CBB Bancorp, Inc. Reports Fourth Quarter and Full Year 2022 Financial Results

January 27, 2023 at 09:00 AM EST

CBB Bancorp, Inc. ("CBB" or the "Company') (OTCQX: CBBI), the holding company of Commonwealth Business Bank, doing business as CBB Bank (the "Bank"), announced today net income for fourth quarter 2022 of $7.3 million, or $0.70 per diluted share, an increase of 28.0% compared to $5.7 million, or $0.54 per diluted share, in the prior quarter and a decrease of 8.5% compared to $8.0 million, or $0.77 per diluted share, in the same period last year.

Additionally, CBB reported net income for the year ended December 31, 2022 of $27.9 million, or $2.66 per diluted share, an increase of 0.4% from the $27.5 million, or $2.65 per diluted share, of net income for the year ended December 31, 2021.

Overall Results

Net income for fourth quarter 2022 was positively impacted by an improved net interest margin and a lower loan loss reserve requirement. The Company’s annualized return on average assets for fourth quarter 2022 was 1.64% compared to 1.27% for third quarter 2022 and 1.68% for fourth quarter 2021. The annualized return on average equity for fourth quarter 2022 was 14.04% compared to 11.24% for third quarter 2022 and 17.54% for fourth quarter 2021. The net interest margin for fourth quarter 2022 was 4.59% compared to 4.28% for third quarter 2022 and 3.49% for fourth quarter 2021. The efficiency ratio for fourth quarter 2022 was 51.41% compared to 55.64% for third quarter 2022 and 52.84% for fourth quarter 2021.

“We are pleased to announce our positive earnings performance for the fourth quarter, as our earnings continue to benefit from loan growth and higher net interest income, while maintaining excellent asset quality,” said James Hong, President and CEO.

Net Interest Income and Margin:

Net Interest Income

Net interest income for fourth quarter 2022 was $20.1 million, an increase of $1.2 million, or 6.6%, from third quarter 2022, and an increase of $3.8 million, or 23.2%, from fourth quarter 2021. For the year ended December 31, 2022, net interest income was $71.2 million, an increase of $12.4 million, or 20.1%, over 2021. The increase in net interest income over the prior year was primarily driven by the increase in total loans, as well as increased variable rate asset yields resulting from recent increases in interest rates by the Federal Reserve Bank.

Net Interest Margin

Our net interest margin for fourth quarter 2022 was 4.59% compared to 4.28% for third quarter 2022 and 3.49% for fourth quarter 2021. The increase in net interest margin was due to the impact of increases in the prime and federal funds rates, which were only partially offset by rising deposit costs. For the year ended December 31, 2022, net interest margin was 4.08% compared to 3.67% in 2021. Our cost of funds increased for fourth quarter 2022 to 1.19% from 0.63% for third quarter 2022 and 0.30% for fourth quarter 2021. For the year ended December 31, 2022, the cost of funds was 0.62% compared to 0.38% in 2021.

Provision for Loan Losses:

The Company recorded no provision for loan losses for fourth quarter 2022, compared to a provision of $0.9 million for third quarter 2022 and a negative provision of $0.8 million for fourth quarter 2021. A provision for loan losses of $1.3 million was recorded for the year ended December 31, 2022, compared to a $0.3 million negative provision for the corresponding period in 2021. The zero loan loss provision during the fourth quarter of 2022 was due to continued strong performance by our borrowers, which offset any provision that would otherwise have been recorded due to loan portfolio growth. See Table 10 for additional information.

Noninterest Income:

Noninterest income for fourth quarter 2022 was $0.9 million compared to $1.2 million for third quarter 2022 and $5.3 million for fourth quarter 2021. For the year ended December 31, 2022, noninterest income was $12.3 million compared to $19.6 million in 2021. There were no sales of SBA loans during the third and fourth quarter of 2022, compared with SBA loan sales of $42.2 million with an average premium percentage received of 11.1% during the fourth quarter of 2021. For the year ended December 31, 2022, the gain on sale of SBA loans was $8.0 million compared to $14.9 million for the year 2021.

Noninterest Expense:

Noninterest expense for fourth quarter 2022 was $10.8 million compared to $11.2 million for third quarter 2022 and $11.4 million for fourth quarter 2021. The decrease in noninterest expense in the fourth quarter of 2022 was largely due to a decrease in salaries and employee benefits. Salaries and employee benefits were at $6.2 million in fourth quarter 2022, down $0.6 million from $6.9 million in the prior quarter, and down $ 0.4 million from $6.6 million in the fourth quarter of 2021.

For the year ended December 31, 2022, noninterest expense was $43.2 million compared to $40.3 million for the corresponding period in 2021 year. The increase in noninterest expense in 2022 compared to 2021 was primarily driven by an increase in salaries and employee benefits which was offset by a decrease in merger-related expenses.

Income Taxes:

The Company’s effective tax rate for fourth quarter 2022 was 28.2% compared to 28.3% for third quarter 2022 and 27.1% for fourth quarter 2021. For the year ended December 31, 2022, the effective tax rate was 28.3% compared to 28.2% in 2021.

Balance Sheet:

Investment Securities:

Investment securities were $72.6 million at December 31, 2022, a decrease from $75.8 million at September 30, 2022 and from $84.2 million from December 31, 2021. The decreases were due to net principal paydowns. There were no portfolio additions in 2022.

Loans Receivable:

Loans receivable (including loans held for sale) at December 31, 2022 was $1.5 billion, an increase of $68.7 million, or 4.7%, from September 30, 2022, and an increase of $116.3 million, or 8.3%, from December 31, 2021. The increase in loan balances in 2022 compared with 2021 can be attributed, in part, to the decision not to sell SBA loans during the period due to their attractive variable rate yields and declining premiums on sale in the market.

The weighted average loan-to-value ratio of Commercial Real Estate loans was 69.4% at December 31, 2022. Excluding SBA loans, the weighted average loan-to-value ratio of CRE loans was 53%.

Allowance for Loan Losses and Asset Quality:

The allowance for loan losses at December 31, 2022 was $15.5 million, or 1.21% of portfolio loans, compared to $15.6 million, or 1.24% of portfolio loans, at September 30, 2022. Non-performing loans as of December 31, 2022 were $6.8 million, up from $690 thousand at September 30, 2022. The increase in non-performing loans was due to $6.1 million in real estate secured loans that were in the process of payoff or refinancing at year-end. The entire $6.1 million was paid off or refinanced and returned to performing status in January 2023. Loans payment deferments are considered performing loans in accordance with regulatory guidance. Our coverage ratio of allowance for loan losses to nonperforming assets continues to exceed 1900%.

SBA Loans Held for Sale:

SBA loans held for sale at December 31, 2022 were $230.4 million, compared to $186.4 million at September 30 2022 and $158.1 million at December 31, 2021. We continue to assess SBA loan sale premiums and plan to sell loans when we believe it is advantageous to do so. See comments under “Noninterest Income”, and Table 7 for additional SBA loan origination and sale data.

Deposits:

Deposits were $1.5 billion at December 31, 2022, up $4.9 million, or 0.3%, from September 30, 2022 and down $19.9 million, or 1.3%, from December 31, 2021. Noninterest-bearing demand deposits (DDAs) decreased $110.4 million, or 19.6%, from September 30, 2022 and decreased $168.1 million, or 27.1%, from December 31, 2021. DDAs were 30.0% of total deposits at December 31, 2022 compared to 37.3% at September 30, 2022 and 40.5% at December 31, 2021. The decrease in DDA deposits in the fourth quarter of 2022 was primarily due to a decrease in escrow related deposits, which have been adversely affected by the higher interest rate environment.

NOW and MMDA decreased $39.2 million, or 12.5%, from September 30, 2022 and $50.8 million, or 15.6% from December 31, 2021. Time deposits increased $169.8 million, or 29.2%, from September 30, 2022 and increased $224.6 million, or 42.7%, from December 31, 2021. Our time deposits at December 30, 2022 were $750.4 million, or 48.7% of total deposits, up from $580.6 million, or 37.9% of total deposits, at September 30, 2022 and up from $525.7 million, or 33.7% of total deposits, at December 31, 2021. The increases in time deposits during the fourth quarter of 2022 reflects a shift in depositors’ preferences for the higher rate term deposits over money market rates as rates have risen in the second half of 2022.

Borrowings:

Borrowings at December 31, 2022, September 30, 2022 and December 31, 2021 consisted of $50.0 million of Federal Home Loan Bank of San Francisco (FHLB-SF) advances at each date.

Capital:

Stockholders’ equity was $209.5 million at December 31, 2022, representing an increase of $6.8 million, or 3.3%, over stockholders’ equity of $202.7 million at September 30, 2022. Tangible book value per share at December 31, 2022 was $19.59 compared to $18.95 at September 30, 2022, an increase of $0.64 per share, or 3.4%.

Each of the Company’s and the Bank’s regulatory capital ratios increased at December 31, 2022 from September 30, 2022 and from December 31, 2021 and continue to exceed the minimum levels required to be considered “Well Capitalized” under the applicable regulatory capital rules and remain in compliance with the fully phased-in Basel III requirements, which went into effect on January 1, 2021, as shown on Table 11 in this press release. The Common Equity Tier 1 risked-based capital ratio at December 31, 2022 was 14.92% at the Company level and 14.87% at the Bank level.

About CBB Bancorp, Inc.:

CBB Bancorp, Inc. is the holding company of Commonwealth Business Bank, a full-service commercial bank which specializes in loans to small-to medium-sized businesses and does business as “CBB Bank.” As of December 31, 2022, the Bank has ten full-service banking offices in Los Angeles and Orange Counties in California, Dallas County in Texas and Honolulu, Hawaii; three SBA regional offices in Los Angeles and Dallas Counties; and five loan production offices in Texas, Georgia, Colorado and Washington.

For additional information, please go to www.cbb-bank.com under tab “About Us” and select “Investors Relations” to see 4Q 2022 Overview and COVID-19 update presentation.

FORWARD-LOOKING STATEMENTS:

This news release may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, and CBB Bancorp and Commonwealth Business Bank (together, the “Company”) intend for such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties and actual results may differ materially from those presented, either expressed or implied, in this news release. Factors that might cause such differences include, but are not limited to: the Company’s ability to successfully execute its business plans and achieve its objectives; changes in general economic and financial market conditions, either nationally or locally, in areas in which the Company conducts its operations; changes in interest rates; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; increased competitive challenges and expanding product and pricing pressures among financial institutions; legislation or regulatory changes which adversely affect the Company’s operations or business; loss of key personnel; 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 publicly revise these forward-looking statements to reflect subsequent events or circumstances.

Schedules and Financial Data: All tables and data to follow

STATEMENT OF INCOME AND PERFORMANCE HIGHLIGHT (Unaudited) - Table 1
(Dollars in thousands, except per share amounts)

	Three Months Ended																			Twelve Months Ended
	December 31,			September 30,			$			%		December 31,			$			%		December 31,			December 31,			$			%
	2022			2022			*Change*			*Change*		2021			*Change*			*Change*		2022			2021			*Change*			*Change*

Interest income	$	24,744		$	21,334		$	3,410		16.0	%	$	17,553		$	7,191		41.0	%	$	80,917		$	64,285		$	16,632		25.9	%
Interest expense		4,677			2,507			2,170		86.6	%		1,265			3,412		269.7	%		9,762			5,493			4,269		77.7	%
Net interest income		20,067			18,827			*1,240*		*6.6*	%		16,288			*3,779*		*23.2*	%		71,155			58,792			*12,363*		*21.0*	%

Provision for loan losses		-			910			(910	)	(100.0	%)		(800	)		800		(100.0	%)		1,343			(300	)		1,643		(547.7	%)
Net interest income after provision for loan losses		20,067			17,917			*2,150*		*12.0*	%		17,088			*2,979*		*17.4*	%		69,812			59,092			*10,720*		*18.1*	%

Gain on sale of loans		-			-			-		-			4,151			(4,151	)	(100.0	%)		7,966			14,900			(6,934	)	(46.5	%)
Gain (loss) on sale of OREO		-			-			-		-			-			-		-			-			-			-		-
SBA servicing fee income, net		491			709			(218	)	(30.7	%)		683			(192	)	(28.1	%)		2,447			2,850			(403	)	(14.1	%)
Reversal of valuation allowance on servicing assets		-			-			-		-			-			-		-			-			-			-		-
Service charges and other income		457			518			(61	)	(11.8	%)		499			(42	)	(8.4	%)		1,935			1,813			122		6.7	%
Noninterest income		948			1,227			*(279*	)	*(22.7*	%)		5,333			*(4,385*	)	*(82.2*	%)		12,348			19,563			*(7,215*	)	*(36.9*	%)

Salaries and employee benefits		6,233			6,861			(628	)	(9.2	%)		6,614			(381	)	(5.8	%)		27,153			23,967			3,186		13.3	%
Occupancy and equipment		1,133			1,118			15		1.3	%		1,028			105		10.2	%		4,485			4,019			466		11.6	%
Marketing expense		434			489			(55	)	(11.2	%)		111			323		291.0	%		1,919			994			925		93.1	%
Professional expense		418			519			(101	)	(19.5	%)		368			50		13.6	%		1,869			1,809			60		3.3	%
Merger related expense		7			47			(40	)	(85.1	%)		454			(447	)	(98.5	%)		177			2,185			(2,008	)	(91.9	%)
Other expenses		2,579			2,125			454		21.4	%		2,850			(271	)	(9.5	%)		7,614			7,313			301		4.1	%
Noninterest expense		10,804			11,159			*(355*	)	*(3.2*	%)		11,425			*(621*	)	*(5.4*	%)		43,217			40,287			*2,930*		*7.3*	%

Income before income tax expense		10,211			7,985			*2,226*		*27.9*	%		10,996			*(785*	)	*(7.1*	%)		38,943			38,368			*575*		*1.5*	%

Income tax expense		2,882			2,258			624		27.6	%		2,984			(102	)	(3.4	%)		11,023			10,838			185		1.7	%

Net income	$	7,329		$	5,727		$	*1,602*		*28.0*	%	$	8,012		$	*(683*	)	*(8.5*	%)	$	27,920		$	27,530		$	*390*		*1.4*	%

Effective tax rate		28.2	%		28.3	%		*(0.1*	%)	*(0.2*	%)		27.1	%		*1.1*	%	*4.0*	%		28.3	%		28.2	%		*0.1*	%	*0.2*	%

Outstanding number of shares		10,569,601			10,569,601			-		-			10,284,962			284,639		2.8	%		10,569,601			10,284,962			284,639		2.8	%

Weighted average shares for basic EPS		10,569,601			10,516,394			53,207		0.5	%		10,284,962			284,639		2.8	%		10,421,546			10,268,940			152,606		1.5	%
Weighted average shares for diluted EPS		10,600,053			10,545,544			54,509		0.5	%		10,424,771			175,282		1.7	%		10,509,800			10,389,885			119,915		1.2	%

Basic EPS	$	0.70		$	0.54		$	0.16		29.6	%	$	0.78		$	(0.08	)	(10.3	%)	$	2.68		$	2.68		$	-		-
Diluted EPS	$	0.70		$	0.54		$	0.16		29.6	%	$	0.77		$	(0.07	)	(9.1	%)	$	2.66		$	2.65		$	0.01		0.4	%

Return on average assets		1.64	%		1.27	%		0.37	%	29.1	%		1.68	%		(0.04	%)	(2.4	%)		1.56	%		1.68	%		(0.12	%)	(7.1	%)
Return on average equity		14.04	%		11.24	%		2.80	%	24.9	%		17.54	%		(3.50	%)	(20.0	%)		14.09	%		15.98	%		(1.89	%)	(11.8	%)

Efficiency ratio¹		51.41	%		55.64	%		(4.23	%)	(7.6	%)		52.84	%		(1.43	%)	(2.7	%)		51.76	%		51.42	%		0.34	%	0.7	%
Yield on interest-earning assets²		5.66	%		4.85	%		0.81	%	16.7	%		3.76	%		1.90	%	50.5	%		4.64	%		4.01	%		0.63	%	15.7	%
Cost of funds		1.19	%		0.63	%		0.56	%	88.9	%		0.30	%		0.89	%	296.7	%		0.62	%		0.38	%		0.24	%	63.2	%
Net interest margin²		4.59	%		4.28	%		0.31	%	7.2	%		3.49	%		1.10	%	31.5	%		4.08	%		3.67	%		0.41	%	11.2	%

¹		Represents the ratio of noninterest expense less other real estate owned operations to the sum of net interest income before provision for credit losses and total noninterest income, less gains/(loss) on sale of securities, other-than-temporary impairment recovery/(loss) on investment securities and gain/(loss) from other real estate owned.
²		Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

BALANCE SHEET, CAPITAL AND OTHER DATA (Unaudited) - Table 2
(Dollars in thousands)

		December 31,			September 30,			$			%		December 31,			$			%
		2022			2022			*Change*			*Change*		2021			*Change*			*Change*
ASSETS
	Cash and due from banks	$	20,134		$	17,232		$	2,902		16.8	%	$	7,702		$	12,432		161.4	%
	Interest-earning deposits at the FRB and other banks		170,839			225,044			(54,205	)	(24.1	%)		284,583			(113,744	)	(40.0	%)
	Investment securities¹		72,550			75,839			(3,289	)	(4.3	%)		84,238			(11,688	)	(13.9	%)
	Loans held-for-sale, at the lower of cost or fair value		230,431			186,438			43,993		23.6	%		158,128			72,303		45.7	%

	Loans receivable		1,285,278			1,260,590			24,688		2.0	%		1,241,319			43,959		3.5	%
	Allowance for loan losses		(15,525	)		(15,602	)		77		0.5	%		(14,192	)		(1,333	)	(9.4	%)
	Loans receivable, net		1,269,753			1,244,988			*24,765*		*2.0*	%		1,227,127			*42,626*		*3.5*	%

	OREO		-			-			-		-			-			-		-
	Restricted stock investments		10,121			10,121			-		0.0	%		8,850			1,271		14.4	%
	Servicing assets		9,232			10,158			(926	)	(9.1	%)		10,632			(1,400	)	(13.2	%)
	Goodwill		2,185			2,185			-		-			2,185			-		0.0	%
	Intangible assets		303			317			(14	)	(4.4	%)		360			(57	)	(15.8	%)
	Other assets		26,939			27,845			(906	)	(3.3	%)		25,450			1,489		5.9	%
	Total assets	$	1,812,487		$	1,800,167		$	*12,320*		*0.7*	%	$	1,809,255		$	3,232		*0.2*	%

LIABILITIES AND STOCKHOLDERS' EQUITY
	Noninterest-bearing	$	451,651		$	562,051		$	(110,400	)	(19.6	%)	$	619,774		$	(168,123	)	(27.1	%)
	Interest-bearing		1,086,599			971,263			115,336		11.9	%		938,338			148,261		15.8	%
	Total deposits		1,538,250			1,533,314			*4,936*		*0.3*	%		1,558,112			*(19,862*	)	*(1.3*	%)

	FHLB advances and other borrowing		50,000			50,000			-		-			50,000			-		-
	Other liabilities		14,706			14,109			597		4.2	%		15,901			(1,195	)	(7.5	%)
	Total liabilities		1,602,956			1,597,423			*5,533*		*0.3*	%		1,624,013			*(21,057*	)	*(1.3*	%)

	Stockholders' Equity		209,531			202,744			*6,787*		*3.3*	%		185,242			*24,289*		*13.1*	%
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY		$	1,812,487		$	1,800,167		$	*12,320*		*0.7*	%	$	1,809,255		$	*3,232*		*0.2*	%

CAPITAL RATIOS
	Leverage ratio
	Company		11.71	%		11.25	%		0.46	%	4.1	%		9.55	%		2.16	%	22.6	%
	Bank		11.67	%		11.15	%		0.52	%	4.7	%		9.55	%		2.12	%	22.2	%
	Common equity tier 1 risk-based capital ratio
	Company		14.92	%		14.82	%		0.10	%	0.7	%		13.83	%		1.09	%	7.9	%
	Bank		14.87	%		14.70	%		0.17	%	1.2	%		13.82	%		1.04	%	7.6	%
	Tier 1 risk-based capital ratio
	Company		14.92	%		14.82	%		0.10	%	0.7	%		13.83	%		1.09	%	7.9	%
	Bank		14.87	%		14.70	%		0.17	%	1.2	%		13.82	%		1.04	%	7.6	%
	Total risk-based capital ratio
	Company		16.08	%		16.02	%		0.06	%	0.4	%		14.98	%		1.10	%	7.3	%
	Bank		16.03	%		15.89	%		0.14	%	0.9	%		14.97	%		1.06	%	7.1	%
	Tangible common equity per share	$	19.59		$	18.95		$	0.64		3.4	%	$	17.76		$	1.83		10.3	%
	Loan-to-Deposit (LTD) ratio		83.55	%		82.21	%		1.34	%	1.6	%		79.67	%		3.88	%	4.9	%
	Nonperforming assets	$	6,807		$	690		$	6,117		886.5	%	$	747		$	6,060		811.2	%
	Nonperforming assets as a % of loans receivable		0.53	%		0.05	%		0.48	%	960.0	%		0.06	%		0.47	%	783.3	%
	ALLL as a % of loans receivable		1.21	%		1.24	%		(0.03	%)	(2.4	%)		1.14	%		0.07	%	6.1	%
	ALLL as a % of loans receivable exc. SBA PPP loans		1.21	%		1.24	%		(0.03	%)	(2.4	%)		1.18	%		0.03	%	2.5	%

Includes AFS and HTM

FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3 (Dollars in thousands, except per share amounts)

	Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2022			2022			2022			2022			2021

Interest income	$	24,744		$	21,334		$	17,807		$	17,032		$	17,553
Interest expense		4,677			2,507			1,369			1,209			1,265
Net interest income		20,067			18,827			16,438			15,823			16,288

Provision for loan losses		-			910			1,600			(1,167	)		(800	)
Net interest income after provision for loan losses		20,067			17,917			14,838			16,990			17,088

Gain on sale of loans		-			-			3,298			4,668			4,151
Gain (loss) on sale of OREO		-			-			-			-			-
SBA servicing fee income, net		491			709			778			469			683
Reversal of valuation allowance on servicing assets		-			-			-			-			-
Service charges and other income		457			518			462			498			499
Noninterest income		948			1,227			4,538			5,635			5,333

Salaries and employee benefits		6,233			6,861			6,994			7,065			6,614
Occupancy and equipment		1,133			1,118			1,114			1,120			1,028
Marketing expense		434			489			511			485			111
Professional expense		418			519			517			415			368
Merger related expense		7			47			123			-			454
Other expenses		2,579			2,125			1,114			1,796			2,850
Noninterest expense		10,804			11,159			10,373			10,881			11,425

Income before income tax expense		10,211			7,985			9,003			11,744			10,996

Income tax expense		2,882			2,258			2,547			3,336			2,984

Net income	$	7,329		$	5,727		$	6,456		$	8,408		$	8,012

Effective tax rate		28.2	%		28.3	%		28.3	%		28.4	%		27.1	%

Outstanding number of shares		10,569,601			10,569,601			10,416,601			10,299,361			10,284,962

Weighted average shares for basic EPS		10,569,601			10,516,394			10,305,014			10,291,071			10,284,962
Weighted average shares for diluted EPS		10,600,053			10,545,544			10,409,663			10,479,488			10,424,771

Basic EPS	$	0.70		$	0.54		$	0.62		$	0.82		$	0.78
Diluted EPS	$	0.70		$	0.54		$	0.62		$	0.80		$	0.77

FIVE-QUARTER SALARIES BENEFIT METRICS (Unaudited) - Table 4
(Dollars in thousands)

	At or for the Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2022			2022			2022			2022			2021

Salaries and benefits	$	6,233		$	6,861		$	6,994		$	7,065		$	6,614
FTE at the end of period		179			190			199			208			205
Average FTE during the period		184			193			201			206			201
Salaries and benefits/average FTE¹	$	134		$	141		$	140		$	139		$	131
Salaries and benefits/average assets¹		1.39	%		1.52	%		1.55	%		1.60	%		1.39	%
Noninterest expense/average assets¹		2.41	%		2.47	%		2.30	%		2.47	%		2.40	%

Annualized

FIVE-QUARTER BALANCE SHEET (Unaudited) - Table 5
(Dollars in thousands)

	December 31,			September 30,			June 30,			March 31,			December 31,
	2022			2022			2022			2022			2021
ASSETS
Cash and due from banks	$	20,134		$	17,232		$	18,087		$	14,579		$	7,702
Interest-earning deposits at the FRB and other banks		170,839			225,044			243,072			288,603			284,583
Investment securities		72,550			75,839			77,469			80,104			84,238
Loans held-for-sale, at the lower of cost or fair value		230,431			186,438			141,104			149,733			158,128

Loans receivable		1,285,278			1,260,590			1,260,939			1,225,739			1,241,319
Allowance for loan losses		(15,525	)		(15,602	)		(14,739	)		(13,089	)		(14,192	)
Loans receivable, net		1,269,753			1,244,988			1,246,200			1,212,650			1,227,127

OREO		-			-			-			-			-
Restricted stock investments		10,121			10,121			10,111			8,850			8,850
Servicing assets		9,232			10,158			10,996			10,671			10,632
Goodwill		2,185			2,185			2,185			2,185			2,185
Intangible assets		303			317			331			346			360
Other assets		26,939			27,845			28,060			24,061			25,450
Total assets	$	1,812,487		$	1,800,167		$	1,777,615		$	1,791,782		$	1,809,255


LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing	$	451,651		$	562,051		$	566,610		$	576,378		$	619,774
Interest-bearing		1,086,599			971,263			948,760			957,633			938,338
Total deposits		1,538,250			1,533,314			1,515,370			1,534,011			1,558,112

FHLB advances		50,000			50,000			50,000			50,000			50,000
Other liabilities		14,706			14,109			15,134			16,687			15,901
Total liabilities		1,602,956			1,597,423			1,580,504			1,600,698			1,624,013

Stockholders' Equity		209,531			202,744			197,111			191,084			185,242
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,812,487		$	1,800,167		$	1,777,615		$	1,791,782		$	1,809,255

FIVE-QUARTER LOANS RECEIVABLE COMPONENTS (Unaudited) - Table 6
(Dollars in thousands)

	December 31, 2022				September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021
	Balance		%		Balance		%		Balance		%		Balance		%		Balance		%

Construction	$	17,537	1.4	%	$	14,919	1.2	%	$	23,431	1.9	%	$	18,541	1.5	%	$	23,939	1.9	%
Commercial real estate		1,078,588	83.9	%		1,050,154	83.3	%		1,023,298	81.1	%		976,924	79.7	%		978,995	78.9	%
Commercial and industrial		125,298	9.7	%		128,099	10.1	%		146,175	11.6	%		159,111	13.0	%		169,489	13.7	%
Home mortgage		52,031	4.1	%		57,773	4.6	%		57,612	4.6	%		59,836	4.9	%		61,030	4.9	%
Consumer		6,260	0.5	%		4,839	0.4	%		6,609	0.5	%		7,589	0.6	%		4,269	0.3	%
Gross loans		1,279,714	99.6	%		1,255,784	99.6	%		1,257,125	99.7	%		1,222,001	99.7	%		1,237,722	99.7	%

Net deferred loan fees/costs		5,564	0.4	%		4,806	0.4	%		3,814	0.3	%		3,738	0.3	%		3,597	0.3	%
Loans receivable	$	1,285,278	100.0	%	$	1,260,590	100.0	%	$	1,260,939	100.0	%	$	1,225,739	100.0	%	$	1,241,319	100.0	%

Loans held-for-sale	$	230,431			$	186,438			$	141,104			$	149,733			$	158,128
Loans receivable, including loans held-for-sale	$	1,515,709			$	1,447,028			$	1,402,043			$	1,375,472			$	1,399,447

FIVE-QUARTER SBA LOAN PRODUCTIONS/SALES DATA (Unaudited) - Table 7
(Dollars in thousands)

	Three Months Ended															Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
	2022			2022			2022			2022			2021			2022			2021

SBA loans held-for-sale at beginning of the quarter/year	$	186,438		$	141,104		$	149,733		$	158,128		$	136,394		$	158,128		$	59,077
SBA loans originated/transferred from/to held-for-
investment during the quarter/year		45,184			49,922			43,451			43,132			68,136			181,689			261,455
SBA loans sold during the quarter/year		-			-			(50,845	)		(50,531	)		(42,210	)		(101,376	)		(156,630	)
SBA loans principal payment, net of advance		(1,191	)		(4,588	)		(1,235	)		(996	)		(4,193	)		(8,010	)		(5,775	)
SBA loans held-for-sale at end of the quarter/year	$	230,431		$	186,438		$	141,104		$	149,733		$	158,128		$	230,431		$	158,128

Gain on sale of SBA loans	$	-		$	-		$	3,298		$	4,668		$	4,151		$	7,966		$	14,900
Premium on sale (weighted average)		-			-			8.0	%		11.0	%		11.1	%		9.5	%		11.4	%

SBA loan production	$	60,746		$	69,234		$	56,676		$	54,523		$	82,448		$	287,633		$	378,254

FIVE QUARTER SBA SERVICING ASSETS AND SERVICING FEES (Unaudited) - Table 8
(Dollars in thousands)

	Three Months Ended															Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
	2022			2022			2022			2022			2021			2022			2021


SBA servicing assets @ beginning of the quarter/year	$	10,158		$	10,996		$	10,671		$	10,632		$	10,392		$	10,632		$	9,873

Newly added SBA servicing assets from SBA loans sold		-			-			1,081			1,052			1,006			2,133			3,458
Regular quarterly/annual servicing assets amortization		(434	)		(471	)		(478	)		(462	)		(453	)		(1,845	)		(1,654	)
SBA servicing assets amortized from SBA loans paid off/charged off		(492	)		(367	)		(278	)		(551	)		(313	)		(1,688	)		(1,045	)

Subtotal before impairment		9,232			10,158			10,996			10,671			10,632			9,232			10,632

Reversal of valuation allowance on servicing assets		-			-			-			-			-			-			-

SBA servicing assets @ the end of the quarter/year	$	9,232		$	10,158		$	10,996		$	10,671		$	10,632		$	9,232		$	10,632

FIVE-QUARTER DEPOSIT COMPONENTS (Unaudited) - Table 9
(Dollars in thousands)

	December 31, 2022				September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021
	Balance		%		Balance		%		Balance		%		Balance		%		Balance		%

Noninterest-bearing demand	$	451,651	29.4	%	$	562,051	36.7	%	$	566,610	37.4	%	$	576,378	37.6	%	$	619,774	39.8	%
Interest-bearing demand		8,878	0.6	%		10,268	0.7	%		12,754	0.8	%		12,059	0.8	%		10,723	0.7	%
NOW & MMDA		274,521	17.9	%		313,719	20.5	%		327,477	21.6	%		344,501	22.5	%		325,313	20.9	%
Savings		52,845	3.4	%		66,673	4.3	%		73,791	4.9	%		79,685	5.2	%		76,588	4.9	%
TCDs of $250K and under		278,952	18.1	%		246,886	16.1	%		245,203	16.2	%		253,617	16.5	%		259,758	16.7	%
TCDs of $250K over		320,386	20.8	%		242,700	15.8	%		198,518	13.1	%		176,754	11.5	%		174,939	11.2	%
Wholesale TCDs		151,017	9.8	%		91,017	5.9	%		91,017	6.0	%		91,017	5.9	%		91,017	5.8	%
Total Deposits	$	1,538,250	100.0	%	$	1,533,314	100.0	%	$	1,515,370	100.0	%	$	1,534,011	100.0	%	$	1,558,112	100.0	%

Recap:
Noninterest-bearing demand	$	451,651	29.4	%	$	562,051	36.7	%	$	566,610	37.4	%	$	576,378	37.6	%	$	619,774	39.8	%
Interest-bearing demand		8,878	0.6	%		10,268	0.7	%		12,754	0.8	%		12,059	0.8	%		10,723	0.7	%
NOW & MMDA		274,521	17.8	%		313,719	20.5	%		327,477	21.6	%		344,501	22.5	%		325,313	20.9	%
Savings		52,845	3.5	%		66,673	4.3	%		73,791	4.9	%		79,685	5.2	%		76,588	4.9	%
TCDs of $250K and under		278,952	18.1	%		246,886	16.1	%		245,203	16.2	%		253,617	16.5	%		259,758	16.7	%
Core Deposits		1,066,847	69.4	%		1,199,597	78.3	%		1,225,835	80.9	%		1,266,240	82.6	%		1,292,156	83.0	%

TCDs of $250K over		320,386	20.8	%		242,700	15.8	%		198,518	13.1	%		176,754	11.5	%		174,939	11.2	%
Wholesale TCDs		151,017	9.8	%		91,017	5.9	%		91,017	6.0	%		91,017	5.9	%		91,017	5.8	%
Noncore Deposits		471,403	30.6	%		333,717	21.7	%		289,535	19.1	%		267,771	17.4	%		265,956	17.0	%
Total Deposits	$	1,538,250	100.0	%	$	1,533,314	100.0	%	$	1,515,370	100.0	%	$	1,534,011	100.0	%	$	1,558,112	100.0	%

FIVE-QUARTER SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited) - Table 10
(Dollars in thousands)

		4th Qtr.			3rd Qtr.			2nd Qtr.			1st Qtr.			4th Qtr.
		2022			2022			2022			2022			2021
Allowance for Loan Losses
	Balance at beginning of period	$	15,602		$	14,739		$	13,089		$	14,192		$	15,000
	Provision for loan losses					910			1,600			(1,167	)		(800	)
	Charge-offs		(90	)		(89	)		-			-			(89	)
	Recoveries		13			42			50			64			81
	Balance at the end of period	$	15,525		$	15,602		$	14,739		$	13,089		$	14,192

Nonperforming Assets:¹
	Over 90 days still accruing	$	6,006		$	-		$	-		$	-		$	-
	Nonaccrual loans		801			690			2,532			723			747
	Total nonperforming loans		6,807			690			2,532			723			747

	Other real estate owned		-			-			-			-			-
	Total nonperforming assets	$	6,807		$	690		$	2,532		$	723		$	747

Classified Assets:¹
	Substandard	$	8,165		$	9,146		$	11,133		$	9,300		$	11,156
	Doubtful								-			-			-
	Loss								-			-			-
	Total classified loans	$	8,165		$	9,146		$	11,133		$	9,300		$	11,156

	Other real estate owned		-			-			-			-			-
	Total classified assets	$	8,165		$	9,146		$	11,133		$	9,300		$	11,156

Performing TDR loans:¹		$	4,471		$	4,797		$	4,744		$	3,253		$	3,521

Delinquent Loans:¹
	Loans 30-89 days past due	$	381		$	3,936		$	11,553		$	6,275		$	267
	90 days or more past due and still accruing		6,006			-			-			-			-
	Nonaccrual		801			690			2,532			723			747
	Total delinquent loans	$	7,188		$	4,626		$	14,085		$	6,998		$	1,014

Asset Quality Ratios:
	Net (recoveries) charge-offs to average loans²		0.02	%		0.01	%		(0.01	%)		(0.02	%)		0.00	%
	Nonaccrual loans to loans receivable		0.06	%		0.05	%		0.20	%		0.06	%		0.06	%
	Nonperforming loans to loans receivable		0.53	%		0.05	%		0.20	%		0.06	%		0.06	%
	Nonperforming assets to total assets		0.38	%		0.04	%		0.14	%		0.04	%		0.04	%
	Classified loans to loans receivable		0.64	%		0.73	%		0.88	%		0.76	%		0.90	%
	Classified loans to Tier 1 and ALLL		3.67	%		4.24	%		5.32	%		4.61	%		5.67	%
	Classified assets to total assets		0.45	%		0.51	%		0.63	%		0.52	%		0.62	%
	Classified assets to Tier 1 and ALLL		3.67	%		4.24	%		5.32	%		4.61	%		5.67	%
	ALLL to loans receivable		1.21	%		1.24	%		1.17	%		1.07	%		1.14	%
	ALLL to loans receivable exc. SBA PPP loans		1.21	%		1.24	%		1.18	%		1.09	%		1.18	%
	ALLL to nonaccrual loans		1938.20	%		2261.16	%		582.11	%		1810.37	%		1899.87	%
	ALLL to nonperforming loans		228.07	%		2261.16	%		582.11	%		1810.37	%		1899.87	%
	ALLL to nonperforming assets		228.07	%		2261.16	%		582.11	%		1810.37	%		1899.87	%
	Texas ratio ³		3.06	%		0.32	%		1.21	%		0.36	%		0.38	%

¹		Net of SBA guaranteed balance
²		Includes loans held-for-sale
³		Nonperforming assets divided by tangible common equity and ALLL

FIVE-QUARTER CAPITAL RATIOS (Unaudited) - Table 11

	Well Capitalized		Adequately Capitalized		December 31,			September 30,			June 30,			March 31,			December 31,
	Regulatory		BASEL III
	Requirement		Fully Phased In		2022			2022			2022			2022			2021

Leverage ratio
Company	N/A		N/A			11.71	%		11.25	%		10.80	%		10.56	%		9.55	%
Bank	5.00	%	4.00	%		11.67	%		11.15	%		10.73	%		10.55	%		9.55	%
Common equity tier 1 risk-based capital ratio
Company	N/A		N/A			14.92	%		14.82	%		14.47	%		14.50	%		13.83	%
Bank	6.50	%	7.00	%		14.87	%		14.70	%		14.38	%		14.50	%		13.82	%
Tier 1 risk-based capital ratio
Company	N/A		N/A			14.92	%		14.82	%		14.47	%		14.50	%		13.83	%
Bank	8.00	%	8.50	%		14.87	%		14.70	%		14.38	%		14.50	%		13.82	%
Total risk-based capital ratio
Company	N/A		N/A			16.08	%		16.02	%		15.63	%		15.57	%		14.98	%
Bank	10.00	%	10.50	%		16.03	%		15.89	%		15.53	%		15.57	%		14.97	%

Tangible common equity/total assets						11.44	%		11.14	%		10.96	%		10.54	%		10.11	%
Tangible common equity per share					$	19.59		$	18.95		$	18.68		$	18.31		$	17.76

FIVE-QUARTER MARGIN ANALYSIS (Unaudited) -Table 12
(Dollars in thousands)

	Three Months Ended
	December 31, 2022							September 30, 2022							June 30, 2022							March 31, 2022							December 31, 2021
	Avg Balance			Interest		Yield		Avg Balance			Interest		Yield		Avg Balance			Interest		Yield		Avg Balance			Interest		Yield		Avg Balance			Interest		Yield
Number of Days in the Period
INTEREST-EARNING ASSETS
Loans ¹	$	1,473,100		$	22,407	6.03	%	$	1,413,632		$	19,299	5.42	%	$	1,389,968		$	16,643	4.80	%	$	1,368,996		$	16,352	4.84	%	$	1,396,201		$	16,893	4.80	%
Investment securities²		73,371			552	2.98	%		77,304			543	2.79	%		78,709			488	2.49	%		82,818			471	2.31	%		85,555			454	2.11	%
Interest-earning deposits at the FRB and other banks		180,358			1,666	3.66	%		246,955			1,398	2.25	%		286,974			599	0.84	%		288,966			141	0.20	%		365,501			144	0.16	%
Other earning assets		10,121			169	6.62	%		10,121			145	5.68	%		9,861			129	5.25	%		8,850			119	5.45	%		8,850			115	5.16	%
Total interest-earning assets ²		1,736,950			24,794	5.66	%		1,748,012			21,385	4.85	%		1,765,512			17,859	4.06	%		1,749,630			17,083	3.96	%		1,856,107			17,606	3.76	%

NONINTEREST-EARNING ASSETS
Cash and due from banks		15,632							17,429							14,866							13,338							13,318
Other noninterest-earning assets		38,529							40,251							38,621							36,714							37,779
Total noninterest-earning assets		54,161							57,680							53,487							50,052							51,097

Less: Allowance for loan losses		(15,581	)						(14,756	)						(13,126	)						(14,200	)						(14,849	)
TOTAL ASSETS	$	1,775,530						$	1,790,936						$	1,805,873						$	1,785,482						$	1,892,355

INTEREST-BEARING DEPOSITS
Interest-bearing demand	$	20,352		$	10	0.19	%	$	23,461		$	8	0.14	%	$	26,781		$	4	0.06	%	$	27,442		$	3	0.04	%	$	27,904		$	3	0.04	%
Money market		288,611			1,433	1.97	%		316,964			894	1.12	%		308,377			443	0.58	%		321,694			356	0.45	%		338,937			401	0.47	%
Savings		61,152			96	0.62	%		71,519			85	0.47	%		75,306			59	0.31	%		76,967			61	0.32	%		77,057			68	0.35	%
Time deposits		625,823			3,020	1.91	%		556,919			1,401	1.00	%		523,504			746	0.57	%		529,421			673	0.52	%		527,634			674	0.51	%
Total interest-bearing deposits		995,938			4,559	1.82	%		968,863			2,388	0.98	%		933,968			1,252	0.54	%		955,524			1,093	0.46	%		971,532			1,146	0.47	%

Borrowings		50,001			118	0.94	%		50,001			119	0.94	%		50,000			117	0.94	%		50,000			116	0.94	%		50,000			119	0.94	%
Total interest-bearing liabilities		1,045,939			4,677	1.77	%		1,018,864			2,507	0.98	%		983,968			1,369	0.56	%		1,005,524			1,209	0.49	%		1,021,532			1,265	0.49	%

Noninterest-bearing deposits		507,719							555,291							611,395							574,436							673,154
Other liabilities		14,732							14,596							15,818							16,966							16,425

Stockholders' equity		207,140							202,185							194,692							188,556							181,244
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,775,530						$	1,790,936						$	1,805,873						$	1,785,482						$	1,892,355

Net interest income²				$	20,117						$	18,878						$	16,490						$	15,874						$	16,341

Net interest spread						3.89	%						3.87	%						3.50	%						3.47	%						3.27	%

Effect of noninterest-bearing sources						0.70	%						0.41	%						0.25	%						0.21	%						0.22	%

Net interest margin²						4.59	%						4.28	%						3.75	%						3.68	%						3.49	%


Cost of deposits	$	1,503,657		$	4,559	1.20	%	$	1,524,154		$	2,388	0.62	%	$	1,545,363		$	1,252	0.32	%	$	1,529,960		$	1,093	0.29	%	$	1,644,686		$	1,146	0.28	%

Cost of funds	$	1,553,658		$	4,677	1.19	%	$	1,574,155		$	2,507	0.63	%	$	1,595,363		$	1,369	0.34	%	$	1,579,960		$	1,209	0.31	%	$	1,694,686		$	1,265	0.30	%

¹		Includes loans held-for-sale
²		Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

FIVE-QUARTER COMPONENTS OF YIELD ON LOANS (Unaudited) - Table 13
(Dollars in thousands)

	Three Months Ended
	December 31, 2022					September 30, 2022					June 30, 2022				March 31, 2022				December 31, 2021
	Amount			Yield		Amount			Yield		Amount		Yield		Amount		Yield		Amount		Yield

Contractual yield	$	21,534		5.80	%	$	18,134		5.09	%	$	15,496	4.47	%	$	14,596	4.32	%	$	15,142	4.30	%
SBA discount accretion		1,172		0.32	%		1,078		0.30	%		1,035	0.30	%		1,421	0.42	%		1,024	0.29	%
Prepayment penalties & late fees		17		0.00	%		94		0.03	%		56	0.02	%		107	0.03	%		72	0.02	%
Amortization of net deferred costs		(316	)	-0.09	%		(7	)	0.00	%		56	0.01	%		228	0.07	%		655	0.19	%
As reported yield on loans	$	22,407		6.03	%	$	19,299		5.42	%	$	16,643	4.80	%	$	16,352	4.84	%	$	16,893	4.80	%

MARGIN ANALYSIS (Unaudited) - Table 14
(Dollars in thousands)

	Twelve Months Ended
	December 31,2022							December 31,2021
	Avg Balance			Interest		Yield		Avg Balance			Interest		Yield
Number of Days in the Period
INTEREST-EARNING ASSETS
Loans ¹	$	1,411,715		$	74,701	5.29	%	$	1,281,283		$	61,868	4.83	%
Investment securities²		78,022			2,054	2.63	%		85,251			1,804	2.12	%
Interest-earning deposits at the FRB and other banks		250,532			3,804	1.52	%		232,050			346	0.15	%
Other earning assets		9,743			562	5.77	%		8,679			463	5.33	%
Total interest-earning assets ²		1,750,012			81,121	4.64	%		1,607,263			64,481	4.01	%

NONINTEREST-EARNING ASSETS
Cash and due from banks		15,328							11,806
Other noninterest-earning assets		38,539							34,069
Total noninterest-earning assets		53,867							45,875

Less: Allowance for loan losses		(14,420	)						(14,773	)

TOTAL ASSETS	$	1,789,459						$	1,638,365

INTEREST-BEARING DEPOSITS
Interest-bearing demand	$	24,487		$	25	0.10	%	$	23,509		$	11	0.05	%
Money market		308,843			3,125	1.01	%		295,559			1,507	0.51	%
Savings		71,193			302	0.42	%		60,876			254	0.42	%
Time deposits		559,176			5,840	1.04	%		498,053			3,236	0.65	%
Total interest-bearing deposits		963,699			9,292	0.96	%		877,997			5,008	0.57	%

Borrowings		50,000			470	0.94	%		54,247			485	0.89	%
Total interest-bearing liabilities		1,013,699			9,762	0.96	%		932,244			5,493	0.59	%

Noninterest-bearing deposits		562,035							519,570
Other Liabilities		15,520							14,268

Stockholders' equity		198,205							172,283

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,789,459						$	1,638,365

Net interest income²				$	71,359						$	58,988

Net interest spread						3.68	%						3.42	%

Effect of noninterest-bearing sources						0.40	%						0.25	%

Net interest margin²						4.08	%						3.67	%


Cost of deposits	$	1,525,734		$	9,292	0.61	%	$	1,397,567		$	5,008	0.36	%

Cost of funds	$	1,575,734		$	9,762	0.62	%	$	1,451,814		$	5,493	0.38	%

¹		Includes loans held-for-sale
²		Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

COMPONENTS OF YIELD ON LOANS (Unaudited) - Table 15
(Dollars in thousands)

	Twelve Months Ended
	December 31, 2022					December 31, 2021
	Amount			Yield		Amount		Yield

Contractual yield	$	69,760		4.94	%	$	54,992	4.29	%
SBA discount accretion		4,706		0.33	%		3,827	0.30	%
Prepayment penalties & late fees		274		0.02	%		323	0.03	%
Amortization of net deferred costs		(39	)	0.00	%		2,726	0.21	%
As reported yield on loans	$	74,701		5.29	%	$	61,868	4.83	%

View source version on businesswire.com: https://www.businesswire.com/news/home/20230126005962/en/

Contacts

Douglas J Goddard, EVP & CFO

(323) 988-3010

DouglasG@cbb-bank.com