Attached files
| file | filename |
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| 8-K - 8-K - CU Bancorp | d823071d8k.htm |
Exhibit 99.1
CU Bancorp
a better banking experience
Forward-Looking Statements
This press release contains certain forward-looking information about CU Bancorp (the “Company”), 1st Enterprise Bank and the combined company after the close of the transaction that is intended to be covered by the safe harbor for “forward looking statements” provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. Forward-looking statements speak only as of the date they are made and we assume no duty to update such statements. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Risks and uncertainties include, but are not limited to: lower than expected revenues; credit quality deterioration or a reduction in real estate values could cause an increase in the allowance for credit losses and a reduction in net earnings; increased competitive pressure among depository institutions; the Company’s ability to complete future acquisitions, successfully integrate such acquired entities, or achieve expected beneficial synergies and/or operating efficiencies within expected time-frames or at all; the possibility that personnel changes will not proceed as planned; the cost of additional capital is more than expected; a change in the interest rate environment reduces net interest margins; asset/liability repricing risks and liquidity risks; legal matters could be filed against the Company and could take longer or cost more than expected to resolve or may be resolved adversely to the Company; general economic conditions, either nationally or in the market areas in which the Company does or anticipates doing business, are less favorable than expected; environmental conditions, including natural disasters and drought, may disrupt our business, impede our operations, negatively impact the values of collateral securing the Company’s loans and leases or impair the ability of our borrowers to support their debt obligations; the economic and regulatory effects of the continuing war on terrorism and other events of war, including the conflicts in the Middle East; legislative or regulatory requirements or changes adversely affecting the Company’s business; changes in the securities markets; regulatory approvals for any capital activities cannot be obtained on the terms expected or on the anticipated schedule; and, other risks that are described in CU Bancorp’s public filings with the U.S. Securities and Exchange Commission (the “SEC”). Additional risks and uncertainties relating to the proposed transaction with 1st Enterprise Bank include, but are not limited to: the ability to complete the proposed transaction, including obtaining regulatory approvals and approvals by the shareholders of CU Bancorp and 1st Enterprise Bank; the length of time necessary to consummate the proposed transaction; the ability to successfully integrate the two institutions and achieve expected synergies and operating efficiencies on the expected timeframe; unexpected costs relating to the proposed transaction; and the potential impact on the institutions’ respective businesses as a result of uncertainty surrounding the proposed transaction. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, CU Bancorp’s results could differ materially from those expressed in, implied or projected by such forward-looking statements. CU Bancorp assumes no obligation to update such forward-looking statements. For a more complete discussion of risks and uncertainties, investors and security holders are urged to read CU Bancorp’s annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by CU Bancorp with the SEC. The documents filed by CU Bancorp with the SEC may be obtained at CU Bancorp’s website at www.cubancorp.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from CU Bancorp by directing a request to: CU Bancorp c/o California United Bank, 15821 Ventura Boulevard, Suite 100, Encino, CA 91436. Attention: Investor Relations. Telephone 818-257-7700.
CU BANCORP, CALIFORNIA UNITED BANK AND 1ST ENTERPRISE BANK MERGER ANNOUNCEMENT On June 3, 2014, CU Bancorp announced that it had entered into an Agreement and Plan of Merger (the “Merger Agreement”) among CU Bancorp, California United and 1st Enterprise Bank, a California state-chartered commercial bank (“1st Enterprise”) pursuant to which CU Bancorp will acquire 1st Enterprise Bank by merging 1st Enterprise Bank with and into California United Bank (the “Merger”). California United Bank will survive the Merger and will continue the commercial banking operations of the combined bank following the Merger. Under the terms of the Merger Agreement, holders of 1st Enterprise Bank common stock will receive shares of CU Bancorp common stock based upon a fixed exchange ratio of 1.3450 shares of CU Bancorp common stock for each share of 1st Enterprise Bank common stock. The U.S. Treasury, as the holder of all outstanding shares of 1st Enterprise Bank preferred stock granted in connection with 1st Enterprise’s participation in the Treasury’s Small Business Lending Fund program, will receive, in exchange for these shares, a new series of CU Bancorp preferred stock having the same rights (including with respect to dividends), preferences, privileges, voting powers, limitations and restrictions as the 1st Enterprise preferred stock. The Merger is subject to customary closing conditions, including regulatory and shareholder approvals. ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION WITH 1ST ENTERPRISE BANK AND WHERE TO FIND IT Investors and security holders are urged to carefully review and consider each of CU Bancorp’s public filings with the SEC, including but not limited to its annual reports on Form 10-K, proxy statements, current reports on Form 8-K and quarterly reports on Form 10-Q. The documents filed by CU Bancorp with the SEC may be obtained free of charge at CU Bancorp’s website at www.cubancorp.com or at the SEC website at www.sec.gov. These documents may also be obtained free of charge from CU Bancorp by directing a request to: CU Bancorp c/o California United Bank, 15821 Ventura Boulevard, Suite 100, Encino, CA 91436. Attention: Investor Relations. Telephone 818-257-7700. The information on CU Bancorp’s website is not, and shall not be deemed to be, a part of this filing or incorporated into other filings CU Bancorp makes with the SEC. In connection with the proposed merger of California United Bank with 1st Enterprise Bank, CU Bancorp intends to file a registration statement on Form S-4 with the SEC to register the shares of CU Bancorp common stock to be issued to shareholders of 1st Enterprise Bank. The registration statement will include a joint proxy statement of CU Bancorp and 1st Enterprise and a prospectus of CU Bancorp, and each party will file other documents regarding the proposed transaction with the SEC. Before making any voting or investment decision, investors and security holders of CU Bancorp and 1st Enterprise Bank are urged to carefully read the entire registration statement and joint proxy statement/prospectus, when they become available, as well as any amendments or supplements to these documents, because they will contain important information about the proposed transaction. A definitive joint proxy statement/prospectus will be sent to the shareholders of each institution seeking any required stockholder approvals. Investors and security holders will be able to obtain the registration statement and the joint proxy statement/prospectus free of charge from the SEC’s website or from CU Bancorp by writing to the address provided in the paragraph above. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. 2
CUB Story – Background and Growth
May 2005 – Original CUB executive team reunited
Headquartered in Encino
Opened West L.A. 2006
Opened Santa Clarita 2007
Opened Conejo Valley 2008
Opened South Bay 2009
Acquired Cal Oaks 2010
Hired First Regional Team 2010
Acquired Premier Commercial Bank – Orange County 2012
Transferred listing to NASDAQ 2012
Added to Russell 2000 2013
$1.5 billion in assets in nine years
1st Enterprise Merger 2014
3
Merger is a Great Fit of People and Culture
Blending the best of two high performing organizations
Complementary branch locations and customer-centric cultures fit like a glove
Brings together some of the top bankers and banking support staff in Southern California
Larger organization provides increased opportunities for continued professional growth
4
A Highly Experienced and Proven Commercial Banking Team
K. Brian Horton
President
Sam Kunianski
Executive Vice President
South Bay
David Plourde
Executive Vice President
Orange County
William Sloan
Executive Vice President
Commercial R.E.
Keith Cerwinski
Executive Vice President
Inland Empire
Rich Hernandez
Executive Vice President
Tri Valley
David Kohn
Executive Vice President
Los Angeles
5
Robust Market
The LA Basin is the 16th largest economy in the world; it includes Los Angeles, Orange, Riverside, San Bernardino and Ventura counties
Rank in 2013 GDP in World Country $billions
14 South Korea 1,305
15 Mexico 1,261
LA Basin 995
16 Indonesia 868
17 Turkey 820
18 Netherlands 800
19 Saudi Arabia 745
20 Switzerland 650 . . .
53 San Diego 191
Source: The World Bank and Center for the Continuing Study of the California Economy
6
10 Branch Footprint Covers Five-County Area– The 16th Largest Economy in the World
Branch consolidation in Irvine
FENB Woodland Hills LPO to be consolidated into a CUNB branch
7
Strategic Locations
CUNB (8 branches) Santa Clarita Valley:
CUNB: $77 million
FENB (3 branches; 1 LPO)
Simi Valley: $100 Million+ Branches CUNB: $12 million
Downtown LA: Inland Empire:
FENB: $312 million FENB: $76 million
Conejo Valley:
CUNB: $219 million
Anaheim:
San Fernando Valley: CUNB: $199 million CUNB: $235 million
Irvine/Newport Beach:
CUNB: $147 million West LA: FENB: $290 million CUNB: $279 million Pro Forma: $437 million
South Bay:
CUNB: $69 million
Source: CUNB and FENB; branch deposits data as of Sept. 30, 2014
8
How We Compete
Approximately 80% of our new business comes from large banks
CUB’s relationship managers are more accessible and offer more personalized service than larger banks
Dedicated to the communities we serve
CUB employees volunteer at more than 75 nonprofit organizations
Annual golf tournament has raised more than $1.2 million to date
Six local Advisory Boards provide referrals and serve as CUB’s “eyes and ears” in the community
9
Banking Landscape is Rapidly Changing
Protracted zero interest rates have caused severe rate compression
Industry net interest margins are shrinking
3.70%
3.70%
3.63%
3.60%
3.52%
3.50%
3.41%
3.40%
3.36%
3.30%
3.20%
3.20%
3.14%
3.09%
3.10%
3.00%
2.90%
2.80%
2009
2010
2011
2012
2013
Q1-14
Q2-14
Source: SNL Financial
10
Growing Regulatory Burden has Increased Expenses
Minimal new bank formation in recent years
Escalating expenses associated with increased regulatory compliance
The Glass-Steagall Act, aka The Banking Act of 1933, enacted as an emergency response to the failure of nearly 5,000 banks during the Great Depression, was only 37 pages long
Dodd-Frank, the most comprehensive financial regulatory reform since the Depression, enacted in 2010 after the 2008 financial crisis, is 848 pages long and has generated over 2,000 pages of interpretive regulations so far—with more to come
Given the increasing cost of compliance, consolidation in the banking industry will continue
“As battle-scarred survivors of a financial crisis and deep recession, community bankers today confront a frustratingly slow recovery, stiff competition…and the responsibility of complying with new and existing regulations. Some observers have worried that these obstacles—particularly complying with regulations—may prove insurmountable.”
– Ben Bernanke, October 2, 2013
11
An Avalanche of Regulation
Number of Items per Quarterly Call Report has Jumped Dramatically
2000 1800 1600 1400 1200
1000 1955 1680
800
600
1116
400 785 775 569
200 403 309 231 247 238 238
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2012
Source: Call Report Financial Institutions Examination Council
12
Trend of Consolidation Continues to Decrease the Number of Commercial Banks
Number of FDIC Insured Commercial Banks
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
14,496
14,417
14,210
13,723
13,137
12,715
12,347
11,927
11,467
10,961
10,453
9,943
9,530
9,144
8,777
8,582
8,315
8,082
7,888
7,770
7,631
7,526
7,401
7,284
7,088
6,840 6,530 6,291 6,096 5,876 5,809 5,757
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1-14 Q12-14
Source: SNL Financial 13
Only 10 Publicly Traded Banks in Southern California with Assets of $2 Billion to $10 Billion
Assets in
Bank $billions County
CVB Financial Corp. 7.4 San Bernardino
BBCN Bancorp, Inc. 6.9 Los Angeles
Farmers & Merchants Bank of Long Beach 5.5 Los Angeles
Opus Bank 4.7 Orange
Banc of California, Inc. 4.5 Orange
Hanmi Financial Corporation 4.2 Los Angeles
Wilshire Bancorp, Inc. 3.9 Los Angeles
Community Bank 3.5 Los Angeles
CU Bancorp—Pro forma 2.3 Los Angeles
Pacific Premier Bancorp, Inc. 2.0 Orange
“CUB is a ‘pure play’ business bank”
Source: SNL Financial, excludes a local specialty “Scarcity Value” bank.
14
Number of U.S. Banks and Thrifts by Asset Size
“Scarcity Value”
$50—$100 B 9
$25—$50 B 20
$10—$25 B 45
$5—$10 B 69
$1—$5 B 486
Less than $1 B 5,639
0 1,000 2,000 3,000 4,000 5,000 6,000
Source: SNL Financial
15
CUNB & FENB Share the Same Corporate Values
Deliver “old fashioned banking relationship” that business owners want
Service, Service, Service
Value our employees
Disciplined credit culture
“Passionate” – committed to being the very best!
Build shareholder value
16
Why We Will Win!
Unique franchise
Best market!
All-star team of bankers
Best People!
Commitment to fundamentals
Track record of
Ability to grow organically execution! and through strategic M&A
Intense Marketing Focus!
There is a compelling need in the market for a traditional, high touch, relationship-based, commercial business bank to serve the middle market in Southern California.
17
Shareholders of CUB Acquisitions Have Been Well Rewarded
COSB up 226%; CAGR of 32.3%
PCB up 117%; CAGR of
30.3%
$20.00
$20.00
$18.00
$19.56
$18.00
$19.56
11/12/14
11/12/14
$16.00
$16.00
$14.00
$14.00
$12.00
$12.00
$10.00
$10.00
$8.00
$8.00
$9.00
12/8/11
$6.00
$6.00
$6.00
$4.00
$4.00
8/24/10
$2.00
$2.00
$0.00
$0.00
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Summary of Merger Terms
Name: CU Bancorp / California United Bank
Headquarters: Downtown Los Angeles (Current FENB headquarters)
Management: Chairman and CEO, David I. Rainer (current Chairman, President and CEO of CUNB)
President, K. Brian Horton (current President of FENB)
Board Composition: 8 CUNB / 4 FENB
Ownership: 68% CUNB / 32% FENB
Consideration: 1.3450 shares of CUNB stock for each FENB share
100% stock consideration; fixed exchange ratio
Equivalent to $26.27 per FENB share4
13% premium to FENB’s last closing price2
Deal value of approximately $103 million1
16.9x 2014 analyst EPS estimate
172% of tangible book value per share3
Timing: Expected to close on November 30, 2014
1Based on CUNB closing price of $18.19 on June 2, 2014 2Based on FENB closing price of $21.75 on June 2, 2014 3As of March 31, 2014 4Based on CUNB closing price of $19.53 on November 13, 2014
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Asset Growth
Both CUNB and FENB have had strong organic growth
1600
1400
1200
PCB Acquisition $397M
1000
800
COSB Acquisition $118M
600 400 200
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 3Q-14
FENB CUB
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Very Similar Growth in Gross Loans
CUNB FENB
0
200
400
600
800
1000
1200
$489
$855
933
$979
2011 2012 2013 Q32014
29% CAGR
0
100
200
300
400
500
600
$293
$409
$505
$570
2011 2012 2013 Q32014
27% CAGR
21
Nonperforming Assets to Total Assets Are Significantly
Lower than Peer Group of Similar-Sized Banks
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
1.42%
1.19%
1.09%
0.68%
0.30%
4.19%
3.06%
2.31%
1.89%
2010 2011 2012 2013 3Q14
CUB Peer Group Avg.
Peer group includes California banks or bank holding companies with total assets between $1.0-2.0 billion; source: SNL. 22
Net Charge-offs Are Significantly Lower than
Peer Group of Similar-Sized Banks
-2.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
0.49% 1.50% -0.04% 0.94% 0.08% 0.82% 0.00 0.21% -0.02%
2010 2011 2012 2013 3Q14
CUB Peer Group Avg.
Peer group includes California banks or bank holding companies with total assets between $1.0-2.0 billion; source: SNL.
23
Very Similar Deposit Growth and Composition
CUNB
$1,400 $1,232 $1,263 $1,200 $1,078 $1,000 $565 $600 $800 $535 $691
$600 $309 $400 $698 $632 $544 $200 $381
$0
2011 2012 2013 Q32014
FENB
$800 $690 $700 $612 $643 $600 $497 $500 $327 $352 $325 $400 $282 $300
$200 $338 $287 $316 $100 $215
$0
2011 2012 2013 Q32014
Noninterest bearing deposits
Interest bearing deposits
24
Attractive Low Cost Deposit Base
Total deposits of $1.3 billion
Cost of deposits was 0.11% in 3Q14
$698 million or 55% of total are non-interest bearing deposits
Total Deposit Growth Since Inception
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
PCB Acquisition $397M
COSB Acquisition $118M
2005 2006 2007 2008 2009 2010 2011 2012 2013 Q3-14
CUB Organic Acquisitions
25
Improving Operating Leverage
“When Revenues Grow Faster than Expenses, Good Things Happen”
Revenue Operating Expenses
$15 $14 $13
millions) $12 in $11 $
( $10 $9 $8 $7 $6
*3Q12 operating expenses excludes $2.5 million in merger-related expenses; 2Q14 excludes $497 thousand in merger-related expenses; 3Q14 excludes $631 thousand in merger-related expenses.
26
Analysts Project Growth in Net Income for Both Franchises
CUNB
$16.0 16%
$14.0
$11.3
$12.0
$10.0 $9.8
$8.0
$6.0
$4.0
$2.0
$0.0
2013 2014E1
FENB
$8.0 26%
$7.0 $6.1
$6.0 1
$4.8
$5.0
$4.0
$3.0
$2.0
$1.0
$0.0
2013 2014E²
1Mean analyst estimate as of June 2, 2014 2Analyst estimate as of June 2, 2014
27
Record Core Net Income in 3Q14
Core net income of $3.2 million, 28% increase from $2.5 million in 3Q13 Core EPS of $0.28, 21.7% increase from $0.23 in 3Q13
Core EPS
$0.30 $0.25 $0.20 $0.15 $0.10 $0.05
$0.00
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
Graph source: SNL Financial
28
CUB is a Member of the Russell 2000 and the ABA Community Bank Index–Outperforming Both YTD
CUB vs. the Russell 2000 and the American Bankers Association Community Bank Index
29