Investor Presentation Investor Presentation Second Quarter 2013 Results NASDAQ: CUNB Exhibit 99.1 |
Forward-Looking Statements Forward-Looking Statements 2 This presentation contains certain forward-looking information about CU Bancorp and its wholly-owned subsidiary, 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 could reduce 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, accounting 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 Company’s annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by the Company with the SEC. The documents filed with the SEC may be obtained on the Investor Relations page of the Company’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. |
Corporate Overview Corporate Overview California United Bank (CUB) is a premier community-based California United Bank (CUB) is a premier community-based commercial bank serving the Metropolitan Los Angeles, commercial bank serving the Metropolitan Los Angeles, Orange County and Ventura County markets Orange County and Ventura County markets 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) Serving businesses, non-profit organizations, entrepreneurs and professionals Total assets of $1.28 billion California United Bank grew total assets at a 43% CAGR and total deposits at a 51% CAGR since inception in 2005 through December 31, 2012 3 |
Investment Highlights Investment Highlights Emerging business banking franchise reaching an inflection point in profitability Attractive low-cost core deposit base Non-interest bearing deposits comprise 52% of total deposits at 6/30/13 Cost of deposits was 14 bps in Q2 2013 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 Bancorp (PCB) enhances earnings power 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 Added to Russell Indexes in June 2013 4 |
Strategic Geographic Locations Strategic Geographic Locations 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* 5 *New combined location (August 2013) Encino CUB Branch CUB LPO Former COSB Branch Former PCB Branch California California United Bank has a United Bank has a footprint that spans the footprint that spans the most attractive markets in most attractive markets in Southern California: Southern California: |
CUB Market Overview CUB Market Overview Large and Diverse Market Large and Diverse Market LA County would be 9 th largest state in U.S. Orange County would be 31 st largest state in U.S. Los Angeles is largest manufacturing center in U.S. 5-County area* accounts for 47% of California economy and would be 5 th largest state in U.S. Huge Demand for Huge Demand for Small- Small- and Middle-Market Banking and Middle-Market Banking 6 **Small- and Middle-Market Businesses defined as businesses with between 1 and 499 employees Source: Los Angeles Economic Development Commission (as of 2011) *5-County area consists of Los Angeles, Orange, Ventura, Riverside and San Bernardino Counties Over 650,000 small- and middle-market businesses** in 5-County area |
Robust Market for Community Banks Robust Market for Community Banks 7 Number of Small- and Middle-Market Businesses* Net Annual Growth in Number of Small- and Middle- Market Businesses* *Small- and Middle-Market Businesses defined as businesses with between 1 and 499 employees Source: California EDD (as of 2011) 24,050 103,773 438,141 Ventura County Orange County LA County -10,000 0 10,000 20,000 30,000 40,000 37,050 -9,095 8,087 15,655 LA County Orange County Ventura County 2008 2009 2010 2011 |
Why We Are Different Why We Are Different CUB 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 many community 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 8 |
Our Customers Our Customers Our customer base reflects the diversity Our customer base reflects the diversity of industries in Southern California of industries in Southern California 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 9 |
Dedicated to the Community Dedicated to the Community CUB employees are involved in their local communities Strong cultural value demonstrates that supporting the community is also good business CUB supports over 75 charities throughout Southern California financially and with volunteer hours Local advisory board members help identify worthy charitable organizations to support “Outstanding” CRA Rating 10 |
Experienced Management Experienced Management 11 *Formerly EVP at Premier Commercial Bank, N.A. Name Title Functional Banking Exp CUB Tenure David Rainer President Chief Executive Officer 33 years 8 years Anne Williams EVP Chief Operating Officer and Chief Credit Officer 33 years 8 years Karen Schoenbaum EVP Chief Financial Officer 20 years 4 years Anita Wolman EVP General Counsel 36 years 8 years Sam Kunianski EVP Executive Manager – Commercial and Private Banking 29 years 7 years William Sloan EVP Executive Manager – Real Estate and Santa Clarita Regional Manager 29 years 8 years Stephen Pihl EVP Executive Manager – SBA and Orange County Regional Manager 26 years 1 year* |
A History of Success A History of Success 12 The Management Team at California United Bank has three decades of banking experience in the Southern California Market. The same Executive Team that created success at the banks below are now in charge at California United Bank. Wells Fargo/Security Pacific – 1980s California United Bank (1992 – 1997) Grew to $1 billion in assets Sold to Bank of Hawaii in 1997 Santa Monica Bank Sold to U.S. Bancorp in 2000 U.S. Bank (2001 – 2004) California United Bank (Current) Opened in 2005 Acquired Cal Oaks State Bank December 31, 2010 Merged with Premier Commercial Bancorp July 31, 2012 $1.28 billion in total assets at June 30, 2013 |
Our Growth Strategy Our Growth Strategy 13 Organic Organic Acquisitions 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 New SBA lending expertise provided by PCB California Oaks State Bank (12/31/10) Premier Commercial Bank (7/31/12) Leverage relationship-based approach and superior service to win customers from larger banks |
Merger Overview Merger Overview 14 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 enables the bank to expand available services and penetrate additional markets Southern California’s Preeminent Business Bank |
Realizing Synergies from PCB Realizing Synergies from PCB 15 Combined breadth of products and services increasing business development capabilities throughout footprint PCB’s award-winning SBA lending platform is being leveraged throughout CUB’s markets Improving PCB’s deposit mix and reducing funding costs Elimination of redundancies is providing meaningful cost savings and enhancing efficiencies Greater scale is enabling better absorption of increasing regulatory compliance costs TBV/Share Recovery PCB acquired on 7/31/12 $10.85 $10.17 $10.37 $10.60 $10.78 $10.00 $10.50 $11.00 |
Shareholders of CUB Acquisitions Shareholders of CUB Acquisitions Well Rewarded Well Rewarded COSB 8/24/10 $6.00 CUNB 8/13/13 $17.92 PCBP 12/8/11 $9.00 CUNB 8/13/13 $17.92 44.5% CAGR 50.5% CAGR California Oaks State Bank – Acquisition announced August 24, 2010 From announcement through 8/13/2013, COSB shareholders rewarded with compound annual growth rate equal to 44.5% after 1,086 days* Premier Commercial Bancorp – Acquisition announced December 8, 2011 From announcement through 8/13/2013, PCB shareholders rewarded with compound annual growth rate equal to 50.5% after 615 days *Applies to shareholders who elected to receive 100% compensation in CUNB stock 16 |
First Half 2013 Highlights First Half 2013 Highlights 17 Net income increases to $4.5 million from $1.0 million +334% YoY Solid loan growth of 3.5% $49 million in net organic loan growth Offset by $19 million in loan run-off from acquired portfolios High quality deposit growth 5% growth in non-interest bearing demand deposits Ramp-up in SBA lending 1H gain on sale of SBA loans rises to $410K from $0 last year Continued strong credit quality NCOs of 0.08% of average loans Note: YoY defined as 1H 2013 vs. 1H 2012 |
Increasing Core Earnings Increasing Core Earnings * Core earnings reconciliation to net income provided in Appendix 18 2011 2012 2013 $4,989 $1,076 $1,683 $1,596 $3,929 $1,627 $1,046 $1,134 $803 $3,693 $3,500 $4,500 $5,500 $500 $1,500 $2,500 Q1 Q2 Q3 Q4 |
Improving Operating Leverage Improving Operating Leverage 19 3Q12 operating expenses excludes $2.5 million in merger-related expenses $6 $7 $8 $9 $10 $11 $12 $13 $14 $15 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Revenue Operating Expenses |
Impact of PCB Merger Impact of PCB Merger 20 * Core earnings reconciliation to net income provided in Appendix $2,761 $8,682 $0 $2,000 $4,000 $6,000 $8,000 $10,000 1H12 1H13 Core Earnings* 84% 69% 50% 60% 70% 80% 90% 100% 1H12 1H13 Efficiency Ratio 0.29% 0.70% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1H12 1H13 ROAA 2.53% 7.02% 0.00% 2.00% 4.00% 6.00% 8.00% 1H12 1H13 ROAE |
Consistent Asset Growth Consistent Asset Growth 21 *Represents the assets acquired from Premier Commercial Bancorp on July 31, 2012 $102 $178 $260 $379 $457 $638 $800 $853 $1,279 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2005 2006 2007 2008 2009 2010 2011 2012 2Q13 CUB Organic Acquisitions $1,250 $756 COSB acquisition $397* PCB acquisition $118 |
Loan Growth Loan Growth 22 Q2 2013 Loan Growth = $24MM or 2.8% CUB Organic Acquisitions PCB acquisition COSB acquisition |
Loan Portfolio Composition Loan Portfolio Composition (June 30, 2013) (June 30, 2013) 23 C&I 31% Owner- Occupied CRE 20% Non-Owner Occupied CRE 30% Construction 6% 1-4 Family 7% Multi-Family 4% Other 2% |
Loans by Industry Loans by Industry (C&I and Owner-Occupied) (C&I and Owner-Occupied) (June 30, 2013) (June 30, 2013) 24 Note: Based on NASICS codes Admin Mgmt 4% Construction 6% Other 4% Entertainment 1% Finance 5% Healthcare 6% Manufacturing 15% Other Services 3% Professional Svces 6% Real Estate 25% Restaurant/Food Service 7% Hotel/Lodging 1% Retail 4% Transportation 2% Wholesale 10% |
NPAs/Total Assets NPAs/Total Assets 25 Peer Group includes public banks or bank holding companies in California with total assets between $1.0-$2.0 billion 0.00% 1.12% 1.42% 1.19% 1.05% 0.98% 1.07% 1.09% 1.07% 1.06% 2.55% 5.26% 4.44% 3.31% 3.18% 3.27% 2.91% 2.62% 2.01% 1.37% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 2008 2009 2010 2011 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 CUB Peer Group Avg. |
NCOs/Avg. Loans NCOs/Avg. Loans 26 Peer Group includes public banks or bank holding companies in California with total assets between $1.0-$2.0 billion -0.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 2008 2009 2010 2011 2012 1Q13 2Q13 CUB Peer Group Avg. 0.00% 0.80% 0.49% -0.04% 0.08% 0.01% 0.27% 1.01% 1.98% 1.51% 0.88% 0.90% 0.24% 0.14% 2013 YTD NCOs = 0.08% |
Quality Deposit Growth Quality Deposit Growth 27 $60 $116 $191 $246 $346 $545 $691 $800 $1,098 $113 $278 $0 $200 $400 $600 $800 $1,000 $1,200 2005 2006 2007 2008 2009 2010 2011 2012 2Q13 CUB Organic Acquisitions $1,078 PCB acquisition $658 COSB acquisition Q2 2013 Non-Interest Bearing Growth = $14MM |
Deposit Composition Deposit Composition (June 30, 2013) (June 30, 2013) 28 Non Int. Bearing Demand 52.0% Interest Bearing Transaction 11.6% MM and Savings 30.9% CDs 5.5% |
Transaction Accounts and Cost of Funds Transaction Accounts and Cost of Funds 29 Peer Group includes public banks or bank holding companies in California with total assets between $1.0-$2.0 billion |
CU Bancorp Capital Ratios CU Bancorp Capital Ratios 30 Tier 1 Leverage Capital Ratio (%) Total Risk Based Capital Ratio (%) Peer Group includes public banks or bank holding companies in California with total assets between $1.0-$2.0 billion |
Shifting from Growth Shifting from Growth to High Performance to High Performance 31 Continue realizing synergies from the merger with PCB Continue attracting high performing bankers Further penetrate existing footprint Enhance efficiencies as we continue to scale Expand non-interest income through increased SBA loan production and sales |
Contact Information Contact Information 32 For more information, please contact: Karen Schoenbaum, CFO (818) 257-7700 kschoenbaum@cunb.com |
Appendix Appendix 33 Reconciliation of Core Earnings to Net Income (Loss) 2Q13 1Q13 4Q12 3Q12 2Q12 1Q12 4Q11 3Q11 2Q11 1Q11 Net Income (Loss) 2,321 2,155 1,628 (932) 525 506 306 601 312 248 Add back: Provision for income tax expense (benefit) 1,515 1,366 1,166 (453) 502 450 181 454 242 270 Add back: Provision for loan losses 1,153 134 867 521 380 - 781 - 467 194 Subtract: Gain on sale of securities, net - 5 - - - - - 6 69 144 Subtract: Other-than-temporary impairment losses, net - - (65) (30) (30) (30) (130) (19) (70) (45) Add back: Merger related expenses - 43 203 2,517 190 148 198 8 24 190 Core Earnings 4,989 3,693 3,929 1,683 1,627 1,134 1,596 1,076 1,046 803 |