ICB Financial Net Earnings Increase in the Second Quarter

ONTARIO, Calif., Aug. 3, 2011 /PRNewswire/ -- ICB Financial (OTC Bulletin Board: ICBN), today reported financial results for the three and six months ended June 30, 2011.

"We are pleased to have increased earnings compared to the first quarter despite the challenging economic conditions that continue in the Inland Empire. We currently have over $250.0 million in total assets and remain profitable with net income of $203,000 and $253,000 for the three and six month periods ended June 30, 2011, respectively.  In this margin squeezed environment, we are pleased to say that our net interest margin remains among the top 25% of banks in our peer group at 4.16% and we continue to control costs as evidenced by a 3% reduction in overall non-interest expenses compared to the same six month period last year.  We believe our efforts to provide a safe and sound home for our customers' deposits will enable us to build a stronger and more profitable organization, which will position us for growth in the future," stated James S. Cooper, President and Chief Executive Officer of ICB Financial.

Mr. Cooper states, "We continue to maintain our aggressive straightforward approach to problem credits resulting in a marginal increase of $322,000 or 3.51% in non-performing loans during the first six months of this year.  And, we have increased our ratio of allowance for loan losses to total gross loans to 2.62% for the six months of 2011 compared to 2.57% at December 31, 2010. In addition, our capital ratios continue to be more than one and one half times the regulatory requirements to be considered 'well capitalized.' At June 30, 2011, the Bank's total risk based capital ratio was 17.22% compared to the regulatory requirement of 10.0%."

Finally, Mr. Cooper says, "We continue to develop our subsidiary franchise and are excited to be opening a loan and deposit production office in the Pasadena area."

2011 Second Quarter and Year-To-Date Highlights

• The Bank's total risk-based capital ratio was 17.22% at June 30, 2011, which is above the regulatory standard of 10.00% for "well-capitalized" financial institutions. The Bank's capital does include funding received in connection with TARP.
• Cash and cash equivalents and investments were basically unchanged totaling $79.1 at June 30, 2011 compared to $79.8 at December 31, 2010.
• Gross loans decreased $9.5 million, or 5.6%, to $159.0 million at June 30, 2011 from $168.5 million at December 31, 2010 primarily due to paydowns and loan amortization.
• As of June 30, 2011, the allowance for loan losses was $4.2 million, or 2.62% of gross loans, compared to $4.3 million, or 2.57% of gross loans, at December 31, 2010.
• Non-performing loans at June 30, 2011 totaled $9.5 million compared to $9.2 million at December 31, 2010. The marginal increase was due to a limited number of new loans falling into this category, which was offset against paydowns on the current portfolio.  The Bank continues to work diligently on its credits and limit the losses attributable to non performing loans.
• Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits, savings and money market deposits, were $167.4 million and $169.7 million at June 30, 2011 and December 31, 2010, respectively, representing a decrease of $2.3 million, or 1.3%. At June 30, 2010, total core deposits were $176.5 million, resulting in a decrease of $9.1 million, or 5.2%, over the course of the last year.
• Net interest margin has remained constant at 4.16% for the three and six months ended June 30, 2011, compared to 4.55% and 4.34% for the same periods last year.
• For the three and six months ended June 30, 2011, the Company recorded net income of $203,000, or $0.04 per diluted share, and $253,000, or $0.05 per diluted share, respectively, compared to net income of $371,000, or $0.07 per diluted share, and $558,000, or $0.11 per diluted share, for the same periods last year.

Capital Adequacy

At June 30, 2011, the Company's stockholders' equity totaled $32.5 million compared to $31.7 million at December 31, 2010. The increase was primarily related to an increase in unrealized gain on our available for sale investment portfolio and net income earned for the six months ended June 30, 2011. At June 30, 2011, the Bank's total risk-based capital ratio, tier 1 capital ratio, and leverage ratio were 17.22%, 15.95%, and 10.95%, respectively, and were well above the regulatory requirements for "well-capitalized" financial institutions of 10.00%, 6.00%, and 5.00%, respectively.

Balance Sheet

Total assets decreased 3.7%, or $9.9 million, to $258.2 million at June 30, 2011, from $268.1 million at December 31, 2010. The decrease in total assets was primarily attributable to payoffs and loan amortization.  We did see an increase in cash and equivalents but that was offset by a decrease in the investment portfolio.  Cash and cash equivalents increased $4.5 million from $37.7 million at December 31, 2010 to $42.2 million at June 30, 2011. The increase in cash and cash equivalents was primarily attributable to a couple of securities in the investment portfolio being called.  Gross loans at June 30, 2011 were $159.0 million, representing a decrease of $9.5 million, or 5.6%, from $168.5 million at December 31, 2010. The decrease in gross loans was primarily attributable to loan amortization and paydowns and, to a lesser extent, loan charge-offs.

Total liabilities decreased by $10.7 million to $225.7 million as compared to $236.4 million at December 31, 2010. This decrease was primarily due to a $12.1 million decrease in other time deposits, which rolled off the books at a higher than current market rate of interest. At June 30, 2011, total deposits were $224.4 million compared to $235.0 million at December 31, 2010, representing a decrease of 4.5% or $10.6 million. This decrease was primarily due to the rolling off of some large time deposits whose rates were well above the current market rate.  There was a decrease in non-interest bearing demand deposits, and interest bearing deposits of $752,000 and $1.5 million, respectively, partially offset by an increase in certificates of deposit greater than $100,000 of $3.8 million. The increase in time deposits greater than $100,000 was attributable to deposits from a public agency in our service area. Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits and savings and money market deposits, were $167.4 million and $169.7 million at June 30, 2011 and December 31, 2010, respectively, representing a decrease of $2.3 million, or 1.3%.

Credit Quality

Allowance and Provision for Loan Losses

The allowance for loan losses ("ALL") was $4.2 million, or 2.62% of our total loan portfolio, at June 30, 2011 as compared to $4.3 million, or 2.57% of our total loan portfolio, at December 31, 2010. The provision for loan losses was $175,000 and $325,000 for the three and six months ended June 30, 2011, compared to $100,000 and $200,000, respectively, for the same periods last year. During the three and six months ended June 30, 2011, we had net charge-offs of $245,000 and $492,000, respectively, compared to $153,000 and $158,000 during the same periods last year. Management believes that the ALL as of June 30, 2011 and December 31, 2010 was adequate to absorb known and inherent risks in the loan portfolio.

Non-Performing Assets

Non-performing loans totaled $9.5 million and $9.2 million at June 30, 2011 and December 31, 2010, respectively. At June 30, 2011, non-accrual loans consisted of 15 commercial loans totaling $668,000, 15 commercial real estate mortgage loans totaling $8.7 million, and 3 loans secured by residential junior mortgage loans totaling $84,000. As a percentage of our total loan portfolio, the amount of non-performing loans was 5.97% and 5.45% at June 30, 2011 and December 31, 2010, respectively.

"I'm encouraged by the progress we've made in connection with resolving our non-performing assets, even though the balances have elevated $300,000 since the beginning of the year. We hope to build on this progress during the second half of the year by continuing to expeditiously resolve these credits, while limiting the impact to our current earnings," stated Mr. Cooper.

Net Interest Income and Margin

For the three and six months ended June 30, 2011, average interest-earning assets were $229.3 million and $230.9 million, respectively, generating net interest income of $2.4 million and $4.8 million, respectively. For the three and six months ended June 30, 2010, average interest-earning assets were $232.4 million and $240.2 million, generating net interest income of $2.6 million and $5.2 million, respectively.

The Company's net interest margin for the three and six months ended June 30, 2011 was 4.16% compared to 4.55% and 4.34% for the same periods last year, representing a decline of 39 basis points (bps) and 18 bps, respectively. The decrease for the three and six month periods was primarily due to a decrease in the yield on earning assets of 83 bps and 61 bps, respectively, which was offset by a decline in the cost of interest bearing deposits and borrowings of 44 bps for both the three and six months ended June 30, 2011.

The decrease in yield on earning assets for the three and six months ended June 30, 2011 compared to the same periods in 2010 was primarily the result of an increase in the average balance of lower yielding interest earning assets away from the loan portfolio as loans paid down.  For the three and six months ended June 30, 2011, the average balance of interest bearing deposits at other financial institutions was $33.2 million and $29.2 million compared to $7.3 million and $12.9 million for the same periods ending June 30, 2010, which has significantly improved our liquidity position.  During the six month period ended June 30, 2011 the average balance of other time deposits was $40.3 million compared to $60.9 million in 2010.

Non-Interest Income

Non-interest income was $556,000 for the quarter ended June 30, 2011 compared to $479,000 for the quarter ended June 30, 2010. For the three months ended June 30, 2011, the increase in non-interest income was primarily due to the gain on sales of SBA loans, sales of OREO and a recovery of $51,000 of an operational loss in a prior period.

For the six months ended June 30, 2011, non-interest income was $938,000 compared to $1,038,000 for the same period last year. The decrease in non-interest income of $100,000 for the six months ended June 30, 2011 as compared to the same period in the prior year was primarily due to a decrease in loan origination fees.

Non-Interest Expense

Non-interest expense was $2.4 million for the three months ended June 30, 2011 compared to $2.4 million for the three months ended June 30, 2010. Non-interest expense was $4.9 million for the six months ended June 30, 2011 compared to $5.1 million for the six months ended June 30, 2010, representing a decrease of approximately $164,000, or 3.2%.

Income Tax Provision

Income tax provision was $208,000 for the three months ended June 30, 2011 compared to $250,000 for the three months ended June 30, 2010. Income tax provision was $298,000 for the six months ended June 30, 2011 compared to $393,000 for the six months ended June 30, 2010, representing a decrease of $95,000, or 24.2%.

Net Income

For the three months ended June 30, 2011 and 2010, the Company recorded net income of $203,000, or $0.04 per diluted share, and $371,000, or $0.07 per diluted share, respectively. During the three months ended June 30, 2011, net income was negatively impacted by an increase of $75,000 in the provision for loan losses as well as reduced interest income due to lower average loan balances.

For the six months ended June 30, 2011 and 2010, the Company recorded net income of $253,000, or $0.05 per diluted share, and $558,000, or $0.011 per diluted share, respectively. During the six months ended June 30, 2011, net income was negatively impacted by an increase in the provision for loan losses of $125,000. There was also a decline in interest income of $962,000 and partially offset by a decrease in interest expense of $624,000 as compared to the same period last year.

Safe Harbor

Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can find many (but not all) of these forward-looking statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans," "would," "may" or other similar expressions in this press release. These statements are based upon our current expectations and speak only as of the date hereof. Forward-looking statements are subject to certain risks and uncertainties that could cause our actual results, performance or achievements to differ materially and adversely from those expressed, suggested or implied herein. Accordingly, investors should use caution in relying on forward-looking statements to anticipate future results or trends. These risks and uncertainties include, but are not limited to: (1) the impact of changes in interest rates, (2) a further decline in economic conditions, (3) increased competition among financial service providers, and (4) government regulation. The Company does not undertake, and specifically disclaims, any obligation to revise or update any forward-looking statements for any reason.

CONTACT:  Mr. James S. Cooper
President and CEO
ICB Financial
3999 Inland Empire Blvd.
Ontario, CA
91764
909-481-8706, Ext. 280

SUMMARY FINANCIAL INFORMATION

The following tables present relevant financial data from the Company's recent performance (dollars in thousands, except per share data):

SOURCE ICB Financial