Bay Community Bancorp Earns $2.02 Million in Second Quarter 2024

Declares Quarterly Cash Dividend of $0.055 Per Share

OAKLAND, Calif., Aug. 02, 2024 (GLOBE NEWSWIRE) -- Bay Community Bancorp, (OTCPink: CBOBA) (the “Company”), parent company of Community Bank of the Bay, (the “Bank”) a San Francisco Bay Area commercial bank and California’s first certified FDIC-insured Community Development Financial Institution (“CDFI”) with full-service offices in Oakland, Danville, San Jose and San Mateo, and a loan production office in San Francisco, today reported net income of $2.08 million for the second quarter of 2024, compared to $1.66 million for the first quarter of 2024 and $1.85 million for the second quarter of 2023. All financial results are unaudited.

On July 24, the Company’s Board of Directors declared a quarterly cash dividend of $0.055 per share. The dividend is payable September 4, 2024, to shareholders of record on August 23, 2024. This marks the fourteenth consecutive cash dividend payment since the Company initiated quarterly cash dividends on April 30, 2021.

On May 20, 2024, the Company announced that it had entered into a definitive merger agreement the (“Merger Agreement”) with CBC Bancorp, the holding company for Commercial Bank of California. Under the terms of the agreement, CBC Bancorp will acquire Bay Community Bancorp in an all-cash transaction valued at $14.00 per common share, subject to the conditions of the Merger Agreement. This acquisition merges institutions from two of California’s largest banking markets, resulting in approximately $3.5 billion in combined assets. The acquisition of Bay Community Bancorp will transition Community Bank of the Bay to a privately held bank owned by a limited number of shareholders, and its shares will no longer be traded on the OTC Pink Sheets. As a privately held bank upon consummation of the merger, Community Bank of the Bay will maintain its name recognition and San Francisco Bay Area branch operations while officially becoming a division of Commercial Bank of California.

“This transaction brings together two complementary institutions with long standing ties to their communities, similar cultures and a relationship-based approach to banking,” said William S. Keller, CEO. “One of the many benefits of this combination is that the combined bank’s greater scale will allow for increased investments in qualified lending through the products and services that will directly benefit our clients and the communities we serve. Both institutions are committed to growth and we’re excited to work together.”

The transaction is expected to close in the fourth quarter of 2024 upon receipt of required regulatory approvals, shareholder approvals from CBC Bancorp and Bay Community Bancorp and the satisfaction of all closing conditions.

“In addition to announcing the definitive agreement with CBC Bancorp, our second quarter was highlighted by continued earnings momentum as earlier investments in core deposit generating capabilities drove a $23.5 million increase in non-interest-bearing deposits that lowered our cost of funds, while revenues increased 12.1% driven by the repricing of $15.8 million of lower yielding securities, modest loan growth, and the recognition of $817 thousand of accrued interest from the successful resolution of a non-performing loan. Non-interest expenses increased $105 thousand including an estimated $589 thousand of merger related expenses,” said William S. Keller, CEO. “Last year’s loss of five Bay Area competitors created an unprecedented market opportunity that allowed us to expand our branch network and attract key talent. Now the pending combination with CBC provides us with the infrastructure needed to support continued growth and the opportunity to make an even greater impact on the communities we serve.”

“In April we successfully resolved our sole non-performing asset that accounted for 93% of our classified assets. Our commercial real estate loan portfolio continues to perform well,” said Mukhtar Ali, President and Chief Credit Officer. “The major price declines and foreclosures in commercial real estate in our markets so far have been centered in the larger downtown office properties where we have no direct exposure, so our loan portfolio remains strong. Commercial real estate loans against office properties totaled $79.0 million at June 30, 2024, and represented 38.4% of capital. The nonowner-occupied office segment consisted of 23 notes totaling $54.6 million and carried a weighted average loan-to-value of 40.6% at quarter end. All relationships in this category are performing as agreed.”

Second Quarter 2024 Financial Highlights (at or for the period ended June 30, 2024)

Net income available to common shareholders was $2.02 million in the second quarter of 2024, compared to $1.85 million in the second quarter a year ago, and $1.66 million in the preceding quarter. Earnings per common share were $0.24 in the second quarter of 2024, compared to $0.21 in the second quarter a year ago, and $0.19 in the preceding quarter.
Total assets decreased $53.2 million, or 5.0%, to $1.007 billion at June 30, 2024, compared to $1.061 billion a year earlier, and increased $25.1 million, or 2.6%, compared to $982.4 million three months earlier. Average assets for the quarter totaled $1.004 billion, a decrease of $26.0 million, or 2.7%, from the second quarter a year ago and an increase of $17.6 million, or 1.7%, compared with $977.9 million the prior quarter.
Net interest income, before the provision for credit losses, increased 22.9% to $9.59 million in the second quarter of 2024, compared to $7.81 million in the second quarter a year ago, and increased 16.2% compared to $8.26 million in the preceding quarter. A loan loss of $2,000 was recorded in the second quarter of 2024. This compared to a $96,000 negative provision for credit losses in the second quarter of 2023, and a $433,000 provision for credit losses recorded for the preceding quarter.
Noninterest income was $366,000 in the second quarter of 2024, compared to $233,000 in the second quarter of 2023. Noninterest income during the preceding quarter was $946,000, which included $685,000 from a gain on the repayment of the FHLB advance.
Operating revenue (net interest income before the provision for loan losses plus non-interest income) was $9.96 million in the second quarter of 2024, a 23.9% increase compared to $8.04 million in the second quarter a year ago, and an 8.2% increase compared to $9.20 million in the first quarter of 2024.
Net interest margin was 3.90% in the second quarter, compared to 3.46% in the preceding quarter, and 3.19% in the second quarter a year ago. The 44 basis point increase in net interest margin during the second quarter of 2024 was due to an improved deposit mix and the decrease in deposit costs compared to the linked quarter. The average interest yield on loans in the second quarter of 2024 was 5.72%, compared to 5.03% in the year ago quarter and 5.29% in the prior quarter. The average cost of funds in the second quarter was 2.22%, a 4 basis point increase compared to the second quarter a year ago and a 3 basis point decrease compared to the prior quarter.
Noninterest expense was $7.00 million in the second quarter of 2024, compared to $5.50 million in the second quarter of 2023, and $6.41 million in the first quarter of 2024. Noninterest expense during the current quarter reflected costs associated with the merger, as well as expenses associated with the Company’s market expansion.
Loans, net of unearned income, increased $21.3 million, or 3.1%, to $701.3 million at June 30, 2024, compared to $680.0 million a year ago, and increased $8.7 million, or 1.3%, compared to $692.6 million three months earlier. In addition, at June 30, 2024, the unused portion of credit commitments totaled $133.8 million compared to $140.8 million in the prior quarter and $123.1 million a year ago.
Total deposits decreased $15.6 million, or 2.2%, to $704.3 million at June 30, 2024, compared to $719.9 million a year ago, and increased $33.1 million, or 4.9%, compared to $671.2 million three months earlier. Noninterest bearing demand deposit accounts increased 11.4% compared to a year ago and represented 32.4% of total deposits. Savings, NOW and money market accounts decreased 14.9% compared to a year ago and represented 37.9% of total deposits. CDs increased 3.9% compared to a year ago and comprised 29.7% of the total deposit portfolio, at June 30, 2024. For the quarter, the overall cost of funds was 222 basis points compared to 225 basis points in the prior quarter, and 218 basis points in the second quarter a year ago.
Asset quality remains strong with 0.00% nonperforming loans to gross loans at June 30, 2024. This compares to 1.01% of nonperforming loans to gross loans at March 31, 2024, and 1.13% of nonperforming loans to gross loans at June 30, 2023.
The allowance for credit losses on loans was $6.59 million, or 0.94% of gross loans at June 30, 2024, compared to $6.24 million, or 0.92% of total loans at June 30, 2023. The allowance for credit losses reflects management’s assessment of the current economic environment.
Primarily due to retained earnings, total equity increased 3.7% to $195.5 million as of June 30, 2024, compared to $188.6 million a year ago. The Bank’s capital levels remained well above FDIC “Well Capitalized” standards with a Tier 1 capital ratio of 25.2%; Common Equity Tier 1 capital ratio of 10.1%; Total capital ratio of 26.1%; and Leverage ratio of 19.9% as of June 30, 2024.
Book value per common share increased 12.1% to $8.89 as of June 30, 2024, compared to $7.93 per common share a year ago.
The board of directors declared a quarterly cash dividend of $0.055 per share. The dividend is payable September 4, 2024, to shareholders of record on August 23, 2024.

On October 23, 2023, the Company’s board of directors adopted a share repurchase program authorizing the repurchase of up to 436,440 shares of the Company’s outstanding shares of Series A common stock. As of June 30, 2024, the Company had repurchased 226,750 outstanding shares of Series A common stock. Although 209,690 shares remain available under the repurchase program ending September 30, 2024, the Board has temporarily suspended repurchases in consideration of the pending transaction with CBC Bancorp.

The Inflation Reduction Act of 2022 authorized the Environmental Protection Agency ("EPA") to create the Clean Communities Investment Accelerator (“CCIA”) program to “finance clean technology deployment in low-income and disadvantage communities, while simultaneously building the capacity of community lenders that serve those communities.” In March 2024 the EPA awarded $940 million in CCIA program funds to a community coalition led by the Justice Climate Fund. Community Bank of the Bay is a member of the Justice Climate coalition and we are now actively building capacity to help deploy these funds in the communities we serve.

For additional information on the EPA’s Clean Communities Investment Accelerator Program please visit https://www.epa.gov/greenhouse-gas-reduction-fund/clean-communities-investment-accelerator

Bay Community Bancorp
Quarterly Financial Summary (Unaudited)
(Dollars in thousands, except per share data)

		Three Months Ended
Earnings and dividends:		Jun. 30, 2024			Mar. 31, 2024				Dec. 31, 2023				Sep. 30, 2023				Jun. 30, 2023
	Interest income	$	14,047			$	12,609			$	13,297			$	13,268			$	12,278
	Interest expense		4,456				4,353				5,130				5,064				4,473
	Net interest income		9,591				8,256				8,167				8,204				7,805
	Provision for credit losses, loans		2				374				(106	)			626				(96	)
	Noninterest income		366				946				345				3,332				234
	Noninterest expense		6,999				6,436				6,844				6,464				5,495
	Provision for income taxes		881				735				462				1,322				786
	Net income		2,075				1,657				1,312				3,124				1,854
	Dividends on preferred stock		53				-				-			-	-			-	-
	Net income available for common shareholders		2,022				1,657				1,312			-	3,124			-	1,854

Share data:
	Basic earnings per common share	$	0.24			$	0.19			$	0.15			$	0.36			$	0.21
	Dividends declared per common share		0.055				0.050				0.050				0.050				0.050
	Book value per common share		8.89				8.72				8.56				8.14				7.93

	Common shares outstanding, 30,000,000 authorized		8,560,956				8,560,956				8,580,956				8,771,302				8,728,802
	Average common shares outstanding		8,561,318				8,562,055				8,684,272				8,756,981				8,728,802

Balance sheet - average balances:
	Loans receivable, net	$	682,946			$	680,589			$	668,290			$	673,832			$	662,989
	PPP loans		305				354				394				453				500
	Earning assets		966,639				941,745				1,004,692				1,016,344				980,615
	Total assets		1,004,000				977,981				1,043,990				1,058,462				1,021,566
	Deposits		694,422				652,911				704,643				716,450				684,328
	Borrowings		109,341				124,505				140,000				140,000				139,940
	Preferred equity (ECIP)		119,369				119,369				119,369				119,369				119,369
	Shareholders' common equity		73,371				72,369				69,933				68,968				68,129

Ratios:
	Return on average assets		0.79	%			0.68	%			0.50	%			1.17	%			0.73	%
	Return on average common equity		10.85	%			9.19	%			7.45	%			17.98	%			10.92	%
	Yield on earning assets		5.72	%			5.29	%			5.15	%			5.10	%			5.03	%
	Cost of interest-bearing deposits		2.79	%			2.73	%			2.91	%			2.86	%			2.61	%
	Cost of funds		2.22	%			2.25	%			2.41	%			2.35	%			2.18	%
	Net interest margin		3.90	%			3.46	%			3.16	%			3.15	%			3.19	%
	Efficiency ratio		70.29	%			69.60	%			81.03	%			76.15	%			68.35	%

Asset quality:
	Net loan (charge-offs) recoveries to average loans		0.001	%			-0.002	%			-0.009	%			-0.085	%			0.004	%
	Nonperforming loans to gross loans		0.000	%			1.011	%			1.056	%			1.057	%			1.131	%
	Nonperforming assets to total assets		0.000	%			0.712	%			0.732	%			0.677	%			0.725	%
	Allowance for credit losses to gross loans		0.94	%			0.94	%			0.92	%			0.93	%			0.92	%

Bay Community Bancorp
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except per share data)


Assets		Jun. 30, 2024			Mar. 31, 2024			Jun. 30, 2023
	Cash and due from	$	120,414		$	87,919		$	133,547
	Interest bearing deposits		8,981			9,478			11,200
	Available-for-sale securities		116,100			131,925			176,669
	Held-to-maturity securities		31,500			31,500			31,500
	Allowance for credit losses, investments		(95	)		(139	)		(177	)

	Commercial Loans		68,123			66,992			73,405
	PPP		281			330			471
	CRE (Owner occupied)		147,546			144,406			130,339
	CRE (Non-owner occupied)		350,027			341,764			343,661
	Construction and land		83,628			82,640			74,089
	Consumer and other		53,529			58,242			59,800
	Unearned fees, net		(1,850	)		(1,726	)		(1,852	)
	Allowance for credit losses, loans		(6,589	)		(6,523	)		(6,236	)
	Net Loans		694,695			686,125			673,677

	Premises and equipment		1,064			1,154			956
	Life insurance assets		8,117			8,058			7,890
	Accrued interest receivable and other assets		26,687			26,367			25,407
	Total assets	$	1,007,463		$	982,387		$	1,060,669

Liabilities and Shareholders' Equity
	Liabilities
	Deposits
	Demand	$	228,444		$	204,804		$	205,060
	Saving, NOW and money market		266,920			257,320			313,794
	Time		208,934			209,047			201,026
	Total deposits		704,298			671,171			719,880
	FHLB Advances		100,000			110,000			140,000
	Interest payable and other liabilities		7,650			7,230			12,231
	Total liabilities		811,948			788,401			872,111

	Shareholders' Equity
	Preferred stock, $1,000 par value		119,369			119,369			119,369
	Common stock, without par value		49,267			49,230			50,401
	Retained earnings		32,368			30,817			26,028
	Accumulated other comprehensive income (expense)		(5,489	)		(5,430	)		(7,240	)
	Total shareholders' equity		195,515			193,986			188,558
	Total liabilities and shareholders' equity	$	1,007,463		$	982,387		$	1,060,669

Bay Community Bancorp
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)

		Three Months Ended							Six Months Ended
Interest Income		Jun. 30, 2024		Mar. 31, 2024		Jun. 30, 2023			Jun. 30, 2024		Jun. 30, 2023
	Loans	$	10,960	$	9,978	$	9,264		$	20,938	$	18,311
	Securities		1,415		1,759		1,810			3,174		3,704
	Federal funds sold and deposits in banks		1,672		871		1,205			2,543		1,702
	Total interest income		14,047		12,608		12,279			26,655		23,717
Interest Expense
	Deposits		3,345		3,103		3,086			6,448		5,637
	Borrowings		1,111		1,249		1,387			2,360		2,626
	Total interest expense		4,456		4,352		4,473			8,808		8,263
Net Interest Income			9,591		8,256		7,806			17,847		15,454
Provision for Credit Losses			2		433		(96	)		434		(73	)
Net Interest Income After Provision for Loan Losses			9,589		7,823		7,902			17,413		15,527
Noninterest income
	Service charges		65		53		59			118		122
	Other		301		893		174			1,194		364
	Total noninterest income		366		946		233			1,312		486
Noninterest Expense
	Salaries and employee benefits		4,418		4,134		3,201			8,552		6,832
	Net occupancy and equipment expense		534		526		319			1,059		732
	Software and data processing fees		756		719		749			1,475		1,268
	Professional fees		544		365		295			909		543
	Marketing and business development		117		126		178			243		241
	FDIC insurance premiums		132		138		111			271		188
	Other		498		397		642			895		842
	Total noninterest expense		6,999		6,405		5,495			13,404		10,646
Income before Income Tax			2,956		2,364		2,640			5,321		5,367
Provision for Income Taxes			881		708		786			1,589		1,570
Net Income		$	2,075	$	1,656	$	1,854		$	3,732	$	3,797
Dividends on Preferred Stock			53		-		-			53		-
Net Income Available to Common Shareholders		$	2,022	$	1,656	$	1,854		$	3,679	$	3,797

Basic Earnings Per Common Share		$	0.24	$	0.19	$	0.21		$	0.43	$	0.43

Bay Community Bancorp
Additional Financial Information
(Dollars in thousands except per share amounts)(Unaudited)

Asset Quality Ratios and Data:
	Jun. 30, 2024			Mar. 31, 2024			Jun. 30, 2023
Nonaccrual loans (excluding restructured loans)	$	-		$	7,000		$	7,691
Nonaccrual restructured loans		-			-			-
Loans past due 90 days and still accruing		-			-			-
Total non-performing loans		-			7,000			7,691

OREO and other non-performing assets		-			-			-
Total non-performing assets	$	-		$	7,000		$	7,691

Nonperforming loans to gross loans		0.000	%		1.011	%		1.131	%
Nonperforming assets to total assets		0.000	%		0.713	%		0.725	%
Allowance for loan losses to gross loans		0.94	%		0.94	%		0.92	%

Performing restructured loans (RC-C)	$	118		$	119		$	121

Net (charge-offs) recoveries quarter ending	$	5		$	(16	)	$	29

Contact:	William S. Keller, CEO
	510-433-5404
	wkeller@BankCBB.com

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