Beverly Hills Bancorp Announces First Quarter 2008 Results.CALABASAS, Calif. -- Beverly Hills Beverly Hills, city (1990 pop. 31,971), Los Angeles co., S Calif., completely surrounded by the city of Los Angeles; inc. 1914. The largely residential city is home to many motion-picture and television personalities. Bancorp Inc. (the "Company" or "BHBC") (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BHBC), the parent company of First Bank of Beverly Hills (the "Bank"), reported net earnings for the three months ended March 31, 2008 were $1.8 million, or $0.10 per diluted share, compared with $2.6 million, or $0.14 per diluted share, for the three months ended March 31, 2007. The decline in net earnings for the first quarter of 2008 was primarily due to a $0.5 million increase in the provision for loan losses, a $0.3 million decline in net interest income and a $0.7 million increase in primarily nonrecurring operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . The Company's stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. increased by $1.4 million during the three months ended March 31, 2008 to $149.5 million, or $7.95 book value per diluted share. As of March 31, 2008, the Company and the Bank met all regulatory capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . The Bank's risk-based capital ratio Risk-based capital ratio Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset. at March 31, 2008 was 14.22%, exceeding the 8.0% and 10.0% requirements to be adequately and well capitalized under applicable regulations. In addition, the Bank's regulatory capital exceeded by more than $42 million the minimum regulatory capital levels for the Bank to be well capitalized under applicable regulations. Consistent with our strategy of preserving capital and enhancing our regulatory capital ratios, the Company did not declare a regular dividend for the first quarter. The Company recorded a provision for loan losses of $0.7 million in the first quarter of 2008, as compared with a provision of $0.2 million in the first quarter of 2007. The increased loan loss provision reflects higher risk associated with construction loans. Due to existing weaknesses in the real estate markets, the Company has substantially increased, over the past year, its allowance for loan losses to $22.6 million at March 31, 2008. The allowance for loan losses at March 31, 2008 was 2.29% of the loan portfolio as compared with 2.19% at December 31, 2007. Net interest income was $7.3 million for the first quarter of 2008, compared with $7.7 million for the first quarter of 2007. Net interest income declined as average interest-earning assets for the first quarter of 2008 declined $112.4 million from the year-ago period. Interest-earning assets have decreased due to a reduction in both loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and purchases of mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. . The impact of a declining interest-earning assets base has been somewhat offset by an increase in the net interest margin to 2.05% for the first quarter of 2008 from 2.01% for the first quarter of 2007. Operating expenses were $4.2 million for the first quarter of 2008, as compared with $3.5 million for the first quarter of 2007. The Company reduced staffing levels during the first quarter of 2008 and incurred severance and compensation costs of $239,000. Additionally, the Company received a favorable outcome during the first quarter of 2008 in litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. with its former loan servicing Loan servicing is the process by which a mortgage bank or subservicing firm collects the timely payment of interest and principal from borrowers. The level of service varies depending on the type loan and the terms negotiated between the firm and the investor seeking their services. subsidiary and the subsidiary's current parent company. Expenses in the first quarter related to the legal matter totaled $554,000. Loan originations for the quarter ended March 31, 2008 totaled $21.9 million, as compared with $97.5 million in the first quarter of 2007. The Company has significantly reduced loan originations and is presently originating loans on stabilized commercial and multifamily properties only. There were no new construction loans originated during the first quarter of 2008. As of March 31, 2008, the Company had outstanding commitments to fund $129.1 million in loans, which primarily consisted of undisbursed funds on existing construction loans. Current economic conditions and deteriorating real estate markets have adversely affected us, particularly with regard to the construction loan portfolio. In general, developers are having difficulty selling existing inventory; absorption periods have extended beyond the originally projected timelines, creating an interest reserve deficiency reserve deficiency A shortage in funds set aside as a reserve for a specific purpose. For example, during a recession a firm may find the reserve fund covering allowance for bad debts deficient when the amount of bad debts exceeds expectations. , and buyers are not able to secure jumbo purchase money mortgages. This has resulted in an increase in non-accrual loans, which grew from $29.9 million at December 31, 2007 to $45.0 million at March 31, 2008, including $41.4 million of construction loans. The Company had no real estate owned Real Estate Owned Property owned by a lender - usually a bank - after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most at March 31, 2008. Financial Highlights The following table presents selected consolidated financial information for the Company for the periods indicated: [TABLE OMITTED] The following table presents selected consolidated financial information for the Company as of the dates indicated: [TABLE OMITTED] The following table presents selected financial information for the Bank for the periods indicated: [TABLE OMITTED] For further information, please see our website (www.bhbc.com) for our Quarterly Report on Form 10-Q Form 10-Q See 10-Q. and related communications (available on or about May 12, 2008). This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. including financial projections, statements as to the plans and objectives of management for future operations, and statements as to the Company's future economic performance, financial condition and results of operations. These forward-looking statements are not historical facts but rather are based on current expectations, estimates, and projections about our industry, our beliefs and our assumptions. Words such as "may," "will," "anticipates," "expects," "intends," "plans," "believes," "seeks" and "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements. The Company's actual results may differ materially from those projected in these forward-looking statements as a result of a number of factors, including, but not limited to, the condition of the real estate market and the economy, changes in banking regulations, the availability and conditions of financing for loan pool acquisitions, mortgage-backed securities and other financial assets Financial assets Claims on real assets. as well as interest rates. Readers of this release are cautioned not to place undue reliance on these forward-looking statements. [TABLE OMITTED] [TABLE OMITTED] |
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