PR Newswire | Jul 30, 2021 07:23PM EDT

07/30 18:22 CDT

CBOA Financial, Inc. Reports Consolidated Earnings of $1,277,000 in 2Q 2021 TUCSON, Ariz., July 30, 2021

TUCSON, Ariz., July 30, 2021 /PRNewswire/ -- CBOA Financial, Inc. (OTCMKTS:CBOF) (the "Company"), parent company of Commerce Bank of Arizona (the "Bank" or "CBAZ"), announced that consolidated after tax net income for quarter ending June 30, 2021 increased 223% to $1,277,000, from $395,000 year-over-year.

Chris Webster, Bank President and Chief Executive Officer commented, "The strong loan growth performance seen earlier in the year continued through the second quarter. Our highly experienced and accomplished lending team worked hard to originate significant new loan opportunities while at the same time processing another $27 million in second round Paycheck Protection Program ("PPP") loans. However Total Loan balances were impacted as the Bank received a significant level of PPP loan forgiveness during the quarter," Webster added. He further commented, "In terms of our funding costs, 39% of our Total Deposits are Non-interest bearing. As a result, we are able to consistently maintain a very healthy Net Interest Margin as we organically grow our loan portfolio."

First Quarter 2021 Highlights

* Traditional (non-PPP) Loan Growth was $19 million, or 7% for the quarter * Nonperforming assets decreased 23% for the quarter

Operational HighlightsInterest income was aided by recognized fee income of PPP loans that bolstered earnings by $290,000. Further contributing to the growth in net interest income was a $57,000 decline in interest expense.

The Bank continues to make progress on its legacy classified assets. Year-over-year, non-performing assets which include loans and OREO are down 57% from $4.6 million or 1.5% of assets to $2 million or 0.57% of assets.

Balance SheetTotal assets decreased by 8% to $336.5 million during the quarter ended June 30, 2021 and increased 7% compared to $315.2 million a year ago. Total asset growth from June 2020 to June 2021 consisted of PPP loans funding CBAZ deposit accounts totaling $27 million and organic net deposit growth of roughly $4 million.

Traditional gross loans increased $19 million since first quarter 2021 ending the first quarter 2021 at $217 million. Total gross loans decreased by 8.4% to $251 million in the quarter and increased 4.3% compared to $241 million a year ago. Total deposits decreased by 1.5% to $300 million during the quarter and increased 12% compared to $269 million a year ago.

The allowance for loan losses totaled $3.17 million at June 30, 2021, or 1.46% of "traditional" non-PPP loans, compared to 1.50% in the previous quarter, and was 1.26% for the quarter with the PPP loans included.

Shareholders' equity increased at $27 million at June 30, 2021, from the preceding quarter. At June 30, 2021, tangible book value was $2.86 per share compared to $2.81 per share at March 31, 2021 and $2.81 per share a year ago. Excluding the PPP loans, the Bank's June 30, 2021 Tier 1 Leverage ratio would have been 9.3%, and 11.7% as of June 30, 2020. Growth in total assets associated with the PPP loans was the primary driver of a decline in the Bank's Tier 1 Leverage ratio.

Capital ManagementCapital ratios exceeded regulatory guidelines for a well-capitalized institution under Basel III and Dodd Frank Wall Street Reform requirements at June 30, 2021. Capital ratios are presented below.

About the CompanyCommerce Bank of Arizona, established in 2002 in Tucson, Arizona, is a full-service community bank that caters to small-to mid-sized businesses and real estate professionals. CBAZ offers commercial clients with a variety of services ranging from U.S. Small Business Administration (SBA) financing solutions, construction loans, and commercial real estate loans. CBOA Financial, Inc is a single-bank holding company and parent of the Bank. The Company is traded over-the-counter as CBOF. For additional information, visit: www.commercebankaz.com.

Forward-looking StatementsThis press release may include forward-looking statements about CBOA Financial, Inc. or Commerce Bank of Arizona. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: competition, fluctuations in interest rates, dependency on key individuals, loan defaults, geographical concentration, litigation and changes in federal laws, regulations and interpretations thereof. All forward-looking statements included in this press release are based on information available at the time of the release, and CBOA Financial, Inc. and Commerce Bank of Arizona assume no obligation to update any forward-looking statement.

Unaudited Consolidated Summary Financial Information

For the quarter ended Year to Date Dollars in thousands - Unaudited 6/30/2021 3/31/2021 6/30/2020 6/30/2021 6/30/2020

Summary Income Data

Interest Income 3,299 3,486 3,549 6,785 6,375

Interest expense 221 278 366 500 812

Net Interest Income 3,078 3,208 3,183 6,285 5,563

Provision for (reduction in) loan losses 193 - - 193 (279)

Non-interest income 84 70 (460) 154 (452)

Realized gains (losses) on sales of securities - - 47 - 168

Non-interest expense 2,440 2,523 2,375 4,965 4,792

Income (loss) before income taxes 529 755 395 1,281 766

Provision for income tax (748) 212 - (536) -

Net Income 1,277 543 395 1,817 766

Per Share Data

Shares outstanding end-of-period 8,550 8,268 8,208 8,550 8,208

Earnings per common share ($'s) 0.15 0.07 0.05 0.21 0.09

Earnings per common share (Diluted) ($'s) 0.14 0.06 0.04 0.19 0.07

Cash dividend declared - - - - -

Total shareholders' equity 27,033 25,000 23,049 27,033 23,049

Tangible Book value per share ($'s) 2.86 2.81 2.81 2.86 2.81

Selected Balance Sheet Data

Total assets 336,551 365,470 315,157 336,551 315,157

Securities available-for-sale 42,831 38,630 28,888 42,831 28,888

Loans 251,449 259,893 240,979 251,449 240,979

Allowance for loan losses 3,170 2,972 2,991 3,170 2,991

Deposits 300,366 305,012 268,836 300,366 268,836

Other borrowings - 25,539 14,808 - 14,808

Shareholders' equity 27,033 25,000 23,049 27,033 23,049

Performance Ratios (%)

Return on average shareholders' equity 12.53 8.16 6.62 10.36 6.59 (annualized)

Net interest margin 3.63 3.83 4.51 3.73 4.37

Efficiency ratio 76.11 75.25 85.38 75.67 91.58

Asset Quality Data (%)

Nonperforming assets to total assets 0.57 0.77 1.45 0.57 1.45

Reserve for loan losses to total loans 1.26 1.14 1.24 1.26 1.24

Charge-offs to average loans for period (0.0) (0.03) (0.0) (0.0) (0.0)

Regulatory Capital Ratios (%)

Common Equity Tier 1 11.96 12.24 13.40 11.96 13.40

Tier 1 risk-based capital ratio 11.96 12.24 13.40 11.96 13.40

Total risk-based capital ratio 13.21 13.49 14.65 13.21 14.65

Tier 1 leverage capital ratio 8.43 8.41 9.22 8.43 9.22

Contact:Chris WebsterPresident & CEO480-253-4511cwebster@commercebankaz.com

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SOURCE Commerce Bank of Arizona