BBCN Bancorp Reports Third Quarter 2012 EPS of $0.24 Per Share; Reinstates Quarterly Cash Dividend a
BBCN Bancorp Reports Third Quarter 2012 EPS of $0.24 Per Share; Reinstates Quarterly Cash Dividend at $0.05 Per Share
Q3 2012 Summary:
$18.4 million net income available to common stockholders, or $0.24 per diluted common share
$195 million net increase in gross loans receivable, or 5% linked quarter
$41 million increase in non-interest bearing deposits, or 4% linked quarter
Company reinstates quarterly cash dividend at $0.05 per common share
LOS ANGELES--(BUSINESS WIRE)-- BBCN Bancorp, Inc. (the "Company") (NAS: BBCN) , the holding company of BBCN Bank (the "Bank"), today reported net income available to common stockholders of $18.4 million, or $0.24 per diluted common share, for third quarter 2012. This compares with net income available to common stockholders of $8.7 million, or $0.23 per diluted common share, for third quarter 2011, and net income available to common stockholders of $15.6 million, or $0.20 per diluted common share, for second quarter 2012.
The Company also announced today that its Board of Directors has approved the reinstatement of a quarterly cash dividend. All stockholders of record as of November 1, 2012 will be paid a cash dividend of $0.05 per common share, payable on or about November 12, 2012.
"The reinstatement of a quarterly cash dividend reflects our growing confidence in BBCN as the leading Korean American bank in the nation," said Alvin D. Kang, President and Chief Executive Officer. "This confidence is supported by the Company's overall financial performance, with strong core earnings, increasing loan production and steadily improving asset quality trends. In particular, new loan originations were very strong this quarter at $313 million, resulting in a 5% linked quarter increase in gross loans. We are pleased that the Company's financial strength and sustainable earnings power positions us to return profits to our shareholders, while at the same time investing in new growth opportunities."
The Company noted that its merger with Center Financial Corporation ("Center"), completed on November 30, 2011, impacts the comparability of operating results for third quarter 2012 versus third quarter 2011 and the preceding second quarter 2012. The Company includes in this press release supplemental information to help in understanding past financial performance.
Financial Highlights
(Dollars in thousands) | 2012 Third Quarter | 2011 Third Quarter | 2012 Second Quarter | |||||||||||||||||||||
Net income | $ | 18,398 | $ | 9,815 | $ | 19,364 | ||||||||||||||||||
Net income available to common stockholders | $ | 18,398 | $ | 8,738 | $ | 15,593 | ||||||||||||||||||
Diluted earnings per share | $ | 0.24 | $ | 0.23 | $ | 0.20 | ||||||||||||||||||
Net interest income | $ | 58,231 | $ | 31,053 | $ | 59,502 | ||||||||||||||||||
Net interest margin | 4.79 | % | 4.29 | % | 5.02 | % | ||||||||||||||||||
Non-interest income | $ | 7,664 | $ | 4,258 | $ | 10,222 | ||||||||||||||||||
Non-interest expense | $ | 28,770 | $ | 16,817 | $ | 31,077 | ||||||||||||||||||
Net loans receivable | $ | 4,003,542 | $ | 2,208,119 | $ | 3,809,033 | ||||||||||||||||||
Deposits | $ | 4,052,524 | $ | 2,267,196 | $ | 3,882,680 | ||||||||||||||||||
Non-accrual loans (1) | $ | 29,369 | $ | 27,790 | $ | 39,567 | ||||||||||||||||||
ALLL to gross loans | 1.62 | % | 2.65 | % | 1.69 | % | ||||||||||||||||||
ALLL to non-accrual loans (1) | 224.56 | % | 215.94 | % | 165.55 | % | ||||||||||||||||||
ALLL to non-performing assets (1) | 84.41 | % | 106.83 | % | 72.80 | % | ||||||||||||||||||
Provision for loan losses | $ | 6,900 | $ | 3,483 | $ | 7,182 | ||||||||||||||||||
Net charge-offs | $ | 6,453 | $ | 3,170 | $ | 3,987 | ||||||||||||||||||
ROA (2) | 1.42 | % | 1.31 | % | 1.52 | % | ||||||||||||||||||
ROE (2) | 10.11 | % | 10.40 | % | 9.40 | % | ||||||||||||||||||
Efficiency ratio | 43.66 | % | 47.63 | % | 44.57 | % | ||||||||||||||||||
(1) | Excludes the guaranteed portion of delinquent SBA loans totaling $17.3 million, $10.5 million and $18.1 million at the close of the third quarter 2012, third quarter 2011 and second quarter 2012, respectively. | |
(2) | Based on net income before effects of dividends and discount accretion on preferred stock. |
Operating Results for Third Quarter 2012
As previously mentioned, the comparability of operating results with past performance is impacted by the merger. The Company believes the following supplemental information will be helpful in understanding past financial performance. Operating results for the three months ended September 30, 2012, June 30, 2012 and September 30, 2011 include the following pre-tax acquisition accounting adjustments related to the merger.
The increase (decrease) of major adjustments to pre-tax income is summarized below. The impact which these adjustments have to certain yields and costs are described in subsequent sections of this release.
Three Months Ended | |||||||||||||||||||||||
(In thousands) | September 30, 2012 | June 30, 2012 | September 30, 2011 | ||||||||||||||||||||
Accretion of discount on acquired performing loans | $ | 4,890 | $ | 6,010 | $ | — | |||||||||||||||||
Accretion of discount on acquired credit impaired loans | 1,215 | 1,686 | — | ||||||||||||||||||||
Amortization of premium on Center FHLB borrowings | 307 | 904 | — | ||||||||||||||||||||
Accretion of discount on Center subordinated debt | (37 | ) | (36 | ) | — | ||||||||||||||||||
Amortization of premium on Center time deposits | 650 | 787 | — | ||||||||||||||||||||
Increase to pre-tax income | $ | 7,025 | $ | 9,351 | — | ||||||||||||||||||
In addition to the items listed above, acquisition accounting adjustments had the effect of reducing the yield on the securities portfolio in third quarter and second quarter 2012. The acquired Center securities portfolio of approximately $291 million was adjusted to fair value of $293 million as of the merger date, resulting in interest income on investment securities for that portfolio being recognized at a lower average yield, compared with the yield on the balance of the Company's securities portfolio.
Operating results were also impacted by merger and integration related expenses, which amounted to $183,000, $1.3 million and $574,000, for third quarter 2012, second quarter 2012 and third quarter 2011, respectively.
Net Interest Income and Net Interest Margin. The following table summarizes the reported net interest income before provision for loan losses.
Three Months Ended | ||||||||||||||||||||||||||||||
(In thousands) | 9/30/2012 | 9/30/2011 | % change | 6/30/2012 | % change | |||||||||||||||||||||||||
Net interest income before provision for loan losses | $ | 58,231 | 31,053 | 88 | % | 59,502 | (2 | )% | ||||||||||||||||||||||
Third quarter 2012 net interest income before provision for loan losses rose 88% over third quarter 2011, principally reflecting the higher level of interest earning assets following the merger and net growth in loans receivable. Compared with second quarter 2012, net interest income before provision for loan losses declined 2%, reflecting reductions in the weighted average loan portfolio yield and lower levels of accretion of discount on the acquired portfolio relative to the preceding second quarter.
The net interest margin and the impact of acquisition accounting adjustments are summarized in the following table:
Three Months Ended | ||||||||||||||||||||||||||||||||||
9/30/2012 | 9/30/2011 | change | 6/30/2012 | change | ||||||||||||||||||||||||||||||
Net interest margin, excluding effect of acquisition accounting adjustments | 4.14 | % | 4.29 | % | (0.15 | ) | % | 4.15 | % | (0.01 | )% | |||||||||||||||||||||||
Acquisition accounting adjustments | 0.65 | — | 0.65 | 0.87 | (0.22 | ) | ||||||||||||||||||||||||||||
Reported net interest margin | 4.79 | % | 4.29 | % | 0.50 | % | 5.02 | % | (0.23 | )% | ||||||||||||||||||||||||
Third quarter 2012 net interest margin (net interest income divided by average interest-earning assets) was 4.79%, reflecting a 50 basis point improvement over third quarter 2011, largely attributable to the accretion of discounts on acquired loans. Excluding the effect of acquisition accounting adjustments, the core net interest margin for third quarter 2012 decreased 15 basis points from third quarter 2011 to 4.14%. Compared with preceding second quarter, third quarter 2012 net interest margin declined 23 basis points, but declined only 1 basis point on a core basis, when excluding the effect of acquisition accounting.
The weighted average yield on loans and the impact of acquisition accounting adjustments are summarized in the following table:
Three Months Ended | |||||||||||||||||||||||||||||||
9/30/2012 | 9/30/2011 | change | 6/30/2012 | change | |||||||||||||||||||||||||||
The weighted average yield on loans, excluding effect of acquisition accounting adjustments | 5.39 | % | 6.16 | % | (0.77 | ) | % | 5.59 | % | (0.20 | )% | ||||||||||||||||||||
Acquisition accounting adjustments | 0.72 | — | 0.72 | 0.94 | (0.22 | ) | |||||||||||||||||||||||||
Reported weighted average yield on loans | 6.11 | % | 6.16 | % | (0.05 | ) | % | 6.53 | % | (0.42 | )% | ||||||||||||||||||||
The weighted average yield on loans for third quarter 2012 decreased 5 basis points from third quarter 2011 and 77 basis points excluding acquisition accounting adjustments. The reduction in yield, excluding the effect of acquisition accounting adjustments, is primarily attributed to the lower yielding acquired loan portfolio and continued pricing pressures in the market place.
Compared with preceding second quarter 2012, the weighted average yield on loans declined 42 basis points, and 20 basis points, excluding the acquisition accounting adjustments. The decrease, excluding the acquisition accounting adjustments, reflects continuing pricing pressures in the market place. The weighted average yield on new loans originated during third quarter 2012 was 4.53%, compared with 4.66% for second quarter 2012.
The composition of fixed and variable rate loans and the associated weighted average yield, excluding loan discount accretion, is summarized in the following table:
9/30/2012 | 9/30/2011 | change | 6/30/2012 | change | ||||||||||||||||||||||||||
Fixed rate loans | ||||||||||||||||||||||||||||||
As a percentage of total loans | 38 | % | 44 | % | (6 | )% | 38 | % | — | % | ||||||||||||||||||||
Weighted average yield | 5.97 | % | 6.94 | % | (0.97 | )% | 6.25 | % | (0.28 | )% | ||||||||||||||||||||
Variable rate loans | ||||||||||||||||||||||||||||||
As a percentage of total loans | 62 | % | 56 | % | 5 | % | 62 | % | (1 | )% | ||||||||||||||||||||
Weighted average yield | 4.57 | % | 4.96 | % | (0.39 | )% | 4.60 | % | (0.03 | )% | ||||||||||||||||||||
The declining composition of fixed rate loans as a percentage of total loans reflects the Company's focus on variable rate business loans.
The weighted average yield on securities available for sale is summarized in the following table:
Three Months Ended | |||||||||||||||||||||||||||||
9/30/2012 | 9/30/2011 | change | 6/30/2012 | change | |||||||||||||||||||||||||
Weighted average yield on securities available-for-sale | 2.23 | % | 3.16 | % | (0.93 | )% | 2.45 | % | (0.22 | )% | |||||||||||||||||||
The weighted average yield on securities available-for-sale for third quarter 2012 declined 93 basis points from third quarter 2011 and 22 basis points from second quarter 2012. The reductions are primarily attributable to the replacement of maturing securities with lower yielding investments as market interest rates declined.
The weighted average duration and average life of the securities available-for-sale are summarized in the following table:
Three Months Ended | |||||||||||||||||||||||||||||
9/30/2012 | 9/30/2011 | % change | 6/30/2012 | % change | |||||||||||||||||||||||||
Weighted average duration of securities available-for-sale in years | 3.23 | 3.05 | 5.9 | % | 3.38 | (4.4 | )% | ||||||||||||||||||||||
Weighted average life of securities available-for-sale in years | |||||||||||||||||||||||||||||
