BBCN Bancorp Reports Record Financial Results for 2015 Third Quarter

Q3 2015 Summary:

  • Net income totals a record $25.1 million, or $0.32 per diluted common share
  • New loan originations amount to a quarterly record high of $432 million
  • Loans receivable increase 3% to $5.97 billion, or 7% year-to-date
  • Total deposits increase 5% to $6.03 billion, or 6% year-to-date
  • Total assets increase 3% to $7.58 billion, or 6% year-to-date

LOS ANGELES, Oct. 19, 2015 (GLOBE NEWSWIRE) — BBCN Bancorp, Inc. (the “Company”) (NASDAQ:BBCN), the holding company of BBCN Bank (the “Bank”), today reported strong financial results for the three months ended September 30, 2015. Net income for the 2015 third quarter totaled a record $25.1 million, or $0.32 per diluted common share, reflecting a 9% increase over $22.9 million, or $0.29 per diluted common share, for the preceding 2015 second quarter and a 17% increase over $21.4 million, or $0.27 per diluted common share, for the year-ago third quarter.

“We are very pleased to report record financial results for our 2015 third quarter, highlighted by the highest levels of new loan volumes and earnings in our history,” said Kevin S. Kim, Chairman and Chief Executive Officer of BBCN Bancorp, Inc. “During the quarter, we experienced robust loan demand and posted $432 million in new loan originations, which represents a 13% increase over the prior-year third quarter. The quarter’s results also benefited by continued progress with credit recoveries, which offset our provision requirements for the strong loan growth during the quarter. Notwithstanding the continuing investments to strengthen our overall infrastructure and transform BBCN into a more diversified financial institution, disciplined cost management also contributed to record earnings for the quarter.

“With a growing pipeline of loans, we have strong momentum heading into the final quarter of 2015. As we approach the fourth anniversary of BBCN’s creation, we look forward to expanding our presence in the Washington, D.C. metropolitan area with a second branch on track to open later this year. Supported by strong and consistent financial performance and steady execution of our strategic initiatives, we believe BBCN is well positioned to enhance the value proposition to our customers, employees and shareholders as the premier Korean-American bank in the United States,” said Kim.

Financial Highlights

(dollars in thousands, except per share data) At or for the Three Months Ended
  9/30/2015 6/30/2015 9/30/2014
Net income  $ 25,092  $ 22,941  $ 21,420
Diluted earnings per share  $ 0.32  $ 0.29  $ 0.27
Net interest income before provision for loan losses  $ 68,761  $ 67,391  $ 67,907
Net interest margin 3.87% 3.91% 4.15%
Noninterest income  $ 13,227  $ 10,568  $ 11,369
Noninterest expense  $ 38,799  $ 38,698  $ 39,420
Net loans receivable  $ 5,901,614  $ 5,745,706  $ 5,364,612
Deposits  $ 6,028,865  $ 5,758,290  $ 5,509,754
Nonaccrual loans (1)  $ 32,446  $ 39,681  $ 39,564
ALLL to loans receivable 1.19% 1.21% 1.26%
ALLL to nonaccrual loans (1) 219.16% 176.70% 172.46%
ALLL to nonperforming assets (1) (2) 65.80% 59.63% 57.44%
Provision for loan losses  $ 600  $ 1,000  $ 4,256
Net charge offs (recoveries)  $ (392)  $ 476  $ 2,894
ROA 1.35% 1.26% 1.25%
ROE 10.96% 10.13% 9.97%
Efficiency ratio 47.32% 49.64% 49.73%
       
(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $19.9 million, $22.6 million and $28.1 million at September 30, 2015, June 30, 2015, and September 30, 2014, respectively.
(2) Nonperforming assets exclude acquired credit impaired loans totaling $18.5 million, $23.0 million and $32.7 million at September 30, 2015, June 30, 2015, and September 30, 2014, respectively.

Operating Results for the 2015 Third Quarter

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 financial performance. Net interest income for the three months ended September 30, 2015, June 30, 2015, and September 30, 2014 include the following pre-tax acquisition accounting adjustments related to past acquisitions:

(dollars in thousands) Three Months Ended
  9/30/2015 6/30/2015 9/30/2014
Accretion of discount on acquired performing loans $ 2,496 $ 2,515 $ 4,157
Accretion of discount on acquired credit impaired loans 1,723 1,694 1,863
Amortization of premium on acquired FHLB borrowings 97 95 95
Accretion of discount on acquired subordinated debt (43) (42) (41)
Amortization of premium on acquired time deposits 34 49 125
Total $ 4,307 $ 4,311 $ 6,199

Net Interest Income and Net Interest Margin. Net interest income before provision for loan losses for the 2015 third quarter totaled $68.8 million, up 2% over $67.4 million in the preceding 2015 second quarter, and up 1% over $67.9 million in the year-ago third quarter. Largely reflecting the steady organic growth in loans receivable, the Company posted higher interest income on earning assets versus the comparable periods, which more than offset the diminishing acquisition accounting adjustments and impact of declining yields on 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
  9/30/2015 6/30/2015 change 9/30/2014 change
Net interest margin, excluding the effect of acquisition accounting adjustments 3.60% 3.63% (0.03)% 3.73% (0.13)%
Acquisition accounting adjustments 0.27 0.28 (0.01) 0.42 (0.15)
Net interest margin 3.87% 3.91% (0.04)% 4.15% (0.28)%

The net interest margin for the 2015 third quarter declined 4 basis points from the preceding second quarter to 3.87%, or 3 basis points on a core basis when excluding the effect of acquisition accounting adjustments. Compared with the prior-year third quarter, net interest margin decreased 28 basis points, or 13 basis points excluding the effect of acquisition accounting adjustments, largely reflecting the industry-wide declines 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
  9/30/2015 6/30/2015 change 9/30/2014 change
Weighted average yield on loans, excluding the effect of acquisition accounting adjustments 4.62% 4.64% (0.02)% 4.78% (0.16)%
Acquisition accounting adjustments 0.32 0.34 (0.02) 0.51 (0.19)
Weighted average yield on loans 4.94% 4.98% (0.04)% 5.29% (0.35)%

The weighted average yield on loans for the 2015 third quarter declined 4 basis points to 4.94% from the preceding 2015 second quarter, or 2 basis points excluding the effect of acquisition accounting adjustments. The weighted average yield on new loans originated during the 2015 third quarter declined to 4.23% from 4.29% in the preceding second quarter, reflecting what continues to be a fiercely competitive market for both fixed and variable rate loans.

Compared with the prior-year period, the weighted average yield on loans decreased 35 basis points, or 16 basis points on a core basis excluding the effect of acquisition accounting adjustments.

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

  Three Months Ended
  9/30/2015 6/30/2015 change 9/30/2014 change
Weighted average cost of deposits, excluding the effect of acquisition accounting adjustments 0.57% 0.56% 0.01% 0.55% 0.02%
Acquisition accounting adjustments (0.01) 0.01 (0.01) 0.01
Weighted average cost of deposits 0.57% 0.55% 0.02% 0.54% 0.03%

The weighted average cost of deposits for the 2015 third quarter increased 2 basis points from the preceding second quarter, or 1 basis point on a core basis excluding the effect of amortization of premium on time deposits assumed in acquisitions. Compared with the prior-year third quarter, the weighted average cost of deposits increased 3 basis points, or 2 basis points excluding the effect of premium amortization on time deposits assumed in acquisitions.

Noninterest Income. Noninterest income for the 2015 third quarter totaled $13.2 million, an increase of 25% over $10.6 million in the preceding 2015 second quarter and an increase of 16% over $11.4 million in the 2014 third quarter. Aside from normal fluctuations in service fees on deposit accounts and gains on sales of loans and OREO, the Company posted other income and fees of $6.3 million in the 2015 third quarter, which included a higher than normal level of OREO-related rental income of $1.7 million. Other income and fees for both the preceding 2015 second quarter and 2014 third quarter totaled $4.3 million.

Noninterest Expense.  Total noninterest expense for the 2015 third quarter was relatively flat at $38.8 million, compared with $38.7 million in the preceding second quarter, and decreased 2% from $39.4 million in the prior-year third quarter. Salaries and employee benefits expense totaled $21.5 million for the 2015 third quarter, compared with $20.9 million for the preceding second quarter and $19.3 million for the third quarter a year ago. The total number of FTEs as of September 30, 2015 was 941, compared with 927 as of June 30, 2015 and 911 as of September 30, 2014.

Income Tax Provision. The effective tax rate for the 2015 third quarter was 41.1%, compared with 40.0% for the preceding 2015 second quarter and 39.8% for the 2014 third quarter.

Balance Sheet Summary

Loans receivable totaled $5.97 billion at September 30, 2015, reflecting a 3% increase over $5.82 billion at June 30, 2015, and a 10% increase over $5.43 billion at September 30, 2014.

Total new loan originations during the 2015 third quarter amounted to $431.9 million, including SBA loan originations of $54.5 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, which amounted to $46.1 million for the third quarter of 2015, compared with $58.3 million for the preceding 2015 second quarter. During the 2015 third quarter, the Company sold $42.4 million of its SBA loans held for sale.

Aggregate pay offs and pay downs for the 2015 third quarter amounted to $267.1 million, compared with $216.5 million for the preceding 2015 second quarter and $312.0 million for the year-ago third quarter.

Total deposits increased 5% to $6.03 billion at September 30, 2015 from $5.76 billion at June 30, 2015, largely reflecting increases in money market accounts and time deposits, offset by lower balances in noninterest bearing demand deposits. While noninterest bearing deposits at the close of the third quarter declined 3% from June 30, 2015 and accounted for 27% of total deposits, the average balance of noninterest bearing deposits for the 2015 third quarter was modestly higher than the preceding second quarter. Compared with September 30, 2014, total deposits increased 9% over $5.51 billion.

Credit Quality

The provision for loan losses for the 2015 third quarter was $600,000, compared with $1.0 million for the preceding 2015 second quarter and $4.3 million for the prior-year third 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 September 30, 2015, June 30, 2015, and September 30, 2014 is as follows:

(dollars in thousands) 9/30/2015 6/30/2015 9/30/2014
Legacy Loans (1) $ 57,200 $ 55,563 $ 60,073
Acquired Loans – Performing (2) 1,418 1,908 1,973
Acquired Loans – Credit Impaired (2) 12,492 12,647 6,186
Total ALLL $ 71,110 $ 70,118 $ 68,232
       
Loans Receivable $ 5,972,724 $ 5,815,824 $ 5,432,844
ALLL coverage ratio 1.19% 1.21% 1.26%
 
(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 September 30, 2015, June 30, 2015, and September 30, 2014:

(dollars in thousands) 9/30/2015 6/30/2015 9/30/2014
Special Mention (1) $ 141,655 $ 129,795 $ 113,395
Classified (1) 178,720 195,389 231,768
 Criticized $ 320,375 $ 325,184 $ 345,163
 
(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, delinquent loans past due 90 days or more on accrual status (excluding acquired credit impaired loans) and accruing restructured loans. Nonaccrual loans at September 30, 2015 declined to $32.4 million, or 0.54% of loans receivable. This compares with nonaccrual loans of $39.7 million, or 0.68% of loans receivable, at June 30, 2015 and $39.6 million, or 0.73% of loans receivable, at September 30, 2014. Accruing restructured loans declined to $54.3 million at September 30, 2015 from $57.4 million at June 30, 2015 and $56.1 million at September 30, 2014. Total nonperforming loans at September 30, 2015 amounted to $86.7 million, or 1.45% of loans receivable, compared with $97.4 million, or 1.67% of loans receivable, at June 30, 2015 and $95.6 million, or 1.76% of loans receivable, at September 30, 2014.

Nonperforming assets, including nonperforming loans and other real estate owned, amounted to $108.1 million at September 30, 2015, or 1.43% of total assets, compared with $117.6 million, or 1.60% of total assets, at June 30, 2015, and $118.8 million, or 1.71% of total assets, at September 30, 2014.

For the 2015 third quarter, the Company recorded net recoveries of $392,000, or 0.03% of average loans receivable on an annualized basis. This compares with net charge offs of $476,000 for the 2015 second quarter, or 0.03% of average loans receivable on an annualized basis, and $2.9 million, or 0.21% of average loans receivable on an annualized basis, for the year-ago third quarter.

The allowance for loan losses at September 30, 2015 was $71.1 million, or 1.19% of loans receivable (excluding loans held for sale), compared with $70.1 million, or 1.21%, at June 30, 2015 and $68.2 million, or 1.26%, at September 30, 2014.   The coverage ratio of the allowance for loan losses to nonperforming loans (excluding acquired credit impaired loans) was 82.00% at September 30, 2015, versus 71.98% at June 30, 2015 and 71.35% at September 30, 2014.

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 $119.5 million at September 30, 2015, compared with $118.7 million at June 30, 2015 and $130.7 million at September 30, 2014.

Capital

At September 30, 2015, the Company continued to exceed all regulatory capital requirements to be classified as a “well-capitalized” institution, as summarized in the following table.

  9/30/2015 6/30/2015 9/30/2014
Common Equity Tier 1 Capital 12.34% 12.58% 13.02%
Leverage Ratio 11.76% 11.80% 11.80%
Tier 1 Risk-based Ratio 12.96% 13.22% 13.72%
Total Risk-based Ratio 14.05% 14.34% 14.93%

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

  9/30/2015 6/30/2015 9/30/2014
Tangible common equity per share (1) $10.32 $10.05 $9.49
Tangible common equity to tangible assets (1) 10.99% 11.07% 11.07%
(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, October 20, 2015 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for the 2015 third quarter. Investors and analysts are invited to access the conference call by dialing 866-235-9917 (domestic) or 412-902-4103 (international), and asking for the “BBCN Bancorp Call.” 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 www.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 telephonic replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) through October 27, 2015, passcode 10073822.

About BBCN Bancorp, Inc.

BBCN Bancorp, Inc. is the holding company of BBCN Bank, the largest Korean-American bank in the nation with $7.6 billion in assets as of September 30, 2015. Headquartered in Los Angeles and serving a diverse mix of customers mirroring its communities, BBCN operates 50 branches in California, New York, New Jersey, Illinois, Washington and Virginia; eight loan production offices in Seattle, Denver, Dallas, Atlanta, Northern California, Annandale, Virginia, Portland, Oregon and Fremont, California; and a representative office in Seoul, Korea. 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 may contain forward-looking statements, including statements about future operations and projected 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.
Selected Financial Data
 Unaudited (dollars in thousands, except per share data) 
               
Assets 9/30/2015 6/30/2015 % change 12/31/2014 % change 9/30/2014 % change
Cash and due from banks*  $ 278,299  $ 299,883 (7)%  $ 462,160 (40)%  $ 443,320 (37)%
Securities available for sale, at fair value 976,962 875,405 12% 796,523 23% 710,625 37%
Federal Home Loan Bank, Federal Reserve Bank stock and other investments* 59,750 40,558 47% 28,708 108% 28,744 108%
Loans held for sale, at the lower of cost or fair value 25,103 33,785 (26)% 28,311 (11)% 45,695 (45)%
Loans receivable 5,972,724 5,815,824 3% 5,565,192 7% 5,432,844 10%
Allowance for loan losses (71,110) (70,118) 1% (67,758) 5% (68,232) 4%
Net loans receivable 5,901,614 5,745,706 3% 5,497,434 7% 5,364,612 10%
Accrued interest receivable 13,981 13,781 1% 13,634 3% 13,142 6%
Premises and equipment, net 34,798 35,321 (1)% 30,722 13% 30,999 12%
Bank owned life insurance 46,741 46,466 1% 45,927 2% 45,644 2%
Goodwill 105,401 105,401 —% 105,401 —% 105,401 —%
Servicing assets 11,505 10,935 5% 10,341 11% 9,523 21%
Other intangible assets, net 3,086 3,354 (8)% 3,887 (21)% 4,212 (27)%
Other assets 125,762 122,724 2% 117,282 7% 125,889 —%
Total assets  $ 7,583,002  $ 7,333,319 3%  $ 7,140,330 6%  $ 6,927,806 9%
               
Liabilities              
Deposits  $ 6,028,865  $ 5,758,290 5%  $ 5,693,452 6%  $ 5,509,754 9%
Borrowings from Federal Home Loan Bank 530,689 580,785 (9)% 480,975 10% 467,071 14%
Subordinated debentures 42,284 42,241 —% 42,158 —% 42,117 —%
Accrued interest payable 6,231 5,954 5% 5,855 6% 6,173 1%
Other liabilities 45,364 37,461 21% 35,117 29% 38,043 19%
Total liabilities 6,653,433 6,424,731 4% 6,257,557 6% 6,063,158 10%
               
Stockholders’ Equity            
Common stock, $0.001 par value; authorized, 150,000,000 shares at September 30, 2015, June 30, 2015, December 31, 2014, and September 30, 2014; issued and outstanding, 79,553,460, 79,550,403, 79,503,552 and 79,497,331 shares at September 30, 2015, June 30, 2015, December 31, 2014, and September 30, 2014, respectively 80 80 —% 79 1% 79 1%
Capital surplus 541,349 541,091 —% 541,589 —% 541,406 —%
Retained earnings 384,133 367,792 4% 339,400 13% 324,664 18%
Accumulated other comprehensive income (loss), net 4,007 (375) 1,169% 1,705 135% (1,501) 367%
Total stockholders’ equity 929,569 908,588 2% 882,773 5% 864,648 8%
Total liabilities and stockholders’ equity  $ 7,583,002  $ 7,333,319 3%  $ 7,140,330 6%  $ 6,927,806 9%
 
* – At 6/30/15, the Company had $21.4 million in investments in certificates of deposits that were recorded in Cash and due from banks in the prior quarter. The prior quarter balance in investments in certificates of deposits were reclassified to Federal Home Loan Bank, Federal Reserve Bank stock and other investments.
 
 
BBCN Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)
                 
  Three Months Ended Nine Months Ended
  9/30/2015 6/30/2015 % change 9/30/2014 % change 9/30/2015 9/30/2014 % change
Interest income:                
Interest and fees on loans  $ 73,650  $ 71,249 3%  $ 72,437 2%  $ 214,537  $ 212,818 1%
Interest on securities 4,670 4,215 11% 3,999 17% 13,105 12,171 8%
Interest on federal funds sold and other investments 739 1,611 (54)% 648 14% 3,046 1,901 60%
Total interest income 79,059 77,075 3% 77,084 3% 230,688 226,890 2%
                 
Interest expense:                
Interest on deposits 8,390 7,970 5% 7,419 13% 24,115 21,381 13%
Interest on other borrowings 1,908 1,714 11% 1,758 9% 5,298 5,146 3%
Total interest expense 10,298 9,684 6% 9,177 12% 29,413 26,527 11%
                 
Net interest income before provision for loan losses 68,761 67,391 2% 67,907 1% 201,275 200,363 —%
Provision for loan losses 600 1,000 (40)% 4,256 (86)% 3,100 10,278 (70)%
Net interest income after provision for loan losses 68,161 66,391 3% 63,651 7% 198,175 190,085 4%
                 
Noninterest income:                
Service fees on deposit accounts 3,170 3,030 5% 3,456 (8)% 9,261 10,288 (10)%
Net gains on sales of SBA loans 3,390 3,119 9% 3,578 (5)% 9,553 9,112 5%
Net gains on sales of other loans 26 45 (42)% 100% 253 100%
Net gains on sales of securities available for sale —% —% 424 100%
Net gains on sales of OREO 334 73 358% 29 1,052% 516 466 11%
Other income and fees 6,307 4,301 47% 4,306 46% 14,993 13,091 15%
Total noninterest income 13,227 10,568 25% 11,369 16% 35,000 32,957 6%
                 
Noninterest expense:                
Salaries and employee benefits 21,457 20,932 3% 19,346 11% 63,570 56,428 13%
Occupancy 4,941 4,810 3% 4,722 5% 14,443 14,060 3%
Furniture and equipment 2,329 2,323 —% 1,916 22% 6,915 5,942 16%
Advertising and marketing 1,309 1,484 (12)% 1,535 (15)% 4,184 4,131 1%
Data processing and communications 2,192 2,463 (11)% 2,206 (1)% 7,004 6,626 6%
Professional fees 1,289 1,253 3% 1,567 (18)% 3,966 4,195 (5)%
FDIC assessment 1,027 909 13% 1,135 (10)% 3,048 3,238 (6)%
Credit related expenses 1,397 1,976 (29)% 3,531 (60)% 5,562 7,969 (30)%
Other 2,858 2,548 12% 3,462 (17)% 8,040 10,845 (26)%
Total noninterest expense 38,799 38,698 —% 39,420 (2)% 116,732 113,434 3%
Income before income taxes 42,589 38,261 11% 35,600 20% 116,443 109,608 6%
Income tax provision 17,497 15,320 14% 14,180 23% 47,053 43,680 8%
Net income  $ 25,092  $ 22,941 9%  $ 21,420 17%  $ 69,390  $ 65,928 5%
                 
Earnings Per Common Share:                
Basic  $ 0.32  $ 0.29    $ 0.27    $ 0.87  $ 0.83  
Diluted  $ 0.32  $ 0.29    $ 0.27    $ 0.87  $ 0.83  
                 
Average Shares Outstanding:                
Basic 79,552,873 79,549,097   79,493,917   79,545,681 79,486,958  
Diluted 79,584,536 79,608,405   79,601,075   79,606,224 79,617,317  
 
 
BBCN Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)
           
  At or for the Three Months Ended    
  (Annualized) At or for the Nine Months Ended
Profitability measures: 9/30/2015 6/30/2015 9/30/2014 9/30/2015 9/30/2014
 ROA 1.35% 1.26% 1.25% 1.27% 1.3%
 ROE 10.96% 10.13% 9.97% 10.23% 10.46%
 Return on average tangible equity 1 12.44% 11.51% 11.43% 11.63% 12.03%
 Net interest margin 3.87% 3.91% 4.15% 3.88% 4.21%
 Efficiency ratio 47.32% 49.64% 49.73% 49.41% 48.62%
 
Average tangible equity is calculated by subtracting average goodwill and average core deposit intangibles assets from average stockholders’ equity. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.
 
 
BBCN Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)
                   
  Three Months Ended Three Months Ended Three Months Ended
  9/30/2015 6/30/2015 9/30/2014
    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:                  
Loans receivable, including loans held for sale  $ 5,918,005  $ 73,650 4.94%  $ 5,742,153  $ 71,249 4.98%  $ 5,434,815  $ 72,437 5.29%
Securities available for sale 881,054 4,670 2.12% 819,820 4,215 2.06% 734,282 3,999 2.18%
FRB and FHLB stock and other investments 261,044 739 1.11% 348,690 1,611 1.83% 332,643 648 0.76%
Total interest earning assets  $ 7,060,103  $ 79,059 4.44%  $ 6,910,663  $ 77,075 4.47%  $ 6,501,740  $ 77,084 4.71%
                   
INTEREST BEARING LIABILITIES:                  
Deposits:                  
Demand, interest bearing  $ 1,695,709  $ 3,141 0.73%  $ 1,608,495  $ 2,873 0.72%  $ 1,492,175  $ 2,558 0.68%
Savings 196,090 419 0.85% 194,053 416 0.86% 202,785 496 0.97%
Time deposits:                  
$100,000 or more 1,677,861 3,450 0.82% 1,750,089 3,514 0.81% 1,601,436 3,095 0.77%
Other 677,338 1,380 0.81% 609,654 1,167 0.77% 677,474 1,270 0.74%
Total time deposits 2,355,199 4,830 0.81% 2,359,743 4,681 0.80% 2,278,910 4,365 0.76%
Total interest bearing deposits 4,246,998 8,390 0.78% 4,162,291 7,970 0.77% 3,973,870 7,419 0.74%
FHLB advances 532,926 1,514 1.13% 481,946 1,327 1.10% 462,434 1,373 1.18%
Other borrowings 40,716 394 3.79% 40,670 387 3.76% 40,533 385 3.72%
Total interest bearing liabilities 4,820,640 $ 10,298 0.85% 4,684,907 $ 9,684 0.83% 4,476,837 $ 9,177 0.81%
Noninterest bearing demand deposits 1,630,633     1,623,922     1,483,966    
Total funding liabilities/cost of funds  $ 6,451,273   0.63%  $ 6,308,829   0.62%  $ 5,960,803   0.61%
Net interest income/net interest spread    $ 68,761 3.60%    $ 67,391 3.64%    $ 67,907 3.89%
Net interest margin     3.87%     3.91%     4.15%
Net interest margin, excluding effect of nonaccrual loan income (expense)     3.87%     3.91%     4.14%
Net interest margin, excluding effect of nonaccrual loan income (expense) and prepayment fee income     3.85%     3.88%     4.10%
Nonaccrual loan income (reversed) recognized   $ —      $ (21)      $ 63  
Prepayment fee income received   333     457     608  
Net    $ 333      $ 436      $ 671  
                   
Cost of deposits:                  
Noninterest bearing demand deposits  $ 1,630,633  $ —     $ 1,623,922  $ —     $ 1,483,966  $ —   
Interest bearing deposits 4,246,998 8,390 0.78% 4,162,291 7,970 0.77% 3,973,870 7,419 0.74%
Total deposits  $ 5,877,631  $ 8,390 0.57%  $ 5,786,213  $ 7,970 0.55%  $ 5,457,836  $ 7,419 0.54%
 
 
BBCN Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)
             
  Nine Months Ended Nine Months Ended
  9/30/2015 9/30/2014
    Interest Annualized   Interest Annualized
  Average Income/ Average Average Income/ Average
  Balance Expense Yield/Cost Balance Expense Yield/Cost
INTEREST EARNING ASSETS:            
Loans receivable, including loans held for sale  $ 5,760,376  $ 214,537 4.98%  $ 5,303,478  $ 212,818 5.37%
Securities available for sale 828,088 13,105 2.11% 718,291 12,171 2.26%
FRB and FHLB stock and other investments 339,686 3,046 1.18% 339,828 1,881 0.73%
Term federal funds sold NA 4,469 20 0.60%
Total interest earning assets  $ 6,928,150  $ 230,688 4.45%  $ 6,366,066  $ 226,890 4.76%
             
INTEREST BEARING LIABILITIES:            
Deposits:            
Demand, interest bearing $ 1,643,539 $ 8,779 0.71% $ 1,456,348 $ 7,335 0.67%
Savings 195,072 1,260 0.86% 209,121 1,635 1.05%
Time deposits:            
$100,000 or more 1,713,631 10,340 0.81% 1,596,416 8,757 0.73%
Other 637,916 3,736 0.78% 679,114 3,654 0.72%
Total time deposits 2,351,547 14,076 0.80% 2,275,530 12,411 0.73%
Total interest bearing deposits 4,190,158 24,115 0.77% 3,940,999 21,381 0.73%
FHLB advances 498,795 4,138 1.11% 443,346 3,894 1.17%
Other borrowings 40,670 1,160 3.76% 44,431 1,252 3.71%
Total interest bearing liabilities 4,729,623 $ 29,413 0.83% 4,428,776 $ 26,527 0.80%
Noninterest bearing demand deposits 1,599,554     1,425,718    
Total funding liabilities/cost of funds  $ 6,329,177   0.62%  $ 5,854,494   0.61%
Net interest income/net interest spread    $ 201,275 3.62%    $ 200,363 3.96%
Net interest margin     3.88%     4.21%
Net interest margin, excluding effect of nonaccrual loan income (expense)     3.88%     4.20%
Net interest margin, excluding effect of nonaccrual loan income (expense) and prepayment fee income     3.86%     4.17%
Nonaccrual loan income (reversed) recognized   $ (45)      $ 138  
Prepayment fee income received   1,300     1,523  
Net    $ 1,255      $ 1,661  
             
Cost of deposits:            
Noninterest bearing demand deposits  $ 1,599,554  $ —     $ 1,425,718  $ —   
Interest bearing deposits 4,190,158 24,115 0.77% 3,940,999 21,381 0.73%
Total deposits  $ 5,789,712  $ 24,115 0.56%  $ 5,366,717  $ 21,381 0.53%
 
 
BBCN Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)
                 
  Three Months Ended Nine Months Ended
AVERAGE BALANCES 9/30/2015 6/30/2015 % change 9/30/2014 % change 9/30/2015 9/30/2014 % change
Loans receivable, including loans held for sale  $ 5,918,005  $ 5,742,153 3%  $ 5,434,815 9%  $ 5,760,376  $ 5,303,478 9%
Investments 1,142,098 1,168,510 (2)% 1,066,925 7% 1,167,774 1,062,588 10%
Interest earning assets 7,060,103 6,910,663 2% 6,501,740 9% 6,928,150 6,366,066 9%
Total assets 7,424,598 7,264,687 2% 6,867,468 8% 7,284,661 6,739,534 8%
                 
Interest bearing deposits 4,246,998 4,162,291 2% 3,973,870 7% 4,190,158 3,940,999 6%
Interest bearing liabilities 4,820,640 4,684,907 3% 4,476,837 8% 4,729,623 4,428,776 7%
Noninterest bearing demand deposits 1,630,633 1,623,922 —% 1,483,966 10% 1,599,554 1,425,718 12%
Stockholders’ equity 915,702 906,310 1% 859,606 7% 904,166 840,743 8%
Net interest earning assets 2,239,463 2,225,756 1% 2,024,903 11% 2,198,527 1,937,290 13%
                 
                 
LOAN PORTFOLIO COMPOSITION: 9/30/2015 6/30/2015 % change 12/31/2014 % change 9/30/2014 % change  
Commercial loans  $ 1,060,618  $ 1,085,714 (2)%  $ 1,038,383 2%  $ 1,023,924 4%  
Real estate loans 4,827,281 4,645,401 4% 4,439,850 9% 4,317,960 12%  
Consumer and other loans 88,092 87,707 —% 89,849 (2)% 92,362 (5)%  
Loans outstanding 5,975,991 5,818,822 3% 5,568,082 7% 5,434,246 10%  
Unamortized deferred loan fees – net of costs (3,267) (2,998) 9% (2,890) 13% (1,402) 133%  
Loans, net of deferred loan fees and costs 5,972,724 5,815,824 3% 5,565,192 7% 5,432,844 10%  
Allowance for loan losses (71,110) (70,118) 1% (67,758) 5% (68,232) 4%  
Loan receivable, net  $ 5,901,614  $ 5,745,706 3%  $ 5,497,434 7%  $ 5,364,612 10%  
                 
REAL ESTATE LOANS BY PROPERTY TYPE: 9/30/2015 6/30/2015 % change 12/31/2014 % change 9/30/2014 % change  
Retail buildings  $ 1,236,686  $ 1,183,866 4%  $ 1,244,133 (1)%  $ 1,233,161 —%  
Hotels/motels 1,031,931 969,980 6% 889,411 16% 846,921 22%  
Gas stations/car washes 648,759 630,445 3% 602,946 7% 582,725 11%  
Mixed-use facilities 349,097 349,600 —% 334,068 4% 353,395 (1)%  
Warehouses 500,747 499,313 —% 450,356 11% 443,418 13%  
Multifamily 222,047 213,256 4% 205,280 8% 197,902 12%  
Other 838,014 798,941 5% 713,656 17% 660,438 27%  
Total  $ 4,827,281  $ 4,645,401 4%  $ 4,439,850 9%  $ 4,317,960 12%  
                 
DEPOSIT COMPOSITION 9/30/2015 6/30/2015 % change 12/31/2014 % change 9/30/2014 % change  
Noninterest bearing demand deposits  $ 1,631,672  $ 1,689,137 (3)%  $ 1,543,018 6%  $ 1,503,275 9%  
Money market and other 1,783,760 1,615,974 10% 1,663,855 7% 1,537,467 16%  
Saving deposits 193,895 196,998 (2)% 198,205 (2)% 199,953 (3)%  
Time deposits of $100,000 or more 1,716,267 1,637,673 5% 1,667,367 3% 1,595,213 8%  
Other time deposits 703,271 618,508 14% 621,007 13% 673,846 4%  
Total deposit balances  $ 6,028,865  $ 5,758,290 5%  $ 5,693,452 6%  $ 5,509,754 9%  
                 
DEPOSIT COMPOSITION (%) 9/30/2015 6/30/2015   12/31/2014   9/30/2014    
Noninterest bearing demand deposits 27.1% 29.3%   27.1%   27.3%    
Money market and other 29.6% 28.1%   29.2%   27.9%    
Saving deposits 3.2% 3.4%   3.5%   3.6%    
Time deposits of $100,000 or more 28.5% 28.4%   29.3%   29.0%    
Other time deposits 11.6% 10.8%   10.9%   12.2%    
Total deposit balances 100.0% 100.0%   100.0%   100.0%    
 
 
BBCN Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)
               
CAPITAL RATIOS 9/30/2015 6/30/2015 12/31/2014 9/30/2014      
Total stockholders’ equity  $ 929,569  $ 908,588  $ 882,773  $ 864,648      
Common Equity Tier 1 ratio 12.34% 12.58% 12.96% 13.02%      
Tier 1 risk-based capital ratio 12.96% 13.22% 13.64% 13.72%      
Total risk-based capital ratio 14.05% 14.34% 14.80% 14.93%      
Tier 1 leverage ratio 11.76% 11.80% 11.62% 11.80%      
Total risk weighted assets  $ 6,639,958  $ 6,380,538  $ 5,956,129  $ 5,807,854      
Book value per common share  $ 11.68  $ 11.42  $ 11.10  $ 10.87      
Tangible common equity to tangible assets 2 10.99% 11.07% 11.00% 11.07%      
Tangible common equity per share 2  $ 10.32  $ 10.05  $ 9.72  $ 9.49      
               
Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and core deposit intangible assets, net divided by total assets less goodwill and core deposit 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.  
               
Reconciliation of GAAP financial measures to non-GAAP financial measures:      
       
  9/30/2015 6/30/2015 12/31/2014 9/30/2014      
Total stockholders’ equity  $ 929,569  $ 908,588  $ 882,773  $ 864,648      
Less: Common stock warrant (378) (378)      
Goodwill and core deposit intangible assets, net (108,487) (108,755) (109,288) (109,612)      
Tangible common equity  $ 821,082  $ 799,833  $ 773,107  $ 754,658      
               
Total assets $ 7,583,002 $ 7,333,319 $ 7,140,330 $ 6,927,806      
Less: Goodwill and core deposit intangible assets, net (108,487) (108,754) (109,288) (109,612)      
Tangible assets  $ 7,474,515  $ 7,224,564  $ 7,031,042  $ 6,818,194      
               
Common shares outstanding 79,553,460 79,550,403 79,503,552 79,497,331      
               
Tangible common equity to tangible assets 10.99% 11.07% 11.00% 11.07%      
Tangible common equity per share  $ 10.32  $ 10.05  $ 9.72  $ 9.49      
               
  Three Months Ended Six Months Ended
ALLOWANCE FOR LOAN LOSSES: 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014 9/30/2015 9/30/2014
Balance at beginning of period  $ 70,118  $ 69,594  $ 67,758  $ 68,232  $ 66,870  $ 67,758  $ 67,320
Provision for loan losses 600 1,000 1,500 2,360 4,256 3,100 10,278
Recoveries 2,171 975 1,461 3,225 772 4,607 2,334
Charge offs (1,779) (1,451) (1,125) (6,059) (3,666) (4,355) (11,700)
Balance at end of period  $ 71,110  $ 70,118  $ 69,594  $ 67,758  $ 68,232  $ 71,110  $ 68,232
Net charge offs/average gross loans (annualized) (0.03)% 0.03% (0.02)% 0.21% 0.21% (0.01)% 0.24%
     
  Three Months Ended Six Months Ended
NET CHARGED OFF LOANS BY TYPE 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014 9/30/2015 9/30/2014
Real estate loans  $ (505)  $ 13  $ (460)  $ (265)  $ 1,100  $ (952)  $ 2,019
Commercial loans (25) 560 111 3,104 1,803 646 7,472
Consumer loans 138 (97) 13 (5) (9) 54 (125)
Charge offs excluding Acquired Credit Impaired Loans (392) 476 (336) 2,834 2,894 (252) 9,366
Charge offs on Acquired Credit Impaired Loans
Total net charge offs  $ (392)  $ 476  $ (336)  $ 2,834  $ 2,894  $ (252)  $ 9,366
 
 
BBCN Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)
   
NONPERFORMING ASSETS 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014
Delinquent loans on nonaccrual status 3  $ 32,446  $ 39,681  $ 38,755  $ 46,352  $ 39,564
Delinquent loans 90 days or more on accrual status 4 333 361
Accruing restructured loans 54,274 57,393 57,905 57,128 56,061
Total nonperforming loans 86,720 97,407 96,660 103,841 95,625
Other real estate owned 21,350 20,187 19,606 21,938 23,162
Total nonperforming assets  $ 108,070  $ 117,594  $ 116,266  $ 125,779  $ 118,787
Nonperforming assets/total assets 1.43% 1.60% 1.6% 1.76% 1.71%
Nonperforming assets/loans receivable & OREO 1.80% 2.01% 2.03% 2.25% 2.18%
Nonperforming assets/total capital 11.63% 12.94% 12.93% 14.25% 13.74%
Nonperforming loans/loans receivable 1.45% 1.67% 1.69% 1.87% 1.76%
Nonaccrual loans/loans receivable 0.54% 0.68% 0.68% 0.83% 0.73%
Allowance for loan losses/loans receivable 1.19% 1.21% 1.22% 1.22% 1.26%
Allowance for loan losses/nonaccrual loans 219.16% 176.70% 179.57% 146.18% 172.46%
Allowance for loan losses/nonperforming loans 82.00% 71.98% 72% 65.25% 71.35%
Allowance for loan losses/nonperforming assets 65.8% 59.63% 59.86% 53.87% 57.44%
           
3 Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $19.9 million, $22.6 million, $26.1 million, $28.9 million, and $28.1 million at September, 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014, and September 30, 2014, respectively.
4 Excludes Acquired Credit Impaired Loans totaling $18.5 million, $23.0 million, $24.1 million, $30.4 million, and $32.7 million, at September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014, and September 30, 2014, respectively.
   
BREAKDOWN OF ACCRUING RESTRUCTURED LOANS BY TYPE: 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014
Retail buildings  $ 5,631  $ 5,705  $ 5,956  $ 6,050  $ 5,979
Hotels/motels 7,632 8,012 8,095 8,172 8,246
Gas stations/car washes
Mixed-use facilities 775 844 784 789 792
Warehouses 5,698 5,759 6,180 5,880 5,939
Multifamily
Other 5 34,538 37,073 36,890 36,237 35,105
Total  $ 54,274  $ 57,393  $ 57,905  $ 57,128  $ 56,061
           
Includes commercial business and other loans
           
   
DELINQUENT LOANS LESS THAN 90 DAYS PAST DUE 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014
Legacy          
30 – 59 days  $ 4,381  $ 3,457  $ 4,901  $ 2,084  $ 3,936
60 – 89 days 2,874 1,546 1,565 1,812 1,284
Total delinquent loans less than 90 days past due – legacy  $ 7,255  $ 5,003  $ 6,466  $ 3,896  $ 5,220
           
Acquired          
30 – 59 days  $ 2,382  $ 1,553  $ 1,294  $ 1,806  $ 6,911
60 – 89 days 148 629 66 436 283
Total delinquent loans less than 90 days past due – acquired  $ 2,530  $ 2,182  $ 1,360  $ 2,242  $ 7,194
           
Total delinquent loans less than 90 days past due  $ 9,785  $ 7,185  $ 7,826  $ 6,138  $ 12,414
 
 
BBCN Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)
   
DELINQUENT LOANS LESS THAN 90 DAYS PAST DUE BY TYPE 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014
           
Legacy          
Real estate loans  $ 2,468  $ 2,240  $ 2,127  $ 2,475  $ 2,768
Commercial loans 4,737 2,734 4,082 1,385 2,221
Consumer loans 50 29 257 36 231
Total delinquent loans less than 90 days past due – legacy  $ 7,255  $ 5,003  $ 6,466  $ 3,896  $ 5,220
           
Acquired          
Real estate loans  $ 2,335  $ 1,843  $ 1,145  $ 1,747  $ 6,297
Commercial loans 164 333 199 382 884
Consumer loans 31 6 16 113 13
Total delinquent loans less than 90 days past due – acquired  $ 2,530  $ 2,182  $ 1,360  $ 2,242  $ 7,194
           
Total delinquent loans less than 90 days past due  $ 9,785  $ 7,185  $ 7,826  $ 6,138  $ 12,414
           
   
NONACCRUAL LOANS BY TYPE 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014
           
Real estate loans  $ 23,361  $ 25,922  $ 25,126  $ 30,988  $ 29,001
Commercial loans 7,996 12,031 12,591 14,302 9,486
Consumer loans 1,089 1,728 1,038 1,062 1,077
Total non-accrual loans  $ 32,446  $ 39,681  $ 38,755  $ 46,352  $ 39,564
   
CRITICIZED LOANS 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014
Legacy          
Special mention  $ 116,267  $ 102,725  $ 90,041  $ 96,092  $ 88,314
Substandard 97,225 103,074 111,162 114,369 113,865
Doubtful 184 220 228 39 470
Loss
Total criticized loans – legacy  $ 213,676  $ 206,019  $ 201,431  $ 210,500  $ 202,649
           
Acquired          
Special mention  $ 25,388  $ 27,070  $ 22,257  $ 26,243  $ 25,081
Substandard 79,774 90,262 96,655 107,506 114,347
Doubtful 1,537 1,833 1,947 2,148 3,086
Loss
Total criticized loans – acquired  $ 106,699  $ 119,165  $ 120,859  $ 135,897  $ 142,514
           
Total criticized loans  $ 320,375  $ 325,184  $ 322,290  $ 346,397  $ 345,163
CONTACT: Angie Yang
         SVP, Investor Relations
         213-251-2219
         angie.yang@BBCNbank.com