BBCN Bancorp Reports Second Quarter 2012 Results

BBCN Bancorp, Inc. (the “Company”) (NASDAQ: BBCN), the holding company of BBCN Bank (the “Bank”), today reported net income available to common stockholders of $15.6 million, or $0.20 per diluted common share, for second quarter 2012. This compares with net income available to common stockholders of $5.2 million, or $0.14 per diluted common share, for second quarter 2011, and net income available to common stockholders of $22.1 million, or $0.28 per diluted common share, for first quarter 2012.

The merger with Center Financial Corporation (“Center”), completed on November 30, 2011, impacts the comparability of operating results for second quarter 2012 versus second quarter 2011 and the preceding first quarter 2012. The Company includes in this press release supplemental information to help in understanding past financial performance.

“The completion of the merger integration during the quarter marked a milestone achievement that positions BBCN for enduring growth as the leading Korean American bank in the nation,” said Alvin D. Kang, President and Chief Executive Officer. “Notwithstanding the tremendous company-wide effort required to complete the systems and office integrations, our front lines produced strong new loan originations that resulted in a 4% linked quarter increase in our loan portfolio, underscoring the strength of the new BBCN organization. We continued to focus on enhancing efficiencies, maintaining asset quality and improving our earnings power, and delivered pre-tax, pre-provision earnings of 3.03% for the quarter. While the overall economic and interest rate environment continues to present challenges, we believe we are well positioned with the integration and TARP redemption behind us to expand our franchise.”

Financial Highlights
        2012 Second Quarter       2011 Second Quarter       2012 First Quarter
      (Dollars in thousands)
Net income $ 19,364       $ 6,318       $ 23,934

Net income available to common stockholders
$ 15,593 $ 5,243 $ 22,065
Diluted earnings per share $ 0.20 $ 0.14 $ 0.28
Net interest income $ 59,502 $ 29,331 $ 60,859
Net interest margin 5.02 % 4.16 % 5.11 %
Non-interest income $ 10,222 $ 7,684 $ 11,645
Non-interest expense $ 31,077 $ 16,886 $ 30,435
Net loans receivable $ 3,809,033 $ 2,142,750 $ 3,674,890
Deposits $ 3,882,680 $ 2,232,180 $ 3,920,464
Non-accrual loans (1) $ 39,567 $ 35,385 $ 39,651
ALLL to gross loans 1.69 % 2.71 % 1.67 %
ALLL to non-accrual loans (1) 165.55 % 168.70 % 157.14 %
ALLL to non-performing assets (1) 72.80 % 107.41 % 71.14 %
Provision for loan losses $ 7,182 $ 10,047 $ 2,600
Net charge-offs $ 3,987 $ 13,691 $ 2,243
ROA (2) 1.52 % 0.86 % 1.86 %
ROE (2) 9.4 % 6.84 % 11.87 %
Efficiency ratio 44.57 % 45.62 % 41.98 %
 
(1) Excludes the guaranteed portion of delinquent SBA loans totaling $18.1 million, $14.2 million and $16.9 million at the close of the second quarter 2012, second quarter 2011 and first quarter 2012, respectively.
 
(2) Based on net income before effects of dividends and discount accretion on preferred stock.
 

The Company noted that the variance between net income and net income available to common stockholders in second quarter 2012 was significantly larger than in past quarters. In addition to regular quarterly dividends and discount accretion on TARP preferred stock, the Company incurred additional discount accretion of $1.9 million, equal to $0.02 per diluted common share, related to the TARP redemption on June 27, 2012.

Operating Results for Second Quarter 2012

As previously mentioned, the comparability of operating results with past performance is impacted by the merger. The Company believes the following supplemental information will be helpful in understanding past financial performance. Operating results for the three months ended June 30, 2012, March 31, 2012 and June 30, 2011 include the following pre-tax acquisition accounting adjustments and expenses related to the merger.

The increase (decrease) of these adjustments to pre-tax income is summarized below. The impact which these adjustments have to certain yields and costs are described in subsequent sections of this release.
     
Three Months Ended
(In thousands) June 30, 2012       March 31, 2012       June 30, 2011
Accretion of discount on acquired Center loans $ 7,696 $ 9,645 $ 0
Amortization of premiums on Center FHLB borrowings 904 1,231 0
Accretion of discount on Center subordinated debt (36 ) (35 ) 0
Amortization of premium on Center time deposits 787 1,275 0
Amortization of Center core deposit intangibles (253 ) (290 ) 0
Accretion of discounts on other Center assets 57 57 0
Amortization of unfavorable lease liability 57 58 0
Merger and integration expense (1,348 ) (1,773 ) (381 )
Increase (decrease) to pre-tax income $ 7,864   $ 10,168   $ (381 )
 

In addition to the items listed above, acquisition accounting adjustments had the effect of reducing the yield on the securities portfolio in second quarter and first quarter 2012. The acquired Center securities portfolio of approximately $290 million was adjusted to fair value of $293 million as of the merger date, resulting in interest income on investment securities for that portfolio being recognized at a lower average yield, compared with the yield on the balance of the Company's securities portfolio.

Net Interest Income and Net Interest Margin. The following table summarizes the reported net interest income before provision for loan losses.

     
Three Months Ended
6/30/2012       6/30/2011       % change       3/31/2012       % change
Net interest income before provision for loan losses $ 59,502 $ 29,331 103 % $ 60,859 (2 %)
     

Second quarter 2012 net interest income before provision for loan losses rose 103% over second quarter 2011, principally due to the higher level of interest earning assets following the merger, as well as net interest margin improvement. Compared with first quarter 2012, net interest income before provision for loan losses declined 2%, primarily reflecting reduced levels of accretion of discount on the acquired portfolio relative to the preceding first quarter.

The net interest margin and the impact of acquisition accounting adjustments is summarized in the following table:

     
Three Months Ended

June 30,

2012
     

June 30,

2011
      change      

March 31,

2012
      change
Net interest margin, excluding effect of acquisition accounting adjustments 4.15 % 4.16 % (0.01 )% 4.04 % 0.11 %
Acquisition accounting adjustments 0.87   0.00   1.07  
Reported net interest margin 5.02 % 4.16 % 0.86 % 5.11 % (0.09 )%
 

Second quarter 2012 net interest margin (net interest income divided by average interest-earning assets) was 5.02%, reflecting an 86 basis point improvement over second quarter 2011, largely attributable to the accretion of discounts on acquired loans. Excluding the effect of acquisition accounting adjustments, the core net interest margin for second quarter 2012 decreased 1 basis point to 4.15%. Compared with preceding first quarter, second quarter 2012 net interest margin declined 9 basis points, but improved 11 basis points on a core basis when excluding the effect of acquisition accounting. The increase, excluding the effect of acquisition accounting, is primarily due to an improvement in the cost of deposits and borrowings.

The weighted average yield on loans and the impact of acquisition accounting adjustments is summarized in the following table:

     
Three Months Ended

June 30,

2012
     

June 30,

2011
      change      

March 31,

2012
      change

The weighted average yield on loans, excluding effect of acquisition accounting adjustments
5.59 % 6.07 % (0.48 )% 5.61 % (0.02 )%
Acquisition accounting adjustments 0.94   0.00   1.14  
Reported weighted average yield on loans 6.53 % 6.07 % 0.46 % 6.75 % (0.22 )%
 

The weighted average yield on loans increased 46 basis points to 6.53% for second quarter 2012 from second quarter 2011, but declined 48 basis points, excluding the accretion of discounts on acquired loans from Center. The reduction in yield, excluding the effect of acquisition adjustments, is primarily attributed to the lower yielding acquired loan portfolio, and to a lesser extent, continued pricing pressures in the market place.

Compared with first quarter 2012, the weighted average yield on loans declined 22 basis points, and decreased 2 basis points, excluding the acquisition accounting adjustments. The decrease, excluding the acquisition accounting adjustments, reflects continuing pricing pressures in the market place.

The composition of fixed and variable rate loans and the associated weighted average yield, excluding loan discount accretion, is summarized in the following table:
                             

June 30,

2012

June 30,

2011
change

March 31,

2012
change
Fixed rate loans
As a percentage of total loans 38 % 45 % (7 )% 39 % (1 )%
Weighted average yield 6.25 % 7.06 % (0.81 )% 6.49 % (0.24 )%
Variable rate loans
As a percentage of total loans 62 % 55 % 7 % 61 % 1 %
Weighted average yield 4.60 % 4.91 % (0.31 )% 4.61 % (0.01 )%
 

The declining composition of fixed rate loans as a percentage of total loans reflects the Company's focus on variable rate business loans.

The weighted average yield on securities available for sale is summarized in the following table:

      Three Months Ended
6/30/2012       6/30/2011       change       3/31/2012       change
Weighted average yield on securities available-for-sale 2.45 % 3.16 % (0.71 )% 2.71 % (0.26 )%
 

The weighted average yield on securities available-for-sale for second quarter 2012 declined 71 basis points from second quarter 2011 and 26 basis points from first quarter 2012. The reductions are primarily attributable to the replacement of maturing securities with lower yielding investments as market interest rates declined, as well as the impact of acquisition accounting.

The weighted average duration and average life of the securities available-for-sale is summarized in the following table:

     
Three Months Ended
6/30/2012       6/30/2011       % change       3/31/2012       % change
Weighted average duration of securities available-for-sale in years 3.38 3.57 -0.19 3.83 -0.45
Weighted average life of securities available-for-sale in years 3.70 4.04 -0.34 4.26 -0.56
 

The weighted average cost of deposits and the impact of acquisition accounting adjustments are summarized in the following table:
     
Three Months Ended

June 30,

2012
     

June 30,

2011
      change      

March 31,

2012
      change
The weighted average cost of deposits, excluding effect of acquisition accounting adjustments 0.63 % 0.93 % (0.30 )% 0.69 % (0.06 )%
Acquisition accounting adjustments (0.08 ) 0.00   (0.13 )
Reported weighted average cost of deposits 0.55 % 0.93 % (0.38 )% 0.56 % (0.01 )%
 

The weighted average cost of deposits for second quarter 2012 was 0.55%, improving 38 basis points from second quarter 2011 and 1 basis point from first quarter 2012. Excluding the amortization of premium on time deposits assumed in the Center merger, the weighted average cost of deposits for second quarter 2012 decreased 30 basis points from second quarter 2011 and 6 basis points from first quarter 2012.

In addition to the acquisition accounting adjustments, the second quarter 2012 weighted average cost of deposits benefited from overall reductions in the cost of interest-bearing demand deposits, as well as a favorable shift in the mix of deposits with higher concentrations of non-interest bearing demand deposits. Non-interest bearing demand deposits accounted for 27% of total deposits at June 30, 2012, compared with 19% at June 30, 2011 and 26% at March 31, 2012.

The weighted average cost of FHLB advances and the impact of acquisition accounting adjustments are summarized in the following table:
     
Three Months Ended

June 30,

2012
     

June 30,

2011
      change      

March 31,

2012
      change
The weighted average cost of FHLB advances, excluding effect of acquisition accounting adjustments 3.08 % 3.23 % (0.15 )% 3.41 % (0.33 )%
Acquisition accounting adjustments (1.13 ) 0.00   (1.49 )
Reported weighted average cost of FHLB advances 1.95 % 3.23 % (1.28 )% 1.92 % 0.03 %
 

For second quarter 2012, the weighted average cost of FHLB advances decreased 128 basis points to 1.95% from second quarter 2011, largely due to the amortization of premiums on acquired FHLB borrowings. Excluding acquisition accounting adjustments, the weighted average cost of FHLB advances decreased 15 basis points, reflecting the addition of $105.0 million in new FHLB borrowings at a rate of 0.76%, which is substantially lower than the weighted average rate of the rest of the borrowings. The weighted average original maturity of the new borrowings was 3.67 years. In addition, a total of $65.1 million of FHLB borrowings with weighted average rates of 0.57% matured during the quarter and were paid off.

Compared with the preceding first quarter, the weighted average cost of FHLB advances increased 3 basis points, but decreased 33 basis points, excluding acquisition accounting adjustments.

Non-interest Income. Second quarter 2012 non-interest income increased to $10.2 million from $7.7 million for second quarter 2011, reflecting operations as a combined Company, partially offset by a $1.9 million reduction in net gains on sale of SBA loans from the prior-year period.

Compared with first quarter 2012, non-interest income declined $1.3 million and is largely attributed to the variance in gains on sales.

The various net gains (losses) on sales are summarized in the following table:
     
Three Months Ended
6/30/2012       6/30/2011       % change       3/31/2012       % change
Net gains on sales of SBA loans $ 2,463 $ 4,354 (43 )% $ 2,963 (17 )%
Net gains on sale of other loans 146 100 % 100 %
Net gains on sales of securities available-for-sale 6 (100 )% 816 (100 )%
Net valuation gains (losses) on interest swaps and caps 10 (101 ) (110 )% 3 233 %
Net gains (losses) on sales of OREO   (8 )   25   (132 )%   61   (113 )%
Total net gains on sale $ 2,611   $ 4,284   $ 3,843  
 

Non-interest Expense. Second quarter 2012 non-interest expense rose 84% to $31.1 million from $16.9 million for second quarter 2011, largely reflecting the combined operations of the new BBCN. Second quarter 2012 non-interest expense increased 2% from $30.4 million for first quarter 2012.

Salaries and benefits expense totaled $14.7 million for second quarter 2012, an increase of 92% over $7.6 million for second quarter 2011, and an increase of 4% over $14.1 million for first quarter 2012. The significant increase over second quarter 2011 reflects the combined operations as BBCN. The number of full time equivalent employees (FTEs) was 653, 661 and 369 as of June 30, 2012, March 31, 2012 and June 30, 2011, respectively. The FTEs as of June 30, 2011 on a pro forma basis was 682. The adjusted number of FTEs as of the merger closing date of November 30, 2011 was 690. Notwithstanding a slight decrease in FTEs from March 31, 2012, salaries and benefits expense increased modestly, reflecting annual salary increases, as well as higher vacation and bonus accruals.

Occupancy expense for second quarter 2012 rose 73% to $4.2 million from $2.4 million for second quarter 2011, primarily reflecting the combined number of branches post-merger. Occupancy expense rose $586,000 over the $3.6 million for first quarter 2012, and is partially attributed to a $375,000 non-recurring expense associated with the renegotiation of a sub-lease.

The FDIC assessment for second quarter 2012 amounted to $51,000, compared with $877,000 for second quarter 2011 and $1.0 million for the preceding first quarter 2012. The significant decline is attributed to the recognition of a $650,000 assessment rate reduction for fourth quarter 2011 as a result of an upgrade of the Company's risk category. The Company noted that the FDIC assessment is primarily based on assets and expects it will be approximately $1.0 million for third quarter 2012.

The Company noted that its Other non-interest expense line item for second quarter 2012 included a $461,000 loss incurred on the early retirement of a $10.0 million Trust Preferred security, bearing a 10.18% interest rate.

The effective tax rate for second quarter 2012 was 38.5%, compared with 37.3% for second quarter 2011 and 39.4% for first quarter 2012.

Balance Sheet Summary

Gross loans receivable totaled $3.87 billion at June 30, 2012, an increase of 4% compared with $3.74 billion at March 31, 2012 and December 31, 2011. Total loan originations for second quarter 2012 amounted to $241.5 million, including SBA loan originations of $67.1 million. In comparison, new loan production during first quarter 2012 equaled $167.6 million, including SBA loan originations of $34.6 million.

Sales of SBA loans to the secondary market and gains derived from those sales are based substantially on the production of SBA 7(a) loans. Production of SBA 7(a) loans amounted to $49.8 million for second quarter 2012, compared with $31.2 million for first quarter 2012.

Aggregate loan pay-offs, pay-downs, amortization and other adjustments totaled $107.3 million during second quarter 2012, compared with $64.2 million during second quarter 2011 and $169.6 million during first quarter 2012. The Company noted the level of pay-offs and pay-downs were unusually high during the first quarter 2012.

Total deposits decreased to $3.88 billion at June 30, 2012 from $3.92 billion at March 31, 2012 and $3.94 billion at December 31, 2011, reflecting reductions in MMA accounts and a continued run-off of higher rate non-jumbo time deposits, offset by growing balances of non-interest bearing deposits. The mix of deposits continued to shift favorably with non-interest bearing deposits at June 30, 2012 increasing to $1.06 billion, or 27% of total deposits, from $1.01 billion, or 26% of total deposits, at March 31, 2012.

Credit Quality

The Company recorded a provision for loan losses of $7.2 million in second quarter 2012, compared with $10.0 million in second quarter 2011 and $2.6 million in the preceding first quarter 2012. The increase in the provision for loan losses compared with first quarter 2012 was primarily attributable to loan loss allowances for the strong new loan originations during the quarter that resulted in a net $137.4 million increase in loans outstanding, for refinanced acquired loans, and for further degradation in acquired credit impaired loans.

For a more detailed understanding of the changes in the Allowance for Loan and Lease Losses (“ALLL”), the composition of the ALLL has been segmented for disclosure purposes between loans accounted for under the amortized cost method (referred to as “BBCN” loans) and loans acquired in the Center merger (referred to as “Acquired” loans). The acquired loans are further segregated between performing and credit impaired loans. The composition of ALLL for the three months ended June 30, 2012, March 31, 2012 and December 31, 2011 is as follows:
                         
(dollars in thousands) 6/30/2012 3/31/2012 12/31/2011
BBCN loans (1) $ 62,397 $ 60,233

$
61,952
Acquired loans - Performing Loans (2) 1,194 1,262
Acquired loans - Credit Impaired Loans (2)   1,914     814      
Total ALLL $ 65,505   $ 62,309   $ 61,952  
 
Gross loans, net of deferred loan fees and costs $ 3,874,538 $ 3,737,199 $ 3,738,826
Loss coverage ratio   1.69 %   1.67 %   1.66 %
 
(1)     BBCN loans include Nara loans outstanding at acquisition date, former Center loans that were refinanced and new BBCN loans originated post merger.
(2) Acquired loans were marked to fair value at acquisition date, and provisions for loan losses reflect credit deterioration since the acquisition date.
 

Following are the Special Mention, Classified and Total Watchlist loan balances as of June 30 and March 31, 2012:
                     
(dollars in thousands) 6/30/2012 3/31/2012
Special Mention (1) $ 109,387 $ 107,389
Classified (1) $ 204,709 $ 216,887
Total Watchlist $ 314,096 $ 324,276
 
(1)     Balances include the acquired loans which were marked to fair value at November 30, 2011. For loan classification purposes, the loan grading did not change as a result of the merger.
 

Non-performing loans (defined as loans past due 90 days or more and on non-accrual status, acquired loans past due 90 days or more and on accrual status, and accruing restructured loans) at June 30, 2012 were $83.3 million, or 2.15% of total loans, compared with $81.9 million, or 2.19% of total loans, at March 31, 2012. The modest increase in the dollar amount of non-performing loans reflects increases in delinquent loans 90 days or more past due, but which are still on accrual status in accordance with acquisition accounting rules, partially offset by decreases in accruing restructured loans.

Non-performing assets at June 30, 2012 were $90.0 million, or 1.78% of total assets, compared with $87.6 million, or 1.69% of total assets, at March 31, 2012, due principally to the increase in non-performing loans.

Net loan charge-offs during second quarter 2012 totaled $4.0 million, or 0.41% of average loans on an annualized basis, compared with $2.2 million, or 0.24%, during first quarter 2012.

The allowance for loan losses at June 30, 2012 was $65.5 million, or 1.69% of gross loans receivable (excluding loans held for sale), compared with $62.3 million, or 1.67%, at March 31, 2012. The increase primarily reflects the increase in the allowance for loan losses due to new loan growth and for refinanced acquired loans. The coverage ratio of the allowance for loan losses to non-performing loans (excluding acquired loans past due 90 days or more on accrual status) increased to 105% at June 30, 2012, from 98% at March 31, 2012.

Impaired loans (defined as loans for which it is probable that not all principal and interest payments due will be collectible in accordance with the contractual terms) at June 30, 2012 and March 31, 2012 were $91.4 million and $99.8 million, respectively.

Specific reserves for impaired loans were $13.2 million, or 14.4% of the aggregate impaired loan amount at June 30, 2012, compared with $16.5 million, or 16.5%, at March 31, 2012. The decrease in specific reserves largely reflects charge-offs, pay downs and pay offs. Excluding specific reserves for impaired loans, the allowance coverage on the remaining loan portfolio was 1.38% at June 30, 2012, compared with 1.26% at March 31, 2012. This increase is due primarily to additions to the allowance for new loan growth and for acquired loans as they experience credit deterioration or are refinanced or renewed and are categorized as part of the BBCN portfolio.

Capital

As previously announced, BBCN redeemed $122 million of Series A and Series B Preferred Stock issued under the U.S. Treasury's TARP Capital Purchase Program on June 27, 2012. The redemption covered the total combined preferred stock investment by the U.S. Treasury of $67 million in the former Nara Bancorp, Inc. and $55 million in the former Center Financial Corporation. The Company has entered into negotiations to repurchase all 858,746 BBCN warrants held by the Treasury.

At June 30, 2012, the Company continued to exceed all regulatory capital requirements to be classified as a “well-capitalized” institution, as summarized in the following table.
                         
6/30/2012           3/31/2012           12/31/2011
Leverage Ratio (1) 12.97 % 15.08 % 19.81 %
Tier 1 Risk-based Ratio 15.54 % 18.85 % 18.15 %
Total Risk-based Ratio 16.80 % 20.11 % 19.41 %
 
(1)     The calculation for the Leverage Ratio utilizes the daily average balance of total assets in the denominator, as opposed to the period end balances utilized in the calculation of the other capital ratios. Accordingly, the Company believes that the Leverage Ratio reported for the fourth quarter 2011 is not necessarily representative of the Company's Leverage Ratio at the end of 2011. On a pro forma basis, utilizing the daily average balance of total assets in the month of December following the completion of the merger, the Leverage Ratio was 14.00%.
 

Tangible common equity per share and as a percentage of tangible assets improved over prior comparable periods, as summarized in the following table:

                         
6/30/2012           3/31/2012           12/31/2011
Tangible common equity per share (1) $ 7.94 $ 7.72 $ 7.43
Tangible common equity to tangible assets (1) 12.49 % 11.86 % 11.42 %
 
(1)     Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and net other intangible assets divided by total assets less goodwill and net other intangible assets. Management reviews tangible common equity to tangible assets in evaluating the Company's capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital. See the accompanying financial information for a reconciliation of the ratio of tangible common equity to tangible assets with stockholders' equity and total assets.
 

Investor Conference Call

The Company will host an investor conference call on Tuesday, July 24, 2012 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for second quarter 2012. Investors and analysts may access the conference call by dialing 800-706-7749 (domestic) or 617-614-3474 (international), passcode 95149564. Other interested parties are invited to listen to a live webcast of the call available at the Investor Relations section of BBCN Bancorp's website at www.BBCNbank.com.

After the live webcast, a replay will be archived in the Investor Relations section of BBCN Bancorp's website for one year. A telephonic replay of the call will be available at 888-286-8010 (domestic) or 617-801-6888 (international) through July 31, 2012, passcode 42573151.

About BBCN Bancorp, Inc.

BBCN Bancorp, Inc. is the parent company of BBCN Bank, the largest Korean American bank in the nation with $5.1 billion in assets as of June 30, 2012. The Company is a result of the merger of equals of Nara Bancorp, Inc. and Center Financial Corporation completed on November 30, 2011. Headquartered in Los Angeles and serving a diverse mix of customers mirroring its communities, BBCN operates more than 40 branches in California, New York, New Jersey, Washington and Illinois, along with four loan production offices in Seattle, Denver, Dallas and Atlanta. BBCN specializes in core business banking products for small and medium-sized businesses, with an emphasis in commercial real estate and business lending, SBA lending and international trade financing. BBCN Bank is a California-chartered bank and its deposits are insured by the FDIC to the extent provided by law. BBCN is an Equal Opportunity Lender.

Forward-Looking Statements

This press release contains forward-looking statements, including statements about future operations and projected full-year financial results that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward looking statements. These risks and uncertainties include but are not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services, and pricing. Readers should carefully review the risk factors and the information that could materially affect the Company's financial results and business, described in documents the Company files from time to time with the Securities and Exchange Commission, including its quarterly reports on Form 10-Q and Annual Reports on Form 10-K, and particularly the discussions of business considerations and certain factors that may affect results of operations and stock price set forth therein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.
               

BBCN Bancorp, Inc.

Consolidated Statements of Financial Condition

Unaudited (Dollars in Thousands, Except per Share Data)
 
Assets 6/30/2012   3/31/2012   % change   12/31/2011   % change   6/30/2011   % change
 
Cash and due from banks $ 179,621 $ 365,679 -51 % $ 300,110 -40 % $ 171,129 5 %
Term federal funds sold - 20,000 -100 % 40,000 -100 % - 0 %
Securities available for sale, at fair value 666,852 697,808 -4 % 740,920 -10 % 472,420 41 %
Federal Home Loan Bank and Federal Reserve Bank stock 24,778 26,064 -5 % 27,373 -9 % 22,657 9 %
Loans held for sale, at the lower of cost or fair value 32,590 50,620 -36 % 42,407 -23 % 27,120 20 %
Loans receivable 3,874,538 3,737,199 4 % 3,738,826 4 % 2,202,446 76 %
Allowance for loan losses   (65,505 )     (62,309 )   -5 %     (61,952 )   -6 %     (59,696 )   10 %
Net loans receivable   3,809,033       3,674,890     4 %     3,676,874     4 %     2,142,750     78 %
Accrued interest receivable 12,062 12,253 -2 % 13,439 -10 % 8,069 49 %
Premises and equipment, net 21,805 20,353 7 % 20,913 4 % 9,938 119 %
Bank owned life insurance 43,119 42,819 1 % 42,514 1 % 24,489 76 %
Goodwill 89,882 89,882 0 % 90,473 -1 % 2,509 3482 %
Other intangible assets, net 3,636 3,938 -8 % 4,276 -15 % 379 859 %
Other assets   166,027       165,009     1 %     167,305     -1 %     85,828     93 %
Total assets $ 5,049,405     $ 5,169,315     -2 %   $ 5,166,604     -2 %   $ 2,967,288     70 %
 
Liabilities
 
Deposits $ 3,882,680 $ 3,920,464 -1 % $ 3,940,892 -1 % $ 2,232,180 74 %
Borrowings from Federal Home Loan Bank 371,143 332,109 12 % 344,402 8 % 300,000 24 %
Subordinated debentures 41,772 52,137 -20 % 52,102 -20 % 39,268 6 %
Accrued interest payable 5,924 6,485 -9 % 6,519 -9 % 3,382 75 %
Other liabilities   32,425       39,954     -19 %     26,750     21 %     19,919     63 %
Total liabilities   4,333,944       4,351,149     0 %     4,370,665     -1 %     2,594,749     67 %
 
Stockholders' Equity
 
Preferred stock, $0.001 par value; authorized 10,000,000 undesignated shares; issued and outstanding 0 shares, 122,000 shares, 122,000 shares and 67,000 shares as of June 30, 2012, March 31, 2012, December 31, 2011, and June 30, 2011, respectively
 
Series A, Fixed Rate Cumulative Perpetual Preferred Stock, issued and outstanding 0 shares at June 30, 2012 and 67,000 shares at March 31, 2012, December 31, 2011, and June 30, 2011 - 65,399 -100 % 65,158 -100 % 64,679 -100 %
Series B, Fixed Rate Cumulative Perpetual Preferred Stock, issued and outstanding 0 shares, 55,000 shares, 55,000 shares and 0 shares at June 30, 2012, March 31, 2012, December 31, 2011 and June 30, 2011, respectively - 54,295 -100 % 54,192 -100 % - 0 %

Common stock, $0.001 par value; authorized, 150,000,000 shares at June 30, 2012, March 31, 2012 and December 31, 2011 and 100,000,000 shares at June 30, 2011; issued and outstanding, 78,014,107, 77,996,391, 77,984,252 and 38,097,327 shares at June 30, 2012, March 31, 2012, December 31, 2011 and June 30, 2011, respectively
78 78 0 % 78 0 % 38 105 %
Capital surplus 525,985 525,123 0 % 524,639 0 % 172,066 206 %
Retained earnings 180,567 164,974 9 % 142,909 26 % 131,275 38 %
Accumulated other comprehensive income, net   8,831       8,297     6 %     8,963     -1 %     4,481     97 %
Total stockholders' equity   715,461       818,166     -13 %     795,939     -10 %     372,539     92 %
 
Total liabilities and stockholders' equity $ 5,049,405     $ 5,169,315     -2 %   $ 5,166,604     -2 %   $ 2,967,288     70 %
 
 

               
Three Months Ended

Six Months Ended
6/30/2012   6/30/2011   % change   3/31/2012   % change 6/30/2012   6/30/2011   % change
   
Interest income:
Interest and fees on loans $ 62,504 $ 33,150 89 % $ 63,419 -1 % $ 125,923 $ 66,235 90 %
Interest on securities 4,249 3,965 7 % 4,909 -13 % 9,158 7,895 16 %
Interest on federal funds sold and other investments   190       179     6 %     227     -16 %   417       358     16 %
Total interest income   66,943       37,294     80 %     68,555     -2 %   135,498       74,488     82 %
 
Interest expense:
Interest on deposits 5,245 5,090 3 % 5,403 -3 % 10,648 10,221 4 %
Interest on other borrowings   2,196       2,873     -24 %     2,293     -4 %   4,489       6,053     -26 %
Total interest expense   7,441       7,963     -7 %     7,696     -3 %   15,137       16,274     -7 %
 
Net interest income before provision for loan losses 59,502 29,331 103 % 60,859 -2 % 120,361 58,214 107 %
Provision for loan losses   7,182       10,047     -29 %     2,600     176 %   9,782       15,309     -36 %
Net interest income after provision for loan losses   52,320       19,284     171 %     58,259     -10 %   110,579       42,905     158 %
 
Non-interest income:
Service fees on deposit accounts 3,269 1,413 131 % 3,160 3 % 6,429 2,910 121 %
Net gains on sales of SBA loans 2,463 4,354 -43 % 2,963 -17 % 5,426 5,514 -2 %
Net gains on sales of other loans 146 - 100 % - 100 % 146 - -100 %
Net gains on sales of securities available-for-sale - 6 -100 % 816 -100 % 816 6 13500 %
Net valuation gains (losses) on interest swaps and caps 10 (106 ) 109 % 3 233 % 13 (117 ) 111 %
Net gains on sales of OREO (8 ) 25 -132 % 61 -113 % 53 27 96 %
Other income and fees   4,342       1,992     118 %     4,642     -6 %   8,984       3,854     133 %
Total non-interest income   10,222       7,684     33 %     11,645     -12 %   21,867       12,194     79 %
 
Non-interest expense:
Salaries and employee benefits 14,658 7,625 92 % 14,079 4 % 28,737 14,779 94 %
Occupancy 4,232 2,445 73 % 3,646 16 % 7,878 4,882 61 %
Furniture and equipment 1,468 934 57 % 1,218 21 % 2,686 1,869 44 %
Advertising and marketing 1,525 594 157 % 1,458 5 % 2,983 1,173 154 %
Data processing and communications 1,573 923 70 % 1,611 -2 % 3,184 1,906 67 %
Professional fees 1,069 769 39 % 613 74 % 1,682 1,478 14 %
FDIC assessment 51 877 -94 % 1,037 -95 % 1,088 2,166 -50 %
Merger-related expenses 1,348 380 255 % 1,773 -24 % 3,121 891 250 %
Other   5,153       2,339     120 %     5,000     3 %   10,153       4,437     129 %
Total non-interest expense   31,077       16,886     84 %     30,435     2 %   61,512       33,581     83 %
Income before income taxes 31,465 10,082 212 % 39,469 -20 % 70,934 21,518 230 %
Income tax provision   12,101       3,764     221 %     15,535     -22 %   27,636       8,454     227 %
Net income $ 19,364     $ 6,318     206 %   $ 23,934     -19 %   43,298       13,064     231 %
Dividends and discount accretion on preferred stock $ (3,771 )   $ (1,075 )   251 %   $ (1,869 )   102 %   (5,640 )     (2,150 )   162 %
Net income available to common stockholders $ 15,593     $ 5,243     197 %   $ 22,065     -29 % $ 37,658     $ 10,914     245 %
 
Earnings Per Common Share:
Basic $ 0.20 $ 0.14 $ 0.28 $ 0.48 $ 0.29
Diluted $ 0.20 $ 0.14 $ 0.28 $ 0.48 $ 0.29
 
Average Shares Outstanding:
Basic 78,007,270 38,047,371 77,987,342 77,997,305 38,017,473
Diluted 78,141,527 38,082,023 78,101,818 78,121,259 38,079,650
 
 

      Three months ended  

Six Months Ended
6/30/2012   3/31/2012   12/31/2011   9/30/2011   6/30/2011 6/30/2012   6/30/2011
         
Net Income $ 19,364 $ 23,934 $ 4,236 $ 9,815 $ 6,318 $ 43,298 $ 13,064
Add back: Income tax 12,101 15,535 2,010 5,196 3,764 27,636 8,454
Add back: Provision for loan losses   7,182       2,600       9,147       3,483       10,047     9,782       15,309  
Pre-tax, pre-provision income (PTPP) 1 $ 38,647     $ 42,069     $ 15,393     $ 18,494     $ 20,129   $ 80,716     $ 36,827  
PTPP to average assets (annualized) 3.03 % 3.27 % 1.62 % 2.48 % 2.75 % 3.15 % 2.51 %
 

1
   

While pre-tax, pre-provision income is a non-GAAP performance measure, we believe it is a useful measure in analyzing underlying performance trends, particularly in times of economic stress. It is the level of earnings adjusted to exclude the impact of income tax and provision expense.
 
 

      (Annualized)

At or for the Three Months Ended
          (Annualized)

At or for the Six Months Ended
Profitability measures: 6/30/2012       6/30/2011       3/31/2012 6/30/2012       6/30/2011
ROA 2 1.52 %       0.86 %       1.86 % 1.69 %       0.89 %
ROE 2 9.40 % 6.84 % 11.87 % 10.62 % 7.13 %
Return on average tangible equity 2,3 10.61 % 6.89 % 13.44 % 12.01 % 7.19 %
Net interest margin 5.02 % 4.16 % 5.11 % 5.07 % 4.15 %
Efficiency ratio 44.57 % 45.62 % 41.98 % 43.25 % 47.69 %

2
   

Based on net income before effect of dividends and discount accretion on preferred stock.

3

Average tangible equity is calculated by subtracting average goodwill and average other intangibles from average stockholders' equity. This is non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.

 
 

      Three Months Ended     Three Months Ended     Three Months Ended
6/30/2012 6/30/2011 3/31/2012
                       
Interest Annualized Interest Annualized Interest Annualized
Average Income/ Average Average Income/ Average Average Income/ Average
Balance Expense Yield/Cost Balance Expense Yield/Cost Balance Expense Yield/Cost
(Dollars in thousands) (Dollars in thousands) (Dollars in thousands)
INTEREST EARNING ASSETS:
 
Gross loans, includes loans held for sale $ 3,847,921 $ 62,504 6.53 % $ 2,190,436 $ 33,150 6.07 % $ 3,777,495 $ 63,419 6.75 %
Securities available for sale 692,399 4,249 2.45 % 501,298 3,965 3.16 % 725,728 4,909 2.71 %
FRB and FHLB stock and other investments 203,935 160 0.31 % 132,957 179 0.54 % 257,583 178 0.27 %
Federal funds sold   19,794   30   0.59 %   -   -   N/A   25,780   49   0.74 %
Total interest earning assets $ 4,764,049 $ 66,943   5.65 % $ 2,824,691 $ 37,294   5.29 % $ 4,786,586 $ 68,555   5.76 %
 
INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest-bearing $ 1,184,339 $ 1,849 0.63 % $ 710,948 $ 1,545 0.87 % $ 1,232,763 $ 2,123 0.69 %
Savings 187,872 830 1.78 % 126,238 729 2.32 % 195,932 922 1.89 %
Time deposits:
$100,000 or more 807,803 1,498 0.75 % 315,278 381 0.49 % 767,171 1,411 0.74 %
Other   652,937   1,068   0.66 %   623,361   2,435   1.57 %   722,982   947   0.53 %
Total time deposits   1,460,740   2,566   0.71 %   938,639   2,816   1.20 %   1,490,153   2,358   0.64 %
Total interest bearing deposits   2,832,951   5,245   0.74 %   1,775,825   5,090   1.15 %   2,918,848   5,403   0.74 %
FHLB advances 329,066 1,603 1.95 % 300,000 2,412 3.23 % 339,964 1,626 1.92 %
Other borrowings   47,488   593   4.95 %   42,624   461   4.27 %   50,108   667   5.26 %
Total interest bearing liabilities   3,209,505 $ 7,441   0.93 %   2,118,449 $ 7,963   1.51 %   3,308,920 $ 7,696   0.93 %
Non-interest bearing demand deposits   1,021,805   417,366   984,813
Total funding liabilities / cost of funds $ 4,231,310 0.71 % $ 2,535,815 1.26 % $ 4,293,733 0.72 %
Net interest income / net interest spread $ 59,502   4.72 % $ 29,331   3.78 % $ 60,859   4.83 %
Net interest margin 5.02 % 4.16 % 5.11 %

Net interest margin, excluding effect of non-accrual loan income(expense)
5.06 % 4.20 % 5.14 %

Net interest margin, excluding effect of non-accrual loan income(expense) and prepayment fee income
5.04 % 4.19 % 5.13 %
 
Non-accrual loan income (reversed) recognized $ (400 ) $ (237 ) $ (349 )
Prepayment fee income received   198     34     116  
Net $ (202 ) $ (203 ) $ (233 )
 
Cost of deposits:
Non-interest bearing demand deposits $ 1,021,805 $ - $ 417,366 $ - $ 984,813 $ -
Interest bearing deposits   2,832,951   5,245   0.74 %   1,775,825   5,090   1.15 %   2,918,848   5,403   0.74 %
Total deposits $ 3,854,756 $ 5,245   0.55 % $ 2,193,191 $ 5,090   0.93 % $ 3,903,661 $ 5,403   0.56 %
 
 

      Six Months Ended     Six Months Ended
6/30/2012 6/30/2011
               
Interest Annualized Interest Annualized
Average Income/ Average Average Income/ Average
Balance Expense Yield/Cost Balance Expense Yield/Cost
(Dollars in thousands) (Dollars in thousands)
INTEREST EARNING ASSETS:
 
Gross loans, includes loans held for sale $ 3,812,708 $ 125,923 6.64 % $ 2,179,150 $ 66,235 6.13 %
Securities available for sale 709,063 9,158 2.58 % 513,751 7,895 3.07 %
FRB and FHLB stock and other investments 230,789 339 0.29 % 135,016 358 0.53 %
Federal funds sold   22,787   78   0.68 %   -   -   N/A
Total interest earning assets $ 4,775,347 $ 135,498   5.70 % $ 2,827,917 $ 74,488   5.31 %
 
INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest-bearing $ 1,208,551 $ 3,973 0.66 % $ 695,686 $ 3,009 0.87 %
Savings 191,902 1,752 1.84 % 126,449 1,439 2.29 %
Time deposits:
$100,000 or more 787,468 2,895 0.74 % 318,475 837 0.53 %
Other   687,979   2,029   0.59 %   631,907   4,936   1.58 %
Total time deposits   1,475,447   4,924   0.67 %   950,382   5,773   1.23 %
Total interest bearing deposits   2,875,900   10,649   0.74 %   1,772,517   10,221   1.16 %
FHLB advances 334,515 3,229 1.94 % 312,238 4,984 3.22 %
Other borrowings   48,798   1,260   5.11 %   48,822   1,069   4.35 %
Total interest bearing liabilities   3,259,213 $ 15,138   0.93 %   2,133,577 $ 16,274   1.54 %
Non-interest bearing demand deposits   1,003,307   403,229
Total funding liabilities / cost of funds $ 4,262,520 0.71 % $ 2,536,806 1.29 %
Net interest income / net interest spread $ 120,360   4.77 % $ 58,214   3.77 %
Net interest margin 5.07 % 4.15 %

Net interest margin, excluding effect of non-accrual loan income(expense)
5.10 % 4.17 %

Net interest margin, excluding effect of non-accrual loan income(expense) and prepayment fee income
5.09 % 4.16 %
 
Non-accrual loan income (reversed) recognized $ (749 ) $ (337 )
Prepayment fee income received   314     263  
Net $ (435 ) $ (74 )
 
Cost of deposits:
Non-interest bearing demand deposits $ 1,003,307 $ - $ 403,229 $ -
Interest bearing deposits   2,875,900   10,649   0.74 %   1,772,517   10,221   1.16 %
Total deposits $ 3,879,207 $ 10,649   0.55 % $ 2,175,746 $ 10,221   0.95 %
 
 

      For the Three Months Ended   Six Months Ended
6/30/2012   6/30/2011   % change   3/31/2012   % change   6/30/2012   6/30/2011   % change
AVERAGE BALANCES              
Gross loans, includes loans held for sale $ 3,847,921 $ 2,190,436 76 % $ 3,777,495 2 % 3,812,708 2,179,150 75 %
Investments 916,128 634,255 44 % 1,009,091 -9 % 962,639 648,767 48 %
Interest-earning assets 4,764,049 2,824,691 69 % 4,786,586 0 % 4,775,347 2,827,917 69 %
Total assets 5,102,769 2,933,003 74 % 5,139,396 -1 % 5,121,082 2,934,546 75 %
 
Interest-bearing deposits 2,832,951 1,775,825 60 % 2,918,848 -3 % 2,875,900 1,772,517 62 %
Interest-bearing liabilities 3,209,505 2,118,449 52 % 3,308,920 -3 % 3,259,213 2,133,577 53 %
Non-interest-bearing demand deposits 1,021,805 417,366 145 % 984,813 4 % 1,003,307 403,229 149 %
Stockholders' Equity 823,839 369,485 123 % 806,384 2 % 815,111 366,343 122 %
Net interest earning assets 1,554,544 706,242 120 % 1,477,666 5 % 1,516,134 694,340 118 %
 
LOAN PORTFOLIO COMPOSITION: 6/30/2012   3/31/2012   % change   12/31/2011   % change   6/30/2011   % change
 
Commercial loans $ 1,053,319 $ 999,011 5 % $ 996,260 6 % $ 587,436 79 %
Real estate loans 2,762,944 2,676,589 3 % 2,678,679 3 % 1,605,641 72 %
Consumer and other loans   60,732       64,095       -5 %     66,631     -9 %     11,755     417 %
Loans outstanding 3,876,995 3,739,695 4 % 3,741,570 4 % 2,204,832 76 %
Unamortized deferred loan fees - net of costs   (2,457 )     (2,496 )     2 %     (2,744 )   10 %     (2,386 )   -3 %
Loans, net of deferred loan fees and costs 3,874,538 3,737,199 4 % 3,738,826 4 % 2,202,446 76 %
Allowance for loan losses   (65,505 )     (62,309 )     -5 %     (61,952 )   -6 %     (59,696 )   -10 %
Loan receivable, net $ 3,809,033     $ 3,674,890       4 %   $ 3,676,874     4 %   $ 2,142,750     78 %
 
REAL ESTATE LOANS BY PROPERTY TYPE: 6/30/2012   3/31/2012   % change   12/31/2011   % change   6/30/2011   % change
Retail buildings $ 808,172 $ 785,264 3 % $ 788,384 3 % $ 386,380 109 %
Hotels/motels 457,088 436,628 5 % 432,206 6 % 256,129 78 %
Gas stations/ car washes 423,344 408,311 4 % 408,812 4 % 309,914 37 %
Mixed-use facilities 221,865 209,081 6 % 198,916 12 % 161,285 38 %
Warehouses 296,174 270,929 9 % 261,874 13 % 116,461 154 %
Multifamily 118,277 122,859 -4 % 129,181 -8 % 98,464 20 %
Other   438,140       443,517       -1 %     459,306     -5 %     273,525     60 %
Total $ 2,762,944     $ 2,676,589       3 %   $ 2,678,679     3 %   $ 1,602,158     72 %
 
DEPOSIT COMPOSITION 6/30/2012   3/31/2012     % Change   12/31/2011   % Change   6/30/2011   % Change
Non-interest-bearing demand deposits $ 1,064,013 $ 1,011,466 5 % $ 984,350 8 % $ 432,616 146 %
Money market and other 1,143,329 1,240,295 -8 % 1,237,378 -8 % 712,028 61 %
Saving deposits 183,087 193,458 -5 % 198,063 -8 % 126,694 45 %
Time deposits of $100,000 or more 834,719 787,774 6 % 759,923 10 % 343,366 143 %
Other time deposits   657,532       687,471       -4 %     761,178     -14 %     617,476     6 %
Total deposit balances $ 3,882,680     $ 3,920,464       -1 %   $ 3,940,892     -1 %   $ 2,232,180     74 %
 
DEPOSIT COMPOSITION (%) 6/30/2012   3/31/2012   12/31/2011   6/30/2011
Non-interest-bearing demand deposits 27.4 % 25.8 % 25.0 % 19.4 %
Money market and other 29.4 % 31.7 % 31.4 % 31.8 %
Saving deposits 4.7 % 4.9 % 5.0 % 5.7 %
Time deposits of $100,000 or more 21.5 % 20.1 % 19.3 % 15.4 %
Other time deposits   16.9 %     17.5 %     19.3 %     27.7 %
Total deposit balances   100.0 %     100.0 %     100.0 %     100.0 %
 
CAPITAL RATIOS 6/30/2012   3/31/2012   12/31/2011   6/30/2011
Total stockholders' equity $ 715,461 $ 818,166 $ 795,939 $ 372,539
Tier 1 risk-based capital ratio 15.54 % 18.85 % 18.15 % 16.42 %
Total risk-based capital ratio 16.80 % 20.11 % 19.41 % 17.69 %
Tier 1 leverage ratio 12.97 % 15.08 % 19.81 % 13.32 %
Book value per common share $ 9.14 $ 8.92 $ 8.64 $ 8.02
Tangible common equity per share4 $ 7.94 $ 7.72 $ 7.43 $ 7.94
Tangible common equity to tangible assets4 12.49 % 11.86 % 11.42 % 10.21 %
 

4
   

Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and other intangible assets, net divided by total assets less goodwill and other intangible assets, net. Management reviews tangible common equity to tangible assets in evaluating the Company's capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital.

 

 

Reconciliation of GAAP financial measures to non-GAAP financial measures:
             
6/30/2012   3/31/2012   12/31/2011   6/30/2011
Total stockholders' equity $ 715,461 $ 818,166 $ 795,939 $ 372,539

Less:

Preferred stock, net of discount
- (119,694 ) (119,350 ) (64,679 )
Common stock warrant (2,760 ) (2,760 ) (2,760 ) (2,383 )
Goodwill and other intangible assets, net   (93,518 )     (93,820 )     (94,749 )     (2,888 )
Tangible common equity $ 619,183     $ 601,892     $ 579,080     $ 302,589  
 
Total assets $ 5,049,405 $ 5,169,315 $ 5,166,604 $ 2,967,288

Less:

Goodwill and other intangible assets, net
  (93,518 )     (93,820 )     (94,749 )     (2,888 )
Tangible assets $ 4,955,887     $ 5,075,495     $ 5,071,855     $ 2,964,400  
 
Common shares outstanding 78,012,891 77,996,391 77,984,252 38,097,327
 
Tangible common equity to tangible assets 12.49 % 11.86 % 11.42 % 10.21 %
Tangible common equity per share $ 7.94 $ 7.72 $ 7.43 $ 7.94
 
 

      For the Three Months Ended   For the Six Months Ended
ALLOWANCE FOR LOAN LOSSES: 6/30/2012   3/31/2012   12/31/2011   9/30/2011   6/30/2011 6/30/2012   6/30/2011
Balance at beginning of period $ 62,309   $ 61,952   $ 60,009   $ 59,696   $ 63,340 $ 61,952   $ 62,320
Provision for loan losses 7,182 2,600 9,147 3,483 10,047 9,782 15,309
Recoveries 1,623 1,139 524 800 1,500 2,762 2,568
Charge offs   (5,609 )     (3,382 )     (7,728 )     (3,970 )     (15,191 )   (8,991 )     (20,501 )
Balance at end of period $ 65,505     $ 62,309     $ 61,952     $ 60,009     $ 59,696   $ 65,505     $ 59,696  
Net charge-off/average gross loans (annualized) 0.41 % 0.24 % 1.03 % 0.56 % 2.50 % 0.33 % 1.65 %
 
For the Three Months Ended For the Six Months Ended
NET CHARGED OFF LOANS BY TYPE 6/30/2012   3/31/2012   12/31/2011   9/30/2011   6/30/2011 6/30/2012   6/30/2011
 
Real estate loans $ 1,378 $ 1,610 $ 3,867 $ 1,902 $ 12,242 $ 2,988 $ 15,089
Commercial loans 2,158 631 3,350 1,158 1,474 2,789 2,929
Consumer loans   451     2     (13 )   110     (25 )   453     (85 )
Total net charge-offs $ 3,987   $ 2,243   $ 7,204   $ 3,170   $ 13,691   $ 6,230   $ 17,933  
 
 

NON-PERFORMING ASSETS       6/30/2012   3/31/2012   12/31/2011   9/30/2011   6/30/2011
Delinquent loans 90 days or more on non-accrual status $ 39,567   $ 39,651   $ 31,212   $ 27,790   $ 35,385
Delinquent loans 90 days or more on accrual status5, 7 20,708 18,192 16,169 - -
Accruing restructured loans   22,994       24,106       18,775       23,543       15,787  
Total non-performing loans 83,269 81,949 66,156 51,333 51,172
Other real estate owned   6,712       5,641     7,625       4,838       4,404  
Total non-performing assets $ 89,981     $ 87,590   $ 73,781     $ 56,171     $ 55,576  
Non-performing assets/ total assets 1.78 % 1.69 % 1.43 % 1.86 % 1.87 %
Non-performing assets/ gross loans & OREO 2.32 % 2.34 % 1.97 % 2.47 % 2.52 %
Non-performing assets/ total capital 12.58 % 10.71 % 9.27 % 14.64 % 14.92 %
Non-performing loans/gross loans 2.15 % 2.19 % 1.77 % 2.26 % 2.32 %
Non-accrual loans/gross loans 1.02 % 1.06 % 0.83 % 1.23 % 1.61 %
Allowance for loan losses/ gross loans 1.69 % 1.67 % 1.66 % 2.65 % 2.71 %
Allowance for loan losses/ non-accrual loans 165.55 % 157.14 % 198.49 % 215.94 % 168.70 %
Allowance for loan losses/ non-performing loans (excludes delinquent loans 90 days or more on accrual status5) 104.71 % 97.73 % 123.94 % 116.90 % 116.66 %
Allowance for loan losses/ non-performing assets 72.80 % 71.14 % 83.97 % 106.83 % 107.41 %
 

5
   

All such loans represent acquired loans that were originally recorded at fair value upon acquisition. These loans are considered to be accruing as we can reasonably estimate future cash flows on acquired loans and we expect to fully collect the carrying value of these loans. Therefore, we are accreting the difference between the carrying value of these loans and their expected cash flows.
 
 

BREAKDOWN OF ACCRUING RESTRUCTURED LOANS BY TYPE:       6/30/2012   3/31/2012   12/31/2011   9/30/2011   6/30/2011
Retail buildings $ 1,526   $ 804   $ 586   $ 590   $ -
Hotels/motels 8,909 8,425 9,481 12,905 12,027
Gas stations/ car washes - - - - -
Mixed-use facilities 2,312 3,254 947 952 953
Warehouses 1,052 1,060 - - -
Multifamily - - - - -
Other6   9,195   10,563   7,761   9,096   2,807
Total $ 22,994 $ 24,106 $ 18,775 $ 23,543 $ 15,787
6 Includes commercial business and other loans
 
 
DELINQUENT LOANS LESS THAN 90 DAYS PAST DUE 6/30/2012   3/31/2012   12/31/2011   9/30/2011   6/30/2011
 
Legacy
30 - 59 days $ 5,479 $ 3,062 $ 2,842 $ 9,455 $ 1,450
60 - 89 days   833   3,747   507   1,503   1,868
Total delinquent loans less than 90 days past due - legacy7 $ 6,312 $ 6,809 $ 3,349 $ 10,958 $ 3,318
 
Acquired
30 - 59 days $ 3,601 $ 6,422 $ 10,729
60 - 89 days   6,080   3,075   8,344
Total delinquent loans less than 90 days past due - acquired7 $ 9,681 $ 9,497 $ 19,073
 
Total delinquent loans less than 90 days past due7 $ 15,993 $ 16,306
 
DELINQUENT LOANS LESS THAN 90 DAYS PAST DUE BY TYPE   6/30/2012     3/31/2012     12/31/2011     9/30/2011     6/30/2011
 
Legacy
Real estate loans $ 5,269 $ 5,540 $ 1,569 $ 9,091 $ 1,701
Commercial loans 1,027 1,269 1,777 1,861 1,606
Consumer loans   16   -   3   6   11
Total delinquent loans less than 90 days past due - legacy7 $ 6,312 $ 6,809 $ 3,349 $ 10,958 $ 3,318
 
Acquired
Real estate loans $ 6,631 $ 6,972 $ 14,965
Commercial loans 2,422 1,655 3,040
Consumer loans   628   870   1,068
Total delinquent loans less than 90 days past due - acquired7 $ 9,681 $ 9,497 $ 19,073
 
Total delinquent loans less than 90 days past due7 $ 15,993 $ 16,306 $ 22,422
 
 
NON-ACCRUAL LOANS BY TYPE 6/30/2012   3/31/2012   12/31/2011   9/30/2011   6/30/2011
 
Real estate loans $ 27,822 $ 27,301 $ 19,469 $ 14,725 $ 20,661
Commercial loans 11,463 11,378 11,593 12,908 14,342
Consumer loans   282   972   150   157   382
Total non-accrual loans7 $ 39,567 $ 39,651 $ 31,212 $ 27,790 $ 35,385
 
WATCH LIST LOANS 6/30/2012   3/31/2012   12/31/2011   9/30/2011   6/30/2011
Legacy
Special mention $ 48,701 $ 39,667 $ 35,740 $ 31,576 $ 15,342
Substandard 88,537 100,394 97,673 103,798 116,561
Doubtful 5,530 6,243 6,411 5,600 5,174
Loss   -   -   -   -   -
Total watch list loans - legacy7 $ 142,768 $ 146,304 $ 139,824 $ 140,974 $ 137,077
 
Acquired
Special mention $ 60,686 $ 67,722 $ 61,411
Substandard 110,370 109,699 100,680
Doubtful 261 470 76
Loss   11   81   -
Total watch list loans - acquired7 $ 171,328 $ 177,972 $ 162,167
 
Total watch list loans7 $ 314,096 $ 324,276 $ 301,991
 

7
   

Excludes the guaranteed portion of delinquent SBA loans as these are 100% guaranteed by the SBA.

Copyright Business Wire 2010

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