Commerce Bank of Arizona (fka CBOF)

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$CBOF CBOA Financial, Inc. Reports Consolidated Earnings of $457,000 in 3Q 2020
Press Release | 11/13/2020
CBOA Financial, Inc. Reports Consolidated Earnings of $457,000 in 3Q 2020
PR Newswire

TUCSON, Ariz., Nov. 13, 2020

TUCSON, Ariz., Nov. 13, 2020 /PRNewswire/ -- CBOA Financial, Inc. (OTCMKTS:CBOF) (the "Company"), parent company of Commerce Bank of Arizona (the "Bank" or "CBAZ"), announced that consolidated net income for quarter ending September 30, 2020 increased 15.7% to $457,000, from $395,000 in the second quarter of 2020.

Commerce Bank of Arizona (PRNewsfoto/Commerce Bank of Arizona)

Chris Webster, Bank President and Chief Executive Officer said, "Commerce Bank of Arizona completed another quarter of solid financial performance. Performance was driven by stable loan and deposit growth. Organic loan growth was strong and Net Interest Margin has remained relatively steady despite the Federal Reserve's low interest policy," Webster added.

Third Quarter 2020 Highlights

Loan growth of $8.7MM, or 3.6% for the quarter
Deposit growth of $10.4MM, or 3.9% for the quarter
NIM of 4.03% for the quarter, despite rate pressure
Operational Highlights
Interest income was aided by recognized fee income of PPP loans that bolstered earnings by $357,000. Further contributing to the growth in net interest income was a $10,000 decline in interest expense despite the $10 million increase in total deposits during the quarter.

The Bank's $49,000 negative non-interest income was driven by writedowns of OREO properties which the Bank acquired primarily in the 2012-2015 time period. The Bank has aggressively priced these assets in response to the continuing difficulty of marketing these types of properties, which was exacerbated by the pandemic.

Balance Sheet
Total assets increased by 5.2% to $331.6 million during the quarter ended September 30, 2020 and increased 32% compared to $251.6 million a year ago. Total asset growth from September 2019 to September 2020 consisted of PPP loans funding CBAZ deposit accounts totaling $64 million, and organic net deposit growth of roughly $15 million.

Traditional gross loans rose $7.9 million since second quarter 2020 ending the third quarter at $186 million. Including the $64 million in PPP loans, total loans increased by 3.6% to $249.7 million in the quarter and increased 40% compared to $178 million a year ago. Total deposits increased by 3.9% to $279.2 million during the quarter and increased 26% compared to $221 million a year ago.

The allowance for loan losses totaled $2.99 million at September 30, 2020, or 1.41% of "traditional" non-PPP loans, compared to 1.34% in the previous quarter, and was 1.11% for the quarter with the PPP loans included. Though the Bank's recorded reserve did not materially change, worsening economic factors and pandemic related payment deferrals are being accounted for in the Bank's reserve calculation. Due to a large "unallocated" reserve, the Bank remained adequately reserved for the quarter.

Shareholders' equity increased to $23.6 million at September 30, 2020, from $23.0 million the preceding quarter. At September 30, 2020, book value and tangible book value were $2.87 per share compared to $2.81 per share at June 30, 2020 and $2.57 per share a year ago. The growth in total assets associated with the PPP loans was the primary driver of the decline in the Bank's Tier 1 Leverage ratio. Excluding the PPP loans, the Bank's third quarter 2020 Tier 1 Leverage ratio would have been 10.3%, just slightly lower than 10.7% for second quarter 2020 and 11.1% as of September 30, 2019.

Capital Management
Capital ratios exceeded regulatory guidelines for a well-capitalized institution under Basel III and Dodd Frank Wall Street Reform requirements at September 30, 2020. Capital ratios are presented below.

About the Company
Commerce Bank of Arizona, established in 2002 in Tucson, Arizona, is a full-service community bank that caters to small-to mid-sized businesses and real estate professionals. CBAZ offers commercial clients with a variety of services ranging from U.S. Small Business Administration (SBA) financing solutions, construction loans, and commercial real estate loans. CBOA Financial, Inc is a single-bank holding company and parent of the Bank. The Company is traded over-the-counter as CBOF. For additional information, visit: www.commercebankaz.com.

Forward-looking Statements
This press release may include forward-looking statements about CBOA Financial, Inc. or Commerce Bank of Arizona. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: competition, fluctuations in interest rates, dependency on key individuals, loan defaults, geographical concentration, litigation and changes in federal laws, regulations and interpretations thereof. All forward-looking statements included in this press release are based on information available at the time of the release, and CBOA Financial, Inc. and Commerce Bank of Arizona assume no obligation to update any forward-looking statement.

Unaudited Consolidated Summary Financial Information


Dollars in thousands - Unaudited


For the quarter ended


Year to Date



30/09/2020

30/06/2020

30/09/2019


30/09/2020

30/09/2019

Summary Income Data





Interest Income


3,202

3,549

2,955


9,577

8,835

Interest expense


356

366

519


1,168

1,425

Net Interest Income


2,846

3,183

2,436


8,409

7,410

Provision for (reduction in) loan losses


-

-

(79)


(279)

(79)

Non-interest income


(49)

(460)

130


(501)

359

Realized gains (losses) on sales of securities


-

47

(5)


168

(5)

Non-interest expense


2,340

2,375

2,141


7,132

6,417

Income (loss) before income taxes


457

395

499


1,223

1,426

Provision for income tax


-

-

-


-

-

Net Income


457

395

499


1,223

1,426









Per Share Data








Shares outstanding end-of-period


8,208

8,208

7,878


8,208

7,878

Earnings per common share ($'s)


0.06

0.05

0.06


0.15

0.18

Earnings per common share (Diluted) ($'s)


0.04

0.04

0.05


0.12

0.13

Cash dividend declared


-

-

-


-

-

Total shareholders' equity


23,589

23,049

20,732


23,589

20,732

Book value per share ($'s)


2.87

2.81

2.57


2.87

2.57









Selected Balance Sheet Data








Total assets


331,636

315,312

251,568


331,636

251,568

Securities available-for-sale


36,636

29,854

24,283


36,636

24,283

Loans


249,684

240,979

178,120


249,684

178,120

Allowance for loan losses


2,996

2,991

2,945


2,996

2,945

Deposits


279,187

268,836

221,032


279,187

221,032

Other borrowings


21,574

14,808

2,808


21,574

2,808

Shareholders' equity


23,589

23,049

20,732


23,589

20,732









Performance Ratios (%)








Return on average shareholders' equity
(annualized)


7.10

6.62

8.82


7.10

8.82

Net interest margin


4.03

4.51

4.47


4.03

4.47

Efficiency ratio


82.45

85.38

81.32


82.45

81.32









Asset Quality Data (%)








Nonperforming assets to total assets


1.30

1.45

4.23


1.30

4.23

Reserve for loan losses to total loans


1.20

1.24

1.65


1.20

1.65

Charge-offs to average loans for period


(0.01)

(0.02)

(0.2)


(0.01)

(0.2)









Regulatory Capital Ratios (%)








Common Equity Tier 1


12.95

13.40

12.97


12.95

12.97

Tier 1 risk-based capital ratio


12.95

13.40

12.97


12.95

12.97

Total risk-based capital ratio


14.20

14.65

14.22


14.20

14.22

Tier 1 leverage capital ratio


8.80

9.22

11.06


8.80

11.06

Contact:
Chris Webster
President & CEO
480-253-4511
[e-mail]

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