ICB Financial 2009 Financial Performance
ASSETS INCREASE 12.8%
DEPOSITS INCREASE 19.2%
ONTARIO, Calif., Feb. 28 /PRNewswire-FirstCall/ -- ICB Financial (OTC Bulletin Board: ICBN)
Letter to Our Customers and Shareholders
In 2009, even the strongest banks faced the challenges of a deepening recession. While ICB Financial ("ICB") remained profitable on a month-to-month basis for most of the year, write-downs, loan loss provisions, and FDIC expenses in the fourth quarter had a substantial impact on our year-end net income, resulting in a higher than expected loss. However, the ICB franchise continues to be financially strong while we implement multiple steps to strengthen our balance sheet.
In a difficult economy, we were able to achieve double-digit growth in total assets as well as total deposits. Assets grew 12.8% to $285.6 million from $253.1 million at year end 2008. Deposits grew 19.2% to $252.5 million from $211.9 million at year end 2008. This was exceptional growth considering the economy and the growth of other banks in our peer group. Despite a declining interest rate environment we were able to maintain a healthy annualized net interest margin of 4.45%.
ICB also compares very favorably to its peer group of banks in risk-factor measurement, which is indicative of a bank's credit troubles. ICB has a Texas Ratio of 19%, coming in significantly lower than the State of California bank average of 35% or the Western States bank average of 43%.
Our area's economic conditions, as well as our work to strengthen the loan portfolio, resulted in a 1.8% decrease in loan volume from the previous year. Total loans were $205.4 million, compared to $207.6 million at December 31, 2008. ICB incurred a net operating loss of $5.6 million for 2009, compared to net income of $313,000 for the year ended December 31, 2008. Several issues precipitated this loss, including a write-down of a Goodwill Asset ($2.3 million), our loan losses from the depressed business climate in the Inland Empire ($5.4 million), higher loan loss reserves ($6.9 million), and a substantial increase in FDIC insurance expense ($548,000).
This past year has shown us that to continue as one of the premier community banks in Southern California, we must not be encumbered with assets that represent past successes. The Management and the Board of Directors have thus agreed to dispose of a Goodwill Asset, which was a non-earning asset, that has been included in our assets since the consummation of a successful merger with another local community bank in 2006. Writing off this Goodwill resulted in an expense of $2.3 million in the fourth quarter of the year. Going forward, this will make the Bank's asset base more efficient and productive in the years ahead. This write-off of goodwill did not affect shareholder value since goodwill has traditionally been excluded from the calculation of tangible book value.
During 2009, we took a multi-pronged approach to strengthening our franchise with efforts that included enhancing our liquidity, increasing our ability to provide credit-worthy lending, improving our loan portfolio, and augmenting our management group:
- ICB continues to exceed the "well capitalized" benchmarks and further strengthen our capital ratios, which now stand at 13.70% for Total Risk-Based Capital (the minimum for "well-capitalized" status is 10%) and 9.27% for Tier 1 Leverage Capital (the minimum for "well-capitalized" status is 5%). By participating in the U.S. Treasury Department's TARP Capital Program, we added an additional $6 million capital cushion in early 2009. This provided ICB with the capacity to increase our lending to credit-worthy businesses. Participation in the TARP program was limited to banks considered to be strong, viable banking entities with a future of continued community service to their respective markets.
- Liquidity Management has been extremely important to the Company and recent market events continue to highlight the need for sound liquidity risk management practices. Inland Community Bank (the "Bank") has maintained strong liquidity and has improved its liquidity measures by using both traditional static balance sheet ratios with forward-looking dynamic measures and performing stress testing using stress scenarios that are outlined in the latest regulatory guidance. These stress scenarios, outlined in the regulatory guidance, are incorporated into our comprehensive Contingency Funding Plan.
- Asset quality remains a top priority for Management and, as a result of the continuous monitoring of problem assets the Bank added $6.9 million to its Allowance for Loan and Lease Losses ("ALLL") during 2009. The ratio of the ALLL to total loans for the Bank increased from 1.38% at the end of 2008 to 2.32% at the end of 2009. Until conditions improve we will be extremely conservative in positioning our ALLL to insure it is consistent with the losses inherent in our loan portfolio.
- The Bank continues to diligently increase operating efficiencies and to look for new ways to reduce overhead expenses in addition to reductions that were initially implemented in 2008. These efforts have continued to increase the income generated from operations. Additional efforts implemented by Senior Management have also helped to reduce non-interest expenses, which have again been reduced substantially in 2009. These reductions in expenses have been somewhat negated by a substantial increase in FDIC insurance expense, which increased from $158,000 in 2008 to $548,000 in 2009, and there appears to be no reduction in this expense for the next few years.
- To navigate these uncertain times, we've augmented our management group with experienced senior officers in loan and branch administration and added a respected and knowledgeable former Inland Empire banker to our Board of Directors.
As a true community bank, we're committed to providing comprehensive banking services to businesses that have looked to us as the foundation of their success. Our growth in our deposit base demonstrates the confidence that our customers place in ICB and we will build on this trust into 2010 and beyond. Every member of our team has worked hard to ensure that our customers receive the best service possible and to assure each customer that any deposit made in Inland Community Bank, regardless of size, is safe and sound. We continue to emphasize the basic fundamentals of banking and managing the risks associated with business banking.
We move into 2010 confident that we fully have the capabilities and strategies in place to expand the ICB franchise as the business climate turns more positive. The ICB team of banking professionals continues to focus on building a foundation of strength and safety for our customers and shareholders, supported by a great team of employees. We're working hard to assure that an investment in ICB Financial will be rewarding in the years to come.
Thank you once again for your support during this difficult time as we remain focused on meeting the needs of our business community and growing our franchise.
James S. Cooper
President and Chief Executive Officer
Financial Performance highlights for the year and quarter ended December 31, 2009 include:
- Total assets increased 12.8%; $285.5 million as of December 31, 2009 compared to $253.1 million at December 31, 2008, an increase of $32.4 million.
- Total loans at December 31, 2009 were $205.4 million compared to $207.6 at December 31, 2008.
- Total deposits at December 31, 2009 were up 19.2% or $40.6 million compared to December 31, 2008.
- The Efficiency ratio for 2009 was 97.5% which was up from 72.9% in 2008, as the result of several issues including the write-off of goodwill in the amount of $2.3 million and increased FDIC insurance assessments totaling $548,000.
- Non-performing assets increased to 3.4% of total assets at December 31, 2009 compared to 2.4% at December 31, 2008.
- Provision for loan and lease losses was $7,471M for 2009 verses $2,700M for 2008 for the Company.
- Gross interest revenue of $13.8 million for 2009 compared to $14.6 million for 2008, a decrease of 6.0%.
- Important Bank Ratios at December 31, 2009:
- Total Risk-Based Capital – 13.70%; minimum for well capitalized under regulatory guidelines is 10.00%.
- Tier 1 Leverage Capital – 9.27%; minimum for well capitalized under regulatory guideline is 5.0%
- ALLL as a percent of loans (excludes loans held for sale) – 2.31%.
- Net charge-offs for 2009 as a percent of 2009 average total loans – 2.85%
- Total OREO, Delinquent and Non-accrual loans (NPA's) to total risk based capital – 27.4%, which is also equivalent to 4.0% of total loans at 12-31-09.
- Average Net Interest Margin for 2009 was a healthy 4.45%.
CONTACT: |
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Mr. James S. Cooper |
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President and CEO |
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ICB Financial |
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909-483-8880 |
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Consolidated Balance Sheets
Unaudited - Internally Prepared
(in thousands)
Dec 2008 to
As of As of Dec 2009 As of
Dec 31, Dec 31, Percentage Dec 31,
2009 2008 Change 2007
------- ------- --------- -------
Assets
Total cash and
due from banks
Noninterest-bearing
balances, coin and currency $7,626 $6,111 24.8% $9,355
Interest bearing balances 31,059 9,979 211.2% 13,103
Held to maturity
securities - held to
maturity - 3,001 -100.0% 8,583
Available for
sale securities 21,097 4,099 414.7% 848
Federal funds sold - - 0.0% 7,885
Loans held for sale (at the
lower of cost or market) 17,289 9,520 81.6% -
Loans , net of
unearned income 188,155 198,125 -5.0% 188,690
Less: Allowance
for loan losses (4,133) (2,627) 57.3% (1,974)
------ ------ ---- ------
Net loans 201,311 205,018 -1.8% 186,716
------- ------- ---- -------
Premises and
fixed assets - net 9,834 10,181 -3.4% 10,281
Other real estate owned
and investments in OREO 94 1,688 -94.4% 600
Intangible assets: Goodwill - 2,280 -100.0% 2,280
Core deposit
intangibles 990 1,094 -9.5% 1,396
Other assets 13,549 9,679 40.0% 8,508
------ ----- ---- -----
Total Assets $285,560 $253,130 12.8% $249,555
======== ======== ==== ========
Liabilities and Capital
Deposits
Noninterest-bearing $60,152 $57,277 5.0% $68,177
Interest bearing 192,390 154,576 24.5% 147,315
------- ------- ---- -------
Total deposits 252,542 211,853 19.2% 215,492
------- ------- ---- -------
Advances from FHLB
San Francisco - 9,000 -100.0% -
Other liabilities 1,537 1,504 2.2% 1,652
----- ----- --- -----
Total liabilities 254,079 222,357 14.3% 217,144
------- ------- ---- -------
Equity capital
Preferred Stock 6,300 - -
Common stock 5,121 5,108 0.3% 5,459
Surplus 21,641 21,611 0.1% 23,246
Retained earnings (1,585) 3,998 -139.6% 3,714
Accumulated other
comprehensive income (loss) 4 56 -92.9% (8)
--- --- ----- ---
Total Equity Capital 31,481 30,773 2.3% 32,411
------ ------ --- ------
Total Liabilities
and Equity Capital $285,560 $253,130 12.8% $249,555
======== ======== ==== ========
Consolidated Income Statements
Unaudited - Internally Prepared
(in thousands)
Year Year
ended ended
Dec 31, Dec 31, Percentage
2009 2008 Change
-------- -------- ----------
Interest Income on:
Total interest and fees on
loans $13,065 $13,911 -6.5%
Interest on investment
securities 459 376 18.1%
Interest on federal funds sold 3 108 -3500.0%
Other interest income 320 284 11.3%
--- --- ----
Total interest income 13,847 14,679 -6.0%
------ ------ ----
Interest Expense:
Interest paid on deposits 3,535 4,391 -24.2%
Total interest expense 3,535 4,391 -24.2%
----- ----- -----
Net interest income $10,312 $10,288 0.2%
Provision for Possible Loan
Losses 7,471 2,700 63.9%
----- ----- ----
Net Interest Income after ALLL
Provision 2,841 7,588 -167.1%
Total non-interest income 1,924 1,530 20.5%
Total non-interest expense 11,928 8,616 27.8%
------ ----- ----
Income before income taxes (7,163) 502 107.0%
Applicable income taxes
expense (benefit) (1,903) 189 109.9%
------ --- -----
Net Income (loss) before
preferred dividend (5,260) 313 106.0%
Preferred stock dividend
expense (319) - 100.0%
---- --- -----
Net income $(5,579) $313 105.6%
======= ==== =====
SELECTED FINANCIAL RATIOS AND PER SHARE DATA
Per Common Share Data
Earnings per share - basic (1.09) 0.06 -1880.1%
Earnings per share - diluted (1.06) 0.06 -1914.4%
Actual shares outstanding 5,120,861 5,107,731 0.3%
Weighted Average Shares
Outstanding 5,114,296 5,195,592 -1.6%
Shares outstanding - (fully
diluted) 5,257,566 5,351,992 -1.8%
Financial Ratios
Return on Average Assets -1.99% 0.13% -1630.8%
Return on Average Equity -18.35% 0.99% -1953.5%
Yield on Earning Assets 5.71% 6.73% -15.2%
Efficiency ratio 97.50% 72.90% 33.7%
Loan to deposit ratio 81.30% 98.00% -17.0%
ALLL as a percent of Total
Loans (Includes OBS reserve) 2.09% 1.38% 51.4%
Nonperforming loans - in
thousands $9,825 $5,952 65.1%
Nonperforming loans as a
percent of total assets 3.44% 2.35% 46.4%
Book value per share $4.92 $6.02 -18.3%
Tangible book value per share $4.72 $5.53 -14.6%
4th 4th
Quarter Quarter Percentage
2009 2008 Change
---- ---- ------
Interest Income on:
Total interest and fees on
loans $3,268 $3,427 -4.6%
Interest on investment
securities 124 89 39.3%
Interest on federal funds sold - 10 -100.0%
Other interest income 74 65 13.8%
-- -- ----
Total interest income 3,466 3,591 -3.5%
----- ----- ----
Interest Expense:
Interest paid on deposits 813 1,055 -22.9%
Total interest expense 813 1,055 -22.9%
--- ----- -----
Net interest income 2,653 2,536 4.6%
Provision for Possible Loan
Losses 4,845 1,055 359.2%
----- ----- -----
Net Interest Income after ALLL
Provision (2,192) 1,481 -248.0%
Total non-interest income 513 395 29.9%
Total non-interest expense 5,212 2,129 144.8%
----- ----- -----
Income before income taxes (6,891) (253) 2623.7%
Applicable income taxes
expense (benefit) (1,788) (91) 1864.8%
------ --- ------
Net Income (loss) before
preferred dividend (5,103) (162) 3050.0%
Preferred stock dividend
expense (97) - 100.0%
--- --- -----
Net income $(5,200) $(162) 3109.9%
======= ===== ======
SELECTED FINANCIAL RATIOS AND PER SHARE DATA
Per Common Share Data
Earnings per share - basic (1.02) (0.03) -3101.6%
Earnings per share - diluted (1.02) (0.03) -3284.8%
Actual shares outstanding 5,120,861 5,107,731 0.3%
Weighted Average Shares
Outstanding 5,114,296 5,195,592 -1.6%
Shares outstanding - (fully
diluted) 5,257,566 5,351,992 -1.8%
Financial Ratios
Return on Average Assets -7.36% -0.50% -1372.0%
Return on Average Equity -59.56% -0.50% -11812.0%
Yield on Earning Assets 5.84% 6.46% -9.6%
Efficiency ratio 164.63% 72.60% 126.8%
Loan to deposit ratio 81.30% 98.00% -17.0%
ALLL as a percent of Total
Loans (Includes OBS reserve) 2.09% 1.38% 51.4%
Nonperforming loans - in
thousands $9,825 $5,952 65.1%
Nonperforming loans as a
percent of total assets 3.44% 2.35% 46.4%
Book value per share $4.92 $6.02 -18.3%
Tangible book value per share $4.72 $5.53 -14.6%
SOURCE ICB Financial
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