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Focus Business Bank Announces Unaudited Financial Results for Quarter Ending June 30, 2014

SAN JOSE, CA -- (Marketwired) -- 07/30/14 -- Focus Business Bank (OTCQB: FCSB) announced unaudited financial results for the quarter and six-months ended June 30, 2014. Net income for the quarter and six-months ended June 30, 2014 were $313,000 ($0.11/per diluted share) and $565,000 ($0.19/per diluted share), respectively, compared to $162,000 ($0.06/per diluted share) and $313,000 ($0.11/per diluted share) for the quarter and six-months ending June 30, 2013, respectively. The increases in net income for the quarter and six-months ending June 30, 2014 compared to the same periods in 2013 were primarily attributable to growth in net interest income resulting from a significant increase in earning assets and an increase in non-interest income from gains on sales of SBA loans, partially offset by increases in operating expenses, the provision for loan losses and income taxes.

Chairman and Chief Executive Officer Richard L. Conniff commented on the June 30, 2014 results, "The Bank has made strategic investments to support growth in core deposits, which we believe will significantly enhance the future value of our franchise. In the two year period from June 30, 2012 to June 30, 2014, deposits grew from $144 million to $340 million, an increase of 137%. As these deposits continue to be carefully deployed into loans and investments, we expect the core earnings of the Bank should continue to improve."

Highlights of the Quarter Ended June 30, 2014

  • Total assets of $369.4 million at June 30, 2014 were an all time record high and represented an increase of 42% over June 30, 2013.
  • Total loans of $145.6 million at June 30, 2014 were 21% above June 30, 2013.
  • Interest bearing deposits of $244.2 million at June 30, 2014 increased 50% from June 30, 2013. The increase is primarily related to growth in the Bank's specialty deposit businesses including services to condominium homeowner associations and public benefit companies.
  • Non-interest bearing demand deposits of $96.2 million at June 30, 2014 represent a 37% increase over June 30, 2013 and reflect growth in business banking relationships.

Assets and Liabilities

As a result of deposit growth, the Bank continues to maintain high levels of liquidity. The Bank's liquid assets, consisting of cash and due from banks, federal funds sold and investment securities, totaled $217.8 million, or 59% of total assets, at June 30, 2014 compared to $135.6 million, or 52% of total assets, at June 30, 2013. Although loans grew 21% from June 30, 2013 to June 30, 2014, the loan to deposit ratio at June 30, 2014 was 43% compared to 49% at December 31, 2013 and 51% at June 30, 2013.

Mr. Conniff noted, "The Santa Clara County economy remains one of the strongest in the country. It is also one of the most competitive banking markets with national, regional and community banks abundantly represented. Focus Business Bank competes by being tightly focused on closely-held local businesses seeking a long term banking relationship tailored to their specific needs. We continue to add to our business banking team and are well positioned to support the needs of our clients."

Net Interest Income

Net interest income for the quarter and six-months ended June 30, 2014 was $2.1 million and $4.1 million, respectively, compared to $1.6 million and $3.2 million for the same periods ended June 30, 2013. The increase in net interest income was directly related to the higher volume of earning assets funded by growth in deposits. The increase in net interest income attributable to higher volumes of earning assets was partially offset by decreases in the net interest margin related to a lower loan to deposit ratio and market interest rates which remain at historically low levels. The net interest margin for the quarter ended June 30, 2014 was 2.62% compared to 2.85% for the quarter ended June 30, 2013.

Non-interest Income

Non-interest income includes service charges and fees, securities gains and losses, SBA loan sales gains and loan servicing fees. Total non-interest income was $519,000 and $1,044,000, respectively, for the quarter and six-months ended June 30, 2014 compared to $326,000 and $596,000 for the same periods ending June 30, 2013. Most of the increase in non-interest income for the quarter and six-months ended June 30, 2014 compared to the same periods the previous year relates to gains on the sale of SBA loans in the secondary market. Gains from the sale of SBA loans totaled $366,000 and $678,000, respectively, for the three and six month periods ended June 30, 2014, respectively, compared to $280,000 and $448,000 for the same periods ending June 30, 2013. Focus Business Bank is an SBA Preferred Lender and the origination and sale of SBA loans has been a material and recurring source of revenue for many years.

Non-Interest Expense

Non-interest expense for the quarter and six-months ended June 30, 2014 was $2.0 million and $4.1 million, respectively, compared to $1.7 million and $3.3 million for the same periods ended June 30, 2013. The increase in non-interest expense is primarily attributable to the Bank's growth. FTEs increased from 29 at June 30, 2013 to 35 at June 30, 2014. The increase in headcount also resulted in higher occupancy expense as the Bank expanded its leased premises in mid-2013.

Asset Quality

At June 30, 2014, the Bank had $143,000 in non-performing loans compared to $1.1 million at December 31, 2013 and no non-performing loans at June 30, 2013. The provision for loan losses for the quarter and six-months ended June 30, 2014 was $75,000 and $175,000, respectively, compared to no provision for loan losses in 2013. At June 30, 2014, the reserve for loan losses was 1.74% of total loans, compared to 1.82% at December 31, 2013 and 2.12% at June 30, 2013.


Focus Business Bank has capital ratios in excess of the minimum regulatory requirements for a bank to be considered well capitalized. At June 30, 2014, the total risk-based capital ratio was 13.73% compared to the regulatory well capitalized minimum of 10%. The Bank has not participated in any government sponsored capital programs, including the Troubled Asset Relief Program ("TARP") or the Small Business Lending Fund ("SBLF").

About Focus Business Bank

Focus Business Bank is dedicated to meeting the banking needs of closely-held businesses and professionals in Santa Clara County. The Bank also serves not-for-profit organizations and condominium homeowner associations with expertise, market knowledge, products and services tailored to these specific industries. The Bank specializes in business cash management services and commercial loans of all types. The Bank's office is located at 10 Almaden Boulevard in downtown San Jose, California.

Forward-Looking Statements

This release may contain forward-looking statements, such as, among others, statements about plans, expectations and goals concerning future growth and performance. Forward-looking statements are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates, inflation, government regulations and general economic conditions, including the real estate market in California and other factors beyond the Bank's control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. The Bank undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

                             Focus Business Bank
                   Unaudited Summary Financial Information

                                            As of
                                                                 12 Month %
BALANCE SHEET                 30-Jun-14   31-Dec-13   30-Jun-13    Change
($ in ',000s except per
 share data)
Cash and due from banks
 Interest bearing            $  100,031  $   89,507  $   71,656          40%
 Non-interest bearing            21,891      13,484      23,061          -5%
Federal funds sold                  501         501         505          -1%
Investment securities            95,381      63,293      40,400         136%
Loans                           145,647     140,342     119,907          21%
 Allowance for loan losses       (2,527)     (2,548)     (2,546)         -1%
                             ----------  ----------  ----------
  Net Loans                     143,120     137,794     117,361          22%
Other assets                      8,502       8,080       7,688          11%
                             ----------  ----------  ----------
TOTAL ASSETS                 $  369,426  $  312,659  $  260,671          42%
                             ==========  ==========  ==========
 Non-interest bearing        $   96,213  $   94,661  $   70,433          37%
 Interest bearing               244,216     190,354     162,949          50%
                             ----------  ----------  ----------
  Total deposits                340,429     285,015     233,382          46%
Other liabilities                 1,188         949       1,093           9%
                             ----------  ----------  ----------
TOTAL LIABILITIES               341,617     285,964     234,475          46%
Stockholders' equity             27,809      26,695      26,196           6%
                             ----------  ----------  ----------
 STOCKHOLDERS' EQUITY        $  369,426  $  312,659  $  260,671          42%
                             ==========  ==========  ==========
Shares outstanding            2,947,722   2,934,930   2,918,356
Book value per share
 adjusted for 5% stock
 dividend on September 27,
 2013                        $     9.43  $     9.10  $     8.98           5%
Balance Sheet Ratios
 Loan/deposit                        43%         49%         51%
 Non-interest/total deposit          28%         33%         30%
Regulatory Capital Ratios
 Tier-1 leverage                   7.39%       8.50%       9.95%
 Tier-1 risk based capital        12.48%      13.58%      15.72%
 Total risk-based capital         13.73%      14.84%      16.98%
Asset Quality Metrics
 Non-performing loans        $      143  $    1,098  $        -
 Non-performing loans/total
  loans                            0.10%       0.78%       0.00%
 ALLL/total loans                  1.74%       1.82%       2.12%

                             Focus Business Bank
               Unaudited Summary Financial Information (cont.)

                                 Quarters Ended         Six-months Ended
                             ----------------------  ----------------------
INCOME STATEMENT              30-Jun-14   30-Jun-13   30-Jun-14   30-Jun-13
                             ----------  ----------  ----------  ----------
($ in ',000s except per
 share data)
Interest income              $    2,301  $    1,794  $    4,506  $    3,492
Interest expense                    184         161         366         297
                             ----------  ----------  ----------  ----------
  Net interest income             2,117       1,633       4,140       3,195
Provision for loan losses            75           -         175           -
Non-interest income                 519         326       1,044         596
Non-interest expense              2,049       1,702       4,098       3,307
                             ----------  ----------  ----------  ----------
    Pre-tax income                  512         257         911         484
    Income taxes                    199          95         346         171
                             ----------  ----------  ----------  ----------
Net income                   $      313  $      162  $      565  $      313
                             ==========  ==========  ==========  ==========
Net income per diluted share $     0.11  $     0.06        0.19  $     0.11
Performance Metrics
  Net interest margin              2.62%       2.96%       2.68%       2.97%
  Return on average assets         0.36%       0.26%       0.34%       0.27%
  Return on average equity         4.56%       2.46%       4.17%       2.39%

Richard L. Conniff
Chairman and Chief Executive Officer
Email Contact

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