California Republic Bancorp Announces Second Quarter 2014 Results

  • Prime Auto Loan Originations growth of 131% to $291 Million
  • All Time High Total Serviced Portfolio of over $1.4 Billion
  • Record Assets of $948 Million
  • Core Deposit growth of $198 Million, with 59% of total non-interest bearing
  • Record earnings of $5.5 Million pre-tax and $3.3 million after tax
  • ROE of 19.6% and ROA of 1.6%, respectively for the quarter

Business Wire

IRVINE, Calif.--(BUSINESS WIRE)--

California Republic Bancorp (“CRB” or “Company”) (OTCBB: CRPB), a bank holding company for California Republic Bank (“Bank”), announced record net income for the three months ended June 30, 2014 of $3.3 million, or $0.62 per basic common shares, compared with $2.9 million, or $0.55 per basic common share for the same period a year earlier. For the six months ended June 30, 2014, net income increased 115% to $6.2 million, or $1.18 per basic common shares, compared with $2.9 million, $0.56 per basic common shares, for the same period a year ago.

CRB also announced that prime auto loan originations increased 131%, or $165 million, to $291 million for the second quarter of 2014 compared with $126 million for the second quarter a year ago. With continued strong loan origination growth, CRB announced its total serviced loan portfolio increased 88% to $1.4 billion at June 30, 2014 compared with $770 million a year ago.

“We are very pleased with our second quarter results and believe they demonstrate the strong platform for growth and earnings we’ve built for the future of our company,” stated Jon Wilcox, Chief Executive Officer of California Republic Bancorp. “In a challenging banking environment, we have stuck to our core business expertise and continue to gain market share through organic growth.”

John DeCero, President of CRB added, “We are proud of our record loan growth and the continued nationwide expansion that was achieved this quarter. However, we are most encouraged that our credit attributes have remained strong as we deepened our existing, long-term relationships and carefully built new ones, with only 0.23% loan losses in our prime auto loan portfolio, and no loan losses in our commercial banking portfolio, since our inception.”

Business Performance:

Total assets increased 29%, or $211 million, to $948 million at June 30, 2014 compared with the same period a year earlier. The year-over-year growth in total assets includes a $125 million increase, or 199%, in prime auto loans to $188 million due to growth in originations and the timing of the Company’s auto loan securitization activities; a $119 million increase in investment securities to $121 million, as the Company begins to deploy its excess liquidity; and a $61.5 million increase, or 19%, in commercial loans to $391 million at June 30, 2014, compared with the same period a year ago. Growth in assets was supported by a $198 million increase, or 30%, in total deposits to $867 million at June 30, 2014, compared with the same period a year earlier. Noninterest bearing demand deposit accounts grew $142 million, or 38%, to $516 million at June 30, 2014 compared with the same period a year ago. Noninterest bearing demand deposit accounts now represent over 59% of total deposits.

For the six months ended June 30, 2014, Prime auto loan originations increased 116%, or $279 million to $520 million, compared with $241 million for the same six month period a year earlier, as the Bank continues to build out new locations and increase its base of well-established auto dealerships. The Bank continues to maintain stable and consistent borrower credit attributes, demographics, and loan structure, reaffirming its commitment to not sacrifice credit quality for loan growth. Total serviced auto loans outstanding increased 139%, or $613 million to $1.1 billion at June 30, 2014 compared with the same period a year ago.

The Bank successfully completed a prime automobile loan securitization transaction in the second quarter of 2014 in which $225 million in notes backed by $225 million of the Bank’s automobile loans were sold in an underwritten public offering registered with the Securities and Exchange Commission. The Bank also sold all remaining residual interest in the securitized receivables through a sale of the underlying ownership certificates of the securitization trust through a private placement transaction under Rule 144A to qualified institutional buyers. Furthermore, this securitization transaction was accounted for as true sale and included all future residuals, therefore leaving no possibility for later adjustments affecting the financial position of the Bank. The Bank recorded a cash gain of $5.9 million from this securitization transaction. CRB also retained the right to service the sold loans on which it is paid an annual servicing fee of 1.0% on the outstanding pool balance annually until the transaction is paid-off.

“We are pleased to have successfully completed our fifth auto loan securitization transaction and our third public deal”, stated Jon Wilcox. “We continue to be pleased with the execution of these transactions and the overall interest we received from investors on our prime auto notes”, noted John DeCero.

Financial Performance:

Net interest income grew 22%, or $1.7 million to $9.4 million for the three months ended June 30, 2014 compared with $7.7 million for the same period a year ago. For the six months ended June 30, 2014, net interest income grew 32%, or $4.5 million to $18.5 million compared with $14.0 million for the same period a year earlier. Net interest margins widened 9 basis points to 4.54% for the six months ended June 30, 2014 compared with 4.45% for the same period a year earlier.

Noninterest income grew 56%, or $2.8 million, to $7.9 million for the three months ended June 30, 2014, compared with $5.1 million for the same period a year earlier. For the six months ended June 30, 2014, noninterest income grew 155%, or $8.6 million, to $14.2 million, compared with $5.6 million for the same period a year ago. For the six months ended June 30, 2014, noninterest income was positively impacted by a $205 million increase, or 85%, in auto loans securitized and sold, and a $488 million increase, or 129%, in auto loans serviced for others.

Noninterest expense increased $3.1 million, or 39%, to $11.1 million for the second quarter of 2014 compared with $8.0 million the same period a year ago. For the six months ended June 30, 2014, noninterest expense increased $6.8 million, or 47%, to $21.2 million, compared with $14.4 million for the same period a year ago. The year-over-year increase in noninterest expense is the result of the Company continuing to make significant investments in its auto lending platform to support its nationwide expansion.

Return on average equity was 19.6% and return on average assets was 1.6% for the second quarter of 2014 compared with 20.1% and 1.9%, respectively, for the same period a year earlier. For the six months ended June 30, 2014, return on average equity was 19.8% and return on average assets was 1.5%, compared with 10.3% and 0.9%, respectively, for the same period a year earlier.

Asset Quality:

California Republic Bank continued to report strong credit quality metrics through the three and six months end June 30, 2014, with no nonperforming or charged-off loans since inception within the commercial bank portfolio, and a net annualized charge-off rate for its owned auto loan portfolio of 0.23% for the second quarter of 2014 compared with 0.43% for the same period a year ago. For the six months ended June 30, 2014 net annualized charge-off rate was 0.24%, compared with 0.35% for the same period a year ago for its owned auto loan portfolio.

Regulatory Capital:

The Bank’s regulatory capital ratios exceeded those required to be considered a “well capitalized” institution for regulatory purposes. The tier 1 leverage ratio for the Bank was 8.0%, the tier 1 risk based capital ratio was 11.1%, and the total risk based capital ratio was 11.9% at June 30, 2014, all in excess of the “well capitalized” minimums of 5%, 6% and 10%, respectively.

About California Republic Bancorp:

California Republic Bancorp is the holding company for California Republic Bank and CRB Auto, Inc. California Republic Bank is a full-service commercial bank providing loans, deposit and cash management services to individuals, businesses, and investors. The Bank offers its clients direct access to decision makers, unparalleled responsiveness, seasoned Relationship Managers and state-of the-art technology. The Bank has four full-service branches serving Southern California located in Newport Beach, Beverly Hills, Irvine, and Westlake Village. The Bank also owns and operates an indirect auto finance business and a separate wholly owned subsidiary, CRB Auto, Inc. which purchases auto contracts from both franchised and select independent automobile dealerships throughout California, Arizona, Texas, Nevada, Kansas, Missouri, and Iowa.

For more information, contact Jon Wilcox, CEO, or John DeCero, President at 949-270-9719. You can also visit the Company’s website at www.crbnk.com.

California Republic Bancorp’s Board of Directors includes:

Inside Directors: Jon Wilcox, CEO and John DeCero, President.

Outside Directors: Robert Barth, Chairman of the Board of California Republic Bank and CEO of Black Equities Group Ltd.; John Bendheim, President of Bendheim Enterprises, Inc.; Marc Brutten, Entrepreneur and CEO of Westcore Holdings; Bob Din, CEO of En Pointe Technologies; John Hagestad, Managing Partner of SARES-REGIS Group; Warren S. Orlando, Chairman, 1st United Bancorp Inc.; and J. Scott Watt, President and CEO of the Watt Group of Companies.

For information regarding the purchase or sale of California Republic Bancorp’s stock, contact Douglas Deubel, Raymond James at 1-888-734-0540.

Forward-looking Statements

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to the safe harbors created by the act. These forward-looking statements refer to California Republic’s current expectations regarding future operating results, and growth in loans, deposits, and assets. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results, performance or achievements to differ materially from those expressed, suggested or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to (1) the impact of changes in interest rates, a decline in economic conditions and increased competition by financial service providers on California Republic’s results of operations; (2) California Republic’s ability to continue its internal growth rate; (3) California Republic’s ability to build net interest spread; (4) the quality of California Republic’s earning assets; (5) changes in the level of non-performing assets and charge-offs; (6) the effect of changes in laws and regulations with which California Republic must comply; (7) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory authorities and accounting requirements; (8) acts of war or terrorism or natural disasters; (9) the timely development of new banking products and services; (10) the success of products and services, such as the indirect auto loan business; (11) technological changes; (12) cyber-security threats, including loss of system functionality or theft or loss of data; (13) the ability to increase market share and control expenses; (14) the ability to successfully operate CRB Auto, Inc. as a separate subsidiary of the Bank; and (15) California Republic’s success at managing the risks involved in the foregoing items.

California Republic does not undertake, and specifically disclaims any obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by law.

California Republic Bancorp and Subsidiaries
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands)
         
Three Months Ended Six Months Ended
 

6/30/2014

 

6/30/2013

    6/30/2014   6/30/2013

Interest income

Loans $ 9,530 $ 8,216 $ 18,943 $ 14,867
Other   406   122     604   247
TOTAL INTEREST INCOME 9,936 8,338 19,547 15,114
 

Interest expense

Deposits 506 589 1,082 1,148
Other   -   -     -   -
TOTAL INTEREST EXPENSE   506   589     1,082   1,148

Net interest income

9,430 7,749 18,465 13,966
Provision for loan losses 800 (75 ) 819 52
NET INTEREST INCOME AFTER        
PROVISION FOR LOAN LOSSES 8,630 7,824 17,646 13,914

Noninterest income

Gain on sale of loans 5,851 4,345 10,498 4,345
Loan servicing fees 2,001 699 3,575 1,177
Other   61   36     135   50
TOTAL NONINTEREST INCOME 7,913 5,080 14,208 5,572

Noninterest expense

Salaries and employee benefits

8,283 4,609 15,584 8,280
Other   2,792   3,352     5,606   6,095
TOTAL NONINTEREST EXPENSE   11,075   7,961     21,190   14,375
INCOME BEFORE INCOME TAXES 5,467 4,943 10,663 5,111
Income tax expense   2,195   2,072     4,422   2,206

NET INCOME

$ 3,272 $ 2,871   $ 6,241 $ 2,905
 
Earnings per common share:
Basic $ 0.62 $ 0.55 $ 1.18 $ 0.56
 

Weighted average number of common shares

Basic 5,316 5,212 5,279 5,212
 
 

California Republic Bancorp and Subsidiaries

UNAUDITED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
     
  6/30/2014     3/31/2014     6/30/2013  
ASSETS
Cash and cash equivalents $ 233,483 $ 340,685 $ 333,817
Investment securities 121,239 3,436 2,263
Commercial loans 391,169 349,184 329,713
Auto loans   187,636     136,512     62,715  
Gross loans 578,805 485,696 392,428
Allowance for loan and lease losses   (5,047 )   (4,368 )   (4,931 )
Net loans 573,758 481,328 387,497
Premises and equipment, net 3,269 3,506 2,697
FHLB stock and other investments 3,470 3,302 3,404
Other assets   12,441     9,565     7,442  
TOTAL ASSETS $ 947,660   $ 841,822   $ 737,120  
 
LIABILITIES
Deposits:
Noninterest bearing $ 515,811 $ 439,181 $ 373,624
Interest bearing   351,420     328,374     295,984  

Total deposits

867,231 767,555 669,608
Other borrowings
Other liabilities   11,801     9,118     8,550  

TOTAL LIABILITIES

879,032 776,673 678,158
 
SHAREHOLDERS' EQUITY
Common stock 53,050 52,900 51,992
Paid in capital 4,281 4,094 3,609
Retained earnings 11,425 8,155 3,361
Accumulated other comprehensive income   (128 )   -     -  
TOTAL SHAREHOLDERS' EQUITY   68,628     65,149     58,962  

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 947,660   $ 841,822   $ 737,120  
 
 
California Republic Bancorp and Subsidiaries
UNAUDITED CONSOLIDATED AVERAGE BALANCES AND ANNUALIZED YIELDS
(Dollars in thousands)
 
  Six Months Ended
6/30/2014     6/30/2013  
Average     Average    
  Balance Income Rate Balance Income Rate
ASSETS
Cash $ 210,765 $ 260 0.25 % $ 147,688 $ 179 0.24 %
Investment securities 12,790 246 3.88 % 601 3 1.13 %
Commercial loans 362,098 9,650 5.37 % 303,862 8,402 5.58 %
Auto loans   230,591   9,293 8.13 %   178,170   6,465 7.32 %

Total loans

592,690 18,943 6.45 % 482,033 14,867 6.22 %
Other interest earning assets   3,364   98 5.87 %   2,928   64 4.41 %

Total interest earning assets

819,609 19,547 4.81 % 633,249 15,114 4.81 %
Other assets   4,297   12,269

Total Assets

$ 823,905 $ 645,518
 
LIABILITIES & EQUITY
Interest bearing transaction accts $ 344,248 $ 1,067 0.63 % $ 297,769 $ 1,136 0.77 %
Time certificate of deposits   4,538   15 0.67 %   3,169   12 0.76 %
Total Interest Bearing Deposits 348,786 1,082 0.63 % 300,938 1,148 0.77 %
Other borrowings   0   0 0.00 %   0   0 0.00 %
Total interest bearing liabilities 348,786 1,082 0.63 % 300,938 1,148 0.77 %
Non-interest bearing demand accts   407,165       286,246    
Total funding 755,951 1,082 0.29 % 587,184 1,148 0.39 %
Other liabilities 4,277 1,662
Shareholders' equity   63,676   56,672

Total liabilities & shareholders' equity

$ 823,904   $ 645,518  

Net interest spread

4.18 % 4.04 %
       
Net interest income / margin $ 18,465 4.54 % $ 13,966 4.45 %
 
 
California Republic Bancorp and Subsidiaries
UNAUDITED SELECTED FINANCIAL DATA
(Dollars in thousands)
 
      At and For
Three Months Ended Six Months Ended
  6/30/2014     6/30/2013     6/30/2014       6/30/2013  
LOANS:

Auto Loans:

Purchases $ 291,213 $ 126,237 $ 520,014 $ 241,223
Sales (225,096 ) (243,036 ) (448,474 ) (243,036 )
Principal reductions   (14,993 )   (14,004 )   (27,612 )   (25,651 )
Auto loans owned $ 187,636   $ 62,715   187,636 62,715
Auto loans serviced for others   865,314     377,209  

Total auto loans serviced

$ 1,052,950 $ 439,924
-
Commercial bank loans   391,169     329,713  

Total managed loans

$ 1,444,119   $ 769,637  
       
PERFORMANCE RATIOS:
Return on average equity 19.62 % 20.07 % 19.77 % 10.34 %
Return on average assets 1.56 % 1.90 % 1.53 % 0.91 %
Book value per share $ 12.91 $ 11.31
 
ASSET QUALITY RATIOS:
30 day plus delinquent loans (1) 0.19 % 0.16 %
Nonperforming loans to total loans (1) 0.02 % 0.03 %
Allowance for loan losses to total loans 0.87 % 1.26 %
Net chargeoffs on commercial banking loans (2) - - - -
Net chargeoffs on auto loans owned 0.23 % 0.43 % 0.24 % 0.35 %
 
(1) No commercial loans are delinquent or nonperforming
(2) No life-to-date net chargeoffs on commercial banking loans
 

CAPITAL RATIOS

Bank:

Tier 1 leverage capital ratio

8.02 % 8.54 %
Tier 1 risk-based capital ratio 11.09 % 13.86 %
Total risk-based capital ratio 11.94 % 15.07 %
 

Contact:
For California Republic Bancorp
John DeCero, 949-270-9797
President
View Comments (0)