Manhattan Bancorp Reports Profitable Operations for Quarter and Year

Business Wire

LOS ANGELES--(BUSINESS WIRE)--

Manhattan Bancorp (MNHN), holding company for subsidiary Bank of Manhattan, N.A., announced today its financial results for the three and nine months ended September 30, 2013.

For the quarter ended September 30, 2013, net income was $81 thousand, or $0.01 per diluted share, compared to $2.6 million, or $0.18 per diluted share, for the same period in 2012. For the nine months ended September 30, 2013, net income was $1.6 million, or $0.13 per diluted share, compared to $668 thousand, or $0.08 per diluted share, for the same period in 2012.

Additional highlights for the nine months of 2013 include the following:

  • Total assets were $477.9 million as of September 30, 2013, an increase of $12.5 million from $465.4 million as of December 31, 2012.
  • Total net loans outstanding were $336.3 million as of September 30, 2013, a decrease of $34.7 million from $371.0 million as of December 31, 2012.
  • Net interest margin for the quarter was 4.23% and 4.33% for the nine months of the year.
  • The efficiency ratio for the nine months of 2013 was 95.0%.
  • Non-performing loans of $2.3 million represented 0.82% of the total loans held for investment outstanding as of September 30, 2013.
  • The Bank’s Tier 1 Leverage Ratio and Total Risk-Based Capital Ratio as of September 30, 2013 were 9.99% and 14.79%, respectively.

Terry Robinson, Chief Executive Officer, stated, “I am pleased to report that the Company has posted its fifth consecutive quarter of profitable operations since the Merger with Professional Business Bank, which closed effective May 31, 2012.” Mr. Robinson added that, “Our mortgage operations were significantly impacted during the third quarter by rising interest rates similar to most participants in the mortgage industry, which significantly impacted our earnings compared with previous quarters. Fortunately, we have acted pro-actively and are positioned to perform well in this division going forward, while we continue to take advantage of the synergies made possible through the Merger.” Richard Pimentel, Chief Financial Officer, went on to explain, “Although Manhattan Bancorp and Bank of Manhattan were the surviving entities in the Merger, the transaction was treated as a ‘reverse acquisition’ for accounting purposes, resulting in the Bank of Manhattan’s balance sheet being subjected to ‘fair value’ accounting. As a result, earnings for the nine months ended September 30, 2013 reflect the results of operations for the combined banks, while the reported earnings for the same period in 2012 include the results of operations of Professional Business Bank for the entire period and only four months of operating results for Manhattan. Thus, comparisons of the year to date 2013 results with the same period in the prior year are difficult to analyze, at best.”

Net Interest Income and Margin

Third quarter 2013 over 2012

The Company’s net interest income totaled $4.6 million for the quarter ended September 30, 2013, a decrease of $95 thousand, or 2%, compared with the $4.7 million reported in the same quarter of 2012. The decrease in net interest income was largely due to a decrease in loans as a result of a decline in residential mortgage loans held for sale and the elimination of loans for mortgage warehouse lines combined with a decrease in our net interest margin and spread. Average interest earning assets increased to $434.4 million for the third quarter in 2013 from $412.5 million during the same quarter in 2012 – an increase of $21.9 million, or 5%. However, average loans for the three months ended September 30, 2013 decreased $24.2 million, or 7%, to $347.5 million from $371.7 million for the same period last year, while at the same time average Federal funds sold increased by $50.2 million, or 179%, to $78.3 million for 2013 compared to $28.0 million for the same period of time in 2012. Similarly, average interest bearing liabilities increased to $269.8 million for the third quarter in 2013 from $268.9 million during the same quarter in 2012 – an increase of $901 thousand, or 0.3%. At this same time the interest spread decreased by 32 basis points to 4.22% and the net interest margin decreased by 32 basis points to 4.23%.

The decrease in the spread and net interest margin in the third quarter of 2013 as compared to the same quarter in 2012 was due to a decrease in the yield on interest earning assets partially offset by a decrease in the cost of interest bearing liabilities. The principal contributor to the decrease in the yield on earning assets was a decrease in average loan balances during the third quarter of 2013 compared with the same period in 2012. The yield on earning assets for the third quarter of 2013 decreased 40 basis points to 4.56% as compared to 4.96% for the third quarter of 2012. However, the yield on loans for the third quarter of 2013 increased by 15 basis points to 5.58% compared to 5.43% for the third quarter of 2012. The higher loan yield in the third quarter of 2013 compared to the same period in 2012 was reflective of the collection of loan prepayment fees during the quarter along with a greater amount of yield accretion in 2013 associated with loans accounted for under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310-30 - Accounting for Certain Loans or Debt Securities Acquired in a Transfer. The cost of interest bearing liabilities decreased 10 basis points to 0.53% for the third quarter of 2103 compared to 0.63% during the third quarter of 2012.

Year to Date 2013 over 2012

The Company’s net interest income totaled $13.9 million for the nine months ended September 30, 2013, an increase of $3.5 million, or 34%, compared with the $10.4 million reported in the nine months of 2012. The increase in net interest income was largely due to an increase in earning assets as a result of the Merger partially offset by increased interest bearing liabilities and a decrease in our net interest margin and spread. Average interest earning assets increased to $428.8 million for the nine months of 2013 from $299.5 million during the same period in 2012 – an increase of $129.3 million, or 43%. Similarly, average interest bearing liabilities increased to $275.3 million for the nine months ended September 30, 2013 from $186.9 million during the same time frame in 2012 – an increase of $88.4 million, or 47%. At this same time the interest spread decreased by 29 basis points to 4.32% and the net interest margin decreased by 30 basis points to 4.33%.

The decrease in the spread and net interest margin for the nine months of 2013 as compared to the same time frame in 2012 was largely due to a decrease in the yield on interest earning assets. The yield on earning assets decreased 32 basis points to 4.65% for the nine months of 2013 compared to 4.97% during the same period of 2012. The cost of interest bearing liabilities decreased 4 basis points to 0.50% for the nine months ended September 30, 2013 compared to 0.54% for the same period in 2012. The principal contributor to the decrease in the yield on earning assets was a decrease in loan yields of 42 basis points to 5.27% during the nine months ended September 30, 2013 compared with 5.69% for the same period in 2012. Lower loan yields in the third quarter of 2013 compared to the same period in 2012 were reflective of a greater amount of yield accretion in 2012 associated with loans accounted for under FASB ASC 310-30.

Non-Interest Income

Third quarter 2013 over 2012

Non-interest income for the quarters ended September 30, 2013 and 2012 was $4.5 million and $12.7 million, respectively. This $8.2 million decrease was due primarily to a decrease in revenue provided by mortgage division and broker-dealer activities, along with a small decrease in revenue from our commercial division.

Non-interest income for the third quarter of 2013 includes revenues generated from the mortgage division, which totaled $3.7 million, compared to $8.7 million from mortgage activity reflected during the third quarter of 2012. The mortgage division revenue is a function of the volume of loan origination during the period, which declined by $75.3 million, or 29%, to $187.7 million for the third quarter of 2013 compared to $263.0 million during the same quarter of 2012. Approximately 52% of mortgage loans originated during the third quarter of 2013 were made to refinance existing mortgages while 48% were made to finance the purchase of a home.

Revenue from broker-dealer activities decreased to zero for the third quarter of 2013 compared to $3.2 million during the same quarter of 2012, which is a result of the broker-dealer subsidiary spin off that occurred during the fourth quarter of 2012.

For the quarter ended September 30, 2013, non-interest income from the commercial division totaled $791 thousand, a decrease of $81 thousand from the $872 thousand for the third quarter of 2012. The decrease in commercial division income was principally due to a decrease in gains on the recovery of acquired loans totaling $273 thousand for the third quarter of 2013, a decrease of $62 thousand from the $335 thousand for the same quarter in 2012. The decrease was also related to incremental earnings from the Bank’s participation in the MIMS-1 limited partnership fund, which resulted in income of $101 thousand during the third quarter of 2013, while $191 thousand was recorded in the same period of 2012. These decreases in commercial division revenue were partly offset by an increase in fee income, which totaled $378 thousand in the third quarter of 2013 compared with $283 thousand in the same period of 2012.

Year to Date 2013 over 2012

Non-interest income for the nine months ended September 30, 2013 and 2012 was $20.4 million and $16.3 million, respectively. This $4.1 million increase was due primarily to revenue provided by mortgage division activity and commercial division income, partially offset by decreases in revenue from broker-dealer activities.

As a result of the Merger, non-interest income for the nine months of 2013 includes revenues generated from the mortgage division, which totaled $17.8 million, compared to $9.6 million from mortgage activity reflected during the same period in 2012. Since the Merger occurred on May 31st, the revenue for the nine months of 2012 only reflects the result of mortgage operations for four months. The mortgage division revenue is a function of the volume of loan originations during the period, which totaled $738.5 million for the nine months of 2013 compared to $331.1 million during the same time frame in 2012, which only included four months of operations due to the Merger. Approximately 60% of mortgage loans originated during the nine months of 2013 were made to refinance existing mortgages, while 40% were made to finance the purchase of a home.

For the nine months ended September 30, 2013, non-interest income from the commercial division totaled $2.5 million, an increase of $224 thousand from $2.3 million for the same period in 2012. The increase in commercial division income was principally due to increased fee income that was $1.3 million for the nine months of 2013, an increase of $627 thousand from the $642 thousand for the same period in 2012. The increase was partly related to OREO income and account analysis fees totaling $498 thousand for the nine months ended September 30, 2013, while $170 thousand was recognized in the same period of 2012. The increase was also related to incremental earnings from the Bank’s participation in the MIMS-1 limited partnership fund, which resulted in income of $366 thousand during the third quarter of 2013, while $236 thousand was recorded in the same period of 2012. The increases in non-interest income from the commercial banking activities in the nine months of 2013 were partially offset by a $529 thousand decrease in income from gains realized on the sale of securities that totaled $529 thousand for the nine months of 2012, while none were realized during the same period in 2013.

The Company did not have any revenue from broker-dealer activities for the nine months of 2013 compared to $4.3 million during the same period of 2012, which is a result of the broker-dealer subsidiary spin off that occurred during the fourth quarter of 2012. As a result of the Merger, the non-interest income for the nine months of 2012 only reflects broker-dealer activity for four months.

Non-Interest Expense

Third quarter 2013 over 2012

Non-interest expense for the quarters ended September 30, 2013 and 2012 was $9.1 million and $14.7 million, respectively, a decrease of $5.6 million, or 38%. Most of the decrease in non-interest expense was driven by lower expenses related to a decline in residential mortgage origination volume along with no expenses associated with broker-dealer activity in the third quarter of 2013 as compared to the same period in 2012. The Company also experienced decreases in other categories of non-interest expense that were largely the result of efficiencies resulting from the Merger and no broker-dealer activity in 2013 as compared to the same period in 2012.

Four expense categories comprised 87% and 89% of the Company’s total operating expenses for the third quarter of 2013 and 2012, respectively: compensation and benefits, occupancy and equipment, technology and communication, and professional fees. These four expense categories totaled $7.9 million for the third quarter of 2013, a decrease of $5.2 million, or 40%, compared with $13.1 million for the same period of 2012, and accounted for most of the total decrease in the Company’s non-interest expenses for the third quarter of 2013 compared to the same period in 2012.

Compensation and Benefits

Compensation and benefits expense totaled $5.8 million and $10.0 million in the quarters ended September 30, 2013 and 2012, respectively. These expenses comprised 63% and 68% of total non-interest expense for the third quarter of 2013 and 2012, respectively.

Compensation and benefits expense decreased by $4.2 million, or 43%, for the third quarter of 2013 compared with the same period in 2012. This decrease primarily reflected lower commissions paid on a reduced volume of residential mortgage loan origination for the quarter along with no broker-dealer compensation expense in the quarter as compared to the same quarter in 2012, partially offset by higher base compensation for more personnel in the mortgage division during the third quarter of 2013 as compared to the same quarter in 2012. The Company had a total of 192 full-time equivalent employees as of September 30, 2013, which was comprised of 117 in the mortgage division and 76 in the commercial division. As of September 30, 2012, the Company had a total of 221 full-time equivalent employees, which was comprised of 78 in the commercial division, 102 in the mortgage division and 41 associated with the broker-dealer subsidiary.

Occupancy and Equipment

Occupancy and equipment costs totaled $892 thousand and $1.0 million for the third quarter of 2013 and 2012, respectively. These expenses, which comprised 10% and 7% of total operating expenses for the third quarter of 2013 and 2012, respectively, decreased by $132 thousand, or 13%, for the third quarter of 2013 compared with the same period in the prior year. The decrease is primarily reflected in reduced rent, depreciation expense and gains/(losses) of fixed assets in the third quarter of 2013 as compared to the same quarter in 2012. The decrease in occupancy and equipment expense was principally due to the lack of broker-dealer related expenses in the third quarter of 2013 as compared to the same quarter in 2012.

Technology and Communication

Technology and communication expense, which totaled $600 thousand and $971 thousand for the third quarter in 2013 and 2012, respectively, comprised 7% of the Company’s total operating expenses in the third quarter of 2013 and 2012, respectively. These expenses decreased by $371 thousand, or 38%, in the third quarter of 2013 compared with the same period of the prior year. These decreases primarily reflect synergies resulting from the Merger and no expenses associated with broker-dealer activities during the third quarter of 2013 as compared to the same quarter in 2012.

Professional Fees

Professional fees, which totaled $674 thousand and $1.1 million for the third quarter of 2013 and 2012, respectively, comprised 7% of the Company’s total operating expenses during these same respective periods. This category of expense decreased by $393 thousand for the third quarter of 2013 compared with the same period in the prior year, primarily due to outlays for professional services related to the Merger incurred in 2012 with none in 2013.

Year to Date 2013 over 2012

Non-interest expense for the nine months ended September 30, 2013 and 2012 was $32.5 million and $25.6 million, respectively, an increase of $6.9 million, or 27%. Most of the increase in non-interest expense was driven by growth in the Company’s staffing levels due to the Merger, including the increase in infrastructure to support expansions in our mortgage and commercial divisions. The Company also experienced increases in other categories of non-interest expense that were largely the result of the Merger. Non-interest expenses for the nine months ended September 30, 2013 include the expenses of the merged banks for the entire period where the same nine months ended September 30, 2012 only include the expense of the acquired operations for four months.

Four expense categories comprised 88% and 91% of the Company’s total operating expenses for the nine months of 2013 and 2012, respectively: compensation and benefits, occupancy and equipment, technology and communication, and professional fees. These four expense categories totaled $28.7 million for the nine months of 2013, an increase of $5.4 million, or 23%, compared with $23.3 million for the same period of 2012, and accounted for almost all of the total increase in the Company’s non-interest expenses for the nine months of 2013 compared to the same period in 2012.

Compensation and Benefits

Compensation and benefits expense totaled $21.1 million and $16.7 million for the nine months ended September 30, 2013 and 2012, respectively. These expenses comprised 65% of total non-interest expense for the nine months of 2013 and 2012.

Compensation and benefits expense grew by $4.4 million, or 27%, for the nine months of 2013 compared with the same period in 2012. This increase primarily reflected growth in the Company’s staffing levels due to the Merger and to support planned expansions in both the mortgage division and, to a lesser extent, the commercial division, which was partially offset by a decrease in costs associated with broker-dealer activity. As of September 30, 2012, the Company had a total of 221 full-time equivalent employees, which was comprised of 78 in the commercial division, 102 in the mortgage division and 41 associated with the broker-dealer subsidiary; as a result of the Merger only four months of the compensation and benefits cost associated with 78 commercial bank division employees and all of the mortgage and broker-dealer employees is reflected in the personnel expense for the nine months of 2012.

Occupancy and Equipment

Occupancy and equipment costs totaled $2.7 million and $1.8 million for the nine months of 2013 and 2012, respectively. These expenses, which comprised 8% and 7% of total operating expenses for the nine months of 2013 and 2012, respectively, increased by $827 thousand, or 45%, for the nine months of 2013 compared with the same period in the prior year. This increase primarily reflected the additional offices acquired in the Merger along with the requisite growth in the Company’s infrastructure to support expansions in the mortgage and commercial divisions; as a result of the Merger only four months of the cost associated with the acquired branches and office space is included in the occupancy and equipment cost for the nine months of 2012.

Technology and Communication

Technology and communication expense, which totaled $2.1 million and $1.7 million for the nine months of 2013 and 2012, respectively, comprised 7% of the Company’s total operating expenses in the nine months of 2013 and 2012. These expenses increased by $379 thousand, or 22%, in the nine months of 2013 compared with the same period of the prior year. These increases primarily reflected the additional cost of operations acquired in the Merger and the requisite growth in the Company’s infrastructure to support expansions in our mortgage division and, to a lesser extent, commercial division. In addition, expenses incurred during the nine months of 2013 include expenses related to the integration of technology platforms as a result of the Merger, whereas there are only four months of expenses associated with the acquired operations reflected in technology and communication expense for the nine months of 2012.

Professional Fees

Professional fees, which totaled $2.8 million and $3.0 million for the nine months of 2013 and 2012, respectively, comprised 9% and 12% of the Company’s total operating expenses during these same respective periods. This category of expense decreased by $279 thousand for the nine months of 2013 compared with the same period in the prior year, primarily due to expenses related to the Merger incurred in the nine months of 2012 while none are reflected in the professional fees for the nine months of 2013, partially offset by outlays for professional services related to the mortgage division during the nine months of 2013 for which there was only four months of expense related to the acquired operations reflected in the nine months of 2012.

Balance Sheet

Total assets at September 30, 2013 totaled $477.9 million, up $12.5 million, or 3%, from $465.4 million at December 31, 2012. The increase in our total assets was driven by the growth in our core deposits that increased our cash and cash equivalents and funded an increase in our loans held for investment, partially offset by decreases in our loan held for sale portfolio.

Net loans totaled $336.3 million at September 30, 2013, down $34.7 million, or 9%, from $371.0 million at December 31, 2012. Most of the decrease in loans is attributable to the mortgage division, as loans held for sale decreased by $40.1 million, or 42%, to $55.9 million at September 30, 2013 compared with $96.0 million at December 31, 2012. The loans attributable to the commercial division, as loans held for investment increased $5.2 million, or 2%, to $282.7 million at September 30, 2013 compared with $277.4 million at December 31, 2012. The net increase in loans held for investment also reflects the effect of a decrease in residential mortgage warehouse loans that decreased to zero during the nine months of 2013 from $24.8 million at December 31, 2012; the Company has ceased actively lending to this market segment and the associated loan balances have matured and paid off with no losses ever having been incurred.

The principal source of funding for the Company comes from depository accounts that increased by $23.5 million, or 6%, to $406.9 million at September 30, 2013 from $383.3 million at December 31, 2012. Most of the increase in deposits resulted from increases in non-interest bearing demand accounts. Non-interest bearing demand accounts increased $36.4 million, or 29%, to $161.7 million at September 30, 2013 from $125.3 million at December 31, 2012.

Growth in demand accounts for the nine months of 2013 was partially offset by a reduction in savings and money market accounts that decreased by $10.9 million, or 8%, to $135.1 million at September 30, 2013 from $146.0 million at December 31, 2012. The majority of the decrease in savings and money market accounts related to temporary customer deposits at December 31, 2012 that were withdrawn shortly after the start of 2013.

During the nine months of 2013, the Company was able to obtain lower cost certificates of deposit that allowed for a decrease in short-term borrowings with the Federal Home Loan Bank (“FHLB”). The Company did not have any short-term borrowing from the FHLB at September 30, 2013, which was down from $15.1 million at December 31, 2012. Total FHLB borrowings at September 30, 2013 were $6.0 million, a decrease of $13.6 million from $19.6 million at December 31, 2012.

As a result of the increase in funding, liabilities in excess of loan growth, cash and investable balances (Federal funds sold, interest bearing deposits and investment securities) increased by $49.8 million, or 101%, to $99.2 million at September 30, 2013, compared with $49.4 million at December 31, 2012. The Company maintains most of these balances in interest bearing accounts at other banks, including the Federal Reserve, in order to support the day-to-day fluctuating cash requirements during the month in its deposit accounts and the funding and sale of mortgage loans in its mortgage division.

Credit Quality

At September 30, 2013, the Company’s allowance for loan losses totaled $2.3 million, or 0.80% of loans held for investment, compared with $2.4 million, or 0.87% of loans held for investment, at December 31, 2012. During the nine months of 2013, the Company had net charge offs of $83 thousand, which compared favorably to $1.1 million during the nine months of 2012. As a result of its analysis of the adequacy of the allowance for loan losses as of September 30, 2013, the Company made a $70 thousand provision for loan losses during the nine months of 2013 compared to a provision of $379 thousand during the nine months of 2012.

The Company had $2.3 million in non-accrual loans in its portfolio of loans held for investment at September 30, 2013, or 0.82% of total loans held for investment. There were no loans past due 90 days or more that had not been placed on non-accrual at September 30, 2013. Included in the loans that have been placed on non-accrual are four loans that were classified as troubled debt restructuring, which totaled $62 thousand as of September 30, 2013. There were no non-performing loans in the Company’s portfolio of loans held for sale. As of December 31, 2012, the Bank had $5.2 million in non-accrual loans, or 1.89% of total loans held for investment, including $331 thousand classified as troubled debt restructuring.

Goodwill

During the second quarter of 2013 the Company finalized its purchase accounting estimates for the Merger. As a result, the Company recorded a decrease in goodwill by $678 thousand, with offsetting entries to decrease the fair value of purchased loans by $453 thousand, increase core deposit intangibles by $280 thousand and to decrease additional paid in capital by $851 thousand. In addition, the Company evaluated the recorded goodwill for impairment as of April 30, 2013 and determined that the recorded goodwill was not impaired.

Capital Adequacy

Shareholders’ equity totaled $58.6 million at September 30, 2013, an increase of $1.5 million from $57.1 million at December 31, 2012. Net income of $1.6 million plus the net proceeds of $485 thousand from a rights offering conducted by the Company and share based compensation of $253 thousand contributed to this increase in shareholders’ equity, which was partially offset by a purchase accounting adjustment of $851 thousand and a $32 thousand decrease in accumulated other comprehensive income. In February of 2013, the Company completed a rights offering, which resulted in the issuance of 152,411 shares of its common stock at $4.52 per share for gross proceeds of $689 thousand and net proceeds of $485 thousand.

As a result of this capital activity during the nine months of 2013, the book value per share increased by $0.06 to $4.68 at September 30, 2013 from $4.62 at December 31, 2012; tangible book value per share increased by $0.13 to $3.95 at September 30, 2013 from $3.82 at December 31, 2012.

Capital ratios for the Company and the Bank continue to exceed levels required by banking regulators to be considered “Well-Capitalized” (the highest level specified by regulators). As of September 30, 2013, the Bank’s total risk-adjusted capital ratio, tier 1 risk-adjusted capital ratio, and tier 1 capital ratio were 14.79%, 13.98%, and 9.99%, respectively, well above the regulatory requirements of 10%, 6%, and 5%, respectively, to be considered “Well-Capitalized.”

About Manhattan Bancorp/Bank of Manhattan

Manhattan Bancorp is a bank holding company with approximately a half billion in total assets. Its principal subsidiary, Bank of Manhattan, N.A., is a full service bank headquartered in the South Bay area of Los Angeles, California. Founded in 2007, Bank of Manhattan specializes in delivering relationship banking services and residential mortgages to entrepreneurs, family-owned and closely-held middle market businesses, real estate investors and professional service firms. The Bank has five full-service offices in El Segundo, Manhattan Beach, Pasadena, Glendale and Montebello as well as eight mortgage loan production offices in Southern California. For more information about Manhattan Bancorp, please visit www.bankofmanhattan.com.

Forward-Looking Statement

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements.

All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business prospects, strategic alternatives, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, acquisition and divestiture opportunities, plans and objectives of management for future operations and other similar forecasts and statements of expectation and statements of assumptions underlying any of the foregoing. Words such as “will likely result,” “aims,” “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of these words and similar expressions are intended to identify these forward-looking statements.

Forward-looking statements are based on the Company’s current expectations and assumptions regarding its business, the regulatory environment, the economy and other future conditions. The Company’s actual results may differ materially from those contemplated by the forward-looking statements. The Company cautions you against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements are detailed in reports filed by the Company with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and subsequently filed Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date they are made, and the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, whether as a result of new information, future developments or otherwise, except as may be required by law.

                       
Manhattan Bancorp and Subsidiaries
Consolidated Balance Sheets

(Unaudited)

(Dollars in thousands)
 
September 30,

2013

December 31,

2012

Assets
Cash and due from banks $ 8,073 $ 6,949
Federal funds sold/interest bearing demand funds   84,174     33,221  
Total cash and cash equivalents 92,247 40,170
Time deposits - other financial institutions 750 829
Investment securities - available for sale, at fair value 6,193 8,364
Loans held for sale, at fair value 55,930 96,014
Loans held for investment 282,655 277,443
Allowance for loan losses   (2,269 )   (2,414 )
Net loans held for investment   280,386     275,029  
Total loans, net 336,316 371,043
Premises and equipment, net 8,574 9,039
Federal Home Loan Bank and Federal Reserve stock 4,458 4,526
Goodwill 6,718 7,396
Core deposit intangible 2,373 2,574
Other real estate owned - 3,581
Investment in limited partnership fund 7,021 6,655
Mortgage servicing rights 5,885 5,123
Accrued interest receivable 455 754
Other assets   6,957     5,333  
Total assets   477,947     465,387  
 
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing demand 161,726 125,254
Interest bearing:
Demand 17,582 15,156
Savings and money market 135,100 146,042
Certificates of deposit equal to or greater than $100,000 58,308 75,800
Certificates of deposit less than $100,000   34,158     21,079  
Total deposits 406,874 383,331
FHLB advances and other borrowings 6,000 19,590
Accrued interest payable and other liabilities   6,482     5,338  
Total liabilities 419,356 408,259
 
Stockholders' equity

Serial preferred stock - no par value; 10,000,000 shares authorized; issued and outstanding: none in 2012 and 2011

- -

Common stock - no par value; 30,000,000 authorized; issued and outstanding: 0,000 in 2013 and 0,000 in 2012

- -
Additional paid in capital 61,504 61,617
Accumulated other comprehensive income 80 112

Accumulated deficit

  (2,993 )   (4,601 )
Total stockholders' equity   58,591     57,128  
Total equity 58,591 57,128
   
Total liabilities and stockholders' equity $ 477,947   $ 465,387  
 
Book value per share $ 4.68 $ 4.62
Tangible book value per share $ 3.95 $ 3.82
 
 
                           
Manhattan Bancorp and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per share amounts)
 
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2013 2012 2013 2012
 
Interest income
Interest and fees on loans $ 4,886 $ 5,086 $ 14,591 $ 10,876
Interest on investment securities 58 45 236 178
Interest on federal funds sold 50 18 89 62
Interest on time deposits-other financial institutions   2     5   4   17
Total interest income 4,996 5,154 14,920 11,133
 
Interest expense
NOW, money market and savings 174 139 519 250
Time deposits 173 161 479 347
FHLB advances and other borrowed funds   16     126   37   164
Total interest expense 363 426 1,035 761
       
Net interest income 4,633 4,728 13,885 10,372
 
Provision for loan losses 30 112 70 379
       
Net interest income after provision for loan losses   4,603     4,616   13,815   9,993
 
Non-interest income
Whole loan sales and warehouse lending fees - 315 - 598
Advisory income - 607 - 771
Trading income - 2,276 - 2,950
Mortgage banking, including gain on sale on loans held for sale 3,737 8,665 17,846 9,643
Earnings on MIMS-1 limited partnership fund 101 191 366 236
Other bank fees and income 378 283 1,269 642
Rental income 39 62 317 248
Gain on recovery of acquired loans 273 335 567 640
Gain on sale of securities   -     1   -   529
Total non-interest income 4,528 12,735 20,365 16,257
 
Non-interest expenses
Compensation and benefits 5,755 10,039 21,111 16,682
Occupancy and equipment 892 1,024 2,661 1,834
Technology and communication 600 971 2,120 1,741
Professional fees 674 1,067 2,763 3,042
FDIC insurance and regulatory assessments 98 184 370 332
Amortization of intangibles 149 135 481 310
Other non-interest expenses   908     1,300   3,013   1,622
Total non-interest expenses 9,076 14,720 32,519 25,563
       
Income (loss) before income taxes 55 2,631 1,661 687
 
Provision for income taxes (26 ) 4 54 19
       
Net income (loss) $ 81   $ 2,627   1,607   668
Weighted average number of shares outstanding
Basic 12,530,768 14,697,317 12,497,674 7,932,884
Diluted 12,619,868 14,726,117 12,544,768 7,945,708
 
Earnings per Share
Basic $ 0.01 $ 0.18 $ 0.13 $ 0.08
Diluted $ 0.01 $ 0.18 $ 0.13 $ 0.08

Contact:
Investor Relations Contact:
Manhattan Bancorp
Terry Robinson, Chief Executive Officer
(310) 606-8080

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