TACOMA, WA / ACCESSWIRE / July 31, 2020 / Commencement Bank (OTCQX:CBWA) reported a net income of $580,000 or $0.14 per share for the quarter ending June 30, 2020. The significant factor in the reduction in net income was due to an additional contribution to the reserve for potential loan losses. At this point, no loans have defaulted due to the pandemic; however, it is logical to assume that the near stoppage of economic activity through the COVID-19 pandemic could have an impact on future loan losses.
During second quarter 2020, the Bank's balance sheet grew to unprecedented numbers as a result of our Paycheck Protection Program (PPP) activities. Commencement processed over 500 loans for approximately $115 million, servicing existing clients that requested a loan along with many other businesses that were left unserved by their previous banks. Federal Funds Sold grew appreciably from the additional deposits of the PPP loan fundings, additional deposit inflows from newly acquired clients, and the proceeds of the Paycheck Protection Program Liquidity Facility (PPPLF).
As a reflection of the PPP below market interest rate loans and effects of the emergency rate decreases implemented by the Federal Open Market Committee in March, net interest margin remained under pressure. Cost of funds were reduced during the quarter with further improvement expected in the third quarter. Margins are anticipated to increase as the PPP loans are forgiven and constitute a smaller percentage of the loan portfolio. The forgiveness process will also allow for increased recognition of processing fees, which are currently being amortized over the life of the PPP loans.
Despite the increase in asset size, capital remained very strong and significantly above regulatory definitions of well-capitalized.
In June, Commencement Bank shareholders approved the formation of a new bank holding company, Commencement Bancorp, Inc. Effective during third quarter 2020, Commencement Bancorp, Inc. began trading under the Bank's former ticker symbol CBWA on the OTC Markets premium trading platform, OTCQX. It is anticipated that this will aid the organization in its strategic growth initiatives and provide better access to capital markets.
"This has been an unprecedented quarter due to the impact COVID-19 has had on our economy. I am extremely proud of the dedication our team has shown as they truly embraced the essence of a community bank and provided over 500 Paycheck Protection Program loans to existing clients as well as many businesses whose banks failed to provide them with one. I admire the effort made by our staff as they assisted small businesses, their employees, and families through a time of great uncertainty," said John Manolides, President & Chief Executive Officer.
For further discussion, please contact the following:
John E. Manolides - President & Chief Executive Officer Direct Phone: (253)284-1802
Tom Dhamers - Executive Vice President & Chief Financial Officer Direct Phone: (253)284-1803
About Commencement Bank
Commencement Bank, headquartered in Tacoma, Washington, was formed in 2006 to provide traditional, reliable, and sustainable banking in Pierce County, South King County, Thurston County and the surrounding areas. The team of experienced banking experts focuses on personal attention, flexible service, and building strong relationships with customers through state-of-the-art technology as well as traditional delivery systems. As a local bank, Commencement Bank is deeply committed to the community.
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.
SOURCE: Commencement Bank
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