Business Bancorp Posts 1Q02 Profits; Merger With MCB Financial Accretive to Earnings in First Quarter.Business Editors SAN RAFAEL San Rafael (săn rəfĕl`), residential city (1990 pop. 48,404), seat of Marin co., W Calif., a suburb of San Francisco on the northern shore of San Francisco Bay; inc. 1913. , Calif.--(BUSINESS WIRE)--May 6, 2002 Business Bancorp (NasdaqNM:BZBC), the parent company of Business Bank of California The Bank of California was founded in San Francisco, California on July 5, 1864 by William Chapman Ralston. It was the first commercial bank in the Western United States, the second-richest bank in the nation, and considered instrumental in developing the American Old West. (www.businessbank.com), today reported profits from operations were accretive to earnings in its first quarter following the recent merger of equals between Business Bancorp and MCB (Memory Control Block) An identifier (16 bytes) that DOS places in front of each block of memory it allocates. Financial. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). earnings per share in the first quarter ended March 31, 2002, totaled $0.31 compared to $0.30 in the first quarter of 2001. Cash operating EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. increased 12% to $0.36 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 from $0.32 per diluted share in the first quarter of 2001. Cash operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before exclude 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. merger-related expenses, net gains on sale of investments, and amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. . Because the merger was completed at the end of 2001 and was accounted for as a purchase transaction, the GAAP 2001 financial statements exclude MCB Financial's results. Consequently, financial statements for the current period are not meaningfully comparable to year-ago periods. This release includes pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma data that reflects the combined operations For the department of the British War Office during World War II, see . In the military, combined operations are operations conducted by forces of two or more allied nations acting together for the accomplishment of a single mission. See also
First Quarter Highlights (ended 3/31/02 compared to 3/31/01) -- Cash operating earnings increased 118% to $1.4 million, compared to $655,000 on a GAAP basis and up 6% on a proforma basis over one year ago. -- Deposits grew to $526 million, an 11% increase for the combined operations and an 89% rise from the year ago GAAP result. -- Total loans increased to $384 million, up 10% for the combined operations and 106% from 1Q01 GAAP. -- Credit quality remains strong with the ratio of nonperforming loans to total loans at 0.24% and the allowance for loan losses as a percentage of total loans at 1.22%. The ratio of total nonperforming assets (NPA) to total assets dropped to 0.30% compared to 0.45%. NPA were $1.8 million at March 31, 2002 compared to $1.5 million a year ago for both GAAP and pro forma results. -- Net interest margin was 5.45%, compared to 5.86% a year ago. -- The bank remains well capitalized with Tier 1 Capital of 9.4%. Merger Update Completed on December December: see month. 31, 2001, the merger of equals between Business Bancorp and MCB Financial laid the foundation for one of California's first statewide, middle-market The term middle-market may refer to either a type of newspaper or a type of company. A middle-market newspaper is one that attempts to cater to readers who want some entertainment value from their newspaper as well as adequate serious coverage of significant news , business banks. "We've we've Contraction of we have. we've have developed a merger integration plan that focuses the community and our staff on those things that represent direct value, including expanded services, numerous convenient locations, higher lending capacity, broader product offerings and the continuation of valued business relationships," said Alan A`lan´ n. 1. A wolfhound. J. Lane, Chief Executive Officer. "Our integration process, aided by the Sheshunoff consultants, is proceeding well," said Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by O. Hall, President. "Their team-based approach to identifying and implementing the best practices of each entity, optimizing business processes across the organization, and understanding the customer and economic diversity is comprehensive and methodical me·thod·i·cal also me·thod·ic adj. 1. Arranged or proceeding in regular, systematic order. 2. Characterized by ordered and systematic habits or behavior. See Synonyms at orderly. . We believe that the resulting unified organization will benefit greatly in terms of efficiency and service. In April, we completed the data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a integration, which was accomplished on-time and without major problems." Operating Results (1Q02 compared to 1Q01) First quarter net interest income increased to $7.4 million, compared to $4.1 million per GAAP and $7.1 million pro forma in the first quarter a year ago. Other income totaled $1.1 million, which included no gains or losses from sales of loans, 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 or investments. In the first quarter a year ago, the bank reported GAAP other income of $862,000, which included $104,000 in total gain on sales. On a pro forma basis in the first quarter of 2001, other income totaled $1.1 million and included $128,000 in total gains. First quarter 2002 GAAP results include $225,000 in pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta costs associated with the merger and with the on-going integration effort. In addition, the bank recognized non-cash amortization expenses of $86,000 in 1Q02 and $164,000 in 1Q01. "These merger-related expenses are budgeted to remain at current levels for the next two quarters while we complete the full integration of our organization," said Patrick E. Phelan, Chief Financial Officer. "Following the completion of that process, we expect to more fully realize the cost savings from the business optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. program currently being implemented. In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite these non-recurring expenses, the merger was moderately accretive to earnings and based on current progress, should continue to be accretive going forward." Excluding non-recurring and non-cash costs, 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. only increased 2% to $6.1 million, compared to $5.7 million of combined operating expenses in the first quarter a year ago. Including these expenses, operating expenses increased 8% to $6.4 million compared to $5.9 million for the proforma Proforma A financial projection based on assumptions. basis, and increased 62% from $3.9 million based on GAAP. "Our priority this year it to complete our integration plan and establish a platform for robust growth. During this process, we have established relatively moderate growth objectives," said Lane. "We closed the first quarter of the year on track to reach our 2002 goals to grow cash operating EPS 11% to 17%, expand our deposit base 5% to 10%, and increase our loan portfolio by greater than10%. We also continue to pursue improvements in our profitability ratios Profitability ratios Ratios that focus on how well a firm is performing. Profit margins measure performance with relation to sales. Rate of return ratios measure performance relative to some measure of size of the investment. and believe our goals of generating an ROAE ROAE Return on Average Equity of 10% or higher and an ROAA ROAA Return on Average Assets (business, banking, accounting) ROAA Rural Oregon Arts Association ROAA Royce Online Account Access (Royce Fund Services, Inc. above 0.85%, are achievable. Asset quality remained on target with the ratio of NPA/Assets under 0.50%, with no net charge-offs during the quarter."
Cash Operating Earnings (1) GAAP GAAP ProForma GAAP
(in 000's except per share) 1Q02 1Q01 1Q01 Change
------------------------------
GAAP net income $1,231 $ 616 $1,327 100%
Provision for income taxes 745 344 835 117%
-----------------------
Income before tax 1,976 960 2,162 106%
Less: Gains on sale of investments and
other 0 (104) (128)
Add: Merger-related costs 225 0 0
Add: Amortization of intangibles 86 164 164
-----------------------
Pre-tax cash operating earnings 2,287 1,020 2,198 124.2%
Provision for income taxes (862) (365) (849)
Cash operating earnings $1,425 $ 655 $1,349 117.7%
=======================
Cash earnings per share (1)
Basic $ 0.37 $ 0.32 nm 14.8%
Diluted $ 0.36 $ 0.32 nm 11.7%
Weighted average common shares
outstanding 3,844 2,027 nm
Weighted average common shares
outstanding 4,012 2,058 nm
(1) Defined as reported net income excluding after-tax net
merger-related charges, gains on sales of investment securities
and excluding amortization of intangible assets.
Balance Sheet Highlights (at March 31, 2002 compared to March 31, 2001) Business Bancorp's balance sheet reflects strong growth from both the merger and internal growth, with assets up 81% to $606 million. Deposits increased 89% to $526 million, with non-interest bearing deposits growing 68% and interest bearing transaction accounts up 101%. Gross loans rose 107% to $384 million, with commercial real estate loans increasing 143% to $214 million, equaling 56% of the portfolio. Commercial loans increased 99% to $73 million, totaling 19% of the portfolio, and real estate construction lending increased 74% to $68 million and 18% of the portfolio. Shareholder equity grew 111% to $52 million, or $14.17 per share. During the first quarter, the company adopted a share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program, buying back 291,000 shares for a total of $4.2 million. About Business Bancorp Business Bancorp is a bank holding company that owns 100% of the capital stock of Business Bank of California, the company's principal operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. . The bank is a California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). state chartered Fed member commercial bank whose primary business includes retail banking, commercial, construction, and SBA SBA abbr. Small Business Administration Noun 1. SBA - an independent agency of the United States government that protects the interests of small businesses and ensures that they receive a fair share of government lending activities. Business Bank of California has served California businesses since 1984. The bank operates 16 branches in the Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, cities of Corona Corona, city, United States Corona (kərō`nə), city (1990 pop. 76,095), Riverside co., S Calif.; inc. 1896. The city developed as a primary citrus fruit producer and shipping center. There is also light manufacturing. , Hemet, Hesperia, Ontario, Phelan, Riverside, Redlands, Upland Upland, city (1990 pop. 63,374), San Bernardino co., S Calif., in a citrus-fruit region at the foot of the San Gabriel Mts.; inc. 1906. Citrus fruits and grapes are packed and processed in the city. Paint, orchard heaters, auto parts, and feed products are also made. and San Bernardino San Bernardino, city, United States San Bernardino (săn bûr'nədē`nō), city (1990 pop. 164,164), seat of San Bernardino co., S Calif., at the foot of the San Bernardino Mts.; inc. 1854. , and in the Northern California Northern California, sometimes referred to as NorCal, is the northern portion of the U.S. state of California. The region contains the San Francisco Bay Area, the state capital, Sacramento; as well as the substantial natural beauty of the redwood forests, the northern cities of San Rafael, Petaluma, San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , South San Francisco South San Francisco, city (1990 pop. 54,312), San Mateo co., W Calif.; inc. 1908. South San Francisco has several industrial parks; its manufactures include medical supplies and equipment, foods, paint, paper products, consumer goods, and clothing. , and Hayward. The branches are strongly focused on providing high quality, personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. services to small businesses, professionals and consumers. For information on the company or to obtain the company's quarterly financial supplement, visit our website at www.businessbank.com or e-mail your request to pphelan@businessbank.com or info@businessbank.com. Include your name, phone, facsimile, e-mail and mailing address. The statements contained in this release that are not historical facts are 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. based on management's current expectations and beliefs concerning future developments and their potential effects on the company. There can be no assurance that future developments affecting the company will be those anticipated by management. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties, including the bank's ability to implement its plans to efficiently integrate its operations with those of MCB Financial, the impact of current events on the California economy, changes in interest rates and other factors detailed in the company's SEC filings.
FINANCIAL INFORMATION Three Months Ended March 31,
Income Statement 2002 2001 2001
(in 000's, except per share) (unaudited) GAAP GAAP ProForma
--------- --------- ---------
Interest income $ 9,564 $ 6,407 $ 10,913
Interest expense 2,204 2,294 3,804
--------- --------- ---------
Net interest income 7,360 4,113 7,109
Provision for loan losses 100 75 175
--------- --------- ---------
Net interest income after
provision for loan losses 7,260 4,038 6,934
Other income:
Service fees on deposit accounts 788 590 713
Gain on sale of SBA loans -- -- 24
Gain on sale of other real estate owned -- -- --
Gain / (loss) on sales of investments -- 104 104
Other 300 168 279
--------- --------- ---------
Total other income 1,088 862 1,120
Other expenses:
Salaries and employee benefits 3,359 2,025 3,135
Occupancy 596 247 531
Merger-related costs 225 -- --
Other 2,192 1,668 2,226
--------- --------- ---------
Total other expenses 6,372 3,940 5,892
Income before income taxes 1,976 960 2,162
Income tax expense 745 344 835
--------- --------- ---------
Net income $ 1,231 $ 616 $ 1,327
========= ========= =========
PER SHARE DATA:
Net income per share
Basic $ 0.32 $ 0.30 nm
Diluted $ 0.31 $ 0.30 nm
Common dividends declared per share $ 0.01 $ 0.00 nm
Book value $ 14.17 $ 12.22 nm
Tangible book value $ 8.18 $ 8.55 nm
Weighted average common shares
outstanding 3,844 2,027 nm
Weighted average diluted shares
outstanding 4,012 2,058 nm
Common shares outstanding at period end 3,691 2,027 nm
Balance Sheet
Mar 31 Mar 31 Mar 31
(in 000's) (unaudited) 2002 2001 2001
GAAP GAAP Pro Forma
--------- --------- ---------
Assets:
Cash and due from banks $ 31,604 $ 25,150 $ 48,172
Investments 153,786 106,912 132,420
Loans:
Real estate -- construction 68,238 39,192 64,811
Commercial real estate 214,380 88,398 189,062
Real estate -- other 18,733 14,063 19,382
Commercial 73,371 36,943 64,923
Consumer and other 10,472 8,492 12,470
Deferred loan fees, net (1,193) (1,159) (1,351)
--------- --------- ---------
Total loans 384,001 185,929 349,297
Allowance for loan losses (4,672) (1,910) (3,949)
--------- --------- ---------
Total loans, net 379,329 184,019 345,348
Goodwill and other intangible assets 22,130 7,441 7,441
Other assets 18,771 11,480 17,989
--------- --------- ---------
Total assets $605,620 $335,002 $551,370
========= ========= =========
Liabilities and Stockholders' Equity:
Liabilities:
Deposits:
Noninterest-bearing $165,239 $ 98,549 $152,767
NOW, MMDA and Savings 249,311 103,043 179,004
Time certificates, $100,000 and over 68,968 43,001
Other time certificates 42,133 32,960
--------- --------- ---------
Total deposits 525,651 277,553 473,687
Other borrowings 10,193 19,825 20,451
Other liabilities 3,970 2,861 4,571
--------- --------- ---------
Total liabilities 539,814 300,239 498,709
Trust preferred securities 13,487 10,000 13,000
--------- --------- ---------
Stockholders' equity 52,319 24,763 39,661
--------- --------- ---------
Total liabilities and
stockholders' equity $605,620 $335,002 $551,370
========= ========= =========
FINANCIAL RATIOS
Three Months Ended March 31,
($ in 000's except per share) (unaudited) 2002 2001
-----------------------
Average Balances
Average investments $ 164,639 $ 109,072
Average loans, net of unearned income $ 390,082 $ 181,860
Average interest-earning assets $ 554,721 $ 290,932
Average assets $ 620,952 $ 325,472
Average deposits $ 520,529 $ 268,253
Average interest-bearing liabilities $ 402,422 $ 209,713
Average equity $ 54,712 $ 24,153
Profitability Ratios
Return on average assets 0.80% 0.76%
Return on average equity 9.12% 10.20%
Net interest margin 5.45% 5.86%
Efficiency ratio 75.43% 79.20%
Efficiency ratio (excluding interest on trust
preferred securities) 72.52% 75.09%
Credit Quality Data 31-Mar-02 31-Mar-01
---------- ----------
Non-accrual loans $ 878 $ 999
Loans 90 days or more past due and
still accruing 33 --
Total nonperforming loans 911 999
Other real estate owned 885 500
Total nonperforming assets $ 1,796 $ 1,499
Nonperforming loans as a percentage of
total loans 0.24% 0.54%
Nonperforming assets as a percentage of
total assets 0.30% 0.45%
Allowance for loan losses as a percentage of
total loans 1.22% 1.03%
Quarterly net loan charge-offs (recoveries) (15) 8
Capital Ratios and Others
Stockholders' equity as a percentage of
total assets 8.64% 7.39%
Total risk-based capital ratio 10.49% 12.20%
Tier 1 risk-based capital ratio 9.43% 10.20%
Tier 1 leverage ratio 7.00% 7.40%
Loan to deposit ratio 73.05% 66.99%
Non-interest bearing deposits to total deposits 31.44% 35.51%
Valuation
Tangible book value per share $ 8.18 $ 8.55
Market value per share @ 3/31 $ 14.09 $ 11.75
LTM EPS $ 1.21 $ 1.17
Price to tangible book @ 3/31 1.72 1.37
P/E (LTM) @ 3/31 11.64 10.04
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion