Suncrest Bank Reports Third Quarter Earnings.

Published: Oct. 26, 2021 at 4:00 PM CDT

SACRAMENTO, Calif. and VISALIA, Calif., Oct. 26, 2021 /PRNewswire/ -- Suncrest Bank (OTCQX: SBKK) today reported unaudited financial results for the third quarter of 2021.

Third Quarter 2021 Highlights

  • Announced agreement to merge with CVB Financial Corp. on July 27, 2021
  • Net income of $4.3 million, an increase of $1.1 million over Q3 2020
  • Diluted EPS of $0.34, an increase of 30.8% over Q3 2020
  • New originations1 during the quarter (excluding PPP) of $32.6 million
  • QTD total loan growth (excluding PPP) of $2.0 million2
  • YTD total loan growth (excluding PPP) of $56.9 million or 8.10%
  • QTD total deposits (excluding brokered) increased $56.2 million or 4.9%
  • YTD total deposits (excluding brokered) increased $167.5 million or 16.18%
  • Return on average tangible assets of 1.27%
  • Return on average tangible equity of 12.74%
  • Efficiency ratio of 53.20%
  • Tier 1 leverage ratio of 9.50%

_______________________________

1

Includes unfunded commitments

2.

Includes a decline of approximately $6.0 million in a borrower LOC exclusively to fund PPP loans

Income Statement

Net income for the quarter was $4.3 million compared to $4.5 million for the linked quarter and $3.2 million for the same quarter last year. The decrease over the linked quarter is primarily due to merger expenses of $389,000 before tax or $348,000 after tax. The increase over the third quarter of 2020 is mostly driven by an increase in net interest income and the reduction in provision for loan losses, partially offset by an increase in noninterest expense.
Interest income increased to $12.8 million versus $12.5 million for the linked quarter and increased from $11.3 million compared to the third quarter of 2020. The increase over the linked quarter is primarily a result of an increase in the loan yield from 4.80% in the linked quarter to 4.95% for the quarter ended September 30, 2021. Interest expense declined to $484,000 as compared to $490,000 over the linked quarter due to a decline in our cost of funds to 16 basis points (bps) from 17 bps last quarter.  In addition, the decrease in interest expense was $220,000 over the same quarter last year due to a decline in our cost of funds by 9 basis points.
Included in interest income are fees earned on Paycheck Protection Program ("PPP") Loans of approximately $878,000 in the third quarter versus $764,000 in the linked quarter and $449,000 in the third quarter of 2020.  
Net interest Margin (NIM) declined slightly to 3.72% compared to 3.82% for the linked quarter and increased as compared to 3.47% for the third quarter of 2020. NIM improved over the same quarter last year primarily due to the decrease in the cost of funds by 9 basis points. Yield on loans improved to 4.95% in Q3 from 4.80% for the linked quarter.
Total noninterest expense increased over the linked quarter by 7.1% or $452,000, and increased over the same quarter last year by approximately $1.2 million. The increase over the linked quarter was primarily a result of merger expenses of $389,000.  The increase over the same quarter last year is predominantly a result of increased employee expenses. We continue to maintain our key expense ratios at consistently low levels with efficiency ratio being 53.20% in Q3 while our burden ratio and noninterest expense to average assets were 1.82% and 1.96% respectively.

Balance Sheet

Total assets at September 30, 2021 increased to $1.42 billion as compared to $1.37 billion for the linked quarter.  The increase was $44.2 million or 3.22% as a result of an increase in total federal funds sold and were funded by an increase in deposits. 

Total deposits (excluding brokered deposits) at September 30, 2021 were $1.20 billion, an increase of $56.2 million or 4.90% over the linked quarter. Total deposits (excluding brokered deposits) increased year to date by $167.5 million or 16.18%.

During the quarter ended March 31, 2021 the bank acquired $60.0 million in low cost brokered deposits to partially fund PPP loans and pay down advances from the Federal Home Loan Bank. Brokered deposits at September 30, 2021 were $30.0 million

Total loans (excluding PPP loans) at September 30, 2021 were $759.5 million, an increase of $2.0 million over the linked quarter and $56.9 million or 8.10% year to date. The increase over the linked quarter includes a reduction of approximately $6.0 million in a line of credit provided to a local partner CDFI specifically and exclusively for the funding of PPP loans.

Total PPP loans were $61.4 million at September 30, 2021 compared to $111.3 million at June 30, 2021.

Asset Quality 

Non-performing assets decreased to $4.5 million or 0.31% of total assets at September 30, 2021 compared to 0.35% at June 30, 2021.
Based on our standard analysis of portfolio trends and considerations for stabilizing economic conditions of our primary industries, we determined a provision for loan losses was not required for the quarter. As a result, our allowance as a percentage of total loans (excluding both PPP and acquired loans) declined to 1.34% at September 30, 2021 compared to 1.36% at June 30, 2021. 
At the end of the third quarter all loans that were previously in our payment deferral program have resumed scheduled payments.
Per the table below, both classified accrual and classified nonaccrual loan balances declined through the quarter. Total classified loans as a percentage of total loans, excluding PPP loans, declined to 1.60%.  The percentage including PPP loans slightly increased to 1.48% due to the reduction in PPP loans in the third quarter.

Q3 2021

Q2 2021

Q4 2020

Q3 2020

Total Classified Loans (a)

$12,189,182

$12,533,580

$12,928,632

$14,370,053

Classified - Accrual Loans

$7,730,350

$7,864,816

$9,176,720

$10,111,838

Classified - Non-Accrual Loans

$4,458,832

$4,668,764

$3,751,912

$4,258,215

Total Classified / Total Loans

1.48%

1.44%

1.58%

1.78%

Total Classified / Total Loans
(excluding PPP)

1.60%

1.65%

1.84%

2.12%


(a)   Includes classified accrual loans and non-accrual loans

Capital

Suncrest Bank remained well capitalized at September 30, 2021. All of the bank's capital ratios are above minimum regulatory standards for "well capitalized" institutions.

At September 30, 2021 tangible book value per common share was $10.91 with common shares issued of 12,251,000 as of the same date.

About Suncrest Bank
Suncrest Bank, member FDIC, offers a full range of commercial, small business and agribusiness loans, cash management services and personal deposit products throughout the Central Valley of California and the Greater Sacramento Region. It is regularly rated Five Stars by Bauer Financial as one of the nation's strongest financial institutions, and in 2017 and 2018 was named to the OTCQX® Best 50, a ranking of top performing companies traded on the OTCQX Best Market. It is a Preferred Lender with the Small Business Administration and its stock can be purchased on the open market, trading on the OTCQX under the ticker symbol SBKK. For all other information, visit www.suncrestbank.com

Forward Looking Statements
Except for the historical information in this news release, the matters described herein contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and charge-offs, results of examinations by our banking regulators, our ability to maintain adequate levels of capital and liquidity, our ability to manage loan delinquency rates, our ability to price deposits to retain existing customers and achieve low-cost deposit growth, manage expenses and lower the efficiency ratio, expand or maintain the net interest margin, mitigate interest rate risk for changes in the interest rate environment, competitive pressures in the banking industry, access to available sources of credit to manage liquidity, the local and national economic environment, and other risks and uncertainties.  Accordingly, undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this release. Suncrest Bank undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Investors are encouraged to read the Suncrest Bank annual reports which are available on our website.

Suncrest Bank







Statements of Financial Condition







(Unaudited)









September 30,


June 30,


September 30,



2021


2021


2020

ASSETS







Cash and Due from Banks


$               21,931,450


$               15,578,565


$               44,079,328

Federal Funds Sold


134,380,000


41,425,000


44,895,000

TOTAL CASH AND CASH EQUIVALENTS


156,311,450


57,003,565


88,974,328








Investment Securities Available for Sale (AFS)


373,683,522


379,724,228


326,352,206

Loans:







   Total Loans


820,909,341


868,818,328


809,529,778

   Allowance for Loan Losses


(8,502,685)


(8,502,239)


(8,259,802)

NET LOANS


812,406,656


860,316,089


801,269,976








Federal Home Loan Bank and Other Bank Stock, at Cost


5,366,684


5,366,684


5,862,141

Premises and Equipment


5,846,699


5,990,719


6,318,134

Other Real Estate Owned


-


-


129,644

Bank Owned Life Insurance


8,894,306


8,835,996


8,665,725

Goodwill


38,989,566


38,989,566


38,989,566

Core Deposit Intangible


2,099,076


2,232,796


2,687,236

Accrued Interest and Other Assets


12,561,061


13,524,738


11,119,069



$           1,416,159,020


$           1,371,984,381


$           1,290,368,025








LIABILITIES AND SHAREHOLDERS' EQUITY







Deposits:







   Noninterest-bearing Demand


$             535,404,805


$             528,012,539


$             463,293,142

   Savings, NOW and Money Market Accounts


605,771,974


552,252,423


514,649,377

   Time Deposits - Retail


61,911,688


66,582,888


72,677,647

   Time Deposits - Wholesale


30,000,000


45,000,000


-

TOTAL DEPOSITS


1,233,088,467


1,191,847,850


1,050,620,166

Accrued Interest and Other Liabilities


8,283,875


7,621,556


7,586,690

Other Borrowings


-


-


68,559,008

TOTAL LIABILITIES


1,241,372,342


1,199,469,406


1,126,765,864








Shareholders' Equity:







   Common Stock - No par value


118,210,416


118,199,166


118,088,766

   Additional Paid-in Capital


3,885,288


3,741,305


3,331,027

   Retained Earnings


46,920,609


42,624,814


32,843,797

   Accumulated Other Comprehensive Income - Net 







      Unrealized Gain on Securities AFS


5,770,365


7,949,690


9,338,571

TOTAL SHAREHOLDERS' EQUITY


174,786,678


172,514,975


163,602,161



$           1,416,159,020


$           1,371,984,381


$           1,290,368,025

Suncrest Bank







Statements of Income (Unaudited)







For the Three Months Ended
















September 30,


June 30,


September 30,



2021


2021


2020

INTEREST INCOME







   Interest and Fees on Loans


$       10,593,539


$       10,334,296


$         9,621,006

   Interest on Investment Securities


2,176,940


2,184,839


1,620,278

   Interest on Federal Funds Sold and Other


30,752


13,995


39,284

TOTAL INTEREST INCOME


12,801,231


12,533,130


11,280,568








INTEREST EXPENSE







   Interest on Savings Deposits, NOW and Money Market Accounts


384,204


397,994


451,276

   Interest on Time Deposits - Retail


90,719


80,198


191,864

   Interest on Time Deposits - Wholesale


8,989


11,342


-

   Interest on Other Borrowings


-


-


60,757

TOTAL INTEREST EXPENSE


483,912


489,534


703,897








NET INTEREST INCOME


12,317,319


12,043,596


10,576,671








Provision for Loan Losses


-


-


1,000,000

NET INTEREST INCOME AFTER







PROVISION FOR LOAN LOSSES


12,317,319


12,043,596


9,576,671








NONINTEREST INCOME







   Service Charges, Fees, and Other Income


484,266


438,819


407,018

   Gain on Sale of Loans


-


28,273


-



484,266


467,092


407,018








NONINTEREST EXPENSE







   Salaries and Employee Benefits


3,576,488


3,536,175


3,148,861

   Occupancy Expenses


593,456


591,437


587,021

   Other Expenses


2,640,644


2,231,227


1,895,345



6,810,588


6,358,839


5,631,227

INCOME BEFORE INCOME TAXES


5,990,997


6,151,849


4,352,462

Income Taxes


1,695,200


1,664,600


1,144,000

NET INCOME


$          4,295,797


$          4,487,249


$          3,208,462

Suncrest Bank





Statements of Income (Unaudited)





For the Nine Months Ended












September 30,


September 30,



2021


2020

INTEREST INCOME





   Interest and Fees on Loans


$            30,395,689


$       27,975,918

   Interest on Investment Securities


6,407,199


4,439,179

   Interest on Federal Funds Sold and Other


59,767


333,081

TOTAL INTEREST INCOME


36,862,655


32,748,178






INTEREST EXPENSE





   Interest on Savings Deposits, NOW and Money Market Accounts


1,180,719


1,851,301

   Interest on Time Deposits - Retail


274,875


650,650

   Interest on Time Deposits - Wholesale


30,278


-

   Interest on Other Borrowings


5,302


97,680

TOTAL INTEREST EXPENSE


1,491,174


2,599,631






NET INTEREST INCOME


35,371,481


30,148,547






Provision for Loan Losses


-


3,300,000

NET INTEREST INCOME AFTER





PROVISION FOR LOAN LOSSES


35,371,481


26,848,547






NONINTEREST INCOME





   Service Charges, Fees, and Other Income


1,385,881


1,177,288

   Gain on Sale of Loans


28,273


-



1,414,154


1,177,288






NONINTEREST EXPENSE





   Salaries and Employee Benefits


10,479,590


9,100,782

   Occupancy Expenses


1,769,297


1,745,487

   Other Expenses


6,902,598


5,694,756



19,151,485


16,541,025

INCOME BEFORE INCOME TAXES


17,634,150


11,484,810

Income Taxes


4,846,500


2,702,600

NET INCOME


$             12,787,650


$          8,782,210

Suncrest Bank







Selected Financial Data & Ratios (Unaudited)









September 30,


June 30,


September 30,



2021


2021


2020

For the three months ended:







Return on Average Assets(ROAA)


1.23%


1.33%


0.99%

Return on Average Tangible Assets (1)


1.27%


1.37%


1.03%

Return on Average Equity(ROAE)


9.77%


10.65%


7.84%

Return on Average Tangible Equity (1)


12.74%


14.10%


10.52%

Noninterest Expense (NIE) To Average Assets


1.96%


1.89%


1.74%

Efficiency Ratio


53.20%


50.83%


51.27%

Burden Ratio


1.82%


1.75%


1.62%

Net Interest Margin


3.72%


3.82%


3.47%

Cost of Funds


0.16%


0.17%


0.25%

Basic Earnings Per Share (EPS)


$               0.35


$                 0.37


$               0.26

Diluted EPS


$               0.34


$                 0.36


$               0.26










September 30,


September 30,





2021


2020



For the nine months ended:







Return on Average Assets(ROAA)


1.27%


1.00%



Return on Average Tangible Assets (1)


1.31%


1.04%



Return on Average Equity(ROAE)


9.97%


7.42%



Return on Average Tangible Equity (1)


13.13%


10.09%



Noninterest Expense (NIE) To Average Assets


1.90%


1.89%



Efficiency Ratio


52.06%


52.80%



Burden Ratio


1.76%


1.75%



Net Interest Margin


3.74%


3.70%



Cost of Funds


0.17%


0.35%



Basic Earnings Per Share (EPS)


$               1.04


$                 0.71



Diluted EPS


$               1.02


$                 0.70

















(1)  These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited.  They should not be

considered in isolation or as a substitute for analyses of results reported under GAAP.  These non-GAAP measures may not be

comparable to similarly titled measures reported by other companies.







Suncrest Bank







Selected Financial Data & Ratios Continued (Unaudited)
















September 30,


June 30,


September 30,



2021


2021


2020

At Period End:







Loans to Deposits


66.57%


72.90%


77.05%

Average Loans to Average Deposits (QTD)


70.27%


73.64%


76.22%

Non-Performing Assets to Assets


0.31%


0.35%


0.34%

Outstanding Shares


12,251,000


12,249,500


12,235,500

Tangible Book Value Per Share (1)


$                   10.91


$                   10.72


$                     9.96

Tangible Book Value Per Share excluding Unrealized Gain on Securities (1)


$                   10.44


$                   10.07


$                     9.20

Book Value Per Share


$                   14.27


$                   14.08


$                   13.37















Regulatory Capital Ratios







Tier 1 Leverage (to average assets)


9.50%


9.45%


9.50%

Common Equity Tier 1 Capital (to risk weighted assets)


13.73%


13.86%


13.72%

Tier 1 Capital (to risk weighted assets)


13.73%


13.86%


13.72%

Total Capital (to risk weighted assets)


14.66%


14.84%


14.74%
























September 30,


June 30,


September 30,



2021


2021


2020

Loan Composition







Commercial and Industrial:


$          33,897,330


$          39,134,449


$          45,755,958

Paycheck Protection Program:


61,419,920


111,280,895


130,394,846

Loans to Finance Agricultural Production and Other Loans to Farmers:


37,679,663


40,194,038


38,392,086

Loans Secured by Real Estate:







Secured by Farmland


133,994,326


130,397,870


138,428,801

Construction, Land Development and Other Land


21,716,590


21,182,675


26,641,282

1-4 Family Residential Properties


53,128,911


53,532,531


41,388,691

Multifamily Residential Properties


50,070,051


49,661,004


45,446,188

Owner Occupied Nonresidential Properties


102,148,976


110,743,084


93,084,165

Non-Owner Occupied Nonresidential Properties


308,410,748


293,982,408


230,224,802

Total Loans Secured by Real Estate


669,469,602


659,499,572


575,213,929








Municipal Leases:


18,323,150


18,584,601


19,626,108

Other Loans:


119,676


124,773


146,851








Total Loans


$        820,909,341


$        868,818,328


$        809,529,778








(1)  These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited.  They



should not be considered in isolation or as a substitute for analyses of results reported under GAAP.  These non-GAAP



measures may not be comparable to similarly titled measures reported by other companies.





Suncrest Bank













Average Balance Sheet and Yields (Unaudited)











For the Three Months Ended















September 30, 2021


June 30, 2021



Average




Average


Average




Average



Balance


Interest


Yield/Rate


Balance


Interest


Yield/Rate














Interest Earning Assets:













Deposits in Other Financial Institutions


$      80,895,754


$      30,752


0.15%


$      35,405,889


$        13,995


0.16%

Investment Securities


382,461,945


2,176,940


2.28%


367,244,025


2,184,839


2.38%

Loans


849,690,018


10,593,539


4.95%


862,921,793


10,334,296


4.80%

Total Interest Earning Assets


1,313,047,717


12,801,231


3.87%


1,265,571,707


12,533,130


3.97%

Noninterest Earning Assets


79,883,114






82,474,013





Total Assets


$ 1,392,930,831






$ 1,348,045,720


















Interest Bearing Liabilities













Interest Bearing Transaction Accounts


$    164,148,322


167,499


0.40%


$    158,481,231


171,063


0.43%

Savings and Money Market Accounts


423,094,624


216,705


0.20%


400,437,784


226,931


0.23%

Time Deposits - Retail


64,067,178


90,719


0.56%


69,314,072


80,198


0.46%

Time Deposits - Wholesale


34,076,127


8,989


0.10%


49,120,942


11,342


0.09%

Total Interest Bearing Deposits


685,386,251


483,912


0.28%


677,354,029


489,534


0.29%

Other Borrowings and FLHB Advances


-


-


0.00%


-


-


0.00%

Total Interest Bearing Liabilities


685,386,251


483,912


0.28%


677,354,029


489,534


0.29%

Noninterest Bearing Transaction Accounts


523,774,669






494,517,122





Total Funding Sources


1,209,160,920






1,171,871,151





Noninterest Bearing Liabilities


7,806,527






7,664,587





Shareholders' Equity


175,963,384






168,509,982





Total Liabilities and Shareholder's Equity


$ 1,392,930,831






$ 1,348,045,720





Net Interest Income




$12,317,319






$ 12,043,596



Net Interest Margin






3.72%






3.82%



























Suncrest Bank













Average Balance Sheet and Yields (Unaudited)











For the Three Months Ended















September 30, 2021


September 30, 2020



Average




Average


Average




Average



Balance


Interest


Yield/Rate


Balance


Interest


Yield/Rate














Interest Earning Assets:













Deposits in Other Financial Institutions


$      80,895,754


$      30,752


0.15%


$    134,317,994


$        39,284


0.12%

Investment Securities


382,461,945


2,176,940


2.28%


277,443,763


1,620,278


2.34%

Loans


849,690,018


10,593,539


4.95%


801,674,194


9,621,006


4.77%

Total Interest Earning Assets


1,313,047,717


12,801,231


3.87%


1,213,435,951


11,280,568


3.70%

Noninterest Earning Assets


79,883,114






78,283,592





Total Assets


$ 1,392,930,831






$ 1,291,719,543


















Interest Bearing Liabilities













Interest Bearing Transaction Accounts


$    164,148,322


167,499


0.40%


$    149,384,315


165,969


0.44%

Savings and Money Market Accounts


423,094,624


216,705


0.20%


364,811,548


285,307


0.31%

Time Deposits - Retail


64,067,178


90,719


0.56%


74,361,165


191,864


1.03%

Time Deposits - Wholesale


34,076,127


8,989


0.10%


-


-


0.00%

Total Interest Bearing Deposits


685,386,251


483,912


0.28%


588,557,028


643,140


0.43%

Other Borrowings and FLHB Advances


-


-


0.00%


68,563,899


60,757


0.35%

Total Interest Bearing Liabilities


685,386,251


483,912


0.28%


657,120,927


703,897


0.43%

Noninterest Bearing Transaction Accounts


523,774,669






463,248,302





Total Funding Sources


1,209,160,920






1,120,369,229





Noninterest Bearing Liabilities


7,806,527






7,730,135





Shareholders' Equity


175,963,384






163,620,179





Total Liabilities and Shareholder's Equity


$ 1,392,930,831






$ 1,291,719,543





Net Interest Income




$12,317,319






$ 10,576,671



Net Interest Margin






3.72%






3.47%



























Suncrest Bank













Average Balance Sheet and Yields (Unaudited)











For the Nine Months Ended















September 30, 2021


September 30, 2020



Average




Average


Average




Average



Balance


Interest


Yield/Rate


Balance


Interest


Yield/Rate














Interest Earning Assets:













Deposits in Other Financial Institutions


$      52,811,090


$      59,767


0.15%


$    106,016,940


$      333,081


0.42%

Investment Securities


363,748,840


6,407,199


2.35%


242,738,055


4,439,179


2.44%

Loans


847,995,236


30,395,689


4.79%


740,923,105


27,975,918


5.04%

Total Interest Earning Assets


1,264,555,166


36,862,655


3.90%


1,089,678,100


32,748,178


4.01%

Noninterest Earning Assets


55,443,016






80,211,321





Total Assets


$ 1,344,575,852






$ 1,169,889,421


















Interest Bearing Liabilities













Interest Bearing Transaction Accounts


$    158,178,277


496,416


0.42%


$    138,419,679


314,028


0.30%

Savings and Money Market Accounts


399,517,542


684,303


0.23%


359,887,691


1,537,273


0.57%

Time Deposits - Retail


68,471,206


274,875


0.54%


77,858,739


650,650


1.12%

Time Deposits - Wholesale


41,923,143


30,278


0.10%


-


-


0.00%

Total Interest Bearing Deposits


668,090,168


1,485,872


0.30%


576,166,109


2,501,951


0.58%

Other Borrowings and FLHB Advances


3,848,246


5,302


0.18%


37,179,040


97,680


0.35%

Total Interest Bearing Liabilities


671,938,414


1,491,174


0.30%


613,345,149


2,599,631


0.57%

Noninterest Bearing Transaction
Accounts


493,776,669






391,224,164





Total Funding Sources


1,165,715,083






1,004,569,313





Noninterest Bearing Liabilities


7,904,884






7,608,560





Shareholders' Equity


170,955,885






157,711,548





Total Liabilities and Shareholder's Equity


$ 1,344,575,852






$ 1,169,889,421





Net Interest Income




$35,371,481






$ 30,148,547



Net Interest Margin






3.74%






3.70%

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SOURCE Suncrest Bank

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