BBCN Bancorp Reports Fourth Quarter 2012 Net Income of $21.5 Million, or $0.28 Per Share; Declares Q
BBCN Bancorp Reports Fourth Quarter 2012 Net Income of $21.5 Million, or $0.28 Per Share; Declares Quarterly Cash Dividend of $0.05 Per Share
Q4 2012 Summary:
$21.5 million net income available to common stockholders, or $0.28 per diluted common share
$227 million net increase in gross loans receivable, or 6% linked quarter
$79 million increase in non-interest bearing deposits, or 7% linked quarter
$5.6 billion in total assets, reflecting a 6% increase linked quarter
Quarterly cash dividend of $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 $21.5 million, or $0.28 per diluted common share, for fourth quarter 2012. This compares with net income available to common stockholders of $2.9 million, or $0.05 per diluted common share, for fourth quarter 2011, and net income available to common stockholders of $18.4 million, or $0.24 per diluted common share, for third quarter 2012.
For the full 2012 year, the Company posted net income available to common stockholders of $77.6 million, or $0.99 per diluted common share. This compares with net income available to common stockholders of $22.5 million, or $0.53 per diluted common share, for 2011, which reflects the operations of 11 months of the former Nara Bancorp, Inc. and one month of combined operations following the merger with Center Financial Corporation ("Center"), completed November 30, 2011.
The Company also announced today that its Board of Directors declared a quarterly cash dividend for first quarter 2013. All stockholders of record as of February 8, 2013 will be paid a cash dividend of $0.05 per common share, payable on or about February 22, 2013.
"We completed our first full year of operations as the leading Korean American bank in the nation with strong performances on all fronts," said Alvin D. Kang, President and Chief Executive Officer. "Fourth quarter 2012 new loan originations of $371.2 million exceeded the strong levels of the preceding quarter. This performance helped to mitigate the net interest margin compression in the current interest rate environment and supported a five percent linked quarter increase in our pre-tax pre-provision earnings, which amounted to 2.83% of average assets on an annualized basis. Combined with steadily improving asset quality trends, we reported another quarter of strong core profitability to complete the year. All-in-all, we believe BBCN is well positioned for continued profitability and growth."
The Company noted that the Center merger impacts the comparability of operating results for fourth quarter 2012 versus fourth quarter 2011 and the preceding third quarter 2012, as well as the operating results for the full 2012 year versus 2011. Supplemental information, which the Company believes will aid in understanding past financial performance, is included in this press release.
Financial Highlights | ||||||||||||||||
(Dollars in thousands) | 2012 Fourth Quarter | 2011 Fourth Quarter | 2012 Third Quarter | |||||||||||||
Net income | $ | 21,527 | $ | 4,236 | $ | 18,398 | ||||||||||
Net income available to common stockholders | $ | 21,527 | $ | 2,895 | $ | 18,398 | ||||||||||
Diluted earnings per share | $ | 0.28 | $ | 0.05 | $ | 0.24 | ||||||||||
Net interest income | $ | 59,646 | $ | 40,551 | $ | 58,231 | ||||||||||
Net interest margin | 4.61 | % | 4.52 | % | 4.79 | % | ||||||||||
Non-interest income | $ | 9,859 | $ | 6,678 | $ | 7,664 | ||||||||||
Non-interest expense | $ | 30,609 | $ | 31,836 | $ | 28,770 | ||||||||||
Net loans receivable | $ | 4,229,311 | $ | 3,676,874 | $ | 4,003,542 | ||||||||||
Deposits | $ | 4,384,035 | $ | 3,940,892 | $ | 4,052,524 | ||||||||||
Non-accrual loans (1) | $ | 26,613 | $ | 31,213 | $ | 29,369 | ||||||||||
ALLL to gross loans | 1.56 | % | 1.66 | % | 1.62 | % | ||||||||||
ALLL to non-accrual loans (1) | 251.53 | % | 198.49 | % | 224.56 | % | ||||||||||
ALLL to non-performing assets (1) | 87.69 | % | 83.97 | % | 84.41 | % | ||||||||||
Provision for loan losses | $ | 2,422 | $ | 9,147 | $ | 6,900 | ||||||||||
Net charge-offs | $ | 1,433 | $ | 7,204 | $ | 6,453 | ||||||||||
ROA (2) | 1.57 | % | 0.45 | % | 1.42 | % | ||||||||||
ROE (2) | 11.55 | % | 3.10 | % | 10.11 | % | ||||||||||
Efficiency ratio | 44.04 | % | 67.41 | % | 43.66 | % | ||||||||||
(1) Excludes the guaranteed portion of delinquent SBA loans totaling $17.6 million, $10.4 million and $17.3 million at the close of the fourth quarter 2012, fourth quarter 2011 and third quarter 2012, respectively. | ||||||||||||||||
(2) Based on net income before effects of dividends and discount accretion on preferred stock. | ||||||||||||||||
Operating Results for Fourth 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 December 31, 2012, September 30, 2012 and December 31, 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) | December 31, | September 30, | December 31, | ||||||||||||||||
Accretion of discount on acquired performing loans | $ | 4,697 | $ | 4,890 | $ | 2,429 | |||||||||||||
Accretion of discount on acquired credit impaired loans | 1,174 | 1,215 | 3,298 | ||||||||||||||||
Amortization of premium on Center FHLB borrowings | 92 | 307 | 419 | ||||||||||||||||
Accretion of discount on Center subordinated debt | (37 | ) | (37 | ) | (12 | ) | |||||||||||||
Amortization of premium on Center time deposits | 375 | 650 | 315 | ||||||||||||||||
Increase to pre-tax income | $ | 6,301 | $ | 7,025 | 6,449 | ||||||||||||||
In addition to the items listed above, acquisition accounting adjustments had the effect of reducing the yield on the securities portfolio in fourth quarter and third quarter 2012. The acquired 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 $505,000, $183,000 and $3.2 million, for fourth quarter 2012, third quarter 2012 and fourth quarter 2011, respectively. The Company noted that fourth quarter 2012 merger and integration related expenses primarily reflected expenses associated with the pending Pacific International Bancorp, Inc. acquisition.
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) | 12/31/2012 | 12/31/2011 | % change | 9/30/2012 | % change | |||||||||||||||
Net interest income before provision for loan losses | $ | 59,646 | $ | 40,551 | 47 | % | $ | 58,231 | 2 | % | ||||||||||
Fourth quarter 2012 net interest income before provision for loan losses rose 47% over fourth quarter 2011 and 2% over preceding third quarter 2012, principally reflecting the higher level of interest earning assets as a result of the net growth in loans receivable.
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 | ||||||||||||||||||||
12/31/2012 | 12/31/2011 | change | 9/30/2012 | change | ||||||||||||||||
Net interest margin, excluding effect of acquisition accounting adjustments | 4.06 | % | 4.13 | % | (0.07 | ) | % | 4.14 | % | (0.08 | ) | % | ||||||||
Acquisition accounting adjustments | 0.55 | 0.39 | 0.16 | 0.65 | (0.10 | ) | ||||||||||||||
Reported net interest margin | 4.61 | % | 4.52 | % | 0.09 | % | 4.79 | % | (0.18 | ) | % | |||||||||
Fourth quarter 2012 net interest margin was 4.61%, reflecting a 9 basis point improvement over fourth 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 fourth quarter 2012 decreased 11 basis points from fourth quarter 2011 to 4.06%.
Compared with preceding third quarter, fourth quarter 2012 net interest margin declined 18 basis points, largely reflecting decreases in the weighted average yields on loans and investment securities. Excluding the effect of acquisition accounting, the core net interest margin for fourth quarter 2012 declined only 8 basis points from third quarter 2012.
The weighted average yield on loans and the impact of acquisition accounting adjustments are summarized in the following table:
Three Months Ended | ||||||||||||||||||||
12/31/2012 | 12/31/2011 | change | 9/30/2012 | change | ||||||||||||||||
The weighted average yield on loans, excluding effect of acquisition accounting adjustments | 5.24 | % | 5.87 | % | (0.63 | ) | % | 5.39 | % | (0.15 | ) | % | ||||||||
Acquisition accounting adjustments | 0.65 | 0.43 | 0.22 | 0.72 | (0.07 | ) | ||||||||||||||
Reported weighted average yield on loans | 5.89 | % | 6.30 | % | (0.41 | ) | % | 6.11 | % | (0.22 | ) | % | ||||||||
The weighted average yield on loans for fourth quarter 2012 decreased 41basis points from fourth quarter 2011 and 72 basis points on a core basis excluding acquisition accounting adjustments. The reduction in the core yield, excluding the effect of acquisition accounting adjustments, is primarily attributed to the significant pricing pressures in the market place over the past year and the lower yielding acquired loan portfolio.
Compared with preceding third quarter 2012, the weighted average yield on loans declined 22 basis points, and 15 basis points on a core basis, excluding the acquisition accounting adjustments. The more moderate decrease in the core yield, excluding the effect of acquisition accounting adjustments, versus the year-over-year comparison, reflects a stabilization in the competitive pricing environment in the market place during fourth quarter 2012. The weighted average yield on new loans originated during fourth quarter 2012 was 4.54%, compared with 4.53% for third 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:
12/31/2012 | 12/31/2011 | change | 9/30/2012 | change | ||||||||||||||||||
Fixed rate loans | ||||||||||||||||||||||
As a percentage of total loans | 40 | % | 40 | % | — | % | 38 | % | 2 | % | ||||||||||||
Weighted average yield | 5.63 | % | 6.61 | % | (0.98 | ) | % | 5.97 | % | (0.34 | ) | % | ||||||||||
Variable rate loans | ||||||||||||||||||||||
As a percentage of total loans | 60 | % | 60 | % | — | % | 62 | % | (2 | ) | % | |||||||||||
Weighted average yield | 4.52 | % | 4.64 | % | (0.12 | ) | % | 4.57 | % | (0.05 | ) | % | ||||||||||
The increased composition of fixed rate loans as a percentage of total loans reflects the high demand for fixed rate commercial real estate loans in the current interest rate environment.
The weighted average yield on securities available for sale is summarized in the following table:
Three Months Ended | ||||||||||||||||
12/31/2012 | 12/31/2011 | change | 9/30/2012 | change | ||||||||||||
Weighted average yield on securities available-for-sale | 2.08 | % | 2.65 | % | (0.57 | )% | 2.23 | % | (0.15 | )% | ||||||
The weighted average yield on securities available-for-sale for fourth quarter 2012 declined 57 basis points from fourth quarter 2011 and 15 basis points from the preceding third 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 | ||||||||||||||||
12/31/2012 | 12/31/2011 | % change | 9/30/2012 | % change | ||||||||||||
Weighted average duration of securities available-for-sale in years | 3.26 | 3.54 | (7.91 | )% | 3.23 | (0.93 | )% | |||||||||
Weighted average life of securities available-for-sale in years | 3.50 | 3.91 | (10.49 | )% | 3.47 | (0.09 | )% | |||||||||
The weighted average cost of deposits and the impact of acquisition accounting adjustments are summarized in the following table:
Three Months Ended | ||||||||||||||||||||||||
12/31/2012 | 12/31/2011 | change | 9/30/2012 | change | ||||||||||||||||||||
The weighted average cost of deposits, excluding effect of acquisition accounting adjustments | 0.55 | % | 0.75 | % | (0.20 | ) | % | 0.59 | % | (0.04 | ) | % | ||||||||||||
Acquisition accounting adjustments | (0.03 | ) | (0.04 | ) | ||||||||||||||||||||
