BBCN Bancorp Reports 2014 First Quarter Financial Results

BBCN Bancorp, Inc. Company Logo

Q1 2014 Summary:

  • Net income totals $22.2 million, or $0.28 per diluted common share
  • New loan production for the quarter amounts to $298 million
  • Loans receivable increase to $5.19 billion, reflecting a 2% increase over December 31, 2013
  • Total deposits increase to $5.33 billion, reflecting a 4% increase during the quarter
  • Total assets increase to $6.67 billion, reflecting a 3% increase over the preceding quarter

LOS ANGELES, April 21, 2014 (GLOBE NEWSWIRE) -- BBCN Bancorp, Inc. (the "Company") (Nasdaq:BBCN), the holding company of BBCN Bank (the "Bank"), today reported net income of $22.2 million, or $0.28 per diluted common share, for the three months ended March 31, 2014. This compares with net income of $18.1 million, or $0.23 per diluted common share, for the preceding 2013 fourth quarter and $17.5 million, or $0.22 per diluted common share, for the year-ago first quarter.

"We are very pleased to have started off 2014 with another strong quarter of loan production, which, together with the benefits from the two acquisitions completed last year, contributed to a 10% increase in revenue generation over the prior-year period," said Kevin S. Kim, Chairman and Chief Executive Officer of BBCN Bancorp, Inc. "We originated more than $298 million in new loans during the first quarter of 2014, reflecting a 35% increase over the first quarter a year ago. We attribute the robust levels of originations to the dedicated efforts of our skilled relationship managers on our lending teams and our leadership as the dominant Korean-American bank in all five of our core geographic markets. We continue to maintain a high level of profitability, with our annualized pre-tax, pre-provision earnings representing 2.44% of average assets, which is resulting in a significant amount of capital being generated for reinvestment in the Company. Looking forward into 2014, we believe BBCN is well positioned with a best-in-class executive management team and an expanding product and service offering to further the growth of our franchise for the benefit of our customers, employees and shareholders."

Financial Highlights

(Dollars in thousands, except per share data) At or for the Three Months Ended
3/31/2014 12/31/2013 3/31/2013
Net income $ 22,196 $ 18,071 $ 17,461
Diluted earnings per share $ 0.28 $ 0.23 $ 0.22
Net interest income before provision for loan losses $ 64,966 $ 66,876 $ 59,716
Net interest margin 4.29% 4.45% 4.49%
Noninterest income $ 11,095 $ 11,356 $ 9,940
Noninterest expense $ 36,275 $ 38,164 $ 33,275
Net loans receivable $ 5,125,095 $ 5,006,856 $ 4,426,778
Deposits $ 5,334,560 $ 5,148,057 $ 4,555,674
Nonaccrual loans (1) $ 47,134 $ 39,154 $ 42,269
ALLL to loans receivable 1.27% 1.33% 1.63%
ALLL to nonaccrual loans (1) 138.86% 171.94% 173.34%
ALLL to nonperforming assets (1) (2) 62.66% 69.15% 88.34%
Provision for loan losses $ 3,026 $ 10,950 $ 7,506
Net charge offs $ 4,647 $ 9,345 $ 1,179
ROA 1.36% 1.13% 1.22%
ROE 10.48% 8.92% 9.13%
Efficiency ratio 47.69% 48.78% 47.77%
(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $31.2 million, $27.5 million and $18.6 million at March 31, 2014, December 31, 2013 and March 31, 2013, respectively.
(2) Nonperforming assets exclude acquired credit impaired loans totaling $46.0 million, $43.8 million and $21.6 million at March 31, 2014, December 31, 2013 and March 31, 2013, respectively.

Operating Results for the First Quarter of 2014

The comparability of BBCN's operating results with past performance is impacted by acquisition accounting adjustments related to past acquisitions. The Company provides the following supplemental information to facilitate a better understanding of past financial performance. Operating results for the three months ended March 31, 2014, December 31, 2013 and March 31, 2013 include the following pre-tax acquisition accounting adjustments related to mergers:

Three Months Ended
March 31, December 31, March 31,
2014 2013 2013
Accretion of discount on acquired performing loans $ 3,202 $ 4,873 $ 4,076
Accretion of discount on acquired credit impaired loans 2,645 2,480 1,522
Amortization of premium on acquired FHLB borrowings 92 94 91
Accretion of discount on acquired subordinated debt (91) (107) (43)
Amortization of premium on acquired time deposits 314 369 438
Increase to pre-tax income $ 6,162 $ 7,709 $ 6,084

Net Interest Income and Net Interest Margin. Net interest income before provision for loan losses for the first quarter of 2014 totaled $65.0 million, compared with $66.9 million in the preceding fourth quarter of 2013. The Company attributed the decline largely to a decline in the net interest margin. Compared with prior-year first quarter, net interest income before provision for loan losses for the current first quarter increased 9%, largely reflecting a 14% increase in the average interest earning assets.

The net interest margin (net interest income divided by average interest-earning assets) and the impact of acquisition accounting adjustments are summarized in the following table:

Three Months Ended
3/31/2014 12/31/2013 change 3/31/2013 change
Net interest margin, excluding the effect of acquisition accounting adjustments 3.82% 3.87% (0.05)% 3.97% (0.15)%
Acquisition accounting adjustments 0.47 0.58 (0.11) 0.52 (0.05)
Net interest margin 4.29% 4.45% (0.16)% 4.49% (0.20)%

The net interest margin for the 2014 first quarter decreased 16 basis points from the preceding 2013 fourth quarter to 4.29%. On a core basis, excluding the effect of acquisition accounting adjustments, the net interest margin for the 2014 first quarter decreased only 5 basis points from the preceding 2013 fourth quarter.

Compared with the prior-year period, net interest margin for the 2014 first quarter declined 20 basis points. Excluding the effect of acquisition accounting adjustments, the core net interest margin for the first quarter of 2014 declined 15 basis points from the year-ago period.

The Company largely attributed the declines in the net interest margin from the comparable periods to decreases in the weighted average yield on loans.

The weighted average yield on loans and the impact of acquisition accounting adjustments are summarized in the following table:

Three Months Ended
3/31/2014 12/31/2013 change 3/31/2013 change
Weighted average yield on loans, excluding the effect of acquisition accounting adjustments 4.83% 4.90% (0.07)% 5.15% (0.32)%
Acquisition accounting adjustments 0.54 0.69 (0.15) 0.60 0.06
Weighted average yield on loans 5.37% 5.59% (0.22)% 5.75% (0.38)%

The weighted average yield on loans for the 2014 first quarter decreased 22 basis points from the preceding 2013 fourth quarter, but decreased only 7 basis points on a core basis when excluding the effect of acquisition accounting adjustments. The weighted average yield on new loans originated during the 2014 first quarter was 4.53%, reflecting a 3 basis point increase from 4.50% for the preceding 2013 fourth quarter. Compared with the prior-year period, the weighted average yield on loans for the 2014 first quarter decreased 38 basis points and 32 basis points on a core basis, excluding the effect of acquisition accounting adjustments.

The composition of fixed and variable rate loans and the associated weighted average contractual rates are summarized in the following table:

3/31/2014 12/31/2013 change 3/31/2013 change
Fixed rate loans
As a percentage of total loans 49% 48% 2% 40% 23%
Weighted average contractual rate 4.90% 4.99% (0.09)% 5.47% (0.57)%
Variable rate loans
As a percentage of total loans 51% 52% (2)% 60% (15)%
Weighted average contractual rate 4.33% 4.37% (0.04)% 4.49% (0.16)%

The decrease in the weighted average contractual rate for fixed rate loans for the 2014 first quarter reflects what continues to be a highly competitive rate environment for fixed rate commercial real estate loans in the current interest rate environment.

The weighted average cost of deposits and the impact of acquisition accounting adjustments are summarized in the following table:

Three Months Ended
3/31/2014 12/31/2013 change 3/31/2013 change
Weighted average cost of deposits, excluding the effect of acquisition accounting adjustments 0.55% 0.52% 0.03% 0.53% 0.02%
Acquisition accounting adjustments (0.03) (0.02) (0.01) (0.04) 0.01
Weighted average cost of deposits 0.52% 0.50% 0.02% 0.49% 0.03%

The weighted average cost of deposits for the 2014 first quarter was relatively stable with the preceding fourth quarter, up 2 basis points on a reported basis and up 3 basis points on a core basis, excluding the effect of amortization of premium on time deposits assumed in mergers. Compared with the prior-year period, the weighted average cost of deposits for the 2014 first quarter increased 3 basis points and increased 2 basis points on a core basis, excluding the effect of premium amortization on time deposits assumed in mergers.

Noninterest Income. Total noninterest income for the 2014 first quarter amounted to $11.1 million, reflecting a 2% decrease from $11.4 million in the preceding 2013 fourth quarter and a 12% increase over $9.9 million in the prior-year first quarter. The modest decrease in noninterest income from the preceding quarter was primarily attributable lower levels of service fees on deposit accounts and other income and fees. The increase in total noninterest income for the 2014 first quarter over the prior-year period predominantly reflects higher levels of service fees on deposit accounts as a result of the Foster and Pacific International acquisitions.

Noninterest Expense. Total noninterest expense for the first quarter of 2014 amounted to $36.3 million, reflecting a 5% decrease from $38.2 million in the preceding 2013 fourth quarter and a 9% increase over $33.3 million in the prior-year first quarter. Salaries and benefits expense for the 2014 first quarter included separation payments related to the retirement of the Bank's former chief executive officer. Compared with the prior-year first quarter, the increase in salaries and benefits expense reflects the increase in FTEs related to Foster, as well as the full quarter impact of the Pacific International the acquisition completed February 15, 2013. The total number of FTEs was 860 as of March 31, 2014, 835 as of December 31, 2013, and 762 as of March 31, 2013.

In addition, the Company noted that total noninterest expenses include merger and integration related expenses, which totaled $173,000, $2.5 million, and $1.3 million for the 2014 first quarter, the 2013 fourth quarter and 2013 first quarter, respectively. Merger and integration related expenses for the 2014 first quarter included miscellaneous expenses associated with the integration of Foster Bankshares.

Income Tax Provision. The effective tax rate for the 2014 first quarter was 39.6%, compared with 37.9% for the preceding 2013 fourth quarter and 39.5% for the 2013 first quarter.

Balance Sheet Summary

Loans receivable totaled $5.19 billion at March 31, 2014, reflecting a 2% increase over $5.07 billion at December 31, 2013, and an increase of 15% over $4.50 billion a year earlier at March 31, 2013.

Total new loan originations during the first quarter of 2014 amounted to $296.7 million, including SBA loan originations of $42.3 million. Sales of SBA loans to the secondary market and gains derived from those sales are based substantially on the production of SBA 7(a) loans. Production of SBA 7(a) loans amounted to $38.1 million for the first quarter of 2014, compared with $35.5 million for the preceding 2013 fourth quarter. During the 2014 first quarter, the Company sold $30.3 million of its SBA loans held for sale.

Aggregate pay offs and pay downs during the 2014 first quarter amounted to $195.9 million, compared with $209.7 million for the preceding fourth quarter and $154.5 million for the year-ago first quarter.

Total deposits amounted to $5.33 billion at March 31, 2014, compared with $5.15 billion at December 31, 2013 and $4.56 billion a year earlier at March 31, 2013. The increase from the end of the prior quarter is attributed to increases across all deposit categories with the exception of savings deposits. Noninterest bearing deposits at March 31, 2014 totaled $1.44 billion and accounted for 27% of total deposits.

Credit Quality

The provision for loan losses for the 2014 first quarter was $3.0 million, compared with $11.0 million for the preceding 2013 fourth quarter and $7.5 million for the prior-year first quarter.

For a more detailed understanding of the changes in the Allowance for Loan and Lease Losses ("ALLL"), the composition of the ALLL has been segmented for disclosure purposes between loans accounted for under the amortized cost method (referred to as "Legacy Loans") and loans acquired through the Center Financial, Pacific International and Foster transactions (referred to as "Acquired Loans"). The Acquired Loans are further segregated between performing and credit impaired loans.

The composition of the ALLL as of March 31, 2014, December 31, 2013, and March 31, 2013 is as follows:

(dollars in thousands) 3/31/2014 12/31/2013 3/31/2013
Legacy Loans (1) $ 58,203 $ 59,978 $ 62,469
Acquired Performing Loans (2) 1,937 2,564 6,265
Acquired Credit Impaired Loans (2) 5,560 4,778 4,534
Total ALLL $ 65,700 $ 67,320 $ 73,268
Loans receivable $ 5,190,795 $ 5,074,176 $ 4,500,046
ALLL coverage ratio 1.27% 1.33% 1.63%
(1) Legacy Loans include loans originated by the Bank's predecessor bank, loans originated
by BBCN and loans that were acquired and that have been refinanced as new loans.
(2) Acquired Loans were marked to fair value at acquisition date, and the allowance for loan
losses reflect provisions for credit deterioration since the acquisition date.

Following are the components of criticized loan balances as of March 31, 2014, December 31, 2013, and March 31, 2013:

(dollars in thousands) 3/31/2014 12/31/2013 3/31/2013
Special Mention (1) $ 93,553 $ 89,489 $ 112,403
Classified (1) $ 253,342 $ 266,361 $ 229,354
Criticized $ 346,895 $ 355,850 $ 341,757
(1) Balances include Acquired Loans which were marked to fair value on the date of acquisition.

The Company defines nonperforming loans to include delinquent loans past due 90 days or more on nonaccrual status, plus delinquent loans past due 90 days or more on accrual status (excluding acquired credit impaired loan balances) and accruing restructured loans. Nonperforming loans at March 31, 2014 totaled $84.8 million, or 1.63% of loans receivable. This includes the addition of an aggregate $4.2 commercial credit relationship, which was downgraded to nonaccrual status during the 2014 first quarter, but for which a $2.6 million specific reserve was established and subsequently included in the Company's 2013 fourth quarter financial results, as previously reported. Following a $3.0 million charge off related to this credit, a $1.2 million outstanding balance remains in nonaccrual. In comparison, nonperforming loans totaled $73.1 million, or 1.44% of loans receivable, at December 31, 2013 and $74.5 million, or 1.66% of loans receivable, at March 31, 2013.

Nonperforming assets, including other real estate owned, amounted to $104.8 million at March 31, 2014, or 1.57% of total assets, compared with $97.4 million, or 1.50% of total assets, at December 31, 2013 and $82.9 million, or 1.42% of total assets, at March 31, 2013.

Net loan charge-offs for the 2014 first quarter totaled $4.6 million, including the $3.0 million charge off mentioned above, and equaled 0.36% of average loans on an annualized basis. This compares with net loan charge offs of $9.3 million, or 0.75% of average loans on an annualized basis, for the preceding 2013 fourth quarter and $1.2 million, or 0.11% of average loans on an annualized basis, for the year-ago first quarter.

The allowance for loan losses at March 31, 2014 was $65.7 million, or 1.27% of gross loans receivable (excluding loans held for sale), compared with $67.3 million, or 1.33%, at December 31, 2013 and $73.3 million, or 1.63%, at March 31, 2013. The coverage ratio of the allowance for loan losses to nonperforming loans (excluding acquired loans past due 90 days or more on accrual status) was 77.44% at March 31, 2014, compared with 92.14% at December 31, 2013 and 98.32% at March 31, 2013.

Impaired loans (defined as loans for which it is probable that not all principal and interest payments due will be collected in accordance with the contractual terms) totaled $121.8 million at March 31, 2014, compared with $116.3 million at December 31, 2013 and $102.0 million at March 31, 2013.

Capital

At March 31, 2014, the Company continued to exceed all regulatory capital requirements to be classified as a "well-capitalized" institution, as summarized in the following table.

3/31/2014 12/31/2013 3/31/2013
Leverage Ratio 11.79% 11.97% 12.64%
Tier 1 Risk-based Ratio 13.46% 13.66% 14.62%
Total Risk-based Ratio 14.70% 14.90% 15.88%

As previously disclosed, on March 17, 2014, the Company redeemed $15.0 million in trust preferred securities issued by Foster.

Tangible common equity per share and as a percentage of tangible assets are summarized in the following table:

3/31/2014 12/31/2013 3/31/2013
Tangible common equity per share (1) $9.08 $8.79 $8.57
Tangible common equity to tangible assets (1) 11.00% 10.97% 11.77%
(1) Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and net other intangible assets divided by total assets less goodwill and net other intangible assets. Management reviews tangible common equity to tangible assets in evaluating the Company's capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital. The accompanying financial information includes a reconciliation of the ratio of tangible common equity to tangible assets with stockholders' equity and total assets.

Investor Conference Call

The Company will host an investor conference call on Tuesday, April 22, 2014 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for the first quarter of 2014. Investors and analysts may access the conference call by dialing 800-762-8779 (domestic) or 480-629-9645 (international), passcode 4678728 or "BBCN Bancorp." Other interested parties are invited to listen to a live webcast of the call available at the Investor Relations section of BBCN Bancorp's website at BBCNbank.com. After the live webcast, a replay will remain available in the Investor Relations section of BBCN Bancorp's website for one year. A replay of the call will be available at 800-406-7325 (domestic) or 303-590-3030 (international) through April 29, 2014, passcode 4678728.

About BBCN Bancorp, Inc.

BBCN Bancorp, Inc. is the holding company of BBCN Bank, the largest Korean-American bank in the nation with $6.7 billion in assets as of March 31, 2014. Headquartered in Los Angeles and serving a diverse mix of customers mirroring its communities, BBCN operates 49 branches in California, New York, New Jersey, Illinois, Washington and Virginia, along with six loan production offices in Seattle, Denver, Dallas, Atlanta, Northern California and Annandale, Virginia. BBCN specializes in core business banking products for small and medium-sized businesses, with an emphasis in commercial real estate and business lending, SBA lending and international trade financing. BBCN Bank is a California-chartered bank and its deposits are insured by the FDIC to the extent provided by law. BBCN is an Equal Opportunity Lender.

Forward-Looking Statements

This press release contains forward-looking statements, including statements about future operations and projected full-year financial results that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward looking statements. These risks and uncertainties include but are not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services, and pricing. Readers should carefully review the risk factors and the information that could materially affect the Company's financial results and business, described in documents the Company files from time to time with the Securities and Exchange Commission, including its quarterly reports on Form 10-Q and Annual Reports on Form 10-K, and particularly the discussions of business considerations and certain factors that may affect results of operations and stock price set forth therein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.

(tables follow)

BBCN Bancorp, Inc.
Consolidated Financial Statements and Selected Financial Data
Unaudited (Dollars in Thousands, Except per Share Data)
Assets 3/31/2014 12/31/2013 % change 3/31/2013 % change
Cash and due from banks $ 403,111 $ 316,705 27% $ 280,813 44%
Securities available for sale, at fair value 725,229 705,751 3% 717,441 1%
Federal Home Loan Bank and Federal Reserve Bank stock 27,902 27,941 0% 24,308 15%
Loans held for sale, at the lower of cost or fair value 38,157 44,115 -14% 48,941 -22%
Loans receivable 5,190,794 5,074,176 2% 4,500,046 15%
Allowance for loan losses (65,699) (67,320) -2% (73,268) -10%
Net loans receivable 5,125,095 5,006,856 2% 4,426,778 16%
Accrued interest receivable 13,410 13,403 0% 13,271 1%
Premises and equipment, net 31,290 30,894 1% 22,960 36%
Bank owned life insurance 45,062 44,770 1% 44,079 2%
Goodwill 105,401 105,401 0% 93,404 13%
Other intangible assets, net 4,859 5,184 -6% 3,401 43%
Other assets 148,035 174,179 -15% 158,201 -6%
Total assets $ 6,667,551 $ 6,475,199 3% $ 5,833,597 14%
Liabilities
Deposits $ 5,334,560 $ 5,148,057 4% $ 4,555,674 17%
Borrowings from Federal Home Loan Bank 421,260 421,352 0% 421,632 0%
Subordinated debentures 42,037 57,410 -27% 45,996 -9%
Accrued interest payable 5,740 4,821 19% 4,325 33%
Other liabilities 31,795 34,185 -7% 33,695 -6%
Total liabilities 5,835,392 5,665,825 3% 5,061,322 15%
Stockholders' Equity
Common stock, $0.001 par value; authorized, 150,000,000 shares at March 31, 2014, December 31, 2013 and March 31, 2013; issued and outstanding, 79,488,899, 79,441,525 and 78,812,140 at March 31, 2014, December 31, 2013 and March 31, 2013, respectively 79 79 0% 79 0%
Capital surplus 540,979 540,876 0% 535,091 1%
Retained earnings 294,842 278,604 6% 230,149 28%
Accumulated other comprehensive income, net (3,741) (10,185) -63% 6,956 -154%
Total stockholders' equity 832,159 809,374 3% 772,275 8%
Total liabilities and stockholders' equity $ 6,667,551 $ 6,475,199 3% $ 5,833,597 14%
Three Months Ended
3/31/2014 12/31/2013 % change 3/31/2013 % change
Interest income:
Interest and fees on loans $ 68,694 $ 70,435 -2% $ 63,029 9%
Interest on securities 4,095 3,971 3% 3,427 19%
Interest on federal funds sold and other investments 565 510 11% 287 97%
Total interest income 73,354 74,916 -2% 66,743 10%
Interest expense:
Interest on deposits 6,690 6,307 6% 5,408 24%
Interest on other borrowings 1,698 1,733 -2% 1,619 5%
Total interest expense 8,388 8,040 4% 7,027 19%
Net interest income before provision for loan losses 64,966 66,876 -3% 59,716 9%
Provision for loan losses 3,026 10,950 -72% 7,506 -60%
Net interest income after provision for loan losses 61,940 55,926 11% 52,210 19%
Noninterest income:
Service fees on deposit accounts 3,472 3,720 -7% 2,875 21%
Net gains on sales of SBA loans 2,722 2,699 1% 2,694 1%
Net gains on sales of other loans -- -- 0% 43 -100%
Net gains on sales of securities available-for-sale -- -- 0% 54 -100%
Net valuation gains on interest swaps and caps -- -- 0% -- 0%
Net gains (loss) on sales of OREO 406 (45) -1002% 2 20200%
Other income and fees 4,495 4,982 -10% 4,272 5%
Total noninterest income 11,095 11,356 -2% 9,940 12%
Noninterest expense:
Salaries and employee benefits 18,938 17,719 7% 16,332 16%
Occupancy 4,623 4,470 3% 4,011 15%
Furniture and equipment 2,014 1,895 6% 1,573 28%
Advertising and marketing 1,088 1,328 -18% 1,273 -15%
Data processing and communications 2,122 2,107 1% 1,644 29%
Professional fees 1,313 1,010 30% 1,301 1%
FDIC assessment 1,023 939 9% 694 47%
Merger and integration expenses 173 2,540 -93% 1,305 -87%
Other 4,981 6,156 -19% 5,142 -3%
Total noninterest expense 36,275 38,164 -5% 33,275 9%
Income before income taxes 36,760 29,118 26% 28,875 27%
Income tax provision 14,564 11,047 32% 11,414 28%
Net income $ 22,196 $ 18,071 23% $ 17,461 27%
Earnings Per Common Share:
Basic $ 0.28 $ 0.23 $ 0.22
Diluted $ 0.28 $ 0.23 $ 0.22
Average Shares Outstanding:
Basic 79,489,579 79,350,797 78,389,434
Diluted 79,639,479 79,520,193 78,480,671
Three months ended
3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
Net Income $ 22,196 $ 18,071 $ 23,552 $ 22,671 $ 17,461
Add back: Income tax 14,564 11,047 15,117 14,821 11,414
Add back: Provision for loan losses 3,026 10,950 744 800 7,506
Pre-tax, pre-provision income (PTPP) 1 $ 39,786 $ 40,068 $ 39,413 $ 38,292 $ 36,381
PTPP to average assets (annualized) 2.44% 2.51% 2.56% 2.60% 2.54%
1 While pre-tax, pre-provision income is a non-GAAP performance measure, we believe it is a useful measure in analyzing underlying performance trends, particularly in times of economic stress. It is the level of earnings adjusted to exclude the impact of income tax and provision expense.
At or for the Three Months Ended (Annualized)
Profitability measures: 3/31/2014 12/31/2013 3/31/2013
ROA 1.36% 1.13% 1.22%
ROE 10.84% 8.92% 9.13%
Return on average tangible equity 2 12.52% 10.51% 10.42%
Net interest margin 4.29% 4.45% 4.49%
Efficiency ratio 47.69% 48.78% 47.77%
2 Average tangible equity is calculated by subtracting average goodwill and average other intangibles from average stockholders' equity. This is non-GAAP measure that we believe provides investors wth information that is useful in understanding our financial performance and position.
Three Months Ended Three Months Ended Three Months Ended
3/31/2014 12/31/2013 3/31/2013
Interest Annualized Interest Annualized Interest Annualized
Average Income/ Average Average Income/ Average Average Income/ Average
Balance Expense Yield/Cost Balance Expense Yield/Cost Balance Expense Yield/Cost
INTEREST EARNING ASSETS:
Gross loans, includes loans held for sale $ 5,183,801 $ 68,694 5.37% $ 4,999,586 $ 70,435 5.59% $ 4,444,313 $ 63,029 5.75%
Securities available for sale 698,931 4,095 2.34% 702,886 3,971 2.26% 691,984 3,427 1.98%
FRB and FHLB stock and other investments 259,107 565 0.87% 258,270 510 0.77% 257,526 287 0.45%
Federal funds sold -- -- NA -- -- NA -- -- NA
Total interest earning assets $ 6,141,839 $ 73,354 4.84% $ 5,960,742 $ 74,916 4.99% $ 5,393,823 $ 66,743 5.01%
INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest-bearing $ 1,392,300 $ 2,277 0.66% $ 1,327,322 $ 2,082 0.62% $ 1,265,967 $ 1,873 0.60%
Savings 217,426 600 1.12% 226,638 657 1.15% 186,189 754 1.64%
Time deposits:
$100,000 or more 1,561,170 2,679 0.70% 1,468,459 2,413 0.65% 1,161,322 1,730 0.60%
Other 663,978 1,134 0.69% 662,029 1,155 0.69% 695,802 1,051 0.61%
Total time deposits 2,225,148 3,813 0.69% 2,130,488 3,568 0.66% 1,857,124 2,781 0.61%
Total interest bearing deposits 3,834,874 6,690 0.71% 3,684,448 6,307 0.68% 3,309,280 5,408 0.66%
FHLB advances 421,318 1,211 1.17% 420,319 1,204 1.14% 422,944 1,224 1.17%
Other borrowings 52,400 487 3.72% 56,453 529 3.67% 42,264 395 3.74%
Total interest bearing liabilities 4,308,592 $ 8,388 0.79% 4,161,220 $ 8,040 0.77% 3,774,488 $ 7,027 0.75%
Noninterest bearing demand deposits 1,353,719 1,379,230 1,138,690
Total funding liabilities/cost of funds $ 5,662,311 0.60% $ 5,540,450 0.58% $ 4,913,178 0.58%
Net interest income/net interest spread $ 64,966 4.05% $ 66,876 4.22% $ 59,716 4.26%
Net interest margin 4.29% 4.45% 4.49%
Net interest margin, excluding effect of
nonaccrual loan income (expense) 4.30% 4.47% 4.47%
Net interest margin, excluding effect of
nonaccrual loan income (expense) and prepayment fee income 4.26% 4.44% 4.46%
Nonaccrual loan income (reversed) recognized $ (197) $ (280) $ 236
Prepayment fee income received 309 537 63
Net $ 112 $ 257 $ 299
Cost of deposits:
Noninterest bearing demand deposits $ 1,353,719 $ -- $ 1,379,230 $ -- $ 1,138,690 $ --
Interest bearing deposits 3,834,874 6,690 0.71% 3,684,448 6,307 0.68% 3,309,280 5,409 0.66%
Total deposits $ 5,188,593 $ 6,690 0.52% $ 5,063,678 $ 6,307 0.50% $ 4,447,970 $ 5,409 0.49%
.
Three Months Ended
3/31/2014 12/31/2013 % change 3/31/2013 % change
AVERAGE BALANCES
Gross loans, includes loans held for sale $ 5,183,801 $ 4,999,586 4% $ 4,444,313 17%
Investments 958,038 961,156 0% 949,510 1%
Interest earning assets 6,141,839 5,960,742 3% 5,393,830 14%
Total assets 6,525,548 6,393,648 2% 5,727,738 14%
Interest bearing deposits 3,834,874 3,684,448 4% 3,309,280 16%
Interest bearing liabilities 4,308,592 4,161,220 4% 3,774,488 14%
Noninterest bearing demand deposits 1,353,719 1,379,230 -2% 1,138,690 19%
Stockholders' equity 819,344 810,563 1% 765,230 7%
Net interest earning assets 1,833,247 1,799,522 2% 1,619,342 13%
3/31/2014 12/31/2013 % change 3/31/2013 % change
LOAN PORTFOLIO COMPOSITION:
Commercial loans $ 1,058,665 $ 1,073,778 -1% $ 1,078,253 -2%
Real estate loans 4,034,998 3,904,059 3% 3,374,732 20%
Consumer and other loans 98,895 98,507 0% 48,881 102%
Loans outstanding 5,192,558 5,076,344 2% 4,501,866 15%
Unamortized deferred loan fees - net of costs (1,763) (2,168) -19% (1,820) -3%
Loans, net of deferred loan fees and costs 5,190,795 5,074,176 2% 4,500,046 15%
Allowance for loan losses (65,699) (67,320) -2% (73,268) -10%
Loan receivable, net $ 5,125,096 $ 5,006,856 2% $ 4,426,778 16%
REAL ESTATE LOANS BY PROPERTY TYPE: 3/31/2014 12/31/2013 % change 3/31/2013 % change
Retail buildings $ 1,166,573 $ 1,140,103 2% $ 914,809 28%
Hotels/motels 734,141 720,175 2% 642,470 14%
Gas stations/car washes 534,078 522,198 2% 483,151 11%
Mixed-use facilities 331,571 312,156 6% 303,286 9%
Warehouses 415,635 383,979 8% 356,724 17%
Multifamily 193,503 181,503 7% 147,383 31%
Other 659,497 643,945 2% 526,909 25%
Total $ 4,034,998 $ 3,904,059 3% $ 3,374,732 20%
DEPOSIT COMPOSITION 3/31/2014 12/31/2013 % change 3/31/2013 % change
Noninterest bearing demand deposits $ 1,442,348 $ 1,399,454 3% $ 1,182,509 22%
Money market and other 1,391,541 1,376,068 1% 1,269,388 10%
Saving deposits 210,973 222,446 -5% 192,208 10%
Time deposits of $100,000 or more 1,589,751 1,499,248 6% 1,237,366 28%
Other time deposits 699,947 650,841 8% 674,203 4%
Total deposit balances $ 5,334,560 $ 5,148,057 4% $ 4,555,674 17%
DEPOSIT COMPOSITION (%) 3/31/2014 12/31/2013 3/31/2013
Noninterest bearing demand deposits 27.1% 27.2% 26.0%
Money market and other 26.1% 26.7% 27.9%
Saving deposits 4.0% 4.3% 4.2%
Time deposits of $100,000 or more 29.8% 29.1% 27.2%
Other time deposits 13.1% 12.6% 14.8%
Total deposit balances 100.0% 100.0% 100.0%
CAPITAL RATIOS 3/31/2014 12/31/2013 3/31/2013
Total stockholders' equity $ 832,159 $ 809,374 $ 772,275
Tier 1 risk-based capital ratio 13.46% 13.66% 14.63%
Total risk-based capital ratio 14.70% 14.90% 15.88%
Tier 1 leverage ratio 11.79% 11.97% 12.64%
Book value per common share $ 10.46 $ 10.18 $ 9.79
Tangible common equity per share3 $ 9.08 $ 8.79 $ 8.57
Tangible common equity to tangible assets3 11.00% 10.97% 11.77%
3 Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and other intangible assets, net divided by total assets less goodwill and other intangible assets, net. Management reviews tangible common equity to tangible assets in evaluating the Company's capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital.
Reonciliation of GAAP financial measures to non-GAAP financial measures:
3/31/2014 12/31/2013 3/31/2013
Total stockholders' equity $ 832,159 $ 809,374 $ 772,275
Less: Common stock warrant (378) (378) (378)
Goodwill and other intangible assets, net (110,260) (110,585) (96,805)
Tangible common equity $ 721,521 $ 698,411 $ 675,092
Total assets $ 6,667,551 $ 6,475,199 $ 5,833,597
Less: Goodwill and other intangible assets, net (110,260) (110,585) (96,805)
Tangible assets $ 6,557,291 $ 6,364,614 $ 5,736,792
Common shares outstanding 79,488,899 79,441,525 78,812,140
Tangible common equity to tangible assets 11.00% 10.97% 11.77%
Tangible common equity per share $ 9.08 $ 8.79 $ 8.57
Three Months Ended
ALLOWANCE FOR LOAN LOSSES: 3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
Balance at beginning of period $ 67,320 $ 65,715 $ 71,675 $ 73,268 $ 66,941
Provision for loan losses 3,026 10,950 744 800 7,506
Recoveries 616 605 1,086 507 250
Charge offs (5,263) (9,950) (7,790) (2,900) (1,429)
Balance at end of period $ 65,699 $ 67,320 $ 65,715 $ 71,675 $ 73,268
Net charge offs/average gross loans (annualized) 0.36% 0.75% 0.56% 0.21% 0.11%
Three Months Ended
NET CHARGED OFF LOANS BY TYPE 3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
Real estate loans $ 154 $ 288 $ 6,129 $ 744 $ 1,014
Commercial loans 4,414 9,139 119 1,684 150
Consumer loans 79 (82) (44) (35) 15
Charge offs excluding Acquired Credit Impaired Loans 4,647 9,345 6,204 2,393 1,179
Charge offs on Acquired Credit Impaired Loans -- -- 500 -- --
Total net charge offs $ 4,647 $ 9,345 $ 6,704 $ 2,393 $ 1,179
NONPERFORMING ASSETS 3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
Delinquent loans 90 days or more on nonaccrual status4 $ 47,314 $ 39,154 $ 36,129 $ 44,987 $ 42,269
Delinquent loans 90 days or more on accrual status5 -- 5 948 252 --
Accruing restructured loans 37,527 33,903 36,018 36,225 32,249
Total nonperforming loans 84,841 73,062 73,095 81,464 74,518
Other real estate owned 20,001 24,288 27,582 9,596 8,419
Total nonperforming assets $ 104,842 $ 97,350 $ 100,677 $ 91,060 $ 82,937
Nonperforming assets/total assets 1.57% 1.50% 1.59% 1.55% 1.42%
Nonperforming assets/loans receivable & OREO 2.01% 1.91% 2.04% 2.01% 1.84%
Nonperforming assets/total capital 12.60% 12.03% 12.57% 11.66% 10.74%
Nonperforming loans/loans receivable 1.63% 1.44% 1.49% 1.80% 1.66%
Nonaccrual loans/loans receivable 0.91% 0.77% 0.74% 1.00% 0.94%
Allowance for loan losses/loans receivable 1.27% 1.33% 1.34% 1.59% 1.63%
Allowance for loan losses/nonaccrual loans 138.86% 171.94% 181.89% 159.32% 173.34%
Allowance for loan losses/nonperforming loans (excludes delinquent loans 90 days or more on accrual status) 77.44% 92.14% 89.90% 87.98% 98.32%
Allowance for loan losses/nonperforming assets 62.66% 69.15% 65.27% 78.71% 88.34%
4 Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $31.2 million, $27.5 million, $25.2 million, $21.0 million and $18.6 million at March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively.
5 Excludes Acquired Credit Impaired Loans totaling $46.0 million, $43.8 million, $38.6 million, $18.5 million and $21.6 million at March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively.
BREAKDOWN OF ACCRUING RESTRUCTURED LOANS BY TYPE: 3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
Retail buildings $ 5,542 $ 5,576 $ 6,777 $ 6,812 $ 2,556
Hotels/motels 8,401 8,477 8,550 8,623 8,701
Gas stations/car washes -- -- -- -- --
Mixed-use facilities 796 802 807 811 816
Warehouses 812 482 485 489 492
Multifamily -- -- -- -- 3,247
Other6 21,976 18,567 19,399 19,490 16,437
Total $ 37,527 $ 33,904 $ 36,018 $ 36,225 $ 32,249
6 Includes commercial business and other loans
DELINQUENT LOANS LESS THAN 90 DAYS PAST DUE 3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
Legacy
30 - 59 days $ 1,700 $ 2,209 $ 1,705 $ 2,056 $ 1,174
60 - 89 days 445 266 732 85 2,411
Total delinquent loans less than 90 days past due - legacy $ 2,145 $ 2,475 $ 2,437 $ 2,141 $ 3,585
Acquired
30 - 59 days $ 4,916 $ 5,113 $ 4,013 $ 1,768 $ 10,878
60 - 89 days 3 2,506 1,663 2,121 258
Total delinquent loans less than 90 days past due - acquired $ 4,919 $ 7,619 $ 5,676 $ 3,889 $ 11,136
Total delinquent loans less than 90 days past due $ 7,064 $ 10,094 $ 32,107 $ 16,305 $ 29,985
DELINQUENT LOANS LESS THAN 90 DAYS PAST DUE BY TYPE 3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
Legacy
Real estate loans $ 760 $ 1,375 $ 1,664 $ 853 $ 2,870
Commercial loans 1,338 1,024 744 1,267 692
Consumer loans 47 76 29 21 23
Total delinquent loans less than 90 days past due - legacy $ 2,145 $ 2,475 $ 2,437 $ 2,141 $ 3,585
Acquired
Real estate loans $ 4,036 $ 6,034 $ 4,616 $ 2,695 $ 9,287
Commercial loans 598 1,228 833 1,167 1,448
Consumer loans 285 357 227 27 401
Total delinquent loans less than 90 days past due - acquired $ 4,919 $ 7,619 $ 5,676 $ 3,889 $ 11,136
Total delinquent loans less than 90 days past due $ 7,064 $ 10,094 $ 32,107 $ 16,305 $ 29,985
NONACCRUAL LOANS BY TYPE 3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
Real estate loans $ 34,070 $ 28,083 $ 26,616 $ 34,577 $ 33,751
Commercial loans 12,216 10,141 8,743 9,629 7,591
Consumer loans 1,028 930 770 781 927
Total non-accrual loans $ 47,314 $ 39,154 $ 36,129 $ 44,987 $ 42,269
CRITICIZED LOANS 3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
Legacy
Special mention $ 52,159 $ 46,480 $ 61,804 $ 66,774 $ 59,681
Substandard 111,529 120,163 100,551 97,692 94,303
Doubtful 3,332 359 8 152 455
Loss -- -- -- -- 22
Total criticized loans - legacy $ 167,020 $ 167,002 $ 162,363 $ 164,618 $ 154,461
Acquired
Special mention $ 41,395 $ 43,009 $ 49,827 $ 42,014 $ 52,722
Substandard 134,660 138,337 143,149 121,758 133,398
Doubtful 2,376 6,100 2,045 368 327
Loss 1,445 1,402 990 707 849
Total criticized loans - acquired $ 179,876 $ 188,848 $ 196,011 $ 164,847 $ 187,296
Total criticized loans $ 346,896 $ 355,850 $ 358,374 $ 329,465 $ 341,757

CONTACT: Angie Yang SVP, Investor Relations 213-251-2219 angie.yang@BBCNbank.com

Source:BBCN Bancorp, Inc.