Beverly Hills Bancorp Inc. said Thursday that second-quarter net income fell 36% from a year earlier, to $2.1 million, because of increased funding costs and deteriorating credit quality.
The $1.6 billion-asset Calabasas, Calif., company said that its net interest margin declined 48 basis points, to 2.06%, mainly because of significant increases in the cost of funds. Related Links
Deposits fell 16%, to $713 million, compared with a 29% increase in Federal Home Loan Bank advances, to $641 million.
In July of last year Beverly Hills sold one of its two branches and began to depend more on wholesale borrowing to fund its new focus: making variable-rate construction and land development loans, particularly to condominium developers.
For the quarter, it also posted a $661,000 loan-loss provision, compared with a $109,000 recapture a year earlier. As of June 30 it has $20.8 million of nonperforming loans, or 1.3% of total assets, including a $18.6 million defaulted construction loan to a Coachella condo developer.
