Community Bancorp Inc. (the "Company") (NASDAQ:CMBC), a Southern
California based community bank holding company with $888.4 million
in total assets, today announced record financial results for the
quarter ended March 31, 2006. Net income increased 41.0% for the
first quarter 2006 to $3.6 million compared to $2.5 million for the
same period last year. Earnings per share (EPS) increased 23.9% for
the first quarter 2006 to $0.57 per diluted share compared to $0.46
per diluted share for the same period in 2005. Return on average
tangible equity (ROTE) increased to 26.39% for the first quarter of
2006 compared to 21.29% for the same period in 2005. Return on
average assets (ROA) was 1.59% for the first quarter of 2006
compared to 1.49% for the same period last year. Factors
contributing to the quarter-over-quarter increase in net income
included the Rancho Bernardo Bank acquisition, strong loan and
deposit growth and an increase in the net interest margin. -0- *T
FIRST QUARTER RESULTS (unaudited) (dollars in First First Fourth
thousands, Quarter Quarter Quarter except per share data) 2006 2005
% Change 2005 % Change ------- ------- --------- ------- ---------
Diluted EPS $0.57 $0.46 23.91% $0.62 -8.06% Net Income $3,581
$2,539 41.04% $3,842 -6.79% Return on Average Assets (ROA) 1.59%
1.49% 6.34% 1.73% -8.19% Return on Average Tangible Equity (ROTE)
26.39% 21.29% 23.99% 31.41% -15.97% Net Interest Margin 6.10% 5.66%
7.77% 6.01% 1.50% Efficiency Ratio 59.67% 59.75% -0.13% 55.69%
7.15% *T "The results for the first quarter 2006 continue to build
upon our success during 2005, showing strong growth in both our
balance sheet and earnings," stated Michael J. Perdue, President
and CEO. "We continue to gain momentum in all of our markets,
including east San Diego County as well as our Riverside County
markets where we opened our twelfth branch in Corona during the
month of March. We remain committed to our strategic vision of
being the premier community banking institution in Southern
California. Our financial results in the first quarter reflect our
continued strong profitability which led to an increased dividend
to $0.125 for the first quarter 2006, a 25% increase from last
year's first quarter dividend. "We experienced strong loan demand
contributing to a 23% increase in gross loans from the same period
in 2005. The continued improvement in our deposit mix has also
contributed to our improved performance from last year. Average
non-interest bearing demand deposits have increased significantly,
rising 45% to $165.5 million for the first quarter 2006 compared to
$114.1 million for the same period in 2005. As a result of our
performance, combined with the increase in market interest rates,
our net interest income increased 48% for the first quarter 2006
over 2005, and our net interest margin increased 44 basis points
from 5.66% in the first quarter 2005 to 6.10% in the first quarter
2006," continued Perdue. Loan production was strong, increasing
15.7% to $142.4 million for the first quarter 2006 compared to
$123.1 million for the same period in 2005. Of these totals,
commercial and other loan originations were 72.4% of the total
production, or $103.0 million, while SBA loan originations were
27.6% of the total production. Overall, SBA loan production
declined 12.6% from $45.1 million in the first quarter 2005 to
$39.4 million in the first quarter 2006 however SBA 7a production
increased 54.0% to $18.6 million compared to $12.1 million for the
same period last year. Cash and cash equivalents declined $13.4
million compared to December 31, 2005 due to a reduction in federal
funds sold of $14.2 million. Compared to the fourth quarter 2005,
overall loan production increased 25.6% from $113.4 million to
$142.4 million. However, due to higher than expected payoff
activity in the quarter loan totals declined $4.4 million from
$737.1 million as of December 31, 2005 to $732.7 million as of
March 31, 2006. As a result of strong core deposit production in
the quarter, deposits increased $8.0 million compared to December
31, 2005 despite runoff of $22.3 million in the wholesale CD
portfolio in the quarter. As a result of the decrease in cash,
increase in deposits, and increase in equity, short term borrowings
declined $31.8 million compared to December 31, 2005. INTEREST
INCOME AND EXPENSE During the first quarter of 2006, net interest
income after loan loss provision increased 47.8% over the same
period last year. Total interest income was $17.0 million, a 59.6%
increase over the $10.6 million for the same period in 2005. The
increase was the result of the 32.0% increase in average interest
earning assets and increases in the yield on those assets. Total
interest expense for the first quarter 2006 increased to $4.7
million compared to $2.0 million for the same period in 2005.
Interest expense increased due to the 27.4% increase in average
interest bearing liabilities combined with an increase in the cost
of those liabilities due to an increase in market interest rates.
Average transaction accounts increased significantly, rising 33.5%
to $398.7 million for the first quarter 2006 compared to $298.6
million for the same period in 2005. OTHER OPERATING INCOME Other
operating income decreased 4.6% to $2.5 million for the first
quarter of 2006 compared to $2.6 million during the same period
last year due to a decrease in the gain on sale of loans and a
decline in loan servicing fees. SBA 7a loan sales totaled $15.5
million and SBA 504 loan sales totaled $6.3 million for the first
quarter of 2006 compared to $18.4 million in SBA 7a and $1.5
million in SBA 504 loans for the same period in 2005. The change in
mix of loans sold resulted in a decrease in gain on sale revenue
during the first quarter of 2006 to $1.7 million compared to $1.8
million for the same period in 2005. The decreases in gain on sale
and in loan servicing fees were partially offset by increases in
customer service charges and other fee income. OTHER OPERATING
EXPENSES Other operating expenses increased 31.3% to $8.8 million
for the first quarter of 2006 compared to $6.7 million for the same
period last year. The increase in non-interest expense was due to
significant growth, including the acquisition of Rancho Bernardo
Community Bank, with the addition of one banking office and the
addition of a de novo banking office in Corona, CA. Additional
increases were as a result of the expensing of stock options
associated with the adoption of Statement of Financial Accounting
Standard No. 123 (revised 2004) at $64,000 for the quarter, and the
expensing of restricted stock grants at $87,000 for the quarter
which fully vested in February. As of March 31, 2006, the Company
had 259 full time equivalent employees, compared to 198 as of March
31, 2005. The Company's efficiency ratio remained steady at 59.67%
for the first quarter of 2006 compared to 59.75% for the same
period in 2005. RESERVES AND ASSET QUALITY As of March 31, 2006,
the reserve for loan losses increased to $9.9 million compared to
$7.9 million as of March 31, 2005. The reserve for loan losses as a
percentage of total gross loans was 1.34% as of March 31, 2006
compared to 1.33% as of March 31, 2005. The reserve for loan losses
as a percentage of total gross loans net of government guarantees
was 1.39% as of both March 31, 2006 and March 31, 2005. The Company
had net loan recoveries to average net loans of 0.04% for the
quarter ended March 31, 2006 compared to net loan recoveries of
0.06% for the same period in 2005. Non-performing loans totaled
$4.5 million as of March 31, 2006 compared to $3.9 million as of
March 31, 2005. Net of government guarantees, non-performing loans
totaled $2.4 million, or 0.33% of total gross loans, as of March
31, 2006 compared to $1.0 million, or 0.17% of total gross loans,
as of March 31, 2005. CAPITAL RATIOS The Company's and Bank's
capital ratios continue to be above the well-capitalized guidelines
established by bank regulatory agencies. The Company's tangible
equity to tangible assets declined to 6.53% as of March 31, 2006
compared to 6.89% as of March 31, 2005 due to the significant
growth in assets, including the acquisition of Rancho Bernardo
Community Bank. GENERAL INFORMATION Community Bancorp is a bank
holding company with $888.4 million in assets as of March 31, 2006,
with a wholly owned banking subsidiary, Community National Bank,
headquartered in Escondido, California. The bank's primary focus is
community banking, providing commercial banking services including
commercial, real estate and SBA loans to small and medium sized
businesses. The bank serves San Diego County and southwest
Riverside County with twelve community banking offices in Bonsall,
Corona, El Cajon, Encinitas, Escondido, Fallbrook, La Mesa,
Murrieta, Rancho Bernardo, Santee, Temecula and Vista, and has
additional SBA loan production offices that originate loans
throughout Arizona, California and Nevada. FORWARD LOOKING
STATEMENTS Statements concerning future performance, developments
or events, expectations for growth and income forecasts, and any
other guidance on future periods, constitute forward-looking
statements that are subject to a number of risks and uncertainties.
Actual results may differ materially from stated expectations.
Specific factors include, but are not limited to, loan production,
balance sheet management, expanded net interest margin, the ability
to control costs and expenses, interest rate changes and financial
policies of the United States government (including the Small
Business Administration), and general economic conditions.
Additional information on these and other factors that could affect
financial results are included in its Securities and Exchange
Commission filings. The Company disclaims any obligation to update
any such factors or to publicly announce the results of any
revisions to any forward-looking statements contained herein to
reflect future events or developments. -0- *T CONSOLIDATED BALANCE
SHEETS Percentage ------------------------------ change (unaudited)
(dollars in from March December March thousands) Mar 31, 31, 31,
31, 2005 2006 2005 2005 ---------- --------- --------- ---------
ASSETS: Cash and cash equivalents $24,316 $37,752 $36,640
Investments and interest bearing deposits in financial institutions
60,393 61,710 33,531 Loans held for investment 20% 561,958 582,745
468,154 Less allowance for loan losses (9,856) (9,773) (7,917)
--------- --------- --------- Net loans held for investment 552,102
572,972 460,237 Loans held for sale 37% 170,705 154,327 124,710
Premises and equipment, net 7,063 6,971 6,802 Other real estate
owned and repossessed assets 233 68 1,631 Accrued interest and
other assets 15,680 16,124 14,196 Income tax receivable and
deferred tax asset, net 5,925 6,730 5,937 Servicing assets, net
3,929 3,833 4,301 Interest-only strips, at fair value 2,733 2,622
1,992 Goodwill 45,309 45,441 18,286 --------- --------- ---------
Total assets 25% $888,388 $908,550 $708,263 ========= =========
========= LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Interest
bearing 17% $545,340 $545,517 $467,141 Non-interest bearing 44%
173,222 164,956 119,967 --------- --------- --------- Total
deposits 22% 718,562 710,473 587,108 Short term borrowing 20,540
52,290 27,000 Long term debt 35,575 37,203 18,248 Accrued expenses
and other liabilities 13,326 12,326 10,065 --------- ---------
--------- Total liabilities 23% 788,003 812,292 642,421 ---------
--------- --------- Stockholders' equity Common stock, $0.625 par
value; authorized 10,000,000 shares, issued and outstanding;
6,032,363 at March 31, 2006, 5,939,397 at December 31, 2005 and
5,263,123 at March 31, 2005 3,770 3,705 3,289 Additional paid-in
capital 63,042 61,696 39,779 Accumulated other comprehensive loss,
net of income taxes (582) (386) (210) Deferred compensation -
restricted stock - (85) - Retained earnings 34,155 31,328 22,984
--------- --------- --------- Total stockholders' equity 52%
100,385 96,258 65,842 --------- --------- --------- Total
liabilities and stockholders' equity 25% $888,388 $908,550 $708,263
========= ========= ========= CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------ (unaudited) (dollars in
thousands, Qtly Three Months Ended except per share data) % March
31, Change 2006 2005 INTEREST INCOME ------ -----------
-------------- Interest on loans $16,192 $10,202 Interest on fed
funds sold 32 73 Interest-earning deposits with banks 4 8 Interest
on other investments 740 351 ------------ -------------- Total
Interest Income 60% 16,968 10,634 INTEREST EXPENSE Deposits 3,572
1,604 Other borrowed money 1,141 418 ------------ --------------
Total Interest Expense 133% 4,713 2,022 Net interest income 42%
12,255 8,612 Provision for loan losses - 318 ------------
-------------- Net Interest Income After Loan Loss Provision 48%
12,255 8,294 OTHER OPERATING INCOME Net gain on sale of loans 1,666
1,830 Loan servicing fees, net 106 224 Customer service charges 321
238 Other fee income 371 291 ------------ -------------- Total
Other Operating Income -5% 2,464 2,583 OTHER OPERATING EXPENSES
Salaries and employee benefits 5,239 3,730 Occupancy 668 545
Depreciation 344 301 Other 2,532 2,113 ------------ --------------
Total Other Operating Expenses 31% 8,783 6,689 ------------
-------------- Income before income taxes 5,936 4,188 Income tax
2,355 1,649 ------------ -------------- NET INCOME 41% $3,581
$2,539 ============ ============== Per Share Data Basic earnings
per share 22% $0.60 $0.49 ============ ============== Diluted
earnings per share 24% $0.57 $0.46 ============ ==============
Average shares for basic earnings per share 5,972,455 5,227,333
Average shares for diluted earnings per share 6,269,044 5,542,680
SUPPLEMENTAL DATA ----------------- (unaudited)(dollars in
thousands, except Quarter ended per share data) March 31,
--------------- 2006 2005 ------- ------- Annualized return on
average assets 1.59% 1.49% Annualized return on average equity
14.37% 15.59% Annualized return on average tangible equity 26.39%
21.29% Efficiency ratio 59.67% 59.75% Annualized net interest
margin 6.10% 5.66% Book value per share $16.64 $12.51 Tangible book
value per share $9.13 $9.04 Dividends per share $0.125 $0.10
NON-PERFORMING ASSETS At At --------------------- March 31,
December 31, --------------- --------- 2006 2005 2005 -------
------- --------- Non-accrual loans $4,501 $3,887 $3,647 Loans past
due 90 days or more - - - Restructured loans 16 - - ------- -------
--------- Total non-performing loans 4,517 3,887 3,647 OREO &
other repossessed assets 233 1,631 68 ------- ------- ---------
Total non-performing assets $4,750 $5,518 $3,715 ======= =======
========= Total non-performing loans/gross loans 0.61% 0.65% 0.49%
Total non-performing assets/total assets 0.53% 0.78% 0.41% Total
non-performing loans net of guarantees/gross loans 0.33% 0.17%
0.28% Total non-performing assets net of guarantees/total assets
0.30% 0.37% 0.24% ALLOWANCE FOR LOAN LOSSES Quarter ended
------------------------- March 31, --------------- 2006 2005
------- ------- Balance at beginning of period $9,773 $7,508
Provision for loan losses - 318 Net recoveries 83 91 -------
------- Balance at end of period $9,856 $7,917 ======= ======= Loan
loss allowance/gross loans 1.34% 1.33% Loan loss allowance/gross
loans net of guarantees 1.39% 1.39% Loan loss allowance/loans held
for investment 1.75% 1.69% Loan loss allowance/non-performing loans
218.20% 203.68% Loan loss allowance/non-performing assets 207.49%
143.48% Loan loss allowance/non-performing loans, net of guarantees
410.67% 788.55% Loan loss allowance/non-performing assets, net of
guarantees 374.33% 300.46% Net recoveries to average loans
(annualized) 0.04% 0.06% CAPITAL RATIOS At At -------------- March
31, December 31, --------------- --------- 2006 2005 2005 -------
------- --------- Holding Company Ratios Total capital (to
risk-weighted assets) 12.32% 10.80% 11.79% Tier 1 capital (to
risk-weighted assets) 10.96% 9.55% 10.55% Tier 1 capital (to
average assets) 10.31% 9.39% 10.18% Tangible equity to tangible
assets 6.53% 6.89% 5.89% Bank only Ratios Total capital (to
risk-weighted assets) 12.04% 10.55% 11.49% Tier 1 capital (to
risk-weighted assets) 10.79% 9.30% 10.25% Tier 1 capital (to
average assets) 10.14% 9.13% 9.91% For the three months ended March
31, 2006 ---------------------------------- (unaudited) (dollars in
thousands) Average Interest Average Balance Earned/Paid Rate/Yield
--------- ------------ ----------- Average assets: Securities and
time deposits at other banks $63,707 $744 4.74% Fed funds sold
2,859 32 4.56% Loans: Commercial 52,846 1,048 8.04% Real Estate
646,188 14,230 8.93% Aircraft 28,820 486 6.84% Consumer 19,963 428
8.70% --------- ------------ Total loans 747,817 16,192 8.78%
--------- ------------ Total earning assets 814,383 16,968 8.45%
Non earning assets 87,437 --------- Total average assets $901,820
========= Average liabilities and stockholders' equity: Interest
bearing deposits: Savings and interest bearing accounts $233,248
$771 1.34% Time deposits 311,951 2,801 3.64% --------- ------------
Total interest bearing deposits 545,199 3,572 2.66% Short term
borrowing 44,506 489 4.46% Long term debt 36,595 652 7.22%
--------- ------------ Total interest bearing liabilities 626,300
4,713 3.05% Demand deposits 165,477 Accrued expenses and other
liabilities 10,389 Net stockholders' equity 99,654 --------- Total
average liabilities and stockholders' equity $901,820 $12,255
========= ============ Net interest spread 5.40% =========== Net
interest margin 6.10% =========== For the three months ended March
31, 2005 ---------------------------------- (unaudited) (dollars in
thousands) Average Interest Average Balance Earned/Paid Rate/Yield
--------- ------------ ----------- Average assets: Securities and
time deposits at other banks $36,868 $359 3.95% Fed funds sold
11,715 73 2.53% Loans: Commercial 39,630 647 6.62% Real Estate
481,994 8,726 7.34% Aircraft 29,380 488 6.74% Consumer 17,292 341
8.00% --------- ------------ Total loans 568,296 10,202 7.28%
--------- ------------ Total earning assets 616,879 10,634 6.99%
Non earning assets 63,062 --------- Total average assets $679,941
========= Average liabilities and stockholders' equity: Interest
bearing deposits: Savings and interest bearing accounts $184,468
$254 0.56% Time deposits 268,445 1,350 2.04% --------- ------------
Total interest bearing deposits 452,913 1,604 1.44% Short term
borrowing 20,820 132 2.57% Long term debt 17,687 286 6.56%
--------- ------------ Total interest bearing liabilities 491,420
2,022 1.67% Demand deposits 114,090 Accrued expenses and other
liabilities 9,300 Net stockholders' equity 65,131 --------- Total
average liabilities and stockholders' equity $679,941 $8,612
========= ============ Net interest spread 5.32% =========== Net
interest margin 5.66% =========== *T
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