At the Bank level, unrealized losses and gains reflected in AOCI are not included in regulatory capital. As a result, Tier-1 capital at the Bank for regulatory purposes was $220.99 million at quarter end excluding the unrealized loss. The regulatory leverage capital ratio was 14.33% for the current quarter, while the total risk-based capital ratio was 20.84%, exceeding regulatory minimums to be considered well-capitalized.

Asset Quality

Nonperforming assets decreased to $9.89 million, or 0.66% of total assets, at December 31, 2024, compared to $12.82 million, or 0.85% of total assets, from the preceding quarter. Of the $9.89 million nonperforming loans, $8.04 million are covered by SBA guarantees. Total delinquent loans increased to $8.32 million at December 31, 2024, compared to $3.37 million at September 30, 2024.

Past due loans 30-60 days were $4.89 million at December 31, 2024, compared to $1.65 million at September 30, 2024, and $1.08 million at December 31, 2023. There were $2.45 million past due loans from 60-90 days at December 31, 2024, compared to $1.39 million at September 30, 2024 and $199,000 in past due loans from 60-90 days a year earlier. Past due loans 90+ days at quarter end totaled $987,000 at December 31, 2024, compared to $1.35 million, at December 31, 2023. Of the $8.32 million in past due loans at December 31, 2024, $2.79 million were purchased government guaranteed loans, which are guaranteed by the SBA for the full payment of the principal plus interest.

 
Delinquent Loan Summary 
                                                   --- 
                                                    Purchased Govt. 
(in thousands)                           Organic       Guaranteed     Total 
--------------------------------------  ---------  -----------------  ------ 
 
Delinquent accruing loans 30-59 days     $  2,184    $         2,702  $4,886 
Delinquent accruing loans 60-89 days        2,449                 --   2,449 
Delinquent accruing loans 90+ days            897                 90     987 
                                            -----  ---  ------------   ----- 
Total delinquent accruing loans          $  5,530    $         2,792  $8,322 
                                            -----  ---  ------------   ----- 
 
Non-Accrual Loan Summary 
                                                   --- 
                                                    Purchased Govt. 
(in thousands)                           Organic       Guaranteed     Total 
--------------------------------------  ---------  -----------------  ------ 
 
Loans on non-accrual                     $  9,894    $            --  $9,894 
Non-accrual loans with SBA guarantees       8,036                 --   8,036 
                                            -----  ---  ------------   ----- 
Net Bank exposure to non-accrual loans   $  1,858    $            --  $1,858 
                                            -----  ---  ------------   ----- 
 

There was a $1,671,000 provision for credit losses in the fourth quarter of 2024, compared to $769,000 provision for credit losses in the fourth quarter a year ago, and a $762,000 provision for credit losses booked in the third quarter of 2024. The provision recorded during the fourth quarter of 2024 is the result of loan portfolio growth and charge-off activity.

"We watch the SBA portfolio very closely since rates have increased so rapidly over the last two years, putting pressure on borrowers. A majority of the loans within the portfolio are floating rate loans tied to WSJ Prime and reset quarterly. Borrowers saw a 50bps reduction in their rates on January 1, 2025 resulting from the 50bps reduction in WSJ Prime during the fourth quarter," added Miller. "A portion of the portfolio consists of fully guaranteed loans the Company has purchased, as well as organic SBA and USDA loans the Bank has originated. When the effect of these guarantees is considered relative to the loan portfolio, the ratio of allowance for credit losses to the total, non-guaranteed, loan portfolio was 1.17%, as of December 31, 2024, and our total non-guaranteed exposure on these SBA loans is $41.19 million spread over 220 loans."

"We incurred net charge offs of $1,287,000 during the current quarter, compared to $766,000 in net charge offs in the fourth quarter a year ago, and $4,000 in net recoveries in the preceding quarter," said Miller. "Our loan portfolio increased 15% from a year ago with commercial real estate ("CRE") loans representing 62% of the total loan portfolio. Within the CRE portfolio, there are $52.18 million in loans for CRE office as shown in the table below. Since the majority of our CRE office exposure is concentrated in the Central Valley, we are experiencing less volatility than city center CRE markets. Our credit metrics remain strong as we continue to maintain conservative underwriting standards."

 
(in thousands)              CRE Office Exposure of December 31, 2024 
Region                  Owner-Occupied        Non-Owner Occupied     Total 
------------------  -----------------------  --------------------  --------- 
Central Valley        $              26,188     $          14,307  $  40,495 
Southern 
 California                           2,281                   353      2,634 
Other California                      4,527                 3,995      8,522 
                    ---  ------------------  ----  --------------   -------- 
   Total 
    California                       32,996                18,655     51,651 
   Out of 
    California                           --                   530        530 
                    ---  ------------------  ----  --------------   -------- 
      Total CRE 
       Office         $              32,996     $          19,185  $  52,181 
                    ---  ------------------  ----  --------------   -------- 
 

As of this release, the Company is not aware of any material impact on its loan portfolio or collateral due to the Southern California wildfires occurring in January 2025. The situation is still evolving, and the Company will continue to monitor for potential exposure and impact.

The ratio of allowance for credit losses to total loans was 1.10% at December 31, 2024, compared to 1.08% a year earlier and 1.15% at September 30, 2024.

About FFB Bancorp

FFB Bancorp, formerly Communities First Financial Corporation, a bank holding company established in 2014, is the parent company of FFB Bank, founded in 2005 in Fresno, California. As a leading SBA Lender in California's Central Valley and one of the few direct acquiring banks in the United States, FFB Bank offers clients a range of personal and business checking accounts, payment processes, and loan programs. Among the Bank's awards and accomplishments, it was ranked #1 on American Banker's list of the Top 20 Publicly Traded Banks under $2 Billion in Assets for 2024. For 2022, the Bank was also ranked by S&P Global as the #18 best performing community bank under $3 billion in assets. The Company has also received recognition as part of the OTCQX Best 50 Companies for 2019, 2023, and 2024. For additional information, you can visit the Company's website at www.ffb.bank or by contacting a representative at 559-439-0200.

Forward Looking Statements

This earnings release may contain forward-looking statements. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance, nor should they be relied upon as representing management's views as of any subsequent date. The forward-looking statements are based on managements' expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation, the Company's ability to effectively execute its business plans; the impact of the Order on our financial condition and results of operations; changes in general economic and financial market conditions; changes in interest rates; and, in particular, actions taken by the Federal Reserve to try and control inflation; changes in the competitive environment; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; losses, customer bankruptcy, claims and assessments; changes in banking regulations or other regulatory or legislative requirements affecting the Company's business; international developments; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. The Company undertakes no obligation to release publicly the results of any revisions to the forward-looking statements included herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events. The Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

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