Community Bancorp Inc. (the "Company") (NASDAQ: CMBC) a Southern
California based community bank holding company with $908.6 million
in total assets, today announced financial results for the quarter
and year ended December 31, 2005. 2005 Financial Highlights: -- Net
income totaled $12.6 million in 2005, up 50.6% from $8.4 million
for the prior year -- Diluted earnings per share increased 26.9% to
$2.17, compared to $1.71 in 2004 -- Net interest income increased
52.2% for the year -- Net interest margin increased to 5.80% for
2005, compared to 5.40% for 2004 -- Return on average tangible
equity for 2005 exceeded 20% for the third year in a row -- Return
on average assets for 2005 was 1.61% compared to 1.55% for 2004 --
The Company's efficiency ratio improved to 56.9% for 2005 from
60.1% in 2004 -- Total loans increased $197.6 million or 36.6% to
$737.1 million at year-end from $539.5 million one year ago --
Total deposits increased $160.7 million or 29.2% to $710.5 million
at year-end from $549.8 million one year ago -- Total non-interest
bearing deposits increased $54.2 million or 48.9% to $165.0 million
at year end, compared to $110.8 million a year ago -- Net charge
offs for the year were only 0.04% of average loans outstanding --
The Company increased its quarterly cash dividend to $0.10 per
share or $0.40 per share for the year Fourth Quarter 2005 Financial
Highlights: -- Net income totaled $3.8 million, up 13.5% from the
third quarter 2005 and 54.4% from the fourth quarter 2004 --
Diluted earnings per share increased 37.8% to $0.62, compared to
$0.45 in the fourth quarter 2004 -- Net interest income increased
42.3%, compared to the fourth quarter 2004 -- Net interest margin
increased to 6.01%, compared to 5.81% for the third quarter 2005
and 5.66% for the fourth quarter 2004 The comparability of
financial information is affected by our two acquisitions.
Operating results include the operations of acquired entities from
the dates of acquisition. We acquired Cuyamaca Bank on October 1,
2004 and Rancho Bernardo Community Bank on August 19, 2005. -0- *T
FOURTH QUARTER RESULTS (unaudited) (dollars in thousands, except
per Fourth Fourth Third share data) Quarter Quarter Quarter 2005
2004 % Change 2005 % Change ------- ------- --------- -------
--------- Diluted EPS $0.62 $0.45 37.78% $0.58 6.90% Net Income
$3,842 $2,489 54.36% $3,384 13.53% Return on Average Assets (ROA)
1.73% 1.52% 14.12% 1.63% 6.42% Return on Average Tangible Equity
(ROTE) 19.91% 21.30% -6.52% 22.12% -9.99% Net Interest Margin 6.01%
5.66% 6.18% 5.81% 3.44% Efficiency Ratio 55.69% 62.25% -10.53%
54.97% 1.32% *T Michael J. Perdue, President and CEO, said, "2005
was another outstanding year for our Company. We became a much
larger institution due to the tremendous efforts of our team
resulting in strong internal loan and deposit growth as well as the
closing of two acquisitions in the last fifteen months. We also
focused on controlling our interest expenses and improving our
deposit mix which helped boost our net interest margin from 5.66%
in the fourth quarter of 2004 to 6.01% in the most recent quarter
in 2005. "We experienced continued robust internal growth during
2005, which, combined with the acquisition of Rancho Bernardo
Community Bank, produced a 42% increase in total assets to $908.6
million as of December 31, 2005 compared to $641.6 million as of
December 31, 2004. If we exclude the effect of the acquisition,
assets grew internally 27% since December 31, 2004," continued
Perdue. "Excluding the acquisitions, gross loans increased 26% and
retail deposits increased 12% over 2004. "Including the
acquisitions, total loans increased 37% to $737.1 million as of
December 31, 2005 compared to $539.5 million as of December 31,
2004. Total deposits also increased substantially, rising 29% to
$710.5 million as of December 31, 2005 compared to $549.8 million
in 2004," continued Perdue. "The continued improvement in our
deposit mix also contributed to our improved performance.
Non-interest bearing deposits increased significantly, rising 49%
to $165.0 million as of year end compared to $110.8 million in
2004. As a result of this strengthened deposit portfolio and the
increase in market rates our net interest income increased 52% for
the year 2005 over 2004. "Loan production was very strong,
increasing 18% to $494.9 million for the year ended December 31,
2005 compared to $420.6 million for 2004. Of these totals,
commercial and other loan originations were 67% of the total
production, or $333.2 million, while SBA loan originations were 33%
of the total production, or $161.7 million," Perdue concluded.
INTEREST INCOME AND EXPENSE Net interest income before loan loss
provision increased 52.2% for the year ended December 31, 2005 over
2004. Total interest income was $53.9 million, a 65.0% increase
over the $32.6 million for 2004. The increase was primarily the
result of the 42.0% increase in average interest earning assets and
increases in the yield on those assets. Total interest expense for
the year ended December 31, 2005 was $12.8 million, a 126.3%
increase over the $5.7 million for 2004. Interest expense increased
due to the 39.3% increase in average interest bearing liabilities
combined with an increase in the cost of those liabilities. For the
year 2005, average transaction accounts increased 52.2% to $344.0
million compared to $226.1 million for 2004. Net interest income
before loan loss provision increased 42.3% to $12.1 million for the
fourth quarter 2005 from $8.5 million in the fourth quarter of
2004. The net interest margin increased to 6.01% in the fourth
quarter compared to 5.81% in the third quarter 2005 and 5.66% in
the fourth quarter 2004. OTHER OPERATING INCOME Excluding the gain
(loss) on REO, other operating income remained relatively flat at
$9.9 million for the year ended December 31, 2005 compared to $9.8
million during 2004. SBA 504 loan sales totaled $26.9 million and
SBA 7a loan sales totaled $59.7 million for the year 2005 compared
to $33.2 million in SBA 504 loans and $48.6 million in SBA 7a for
the same period in 2004. Excluding the loss on REO in the fourth
quarter 2004, other operating income decreased 17.4% to $2.3
million for the fourth quarter 2005 compared to $2.7 million during
the fourth quarter 2004. Other operating income for the fourth
quarter and year were negatively impacted by a market value
adjustment of $775,000 of the servicing asset, partially offset by
a $435,000 increase in the value of the IO Strip. OTHER OPERATING
EXPENSES Other operating expenses increased 31.2% to $29.0 million
for the year ended December 31, 2005 compared to $22.1 million for
the year ended December 31, 2004. The increase in non-interest
expense was due to significant growth and expansion, including the
acquisitions of Cuyamaca Bank and Rancho Bernardo Community Bank,
with five combined banking offices, and the addition of a new
banking office in Murrieta, CA. As of December 31, 2005, the
Company had 246 full time equivalent employees, compared to 189 as
of December 31, 2004. Other operating expenses increased 14.3% to
$8.0 million for the fourth quarter 2005 compared to $7.0 million
for the same period in 2004 due to the growth in staff and related
expenses. RESERVES AND ASSET QUALITY As of December 31, 2005, the
reserve for loan losses increased to $9.8 million compared to $7.5
million as of December 31, 2004. The reserve for loan losses as a
percentage of total gross loans was 1.32% as of December 31, 2005
compared to 1.38% as of December 31, 2004. The reserve for loan
losses as a percentage of total gross loans net of government
guarantees was 1.38% as of December 31, 2005 compared to 1.48% as
of December 31, 2004. The Company recorded a provision for loan
losses of $1.2 million for both the years ended December 31, 2005
and 2004. The Company had net loan charge offs of $235,000, or
0.04%, for the year ended December 31, 2005 compared to net loan
charge offs of $34,000, or 0.01%, for 2004. Net of government
guarantees, non-performing loans were $2.7 million as of December
31, 2005 compared to $2.1 million as of December 31, 2004. Net of
government guarantees, non-performing loans as a percent of gross
loans were 0.36% as of December 31, 2005 compared to 0.39% as of
December 30, 2004. CAPITAL RATIOS The Company's and Bank's capital
ratios continue to be above the well-capitalized guidelines
established by bank regulatory agencies. The Company's tangible
equity to tangible assets declined to 5.85% as of December 31, 2005
compared to 7.33% as of December 31, 2004 due to the acquisition of
Rancho Bernardo Community Bank combined with the significant growth
in assets. In order to facilitate the acquisition of Rancho
Bernardo Community Bank, the Company issued $20.0 million in trust
preferred securities, of which $4.4 million was contributed to the
Bank subsidiary as additional capital. RANCHO BERNARDO COMMUNITY
BANK ACQUISITION Community Bancorp acquired Rancho Bernardo
Community Bank (OTCBB:RBCB) by merging it into Community National
Bank, as of the close of business on August 19, 2005. As a result,
Community began consolidating the results of the combined entity
beginning on August 20, 2005. As of the date of acquisition, Rancho
Bernardo had total assets of $125.8 million, total gross loans of
$80.6 million and total deposits of $114.2 million. GENERAL
INFORMATION Community Bancorp is a bank holding company with $908.6
million in assets as of December 31, 2005, with a wholly owned
banking subsidiary, Community National Bank, headquartered in
Escondido, California. The bank's primary focus is community
banking, providing commercial banking services including
commercial, real estate and SBA loans to small and medium sized
businesses. The bank serves San Diego County and southwest
Riverside County with eleven community banking offices in Bonsall,
El Cajon, Encinitas, Escondido, Fallbrook, La Mesa, Murrieta,
Rancho Bernardo, Santee, Temecula and Vista, a commercial loan
production office in Corona, CA, and has additional SBA loan
production offices that originate loans in California, Arizona,
Nevada and Oregon. FORWARD LOOKING STATEMENTS Statements concerning
future performance, developments or events, expectations for growth
and income forecasts, and any other guidance on future periods,
constitute forward-looking statements that are subject to a number
of risks and uncertainties. Actual results may differ materially
from stated expectations. Specific factors include, but are not
limited to, loan production, balance sheet management, expanded net
interest margin, the ability to control costs and expenses,
interest rate changes and financial policies of the United States
government (including the Small Business Administration), and
general economic conditions. Additional information on these and
other factors that could affect financial results are included in
its Securities and Exchange Commission filings. The Company
disclaims any obligation to update any such factors or to publicly
announce the results of any revisions to any forward-looking
statements contained herein to reflect future events or
developments. -0- *T CONSOLIDATED BALANCE SHEETS Percentage
--------------------------- change (unaudited) (dollars in
thousands) from December December Dec 31, 31, 31, 2004 2005 2004
---------- --------- --------- ASSETS: Cash and cash equivalents
$37,752 $24,407 Investments and interest bearing deposits in
financial institutions 61,709 35,973 Loans held for investment 33%
582,745 437,932 Less allowance for loan losses (9,773) (7,508)
--------- --------- Net loans held for investment 572,972 430,424
Loans held for sale 52% 154,327 101,588 Premises and equipment, net
6,971 6,737 Other real estate owned and repossessed assets 68 -
Accrued interest and other assets 16,123 13,402 Income tax
receivable and deferred tax asset, net 6,377 5,928 Servicing
assets, net 3,833 4,011 Interest-only strips, at fair value 2,623
1,749 Goodwill 45,822 17,387 --------- --------- Total assets 42%
$908,577 $641,606 ========= ========= LIABILITIES AND STOCKHOLDERS'
EQUITY Deposits Interest bearing 24% $545,517 $438,995 Non-interest
bearing 49% 164,956 110,771 --------- --------- Total deposits 29%
710,473 549,766 Short term borrowing 52,290 1,000 Long term debt
37,203 17,640 Accrued expenses and other liabilities 12,327 10,082
--------- --------- Total liabilities 40% 812,293 578,488 ---------
--------- Stockholders' equity Common stock, $0.625 par value;
authorized 10,000,000 shares, issued and outstanding; 5,939,397
(including 11,670 of restricted stock awarded under the equity
based compensation plan) at December 31, 2005, 5,162,725 at
December 31, 2004 3,705 3,227 Additional paid-in capital 61,696
38,994 Deferred compensation - restricted stock (85) - Accumulated
other comprehensive gain (loss), net of income taxes (361) (73)
Retained earnings 31,329 20,970 --------- --------- Total
stockholders' equity 53% 96,284 63,118 --------- --------- Total
liabilities and stockholders' equity 42% $908,577 $641,606
========= ========= CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------ (unaudited) (dollars in
thousands, except per share data) Qtly Quarter Ended Annual Year
Ended INTEREST % December 31, % December 31, INCOME Change 2005
2004 Change 2005 2004 ------- -------- ---------- ------- --------
---------- Interest on loans $15,551 $9,798 $51,591 $31,383
Interest on fed funds sold 55 116 263 240 Interest- earning
deposits with banks 7 11 27 14 Interest on other investments 617
268 1,975 994 ---------- ---------- ---------- ---------- Total
Interest Income 59% 16,230 10,193 65% 53,856 32,631 INTEREST
EXPENSE Deposits 3,185 1,420 10,196 4,586 Other borrowed money 966
284 2,619 1,078 ---------- ---------- ---------- ---------- Total
Interest Expense 144% 4,151 1,704 126% 12,815 5,664 Net interest
income 42% 12,079 8,489 52% 41,041 26,967 Provision for loan losses
70 338 1,231 1,176 ---------- ---------- ---------- ---------- Net
Interest Income After Loan Loss Provision 47% 12,009 8,151 54%
39,810 25,791 OTHER OPERATING INCOME Net gain on sale of loans
1,728 1,745 6,968 6,683 Loan servicing fees, net (543) 215 157 829
Customer service charges 294 262 1,087 831 Gain (Loss) on OREO and
other repossessed assets - 17 157 (143) Other fee income 773 504
1,654 1,460 ---------- ---------- ---------- ---------- Total Other
Operating Income -18% 2,252 2,743 4% 10,023 9,660 OTHER OPERATING
EXPENSES Salaries and employee benefits 4,426 3,287 16,407 11,421
Occupancy 640 785 2,335 1,818 Depreciation 342 255 1,299 821 Other
2,572 2,655 8,937 8,029 ---------- ---------- ---------- ----------
Total Other Operating Expenses 14% 7,980 6,982 31% 28,978 22,089
---------- ---------- ---------- ---------- Income before income
taxes 6,281 3,912 20,855 13,362 Income tax 2,439 1,423 8,259 4,996
---------- ---------- ---------- ---------- NET INCOME 54% $3,842
$2,489 51% $12,596 $8,366 ========== ========== ==========
========== Per Share Data Basic earnings per share 33% $0.65 $0.49
25% $2.29 $1.83 ========== ========== ========== ========== Diluted
earnings per share 38% $0.62 $0.45 27% $2.17 $1.71 ==========
========== ========== ========== Average shares for basic earnings
per share 5,926,546 5,122,215 5,501,774 4,570,734 Average shares
for diluted earnings per share 6,245,621 5,482,949 5,814,462
4,885,069 SUPPLEMENTAL DATA ----------------- (unaudited)(dollars
in thousands, Quarter ended Year ended except per share data)
December 31, December 31, ---------------- --------------- 2005
2004 2005 2004 -------- ------- ------- ------- Annualized return
on average assets 1.73% 1.52% 1.61% 1.55% Annualized return on
average equity 16.13% 17.18% 16.37% 18.84% Annualized return on
average tangible equity 19.91% 21.30% 25.63% 20.11% Efficiency
ratio 55.69% 62.25% 56.92% 60.08% Annualized net interest margin
6.01% 5.66% 5.80% 5.40% Book value per share $16.21 $12.23 Tangible
book value per share $8.50 $8.86 Dividends per share $0.10 $0.05
$0.40 $0.20 NON-PERFORMING ASSETS At December 31,
--------------------- ---------------- (unaudited)(dollars in
thousands) 2005 2004 -------- ------- Non-accrual loans $3,647
$4,027 Loans past due 90 days or more - - Restructured loans - -
-------- ------- Total non-performing loans 3,647 4,027 OREO &
other repossessed assets 68 - -------- ------- Total non-performing
assets $3,715 $4,027 ======== ======= Total non-performing
loans/gross loans 0.49% 0.74% Total non-performing assets/total
assets 0.41% 0.63% Total non-performing loans net of
guarantees/gross loans 0.36% 0.39% Total non-performing assets net
of guarantees/total assets 0.30% 0.33% Quarter ended Year ended
ALLOWANCE FOR LOAN LOSSES December 31, December 31,
------------------------- ---------------- ---------------
(unaudited)(dollars in thousands) 2005 2004 2005 2004 --------
------- ------- ------- Balance at beginning of period $10,124
$6,029 $7,508 $5,210 Reserve acquired in merger 1,156 1,269 1,156
Provision for loan losses 70 338 1,231 1,176 Recovery of (provision
for) reserve for losses on commitments to extend credit - - - - Net
recoveries (chargeoffs) (421) (15) (235) (34) -------- -------
------- ------- Balance at end of period $9,773 $7,508 $9,773
$7,508 ======== ======= ======= ======= Loan loss allowance/gross
loans 1.32% 1.38% Loan loss allowance/gross loans net of guarantees
1.38% 1.48% Loan loss allowance/loans held for investment 1.68%
1.71% Loan loss allowance/non-performing loans 267.97% 186.44% Loan
loss allowance/non-performing assets 263.07% 186.44% Loan loss
allowance/non-performing loans, net of guarantees 368.24% 351.99%
Loan loss allowance/non-performing assets, net of guarantees
359.04% 351.99% Net Charge offs (recoveries) to average loans
(annualized) 0.23% 0.01% 0.04% 0.01% CAPITAL RATIOS At December 31,
-------------- ---------------- (unaudited) 2005 2004 --------
------- Holding Company Ratios Total capital (to risk-weighted
assets) 11.75% 11.47% Tier 1 capital (to risk-weighted assets)
10.20% 10.22% Tier 1 capital (to average assets) 9.86% 9.48%
Tangible equity to tangible assets 5.85% 7.33% Bank only Ratios
Total capital (to risk-weighted assets) 11.47% 11.19% Tier 1
capital (to risk-weighted assets) 10.22% 9.94% Tier 1 capital (to
average assets) 9.88% 9.30% (unaudited) (dollars in thousands) For
the three months ended December 31, 2005 2004
-------------------------- -------------------------- Average
Interest Average Average Interest Average Balance Earned/ Rate/
Balance Earned/ Rate/ Paid Yield Paid Yield --------- --------
------- --------- -------- ------- Average assets: Securities and
time deposits at other banks $57,324 $624 4.32% $28,845 $278 3.83%
Fed funds sold 5,730 55 3.81% 22,360 117 2.08% Loans: Commercial
52,549 1,006 7.60% 33,811 678 7.98% Real Estate 629,953 13,598
8.56% 468,717 8,241 7.00% Aircraft 30,170 506 6.65% 28,916 501
6.91% Consumer 21,144 441 8.27% 12,774 376 11.72% ---------
-------- --------- -------- Total loans 733,816 15,551 8.41%
544,218 9,796 7.15% --------- -------- --------- -------- Total
earning assets 796,870 16,230 8.08% 595,423 10,191 6.80% Non
earning assets 89,105 57,477 --------- --------- Total average
assets $885,975 $652,900 ========= ========= Average liabilities
and stockholders' equity: Interest bearing deposits: Savings and
interest bearing accounts $239,402 $726 1.20% $181,747 $243 0.53%
Time deposits 306,706 2,459 3.18% 270,839 1,177 1.73% ---------
-------- --------- -------- Total interest bearing deposits 546,108
3,185 2.31% 452,586 1,420 1.25% Short term borrowing 29,434 314
4.23% 2,002 9 1.79% Long term debt 38,191 652 6.77% 17,633 275
6.20% --------- -------- --------- -------- Total interest bearing
liabilities 613,733 4,151 2.68% 472,221 1,704 1.44% Demand deposits
164,587 114,310 Accrued expenses and other liabilities 12,373 8,402
Net stockholders' equity 95,282 57,967 --------- --------- Total
average liabilities stockholders' equity $885,975 $12,079 $652,900
$8,487 ========= ======== ========= ======== Net interest spread
5.40% 5.36% ====== ======= Net interest margin 6.01% 5.66% ======
======= For the year ended December 31, 2005 2004
-------------------------- -------------------------- Average
assets: Securities and time deposits at other banks $48,851 $2,002
4.10% $25,687 $1,008 3.92% Fed funds sold 8,673 263 3.03% 16,713
240 1.44% Loans: Commercial 47,130 3,380 7.17% 24,557 1,549 6.31%
Real Estate 554,412 44,644 8.05% 396,386 27,194 6.86% Aircraft
30,328 2,043 6.74% 29,649 2,071 6.99% Consumer 18,674 1,524 8.16%
5,755 569 9.90% --------- -------- --------- -------- Total loans
650,544 51,591 7.93% 456,347 31,383 6.88% --------- --------
--------- -------- Total earning assets 708,068 53,856 7.61%
498,747 32,631 6.54% Non earning assets 74,844 40,582 ---------
--------- Total average assets $782,912 $539,329 =========
========= Average liabilities and stockholders' equity: Interest
bearing deposits: Savings and interest bearing accounts $206,050
$1,782 0.86% $138,514 $681 0.49% Time deposits 299,626 8,414 2.81%
236,810 3,905 1.65% --------- -------- --------- -------- Total
interest bearing deposits 505,676 10,196 2.02% 375,324 4,586 1.22%
Short term borrowing 26,326 891 3.38% 9,400 116 1.23% Long term
debt 25,474 1,728 6.78% 15,420 962 6.24% --------- --------
--------- -------- Total interest bearing liabilities 557,476
12,815 2.30% 400,144 5,664 1.42% Demand deposits 137,951 87,548
Accrued expenses and other liabilities 10,531 7,226 Net
stockholders' equity 76,954 44,411 --------- --------- Total
average liabilities stockholders' equity $782,912 $41,041 $539,329
$26,967 ========= ======== ========= ======== Net interest spread
5.31% 5.12% ====== ======= Net interest margin 5.80% 5.40% ======
======= *T
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