California Bank of Commerce More Than Doubles Net Income in 2012

California Bank of Commerce More Than Doubles Net Income in 2012

Reports Record Loans, Deposits, and Revenue

LAFAYETTE, Calif.--(BUSINESS WIRE)-- California Bank of Commerce (OTCBB: CABC) reports Net Income of $1.8 million for the full year 2012 compared to $793,000 for 2011, an increase of 123%, with basic earnings per share at $0.57 in 2012, compared to $0.23 per share in 2011, an increase of 147%.

"The Bank continues to be a very compelling solution for middle market companies in Northern California. Our strong loan and deposit growth is a testament to our people and the way we do business banking," said John Lindstedt interim President and CEO. The increase in Net Income in 2012 was primarily driven by $42 million in average loan growth and a stable Net Interest Margin year over year.

Highlights: 2012 versus 2011

  • Total Loans grew $38 million or 18% to $246 million
  • Total Deposits grew $38 million or 15% to $281 million
  • Net Interest Income grew $2.3 million or 25% to $11 million
  • Net Income grew $1 million or 123% to $1.8 million

Highlights: Fourth Quarter 2012 versus Third Quarter 2012

  • Total Loans grew $4 million or 2%
  • Total Deposits grew $7 million or 3%

Net Interest Income and Margin

For the year ended December 31, 2012 compared to the year ended December 31, 2011, Net Interest Income increased by $2.3 million or 25% to $11.4 million. This year over year increase in Net Interest Income was primarily driven by a combination of strong loan growth, growth in core deposits, and a relatively stable net interest margin. Average Total Earning Assets increased $63 million or 26% between the years and were concentrated in loans, which were up by $42 million or 22%, while the average Net Interest Margin for 2012 was 3.72%, compared to last year's average of 3.73%.

On a linked quarterly basis, Net Interest Income for the Fourth Quarter of 2012 was up by $86,000 to $3.0 million compared to the Third Quarter of 2012. The change in Net Interest Income resulted from a $13 million or 4% increase in Average Total Earning Assets concentrated in cash and investments, which led to a decline in yield. This decline was partially offset by strong growth in Non-Interest-bearing Deposits, an increase in the average loan yield, and a decrease in the cost of funds. Consequently, the Net Interest Margin declined from 3.65% in the Third Quarter to 3.60% in the Fourth Quarter.

For the Fourth Quarter of 2012 compared to the Fourth Quarter of 2011, Net Interest Income increased by $488,000 or 19% to $3.0 million, as a result of strong growth in Average Total Earning Assets, which increased by $56 million or 20% between the periods. This growth in Average Total Earning Asset was concentrated in loans, which were up $35 million or 17%, and investments, which were up $13 million or 42%.

Yields on loans and investments declined between the Fourth Quarter of 2012 and the Fourth Quarter of 2011, with the average yield on Total Earning Assets at 4.08% in 2012 compared to 4.22% in 2011. This decline was mostly offset by strong core deposit growth, including a $21 million or 35% increase in Non-Interest-Bearing deposits and a 16 basis point decrease in the Bank's average cost of interest-bearing liabilities. As a result of these rate and volume changes, the Fourth Quarter 2012 Net Interest Margin of 3.60% declined by 3 basis points compared to the 3.63% average margin in the Fourth Quarter of 2011.

Non-Interest Income

For 2012, Non-Interest Income increased by $906,000 to $1.7 million, compared to $834,000 in 2011. While gains on loan and investment sales and earnings from Bank-Owned Life Insurance were primary contributors to this year-over-year change, 40% of the increase was driven by transactional fees related to the Bank's lending and deposit activities.

Non-Interest Expense

Non-Interest Expense for 2012 increased by $1.6 million to $8.8 million compared to $7.2 million in 2011, an increase of 23%. The Non-Interest Expense increase was primarily the result of additional staffing to support the Bank's strong asset growth, with compensation and benefits expenses up by 29%, while Occupancy, Equipment and Other expenses were up a combined 12%.

The Bank has consistently improved its operating results by controlling costs as it has grown, as illustrated by a decrease in its average efficiency ratio to 66.8% in 2012 compared to 73.6% in 2011 and 71.1% in 2010.

Further, the Bank has benefited from strong employee performance increasing its Total Assets per Employee to $8.7 million at year-end 2012 compared to $7.9 million at year-end 2011 and $7.4 million at year-end 2010.

Balance Sheet

As of December 31, 2012, Total Assets were up by $51 million or 17% to $349 million with Total Loans up by $38 million or 18% to $246 million compared to December 31, 2011. Of this loan growth, $27 million or 72% was in Commercial and Industrial loans, while Commercial Real Estate loans were up by $10 million. Other earning assets, including Interest-Bearing Cash and Investments, increased by $8.9 million or 11% from 2011 to 2012.

For the year ended December 31, 2012, Total Asset growth was funded primarily with deposits, which were up by $38 million or 15%, with Non-Interest Bearing Deposits increasing by $28 million or 50% over the year ended December 31, 2011. Non-Interest Bearing Deposits represented 30% of total deposits at December 31, 2012 compared to 23% at December 31, 2011. Additionally, with low borrowing costs, the Bank increased its Long-Term Borrowings in 2012 by $11 million over December 31, 2011.

Credit Quality

The Bank's overall loan quality improved in 2012 with total non-performing Loans decreasing to $4.4 million or 1.26% of Total Assets at December 31, 2012, compared to $5.9 million and 1.99%, respectively, at December 31, 2011. Of this amount, performing TDR (Troubled Debt Restructuring) assets fell from $4.9 million at the end of 2011 to $2.8 million at the end of 2012.

Reflecting the generally improving credit trends and the quality metrics within the Bank's loan portfolio, the Reserve for Loan Losses was $4.675 million at year-end 2012 or 1.90% of Total Loans, compared to $4.175 million or 2.01% of Total Loans at year-end 2011.

About California Bank of Commerce

California Bank of Commerce was designed and built to provide a unique banking experience for its clients. The Bank offers a broad range of commercial banking services to closely held businesses and professionals throughout the San Francisco Bay Area. For more information on California Bank of Commerce and our unique banking experience, call us at (925) 283-2265, or visit us at

($ Thousands)
Twelve Months EndedYear Over Year Change
Interest income$13,048$10,689$2,35922%
Interest expense (1,612) (1,555)$(57)-4%
Net interest income before provision$11,436$9,134$2,30225%
Provision to the Loan Loss Reserve (1,250) (1,328)$78 6%
Net interest income after provision$10,186$7,806$2,38030%
Non-interest income1,740834$906109%
Non-interest expense (8,806) (7,164)$(1,642)-23%
Income before tax provision3,1201,476$1,644111%
(Provision) Benefit for income taxes (1,354) (683)$(671)-98%
Net income - Period$1,766 $793 $973 123%
Earnings Per Common Share
Income per Common share$0.642$0.288$0.354123%
Basic Income (loss) per Common share$0.569$0.230$0.339147%
Weighted average shares outstanding2,750,2172,750,0002170%
 Three Months Ended Year Over Year Change
31-Dec-12 30-Sep-12 31-Dec-11$ %
Interest income$3,422$3,358$2,949$47316%
Interest expense (403) (426) (418) 15 4%
Net interest income before provision$3,019$2,932$2,531$48819%
Provision to the Loan Loss Reserve (250) (312) (334) 84 25%
Net interest income after provision$2,769$2,620$2,197$57226%
Non-interest income584344215369172%
Non-interest expense (2,422) (2,107) (1,857) (565)-30%
Income before tax provision93185755537668%
(Provision) Benefit for income taxes (403) (371) (237) (166)-70%
Net income - Period$528 $486 $318 $210 66%
Earnings Per Common Share
Income per Common share$0.192$0.177$0.116$0.07666%
Basic Income (loss) per Common share$0.182$0.167$0.104$0.07875%
Weighted average shares outstanding2,750,8612,750,0002,750,0008610%
($ Thousands)
Year Over Year Change
Total Cash and Investments$96,284$92,598$84,731$11,55314%
Loans, net of deferred costs/fees246,149241,755208,119$38,03018%
Loan Loss Reserve(4,675)(4,650)(4,175)$(500)-12%
Other 11,509  11,745  9,870 $1,639 17%
Total Assets$349,267 $341,448 $298,545 $50,722 17%
Liabilities & Shareholders' Equity
Non-interest Bearing Deposits$83,182$73,163$55,465$27,71750%
Interest Bearing Deposits 198,300  200,825  188,438 $9,862 5%
Total Deposits$281,482$273,988$243,903$37,57915%
Total Borrowings and Other Liabilities 31,089  31,073  19,999 $11,090 55%
Total Liabilities$312,571$305,061$263,902$48,66918%
Shareholder's Equity$36,696 $36,387 $34,643 $2,053 6%
Total Liabilities & Shareholders' Equity$349,267 $341,448 $298,545 $50,722 17%
Shares Outstanding2,757,2432,750,0002,750,0007,2430%
Book Value per Common Share$9.34$9.25$8.62$0.728%
Average Yields and Cost4Q 20123Q 20124Q 2011
Net Interest Margin3.60%3.65%3.63%
Yield on Earning Assets4.08%4.17%
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