,821,148			$	1,812,487			$	1,800,167
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing	$	406,033			$	426,333			$	428,559			$	451,651			$	562,051
Interest-bearing		1,143,257				1,096,078				1,108,754				1,086,599				971,263
Total deposits		1,549,290				1,522,411				1,537,313				1,538,250				1,533,314
FHLB advances		50,000				50,000				50,000				50,000				50,000
Other liabilities		31,141				23,956				17,651				14,706				14,109
Total liabilities		1,630,431				1,596,367				1,604,964				1,602,956				1,597,423
Stockholders' Equity		228,881				223,263				216,184				209,531				202,744
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,859,312			$	1,819,630			$	1,821,148			$	1,812,487			$	1,800,167

FIVE-QUARTER LOANS RECEIVABLE COMPONENTS (Unaudited) - Table 6
(Dollars in thousands)
	September 30, 2023						June 30, 2023						March 31, 2023						December 31, 2022						September 30, 2022
	Balance			%			Balance			%			Balance			%			Balance			%			Balance			%
Construction	$	30,924		2.6	%		$	20,106		1.7	%		$	19,550		1.6	%		$	17,537		1.4	%		$	14,919		1.2	%
Commercial real estate		1,005,735		83.7	%			1,014,785		84.5	%			1,033,124		84.5	%			1,078,588		83.9	%			1,050,154		83.3	%
Commercial and industrial		113,374		9.4	%			114,106		9.4	%			114,184		9.3	%			125,298		9.7	%			128,099		10.1	%
Home mortgage		45,452		3.8	%			45,987		3.8	%			49,155		4.0	%			52,031		4.1	%			57,773		4.6	%
Consumer		616		0.1	%			1,074		0.1	%			1,049		0.1	%			6,260		0.5	%			4,839		0.4	%
Gross loans held-for-investment		1,196,101		99.6	%			1,196,058		99.6	%			1,217,062		99.5	%			1,279,714		99.6	%			1,255,784		99.6	%
Deferred loan fees/costs, net		5,129		0.4	%			5,179		0.4	%			5,805		0.5	%			5,564		0.4	%			4,806		0.4	%
Loans held-for-investment	$	1,201,230		100.0	%		$	1,201,237		100.0	%		$	1,222,867		100.0	%		$	1,285,278		100.0	%		$	1,260,590		100.0	%
Loans held-for-sale	$	219,355					$	215,083					$	243,753					$	230,431					$	186,438
Total loans receivable	$	1,420,585					$	1,416,320					$	1,466,620					$	1,515,709					$	1,447,028

FIVE-QUARTER SBA LOAN PRODUCTIONS/SALES DATA (Unaudited) - Table 7
(Dollars in thousands)
	Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
		2023				2023				2023				2022				2022
SBA loans held-for-sale at beginning of the quarter/year	$	215,083			$	243,753			$	230,431			$	186,438			$	141,104
SBA loans originated/transferred from/to held-for-investment during the quarter/year		16,260				18,273				16,890				45,184				49,922
SBA loans sold during the quarter/year		(9,245	)			(42,437	)			-				-				-
SBA loans principal paydown/payoff, net of advance		(2,743	)			(4,506	)			(3,568	)			(1,191	)			(4,588	)
SBA loans held-for-sale at end of the quarter/year	$	219,355			$	215,083			$	243,753			$	230,431			$	186,438
Gain on sale of SBA loans	$	419			$	1,952			$	-			$	-			$	-
Premium on sale (weighted average)		8.3	%			6.8	%			-				-				-
SBA loan production	$	24,270			$	24,013			$	21,719			$	60,746			$	69,234

FIVE QUARTER SBA SERVICING ASSETS AND SERVICING FEES (Unaudited) - Table 8
(Dollars in thousands)
		Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
			2023				2023				2023				2022				2022
SBA servicing assets @ beginning of the quarter/year		$	8,426			$	8,528			$	9,232			$	10,158			$	10,996
Newly added SBA servicing assets from SBA loans sold			182				806				-				-				-
Regular quarterly/annual servicing assets amortization			(371	)			(379	)			(403	)			(434	)			(471	)
SBA servicing assets amortized from SBA loans paid off/charged off			(364	)			(529	)			(301	)			(492	)			(367	)
Subtotal before impairment			7,873				8,426				8,528				9,232				10,158
Reversal of valuation allowance on servicing assets			-				-				-				-				-
SBA servicing assets @ the end of the quarter/year		$	7,873			$	8,426			$	8,528			$	9,232			$	10,158

FIVE-QUARTER DEPOSIT COMPONENTS (Unaudited) - Table 9
(Dollars in thousands)
	September 30, 2023						June 30, 2023						March 31, 2023						December 31, 2022						September 30, 2022
	Balance			%			Balance			%			Balance			%			Balance			%			Balance			%
Noninterest-bearing demand	$	406,033		26.2	%		$	426,333		28.0	%		$	428,559		27.9	%		$	451,651		29.4	%		$	562,051		36.7	%
Interest-bearing demand		6,395		0.4	%			9,056		0.6	%			10,883		0.7	%			8,878		0.6	%			10,268		0.7	%
NOW & MMDA		227,283		14.7	%			210,429		13.8	%			211,793		13.8	%			274,521		17.9	%			313,719		20.5	%
Savings		78,969		5.1	%			62,324		4.1	%			62,188		4.0	%			52,845		3.4	%			66,673		4.3	%
TCDs of $250K and under		312,704		20.2	%			298,520		19.6	%			294,074		19.1	%			278,952		18.1	%			246,886		16.1	%
TCDs of $250K over		373,345		24.1	%			368,262		24.2	%			367,167		23.9	%			320,386		20.8	%			242,700		15.8	%
Wholesale TCDs		144,561		9.3	%			147,487		9.7	%			162,649		10.6	%			151,017		9.8	%			91,017		5.9	%
Total Deposits	$	1,549,290		100.0	%		$	1,522,411		100.0	%		$	1,537,313		100.0	%		$	1,538,250		100.0	%		$	1,533,314		100.0	%
Recap:
Noninterest-bearing demand	$	406,033		26.2	%		$	426,333		28.0	%		$	428,559		27.9	%		$	451,651		29.4	%		$	562,051		36.7	%
Interest-bearing demand		6,395		0.4	%			9,056		0.6	%			10,883		0.7	%			8,878		0.6	%			10,268		0.7	%
NOW & MMDA		227,283		14.7	%			210,429		13.8	%			211,793		13.8	%			274,521		17.8	%			313,719		20.5	%
Savings		78,969		5.1	%			62,324		4.1	%			62,188		4.0	%			52,845		3.5	%			66,673		4.3	%
TCDs of $250K and under		312,704		20.2	%			298,520		19.6	%			294,074		19.1	%			278,952		18.1	%			246,886		16.1	%
Core Deposits		1,031,384		66.6	%			1,006,662		66.1	%			1,007,497		65.5	%			1,066,847		69.4	%			1,199,597		78.3	%
TCDs of $250K over		373,345		24.1	%			368,262		24.2	%			367,167		23.9	%			320,386		20.8	%			242,700		15.8	%
Wholesale TCDs		144,561		9.3	%			147,487		9.7	%			162,649		10.6	%			151,017		9.8	%			91,017		5.9	%
Noncore Deposits		517,906		33.4	%			515,749		33.9	%			529,816		34.5	%			471,403		30.6	%			333,717		21.7	%
Total Deposits	$	1,549,290		100.0	%		$	1,522,411		100.0	%		$	1,537,313		100.0	%		$	1,538,250		100.0	%		$	1,533,314		100.0	%

FIVE-QUARTER SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited) - Table 10
(Dollars in thousands)
		3rd Qtr.				2nd Qtr.				1st Qtr.				4th Qtr.				3rd Qtr.
			2023				2023				2023				2022				2022
Allowance for Credit Losses
Balance at beginning of period		$	15,626			$	15,627			$	15,525			$	15,602			$	14,739
CECL transition provision			-				-				250				-				-
Provision for credit losses			-				-				-				-				910
Charge-offs			(350	)			(11	)			(159	)			(90	)			(89	)
Recoveries			8				10				11				13				42
Balance at the end of period		$	15,284			$	15,626			$	15,627			$	15,525			$	15,602
Nonperforming Assets:¹
Over 90 days still accruing		$	2			$	39			$	-			$	6,006			$	-
Nonaccrual loans			616				645				636				801				690
Total nonperforming loans			618				684				636				6,807				690
Other real estate owned		$	55				-				-				-				-
Total nonperforming assets		$	673			$	684			$	636			$	6,807			$	690
Classified Assets:¹
Substandard		$	10,105			$	10,491			$	7,673			$	8,165			$	9,146
Doubtful			-				-				-				-				-
Loss
Total classified loans		$	10,105			$	10,491			$	7,673			$	8,165			$	9,146
Other real estate owned		$	55				-				-				-				-
Total classified assets		$	10,160			$	10,491			$	7,673			$	8,165			$	9,146
Performing TDR loans:¹		$	6,948			$	7,220			$	4,332			$	4,471			$	4,797
Delinquent Loans:¹
Loans 30-89 days past due		$	10,620			$	4,420			$	3,551			$	381			$	3,936
90 days or more past due and still accruing			2				39				-				6,006				-
Nonaccrual			616				645				636				801				690
Total delinquent loans		$	11,238			$	5,104			$	4,187			$	7,188			$	4,626
Asset Quality Ratios:
Net (recoveries) charge-offs to average loans²			0.10	%			0.00	%			0.04	%			0.02	%			0.01	%
Nonaccrual loans to loans held-for-investment			0.05	%			0.05	%			0.05	%			0.06	%			0.05	%
Nonperforming loans to loans held-for-investment			0.05	%			0.06	%			0.05	%			0.53	%			0.05	%
Nonperforming assets to total assets			0.04	%			0.04	%			0.03	%			0.38	%			0.04	%
Classified loans to loans held-for-investment			0.84	%			0.87	%			0.63	%			0.64	%			0.73	%
Classified loans to Tier 1 and ACL			4.18	%			4.44	%			3.35	%			3.67	%			4.24	%
Classified assets to total assets			0.55	%			0.58	%			0.42	%			0.45	%			0.51	%
Classified assets to Tier 1 and ACL			4.20	%			4.44	%			3.35	%			3.67	%			4.24	%
ACL to loans held-for-investment			1.27	%			1.30	%			1.28	%			1.21	%			1.24	%
ACL to nonaccrual loans			2481.17	%			2422.64	%			2457.08	%			1938.20	%			2261.16	%
ACL to nonperforming loans			2473.14	%			2284.50	%			2457.08	%			228.07	%			2261.16	%
ACL to nonperforming assets			2271.03	%			2284.50	%			2457.08	%			228.07	%			2261.16	%
Texas ratio³			0.28	%			0.29	%			0.28	%			3.06	%			0.32	%
1 Net of SBA guaranteed balance
2 Includes loans held-for-sale
3 Nonperforming assets divided by tangible common equity and ACL

FIVE-QUARTER CAPITAL RATIOS (Unaudited) - Table 11
		Well Capitalized		Adequately Capitalized		September 30,				June 30,				March 31,				December 31,				September 30,
		Regulatory		BASEL III
		Requirement		Fully Phased In			2023				2023				2023				2022				2022
Leverage ratio
Company		N/A		N/A			12.53	%			12.23	%			11.86	%			11.71	%			11.25	%
Bank		5.00%		4.00%			12.50	%			12.20	%			11.82	%			11.67	%			11.15	%
Common equity tier 1 risk-based capital ratio
Company		N/A		N/A			17.61	%			17.08	%			16.15	%			14.92	%			14.82	%
Bank		6.50%		7.00%			17.58	%			17.03	%			16.10	%			14.87	%			14.70	%
Tier 1 risk-based capital ratio
Company		N/A		N/A			17.61	%			17.08	%			16.15	%			14.92	%			14.82	%
Bank		8.00%		8.50%			17.57	%			17.03	%			16.10	%			14.87	%			14.70	%
Total risk-based capital ratio
Company		N/A		N/A			18.83	%			18.32	%			17.37	%			16.08	%			16.02	%
Bank		10.00%		10.50%			18.79	%			18.27	%			17.31	%			16.03	%			15.89	%
Tangible common equity/total assets							12.19	%			12.15	%			11.75	%			11.44	%			11.14	%
Tangible common equity per share						$	21.39			$	20.85			$	20.18			$	19.59			$	18.95

FIVE-QUARTER MARGIN ANALYSIS (Unaudited) -Table 12
(Dollars in thousands)
	Three Months Ended
	September 30, 2023										June 30, 2023										March 31, 2023										December 31, 2022										September 30, 2022
	Avg Balance				Interest			Yield			Avg Balance				Interest			Yield			Avg Balance				Interest			Yield			Avg Balance				Interest			Yield			Avg Balance				Interest			Yield
Number of Days in the Period
INTEREST-EARNING ASSETS
Loans Receivable¹	$	1,417,148			$	24,734		6.92	%		$	1,444,608			$	24,661		6.85	%		$	1,502,078			$	24,379		6.58	%		$	1,473,100			$	22,407		6.03	%		$	1,413,632			$	19,299		5.42	%
Investment securities²		64,587				577		3.54	%			67,958				595		3.51	%			70,146				577		3.34	%			73,371				552		2.98	%			77,304				543		2.79	%
Interest-earning deposits at the FRB and other banks		293,081				3,994		5.41	%			258,236				3,296		5.12	%			190,692				2,178		4.63	%			180,358				1,666		3.66	%			246,955				1,398		2.25	%
Other earning assets		11,011				196		7.06	%			10,825				163		6.04	%			10,121				164		6.57	%			10,121				169		6.62	%			10,121				145		5.68	%
Total interest-earning assets²		1,785,827				29,501		6.55	%			1,781,627				28,715		6.46	%			1,773,037				27,298		6.24	%			1,736,950				24,794		5.66	%			1,748,012				21,385		4.85	%
NONINTEREST-EARNING ASSETS
Cash and due from banks		13,045										12,792										14,262										15,632										17,429
Other noninterest-earning assets		33,331										34,060										36,643										38,529										40,251
Total noninterest-earning assets		46,376										46,852										50,905										54,161										57,680
Less: Allowance for credit losses		(15,622	)									(15,627	)									(15,552	)									(15,581	)									(14,756	)
TOTAL ASSETS	$	1,816,581									$	1,812,852									$	1,808,390									$	1,775,530									$	1,790,936
INTEREST-BEARING DEPOSITS
Interest-bearing demand	$	12,347			$	6		0.19	%		$	14,522			$	7		0.19	%		$	18,021			$	9		0.20	%		$	20,352			$	10		0.19	%		$	23,461			$	8		0.14	%
Money market		211,152				1,907		3.58	%			192,872				1,414		2.94	%			231,865				1,469		2.57	%			288,611				1,433		1.97	%			316,964				894		1.12	%
Savings		70,579				494		2.78	%			63,786				324		2.04	%			55,576				164		1.20	%			61,152				96		0.62	%			71,519				85		0.47	%
Time deposits		820,335				8,916		4.31	%			839,198				8,068		3.86	%			797,072				6,410		3.26	%			625,823				3,020		1.91	%			556,919				1,401		1.00	%
Total interest-bearing deposits		1,114,413				11,323		4.03	%			1,110,378				9,813		3.54	%			1,102,534				8,052		2.96	%			995,938				4,559		1.82	%			968,863				2,388		0.98	%
Borrowings		50,001				119		0.94	%			50,000				117		0.94	%			50,000				116		0.94	%			50,001				118		0.94	%			50,001				119		0.94	%
Total interest-bearing liabilities		1,164,414				11,442		3.90	%			1,160,378				9,930		3.43	%			1,152,534				8,168		2.87	%			1,045,939				4,677		1.77	%			1,018,864				2,507		0.98	%
Noninterest-bearing deposits		397,791										411,432										425,190										507,719										555,291
Other liabilities		27,519										20,934										16,947										14,732										14,596
Stockholders' equity		226,857										220,108										213,719										207,140										202,185
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,816,581									$	1,812,852									$	1,808,390									$	1,775,530									$	1,790,936
Net interest income²					$	18,059									$	18,785									$	19,130									$	20,117									$	18,878
Net interest spread								2.65	%									3.03	%									3.37	%									3.89	%									3.87	%
Effect of noninterest-bearing sources								1.36	%									1.20	%									1.01	%									0.70	%									0.41	%
Net interest margin²								4.01	%									4.23	%									4.38	%									4.59	%									4.28	%
Cost of deposits	$	1,512,204			$	11,323		2.97	%		$	1,521,810			$	9,813		2.59	%		$	1,527,724			$	8,052		2.14	%		$	1,503,657			$	4,559		1.20	%		$	1,524,154			$	2,388		0.62	%
Cost of funds	$	1,562,205			$	11,442		2.91	%		$	1,571,810			$	9,930		2.53	%		$	1,577,724			$	8,168		2.10	%		$	1,553,658			$	4,677		1.19	%		$	1,574,155			$	2,507		0.63	%
¹ Loan held-for-investment, plus loans held-for-sale
² Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

FIVE-QUARTER COMPONENTS OF YIELD ON LOANS (Unaudited) - Table 13
(Dollars in thousands)
		Three Months Ended
		September 30, 2023							June 30,2023							March 31, 2023							December 31, 2022							September 30, 2022
		Amount				Yield			Amount				Yield			Amount				Yield			Amount				Yield			Amount				Yield
Contractual yield		$	23,932			6.70	%		$	23,767			6.60	%		$	23,643			6.38	%		$	21,534			5.80	%		$	18,134			5.09	%
SBA discount accretion			921			0.25	%			1,124			0.31	%			937			0.25	%			1,172			0.32	%			1,078			0.30	%
Prepayment penalties and late fees			18			0.01	%			60			0.02	%			30			0.01	%			17			0.00	%			94			0.03	%
Amortization of net deferred costs			(137	)		-0.04	%			(290	)		-0.08	%			(231	)		-0.06	%			(316	)		-0.09	%			(7	)		0.00	%
As reported yield on loans		$	24,734			6.92	%		$	24,661			6.85	%		$	24,379			6.58	%		$	22,407			6.03	%		$	19,299			5.42	%

MARGIN ANALYSIS (Unaudited) - Table 14
(Dollars in thousands)
	Three Months Ended
	September 30,2023										September 30,2022
	Avg Balance				Interest			Yield			Avg Balance				Interest			Yield
Number of Days in the Period
INTEREST-EARNING ASSETS
Loans Receivable ¹	$	1,454,301			$	73,774		6.78	%		$	1,391,029			$	52,294		5.03	%
Investment securities ²		67,543				1,749		3.46	%			79,590				1,502		2.52	%
Interest-earning deposits at the FRB and other banks		247,712				9,468		5.11	%			274,180				2,138		1.04	%
Other earning assets		10,655				523		6.56	%			9,615				393		5.46	%
Total interest-earning assets ²		1,780,211				85,514		6.42	%			1,754,414				56,327		4.29	%
NONINTEREST-EARNING ASSETS
Cash and due from banks		13,362										15,226
Other noninterest-earning assets		34,634										38,542
Total noninterest-earning assets		47,996										53,768
Less: Allowance for credit losses		(15,601	)									(14,029	)
TOTAL ASSETS	$	1,812,606									$	1,794,153
INTEREST-BEARING DEPOSITS
Interest-bearing demand	$	14,943			$	22		0.20	%		$	25,880			$	15		0.08	%
Money market		211,887				4,789		3.02	%			315,661				1,692		0.72	%
Savings		63,369				983		2.07	%			74,577				206		0.37	%
Time deposits		818,953				23,394		3.82	%			536,715				2,820		0.70	%
Total interest-bearing deposits		1,109,152				29,188		3.52	%			952,833				4,733		0.66	%
Borrowings		50,000				352		0.94	%			50,000				352		0.94	%
Total interest-bearing liabilities		1,159,152				29,540		3.41	%			1,002,833				5,085		0.68	%
Noninterest-bearing deposits		411,370										580,340
Other liabilities		21,808										15,785
Stockholders' equity		220,276										195,195
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,812,606									$	1,794,153
Net interest income²					$	55,974									$	51,242
Net interest spread								3.01	%									3.61	%
Effect of noninterest-bearing sources								1.19	%									0.30	%
Net interest margin²								4.20	%									3.91	%
Cost of deposits	$	1,520,522			$	29,188		2.57	%		$	1,533,173			$	4,733		0.41	%
Cost of funds	$	1,570,522			$	29,540		2.51	%		$	1,583,173			$	5,085		0.43	%
¹ Loan held-for-investment, plus loans held-for-sale
² Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

COMPONENTS OF YIELD ON LOANS (Unaudited) - Table 15
(Dollars in thousands)
		Nine Months Ended
		September 30, 2023							September 30, 2022
		Amount				Yield			Amount			Yield
Contractual yield		$	71,342			6.56	%		$	48,226		4.64	%
SBA discount accretion			2,982			0.27	%			3,534		0.34	%
Prepayment penalties and late fees			108			0.01	%			257		0.02	%
Amortization of net deferred costs			(658	)		-0.06	%			277		0.03	%
As reported yield on loans		$	73,774			6.78	%		$	52,294		5.03	%

View source version on businesswire.com: https://www.businesswire.com/news/home/20231026213774/en/

Contacts

Richard Koh, EVP & CFO
(323) 988-3037
RichardK@cbb-bank.com