Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries CBB Bancorp, Inc. Reports Second Quarter 2022 Financial Results By: CBB Bancorp, Inc. via Business Wire July 29, 2022 at 09:00 AM EDT CBB Bancorp, Inc. ("CBB" or the "Company') (OTCQX: CBBI), the holding company of Commonwealth Business Bank (the "Bank"), announced today net income for second quarter 2022 of $6.5 million, or $0.62 per diluted share, a decrease of 23.2% compared to $8.4 million, or $0.80 per diluted share, in the prior quarter and an increase of 2.4% compared to $6.3 million, or $0.61 per diluted share, in the same period last year. Overall Results Net income for second quarter 2022 was affected by higher loan loss provisions during the quarter as a result of increases in past due and classified loans and growth in the loan portfolio. Core earnings remained strong, as our net interest margin and efficiency ratio improved from the prior quarter. Our return on average assets for second quarter 2022 was 1.43% compared to 1.91% for first quarter 2022 and 1.70% for second quarter 2021. Our return on average equity for second quarter 2022 was 13.30%, compared to 18.08% for first quarter 2022 and 14.91% for second quarter 2021. Our net interest margin for second quarter 2022 was 3.75%, compared to 3.68% for first quarter 2022 and 3.75% for second quarter 2021. Our efficiency ratio for second quarter 2022 was 49.45%, compared to 50.71% for first quarter 2022 and 52.24% for second quarter 2021. James Hong, President and CEO, commented, “We are pleased to announce strong core earnings for the second quarter of 2022, despite the uncertain economic climate. We continue to see opportunities to add to our core earnings going forward through the addition of quality loan and deposit customers.” Net Interest Income and Margin Net Interest Income Net interest income for second quarter 2022 was $16.4 million, an increase of $615 thousand, or 3.9%, from first quarter 2022, and an increase of $2.9 million, or 21.2%, from second quarter 2021. The increase in net interest income compared with the prior quarter was driven by loan growth, as well as an increase in variable rate asset yields due to recent increases in interest rates by the Federal Reserve Bank. Net interest income growth compared with the second quarter of 2021 also benefited from the merger with Ohana Pacific Bank (OPB) as of July 1, 2021. Net Interest Margin Our net interest margin for second quarter 2022 was 3.75%, compared to 3.68% for first quarter 2022 and 3.75% for second quarter 2021. The increase in net interest margin compared to first quarter 2022 was due to increased interest income on cash and due from banks balances, which are immediately affected by the Federal Reserve’s interest rate changes. Our cost of funds for second quarter 2022 increased to 0.34% from 0.31% for first quarter 2022 and decreased from 0.42% for second quarter 2021. Provision for Loan Losses: The Company had a provision for loan losses for second quarter 2022 of $1.6 million, compared to a recovery of $1.2 million for first quarter 2022 and no provision for loan losses for second quarter 2021. The provision recorded for the current quarter was due to moderate increases in delinquencies and classified assets and growth in the loan portfolio. See Table 10 in this press release for additional information and trends. Noninterest Income: Noninterest income for second quarter 2022 was $4.5 million, compared to $5.6 million for first quarter 2022 and $5.0 million for second quarter 2021. The decrease in noninterest income in second quarter 2022 was primarily the result of decreased gains on sales of loans. Sales of SBA loans were $50.8 million with an average premium percentage received of 8.0% during the second quarter of 2022, compared with SBA loan sales of $50.5 million with an average premium percentage received of 11.0% during the first quarter of 2022 and SBA loan sales of $42.2 million with an average premium percentage received of 11.9% during the second quarter of 2021. Noninterest Expense: Noninterest expense for second quarter 2022 was $10.4 million, compared to $10.9 million for first quarter 2022 and $9.7 million for second quarter 2021. Salaries and employee benefits were substantially unchanged at $7.0 million in second quarter 2022 compared with the prior quarter, and up from $6.0 million in the second quarter of 2021. The decrease in other expenses compared to the first quarter of 2022 was in part due to the reversal of a provision for probable loss of $800 thousand that had been established with respect to an anticipated repurchase of SBA loans sold. The reversal was recorded to reflect the final settlement that was made with the SBA on the loans in question. The increased noninterest expense levels in the second quarter of 2022 compared to the prior year is primarily due to the inclusion of the operations of OPB, acquired as of July 1, 2021, for the full period. Income Taxes: The Company’s effective tax rate for second quarter 2022 was 28.3% compared to 28.4% for first quarter 2022 and 28.9% for second quarter 2021. Balance Sheet: Investment Securities: Investment securities were $77.5 million at June 30, 2022, a decrease of $2.6 million from March 31, 2022 and $4.9 million from June 30, 2021. The decreases were due to principal paydowns. There were no portfolio additions in second quarter 2022, or in the comparable period of 2021. Loans Receivable: Loans receivable (including loans held for sale) at June 30, 2022 was $1.4 billion, an increase of $26.6 million, or 1.9%, from loans receivable at March 31, 2022, and an increase of $172.1 million, or 14.0%, from loans receivable at June 30, 2021. The increase in loan balances compared with the second quarter of 2021 was due to the $149.2 million in loans receivable that were acquired in the OPB merger as of July 1, 2021, as well as organic growth. Our weighted average loan-to-value ratio of commercial real estate loans was 69.9% at June 30, 2022. Excluding SBA loans, our weighted average loan-to-value of CRE loans was 53.8%. For additional information, please go to www.cbb-bank.com under tab “About Us” and select “Investors Relations” to see 2Q 2022 Overview and COVID-19 update presentation. Paycheck Protection Program (PPP): PPP loans totaled $10.7 million at June 30, 2022. Net unearned fees on PPP loans as of June 30, 2022 were $271 thousand, and these fees are being accreted to income based on a two-year contractual maturity. The SBA approved $10.2 million in PPP loan forgiveness applications processed for our PPP loans in second quarter 2022. Allowance for Loan Losses and Asset Quality: Our allowance for loan losses at June 30, 2022 was $14.7 million, or 1.17% of portfolio loans, compared to $13.1 million, or 1.07% of portfolio loans, at March 31 2022 and compared to $14.9 million, or 1.32% of portfolio loans, at June 30, 2021. Excluding PPP loans of $10.7. million, which are government guaranteed, the allowance for loan losses at June 30, 2022 was 1.18%, compared to 1.09% and 1.42%, respectively, at March 31, 2022 and June 30, 2021. The decrease in the allowance as a percentage of the portfolio in the current quarter compared with the prior year is primarily due to loans acquired in the OPB merger, which have been recorded at market value and do not currently carry any loan loss allowance. Non-performing loans were $2.5 million at June 30, 2022, compared to $723 thousand at March 31, 2022 and $1.3 million at June 30, 2021. Loans with payment deferments are considered to be performing loans in accordance with regulatory guidance. Our coverage ratio of allowance for loan losses to nonperforming assets exceeded 500%. For additional information, please go to www.cbb-bank.com under tab “About Us” and select “Investors Relations” to see 2Q 2022 Overview and COVID-19 update presentation. SBA Loans Held for Sale: SBA loans held for sale at June 30, 2022 were $141.1 million, compared to $149.7 million at March 31, 2022 and $96.6 million at June 30, 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 June 30, 2022, down $18.6 million, or 1.2%, from March 31, 2022 and up $136.7 million, or 9.9%, from June 30, 2021. Noninterest-bearing demand deposits (“DDAs”) decreased $9.8 million, or 1.7%, to $566.6 million at June 30, 2022 from March 31, 2022 and decreased $5.7 million, or 1.0%, from June 30, 2021. DDAs were 38.2% of total deposits at June 30, 2022, compared to 38.4% at March 31, 2022 and 41.5% at June 30, 2021. NOW and MMDA accounts decreased $17.0 million, or 4.9%, to $327.5 million at June 30, 2022 from March 31, 2022 and increased $36.0 million, or 12.4%, from June 30, 2021. Time deposits increased $13.4 million, or 2.6%, at June 30, 2022 from March 31, 2022 and increased $61.1 million, or 12.9%, from June 30, 2021. Time deposits at June 30, 2022 were $534.7 million, or 35.3% of total deposits, compared to $521.4 million, or 34.0% of total deposits, at March 31, 2022, and $473.7 million, or 34.4% of total deposits, at June 30, 2021. The primary cause of the decreases in noninterest bearing deposit balances during 2022 compared with earlier quarters was a decline in escrow-related deposits sourced from our Specialty Deposit Group. The increase in total deposits compared with the second quarter of 2021 was due to normal growth combined with the completion of the merger with OPB during the third quarter of 2021. Borrowings: Borrowings at June 30, 2022, March 31, 2022 and June 30, 2021 consisted of $50.0 million of Federal Home Loan Bank of San Francisco advances at each date. Capital: Stockholders’ equity was $197.1 million at June 30, 2022, representing an increase of $6.0 million, or 3.2%, over stockholders’ equity of $191.1 million at March 31, 2022. Tangible book value per share at June 30, 2022 was $18.68, compared with $18.31 at March 31, 2022, an increase of $0.37 per share or 2.0%. All of our regulatory capital ratios continue to exceed the minimum levels required to be considered “Well Capitalized” as defined for bank regulatory purposes and in compliance with the fully phased-in Basel III requirements, as shown on Table 11 in this press release. Our Common Equity Tier 1 risked-based capital at June 30, 2022 was 14.47% at the Company level and 14.38% 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 June 30, 2022, the Bank has ten full-service banking offices in Los Angeles and Orange Counties in California, Dallas County in Texas and Honolulu, Hawaii; two 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 2Q 2022 Overview and COVID-19 update presentation. FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements. These statements typically include words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar terms and phrases, including references to assumptions. You should not place undue reliance on such statements. Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management’s experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company’s control) that could cause actual results to differ materially from the anticipated future results expressed or implied by such forward-looking statements. Factors that could affect our results include, without limitation, the following: the timing and occurrence or non-occurrence of anticipated events may be subject to circumstances beyond the Company’s control; increases in competitive pressure among financial institutions or from non-financial institutions may occur; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Company and the Bank; significant increases in loan losses may occur; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently by investors and stock market analysts; changes in corporate and/or individual income tax laws may adversely affect the Company’s financial condition or results of operations or the behavior of our loan and deposit customers; changes in general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, the effects of the COVID-19 pandemic, and of other widespread outbreaks of disease or pandemics, together with related impacts on general economic conditions, including adverse impacts on our customers’ ability to make timely payments on their loans from us, reduced fee income due to reduced loan origination activity, reductions in or absence of gains on loan sales due to uncertainty in the loan sale market, and increased operating expense due to required changes in how we conduct our business may adversely affect us; conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive to implement or accommodate than the Company anticipates; there may be failures or breaches of our information technology security systems or those of our third party service providers; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates; we may encounter greater difficulty, delay and expense than we anticipate in integrating the personnel and operations of Ohana Pacific Bank or any other companies we acquire. The Company undertakes no obligation to revise any forward-looking statement contained herein to reflect any future events or circumstances, except to the extent required by law. 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 Six Months Ended June 30, March 31, $ % June 30, $ % June 30, June 30, $ % 2022 2022 Change Change 2021 Change Change 2022 2021 Change Change Interest income $ 17,807 $ 17,032 $ 775 4.6 % $ 14,923 $ 2,884 19.3 % $ 34,839 $ 29,295 $ 5,544 18.9 % Interest expense 1,369 1,209 160 13.2 % 1,358 11 0.8 % 2,578 2,891 (313 ) (10.8 %) Net interest income 16,438 15,823 615 3.9 % 13,565 2,873 21.2 % 32,261 26,404 5,857 22.2 % Provision for loan losses 1,600 (1,167 ) 2,767 (237.1 %) - 1,600 100.0 % 433 500 (67 ) (13.4 %) Net interest income after provision for loan losses 14,838 16,990 (2,152 ) (12.7 %) 13,565 1,273 9.4 % 31,828 25,904 5,924 22.9 % Gain on sale of loans 3,298 4,668 (1,370 ) (29.3 %) 3,988 (690 ) (17.3 %) 7,966 6,444 1,522 23.6 % Gain (loss) on sale of OREO - - - - - - - - - - - SBA servicing fee income, net 778 469 309 65.9 % 622 156 25.1 % 1,247 1,469 (222 ) (15.1 %) Reversal of valuation allowance on servicing assets - - - - - - - - - - - Service charges and other income 462 498 (36 ) (7.2 %) 395 67 17.0 % 960 774 186 24.0 % Noninterest income 4,538 5,635 (1,097 ) (19.5 %) 5,005 (467 ) (9.3 %) 10,173 8,687 1,486 17.1 % Salaries and employee benefits 6,994 7,065 (71 ) (1.0 %) 6,000 994 16.6 % 14,059 10,853 3,206 29.5 % Occupancy and equipment 1,114 1,120 (6 ) (0.5 %) 945 169 17.9 % 2,234 1,924 310 16.1 % Marketing expense 511 485 26 5.4 % 309 202 65.4 % 996 596 400 67.1 % Professional expense 517 415 102 24.6 % 491 26 5.3 % 932 946 (14 ) (1.5 %) Merger related expense 123 - 123 100.0 % 600 (477 ) (79.5 %) 123 1,281 (1,158 ) (90.4 %) Other expenses 1,114 1,796 (682 ) (38.0 %) 1,356 (242 ) (17.8 %) 2,910 2,656 254 9.6 % Noninterest expense 10,373 10,881 (508 ) (4.7 %) 9,701 672 6.9 % 21,254 18,256 2,998 16.4 % Income before income tax expense 9,003 11,744 (2,741 ) (23.3 %) 8,869 134 1.5 % 20,747 16,335 4,412 27.0 % Income tax expense 2,547 3,336 (789 ) (23.7 %) 2,566 (19 ) (0.7 %) 5,883 4,698 1,185 25.2 % Net income $ 6,456 $ 8,408 $ (1,952 ) (23.2 %) $ 6,303 $ 153 2.4 % $ 14,864 $ 11,637 $ 3,227 27.7 % Effective tax rate 28.3 % 28.4 % (0.1 %) (0.4 %) 28.9 % (0.6 %) (2.2 %) 28.4 % 28.8 % (0.4 %) (1.4 %) Outstanding number of shares 10,416,601 10,299,361 117,240 1.1 % 10,279,962 136,639 1.3 % 10,416,601 10,279,962 136,639 1.3 % Weighted average shares for basic EPS 10,305,014 10,291,071 13,943 0.1 % 10,262,956 42,058 0.4 % 10,298,081 10,255,167 42,914 0.4 % Weighted average shares for diluted EPS 10,409,663 10,479,488 (69,825 ) (0.7 %) 10,392,427 17,236 0.2 % 10,441,230 10,346,516 94,714 0.9 % Basic EPS $ 0.62 $ 0.82 $ (0.20 ) (24.4 %) $ 0.61 $ 0.01 1.6 % $ 1.44 $ 1.13 $ 0.31 27.4 % Diluted EPS $ 0.62 $ 0.80 $ (0.18 ) (22.5 %) $ 0.61 $ 0.01 1.6 % $ 1.42 $ 1.13 $ 0.29 25.7 % Return on average assets 1.43 % 1.91 % (0.48 %) (25.1 %) 1.70 % (0.27 %) (15.9 %) 1.67 % 1.65 % 0.02 % 1.2 % Return on average equity 13.30 % 18.08 % (4.78 %) (26.4 %) 14.91 % (1.61 %) (10.8 %) 15.64 % 14.11 % 1.53 % 10.8 % Efficiency ratio¹ 49.45 % 50.71 % (1.26 %) (2.5 %) 52.24 % (2.79 %) (5.3 %) 50.09 % 52.02 % (1.93 %) (3.7 %) Yield on interest-earning assets² 4.06 % 3.96 % 0.10 % 2.5 % 4.12 % (0.06 %) (1.5 %) 4.01 % 4.24 % (0.23 %) (5.4 %) Cost of funds 0.34 % 0.31 % 0.03 % 9.7 % 0.42 % (0.08 %) (19.0 %) 0.33 % 0.47 % (0.14 %) (29.8 %) Net interest margin² 3.75 % 3.68 % 0.07 % 1.9 % 3.75 % 0.00 % 0.0 % 3.71 % 3.82 % (0.11 %) (2.9 %) 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) June 30, March 31, $ % June 30, $ % 2022 2022 Change Change 2021 Change Change ASSETS Cash and due from banks $ 18,087 $ 14,579 $ 3,508 24.1 % $ 10,509 $ 7,578 72.1 % Interest-earning deposits at the FRB and other banks 243,072 288,603 (45,531 ) (15.8 %) 240,932 2,140 0.9 % Investment securities¹ 77,469 80,104 (2,635 ) (3.3 %) 82,354 (4,885 ) (5.9 %) Loans held-for-sale, at the lower of cost or fair value 141,104 149,733 (8,629 ) (5.8 %) 96,554 44,550 46.1 % Loans receivable 1,260,939 1,225,739 35,200 2.9 % 1,133,371 127,568 11.3 % Allowance for loan losses (14,739 ) (13,089 ) (1,650 ) (12.6 %) (14,908 ) 169 1.1 % Loans receivable, net 1,246,200 1,212,650 33,550 2.8 % 1,118,463 127,737 11.4 % OREO - - - - - - - Restricted stock investments 10,111 8,850 1,261 14.2 % 8,850 1,261 14.2 % Servicing assets 10,996 10,671 325 3.0 % 10,189 807 7.9 % Goodwill 2,185 2,185 - 0.0 % - 2,185 100.0 % Intangible assets 331 346 (15 ) (4.3 %) - 331 100.0 % Other assets 28,060 24,061 3,999 16.6 % 45,071 (17,011 ) (37.7 %) Total assets $ 1,777,615 $ 1,791,782 $ (14,167 ) (0.8 %) $ 1,612,922 $ 164,693 10.2 % LIABILITIES AND STOCKHOLDERS' EQUITY Noninterest-bearing $ 566,610 $ 576,378 $ (9,768 ) (1.7 %) $ 572,284 $ (5,674 ) (1.0 %) Interest-bearing 948,760 957,633 (8,873 ) (0.9 %) 806,397 142,363 17.7 % Total deposits 1,515,370 1,534,011 (18,641 ) (1.2 %) 1,378,681 136,689 9.9 % FHLB advances and other borrowing 50,000 50,000 - - 50,000 - 0.0 % Other liabilities 15,134 16,687 (1,553 ) (9.3 %) 13,026 2,108 16.2 % Total liabilities 1,580,504 1,600,698 (20,194 ) (1.3 %) 1,441,707 138,797 9.6 % Stockholders' Equity 197,111 191,084 6,027 3.2 % 171,215 25,896 15.1 % TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,777,615 $ 1,791,782 $ (14,167 ) (0.8 %) $ 1,612,922 $ 164,693 10.2 % CAPITAL RATIOS Leverage ratio Company 10.80 % 10.56 % 0.24 % 2.3 % 11.35 % (0.55 %) (4.9 %) Bank 10.73 % 10.55 % 0.18 % 1.7 % 11.33 % (0.60 %) (5.3 %) Common equity tier 1 risk-based capital ratio Company 14.47 % 14.50 % (0.03 %) (0.2 %) 14.39 % 0.08 % 0.6 % Bank 14.38 % 14.50 % (0.12 %) (0.8 %) 14.37 % 0.01 % 0.1 % Tier 1 risk-based capital ratio Company 14.47 % 14.50 % (0.03 %) (0.2 %) 14.39 % 0.08 % 0.6 % Bank 14.38 % 14.50 % (0.12 %) (0.8 %) 14.37 % 0.01 % 0.1 % Total risk-based capital ratio Company 15.63 % 15.57 % 0.06 % 0.4 % 15.64 % (0.01 %) (0.1 %) Bank 15.53 % 15.57 % (0.04 %) (0.2 %) 15.62 % (0.09 %) (0.6 %) Tangible common equity per share $ 18.68 $ 18.31 $ 0.37 2.0 % $ 16.66 $ 2.02 12.1 % Loan-to-Deposit (LTD) ratio 83.21 % 79.90 % 3.31 % 4.1 % 82.21 % 1.00 % 1.2 % Nonperforming assets $ 2,532 $ 723 $ 1,809 250.2 % $ 1,339 $ 1,193 89.1 % Nonperforming assets as a % of loans receivable 0.20 % 0.06 % 0.14 % 233.3 % 0.12 % 0.08 % 66.7 % ALLL as a % of loans receivable 1.17 % 1.07 % 0.10 % 9.3 % 1.32 % (0.15 %) (11.4 %) ALLL as a % of loans receivable exc. SBA PPP loans 1.18 % 1.09 % 0.09 % 8.3 % 1.42 % (0.24 %) (16.9 %) 1 Includes AFS and HTM FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3 (Dollars in thousands, except per share amounts) Three Months Ended June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 Interest income $ 17,807 $ 17,032 $ 17,553 $ 17,437 $ 14,923 Interest expense 1,369 1,209 1,265 1,337 1,358 Net interest income 16,438 15,823 16,288 16,100 13,565 Provision for loan losses 1,600 (1,167 ) (800 ) - - Net interest income after provision for loan losses 14,838 16,990 17,088 16,100 13,565 Gain on sale of loans 3,298 4,668 4,151 4,305 3,988 Gain (loss) on sale of OREO - - - - - SBA servicing fee income, net 778 469 683 698 622 Reversal of valuation allowance on servicing assets - - - - - Service charges and other income 462 498 499 540 395 Noninterest income 4,538 5,635 5,333 5,543 5,005 Salaries and employee benefits 6,994 7,065 6,614 6,500 6,000 Occupancy and equipment 1,114 1,120 1,028 1,067 945 Marketing expense 511 485 111 287 309 Professional expense 517 415 368 495 491 Merger related expense 123 - 454 450 600 Other expenses 1,114 1,796 2,850 1,807 1,356 Noninterest expense 10,373 10,881 11,425 10,606 9,701 Income before income tax expense 9,003 11,744 10,996 11,037 8,869 Income tax expense 2,547 3,336 2,984 3,156 2,566 Net income $ 6,456 $ 8,408 $ 8,012 $ 7,881 $ 6,303 Effective tax rate 28.3 % 28.4 % 27.1 % 28.6 % 28.9 % Outstanding number of shares 10,416,601 10,299,361 10,284,962 10,284,962 10,279,962 Weighted average shares for basic EPS 10,305,014 10,291,071 10,284,962 10,280,016 10,262,956 Weighted average shares for diluted EPS 10,409,663 10,479,488 10,424,771 10,427,687 10,392,427 Basic EPS $ 0.62 $ 0.82 $ 0.78 $ 0.77 $ 0.61 Diluted EPS $ 0.62 $ 0.80 $ 0.77 $ 0.75 $ 0.61 FIVE-QUARTER SALARIES BENEFIT METRICS (Unaudited) - Table 4 (Dollars in thousands) At or for the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 Salaries and benefits $ 6,994 $ 7,065 $ 6,614 $ 6,500 $ 6,000 FTE at the end of period 199 208 205 200 183 Average FTE during the period 201 206 201 202 182 Salaries and benefits/average FTE¹ $ 140 $ 139 $ 131 $ 127 $ 132 Salaries and benefits/average assets¹ 1.55 % 1.60 % 1.39 % 1.43 % 1.62 % Noninterest expense/average assets¹ 2.30 % 2.47 % 2.40 % 2.33 % 2.62 % 1 Annualized FIVE-QUARTER BALANCE SHEET (Unaudited) - Table 5 (Dollars in thousands) June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 ASSETS Cash and due from banks $ 18,087 $ 14,579 $ 7,702 $ 11,621 $ 10,509 Interest-earning deposits at the FRB and other banks 243,072 288,603 284,583 386,087 240,932 Investment securities¹ 77,469 80,104 84,238 86,440 82,354 Loans held-for-sale, at the lower of cost or fair value 141,104 149,733 158,128 136,394 96,554 Loans receivable 1,260,939 1,225,739 1,241,319 1,255,814 1,133,371 Allowance for loan losses (14,739 ) (13,089 ) (14,192 ) (15,000 ) (14,908 ) Loans receivable, net 1,246,200 1,212,650 1,227,127 1,240,814 1,118,463 OREO - - - - - Restricted stock investments 10,111 8,850 8,850 8,850 8,850 Servicing assets 10,996 10,671 10,632 10,392 10,189 Goodwill 2,185 2,185 2,185 2,269 - Intangible assets 331 346 360 375 - Other assets 28,060 24,061 25,450 25,859 45,071 Total assets $ 1,777,615 $ 1,791,782 $ 1,809,255 $ 1,909,101 $ 1,612,922 LIABILITIES AND STOCKHOLDERS' EQUITY Noninterest-bearing $ 566,610 $ 576,378 $ 619,774 $ 670,489 $ 572,284 Interest-bearing 948,760 957,633 938,338 995,574 806,397 Total deposits 1,515,370 1,534,011 1,558,112 1,666,063 1,378,681 FHLB advances 50,000 50,000 50,000 50,000 50,000 Other liabilities 15,134 16,687 15,901 14,719 13,026 Total liabilities 1,580,504 1,600,698 1,624,013 1,730,782 1,441,707 Stockholders' Equity 197,111 191,084 185,242 178,319 171,215 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,777,615 $ 1,791,782 $ 1,809,255 $ 1,909,101 $ 1,612,922 1 Includes AFS and HTM FIVE-QUARTER LOANS RECEIVABLE COMPONENTS (Unaudited) - Table 6 (Dollars in thousands) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Balance % Balance % Balance % Balance % Balance % Construction $ 23,431 1.9 % $ 18,541 1.5 % $ 23,939 1.9 % $ 21,725 1.7 % $ 18,753 1.7 % Commercial real estate 1,023,298 81.1 % 976,924 79.7 % 978,995 78.9 % 971,387 77.3 % 893,700 78.8 % Commercial and industrial 146,175 11.6 % 159,111 13.0 % 169,489 13.7 % 198,217 15.8 % 217,350 19.2 % Home mortgage 57,612 4.57 % 59,836 4.9 % 61,030 4.9 % 60,075 4.8 % - - Consumer 6,609 0.5 % 7,589 0.6 % 4,269 0.3 % 2,185 0.2 % 2,236 0.2 % Gross loans 1,257,125 99.7 % 1,222,001 99.7 % 1,237,722 99.7 % 1,253,589 99.8 % 1,132,039 99.9 % Net deferred loan fees/costs 3,814 0.3 % 3,738 0.3 % 3,597 0.3 % 2,225 0.2 % 1,332 0.1 % Loans receivable $ 1,260,939 100.0 % $ 1,225,739 100.0 % $ 1,241,319 100.0 % $ 1,255,814 100.0 % $ 1,133,371 100.0 % Loans held-for-sale $ 141,104 $ 149,733 $ 158,128 $ 136,394 $ 96,554 Loans receivable, including loans held-for-sale $ 1,402,043 $ 1,375,472 $ 1,399,447 $ 1,392,208 $ 1,229,925 FIVE-QUARTER SBA LOAN PRODUCTIONS/SALES DATA (Unaudited) - Table 7 (Dollars in thousands) Three Months Ended June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 SBA loans held-for-sale at beginning of the quarter/year $ 149,733 $ 158,128 $ 136,394 $ 96,554 $ 76,066 SBA loans originated/transferred from/to held-for-investment during the quarter/year 43,451 43,132 68,136 82,303 62,864 SBA loans sold during the quarter/year (50,845 ) (50,531 ) (42,210 ) (42,019 ) (42,163 ) SBA loans principal payment, net of advance (1,235 ) (996 ) (4,193 ) (444 ) (213 ) SBA loans held-for-sale at end of the quarter/year $ 141,104 $ 149,733 $ 158,128 $ 136,394 $ 96,554 Gain on sale of SBA loans $ 3,298 $ 4,668 $ 4,151 $ 4,305 $ 3,988 Premium on sale (weighted average) 8.0 % 11.0 % 11.1 % 11.5 % 11.9 % SBA loan production $ 56,676 $ 54,523 $ 82,448 $ 93,986 $ 78,058 Non-PPP loans 56,676 54,523 82,448 93,986 75,065 PPP loans - - - - 2,994 FIVE QUARTER SBA SERVICING ASSETS AND SERVICING FEES (Unaudited) - Table 8 (Dollars in thousands) Three Months Ended June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 SBA servicing assets @ beginning of the quarter/year $ 10,671 $ 10,632 $ 10,392 $ 10,189 $ 10,000 Newly added SBA servicing assets from SBA loans sold 1,081 1,052 1,006 920 897 Regular quarterly/annual servicing assets amortization (478 ) (462 ) (453 ) (421 ) (422 ) SBA servicing assets amortized from SBA loans paid off/charged off (278 ) (551 ) (313 ) (296 ) (286 ) Subtotal before impairment 10,996 10,671 10,632 10,392 10,189 Reversal of valuation allowance on servicing assets - - - - - SBA servicing assets @ the end of the quarter/year $ 10,996 $ 10,671 $ 10,632 $ 10,392 $ 10,189 FIVE-QUARTER DEPOSIT COMPONENTS (Unaudited) - Table 9 (Dollars in thousands) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Balance % Balance % Balance % Balance % Balance % Noninterest-bearing demand $ 566,610 37.4 % $ 576,378 37.6 % $ 619,774 39.8 % $ 670,489 40.2 % $ 572,284 41.5 % Interest-bearing demand 12,754 0.8 % 12,059 0.8 % 10,723 0.7 % 10,904 0.7 % - - NOW & MMDA 327,477 21.6 % 344,501 22.5 % 325,313 20.9 % 376,549 22.6 % 291,437 21.1 % Savings 73,791 4.9 % 79,685 5.2 % 76,588 4.9 % 75,497 4.5 % 41,284 3.0 % TCDs of $250K and under 245,203 16.2 % 253,617 16.5 % 259,758 16.7 % 264,130 15.9 % 219,174 15.9 % TCDs of $250K over 198,518 13.1 % 176,754 11.5 % 174,939 11.2 % 177,477 10.7 % 158,485 11.5 % Wholesale TCDs 91,017 6.0 % 91,017 5.9 % 91,017 5.8 % 91,017 5.5 % 96,017 7.0 % Total Deposits $ 1,515,370 100.0 % $ 1,534,011 100.0 % $ 1,558,112 100.0 % $ 1,666,063 100.0 % $ 1,378,681 100.0 % Recap: Noninterest-bearing demand $ 566,610 37.4 % $ 576,378 37.6 % $ 619,774 39.8 % $ 670,489 40.2 % $ 572,284 41.5 % Interest-bearing demand 12,754 0.8 % 12,059 0.8 % 10,723 0.7 % 10,904 0.7 % - - NOW & MMDA 327,477 21.6 % 344,501 22.5 % 325,313 20.9 % 376,549 22.6 % 291,437 21.1 % Savings 73,791 4.9 % 79,685 5.2 % 76,588 4.9 % 75,497 4.5 % 41,284 3.0 % TCDs of $250K and under 245,203 16.2 % 253,617 16.5 % 259,758 16.7 % 264,130 15.9 % 219,174 15.9 % Core Deposits 1,225,835 80.9 % 1,266,240 82.6 % 1,292,156 83.0 % 1,397,569 83.9 % 1,124,179 81.5 % TCDs of $250K over 198,518 13.1 % 176,754 11.5 % 174,939 11.2 % 177,477 10.7 % 158,485 11.5 % Wholesale TCDs 91,017 6.0 % 91,017 5.9 % 91,017 5.8 % 91,017 5.4 % 96,017 7.0 % Noncore Deposits 289,535 19.1 % 267,771 17.4 % 265,956 17.0 % 268,494 16.1 % 254,502 18.5 % Total Deposits $ 1,515,370 100.0 % $ 1,534,011 100.0 % $ 1,558,112 100.0 % $ 1,666,063 100.0 % $ 1,378,681 100.0 % FIVE-QUARTER SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited) - Table 10 (Dollars in thousands) 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 2022 2022 2021 2021 2021 Allowance for Loan Losses Balance at beginning of period $ 13,089 $ 14,192 $ 15,000 $ 14,908 $ 14,888 Provision for loan losses 1,600 (1,167 ) (800 ) - - Charge-offs - - (89 ) - - Recoveries 50 64 81 92 20 Balance at the end of period $ 14,739 $ 13,089 $ 14,192 $ 15,000 $ 14,908 Nonperforming Assets:¹ Over 90 days still accruing $ - $ - $ - $ - $ - Nonaccrual loans 2,532 723 747 768 1,339 Total nonperforming loans 2,532 723 747 768 1,339 Other real estate owned - - - - - Total nonperforming assets $ 2,532 $ 723 $ 747 $ 768 $ 1,339 Classified Assets:¹ Substandard $ 11,133 $ 9,300 $ 11,156 $ 10,672 $ 10,052 Doubtful - - - - - Loss - - - - - Total classified loans $ 11,133 $ 9,300 $ 11,156 $ 10,672 $ 10,052 Other real estate owned - - - - - Total classified assets $ 11,133 $ 9,300 $ 11,156 $ 10,672 $ 10,052 Performing TDR loans: $ 4,744 $ 3,253 $ 3,521 $ 3,658 $ 3,776 Delinquent Loans:¹ Loans 30-89 days past due $ 11,553 $ 6,275 $ 267 $ 1,688 $ 2,524 90 days or more past due and still accruing - - - - - Nonaccrual 2,532 723 747 768 1,339 Total delinquent loans $ 14,085 $ 6,998 $ 1,014 $ 2,456 $ 3,863 Asset Quality Ratios: Net (recoveries) charge-offs to average loans² (0.01 %) (0.02 %) 0.00 % (0.03 %) (0.01 %) Nonaccrual loans to loans receivable 0.20 % 0.06 % 0.06 % 0.06 % 0.12 % Nonperforming loans to loans receivable 0.20 % 0.06 % 0.06 % 0.06 % 0.12 % Nonperforming assets to total assets 0.14 % 0.04 % 0.04 % 0.04 % 0.08 % Classified loans to loans receivable 0.88 % 0.76 % 0.90 % 0.85 % 0.89 % Classified loans to Tier 1 and ALLL 5.32 % 4.61 % 5.67 % 5.53 % 5.40 % Classified assets to total assets 0.63 % 0.52 % 0.62 % 0.56 % 0.62 % Classified assets to Tier 1 and ALLL 5.32 % 4.61 % 5.67 % 5.53 % 5.40 % ALLL to loans receivable 1.17 % 1.07 % 1.14 % 1.19 % 1.32 % ALLL to loans receivable exc. SBA PPP loans 1.18 % 1.09 % 1.18 % 1.26 % 1.42 % ALLL to nonaccrual loans 582.11 % 1810.37 % 1899.87 % 1953.13 % 1113.37 % ALLL to nonperforming loans 582.11 % 1810.37 % 1899.87 % 1953.13 % 1113.37 % ALLL to nonperforming assets 582.11 % 1810.37 % 1899.87 % 1953.13 % 1113.37 % Texas ratio³ 1.21 % 0.36 % 0.38 % 0.40 % 0.72 % 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 June 30, March 31, December 31, September 30, June 30, Regulatory BASEL III Requirement Fully Phased In 2022 2022 2021 2021 2021 Leverage ratio Company N/A N/A 10.80 % 10.56 % 9.55 % 9.61 % 11.35 % Bank 5.00% 4.00% 10.73 % 10.55 % 9.55 % 9.60 % 11.33 % Common equity tier 1 risk-based capital ratio Company N/A N/A 14.47 % 14.50 % 13.83 % 13.61 % 14.39 % Bank 6.50% 7.00% 14.38 % 14.50 % 13.82 % 13.59 % 14.37 % Tier 1 risk-based capital ratio Company N/A N/A 14.47 % 14.50 % 13.83 % 13.61 % 14.39 % Bank 8.00% 8.50% 14.38 % 14.50 % 13.82 % 13.59 % 14.37 % Total risk-based capital ratio Company N/A N/A 15.63 % 15.57 % 14.98 % 14.86 % 15.64 % Bank 10.00% 10.50% 15.53 % 15.57 % 14.97 % 14.84 % 15.62 % Tangible common equity/total assets 10.96 % 10.54 % 10.11 % 9.21 % 10.62 % Tangible common equity per share $ 18.68 $ 18.31 $ 17.76 $ 17.08 $ 16.66 FIVE-QUARTER MARGIN ANALYSIS (Unaudited) -Table 12 (Dollars in thousands) Three Months Ended June 30, 2021 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 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 Loans¹ $ 1,389,968 $ 16,643 4.80 % $ 1,368,996 $ 16,352 4.84 % $ 1,396,201 $ 16,893 4.80 % $ 1,390,851 $ 16,800 4.79 % $ 1,195,908 $ 14,338 4.81 % Investment securities² 78,709 488 2.49 % 82,818 471 2.31 % 85,555 454 2.11 % 87,585 460 2.08 % 83,152 442 2.13 % Interest-earning deposits at the FRB and other banks 286,974 599 0.84 % 288,966 141 0.20 % 365,501 144 0.16 % 282,512 112 0.16 % 168,677 54 0.13 % Other earning assets 9,861 129 5.25 % 8,850 119 5.45 % 8,850 115 5.16 % 8,925 116 5.16 % 8,737 135 6.20 % Total interest-earning assets² 1,765,512 17,859 4.06 % 1,749,630 17,083 3.96 % 1,856,107 17,606 3.76 % 1,769,873 17,488 3.92 % 1,456,474 14,969 4.12 % NONINTEREST-EARNING ASSETS Cash and due from banks 14,866 13,338 13,318 13,079 10,752 Other noninterest-earning assets 38,621 36,714 37,779 36,548 32,002 Total noninterest-earning assets 53,487 50,052 51,097 49,627 42,754 Less: Allowance for loan losses (13,126 ) (14,200 ) (14,849 ) (14,958 ) (14,899 ) TOTAL ASSETS $ 1,805,873 $ 1,785,482 $ 1,892,355 $ 1,804,542 $ 1,484,329 INTEREST-BEARING DEPOSITS Interest-bearing demand $ 26,781 $ 4 0.06 % $ 27,442 $ 3 0.04 % $ 27,904 $ 3 0.04 % $ 36,670 $ 4 0.04 % $ 13,373 $ 2 0.06 % Money market 308,377 443 0.58 % 321,694 356 0.45 % 338,937 401 0.47 % 312,606 388 0.49 % 263,845 352 0.54 % Savings 75,306 59 0.31 % 76,967 61 0.32 % 77,057 68 0.35 % 74,266 71 0.38 % 43,433 55 0.51 % Time deposits 523,504 746 0.57 % 529,421 673 0.52 % 527,634 674 0.51 % 542,901 756 0.55 % 469,000 831 0.71 % Total interest-bearing deposits 933,968 1,252 0.54 % 955,524 1,093 0.46 % 971,532 1,146 0.47 % 966,443 1,219 0.50 % 789,651 1,240 0.63 % Borrowings 50,000 117 0.94 % 50,000 116 0.94 % 50,000 119 0.94 % 50,000 118 0.94 % 51,539 118 0.92 % Total interest-bearing liabilities 983,968 1,369 0.56 % 1,005,524 1,209 0.49 % 1,021,532 1,265 0.49 % 1,016,443 1,337 0.52 % 841,190 1,358 0.65 % Noninterest-bearing deposits 611,395 574,436 673,154 597,056 459,695 Other liabilities 15,818 16,966 16,425 16,046 13,906 Stockholders' equity 194,692 188,556 181,244 174,997 169,538 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,805,873 $ 1,785,482 $ 1,892,355 $ 1,804,542 $ 1,484,329 Net interest income² $ 16,490 $ 15,874 $ 16,341 $ 16,151 $ 13,611 Net interest spread 3.50 % 3.47 % 3.27 % 3.40 % 3.47 % Effect of noninterest-bearing sources 0.25 % 0.21 % 0.22 % 0.22 % 0.28 % Net interest margin² 3.75 % 3.68 % 3.49 % 3.62 % 3.75 % Cost of deposits $ 1,545,363 $ 1,252 0.32 % $ 1,529,960 $ 1,093 0.29 % $ 1,644,686 $ 1,146 0.28 % $ 1,563,499 $ 1,219 0.31 % $ 1,249,346 $ 1,240 0.40 % Cost of funds $ 1,595,363 $ 1,369 0.34 % $ 1,579,960 $ 1,209 0.31 % $ 1,694,686 $ 1,265 0.30 % $ 1,613,499 $ 1,337 0.33 % $ 1,300,885 $ 1,358 0.42 % 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 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Contractual yield $ 15,496 4.47 % $ 14,596 4.32 % $ 15,142 4.30 % $ 15,032 4.29 % $ 12,670 4.25 % SBA discount accretion 1,035 0.30 % 1,421 0.42 % 1,024 0.29 % 1,038 0.30 % 1,027 0.34 % Prepayment penalties & late fees 56 0.02 % 107 0.03 % 72 0.02 % 41 0.01 % 89 0.03 % Amortization of net deferred costs 56 0.01 % 228 0.07 % 655 0.19 % 689 0.20 % 552 0.19 % As reported yield on loans $ 16,643 4.80 % $ 16,352 4.84 % $ 16,893 4.80 % $ 16,800 4.79 % $ 14,338 4.81 % MARGIN ANALYSIS (Unaudited) - Table 14 (Dollars in thousands) Six Months Ended June 30,2022 June 30,2021 Avg Balance Interest Yield Avg Balance Interest Yield Number of Days in the Period INTEREST-EARNING ASSETS Loans¹ $ 1,379,540 $ 32,995 4.82 % $ 1,167,180 $ 28,175 4.87 % Investment securities² 80,752 959 2.39 % 83,911 890 2.14 % Interest-earning deposits at the FRB and other banks 288,018 740 0.52 % 138,570 90 0.13 % Other earning assets 9,358 248 5.34 % 8,468 232 5.52 % Total interest-earning assets² 1,757,668 34,942 4.01 % 1,398,129 29,387 4.24 % NONINTEREST-EARNING ASSETS Cash and due from banks 14,106 10,390 Other noninterest-earning assets 37,674 31,582 Total noninterest-earning assets 51,780 41,972 Less: Allowance for loan losses (13,660 ) (14,641 ) TOTAL ASSETS $ 1,795,788 $ 1,425,460 INTEREST-BEARING DEPOSITS Interest-bearing demand $ 27,110 $ 7 0.05 % $ 14,586 $ 4 0.06 % Money market 314,999 799 0.51 % 264,845 718 0.55 % Savings 76,132 120 0.32 % 45,845 115 0.51 % Time deposits 526,446 1,419 0.54 % 460,223 1,806 0.79 % Total interest-bearing deposits 944,687 2,345 0.50 % 785,499 2,643 0.68 % Borrowings 50,000 233 0.94 % 58,564 248 0.85 % Total interest-bearing liabilities 994,687 2,578 0.52 % 844,063 2,891 0.69 % Noninterest-bearing deposits 593,071 402,119 Other Liabilities 16,389 12,929 Stockholders' equity 191,641 166,349 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,795,788 $ 1,425,460 Net interest income² $ 32,364 $ 26,496 Net interest spread 3.49 % 3.55 % Effect of noninterest-bearing sources 0.22 % 0.27 % Net interest margin² 3.71 % 3.82 % Cost of deposits $ 1,537,758 $ 2,345 0.31 % $ 1,187,618 $ 2,643 0.45 % Cost of funds $ 1,587,758 $ 2,578 0.33 % $ 1,246,182 $ 2,891 0.47 % 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) Six Months Ended June 30, 2022 June 30, 2021 Amount Yield Amount Yield Contractual yield $ 30,092 4.40 % $ 24,818 4.29 % SBA discount accretion 2,456 0.36 % 1,765 0.30 % Prepayment penalties & late fees 163 0.02 % 210 0.04 % Amortization of net deferred costs 284 0.04 % 1,382 0.24 % As reported yield on loans $ 32,995 4.82 % $ 28,175 4.87 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220728006110/en/Contacts Douglas J Goddard, EVP & CFO (323) 988-3010 DouglasG@cbb-bank.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
CBB Bancorp, Inc. Reports Second Quarter 2022 Financial Results By: CBB Bancorp, Inc. via Business Wire July 29, 2022 at 09:00 AM EDT CBB Bancorp, Inc. ("CBB" or the "Company') (OTCQX: CBBI), the holding company of Commonwealth Business Bank (the "Bank"), announced today net income for second quarter 2022 of $6.5 million, or $0.62 per diluted share, a decrease of 23.2% compared to $8.4 million, or $0.80 per diluted share, in the prior quarter and an increase of 2.4% compared to $6.3 million, or $0.61 per diluted share, in the same period last year. Overall Results Net income for second quarter 2022 was affected by higher loan loss provisions during the quarter as a result of increases in past due and classified loans and growth in the loan portfolio. Core earnings remained strong, as our net interest margin and efficiency ratio improved from the prior quarter. Our return on average assets for second quarter 2022 was 1.43% compared to 1.91% for first quarter 2022 and 1.70% for second quarter 2021. Our return on average equity for second quarter 2022 was 13.30%, compared to 18.08% for first quarter 2022 and 14.91% for second quarter 2021. Our net interest margin for second quarter 2022 was 3.75%, compared to 3.68% for first quarter 2022 and 3.75% for second quarter 2021. Our efficiency ratio for second quarter 2022 was 49.45%, compared to 50.71% for first quarter 2022 and 52.24% for second quarter 2021. James Hong, President and CEO, commented, “We are pleased to announce strong core earnings for the second quarter of 2022, despite the uncertain economic climate. We continue to see opportunities to add to our core earnings going forward through the addition of quality loan and deposit customers.” Net Interest Income and Margin Net Interest Income Net interest income for second quarter 2022 was $16.4 million, an increase of $615 thousand, or 3.9%, from first quarter 2022, and an increase of $2.9 million, or 21.2%, from second quarter 2021. The increase in net interest income compared with the prior quarter was driven by loan growth, as well as an increase in variable rate asset yields due to recent increases in interest rates by the Federal Reserve Bank. Net interest income growth compared with the second quarter of 2021 also benefited from the merger with Ohana Pacific Bank (OPB) as of July 1, 2021. Net Interest Margin Our net interest margin for second quarter 2022 was 3.75%, compared to 3.68% for first quarter 2022 and 3.75% for second quarter 2021. The increase in net interest margin compared to first quarter 2022 was due to increased interest income on cash and due from banks balances, which are immediately affected by the Federal Reserve’s interest rate changes. Our cost of funds for second quarter 2022 increased to 0.34% from 0.31% for first quarter 2022 and decreased from 0.42% for second quarter 2021. Provision for Loan Losses: The Company had a provision for loan losses for second quarter 2022 of $1.6 million, compared to a recovery of $1.2 million for first quarter 2022 and no provision for loan losses for second quarter 2021. The provision recorded for the current quarter was due to moderate increases in delinquencies and classified assets and growth in the loan portfolio. See Table 10 in this press release for additional information and trends. Noninterest Income: Noninterest income for second quarter 2022 was $4.5 million, compared to $5.6 million for first quarter 2022 and $5.0 million for second quarter 2021. The decrease in noninterest income in second quarter 2022 was primarily the result of decreased gains on sales of loans. Sales of SBA loans were $50.8 million with an average premium percentage received of 8.0% during the second quarter of 2022, compared with SBA loan sales of $50.5 million with an average premium percentage received of 11.0% during the first quarter of 2022 and SBA loan sales of $42.2 million with an average premium percentage received of 11.9% during the second quarter of 2021. Noninterest Expense: Noninterest expense for second quarter 2022 was $10.4 million, compared to $10.9 million for first quarter 2022 and $9.7 million for second quarter 2021. Salaries and employee benefits were substantially unchanged at $7.0 million in second quarter 2022 compared with the prior quarter, and up from $6.0 million in the second quarter of 2021. The decrease in other expenses compared to the first quarter of 2022 was in part due to the reversal of a provision for probable loss of $800 thousand that had been established with respect to an anticipated repurchase of SBA loans sold. The reversal was recorded to reflect the final settlement that was made with the SBA on the loans in question. The increased noninterest expense levels in the second quarter of 2022 compared to the prior year is primarily due to the inclusion of the operations of OPB, acquired as of July 1, 2021, for the full period. Income Taxes: The Company’s effective tax rate for second quarter 2022 was 28.3% compared to 28.4% for first quarter 2022 and 28.9% for second quarter 2021. Balance Sheet: Investment Securities: Investment securities were $77.5 million at June 30, 2022, a decrease of $2.6 million from March 31, 2022 and $4.9 million from June 30, 2021. The decreases were due to principal paydowns. There were no portfolio additions in second quarter 2022, or in the comparable period of 2021. Loans Receivable: Loans receivable (including loans held for sale) at June 30, 2022 was $1.4 billion, an increase of $26.6 million, or 1.9%, from loans receivable at March 31, 2022, and an increase of $172.1 million, or 14.0%, from loans receivable at June 30, 2021. The increase in loan balances compared with the second quarter of 2021 was due to the $149.2 million in loans receivable that were acquired in the OPB merger as of July 1, 2021, as well as organic growth. Our weighted average loan-to-value ratio of commercial real estate loans was 69.9% at June 30, 2022. Excluding SBA loans, our weighted average loan-to-value of CRE loans was 53.8%. For additional information, please go to www.cbb-bank.com under tab “About Us” and select “Investors Relations” to see 2Q 2022 Overview and COVID-19 update presentation. Paycheck Protection Program (PPP): PPP loans totaled $10.7 million at June 30, 2022. Net unearned fees on PPP loans as of June 30, 2022 were $271 thousand, and these fees are being accreted to income based on a two-year contractual maturity. The SBA approved $10.2 million in PPP loan forgiveness applications processed for our PPP loans in second quarter 2022. Allowance for Loan Losses and Asset Quality: Our allowance for loan losses at June 30, 2022 was $14.7 million, or 1.17% of portfolio loans, compared to $13.1 million, or 1.07% of portfolio loans, at March 31 2022 and compared to $14.9 million, or 1.32% of portfolio loans, at June 30, 2021. Excluding PPP loans of $10.7. million, which are government guaranteed, the allowance for loan losses at June 30, 2022 was 1.18%, compared to 1.09% and 1.42%, respectively, at March 31, 2022 and June 30, 2021. The decrease in the allowance as a percentage of the portfolio in the current quarter compared with the prior year is primarily due to loans acquired in the OPB merger, which have been recorded at market value and do not currently carry any loan loss allowance. Non-performing loans were $2.5 million at June 30, 2022, compared to $723 thousand at March 31, 2022 and $1.3 million at June 30, 2021. Loans with payment deferments are considered to be performing loans in accordance with regulatory guidance. Our coverage ratio of allowance for loan losses to nonperforming assets exceeded 500%. For additional information, please go to www.cbb-bank.com under tab “About Us” and select “Investors Relations” to see 2Q 2022 Overview and COVID-19 update presentation. SBA Loans Held for Sale: SBA loans held for sale at June 30, 2022 were $141.1 million, compared to $149.7 million at March 31, 2022 and $96.6 million at June 30, 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 June 30, 2022, down $18.6 million, or 1.2%, from March 31, 2022 and up $136.7 million, or 9.9%, from June 30, 2021. Noninterest-bearing demand deposits (“DDAs”) decreased $9.8 million, or 1.7%, to $566.6 million at June 30, 2022 from March 31, 2022 and decreased $5.7 million, or 1.0%, from June 30, 2021. DDAs were 38.2% of total deposits at June 30, 2022, compared to 38.4% at March 31, 2022 and 41.5% at June 30, 2021. NOW and MMDA accounts decreased $17.0 million, or 4.9%, to $327.5 million at June 30, 2022 from March 31, 2022 and increased $36.0 million, or 12.4%, from June 30, 2021. Time deposits increased $13.4 million, or 2.6%, at June 30, 2022 from March 31, 2022 and increased $61.1 million, or 12.9%, from June 30, 2021. Time deposits at June 30, 2022 were $534.7 million, or 35.3% of total deposits, compared to $521.4 million, or 34.0% of total deposits, at March 31, 2022, and $473.7 million, or 34.4% of total deposits, at June 30, 2021. The primary cause of the decreases in noninterest bearing deposit balances during 2022 compared with earlier quarters was a decline in escrow-related deposits sourced from our Specialty Deposit Group. The increase in total deposits compared with the second quarter of 2021 was due to normal growth combined with the completion of the merger with OPB during the third quarter of 2021. Borrowings: Borrowings at June 30, 2022, March 31, 2022 and June 30, 2021 consisted of $50.0 million of Federal Home Loan Bank of San Francisco advances at each date. Capital: Stockholders’ equity was $197.1 million at June 30, 2022, representing an increase of $6.0 million, or 3.2%, over stockholders’ equity of $191.1 million at March 31, 2022. Tangible book value per share at June 30, 2022 was $18.68, compared with $18.31 at March 31, 2022, an increase of $0.37 per share or 2.0%. All of our regulatory capital ratios continue to exceed the minimum levels required to be considered “Well Capitalized” as defined for bank regulatory purposes and in compliance with the fully phased-in Basel III requirements, as shown on Table 11 in this press release. Our Common Equity Tier 1 risked-based capital at June 30, 2022 was 14.47% at the Company level and 14.38% 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 June 30, 2022, the Bank has ten full-service banking offices in Los Angeles and Orange Counties in California, Dallas County in Texas and Honolulu, Hawaii; two 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 2Q 2022 Overview and COVID-19 update presentation. FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements. These statements typically include words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar terms and phrases, including references to assumptions. You should not place undue reliance on such statements. Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management’s experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company’s control) that could cause actual results to differ materially from the anticipated future results expressed or implied by such forward-looking statements. Factors that could affect our results include, without limitation, the following: the timing and occurrence or non-occurrence of anticipated events may be subject to circumstances beyond the Company’s control; increases in competitive pressure among financial institutions or from non-financial institutions may occur; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Company and the Bank; significant increases in loan losses may occur; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently by investors and stock market analysts; changes in corporate and/or individual income tax laws may adversely affect the Company’s financial condition or results of operations or the behavior of our loan and deposit customers; changes in general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, the effects of the COVID-19 pandemic, and of other widespread outbreaks of disease or pandemics, together with related impacts on general economic conditions, including adverse impacts on our customers’ ability to make timely payments on their loans from us, reduced fee income due to reduced loan origination activity, reductions in or absence of gains on loan sales due to uncertainty in the loan sale market, and increased operating expense due to required changes in how we conduct our business may adversely affect us; conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive to implement or accommodate than the Company anticipates; there may be failures or breaches of our information technology security systems or those of our third party service providers; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates; we may encounter greater difficulty, delay and expense than we anticipate in integrating the personnel and operations of Ohana Pacific Bank or any other companies we acquire. The Company undertakes no obligation to revise any forward-looking statement contained herein to reflect any future events or circumstances, except to the extent required by law. 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 Six Months Ended June 30, March 31, $ % June 30, $ % June 30, June 30, $ % 2022 2022 Change Change 2021 Change Change 2022 2021 Change Change Interest income $ 17,807 $ 17,032 $ 775 4.6 % $ 14,923 $ 2,884 19.3 % $ 34,839 $ 29,295 $ 5,544 18.9 % Interest expense 1,369 1,209 160 13.2 % 1,358 11 0.8 % 2,578 2,891 (313 ) (10.8 %) Net interest income 16,438 15,823 615 3.9 % 13,565 2,873 21.2 % 32,261 26,404 5,857 22.2 % Provision for loan losses 1,600 (1,167 ) 2,767 (237.1 %) - 1,600 100.0 % 433 500 (67 ) (13.4 %) Net interest income after provision for loan losses 14,838 16,990 (2,152 ) (12.7 %) 13,565 1,273 9.4 % 31,828 25,904 5,924 22.9 % Gain on sale of loans 3,298 4,668 (1,370 ) (29.3 %) 3,988 (690 ) (17.3 %) 7,966 6,444 1,522 23.6 % Gain (loss) on sale of OREO - - - - - - - - - - - SBA servicing fee income, net 778 469 309 65.9 % 622 156 25.1 % 1,247 1,469 (222 ) (15.1 %) Reversal of valuation allowance on servicing assets - - - - - - - - - - - Service charges and other income 462 498 (36 ) (7.2 %) 395 67 17.0 % 960 774 186 24.0 % Noninterest income 4,538 5,635 (1,097 ) (19.5 %) 5,005 (467 ) (9.3 %) 10,173 8,687 1,486 17.1 % Salaries and employee benefits 6,994 7,065 (71 ) (1.0 %) 6,000 994 16.6 % 14,059 10,853 3,206 29.5 % Occupancy and equipment 1,114 1,120 (6 ) (0.5 %) 945 169 17.9 % 2,234 1,924 310 16.1 % Marketing expense 511 485 26 5.4 % 309 202 65.4 % 996 596 400 67.1 % Professional expense 517 415 102 24.6 % 491 26 5.3 % 932 946 (14 ) (1.5 %) Merger related expense 123 - 123 100.0 % 600 (477 ) (79.5 %) 123 1,281 (1,158 ) (90.4 %) Other expenses 1,114 1,796 (682 ) (38.0 %) 1,356 (242 ) (17.8 %) 2,910 2,656 254 9.6 % Noninterest expense 10,373 10,881 (508 ) (4.7 %) 9,701 672 6.9 % 21,254 18,256 2,998 16.4 % Income before income tax expense 9,003 11,744 (2,741 ) (23.3 %) 8,869 134 1.5 % 20,747 16,335 4,412 27.0 % Income tax expense 2,547 3,336 (789 ) (23.7 %) 2,566 (19 ) (0.7 %) 5,883 4,698 1,185 25.2 % Net income $ 6,456 $ 8,408 $ (1,952 ) (23.2 %) $ 6,303 $ 153 2.4 % $ 14,864 $ 11,637 $ 3,227 27.7 % Effective tax rate 28.3 % 28.4 % (0.1 %) (0.4 %) 28.9 % (0.6 %) (2.2 %) 28.4 % 28.8 % (0.4 %) (1.4 %) Outstanding number of shares 10,416,601 10,299,361 117,240 1.1 % 10,279,962 136,639 1.3 % 10,416,601 10,279,962 136,639 1.3 % Weighted average shares for basic EPS 10,305,014 10,291,071 13,943 0.1 % 10,262,956 42,058 0.4 % 10,298,081 10,255,167 42,914 0.4 % Weighted average shares for diluted EPS 10,409,663 10,479,488 (69,825 ) (0.7 %) 10,392,427 17,236 0.2 % 10,441,230 10,346,516 94,714 0.9 % Basic EPS $ 0.62 $ 0.82 $ (0.20 ) (24.4 %) $ 0.61 $ 0.01 1.6 % $ 1.44 $ 1.13 $ 0.31 27.4 % Diluted EPS $ 0.62 $ 0.80 $ (0.18 ) (22.5 %) $ 0.61 $ 0.01 1.6 % $ 1.42 $ 1.13 $ 0.29 25.7 % Return on average assets 1.43 % 1.91 % (0.48 %) (25.1 %) 1.70 % (0.27 %) (15.9 %) 1.67 % 1.65 % 0.02 % 1.2 % Return on average equity 13.30 % 18.08 % (4.78 %) (26.4 %) 14.91 % (1.61 %) (10.8 %) 15.64 % 14.11 % 1.53 % 10.8 % Efficiency ratio¹ 49.45 % 50.71 % (1.26 %) (2.5 %) 52.24 % (2.79 %) (5.3 %) 50.09 % 52.02 % (1.93 %) (3.7 %) Yield on interest-earning assets² 4.06 % 3.96 % 0.10 % 2.5 % 4.12 % (0.06 %) (1.5 %) 4.01 % 4.24 % (0.23 %) (5.4 %) Cost of funds 0.34 % 0.31 % 0.03 % 9.7 % 0.42 % (0.08 %) (19.0 %) 0.33 % 0.47 % (0.14 %) (29.8 %) Net interest margin² 3.75 % 3.68 % 0.07 % 1.9 % 3.75 % 0.00 % 0.0 % 3.71 % 3.82 % (0.11 %) (2.9 %) 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) June 30, March 31, $ % June 30, $ % 2022 2022 Change Change 2021 Change Change ASSETS Cash and due from banks $ 18,087 $ 14,579 $ 3,508 24.1 % $ 10,509 $ 7,578 72.1 % Interest-earning deposits at the FRB and other banks 243,072 288,603 (45,531 ) (15.8 %) 240,932 2,140 0.9 % Investment securities¹ 77,469 80,104 (2,635 ) (3.3 %) 82,354 (4,885 ) (5.9 %) Loans held-for-sale, at the lower of cost or fair value 141,104 149,733 (8,629 ) (5.8 %) 96,554 44,550 46.1 % Loans receivable 1,260,939 1,225,739 35,200 2.9 % 1,133,371 127,568 11.3 % Allowance for loan losses (14,739 ) (13,089 ) (1,650 ) (12.6 %) (14,908 ) 169 1.1 % Loans receivable, net 1,246,200 1,212,650 33,550 2.8 % 1,118,463 127,737 11.4 % OREO - - - - - - - Restricted stock investments 10,111 8,850 1,261 14.2 % 8,850 1,261 14.2 % Servicing assets 10,996 10,671 325 3.0 % 10,189 807 7.9 % Goodwill 2,185 2,185 - 0.0 % - 2,185 100.0 % Intangible assets 331 346 (15 ) (4.3 %) - 331 100.0 % Other assets 28,060 24,061 3,999 16.6 % 45,071 (17,011 ) (37.7 %) Total assets $ 1,777,615 $ 1,791,782 $ (14,167 ) (0.8 %) $ 1,612,922 $ 164,693 10.2 % LIABILITIES AND STOCKHOLDERS' EQUITY Noninterest-bearing $ 566,610 $ 576,378 $ (9,768 ) (1.7 %) $ 572,284 $ (5,674 ) (1.0 %) Interest-bearing 948,760 957,633 (8,873 ) (0.9 %) 806,397 142,363 17.7 % Total deposits 1,515,370 1,534,011 (18,641 ) (1.2 %) 1,378,681 136,689 9.9 % FHLB advances and other borrowing 50,000 50,000 - - 50,000 - 0.0 % Other liabilities 15,134 16,687 (1,553 ) (9.3 %) 13,026 2,108 16.2 % Total liabilities 1,580,504 1,600,698 (20,194 ) (1.3 %) 1,441,707 138,797 9.6 % Stockholders' Equity 197,111 191,084 6,027 3.2 % 171,215 25,896 15.1 % TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,777,615 $ 1,791,782 $ (14,167 ) (0.8 %) $ 1,612,922 $ 164,693 10.2 % CAPITAL RATIOS Leverage ratio Company 10.80 % 10.56 % 0.24 % 2.3 % 11.35 % (0.55 %) (4.9 %) Bank 10.73 % 10.55 % 0.18 % 1.7 % 11.33 % (0.60 %) (5.3 %) Common equity tier 1 risk-based capital ratio Company 14.47 % 14.50 % (0.03 %) (0.2 %) 14.39 % 0.08 % 0.6 % Bank 14.38 % 14.50 % (0.12 %) (0.8 %) 14.37 % 0.01 % 0.1 % Tier 1 risk-based capital ratio Company 14.47 % 14.50 % (0.03 %) (0.2 %) 14.39 % 0.08 % 0.6 % Bank 14.38 % 14.50 % (0.12 %) (0.8 %) 14.37 % 0.01 % 0.1 % Total risk-based capital ratio Company 15.63 % 15.57 % 0.06 % 0.4 % 15.64 % (0.01 %) (0.1 %) Bank 15.53 % 15.57 % (0.04 %) (0.2 %) 15.62 % (0.09 %) (0.6 %) Tangible common equity per share $ 18.68 $ 18.31 $ 0.37 2.0 % $ 16.66 $ 2.02 12.1 % Loan-to-Deposit (LTD) ratio 83.21 % 79.90 % 3.31 % 4.1 % 82.21 % 1.00 % 1.2 % Nonperforming assets $ 2,532 $ 723 $ 1,809 250.2 % $ 1,339 $ 1,193 89.1 % Nonperforming assets as a % of loans receivable 0.20 % 0.06 % 0.14 % 233.3 % 0.12 % 0.08 % 66.7 % ALLL as a % of loans receivable 1.17 % 1.07 % 0.10 % 9.3 % 1.32 % (0.15 %) (11.4 %) ALLL as a % of loans receivable exc. SBA PPP loans 1.18 % 1.09 % 0.09 % 8.3 % 1.42 % (0.24 %) (16.9 %) 1 Includes AFS and HTM FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3 (Dollars in thousands, except per share amounts) Three Months Ended June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 Interest income $ 17,807 $ 17,032 $ 17,553 $ 17,437 $ 14,923 Interest expense 1,369 1,209 1,265 1,337 1,358 Net interest income 16,438 15,823 16,288 16,100 13,565 Provision for loan losses 1,600 (1,167 ) (800 ) - - Net interest income after provision for loan losses 14,838 16,990 17,088 16,100 13,565 Gain on sale of loans 3,298 4,668 4,151 4,305 3,988 Gain (loss) on sale of OREO - - - - - SBA servicing fee income, net 778 469 683 698 622 Reversal of valuation allowance on servicing assets - - - - - Service charges and other income 462 498 499 540 395 Noninterest income 4,538 5,635 5,333 5,543 5,005 Salaries and employee benefits 6,994 7,065 6,614 6,500 6,000 Occupancy and equipment 1,114 1,120 1,028 1,067 945 Marketing expense 511 485 111 287 309 Professional expense 517 415 368 495 491 Merger related expense 123 - 454 450 600 Other expenses 1,114 1,796 2,850 1,807 1,356 Noninterest expense 10,373 10,881 11,425 10,606 9,701 Income before income tax expense 9,003 11,744 10,996 11,037 8,869 Income tax expense 2,547 3,336 2,984 3,156 2,566 Net income $ 6,456 $ 8,408 $ 8,012 $ 7,881 $ 6,303 Effective tax rate 28.3 % 28.4 % 27.1 % 28.6 % 28.9 % Outstanding number of shares 10,416,601 10,299,361 10,284,962 10,284,962 10,279,962 Weighted average shares for basic EPS 10,305,014 10,291,071 10,284,962 10,280,016 10,262,956 Weighted average shares for diluted EPS 10,409,663 10,479,488 10,424,771 10,427,687 10,392,427 Basic EPS $ 0.62 $ 0.82 $ 0.78 $ 0.77 $ 0.61 Diluted EPS $ 0.62 $ 0.80 $ 0.77 $ 0.75 $ 0.61 FIVE-QUARTER SALARIES BENEFIT METRICS (Unaudited) - Table 4 (Dollars in thousands) At or for the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 Salaries and benefits $ 6,994 $ 7,065 $ 6,614 $ 6,500 $ 6,000 FTE at the end of period 199 208 205 200 183 Average FTE during the period 201 206 201 202 182 Salaries and benefits/average FTE¹ $ 140 $ 139 $ 131 $ 127 $ 132 Salaries and benefits/average assets¹ 1.55 % 1.60 % 1.39 % 1.43 % 1.62 % Noninterest expense/average assets¹ 2.30 % 2.47 % 2.40 % 2.33 % 2.62 % 1 Annualized FIVE-QUARTER BALANCE SHEET (Unaudited) - Table 5 (Dollars in thousands) June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 ASSETS Cash and due from banks $ 18,087 $ 14,579 $ 7,702 $ 11,621 $ 10,509 Interest-earning deposits at the FRB and other banks 243,072 288,603 284,583 386,087 240,932 Investment securities¹ 77,469 80,104 84,238 86,440 82,354 Loans held-for-sale, at the lower of cost or fair value 141,104 149,733 158,128 136,394 96,554 Loans receivable 1,260,939 1,225,739 1,241,319 1,255,814 1,133,371 Allowance for loan losses (14,739 ) (13,089 ) (14,192 ) (15,000 ) (14,908 ) Loans receivable, net 1,246,200 1,212,650 1,227,127 1,240,814 1,118,463 OREO - - - - - Restricted stock investments 10,111 8,850 8,850 8,850 8,850 Servicing assets 10,996 10,671 10,632 10,392 10,189 Goodwill 2,185 2,185 2,185 2,269 - Intangible assets 331 346 360 375 - Other assets 28,060 24,061 25,450 25,859 45,071 Total assets $ 1,777,615 $ 1,791,782 $ 1,809,255 $ 1,909,101 $ 1,612,922 LIABILITIES AND STOCKHOLDERS' EQUITY Noninterest-bearing $ 566,610 $ 576,378 $ 619,774 $ 670,489 $ 572,284 Interest-bearing 948,760 957,633 938,338 995,574 806,397 Total deposits 1,515,370 1,534,011 1,558,112 1,666,063 1,378,681 FHLB advances 50,000 50,000 50,000 50,000 50,000 Other liabilities 15,134 16,687 15,901 14,719 13,026 Total liabilities 1,580,504 1,600,698 1,624,013 1,730,782 1,441,707 Stockholders' Equity 197,111 191,084 185,242 178,319 171,215 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,777,615 $ 1,791,782 $ 1,809,255 $ 1,909,101 $ 1,612,922 1 Includes AFS and HTM FIVE-QUARTER LOANS RECEIVABLE COMPONENTS (Unaudited) - Table 6 (Dollars in thousands) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Balance % Balance % Balance % Balance % Balance % Construction $ 23,431 1.9 % $ 18,541 1.5 % $ 23,939 1.9 % $ 21,725 1.7 % $ 18,753 1.7 % Commercial real estate 1,023,298 81.1 % 976,924 79.7 % 978,995 78.9 % 971,387 77.3 % 893,700 78.8 % Commercial and industrial 146,175 11.6 % 159,111 13.0 % 169,489 13.7 % 198,217 15.8 % 217,350 19.2 % Home mortgage 57,612 4.57 % 59,836 4.9 % 61,030 4.9 % 60,075 4.8 % - - Consumer 6,609 0.5 % 7,589 0.6 % 4,269 0.3 % 2,185 0.2 % 2,236 0.2 % Gross loans 1,257,125 99.7 % 1,222,001 99.7 % 1,237,722 99.7 % 1,253,589 99.8 % 1,132,039 99.9 % Net deferred loan fees/costs 3,814 0.3 % 3,738 0.3 % 3,597 0.3 % 2,225 0.2 % 1,332 0.1 % Loans receivable $ 1,260,939 100.0 % $ 1,225,739 100.0 % $ 1,241,319 100.0 % $ 1,255,814 100.0 % $ 1,133,371 100.0 % Loans held-for-sale $ 141,104 $ 149,733 $ 158,128 $ 136,394 $ 96,554 Loans receivable, including loans held-for-sale $ 1,402,043 $ 1,375,472 $ 1,399,447 $ 1,392,208 $ 1,229,925 FIVE-QUARTER SBA LOAN PRODUCTIONS/SALES DATA (Unaudited) - Table 7 (Dollars in thousands) Three Months Ended June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 SBA loans held-for-sale at beginning of the quarter/year $ 149,733 $ 158,128 $ 136,394 $ 96,554 $ 76,066 SBA loans originated/transferred from/to held-for-investment during the quarter/year 43,451 43,132 68,136 82,303 62,864 SBA loans sold during the quarter/year (50,845 ) (50,531 ) (42,210 ) (42,019 ) (42,163 ) SBA loans principal payment, net of advance (1,235 ) (996 ) (4,193 ) (444 ) (213 ) SBA loans held-for-sale at end of the quarter/year $ 141,104 $ 149,733 $ 158,128 $ 136,394 $ 96,554 Gain on sale of SBA loans $ 3,298 $ 4,668 $ 4,151 $ 4,305 $ 3,988 Premium on sale (weighted average) 8.0 % 11.0 % 11.1 % 11.5 % 11.9 % SBA loan production $ 56,676 $ 54,523 $ 82,448 $ 93,986 $ 78,058 Non-PPP loans 56,676 54,523 82,448 93,986 75,065 PPP loans - - - - 2,994 FIVE QUARTER SBA SERVICING ASSETS AND SERVICING FEES (Unaudited) - Table 8 (Dollars in thousands) Three Months Ended June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 SBA servicing assets @ beginning of the quarter/year $ 10,671 $ 10,632 $ 10,392 $ 10,189 $ 10,000 Newly added SBA servicing assets from SBA loans sold 1,081 1,052 1,006 920 897 Regular quarterly/annual servicing assets amortization (478 ) (462 ) (453 ) (421 ) (422 ) SBA servicing assets amortized from SBA loans paid off/charged off (278 ) (551 ) (313 ) (296 ) (286 ) Subtotal before impairment 10,996 10,671 10,632 10,392 10,189 Reversal of valuation allowance on servicing assets - - - - - SBA servicing assets @ the end of the quarter/year $ 10,996 $ 10,671 $ 10,632 $ 10,392 $ 10,189 FIVE-QUARTER DEPOSIT COMPONENTS (Unaudited) - Table 9 (Dollars in thousands) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Balance % Balance % Balance % Balance % Balance % Noninterest-bearing demand $ 566,610 37.4 % $ 576,378 37.6 % $ 619,774 39.8 % $ 670,489 40.2 % $ 572,284 41.5 % Interest-bearing demand 12,754 0.8 % 12,059 0.8 % 10,723 0.7 % 10,904 0.7 % - - NOW & MMDA 327,477 21.6 % 344,501 22.5 % 325,313 20.9 % 376,549 22.6 % 291,437 21.1 % Savings 73,791 4.9 % 79,685 5.2 % 76,588 4.9 % 75,497 4.5 % 41,284 3.0 % TCDs of $250K and under 245,203 16.2 % 253,617 16.5 % 259,758 16.7 % 264,130 15.9 % 219,174 15.9 % TCDs of $250K over 198,518 13.1 % 176,754 11.5 % 174,939 11.2 % 177,477 10.7 % 158,485 11.5 % Wholesale TCDs 91,017 6.0 % 91,017 5.9 % 91,017 5.8 % 91,017 5.5 % 96,017 7.0 % Total Deposits $ 1,515,370 100.0 % $ 1,534,011 100.0 % $ 1,558,112 100.0 % $ 1,666,063 100.0 % $ 1,378,681 100.0 % Recap: Noninterest-bearing demand $ 566,610 37.4 % $ 576,378 37.6 % $ 619,774 39.8 % $ 670,489 40.2 % $ 572,284 41.5 % Interest-bearing demand 12,754 0.8 % 12,059 0.8 % 10,723 0.7 % 10,904 0.7 % - - NOW & MMDA 327,477 21.6 % 344,501 22.5 % 325,313 20.9 % 376,549 22.6 % 291,437 21.1 % Savings 73,791 4.9 % 79,685 5.2 % 76,588 4.9 % 75,497 4.5 % 41,284 3.0 % TCDs of $250K and under 245,203 16.2 % 253,617 16.5 % 259,758 16.7 % 264,130 15.9 % 219,174 15.9 % Core Deposits 1,225,835 80.9 % 1,266,240 82.6 % 1,292,156 83.0 % 1,397,569 83.9 % 1,124,179 81.5 % TCDs of $250K over 198,518 13.1 % 176,754 11.5 % 174,939 11.2 % 177,477 10.7 % 158,485 11.5 % Wholesale TCDs 91,017 6.0 % 91,017 5.9 % 91,017 5.8 % 91,017 5.4 % 96,017 7.0 % Noncore Deposits 289,535 19.1 % 267,771 17.4 % 265,956 17.0 % 268,494 16.1 % 254,502 18.5 % Total Deposits $ 1,515,370 100.0 % $ 1,534,011 100.0 % $ 1,558,112 100.0 % $ 1,666,063 100.0 % $ 1,378,681 100.0 % FIVE-QUARTER SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited) - Table 10 (Dollars in thousands) 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 2022 2022 2021 2021 2021 Allowance for Loan Losses Balance at beginning of period $ 13,089 $ 14,192 $ 15,000 $ 14,908 $ 14,888 Provision for loan losses 1,600 (1,167 ) (800 ) - - Charge-offs - - (89 ) - - Recoveries 50 64 81 92 20 Balance at the end of period $ 14,739 $ 13,089 $ 14,192 $ 15,000 $ 14,908 Nonperforming Assets:¹ Over 90 days still accruing $ - $ - $ - $ - $ - Nonaccrual loans 2,532 723 747 768 1,339 Total nonperforming loans 2,532 723 747 768 1,339 Other real estate owned - - - - - Total nonperforming assets $ 2,532 $ 723 $ 747 $ 768 $ 1,339 Classified Assets:¹ Substandard $ 11,133 $ 9,300 $ 11,156 $ 10,672 $ 10,052 Doubtful - - - - - Loss - - - - - Total classified loans $ 11,133 $ 9,300 $ 11,156 $ 10,672 $ 10,052 Other real estate owned - - - - - Total classified assets $ 11,133 $ 9,300 $ 11,156 $ 10,672 $ 10,052 Performing TDR loans: $ 4,744 $ 3,253 $ 3,521 $ 3,658 $ 3,776 Delinquent Loans:¹ Loans 30-89 days past due $ 11,553 $ 6,275 $ 267 $ 1,688 $ 2,524 90 days or more past due and still accruing - - - - - Nonaccrual 2,532 723 747 768 1,339 Total delinquent loans $ 14,085 $ 6,998 $ 1,014 $ 2,456 $ 3,863 Asset Quality Ratios: Net (recoveries) charge-offs to average loans² (0.01 %) (0.02 %) 0.00 % (0.03 %) (0.01 %) Nonaccrual loans to loans receivable 0.20 % 0.06 % 0.06 % 0.06 % 0.12 % Nonperforming loans to loans receivable 0.20 % 0.06 % 0.06 % 0.06 % 0.12 % Nonperforming assets to total assets 0.14 % 0.04 % 0.04 % 0.04 % 0.08 % Classified loans to loans receivable 0.88 % 0.76 % 0.90 % 0.85 % 0.89 % Classified loans to Tier 1 and ALLL 5.32 % 4.61 % 5.67 % 5.53 % 5.40 % Classified assets to total assets 0.63 % 0.52 % 0.62 % 0.56 % 0.62 % Classified assets to Tier 1 and ALLL 5.32 % 4.61 % 5.67 % 5.53 % 5.40 % ALLL to loans receivable 1.17 % 1.07 % 1.14 % 1.19 % 1.32 % ALLL to loans receivable exc. SBA PPP loans 1.18 % 1.09 % 1.18 % 1.26 % 1.42 % ALLL to nonaccrual loans 582.11 % 1810.37 % 1899.87 % 1953.13 % 1113.37 % ALLL to nonperforming loans 582.11 % 1810.37 % 1899.87 % 1953.13 % 1113.37 % ALLL to nonperforming assets 582.11 % 1810.37 % 1899.87 % 1953.13 % 1113.37 % Texas ratio³ 1.21 % 0.36 % 0.38 % 0.40 % 0.72 % 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 June 30, March 31, December 31, September 30, June 30, Regulatory BASEL III Requirement Fully Phased In 2022 2022 2021 2021 2021 Leverage ratio Company N/A N/A 10.80 % 10.56 % 9.55 % 9.61 % 11.35 % Bank 5.00% 4.00% 10.73 % 10.55 % 9.55 % 9.60 % 11.33 % Common equity tier 1 risk-based capital ratio Company N/A N/A 14.47 % 14.50 % 13.83 % 13.61 % 14.39 % Bank 6.50% 7.00% 14.38 % 14.50 % 13.82 % 13.59 % 14.37 % Tier 1 risk-based capital ratio Company N/A N/A 14.47 % 14.50 % 13.83 % 13.61 % 14.39 % Bank 8.00% 8.50% 14.38 % 14.50 % 13.82 % 13.59 % 14.37 % Total risk-based capital ratio Company N/A N/A 15.63 % 15.57 % 14.98 % 14.86 % 15.64 % Bank 10.00% 10.50% 15.53 % 15.57 % 14.97 % 14.84 % 15.62 % Tangible common equity/total assets 10.96 % 10.54 % 10.11 % 9.21 % 10.62 % Tangible common equity per share $ 18.68 $ 18.31 $ 17.76 $ 17.08 $ 16.66 FIVE-QUARTER MARGIN ANALYSIS (Unaudited) -Table 12 (Dollars in thousands) Three Months Ended June 30, 2021 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 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 Loans¹ $ 1,389,968 $ 16,643 4.80 % $ 1,368,996 $ 16,352 4.84 % $ 1,396,201 $ 16,893 4.80 % $ 1,390,851 $ 16,800 4.79 % $ 1,195,908 $ 14,338 4.81 % Investment securities² 78,709 488 2.49 % 82,818 471 2.31 % 85,555 454 2.11 % 87,585 460 2.08 % 83,152 442 2.13 % Interest-earning deposits at the FRB and other banks 286,974 599 0.84 % 288,966 141 0.20 % 365,501 144 0.16 % 282,512 112 0.16 % 168,677 54 0.13 % Other earning assets 9,861 129 5.25 % 8,850 119 5.45 % 8,850 115 5.16 % 8,925 116 5.16 % 8,737 135 6.20 % Total interest-earning assets² 1,765,512 17,859 4.06 % 1,749,630 17,083 3.96 % 1,856,107 17,606 3.76 % 1,769,873 17,488 3.92 % 1,456,474 14,969 4.12 % NONINTEREST-EARNING ASSETS Cash and due from banks 14,866 13,338 13,318 13,079 10,752 Other noninterest-earning assets 38,621 36,714 37,779 36,548 32,002 Total noninterest-earning assets 53,487 50,052 51,097 49,627 42,754 Less: Allowance for loan losses (13,126 ) (14,200 ) (14,849 ) (14,958 ) (14,899 ) TOTAL ASSETS $ 1,805,873 $ 1,785,482 $ 1,892,355 $ 1,804,542 $ 1,484,329 INTEREST-BEARING DEPOSITS Interest-bearing demand $ 26,781 $ 4 0.06 % $ 27,442 $ 3 0.04 % $ 27,904 $ 3 0.04 % $ 36,670 $ 4 0.04 % $ 13,373 $ 2 0.06 % Money market 308,377 443 0.58 % 321,694 356 0.45 % 338,937 401 0.47 % 312,606 388 0.49 % 263,845 352 0.54 % Savings 75,306 59 0.31 % 76,967 61 0.32 % 77,057 68 0.35 % 74,266 71 0.38 % 43,433 55 0.51 % Time deposits 523,504 746 0.57 % 529,421 673 0.52 % 527,634 674 0.51 % 542,901 756 0.55 % 469,000 831 0.71 % Total interest-bearing deposits 933,968 1,252 0.54 % 955,524 1,093 0.46 % 971,532 1,146 0.47 % 966,443 1,219 0.50 % 789,651 1,240 0.63 % Borrowings 50,000 117 0.94 % 50,000 116 0.94 % 50,000 119 0.94 % 50,000 118 0.94 % 51,539 118 0.92 % Total interest-bearing liabilities 983,968 1,369 0.56 % 1,005,524 1,209 0.49 % 1,021,532 1,265 0.49 % 1,016,443 1,337 0.52 % 841,190 1,358 0.65 % Noninterest-bearing deposits 611,395 574,436 673,154 597,056 459,695 Other liabilities 15,818 16,966 16,425 16,046 13,906 Stockholders' equity 194,692 188,556 181,244 174,997 169,538 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,805,873 $ 1,785,482 $ 1,892,355 $ 1,804,542 $ 1,484,329 Net interest income² $ 16,490 $ 15,874 $ 16,341 $ 16,151 $ 13,611 Net interest spread 3.50 % 3.47 % 3.27 % 3.40 % 3.47 % Effect of noninterest-bearing sources 0.25 % 0.21 % 0.22 % 0.22 % 0.28 % Net interest margin² 3.75 % 3.68 % 3.49 % 3.62 % 3.75 % Cost of deposits $ 1,545,363 $ 1,252 0.32 % $ 1,529,960 $ 1,093 0.29 % $ 1,644,686 $ 1,146 0.28 % $ 1,563,499 $ 1,219 0.31 % $ 1,249,346 $ 1,240 0.40 % Cost of funds $ 1,595,363 $ 1,369 0.34 % $ 1,579,960 $ 1,209 0.31 % $ 1,694,686 $ 1,265 0.30 % $ 1,613,499 $ 1,337 0.33 % $ 1,300,885 $ 1,358 0.42 % 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 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Contractual yield $ 15,496 4.47 % $ 14,596 4.32 % $ 15,142 4.30 % $ 15,032 4.29 % $ 12,670 4.25 % SBA discount accretion 1,035 0.30 % 1,421 0.42 % 1,024 0.29 % 1,038 0.30 % 1,027 0.34 % Prepayment penalties & late fees 56 0.02 % 107 0.03 % 72 0.02 % 41 0.01 % 89 0.03 % Amortization of net deferred costs 56 0.01 % 228 0.07 % 655 0.19 % 689 0.20 % 552 0.19 % As reported yield on loans $ 16,643 4.80 % $ 16,352 4.84 % $ 16,893 4.80 % $ 16,800 4.79 % $ 14,338 4.81 % MARGIN ANALYSIS (Unaudited) - Table 14 (Dollars in thousands) Six Months Ended June 30,2022 June 30,2021 Avg Balance Interest Yield Avg Balance Interest Yield Number of Days in the Period INTEREST-EARNING ASSETS Loans¹ $ 1,379,540 $ 32,995 4.82 % $ 1,167,180 $ 28,175 4.87 % Investment securities² 80,752 959 2.39 % 83,911 890 2.14 % Interest-earning deposits at the FRB and other banks 288,018 740 0.52 % 138,570 90 0.13 % Other earning assets 9,358 248 5.34 % 8,468 232 5.52 % Total interest-earning assets² 1,757,668 34,942 4.01 % 1,398,129 29,387 4.24 % NONINTEREST-EARNING ASSETS Cash and due from banks 14,106 10,390 Other noninterest-earning assets 37,674 31,582 Total noninterest-earning assets 51,780 41,972 Less: Allowance for loan losses (13,660 ) (14,641 ) TOTAL ASSETS $ 1,795,788 $ 1,425,460 INTEREST-BEARING DEPOSITS Interest-bearing demand $ 27,110 $ 7 0.05 % $ 14,586 $ 4 0.06 % Money market 314,999 799 0.51 % 264,845 718 0.55 % Savings 76,132 120 0.32 % 45,845 115 0.51 % Time deposits 526,446 1,419 0.54 % 460,223 1,806 0.79 % Total interest-bearing deposits 944,687 2,345 0.50 % 785,499 2,643 0.68 % Borrowings 50,000 233 0.94 % 58,564 248 0.85 % Total interest-bearing liabilities 994,687 2,578 0.52 % 844,063 2,891 0.69 % Noninterest-bearing deposits 593,071 402,119 Other Liabilities 16,389 12,929 Stockholders' equity 191,641 166,349 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,795,788 $ 1,425,460 Net interest income² $ 32,364 $ 26,496 Net interest spread 3.49 % 3.55 % Effect of noninterest-bearing sources 0.22 % 0.27 % Net interest margin² 3.71 % 3.82 % Cost of deposits $ 1,537,758 $ 2,345 0.31 % $ 1,187,618 $ 2,643 0.45 % Cost of funds $ 1,587,758 $ 2,578 0.33 % $ 1,246,182 $ 2,891 0.47 % 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) Six Months Ended June 30, 2022 June 30, 2021 Amount Yield Amount Yield Contractual yield $ 30,092 4.40 % $ 24,818 4.29 % SBA discount accretion 2,456 0.36 % 1,765 0.30 % Prepayment penalties & late fees 163 0.02 % 210 0.04 % Amortization of net deferred costs 284 0.04 % 1,382 0.24 % As reported yield on loans $ 32,995 4.82 % $ 28,175 4.87 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220728006110/en/Contacts Douglas J Goddard, EVP & CFO (323) 988-3010 DouglasG@cbb-bank.com
CBB Bancorp, Inc. ("CBB" or the "Company') (OTCQX: CBBI), the holding company of Commonwealth Business Bank (the "Bank"), announced today net income for second quarter 2022 of $6.5 million, or $0.62 per diluted share, a decrease of 23.2% compared to $8.4 million, or $0.80 per diluted share, in the prior quarter and an increase of 2.4% compared to $6.3 million, or $0.61 per diluted share, in the same period last year. Overall Results Net income for second quarter 2022 was affected by higher loan loss provisions during the quarter as a result of increases in past due and classified loans and growth in the loan portfolio. Core earnings remained strong, as our net interest margin and efficiency ratio improved from the prior quarter. Our return on average assets for second quarter 2022 was 1.43% compared to 1.91% for first quarter 2022 and 1.70% for second quarter 2021. Our return on average equity for second quarter 2022 was 13.30%, compared to 18.08% for first quarter 2022 and 14.91% for second quarter 2021. Our net interest margin for second quarter 2022 was 3.75%, compared to 3.68% for first quarter 2022 and 3.75% for second quarter 2021. Our efficiency ratio for second quarter 2022 was 49.45%, compared to 50.71% for first quarter 2022 and 52.24% for second quarter 2021. James Hong, President and CEO, commented, “We are pleased to announce strong core earnings for the second quarter of 2022, despite the uncertain economic climate. We continue to see opportunities to add to our core earnings going forward through the addition of quality loan and deposit customers.” Net Interest Income and Margin Net Interest Income Net interest income for second quarter 2022 was $16.4 million, an increase of $615 thousand, or 3.9%, from first quarter 2022, and an increase of $2.9 million, or 21.2%, from second quarter 2021. The increase in net interest income compared with the prior quarter was driven by loan growth, as well as an increase in variable rate asset yields due to recent increases in interest rates by the Federal Reserve Bank. Net interest income growth compared with the second quarter of 2021 also benefited from the merger with Ohana Pacific Bank (OPB) as of July 1, 2021. Net Interest Margin Our net interest margin for second quarter 2022 was 3.75%, compared to 3.68% for first quarter 2022 and 3.75% for second quarter 2021. The increase in net interest margin compared to first quarter 2022 was due to increased interest income on cash and due from banks balances, which are immediately affected by the Federal Reserve’s interest rate changes. Our cost of funds for second quarter 2022 increased to 0.34% from 0.31% for first quarter 2022 and decreased from 0.42% for second quarter 2021. Provision for Loan Losses: The Company had a provision for loan losses for second quarter 2022 of $1.6 million, compared to a recovery of $1.2 million for first quarter 2022 and no provision for loan losses for second quarter 2021. The provision recorded for the current quarter was due to moderate increases in delinquencies and classified assets and growth in the loan portfolio. See Table 10 in this press release for additional information and trends. Noninterest Income: Noninterest income for second quarter 2022 was $4.5 million, compared to $5.6 million for first quarter 2022 and $5.0 million for second quarter 2021. The decrease in noninterest income in second quarter 2022 was primarily the result of decreased gains on sales of loans. Sales of SBA loans were $50.8 million with an average premium percentage received of 8.0% during the second quarter of 2022, compared with SBA loan sales of $50.5 million with an average premium percentage received of 11.0% during the first quarter of 2022 and SBA loan sales of $42.2 million with an average premium percentage received of 11.9% during the second quarter of 2021. Noninterest Expense: Noninterest expense for second quarter 2022 was $10.4 million, compared to $10.9 million for first quarter 2022 and $9.7 million for second quarter 2021. Salaries and employee benefits were substantially unchanged at $7.0 million in second quarter 2022 compared with the prior quarter, and up from $6.0 million in the second quarter of 2021. The decrease in other expenses compared to the first quarter of 2022 was in part due to the reversal of a provision for probable loss of $800 thousand that had been established with respect to an anticipated repurchase of SBA loans sold. The reversal was recorded to reflect the final settlement that was made with the SBA on the loans in question. The increased noninterest expense levels in the second quarter of 2022 compared to the prior year is primarily due to the inclusion of the operations of OPB, acquired as of July 1, 2021, for the full period. Income Taxes: The Company’s effective tax rate for second quarter 2022 was 28.3% compared to 28.4% for first quarter 2022 and 28.9% for second quarter 2021. Balance Sheet: Investment Securities: Investment securities were $77.5 million at June 30, 2022, a decrease of $2.6 million from March 31, 2022 and $4.9 million from June 30, 2021. The decreases were due to principal paydowns. There were no portfolio additions in second quarter 2022, or in the comparable period of 2021. Loans Receivable: Loans receivable (including loans held for sale) at June 30, 2022 was $1.4 billion, an increase of $26.6 million, or 1.9%, from loans receivable at March 31, 2022, and an increase of $172.1 million, or 14.0%, from loans receivable at June 30, 2021. The increase in loan balances compared with the second quarter of 2021 was due to the $149.2 million in loans receivable that were acquired in the OPB merger as of July 1, 2021, as well as organic growth. Our weighted average loan-to-value ratio of commercial real estate loans was 69.9% at June 30, 2022. Excluding SBA loans, our weighted average loan-to-value of CRE loans was 53.8%. For additional information, please go to www.cbb-bank.com under tab “About Us” and select “Investors Relations” to see 2Q 2022 Overview and COVID-19 update presentation. Paycheck Protection Program (PPP): PPP loans totaled $10.7 million at June 30, 2022. Net unearned fees on PPP loans as of June 30, 2022 were $271 thousand, and these fees are being accreted to income based on a two-year contractual maturity. The SBA approved $10.2 million in PPP loan forgiveness applications processed for our PPP loans in second quarter 2022. Allowance for Loan Losses and Asset Quality: Our allowance for loan losses at June 30, 2022 was $14.7 million, or 1.17% of portfolio loans, compared to $13.1 million, or 1.07% of portfolio loans, at March 31 2022 and compared to $14.9 million, or 1.32% of portfolio loans, at June 30, 2021. Excluding PPP loans of $10.7. million, which are government guaranteed, the allowance for loan losses at June 30, 2022 was 1.18%, compared to 1.09% and 1.42%, respectively, at March 31, 2022 and June 30, 2021. The decrease in the allowance as a percentage of the portfolio in the current quarter compared with the prior year is primarily due to loans acquired in the OPB merger, which have been recorded at market value and do not currently carry any loan loss allowance. Non-performing loans were $2.5 million at June 30, 2022, compared to $723 thousand at March 31, 2022 and $1.3 million at June 30, 2021. Loans with payment deferments are considered to be performing loans in accordance with regulatory guidance. Our coverage ratio of allowance for loan losses to nonperforming assets exceeded 500%. For additional information, please go to www.cbb-bank.com under tab “About Us” and select “Investors Relations” to see 2Q 2022 Overview and COVID-19 update presentation. SBA Loans Held for Sale: SBA loans held for sale at June 30, 2022 were $141.1 million, compared to $149.7 million at March 31, 2022 and $96.6 million at June 30, 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 June 30, 2022, down $18.6 million, or 1.2%, from March 31, 2022 and up $136.7 million, or 9.9%, from June 30, 2021. Noninterest-bearing demand deposits (“DDAs”) decreased $9.8 million, or 1.7%, to $566.6 million at June 30, 2022 from March 31, 2022 and decreased $5.7 million, or 1.0%, from June 30, 2021. DDAs were 38.2% of total deposits at June 30, 2022, compared to 38.4% at March 31, 2022 and 41.5% at June 30, 2021. NOW and MMDA accounts decreased $17.0 million, or 4.9%, to $327.5 million at June 30, 2022 from March 31, 2022 and increased $36.0 million, or 12.4%, from June 30, 2021. Time deposits increased $13.4 million, or 2.6%, at June 30, 2022 from March 31, 2022 and increased $61.1 million, or 12.9%, from June 30, 2021. Time deposits at June 30, 2022 were $534.7 million, or 35.3% of total deposits, compared to $521.4 million, or 34.0% of total deposits, at March 31, 2022, and $473.7 million, or 34.4% of total deposits, at June 30, 2021. The primary cause of the decreases in noninterest bearing deposit balances during 2022 compared with earlier quarters was a decline in escrow-related deposits sourced from our Specialty Deposit Group. The increase in total deposits compared with the second quarter of 2021 was due to normal growth combined with the completion of the merger with OPB during the third quarter of 2021. Borrowings: Borrowings at June 30, 2022, March 31, 2022 and June 30, 2021 consisted of $50.0 million of Federal Home Loan Bank of San Francisco advances at each date. Capital: Stockholders’ equity was $197.1 million at June 30, 2022, representing an increase of $6.0 million, or 3.2%, over stockholders’ equity of $191.1 million at March 31, 2022. Tangible book value per share at June 30, 2022 was $18.68, compared with $18.31 at March 31, 2022, an increase of $0.37 per share or 2.0%. All of our regulatory capital ratios continue to exceed the minimum levels required to be considered “Well Capitalized” as defined for bank regulatory purposes and in compliance with the fully phased-in Basel III requirements, as shown on Table 11 in this press release. Our Common Equity Tier 1 risked-based capital at June 30, 2022 was 14.47% at the Company level and 14.38% 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 June 30, 2022, the Bank has ten full-service banking offices in Los Angeles and Orange Counties in California, Dallas County in Texas and Honolulu, Hawaii; two 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 2Q 2022 Overview and COVID-19 update presentation. FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements. These statements typically include words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar terms and phrases, including references to assumptions. You should not place undue reliance on such statements. Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management’s experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company’s control) that could cause actual results to differ materially from the anticipated future results expressed or implied by such forward-looking statements. Factors that could affect our results include, without limitation, the following: the timing and occurrence or non-occurrence of anticipated events may be subject to circumstances beyond the Company’s control; increases in competitive pressure among financial institutions or from non-financial institutions may occur; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Company and the Bank; significant increases in loan losses may occur; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently by investors and stock market analysts; changes in corporate and/or individual income tax laws may adversely affect the Company’s financial condition or results of operations or the behavior of our loan and deposit customers; changes in general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, the effects of the COVID-19 pandemic, and of other widespread outbreaks of disease or pandemics, together with related impacts on general economic conditions, including adverse impacts on our customers’ ability to make timely payments on their loans from us, reduced fee income due to reduced loan origination activity, reductions in or absence of gains on loan sales due to uncertainty in the loan sale market, and increased operating expense due to required changes in how we conduct our business may adversely affect us; conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive to implement or accommodate than the Company anticipates; there may be failures or breaches of our information technology security systems or those of our third party service providers; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates; we may encounter greater difficulty, delay and expense than we anticipate in integrating the personnel and operations of Ohana Pacific Bank or any other companies we acquire. The Company undertakes no obligation to revise any forward-looking statement contained herein to reflect any future events or circumstances, except to the extent required by law. 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 Six Months Ended June 30, March 31, $ % June 30, $ % June 30, June 30, $ % 2022 2022 Change Change 2021 Change Change 2022 2021 Change Change Interest income $ 17,807 $ 17,032 $ 775 4.6 % $ 14,923 $ 2,884 19.3 % $ 34,839 $ 29,295 $ 5,544 18.9 % Interest expense 1,369 1,209 160 13.2 % 1,358 11 0.8 % 2,578 2,891 (313 ) (10.8 %) Net interest income 16,438 15,823 615 3.9 % 13,565 2,873 21.2 % 32,261 26,404 5,857 22.2 % Provision for loan losses 1,600 (1,167 ) 2,767 (237.1 %) - 1,600 100.0 % 433 500 (67 ) (13.4 %) Net interest income after provision for loan losses 14,838 16,990 (2,152 ) (12.7 %) 13,565 1,273 9.4 % 31,828 25,904 5,924 22.9 % Gain on sale of loans 3,298 4,668 (1,370 ) (29.3 %) 3,988 (690 ) (17.3 %) 7,966 6,444 1,522 23.6 % Gain (loss) on sale of OREO - - - - - - - - - - - SBA servicing fee income, net 778 469 309 65.9 % 622 156 25.1 % 1,247 1,469 (222 ) (15.1 %) Reversal of valuation allowance on servicing assets - - - - - - - - - - - Service charges and other income 462 498 (36 ) (7.2 %) 395 67 17.0 % 960 774 186 24.0 % Noninterest income 4,538 5,635 (1,097 ) (19.5 %) 5,005 (467 ) (9.3 %) 10,173 8,687 1,486 17.1 % Salaries and employee benefits 6,994 7,065 (71 ) (1.0 %) 6,000 994 16.6 % 14,059 10,853 3,206 29.5 % Occupancy and equipment 1,114 1,120 (6 ) (0.5 %) 945 169 17.9 % 2,234 1,924 310 16.1 % Marketing expense 511 485 26 5.4 % 309 202 65.4 % 996 596 400 67.1 % Professional expense 517 415 102 24.6 % 491 26 5.3 % 932 946 (14 ) (1.5 %) Merger related expense 123 - 123 100.0 % 600 (477 ) (79.5 %) 123 1,281 (1,158 ) (90.4 %) Other expenses 1,114 1,796 (682 ) (38.0 %) 1,356 (242 ) (17.8 %) 2,910 2,656 254 9.6 % Noninterest expense 10,373 10,881 (508 ) (4.7 %) 9,701 672 6.9 % 21,254 18,256 2,998 16.4 % Income before income tax expense 9,003 11,744 (2,741 ) (23.3 %) 8,869 134 1.5 % 20,747 16,335 4,412 27.0 % Income tax expense 2,547 3,336 (789 ) (23.7 %) 2,566 (19 ) (0.7 %) 5,883 4,698 1,185 25.2 % Net income $ 6,456 $ 8,408 $ (1,952 ) (23.2 %) $ 6,303 $ 153 2.4 % $ 14,864 $ 11,637 $ 3,227 27.7 % Effective tax rate 28.3 % 28.4 % (0.1 %) (0.4 %) 28.9 % (0.6 %) (2.2 %) 28.4 % 28.8 % (0.4 %) (1.4 %) Outstanding number of shares 10,416,601 10,299,361 117,240 1.1 % 10,279,962 136,639 1.3 % 10,416,601 10,279,962 136,639 1.3 % Weighted average shares for basic EPS 10,305,014 10,291,071 13,943 0.1 % 10,262,956 42,058 0.4 % 10,298,081 10,255,167 42,914 0.4 % Weighted average shares for diluted EPS 10,409,663 10,479,488 (69,825 ) (0.7 %) 10,392,427 17,236 0.2 % 10,441,230 10,346,516 94,714 0.9 % Basic EPS $ 0.62 $ 0.82 $ (0.20 ) (24.4 %) $ 0.61 $ 0.01 1.6 % $ 1.44 $ 1.13 $ 0.31 27.4 % Diluted EPS $ 0.62 $ 0.80 $ (0.18 ) (22.5 %) $ 0.61 $ 0.01 1.6 % $ 1.42 $ 1.13 $ 0.29 25.7 % Return on average assets 1.43 % 1.91 % (0.48 %) (25.1 %) 1.70 % (0.27 %) (15.9 %) 1.67 % 1.65 % 0.02 % 1.2 % Return on average equity 13.30 % 18.08 % (4.78 %) (26.4 %) 14.91 % (1.61 %) (10.8 %) 15.64 % 14.11 % 1.53 % 10.8 % Efficiency ratio¹ 49.45 % 50.71 % (1.26 %) (2.5 %) 52.24 % (2.79 %) (5.3 %) 50.09 % 52.02 % (1.93 %) (3.7 %) Yield on interest-earning assets² 4.06 % 3.96 % 0.10 % 2.5 % 4.12 % (0.06 %) (1.5 %) 4.01 % 4.24 % (0.23 %) (5.4 %) Cost of funds 0.34 % 0.31 % 0.03 % 9.7 % 0.42 % (0.08 %) (19.0 %) 0.33 % 0.47 % (0.14 %) (29.8 %) Net interest margin² 3.75 % 3.68 % 0.07 % 1.9 % 3.75 % 0.00 % 0.0 % 3.71 % 3.82 % (0.11 %) (2.9 %) 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) June 30, March 31, $ % June 30, $ % 2022 2022 Change Change 2021 Change Change ASSETS Cash and due from banks $ 18,087 $ 14,579 $ 3,508 24.1 % $ 10,509 $ 7,578 72.1 % Interest-earning deposits at the FRB and other banks 243,072 288,603 (45,531 ) (15.8 %) 240,932 2,140 0.9 % Investment securities¹ 77,469 80,104 (2,635 ) (3.3 %) 82,354 (4,885 ) (5.9 %) Loans held-for-sale, at the lower of cost or fair value 141,104 149,733 (8,629 ) (5.8 %) 96,554 44,550 46.1 % Loans receivable 1,260,939 1,225,739 35,200 2.9 % 1,133,371 127,568 11.3 % Allowance for loan losses (14,739 ) (13,089 ) (1,650 ) (12.6 %) (14,908 ) 169 1.1 % Loans receivable, net 1,246,200 1,212,650 33,550 2.8 % 1,118,463 127,737 11.4 % OREO - - - - - - - Restricted stock investments 10,111 8,850 1,261 14.2 % 8,850 1,261 14.2 % Servicing assets 10,996 10,671 325 3.0 % 10,189 807 7.9 % Goodwill 2,185 2,185 - 0.0 % - 2,185 100.0 % Intangible assets 331 346 (15 ) (4.3 %) - 331 100.0 % Other assets 28,060 24,061 3,999 16.6 % 45,071 (17,011 ) (37.7 %) Total assets $ 1,777,615 $ 1,791,782 $ (14,167 ) (0.8 %) $ 1,612,922 $ 164,693 10.2 % LIABILITIES AND STOCKHOLDERS' EQUITY Noninterest-bearing $ 566,610 $ 576,378 $ (9,768 ) (1.7 %) $ 572,284 $ (5,674 ) (1.0 %) Interest-bearing 948,760 957,633 (8,873 ) (0.9 %) 806,397 142,363 17.7 % Total deposits 1,515,370 1,534,011 (18,641 ) (1.2 %) 1,378,681 136,689 9.9 % FHLB advances and other borrowing 50,000 50,000 - - 50,000 - 0.0 % Other liabilities 15,134 16,687 (1,553 ) (9.3 %) 13,026 2,108 16.2 % Total liabilities 1,580,504 1,600,698 (20,194 ) (1.3 %) 1,441,707 138,797 9.6 % Stockholders' Equity 197,111 191,084 6,027 3.2 % 171,215 25,896 15.1 % TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,777,615 $ 1,791,782 $ (14,167 ) (0.8 %) $ 1,612,922 $ 164,693 10.2 % CAPITAL RATIOS Leverage ratio Company 10.80 % 10.56 % 0.24 % 2.3 % 11.35 % (0.55 %) (4.9 %) Bank 10.73 % 10.55 % 0.18 % 1.7 % 11.33 % (0.60 %) (5.3 %) Common equity tier 1 risk-based capital ratio Company 14.47 % 14.50 % (0.03 %) (0.2 %) 14.39 % 0.08 % 0.6 % Bank 14.38 % 14.50 % (0.12 %) (0.8 %) 14.37 % 0.01 % 0.1 % Tier 1 risk-based capital ratio Company 14.47 % 14.50 % (0.03 %) (0.2 %) 14.39 % 0.08 % 0.6 % Bank 14.38 % 14.50 % (0.12 %) (0.8 %) 14.37 % 0.01 % 0.1 % Total risk-based capital ratio Company 15.63 % 15.57 % 0.06 % 0.4 % 15.64 % (0.01 %) (0.1 %) Bank 15.53 % 15.57 % (0.04 %) (0.2 %) 15.62 % (0.09 %) (0.6 %) Tangible common equity per share $ 18.68 $ 18.31 $ 0.37 2.0 % $ 16.66 $ 2.02 12.1 % Loan-to-Deposit (LTD) ratio 83.21 % 79.90 % 3.31 % 4.1 % 82.21 % 1.00 % 1.2 % Nonperforming assets $ 2,532 $ 723 $ 1,809 250.2 % $ 1,339 $ 1,193 89.1 % Nonperforming assets as a % of loans receivable 0.20 % 0.06 % 0.14 % 233.3 % 0.12 % 0.08 % 66.7 % ALLL as a % of loans receivable 1.17 % 1.07 % 0.10 % 9.3 % 1.32 % (0.15 %) (11.4 %) ALLL as a % of loans receivable exc. SBA PPP loans 1.18 % 1.09 % 0.09 % 8.3 % 1.42 % (0.24 %) (16.9 %) 1 Includes AFS and HTM FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3 (Dollars in thousands, except per share amounts) Three Months Ended June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 Interest income $ 17,807 $ 17,032 $ 17,553 $ 17,437 $ 14,923 Interest expense 1,369 1,209 1,265 1,337 1,358 Net interest income 16,438 15,823 16,288 16,100 13,565 Provision for loan losses 1,600 (1,167 ) (800 ) - - Net interest income after provision for loan losses 14,838 16,990 17,088 16,100 13,565 Gain on sale of loans 3,298 4,668 4,151 4,305 3,988 Gain (loss) on sale of OREO - - - - - SBA servicing fee income, net 778 469 683 698 622 Reversal of valuation allowance on servicing assets - - - - - Service charges and other income 462 498 499 540 395 Noninterest income 4,538 5,635 5,333 5,543 5,005 Salaries and employee benefits 6,994 7,065 6,614 6,500 6,000 Occupancy and equipment 1,114 1,120 1,028 1,067 945 Marketing expense 511 485 111 287 309 Professional expense 517 415 368 495 491 Merger related expense 123 - 454 450 600 Other expenses 1,114 1,796 2,850 1,807 1,356 Noninterest expense 10,373 10,881 11,425 10,606 9,701 Income before income tax expense 9,003 11,744 10,996 11,037 8,869 Income tax expense 2,547 3,336 2,984 3,156 2,566 Net income $ 6,456 $ 8,408 $ 8,012 $ 7,881 $ 6,303 Effective tax rate 28.3 % 28.4 % 27.1 % 28.6 % 28.9 % Outstanding number of shares 10,416,601 10,299,361 10,284,962 10,284,962 10,279,962 Weighted average shares for basic EPS 10,305,014 10,291,071 10,284,962 10,280,016 10,262,956 Weighted average shares for diluted EPS 10,409,663 10,479,488 10,424,771 10,427,687 10,392,427 Basic EPS $ 0.62 $ 0.82 $ 0.78 $ 0.77 $ 0.61 Diluted EPS $ 0.62 $ 0.80 $ 0.77 $ 0.75 $ 0.61 FIVE-QUARTER SALARIES BENEFIT METRICS (Unaudited) - Table 4 (Dollars in thousands) At or for the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 Salaries and benefits $ 6,994 $ 7,065 $ 6,614 $ 6,500 $ 6,000 FTE at the end of period 199 208 205 200 183 Average FTE during the period 201 206 201 202 182 Salaries and benefits/average FTE¹ $ 140 $ 139 $ 131 $ 127 $ 132 Salaries and benefits/average assets¹ 1.55 % 1.60 % 1.39 % 1.43 % 1.62 % Noninterest expense/average assets¹ 2.30 % 2.47 % 2.40 % 2.33 % 2.62 % 1 Annualized FIVE-QUARTER BALANCE SHEET (Unaudited) - Table 5 (Dollars in thousands) June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 ASSETS Cash and due from banks $ 18,087 $ 14,579 $ 7,702 $ 11,621 $ 10,509 Interest-earning deposits at the FRB and other banks 243,072 288,603 284,583 386,087 240,932 Investment securities¹ 77,469 80,104 84,238 86,440 82,354 Loans held-for-sale, at the lower of cost or fair value 141,104 149,733 158,128 136,394 96,554 Loans receivable 1,260,939 1,225,739 1,241,319 1,255,814 1,133,371 Allowance for loan losses (14,739 ) (13,089 ) (14,192 ) (15,000 ) (14,908 ) Loans receivable, net 1,246,200 1,212,650 1,227,127 1,240,814 1,118,463 OREO - - - - - Restricted stock investments 10,111 8,850 8,850 8,850 8,850 Servicing assets 10,996 10,671 10,632 10,392 10,189 Goodwill 2,185 2,185 2,185 2,269 - Intangible assets 331 346 360 375 - Other assets 28,060 24,061 25,450 25,859 45,071 Total assets $ 1,777,615 $ 1,791,782 $ 1,809,255 $ 1,909,101 $ 1,612,922 LIABILITIES AND STOCKHOLDERS' EQUITY Noninterest-bearing $ 566,610 $ 576,378 $ 619,774 $ 670,489 $ 572,284 Interest-bearing 948,760 957,633 938,338 995,574 806,397 Total deposits 1,515,370 1,534,011 1,558,112 1,666,063 1,378,681 FHLB advances 50,000 50,000 50,000 50,000 50,000 Other liabilities 15,134 16,687 15,901 14,719 13,026 Total liabilities 1,580,504 1,600,698 1,624,013 1,730,782 1,441,707 Stockholders' Equity 197,111 191,084 185,242 178,319 171,215 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,777,615 $ 1,791,782 $ 1,809,255 $ 1,909,101 $ 1,612,922 1 Includes AFS and HTM FIVE-QUARTER LOANS RECEIVABLE COMPONENTS (Unaudited) - Table 6 (Dollars in thousands) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Balance % Balance % Balance % Balance % Balance % Construction $ 23,431 1.9 % $ 18,541 1.5 % $ 23,939 1.9 % $ 21,725 1.7 % $ 18,753 1.7 % Commercial real estate 1,023,298 81.1 % 976,924 79.7 % 978,995 78.9 % 971,387 77.3 % 893,700 78.8 % Commercial and industrial 146,175 11.6 % 159,111 13.0 % 169,489 13.7 % 198,217 15.8 % 217,350 19.2 % Home mortgage 57,612 4.57 % 59,836 4.9 % 61,030 4.9 % 60,075 4.8 % - - Consumer 6,609 0.5 % 7,589 0.6 % 4,269 0.3 % 2,185 0.2 % 2,236 0.2 % Gross loans 1,257,125 99.7 % 1,222,001 99.7 % 1,237,722 99.7 % 1,253,589 99.8 % 1,132,039 99.9 % Net deferred loan fees/costs 3,814 0.3 % 3,738 0.3 % 3,597 0.3 % 2,225 0.2 % 1,332 0.1 % Loans receivable $ 1,260,939 100.0 % $ 1,225,739 100.0 % $ 1,241,319 100.0 % $ 1,255,814 100.0 % $ 1,133,371 100.0 % Loans held-for-sale $ 141,104 $ 149,733 $ 158,128 $ 136,394 $ 96,554 Loans receivable, including loans held-for-sale $ 1,402,043 $ 1,375,472 $ 1,399,447 $ 1,392,208 $ 1,229,925 FIVE-QUARTER SBA LOAN PRODUCTIONS/SALES DATA (Unaudited) - Table 7 (Dollars in thousands) Three Months Ended June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 SBA loans held-for-sale at beginning of the quarter/year $ 149,733 $ 158,128 $ 136,394 $ 96,554 $ 76,066 SBA loans originated/transferred from/to held-for-investment during the quarter/year 43,451 43,132 68,136 82,303 62,864 SBA loans sold during the quarter/year (50,845 ) (50,531 ) (42,210 ) (42,019 ) (42,163 ) SBA loans principal payment, net of advance (1,235 ) (996 ) (4,193 ) (444 ) (213 ) SBA loans held-for-sale at end of the quarter/year $ 141,104 $ 149,733 $ 158,128 $ 136,394 $ 96,554 Gain on sale of SBA loans $ 3,298 $ 4,668 $ 4,151 $ 4,305 $ 3,988 Premium on sale (weighted average) 8.0 % 11.0 % 11.1 % 11.5 % 11.9 % SBA loan production $ 56,676 $ 54,523 $ 82,448 $ 93,986 $ 78,058 Non-PPP loans 56,676 54,523 82,448 93,986 75,065 PPP loans - - - - 2,994 FIVE QUARTER SBA SERVICING ASSETS AND SERVICING FEES (Unaudited) - Table 8 (Dollars in thousands) Three Months Ended June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 SBA servicing assets @ beginning of the quarter/year $ 10,671 $ 10,632 $ 10,392 $ 10,189 $ 10,000 Newly added SBA servicing assets from SBA loans sold 1,081 1,052 1,006 920 897 Regular quarterly/annual servicing assets amortization (478 ) (462 ) (453 ) (421 ) (422 ) SBA servicing assets amortized from SBA loans paid off/charged off (278 ) (551 ) (313 ) (296 ) (286 ) Subtotal before impairment 10,996 10,671 10,632 10,392 10,189 Reversal of valuation allowance on servicing assets - - - - - SBA servicing assets @ the end of the quarter/year $ 10,996 $ 10,671 $ 10,632 $ 10,392 $ 10,189 FIVE-QUARTER DEPOSIT COMPONENTS (Unaudited) - Table 9 (Dollars in thousands) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Balance % Balance % Balance % Balance % Balance % Noninterest-bearing demand $ 566,610 37.4 % $ 576,378 37.6 % $ 619,774 39.8 % $ 670,489 40.2 % $ 572,284 41.5 % Interest-bearing demand 12,754 0.8 % 12,059 0.8 % 10,723 0.7 % 10,904 0.7 % - - NOW & MMDA 327,477 21.6 % 344,501 22.5 % 325,313 20.9 % 376,549 22.6 % 291,437 21.1 % Savings 73,791 4.9 % 79,685 5.2 % 76,588 4.9 % 75,497 4.5 % 41,284 3.0 % TCDs of $250K and under 245,203 16.2 % 253,617 16.5 % 259,758 16.7 % 264,130 15.9 % 219,174 15.9 % TCDs of $250K over 198,518 13.1 % 176,754 11.5 % 174,939 11.2 % 177,477 10.7 % 158,485 11.5 % Wholesale TCDs 91,017 6.0 % 91,017 5.9 % 91,017 5.8 % 91,017 5.5 % 96,017 7.0 % Total Deposits $ 1,515,370 100.0 % $ 1,534,011 100.0 % $ 1,558,112 100.0 % $ 1,666,063 100.0 % $ 1,378,681 100.0 % Recap: Noninterest-bearing demand $ 566,610 37.4 % $ 576,378 37.6 % $ 619,774 39.8 % $ 670,489 40.2 % $ 572,284 41.5 % Interest-bearing demand 12,754 0.8 % 12,059 0.8 % 10,723 0.7 % 10,904 0.7 % - - NOW & MMDA 327,477 21.6 % 344,501 22.5 % 325,313 20.9 % 376,549 22.6 % 291,437 21.1 % Savings 73,791 4.9 % 79,685 5.2 % 76,588 4.9 % 75,497 4.5 % 41,284 3.0 % TCDs of $250K and under 245,203 16.2 % 253,617 16.5 % 259,758 16.7 % 264,130 15.9 % 219,174 15.9 % Core Deposits 1,225,835 80.9 % 1,266,240 82.6 % 1,292,156 83.0 % 1,397,569 83.9 % 1,124,179 81.5 % TCDs of $250K over 198,518 13.1 % 176,754 11.5 % 174,939 11.2 % 177,477 10.7 % 158,485 11.5 % Wholesale TCDs 91,017 6.0 % 91,017 5.9 % 91,017 5.8 % 91,017 5.4 % 96,017 7.0 % Noncore Deposits 289,535 19.1 % 267,771 17.4 % 265,956 17.0 % 268,494 16.1 % 254,502 18.5 % Total Deposits $ 1,515,370 100.0 % $ 1,534,011 100.0 % $ 1,558,112 100.0 % $ 1,666,063 100.0 % $ 1,378,681 100.0 % FIVE-QUARTER SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited) - Table 10 (Dollars in thousands) 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 2022 2022 2021 2021 2021 Allowance for Loan Losses Balance at beginning of period $ 13,089 $ 14,192 $ 15,000 $ 14,908 $ 14,888 Provision for loan losses 1,600 (1,167 ) (800 ) - - Charge-offs - - (89 ) - - Recoveries 50 64 81 92 20 Balance at the end of period $ 14,739 $ 13,089 $ 14,192 $ 15,000 $ 14,908 Nonperforming Assets:¹ Over 90 days still accruing $ - $ - $ - $ - $ - Nonaccrual loans 2,532 723 747 768 1,339 Total nonperforming loans 2,532 723 747 768 1,339 Other real estate owned - - - - - Total nonperforming assets $ 2,532 $ 723 $ 747 $ 768 $ 1,339 Classified Assets:¹ Substandard $ 11,133 $ 9,300 $ 11,156 $ 10,672 $ 10,052 Doubtful - - - - - Loss - - - - - Total classified loans $ 11,133 $ 9,300 $ 11,156 $ 10,672 $ 10,052 Other real estate owned - - - - - Total classified assets $ 11,133 $ 9,300 $ 11,156 $ 10,672 $ 10,052 Performing TDR loans: $ 4,744 $ 3,253 $ 3,521 $ 3,658 $ 3,776 Delinquent Loans:¹ Loans 30-89 days past due $ 11,553 $ 6,275 $ 267 $ 1,688 $ 2,524 90 days or more past due and still accruing - - - - - Nonaccrual 2,532 723 747 768 1,339 Total delinquent loans $ 14,085 $ 6,998 $ 1,014 $ 2,456 $ 3,863 Asset Quality Ratios: Net (recoveries) charge-offs to average loans² (0.01 %) (0.02 %) 0.00 % (0.03 %) (0.01 %) Nonaccrual loans to loans receivable 0.20 % 0.06 % 0.06 % 0.06 % 0.12 % Nonperforming loans to loans receivable 0.20 % 0.06 % 0.06 % 0.06 % 0.12 % Nonperforming assets to total assets 0.14 % 0.04 % 0.04 % 0.04 % 0.08 % Classified loans to loans receivable 0.88 % 0.76 % 0.90 % 0.85 % 0.89 % Classified loans to Tier 1 and ALLL 5.32 % 4.61 % 5.67 % 5.53 % 5.40 % Classified assets to total assets 0.63 % 0.52 % 0.62 % 0.56 % 0.62 % Classified assets to Tier 1 and ALLL 5.32 % 4.61 % 5.67 % 5.53 % 5.40 % ALLL to loans receivable 1.17 % 1.07 % 1.14 % 1.19 % 1.32 % ALLL to loans receivable exc. SBA PPP loans 1.18 % 1.09 % 1.18 % 1.26 % 1.42 % ALLL to nonaccrual loans 582.11 % 1810.37 % 1899.87 % 1953.13 % 1113.37 % ALLL to nonperforming loans 582.11 % 1810.37 % 1899.87 % 1953.13 % 1113.37 % ALLL to nonperforming assets 582.11 % 1810.37 % 1899.87 % 1953.13 % 1113.37 % Texas ratio³ 1.21 % 0.36 % 0.38 % 0.40 % 0.72 % 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 June 30, March 31, December 31, September 30, June 30, Regulatory BASEL III Requirement Fully Phased In 2022 2022 2021 2021 2021 Leverage ratio Company N/A N/A 10.80 % 10.56 % 9.55 % 9.61 % 11.35 % Bank 5.00% 4.00% 10.73 % 10.55 % 9.55 % 9.60 % 11.33 % Common equity tier 1 risk-based capital ratio Company N/A N/A 14.47 % 14.50 % 13.83 % 13.61 % 14.39 % Bank 6.50% 7.00% 14.38 % 14.50 % 13.82 % 13.59 % 14.37 % Tier 1 risk-based capital ratio Company N/A N/A 14.47 % 14.50 % 13.83 % 13.61 % 14.39 % Bank 8.00% 8.50% 14.38 % 14.50 % 13.82 % 13.59 % 14.37 % Total risk-based capital ratio Company N/A N/A 15.63 % 15.57 % 14.98 % 14.86 % 15.64 % Bank 10.00% 10.50% 15.53 % 15.57 % 14.97 % 14.84 % 15.62 % Tangible common equity/total assets 10.96 % 10.54 % 10.11 % 9.21 % 10.62 % Tangible common equity per share $ 18.68 $ 18.31 $ 17.76 $ 17.08 $ 16.66 FIVE-QUARTER MARGIN ANALYSIS (Unaudited) -Table 12 (Dollars in thousands) Three Months Ended June 30, 2021 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 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 Loans¹ $ 1,389,968 $ 16,643 4.80 % $ 1,368,996 $ 16,352 4.84 % $ 1,396,201 $ 16,893 4.80 % $ 1,390,851 $ 16,800 4.79 % $ 1,195,908 $ 14,338 4.81 % Investment securities² 78,709 488 2.49 % 82,818 471 2.31 % 85,555 454 2.11 % 87,585 460 2.08 % 83,152 442 2.13 % Interest-earning deposits at the FRB and other banks 286,974 599 0.84 % 288,966 141 0.20 % 365,501 144 0.16 % 282,512 112 0.16 % 168,677 54 0.13 % Other earning assets 9,861 129 5.25 % 8,850 119 5.45 % 8,850 115 5.16 % 8,925 116 5.16 % 8,737 135 6.20 % Total interest-earning assets² 1,765,512 17,859 4.06 % 1,749,630 17,083 3.96 % 1,856,107 17,606 3.76 % 1,769,873 17,488 3.92 % 1,456,474 14,969 4.12 % NONINTEREST-EARNING ASSETS Cash and due from banks 14,866 13,338 13,318 13,079 10,752 Other noninterest-earning assets 38,621 36,714 37,779 36,548 32,002 Total noninterest-earning assets 53,487 50,052 51,097 49,627 42,754 Less: Allowance for loan losses (13,126 ) (14,200 ) (14,849 ) (14,958 ) (14,899 ) TOTAL ASSETS $ 1,805,873 $ 1,785,482 $ 1,892,355 $ 1,804,542 $ 1,484,329 INTEREST-BEARING DEPOSITS Interest-bearing demand $ 26,781 $ 4 0.06 % $ 27,442 $ 3 0.04 % $ 27,904 $ 3 0.04 % $ 36,670 $ 4 0.04 % $ 13,373 $ 2 0.06 % Money market 308,377 443 0.58 % 321,694 356 0.45 % 338,937 401 0.47 % 312,606 388 0.49 % 263,845 352 0.54 % Savings 75,306 59 0.31 % 76,967 61 0.32 % 77,057 68 0.35 % 74,266 71 0.38 % 43,433 55 0.51 % Time deposits 523,504 746 0.57 % 529,421 673 0.52 % 527,634 674 0.51 % 542,901 756 0.55 % 469,000 831 0.71 % Total interest-bearing deposits 933,968 1,252 0.54 % 955,524 1,093 0.46 % 971,532 1,146 0.47 % 966,443 1,219 0.50 % 789,651 1,240 0.63 % Borrowings 50,000 117 0.94 % 50,000 116 0.94 % 50,000 119 0.94 % 50,000 118 0.94 % 51,539 118 0.92 % Total interest-bearing liabilities 983,968 1,369 0.56 % 1,005,524 1,209 0.49 % 1,021,532 1,265 0.49 % 1,016,443 1,337 0.52 % 841,190 1,358 0.65 % Noninterest-bearing deposits 611,395 574,436 673,154 597,056 459,695 Other liabilities 15,818 16,966 16,425 16,046 13,906 Stockholders' equity 194,692 188,556 181,244 174,997 169,538 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,805,873 $ 1,785,482 $ 1,892,355 $ 1,804,542 $ 1,484,329 Net interest income² $ 16,490 $ 15,874 $ 16,341 $ 16,151 $ 13,611 Net interest spread 3.50 % 3.47 % 3.27 % 3.40 % 3.47 % Effect of noninterest-bearing sources 0.25 % 0.21 % 0.22 % 0.22 % 0.28 % Net interest margin² 3.75 % 3.68 % 3.49 % 3.62 % 3.75 % Cost of deposits $ 1,545,363 $ 1,252 0.32 % $ 1,529,960 $ 1,093 0.29 % $ 1,644,686 $ 1,146 0.28 % $ 1,563,499 $ 1,219 0.31 % $ 1,249,346 $ 1,240 0.40 % Cost of funds $ 1,595,363 $ 1,369 0.34 % $ 1,579,960 $ 1,209 0.31 % $ 1,694,686 $ 1,265 0.30 % $ 1,613,499 $ 1,337 0.33 % $ 1,300,885 $ 1,358 0.42 % 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 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Contractual yield $ 15,496 4.47 % $ 14,596 4.32 % $ 15,142 4.30 % $ 15,032 4.29 % $ 12,670 4.25 % SBA discount accretion 1,035 0.30 % 1,421 0.42 % 1,024 0.29 % 1,038 0.30 % 1,027 0.34 % Prepayment penalties & late fees 56 0.02 % 107 0.03 % 72 0.02 % 41 0.01 % 89 0.03 % Amortization of net deferred costs 56 0.01 % 228 0.07 % 655 0.19 % 689 0.20 % 552 0.19 % As reported yield on loans $ 16,643 4.80 % $ 16,352 4.84 % $ 16,893 4.80 % $ 16,800 4.79 % $ 14,338 4.81 % MARGIN ANALYSIS (Unaudited) - Table 14 (Dollars in thousands) Six Months Ended June 30,2022 June 30,2021 Avg Balance Interest Yield Avg Balance Interest Yield Number of Days in the Period INTEREST-EARNING ASSETS Loans¹ $ 1,379,540 $ 32,995 4.82 % $ 1,167,180 $ 28,175 4.87 % Investment securities² 80,752 959 2.39 % 83,911 890 2.14 % Interest-earning deposits at the FRB and other banks 288,018 740 0.52 % 138,570 90 0.13 % Other earning assets 9,358 248 5.34 % 8,468 232 5.52 % Total interest-earning assets² 1,757,668 34,942 4.01 % 1,398,129 29,387 4.24 % NONINTEREST-EARNING ASSETS Cash and due from banks 14,106 10,390 Other noninterest-earning assets 37,674 31,582 Total noninterest-earning assets 51,780 41,972 Less: Allowance for loan losses (13,660 ) (14,641 ) TOTAL ASSETS $ 1,795,788 $ 1,425,460 INTEREST-BEARING DEPOSITS Interest-bearing demand $ 27,110 $ 7 0.05 % $ 14,586 $ 4 0.06 % Money market 314,999 799 0.51 % 264,845 718 0.55 % Savings 76,132 120 0.32 % 45,845 115 0.51 % Time deposits 526,446 1,419 0.54 % 460,223 1,806 0.79 % Total interest-bearing deposits 944,687 2,345 0.50 % 785,499 2,643 0.68 % Borrowings 50,000 233 0.94 % 58,564 248 0.85 % Total interest-bearing liabilities 994,687 2,578 0.52 % 844,063 2,891 0.69 % Noninterest-bearing deposits 593,071 402,119 Other Liabilities 16,389 12,929 Stockholders' equity 191,641 166,349 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,795,788 $ 1,425,460 Net interest income² $ 32,364 $ 26,496 Net interest spread 3.49 % 3.55 % Effect of noninterest-bearing sources 0.22 % 0.27 % Net interest margin² 3.71 % 3.82 % Cost of deposits $ 1,537,758 $ 2,345 0.31 % $ 1,187,618 $ 2,643 0.45 % Cost of funds $ 1,587,758 $ 2,578 0.33 % $ 1,246,182 $ 2,891 0.47 % 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) Six Months Ended June 30, 2022 June 30, 2021 Amount Yield Amount Yield Contractual yield $ 30,092 4.40 % $ 24,818 4.29 % SBA discount accretion 2,456 0.36 % 1,765 0.30 % Prepayment penalties & late fees 163 0.02 % 210 0.04 % Amortization of net deferred costs 284 0.04 % 1,382 0.24 % As reported yield on loans $ 32,995 4.82 % $ 28,175 4.87 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220728006110/en/