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 June 30, 2007 of $2.1 million, or $0.11 per diluted share, compared with $3.3 million, or $0.15 per diluted share, for the three months ended June 30, 2006. For the six months ended June 30, 2007, the Company's net income was $4.8 million, or $0.25 per diluted share, compared with $5.8 million, or $0.27 per diluted share, for the six months ended June 30, 2006.
The decrease in net income from the quarter ended June 30, 2006 to the quarter ended June 30, 2007 was attributable to a $0.6 million decrease in net interest income, reflecting a significant increase in our cost of funds, a $0.7 million increase in operating expenses, and a $0.7 million provision for loan losses, as compared with a $0.1 million loan loss recapture in the prior period.
The Company's net interest income was $8.0 million for the second quarter of 2007, compared with $8.6 million for the second quarter of 2006. This decrease was due to a decline in the Company's net interest margin from 2.54% to 2.06%, which more than offset a $196.4 million increase in average net interest-earning assets in the 2007 period as compared with the 2006 period. The decline in the margin was primarily the result of increases in market interest rates during 2006 and 2007. Our net interest margin tends to decrease as interest rates rise since our interest-bearing liabilities reprice more frequently than our interest-earning assets. As a result, our weighted average cost of interest-bearing liabilities increased by 93 basis points to 5.11% for the three months ended June 30, 2007, compared with 4.18% for the three months ended June 30, 2006. This compares with an increase of 44 basis points in the yield on our interest-earning assets from 6.27% for the second quarter of 2006 to 6.71% for the second quarter of 2007.
The financial results for the first six months of 2007 reflect a $1.8 million decline in net interest income as compared with the 2006 period, and a $0.8 million provision for loan losses in 2007. Other operating expenses, primarily legal fees, were reduced $0.6 million from the 2006 period.
Net interest income for the six months ended June 30, 2007, totaled $15.7 million, compared with $17.5 million for the first six months of 2006. The $1.8 million decrease in net interest income resulted from a decline in the net interest margin to 2.03% for the six months ended June 30, 2007, as compared with 2.61% for the first six months of 2006.
Stockholders' equity decreased by $1.6 million during the six months ended June 30, 2007 to $153.9 million, or $8.18 book value per diluted share. This decrease in equity was primarily due to cash dividends of $4.7 million and net after-tax unrealized losses of $2.0 million on the Company's portfolio of available-for-sale securities. These decreases were partially offset by net income of $4.8 million, a $0.2 million increase in paid-in capital relating to exercise of stock options, and a $0.1 million increase in paid-in capital representing stock-based compensation expense.
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 three and six months ended June 30, 2007 included the following:
- Loan originations for the three and six months ended June 30, 2007, totaled $67.9 million and $165.4 million, respectively, as compared with $63.2 million and $123.7 million, respectively, for the corresponding 2006 periods. At June 30, 2007, the Company had outstanding commitments to fund $220.6 million in new construction, commercial and multifamily loans.
- The Company's loan portfolio increased by $23.0 million to $1.06 billion during the first six months of 2007. The increase in the portfolio was due to the loan originations exceeding loan repayments of $125.3 million and loan participation sales of $16.3 million.
- The Company recorded a loan loss provision of $661,000 for the second quarter of 2007, as compared with a loan loss recapture of $109,000 for the second quarter of 2006. For the six months ended June 30, 2007, the provision for loan losses was $846,000, compared with $69,000 in net loan loss recaptures for the corresponding 2006 period. At June 30, 2007, the ratio of the Company's allowance for loan losses to total loans was 0.79%, or an increase from the 0.74% ratio at December 31, 2006.
- Total nonperforming assets at June 30, 2007, were $20.8 million, or 1.3% of total assets. The increase in nonperforming assets was due to one construction loan of $18.6 million that was placed on nonaccrual status in the second quarter of 2007. In October 2006, the Company purchased a participation in the loan that was for the construction of 94 semi-attached residences in Coachella, California. The Company has recorded a notice of default and is pursuing legal remedies against the guarantors of the loan.
- At June 30, 2007, the Company's deposits totaled $713.2 million, as compared with $850.9 million at December 31, 2006. The decrease in deposits resulted from the utilization of FHLB advances as the Company's primary funding source. FHLB advances increased by $145.0 million during the first six months of 2007 to $641.3 million at June 30, 2007.
- As of June 30, 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 June 30, | Six Months Ended June 30, | |||||||||||||
| Operating Data: | 2007 | 2006 | 2007 | 2006 | |||||||||||
| (Dollars in thousands, except per-share data) | |||||||||||||||
| Net income | $ | 2,143 | $ | 3,276 | $ | 4,786 | $ | 5,774 | |||||||
| Income before taxes | 3,697 | 5,526 | 8,260 | 9,876 | |||||||||||
| Net interest income | 8,004 | 8,598 | 15,660 | 17,474 | |||||||||||
| Earnings per share - diluted | 0.11 | 0.15 | 0.25 | 0.27 | |||||||||||
| Net interest margin | 2.06 | % | 2.54 | % | 2.03 | % | 2.61 | % | |||||||
| Net interest spread | 1.60 | % | 2.09 | % | 1.58 | % | 2.17 | % | |||||||
| Return on average assets (annualized) | 0.53 | % | 0.92 | % | 0.60 | % | 0.82 | % | |||||||
| Return on average equity (annualized) | 5.38 | % | 7.60 | % | 6.07 | % | 6.71 | % | |||||||
| Efficiency ratio | 49.15 | % | 39.43 | % | 45.97 | % | 46.06 | % | |||||||
| Risk-based capital ratio | 15.68 | % | 19.79 | % | 15.68 | % | 19.79 | % | |||||||
The following table presents selected consolidated financial information for the Company as of the dates indicated:
| June 30, | December 31, | June 30, | ||||||
| Balance Sheet Data: | 2007 | 2006 | 2006 | |||||
| (Dollars in thousands, except per-share data) | ||||||||
| Total assets | $ | 1,625,993 | $ | 1,623,836 | $ | 1,465,514 | ||
| Loans and discounted loans, net | 1,064,888 | 1,041,883 | 941,703 | |||||
| Deposits | 713,185 | 850,890 | 703,459 | |||||
| Stockholders' equity | 153,871 | 155,438 | 171,355 | |||||
| Book value per share - diluted | 8.18 | 8.27 | 7.95 | |||||
| Total assets per employee | 35,348 | 34,550 | 29,310 | |||||
The following table presents selected unconsolidated financial information for the Bank for the periods indicated:
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| Operating Data: | 2007 | 2006 | 2007 | 2006 | |||||||||||
| (Dollars in thousands) | |||||||||||||||
| Net income | $ | 2,904 | $ | 3,598 | $ | 6,081 | $ | 7,215 | |||||||
| Income before taxes | 5,012 | 6,064 | 10,493 | 12,355 | |||||||||||
| Net interest income | 8,208 | 8,635 | 16,200 | 17,579 | |||||||||||
| Net interest margin | 2.16 | % | 2.57 | % | 2.15 | % | 2.65 | % | |||||||
| Net interest spread | 1.72 | % | 2.22 | % | 1.72 | % | 2.32 | % | |||||||
| Efficiency ratio | 34.24 | % | 34.27 | % | 33.62 | % | 33.11 | % | |||||||
| Risk-based capital ratio | 13.38 | % | 14.80 | % | 13.38 | % | 14.80 | % | |||||||
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 August 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 CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
| June 30, 2007 | December 31, 2006 | |||||||||||||||||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 19,169 | $ | 27,005 | ||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities available for sale, at fair value | 447,652 | 460,893 | ||||||||||||||||||||||||||||||||||||||
| Investment securities available for sale, at fair value | 6,836 | 8,920 | ||||||||||||||||||||||||||||||||||||||
| Investment securities held to maturity, at amortized cost (fair value of $9,729 and $9,735) | 9,784 | 9,759 | ||||||||||||||||||||||||||||||||||||||
| Loans, net of allowance for loan losses of $8,419 and $7,878 | 1,063,911 | 1,040,726 | ||||||||||||||||||||||||||||||||||||||
| Discounted loans, net of allowance for loan losses of $68 and $99 | 977 | 1,157 | ||||||||||||||||||||||||||||||||||||||
| Stock in Federal Home Loan Bank of San Francisco, at cost | 31,083 | 29,015 | ||||||||||||||||||||||||||||||||||||||
| Real estate owned, net | 364 | 653 | ||||||||||||||||||||||||||||||||||||||
| Leasehold improvements and equipment, net | 1,098 | 1,244 | ||||||||||||||||||||||||||||||||||||||
| Accrued interest receivable | 8,703 | 8,685 | ||||||||||||||||||||||||||||||||||||||
| Deferred tax asset, net | 29,247 | 28,276 | ||||||||||||||||||||||||||||||||||||||
| Goodwill, net | 3,054 | 3,054 | ||||||||||||||||||||||||||||||||||||||
| Prepaid expenses and other assets | 4,115 | 4,449 | ||||||||||||||||||||||||||||||||||||||
| TOTAL | $ | 1,625,993 | $ | 1,623,836 | ||||||||||||||||||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 1,214 | $ | 2,038 | ||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | 711,971 | 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.
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Banks
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