Regional Financials: BBCN Bancorp (BBCN)
A total of 28 of BBCN’s 49 branches are located in California, with most in the Los Angeles area. That said, 33% of its $5.1 billion loan portfolio originates from outside Southern California; most of which is either for commercial real estate or corporate and/or industrial purposes.
Although Korean-Americans are its primary customers, BBCN is focused on small- and medium-sized businesses of any description. To that end, it’s currently the eighth-largest SBA lender in the country by volume.
As regional financials go, BBCN generates revenue the old fashioned way earning a spread between the interest it receives from the customer and the interest it pays for the funds it lends. As a result, its efficiency ratio of 47.69% in the first quarter ended March 31, 2014, is exemplary. Its pre-tax, pre-provision (PTPP) income in Q1 2014 was $39.8 million, a return on average assets of 2.44%. While that’s its lowest rate of return over the past five quarters, it’s still better by 59 basis points than Cathay General Bancorp’s (CATY) PTPP of 1.85% ($49 million in net income before taxes and provisions for loan losses annualized/total average assets of $10.6 billion) in the first quarter.
BBCN is a well-operated bank. It’s easy to see why it ranks highly amongst all the financials — regional or otherwise.