Commerce National Bank Announces a Profitable 2006
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Commerce National Bank Announces a Profitable 2006

Friday, February 2, 2007 1:36 PM
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Commerce National Bank (OTCBB:CNBF), a community business bank in its third year of operation, announced its financial results for the fourth quarter of 2006. As of December 31, 2006, the Bank reported total assets of $168.7 million, representing an increase of $54.9 million, or 48% from December 31, 2005. Total deposits were $141.7 million, an increase of $52.8 million, or 59% from prior year. Net loans were $97.6 million, an increase of $32.7 million, or 50% from prior year. Total shareholders' equity as of December 31, 2006 was $26.6 million, representing an increase of $1.9 million, or 8% over total shareholders' equity of $24.7 million at December 31, 2005.

For the quarter ended December 31, 2006, Commerce National Bank reported net income of $818,000, a $768,000 increase from the same period last year, after recording stock option expense of $174,000 in the fourth quarter of 2006. The Bank also recorded an income tax benefit of $480,000 during the fourth quarter of 2006. For the year ended December 31, 2006, the Bank reported net income of $684,000, an increase of $1.4 million from the same period in 2005, after recording stock option expense of $679,000 in 2006. Beginning in January 2006, the Bank recorded stock option expense pursuant to the requirements of SFAS 123r "Share-Based Payments." In prior years, the Bank followed the intrinsic value method, which did not require the recording of stock option expense.

Basic Earnings Per Share for the fourth quarter and the year ended December 31, 2006 was $0.31 and $0.26, respectively, compared to $0.02 and ($0.42) for the same periods last year. Diluted Earnings Per Share for the fourth quarter and the year ended December 31, 2006 was $0.30 and $0.25, respectively, compared to $0.02 and ($0.42) for the same periods last year.

For the fourth quarter of 2006, net interest income totaled $1.8 million, representing an increase of $602,000, or 51%, over the same period last year. Interest income increased $1.2 million, or 73%, which was partly offset by an increase in interest expense of $551,000, or 140%. For the year ended December 31, 2006, net interest income totaled $6.2 million, representing an increase of $2.7 million, or 75%, over last year. Interest income increased $4.6 million, or 100%, which was partly offset by an increase in interest expense of $1.9 million, or 185%.

Non-interest income increased $197,000 and $468,000 for the three and twelve months ended December 31, 2006, respectively, compared to the same periods in 2005, primarily as a result of the income from the Small Business Administration (SBA) Department that was formed in March 2006.

Non-interest expense increased $552,000 and $2.2 million for the three and twelve months ended December 31, 2006, respectively, compared to the same periods in 2005. The increase was primarily due to the recording of stock option compensation expense and an increase in the number of employees in 2006.

With offices in Newport Beach and the City of Fullerton, the Bank is well positioned to serve businesses, professionals and selected real estate customers in both the northern and southern areas of Orange County. The offices are staffed by experienced business bankers who are committed to providing exemplary service to their customers in the business community.


                  Condensed Statement of Operations
(Unaudited)
(In thousand dollars, except per share amounts)
Three Months Ended    Year Ended
December 31        December 31
------------------ -----------------
2006     2005     2006     2005
--------- -------- -------- --------
Interest Income                     $2,726   $1,573   $9,180   $4,590
Interest Expense                      (944)    (393)  (2,987)  (1,050)
--------- -------- -------- --------
Net Interest Income               1,782    1,180    6,193    3,540
Provision for Loan Losses              (75)    (116)    (439)    (476)
--------- -------- -------- --------
Net Interest Income After
Provision for Loan Losses        1,707    1,064    5,754    3,064
Non Interest Income                    278       81      572      104
Non Interest Expense                (1,647)  (1,095)  (6,121)  (3,930)
--------- -------- -------- --------
Net Income (Loss) Before
Income Taxes                       338       50      205     (762)
Income Tax Benefit (Expense)           480        0      479       (1)
--------- -------- -------- --------
Net Income (Loss)                   $818      $50     $684    $(763)
========= ======== ======== ========
Basic Earnings (Loss) Per Share    $0.31    $0.02    $0.26   $(0.42)
========= ======== ======== ========
Diluted Earnings (Loss) Per
Share                             $0.30    $0.02    $0.25   $(0.42)
========= ======== ======== ========

              Condensed Statement of Financial Condition
(Unaudited)
(In thousand dollars)
December 31,
-------------------
Assets                                               2006      2005
--------- ---------
Cash & Due From Banks                              $4,370    $3,455
Federal Funds Sold                                 36,855     6,280
Investments                                        26,063    36,409
Loans (Net)                                        97,617    64,869
Other Assets                                        3,748     2,728
--------- ---------
Total Assets                                   $168,653  $113,741
========= =========
Liabilities & Shareholders' Equity
Demand Deposits                                   $30,551   $22,830
Money Market, Savings, NOW & Certificates of
Deposit                                          111,107    66,038
--------- ---------
Total Deposits                                  141,658    88,868
Other Liabilities                                     436       206
Shareholders' Equity                             26,559    24,667
--------- ---------
Total Liabilities & Shareholders' Equity       $168,653  $113,741
========= =========

Forward Looking Statement

This news release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about Commerce National Bank's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: Commerce National Bank's timely development of new products and services, technological changes, changes in consumer spending and savings habits and other risks discussed from time to time in Commerce National Bank's reports and filings with the Office of the Comptroller of the Currency. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and Commerce National Bank does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

Commerce National Bank
Mark Simmons, President/CEO, 949-870-3860
Fax: 949-870-4499
[email protected]
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