LOS ANGELES--(BUSINESS WIRE)--Manhattan Bancorp (OTCQB:MNHN), holding company for subsidiary Bank of Manhattan, N.A., announced today its financial results for the three months ended March 31, 2014.
For the quarter ended March 31, 2014, the Company reported net loss was $1.90 million, or $(0.15) per diluted share, compared to net income of $377 thousand, or $0.03 per diluted share, for the comparable period in 2013.
Terry Robinson, Chief Executive Officer, stated, “While reporting a loss in the first quarter of 2014 is very disappointing, it does not represent a fundamental change in the direction of our Company. The loss is entirely attributed to a one-time operational loss and a depressed mortgage market coupled with normal seasonal factors. We anticipate a return to sustained profitability in the second quarter of 2014.”
Richard Pimentel, Chief Financial Officer, went on to explain, “The first quarter of the year recorded growth in our commercial loans and customer deposits that were in line with expectations. However, as stated by our CEO, the quarter was negatively impacted by a continued depressed mortgage market and an operating loss related to foreign-based wire fraud. Management initiated actions over the last six months directed at improving net income and lowering overhead that will have a positive effect on earnings for the remainder of 2014 and beyond.”
Additional highlights for the first quarter of 2014 include the following:
- Total assets were $504.4 million as of March 31, 2014, an increase of $0.5 million from $503.9 million as of December 31, 2013.
- Investment securities were $20.5 million as of March 31, 2014, an increase of $14.7 million from $5.6 million as of December 31, 2013.
- Total net loans outstanding were $338.2 million as of March 31, 2014, an increase of $11.4 million from $326.8 million as of December 31, 2013.
- Net interest margin for the quarter was 3.64%.
- Non-performing loans of $2.2 million represented 0.72% of the total loans held for investment outstanding as of March 31, 2014.
- The Bank’s Tier 1 Leverage Ratio and Total Risk-Based Capital Ratio as of March 31, 2014 were 9.58% and 14.25%, respectively.
Net Interest Income and Margin
The Company’s net interest income totaled $4.1 million for the quarter ended March 31, 2014, a decrease of $0.6 million or 13% compared with the $4.7 million reported in the comparable quarter of 2013. 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. Average interest earning assets increased to $455.6 million for the first quarter in 2014 from $417.9 million during the same quarter in 2013 – an increase of $38 million, or 9%. However, average loans for the three months ended March 31, 2014 decreased $52.4 million, or 14% to $322.2 million from $374.6 million for the same period last year, while at the same time average Federal funds sold increased by $81.7 million, or 246.9% to $114.7 million for 2014 compared to $33.1 million for the same period of time in 2013. Similarly, average interest bearing liabilities increased to $437.6 million for the first quarter in 2014 from $408.9 million during the same quarter in 2013 – an increase of $29 million, or 7%. At this same time the interest spread decreased by 93 basis points to 3.63% and the net interest margin decreased by 93 basis points to 3.64%.
The decrease in the spread and net interest margin in the first quarter of 2014 compared to the comparable quarter in 2013 was due to a decrease in the yield on interest earning assets combined with an increase in the average 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 first quarter of 2014 compared with the comparable period in 2013. The yield on earning assets decreased 87 basis points to 4.02% for the first quarter of 2014 compared to 4.89% during the first quarter of 2013. The cost of interest bearing liabilities increased 6 basis points to 0.39% for the first quarter of 2014 compared to 0.33% for the comparable quarter in 2013. The primary contributor to the increase in the cost of interest bearing liabilities was an increase in the cost of certificates of deposit of 53 basis points to 1.08% for the first quarter of 2014 compared to 0.53% for the comparable period in 2013.
Non-interest income for the quarters ended March 31, 2014 and 2013 was $4.2 million and $7.4 million, respectively. This $3.2 million decrease was due primarily to revenue provided by mortgage division activity.
For the quarter ended March 31, 2014, non-interest income from the mortgage division totaled $3.4 million, a decrease of $3.2 million from $6.5 million for the first quarter of 2013. The mortgage division revenue is largely a function of the volume of loan origination during the period, which totaled $106 million for the first quarter of 2014 compared to $274 million for the first quarter of 2013. Approximately 45% of mortgage loans originated during the first quarter of 2014 were made to refinance existing mortgages while 55% were made to finance the purchase of a home.
For the quarter ended March 31, 2014, non-interest income from the commercial division totaled $839 thousand, a decrease of $7 thousand from the $846 thousand for the first quarter of 2013. The decrease was related to decreases in rental income and earnings from the Bank’s participation in the MIMS-1 limited partnership fund which was $25 thousand and $60 thousand, respectively for the first quarter of 2014 compared to $158 thousand and $100 thousand for the comparable period in 2013. The decline was offset by gains on the recovery of acquired loans totaling $405 thousand in the first quarter of 2014, where $225 thousand was recognized in the comparable period of 2013.
Non-interest expense for the quarters ended March 31, 2014 and 2013 was $9.9 million and $11.9 million, respectively, a decrease of $2.0 million, or 17%. Most of the decrease in non-interest expense was the result of decreases in compensation and professional fees.
Four expense categories comprised 92% and 81% of the Company’s operating expenses for the first quarter of 2014 and 2013, respectively: compensation and benefits, occupancy and equipment, technology and communication, and other non-interest expense. These four expense categories totaled $9.1 million for the first quarter of 2014, a decrease of $1.4 million, or 13%, compared with $10.5 million for the comparable period of 2013, and accounted for almost all of the total increase in the Company’s non-interest expenses for the first quarter of 2014 compared to the first quarter in 2013.
Compensation and Benefits
Compensation and benefits expense totaled $6.1 million and $7.7 million in the quarters ended March 31, 2014 and 2013, respectively. These expenses comprised 61% and 64% of total non-interest expense for the first quarter of 2014 and 2013, respectively.
Compensation and benefits decreased $1.6 million, or 21%, for the first quarter of 2014 compared with the first quarter in 2013. The decrease is primarily due to reduced commission expense related to decreased production in the mortgage division. The Company had a total of 204 full-time equivalent employees as of March 31, 2014, which was comprised of 129 in the mortgage division and 75 in the commercial division. As of March 31, 2013 the Company had a total of 195 full-time equivalent employees, which comprised of 117 in the mortgage division and 78 in the commercial division.
Occupancy and Equipment
Occupancy and equipment costs totaled $896 thousand and $910 thousand for the first quarter of 2014 and 2013, respectively. These expenses, which comprised 9% and 8% of total operating expenses for the first quarter of 2014 and 2013, respectively, decreased by $14 thousand, or 2%, in for the first quarter of 2014 compared with the first quarter in the prior year.
Technology and Communication
Technology and communication expense, which totaled $701 thousand and $839 thousand for the first quarter in 2014 and 2013, respectively, comprised 7% and 7% of the Company’s total operating expenses in the first quarter of 2014 and 2013, respectively. These expenses decreased by $138 thousand, or 17%, in the first quarter of 2014 compared with the first quarter of the prior year.
Other Non-Interest Expense
Other non-interest expense, which totaled $1.5 million and $1.1 million for the first quarter of 2014 and 2013, respectively, comprised 15% and 9% of the Company’s total operating expenses during respective periods. This category of expense increased by $366 thousand for the first quarter of 2014 compared with the first quarter in the prior year, primarily due to a non-recurring loss in the commercial division and increased business development costs.
Total assets at March 31, 2014 totaled $504.5 million, up 0.1% from $503.9 million at December 31, 2013. The increase in our total assets was driven by growth in commercial and mortgage loans.
Net loans totaled $338.2 million at March 31, 2014, up $11.4 million, or 4%, from $326.8 million at December 31, 2013. Loans held for investment increased by $7.4 million, or 3%, to $303.0 million at March 31, 2014 compared with $295.6 million at December 31, 2013. Loans held for sale increased by $4.2 million, or 12.3%, to $38.1 million at March 31, 2014 compared with $33.9 million at December 31, 2013.
The principal source of funding for the Company comes from depository accounts that increased by $2.6 million, or 0.6%, to $435.2 million at March 31, 2014 from $432.6 million at December 31, 2013. Most of the increase in deposits resulted in non-interest bearing demand accounts offset by a decrease in certificates of deposit balances.
Most of the increase in deposits came from a $9.8 million increase in non-interest bearing deposits to $186.3 million at March 31, 2014 from $176.5 million at December 31, 2013.
At March 31, 2014, the Company’s allowance for loan losses totaled $2.9 million, or 0.96% of loans held for investment, compared with $2.7 million, or 0.90% of loans held for investment, at December 31, 2013. During the first quarter of 2014, the Company had net charge offs of $9 thousand, which compared favorably to $16 thousand during the first quarter of 2013. The Company had $2.2 million in non-accrual loans in its portfolio of loans held for investment at March 31, 2014, or 0.73% 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 March 31, 2014. Included in the loans that have been placed on non-accrual are two loans that were classified as troubled debt restructuring, which totaled $168 thousand as of March 31, 2014. There were no non-performing loans in the Company’s portfolio of loans held for sale. As of December 31, 2013, the Bank had $2.1 million in non-accrual loans, or 0.72% of total loans held for investment, including $27 thousand classified as troubled debt restructuring.
Stockholders’ equity totaled $57.7 million at March 31, 2014, a decrease of $1.8 million from $59.5 million at December 31, 2013.
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 March 31, 2014, the Bank’s total risk-adjusted capital ratio, tier 1 risk-adjusted capital ratio, and tier 1 capital ratio were 14.25%, 13.21%, and 9.58%, 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 $504 million in 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.
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|
|(Dollars in thousands)|
|March 31,||December 31,|
|Cash and due from banks||$||10,119||$||6,983|
|Federal funds sold/interest bearing demand funds||83,046||118,460|
|Total cash and cash equivalents||93,165||125,443|
|Time deposits - other financial institutions||12,663||5,750|
|Investment securities - available for sale, at fair value||20,477||5,751|
|Loans held for sale, at fair value||38,106||33,944|
|Loans held for investment||303,012||295,566|
|Allowance for loan losses||(2,917||)||(2,661||)|
|Net loans held for investment||300,095||292,905|
|Total loans, net||338,201||326,849|
|Premises and equipment, net||8,145||8,377|
|Federal Home Loan Bank and Federal Reserve stock||4,487||4,487|
|Core deposit intangible||2,074||2,224|
|Other real estate owned||-||-|
|Investment in limited partnership fund||7,170||7,110|
|Mortgage servicing rights||6,994||6,584|
|Accrued interest receivable||883||817|
|Liabilities and Stockholders' Equity|
|Non-interest bearing demand||186,299||176,507|
|Savings and money market||143,485||143,212|
|Certificates of deposit equal to or greater than $100,000||48,812||54,419|
|Certificates of deposit less than $100,000||33,386||36,616|
|FHLB advances and other borrowings||6,000||6,000|
|Accrued interest payable and other liabilities||5,611||5,867|
|Serial preferred stock - no par value; 10,000,000 shares||-||-|
|authorized; issued and outstanding: none in 2012 and 2011|
|Common stock - no par value; 30,000,000 authorized;||-||-|
|issued and outstanding: 12,598,268 in 2013 and 12,355,857 in 2012|
|Additional paid in capital||61,720||61,644|
|Accumulated other comprehensive income||37||65|
|Total stockholders' equity||57,673||59,517|
|Total liabilities and stockholders' equity||$||504,467||$||503,935|
|Book value per share||$||4.58||$||4.82|
|Tangible book value per share||$||3.88||$||4.09|
|Manhattan Bancorp and Subsidiaries|
|Consolidated Statements of Operations|
|(Dollars in thousands, except per share amounts)|
|For the Three Months|
|Ended March 31,|
|Interest and fees on loans||$||4,349||$||4,953|
|Interest on investment securities||88||56|
|Interest on federal funds sold||71||17|
|Interest on time deposits-other financial institutions||7||1|
|Total interest income||4,515||5,027|
|NOW, money market and savings||180||173|
|FHLB advances and other borrowed funds||16||15|
|Total interest expense||426||329|
|Net interest income||4,089||4,698|
|Provision for loan losses||275||(220||)|
|Net interest income after provision for loan losses||3,814||4,918|
|Whole loan sales and warehouse lending fees||-||-|
|Mortgage banking, including gain on sale on loans held for sale||3,363||6,546|
|Earnings on MIMS-1 limited partnership fund||60||100|
|Other bank fees and income||349||363|
|Gain on recovery of acquired loans||405||225|
|Gain on sale of securities||-||-|
|Total non-interest income||4,202||7,392|
|Compensation and benefits||6,069||7,672|
|Occupancy and equipment||896||910|
|Technology and communication||701||839|
|FDIC insurance and regulatory assessments||120||153|
|Amortization of intangibles||149||135|
|Other non-interest expenses||1,452||1,086|
|Total non-interest expenses||9,906||11,933|
|Income (loss) before income taxes||(1,890||)||377|
|Provision for income taxes||1||-|
|Net income (loss)||$||(1,891||)||$||377|
|Less: Net income attributable to the non-controlling interest||-||-|
|Net income (loss) attributable to common||$||(1,891||)||$||377|
|stockholders of Manhattan Bancorp|
|Weighted average number of shares outstanding|
|(basic and diluted)||12,598,268||12,450,183|
|Earnings per Share|
|Basic and diluted earnings (loss) per share||$||(0.15||)||$||0.03|