Community Bank Reports Year-to-Date Earnings of $18.8 Million

Community Bank Reports Year-to-Date Earnings of $18.8 Million

PASADENA, Calif.--(BUSINESS WIRE)-- Community Bank, an independent business bank with 17 business centers in Los Angeles, San Bernardino, Riverside, Ventura and Orange Counties, today reported a 2.6% increase in net income to $7.0 million for the third quarter of 2012 compared to $6.8 million for the similar quarter in 2011. For the nine months ended September 30, 2012, the Bank reported net income of $18.8 million compared to $18.5 million for the same period last year.

Net interest income for the third quarter of 2012 increased 5.4% over the prior year, totaling $24.7 million in 2012 versus $23.4 million in the prior year. During the nine months ended September 30, 2012, net interest income increased 0.4% over the prior year, totaling $69.9 million in 2012 versus $69.6 million in 2011. The improvement during 2012 was largely driven by lower funding costs combined with an increase in earning asset growth at compressed rates which resulted in net interest margins of 3.57% and 3.56% for the third quarter and nine months ended September 30, 2012 respectively, compared to 3.66% and 3.77% for the third quarter and nine months ended September 30, 2011.

The Bank's reserve for loan losses as of September 30, 2012 was $35.3 million or 1.89% of total loans compared to $36.4 million or 2.06% of total loans as of September 30, 2011. The provision for loan losses totaled $0.3 million for the third quarter and nine months ended September 30, 2012, compared to 0.3 million and $1.9 million for the third quarter and nine months ended September 30, 2011. The lower provisioning needs is a direct reflection of continued improvements in asset quality.

Total loans as of September 30, 2012 increased from the prior year quarter at $1.87 as compared to $1.77 billion as of September 30, 2011. Total deposits as of September 30, 2012 increased to $2.16 billion as compared to $1.99 billion as of September 30, 2011. Community Bank's capital ratios continue to exceed regulatory requirements with Tier 1 Leverage, Tier 1 Risk-based Capital and Total Risk-based Capital Ratios of 9.42%, 11.90%, and 13.16%, respectively, as of September 30, 2012. Regulatory requirements for a "well-capitalized bank" are 5%, 6%, and 10%, respectively.

David Malone, President and Chief Executive Officer, commented, "The Bank's profitability in 2012, although good, was negatively affected by the low interest rate environment. This was evidenced by a reduction in net interest margin in 2012 versus 2011. Our loan pipeline continues strong but customers seem reluctant to initiate capital spending programs prior to the November elections. The uncertainty occasioned by the so-called 'fiscal cliff' coupled with possible income tax increases has made all of us cautious.

"The Bank continues to enjoy a strong capital base with excess liquidity. We also are optimistic about the future and expect good operating results through the remainder of the year. We encourage our customers to vote on November 6th. We are fortunate to live in a Democracy that allows the freedom to render our opinion at the ballot box."

Community Bank, with assets exceeding $2.9 billion, was founded in 1945 and is headquartered in Pasadena. The Bank is a regional Southern California Bank with offices in Anaheim, Burbank, Commerce, Corona, Fontana, Glendale, Huntington Beach, Irvine, Ontario, Pasadena, Redlands, Santa Clarita, Santa Fe Springs, South Bay, Ventura, West Los Angeles and Woodland Hills. For more information, visit the Community Bank Website at

This press release contains certain forward-looking statements, including certain plans, expectations, goals and projections, which are subject to numerous assumptions, risks and uncertainties. Actual results could differ materially from those contained in or implied by such statements for a variety of factors including: changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of business strategies; the nature and extent of governmental actions and reforms; and rapidly changing technology and evolving banking industry standards.

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Financial Highlights - Income Statement and Ratios (Unaudited)
(Amounts in Thousands)
For the quarters endedFor the nine months ended
September 30,September 30,
INCOME STATEMENT 2012  2011 ChangeChange 2012  2011 ChangeChange
Interest income$29,946$29,088$8582.9%$85,559$87,027$(1,468)(1.7%)
Interest expense 5,262  5,660  (398)(7.0%) 15,658  17,439  (1,781)(10.2%)
Net interest income24,68423,4281,2565.4%69,90169,5883130.4%
Provision for loan losses 300  300  - -  300  1,900  (1,600)(84.2%)
Net interest income after provision24,38423,1281,2565.4%69,60167,6881,9132.8%
Non-interest income2,3492,774(425)(15.3%)7,1529,265(2,113)(22.8%)
Non-interest expense 15,290  14,723  567 3.9% 46,188  47,027  (839)(1.8%)
Income before income tax11,44311,1792642.4%30,56529,9266392.1%
Income tax 4,462  4,375  87 2.0% 11,806  11,467  339 3.0%
Net income$6,981 $6,804 $177 2.6%$18,759 $18,459 $300 1.6%
Financial Highlights - Balance Sheet (Unaudited)
(Amounts in Thousands)
As of September 30,DollarPercent
BALANCE SHEET 2012  2011 ChangeChange
Cash and cash equivalents$54,402$45,883$8,51918.6%
Non-owner occupied real estate loans619,365651,916(32,551)(5.0%)
Owner occupied real estate loans 753,801  640,170  113,631 17.8%
Total real estate loans1,373,1661,292,08681,0806.3%
Commercial & industrial loans465,473437,64527,8286.4%
Other loans 30,289  37,544  (7,255)(19.3%)
Total loans1,868,9281,767,275101,6535.8%
Loan loss reserve (35,307) (36,387) 1,080 (3.0%)
Net loans1,833,6211,730,888102,7335.9%
Other assets 112,764  110,925  1,839 1.7%
Total assets$2,909,228 $2,607,564 $301,664 11.6%
Earning assets$2,795,349$2,500,489$294,86011.8%
Non-interest bearing deposits$614,880$546,340$68,54012.5%
Interest bearing deposits 1,545,444  1,444,046  101,398 7.0%
Total deposits2,160,3241,990,386169,9388.5%
Funds purchased/borrowed443,000344,28098,72028.7%
Other liabilities 17,143  13,555  3,588 26.5%
Total liabilities2,620,4672,348,221272,24611.6%
Stockholders' equity 288,761  259,343  29,418 11.3%

Total liabilities & stockholders' equity

$2,909,228 $2,607,564 $301,664 11.6%
Selected Financial Data and Highlights (Unaudited)
(Amounts in Thousands)
For the quarters endedFor the nine months ended
September 30,September 30,
 2012  2011  2012  2011 
Return on average equity9.78%10.61%9.08%10.06%
Return on average assets0.97%1.02%0.92%0.96%
Net interest margin3.57%3.66%3.56%3.77%
Efficiency ratio56.56%56.19%60.00%59.83%
Book value per common share$94.69$86.31
Basic earnings per common share$2.29$2.27$6.17$6.14
Diluted earnings per common share$2.23$2.17