Luther Burbank (LBC) priced its offering at $10.75 per share, which was on the low end of the expected range ($10.50 - $12.50), but the size of the offering was increased to 12.15 million shares from 11.40 million shares.
Shares of the California-based bank holding company for Luther Burbank Savings will begin trading today.
Luther Burbank is a California chartered bank that specializes in real estate secured lending in metropolitan areas along the West Coast with a focus on multifamily residential lending and jumbo, nonconforming single family residential lending.
Management believes the bank's success depends on a development of strong relationships with depositors.
The bank's typical multifamily borrower is a professional investor with multiple properties and a focus on investing in stabilized cash-flowing assets to build equity, current income, and wealth. The bank's own bankers originate the bulk of multifamily loans, but some originations are also made through brokers.
The bank has nine locations in California. Four branches are located in the San Francisco area while the remaining five are located in the Los Angeles area. Going forward, the bank plans to expand into other markets on the West Coast with an ultimate goal of having a presence in cities between Seattle and San Diego.
The bank achieved a 12.9% compound annual asset growth rate between December 31, 2014 and December 31, 2016. Earnings during the same period increased at a compound annual growth rate of 22.7%. Loans during the two-year period increased at a compound average growth rate of 13.9%.
57.0% of the bank's loan portfolio at the end of September 2017 was made up of multifamily residential loans while single family residential loans made up 40.0% of the total. Commercial real estate loans and construction & land development loans made up 2.0% and 1.0% of the loan portfolio, respectively.
At the end of September 2017, single family loans had an average balance of $840,000 with a weighted average loan to value of 65.0% and a weighted average credit score at origination/refreshed of 746. Multi-family loans had an average balance of $1.40 million with a weighted average loan to value ratio of 56.0% and a weighted average debt service coverage ratio of 1.57.
At the end of September 2017, nonperforming assets made up 0.11% of the bank's total assets. The bank foreclosed on just one property since January 1, 2015.
The bank generated net interest income of $83.43 million through the first nine months of 2017, which was up 18.4% year-over-year. During 2016, the bank's net interest income totaled $94.64 million, which represented year-over-year growth of 11.5%.
Net income for the first nine months of 2017 was $48.96 million, up 26.1% year-over-year. Net income in 2016 totaled $52.12 million, up 47.3% year-over-year. The bank earned $0.70 per share during the nine months ended September 30, 2017, up from $0.56 for the first nine months of 2016. The bank earned $0.74 during fiscal year 2016, up from $0.51 per share earned in 2015. Starting in the second quarter of 2018, the bank plans to establish a quarterly cash dividend of $0.0575.
The bank intends to use $40 million to fund a cash distribution to shareholders immediately after closing of the offering. This dividend will not be paid to new investors. Remaining proceeds will be used to increase the bank's capital and for working capital & other general corporate purposes.