Commonwealth Business Bank Reports Net Income of $307,000 for the Third Quarter

Commonwealth Business Bank (OTCBB: CWBB) today reported a net income of $307,000 or $0.09 per common share for the third quarter 2009, compared with a net loss of $435,000 or ($0.14) per common share for the second quarter 2009.

"Our profit has returned in the third quarter. With the gradual deployment of excess liquidity into higher yielding assets coupled with an aggressive reduction in higher cost deposits, we improved our net interest margin as projected. We also controlled overhead costs and increased non-interest income. Our loan portfolio stabilized and with sizeable loan recoveries during the quarter, we were able to lower our loan loss provisions. We continue to build core deposits, reduce our cost of funds, and expect the net interest margin to further expand in the fourth quarter," said Jack Choi, President & CEO.

"Despite many positive indications on economic recovery, we are cautious to forecast the enduring economic and financial stabilization. There are still many prevailing uncertainties such as the rapid downward spiral of commercial real estate values, conclusion of the government stimulus programs, increasing unemployment rates and weak retail sales. Accordingly, we continue to focus on our defensive strategy with vigilant loan monitoring and early identification and resolution of problemed assets as well as building strong loan loss reserves."

3Q 2009 Results Compared to 2Q 2009

-- Net income was $307,000 or $0.09 per common share compared with a net loss of $435,000 or ($0.14) per common share.

-- Cost of funds decreased by 25 basis points to 2.17% and net interest margin improved by 24 basis points to 2.92%.

-- Non-interest income increased by $59,000 from recognition of gains on sale of SBA loans and an increase in other fee income.

-- Total assets decreased by 2.30% or $7.8 million to $330.7 million.

-- Total deposits decreased by 3.04% or $8.5 million to $270.3 million.

-- Gross loans increased by 0.9% or $2.3 million to $260.1 million.

-- ALLL decreased to 2.16% of gross loans, primarily due to charge-offs and pay-offs of loans previously placed in nonaccrual status.

-- NPL reduced to 0.84% from 2.10% of gross loans.

-- Net charge offs for the quarter decreased to 0.33% of average loans.

-- No OREOs or troubled debt restructuring.

-- Well capitalized with the leverage ratio of 14.5%, tier one capital ratio of 17.5% and total risk based capital ratio of 18.7%.

-- Tangible common equity to tangible assets of 12.3%.

-- Efficiency ratio decreased to 61.37% due to a reduction in non-interest expenses and increases in net interest income and non-interest income.

BALANCE SHEETS (Unaudited)
($ in thousands, expect per share amounts)
                                            September 30,      June 30,         September 30,
                                                 2009              2009              2008
Assets
Cash & due from banks                       $    4,049         $   4,411        $    5,473
Interest-bearing due from banks                  29,815            38,444            3,000
Fed funds sold                                   -                 3,320             15,810
Investment securities                            32,611            30,636            28,507
Loans, net of deferred fees                      260,098           257,839           238,377
Allowance for loan losses                        (5,611  )         (5,928  )         (3,467  )
Net loans                                        254,487           251,911           234,910
Premises and equipments, net                     1,436             1,523             1,743
Accrued interest receivable                      1,089             985               1,063
Customer liability on acceptances                482               187               -
Other assets                                     6,759             7,085             5,341
Total Assets                                $    330,728       $   338,502      $    295,847
Liabilities and Shareholders' Equity
Noninterest-bearing deposits                $    35,236        $   37,172       $    31,148
Interest-bearing deposits                        235,071           241,603           211,042
Total deposits                                   270,307           278,775           242,190
FHLB advance                                     9,000             9,000             9,000
Accrued interest payable                         886               971               997
Bank liability on acceptances                    482               187               -
Other liabilities                                1,319             1,386             1,736
Total Liabilities                                281,994           290,319           253,923
Total shareholders' equity                       48,734            48,183            41,924
Total Liabilities and Shareholders' Equity  $    330,728       $   338,502      $    295,847
Book value per common share                 $    13.24         $   13.07        $    13.53

STATEMENTS OF INCOME (Unaudited)
($ in thousands, except per share amounts)
                            Three Months Ended
                            Sept. 30, 2009    June 30, 2009     Sept. 30, 2008
Interest income             $    3,937        $    3,774        $    4,256
Interest Expense                 1,532             1,650             1,854
Net interest income              2,405             2,124             2,402
Provision for loan losses        602               1,482             628
Non interest income              606               547               311
Non interest expense             1,848             1,899             1,771
Income before income taxes       561               (710   )          314
Provision for income taxes       254               (275   )          160
Net income                  $    307          $    (435   )          154
Basic EPS                   $    0.09         $    (0.14  )     $    0.05
Diluted EPS                 $    0.09         $    (0.14  )     $    0.05
INCOME STATEMENT RATIOS
Return on average assets         0.37   %          -0.54  %          0.21  %
Return on average equity         2.50   %          -3.58  %          1.45  %
Net interest margin              2.92   %          2.68   %          3.41  %
Efficiency ratio                 61.37  %          71.10  %          66.55 %
                            Nine Months Ended
                            September 30
                                 2009              2008
Interest income             $    11,384       $    12,839
Interest expense                 4,792             5,848
Net interest income              6,592             6,991
Provision for loan losses        3,407             1,274
Non interest income              1,469             1,296
Non interest expense             5,513             5,513
Income before income taxes       (859   )          1,500
Income tax provision             (319   )          663
Net income                  $    (540   )     $    837
Basic EPS                   $    (0.19  )     $    0.27
Diluted EPS                 $    (0.19  )     $    0.26
INCOME STATEMENT RATIOS
Return on average assets         -0.23  %          0.41   %
Return on average equity         -1.49  %          2.67   %
Net interest margin              2.81   %          3.49   %
Efficiency ratio                 68.39  %          66.94  %

The Bank's Call Reports are available for review or download directly from the FDIC website at www.fdic.gov, or through the link at the Bank's website at www.cwbbank.com.

This press release contains certain forward-looking information about Commonwealth Business Bank that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements, and include statements related to the bank's outlook. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of Commonwealth Business Bank. Commonwealth Business Bank cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. Risks and uncertainties include, but are not limited to, revenues that are lower than expected and credit quality deterioration which could cause an increase in the provision for credit losses.

These forward-looking statements involve known and unknown risks, uncertainties and factors such as: changes in consumer spending, borrowing and savings habits, technological changes, the cost of additional capital is more than expected, a change in the interest rate environment reduces interest margins, asset/liability repricing risks and liquidity risks, general economic conditions, particularly those affecting real estate values, either nationally or in the market areas in which Commonwealth Business Bank does or anticipates doing business, including the possibility of a U.S. recession, a slowdown in construction activity, recent volatility in the credit or equity markets and its effect on the general economy, loan delinquency rates, the ability of Commonwealth Business Bank to retain customers, demographic changes, demand for the products or services of Commonwealth Business Bank as well as its ability to attract and retain qualified people, competition with other banks and financial institutions, and other factors. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, Commonwealth Business Bank's results could differ materially from those expressed in, or implied or projected by such forward-looking statements. Commonwealth Business Bank assumes no obligation to update such forward-looking statements.

SOURCE: Commonwealth Business Bank

Commonwealth Business Bank 
K. Kaye Kim, CFO, 323-988-3007 
Kayek@cwbbank.com

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