1st United Bancorp, Inc. Announces a 173% increase in Earnings for the three months ended June 30, 2013 and a 137% increase in Earnings for the six months ended June 30, 2013

Tue Jul 23, 2013 4:15pm EDT

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1st United Bancorp, Inc. Announces a 173% increase in Earnings for the three months ended June 30, 2013 and a 137% increase in Earnings for the six months ended June 30, 2013

PR Newswire

BOCA RATON, Fla., July 23, 2013 /PRNewswire/ -- (NASDAQ Global Select: FUBC) -- 1st United Bancorp, Inc. ("1st United") reported net income of $1.8 million ($0.05 per share) for the three months ended June 30, 2013 as compared to net income of $647,000 ($0.02 per share) for the three months ended June 30, 2012.  1st United reported net income of $3.4 million ($0.10 per share) for the six months ended June 30, 2013 as compared to net income of $1.4 million ($0.04 per share) for the six months ended June 30, 2012.

Highlights for the quarter and six months ended June 30, 2013:

Financial Condition

  • Total assets at June 30, 2013 were $1.55 billion, as compared to approximately $1.56 billion at March 31, 2013 and $1.57 billion at December 31, 2012.  During the six months ended June 30, 2013, 1st United continued to redeploy excess liquidity by increasing total loans by $21.5 million and securities by $94.7 million.
  • Total deposits at June 30, 2013 of $1.29 billion were consistent with total deposits at March 31, 2013 and December 31, 2012.  Non-interest bearing deposits were approximately 35% of total deposits at June 30, 2013 as compared to approximately 34% of total deposits at March 31, 2013 and 33% of total deposits at December 31, 2012. 
  • Total risk-based capital ratio, Tier 1 capital ratio, and leverage ratio for 1st United at June 30, 2013 were 20.01%, 18.89% and 11.26%, respectively, and exceeded all regulatory requirements for "well capitalized."

Asset Quality

  • Total non-performing assets were $39.7 million (2.57% of total assets) at June 30, 2013 representing a $2.9 million decrease as compared to $42.7 million (2.73% of total assets) at March 31, 2013 and a $3.2 million decrease as compared to the December 31, 2012 balance of $42.9 million (2.74% of total assets). 
  • Included in the $39.7 million in non-performing assets at June 30, 2013 were $20.9 million of assets covered under loss share agreements as compared to total non-performing assets at March 31, 2013 of $42.7 million, of which $23.9 million were covered under loss share agreements.  At June 30, 2013, we had approximately $1.5 million of assets under agreements to sell at no additional loss which we anticipate closing during the third quarter 2013.  Excluding assets covered by FDIC loss share agreements, non-performing assets were $18.8 million (1.22% of total assets) at June 30, 2013 as compared to $18.8 million (1.20% of total assets) at March 31, 2013 and $18.3 million (1.17% of total assets) at December 31, 2012.
  • Classified assets (substandard and special mention) decreased by $8.5 million from $73.4 million at March 31, 2013 to $64.8 million at June 30, 2013. Classified assets at June 30, 2013 decreased by $26.4 million from $91.3 million at December 31, 2012.  These decreases were due to resolutions, including sales, payoffs and transfers to other real estate owned, as well as credit upgrades of assets which have shown continued improvement.
  • Loans past due greater than 30 days and less than 90 days at June 30, 2013 were $2.8 million, representing a $1.1 million decrease as compared to the March 31, 2013 balance of $3.9 million and a $7.0 million decrease as compared to the December 31, 2012 balance of $9.8 million.

Operating Results – Quarter ended June 30, 2013

Net income of $1.8 million for the three months ended June 30, 2013 was impacted by the following:

  • The net interest margin was 5.8% for the quarter ended June 30, 2013.  The margin was positively impacted by increased cash flows of assets covered under loss share agreements which also included resolutions, including sales, payoffs and transfers to other real estate owned resulting in additional margin income of $5.4 million or 159 basis points. Exclusive of this, 1st United's margin would have been approximately 4.20%.
  • The provision for loan losses was $1.3 million for the quarter ended June 30, 2013. 
  • Net gains on sales of securities of $609,000 were realized for the quarter ended June 30, 2013.
  • Net gains on sales of other real estate of $393,000 were realized for the quarter ended June 30, 2013, which primarily related to assets covered under loss share agreements. 
  • A charge of approximately $5.2 million was recorded during the quarter related to the income (approximately $5.4 million) from the increased cash flows on the resolution, including sales, payoffs and transfers to other real estate owned, of assets covered under FDIC loss sharing agreements, which included approximately $312,000 related to other real estate, which reduced the FDIC loss share receivable.
  • 1st United incurred initial merger reorganization related expenses of $128,000 related to the merger of Enterprise Bancorp, Inc. (EBI), which was completed on July 1, 2013.  Expenses primarily included professional fees associated with the merger and integration of operations.  Additional merger reorganization costs of up to $1.8 million are anticipated to be incurred for the third quarter of 2013.
  • 1st United determined to strategically close one banking center on the west coast of Florida.  The banking center will close during the fourth quarter of 2013 with both customers and employees relocated to another 1st United banking center.  The related expense for this closing of $404,000 was incurred during the quarter ended June 30, 2013 and includes termination of the facilities lease and related write-off of leasehold improvements and other fixed assets.  The closure of this location is anticipated to produce an annualized operating expense savings of approximately $400,000 per year.
  • Inclusive within non-interest expense were write-downs of $114,000 of other real estate owned to their fair values due to updated appraisals.

Operating Results – Six months ended June 30, 2013

Net income of $3.4 million for the six months ended June 30, 2013 was impacted by the following:

  • The net interest margin was 5.45% for the six months ended June 30, 2013.  The margin was positively impacted by increased cash flows of assets covered under loss share agreements which also included resolutions, including sales, payoffs and transfers to other real estate owned of $8.4 million or 126 basis points. Exclusive of this, 1st United's margin would have been approximately 4.19%.
  • The provision for loan losses was $2.0 million for the six months ended June 30, 2013. 
  • Net gains on sales of securities of $732,000 were realized for the six months ended June 30, 2013.
  • Net gains on sales of other real estate of $833,000 were realized for the six months ended June 30, 2013, which primarily related to assets covered under loss share agreements. 
  • A charge of approximately $8.2 million was recorded during the six months related to the income (approximately $8.4 million) from increased cash flows on the resolution, including sales, payoffs and transfers to other real estate owned, of assets covered under FDIC loss sharing agreements, which included approximately $659,000 related to other real estate, which reduced the FDIC loss share receivable.
  • Inclusive within non-interest expense were write-downs of $641,000 of other real estate owned to their fair values due to updated appraisals.

Management Comments:

"We are excited about our merger with Enterprise Bancorp, Inc. ("EBI") and its wholly owned subsidiary Enterprise Bank which was completed on July 1, 2013.  We acquired total loans of $160 million and deposits of $176.9 million," said Warren S. Orlando, Chairman.  "This acquisition will grow our current $1.5 billion balance sheet to approximately $1.7 billion.  EBI contributed three banking centers, one of which will be closed and one of which a 1st United banking center will be merged into for a net result of one new banking center.  Our continued strong capital base, liquidity and overall financial strength will continue to allow us the opportunity to continue to expand both organically as well as through potential acquisitions."

"Our net earnings have improved to $1.8 million for the quarter ended June 30, 2013.  These results included a loan provision of $1.3 million.  Our margin continues to remain strong and is driven by our core deposits and low cost of funds.  We currently have approximately 35% of our total deposits comprised of non-interest bearing deposits at June 30, 2013.  Our gross loan portfolio increased for the second consecutive quarter.  We had originations and loan advances of $77.1 million which were partially offset by payoffs and resolutions of $70.1 million.  Our new loan pipeline remains strong moving into the third quarter and we continue to see increased loan production in each of the markets that we serve," said Rudy E. Schupp, Chief Executive Officer.

"We currently estimate approximately $9.5 million in goodwill will be recorded due to the EBI acquisition.  The conversion of systems will be completed by the end of the third quarter, and we estimate one-time merger and integration costs of up to $1.8 million.  We are encouraged with the continued improvement in non-performing and classified assets during the quarter, with a reduction of $2.9 million in non-performing assets along with a reduction of $8.5 million in classified assets since March 31, 2013.  We were pleased by the continued improvement in classified assets, though we continue to believe there will be fluctuations in this area until the overall market improves.  We remain vigilant and will continue to monitor asset quality and act quickly to resolve problem assets as they are identified," said John Marino, President and Chief Financial Officer.

For interested persons, 1st United will be hosting an investor call to review the quarterly results 10:00 a.m. Eastern Daylight Time on July 24, 2013.  The number for the conference call is (800) 857-9849 (Passcode: 3183056).  A replay of the conference call will be available beginning the evening of July 24, 2013 until August 7, 2013 by dialing (888) 562-2764 (domestic), using the passcode 5421.

About 1st United Bancorp, Inc.

1st United is a financial holding company headquartered in Boca Raton, Florida. 1st United's principal subsidiary, 1st United Bank, is a Florida chartered commercial bank, which operates 23 branches in South and Central Florida, including Brevard, Broward, Hillsborough, Indian River, Miami-Dade, Orange, Palm Beach, Pasco and Pinellas Counties.  1st United's principal executive office and mailing address is One North Federal Highway, Boca Raton, FL 33432 and its telephone number is (561) 362-3435.  1st United's stock is listed on the NASDAQ Global Select Market under the symbol "FUBC".

Forward Looking Statements

Any non-historical statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements are based on current plans and expectations that are subject to uncertainties and risks, which could cause 1st United's future results to differ materially.  The following factors, among others, could cause our actual results to differ: our ability to comply with the terms of loss share agreements with the FDIC; legislative and regulatory changes, including the Dodd-Frank Wall Street Reform, Consumer Protection Act and Basel III,  the strength of the United States economy in general and the strength of the local economies in which we conduct operations; the accuracy of our financial statement estimates and assumptions, including the estimate of our loan loss provision and the FDIC receivable; our ability to integrate the business and operations of companies and banks that we have acquired, and those that we may acquire in the future; the failure to achieve expected gains, revenue growth, and/or expense savings from future acquisitions; the frequency and magnitude of foreclosure of our loans;  the reduction in FDIC insurance on certain non-interest bearing accounts due to the expiration of the Transaction Account Guarantee program; increased competition and its effect on pricing including the impact on our net interest margin from repeal of regulation Q;  our customers' willingness to make timely payments on their loans; the effects of the health and soundness of other financial institutions; changes in securities and real estate markets; changes in monetary and fiscal policies of the U.S. Government; inflation, interest rate, market, and monetary fluctuations; the effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; our need and our ability to incur additional debt or equity financing; the effects of harsh weather conditions, including hurricanes, and man-made disasters; our ability to comply with the extensive laws and regulations to which we are subject; the willingness of clients to accept third-party products and services rather than our products and services and vice versa; technological changes; negative publicity and the impact on our reputation; the effects of security breaches and computer viruses that may affect our computer systems; changes in consumer spending and saving habits; changes in accounting principles, policies, practices or guidelines; limited trading activity of our common stock; the concentration of ownership of our common stock; our ability to retain key members of management; anti-takeover provisions under federal and state law as well as our Articles of Incorporation and our Bylaws; other risks described from time to time in our filings with the Securities and Exchange Commission; and our ability to manage the risks involved in the foregoing.  These factors, as well as additional factors, can be found in our periodic and other filings with the SEC, which are available at the SEC's internet site (http://www.sec.gov). Actual results may differ materially from projections and could be affected by a variety of factors, including factors beyond our control. Forward-looking statements in this press release speak only as of the date of the press release, and 1st United assumes no obligation to update forward-looking statements or the reasons why actual results could differ.

 



For the three month period ended

June 30,




2013


2012


INCOME STATEMENT DATA

(unaudited)



(Amounts in thousands, except per

share data)







Interest income


$

20,546


$

19,166


Interest expense



898



1,476


Net interest income



19,648



17,690


Provision for loan losses



1,300



3,100


Net interest income after provision for loan

   losses



18,348



14,590










Net gains on sales of OREO



393



1,218


Net gains on sales of securities



609



1,175


Adjustment to FDIC loss share receivable



(4,922)



(3,042)


Other non-interest income



1,201



1,240


Total non-interest income



(2,719)



591










Salaries and employee benefits



6,028



6,238


Occupancy and equipment



1,969



2,020


Merger reorganization expense



128



1,309


Disposal of banking center



404




Other non-interest expense



4,299



4,595


Total non-interest expense



12,828



14,162










Income before taxes



2,801



1,019


Income tax expense



1,034



372


Net income


$

1,767


$

647










PER SHARE DATA








Basic and diluted earnings per share


$

0.05


$

0.02










SELECTED OPERATING RATIOS








Return on average assets



0.45

%


0.16

%

Return on average shareholders' equity



2.97

%


1.10

%

Net interest margin



5.79

%


5.14

%









Average assets


$

1,572,022


$

1,596,678


Average shareholders' equity


$

239,018


$

236,032



















 



For the six month period ended

June 30,




2013


2012


INCOME STATEMENT DATA

(unaudited)



(Amounts in thousands, except per

share data)







Interest income


$

38,266


$

35,054


Interest expense



1,889



2,913


Net interest income



36,377



32,141


Provision for loan losses



1,950



4,400


Net interest income after provision for loan

   losses



34,427



27,741










Net gains on sales of OREO



833



1,953


Net gains on sales of securities



732



1,673


Adjustment to FDIC loss share receivable



(7,741)



(5,117)


Other non-interest income



2,470



2,361


Total non-interest income



(3,706)



870










Salaries and employee benefits



12,227



11,946


Occupancy and equipment



3,938



3,965


Merger reorganization expense



128



1,760


Disposal of banking center



404




Other non-interest expense



8,607



8,666


Total non-interest expense



25,304



26,337










Income before taxes



5,417



2,274


Income tax expense



2,029



847


Net income


$

3,388


$

1,427










PER SHARE DATA








Basic and diluted earnings per share


$

0.10


$

0.04










SELECTED OPERATING RATIOS








Return on average assets



0.44

%


0.19

%

Return on average shareholders' equity



2.87

%


1.27

%

Net interest margin



5.45

%


4.95

%









Average assets


$

1,561,740


$

1,499,248


Average shareholders' equity


$

238,363


$

225,864



















 

SELECT FINANCIAL DATA


June 30, 2013


December 31, 2012


(unaudited)


(Amounts in thousands, except per share data)










BALANCE SHEET DATA








Total assets


$

1,545,299


$

1,566,779


Gross loans



934,634



913,168


Allowance for loan losses



10,063



9,788


Net loans



924,727



903,600


Cash and cash equivalents



79,111



207,117


Securities available for sale



354,869



260,122


Other real estate owned



18,104



19,529


Goodwill and other intangible assets



61,429



61,767


FDIC loss share receivable



35,249



46,735


Deposits



1,292,118



1,303,022


Non-interest bearing deposits



447,207



426,968


Shareholders' equity



232,589



236,690










SELECTED ASSET QUALITY DATA, CAPITAL AND

   ASSET QUALITY RATIOS
















Equity/assets



15.05

%


15.11

%

Non-accrual and loans past due greater than 90 days

   loans/total loans



2.31

%


2.56

%

Allowance for loan losses/total loans



1.08

%


1.07

%

Allowance for loan losses/non-accrual loans



46.55

%


45.94

%

Leverage ratio



11.26

%


11.44

%

Tier 1 risk based capital



18.89

%


21.21

%

Total risk based capital



20.01

%


22.43

%

Book value per share


$

6.78


$

6.95


Number of shares of outstanding common stock



34,287,056



34,070,270


 

 

SOURCE 1st United Bancorp, Inc.

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