Beverly Hills Bancorp Inc. Announces Year 2005 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 income for the year ended December December: see month. 31, 2005 of $15.1 million, or $0.70 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , as restated, of $13.8 million, or $0.65 per diluted share, for the year ended December 31, 2004. The Company has restated its audited financial statements for 2004 (see "Restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of 2004 Results" below) to correct errors in those financial statements. Total net income for 2004 (as restated), including discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , was $26.7 million, or $1.25 per diluted share. The Company's 2004 results included a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain of $21.7 million on the sale of 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, Wilshire Not to be confused with Wiltshire. Wilshire may refer to:
WCC n abbr (= World Council of Churches) → Weltkirchenrat m "). Pre-tax income from continuing operations, excluding the operating results of WCC and the gain on its sale, increased by $7.2 million, from $18.4 million for the year ended December 31, 2004 to $25.6 million for the year ended December 31, 2005. Management believes that pre-tax income represents a more meaningful measure of the Company's financial results than after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. net income, as approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.0 million of the reported income tax expense will not be currently payable in cash due to the utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of its net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carryforward carryforward 1. A business operating loss that, for tax purposes, may be claimed a certain number of years in the future, often up to 15 years. . The increase in the Company's income from continuing operations reflects a $5.5 million increase in net interest income, as a result of a higher earning-asset volume and significant loan prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. fees triggered by early payoffs. In addition, the Company recorded $41,000 in loan loss recaptures during the year, compared with a provision for loan losses of $0.4 million for the year ended December 31, 2004. The Company's other operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased by $0.7 million from 2004 to 2005, and total general and administrative expenses declined by $0.6 million. The Company's operating highlights for the year 2005 included the following: - Net interest income was $39.1 million for the year ended December 31, 2005, compared with $33.5 million for the year ended December 31, 2004. This increase was due primarily to a higher loan volume in 2005, reflecting the Bank's significant 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 throughout 2004. The Company's average balance of interest-earning assets in 2005 was more than $1.3 billion, an increase of $164.0 million over the 2004 average. In addition, interest income for 2005 included $4.7 million in loan prepayment fees, compared with $0.9 million of such fees in 2004. (The Company previously included loan prepayment fees in other operating income, but reclassified these fees to loan interest income in 2005. Prior years' results have been adjusted to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current classification.) These increases in interest income were partially offset by a substantial increase in the Company's cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. during 2005, reflecting the continuing rise in market rates of interest. - The net interest margin increased by 6 basis points to 2.94% for the year ended December 31, 2005, compared with 2.88% for the year ended December 31, 2004. This increase was due to the $3.8 million increase in loan prepayment fees, net of accelerated premium amortization on prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. loans. Excluding the effects of these loan prepayments PrepaymentsPayments made in excess of scheduled mortgage principal repayments. , we experienced a compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. in our net interest margin in 2005 due to the increase in interest rates and the flattening
The flattening, ellipticity, or oblateness of an oblate spheroid is the "squashing" of the spheroid's pole, down towards its equator. of the treasury yield curve. The continuing rise in rates substantially increased the Bank's cost of funds as maturing deposits and borrowings were replaced with higher-costing funds. - The Bank originated and purchased a total of $261.8 million in commercial real estate and multi-family mortgage loans for the year ended December 31, 2005, down from $439.0 million for the year ended December 31, 2004. Origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real activity slowed throughout 2005, primarily as a result of the increase in interest rates, which reduced the number of refinancings, and also due to increasing competitiveness in loan pricing. - At December 31, 2005, the Bank had $625.6 million in deposits, an increase of $45.6 million over the year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2004 total. The weighted-average interest rate on the Bank's deposits increased from 2.06% at December 31, 2004 to 3.64% at December 31, 2005. This increase reflected both the increase in market interest rates throughout 2005 and an increase in the Bank's certificates of deposit as a share of its total deposits. - The Bank's total nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. declined to $5.2 million, or less than 0.4% of its total assets, as of December 31, 2005. - As of December 31, 2005, 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. was 15.24%, exceeding the 10.0% ratio required to be categorized cat·e·go·rize tr.v. cat·e·go·rized, cat·e·go·riz·ing, cat·e·go·riz·es To put into a category or categories; classify. cat as "well capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. " under applicable regulations. Fourth Quarter Results BHBC's net income for the quarter ended December 31, 2005 was $3.9 million, or $0.18 per diluted share, compared with $6.0 million (as restated), or $0.29 per diluted share, for the quarter ended December 31, 2004. (The net income for the fourth quarter of 2004 reflected significant, non-recurring tax benefits realized through the reduction in the Company's deferred tax asset valuation allowance.) The Company's pre-tax income from continuing operations was $6.4 million for the fourth quarter of 2005, compared with $5.3 million for the fourth quarter of 2004. The increase for the 2005 period was the result of two factors: (1) the Company reduced its employee bonus expense by $0.7 million after an evaluation of the adequacy of the year-end bonus accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. , and (2) other operating income increased by $0.4 million, due to higher dividends on FHLB FHLB Federal Home Loan Bank stock and the absence of losses on sales of real estate in the fourth quarter of 2005, compared with $0.2 million of such losses in the 2004 period. Restatement of 2004 Results As previously announced, the Company identified material errors in the 2004 financial statements as originally filed and has restated those financial statements. The cumulative effects of the adjustments on the financial statements as of and for the year ended December 31, 2004 are as follows: (1) Net income as restated increased by $1.1 million, consisting of an increase in income from discontinued operations of $1.8 million, partially offset by a decrease in income from continuing operations due to an additional income tax provision of $0.7 million, and (2) the balance sheet as restated reflects a decrease in deferred tax assets of $2.6 million, a decrease in current taxes payable of $3.5 million and an increase in 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. of $0.9 million. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Financial Highlights The following tables present selected consolidated financial information for the Company for the periods and as of the dates indicated:
Three Months
Operating Data: Ended Year Ended
December 31, December 31,
--------------- -----------------
2005 2004 2005 2004
------- ------- -------- --------
(Dollars in thousands, except per
share data)
Net income $3,869 $6,004 $15,052 $26,725
Income from continuing operations 3,869 6,219 15,052 13,832
Income from continuing operations
before taxes 6,374 5,289 25,576 18,417
Net interest income 9,513 9,461 39,054 33,547
Earnings per share - diluted 0.18 0.29 0.70 1.25
Earnings per share from continuing
operations - diluted 0.18 0.30 0.70 0.65
Net interest margin 2.79% 2.96% 2.94% 2.88%
Net interest spread 2.39% 2.60% 2.66% 2.59%
Return on average assets 1.08% 1.83% 1.08% 2.22%
Return on average equity 8.87% 15.95% 8.70% 19.31%
Return on average assets from
continuing operations 1.08% 1.89% 1.08% 1.15%
Return on average equity from
continuing operations 8.87% 16.53% 8.70% 9.99%
Efficiency ratio 35.54% 46.88% 37.83% 46.18%
December 31,
---------------------------------------
Balance Sheet Data: 2005 2004
------------------ --------------------
(Dollars in thousands, except per share
data)
Total assets $1,403,739 $1,335,623
Stockholders' equity 173,870 171,062
Book value per share - diluted 8.07 7.97
Total assets per employee 26,995 21,895
For further information, please see our website (www.bhbc.com) for our 10-K Report and related communications (available on March 31, 2006). 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, the availability and conditions of financing for loan pool acquisitions, mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. 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.
BEVERLY HILLS BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share data)
December 31,
-----------------------
2005 2004
----------- -----------
(as
ASSETS Restated)
Cash and cash equivalents $20,954 $15,526
Mortgage-backed securities available for sale,
at fair value 332,572 307,461
Investment securities available for sale, at
fair value 13,728 13,819
Investment securities held to maturity, at
amortized cost (fair value of $9,650 and
$9,795) 9,708 9,657
Loans, net of allowance for loan losses of
$7,080 and $7,277 948,144 915,383
Discounted loans, net of allowance for loan
losses of $209 and $3,506 1,679 1,587
Stock in Federal Home Loan Bank of San
Francisco, at cost 27,625 22,681
Real estate owned, net 62 1,769
Leasehold improvements and equipment, net 1,539 854
Accrued interest receivable 6,284 5,333
Income taxes receivable 3,910 151
Deferred tax asset, net 30,739 34,770
Goodwill 3,054 3,054
Other intangible assets, net - 129
Prepaid expenses and other assets 3,741 3,449
----------- -----------
TOTAL $1,403,739 $1,335,623
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Noninterest-bearing deposits $4,655 $4,473
Interest-bearing deposits 599,994 537,487
Repurchase agreements 63,000 120,000
Accounts payable and other liabilities 10,764 7,145
FHLB advances 530,837 474,837
Junior subordinated notes payable to trust 20,619 20,619
----------- -----------
Total liabilities 1,229,869 1,164,561
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 0 and
10,000,000 shares authorized, 0 shares
outstanding -- --
Common stock, $0.01 par value, 30,000,000
and 90,000,000 shares authorized,
26,965,874 and 26,777,554 shares issued
(including 5,639,368 treasury shares) 270 268
Additional paid-in capital 165,710 164,515
Treasury stock, 5,639,368 shares, at cost (15,224) (15,224)
Retained earnings 27,019 22,590
Accumulated other comprehensive loss (3,905) (1,087)
----------- -----------
Total stockholders' equity 173,870 171,062
----------- -----------
TOTAL $1,403,739 $1,335,623
=========== ===========
BEVERLY HILLS BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
Year Ended December 31,
-----------------------------------
2005 2004 2003
----------- ----------- -----------
(as
Restated)
INTEREST INCOME:
Loans $60,895 $46,632 $35,234
Mortgage-backed securities 14,753 12,233 10,190
Securities and federal funds
sold 1,749 1,176 1,103
----------- ----------- -----------
Total interest income 77,397 60,041 46,527
----------- ----------- -----------
INTEREST EXPENSE:
Deposits 17,623 12,427 11,315
Borrowings 20,720 14,067 12,370
----------- ----------- -----------
Total interest expense 38,343 26,494 23,685
----------- ----------- -----------
NET INTEREST INCOME 39,054 33,547 22,842
(RECAPTURE OF) PROVISION FOR LOSSES
ON LOANS (41) 351 (539)
----------- ----------- -----------
NET INTEREST INCOME AFTER
(RECAPTURE OF) PROVISION FOR
LOSSES ON LOANS 39,095 33,196 23,381
----------- ----------- -----------
OTHER INCOME:
Loan related fees and charges 52 37 107
Deposit fees and charges 63 78 110
Market valuation losses and
impairments -- -- (352)
Gain (loss) on sales of loans,
net -- 20 (66)
Gain on sale of securities, net -- 418 249
Real estate owned, net 187 (136) (204)
FHLB stock dividend income 1,120 711 506
Other income, net 597 198 107
----------- ----------- -----------
Total other income 2,019 1,326 457
----------- ----------- -----------
OTHER EXPENSES:
Compensation and employee
benefits 6,773 6,811 6,349
Professional fees 3,555 3,637 4,619
Occupancy 989 851 804
Loan expenses 360 366 1,584
FDIC insurance premiums 338 476 415
Data processing 406 555 457
Insurance 689 813 583
Depreciation 327 331 692
Amortization of intangibles 129 259 259
Directors expense 539 614 500
Other general and administrative
expense 1,433 1,392 1,645
----------- ----------- -----------
Total other expenses 15,538 16,105 17,907
----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAX
PROVISION 25,576 18,417 5,931
INCOME TAX PROVISION 10,524 4,585 2,539
----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS 15,052 13,832 3,392
----------- ----------- -----------
DISCONTINUED OPERATIONS:
INCOME FROM OPERATIONS OF
DISCONTINUED SEGMENT (INCLUDING
GAIN ON DISPOSAL OF $21,716 IN
2004) -- 22,200 5,726
INCOME TAX PROVISION -- 9,307 2,231
----------- ----------- -----------
INCOME FROM DISCONTINUED
OPERATIONS -- 12,893 3,495
----------- ----------- -----------
NET INCOME $15,052 $26,725 $6,887
=========== =========== ===========
Earnings per share - basic:
Income from continuing operations $0.71 $0.67 $0.18
Discontinued operations -- 0.62 0.19
----------- ----------- -----------
Net income $0.71 $1.29 $0.37
=========== =========== ===========
Earnings per share - diluted:
Income from continuing operations $0.70 $0.65 $0.17
Discontinued operations -- 0.60 0.17
----------- ----------- -----------
Net income $0.70 $1.25 $0.34
=========== =========== ===========
Weighted average number of shares -
basic 21,220,777 20,772,752 18,508,892
Weighted average number of shares -
diluted 21,503,961 21,376,083 20,193,654
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