Commencement Bank : Fourth Quarter Financials

Commencement Bank Fourth Quarter Financials

Jan 26, 2018

Commencement Bank (OTCQX:CBWA) announced a pre-deferred tax asset (DTA) adjusted net income of $3,041,000 for 2017. Like most banks across the country, net income was impacted by a deferred tax asset (DTA) revaluation, resulting in a one-time charge of $940,000. Although the decreased corporate tax rate from 34% to 21% will have a positive impact on future earnings, the DTA revaluation requires the Bank adjust 2017 earnings and report adjusted net income of $2,102,000.

The adjusted 2017 net income of $2,102,000 and $0.61 per share still reflects an increase compared to $1,168,000 and $0.48 per share for 2016. The Bank's total assets for 2017 were $328 million compared to $343.5 million for 2016. Total loans for 2017 increased to $254.7 million compared to $232.7 million one-year earlier. Total deposits decreased to $283.9 million compared to $300.1 million for 2016 resulting from a concerted effort to eliminate institutional and brokered deposits while increasing core customer deposits and decreasing cost of funds. Demand deposits, or non-interest-bearing deposits, improved by 16% when compared to the same period one-year earlier.

Additionally, the Bank has announced a 10% stock dividend payable on February 15, 2018 to shareholders of record on January 30, 2018. Fractional shares will be paid in cash based on the closing price of the stock on the record date.

2017 Financial Highlights:

• Total loans grew 9% to $254.7 million compared to $232.8 million for the same period 2016.
• Non-interest-bearing deposits increased 16% compared to the same period one-year earlier.
• Net interest margin increased to 4.23% compared to 3.95% for the same period in 2016.
• Tangible book value per share increased to $10.41 from $9.74 one-year earlier.
• The efficiency ratio was 62.06% for the year compared to 78.79% for 2016.
• The Texas Ratio, a measurement of nonperforming assets to capital, was 0.01% for 2017 compared to 0.00% the prior year.
• All capital ratios continued to exceed regulatory requirements

'This was an outstanding year for the Bank. We saw strong growth in loans and favorably rebalanced our asset mix. At the same time, we dramatically improved our deposit composition towards greater core deposits and relationships with our customers. Despite the deferred tax asset revaluation, we finished the year with an increase in net income and saw the Bank's stock value improve. We look forward to continued progress in 2018 as we anticipate another solid year with a positive impact on earnings from the corporate tax rate reduction,' said H.R. 'Hal' Russell, Chief Executive Officer.

Commencement Bank's 2017 Annual Meeting will be held on Tuesday, April 17, 2018.

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