CBB Bancorp, Inc. Reports Second Quarter 2023 Financial Results

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 2023 of $8.1 million, or $0.76 per diluted share, an increase of 14.3% compared to $7.1 million, or $0.67 per diluted share, in the prior quarter and an increase of 25.5% compared to $6.5 million, or $0.62 per diluted share, in the same period last year.

Overall Results

Net income for second quarter 2023 includes the benefit of both a gain on the sale of SBA loans and reduced noninterest expense, which more than offset a decline in net interest margin. The return on average assets for second quarter 2023 was 1.79% compared to 1.59% for first quarter 2023 and 1.43% for second quarter 2022. The return on average equity for second quarter 2023 was 14.76%, compared to 13.45% for first quarter 2023 and 13.30% for second quarter 2022. The net interest margin for second quarter 2023 was 4.23%, compared to 4.38% for first quarter 2023 and 3.75% for second quarter 2022. The efficiency ratio for second quarter 2023 was 47.29%, compared to 51.04% for first quarter 2023 and 49.45% for second quarter 2022.

James Hong, President, and CEO, commented, “We are pleased to announce earnings growth for the second quarter of 2023, during a period in which we have continued to emphasize balance sheet safety and liquidity over growth. In addition to solid gains from the Bank’s SBA operations, the Company’s continued emphasis on cost control has helped to sustain the Company’s profitability.”

Net Interest Income and Margin

Net Interest Income

Net interest income for second quarter 2023 was $18.7 million, a decrease of $346 thousand, or 1.8%, from first quarter 2023, and an increase of $2.3 million, or 14.0%, from second quarter 2022. The decrease in net interest income compared with first quarter 2023 was primarily due to the impact of interest rate increases on the cost of deposits. The increase in net interest income compared with the second quarter 2022 was due to the increased yield on the Bank’s variable rate loans, which were impacted by the rising interest rate environment over the past year.

Net Interest Margin

The net interest margin for second quarter 2023 was 4.23%, compared to 4.38% for first quarter 2023 and 3.75% for second quarter 2022. The decrease in net interest margin from the prior quarter was primarily attributable to the rising cost of funds. The cost of funds for second quarter 2023 increased to 2.53% from 2.10% for first quarter 2023 and increased from 0.34% for second quarter 2022.

Provision for Loan Losses:

No provision for credit losses was recorded for the second quarter 2023 as asset quality remained steady and there was a decline in loan balances. The provision for loan losses for first quarter 2023 was also zero, compared with a provision for loan losses of $1.6 million for second quarter 2022. See Table 10 in this press release for additional information and trends.

Noninterest Income:

Noninterest income for second quarter 2023 was $2.8 million, compared to $1.1 million for first quarter 2023 and $4.5 million for second quarter 2022. The increase in noninterest income in second quarter 2023 compared to first quarter 2023 was primarily the result of gains on sales of loans. Sales of SBA loans were $42.4 million with an average premium percentage received of 6.8% during the second quarter 2023. There were no sales of SBA loans during the first quarter 2023 while there were SBA loan sales totaling $50.8 million, with an average premium percentage received of 8.0%, during the second quarter 2022.

Noninterest Expense:

Noninterest expense for second quarter 2023 was $10.2 million, compared to $10.3 million for the first quarter 2023 and $10.4 million for the second quarter 2022. Salaries and employee benefits were substantially lower at $5.6 million in second quarter 2023 compared with the prior quarter total of $6.1 million, and down from $ 7.0 million in the second quarter 2022. Lower salaries and employee benefits in the current quarter reflect both ongoing cost control efforts and lower incentive payments due to lower levels of loan originations. The increase in other expenses compared to the first quarter 2023 includes the effect of an increase in the cost of FDIC deposit insurance as the FDIC raised its general deposit insurance assessment rates effective on January 1, 2023.

Income Taxes:

The Company’ s effective tax rate for second quarter 2023 was 28.6% compared to 28.1% for first quarter 2023 and 28.3% for second quarter 2022.

Balance Sheet:

Investment Securities:

Investment securities were $66.4 million on June 30, 2023, a decrease of $2.5 million from March 31, 2023, and $11.1 million from June 30, 2022. The decreases were due to principal paydowns and an absence of portfolio additions in the six months of 2023, or in the second quarter 2022.

Loans Receivable:

Loans receivable (including loans held for sale) at June 30, 2023, was $1.4 billion, a decrease of $50.3 million, or 3.4%, from loans receivable at March 31, 2023, and an increase of $14.3 million, or 1.0%, from loans receivable at June 30, 2022. The decrease in loans receivable at June 30, 2023 compared to loans receivable at March 31, 2023, was due to slower loan origination due to reduced demand for loans resulting from the comparatively higher interest rate environment.

The weighted average loan-to-value ratio of commercial real estate loans (“CRE”) was 67.07% at June 30, 2023. Excluding SBA loans, the weighted average loan-to-value ratio of CRE loans was 49.91%.

Allowance for Credit Losses and Asset Quality:

The allowance for credit losses at June 30, 2023 was $15.6 million, or 1.30% of portfolio loans, compared to $15.6 million, or 12.8% of portfolio loans, at March 31, 2023, and compared to $14.7 million, or 1.17% of portfolio loans, at June 30, 2022. Nonperforming loans as of June 30, 2023, were $684 thousand, compared to $636 thousand at March 31, 2023, and compared to $2.5 million at June 30, 2022. The coverage ratio of allowance for credit losses to nonperforming assets exceeded 2200% at June 30, 2023.

SBA Loans Held for Sale:

Total SBA loans held for sale at June 30, 2023, was $215.1 million, compared to $ 243.8 million at March 31 2023, and $141.1 million at June 30, 2022. 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, 2023, down $15.0 million, or 1.0% of, from March 31, 2023, and up $7.0 million, or 0.5%, from June 30, 2022. Noninterest-bearing demand deposits (“DDAs”) decreased $2.2 million, or 0.5%, to $426.3 million at June 30, 2023, from March 31, 2023, and decreased $140.3 million, or 24.8%, from June 30, 2022. DDAs were 28.6% of total deposits at June 30, 2023, compared to 28.6% at March 31, 2023, and 38.2% at June 30, 2022. NOW and MMDA accounts decreased $1.4 million, or 0.6%, to $210.4 million at June 30, 2023, from March 31, 2023, and decreased $117.0 million, or 35.7%, from June 30, 2022. Time deposits decreased $9.6 million, or 1.2%, at June 30, 2023, from March 31, 2023, and increased $279.5 million, or 52.3%, from June 30, 2022. Time deposits at June 30, 2023, were $814.3 million, or 53.5% of total deposits, compared to $823.9 million, or 53.6% of total deposits, at March 31, 2023, and $534.7 million, or 35.3% of total deposits, at June 30, 2022. The increases in time deposits during the first two quarters of 2023 compared with the second quarter 2022 reflect a shift in depositors’ preferences for the higher rate term deposits over money market and checking accounts as rates have risen over the course of the past year. The primary cause of the decreases in noninterest bearing deposit balances during 2023 compared with the second quarter 2022 was a decline in escrow-related deposits as the higher interest rate environment caused a significant slowdown in activity for that sector.

Borrowings:

Borrowings at June 30, 2023, March 31, 2023, and June 30, 2022, consisted of $50.0 million of Federal Home Loan Bank of San Francisco advances at each date.

Capital:

Stockholders’ equity was $223.3 million at June 30, 2023, representing an increase of $7.1 million, or 3.3%, over stockholders’ equity of $216.2 million at March 31, 2023. Tangible book value per share at June 30, 2023, was $20.85, compared with $20.18 at March 31, 2023, an increase of $0.67 per share, or 3.3%.

Each of the Company’s and the Bank’s regulatory capital ratios increased at June 30, 2023, from March 31, 2023, and from June 30, 2022, and continue to exceed the minimum levels required to be considered “Well Capitalized” under the applicable regulatory capital rules and in compliance with the fully phased-in Basel III requirements, which went into effect on January 1, 2022, as shown on Table 11 in this press release. The Common Equity Tier 1 risked-based capital at June 30, 2023, was 17.08% at the Company level and 17.03% 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, 2023, 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 the tab “About Us” and select “Investors Relations” to see 2Q 2023 Overview and COVID-19 update presentation.

FORWARD-LOOKING STATEMENTS:

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

The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances, 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,				$			%
			2023				2023			Change			Change				2022			Change			Change				2023				2022			Change			Change
Interest income		$	28,664			$	27,248			$	1,416		5.2	%		$	17,807			$	10,857		61.0	%		$	55,912			$	34,839			$	21,073		60.5	%
Interest expense			9,930				8,168				1,762		21.6	%			1,369				8,561		625.3	%			18,098				2,578				15,520		602.0	%
Net interest income			18,734				19,080				(346	)	(1.8	%)			16,438				2,296		14.0	%			37,814				32,261				5,553		17.2	%
Provision for credit losses			-				-				-		-				1,600				(1,600	)	(100.0	%)			-				433				(433	)	(100.0	%)
Net interest income after provision for credit losses			18,734				19,080				(346	)	(1.8	%)			14,838				3,896		26.3	%			37,814				31,828				5,986		18.8	%
Gain on sale of loans			1,952				-				1,952		100.0	%			3,298				(1,346	)	(40.8	%)			1,952				7,966				(6,014	)	(75.5	%)
Gain (loss) on sale of OREO			-				-				-		-				-				-		-				-				-				-		-
SBA servicing fee income, net			440				654				(214	)	(32.7	%)			778				(338	)	(43.4	%)			1,094				1,247				(153	)	(12.3	%)
Service charges and other income			407				398				9		2.3	%			462				(55	)	(11.9	%)			805				960				(155	)	(16.1	%)
Noninterest income			2,799				1,052				1,747		166.1	%			4,538				(1,739	)	(38.3	%)			3,851				10,173				(6,322	)	(62.1	%)
Salaries and employee benefits			5,581				6,079				(498	)	(8.2	%)			6,994				(1,413	)	(20.2	%)			11,660				14,059				(2,399	)	(17.1	%)
Occupancy and equipment			1,122				1,124				(2	)	(0.2	%)			1,114				8		0.7	%			2,246				2,234				12		0.5	%
Marketing expense			409				374				35		9.4	%			511				(102	)	(20.0	%)			783				996				(213	)	(21.4	%)
Professional expense			436				454				(18	)	(4.0	%)			517				(81	)	(15.7	%)			890				932				(42	)	(4.5	%)
Merger related expense			2				9				(7	)	(77.8	%)			123				(121	)	(98.4	%)			11				123				(112	)	(91.1	%)
Other expenses			2,633				2,235				398		17.8	%			1,114				1,519		136.4	%			4,868				2,910				1,958		67.3	%
Noninterest expense			10,183				10,275				(92	)	(0.9	%)			10,373				(190	)	(1.8	%)			20,458				21,254				(796	)	(3.7	%)
Income before income tax expense			11,350				9,857				1,493		15.1	%			9,003				2,347		26.1	%			21,207				20,747				460		2.2	%
Income tax expense			3,248				2,767				481		17.4	%			2,547				701		27.5	%			6,015				5,883				132		2.2	%
Net income		$	8,102			$	7,090			$	1,012		14.3	%		$	6,456			$	1,646		25.5	%		$	15,192			$	14,864			$	328		2.2	%
Effective tax rate			28.6	%			28.1	%			0.5	%	1.9	%			28.3	%			0.3	%	1.2	%			28.4	%			28.4	%			0.0	%	0.0	%
Outstanding number of shares			10,588,136				10,588,136				-		-				10,416,601				171,535		1.6	%			10,588,136				10,416,601				171,535		1.6	%
Weighted average shares for basic EPS			10,588,136				10,576,191				11,945		0.1	%			10,305,014				283,122		2.7	%			10,582,197				10,298,081				284,116		2.8	%
Weighted average shares for diluted EPS			10,591,350				10,600,189				(8,839	)	(0.1	%)			10,409,663				181,687		1.7	%			10,595,803				10,441,230				154,573		1.5	%
Basic EPS		$	0.77			$	0.67			$	0.10		14.9	%		$	0.62			$	0.15		24.2	%		$	1.44			$	1.44			$	-		-
Diluted EPS		$	0.76			$	0.67			$	0.09		13.4	%		$	0.62			$	0.14		22.6	%		$	1.43			$	1.42			$	0.01		0.7	%
Return on average assets			1.79	%			1.59	%			0.20	%	12.6	%			1.43	%			0.36	%	25.2	%			1.69	%			1.67	%			0.02	%	1.2	%
Return on average equity			14.76	%			13.45	%			1.31	%	9.7	%			13.30	%			1.46	%	11.0	%			14.12	%			15.64	%			(1.52	%)	(9.7	%)
Efficiency ratio¹			47.29	%			51.04	%			(3.75	%)	(7.4	%)			49.45	%			(2.16	%)	(4.4	%)			49.10	%			50.09	%			(0.99	%)	(2.0	%)
Yield on interest-earning assets²			6.46	%			6.24	%			0.22	%	3.5	%			4.06	%			2.40	%	59.1	%			6.36	%			4.01	%			2.35	%	58.6	%
Cost of funds			2.53	%			2.10	%			0.43	%	20.5	%			0.34	%			2.19	%	644.1	%			2.32	%			0.33	%			1.99	%	603.0	%
Net interest margin²			4.23	%			4.38	%			(0.15	%)	(3.4	%)			3.75	%			0.48	%	12.8	%			4.30	%			3.71	%			0.59	%	15.9	%

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,				$			%
			2023				2023			Change			Change				2022			Change			Change
ASSETS
	Cash and due from banks	$	12,704			$	13,788			$	(1,084	)	(7.9	%)		$	18,087			$	(5,383	)	(29.8	%)
	Interest-earning deposits at the FRB and other banks		293,394				240,602				52,792		21.9	%			243,072				50,322		20.7	%
	Investment securities¹		66,400				68,943				(2,543	)	(3.7	%)			77,469				(11,069	)	(14.3	%)
	Loans held-for-sale		215,083				243,753				(28,670	)	(11.8	%)			141,104				73,979		52.4	%
	Loans held-for-investment		1,201,237				1,222,867				(21,630	)	(1.8	%)			1,260,939				(59,702	)	(4.7	%)
	Less: Allowance for credit losses ("ACL")		(15,626	)			(15,627	)			1		0.0	%			(14,739	)			(887	)	(6.0	%)
	Loans held-for-investment, net		1,185,611				1,207,240				(21,629	)	(1.8	%)			1,246,200				(60,589	)	(4.9	%)
	OREO		-				-				-		-				-				-		-
	Restricted stock investments		11,011				10,121				890		8.8	%			10,111				900		8.9	%
	Servicing assets		8,426				8,528				(102	)	(1.2	%)			10,996				(2,570	)	(23.4	%)
	Goodwill		2,185				2,185				-		-				2,185				-		-
	Intangible assets		279				291				(12	)	(4.1	%)			331				(52	)	(15.7	%)
	Other assets		24,537				25,697				(1,160	)	(4.5	%)			28,060				(3,523	)	(12.6	%)
	Total assets	$	1,819,630			$	1,821,148			$	(1,518	)	(0.1	%)		$	1,777,615			$	42,015		2.4	%
LIABILITIES AND STOCKHOLDERS' EQUITY
	Noninterest-bearing	$	426,333			$	428,559			$	(2,226	)	(0.5	%)		$	566,610			$	(140,277	)	(24.8	%)
	Interest-bearing		1,096,078				1,108,754				(12,676	)	(1.1	%)			948,760				147,318		15.5	%
	Total deposits		1,522,411				1,537,313				(14,902	)	(1.0	%)			1,515,370				7,041		0.5	%
	FHLB advances and other borrowing		50,000				50,000				-		-				50,000				-		-
	Other liabilities		23,956				17,651				6,305		35.7	%			15,134				8,822		58.3	%
	Total liabilities		1,596,367				1,604,964				(8,597	)	(0.5	%)			1,580,504				15,863		1.0	%
	Stockholders' Equity		223,263				216,184				7,079		3.3	%			197,111				26,152		13.3	%
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY		$	1,819,630			$	1,821,148			$	(1,518	)	(0.1	%)		$	1,777,615			$	42,015		2.4	%
CAPITAL RATIOS
	Leverage ratio
	Company		12.23	%			11.86	%			0.37	%	3.1	%			10.80	%			1.43	%	13.2	%
	Bank		12.20	%			11.82	%			0.38	%	3.2	%			10.73	%			1.47	%	13.7	%
	Common equity tier 1 risk-based capital ratio
	Company		17.08	%			16.15	%			0.93	%	5.7	%			14.47	%			2.60	%	18.0	%
	Bank		17.03	%			16.10	%			0.93	%	5.8	%			14.38	%			2.65	%	18.4	%
	Tier 1 risk-based capital ratio
	Company		17.08	%			16.15	%			0.93	%	5.7	%			14.47	%			2.60	%	18.0	%
	Bank		17.03	%			16.10	%			0.93	%	5.8	%			14.38	%			2.65	%	18.4	%
	Total risk-based capital ratio
	Company		18.32	%			17.37	%			0.95	%	5.5	%			15.63	%			2.69	%	17.2	%
	Bank		18.27	%			17.31	%			0.96	%	5.5	%			15.53	%			2.74	%	17.6	%
	Tangible common equity per share	$	20.85			$	20.18			$	0.67		3.3	%		$	18.68			$	2.17		11.6	%
	Loan-to-Deposit (LTD) ratio		78.90	%			79.55	%			(0.65	%)	(0.8	%)			83.21	%			(4.31	%)	(5.2	%)
	Nonperforming assets	$	684			$	636			$	48		7.5	%		$	2,532			$	(1,848	)	(73.0	%)
	Nonperforming assets as a % of loans held-for-investment		0.06	%			0.05	%			0.01	%	20.00	%			0.20	%			(0.14	%)	(70.0	%)
	ACL as a % of loans held-for-investment		1.30	%			1.28	%			0.02	%	1.56	%			1.17	%			0.13	%	11.1	%

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,
			2023				2023				2022				2022				2022
Interest income		$	28,664			$	27,248			$	24,744			$	21,334			$	17,807
Interest expense			9,930				8,168				4,677				2,507				1,369
Net interest income			18,734				19,080				20,067				18,827				16,438
Provision for credit losses			-				-				-				910				1,600
Net interest income after provision for credit losses			18,734				19,080				20,067				17,917				14,838
Gain on sale of loans			1,952				-				-				-				3,298
Gain (loss) on sale of OREO			-				-				-				-				-
SBA servicing fee income, net			440				654				491				709				778
Service charges and other income			407				398				457				518				462
Noninterest income			2,799				1,052				948				1,227				4,538
Salaries and employee benefits			5,581				6,079				6,233				6,861				6,994
Occupancy and equipment			1,122				1,124				1,133				1,118				1,114
Marketing expense			409				374				434				489				511
Professional expense			436				454				418				519				517
Merger related expense			2				9				7				47				123
Other expenses			2,633				2,235				2,579				2,125				1,114
Noninterest expense			10,183				10,275				10,804				11,159				10,373
Income before income tax expense			11,350				9,857				10,211				7,985				9,003
Income tax expense			3,248				2,767				2,882				2,258				2,547
Net income		$	8,102			$	7,090			$	7,329			$	5,727			$	6,456
Effective tax rate			28.6	%			28.1	%			28.2	%			28.3	%			28.3	%
Outstanding number of shares			10,588,136				10,588,136				10,569,601				10,569,601				10,416,601
Weighted average shares for basic EPS			10,588,136				10,576,191				10,569,601				10,516,394				10,305,014
Weighted average shares for diluted EPS			10,591,350				10,600,189				10,600,053				10,545,544				10,409,663
Basic EPS		$	0.77			$	0.67			$	0.70			$	0.54			$	0.62
Diluted EPS		$	0.76			$	0.67			$	0.70			$	0.54			$	0.62

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,
			2023				2023				2022				2022				2022
Salaries and benefits		$	5,581			$	6,079			$	6,233			$	6,861			$	6,994
FTE at the end of period			165				170				179				190				199
Average FTE during the period			164				174				184				193				201
Salaries and benefits/average FTE¹		$	137			$	142			$	134			$	141			$	140
Salaries and benefits/average assets¹			1.23	%			1.36	%			1.39	%			1.52	%			1.55	%
Noninterest expense/average assets¹			2.25	%			2.30	%			2.41	%			2.47	%			2.30	%

1	Annualized

FIVE-QUARTER BALANCE SHEET (Unaudited) - Table 5
(Dollars in thousands)
		June 30,				March 31,				December 31,				September 30,				June 30,
			2023				2023				2022				2022				2022
ASSETS
	Cash and due from banks	$	12,704			$	13,788			$	20,134			$	17,232			$	18,087
	Interest-earning deposits at the FRB and other banks		293,394				240,602				170,839				225,044				243,072
	Investment securities		66,400				68,943				72,550				75,839				77,469
	Loans held-for-sale		215,083				243,753				230,431				186,438				141,104
	Loans held-for-investment		1,201,237				1,222,867				1,285,278				1,260,590				1,260,939
	Less: Allowance for credit losses		(15,626	)			(15,627	)			(15,525	)			(15,602	)			(14,739	)
	Loans held-for-investment, net		1,185,611				1,207,240				1,269,753				1,244,988				1,246,200
	OREO		-				-				-				-				-
	Restricted stock investments		11,011				10,121				10,121				10,121				10,111
	Servicing assets		8,426				8,528				9,232				10,158				10,996
	Goodwill		2,185				2,185				2,185				2,185				2,185
	Intangible assets		279				291				303				317				331
	Other assets		24,537				25,697				26,939				27,845				28,060
	Total assets	$	1,819,630			$	1,821,148			$	1,812,487			$	1,800,167			$	1,777,615
LIABILITIES AND STOCKHOLDERS' EQUITY
	Noninterest-bearing	$	426,333			$	428,559			$	451,651			$	562,051			$	566,610
	Interest-bearing		1,096,078				1,108,754				1,086,599				971,263				948,760
	Total deposits		1,522,411				1,537,313				1,538,250				1,533,314				1,515,370
	FHLB advances		50,000				50,000				50,000				50,000				50,000
	Other liabilities		23,956				17,651				14,706				14,109				15,134
	Total liabilities		1,596,367				1,604,964				1,602,956				1,597,423				1,580,504
	Stockholders' Equity		223,263				216,184				209,531				202,744				197,111
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY		$	1,819,630			$	1,821,148			$	1,812,487			$	1,800,167			$	1,777,615

FIVE-QUARTER LOANS RECEIVABLE COMPONENTS (Unaudited) - Table 6
(Dollars in thousands)
	June 30, 2023						March 31, 2023						December 31, 2022						September 30, 2022						June 30, 2022
	Balance			%			Balance			%			Balance			%			Balance			%			Balance			%
Construction	$	20,106		1.7	%		$	19,550		1.6	%		$	17,537		1.4	%		$	14,919		1.2	%		$	23,431		1.9	%
Commercial real estate		1,014,785		84.5	%			1,033,124		84.5	%			1,078,588		83.9	%			1,050,154		83.3	%			1,023,298		81.1	%
Commercial and industrial		114,106		9.5	%			114,184		9.3	%			125,298		9.7	%			128,099		10.1	%			146,175		11.6	%
Home mortgage		45,987		3.8	%			49,155		4.0	%			52,031		4.1	%			57,773		4.6	%			57,612		4.6	%
Consumer		1,074		0.1	%			1,049		0.1	%			6,260		0.5	%			4,839		0.4	%			6,609		0.5	%
Gross loans held-for-investment		1,196,058		99.6	%			1,217,062		99.5	%			1,279,714		99.6	%			1,255,784		99.6	%			1,257,125		99.7	%
Deferred loan fees/costs, net		5,179		0.4	%			5,805		0.5	%			5,564		0.4	%			4,806		0.4	%			3,814		0.3	%
Loans held-for-investment	$	1,201,237		100.0	%		$	1,222,867		100.0	%		$	1,285,278		100.0	%		$	1,260,590		100.0	%		$	1,260,939		100.0	%
Loans held-for-sale	$	215,083					$	243,753					$	230,431					$	186,438					$	141,104
Total loans receivable	$	1,416,320					$	1,466,620					$	1,515,709					$	1,447,028					$	1,402,043

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,
		2023				2023				2022				2022				2022
SBA loans held-for-sale at beginning of the quarter/year	$	243,753			$	230,431			$	186,438			$	141,104			$	149,733
SBA loans originated/transferred from/to held-for-
investment during the quarter/year		18,273				16,890				45,184				49,922				43,451
SBA loans sold during the quarter/year		(42,437	)			-				-				-				(50,845	)
SBA loans principal paydown/payoff, net of advance		(4,506	)			(3,568	)			(1,191	)			(4,588	)			(1,235	)
SBA loans held-for-sale at end of the quarter/year	$	215,083			$	243,753			$	230,431			$	186,438			$	141,104
Gain on sale of SBA loans	$	1,952			$	-			$	-			$	-			$	3,298
Premium on sale (weighted average)		6.8	%			-				-				-				8.0	%
SBA loan production	$	24,013			$	21,719			$	60,746			$	69,234			$	56,676

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,
		2023				2023				2022				2022				2022
SBA servicing assets @ beginning of the quarter/year	$	8,528			$	9,232			$	10,158			$	10,996			$	10,671
Newly added SBA servicing assets from SBA loans sold		806				-				-				-				1,081
Regular quarterly/annual servicing assets amortization		(379	)			(403	)			(434	)			(471	)			(478	)
SBA servicing assets amortized from SBA loans paid off/charged off		(529	)			(301	)			(492	)			(367	)			(278	)
Subtotal before impairment		8,426				8,528				9,232				10,158				10,996
Reversal of valuation allowance on servicing assets		-				-				-				-				-
SBA servicing assets @ the end of the quarter/year	$	8,426			$	8,528			$	9,232			$	10,158			$	10,996

FIVE-QUARTER DEPOSIT COMPONENTS (Unaudited) - Table 9
(Dollars in thousands)
	June 30, 2023						March 31, 2023						December 31, 2022						September 30, 2022						June 30, 2022
	Balance			%			Balance			%			Balance			%			Balance			%			Balance			%
Noninterest-bearing demand	$	426,333		28.0	%		$	428,559		27.9	%		$	451,651		29.4	%		$	562,051		36.7	%		$	566,610		37.4	%
Interest-bearing demand		9,056		0.6	%			10,883		0.7	%			8,878		0.6	%			10,268		0.7	%			12,754		0.8	%
NOW & MMDA		210,429		13.8	%			211,793		13.8	%			274,521		17.9	%			313,719		20.5	%			327,477		21.6	%
Savings		62,324		4.1	%			62,188		4.0	%			52,845		3.4	%			66,673		4.3	%			73,791		4.9	%
TCDs of $250K and under		298,520		19.6	%			294,074		19.1	%			278,952		18.1	%			246,886		16.1	%			245,203		16.2	%
TCDs of $250K over		368,262		24.2	%			367,167		23.9	%			320,386		20.8	%			242,700		15.8	%			198,518		13.1	%
Wholesale TCDs		147,487		9.7	%			162,649		10.6	%			151,017		9.8	%			91,017		5.9	%			91,017		6.0	%
Total Deposits	$	1,522,411		100.0	%		$	1,537,313		100.0	%		$	1,538,250		100.0	%		$	1,533,314		100.0	%		$	1,515,370		100.0	%
Recap:
Noninterest-bearing demand	$	426,333		28.0	%		$	428,559		27.9	%		$	451,651		29.4	%		$	562,051		36.7	%		$	566,610		37.4	%
Interest-bearing demand		9,056		0.6	%			10,883		0.7	%			8,878		0.6	%			10,268		0.7	%			12,754		0.8	%
NOW & MMDA		210,429		13.8	%			211,793		13.8	%			274,521		17.8	%			313,719		20.5	%			327,477		21.6	%
Savings		62,324		4.1	%			62,188		4.0	%			52,845		3.5	%			66,673		4.3	%			73,791		4.9	%
TCDs of $250K and under		298,520		19.6	%			294,074		19.1	%			278,952		18.1	%			246,886		16.1	%			245,203		16.2	%
Core Deposits		1,006,662		66.1	%			1,007,497		65.5	%			1,066,847		69.4	%			1,199,597		78.3	%			1,225,835		80.9	%
TCDs of $250K over		368,262		24.2	%			367,167		23.9	%			320,386		20.8	%			242,700		15.8	%			198,518		13.1	%
Wholesale TCDs		147,487		9.7	%			162,649		10.6	%			151,017		9.8	%			91,017		5.9	%			91,017		6.0	%
Noncore Deposits		515,749		33.9	%			529,816		34.5	%			471,403		30.6	%			333,717		21.7	%			289,535		19.1	%
Total Deposits	$	1,522,411		100.0	%		$	1,537,313		100.0	%		$	1,538,250		100.0	%		$	1,533,314		100.0	%		$	1,515,370		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.
				2023				2023				2022				2022				2022
Allowance for Credit Losses
	Balance at beginning of period		$	15,627			$	15,525			$	15,602			$	14,739			$	13,089
	CECL transition provision							250
	Provision for credit losses							-				-				910				1,600
	Charge-offs			(11	)			(159	)			(90	)			(89	)			-
	Recoveries			10				11				13				42				50
	Balance at the end of period		$	15,626			$	15,627			$	15,525			$	15,602			$	14,739
Nonperforming Assets:¹
	Over 90 days still accruing		$	39			$	-			$	6,006			$	-			$	-
	Nonaccrual loans			645				636				801				690				2,532
	Total nonperforming loans			684				636				6,807				690				2,532
	Other real estate owned			-				-				-				-				-
	Total nonperforming assets		$	684			$	636			$	6,807			$	690			$	2,532
Classified Assets:¹
	Substandard		$	10,491			$	7,673			$	8,165			$	9,146			$	11,133
	Doubtful			-				-												-
	Loss																			-
	Total classified loans		$	10,491			$	7,673			$	8,165			$	9,146			$	11,133
	Other real estate owned			-				-				-				-				-
	Total classified assets		$	10,491			$	7,673			$	8,165			$	9,146			$	11,133
Performing TDR loans:¹			$	7,220			$	4,332			$	4,471			$	4,797			$	4,744
Delinquent Loans:¹
	Loans 30-89 days past due		$	4,420			$	3,551			$	381			$	3,936			$	11,553
	90 days or more past due and still accruing			39				-				6,006				-				-
	Nonaccrual			645				636				801				690				2,532
	Total delinquent loans		$	5,104			$	4,187			$	7,188			$	4,626			$	14,085
Asset Quality Ratios:
	Net (recoveries) charge-offs to average loans²			0.00	%			0.04	%			0.02	%			0.01	%			(0.01	%)
	Nonaccrual loans to loans held-for-investment			0.05	%			0.05	%			0.06	%			0.05	%			0.20	%
	Nonperforming loans to loans held-for-investment			0.06	%			0.05	%			0.53	%			0.05	%			0.20	%
	Nonperforming assets to total assets			0.04	%			0.03	%			0.38	%			0.04	%			0.14	%
	Classified loans to loans held-for-investment			0.87	%			0.63	%			0.64	%			0.73	%			0.88	%
	Classified loans to Tier 1 and ACL			4.44	%			3.35	%			3.67	%			4.24	%			5.32	%
	Classified assets to total assets			0.58	%			0.42	%			0.45	%			0.51	%			0.63	%
	Classified assets to Tier 1 and ACL			4.44	%			3.35	%			3.67	%			4.24	%			5.32	%
	ACL to loans held-for-investment			1.30	%			1.28	%			1.21	%			1.24	%			1.17	%
	ACL to nonaccrual loans			2422.64	%			2457.08	%			1938.20	%			2261.16	%			582.11	%
	ACL to nonperforming loans			2284.50	%			2457.08	%			228.07	%			2261.16	%			582.11	%
	ACL to nonperforming assets			2284.50	%			2457.08	%			228.07	%			2261.16	%			582.11	%
	Texas ratio ³			0.29	%			0.28	%			3.06	%			0.32	%			1.21	%

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

	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				2023				2023				2022				2022				2022
	Leverage ratio
	Company		N/A			N/A				12.23	%			11.86	%			11.71	%			11.25	%			10.80	%
	Bank		5.00	%		4.00	%			12.20	%			11.82	%			11.67	%			11.15	%			10.73	%
	Common equity tier 1 risk-based capital ratio
	Company		N/A			N/A				17.08	%			16.15	%			14.92	%			14.82	%			14.47	%
	Bank		6.50	%		7.00	%			17.03	%			16.10	%			14.87	%			14.70	%			14.38	%
	Tier 1 risk-based capital ratio
	Company		N/A			N/A				17.08	%			16.15	%			14.92	%			14.82	%			14.47	%
	Bank		8.00	%		8.50	%			17.03	%			16.10	%			14.87	%			14.70	%			14.38	%
	Total risk-based capital ratio
	Company		N/A			N/A				18.32	%			17.37	%			16.08	%			16.02	%			15.63	%
	Bank		10.00	%		10.50	%			18.27	%			17.31	%			16.03	%			15.89	%			15.53	%
	Tangible common equity/total assets									12.15	%			11.75	%			11.44	%			11.14	%			10.96	%
	Tangible common equity per share								$	20.85			$	20.18			$	19.59			$	18.95			$	18.68

FIVE-QUARTER MARGIN ANALYSIS (Unaudited) -Table 12
(Dollars in thousands)
	Three Months Ended
	June 30, 2023									March 31, 2023									December 31, 2022									September 30, 2022									June 30, 2022
	Avg Balance			Interest			Yield			Avg Balance			Interest			Yield			Avg Balance			Interest			Yield			Avg Balance			Interest			Yield			Avg Balance			Interest			Yield
Number of Days in the Period
INTEREST-EARNING ASSETS
Loans Receivable¹	$	1,444,608		$	24,661		6.85	%		$	1,502,078		$	24,379		6.58	%		$	1,473,100		$	22,407		6.03	%		$	1,413,632		$	19,299		5.42	%		$	1,389,968		$	16,643		4.80	%
Investment securities ²		67,958			595		3.51	%			70,146			577		3.34	%			73,371			552		2.98	%			77,304			543		2.79	%			78,709			488		2.49	%
Interest-earning deposits at the FRB and other banks		258,236			3,296		5.12	%			190,692			2,178		4.63	%			180,358			1,666		3.66	%			246,955			1,398		2.25	%			286,974			599		0.84	%
Other earning assets		10,825			163		6.04	%			10,121			164		6.57	%			10,121			169		6.62	%			10,121			145		5.68	%			9,861			129		5.25	%
Total interest-earning assets ²		1,781,627			28,715		6.46	%			1,773,037			27,298		6.24	%			1,736,950			24,794		5.66	%			1,748,012			21,385		4.85	%			1,765,512			17,859		4.06	%
NONINTEREST-EARNING ASSETS
Cash and due from banks		12,792									14,262									15,632									17,429									14,866
Other noninterest-earning assets		34,060									36,643									38,529									40,251									38,621
Total noninterest-earning assets		46,852									50,905									54,161									57,680									53,487
Less: Allowance for credit losses		(15,627	)								(15,552	)								(15,581	)								(14,756	)								(13,126	)
TOTAL ASSETS	$	1,812,852								$	1,808,390								$	1,775,530								$	1,790,936								$	1,805,873
INTEREST-BEARING DEPOSITS
Interest-bearing demand	$	14,522		$	7		0.19	%		$	18,021		$	9		0.20	%		$	20,352		$	10		0.19	%		$	23,461		$	8		0.14	%		$	26,781		$	4		0.06	%
Money market		192,872			1,414		2.94	%			231,865			1,469		2.57	%			288,611			1,433		1.97	%			316,964			894		1.12	%			308,377			443		0.58	%
Savings		63,786			324		2.04	%			55,576			164		1.20	%			61,152			96		0.62	%			71,519			85		0.47	%			75,306			59		0.31	%
Time deposits		839,198			8,068		3.86	%			797,072			6,410		3.26	%			625,823			3,020		1.91	%			556,919			1,401		1.00	%			523,504			746		0.57	%
Total interest-bearing deposits		1,110,378			9,813		3.54	%			1,102,534			8,052		2.96	%			995,938			4,559		1.82	%			968,863			2,388		0.98	%			933,968			1,252		0.54	%
Borrowings		50,000			117		0.94	%			50,000			116		0.94	%			50,001			118		0.94	%			50,001			119		0.94	%			50,000			117		0.94	%
Total interest-bearing liabilities		1,160,378			9,930		3.43	%			1,152,534			8,168		2.87	%			1,045,939			4,677		1.77	%			1,018,864			2,507		0.98	%			983,968			1,369		0.56	%
Noninterest-bearing deposits		411,432									425,190									507,719									555,291									611,395
Other liabilities		20,934									16,947									14,732									14,596									15,818
Stockholders' equity		220,108									213,719									207,140									202,185									194,692
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,812,852								$	1,808,390								$	1,775,530								$	1,790,936								$	1,805,873
Net interest income²				$	18,785								$	19,130								$	20,117								$	18,878								$	16,490
Net interest spread							3.03	%								3.37	%								3.89	%								3.87	%								3.50	%
Effect of noninterest-bearing sources							1.20	%								1.01	%								0.70	%								0.41	%								0.25	%
Net interest margin²							4.23	%								4.38	%								4.59	%								4.28	%								3.75	%
Cost of deposits	$	1,521,810		$	9,813		2.59	%		$	1,527,724		$	8,052		2.14	%		$	1,503,657		$	4,559		1.20	%		$	1,524,154		$	2,388		0.62	%		$	1,545,363		$	1,252		0.32	%
Cost of funds	$	1,571,810		$	9,930		2.53	%		$	1,577,724		$	8,168		2.10	%		$	1,553,658		$	4,677		1.19	%		$	1,574,155		$	2,507		0.63	%		$	1,595,363		$	1,369		0.34	%

1	Loan held-for-investment, plus 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 30,2023							March 31, 2023							December 31, 2022							September 30, 2022							June 30, 2022
		Amount				Yield			Amount				Yield			Amount				Yield			Amount				Yield			Amount			Yield
Contractual yield		$	23,767			6.60	%		$	23,643			6.38	%		$	21,534			5.80	%		$	18,134			5.09	%		$	15,496		4.47	%
SBA discount accretion			1,124			0.31	%			937			0.25	%			1,172			0.32	%			1,078			0.30	%			1,035		0.30	%
Prepayment penalties & late fees			60			0.02	%			30			0.01	%			17			0.00	%			94			0.03	%			56		0.02	%
Amortization of net deferred costs			(290	)		-0.08	%			(231	)		-0.06	%			(316	)		-0.09	%			(7	)		0.00	%			56		0.01	%
As reported yield on loans		$	24,661			6.85	%		$	24,379			6.58	%		$	22,407			6.03	%		$	19,299			5.42	%		$	16,643		4.80	%

MARGIN ANALYSIS (Unaudited) - Table 14
(Dollars in thousands)
	Three Months Ended
	June 30,2023										June 30,2022
	Avg Balance				Interest			Yield			Avg Balance				Interest			Yield
Number of Days in the Period
INTEREST-EARNING ASSETS
Loans Receivable ¹	$	1,473,184			$	49,040		6.71	%		$	1,379,540			$	32,995		4.82	%
Investment securities ²		69,046				1,172		3.42	%			80,752				959		2.39	%
Interest-earning deposits at the FRB and other banks		224,651				5,474		4.91	%			288,018				740		0.52	%
Other earning assets		10,475				327		6.30	%			9,358				248		5.34	%
Total interest-earning assets ²		1,777,356				56,013		6.36	%			1,757,668				34,942		4.01	%
NONINTEREST-EARNING ASSETS
Cash and due from banks		13,523										14,106
Other noninterest-earning assets		35,296										37,674
Total noninterest-earning assets		48,819										51,780
Less: Allowance for credit losses		(15,590	)									(13,660	)
TOTAL ASSETS	$	1,810,585									$	1,795,788
INTEREST-BEARING DEPOSITS
Interest-bearing demand	$	16,261			$	16		0.20	%		$	27,110			$	7		0.05	%
Money market		212,261				2,883		2.74	%			314,999				799		0.51	%
Savings		59,704				488		1.65	%			76,132				120		0.32	%
Time deposits		818,251				14,478		3.57	%			526,446				1,419		0.54	%
Total interest-bearing deposits		1,106,477				17,865		3.26	%			944,687				2,345		0.50	%
Borrowings		50,000				233		0.94	%			50,000				233		0.94	%
Total interest-bearing liabilities		1,156,477				18,098		3.16	%			994,687				2,578		0.52	%
Noninterest-bearing deposits		418,273										593,071
Other Liabilities		18,904										16,389
Stockholders' equity		216,931										191,641
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,810,585									$	1,795,788
Net interest income²					$	37,915									$	32,364
Net interest spread								3.20	%									3.49	%
Effect of noninterest-bearing sources								1.10	%									0.22	%
Net interest margin²								4.30	%									3.71	%
Cost of deposits	$	1,524,750			$	17,865		2.36	%		$	1,537,758			$	2,345		0.31	%
Cost of funds	$	1,574,750			$	18,098		2.32	%		$	1,587,758			$	2,578		0.33	%

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

 

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The CBB Bancorp Stock at the time of publication of the news with a fall of -2,32 % to 9,67USD on Nasdaq OTC stock exchange (28. Juli 2023, 02:10 Uhr).