Commercial Capital Bancorp Inc. of Irvine, Calif., blamed a drop in fourth-quarter earnings on higher salary expenses and ongoing costs to defend itself in a lawsuit over trade secrets.
The $5.5 billion-asset thrift company said net income fell 25%, to $15.1 million, due to a 61.6% spike in operating expenses, to $20.5 million. It said it "significantly" increased its staff after acquiring two companies and starting a commercial banking division.
The new division's job is to offer cash management and treasury services and solicit deposits. It was started after 23 bankers defected from Comerica Inc. in July and were hired by Commercial Capital. That prompted the Detroit company to file a lawsuit to bar Commercial Capital from using Comerica's trade secrets to solicit Comerica's customers.
Commercial Capital said that it spent $1.2 million in the fourth quarter defending the lawsuit, and is appealing a November court ruling barring it from soliciting any Comerica customers or other Comerica employees while the lawsuit is ongoing.
Additionally, Commercial Capital's net interest income fell 2.8%, to $37.4 million in the fourth quarter. A drop in core deposits increased its dependence on loans and other funding sources, raising the company's cost of funds to 2.78%, from 2% a year earlier.
Commercial Capital's net interest margin dropped 17 basis points, to 3.21.
The earnings news spooked investors. In heavy trading, Commercial Capital's stock price fell 8.9% Monday, to $15.94.
