LOS ANGELES, CA--(Marketwired - Jul 16, 2014) - 1st Enterprise Bank ("the Bank") (
Financial Highlights
- Total Assets grew by $74 million or 10%, from $716 million at June 30, 2013 to $790 million at June 30, 2014
- Total Loans outstanding grew by $105 million or 24%, from $445 million at June 30, 2013 to $550 million at June 30, 2014
- Total Deposits grew by $93 million or 15%, from $600 million at June 30, 2013 to $693 million at June 30, 2014
- Adjusted Pre-tax Operating Income grew by more than $518,000 or 24% from the prior year See Supplemental Information -- Non-GAAP Financial Measures.
Proposed Merger with CU Bancorp
- On June 3, 2014, 1st Enterprise Bank and CU Bancorp (the parent of California United Bank) jointly announced the signing of a definitive agreement and plan of merger whereby 1st Enterprise will merge into California United Bank. This merger combines two commercial banking franchises in Southern California with more than $2.2 billion in combined assets which operate offices in Los Angeles, Orange, Ventura and San Bernardino counties.
- Under the terms of the merger agreement, 1st Enterprise shareholders will receive 1.3450 shares of CU Bancorp common stock for each share of 1st Enterprise common stock.
- The transaction, currently expected to close in the fourth quarter of 2014, is subject to customary conditions, including the approval of bank regulatory agencies and the shareholders of both companies.
John Black, CEO, stated, "The Bank continues to grow its customer base, which is reflected in its 24% growth in loans and 15% growth in deposits over last year. Income for the quarter was impacted by some extraordinary items including $530,000 in merger related costs and a $500,000 addition to the off-balance sheet reserve for an impaired credit related to standby letters of credit. The Bank's adjusted pre-tax operating income excludes these unusual items and resulted in a 24% increase year over year and a 12% increase over the first quarter of 2014." Brian Horton, President, added, "We are pleased with the Bank's continued growth and our merger with CU Bancorp remains on track to close during the fourth quarter of this year."
For the three months ended June 30, 2014, net interest income before provision was $6.1 million, an increase of 12% compared to the second quarter of 2013 and was equal to the first quarter of 2014. The year-over-year growth in net interest income was the result of both growth in earning assets and expansion in net interest margin. Earning assets were $707 million in the second quarter of 2014, an 8% or $51 million increase over the prior year. The net interest margin was 3.46% during the second quarter of 2014, compared to 3.32% for the prior year. The increase in net interest margin was the result of a .14% increase in the earning asset yield over the prior year. This increase in earning asset yield resulted from loan balances growing from 66% of earning assets in the prior year to 74% in the current quarter. Net interest income over the prior quarter was essentially flat as earning assets grew by $3 million, while the net interest margin declined from 3.50% to 3.46%.
For the current quarter, there was a modest release of loan loss reserves resulting in a credit of $140,000 to the loan loss provision, due to positive migration trends within the Bank's loan risk rating categories. There was no provision for loan loss during the prior quarter and a $66,000 loan loss provision for the second quarter of 2013. There were no loan charge-offs during the second quarter of 2014, the prior year, or the prior quarter. There were net recoveries of $21,000 in both the second quarter of 2014 and the prior year. As of June 30, 2014 there was one non-accrual loan that totaled $1.7 million.
Non-interest income, excluding gain on sale, was $960,000 for the quarter, which was a 9% increase year over year and a 7% sequential increase. Growth in non-interest income was generally due to increased deposit and loan related fees over prior periods.
Non-interest expense increased by $1.3 million or 31% over the prior year and increased by $710,000 or 15% over the prior quarter. Both comparative increases were significantly impacted by one-time transactions expense in the second quarter of 2014 totaling $530,000 and a $500,000 provision expense recorded in the quarter for growth in the off-balance sheet credit reserve. After adjusting for these items, the Bank's operating expense grew by $239,000 or 6% over the prior year and decreased by $208,000 or 5% over the prior quarter. The year over year increase was mostly due to increased staff levels, while the decline from the first quarter was partly due to timing of employment taxes that typically peak in the first quarter of each year.
Non-GAAP Financial Disclosures
This press release contains non-GAAP financial disclosures. The Bank has included non-GAAP financial measurements to provide meaningful supplemental information regarding the Bank's operating performance.
About 1st Enterprise Bank
Founded in 2006, 1st Enterprise Bank is a full service independent commercial banking institution, whose highly experienced bankers personally serve Southern California entrepreneurial businesses, professional firms and nonprofit organizations, along with their owners and key managers. Headquartered in the Los Angeles financial district, with full service regional banking offices in Irvine and Ontario and an LPO in Woodland Hills, 1st Enterprise Bank offers a full range of credit and depository services, with special emphasis on superior customer service, sophisticated cash management services and direct access to bank decision makers. Customers work directly with a dedicated Relationship Manager, a seasoned professional who understands their unique challenges serving as a sounding board and an active participant in their client's success. For more information on 1st Enterprise Bank, please visit www.1stenterprisebank.com.
Forward-Looking Statement:
This news release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about 1st Enterprise Bank's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: 1st Enterprise Bank's timely implementation of new products and services, technological changes, changes in consumer spending and savings habits and other risks discussed from time to time in 1st Enterprise Bank's reports and filings with banking regulatory agencies. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and 1st Enterprise Bank does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.
1st Enterprise Bank | ||||||||||||||
Condensed Statements of Financial Condition | ||||||||||||||
$000 | ||||||||||||||
Unaudited | Unaudited | Unaudited | ||||||||||||
Assets | 6/30/2014 | 3/31/2014 | 6/30/2013 | |||||||||||
Cash and due from banks | $ | 31,103 | $ | 33,270 | $ | 16,786 | ||||||||
Interest earning deposits in other banks | 11,377 | 29,461 | 14,526 | |||||||||||
Total cash and cash equivalents | 42,479 | 62,731 | 31,312 | |||||||||||
Investment securities - available-for-sale | 109,816 | 113,071 | 152,189 | |||||||||||
Investment securities - held-to-maturity | 61,015 | 61,769 | 61,931 | |||||||||||
Loans, net of deferred loan fees | 550,371 | 513,360 | 444,861 | |||||||||||
Allowance for loan losses | (6,400 | ) | (6,519 | ) | (5,790 | ) | ||||||||
Loans, net of allowance for loan losses | 543,971 | 506,841 | 439,071 | |||||||||||
Bank owned life insurance | 16,661 | 16,538 | 16,148 | |||||||||||
Premises and equipment, net | 2,362 | 2,372 | 2,647 | |||||||||||
Accrued interest receivable and other assets | 13,669 | 12,590 | 12,813 | |||||||||||
Total Assets | $ | 789,974 | $ | 775,912 | $ | 716,111 | ||||||||
Liabilities | ||||||||||||||
Noninterest-bearing demand deposits | $ | 335,032 | $ | 321,500 | $ | 274,167 | ||||||||
Interest bearing transaction accounts | 43,523 | 43,770 | 38,076 | |||||||||||
Money market and savings accounts | 301,673 | 270,219 | 271,377 | |||||||||||
Time deposits | 12,924 | 16,083 | 16,879 | |||||||||||
Total Deposits | 693,152 | 651,572 | 600,499 | |||||||||||
Federal Home Loan Bank borrowings | 20,000 | 50,000 | 45,000 | |||||||||||
Other liabilities | 4,507 | 3,253 | 3,384 | |||||||||||
Total Liabilities | 717,659 | 704,825 | 648,883 | |||||||||||
Shareholders' Equity | ||||||||||||||
Serial Preferred Stock | 16,380 | 16,380 | 16,380 | |||||||||||
Common Stock | 43,392 | 43,378 | 43,068 | |||||||||||
Retained Earnings | 12,194 | 11,245 | 7,287 | |||||||||||
Accumulated other comprehensive income | 349 | 84 | 494 | |||||||||||
Total Shareholders' Equity | 72,315 | 71,087 | 67,228 | |||||||||||
Total Liabilities and Shareholders' Equity | $ | 789,974 | $ | 775,912 | $ | 716,111 | ||||||||
1st Enterprise Bank | ||||||||||||||
Condensed Statements of Operations | ||||||||||||||
$000 | Three Months Ended | |||||||||||||
Unaudited | ||||||||||||||
6/30/2014 | 3/31/2014 | 6/30/2013 | ||||||||||||
Interest Income | ||||||||||||||
Interest and fees on loans | $ | 5,346 | $ | 5,293 | $ | 4,724 | ||||||||
Interest on investment securities | 947 | 972 | 879 | |||||||||||
Other interest income | 5 | 3 | 7 | |||||||||||
Total interest income | 6,298 | 6,268 | 5,610 | |||||||||||
Interest Expense | 197 | 191 | 183 | |||||||||||
Net Interest Income | 6,101 | 6,077 | 5,427 | |||||||||||
Provision for loan losses | (140 | ) | - | 66 | ||||||||||
Net Interest Income After Provision for Loan Losses | 6,241 | 6,077 | 5,361 | |||||||||||
Non-interest Income | ||||||||||||||
Service charges, fees and other income | 960 | 900 | 877 | |||||||||||
Gain on sale of investment sercurities | 17 | 41 | 4 | |||||||||||
Total non-interest Income | 977 | 941 | 881 | |||||||||||
Non-interest Expenses | ||||||||||||||
Compensation and benefit expenses | 2,659 | 2,876 | 2,450 | |||||||||||
Occupancy and equipment expenses | 395 | 379 | 405 | |||||||||||
Data processing | 304 | 268 | 268 | |||||||||||
Merger related expenses | 529 | - | - | |||||||||||
Professional and legal | 285 | 401 | 334 | |||||||||||
Provision for credit losses on off-balance sheet exposures | 501 | 112 | (5 | ) | ||||||||||
Other operating expenses | 721 | 648 | 668 | |||||||||||
Total non-interest expense | 5,394 | 4,684 | 4,120 | |||||||||||
Income Before Income Taxes | 1,824 | 2,334 | 2,122 | |||||||||||
Provision for income taxes | 834 | 829 | 712 | |||||||||||
Net Income | $ | 990 | $ | 1,505 | $ | 1,410 | ||||||||
Preferred dividends | 41 | 41 | 41 | |||||||||||
Net Income Applicable to Common Shareholders | $ | 949 | $ | 1,464 | $ | 1,369 | ||||||||
Earnings Per Share | ||||||||||||||
Basic earnings per share | $ | 0.25 | $ | 0.38 | $ | 0.36 | ||||||||
Diluted earnings per share | $ | 0.22 | $ | 0.35 | $ | 0.34 | ||||||||
Average shares outstanding | 3,816,280 | 3,803,389 | 3,793,339 | |||||||||||
Average fully diluted shares | 4,218,767 | 4,182,521 | 4,082,229 | |||||||||||
Total Shares outstanding at end of period | 3,837,239 | 3,840,938 | 3,815,589 | |||||||||||
Capital Ratios | ||||||||||||||
Tier 1 leverage ratio | 9.6 | % | 9.5 | % | 9.6 | % | ||||||||
Tier 1 risk-based capital ratio | 10.5 | % | 11.1 | % | 11.8 | % | ||||||||
Total risk-based capital ratio | 11.6 | % | 12.2 | % | 12.9 | % | ||||||||
Book value per share | $ | 14.58 | $ | 14.24 | $ | 13.33 | ||||||||
Performance Ratios | ||||||||||||||
Return on average assets | 0.53 | % | 0.81 | % | 0.81 | % | ||||||||
Return on average common equity | 6.80 | % | 10.98 | % | 10.51 | % | ||||||||
Net interest margin | 3.46 | % | 3.50 | % | 3.32 | % | ||||||||
Cost of Funds | 0.12 | % | 0.11 | % | 0.12 | % | ||||||||
Efficiency ratio | 71.50 | % | 66.80 | % | 65.96 | % | ||||||||
1st Enterprise Bank | ||||||||||||
Supplemental Information - NON-GAAP Financial Measures | ||||||||||||
Adjusted Operating Income | ||||||||||||
$000 | ||||||||||||
Net Interest Income | $ | 6,101 | $ | 6,077 | $ | 5,427 | ||||||
Non interest income | 977 | 941 | 881 | |||||||||
Less: gain on sale of securities | (17 | ) | (41 | ) | (4 | ) | ||||||
Adjusted Operating Revenue | 7,061 | 6,977 | 6,304 | |||||||||
Non-interest expense | 5,394 | 4,684 | 4,120 | |||||||||
Less: merger related expenses | 529 | - | - | |||||||||
Less: provision for credit losses on off-balance sheet exposures | 501 | 112 | (5 | ) | ||||||||
Adjusted non-interest expense | 4,364 | 4,572 | 4,125 | |||||||||
Adjusted Pre-tax Operating Income | $ | 2,697 | $ | 2,405 | $ | 2,179 | ||||||
Efficiency ratio | 61.8 | % | 65.5 | % | 65.4 | % | ||||||
1st Enterprise Bank | |||||||||||||||
Net Interest Margin Analysis | |||||||||||||||
$000 | For the Three Months Ended | ||||||||||||||
June 30, 2014 | March 31, 2014 | ||||||||||||||
Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | ||||||||||
Loans (1) | 525,520 | 5,346 | 4.08 | % | 510,789 | 5,293 | 4.20 | % | |||||||
Investment Securities (2) | 172,339 | 947 | 2.20 | % | 187,378 | 972 | 2.07 | % | |||||||
Interest-bearing deposits in other banks | 8,875 | 5 | 0.22 | % | 5,946 | 3 | 0.22 | % | |||||||
Total interest-earning assets | 706,734 | 6,298 | 3.57 | % | 704,113 | 6,268 | 3.61 | % | |||||||
Non-interest earning assets | 47,710 | 46,918 | |||||||||||||
Total assets | 754,444 | 751,031 | |||||||||||||
Money market, NOW, and Savings accounts | 329,842 | 177 | 0.22 | % | 314,159 | 168 | 0.22 | % | |||||||
Time Deposits | 15,171 | 15 | 0.40 | % | 11,655 | 10 | 0.34 | % | |||||||
Borrowings | 12,744 | 4 | 0.12 | % | 42,381 | 13 | 0.12 | % | |||||||
Total interest-bearing liabilities | 357,757 | 197 | 0.22 | % | 368,195 | 191 | 0.21 | % | |||||||
Non-interest bearing deposits | 320,955 | 308,411 | |||||||||||||
Other liabilities | 3,377 | 3,970 | |||||||||||||
Total non-interest bearing liabilities | 324,332 | 312,381 | |||||||||||||
Shareholder's Equity | 72,355 | 70,455 | |||||||||||||
Total liabilities and shareholders equity | 754,444 | 751,031 | |||||||||||||
Net interest income | 6,101 | 6,077 | |||||||||||||
Net interest spread (3) | 3.35 | % | 3.40 | % | |||||||||||
Net interest margin (4) | 3.46 | % | 3.50 | % | |||||||||||
For the Three Months Ended | |||||||||||||||
June 30, 2014 | June 30, 2013 | ||||||||||||||
Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | ||||||||||
Loans (1) | 525,520 | 5,346 | 4.08 | % | 435,620 | 4,724 | 4.35 | % | |||||||
Investment Securities (2) | 172,339 | 947 | 2.20 | % | 212,008 | 879 | 1.66 | % | |||||||
Interest-bearing deposits in other banks | 8,875 | 5 | 0.22 | % | 8,256 | 7 | 0.36 | % | |||||||
Total interest-earning assets | 706,734 | 6,298 | 3.57 | % | 655,884 | 5,610 | 3.43 | % | |||||||
Non-interest earning assets | 47,710 | 43,503 | |||||||||||||
Total assets | 754,444 | 699,387 | |||||||||||||
Money market, NOW, and Savings accounts | 329,842 | 177 | 0.22 | % | 306,162 | 160 | 0.21 | % | |||||||
Time Deposits | 15,171 | 15 | 0.40 | % | 14,297 | 11 | 0.31 | % | |||||||
Borrowings | 12,744 | 4 | 0.12 | % | 27,789 | 13 | 0.18 | % | |||||||
Total interest-bearing liabilities | 357,757 | 196 | 0.22 | % | 348,248 | 183 | 0.21 | % | |||||||
Non-interest bearing deposits | 320,955 | 279,575 | |||||||||||||
Other liabilities | 3,377 | 4,328 | |||||||||||||
Total non-interest bearing liabilities | 324,332 | 283,903 | |||||||||||||
Shareholder's Equity | 72,355 | 67,236 | |||||||||||||
Total liabilities and shareholders equity | 754,444 | 699,387 | |||||||||||||
Net interest income | 6,101 | 5,427 | |||||||||||||
Net interest spread (3) | 3.35 | % | 3.22 | % | |||||||||||
Net interest margin (4) | 3.46 | % | 3.32 | % |
(1) | Loan fees have been included in the calculation of interest income | |
(2) | Yields on tax exempt securities have not been calculated on a tax equivalent basis | |
(3) | Represents the difference between the weighted average yield on interest-bearing assets and the weighted average yield on interest bearing liabilities | |
(4) | Represents net interest income as a percentage of average interest-earning assets |