BEVERLY HILLS BANCORP INC. 
By Beverly Hills Bancorp Inc. (the ?Company? or ?BHBC?) (NASDAQ:BHBC), the parent company of First Bank of Beverly Hills (the ?Bank?), reported net income for the three months ended March 31, 2007 of $2.6 million, or $0.14 per diluted share, compared with $2.5 million, or $0.12 per diluted share, for the three months ended March 31, 2006.
The increase in net income for the first quarter of 2007 was primarily attributable to a $1.4 million decrease in other expenses. This increase in income was offset by a $1.2 million decrease in net interest income and a slight increase in the provision for loan losses.
The Company's net interest income was $7.7 million for the first quarter of 2007, compared with $8.9 million for the first quarter of 2006. This decrease was due to a decline in the Company's net interest margin from 2.70% to 2.01%, which more than offset a $215.1 million increase in average net interest earning assets in the 2007 period as compared with the 2006 period. The net interest margin tends to decrease as interest rates rise because the Company's interest-bearing liabilities reprice more frequently than the interest-earning assets. As a result, the weighted average cost of interest-bearing liabilities increased by 119 basis points to 5.03% for the three months ended March 31, 2007, compared with 3.84% for the three months ended March 31, 2006. In contrast, the yield on interest-earning assets increased by only 47 basis points from the first quarter of 2006 to the first quarter of 2007.
Stockholders' equity increased by $1.7 million during the three months ended March 31, 2007 to $157.1 million, or $8.35 book value per diluted share. This increase in equity was due to net income of $2.6 million, net after-tax unrealized gains of $1.2 million on the Company's portfolio of available-for-sale securities and a $0.2 million increase in paid-in capital relating to exercise of stock options. These increases were partially offset by cash dividends of $2.3 million.
Because the Company may utilize approximately $6.0 million of its net operating loss carryforward per year, approximately $2.1 million of the Company's annual reported income tax expense will not be currently payable in cash.
Other operating highlights for the quarter ended March 31, 2007 included the following:
- Loan originations totaled $97.5 million for the quarter ended March 31, 2007, compared with $59.8 million for the corresponding 2006 period. At March 31, 2007, the Company had outstanding commitments to fund $143.5 million in new construction, commercial and multifamily loans.
- The Company's loan portfolio increased by $32.5 million during the first quarter of 2007, net of loan repayments of $55.3 million. The Company also sold loan participations of $10.4 million during the first quarter of 2007 in order to comply with its loans to one borrower limitation. Adjustable-rate loans (including loans with an initial fixed rate for 3 or 5 years which subsequently convert to adjustable-rate) comprised approximately 88% of total loans as of March 31, 2007, as compared with 87% at December 31, 2006.
- At March 31, 2007, the Company's deposits totaled $764.9 million, as compared with $850.9 million at December 31, 2006. The weighted average interest rate on deposits increased to 5.10% for the first quarter of 2007, compared with 4.03% for the first quarter of 2006. The Company experienced a significant decrease in wholesale deposits as maturing brokered CDs were replaced with new FHLB advances which increased $109.0 million during the quarter.
- The Company recorded a loan loss provision of $185,000 for the first quarter of 2007, as compared with a provision of $40,000 for the first quarter of 2006. At March 31, 2007, the ratio of the Company's allowance for loan losses to total loans was 0.74%, consistent with the level at December 31, 2006. At March 31, 2007, total nonperforming assets were $1.5 million, or 0.13% of total assets.
- The Company's legal expenses for the first quarter of 2007 were $120,000, as compared with $1.0 million for the first quarter of 2006. The reduction in legal expenses was primarily attributable to a settlement reached with a former officer of the Company in May 2006.
- As of March 31, 2007, the Company and the Bank met all regulatory capital requirements, and the Bank was ?well capitalized? under applicable regulations.
Financial Highlights | ||||
The following table presents selected consolidated financial information for the Company for the periods indicated: | ||||
|
Three Months Ended March 31, | |||
| Operating Data: | 2007 | 2006 | ||
| (Dollars in thousands, except per-share data) | ||||
| Net income | $ 2,643 | $ 2,498 | ||
| Income before taxes | 4,563 | 4,350 | ||
| Net interest income | 7,656 | 8,876 | ||
| Earnings per share - diluted | 0.14 | 0.12 | ||
| Net interest margin | 2.01% | 2.70% | ||
| Net interest spread | 1.55% | 2.27% | ||
| Return on average assets (annualized) | 0.66% | 0.72% | ||
| Return on average equity (annualized) | 6.78% | 5.82% | ||
| Efficiency ratio | 41.96% | 52.46% | ||
| Risk-based capital ratio | 16.21% | 18.06% | ||
The following table presents selected consolidated financial information for the Company as of the dates indicated: | |||||||
| March 31, | December 31, | March 31, | |||||
| Balance Sheet Data: | 2007 | 2006 | 2006 | ||||
| (Dollars in thousands, except per-share data) | |||||||
| Total assets | $ 1,639,860 | $ 1,623,836 | $ 1,391,176 | ||||
| Loans and discounted loans, net | 1,073,530 | 1,041,883 | 955,298 | ||||
| Deposits | 764,866 | 850,890 | 684,032 | ||||
| Stockholders' equity | 157,130 | 155,438 | 172,729 | ||||
| Book value per share - diluted | 8.35 | 8.27 | 8.01 | ||||
| Total assets per employee | 36,441 | 34,550 | 23,579 | ||||
The following table presents selected unconsolidated financial information for the Bank for the periods indicated: | |||
|
Three Months Ended March 31, | ||
| Operating Data: | 2007 | 2006 | |
| (Dollars in thousands) | |||
| Net income | $ 3,177 | $ 3,617 | |
| Income before taxes | 5,481 | 6,291 | |
| Net interest income | 7,992 | 8,944 | |
| Net interest margin | 2.13% | 2.73% | |
| Net interest spread | 1.71% | 2.41% | |
| Efficiency ratio | 32.18% | 31.95% | |
| Risk-based capital ratio | 13.62% | 15.01% | |
For further information, please see our website (www.bhbc.com) for our Quarterly Report on Form 10-Q and related communications (available on or about May 9, 2007).
This release contains forward-looking statements including financial projections, statements as to the plans and objectives of management for future operations, and statements as to the Company's future economic performance, financial condition and results of operations. These forward-looking statements are not historical facts but rather are based on current expectations, estimates, and projections about our industry, our beliefs and our assumptions. Words such as ?may,? ?will,? ?anticipates,? ?expects,? ?intends,? ?plans,? ?believes,? ?seeks? and ?estimates? and variations of these words and similar expressions are intended to identify forward-looking statements. The Company's actual results may differ materially from those projected in these forward-looking statements as a result of a number of factors, including, but not limited to, the condition of the real estate market and the economy, changes in banking regulations, the availability and conditions of financing for loan pool acquisitions, mortgage-backed securities and other financial assets as well as interest rates. Readers of this release are cautioned not to place undue reliance on these forward-looking statements.
BEVERLY HILLS BANCORP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) (Dollars in thousands) | |||||
| |||||
| March 31, 2007 | December 31, 2006 | ||||
| ASSETS | |||||
| Cash and cash equivalents | $ 16,329 | $ 27,005 | |||
| Mortgage-backed securities available for sale, at fair value | 457,716 | 460,893 | |||
| Investment securities available for sale, at fair value | 7,619 | 8,920 | |||
| Investment securities held to maturity, at amortized cost (fair value of $9,838 and $9,735) | 9,771 | 9,759 | |||
| Loans, net of allowance for loan losses of $8,013 and $7,878 | 1,072,443 | 1,040,726 | |||
| Discounted loans, net of allowance for loan losses of $81 and $99 | 1,087 | 1,157 | |||
| Stock in Federal Home Loan Bank of San Francisco, at cost | 28,451 | 29,015 | |||
| Real estate owned, net | 640 | 653 | |||
| Leasehold improvements and equipment, net | 1,157 | 1,244 | |||
| Accrued interest receivable | 9,048 | 8,685 | |||
| Income taxes receivable | 1,396 | ? | |||
| Deferred tax asset, net | 26,928 | 28,276 | |||
| Goodwill | 3,054 | 3,054 | |||
| Prepaid expenses and other assets | 4,221 | 4,449 | |||
| TOTAL | $ 1,639,860 | $ 1,623,836 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| LIABILITIES: | |||||
| Deposits: | |||||
| Noninterest-bearing deposits | $ 1,172 | $ 2,038 | |||
| Interest-bearing deposits | 763,694 | 848,852 | |||
| Total deposits | 764,866 | 850,890 | |||
| Short-term borrowings | 10,000 | 20,000 | |||
| Repurchase agreements | 40,000 | 40,000 | |||
| FHLB advances | 605,337 | 496,337 | |||
| Junior subordinated notes payable to trusts | 46,393 | 46,393 | |||
| Accounts payable and other liabilities | 16,134 | 14,778 | |||
| Total liabilities | 1,482,730 | 1,468,398 | |||
| COMMITMENTS AND CONTINGENCIES | |||||
| STOCKHOLDERS' EQUITY: | |||||
| Common stock, $0.01 par value, 30,000,000 shares authorized, 27,173,462 and 27,107,534 shares issued (including 8,389,368 treasury shares) | 272 | 271 | |||
| Additional paid-in capital | 166,192 | 165,972 | |||
| Treasury stock, 8,389,368 shares, at cost | (39,974) | (39,974) | |||
| Retained earnings | 32,095 | 31,800 | |||
| Accumulated other comprehensive loss, net | (1,455) | (2,631) | |||
| Total stockholders' equity | 157,130 | 155,438 | |||
| TOTAL | $ 1,639,860 | $ 1,623,836 | |||
BEVERLY HILLS BANCORP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except share data) | |||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2007 | 2006 | ||||||||||||||||||||||||||||||||||
| INTEREST INCOME: | |||||||||||||||||||||||||||||||||||
| Loans | $ 18,993 | $ 16,099 | |||||||||||||||||||||||||||||||||
| Mortgage-backed securities | 5,999 | 3,776 | |||||||||||||||||||||||||||||||||
| Securities and federal funds sold | 485 | 480 | |||||||||||||||||||||||||||||||||
| Total interest income | 25,477 | 20,355 | |||||||||||||||||||||||||||||||||
| INTEREST EXPENSE: | |||||||||||||||||||||||||||||||||||
| Deposits | 10,687 | 6,240 | |||||||||||||||||||||||||||||||||
| Borrowings | 7,134 | 5,239 | |||||||||||||||||||||||||||||||||
| Total interest expense | 17,821 | 11,479 | |||||||||||||||||||||||||||||||||
| NET INTEREST INCOME | 7,656 | 8,876 | |||||||||||||||||||||||||||||||||
| PROVISION FOR LOSSES ON LOANS | 185 | 40 | |||||||||||||||||||||||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON LOANS | 7,471 | 8,836 | |||||||||||||||||||||||||||||||||
| OTHER INCOME: | |||||||||||||||||||||||||||||||||||
| Real estate owned, net | (101) | (5) | |||||||||||||||||||||||||||||||||
| FHLB stock dividends | 406 | 352 | |||||||||||||||||||||||||||||||||
| Other income, net | 220 | 11 | |||||||||||||||||||||||||||||||||
| Total other income | 525 | 358 | |||||||||||||||||||||||||||||||||
| OTHER EXPENSES: | |||||||||||||||||||||||||||||||||||
| Compensation and employee benefits | 1,809 | 2,013 | |||||||||||||||||||||||||||||||||
| Professional fees | 707 | 1,642 | |||||||||||||||||||||||||||||||||
| Occupancy | 147 | 246 | |||||||||||||||||||||||||||||||||
| Loan expenses | 53 | 150 | |||||||||||||||||||||||||||||||||
| Regulatory assessments | 55 | 20 | |||||||||||||||||||||||||||||||||
| Data processing | 90 | 93 | |||||||||||||||||||||||||||||||||
| Insurance | 165 | 172 | |||||||||||||||||||||||||||||||||
| Depreciation | 93 | 89 | |||||||||||||||||||||||||||||||||
| Directors expense | 112 | 90 | |||||||||||||||||||||||||||||||||
| Other general and administrative expense | 202 | 329 | |||||||||||||||||||||||||||||||||
| Total other expenses | 3,433 | 4,844 | |||||||||||||||||||||||||||||||||
| INCOME BEFORE INCOME TAX PROVISION | 4,563 | 4,350 | |||||||||||||||||||||||||||||||||
| INCOME TAX PROVISION | 1,920 | 1,852 | |||||||||||||||||||||||||||||||||
| NET INCOME | $ 2,643 | $ 2,498 | |||||||||||||||||||||||||||||||||
| Earnings per share ? basic | Share
© Business Wire - 2007
Beverly Hills Bancorp Inc. (BHBC), is a financial holding company that conducts banking and lending operations in southern California and surrounding states through its bank subsidiary, First Bank of Beverly Hills, (FBBH or the Bank). The Bank is a commercial bank. The Company is principally a real estate lender focusing on permanent and construction loans for commercial and multi-family properties in California and other western states. In addition, the Company invests in AAA-rated and government-sponsored enterprise (GSE) mortgage-backed securities. The Companyâs primary sources of funding are deposits, Federal Home Loan Bank (FHLB) advances.
Sector
Banks
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