BBCN Bancorp Earnings Call Nuggets: Loan Origination Rates and Capital Management

BBCN Bancorp Inc (NASDAQ:BBCN) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.

Loan Origination Rates

Scott Valentin – FBR Capital Markets: Just with regard to loan rates, it was encouraging to see that the origination rates were up quarter-over-quarter. Is that trend continuing or is that reflect more your discipline, and maybe if not, then are you seeing the markets start to kind of move in that direction as well?

Mark Lee – EVP and Chief Credit Officer: Well, I think that’s more – this is Mark. That I think reflects our discipline, and we expect – market expectation for rate rising to really set in would take some time. I mean, customers recognize that rates kind of go up, but for them to actually see and understand that it’s going to take another few quarters. So in that sense, we have more or less having a self-discipline. Those are rates for the second quarter, throughout the quarter, most of which were set before the rise in treasury rates as it occurred late in the quarter.

Scott Valentin – FBR Capital Markets: Then just in terms of, you mentioned competition, is it coming more from the small bank side, like you said there are some small banks entering the market and maybe distorting price a little bit?

Mark Lee – EVP and Chief Credit Officer: I will say it’s coming from a whole spectrum, largely banks using interest rate swap, they are using – proposing very aggressive rates in the range of 3% to 4% and also we are seeing it from our peers…

Scott Valentin – FBR Capital Markets: Then final question and I’ll go back in the queue. You mentioned payoffs were extremely high in the second quarter versus the first quarter. I assume that – I mean, it seem that rates did not move until late in the quarter, so maybe the rise in rates did not really drive that. But would you expect, given the move in rates, you will see some people seek to lock in rates now and (it will be) payoff?

Kevin S. Kim – Chairman, President and CEO: In the second quarter the larger payoff will happen with the C&I credits. We had some unique situation. We had a $20 million credit that was paid off, and also the $50 million credit that was paid off. I think I will consider that as more or less one-off and don’t expect that to happen like that.

 

Capital Management

David Konrad – Keefe, Bruyette & Woods: This is actually David on for Julianna. Just had a quick question on capital management. So your TC ratio right now is 11.9%. I saw you increased the dividend to $0.075 per quarter. I was just wondering, so what’s your plan on capital management going forward. Are we expecting any special dividends or buybacks coming up?

Douglas J. Goddard – Deputy CFO: The management team and the Board here look at all the things that our competitors do and that you would expect us to look at to optimize value to shareholders. Right now we did increase the dividend and we do have another merger expected to close in the next month, which will have some use of capital. But everything that you would consider for capital management is on the table that is actively considered.