Community 1st Bank Reports Results for the Quarter Ended September 30, 2012

AUBURN, Calif.--(BUSINESS WIRE)--Community 1st Bank (OTCBB: CFBN), with $190.7 million in assets, today reported net income of $180 thousand for the quarter ended September 30, 2012 resulting in net income of $463 thousand for the nine months ended September 30, 2012.

“Our commitment and ability to serve the banking needs of our marketplace has resulted in steady improvement of almost all measured bank metrics. Much has been accomplished so far this year and the momentum positions the Bank well for the future.”

Robert C. Haydon commented, "The results of the quarter ended September 30, 2012 are extremely gratifying; they reflect our commitment to growing both loan and core deposit totals. Of equal importance has been the hard fought battle to reduce non-performing loans: down 67.1% from a year ago! These three elements are all contributing to our ultimate goal: sustained profitability.”

Total assets at September 30, 2012 were $190.7 million, an increase of $23.2 million, or 13.8%, from September 30, 2011. Community 1st Bank (the “Bank”) was successful in growing non-interest bearing deposits from $31.0 million at September 30, 2011 to $39.8 million at September 30, 2012, an increase of $8.8 million, or 28.3%, enhancing the deposit portfolio mix and improving the Bank’s cost of funds. Total deposits increased from $143.9 million at September 30, 2011 to $166.2 million at September 30, 2012, an increase of $22.3 million, or 15.5%. Total loans increased from $70.1 million at September 30, 2011 to $83.9 million at September 30, 2012, an increase of $13.7 million, or 19.6%. When compared to the previous quarter, total assets increased $3.1 million, or 1.7%, from $187.6 million at June 30, 2012. Loans increased by $3.6 million, or 4.5%, from $80.3 million at June 30, 2012. Non-interest bearing deposits increased by $5.9 million, or 17.3%, from $33.9 million at June 30, 2012.

The Bank reported net income for the quarter ended September 30, 2012 of $180 thousand, which included $170 thousand in provision for loan losses, $20 thousand in write-downs of other real estate owned and $160 thousand in gain on sale of securities. This compares to a net loss of $905 thousand for the same period in 2011, which included $867 thousand in provision for loan losses and no gain on sale of securities. Net income increased by $1.1 million, while the provision for loan losses decreased by $697 thousand, write-downs of other real estate owned decreased by $108 thousand, and gain on sale of securities increased by $160 thousand as compared to the third quarter of 2011. The provisioning during the quarter ended September 30, 2012 was primarily a result of the loan growth experienced during the quarter while the OREO write-downs reflect adjustments expected in order to sell these properties. Interest income increased by $141 thousand, or 9.3%, to total $1.7 million for the quarter ended September 30, 2012 compared to the same period in 2011, primarily driven by a change in the mix of our average earning assets to a greater percentage of higher yielding loans. Interest expense increased by $2 thousand, or 0.8%, to total $244 thousand for the quarter ended September 30, 2012 compared to the same period in 2011, primarily driven by an increase in average interest bearing deposits outweighing the decrease in rates and the improved deposit portfolio mix. Net interest income increased by $139 thousand, or 10.8%, for the third quarter of 2012 compared to the same period in 2011. Non-interest expense decreased by $90 thousand, or 6.4%, to total $1.3 million for the quarter ended September 30, 2012 compared to the quarter ended September 30, 2011. The decrease in non-interest expense was primarily driven by a reduction in salaries and employee benefits expense from reducing overall staffing during the first quarter of 2012 as well as a reduction in collection costs corresponding to the substantial reduction in the Bank’s non-performing loans.

The Bank reported net income for the nine months ended September 30, 2012 of $463 thousand, which includes $630 thousand in provision for loan losses, $60 thousand in write-downs of other real estate owned and gains on sale of securities of $541 thousand. This compares to a net loss of $1.3 million for the same period in 2011, which included $1.3 million in provision for loan losses and a gain on sale of securities of $16 thousand. Net income increased by $1.7 million, while the provision for loan losses decreased by $694 thousand, write-downs of other real estate owned decreased by $68 thousand and gain on sale of securities increased by $525 thousand as compared to the nine months ended September 30, 2011. Interest income increased by $439 thousand, or 9.8%, to total $4.9 million for the nine months ended September 30, 2012 compared to the same period in 2011. Interest expense decreased by $21 thousand, or 2.8%, to total $736 thousand for the nine months ended September 30, 2012 compared to the same period in 2011. Net interest income increased by $460 thousand, or 12.3%, for the nine months ended September 30, 2012 compared to the same period in 2011. Non-interest expense decreased by $57 thousand, or 1.4%, to total $4.0 million for the nine months ended September 30, 2012 compared to the same period in 2011.

The allowance for loan losses at September 30, 2012 was $1.9 million, or 2.3% of gross loans, compared to $1.6 million, or 2.2% of gross loans at September 30, 2011. Loan charge-offs for the quarter ended September 30, 2012 were $37 thousand with recoveries of $11 thousand compared to loan charge-offs of $654 thousand with recoveries of $128 thousand for the same period in 2011. Loan charge-offs for the nine months ended September 30, 2012 were $593 thousand with recoveries of $12 thousand compared to loan charge-offs of $1.2 million with recoveries of $153 thousand for the same period in 2011. Nonperforming loans at September 30, 2012 were $2.4 million, or 1.2% of total assets, a reduction of $4.8 million, or 67.1%, from $7.2 million, or 4.3% of total assets, at September 30, 2011.

At September 30, 2012, the Bank had a Tier 1 Leverage Capital ratio of 10.6%, Tier 1 Risk-based Capital ratio of 17.7% and Total Risk-based Capital ratio of 18.9%. At September 30, 2011, the Tier 1 Leverage Capital ratio was 12.7%, Tier 1 Risk-based Capital ratio was 23.0% and Total Risk-based Capital ratio was 24.2%. The Bank’s capital is in excess of that required to be considered “well-capitalized” by regulatory standards.

Robert C. Haydon added, “Our commitment and ability to serve the banking needs of our marketplace has resulted in steady improvement of almost all measured bank metrics. Much has been accomplished so far this year and the momentum positions the Bank well for the future.”

Community 1^st Bank is headquartered in Auburn, California, with branches in Roseville and Auburn, California. Community 1^st Bank offers a wide range of business and consumer deposit products including remote deposit capture, health savings accounts, online banking, and cash management services. The Bank also offers a full complement of loan products, including commercial, consumer, and real estate loans. For more information about the Bank, visit the Bank’s website at www.community1bank.com.

Forward-Looking Statements

Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, loan production, competitive pressure in the banking industry, balance sheet management, net interest margin variations, the ability to control costs and expenses, changes in the interest rate environment and financial policies of the United States government and general economic conditions. The Bank disclaims any obligation to update any such factors.

COMMUNITY 1ST BANK
BALANCE SHEETS (Unaudited)
	September 30, 2012		December 31, 2011		September 30, 2011
ASSETS
Cash and due from banks	$	4,579,000	$	3,037,000	$	2,171,000
Interest-bearing deposits in other financial institutions		45,000		15,000		266,000
Available-for-sale investment securities, at fair value		97,478,000		101,736,000		89,658,000
Loans, less allowance for loan losses of $1,914,000 at September 30, 2012, $1,865,000 at December 31, 2011 and $1,560,000 at September 30, 2011		81,952,000		71,026,000		68,585,000
Bank premises and equipment, net		1,751,000		1,810,000		1,865,000
Other real estate owned		993,000		990,000		1,148,000
Federal Home Loan Bank stock and other securities		1,723,000		1,473,000		1,473,000
Accrued interest receivable and other assets		2,212,000		2,466,000		2,400,000
Total assets	$	190,733,000	$	182,553,000	$	167,566,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing	$	39,766,000	$	34,056,000	$	30,998,000
Interest bearing		126,402,000		118,872,000		112,865,000
Total deposits		166,168,000		152,928,000		143,863,000
Borrowings		2,850,000		8,360,000		735,000
Accrued interest payable and other liabilities		1,039,000		1,024,000		1,206,000
Total liabilities		170,057,000		162,312,000		145,804,000
Shareholders' equity		20,676,000		20,241,000		21,762,000
Total liabilities and shareholders' equity	$	190,733,000	$	182,553,000	$	167,566,000

COMMUNITY 1ST BANK
STATEMENT OF OPERATIONS DATA (Unaudited)
For the Three Months Ended September 30, 2012 and 2011
	2012		2011
Interest income:
Interest and fees on loans	$	1,187,000	$	971,000
Interest on investment securities and interest-bearing deposits in other financial institutions		478,000		553,000
Total interest income		1,665,000		1,524,000
Interest expense:
Deposits		240,000		242,000
Borrowings		4,000		-
Total interest expense		244,000		242,000
Net interest income		1,421,000		1,282,000
Provision for loan losses		170,000		867,000
Net interest income after provision for loan losses		1,251,000		415,000
Non-interest income:
Service charges and fees		18,000		18,000
Gain on sales of available-for-sale investment securities		160,000		-
Other		72,000		73,000
Total non-interest income		250,000		91,000
Non-interest expense:
Salaries and employee benefits		659,000		683,000
Occupancy and equipment		152,000		158,000
Other		510,000		570,000
Total non-interest expense		1,321,000		1,411,000
Net income (loss)	$	180,000	$	(905,000	)
Net income (loss)	$	180,000	$	(905,000	)
Preferred stock accretion of discount		43,000		8,000
Net income (loss) available to common shareholders	$	137,000	$	(913,000	)
Basic income (loss) per share	$	0.03	$	(0.22	)
Weighted average number of shares outstanding		5,449,242		4,166,027

COMMUNITY 1ST BANK
STATEMENT OF OPERATIONS DATA (Unaudited)
For the Nine Months Ended September 30, 2012 and 2011
	2012		2011
Interest income:
Interest and fees on loans	$	3,293,000	$	2,904,000
Interest on investment securities and interest-bearing deposits in other financial institutions		1,647,000		1,597,000
Total interest income		4,940,000		4,501,000
Interest expense:
Deposits		727,000		748,000
Borrowings		9,000		9,000
Total interest expense		736,000		757,000
Net interest income		4,204,000		3,744,000
Provision for loan losses		630,000		1,324,000
Net interest income after provision for loan losses		3,574,000		2,420,000
Non-interest income:
Service charges and fees		52,000		65,000
Gain on sales of available-for-sale investment securities		541,000		16,000
Other		256,000		244,000
Total non-interest income		849,000		325,000
Non-interest expense:
Salaries and employee benefits		2,038,000		2,088,000
Occupancy and equipment		446,000		480,000
Other		1,476,000		1,449,000
Total non-interest expense		3,960,000		4,017,000
Net income (loss)	$	463,000	$	(1,272,000	)
Net income (loss)	$	463,000	$	(1,272,000	)
Preferred stock dividends and accretion of discount		59,000		24,000
Net income (loss) available to common shareholders	$	404,000	$	(1,296,000	)
Basic income (loss) per share	$	0.07	$	(0.50	)
Weighted average number of shares outstanding		5,449,242		2,570,822