Exhibit 99.1
CU BANCORP REPORTS 2014 FOURTH QUARTER AND ANNUAL RESULTS
INCLUDING RECORD LOAN GROWTH OF $98 MILLION
Los Angeles, CA, February 2, 2015 - CU Bancorp (NASDAQ: CUNB), the parent company of wholly owned California United Bank, today reported financial results for the fourth quarter and full year of 2014.
The comparability of financial information for the fourth quarter and full year of 2014 to 2013, is affected by the Company’s acquisition of 1st Enterprise Bank (“1st Enterprise”), which was accomplished by a merger of California United Bank with 1st Enterprise (“the merger”), effective November 30, 2014. Operating results for fourth quarter and full year 2014 include the combined operations of both entities from December 1, 2014.
Full Year and Fourth Quarter 2014 Highlights
| • | | Core earnings of $11.4 million for 2014, an increase of $1.6 million or 16.3% from 2013 |
| • | | Net income in 2014 before the provision for income taxes and excluding merger-related charges was $18.8 million, up 27% from the prior year |
| • | | Net interest income increased to $53.3 million for 2014, an increase of $4.5 million, or 9.2% from 2013 |
| • | | Net interest margin increased for the fourth quarter of 2014 to 3.78% from 3.70% for the prior quarter |
| • | | Net organic loan growth of $98.5 million in the fourth quarter |
| • | | Total assets increased $833 million to $2.3 billion, as a result of the merger |
| • | | Total loans increased to $1.6 billion, as a result of the merger and organic loan growth |
| • | | Total deposits increased to $1.9 billion, as a result of the merger |
| • | | Non-interest bearing demand deposits were 53% of total deposits |
| • | | Nonperforming assets to total assetsdecreased to 0.21%, at December 31, 2014, from 0.68% at December 31, 2013 |
| • | | Continued status as well-capitalized, the highest regulatory category |
Full Year and Fourth Quarter 2014 Operating Results
Net Income and Profitability Ratios
Net income for 2014 was $8.9 million or $0.75 per fully diluted share, compared with net income of $9.8 million or $0.90 per fully diluted share for the full year of 2013. Net income in 2014 was impacted by $3.5 million in charges related to the merger. Excluding merger-related charges, net income before the provision for income taxes for the full year of 2014 was $18.8 million, an increase of 27% compared to net income before the provision for income taxes of $14.8 million for the full year of 2013.
Core net income (defined below) for the full year 2014 was $11.4 million or $0.98 per fully diluted share, an increase of 16.3% from core net income of $9.8 million or $0.91 per fully diluted share, for the full year 2013.
Net income for the fourth quarter of 2014 was $1.3 million or $0.09 per fully diluted share, compared with net income of $2.8 million or $0.26 per fully diluted share for the fourth quarter of 2013. Merger-related expenses in the fourth quarter of 2014 were $2.4 million, compared to none in the year-ago quarter. Excluding merger-related charges, net income before the provision for income taxes for the fourth quarter of 2014 was $4.4 million, an increase of 19% compared to $3.7 million in the fourth quarter of 2013.
Core net income for the fourth quarter of 2014 was $2.7 million or $0.20 per fully diluted share, compared to core net income of $2.8 million or $0.26 per fully diluted share, for the fourth quarter of 2013. Primarily due to record loan growth of $98.5 million in the fourth quarter of 2014, the Company recognized a loan loss provision of $1.7 million, compared to a loan loss provision of $934 thousand in the year-ago quarter.
Net income for the fourth quarter of 2014 was $1.3 million or $0.09 per fully diluted share, compared with net income of $2.5 million or $0.23 per fully diluted share in the third quarter of 2014. Fourth quarter 2014 merger-related expenses increased $1.8 million to $2.4 million, compared to $631 thousand in the third quarter of 2014. Core net income for the fourth quarter of 2014 was $2.7 million or $0.20 per fully diluted share, compared to $3.2 million in the prior quarter or $0.28 per fully diluted share. As noted above, in the fourth quarter of 2014 the Company recorded a loan loss provision of $1.7 million, compared to $35 thousand in the prior quarter.
The Company calculates core net income by adding back the tax-effected merger-related charges to GAAP earnings for the periods presented, because the Company believes the use of core net income, a non-GAAP measure, facilitates the assessment of its banking operations and peer comparability. A reconciliation to GAAP is included in tabular form at the end of this release.
“CUB had a tremendous fourth quarter with record loan growth of $98 million,” said David Rainer, Chairman and Chief Executive Officer of CU Bancorp and California United Bank. “Due to this outstanding growth in loan originations, the Company made a corresponding loan loss provision of $1.7 million to augment the allowance for loan losses, which had a dampening effect on quarterly earnings. That said, the Company had revenue growth of $3.1 million over the previous quarter, a 21% increase.
“While we are very excited about the increase in loan originations during the quarter, we continue to focus on prudent underwriting—reflected in CUB’s exceptional asset quality—and pricing discipline.”
“The integration of California United Bank and 1st Enterprise continues on track and our target date for system convergence remains February 9,” said Brian Horton, President of CU Bancorp and California United Bank. “I am very pleased that despite the responsibilities of integration, we have continued to provide our customers with outstanding customer service and added new banking clients, as reflected in the fourth quarter’s strong loan growth.”
The following table shows certain of the Company’s performance ratios for the full year of 2014 and the full year of 2013, as well as a column calculating performance ratios based on core net income for both years.
| | | | | | | | | | | | | | | | |
| | | FY 2014 | | | CORE
FY 2014 | | | FY 2013 | | | CORE FY
2013 | |
Return on average assets | | | 0.59 | % | | | 0.76 | % | | | 0.74 | % | | | 0.74 | % |
Return on average equity | | | 5.8 | % | | | 7.5 | % | | | 7.5 | % | | | 7.5 | % |
Operating efficiency ratio | | | 71 | % | | | 65 | % | | | 68 | % | | | 68 | % |
Net Interest Income and Net Interest Margin
Net interest income before the provision for loan losses totaled $53.3 million for the full year of 2014, an increase of $4.5 million or 9.2% from the previous year. The increase was due to higher average loan balances, the result of net organic loan growth.
Net interest margin for the full year of 2014 was 3.79%, compared to 3.96% in the previous year. In 2014 the discount earned on early payoffs was $445 thousand less than 2013; this was coupled with a decline in the core loan yield, as newer loans were originated at lower rates than paid off loans, the combination of which had a negative impact on the net interest margin in 2014.
Net interest income before the provision for loan losses totaled $15.7 million for the fourth quarter of 2014, an increase of $3.4 million or 27.5% from the fourth quarter of 2013. The increase was primarily driven by net organic loan growth and one month of combined operations after the merger.
The Company’s net interest income was positively impacted in both the fourth quarter of 2014 and the fourth quarter of 2013 by the recognition of fair value discount earned on early payoffs of acquired loans. The Company recorded $384 thousand and $571 thousand in discount earned on early loan payoffs of acquired loans in the fourth quarter of 2014 and 2013, respectively, with a positive impact on the net interest margin of 9 basis points and 17 basis points, respectively. In addition, in the fourth quarter of 2014, the Company’s net interest income benefitted from the recovery of $227 thousand in interest on a non-accrual loan that was paid off, with a positive impact on the net interest margin of 5 basis points.
The net interest margin in the fourth quarter of 2014 was 3.78%, compared to 3.69% in the fourth quarter of 2013. The increase was primarily driven by average loans being a higher percentage of earning assets in the fourth quarter of 2014.
Net interest income before the provision for loan losses for the fourth quarter of 2014 increased $3.0 million or 23.2% from the third quarter of 2014. This was primarily the result of an increase of $284 million in the Company’s average earning assets, due to one month of combined operations after the merger with 1st Enterprise. The Company recorded $384 thousand and $403 thousand in discount earned on early loan payoffs of acquired loans in the fourth and third quarter of 2014, respectively.
The net interest margin in the fourth quarter of 2014 was 3.78%, compared to 3.70% in the third quarter of 2014. The increase was primarily driven by the recovery of $227 thousand in interest on a non-accrual loan that was paid off, as well as an increase of 4 basis points in the core loan yield to 4.95%, primarily due to the fair value discount amortization on the 1st Enterprise loan portfolio.
As of December 31, 2014, the Company had $21.7 million of discount remaining on acquired accruing loans, including $16.3 million related to the 1st Enterprise merger.
The Company’s cost of funds was 0.13% in the fourth quarter of 2014, a decrease from 0.16% in the fourth quarter of 2013 and 0.14% for the third quarter of 2014.
Non-interest Income
Non-interest income was $7.7 million in 2014, an increase of $1.2 million or 18.3% from $6.5 million in the prior year. The increase included an improvement in deposit account service charge income of $367 thousand, $134 thousand in higher gain on sale of SBA loans, and an increase of $784 thousand in other non-interest income. Included in other non-interest income in 2014 were increases of $339 thousand in transaction referral fees, $132 thousand in letters of credit fees, and a $225 thousand settlement in the second quarter related to an other real estate owned property sold in 2013.
Non-interest income was $2.1 million in the fourth quarter of 2014, an increase of $201 thousand or 10.4% from $1.9 million in the same quarter of the prior year. The overall increase was primarily due to an increase of $225 thousand in deposit account service charge income as a result of the merger and a $208 thousand increase in transaction referral income. These increases were partially offset by a lower gain on sale of SBA loans and a net loss on sale of securities.
Non-interest income in the fourth quarter of 2014 increased $128 thousand or 6.4% over the third quarter of 2014. The overall increase was primarily due to an increase of $222 thousand in deposit account service charge income as a result of the merger, partially offset by a decrease of $46 thousand in gain on sale of SBA loans and a $47 thousand loss on sale of securities.
Non-interest Expense
Non-interest expense incurred in 2014 was $43.4 million, an increase of $5.7 million, or 15.3% from $37.6 million in the prior year. The increase was primarily attributable to $3.5 million in charges associated with the merger on November 30, 2014, and one month of salaries and benefits, and other operating expenses included in 2014. In addition, an increase of $611 thousand in stock-based compensation in 2014 was due to the annual granting of stock-based compensation late in the third quarter of 2013, which resulted in reduced non-interest expense in that year.
Non-interest expense for the fourth quarter of 2014 was $14.1 million, an increase of $4.5 million, or 46.6% compared to non-interest expense of $9.6 million for the same period of the prior year. In addition to $2.4 million in merger-related charges, the increase included one month of additional expenses associated with 1st Enterprise operations, and an increase of $223 thousand in bonus expense concomitant with record loan production. In addition, in the fourth quarter the Company recorded $125 thousand for one month of core deposit intangible amortization related to the merger.
Non-interest expense for the fourth quarter of 2014 increased $4.1 million or 40.6% over the third quarter of 2014. The increase was due to merger-related charges of $2.4 million, a $1.8 million increase from $631 thousand of merger-related charges in the third quarter and as noted above, one month of additional expenses associated with 1st Enterprise operations, as well as an increase of $598 thousand in bonus expense on record loan production. In addition, in the fourth quarter the Company recorded $125 thousand for one month of core deposit intangible amortization related to the merger.
“Merger-related charges are running at the expected rate and the Company doesn’t anticipate any increase in the estimated expenses of $7.9 million, including those previously recognized by 1st Enterprise prior to the merger,” said David Rainer.
At March 31, 2014, the quarter prior to announcement of the merger, 1st Enterprise had 82 active full-time equivalent employees and CUB had 181 active full-time equivalent employees, for a total of 263. As of December 31, 2014, the combined entity had reduced its active full-time equivalent employees by 13 to 250.
Income Tax
The Company had both tax deductible and non-tax deductible merger expenses in 2014. Additionally, various merger expenses are not all subject to the same percentage of tax deductibility. The Company’s merger-related expenses in the second and third quarter of 2014 were not tax deductible; merger expenses in the fourth quarter of 2014 provided the Company with
some merger-related tax deductions. Due to the preceding, tax rates for third and fourth quarter of 2014 were 46% and 36%, respectively. For the full year of 2014 the Company’s effective tax rate was 42%.
Balance Sheet
Assets
Total assets at December 31, 2014, were $2.3 billion, a year-over-year increase of $857 million from December 31, 2013. The increase was primarily due to the addition of $782 million in assets from the 1st Enterprise merger, as well as $52 million in goodwill recorded for the transaction.
Loans
Total loans were $1.6 billion at December 31, 2014, an increase of $646 million from $979 million at the end of the prior quarter. This also represents an increase of $692 million from December 31, 2013. The increase in loans in both periods was largely the result of the merger with 1st Enterprise on November 30, 2014, coupled with organic loan growth.
During the fourth quarter of 2014, the Company had approximately $98.5 million of net organic loan production. Pay downs in the acquired loan portfolios (excluding 1st Enterprise) were approximately $9 million in the same quarter.
Due to the similarity of the 1st Enterprise and CUB loan portfolios prior to the merger, there was little change in the makeup of the Company’s loan portfolio. At December 31, 2014, commercial and industrial loans, and owner occupied real estate loans combined were $868 million or 53.4% of total loans, compared to $496 million or 50.7% at September 30, 2014.
Deposits
Total deposits at December 31, 2014 were $1.9 billion, an increase of $685 million from $1.3 billion at the end of the prior quarter. This also represents an increase of $715 million from December 31, 2013. The increase in total deposits in both periods was primarily the result of the merger with 1st Enterprise.
Non-interest bearing deposits at December 31, 2014 were $1.0 billion or 53% of total deposits, compared to $698 million or 55% of total deposits at September 30, 2014.
Cost of deposits for the quarter was 0.11%, the same as the prior quarter.
Asset Quality
Total non-performing assets were $4.8 million, or 0.21% of total assets at December 31, 2014, compared with $4.4 million, or 0.30% of total assets, at September 30, 2014. The decline in non-performing assets to total assets ratio was due to the low level of non-performing assets in the 1st Enterprise loan portfolio added from the merger.
Total nonaccrual loans were $3.9 million, or 0.24% of total loans, at December 31, 2014, compared with $4.4 million, or 0.44% of total loans, at September 30, 2014. The decline reflects a nonaccrual loan of $850 thousand, which was acquired in the Premier Commercial Bank portfolio in 2012, that is now other real estate owned; the property is a single-family residence in the state of Washington.
Net charge-offs for 2014 were $231 thousand or 0.02% of average loans.
The Company recorded a loan loss provision of $1.7 million for the fourth quarter of 2014. The loan loss provision reflects strong loan origination and modest net charge-offs recorded in 2014, and an overall improving credit quality environment.
The allowance for loan losses as a percentage of loans (excluding acquired loans that have been marked to fair value and their related allowance) was 1.39% at December 31, 2014, compared with 1.43% at September 30, 2014, and 1.50% at December 31, 2013.
Capital
CU Bancorp remained well capitalized at December 31, 2014 with total risk weighted assets of $1,992,043,000. All of the Company’s capital ratios are above minimum regulatory standards for “well capitalized” institutions.
| | | | | | | | |
| December 31, 2014 | | Minimum Capital to Be
Considered
“Well-Capitalized” | | | CU Bancorp | |
Total Risk-Based Capital Ratio | | | 10 | % | | | 11.59 | % |
Tier 1 Risk-Based Capital Ratio | | | 6 | % | | | 10.93 | % |
Tier 1 Leverage Capital Ratio | | | 5 | % | | | 12.89 | % |
At December 31, 2014, tangible common equity was $189.7 million with common shares issued and outstanding of 16,683,856 as of the same date, resulting in tangible book value per common share of $11.37. This compares to tangible common equity of $134.2 million with a tangible book value per common share of $11.95 at September 30, 2014. The increase in tangible common equity and decrease in tangible book value per common share from the prior quarter primarily reflects the merger with 1st Enterprise on November 30, 2014. The Company estimates it will earn back the tangible book value per share in three-and-a-half years.
About CU Bancorp and California United Bank
CU Bancorp is the parent of California United Bank. Founded in 2005, California United Bank provides a full range of financial services, including credit and deposit products, cash management, and internet banking to businesses, non-profits, entrepreneurs, professionals and investors throughout Southern California from its headquarters office in Downtown Los Angeles and additional full-service offices in the San Fernando Valley, the Santa Clarita Valley, the Conejo Valley, Simi Valley, Los Angeles, South Bay, Orange County and the Inland Empire. California United Bank is an SBA Preferred Lender. To view CU Bancorp’s most recent financial information, please visit the Investor Relations section of the Company’s Web site. Information on products and services may be obtained by calling 818-257-7700 or visiting the Company’s Web site at www.cunb.com.
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking information about CU Bancorp (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. Forward-looking statements speak only as of the date they are made and we assume no duty to update such statements. We caution readers that a number of important factors 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 or a reduction in real estate values could cause an increase in the allowance for credit losses and a reduction in net earnings; increased competitive pressure among depository institutions; the Company’s ability to complete future acquisitions, successfully integrate acquired entities, or achieve expected beneficial synergies and/or operating efficiencies within expected time-frames or at all; the possibility that personnel changes will not proceed as planned; the cost of additional capital is more than expected; a change in the interest rate environment reduces net interest margins; asset/liability repricing risks and liquidity risks; legal matters could be filed against the Company and could take longer or cost more than expected to resolve or may be resolved adversely to the Company; 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 and drought, may disrupt our business, impede our operations, negatively impact the values of collateral securing the Company’s loans and leases 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; changes in the securities markets; regulatory approvals for any capital activities cannot be obtained on the terms expected or on the anticipated schedule; and, other risks that are described in CU Bancorp’s public filings with the U.S. Securities and Exchange Commission (the “SEC”). If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, CU Bancorp’s results could differ materially from those expressed in, implied or projected by such forward-looking statements. CU Bancorp assumes no obligation to update such forward-looking statements. For a more complete discussion of risks and uncertainties, investors and security holders are urged to read CU Bancorp’s Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q and other reports filed by CU Bancorp with the SEC. The documents filed by CU Bancorp with the SEC may be obtained at CU Bancorp’s website at www.cubancorp.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from CU Bancorp by directing a request to: CU Bancorp c/o California United Bank, 15821 Ventura Boulevard, Suite 100, Encino, CA 91436. Attention: Investor Relations. Telephone 818-257-7700.
Contacts
CU Bancorp
David Rainer, 818-257-7776
Chairman and CEO
or
Karen Schoenbaum, 818-257-7700
Chief Financial Officer
CU BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
| | | | | | | | | | | | |
| | | December 31,
2014 | | | September 30,
2014 | | | December 31,
2013 | |
| | | Unaudited | | | Unaudited | | | Audited | |
ASSETS | | | | | | | | | | | | |
Cash and due from banks | | $ | 33,996 | | | $ | 27,882 | | | $ | 23,156 | |
Interest earning deposits in other financial institutions | | | 98,590 | | | | 167,859 | | | | 218,131 | |
| | | | | | | | | | | | |
Total cash and cash equivalents | | | 132,586 | | | | 195,741 | | | | 241,287 | |
Certificates of deposit in other financial institutions | | | 76,433 | | | | 74,473 | | | | 60,307 | |
Investment securities available-for-sale, at fair value | | | 226,962 | | | | 139,552 | | | | 106,488 | |
Investment securities held-to-maturity, at amortized cost | | | 47,147 | | | | — | | | | — | |
| | | | | | | | | | | | |
Total investment securities | | | 274,109 | | | | 139,552 | | | | 106,488 | |
Loans | | | 1,624,723 | | | | 978,800 | | | | 933,194 | |
Allowance for loan loss | | | (12,610 | ) | | | (11,348 | ) | | | (10,603 | ) |
| | | | | | | | | | | | |
Net loans | | | 1,612,113 | | | | 967,452 | | | | 922,591 | |
Premises and equipment, net | | | 5,377 | | | | 3,648 | | | | 3,531 | |
Deferred tax assets, net | | | 16,504 | | | | 10,369 | | | | 11,835 | |
Other real estate owned, net | | | 850 | | | | — | | | | — | |
Goodwill | | | 63,950 | | | | 12,292 | | | | 12,292 | |
Core deposit and leasehold right intangibles | | | 9,547 | | | | 2,246 | | | | 2,525 | |
Bank owned life insurance | | | 38,732 | | | | 21,663 | | | | 21,200 | |
Accrued interest receivable and other assets | | | 34,916 | | | | 23,921 | | | | 25,760 | |
| | | | | | | | | | | | |
Total Assets | | $ | 2,265,117 | | | $ | 1,451,357 | | | $ | 1,407,816 | |
| | | | | | | | | | | | |
| | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | |
Non-interest bearing demand deposits | | $ | 1,032,634 | | | $ | 698,251 | | | $ | 632,192 | |
Interest bearing transaction accounts | | | 206,544 | | | | 145,899 | | | | 155,735 | |
Money market and savings deposits | | | 643,675 | | | | 365,945 | | | | 380,915 | |
Certificates of deposit | | | 64,840 | | | | 52,852 | | | | 63,581 | |
| | | | | | | | | | | | |
Total deposits | | | 1,947,693 | | | | 1,262,947 | | | | 1,232,423 | |
Securities sold under agreements to repurchase | | | 9,411 | | | | 13,618 | | | | 11,141 | |
Subordinated debentures, net | | | 9,538 | | | | 9,498 | | | | 9,379 | |
Accrued interest payable and other liabilities | | | 19,283 | | | | 16,521 | | | | 16,949 | |
| | | | | | | | | | | | |
Total Liabilities | | | 1,985,925 | | | | 1,302,584 | | | | 1,269,892 | |
| | | | | | | | | | | | |
SHAREHOLDERS’ EQUITY | | | | | | | | | | | | |
Preferred stock | | | 16,004 | | | | — | | | | — | |
Common stock | | | 226,389 | | | | 122,952 | | | | 121,675 | |
Additional paid-in capital | | | 19,748 | | | | 9,940 | | | | 8,377 | |
Retained earnings | | | 16,861 | | | | 15,678 | | | | 8,077 | |
Accumulated other comprehensive income (loss) | | | 190 | | | | 203 | | | | (205 | ) |
| | | | | | | | | | | | |
Total Shareholders’ Equity | | | 279,192 | | | | 148,773 | | | | 137,924 | |
| | | | | | | | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 2,265,117 | | | $ | 1,451,357 | | | $ | 1,407,816 | |
| | | | | | | | | | | | |
CU BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
| | | | | | | | | | | | |
| | | For the three months ended | |
| | | December 31,
2014 | | | September 30,
2014 | | | December 31,
2013 | |
| | | Unaudited | | | Unaudited | | | Unaudited | |
| | | |
Interest Income | | | | | | | | | | | | |
| | | |
Interest and fees on loans | | $ | 15,191 | | | $ | 12,401 | | | $ | 12,111 | |
Interest on investment securities | | | 812 | | | | 589 | | | | 493 | |
Interest on interest bearing deposits in other financial institutions | | | 261 | | | | 248 | | | | 237 | |
| | | | | | | | | | | | |
Total Interest Income | | | 16,264 | | | | 13,238 | | | | 12,841 | |
| | | | | | | | | | | | |
Interest Expense | | | | | | | | | | | | |
Interest on interest bearing transaction accounts | | | 84 | | | | 70 | | | | 65 | |
Interest on money market and savings deposits | | | 282 | | | | 225 | | | | 255 | |
Interest on certificates of deposit | | | 47 | | | | 58 | | | | 58 | |
Interest on securities sold under agreements to repurchase | | | 7 | | | | 8 | | | | 11 | |
Interest on subordinated debentures | | | 108 | | | | 109 | | | | 109 | |
| | | | | | | | | | | | |
Total Interest Expense | | | 528 | | | | 470 | | | | 498 | |
| | | | | | | | | | | | |
Net Interest Income | | | 15,736 | | | | 12,768 | | | | 12,343 | |
Provision for loan losses | | | 1,721 | | | | 35 | | | | 934 | |
| | | | | | | | | | | | |
Net Interest Income After Provision For Loan Losses | | | 14,015 | | | | 12,733 | | | | 11,409 | |
| | | | | | | | | | | | |
Non-Interest Income | | | | | | | | | | | | |
Gain (Loss) on sale of securities, net | | | (47 | ) | | | — | | | | 42 | |
Gain on sale of SBA loans, net | | | 285 | | | | 331 | | | | 414 | |
Deposit account service charge income | | | 853 | | | | 631 | | | | 628 | |
Other non-interest income | | | 1,041 | | | | 1,042 | | | | 847 | |
| | | | | | | | | | | | |
Total Non-Interest Income | | | 2,132 | | | | 2,004 | | | | 1,931 | |
| | | | | | | | | | | | |
Non-Interest Expense | | | | | | | | | | | | |
Salaries and employee benefits | | | 8,266 | | | | 5,621 | | | | 5,495 | |
Stock compensation expense | | | 367 | | | | 445 | | | | 372 | |
Occupancy | | | 1,142 | | | | 999 | | | | 1,037 | |
Data processing | | | 545 | | | | 472 | | | | 455 | |
Legal and professional | | | 616 | | | | 456 | | | | 557 | |
FDIC deposit assessment | | | 248 | | | | 195 | | | | 226 | |
Merger expenses | | | 1,174 | | | | 631 | | | | — | |
OREO expenses | | | 1 | | | | 8 | | | | 7 | |
Office services expenses | | | 305 | | | | 219 | | | | 248 | |
Other operating expenses | | | 1,443 | | | | 985 | | | | 1,223 | |
| | | | | | | | | | | | |
Total Non-Interest Expense | | | 14,107 | | | | 10,031 | | | | 9,620 | |
| | | | | | | | | | | | |
Net Income Before Provision for Income Tax | | | 2,040 | | | | 4,706 | | | | 3,720 | |
Provision for income tax | | | 733 | | | | 2,157 | | | | 888 | |
| | | | | | | | | | | | |
Net Income | | $ | 1,307 | | | $ | 2,549 | | | $ | 2,832 | |
| | | | | | | | | | | | |
Preferred stock dividends and discount accretion | | | 124 | | | | — | | | | — | |
| | | | | | | | | | | | |
Net Income Available to Common Shareholders | | $ | 1,183 | | | $ | 2,549 | | | $ | 2,832 | |
| | | | | | | | | | | | |
Earnings Per Share | | | | | | | | | | | | |
Basic earnings per share | | $ | 0.09 | | | $ | 0.23 | | | $ | 0.26 | |
Diluted earnings per share | | $ | 0.09 | | | $ | 0.23 | | | $ | 0.26 | |
Average shares outstanding | | | 12,761,000 | | | | 10,986,000 | | | | 10,736,000 | |
Diluted average shares outstanding | | | 13,228,000 | | | | 11,190,000 | | | | 10,999,000 | |
CU BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
| | | | | | | | |
| | | For the year ended December 31, | |
| | | 2014 | | | 2013 | |
| | | Unaudited | | | Audited | |
Interest Income | | | | | | | | |
Interest and fees on loans | | $ | 51,882 | | | $ | 48,201 | |
Interest on investment securities | | | 2,369 | | | | 1,913 | |
Interest on interest bearing deposits in other financial institutions | | | 926 | | | | 732 | |
| | | | | | | | |
Total Interest Income | | | 55,177 | | | | 50,846 | |
| | | | | | | | |
Interest Expense | | | | | | | | |
Interest on interest bearing transaction accounts | | | 278 | | | | 238 | |
Interest on money market and savings deposits | | | 963 | | | | 1,027 | |
Interest on certificates of deposit | | | 216 | | | | 255 | |
Interest on securities sold under agreements to repurchase | | | 34 | | | | 74 | |
Interest on subordinated debentures | | | 431 | | | | 485 | |
| | | | | | | | |
Total Interest Expense | | | 1,922 | | | | 2,079 | |
| | | | | | | | |
Net Interest Income | | | 53,255 | | | | 48,767 | |
Provision for loan losses | | | 2,239 | | | | 2,852 | |
| | | | | | | | |
Net Interest Income After Provision For Loan Losses | | | 51,016 | | | | 45,915 | |
| | | | | | | | |
Non-Interest Income | | | | | | | | |
Gain (Loss) on sale of securities, net | | | (47 | ) | | | 47 | |
Gain on sale of SBA loans, net | | | 1,221 | | | | 1,087 | |
Deposit account service charge income | | | 2,744 | | | | 2,377 | |
Other non-interest income | | | 3,791 | | | | 3,007 | |
| | | | | | | | |
Total Non-Interest Income | | | 7,709 | | | | 6,518 | |
| | | | | | | | |
Non-Interest Expense | | | | | | | | |
Salaries and employee benefits | | | 24,820 | | | | 21,782 | |
Stock compensation expense | | | 1,699 | | | | 1,088 | |
Occupancy | | | 4,112 | | | | 4,194 | |
Data processing | | | 1,968 | | | | 1,868 | |
Legal and professional | | | 2,006 | | | | 2,166 | |
FDIC deposit assessment | | | 844 | | | | 880 | |
Merger expenses | | | 2,302 | | | | 43 | |
OREO expenses | | | 15 | | | | 95 | |
Office services expenses | | | 1,026 | | | | 1,034 | |
Other operating expenses | | | 4,593 | | | | 4,490 | |
| | | | | | | | |
Total Non-Interest Expense | | | 43,385 | | | | 37,640 | |
| | | | | | | | |
Net Income Before Provision for Income Tax | | | 15,340 | | | | 14,793 | |
Provision for income tax | | | 6,432 | | | | 5,008 | |
| | | | | | | | |
Net Income | | $ | 8,908 | | | $ | 9,785 | |
| | | | | | | | |
Preferred stock dividends and discount accretion | | | 124 | | | | — | |
| | | | | | | | |
Net Income Available to Common Shareholders | | $ | 8,784 | | | $ | 9,785 | |
| | | | | | | | |
| | |
Earnings Per Share | | | | | | | | |
Basic earnings per share | | $ | 0.77 | | | $ | 0.93 | |
Diluted earnings per share | | $ | 0.75 | | | $ | 0.90 | |
Average shares outstanding | | | 11,393,000 | | | | 10,567,000 | |
Diluted average shares outstanding | | | 11,668,000 | | | | 10,837,000 | |
CU BANCORP
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS AND YIELD ANALYSIS
(Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the three months ended | |
| | | December 31, 2014 | | | September 30, 2014 | |
| | | Average
Balance | | | Interest | | | Average
Yield/Rate | | | Average
Balance | | | Interest | | | Average
Yield/Rate | |
Interest-Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits in other financial institutions | | $ | 275,340 | | | $ | 261 | | | | 0.37 | % | | $ | 278,623 | | | $ | 248 | | | | 0.35 | % |
Investment securities | | | 191,203 | | | | 812 | | | | 1.70 | % | | | 121,124 | | | | 589 | | | | 1.95 | % |
Loans | | | 1,186,899 | | | | 15,191 | | | | 5.08 | % | | | 969,668 | | | | 12,401 | | | | 5.07 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 1,653,442 | | | | 16,264 | | | | 3.90 | % | | | 1,369,415 | | | | 13,238 | | | | 3.84 | % |
Non-interest-earning assets | | | 109,277 | | | | | | | | | | | | 91,123 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Assets | | $ | 1,762,719 | | | | | | | | | | | $ | 1,460,538 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Interest-Bearing Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing transaction accounts | | $ | 185,232 | | | $ | 84 | | | | 0.18 | % | | $ | 150,160 | | | $ | 70 | | | | 0.18 | % |
Money market and savings deposits | | | 469,065 | | | | 282 | | | | 0.24 | % | | | 363,693 | | | | 225 | | | | 0.25 | % |
Certificates of deposit | | | 61,154 | | | | 47 | | | | 0.30 | % | | | 59,362 | | | | 58 | | | | 0.39 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Interest Bearing Deposits | | | 715,451 | | | | 413 | | | | 0.23 | % | | | 573,215 | | | | 353 | | | | 0.24 | % |
Securities sold under agreements to repurchase | | | 12,716 | | | | 7 | | | | 0.22 | % | | | 14,210 | | | | 8 | | | | 0.22 | % |
Subordinated debentures and other debt | | | 9,642 | | | | 108 | | | | 4.38 | % | | | 9,740 | | | | 109 | | | | 4.38 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Interest Bearing Liabilities | | | 737,809 | | | | 528 | | | | 0.28 | % | | | 597,165 | | | | 470 | | | | 0.31 | % |
Non-interest bearing demand deposits | | | 830,711 | | | | | | | | | | | | 699,592 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total funding sources | | | 1,568,520 | | | | | | | | | | | | 1,296,757 | | | | | | | | | |
Non-interest bearing liabilities | | | 17,157 | | | | | | | | | | | | 16,041 | | | | | | | | | |
Shareholders’ Equity | | | 177,042 | | | | | | | | | | | | 147,740 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 1,762,719 | | | | | | | | | | | $ | 1,460,538 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | | $ | 15,736 | | | | | | | | | | | $ | 12,768 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin | | | | | | | | | | | 3.78 | % | | | | | | | | | | | 3.70 | % |
CU BANCORP
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS AND YIELD ANALYSIS
(Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the three months ended | |
| | | December 31, 2014 | | | December 31, 2013 | |
| | | Average
Balance | | | Interest | | | Average
Yield/Rate | | | Average
Balance | | | Interest | | | Average
Yield/Rate | |
Interest-Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits in other financial institutions | | $ | 275,340 | | | $ | 261 | | | | 0.37 | % | | $ | 315,183 | | | $ | 237 | | | | 0.29 | % |
Investment securities | | | 191,203 | | | | 812 | | | | 1.70 | % | | | 101,497 | | | | 493 | | | | 1.94 | % |
Loans | | | 1,186,899 | | | | 15,191 | | | | 5.08 | % | | | 911,649 | | | | 12,111 | | | | 5.27 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 1,653,442 | | | | 16,264 | | | | 3.90 | % | | | 1,328,329 | | | | 12,841 | | | | 3.84 | % |
Non-interest-earning assets | | | 109,277 | | | | | | | | | | | | 92,025 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Assets | | $ | 1,762,719 | | | | | | | | | | | $ | 1,420,354 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Interest-Bearing Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing transaction accounts | | $ | 185,232 | | | $ | 84 | | | | 0.18 | % | | $ | 144,009 | | | $ | 65 | | | | 0.18 | % |
Money market and savings deposits | | | 469,065 | | | | 282 | | | | 0.24 | % | | | 389,594 | | | | 255 | | | | 0.26 | % |
Certificates of deposit | | | 61,154 | | | | 47 | | | | 0.30 | % | | | 64,302 | | | | 58 | | | | 0.36 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Interest Bearing Deposits | | | 715,451 | | | | 413 | | | | 0.23 | % | | | 597,905 | | | | 378 | | | | 0.25 | % |
Securities sold under agreements to repurchase | | | 12,716 | | | | 7 | | | | 0.22 | % | | | 15,604 | | | | 11 | | | | 0.28 | % |
Subordinated debentures and other debt | | | 9,642 | | | | 108 | | | | 4.38 | % | | | 9,363 | | | | 109 | | | | 4.56 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Interest Bearing Liabilities | | | 737,809 | | | | 528 | | | | 0.28 | % | | | 622,872 | | | | 498 | | | | 0.32 | % |
Non-interest bearing demand deposits | | | 830,711 | | | | | | | | | | | | 648,577 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total funding sources | | | 1,568,520 | | | | | | | | | | | | 1,271,449 | | | | | | | | | |
Non-interest bearing liabilities | | | 17,157 | | | | | | | | | | | | 12,969 | | | | | | | | | |
Shareholders’ Equity | | | 177,042 | | | | | | | | | | | | 135,936 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 1,762,719 | | | | | | | | | | | $ | 1,420,354 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | | $ | 15,736 | | | | | | | | | | | $ | 12,343 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin | | | | | | | | | | | 3.78 | % | | | | | | | | | | | 3.69 | % |
CU BANCORP
CONSOLIDATED YEAR-TO-DATE AVERAGE BALANCE SHEETS AND YIELD ANALYSIS
(Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the twelve months ended | |
| | | December 31, 2014 | | | December 31, 2013 | |
| | | Average
Balance | | | Interest | | | Average
Yield/Rate | | | Average
Balance | | | Interest | | | Average
Yield/Rate | |
Interest-Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits in other financial institutions | | $ | 265,076 | | | $ | 926 | | | | 0.34 | % | | $ | 245,102 | | | $ | 732 | | | | 0.29 | % |
Investment securities | | | 129,841 | | | | 2,369 | | | | 1.82 | % | | | 106,806 | | | | 1,913 | | | | 1.79 | % |
Loans | | | 1,010,030 | | | | 51,882 | | | | 5.14 | % | | | 878,705 | | | | 48,201 | | | | 5.49 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 1,404,947 | | | | 55,177 | | | | 3.93 | % | | | 1,230,613 | | | | 50,846 | | | | 4.13 | % |
Non-interest-earning assets | | | 95,818 | | | | | | | | | | | | 91,975 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Assets | | $ | 1,500,765 | | | | | | | | | | | $ | 1,322,588 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Interest-Bearing Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing transaction accounts | | $ | 153,327 | | | $ | 278 | | | | 0.18 | % | | $ | 130,247 | | | $ | 238 | | | | 0.18 | % |
Money market and savings deposits | | | 390,185 | | | | 963 | | | | 0.25 | % | | | 361,486 | | | | 1,027 | | | | 0.28 | % |
Certificates of deposit | | | 61,048 | | | | 216 | | | | 0.35 | % | | | 65,943 | | | | 255 | | | | 0.39 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Interest Bearing Deposits | | | 604,560 | | | | 1,457 | | | | 0.24 | % | | | 557,676 | | | | 1,520 | | | | 0.27 | % |
Securities sold under agreements to repurchase | | | 13,579 | | | | 34 | | | | 0.25 | % | | | 24,376 | | | | 74 | | | | 0.30 | % |
Subordinated debentures and other debt | | | 9,556 | | | | 431 | | | | 4.45 | % | | | 9,368 | | | | 485 | | | | 5.11 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Interest Bearing Liabilities | | | 627,695 | | | | 1,922 | | | | 0.31 | % | | | 591,420 | | | | 2,079 | | | | 0.35 | % |
Non-interest bearing demand deposits | | | 704,437 | | | | | | | | | | | | 587,637 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total funding sources | | | 1,332,132 | | | | | | | | | | | | 1,179,057 | | | | | | | | | |
Non-interest bearing liabilities | | | 16,133 | | | | | | | | | | | | 12,287 | | | | | | | | | |
Shareholders’ Equity | | | 152,500 | | | | | | | | | | | | 131,244 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 1,500,765 | | | | | | | | | | | $ | 1,322,588 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | | $ | 53,255 | | | | | | | | | | | $ | 48,767 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin | | | | | | | | | | | 3.79 | % | | | | | | | | | | | 3.96 | % |
CU BANCORP
LOAN COMPOSITION
(Dollars in thousands)
| | | | | | | | | | | | |
| | | December 31,
2014 | | | September 30,
2014 | | | December 31,
2013 | |
| | | Unaudited | | | Unaudited | | | Audited | |
| | | |
Commercial and Industrial Loans: | | $ | 528,517 | | | $ | 297,853 | | | $ | 299,473 | |
| | | |
Loans Secured by Real Estate: | | | | | | | | | | | | |
Owner-Occupied Nonresidential Properties | | | 339,309 | | | | 198,406 | | | | 197,605 | |
Other Nonresidential Properties | | | 481,517 | | | | 303,606 | | | | 271,818 | |
Construction, Land Development and Other Land | | | 72,223 | | | | 58,474 | | | | 47,074 | |
1-4 Family Residential Properties | | | 121,985 | | | | 68,134 | | | | 65,711 | |
Multifamily Residential Properties | | | 52,813 | | | | 27,937 | | | | 33,780 | |
| | | | | | | | | | | | |
Total Loans Secured by Real Estate | | | 1,067,847 | | | | 656,557 | | | | 615,988 | |
| | | | | | | | | | | | |
| | | |
Other Loans: | | | 28,359 | | | | 24,390 | | | | 17,733 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Total Loans | | $ | 1,624,723 | | | $ | 978,800 | | | $ | 933,194 | |
| | | | | | | | | | | | |
COMMERCIAL AND INDUSTRIAL LINE OF CREDIT UTILIZATION
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31,
2014 | | | September 30,
2014 | | | December 31,
2013 | |
| | | Unaudited | | | Unaudited | | | Unaudited | |
| | | | | | |
Disbursed | | $ | 403,394 | | | | 47 | % | | $ | 199,052 | | | | 46 | % | | $ | 196,044 | | | | 49 | % |
Undisbursed | | | 453,266 | | | | 53 | % | | | 232,554 | | | | 54 | % | | | 201,860 | | | | 51 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Commitments | | $ | 856,660 | | | | 100 | % | | $ | 431,606 | | | | 100 | % | | $ | 397,904 | | | | 100 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
CU BANCORP
SUPPLEMENTAL DATA
(Dollars in thousands)
| | | | | | | | | | | | |
| | | December 31,
2014 | | | September 30,
2014 | | | December 31,
2013 | |
| | | Unaudited | | | Unaudited | | | Unaudited | |
Capital Ratios Table: | | | | | | | | | | | | |
Total risk-based capital ratio | | | 11.59 | % | | | 12.83 | % | | | 12.80 | % |
Tier 1 risk-based capital ratio | | | 10.93 | % | | | 11.88 | % | | | 11.84 | % |
Tier 1 leverage capital ratio | | | 12.89 | % | | | 10.12 | % | | | 9.57 | % |
| | | |
Asset Quality Table: | | | | | | | | | | | | |
Loans originated by the Bank on non-accrual | | $ | 2,131 | | | $ | 2,018 | | | $ | 1,657 | |
Loans acquired through acquisition that are on non-accrual | | | 1,778 | | | | 2,336 | | | | 7,899 | |
| | | | | | | | | | | | |
Total non-accrual loans | | | 3,909 | | | | 4,354 | | | | 9,556 | |
Other Real Estate Owned | | | 850 | | | | — | | | | — | |
| | | | | | | | | | | | |
Total non-performing assets | | $ | 4,759 | | | $ | 4,354 | | | $ | 9,556 | |
| | | | | | | | | | | | |
| | | |
Net charge-offs/(recoveries) year to date | | $ | 231 | | | $ | (227 | ) | | $ | 1,052 | |
| | | |
Net charge-offs/(recoveries) quarterly | | $ | 458 | | | $ | (29 | ) | | $ | 369 | |
| | | |
Non-accrual loans to total loans | | | 0.24 | % | | | 0.44 | % | | | 1.02 | % |
| | | |
Total non-performing assets to total assets | | | 0.21 | % | | | 0.30 | % | | | 0.68 | % |
| | | |
Allowance for loan losses to total loans | | | 0.78 | % | | | 1.16 | % | | | 1.14 | % |
| | | |
Allowance for loan losses to total loans accounted at historical cost, which excludes purchased loans acquired by acquisition | | | 1.39 | % | | | 1.43 | % | | | 1.50 | % |
| | | |
Net year to date charge-offs/(recoveries) to average year to date loans | | | 0.02 | % | | | (0.02 | )% | | | 0.12 | % |
| | | |
Allowance for loan losses to non-accrual loans accounted at historical cost, which excludes non-accrual purchased loans acquired by acquisition and related allowance | | | 591.7 | % | | | 562.2 | % | | | 639.8 | % |
| | | |
Allowance for loan losses to total non-accrual loans | | | 322.6 | % | | | 260.6 | % | | | 111.0 | % |
As of December 31, 2014, there were no restructured loans or loans over 90 days past due and still accruing.
CU BANCORP
GAAP RECONCILIATIONS
These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for analyses of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
TCE Calculation and Reconciliation to Total Shareholders’ Equity
(Unaudited)
The Company utilizes the term Tangible Common Equity (TCE), a non-GAAP financial measure. CU Bancorp’s management believes TCE is useful because it is a measure utilized by both regulators and market analysts in evaluating a consolidated bank holding company’s financial condition and capital strength. TCE represents common shareholders’ equity less goodwill and certain intangible assets. A reconciliation of CU Bancorp’s total shareholders’ equity to TCE is provided in the table below for the periods indicated:
(Dollars in thousands except per share data)
| | | | | | | | | | | | |
| | | December 31,
2014 | | | September 30,
2014 | | | December 31,
2013 | |
| | | Unaudited | | | Unaudited | | | Audited | |
Tangible Common Equity Calculation | | | | | | | | | | | | |
Total shareholders’ equity | | $ | 279,192 | | | $ | 148,773 | | | $ | 137,924 | |
Less: Preferred stock | | | 16,004 | | | | — | | | | — | |
Less: Goodwill | | | 63,950 | | | | 12,292 | | | | 12,292 | |
Less: Core deposit and leasehold right intangibles | | | 9,547 | | | | 2,246 | | | | 2,525 | |
| | | | | | | | | | | | |
Tangible Common Equity | | $ | 189,691 | | | $ | 134,235 | | | $ | 123,107 | |
| | | | | | | | | | | | |
| | | |
Common shares issued and outstanding | | | 16,683,856 | | | | 11,231,801 | | | | 11,081,364 | |
Tangible book value per common share | | $ | 11.37 | | | $ | 11.95 | | | $ | 11.11 | |
Book value per common share | | $ | 15.78 | | | $ | 13.25 | | | $ | 12.45 | |
CU BANCORP
GAAP RECONCILIATIONS
Core Net Income, ROAA, ROAE, Core Efficiency Ratio
(Unaudited)
The Company utilizes the term Core Net Income, a non-GAAP financial measure. CU Bancorp’s management believes Core Net Income is useful because it is a measure utilized by market analysts to understand the effects of merger-related expenses and provides an alternative view of the Company’s performance over time and in comparison to the Company’s competitors. Core net income should not be viewed as a substitute for net income. A reconciliation of CU Bancorp’s Net Income to Core Net Income, as well as related ratios is presented in the tables below for the periods indicated:
(Dollars in thousands except per share data)
| | | | | | | | | | | | |
| | | Three Months Ended | |
| | | December 31,
2014 | | | September 30,
2014 | | | December 31,
2013 | |
Net Income Available to Common Shareholders | | $ | 1,183 | | | $ | 2,549 | | | $ | 2,832 | |
Add back: Merger expenses, net | | | 825 | | | | 631 | | | | — | |
Add back: Severance and retention expenses, net | | | 688 | | | | — | | | | — | |
| | | | | | | | | | | | |
Core Net Income Available to Common Shareholders | | $ | 2,696 | | | $ | 3,180 | | | $ | 2,832 | |
| | | | | | | | | | | | |
| | | |
Provision for Loan Losses | | $ | 1,721 | | | $ | 35 | | | $ | 934 | |
Average Assets | | $ | 1,762,719 | | | | 1,460,538 | | | | 1,420,354 | |
ROAA | | | 0.27 | % | | | 0.69 | % | | | 0.79 | % |
Core ROAA* | | | 0.61 | % | | | 0.86 | % | | | 0.79 | % |
Average Equity | | $ | 177,042 | | | | 147,740 | | | | 135,936 | |
ROAE | | | 2.65 | % | | | 6.85 | % | | | 8.27 | % |
Core ROAE** | | | 6.04 | % | | | 8.54 | % | | | 8.27 | % |
Diluted Average Shares Outstanding | | | 13,228,000 | | | | 11,190,000 | | | | 10,999,000 | |
Diluted Earnings Per Share | | $ | 0.09 | | | $ | 0.23 | | | $ | 0.26 | |
Diluted Core Earnings Per Share*** | | $ | 0.20 | | | $ | 0.28 | | | $ | 0.26 | |
| * | Core ROAA: Annualized core net income/average assets |
| ** | Core ROAE: Annualized core net income/average equity |
| *** | Diluted Core Earnings Per Share: Annualized core net income/diluted average shares outstanding |
| | | | | | | | | | | | |
| | | Three Months Ended | |
| | | December 31,
2014 | | | September 30,
2014 | | | December 31,
2013 | |
Net Interest Income | | $ | 15,736 | | | $ | 12,768 | | | $ | 12,343 | |
Non-Interest Income | | | 2,132 | | | | 2,004 | | | | 1,931 | |
Non-Interest Expense | | | 14,107 | | | | 10,031 | | | | 9,620 | |
Subtract: Merger expenses | | | 1,174 | | | | 631 | | | | — | |
Subtract: Severance and retention | | | 1,187 | | | | — | | | | — | |
| | | | | | | | | | | | |
Core Non-Interest Expense | | $ | 11,746 | | | $ | 9,400 | | | $ | 9,620 | |
| | | | | | | | | | | | |
| | | |
Efficiency Ratio* | | | 79 | % | | | 68 | % | | | 68 | % |
Core Efficiency Ratio** | | | 66 | % | | | 64 | % | | | 68 | % |
| * | Efficiency ratio represents non-interest expense as a percent of net interest income plus non-interest income, excluding gain on sale of securities, net |
| ** | Core efficiency ratio represents core non-interest expense as a percent of net interest income plus non-interest income, excluding gain on sale of securities, net |
CU BANCORP
GAAP RECONCILIATIONS
Core Net Income, ROAA, ROAE, Core Efficiency Ratio
(Unaudited)
The Company utilizes the term Core Net Income, a non-GAAP financial measure. CU Bancorp’s management believes Core Net Income is useful because it is a measure utilized by market analysts to understand the effects of merger-related expenses and provides an alternative view of the Company’s performance over time and in comparison to the Company’s competitors. Core net income should not be viewed as a substitute for net income. A reconciliation of CU Bancorp’s Net Income to Core Net Income, as well as related ratios is presented in the tables below for the periods indicated:
(Dollars in thousands except per share data)
| | | | | | | | |
| | | Twelve Months Ended | |
| | | December 31,
2014 | | | December 31,
2013 | |
Net Income Available to Common Shareholders | | $ | 8,784 | | | $ | 9,785 | |
Add back: Merger expenses, net | | | 1,952 | | | | 43 | |
Add back: Severance and retention expenses, net | | | 693 | | | | — | |
| | | | | | | | |
Core Net Income Available to Common Shareholders | | $ | 11,429 | | | $ | 9,828 | |
| | | | | | | | |
| | |
Provision for Loan Losses | | $ | 2,329 | | | $ | 2,852 | |
Average Assets | | $ | 1,500,765 | | | $ | 1,322,588 | |
ROAA | | | 0.59 | % | | | 0.74 | % |
Core ROAA* | | | 0.76 | % | | | 0.74 | % |
Average Equity | | $ | 152,500 | | | | 131,244 | |
ROAE | | | 5.76 | % | | | 7.46 | % |
Core ROAE** | | | 7.49 | % | | | 7.49 | % |
Diluted Average Shares Outstanding | | | 11,668,000 | | | | 10,837,000 | |
Diluted Earnings Per Share | | $ | 0.75 | | | $ | 0.90 | |
Diluted Core Earnings Per Share*** | | $ | 0.98 | | | $ | 0.91 | |
| * | Core ROAA: Year-to-date core net income/average assets |
| ** | Core ROAE: Year-to-date core net income/average equity |
| *** | Diluted Core Earnings Per Share: Year-to-date core net income/diluted average shares outstanding |
| | | | | | | | |
| | | Twelve Months Ended | |
| | | December 31,
2014 | | | December 31,
2013 | |
Net Interest Income | | $ | 53,255 | | | $ | 48,767 | |
Non-Interest Income | | | 7,709 | | | | 6,518 | |
Non-Interest Expense | | | 43,385 | | | | 37,640 | |
Subtract: Merger expenses | | | 2,302 | | | | 43 | |
Subtract: Severance and retention expenses | | | 1,195 | | | | — | |
| | | | | | | | |
Core Non-Interest Expense | | $ | 39,888 | | | $ | 37,597 | |
| | | | | | | | |
| | |
Efficiency Ratio* | | | 71 | % | | | 68 | % |
Core Efficiency Ratio** | | | 65 | % | | | 68 | % |
| * | Efficiency ratio represents non-interest expense as a percent of net interest income plus non-interest income, excluding gain on sale of securities, net |
| ** | Core efficiency ratio represents core non-interest expense as a percent of net interest income plus non-interest income, excluding gain on sale of securities, net |
