Community Bancorp Inc. (the "Company") (NASDAQ:CMBC) a Southern
California based community bank holding company with $896.8 million
in total assets, today announced financial results for the six
months and quarter ended June 30, 2006. Net income increased 20.1%
for the six months ended June 30, 2006 to $6.5 million compared to
$5.4 million for the same period last year. Diluted earnings per
share (EPS) increased 6.2% for the six months ended June 30, 2006
to $1.03 compared to $0.97 for the same period in 2005, reflecting
the 639,000 share increase resulting from the Rancho Bernardo Bank
acquisition. For the quarter ended June 30, 2006, net income
increased 1.3% to $2.9 million compared to $2.8 million for the
quarter ended June 30, 2005. Diluted EPS declined to $0.45 for the
second quarter 2006 compared to $0.51 for the same period last year
reflecting the additional shares outstanding. Return on average
tangible equity (ROTE) increased to 23.13% for the six months ended
June 30, 2006 compared to 22.04% for the same period in 2005. For
the second quarter 2006, ROTE was 20.02% compared to 22.76% for the
second quarter 2005. Return on average assets (ROA) was 1.44% for
the six months ended June 30, 2006 compared to 1.52% for the same
period last year. For the second quarter in 2006, ROA was 1.29%
compared to 1.54% for the second quarter 2005. Factors contributing
to these results included the Rancho Bernardo Bank acquisition, an
increase in the net interest margin, and continued strong credit
quality offset by a 29.4% decrease in other operating income. LOANS
AND DEPOSITS Despite strong loan production of $243.8 million for
the six months ended June 30, 2006, the company experienced higher
than expected principal payoffs on commercial real estate and
construction loans, which resulted in total gross loans increasing
$8.0 million or 1.1% to $748.4 million as of June 30, 2006 compared
to $740.4 million as of December 31, 2005. Total gross loans
increased 15.4%, or $100.1 million compared to June 30, 2005
including the loans acquired in the Rancho Bernardo acquisition of
$80.6 million. Commercial and other loan originations were 70% of
the total production while SBA loan originations were 30% of the
total production for the six months ended June 30, 2006. Of the
$74.0 million in SBA originations, SBA 504 originations contributed
56% of the total, or $41.3 million, while SBA 7a originations made
up the remaining 44%, or $32.7 million. Retail deposits increased
1.0% to $650.3 million as of June 30, 2006 compared to $643.9
million as of December 31, 2005 while total deposits declined $11.1
million due to the planned runoff of wholesale deposits which
contributed to the lack of balance sheet growth during 2006. Total
deposits increased 10.4% compared to June 30, 2005 with the most
significant growth being in non-interest bearing deposits which
grew at 29.8% over the same period last year. NET INTEREST INCOME
AND NET INTEREST MARGIN During the quarter ended June 30, 2006 the
Company experienced continued net interest margin expansion with
the margin increasing 17 bps to 6.27% compared to 6.10% for the
first quarter of 2006. Compared to the same period last year, the
net interest margin expanded 66 bps as a result of the Company's
improved deposit mix combined with the increase in market interest
rates. During the six months ended June 30, 2006, net interest
income after loan loss provision increased 44.7% to $24.8 million
over the $17.2 million for the same period last year. Total
interest income was $34.5 million, a 51.7% increase over the $22.8
million for the same period in 2005. The increase was primarily the
result of the 26.5% increase in average interest earning assets and
increases in the yield on those assets. Total interest expense for
the six months ended June 30, 2006 increased 99.1% to $9.7 million
compared to $4.9 million for the same period in 2005. Interest
expense increased due to the 20.9% increase in average interest
bearing liabilities combined with an increase in the cost of those
liabilities as a result of increases in market interest rates.
Average transaction accounts increased significantly, rising 32.7%
to $407.1 million for the six months ended June 30, 2006 compared
to $306.9 million for the same period in 2005. OTHER OPERATING
INCOME Other operating income decreased 29.4% to $3.7 million
during the six months ended June 30, 2006 compared to $5.3 million
during the six months ended June 30, 2005 due primarily to the
one-time $908,000 realized loss from the termination of the
Company's interest rate swap, which was used to hedge its fixed
rate trust preferred debt, combined with a decrease in gain on sale
of loans of $589,000. As a result of the rise in interest rates and
the Company's interest rate outlook, the Company believed that the
swap would no longer benefit net interest income and therefore
elected to terminate the swap during the second quarter of 2006.
SBA 504 and 7a loan sales totaled $42.1 million for the first six
months of 2006 compared to $45.2 million for the same period in
2005. Additionally, during the quarter the Company recorded a
combined impairment on its servicing asset and I/O Strip of
$504,000 which was partially offset by gains of $207,000 from the
sale of its merchant card portfolio. OTHER OPERATING EXPENSES Other
operating expenses increased 30.5% to $17.7 million for the six
months ended June 30, 2006 compared to $13.6 million for the six
months ended June 30, 2005. The increase in non-interest expense
was due to significant growth and expansion, including the
acquisition of Rancho Bernardo Community Bank, with one banking
office, and the addition of a de novo banking office in Corona, CA.
The Company's efficiency ratio was 61.94% for the first six months
of 2006 compared to 58.84% for the same period in 2005. For the
second quarter 2006, the efficiency ratio was 64.35% compared to
57.99% for the same period last year. ASSET QUALITY As of June 30,
2006, the reserve for loan losses increased to $9.8 million
compared to $8.4 million as of June 30, 2005. The reserve for loan
losses as a percentage of total gross loans improved to 1.31% as of
June 30, 2006 compared to 1.29% as of June 30, 2005. The reserve
for loan losses as a percentage of total gross loans net of
government guarantees remained constant at 1.36% as of June 30,
2006 and June 30, 2005. During the first six months of 2006, the
Company did not record a provision for loan losses compared to a
$731,000 provision for the same period in 2005. Non-performing
loans totaled $5.8 million as of June 30, 2006 compared to $3.6
million as of December 31, 2005 and $7.9 million as of June 30,
2005. Non-performing loans as a percentage of gross loans were
0.77% as of June 30, 2006 compared to 0.49% as of December 31, 2005
and 1.22% as of June 30, 2005. Net of government guarantees,
non-performing loans totaled $3.6 million, or 0.49% of total gross
loans, as of June 30, 2006 compared to $2.1 million, or 0.28% of
total gross loans, as of December 31, 2005 and $5.0 million, or
0.78% of total gross loans, as of June 30, 2005. The Company had
net loan recoveries of $7,000 for the six months ended June 30,
2006 compared to net loan recoveries of $153,000 for the same
period in 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 increased to 6.78% as of June 30, 2006
compared to 5.89% as of December 31, 2005 and 6.66% as of June 30,
2005 due to the significant growth in equity. FIRST COMMUNITY
BANCORP MERGER On May 16, 2006, First Community Bancorp
(NASDAQ:FCBP) announced the signing of a definitive agreement and
plan of merger to acquire the Company for approximately $277.0
million in consideration of First Community Common Stock and cash
for outstanding Community Bancorp share-based compensation. First
Community Bancorp is a bank holding company with $4.6 billion in
assets as of June 30, 2006, with two wholly-owned banking
subsidiaries, Pacific Western National Bank and First National
Bank. The merger of the two institutions is expected to be complete
in the fourth quarter of 2006. GENERAL INFORMATION Community
Bancorp is a bank holding company with $896.8 million in assets as
of June 30, 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. ADDITIONAL INFORMATION AND
WHERE TO FIND IT This press release may be deemed to be
solicitation material in respect of the proposed acquisition of
Community Bancorp. First Community and Community Bancorp intend to
file a registration statement including a joint proxy
statement/prospectus and other documents regarding the proposed
acquisition with the SEC. Before making any voting or investment
decision, investors and security holders of either Community
Bancorp or First Community are urged to carefully read the entire
registration statement and proxy statement, when they become
available, as well as any amendments or supplements to these
documents, because they will contain important information about
the proposed acquisition. A definitive proxy statement will be sent
to the shareholders of each institution seeking any required
shareholder approvals. Investors and security holders will be able
to obtain the registration statement and proxy statement free of
charge from First Community or Community Bancorp by writing to the
addresses provided for each company set forth below. Investors and
security holders are urged to carefully review and consider each of
First Community's and Community Bancorp's public filings with the
SEC, including but not limited to their Annual Reports on Form 10-K
for the year ended December 31, 2005 and Quarterly Reports on Form
10-Q for the reporting periods of 2006. The documents filed by
First Community with the SEC may be obtained free of charge at
First Community's website at www.firstcommunitybancorp.com or at
the SEC's website at www.sec.gov. These documents may also be
obtained free of charge from First Community by requesting them in
writing to First Community Bancorp c/o Pacific Western National
Bank, 275 North Brea Boulevard, Brea, CA 92821; Attention: Investor
Relations, or by telephone at 714-671-6800. The documents filed by
Community Bancorp with the SEC may be obtained free of charge at
Community Bancorp's website at www.mycnbonline.com or at the SEC's
website at www.sec.gov. These documents may also be obtained free
of charge from Community Bancorp by requesting them in writing to
Community Bancorp Inc., 900 Canterbury Place, Suite 300, Escondido,
CA 92025, Attention: Investor Relations, or by telephone at Phone:
760-432-1110. -0- *T CONSOLIDATED BALANCE SHEETS
--------------------------- (unaudited) (dollars in thousands)
Percentage change from June 30, June 30, Dec. 31, June 30, 2005
2006 2005 2005 ---------- --------- --------- --------- ASSETS:
Cash and cash equivalents $21,308 $37,752 $25,309 Investments and
interest bearing deposits in financial institutions 59,767 61,710
55,569 Loans held for investment 13% 567,830 582,745 504,658 Less
allowance for loan losses (9,780) (9,773) (8,392) ---------
--------- --------- Net loans held for investment 558,050 572,972
496,266 Loans held for sale 27% 177,556 154,327 139,363 Premises
and equipment, net 6,743 6,971 6,683 Other real estate owned and
repossessed assets 233 68 68 Accrued interest and other assets
14,989 16,124 15,037 Income tax receivable and deferred tax asset,
net 6,418 6,730 7,213 Servicing assets, net 3,734 3,833 4,436
Interest-only strips, at fair value 2,533 2,622 2,030 Goodwill
45,491 45,441 18,226 --------- --------- --------- Total assets 16%
$896,822 $908,550 $770,200 ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Interest bearing 5%
$529,998 $545,517 $503,080 Non-interest bearing 30% 169,373 164,956
130,448 --------- --------- --------- Total deposits 10% 699,371
710,473 633,528 Short term borrowing 47,540 52,290 40,000 Long term
debt 36,250 37,203 18,017 Accrued expenses and other liabilities
10,439 12,326 10,316 --------- --------- --------- Total
liabilities 13% 793,600 812,292 701,861 --------- ---------
--------- Stockholders' equity Common stock, $0.625 par value;
authorized 10,000,000 shares, issued and outstanding; 6,067,816 at
June 30, 2006, 5,939,397 at December 31, 2005, and 5,282,147 at
June 30, 2005 3,792 3,705 3,301 Additional paid-in capital 63,877
61,696 39,955 Accumulated other comprehensive loss, net of income
taxes (713) (386) (199) Deferred compensation - restricted stock -
(85) - Retained earnings 36,266 31,328 25,282 --------- ---------
--------- Total stockholders' equity 51% 103,222 96,258 68,339
--------- --------- --------- Total liabilities and stockholders'
equity 16% $896,822 $908,550 $770,200 ========= ========= =========
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------ (unaudited) (dollars in
thousands, except per share data) Qtly Three Months Ended 6 mo. Six
Months Ended % June 30, % June 30, Change 2006 2005 Change 2006
2005 ------ ---- ---- ------ ---- ---- INTEREST INCOME Interest on
loans $16,796 $11,607 $32,988 $21,809 Interest on fed funds sold 21
76 53 149 Interest-earning deposits with banks 4 8 8 16 Interest on
other investments 734 438 1,475 789 --------- --------- ---------
--------- Total Interest Income 45% 17,555 12,129 52% 34,524 22,763
INTEREST EXPENSE Deposits 3,773 2,266 7,346 3,870 Other borrowed
money 1,193 574 2,334 992 --------- --------- --------- ---------
Total Interest Expense 75% 4,966 2,840 99% 9,680 4,862 Net interest
income 36% 12,589 9,289 39% 24,844 17,901 Provision for loan losses
- 413 - 731 --------- --------- --------- --------- Net Interest
Income After Loan Loss Provision 42% 12,589 8,876 45% 24,844 17,170
OTHER OPERATING INCOME Net gain on sale of loans 1,452 1,877 3,118
3,707 Loan servicing fees, net (30) 255 76 479 Customer service
charges 279 260 599 498 Gain on OREO and other repossessed assets -
157 - 157 Loss on swap (908) - (908) - Gain on affordable housing
partnership 111 - 111 - Other fee income 374 172 746 463 ---------
--------- --------- --------- Total Other Operating Income -53%
1,278 2,721 -29% 3,742 5,304 OTHER OPERATING EXPENSES Salaries and
employee benefits 5,070 3,858 10,308 7,588 Occupancy 682 576 1,350
1,121 Depreciation 356 330 699 631 Other 2,815 2,109 5,348 4,222
--------- --------- --------- --------- Total Other Operating
Expenses 30% 8,923 6,873 31% 17,705 13,562 --------- ---------
--------- --------- Income before income taxes 4,944 4,724 10,881
8,912 Income tax 2,076 1,893 4,431 3,542 --------- ---------
--------- --------- NET INCOME 1% $2,868 $2,831 20% $6,450 $5,370
========= ========= ========= ========= Per Share Data Basic
earnings per share -13% $0.47 $0.54 5% $1.07 $1.02 =========
========= ========= ========= Diluted earnings per share -12% $0.45
$0.51 6% $1.03 $0.97 ========= ========= ========= =========
Average shares for basic earnings per share 6,044,358 5,268,996
6,008,706 5,248,279 Average shares for diluted earnings per share
6,303,873 5,564,696 6,286,706 5,561,324 SUPPLEMENTAL DATA
----------------- (unaudited) (dollars in thousands, except per
share data) Quarter ended Year to date June 30, ended June 30,
--------------- ----------------- 2006 2005 2006 2005 -------
------- --------- ------- Annualized return on average assets 1.29%
1.54% 1.44% 1.52% Annualized return on average equity 11.18% 16.64%
12.76% 16.13% Annualized return on average tangible equity 20.02%
22.76% 23.13% 22.04% Efficiency ratio 64.35% 57.99% 61.94% 58.84%
Annualized net interest margin 6.27% 5.61% 6.18% 5.64% Book value
per share $17.01 $12.94 Tangible book value per share $9.51 $9.49
Dividends per share $0.125 $0.10 $0.25 $0.20 NON-PERFORMING ASSETS
At June 30, At Dec. 31, --------------------- 2006 2005 2005
------- ------- --------- Non-accrual loans $5,765 $7,910 $3,647
Loans past due 90 days or more - - - Restructured loans 4 - -
------- ------- --------- Total non-performing loans 5,769 7,910
3,647 OREO & other repossessed assets 233 68 68 ------- -------
--------- Total non-performing assets $6,002 $7,978 $3,715 =======
======= ========= Total non-performing loans/ gross loans 0.77%
1.22% 0.49% Total non-performing assets/ total assets 0.67% 1.04%
0.41% Total non-performing loans net of guarantees/gross loans
0.49% 0.78% 0.28% Total non-performing assets net of
guarantees/total assets 0.43% 0.66% 0.24% ALLOWANCE FOR LOAN LOSSES
Quarter ended Year to date ------------------------- June 30, ended
June 30, 2006 2005 2006 2005 ------- ------- --------- -------
Balance at beginning of period $9,856 $7,917 $9,773 $7,508
Provision for loan losses - 413 - 731 Net recoveries / (charge
offs) (76) 62 7 153 ------- ------- --------- ------- Balance at
end of period $9,780 $8,392 $9,780 $8,392 ======= ======= =========
======= Loan loss allowance/gross loans 1.31% 1.29% Loan loss
allowance/gross loans net of guarantees 1.36% 1.36% Loan loss
allowance/loans held for investment 1.72% 1.66% Loan loss
allowance/non-performing loans 169.53% 106.09% Loan loss
allowance/non-performing assets 162.95% 105.19% Loan loss
allowance/non-performing loans, net of guarantees 268.46% 166.91%
Loan loss allowance/non-performing assets, net of guarantees
252.32% 164.68% Net recoveries / (charge offs) to average loans
(annualized) -0.04% 0.04% 0.00% 0.05% CAPITAL RATIOS --------------
At June 30, At Dec. 31, 2006 2005 2005 ------- ------- ----------
Holding Company Ratios Total capital (to risk-weighted assets)
12.83% 10.45% 11.79% Tier 1 capital (to risk-weighted assets)
11.53% 9.23% 10.55% Tier 1 capital (to average assets) 10.94% 9.10%
10.18% Tangible equity to tangible assets 6.78% 6.66% 5.89% Bank
only Ratios Total capital (to risk-weighted assets) 12.51% 10.17%
11.49% Tier 1 capital (to risk-weighted assets) 11.26% 8.95% 10.25%
Tier 1 capital (to average assets) 10.68% 8.82% 9.91%
-------------------------------- For the three months ended June
30, 2006 (unaudited) -------------------------------- (dollars in
thousands) Average Interest Average Balance Earned/Paid Rate/Yield
--------- ------------ ----------- Average assets: Securities and
time deposits at other banks $62,406 $738 4.75% Fed funds sold
1,725 21 4.88% Loans: Commercial 50,230 1,054 8.42% Real Estate
645,198 14,863 9.24% Aircraft 27,634 467 6.78% Consumer 18,656 412
8.86% --------- ------------ Total loans 741,718 16,796 9.08%
--------- ------------ Total earning assets 805,849 17,555 8.74%
Non earning assets 86,763 --------- Total average assets $892,612
========= Average liabilities and stockholders' equity: Interest
bearing deposits: Savings and interest bearing accounts $242,863
$910 1.50% Time deposits 287,641 2,863 3.99% --------- ------------
Total interest bearing deposits 530,504 3,773 2.85% Short term
borrowing 41,665 513 4.94% Long term debt 35,559 680 7.67%
--------- ------------ Total interest bearing liabilities 607,728
4,966 3.28% Demand deposits 172,650 Accrued expenses and other
liabilities 9,666 Net stockholders' equity 102,568 --------- Total
average liabilities and stockholders' equity $892,612 $12,589
========= ============ Net interest spread 5.46% ========= Net
interest margin 6.27% ========= --------------------------------
For the six months ended June 30, 2006 (unaudited)
-------------------------------- (dollars in thousands) Average
Interest Average Balance Earned/Paid Rate/Yield ---------
------------ ----------- Average assets: Securities and time
deposits at other banks $63,056 $1,483 4.74% Fed funds sold 2,292
53 4.66% Loans: Commercial 51,538 2,103 8.23% Real Estate 645,693
29,092 9.09% Aircraft 28,227 953 6.81% Consumer 19,310 840 8.77%
--------- ------------ Total loans 744,768 32,988 8.93% ---------
------------ Total earning assets 810,116 34,524 8.59% Non earning
assets 87,100 --------- Total average assets $897,216 =========
Average liabilities and stockholders' equity: Interest bearing
deposits: Savings and interest bearing accounts $238,055 $1,682
1.42% Time deposits 299,796 5,664 3.81% --------- ------------
Total interest bearing deposits 537,851 7,346 2.75% Short term
borrowing 43,086 1,002 4.69% Long term debt 36,077 1,332 7.45%
--------- ------------ Total interest bearing liabilities 617,014
9,680 3.16% Demand deposits 169,064 Accrued expenses and other
liabilities 10,028 Net stockholders' equity 101,110 --------- Total
average liabilities stockholders' equity $897,216 $24,844 =========
============ Net interest spread 5.43% ========= Net interest
margin 6.18% ========= -------------------------------- For the
three months ended June 30, 2005 (unaudited)
-------------------------------- (dollars in thousands) Average
Interest Average Balance Earned/Paid Rate/Yield ---------
------------ ----------- Average assets: Securities and time
deposits at other banks $44,159 $446 4.04% Fed funds sold 10,513 76
2.92% Loans: Commercial 42,473 736 6.95% Real Estate 519,797 10,024
7.73% Aircraft 29,920 503 6.75% Consumer 16,941 344 8.15% ---------
------------ Total loans 609,131 11,607 7.64% ---------
------------ Total earning assets 663,803 12,129 7.33% Non earning
assets 70,141 --------- Total average assets $733,944 =========
Average liabilities and stockholders' equity: Interest bearing
deposits: Savings and interest bearing accounts $188,150 $320 0.68%
Time deposits 289,873 1,946 2.69% --------- ------------ Total
interest bearing deposits 478,023 2,266 1.90% Short term borrowing
33,441 254 3.04% Long term debt 17,837 320 7.17% ---------
------------ Total interest bearing liabilities 529,301 2,840 2.15%
Demand deposits 127,045 Accrued expenses and other liabilities
9,565 Net stockholders' equity 68,033 --------- Total average
liabilities and stockholders' equity $733,944 $9,289 =========
============ Net interest spread 5.18% =========== Net interest
margin 5.61% =========== -------------------------------- For the
six months ended June 30, 2005 (unaudited)
-------------------------------- (dollars in thousands) Average
Interest Average Balance Earned/Paid Rate/Yield ---------
------------ ----------- Average assets: Securities and time
deposits at other banks $40,513 $805 4.01% Fed funds sold 11,114
149 2.71% Loans: Commercial 41,051 1,383 6.79% Real Estate 500,896
18,749 7.55% Aircraft 29,650 992 6.75% Consumer 17,116 685 8.09%
--------- ------------ Total loans 588,713 21,809 7.47% ---------
------------ Total earning assets 640,340 22,763 7.17% Non earning
assets 66,602 --------- Total average assets $706,942 =========
Average liabilities and stockholders' equity: Interest bearing
deposits: Savings and interest bearing accounts $186,309 $574 0.62%
Time deposits 279,159 3,296 2.38% --------- ------------ Total
interest bearing deposits 465,468 3,870 1.68% Short term borrowing
27,130 387 2.88% Long term debt 17,762 605 6.87% ---------
------------ Total interest bearing liabilities 510,360 4,862 1.92%
Demand deposits 120,567 Accrued expenses and other liabilities
9,433 Net stockholders' equity 66,582 --------- Total average
liabilities stockholders' equity $706,942 $17,901 =========
============ Net interest spread 5.25% =========== Net interest
margin 5.64% =========== *T
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