FRESNO, Calif., April 19, 2023 (GLOBE NEWSWIRE) -- Communities First Financial Corporation (the “Company”) (OTCQX: CFST), the parent company of FFB Bank (the “Bank”), today reported net income increased 33% to $7.70 million, or $2.43 per diluted share, for the first quarter of 2023, compared to $5.79 million, or $1.84 per diluted share, for the first quarter of 2022, and increased 1% compared to $7.62 million, or $2.42 per diluted share, for the fourth quarter of 2022. First quarter 2023 results were highlighted by continued net interest margin expansion, which improved to 5.17% at March 31, 2023. All results are unaudited.

First Quarter 2023 Highlights: As of, or for the quarter ended March 31, 2023, compared to the quarter ended March 31, 2022:

  • Pre-tax, pre-provision income increased 36% to $10.77 million.
  • Net income grew 33% to $7.70 million, or $2.43 per diluted share.
  • Return on average equity (“ROAE”) increased 23% to 32.49%.
  • Return on average assets (“ROAA”) increased 15% to 2.47%.
  • Net interest margin expanded 91 basis points to 5.17% from 4.26% a year earlier.
  • Gross revenue (net interest income, before the provision for loan losses, plus non-interest income) increased 40% to $19.34 million.
  • Total assets grew 16% to $1.28 billion.
  • Total portfolio loans grew 24% to $861.46 million.
  • Total deposits increased 14% to $1.10 billion.
  • Shareholder equity was $100.99 million.
  • Book value per common share was $31.87.
  • The Company’s tangible common equity ratio was 7.90%, while the Bank’s regulatory leverage capital ratio was 12.29% and total risk-based capital ratio was 17.87%, at March 31, 2023.

“Following our stellar performance in 2022, we delivered yet another record earnings for first quarter 2023, supported by strong year-over-year growth in net interest income, noninterest income, a higher net interest margin and an improved efficiency ratio,” said Steve Miller, President and Chief Executive Officer. “Our capital levels and excess on and off-balance sheet liquidity positions all remain strong, and together with a solid earnings performance, a large core deposit base and excellent credit quality, we have a solid foundation upon which to continue to expand our franchise.”

“The first quarter was exciting to say the least. But when you sift through most of the noise in the market, the fundamental issues still revolve around the impact of rising rates. We feel that overall there is still much more business that can flow downstream to a strong, relationship based community bank. We continue to manage through the market anxiety well because we have tremendous goodwill with our customer base, and we can respond quicker than our larger peers. During the mid-March volatility, we were able to onboard new relationships and open accounts online, within the same day, while customers are waiting 2 weeks or never getting a return call from some of our larger competitors,” said Miller.

“Total deposits increased 14% from a year ago with non-interest bearing deposits representing 69% of total deposits,” said Miller. “As a result of the higher interest rate environment, we saw new and existing customers seek CDs with a higher yield, resulting in CDs increasing 30% from the linked quarter. As a result of the deposit growth, our borrowings fell from $65 million on December 31, 2022, to $22 million.”

“Also adding to our revenue growth was the fee income generated from our merchant services, which grew from a year ago and increased from the linked quarter,” said Miller. “We strategically sold $18.48 million in SBA loans to improve our liquidity position and recognized an immediate gain of $838,000.” The allowance for credit losses was 1.08% of total loans, and 1.16% of total loans, less government guaranteed balances, at March 31, 2023. The Company adopted the CECL (Current Expected Credit Losses) methodology as of January 1, 2023.

“In mid-March 2023, we also successfully changed our Bank’s name to ‘FFB Bank’ after being known as Fresno First Bank for 17 years. This new branding will allow us to further pursue our growth strategy, as we develop a better name recognition on a national level,” said Miller.

Return on average equity (“ROAE”) was 32.49%, return on average assets (“ROAA”) was 2.47% and the efficiency ratio was 41.46%, while the net interest margin improved to 5.17% for the first quarter of 2023. Total assets increased 16% to $1.28 billion at March 31, 2023, compared to $1.10 billion at March 31, 2022.

Results of Operations

Operating revenue, consisting of net interest income and non-interest income, increased 40% to $19.34 million for the first quarter of 2023, compared to $13.80 million for the first quarter a year ago, and grew 6% from $18.22 million from the fourth quarter of 2022.

Net interest income, before the provision for loan losses, increased 40% to $14.78 million for the first quarter of 2023, compared to $10.54 million for the first quarter a year ago, and increased 3% from $14.31 million for the fourth quarter of 2022. “The increase in net interest income in the first quarter was mainly due to higher yields from our investment and loan portfolios, partially offset by an increase in deposit and borrowing costs,” said Bhavneet Gill, EVP and Chief Financial Officer.

The Company’s net interest margin (“NIM”), which excludes interest expense on the holding company’s sub-debt, improved by 91 basis points to 5.17% for the first quarter of 2023, compared to 4.26% for the first quarter of 2022, and expanded 19 basis points from 4.98% for the preceding quarter. “With the Fed’s recent rapid rise in interest rates, and the resulting higher Prime and Fed Funds rates, many of our earning assets have repriced higher with new business producing higher yields as well,” said Gill. “Our NIM also continued to improve during the first quarter with our low cost of deposit funding these earnings assets.”

The yield on earning assets was 5.59% for the first quarter of 2023, compared to 4.34% for the first quarter a year ago, and 5.18% on a linked quarter basis. The cost of funds increased to 0.43% for the first quarter of 2023, as a result of customers seeking a higher yield due to significant hikes in interest rates. The cost of funds was 0.08% for the first quarter a year earlier, and 0.20% for the fourth quarter of 2022. “While non-interest bearing checking accounts represent 69% of total deposits, we increased interest rates paid on interest-bearing deposits during the first quarter to retain and grow deposit balances,” commented Gill. Uninsured deposit balances, excluding affiliate deposits (FFB Bank-owned funds) and collateralized deposits, totaled $599.07 million or 54.5% of total deposits as of March 31, 2023.

Total non-interest income was $4.56 million for the first quarter of 2023, compared to $3.26 million for the first quarter of 2022, and $3.92 million for the preceding quarter. The growth in non-interest income during the first quarter of 2023 was mainly due to gain on sale of loans and the increase in merchant services income from a year ago and also from the linked quarter basis. Merchant services revenue increased as a result of increases in ISO Partner sponsorship net revenue and organic FFB Payments gross revenue. Gross expenses related to organic FFB Payments lines of business are recognized in other non-interest expense. Deposit fee income also increased year-over-year and from the preceding quarter. Partially offsetting the growth in non-interest income from the fourth quarter of 2022 was $1.32 million in loss on sale of investment securities recognized during the first quarter of 2023.

“We continue to see significant progress across our ISO partner sponsorships and from our own organic ISO business, as our net merchant services income grew from $1.70 million during the first quarter of 2022 to $2.64 million for the first quarter of 2023. Compared to the linked quarter, Organic ISO revenue grew 21.9% to $679,000 while Sponsored ISO revenue increased 5.2% to $1.96 million. Net Merchant Services Income grew 9% from the linked quarter. The team continues to build a strong pipeline of payment related partners that will help fuel further revenue expansion. The evolution of the payments space is quite dynamic, and we are working diligently to ensure the bank and our partners can capitalize on current and future payment rails,” said Miller.

Merchant ISO Processing Volumes ($ in thousands)
SourceQ1 2022Q2 2022Q3 2022Q4 2022Q1 2023
ISO Partner Sponsorship$1,306,116 1,794,688$2,439,610$2,909,360$3,526,911
FFB Payments- Sub-ISO Merchants - - 964 3,701 19,683
FFB Payments - Direct Merchants 346 24,657 39,363 43,013 42,725
 $1,306,462$1,819,345$2,479,937$2,956,074$3,589,319


Merchant ISO Processing Revenues ($ in thousands)
Source of RevenueQ1 2022Q2 2022Q3 2022Q4 2022Q1 2023
Net Revenue*:     
ISO Partner Sponsorship$1,561 1,692$1,628$1,864$1,961
      
Gross Revenue:     
FFB Payments- Sub-ISO Merchants - - 43 144 281
FFB Payments - Direct Merchants 118 1,231 1,331 1,431 1,455
  118 1,231 1,374 1,575 1,736
Gross Expense:     
FFB Payments- Sub-ISO Merchants - - 22 80 148
FFB Payments - Direct Merchants - 754 814 938 909
  - 754 836 1,018 1,057
Net Revenue:     
FFB Payments- Sub-ISO Merchants - - 21 64 133
FFB Payments - Direct Merchants 118 477 517 493 546
FFB Payments Net Revenue 118 477 538 557 679
Net Merchant Services Income:$1,679$2,169$2,166$2,421$2,640
* ISO Partnership Sponsorship is recognized net of expense in Merchant Services Income. FFB Payments revenues are
recognized gross in Merchant Services Income and gross expenses are recognized in Other Operating Expense. Reclassifications
have been made between Non-interest income and Non-interest expense in prior periods for the change. 
      

Total deposit fee income increased 38% to $655,000 for the first quarter of 2023, compared to $475,000 for the first quarter of 2022, and grew 8% from $600,000 for the fourth quarter of 2022. Merchant services income increased 120% to $3.70 million for the first quarter, compared to $1.68 million for the first quarter 2022.

During the first quarter 2023, there was a $904,000 gain on sale of loans, compared to a gain on sale of loans of $803,000 from the first quarter 2022, and a $309,000 loss on sale of loans from the linked quarter. In addition, there was a $1.32 million loss on sale of investment securities during the first quarter. $950,000 of the $1.32 million loss was related to the sale of one bank holding company subordinated debt security. “We continue to monitor the sale of loans and investments and will sell a portion when we believe it strategic to do so, to expand capacity to replace with higher yielding loans and securities. This strategy is expected to improve earnings both in the short and in the long term,” added Miller.

Non-interest expense increased 46% to $8.57 million for the first quarter of 2023, compared to $5.88 million for the first quarter of 2022, and increased 9% from $7.85 million for the fourth quarter of 2022. “The higher operating expenses incurred during the first quarter were across the board as we absorbed existing people related costs and continued to hire additional key talent and invest in modern technology during the year,” said Miller. “These key investments will be ongoing during 2023, as we expand into new markets and add key positions related to risk management, technology and sales.”

Full-time employees increased to 107 at March 31, 2023, compared to 86 full-time employees a year earlier, and 103 full-time employees from the linked quarter. As a result of the increased headcount from a year ago, salaries and employee benefits increased 23% to $4.72 million at March 31, 2023, compared to $3.85 million at March 31, 2022, and increased 16% from $4.07 at December 31, 2022.

Occupancy and equipment expense increased 54% from a year ago, representing 4% of non-interest expense, and increased 16% from the preceding quarter. Other operating expense increased 94% or $1.69 million from a year earlier. The increase was primarily attributed to $1.06 million in operating expenses for the FFB Payments lines of business, which launched in the first quarter of 2022. Merchant operating expenses include interchange fees, chargebacks, partnership, and other card brand fees. Increases in data processing expense, software licenses and subscriptions, and loan origination expenses were the secondary drivers of the year-over-year increase.

The efficiency ratio improved to 41.46% for the first quarter of 2023, compared to 42.60% for the first quarter a year ago, and decreased compared to 38.99% for the fourth quarter of 2022.

Balance Sheet Review

Total assets increased 16% to $1.28 billion at March 31, 2023, from $1.10 billion at March 31, 2022, and declined 1% from $1.29 at December 31, 2022.

“The total portfolio of loans increased 24%, or $167.87 million, to $861.18 million, compared to $693.31 million at March 31, 2022, and grew 2%, or $15.72 million, from $845.46 million on a linked quarter basis. The remaining SBA-PPP loans were down to $204,000 at March 31, 2023, representing a fraction of the total loan portfolio. During the first quarter of 2023, we sold $18.48 million in SBA and $11.06 million in multi-family loans while still growing the portfolio overall,” said Gill.

The commercial and industrial (C&I) portfolio increased 8% to $200.71 million, at March 31, 2023, compared to $185.42 million a year earlier, and declined by 5% from $211.92 million at December 31, 2022. C&I loans represented 23% of total loans at March 31, 2023. Commercial real estate loans increased 37% year-over-year to $513.61 million, representing 60% of total loans at March 31, 2023, and grew 4% on a linked quarter basis. The CRE portfolio includes approximately $230.10 million in multi-family loans originated by the Southern California team that the Company may consider selling at some point in the future. Agriculture loans, representing 7% of the loan portfolio, at March 31, 2023, increasing 1% to $58.79 million from a year ago and remained flat from $58.49 million at December 31, 2022. Real estate construction and land development loans increased 92% from a year ago to $72.09 million, or 8% of total loans, while residential RE 1-4 family loans totaled $15.78 million, or 2% of loans, at March 31, 2023. At March 31, 2023, the SBA, USDA, and other government agencies guaranteed loans totaled $62.31 million, or 7.2% of the loan portfolio.

The investment portfolio increased 13%, or $36.60 million, to $328.58 million at March 31, 2023, from $291.98 million at March 31, 2022, and declined 4% compared to $343.84 million at December 31, 2022. The investment portfolio consists of mortgage-backed and municipal securities, both tax exempt and taxable, treasury securities as well as other domestic debt. At March 31, 2023, the Company had a net unrealized loss position on its investment securities portfolio of $31.71 million, compared to a net unrealized loss of $31.91million at December 31, 2022. Held to maturity securities totaled $3.45 million, or 1.05% of the portfolio, at March 31, 2023. The Company’s investment securities portfolio had an effective duration of 5.13 years at March 31, 2023, compared to 5.05 years at December 31, 2022.

Total deposits increased $137.80 million, or 14%, to $1.10 billion at March 31, 2023, compared to $961.51 million from a year earlier, and grew 2% from $1.08 billion at December 31, 2022. Noninterest-bearing demand deposits increased $147.53 million, or 24%, to $759.42 million at March 31, 2023, compared to $611.89 million at March 31, 2022, and increased 3% from $737.08 million at December 31, 2022. Noninterest-bearing demand deposits represented 69% of total deposits at March 31, 2023.

Total short-term borrowings were $22 million at March 31, 2023, compared to no borrowings at March 31, 2022, and decreased 66% from $65 million at December 31, 2022.

The following table summarizes the Company’s primary and secondary sources of liquidity which were available at March 31, 2023.

Liquidity Source ($ in thousands)March 31, 2023
Cash and cash equivalents$53,545
Unpledged investment securities, fair value 71,809
FHLB advance availability 236,668
Federal Reserve discount window availability 210,966
Correspondent bank unsecured lines of credit 71,500
 $644,488
  

The total primary and secondary liquidity of $644.49 million represents 108% of uninsured deposits as of March 31, 2023.

Shareholders’ equity increased 18% to $100.99 million at March 31, 2023, compared to $85.58 million from a year ago, and grew 9% from $92.36 million at December 31, 2022. Book value per common share increased to $31.87, at March 31, 2023, compared to $27.53 at March 31, 2022, and increased 8% from $29.41 at December 31, 2022.

“The tangible common equity ratio was 7.90% at March 31, 2023, compared to 7.76% a year earlier, and 7.13% at December 31, 2022,” stated Gill. “With the Federal Reserve aggressively raising interest rates, market rates have risen considerably. Consequently, our tangible common equity and tangible book value have been adversely impacted by the increase in rates and the related impact on our securities portfolio through marks on accumulated other comprehensive income (‘AOCI’).”

At the Bank level, unrealized losses and gains reflected in AOCI are not included in regulatory capital. As a result, Tier-1capital at the Bank for regulatory purposes was $158.10 million at quarter end excluding the unrealized loss. The regulatory leverage capital ratio was 12.29% for the current quarter, while the total risk-based capital ratio was 17.87%, exceeding regulatory minimums to be considered well-capitalized.

Asset Quality

Nonperforming assets were unchanged from the preceding quarter at $6.37 million, or 0.49% of total assets, at March 31, 2023, compared to $2.90 million, or 0.26% of total assets at March 31, 2022. Included in nonperforming assets was one loan totaling $740,000 restructured and performing under the terms of its agreements at March 31, 2023, compared to $766,000 in performing restructured loans at December 31, 2022, and $800,000 in performing restructured loans at March 31, 2022. Of the $6.32 million nonperforming loans, $4.20 million are covered by SBA guarantees.

Total delinquent loans declined significantly to $7.53 million at March 31, 2023, compared to $12.75 million at December 31, 2022, and were primarily related to government guaranteed loans purchased by the Bank.

Past due loans 30-60 days were $148,000 at March 31, 2023, compared to $8.27 million at March 31, 2022, and $364,000 at December 31, 2022. There were $98,000 past due loans from 60-90 days at March 31, 2023 compared to $173,000 at March 31, 2022, and $397,000 at December 31, 2022. Past due loans 90+ days at quarter end totaled $7.29 million, compared to $11.99 three months earlier and $16,052 past due loans at March 31, 2022. Of the $7.53 million in past due loans, $7.48 million were purchased government guaranteed loans with an unconditional guarantee.

The Bank continues to hold approximately $28 million of the government guaranteed portion of Small Business Administration (“SBA”) and USDA loans originated by other banks. Many of these purchased loans were placed into a Direct Registration (“DR”) form by the SBA’s transfer agent, Colson Inc. Under the DR program, Colson was required to remit monthly payments to the investor holding the guaranteed balance, whether or not a payment had actually been received from the borrower. When Colson lost the contract in 2020 as the SBA’s fiscal transfer agent, they began transitioning servicing over to the new company called Guidehouse. By late 2021, Guidehouse, under their contract with the SBA, declined to continue the DR program. As a result, all payments under the DR, and several similar programs, were being held by Guidehouse until the DR program could be unwound and the DR holdings converted into normal SBA pass through certificates. Unfortunately, Colson started requesting investors, who had received payments in advance of the borrower, to return advanced funds before they would process the conversion of certificates, which caused further delays. A reconciliation between Guidehouse, Colson and the Bank has taken place, and all are in agreement. The Bank has submitted all paperwork and original certificates to Colson | Guidehouse for processing and is awaiting reissue of the certificates and payment. The Bank is fully guaranteed; however, until the unwind process is completed it will continue to carry these loans as past due. The balance of these past due loans decreased from $12.19 million at December 31, 2022 to $7.48 million at March 31, 2023.

“As detailed in the chart below, most of the delinquencies are purchased government guaranteed loans, which are guaranteed by the SBA for the full payment of the principal plus interest,” commented Miller. “The SBA continues to deal with backlogs and consequently we continue to incur delays in payments. We are assured that full payment can be expected in the coming quarters.” The chart below breaks out the government guaranteed portion compared to organic delinquencies.

Delinquent Loan SummaryOrganic
Purchased Govt.
Guaranteed
Total
($ in thousands)
    
Delinquent accruing loans 30-60 days$55$93$148
Delinquent accruing loans 60-90 days 0 98 98
Delinquent accruing loans 90+ days 0 7,288 7,288
Total delinquent accruing loans$55$7,478$7,534
    
    
    
Non Accrual Loan SummaryOrganic
Purchased Govt.
Guaranteed
Total
($ in thousands)
    
Loans on non accrual$6,323$0$6,323
Non accrual loans with SBA guarantees 4,198 0 4,198
Net Bank exposure to non accrual loans$2,125$0$2,125
    

 

There was a $400,000 provision for credit loss in the first quarter of 2023, compared to zero provision for loan losses in the first quarter a year ago, and a $300,000 provision for loan losses booked in the fourth quarter of 2022.

“We incurred net charge offs of $409,000 during the quarter, compared to zero net charge offs in the fourth quarter a year ago, and $187,000 in net charge offs in the immediate prior quarter,” said Miller. “Our loan portfolio increased 24% from a year ago with commercial real estate (“CRE”) loans representing nearly 60% of the total loan portfolio. Within the CRE portfolio, there are $40.39 million in loans for CRE office as shown in the table below. Since the majority of our CRE office exposure is concentrated in the Central Valley, we feel the volatility that the city center markets are experiencing in regard to ‘return to work’ dynamics is not as pronounced in our local area. Our credit metrics remain strong as we continue to maintain conservative underwriting standards.”

CRE Office Exposure as of 3/31/2023
Region Owner-Occupied   Non-Owner Occupied   Total 
Central Valley$15,037  $16,431  $31,468 
Southern California 1,798   363   2,161 
Other California 1,914   4,298   6,212 
Total California 18,749   21,092   39,841 
Out of California -   553   553 
Total CRE Office$18,749  $21,645  $40,394 
            

The ratio of allowance for credit loss to total loans was 1.08% at March 31, 2023, compared to 1.41% a year earlier and 1.17% at December 31, 2022.

“The SBA portfolio is a segment we watch very closely as rates continue to rise,” added Miller. “A substantial portion of the portfolio consists of loans guaranteed by the U.S. Government. This group of loans consists of fully guaranteed loans the Company has purchased, as well as organic SBA and USDA loans the Bank has originated. When the effect of these guarantees is considered relative to the loan portfolio, the ratio of allowance for loan losses to the total, non-guaranteed, loan portfolio was 1.16%, as of March 31, 2023, and our total unguaranteed exposure on these SBA loans is $25.17 million spread over 179 loans.”

About Communities First Financial Corporation

Communities First Financial Corporation, a bank holding company established in 2014, is the parent company of FFB Bank, founded in 2005 in Fresno, California. FFB Bank, is a leading SBA Lender in California’s Central Valley and has expanded into Southern California. The Bank is also a direct acquiring bank with VISA and MasterCard and processes payments for merchants across the Country directly and through partners. For 2021 Communities First Financial Corp. ranked third in the nation against its peers in the Best Community Banks Category (below $5 billion in assets) and third in the Best Growth Strategy selected from the top 50 banks in the study, reported by Bank Director. In 2020 S&P Global ranked the Bank the #20 best performing community bank under $3 billion in assets, and #1 in California. Named to the 2019 OTCQX Best 50 and ranked one of the top performing OTCQX companies in the country, based on total return and growth in average daily dollar volume for 2018. The Bank was named to the Inc. 5000 Fastest Growing Companies list in 2017 and to Forbes Best 25 Small Businesses in America for 2016. Additional information is available from the Company’s website at www.ffb.bank or by calling 559-439-0200.

Forward Looking Statements

This earnings release may contain forward-looking statements. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. The forward-looking statements are based on managements’ expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation, the Company’s ability to effectively execute its business plans; changes in general economic and financial market conditions; changes in interest rates; and, in particular, actions taken by the Federal Reserve to try and control inflation; changes in the competitive environment; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; losses, customer bankruptcy, claims and assessments; changes in banking regulations or other regulatory or legislative requirements affecting the Company’s business; international developments; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. The Company undertakes no obligation to release publicly the results of any revisions to the forward-looking statements included herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events. The Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Member FDIC

 

SELECT FINANCIAL INFORMATION AND RATIOS (unaudited)
For the Quarter Ended: Percentage Change From:
Mar. 31, 2023Dec. 31, 2022Mar. 31, 2022 Dec. 31, 2022Mar. 31, 2022
BALANCE SHEET DATA - PERIOD END BALANCES:    
 Total assets$1,278,514 $1,294,464 $1,102,540  -1%16%
 Total portfolio loans 861,181  845,463  693,312  2%24%
 Investment securities 328,575  343,843  291,975  -4%13%
 Total deposits 1,099,311  1,081,228  961,510  2%14%
 Shareholders equity, net$100,986 $92,358 $85,577  9%18%
        
SELECT INCOME STATEMENT DATA:      
 Gross revenue$19,337 $18,224 $13,801  6%40%
 Operating expense 8,565  7,846  5,880  9%46%
 Pre-tax, pre-provision income 10,772  10,378  7,921  4%36%
 Net income after tax$7,698 $7,618 $5,789  1%33%
        
SHARE DATA:     
 Basic earnings per share$2.43 $2.43 $1.86  0%30%
 Fully diluted earnings per share$2.43 $2.42 $1.84  0%32%
 Book value per common share$31.87 $29.41 $27.53  8%16%
 Common shares outstanding 3,169,148  3,139,880  3,108,219  1%2%
 Fully diluted shares 3,171,228  3,146,117  3,140,706  1%1%
 CFST - Stock price$62.90 $60.50 $59.75  4%5%
        
RATIOS:      
 Return on average assets 2.47% 2.41% 2.14% 3%15%
 Return on average equity 32.49% 34.86% 26.49% -7%23%
 Efficiency ratio 41.46% 38.99% 42.60% 6%-3%
 Yield on earning assets 5.59% 5.18% 4.34% 8%29%
 Yield on investment securities 4.38% 4.21% 2.82% 4%56%
 Yield on portfolio loans 6.12% 5.65% 5.15% 8%19%
 Cost to fund earning assets 0.43% 0.20% 0.08% 118%435%
 Net Interest Margin 5.17% 4.98% 4.26% 4%21%
 Equity to assets 7.90% 7.13% 7.76% 11%2%
 Loan to deposits ratio 78.34% 78.19% 72.11% 0%9%
 Full time equivalent employees 107.0  103.0  86.0  4%24%
        
BALANCE SHEET DATA - AVERAGES:     
 Total assets$1,264,171 $1,255,212 $1,097,173  1%15%
 Total loans 845,659  810,811  725,136  4%17%
 Investment securities 335,662  342,132  297,048  -2%13%
 Deposits 1,088,664  1,091,317  953,547  0%14%
 Shareholders equity, net$96,081 $86,687 $88,627  11%8%
        
ASSET QUALITY:      
 Total delinquent accruing loans$7,534 $12,750 $24,495  -41%-69%
 Nonperforming assets$6,323 $6,373 $2,899  -1%118%
 Non Accrual / Total Loans .73% .75% .42% -3%76%
 Nonperforming assets to total assets .49% .49% .26% 0%88%
 LLR / Total loans 1.08% 1.17% 1.41% -8%-24%


 

STATEMENT OF INCOME ($ in thousands)For the Quarter Ended: Percentage Change From:
(unaudited)Mar. 31, 2023Dec. 31, 2022Mar. 31, 2022 Dec. 31, 2022Mar. 31, 2022
Interest Income     
 Loan interest income$12,729 $11,545 $9,228 10%38%
 Investment income 3,484  3,401  1,961 2%78%
 Int. on fed funds & CDs in other banks 228  309  19 -26%1100%
 Dividends from non-marketable equity 75  105  8 -29%838%
 Interest income 16,516  15,360  11,216 8%47%
        
 Int. on deposits 957  458  208 109%360%
 Int. on short-term borrowings 313  129  1 143%31200%
 Int. on long-term debt 464  464  464 0%0%
 Interest expense 1,734  1,051  673 65%158%
 Net interest income 14,782  14,309  10,543 3%40%
 Provision for credit losses 400  300  0 33%0%
 Net interest income after provision 14,382  14,009  10,543 3%36%
        
Non-Interest Income:      
 Total deposit fee income 655  600  475 9%38%
 Debit / credit card interchange income 141  137  127 3%11%
 Merchant services income 3,697  3,439  1,679 8%120%
 Gain on sale of loans 904  (309) 803 -393%13%
 Other operating income (842) 48  174 -1854%-584%
 Non-interest income 4,555  3,915  3,258 16%40%
       
Non-Interest Expense:     
 Salaries & employee benefits 4,716  4,067  3,848 16%23%
 Occupancy expense 362  305  235 19%54%
 Other operating expense 3,487  3,474  1,797 0%94%
 Non-interest expense 8,565  7,846  5,880 9%46%
       
 Net income before tax 10,372  10,078  7,921 3%31%
 Tax provision 2,674  2,460  2,132 9%25%
 Net income after tax$7,698 $7,618 $5,789 1%33%

 

 

 


BALANCE SHEET ($ in thousands ) End of Period: Percentage Change From:
(unaudited)Mar. 31, 2023Dec. 31, 2022Mar. 31, 2022 Dec. 31, 2022Mar. 31, 2022
ASSETS      
 Cash and due from banks$27,696 $19,558 $17,992  42%54%
 Fed funds sold and deposits in banks 22,972  37,415  67,384  -39%-66%
 CDs in other banks 2,877  2,983  1,490  -4%93%
 Investment securities 328,575  343,843  291,975  -4%13%
 Loans held for sale 0  11,063  5,430  -100%-100%
 Portfolio loans outstanding:     
 RE constr & land development 72,090  63,265  37,630  14%92%
 Residential RE 1-4 Family 15,783  17,802  15,733  -11%0%
 Commercial Real Estate 513,613  493,358  373,954  4%37%
 Agriculture 58,735  58,494  58,022  0%1%
 Commercial and Industrial 200,705  211,915  185,424  -5%8%
 SBA PPP Loans 204  242  22,378  -16%-99%
 Consumer and Other 51  387  171  -87%-70%
 Total Portfolio Loans 861,181  845,463  693,312  2%24%
 Deferred fees & discounts (3,220) (2,910) (2,492) 11%29%
 Allowance for loan losses (9,271) (9,914) (9,785) -6%-5%
 Loans, net 848,690  832,639  681,035  2%25%
 Non-marketable equity investments 5,592  5,554  4,131  1%35%
 Cash value of life insurance 8,641  8,592  8,447  1%2%
 Accrued interest and other assets 33,471  32,817  24,656  2%36%
 Total assets$1,278,514 $1,294,464 $1,102,540  -1%16%
       
LIABILITIES AND EQUITY      
 Non-interest bearing deposits$759,417 $737,078 $611,890  3%24%
 Interest checking 32,637  41,816  28,401  -22%15%
 Savings 71,542  77,311  95,902  -7%-25%
 Money market 163,995  169,901  171,589  -3%-4%
 Certificates of deposits 71,720  55,122  53,728  30%33%
 Total deposits 1,099,311  1,081,228  961,510  2%14%
 Short-term borrowings 22,000  65,000  0  -66%0%
 Long-term debt 39,481  39,441  39,323  0%0%
 Other liabilities 16,736  16,437  16,130  2%4%
 Total liabilities 1,177,528  1,202,106  1,016,963  -2%16%
       
 Common stock & paid in capital 35,073  34,369  33,136  2%6%
 Retained earnings 88,167  80,469  59,737  10%48%
 Total equity 123,240  114,838  92,873  7%33%
 Accumulated other comprehensive loss (22,254) (22,480) (7,296) -1%205%
 Shareholders equity, net 100,986  92,358  85,577  9%18%
 Total Liabilities and shareholders' equity$1,278,514 $1,294,464 $1,102,540  -1%16%

 


ASSET QUALITY ($ in thousands)Period Ended:
(unaudited)Mar. 31, 2023Dec. 31, 2022Mar. 31, 2022
Delinquent accruing loans 30-60 days$148 $364 $8,270 
Delinquent accruing loans 60-90 days$98 $397 $173 
Delinquent accruing loans 90+ days$7,288 $11,989 $16,052 
Total delinquent accruing loans$7,534 $12,750 $24,495 
    
Loans on non accrual$6,323 $6,373 $2,899 
Other real estate owned$0 $0 $0 
Nonperforming assets$6,323 $6,373 $2,899 
    
Performing restructured loans$740 $766 $800 
    
    
Delq 30-60 / Total Loans .02% .04% 1.19%
Delq 60-90 / Total Loans .01% .05% .02%
Delq 90+ / Total Loans .85% 1.42% 2.32%
Delinquent Loans / Total Loans .87% 1.51% 3.53%
Non Accrual / Total Loans .73% .75% .42%
Nonperforming assets to total assets .49% .49% .26%
    
    
Year-to-date charge-off activity   
Charge-offs$409 $187 $0 
Recoveries$3 $16 $0 
Net charge-offs$406 $171 $0 
Annualized net loan losses (recoveries) to average loans .19% .02% .00%
    
CREDIT LOSS RESERVE RATIOS:   
Reserve for credit losses$9,271 $9,914 $9,785 
    
Total loans$861,181 $845,463 $693,312 
Purchased govt. guaranteed loans$28,224 $29,906 $38,533 
Originated govt. guaranteed loans$34,090 $45,519 $64,721 
    
LLR / Total loans 1.08% 1.17% 1.41%
LLR / Loans less 100% govt. gte. loans (PPP and purchased) 1.11% 1.22% 1.55%
LLR / Loans less all govt. guaranteed loans 1.16% 1.29% 1.66%
LLR / Total assets .73% .77% .89%

 


SELECT FINANCIAL TREND INFORMATION (unaudited)
For the Quarter Ended:
Mar. 31, 2023Dec. 31, 2022Sept. 30, 2022June 30, 2022Mar. 31, 2022
BALANCE SHEET DATA - PERIOD END BALANCES:     
 Total assets$1,278,514 $1,294,464 $1,188,441 $1,144,334 $1,102,540 
 Loans held for sale 0  11,063  0  6,062  5,430 
 Loans held for investment ex. PPP 860,977  845,221  774,801  718,698  670,934 
 PPP Loans 204  242  1,389  3,934  22,378 
 Investment securities 328,575  343,843  339,523  320,279  291,975 
       
 Non-interest bearing deposits 759,417  737,078  724,425  695,977  611,890 
 Interest bearing deposits 339,894  344,150  320,308  308,175  349,620 
 Total deposits 1,099,311  1,081,228  1,044,733  1,004,152  961,510 
 Short-term borrowings 22,000  65,000  0  0  0 
 Long-term debt 39,481  39,441  39,402  39,362  39,323 
       
 Total equity 123,240  114,838  106,788  99,424  92,873 
 Accumulated other comprehensive loss (22,254) (22,480) (25,368) (17,672) (7,296)
 Shareholders equity, net$100,986 $92,358 $81,420 $81,752 $85,577 
       
       
INCOME STATEMENT - QUARTERLY VALUES:     
 Interest income$16,516 $15,360 $13,210 $11,358 $11,216 
       
 Int. on dep. & short-term borrowings 1,270  587  213  191  209 
 Int. on long-term debt 464  464  464  465  464 
 Interest expense 1,734  1,051  677  656  673 
 Net interest income 14,782  14,309  12,533  10,702  10,543 
 Non-interest income 4,555  3,915  4,528  4,244  3,258 
 Gross revenue 19,337  18,224  17,061  14,946  13,801 
       
 Provision for loan losses 400  300  0  0  0 
       
 Non-interest expense 8,565  7,846  7,650  6,290  5,880 
       
 Net income before tax 10,372  10,078  9,411  8,656  7,921 
 Tax provision 2,674  2,460  2,506  2,448  2,132 
 Net income after tax$7,698 $7,618 $6,905 $6,208 $5,789 
       

 

Contact:
Steve Miller – President & CEO
Bhavneet Gill – Executive Vice President & CFO
(559) 439-0200

 


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Source: Communities First Financial Corporation

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