Community Bancorp Third Quarter Net Income Triples; Strong Loan Production and Margin Expansion Contribute to Success.Business Editors ESCONDIDO Escondido (ĕskəndē`dō), city (1990 pop. 108,635), San Diego co., S Calif.; inc. 1888. Located in a grain-, citrus-fruit-, and grape-growing valley, Escondido produces cereal products and has fruit-packing houses and one of the , Calif.--(BUSINESS WIRE)--Oct. 30, 2002 Community Bancorp Inc. (Nasdaq:CMBC CMBC Coast Mountain Bus Company (Surrey, BC, Canada) CMBC Canadian Mennonite Bible College CMBC Camp Memorial Blood Center (US Army) CMBC Castle Morpeth Bridge Club (UK) ) today reported that strong loan production and an improved net interest margin led to significant revenue increases and record profits in the third quarter and first nine months of 2002. Net income for the parent company of Community National Bank tripled to $775,000, or $.22 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share in the third quarter, compared to $233,000, or $.08 per share in the third quarter last year. For the nine months ended September September: see month. 30, 2002, net income increased 169% to $2.1 million, or $.61 per diluted share, up from $774,000, or $.27 per share in the period last year. Nine-month earnings exceed the profits recorded in any full year at Community Bancorp. Per share data reflects the 5% stock dividend paid on November November: see month. 30, 2001, but does not reflect the 5% stock dividend declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. last week, payable on November 29, to shareholders of record November 15, 2002. Revenue, fueled by net interest income growth and gain on sale of loans, increased 53% in the third quarter to $5.7 million, compared to $3.7 million a year ago. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , revenue increased 44% to $16.4 million, from $11.3 million in the first nine months of 2001. Profitability ratios Profitability ratios Ratios that focus on how well a firm is performing. Profit margins measure performance with relation to sales. Rate of return ratios measure performance relative to some measure of size of the investment. improved significantly in both the third quarter and nine-month periods. For the third quarter, return on average equity (ROE A fictitious surname used for an unknown or anonymous person or for a hypothetical person in an illustration. A lawsuit is generally named for the persons who are parties to it. ) improved to 16.0%, compared to 5.9% in the third quarter last year. Return on average assets (ROA ROA See: Return on assets ROA See: Right of accumulation ROA See return on assets (ROA). ) was 0.78% for the period, up from 0.28% a year ago. Year-to-date, ROE improved to 15.2%, from 7.7% in the first nine months last year, and ROA increased to 0.71%, compared to 0.33% a year ago. "Loan production is driving our success, helping to grow both non-interest income and net interest income," stated Tom Swanson, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Year-to-date, loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. are up 15% to $211 million, from $182 million a year ago. We have sold $51 million in SBA SBA abbr. Small Business Administration Noun 1. SBA - an independent agency of the United States government that protects the interests of small businesses and ensures that they receive a fair share of government loans this year, and generated a gain on sale of $3.3 million." Total loans grew 14% to $322 million, compared to $284 million at the end of the third quarter last year and total assets increased 12% to $388 million, from $345 million during the same time frame. "Our commercial real estate lending has been especially strong, in terms of both production and sales," added Bruce Bruce, Scottish royal family descended from an 11th-century Norman duke, Robert de Brus. He aided William I in his conquest of England (1066) and was given lands in England. Mills, Chief Financial Officer. Commercial real estate loan originations were $88 million in the first nine months of 2002, compared to $64 million in the period last year. The company has sold $85 million in loans year-to-date, including $51 million commercial real estate SBA loans. For the nine months ended September 30, 2002, SBA loan originations totaled $60.4 million, compared to $39.4 million last year. Construction loan originations increased to $64 million, while mortgage loan originations increased to $37 million in the period. Net interest income before the provision for loan losses increased 37% to $4.2 million for the quarter, from $3.0 million in the third quarter last year, a direct result of a lower cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. and increased asset size. Other operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased 123% to $1.6 million, compared to $702,000 a year earlier, primarily due to gain on sale of loans. Largely as a result of increased incentives and loan officer commissions, combined with the expansion of the branch network, third quarter operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased 53% to $4.1 million, compared to $2.7 million in the third quarter last year. For the nine-month period, net interest income grew 24% to $11.6 million, compared to $9.4 million a year ago. Other operating income grew 143% to $4.7 million, compared to $1.9 million in the first nine months of last year. Other operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. increased 30% to $12.0 million, from $9.2 million for the nine month period ended September 30, 2001. "Our controlled expansion strategy is paying off," Swanson added. "We opened our fifth full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. branch last December December: see month. in Bonsall Bonsall is the name of several people and places, including:
Deposits grew 8% to $336 million at the end of September, compared to $311 million at September 30, 2001. Non-interest bearing deposits increased 29% to $50 million, while interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid deposits grew 5% to $286 million. Retail deposits increased to $301 million at the end of the third quarter, compared to $246 million last year, while wholesale deposits decreased to $35 million, from $65 million a year ago. "Our deposits have all repriced to match the low interest rate environment, and we have also changed our deposit mix to further lower our cost of funds, including the reduction in wholesale deposits," Mills said. "We utilized excess liquidity to offset the outflow of wholesale deposits, which resulted in both lowered cost of funds and smaller total assets when compared to the end of our second quarter. While interest income has not changed drastically dras·tic adj. 1. Severe or radical in nature; extreme: the drastic measure of amputating the entire leg; drastic social change brought about by the French Revolution. 2. , interest expense has been driven down 32% in the quarter and 31% year-to-date. Those factors combined to expand the net interest margin to 4.49%, compared to 4.28% in the second quarter and 3.82% in the third quarter last year." "Asset quality has improved significantly," Swanson added. "This improvement reflects our continued efforts in strengthening underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and aggressive loss mitigation MITIGATION. To make less rigorous or penal. 2. Crimes are frequently committed under circumstances which are not justifiable nor excusable, yet they show that the offender has been greatly tempted; as, for example, when a starving man steals bread to satisfy efforts." Non-performing assets (NPAs) represented 0.80% of total assets at the end of the third quarter, compared to 1.37% a year ago. Net of government guarantees, non-performing assets were just 0.27% of total assets at September 30, 2002, compared to 0.89% of total assets a year ago. The provision for loan losses was $306,000 for the third quarter of 2002 and $785,000 year-to-date. Net charge offs were $107,000 for the nine-month period. The total reserve for loan losses was $3.6 million at September 30, 2002 compared to $2.6 million a year ago. The allowance for loan losses now represents 1.11% of gross loans, up from 0.90% a year ago. Community National Bank, a subsidiary of Community Bancorp, is a $388 million financial institution headquartered in Escondido, Calif. Located between Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. and San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. , the bank's primary focus is community banking and commercial lending, with additional lending niches of SBA, mortgage and aircraft lending. The bank serves northern San Diego County and the Inland Empire In·land Empire A region of the northwest United States between the Cascade Range and the Rocky Mountains, comprising eastern Washington, eastern Oregon, northern Idaho, and western Montana. Farming, lumbering, and mining are important to the area. communities with retail banking offices in Fallbrook, Temecula, Escondido, Bonsall and Vista. The bank has loan production offices in Fallbrook, Escondido, Los Angeles, Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. , Orange, Sacramento Sacramento, city, United States Sacramento (săkrəmĕn`tō), city (1990 pop. 369,365), state capital and seat of Sacramento co., central Calif. , Temecula, Vista and in the East San Francisco Bay Area “Bay Area” redirects here. For other uses, see Bay Area (disambiguation). The San Francisco Bay Area, colloquially known as the Bay Area or The Bay . www.comnb.com Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, increased profitability, improved operating efficiencies ratios, expanded net interest margin, the ability to control costs and expenses, interest rate changes and financial policies of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. government, and general economic conditions. Additional information on these and other factors that could affect financial results are included in its Securities and Exchange Commission filings. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to any forward-looking statements contained herein to reflect future events or developments.
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------------------------------------
(unaudited)(dollars in thousands, except per share data)
Annual Quarter Ended Year To Date
Percentage September 30, Ended September 30,
Change 2002 2001 2002 2001
INTEREST INCOME
Interest and fees
on loans $5,845 $5,679 $17,256 $18,013
Interest on cash
equivalents 80 350 226 750
Interest-earning
deposits with
banks 1 6 5 24
US Treasury, govt.
agencies & other
securities 344 100 874 332
---------- ---------- ---------- ----------
Total Interest Income 2% 6,270 6,135 18,361 19,119
INTEREST EXPENSE
Deposits 1,712 2,766 5,590 8,786
Other borrowed
money 400 323 1,140 955
---------- ---------- ---------- ----------
Total Interest
Expense -32% 2,112 3,089 6,730 9,741
Net interest income 37% 4,158 3,046 11,631 9,378
Provision for loan
losses 306 670 785 764
---------- ---------- ---------- ----------
Net Interest Income
After Loan Loss
Provision 62% 3,852 2,376 10,846 8,614
OTHER OPERATING
INCOME
Net gain on sale
of loans 1,008 246 3,362 597
Loan servicing
fees, net 137 84 333 287
Customer service
charges 160 134 435 361
Loss on other
repossessed
assets - - (49) -
Other fee income 259 238 649 701
---------- ---------- ---------- ----------
Total Other
Operating
Income 123% 1,564 702 4,730 1,946
OPERATING EXPENSES
Salaries and
employee benefits 2,268 1,325 6,618 4,987
Occupancy 351 227 1,076 679
Telephone 75 69 230 220
Bank premises and
equipment 212 166 770 497
Marketing and
promotions 60 82 207 248
Data processing 174 157 545 464
Professional
services 303 162 721 554
Director, officer
and employee
expenses 105 97 334 368
Office expenses 148 81 398 323
ESOP loan expense - 51 - 153
Other 392 262 1,119 744
---------- ---------- ---------- ----------
Total Other Operating
Expenses 53% 4,088 2,679 12,018 9,237
---------- ---------- ---------- ----------
Income before
income taxes 1,328 399 3,558 1,323
Income tax 553 166 1,480 549
---------- ---------- ---------- ----------
NET INCOME 233% $775 $233 $2,078 $774
========== ========== ========== ==========
Per Share Data(1)
Basic earnings per
common share $0.23 $0.08 $0.63 $0.28
========== ========== ========== ==========
Earnings per
common share -
assuming dilution $0.22 $0.08 $0.61 $0.27
========== ========== ========== ==========
Weighted average
shares outstanding 3,340,837 3,023,046 3,314,364 2,798,663
Weighted average
shares outstanding
including
Dilutive effect of
stock options 3,458,991 3,095,138 3,416,763 2,883,094
CONSOLIDATED BALANCE SHEET
(unaudited) (dollars in thousands)
Annual Sept. 30, Dec. 31, Sept. 30,
Percent- 2002 2001 2001
age
Change
--------- --------- --------- ---------
ASSETS:
Cash and cash equivalents $28,386 $38,946 $49,504
Interest bearing deposits in
financial institutions 99 596 497
Federal Reserve Bank & Federal
Home Loan Bank stock 2,284 1,065 782
Investment securities held-to-
maturity, at amortized cost 24,676 10,626 5,073
Interest-only strip, at fair value 432 354 374
--------- --------- ---------
Total Cash, Cash Equivalents and
Investments -1% 55,877 51,587 56,230
Loans held for sale 51,063 39,023 38,266
Loans held for investment 271,256 269,451 245,294
Reserve for loan losses (3,607) (2,788) (2,550)
--------- --------- ---------
Loans, Net 13% 318,712 305,686 281,010
Bank premises and equipment, net 4,354 2,924 2,338
Other repossessed assets - 1,900 -
Other real estate owned 197 - -
Accrued interest and other assets 5,121 5,579 3,944
Deferred tax asset 1,240 1,240 672
Servicing asset, net 2,343 1,307 1,274
--------- --------- ---------
TOTAL ASSETS 12% $387,844 $370,223 $345,468
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
Deposits:
Interest bearing $286,450 $295,076 $272,489
Non-interest bearing 49,692 38,258 38,564
--------- --------- ---------
Total Deposits 8% 336,142 333,334 311,053
Trust Preferred Securities 10,000 10,000 10,000
Other borrowings 18,176 5,813 3,812
Reserve for losses on commitments to
extend credit 145 285 283
Accounts payable and other
liabilities 3,871 4,290 4,146
--------- --------- ---------
Total Liabilities 12% 368,334 353,722 329,294
STOCKHOLDERS' EQUITY:
Common stock $0.625 par value;
authorized 10,000,000 shares,
issued and outstanding, 3,342,000 at
September 30, 2002, 3,311,000
at December 31, 2001 and 3,154,000
at September 30, 2001 2,089 2,069 1,971
Additional paid-in capital 9,405 9,162 8,310
Unearned ESOP contribution - (668) (694)
Retained earnings 8,016 5,938 6,587
--------- --------- ---------
Total Stockholders' Equity 19,510 16,501 16,174
--------- --------- ---------
TOTAL LIABILITIES AND EQUITY 12% $387,844 $370,223 $345,468
========= ========= =========
CONSOLIDATED FINANCIAL RATIOS
Quarter Year-to-Date
Ended Ended
September 30, September 30,
2002 2001 2002 2001
------- ------- -------- ------
Annualized return on average assets 0.78% 0.28% 0.71% 0.33%
Annualized return on average equity 15.97% 5.88% 15.16% 7.72%
Efficiency ratio 71.44% 71.48% 73.24% 81.57%
Annualized net interest margin 4.49% 3.82% 4.28% 4.25%
Book value per share $5.84 $5.13
NON-PERFORMING ASSETS Quarter At
Ended December
September 30, 31,
2002 2001 2001
------- ------- --------
Non-accrual loans $2,916 $4,724 $3,174
Loans past due 90 days or more - - 29
Restructured loans - - -
------- ------- --------
Total non-performing loans 2,916 4,724 3,203
OREO 197 - -
Other reposessed assets - - 1,900
------- ------- --------
Total non-performing assets $3,113 $4,724 $5,103
======= ======= ========
Total non-performing loans/gross loans 0.90% 1.67% 1.04%
Total non-performing assets/total
assets 0.80% 1.37% 1.38%
Total non-performing loans net of
guarantees/gross loans 0.32% 1.09% 0.37%
Total non-performing assets net of
guarantees/total assets 0.27% 0.89% 0.31%
ALLOWANCE FOR LOAN LOSSES Quarter Ended Year-to-Date Ended
September 30, September 30,
2002 2001 2002 2001
--------- --------- --------- ---------
Balance at beginning of period $3,276 $1,989 $2,788 $1,988
Provision for loan losses 306 670 785 764
Recovery of (provision for)
reserve for
losses on commitments to
extend credit 116 (42) 141 (45)
Charge offs (net of recoveries) (91) (67) (107) (157)
--------- --------- --------- ---------
Balance at end of period $3,607 $2,550 $3,607 $2,550
========= ========= ========= =========
Loan loss allowance/gross loans 1.11% 0.90%
Loan loss allowance/non-
performing loans 123.70% 53.98%
Loan loss allowance/total
assets 0.93% 0.74%
Loan loss allowance/non-
performing assets 115.87% 53.98%
Loan loss allowance/non-
performing loans, net of
guarantees 350.19% 82.63%
Loan loss allowance/non-
performing assets, net of
guarantees 350.19% 82.63%
AVERAGE BALANCES Quarter Ended Year-to-Date Ended
September 30, September 30,
2002 2001 2002 2001
--------- --------- --------- ---------
Average assets $394,229 $334,653 $389,484 $312,373
Average equity $19,256 $15,715 $18,325 $13,400
Average net loans
(includes
LHFS) $321,036 $269,829 $322,421 $263,012
Average deposits $342,305 $301,308 $341,238 $281,895
Average interest earning
assets $367,453 $316,418 $363,313 $295,053
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