California Republic Bancorp Announces First Quarter 2014 Results

  • Record Earnings of $5.2 Million pre-tax and $3.0 million after tax
  • Record Prime Auto Loan Originations of $229 Million
  • All Time High Total Serviced Portfolio of over $1.2 Billion
  • Record Noninterest Bearing Demand Deposits of $439 Million

IRVINE, Calif.--()--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 March 31, 2014 of $3.0 million, or $0.56 per basic common share, compared with $0.1 million, or $0.02 per basic common share, for the same period a year earlier.

CRB also announced that prime auto loan originations increased 99% to $229 million for the first quarter of 2014 compared with $115 million for the first quarter a year ago. With continued strong loan origination growth, CRB announced its total serviced loan portfolio increased 81% to $1.2 billion at March 31, 2014, compared with $664 million a year ago.

“We are very pleased with the continued execution of our long-term business plan producing the strong earnings and loan growth we’ve achieved in the first quarter of 2014,” stated Jon Wilcox, Chief Executive Officer of California Republic Bancorp.

John DeCero, President of CRB, stated, “On the liabilities side of the balance sheet, we continue to grow our noninterest bearing demand deposit accounts at a strong pace, while on the asset side, our run rate for both auto and commercial loans continues to accelerate.”

Business Performance:

Total assets increased $189 million, or 29%, to $842 million at March 31, 2014, compared with the same period a year earlier. The year-over-year growth in total assets reflects continued strong deposit growth of $174 million, or a 29% increase, to $768 million at March 31, 2014, compared with the same time a year earlier. Noninterest bearing demand deposit accounts grew $145 million, or 49%, to $439 million at March 31, 2014, compared to the same period a year ago. Noninterest bearing demand deposit accounts now represent over 57% of total deposits.

Auto loan originations increased $114 million, or 99%, to $229 million for the first quarter, as the Bank continues to build out new locations, as well as continuing its deepening of existing dealerships. The significant origination growth in auto loans has not sacrificed credit quality, as the Bank has maintained stable and consistent borrower credit attributes, demographics, and loan structure. Total serviced loans outstanding at March 31, 2014, increased to $1.2 billion, representing a $538 million, or 81%, increase over the prior year.

The Bank successfully completed a prime automobile loan securitization transaction in the first quarter of 2014 in which $223 million in notes backed by $223 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 a 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 $4.6 million from this securitization. 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 completed our fourth auto loan securitization transaction and our second public deal,” stated Wilcox. “Securitization transactions and selling the corresponding residual interests will continue to play an important role in the growth of our auto lending platform.”

“We’re also pleased with the execution of the transaction and the overall interest we received from investors on our notes. CRB 2014-1 included the participation of 12 new capital market buyers to the platform,” noted DeCero. “We’re excited to have received 'AAA' credit ratings on our Class A notes from two separate rating agencies, Standard & Poor’s and DBRS. In addition, our prior securitizations have also been upgraded by the rating agencies due to their performance. We believe the credit ratings and the upgrades reflect the continued and expanding confidence that Wall Street has in our underwriting and servicing capabilities.”

Financial Performance:

Net interest income grew $2.8 million, or 46%, to $9.0 million for the first quarter of 2014 compared with $6.2 million for the same period a year ago. Net interest margins improved 39 basis points to 4.57% for the first quarter of 2014 compared with 4.18% for the same period a year earlier.

Excluding the gain on sale of auto loans recorded in the first quarter of 2014, noninterest income increased $1.1 million, or 228%, to $1.6 million for the first quarter of 2014 compared with $0.5 million for the same period a year ago. The increase in noninterest income is the result of the $554 million increase in loans serviced for others (the Bank’s securitized and sold portfolios) to $716 million at March 31, 2014, compared with $161 million at March 31, 2013.

Noninterest expense increased $3.8 million, or 59%, to $10.1 million for the first quarter of 2014 compared with $6.4 million the same period a year ago. The year-over-year increase in noninterest expense for the first quarter 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 19.1% and return on average assets was 1.5% for the first quarter of 2014 compared with 0.6% and 0.1%, respectively, for the same period a year earlier.

Asset Quality:

California Republic Bank continued to report strong credit quality through the first quarter of 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 0.28% for the first quarter of 2014 compared with 0.07% for the same period a year ago. Net annualized charge-off rate for loans serviced for others improved, declining by 10 basis points to 0.84% for the first quarter of 2014 compared with 0.94% for the same period a year earlier.

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 13.1%, and the total risk-based capital ratio was 14.1%, 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 customers 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 independent automobile dealerships throughout California, Arizona, Texas, Nevada, Iowa, Kansas, and Missouri.

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

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 1-800-800-4693.

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 nonperforming 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
(Dollars and shares in thousands)
Three Months Ended
3/31/2014 3/31/2013
Interest income
Loans $ 9,413 $ 6,642
Other   198   124
Interest expense
Deposits 576 560
Other   -   -
Net interest income 9,035 6,206
Provision for loan losses   19   127


9,016 6,079
Noninterest income
Gain on sale of loans 4,647 -
Loan servicing fees 1,574 473
Other   74   29
Noninterest expense
Salaries and employee benefits 7,301 4,370
Net occupancy expense 802 549
Other   2,012   1,446
Income tax expense   2,227   134
NET INCOME $ 2,969 $ 82
Earnings per common share:
Basic $ 0.56 $ 0.02
Weighted average number of common shares
Basic 5,259 5,203
California Republic Bancorp and Subsidiaries
(Dollars in thousands)
3/31/2014 3/31/2013
Cash and cash equivalents $ 340,685 $ 138,378
Investment securities held to maturity 3,436 604
Commercial loans 349,184 308,853
Auto loans   136,512     193,518  
Gross loans 485,696 502,371
Allowance for loan and lease losses   (4,368 )   (5,208 )
Net loans 481,328 497,163
Premises and equipment, net 3,506 2,687
FHLB stock and other investments 3,302 2,830
Other assets   9,565     11,237  
TOTAL ASSETS $ 841,822   $ 652,899  
Noninterest bearing $ 439,181 $ 294,353
Interest bearing   328,374     299,192  
Total deposits 767,555 593,545
Other borrowings
Other liabilities   9,118     3,654  
TOTAL LIABILITIES 776,673 597,199
Common stock 52,900 51,901
Paid in capital 4,094 3,348
Retained earnings 8,155 451
Accumulated other comprehensive income   -     -  
TOTAL SHAREHOLDERS' EQUITY   65,149     55,700  
California Republic Bancorp and Subsidiaries
Consolidated Average Balances and Annualized Yields
(Dollars in thousands)
Three Months Ended
3/31/2014 3/31/2013
Average Average
        Balance Income Rate Balance Income Rate
Cash $ 205,768 $ 119 0.23 % $ 165,899 $ 97 0.24 %
Investment securities 3,461 27 3.11 % 607 2 1.34 %
Commercial loans 351,839 4,808 5.54 % 292,678 3,852 5.34 %
Auto loans   237,418   4,605 7.87 %   140,956   2,790 8.03 %
Total loans 589,257 9,413 6.48 % 433,634 6,642 6.21 %
Other interest earning assets   3,302   53 6.45 %   2,728   25 3.72 %
Total interest earning assets 801,788 9,611 4.86 % 602,868 6,766 4.55 %
Other assets   4,944   2,640
Total Assets $ 806,732 $ 605,508
Interest bearing transaction accts $ 356,049 $ 569 0.65 % $ 292,551 $ 553 0.77 %
Time certificate of deposits   4,197   7 0.68 %   3,174   6 0.77 %
Total Interest Bearing Deposits 360,246 576 0.65 % 295,725 559 0.77 %
Other borrowings   0   0 0.00 %   0   0 0.00 %
Total interest bearing liabilities 360,246 576 0.65 % 295,725 559 0.77 %
Non-interest bearing demand accts   382,206       252,395    
Total funding 742,452 576 0.31 % 548,120 559 0.41 %
Other liabilities 1,246 1,302
Shareholders' equity   63,034   56,086
Total liabilities & shareholders' equity $ 806,732   $ 605,508  
Net interest spread   4.21 %   3.78 %
Net interest income / margin $ 9,035 4.57 % $ 6,207 4.18 %
California Republic Bancorp and Subsidiaries
(Dollars in thousands)
            At and For
Three Months Ended
3/31/2014                     3/31/2013
Loan originated:
Commercial bank loans $ 1,466 $ 2,108
Auto loans   228,801     114,987  
Total loan originations 230,267 117,095
Loans sold:
Auto loans   (223,378 )   0  
Total loans sold (223,378 ) 0
Principal reductions   (12,619 )   (11,648 )
Loans outstanding   485,696     502,371  
Loans serviced for others 715,652 161,382
Total serviced loans $ 1,201,348   $ 663,753  
Return on average equity 19.10 % 0.59 %
Return on average assets 1.49 % 0.05 %
Book value per share $ 12.49 $ 10.74
Net interest margin on managed auto loans 6.31 % 7.39 %

30 day plus delinquent loans(1)

0.17 % 0.17 %

Nonperforming loans to total loans(1)

0.04 % 0.01 %
Allowance for loan losses to total loans 0.90 % 1.04 %

Net charge-offs on commercial banking loans

- -

Net charge-offs on auto loans owned

0.28 % 0.07 %

Net charge-offs on loans serviced for others

0.84 % 0.94 %
(1) No commercial loans are delinquent or nonperforming
Tier 1 leverage capital ratio 7.95 % 9.11 %
Tier 1 risk-based capital ratio 13.13 % 10.51 %
Total risk-based capital ratio 14.05 % 11.53 %


California Republic Bancorp
John DeCero, President


California Republic Bancorp
John DeCero, President