COVID-19 information and branch updates

Commencement Bank Third Quarter Financials

Commencement Bancorp, Inc. (OTCQX:CBWA) reported quarterly net income of $1.2 million or $0.29 per share for the quarter ending September 30, 2020, compared to $1.5 million and $0.37 per share for third quarter 2019.

Net interest income after provision for credit losses decreased by 13% compared to one year prior. Contribution to the allowance for loan and lease losses (ALLL) were made in both second and third quarters of 2020. These contributions reflect increased risks to commercial loans as a result of COVID-19 rather than specifically identified credits. Total assets increased 36% from $375.4 million in third quarter 2019 to $511.4 million in third quarter 2020.

Total loans, aside from PPP loans, increased $24.1 million, or 8%, to $310.3 million compared to $286.2 million in third quarter 2019. The SBA Paycheck Protection Program (PPP) loans totaled $114.5 million. Nonperforming assets to total assets were 0.5% and the Bank’s Texas Ratio, a measurement of problem loans and bank-owned properties to capital, decreased to 4.8%.

The Bank processed over 500 PPP loans for both existing and new clients. Net interest margin was impacted by the low yield of 1% on PPP loans. The Bank’s lending practices remained conservative and asset quality remained strong. Traditionally, the Bank has not invested in the leisure/travel industry; therefore, the effects of COVID-19 on this specific industry has not negatively impacted the Bank. The Bank’s loan portfolio remained well-diversified at 42% commercial real estate, 54% commercial, and 4% consumer and other. Industry concentrations are also monitored and remained well-diversified. Through third quarter 2020, the portfolio remained healthy as requests for payment deferrals slowed significantly since the beginning of the pandemic. Management remains optimistic that borrowers are recovering from the early onset of COVID-19 and the economic shutdown.

The Bank has begun processing PPP forgiveness applications from borrowers and has started to receive forgiveness funds from the SBA. Management anticipates this activity to increase over the coming months. The balance of unearned processing fees will be recognized as PPP loan balances are forgiven.

Total deposits increased by $132.8 million, or 41%, from third quarter 2019. New business relationships formed during the PPP loan process contributed to overall growth in deposits. The total number of business checking and money market accounts increased by 23% and 21%, respectively, when compared to year-end 2019. This growth also prompted an overall increase in online and electronic services.

“The Bank’s financial performance this quarter is a direct reflection of our organization’s commitment to serving our communities by supporting the needs of local businesses. The Paycheck Protection Program and the hard work and dedication of our staff has opened the door for us to secure new relationships with clients who were left underserved by their financial institutions. We are heading into the last quarter of 2020 with positive momentum and a strong operating strategy,” said John Manolides, President & Chief Executive Officer.


2020 Third Quarter Financial Highlights:

  • Total assets increased $136 million, or 36%, to $511.4 million at September 30, 2020 from $375.4 million for the period ending September 30, 2019.
  • Net income of $1.2 million, or $0.29 per share, was recorded for the quarter ending September 30, 2020 versus $1.5 million, or $0.37 per share, in third quarter 2019.
  • Total loans increased $138.6 million, or 48%, compared to one year prior. SBA Paycheck Protection Program (PPP) loans totaled $114.5 million.
  • Total deposits increased by $132.8 million, or 41%, from third quarter 2019. Funding of PPP loans, along with new banking relationships earned through participation in this program, accounted for the majority of overall growth.
  • Tangible book value per share increased to $11.75 for the quarter from $10.76 one year earlier.
  • Nonperforming assets to total assets remained stable at 0.5%.

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Forward-Looking Statement Safe Harbor: This news release contains comments or information that constitutes forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Forward-looking statements describe Commencement Bank’s projections, estimates, plans and expectations of future results and can be identified by words such as “believe,” “intend,” “estimate,” “likely,” “anticipate,” “expect,” “looking forward,” and other similar expressions. They are not guarantees of future performance. Actual results may differ materially from the results expressed in these forward-looking statements, which because of their forward-looking nature, are difficult to predict. Investors should not place undue reliance on any forward-looking statement, and should consider factors that might cause differences including but not limited to the degree of competition by traditional and nontraditional competitors, declines in real estate markets, an increase in unemployment or sustained high levels of unemployment; changes in interest rates; greater than expected costs to integrate acquisitions, adverse changes in local, national and international economies; changes in the Federal Reserve’s actions that affect monetary and fiscal policies; changes in legislative or regulatory actions or reform, including without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act; demand for products and services; changes to the quality of the loan portfolio and our ability to succeed in our problem-asset resolution efforts; the impact of technological advances; changes in tax laws; and other risk factors. Commencement Bank undertakes no obligation to publicly update or clarify any forward-looking statement to reflect the impact of events or circumstances that may arise after the date of this release.