Business Bancorp Reports 29% Increase in First Quarter 2003 Profits.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. & 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. , Calif.--(BUSINESS WIRE)--April 21, 2003 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. , today reported profits increased 29% with improving efficiencies and excellent asset quality. Net income in the first quarter increased to $1.6 million, or $0.38 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 to $1.2 million, or $0.29 per diluted share, in the first quarter of 2002. Per share results have been adjusted to reflect the 5% stock dividend paid June June: see month. 28, 2002. "First quarter results provide a solid base for achieving our overall profitability objectives in 2003," said Alan A`lan´ n. 1. A wolfhound. J. Lane, Chief Executive Officer. Asset quality, return on equity and return on assets Return on assets (ROA) Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets). all improved from the first quarter of last year, and earnings per share growth comfortably exceeded our target of 15% to 19% in 2003. We also improved our mix of loans and deposits, which remained relatively unchanged from a year ago. In the first quarter both commercial loans and non-interest bearing deposits were up, helping to offset the reduction in consumer and other real estate loans and time certificates." Asset quality returned to outstanding levels with nonperforming loans at just 0.09% of total loans and net recoveries from previously charged-off loans of $21,000."
Financial Objectives Scorecard
1Q03 Results 2003 Target 2002
Results
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EPS Growth 31% 15% to 19% 22%
Return on Equity 10.78% 11.5% or better 10.64%
Return on Assets 1.02% 1.05% or better 0.93%
Nonperforming Assets/Assets 0.21% 0.50% or better 0.32%
Net Charge-Offs /Loans 0 bp 15 bp 3 bp
Deposit Growth (period end) 1.4% 7% to 10% 2%
Loan Growth (period end) -1.8% 8% -3%
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"Late last year, we recruited a new team of construction lenders for 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, market. They are now well integrated into our system and are generating a solid stream of new construction loan commitments. Based on current activity, the lending pipeline going into the second quarter is excellent and we expect loan growth to pick up in the coming quarters," 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 and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . Operating Results Net interest income after provision for loan losses was level at $7.2 million from the first quarter of 2002. Other income in 1Q03 increased 14% to $1.2 million, with fee income growing 13% to $901,000, reflecting the growth of business services. First quarter net interest margin was 5.41% compared to 5.40% in the fourth quarter of 2002 and 5.45% in the first quarter a year ago. "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. dropped 7% to $5.9 million in 1Q03 from $6.4 million in 1Q02, which included $225,000 in costs from the merger process. "The operational efficiencies we sought to produce in the year-long integration process are clearly at work in our first quarter expenses. With compensation expenses down 2% and other costs down 18% year over year, we are seeing the results of last year's thorough operational realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. ," said Patrick E. Phelan Phelan may refer to:
Balance Sheet Highlights (at March 31, 2003 compared to March 31, 2002) Business Bancorp's assets were up 3% to $627 million from a year ago. Gross loans were down 2% to $377 million as growth in commercial real estate loans was offset by a reduction in construction and consumer loans. Commercial real estate and other commercial loans increased 2%, and now account for 77% of the portfolio. Real estate construction loans totaled $64 million, off 6% from a year ago and accounting for 17% of the portfolio. Asset quality returned to very strong performance measures. Non-performing assets totaled $1.3 million, or 0.21% of total assets, compared to $1.8 million, or 0.30% of assets a year ago. "We've we've Contraction of we have. we've have always taken a conservative approach to our markets and prefer to forgo short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. loan growth rather than risk a deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in asset quality," Hall noted. The allowance for loan losses improved to 1.47% of total loans compared to 1.22% a year ago. Deposits increased slightly to $533 million, with non-interest bearing deposits growing 11% and accounting for 34% of total deposits. Time certificates, both conventional and jumbo, dropped 13% to $96 million from $111 million a year ago. "We've focused on attracting business transaction accounts and continue to build solid commercial business on the liabilities side of the balance sheet. Currently about 82% of our deposits are in low-cost transaction accounts," Lane noted. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. grew 14% to $60 million, or $15.15 per share. Tangible book value increased 23% to $9.59 per share at quarter-end from $7.79 at the end of 1Q02. In 2002, the company repurchased 356,000 shares for a total of $4.9 million. Business Bancorp will host its annual shareholders meeting on May 22, 2003 at 9:00 a.m. at the Hilton Hil·ton , Conrad Nicholson 1887-1979. American hotel-chain organizer who acquired hotels in many American cities and in 1946 founded the Hilton Hotel Corporation. Oakland Oakland, city (1990 pop. 372,242), seat of Alameda co., W Calif., on the eastern side of San Francisco Bay; inc. 1852. Together with San Francisco and San Jose, the city comprises the fourth largest metropolitan area in the United States. Airport. Interested investors and shareholders are invited to join the company's management team and directors for a review of 2002 results and 2003 prospects. About Business Bancorp Business Bancorp, parent of Business Bank of California, completed a merger of equals with MCB (Memory Control Block) An identifier (16 bytes) that DOS places in front of each block of memory it allocates. Financial, parent of Metro Commerce Bank, in December December: see month. 2001. The bank now has assets of more than $600 million and operates 15 branches offering 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. The bank operates in the Southern California 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 Hemet (hĕm`ĭt), city (1990 pop. 36,094), Riverside co., S Calif., in the San Jacinto valley; inc. 1910. Hemet and the surrounding area saw extensive growth in the 1970s and 80s, due to increased local agribusiness and the development of the , Hesperia Hesperia may refer to:
Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. , Phelan, Riverside, Redlands Redlands, city (1990 pop. 60,394), San Bernardino co., S Calif., in the San Bernardino Valley; inc. 1888. Industries include software research and development and the manufacture of metal foil, furniture, and electrical equipment. , 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, 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 Petaluma (pĕtəl  `mə), city (1990 pop. 43,184), Sonoma co., W Calif.; inc. 1858. , 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 further information on the company, visit our website at www.businessbank.com or e-mail your request to pphelan@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 efficiently operate in two geographically distant markets, its ability to gain additional benefits from its merger with MCB Financial, the impact of current events on the 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). economy, changes in interest rates, loan portfolio performance and other factors detailed in the company's SEC filings.
INCOME STATEMENT First Fourth First
($ in thousands, except per share data) Quarter Quarter Quarter Annual
2003 2002 2002 Change
------- ------- ------- ------
Interest income $8,808 $9,156 $9,564 -7.9%
Interest expense 1,515 1,687 2,204 -31.3%
------- ------- -------
Net interest income 7,293 7,469 7,360 -0.9%
Provision for loan losses 100 400 100 0.0%
------- ------- -------
Net interest income after
provision for loan losses 7,193 7,069 7,260 -0.9%
Other Income:
Service fees on deposit accounts 901 879 800 12.6%
Gain on sale of SBA loans 124 138 -
Gain on sale of other real estate owned 1 - -
Gain / (loss) on sales of investments - 225 -
Other 222 262 288 -22.9%
------- ------- -------
Total other income 1,248 1,504 1,088 14.7%
Other Expenses:
Salaries and employee benefits 3,301 3,125 3,359 -1.7%
Occupancy 635 614 596 6.5%
Amortization of Intangible 85 86 87
Other 1,897 2,053 2,330 -18.6%
------- ------- -------
Total other expenses 5,918 5,878 6,372 -7.1%
------- ------- -------
Income before income taxes 2,523 2,695 1,976 27.7%
Income tax expense 945 1,027 745 26.8%
------- ------- -------
Net income $1,578 $1,668 $1,231 28.2%
======= ======= =======
PER SHARE DATA:
---------------------------------------
Net income per share
Basic $0.40 $0.42 $0.30 31.2%
Diluted $0.38 $0.40 $0.29 29.19%
Common dividends declared per share $0.01 $0.01 $0.01 0.0%
Book value $15.15 $14.82 $13.50 12.2%
Tangible book value $9.59 $9.26 $7.79 23.2%
Weighted average common shares
outstanding 3,943 3,932 4,036 -2.3%
Weighted average common and common
equivalent shares outstanding 4,180 4,163 4,213
Common shares outstanding at period end 3,928 3,945 3,876
BALANCE SHEET Mar 31 Dec 31 Sept 30 June 30 Mar 31 Annual
($ in thousands, 2003 2002 2002 2002 2002 Change
except per share ---------------------------------------------------
data)
Assets:
Cash and due from
banks $35,170 $32,531 $26,909 $34,931 $31,604 11.3%
Investments 172,181 181,821 159,876 157,621 153,786 12.0%
Loans:
Real estate -
construction 64,003 59,854 77,624 76,234 68,238 -6.2%
Commercial real
estate 256,871 253,105 245,198 226,108 214,380 19.8%
Real estate -
other 16,774 25,951 25,043 40,766 18,733 -10.5%
Commercial 34,858 33,441 35,588 43,832 73,371 -52.5%
Consumer and
other 5,731 6,791 10,087 11,841 10,472 -45.3%
Deferred loan
fees, net (1,061) (1,042) (1,000) (1,064) (1,193)-11.1%
---------------------------------------------
Total loans 377,176 378,100 392,540 397,717 384,001 -1.8%
Allowance for loan
losses (5,562) (5,442) (5,028) (4,851) (4,672) 19.0%
---------------------------------------------
Total loans, net 371,614 372,658 387,512 392,866 379,329 -2.0%
Goodwill and other
intangible assets 21,826 21,911 22,083 22,152 22,130 -1.4%
Other assets 25,763 22,010 21,564 19,402 18,771 37.2%
---------------------------------------------
Total assets $626,554 $630,931 $617,944 $626,972 $605,620 3.5%
=============================================
Liabilities and
Stockholders'
Equity:
Liabilities:
Deposits:
Noninterest-
bearing $183,094 $184,728 $177,205 $168,474 $165,239 10.8%
NOW, MMDA and
Savings 253,677 244,364 248,725 251,060 249,311 1.8%
Time
certificates,
$100,000 and
over 60,999 64,510 58,282 61,025 68,968 -11.6%
Other time
certificates 35,462 37,237 38,693 40,549 42,133 -15.8%
---------------------------------------------
Total
deposits 533,232 530,839 522,905 521,108 525,651 1.4%
Other borrowings 17,325 23,625 20,725 33,925 10,193 70.0%
Other liabilities 3,035 4,559 3,926 3,575 3,970 -23.6%
---------------------------------------------
Total
liabilities 553,592 559,023 547,556 558,608 539,814 2.6%
Trust preferred
securities 13,454 13,462 13,471 13,479 13,487 -0.2%
Stockholders'
equity 59,508 58,446 56,917 54,885 52,319 13.7%
---------------------------------------------
Total liabilities
and stockholders'
equity $626,554 $630,931 $617,944 $626,972 $605,620 3.5%
=============================================
SUPPLEMENT DATA First Fourth First
Quarter Quarter Quarter Annual
PROFITABILITY 2003 2002 2002 Change
RATIOS: -------------------------------------
Return on average
assets 1.02% 1.06% 0.80%
Return on average
equity 10.78% 11.57% 9.12%
Net interest
margin(a) 5.41% 5.40% 5.45%
Efficiency ratio 69.29% 65.51% 75.45%
Efficiency ratio
excluding
interest on
trust preferred
securities 66.65% 63.08% 72.55%
(a) Computed on a fully taxable equivalent basis
AVERAGE BALANCES:
Average
investments $175,789 $173,553 $164,639 6.8%
Average loans,
net of unearned
income $379,898 $382,874 $390,082 -2.6%
Average interest
earning assets $555,687 $556,427 $554,721 0.2%
Average assets $625,808 $626,043 $620,952 0.8%
Average deposits $527,370 $535,638 $520,529 1.3%
Average interest
bearing
liabilities $380,893 $378,822 $402,422 -5.3%
Average equity $59,367 $57,210 $54,712 8.5%
Mar 31 Dec 31 Sept 30 June 30 Mar 31 Annual
CREDIT QUALITY 2003 2002 2002 2002 2002 Change
DATA: --------------------------------------------- ------
Non-accrual loans $222 $797 $4,194 $1,775 $878 -74.7%
Loans 90+ days
past due & still
accruing 122 249 29 54 33 269.7%
Total
nonperforming
loans 344 1,046 4,223 1,829 911 -62.2%
Other real estate
owned 965 995 1,005 885 885 9.0%
---------------------------------------------
Total
nonperforming
assets $1,309 $2,041 $5,228 $2,714 $1,796 -27.1%
Nonperforming
loans / total
loans 0.09% 0.28% 1.08% 0.46% 0.24%
Nonperforming
assets / total
assets 0.21% 0.32% 0.85% 0.43% 0.30%
Allowance for
loan losses /
total loans 1.47% 1.44% 1.28% 1.22% 1.22%
Net loan charge-
offs (recoveries) $(21) $(14) $123 $22 $(15)
CAPITAL RATIOS:
Stockholders'
equity / total
assets 9.50% 9.26% 9.21% 8.75% 8.64%
Total risk-based
capital ratio 12.38%(b) 12.02% 11.30% 10.68% 10.49%
Tier 1 risk-based
capital ratio 11.13%(b) 10.78% 10.16% 9.61% 9.43%
Tier 1 leverage
ratio 7.74%(b) 7.83% 7.53% 7.25% 7.00%
OTHER PERIOD END
STATISTICS:
Loan to deposit
ratio 70.73% 71.23% 75.07% 76.32% 73.05%
Non-interest
bearing
deposits / total
deposits 34.34% 34.80% 33.89% 32.33% 31.44%
(b) preliminary
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