Luther Burbank Corporation Reports Earnings for the Quarter and Nine Months Ended September 30, 2021 and Announces Quarterly Dividend
Third Quarter 2021 Highlights |
- Net income of
$24.7 million , or$0.48 per diluted share - Net interest margin of 2.47% compared to 2.31%, an increase of 16 basis points
- Return on average assets and equity of 1.34% and 15.24%, respectively
- Cost of interest bearing deposits declined by 20 basis points to 0.54%
- Efficiency ratio of 32.1%
- Internal loan production of
$461.4 million - Nonperforming assets to total assets of 0.01%
- Decline in criticized assets of
$16.0 million , or 42.9% - Tangible book value per share of
$12.59 - Quarterly cash dividend of
$0.12 per common share declared
As of or For the Three Months Ended (1) | |||||||||
(Dollars in thousands, except per share amounts) | 2021 |
2021 |
2020 |
||||||
Performance Ratios | |||||||||
Return on average assets | 1.34 | % | 1.19 | % | 0.80 | % | |||
Return on average equity | 15.24 | % | 13.32 | % | 9.43 | % | |||
Net interest margin | 2.47 | % | 2.31 | % | 2.03 | % | |||
Efficiency ratio (2) | 32.13 | % | 33.52 | % | 44.62 | % | |||
Income Statement | |||||||||
Net interest income | $ | 45,116 | $ | 40,899 | $ | 36,112 | |||
Net income | $ | 24,743 | $ | 21,216 | $ | 14,317 | |||
Diluted earnings per share | $ | 0.48 | $ | 0.41 | $ | 0.27 | |||
Balance Sheet | |||||||||
Total loans | $ | 6,343,861 | $ | 6,443,640 | $ | 6,148,501 | |||
Total deposits | $ | 5,587,156 | $ | 5,401,972 | $ | 5,276,680 | |||
Net charge-off (recovery) ratio | — | % | (0.00 | %) | (0.01 | %) | |||
Nonperforming assets to total assets | 0.01 | % | 0.01 | % | 0.07 | % | |||
Capital | |||||||||
Tier 1 leverage ratio | 9.63 | % | 9.70 | % | 9.22 | % | |||
Tangible book value per share (2) | $ | 12.59 | $ | 12.25 | $ | 11.55 | |||
Growth in tangible book value per share | 2.75 | % | 3.10 | % | 1.94 | % | |||
Dividend declared per share | $ | 0.1200 | $ | 0.0575 | $ | 0.0575 | |||
(1) Unaudited | |||||||||
(2) See "Non-GAAP Reconciliation" table |
Income Statement |
The Company reported net income of
Pre-tax, pre-provision net earnings, a non-GAAP financial measure, is presented because management believes this financial metric provides stockholders with useful information for evaluating the profitability of the Company. A schedule reconciling our GAAP net income to pre-tax, pre-provision net earnings is provided in the tables below.
On
Net Interest Income
Net interest income in the third quarter of 2021 was
During the three months ended
Net interest margin for the third quarter of 2021 was 2.47% compared to 2.31% for the previous quarter. Our net interest margin primarily benefited from the decline in the cost of interest bearing deposits. During the third quarter, the cost of our interest bearing liabilities decreased by 19 basis points, while the yield on our interest earning assets did not change given that the loan yield improvement, discussed above, was offset by a 103.6% increase in the average balance of low yielding cash as compared to the linked quarter. Our net interest spread in the third quarter improved to 2.40%, increasing by 19 basis points as compared to the linked quarter.
Noninterest Income
Noninterest income for the third quarter of 2021 was
Noninterest income primarily consists of FHLB stock dividends, fair value adjustments on equity securities, fee income and the financial impact related to loans sold.
Noninterest Expense
Noninterest expense for the third quarter of 2021 was
Noninterest expense primarily consists of compensation costs, as well as expenses incurred related to occupancy, depreciation and amortization, data processing, marketing and professional services.
Balance Sheet |
Total assets at
Loans
Total loans at
Selected Loan Data (1) | Three Months Ended | Nine Months Ended | ||||||||||||||||||
(Dollars in thousands) | 2021 |
2021 |
2020 |
2021 |
2020 |
|||||||||||||||
Loan Yield | ||||||||||||||||||||
IPL Portfolio | 3.77 | % | 3.66 | % | 3.76 | % | 3.71 | % | 3.88 | % | ||||||||||
SFR Loan Portfolio | 2.71 | % | 2.83 | % | 3.39 | % | 2.86 | % | 3.45 | % | ||||||||||
Loan Originations | ||||||||||||||||||||
IPL Portfolio | $ | 256,320 | $ | 461,646 | $ | 166,664 | $ | 968,570 | $ | 623,321 | ||||||||||
SFR Loan Portfolio (2) | $ | 203,653 | $ | 250,909 | $ | 68,577 | $ | 592,627 | $ | 402,969 | ||||||||||
Weighted Average Coupon on Loan Originations | ||||||||||||||||||||
IPL Portfolio | 3.40 | % | 3.35 | % | 3.65 | % | 3.37 | % | 3.78 | % | ||||||||||
SFR Loan Portfolio (2) | 3.21 | % | 3.22 | % | 3.69 | % | 3.24 | % | 3.83 | % | ||||||||||
Prepayment Speeds | ||||||||||||||||||||
IPL Portfolio | 24.14 | % | 23.23 | % | 13.29 | % | 22.23 | % | 15.20 | % | ||||||||||
SFR Loan Portfolio | 41.26 | % | 40.09 | % | 36.16 | % | 40.67 | % | 35.52 | % | ||||||||||
(1) The table above excludes loan data related to construction, land and non-mortgage loans, which are insignificant components of our loan portfolio. | ||||||||||||||||||||
(2) The Company purchased a pool of fixed rate SFR loans totaling |
The Company's internal production of new IPL and SFR loans decreased by
During the three months ended
The 12 basis point decrease in yield on the SFR portfolio during the quarter ended
Asset Quality
Nonperforming assets totaled
During the three months ended
Prepaid Expenses and Other Assets
Prepaid expenses and other assets totaled
Deposits
Deposits totaled
FHLB Advances
FHLB advances totaled
Other Liabilities
Other liabilities totaled
Capital
As of
(unaudited) | 2021 |
2021 |
2020 |
For |
|||||||
Tier 1 Leverage Ratio | 9.63 | % | 9.70 | % | 9.22 | % | N/A | ||||
Common Equity Tier 1 Risk-Based Ratio | 16.44 | % | 15.73 | % | 15.39 | % | N/A | ||||
Tier 1 Risk-Based Capital Ratio | 18.01 | % | 17.28 | % | 16.98 | % | N/A | ||||
Total Risk-Based Capital Ratio | 18.98 | % | 18.33 | % | 18.19 | % | N/A | ||||
Tangible Stockholders' Equity Ratio (1) | 9.01 | % | 8.76 | % | 8.57 | % | N/A | ||||
Tier 1 Leverage Ratio | 10.61 | % | 10.67 | % | 10.35 | % | 5.00 | % | |||
Common Equity Tier 1 Risk-Based Ratio | 19.85 | % | 19.01 | % | 19.07 | % | 6.50 | % | |||
Tier 1 Risk-Based Capital Ratio | 19.85 | % | 19.01 | % | 19.07 | % | 8.00 | % | |||
Total Risk-Based Capital Ratio | 20.82 | % | 20.07 | % | 20.28 | % | 10.00 | % | |||
(1) See "Non-GAAP Reconciliation" table |
Stockholders’ equity totaled
Earnings Call |
The Company will host a conference call on
About
Cautionary Statements Regarding Forward-Looking Information
This communication contains a number of forward-looking statements, which involve a number of risks and uncertainties. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not a guarantee of future performance and that actual results may prove to be materially different from the results expressed or implied by the forward-looking statements due to a number of factors. The ongoing and dynamic nature of the COVID-19 pandemic may adversely affect the Company, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. The risks from the COVID-19 pandemic have decreased as the pandemic subsides, however, new variants such as the Delta variant may continue to impact key macro-economic indicators such as unemployment and GDP. Deterioration in general business and economic conditions resulting from the continuing pandemic, including the tight labor market, supply chain disruptions, inflationary pressures, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. Other factors include, without limitation, those listed from time to time in reports that the Company files with the
Contact |
Investor Relations
(844) 446-8201
investorrelations@lbsavings.com
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(Dollars in thousands) | 2021 (unaudited) |
2020 |
|||||||
ASSETS | |||||||||
Cash, cash equivalents and restricted cash | $ | 132,039 | $ | 178,861 | |||||
Available for sale debt securities, at fair value | 652,810 | 593,734 | |||||||
Held to maturity debt securities, at amortized cost | 4,155 | 7,467 | |||||||
Equity securities, at fair value | 11,804 | 12,037 | |||||||
Loans held-for-investment | 6,343,861 | 6,049,816 | |||||||
Allowance for loan losses | (37,335 | ) | (46,214 | ) | |||||
Total loans held-for-investment, net | 6,306,526 | 6,003,602 | |||||||
FHLB stock | 23,411 | 25,122 | |||||||
Premises and equipment, net | 16,449 | 18,226 | |||||||
Prepaid expenses and other assets | 73,592 | 67,055 | |||||||
Total assets | $ | 7,220,786 | $ | 6,906,104 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Liabilities: | |||||||||
Deposits | $ | 5,587,156 | $ | 5,264,329 | |||||
FHLB advances | 751,647 | 806,747 | |||||||
Junior subordinated deferrable interest debentures | 61,857 | 61,857 | |||||||
Senior debt | 94,631 | 94,539 | |||||||
Other liabilities | 71,559 | 64,941 | |||||||
Total liabilities | 6,566,850 | 6,292,413 | |||||||
Total stockholders' equity | 653,936 | 613,691 | |||||||
Total liabilities and stockholders' equity | $ | 7,220,786 | $ | 6,906,104 |
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED) | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
(Dollars in thousands except per share data) | 2021 |
2021 |
2020 |
2021 |
2020 |
|||||||||||||||||
Interest and fee income: | ||||||||||||||||||||||
Loans | $ | 55,757 | $ | 54,191 | $ | 56,766 | $ | 164,006 | $ | 175,661 | ||||||||||||
Investment securities | 2,213 | 2,091 | 2,167 | 6,287 | 7,787 | |||||||||||||||||
Cash, cash equivalents and restricted cash | 78 | 34 | 83 | 162 | 454 | |||||||||||||||||
Total interest income | 58,048 | 56,316 | 59,016 | 170,455 | 183,902 | |||||||||||||||||
Interest expense: | ||||||||||||||||||||||
Deposits | 7,535 | 9,749 | 15,744 | 28,890 | 60,146 | |||||||||||||||||
FHLB advances | 3,573 | 3,839 | 5,307 | 11,345 | 16,550 | |||||||||||||||||
Junior subordinated deferrable interest debentures | 250 | 255 | 279 | 763 | 1,104 | |||||||||||||||||
Senior debt | 1,574 | 1,574 | 1,574 | 4,723 | 4,727 | |||||||||||||||||
Total interest expense | 12,932 | 15,417 | 22,904 | 45,721 | 82,527 | |||||||||||||||||
Net interest income before provision for loan losses | 45,116 | 40,899 | 36,112 | 124,734 | 101,375 | |||||||||||||||||
(Reversal of) provision for loan losses | (4,000 | ) | (2,500 | ) | — | (9,000 | ) | 10,550 | ||||||||||||||
Net interest income after provision for loan losses | 49,116 | 43,399 | 36,112 | 133,734 | 90,825 | |||||||||||||||||
Noninterest income | 431 | 510 | 587 | 1,250 | 2,056 | |||||||||||||||||
Noninterest expense | 14,635 | 13,880 | 16,374 | 43,919 | 48,581 | |||||||||||||||||
Income before provision for income taxes | 34,912 | 30,029 | 20,325 | 91,065 | 44,300 | |||||||||||||||||
Provision for income taxes | 10,169 | 8,813 | 6,008 | 26,695 | 13,089 | |||||||||||||||||
Net income | $ | 24,743 | $ | 21,216 | $ | 14,317 | $ | 64,370 | $ | 31,211 | ||||||||||||
Basic earnings per common share | $ | 0.48 | $ | 0.41 | $ | 0.28 | $ | 1.25 | $ | 0.58 | ||||||||||||
Diluted earnings per common share | $ | 0.48 | $ | 0.41 | $ | 0.27 | $ | 1.24 | $ | 0.58 |
CONSOLIDATED FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||||||||||||||
As of or For the Three Months Ended | Nine Months Ended | ||||||||||||||||||
(Dollars in thousands except per share data) | 2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||
PERFORMANCE RATIOS | |||||||||||||||||||
Return on average: | |||||||||||||||||||
Assets | 1.34 | % | 1.19 | % | 0.80 | % | 1.20 | % | 0.59 | % | |||||||||
Stockholders' equity | 15.24 | % | 13.32 | % | 9.43 | % | 13.48 | % | 6.84 | % | |||||||||
Efficiency ratio (1) | 32.13 | % | 33.52 | % | 44.62 | % | 34.86 | % | 46.97 | % | |||||||||
Noninterest expense to average assets | 0.79 | % | 0.78 | % | 0.91 | % | 0.82 | % | 0.91 | % | |||||||||
Loan to deposit ratio | 113.54 | % | 119.28 | % | 116.52 | % | 113.54 | % | 116.52 | % | |||||||||
Average stockholders' equity to average assets | 8.80 | % | 8.90 | % | 8.46 | % | 8.87 | % | 8.56 | % | |||||||||
Dividend payout ratio | 25.13 | % | 14.17 | % | 21.11 | % | 19.00 | % | 29.80 | % | |||||||||
YIELDS/RATES | |||||||||||||||||||
Yield on loans | 3.46 | % | 3.42 | % | 3.65 | % | 3.46 | % | 3.76 | % | |||||||||
Yield on investments | 1.32 | % | 1.29 | % | 1.31 | % | 1.30 | % | 1.59 | % | |||||||||
Yield on interest earning assets | 3.18 | % | 3.18 | % | 3.32 | % | 3.19 | % | 3.48 | % | |||||||||
Cost of interest bearing deposits | 0.54 | % | 0.74 | % | 1.16 | % | 0.72 | % | 1.51 | % | |||||||||
Cost of borrowings | 1.98 | % | 2.03 | % | 2.55 | % | 2.11 | % | 2.64 | % | |||||||||
Cost of interest bearing liabilities | 0.78 | % | 0.97 | % | 1.40 | % | 0.95 | % | 1.71 | % | |||||||||
Net interest spread | 2.40 | % | 2.21 | % | 1.92 | % | 2.24 | % | 1.77 | % | |||||||||
Net interest margin | 2.47 | % | 2.31 | % | 2.03 | % | 2.34 | % | 1.92 | % | |||||||||
CAPITAL | |||||||||||||||||||
Total equity to total assets | 9.06 | % | 8.80 | % | 8.61 | % | |||||||||||||
Tangible stockholders' equity to tangible assets (1) | 9.01 | % | 8.76 | % | 8.57 | % | |||||||||||||
Book value per share | $ | 12.65 | $ | 12.32 | $ | 11.62 | |||||||||||||
Tangible book value per share (1) | $ | 12.59 | $ | 12.25 | $ | 11.55 | |||||||||||||
ASSET QUALITY | |||||||||||||||||||
Net (recoveries) charge-offs | $ | — | $ | (69 | ) | $ | (78 | ) | |||||||||||
Net (recovery) charge-off ratio | — | % | (0.00 | ) | % | (0.01 | ) | % | |||||||||||
Nonperforming loans to total loans | 0.01 | % | 0.01 | % | 0.08 | % | |||||||||||||
Nonperforming assets to total assets | 0.01 | % | 0.01 | % | 0.07 | % | |||||||||||||
Allowance for loan losses to loans held-for-investment | 0.59 | % | 0.64 | % | 0.75 | % | |||||||||||||
Allowance for loan losses to nonperforming loans | 5806.38 | % | 5846.53 | % | 953.49 | % | |||||||||||||
Criticized loans | $ | 21,234 | $ | 37,209 | $ | 47,987 | |||||||||||||
Classified loans | $ | 15,714 | $ | 19,573 | $ | 13,684 | |||||||||||||
LOAN COMPOSITION | |||||||||||||||||||
Multifamily residential | $ | 4,226,685 | $ | 4,281,698 | $ | 4,086,059 | |||||||||||||
Single family residential | $ | 1,908,297 | $ | 1,945,099 | $ | 1,839,156 | |||||||||||||
Commercial real estate | $ | 193,224 | $ | 196,347 | $ | 203,920 | |||||||||||||
Construction and land | $ | 15,655 | $ | 20,496 | $ | 19,266 | |||||||||||||
Non-mortgage | $ | — | $ | — | $ | 100 | |||||||||||||
DEPOSIT COMPOSITION | |||||||||||||||||||
Noninterest bearing transaction accounts | $ | 123,239 | $ | 127,810 | $ | 78,773 | |||||||||||||
Interest bearing transaction accounts | $ | 167,919 | $ | 150,994 | $ | 183,806 | |||||||||||||
Money market deposit accounts | $ | 2,784,470 | $ | 2,350,926 | $ | 1,860,886 | |||||||||||||
Time deposits | $ | 2,511,528 | $ | 2,772,242 | $ | 3,153,215 | |||||||||||||
(1) See "Non-GAAP Reconciliation" table |
NON-GAAP RECONCILIATION (UNAUDITED) | ||||||||||||||||||||||
As of or For the Three Months Ended | Nine Months Ended | |||||||||||||||||||||
(Dollars in thousands) | 2021 |
2021 |
2020 |
2021 |
2020 |
|||||||||||||||||
Pre-tax, Pre-provision Net Earnings | ||||||||||||||||||||||
Income before provision for income taxes | $ | 34,912 | $ | 30,029 | $ | 20,325 | $ | 91,065 | $ | 44,300 | ||||||||||||
Plus: (Reversal of) provision for loan losses | (4,000 | ) | (2,500 | ) | — | (9,000 | ) | 10,550 | ||||||||||||||
Pre-tax, pre-provision net earnings | $ | 30,912 | $ | 27,529 | $ | 20,325 | $ | 82,065 | $ | 54,850 | ||||||||||||
Efficiency Ratio | ||||||||||||||||||||||
Noninterest expense (numerator) | $ | 14,635 | $ | 13,880 | $ | 16,374 | $ | 43,919 | $ | 48,581 | ||||||||||||
Net interest income | 45,116 | 40,899 | 36,112 | 124,734 | 101,375 | |||||||||||||||||
Noninterest income | 431 | 510 | 587 | 1,250 | 2,056 | |||||||||||||||||
Operating revenue (denominator) | $ | 45,547 | $ | 41,409 | $ | 36,699 | $ | 125,984 | $ | 103,431 | ||||||||||||
Efficiency ratio | 32.13 | % | 33.52 | % | 44.62 | % | 34.86 | % | 46.97 | % |
(Dollars in thousands except per share data) | ||||||||||||||
Tangible Book Value Per Share | ||||||||||||||
Total assets | $ | 7,220,786 | $ | 7,257,078 | $ | 7,071,663 | ||||||||
Less: |
(3,297 | ) | (3,297 | ) | (3,297 | ) | ||||||||
Tangible assets | 7,217,489 | 7,253,781 | 7,068,366 | |||||||||||
Less: Total liabilities | (6,566,850 | ) | (6,618,379 | ) | (6,462,830 | ) | ||||||||
Tangible stockholders' equity (numerator) | $ | 650,639 | $ | 635,402 | $ | 605,536 | ||||||||
Period end shares outstanding (denominator) | 51,682,604 | 51,861,704 | 52,410,053 | |||||||||||
Tangible book value per share | $ | 12.59 | $ | 12.25 | $ | 11.55 | ||||||||
Tangible Stockholders' Equity to Tangible Assets | ||||||||||||||
Tangible stockholders' equity (numerator) | $ | 650,639 | $ | 635,402 | $ | 605,536 | ||||||||
Tangible assets (denominator) | $ | 7,217,489 | $ | 7,253,781 | $ | 7,068,366 | ||||||||
Tangible stockholders' equity to tangible assets | 9.01 | % | 8.76 | % | 8.57 | % | ||||||||

Source: Luther Burbank Corporation