United in Our Dedication to Relationships |
2 Forward-Looking Statements This presentation contains certain forward-looking information about CU Bancorp and California United Bank (collectively the “Company”) that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There are a number of important factors that could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Risks and uncertainties include but are not limited to lower than expected revenues; credit quality deterioration which could cause an increase in the allowance for loan losses and a reduction in net earnings; increased competitive pressure among depository institutions; a change in the interest rate environment which reduces interest margins; asset/liability repricing risks and liquidity risks; general economic conditions, either nationally or in the market areas in which the Company does or anticipates doing business are less favorable than expected; environmental conditions, including natural disasters, may disrupt our business, impede our operations, negatively impact the values of collateral security for the Company’s loans or impair the ability of our borrowers to support their debt obligations; the economic and regulatory effects of the continuing war on terrorism and other events of war; legislative or regulatory requirements or changes adversely affecting the Company’s business; and changes in the securities markets. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, the Company’s results could differ materially from those expressed in, implied or projected by such forward- looking statements. The Company assumes no obligation to update such forward-looking statements. For a more complete discussion of risks and uncertainties, read the Bank’s annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by the Bank with the FDIC and by CU Bancorp with the SEC. The documents filed with the FDIC and the SEC may be obtained at California United Bank’s website at www.cunb.com. These documents may also be obtained free of charge from CU Bancorp by directing a request to CU Bancorp, 15821 Ventura Boulevard, Suite 100, Encino, California 91436, Attention: Investor Relations. Telephone 818 257-7700. United in Our Dedication to Relationships |
Investment Highlights 3 • Emerging business banking franchise reaching an inflection point in profitability • Attractive low-cost core deposit base Non-interest bearing deposits comprise 48% of total deposits Cost of deposits was 18 bps in Q3 2012 • Demonstrated ability to grow both organically and through acquisitions • Experienced management team with an established track record of delivering results • Recent acquisition of Premier Commercial Bank (PCB) provides near-term catalyst for earnings growth (excluding merger-related expenses) • Growing awareness in local markets and the investment community Surpassed $1 billion in total assets in July 2012 Transferred listing to Nasdaq Capital Market in October 2012 United in Our Dedication to Relationships |
Corporate Overview 4 • Established by local business owners and entrepreneurs in 2005 • Eight full-service offices in Los Angeles, San Fernando Valley, Conejo Valley, Santa Clarita Valley, Simi Valley, South Bay, and Orange County (Anaheim and Irvine/Newport Beach) • Servicing businesses, non-profit organizations, entrepreneurs, professionals, and high-net worth individuals • Total assets of $1.3 billion • California United Bank grew total assets at a 41.0% CAGR and total deposits at a 50.5% CAGR since inception in 2005 through December 31, 2011 United in Our Dedication to Relationships California United Bank is a premier community-based commercial bank servicing the Metropolitan Los Angeles, Orange County and Ventura County markets |
• Encino (2005) – Headquarters • Los Angeles (2006) • Santa Clarita Valley (2007) • South Bay (2009) – Converted to a branch in 2010 • Orange County (2010) – Loan Production Office • Simi Valley (2010) – Acquired from California Oaks State Bank • Thousand Oaks (2010) – Acquired from California Oaks State Bank • Anaheim (2012) – Acquired from Premier Commercial Bank • Irvine/Newport Beach (2012) – Acquired from Premier Commercial Bank CUNB Branch CUNB LPO Former COSB Branch Former PCB Branch Strategic Geographic Locations 5 United in Our Dedication to Relationships California United Bank has a footprint that spans the most attractive markets in Southern California: |
Why We Are Different 6 • CUNB has been engaged in the successful practice of business banking since its inception Strong growth combined with stellar asset quality • We have the ability to do larger, more complex financings than similar sized banks Formula lines of credit Asset-based lending • Executive team has extensive experience building high performing banks • Demonstrated ability to identify, acquire and successfully integrate banks • Proven ability to attract top bankers Multiple experienced banking teams added from competitors since 2010 • Local advisory boards guide the Bank in its respective business communities United in Our Dedication to Relationships California United Bank sets itself apart from other banks in the following ways: |
Our Customers 7 • Majority of customers participate in the manufacturing, distribution and services industries • Typical customer has between $10 million and $60 million in annual sales (excluding SBA borrowers) • Typical loan commitment ranges between $1 million and $5 million (excluding SBA loans) • Majority of new customers come from larger banks • Most new business generation results from warm leads provided by referral sources Our customer base reflects the diversity of industries in Southern California United in Our Dedication to Relationships |
8 • CUNB employees are involved in their local communities • Strong cultural value demonstrates that supporting the community is also good business • CUNB supports over 75 charities throughout Southern California financially and with volunteer hours • Utilize local advisory boards to help guide the Bank in its respective markets • “Outstanding” CRA Rating United in Our Dedication to Relationships Dedicated to the Community |
9 *Formerly EVP at Premier Commercial Bank, N.A. David Rainer President Chief Executive Officer 32 years 7 years Anne Williams EVP Chief Operating Officer & Chief Credit Officer 32 years 7 years Karen Schoenbaum EVP Chief Financial Officer 19 years 3 years Anita Wolman EVP General Counsel 35 years 7 years Sam Kunianski EVP Executive Manager – Commercial and Private Banking 28 years 6 years William Sloan EVP Executive Manager – Real Estate and Santa Clarita Regional Manager 28 years 7 years Stephen Pihl EVP Executive Manager – SBA and Orange County Regional Manager 25 years New addition* Name Title Functional Banking Exp CUB Tenure Experienced Management United in Our Dedication to Relationships |
10 The Management Team at California United Bank has . The same Executive Team that created success at the banks below are now in charge at California United Bank. – Grew to $1 billion in assets – Sold to Bank of Hawaii in 1997 – Sold to U.S. Bancorp in 2000 – Opened in 2005 – Acquired Cal Oaks State Bank December 31, 2010 – Merged with Premier Commercial Bancorp July 31, 2012 – $1.3 billion in total assets at September 30, 2012 A History of Success • Wells Fargo/Security Pacific – 1980s • California United Bank (1992 – 1997) • Santa Monica Bank • U.S. Bank (2001 – 2004) • California United Bank (Current) United in Our Dedication to Relationships three decades of banking experience in the Southern California Market |
Our Growth Strategy 11 Organic Acquisitions De novo regional offices with strong local leadership Hire “in market” talent Offer sophisticated products/solutions Expertise in C&I and Commercial Real Estate lending Relationship based business Distinguish by service New SBA lending expertise provided by PCB California Oaks State Bank (12/31/10) Premier Commercial Bank (7/31/12) United in Our Dedication to Relationships |
Q3 2012 Highlights 12 • Pre-tax earnings before merger-related expenses of $1.13 million, an increase of 6.5% over prior year • Net interest income of $9.8 million, an increase of 42% over prior year • Net interest margin increased to 3.57% from 3.37% in prior quarter Accretion of purchase accounting discount enhanced loan yields by 29 bps • Net organic loan growth of $51 million, or 10% from the end of the prior quarter • Net organic deposit growth of $24 million, or 3% from the end of the prior quarter • Net charge-offs of $44,000 • Integration of Premier Commercial Bank completed in less than 30 days after close United in Our Dedication to Relationships |
*Represents the assets acquired from Premier Commercial Bancorp on July 31, 2012 Consistent Asset Growth United in Our Dedication to Relationships $102 $178 $260 $379 $457 $638 $800 $871 $118 $397* $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2005 2006 2007 2008 2009 2010 2011 9/30/2012 CUB Organic Acquisitions $1,268 PCB acquisition COSB acquisition 13 $756 |
Loan Growth 14 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 2005 2006 2007 2008 2009 2010 2011 9/30/2012 $795 $421 CUB Organic Acquisitions $35 $96 $162 $232 $263 $334 $489 $540 $87 $255 PCB acquisition COSB acquisition United in Our Dedication to Relationships |
Loan Portfolio Composition (September 30, 2012) 15 Multi-Family Other C&I Owner-Occupied CRE Non-Owner Occupied CRE Construction 3% 2% 6% 8% 29% 22% 30% 1-4 Family United in Our Dedication to Relationships |
Loans by Industry (C&I and Owner-Occupied) (September 30, 2012) 16 Transportation Restaurant/Lodging Retail Admin Mgmt Construction Education Entertainment Finance Healthcare Information Other Services Professional Svces Real Estate Wholesale Manufacturing 14% 22% 6% 5% 3% 3% 13% 7% 1% 2% 7% 7% 1% 3% 7% United in Our Dedication to Relationships |
NPAs/Total Assets 17 Peer Group includes public banks in California with total assets between $1.0-$1.5 billion United in Our Dedication to Relationships 1.42% 1.24% 1.12% 1.10% 1.19% 1.05% 0.98% 1.07% 4.44% 4.90% 4.12% 3.54% 3.31% 3.18% 3.27% 3.11% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 CUNB Peer Group Avg. |
18 Peer Group includes public banks in California with total assets between $1.0-$1.5 billion United in Our Dedication to Relationships 1.57% - 0.02% 0.22% - 0.61% 0.23% - 0.01% 0.49% 0.01% 1.29% 0.83% 1.13% 0.83% 0.73% 0.76% 1.41% 0.75% - 1.00% - 0.50% 0.00% 0.50% 1.00% 1.50% 2.00% 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 CUNB Peer Group Avg. NCOs/Avg. Loans |
19 CUB Organic Acquisitions $1,200 $1,000 $800 $600 $400 $200 $0 2005 2006 2007 2008 2009 2010 2011 9/30/2012 $658 $1,097 $278 $819 $691 $113 $545 $346 $246 $191 $116 $60 $60 COSB acquisition PCB acquisition United in Our Dedication to Relationships Strong Deposit Growth |
CDs 7.8% Non-Int. Bearing Demand 47.9% MM and Savings 34.6% Interest Bearing Transaction 9.6% United in Our Dedication to Relationships Deposit Composition (September 30, 2012) 20 |
Transaction Accounts and Cost of Funds 21 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2006Y 2007Y 2008Y 2009Y 2010Y 2011Y Q2 2012 Q3 2012 Peer Median (Transaction Accounts) CUNB (Transaction Accounts) CUNB (Cost of Funds) Peer Median (Cost of Funds) 2.87 2.44 2.33 2.80 51.4 2.00 46.2 32.2 35.7 29.5 29.1 1.59 26.8 28.4 0.70 1.31 31.1 36.9 38.4 40.3 0.87 0.45 0.64 0.19 0.47 0.12 57.6 0.47 0.24 53.5 64.5 67.5 United in Our Dedication to Relationships Peer Group includes public banks in California with total assets between $1.0-$1.5 billion |
United in Our Dedication to Relationships CU Bancorp Capital Ratios 22 Tier 1 Leverage Capital Ratio (%) Total Risk Based Capital Ratio (%) 10.01% 11.30% 5.00% 0% 2% 4% 6% 8% 10% 12% CUNB Peer Group Avg. FDIC Well Capitalized 12.24% 16.04% 10.00% 0% 5% 10% 15% 20% CUNB Peer Group Avg. FDIC Well Capitalized United in Our Dedication to Relationships Peer Group includes public banks in California with total assets between $1.0-$1.5 billion |
Merger Overview 23 Creates one of Los Angeles/Orange County’s largest independent commercial banking franchises focused exclusively in the market Partnered two of Southern California’s strongest commercial banks; strengthening the franchise for long-term earnings growth and value creation The critical mass of a larger institution will enable the bank to expand available services and penetrate additional markets The transaction will be beneficial for stakeholders in both organizations: creating value for shareholders, employees, customers, and the Southern California communities Southern California’s Preeminent Business Bank United in Our Dedication to Relationships |
Merger of Two Attractive Franchises 24 Low Cost Deposits C&I Lending Expertise Attractive Locations Strong Credit Quality Experienced Management Team SBA Expertise Real Estate Lending Expertise Attractive Orange County Market Strong Credit Quality Experienced Management Team United in Our Dedication to Relationships |
United in Our Dedication to Relationships An Abundance of Synergies 25 Combined breadth of products and services will increase business development capabilities throughout footprint PCB’s award-winning SBA lending platform will be leveraged throughout CUB’s markets Improving PCB’s deposit mix and reducing funding costs Elimination of redundancies will provide meaningful cost savings and enhance efficiencies Greater scale will enable better absorption of increasing regulatory compliance costs |
Shifting from Growth to High Performance 26 • Capture synergies from PCB merger • Expand non-interest income through increased SBA loan production and sales • Continue attracting high performing bankers • Further penetrate existing footprint • Enhance efficiencies as we continue to scale United in Our Dedication to Relationships |
Contact Information 27 • For more information, please contact: – Karen Schoenbaum, CFO (818) 257-7700 kschoenbaum@cunb.com United in Our Dedication to Relationships |